Jumping Ship: From the ‘Millionaire’s Factory’ to the Social Sector

Michael Traill AM, founding CEO of Social Ventures Australia, shares his professional and personal journey of leaving the so-called Millionaire’s Factory after a 20-year career to work in the social sector.

Traill grew up in Morwell, an industrial town in country Victoria. From his local public school he went onto study at Melbourne University and Harvard Business school, which led to a highly-paid and successful career at Macquarie Bank.

In his newly-released memoir Jumping Ship, Traill reveals how a pivotal moment 15 years ago, when he was in his early forties, made him reassess his career priorities.

Determined to put his business skills to good use, Traill left Macquarie to become the founding CEO of Social Ventures Australia, a Not for Profit organisation that provides evidence-based funding, investment and advice to support its cross-sector partners.

Jumping Ship delves into some of SVA’s well-known partnerships, including the deal that created Goodstart Early Learning from the collapsed ABC Learning centres.

Traill spoke to Pro Bono Australia News about why he left the corporate world, the lessons he learnt along the way and how other organisations can increase their social impact.

Where were you working in the Millionaire’s Factory and why did you decide to leave?

I was a co-founder of Macquarie Bank’s original private equity business. I’d been working in that area for 15 years and we’d invested over $400 million in 42 companies.  That had gone well personally, professionally and financially, but I got to a point at the age of 41 when I was thinking about what is it that I can do (in language that I would use now) to connect head and heart.

There was a particular moment where I woke up one weekend thinking about positional moves in my son’s under-12 Aussie rules footy team that was a catalyst to that move. That was important because it came at a point when we were contemplating a pretty significant investment in a buyout, normally a point of time where you’re quite focused on “have you done the homework?”, and nervous and anxious about whether you should do the deal or not. But in that part of my life which was involved in coaching my kid’s AFL team, I was thinking about moves to try to improve the self-esteem of a young boy who was in the team who had a few challenges and issues…  and it was a wake-up moment for me that this issue in the footy team was grabbing my attention.  It made me reflect that if this is what I’m passionate about, I should really consider if I could find ways to use whatever business skills I’d developed in what was then a career of 20 years in different business environments and particularly private equity to make some sort of community difference.

That was the moment of reflection and introspection that started the journey that led me to accepting the role as founding chief executive of what was then called the Social Ventures Initiative, which was to become Social Ventures Australia.

Is Social Ventures Australia what you imagined it would be when you started?

SVA has grown significantly beyond what any of us would reasonably have anticipated when the original business plan was put together in 2001. At the heart of SVA, and it still continues to be important to the work of SVA, is this model of venture philanthropy where you support high-quality organisations run by outstanding social entrepreneurs – support them with funding, with access to strategic support and help them be really clear about the evidence of what works. So that’s still a really core part of the SVA work.

Where SVA has grown substantially is in providing much broader support to the sector. The SVA consulting team now has done a huge amount of work across the social purpose sector, in providing strategic advice and building clear reporting frameworks using social return on investment to check evidence of performance. The impact investing team has done a lot of work advising organisations on how to think differently and creatively about their funding mix.  It manages a pool of more than $40 million in impact investment funding and is a leading driver of social benefit bonds.  None of these things were contemplated in the original design of SVA.

I think most [MT1] importantly that as an organisation with a team of close to 70 people, SVA has become a magnet for a high quality talent pool of people from the business world and across the sectors who really care about the social fabric of Australia and want to use their skills in thoughtful and strategic ways.

A key part of the journey and growth was what we learnt from the original venture philanthropy foundations of SVA and that we could be really effective working as a partner, as an enabler and as a catalyst.  Those capabilities underpinned some of the most powerful work of SVA in driving things like the partnership work in education and employment and the role in driving the Goodstart non-profit syndicate acquisition of the bankrupted ABC childcare centres.

A belief and understanding of those skills has taken SVA places that wouldn’t have been contemplated in the early days. Goodstart particularly has become a bit of a bellwether for how people can look at the sector and see that if you do things with business disciplines for social purpose you can actually really do things that are larger scale. SVA has built quite a reputation for pioneering and thinking differently and practically in those kind of areas.

How has the social sector evolved in the 15 years that you’ve been there?

I think the sector’s evolved quite a lot, and I think the shared journey of the sector in working more collaboratively with the business, philanthropy and government worlds has been really quite a significant one. I’d like to think that SVA has been an important and helpful contributor to that evolution, especially in the linkages with business and philanthropy.

There’s obvious evidence of sticky, entrenched disadvantage and social problems over the last generation, and I think most of us who think about these issues are quite concerned that, despite a generation of economic growth, we still have these issues of entrenched disadvantage. And if you care about that, and many of us do, you have to think differently and creatively about what are the solutions to those, because the reality is a lot of what has been tried in the last 20 to 30 years hasn’t really been as effective as it should be.

And so I do think the sector now thinks more creatively about how is it that we work with government, with business leaders, with philanthropy to drive outcomes and change? How do we become more strategic and thoughtful around what is working? How do we build organisations that are doing good work to support them extending the reach of their work,  where there’s evidence that they know what they’re doing, where there’s evidence that they’re well run?

I think the sector has shifted and I think that’s been a product of not just the social purpose sector, but philanthropy and business and government being prepared to look a little differently at how we can work together more effectively across the community.

What are you hoping people take away from your book?

I wrote the book with two purposes in mind. The first was a shortcut in sharing the story because there has always been an interest in the jump-ship story – why was it that I left the so-called Millionaire’s Factory to work in the social purpose sector. And frankly, I always thought that was a bit of trivial story but people are interested in it. So now I can say to those who want to catch up and have a coffee and talk about that, well you can buy the book and read about that story.

I think the more substantial thing for me, and what I’m hoping people take out of the book, is we need to think about different and practical solutions to the issues of entrenched disadvantage.  In particular, that through the shared practical stories of the work of SVA, of what happened to create Goodstart, people really start to engage in the issues and what they can do, that there are different practical ways of developing partnerships, of building organisations like Goodstart.

A lot of the work SVA’s done [is] really pushing: “let’s be clear about the evidence of what works, let’s think with some intelligence and creativity around what are the nature of the outcomes that we need to drive and the partnerships that are required to make that happen.” The hope is that I make these issues accessible through the book in a practical way through the personal and professional experience of SVA and Goodstart and that this encourages people to do something about it, to think differently about the solutions.

I’ve attached in the appendix a speech I gave at the end of my tenure as chief executive of Social Ventures, which I delivered at the New South Wales parliament.  In many respects the underpinnings of the book are in this oration. It’s core theme is to explore why is it that capital and funding application in the social-purpose sector is, in my view, frequently quite dysfunctional. And if you accept that it’s dysfunctional, and one of my observations in 15 years of doing this work is that in many cases it is, we have to think proactively and constructively about doing that differently. At it’s heart the book is about how do we think about a more efficient social-purpose-capital market where money’s flowing to the organisations and to the people who are making a genuine difference.

What advice would you give to other people looking to jump ship?

I try to avoid giving gratuitous advice. I’m always happy to reflect the personal experience of why I moved when I did, and that was very much a product of following my heart because I felt passionate about the idea that maybe I could find ways to use whatever business skills I had. But I try and avoid telling people when and how or whether they should do that, rather, that they should ask themselves a set of core questions my friend and mentor Norman Drummond put to me which are reflected in the book:

Who are you?

Why are you living and working the way you currently are?

What might you yet become and do with the rest of your life?

These are hard and real questions and I think if people address them honestly they will land in a place of their personal alignment in connecting their head and heart.

One of the great joys of working at SVA is that there are a bunch of people who are a lot younger than me who are making decisions in their 20s and 30s to do work that’s focused on social purpose. And I think SVA’s become home and a magnet for outstanding-quality people who wanted to do their own version of jumping ship, and we’ve created a place to do that. Many of those people, which is a source of great pride at SVA, have gone on to other roles in the sector where they’re making a huge difference.

And so my encouragement to people, and there are many people in the community who really do care who aren’t working in the social-purpose sector, is to find ways where they can use their time, their passion, their intellect and to the extent they’ve got the capacity to fund things, to do all of that with commitment and with some focus when they’re ready to do it.

What were some of the challenges you faced during that transition period in your life?

The challenges were both personal and professional. The professional challenge was a lot about the fundamental question, which was: “was what I’d learnt in the 20 years in the business world actually helpful or relevant in the social purpose world?” because that was kind of untested then. And there was understandably a fair amount of cynicism about that, you know the idea that some do-gooder putting on the hairshirt from the Millionaire’s Factory could make a difference was quite legitimately the subject of some debate. So that was pretty challenging, the idea we had to prove there was a model that could work.

Jan Owen, who I describe as a serial social entrepreneur and who now does an outstanding job running the Foundation for Young Australians was just critical in helping prove there was substance in the model behind SVA when she joined and effectively we jointly ran SVA.  I think in that partnership, because we had quite different backgrounds but we thought and acted in common on a bunch of the issues, there was a visible demonstration of what sat at the heart of SVA, that you could have people aligned from different sectors caring about outcomes and harnessing the best of talent and thinking and experience on both sides of the fence. So that was a really, really important foundational bit of glue for SVA.

More personally… running a start-up Not for Profit organisation was incredibly time consuming. I was passionate about what we were doing, but the truth is I went from a lifestyle where I had reasonable control over my quality of life and family time too, but particularly in the first year at SVA, not having great control over any of that. I think the book hopefully honestly and accurately reflects that there are some of those challenges that I didn’t handle particularly well and I felt like I dropped balls at home. We had three kids who were younger then and I wasn’t around a lot because I was chasing my tail trying to build this start-up very different non-profit organisation. So I think if I had my time differently I would like to think I could have been a bit more balanced around how that played out.

Apart from work-life balance is there anything you miss about the Millionaire’s Factory?

I really enjoyed the time that I had there, and I’m always at pains to say that experience at Macquarie was overwhelmingly a really positive, enjoyable and learning experience.

But the short answer is I’d got to a point in my life where I’d moved on and wanted to do different things, so I don’t miss not being at Macquarie.  I do feel deeply privileged to have worked there for the period of time that I did. There were people like David Clarke, Robin Crawford, Tony Berg, John Gerahty, Sandy Lockhart who I worked with who were mentors, who taught me a lot, who became friends and were without exception strong supporters of the work of SVA.  I do think this says something substantial on a not particularly well-understood story which reflects the ethics and integrity of Macquarie, which has a great record of corporate and foundation engagement.

So it’s more a question of what I was moving to, not what I was moving from. And I think the fact that I’d had that experience at Macquarie served me incredibly well to do the sort of work that sat at the heart of SVA.

In terms of corporate ethics and social purpose – where do you see things moving in the future. Research shows gen y’s want a career with purpose, so will the Millionaire’s Factory always be as large and powerful, or will it get to the stage that corporations are also jumping ship, so to speak?

I would argue pretty strongly that one of the other things that’s changed over the last 15 years is that the leading corporates are actually taking this a lot more seriously, and it’s because, as you suggest in your question, the millennials, the gen x’s are saying we want a place to work where there’s a professional and career opportunity, but we also want to work in a place that creates and takes seriously its place in the community, and I want to be part of that, I want to contribute to that.

So if you’re doing that as a corporate and I’m a prospective employee, that’s actually a really attractive thing to me and I’m more likely to want to work with you and to stay with you if you do that.

I always remember David Clarke, who is founding chair of Macquarie Bank, talking to me about that and reflecting that the questions he was being asked by prospective recruits was changing.  He would tell that in the top three or four questions he would be asked:  “what are you doing in the community?”  and “Will I have an opportunity to engage?” It was a source of considerable pride for him that he was the architect of setting up a foundation, which has given over a quarter of a billion dollars, and Macquarie has taken a leading role in community staff engagement as well as some serious, strategic philanthropic support.

I’m convinced there is a correlation between organisations that do an authentic and high quality job of philanthropic and community engagement and retain their talent.  It’s clear to me there is now a nexus between these things. I do think the ground’s shifting on that, and I think the organisations and the corporates that don’t do that will actually lose their talent, and hence will lose their competitive advantage. And I think that’s a really powerful thing.

Jumping Ship – From the World of Corporate Investment to the Heart of Social Investment, by Michael Traill, published by Hardie Grant is available at bookstores and online.

All royalties from the book will go to the work of SVA.