As the CEO of FolioKarma, Kei Kianpoor is building the strategy and vision for this new company and app that showcases one’s investments according to an investor’s specific ethical principles.
He dually serves as CEO of Investars, a company dedicated to helping investors enhance investment performance through innovative supply chain management tools, indexing and structured products. Previously, Kianpoor held roles with several large investment banks, as well as the Program Officer for the United Nations in Sarajevo during the conflict in Bosnia.
In this edited interview, Kianpoor shares his thinking behind the development of FolioKarma.
Q. What does Karma mean to you and why did you include it in your company name?
A. Karma is the cycle of life—whatever you do ultimately comes around and gets you. If you put positive things in the world, positive things will come back to you. If you put negative things out, negative things will come back to you.
So there’s a number of ways I can take positive actions. I could give money to someone who needs it, I could give a hug to someone who needs a hug. I could also invest in a company whose culture and business practices I ethically support.
Investing itself is a personal expression, but historically we haven’t thought of it that way. Investors research has so far been focused on whether the stock price will move up or down. Yet once you invest in a company, you’re actually empowering that company. Stock price research should only be a small part of an investors due diligence on her investments.
Q. Empowering a company to do what?
A. Anything! Investors don’t understand this, but many corporations wouldn’t be around if they weren’t financed by people. One always thinks these financiers are fat cats with their own money to spend. But financiers are actually using YOUR money. They could be getting it from you directly when you invest in a stock market or indirectly when you invest in a 401k or a retirement fund.
Your money, indirectly and with the money of the people around you, goes to finance the activities of these companies. It provides them with loans and equity capital, which empowers the company to have major global impact.
In the Middle Ages, it was the Age of the Church and that eventually turned into the Age of the State. Now, thanks to globalization, we are coming to the Age of Corporations.
We have huge multinational companies that have tremendous impact over the Earth and the people in it. They also promote a certain culture not just among their employees but among clients and their vendors. These corporations work across borders and in some ways are more powerful than governments and again, you are empowering them.
Q. So you believe individuals can actually have major impact through their investments?
Yes. Blogging and being socially active are good things. But monitoring your investments to see whether they match your ethics and see if the return is worth it to you, when they don’t is probably the most effective way to change the world around you in the age of corporations. Look at the substantial changes brought over in apartheid and other behaviors brought on by divestment movements. FolioKarma enables each individual to do that at an individual level. It is a democratic way of voting with your money.
Q. Is FolioKarma the first company to focus on this?
A. Yes. FolioKarma is the only company that enables you to do this. But the ethical and sustainability spaces have been around forever they just haven’t caught on in the way they should have because of two issues that affect the space which we try to solve with FolioKarma.
Q. What kind of problems?
A. One, ethics are personalized. No two people are going to care about things to the exact same degree. They might both care about one thing in common, but then they may disagree about other things.
You simply can’t have a sustainable fund that is right for everyone’s ethics. I could be a gay conservative who is very religious and wants to invest in sin-free stocks. Where can I find a sustainable fund for that? I can’t.
What we are focused on is the emancipation of the investor’s ethics to enable them to express what is important to them at the individual level.
Once you know whether the issues your fund invests in are important or not to you, you have to determine HOW important they are to you. Would you be willing to lose 1% of your money in the last year because you disagree that corporations you invest in should not be involved in child labor and slavery? I would. Would you be willing to have lost 5% last year because you don’t want to be involved in animal testing? I would. But then again what kind of animal testing. Is the company torturing animals to test make-up or doing necessary experiments in the most humane way possible to cure childhood leukemia? These are the give-and-takes we hope to make transparent. These are the issues we want to help individuals resolves for themselves at an individual level with a very simple, easy to use, tool.
We want to be able to create a stock portfolio where you—not the fund manager—makes the decision on whether something is important enough to you to warrant a possible performance cost.
And this doesn’t have to be negative. Instead of divesting from companies whose activities you disagree with, you could also be investing in companies whose activities you support and would like to encourage. I believe that over the long run this could be no only a more rewarding route, but also a wiser one. Why would you invest in out-of-touch management that is not up to social norms and ethics? It seems like that would be a strategy that though immediately profitable, could one day blow up in your face.
Q. So tell us about your research? How have you collected it and what does it focus on?
A. Our team has imported reports from a wide range of sources, including research institutes, government agencies, non-governmental organizations, advocacy groups and respected media outlets.
More of the data skews towards information that a lot of people would like. For example, did you know that Cisco is one of the best places for women to work according to Forbes Magazine? Or that Microsoft is one of the best companies for people who identify as LGBT to get benefits?
But we’ve also included data about things that people wouldn’t necessarily like to learn about a company. We have research on companies that have violated human rights, companies that are involved in animal testing, companies that are make substantial part of their revenues from war.
But then again, is that good or bad. Some people don’t want to profit from the death, others would argue that they would like to invest in the companies that equip our troops from the many present dangers they protect us from. These are all issues determined by individuals in Foliokarma.
Q. How do you keep your data fresh and current?
A. Our research team updates our lists as often as we can. But this is only “seed” research. Our vision is to crowdsource the process. We think everyone would be better served if PhD’s, researchers, hobbyists, the media and institutions uploaded their own research into FolioKarma. We are working on mechanisms to be able to compensate this research providers when they provide research that is valuable and important to investors.
While our main purpose is to create a simpler way to invest ethically, our secondary but equally important purpose is to expand the quantity and quality of such research available to investors and their advisers.
Billions of dollars go to fund buy-sell holdings from Wall Street. We are conditioned to believe that is all we need to know and that the twentieth firm’s upgrade or downgrade on a stock is actually important information.
Is that all “research” should or can be? Obviously not. Let’s expand what we define as research. Let’s put some of the best minds in the world on it. Let’s better serve investors so far living in this prison of buy/sell and hold.
FolioKarma is for the people who actually want to know more about the company’s activities, business practices and overall ethics. The research that we’re providing allows investors to be able to better understand the company and to judge the management of the company.
Let’s enable you to judge the quality of the people who are the management team and the philosophy of the company, which ultimately could enhance your returns by reducing risk.
You sit there, you click, you buy a company and you think you have power only to see the stock move for or against you. It’s often been said that the market is random. It’s called the random walk theory. But you don’t have to be a victim of the randomness. Look for more than just “returns” and you will get more than just returns.
Empower yourself. Instead of being the passive agent in the age of corporations, become the active component. Determine what you want to invest in not only based on some hope that you might make some money but based on how you want to shape your world. Impose yourself on the events of the world with your money, the same way you do so with your opinions and your vote.
Ready to get started? Download FolioKarma on iTunes.
To learn more about how FolioKarma works, please read: Introducing FolioKarma: The Mobile App for Socially Responsible Investors.
Have a question about FolioKarma or ethical investing? Check out our FAQ.
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