Client Impact: A Conversation with Rafi Musher

At Clearsight, we sought to discover the broader effects of our team’s work. As such, we explored one of our core values, Impact, to try to assess the “greater good.” We learned many of our former clients have put their post-transaction resources and time toward community and philanthropic engagements. We are proud to have played a part in enabling these individuals to fuel their passions and enhance the broader community. This Client Impact series highlights these entrepreneurs, their positive works, and the greater effect on the community.

Rafi Musher is a founder, adviser, and social impact-focused former Clearsight client. Rafi served as CEO of Stax from its founding in 1994 through the Company’s recapitalization by Blue Point Capital Partners in 2021. Rafi has since transitioned to Chairman of the Board at Stax and now spends most of his time pursuing social impact endeavors and occasional advisory roles. Clearsight spoke with Rafi to delve into his views on social impact and business, and how the two can best be combined to bring about a more well-rounded future. This interview has been condensed and edited for clarity.

Rafi Musher (RM): I will say, first and foremost, I commend you doing this because I think part of our great opportunity set as a very connected group is to get more people in the arena of social impact, working with non-profit and for-profit models, and more people to bring their minds and money into these earlier on in their careers. Developing infrastructure for social impact is a big theme for me, helping bring more talent, connections, and capital to non-profits and more for-profit social impact to bear.

In working with Clearsight, this was a consideration along the entire journey. From the beginning, Joel Kallett helped us think about some transition of equity and ownership to our next generation, which facilitated social impact in thinking about the business, how it is run, and the people who benefit from it. This effort encapsulates that working ethos.

Clearsight Advisors (CA): Thank you. We’re looking forward to your thoughts on this topic. How do you approach, or think through, your philanthropic endeavors?

RM: I have a general framework for how I’m thinking about the things I work on. Two of the benefits of my work at Stax over the decades and our commercial due diligence practice include the institutional knowledge from taking thousands of deep dives into companies and markets across sectors and meeting so many different people in different fields. And I gained knowledge from my parents and grandparents in terms of different non-profit beginnings. In trying to think about where I wanted to focus my time next, I put them into four quadrants. The first being the Jewish community and Israel, as my family and I are Jewish. The second is climate initiatives, because it’s bad for everyone if there’s no place to live. Third would be making the world a better place for more people, which is everything from schools to healthcare and basic needs, to social services and workforce development. And finally, there’s the infrastructure for social impact and philanthropy. This digs into how to bring people and resources to the table and get more people involved in social impact endeavors that mean something to them. There is a saying by Hillel, “If I’m only for myself, who am I?” I’ve been lucky to be involved in all four quadrants in different capacities. In each one of those there is some mix of not-for-profit and for-profit, but more of my work is not-for-profit, outside of climate. I also help some private equity firms and their portfolio companies create more social impact, which falls into the infrastructure bucket.

I have experience connecting what we are learning in business with needs in the non-profit world. I investigate impact opportunities just as I would a business opportunity. In doing so, you sometimes recognize a system is not actually serving its designated population – maybe it grew from something 100 years ago that is no longer relevant or is otherwise not optimized. So we might enter a market white space or an opportunity for something that needs philanthropic help. Or it might need a different business model. In some places, for-profit solutions can handle certain social problems. But it still requires innovative thinking, risk capital, and somebody taking a chance. Other areas, like public education, are a more complicated lift. If you know a public school that needs a hand, get in there and help. One of the efforts I’ve been involved with for a long time is Bronx Lab School, which is a very good public school. They used to have one computer for every four students, so we helped get them to a one-to-one ratio. During COVID, a lot of families didn’t have Wi-Fi, reliable Internet, or home computers. Because we did a lot of work with principals and teachers over the years, we could deliver computers and Wi-Fi connections directly to schools and families.

I know people ask, “About how much scale impact does that have?” For each of those families, it has a huge impact. Helping a school has a community impact because it builds upon itself. It can result in a graduating class and peers that build a cluster, which makes it easier for that whole group to rise and grow together. These things compound.

CA: When defining those four quadrants, how did you look at the world and identify these gaps? And then how did you determine how you could help fill those gaps?

RM: That’s a good question. The four quadrants came about after I looked back and determined the connective tissue of my work. I had to go back, like a business, and think about where I could have an impact. Where do my skills make sense? Where could my capital help? Where do I know people who are involved? Where can I work with people to get something done? I joke with people – if you want to play golf, you shouldn’t wait until you’re 65 and retired to play. You’re not going to be any good at it and it’s not going to be any fun if you don’t have friends to play it with you. You’ve got to start early and figure things out. It’s hard and things break along the way, but it’s important to find good people to work with, because you’ll have more fun and get more done together.

I honed in on these categories then asked, what do I want to do going forward? Where do I want to try to lean in? I found that talking to people when they said they had problems and being part of the discussion early on led to places where someone would say, “Here’s a problem that I can’t figure out,” or I’d think, “Maybe we can figure something out together.”

One example is Ultranauts, which hires neurodiverse people to provide data engineering and data quality services to large- and middle-market companies. My involvement arose from a discussion with a friend on how to best provide jobs for this population. At Stax, we did some background work on it and looked at it to see where these folks can be highly valuable. Ultranauts was started by Rajesh Anandan and Art Shectman, who had a totally different way of thinking about operating the business. They applied all the brainpower to making it work for a neurodiverse employee base, as opposed to making it work for everybody else in a company combined with them. I wrote the first check, and then they raised more money around that to get Ultranauts up and running. The company now employs close to a hundred people, many of whom have never had jobs before, so it’s life changing for them and their families. Ultranauts is a for-profit business, but the social impact capital, which was very high-risk early on because it’s a startup, has an immediate material benefit to people. Then it scales up as this one did over a decade and, in the meantime, it’s already done a lot of good.

Another organization I’m involved with, that I founded with friends, is iTrek. I found a lot of people have questions about Israel and the Middle East in general. I used to visit Israel a lot as a kid, and later in life I met people through business who were interested in going if they had somebody good to go with. I was talking with folks about all these different issues and opportunities and we realized if we got more people going, then they’d know more firsthand. Once you go and visit a place, you tend to have a deeper discussion. It garners better understanding of others’ complexities and beauties. So we created this non-profit to help people bring their peer groups and those in leadership positions to Israel and have those discussions with friends or colleagues. As of September 2023, we’ve supported about 600 delegations with ~25,000 participants going to Israel across a variety of leadership sectors. It’s been amazing to see and how the experience has opened people’s minds, expanded ways of thinking, relationships, and lives.

I think people who haven’t had the opportunity to be heavily involved in non-profit work underestimate how many amazing things come from it in terms of the people you work with, and things you get to do that you just wouldn’t have previously imagined. Same with a business – it’s hard to picture what it’s like leading a company with hundreds of people. There is an entrepreneurial spirit to working with a non-profit.

I often converse with those in private equity who are interested in getting more involved with non-profits. I ask what they’re interested in or who I can introduce them to because I’m happy to find something that works for them. The first step is just getting people out of the stands and into the arena.

CA: What motivates you to work with these non-profits?

RM: The old Jewish upbringing is to just do all these things, and I know those ‘things’ thanks to my mom, dad, and grandparents. People have so many amazing experiences that it makes sense to share these and give back more. The more you show up to something and see the different needs and how to be helpful, the more obvious it becomes. We have an opportunity and are in a position to be life-changingly helpful to other people. That’s a big deal when you can change somebody’s life. It’s a lucky place to be. Don’t keep that gift in the closet. Use it. Don’t give up the chance to go capitalize on an opportunity to help someone.

CA: What’s your perspective on the differences as you approach a non-profit versus a corporation? And what similarities do you see?

RM: The similarities lie within developing skill sets and teams. The differences are that non-profits have less money, fewer skills available because of leaner budgets, and it’s a smaller part of the population that works in non-profits. So you can be very helpful across all of those dimensions.

A lot of times, non-profits are receptive if you can materially help. Like a business though, you’ve got to remember you can’t do 50 things at once. Be respectful of the pacing with non-profits, much the same way you would be with a business, but more so.

I think it’s a particularly good thing for young leadership to get more involved in non-profits because they learn how to handle people coming together with many different experiences and day-to-day realities. And they can ask themselves how to help support, make change, or cheerlead.

When we worked with Clearsight, we had a very clear mandate that we were looking for an investor who understood our business and could be a valuable partner. We weren’t interested in arm’s length capital. What’s going to make a private equity firm different and helpful is their team’s ability to guide, give advice, and use experiences and roll up their sleeves to help. There’s leadership development and benefit all along the way for people.

CA: Following up on something you said earlier about advising members of the private equity community, and even members of Stax, on how to get out of the stands and into the arena. Where do you start?

RM: Find anything you like and read up on it. If you think it’s really interesting, call them and say, “I’d like to get a cup of coffee and learn about what you’re doing, with the understanding that I’m not saying I’m giving now, but I’m just interested in learning more.” And then see what happens. If you like the conversation and this is the part you want to play, you could say, “Is there help you could use?” If you say, “This is great, I’d just like to support with hands-on help, or write a check,” then doing that is a great step. It doesn’t need to be a huge one either. Just start and have the mindset of, “I can do more later as I learn about it.”

CA: Right, who doesn’t like a compliment?

RM: Exactly! You could also ask friends or colleagues what they’re involved in.

I think if you want to know if something has good outcomes, look at what they do, not just the cost-effectiveness because non-profits may have very different operating models and backers. If you have a lot of wealth on your board, you can have a low cost of fundraising because those board members fund the organization. But if you’re a small organization where people are volunteering and they have to raise money, well, sometimes an expensive party raises money, and that’s not so cost-effective. But that’s not a red flag. Find somebody and ask, “Are you doing some good work?” Then you can say, “What’s the cost to get things done? Let’s make this a little easier for you.” And don’t worry that you have to solve it all.

Rafi describes in detail how he recommends others get involved in a LinkedIn post.

CA: As you’ve transitioned from CEO of Stax to now Chairman of the Board of Stax, I’m sure your next five years are going to look a little different professionally. What do you foresee outside the office in that non-profit realm?

RM: Most interesting is that I see the time inside the office, which includes talking with people with whom I’ve worked professionally for decades, who are very interested in social impact and how to best be involved at this point in time for themselves.

I’m spending a majority of my time on social impact-related efforts, including non-profit (all four of my segments) and for-profit areas (mostly in climate and access to services). I’m still doing some advisory work with Stax, and working to increase our social impact because there’s so much talent and expertise within the firm that can be applied from our industry and skills-based expertise. The other parts of my time I’m spending with non-profits, foundations, and some past private equity clients to develop their areas of interest.

There are some areas that overlap multiple social impact benefits where I’ll lean in too. We worked with the donor-advised fund of the Jewish Communal Fund by helping them with a growth strategy. A donor-advised fund is a fabulous thing for people to use to contribute appreciated stock, or when they have an event like selling a piece of their company. They can put something into a donor-advised fund and give the money over time to non-profits of interest – they don’t have to make the decision at that time of the transaction. That falls into the infrastructure bucket. I’ll also focus on iTrek and getting more people to participate and join us in a variety of ways, because I think as a Jewish person, we will have a more difficult future than recent past. Engaging people in history, dialog, and critical thinking is imperative if we’re all going to get along. Similarly, helping the Milken Innovation Institute in Israel which trains people in development finance for developing economies globally, cross-regional development, and cross-community development locally. I’ll also find more people who want to help a public school in the Bronx and help people get greater access to resources for learning, jobs, and care. There’s plenty of need out there, and good people to work with like Joel Kallett and the Clearsight team who are doing great work by bringing these ideas to more people.

Rafi Musher is a former Clearsight Advisors client. The names and marks of other companies or their services or products may be the trademarks of their owners and are used only to identify such companies or their services or products and not to indicate endorsement, sponsorship, or ownership by Clearsight Advisors. The information, views, opinions, and positions expressed by in this conversation are those of the individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Clearsight Advisors.