A LONG, SLOW BREAKUP
If you add in the time spent pursuing his MBA, Wertman had racked up a total of two decades in the depths of Wall Street. It wouldn’t be an easy break. “Even when I did decide I was leaving, it took five years to make the transition,” recalls Wertman, noting his family considerations, which now included three young children.
His first step was to distance himself from the Street. So he left the Empire State for the Golden One in 1998 and began running Prudential Security’s West Coast public finance business in its Los Angeles office. Eventually, he got to the point where he was able to take a year off. “I had traveled for the past 14 years,” says Wertman. “I didn’t know my kids or my wife. I was a road warrior.”
According to Wertman, the move west wasn’t because of an epiphany. If anything, it was more of a distancing similar to an addict’s intervention. If there was an awakening and altered life direction, it came when Wertman took a random stroll. One day, Wertman walked “seven or eight blocks” from his downtown skyscraper office. What he found changed everything.
AN INTRODUCTION TO SKID ROW
“I remember standing on Main Street, which is now filled with cute restaurants, but at the time, literally hundreds and hundreds and hundreds of homeless people were in tents smoking crack, shooting up heroin on this block,” recalls Wertman of L.A.’s Skid Row—possibly the gnarliest place on U.S. soil. “And I remember standing on the block—because even in New York we didn’t have anything like that—and looking up and seeing my office on the 46th floor not even eight blocks away. And I was saying, how is this possible? That there’s all this wealth, here’s L.A., and yet this horrible thing exists. And I literally couldn’t sleep at night. This is not America. This is not human. There is no reason for this.”
The 54-block swath of ghetto, bordered by 3rd Street to the north and 7th Street to the south, has been inhabited by society’s marginalized since the end of the 19th century, when mainly transients and seasonal workers staked claim to the area. The population was comprised of mainly single adult men who fled their lives back east to work in petroleum, automotive and sometimes entertainment. Single room hotels and social service agencies began to pop up and when the Great Depression hit in the 30’s the low income housing and services were already in place to handle those hardest hit. Now, nearly 20,000 people are crammed into the area that holds about 2,500 households.
“Skid Row was made worse and worse by the developers,” believes Wertman. “Because the developers kept pushing the edges and kept pushing homeless people into a smaller and smaller core. They came up with all of the policy reasons why it was a good idea to move the homeless people but when it came down to it, if you could move homeless people one more block over, the value of developing two blocks away went up by multiples.”
A BLOOD-BOILING PROBLEM
And just like that, Wertman found the problem that personally made his blood boil.
“You could get all of this for doing nothing but literally getting the police to move the homeless people over one or two blocks,” continues Wertman as his normally California-cool demeanor shifts into frustration and passion. “And that’s what happened in Skid Row.”
Wertman began researching organizations offering services to Skid Row homeless. He quickly found Chrysalis. Launched in 1984 by then 22-year-old John Dillon, Chrysalis has been focused on Skid Row and other pockets of L.A.-area poverty for more than three decades. Dillon started the agency with his own money right after graduating college. Originally it was a clothing distribution center but quickly expanded into Skid Row’s first exclusive employment program. Now, some 31 years later, Chrysalis has had multiple million dollar expansions and relocations and has three centers.
Since it’s creation in 1984, Chrysalis has served more than 51,000 people. In 2014 alone, Chrysalis helped more than 2,100 of their clients secure employment. Also in 2014, Chrysalis-served clients had jobs that earned a combined more than $2.9 million.
‘IT NEVER FELT LIKE IT WAS MY RIGHT TO MAKE A LOT OF MONEY’
Wertman took a seat on the board in 1998 and in 1999 moved to chairman of the Board for Chrysalis. Then, within a year, the president of Chrysalis left. So Wertman tossed his name into the pool of successors.
When word got out that a former investment banker from Wall Street might take over one of the largest organizations to serve Skid Row, push-back ensued. “There was a petition going around Skid Row saying that I would ruin Skid Row, if they let some investment banker MBA in,” laughs Wertman. “There are 18,000 homeless people, but one investment banker is what it’d take to ruin it.”
But in 2001, less than a year after leaving Prudential Securities, Wertman took over as Chrysalis president, taking an 85% pay cut but also gaing gaining an immeasurable amount of social capital. He also changed his position’s name from President to CEO.
“It never felt like it was my right to make a lot of money,” explains Wertman. “To me, it was, ‘If that’s what you’re born with, don’t you have to share that? Aren’t you supposed to help people who weren’t born that way so the world becomes fair?’ I’ve always had this issue with fairness.”
A BUSINESS SOLUTION TO A SOCIAL PROBLEM
Still, with his finance sunglasses on, Wertman immediately saw the long-lasting personal and societal effects of homelessness. Essentially, Wertman took his Wall Street skill set to the world of nonprofits and philanthropy.
“It took no research for me to figure out homelessness is an economic problem,” says Wertman. “It’s not a disease to be cured. It’s about jobs and housing prices. And that fit with something where I thought I could have impact. Because my background was economics and business.”
Wertman says when he started at Chrysalis about 60% of the people that used its services could find and keep jobs once they received a little coaching and some resources. But there was the other 40% that had been de-socialized from life on the street, bounced in and out of jail or had abused substances for so long that they needed much more than just some coaching to hold a job.
“Chrysalis knew if they didn’t get a job, those folks were going to die on the streets or die in jail,” explains Wertman. “Those are the options. We don’t have welfare in America. If you don’t have a job, you’re homeless. And if you’re homeless you either die on the streets or you die in jail. Those are your two choices.”
So Wertman and Chrysalis decided if they couldn’t get employers to hire their clients, they would create the jobs for them. “We decided to start a business,” remembers Wertman. “Or two. Or three.”
Wertman began by piggybacking off the newly established, Chrysalis Enterprises, a social enterprise that creates transitional jobs to train the homeless on job skills and professionalism. They created a street cleaning business. “It required no skill. It was outside. They weren’t going to be accused of stealing things from somebody’s office,” reasons Wertman. “These are the kinds of things you have to think about.”
DRAWING ATTENTION FROM OTHER LARGE CITIES
It turns out, it often only took a few months of street cleaning to gain the skills, resume and references to earn jobs on their own. “Now they had a resume, a reference, and the social skills of getting up in the morning and going to work, dealing with a boss and a community and such,” says Wertman.
The program helped Chrysalis catapult from about a 65% job placement success-rate organization to around 90%. It also attracted the attention of other large cities attempting to solve homeless problems. Gavin Newsom, who was the mayor of San Francisco at the time and is now California’s Lieutenant Governor, wanted Chrysalis to open a similar program in his city.
“Newsom said, ‘I’ll give you a million dollars, I’ll give you a board, just come up here and run it,'” remembers Wertman. “And I said, ‘that’s easy. That’s social services. That’s the easy part. But actually starting a business is not easy.’ We knew the social services part would work, but starting a business is much harder.”
Scaling is complicated and doesn’t always work. And just because something works in one specific place within one specific market, doesn’t mean it’s transferable. And Chrysalis had a special way of impacting the homeless in Los Angeles they called the “special sauce.” Ultimately, Wertman and Chrysalis decided to focus in the Los Angeles area.
In 2005, with Chrysalis booming, Wertman took a position on the faculty at UCLA’s School of Public Affairs. That’s when he began to notice some things about social enterprise. Specifically, he believed that social enterprises could benefit from business-minded people. But they were getting the social work and public policy graduates. And he certainly wasn’t alone in this thinking.
“Social enterprise leaders all around the world were saying the same thing,” says Wertman. “They’d say they’ve got all of these job openings and they’re trying to hire people but all the applications come from the social work and public policy schools. And in my case, I’m also running a $4.5 million garbage business with 900 employees and insurance and customer service and logistics and 28 trucks. I needed the same people as our private sector competitors. Yet none of those resumes were coming to us because we were a non-profit social enterprise.”
THE SWITCH TO B-SCHOOL
So Wertman, like he often does, did something about it. He drafted a 10-page proposal and did cold-call pitches to the deans at UCLA, Pepperdine and USC Marshall. Two schools said no and one said yes.
“He was new, but he understood business schools had a role (in solving societal issues),” Wertman says of Dean James Ellis, who was appointed dean of USC Marshall in 2007. “I don’t think he knew what it was I was going to do—I’m pretty sure I didn’t know what I was going to do—mostly because I didn’t know what a university did. But Dean Ellis knew we had a responsibility to do something.”
Wertman soon learned. First on the docket was to create a special fellows program for MBA students. “At the time, I wasn’t looking to graduate social enterprise MBAs,” says Wertman. “I was looking to graduate finance MBAs who understood and had the resources to use those degrees to solve social, health and environmental problems.”
Then, Marshall and Wertman took it a step further and created an undergraduate minor and scholars program. They ran those for five years when Wertman noticed an educational gap.
BREAKING DOWN HIGHER EDUCATION SILOS
“I’ve had students come to my desk in tears and explain to me that what they want to do is not what their parents want them to do. Their parents want them to make money and be happy but their paradigm for happiness and money is different.”
The students, Wertman explains, were broadly feeling two things. First, many didn’t want to shell out $125K or more for an MBA. Second, they didn’t want to hang out with stereotypical MBAs for two years. And the latter is what Wertman is now focused on changing.
“Philosophically speaking you’ve got hunger, and homelessness and education, and they’ve all been segmented,” Wertman begins. “So who focuses on education problems? People coming out of the education school. Who focuses on poverty? People coming out of the policy school. And it’s all these little things. And my attitude is, let’s just throw a business person on that team. And we’re going to come up with new solutions. That’s all.”
AN INNOVATIVE ONE-YEAR MASTERS
And now Wertman and Marshall are getting those business students on teams. USC Marshall and Wertman–with a hefty investment from Scott and Ella Brittingham–created a one-year master’s in social entrepreneurship program to produce graduates with do-gooder hearts and finance brains. For $50K, and a year of full-time coursework or two years of part-time coursework, students gain the business skill sets similar to MBAs through a social impact lens.
The program graduated its first cohort last spring, and whether they started their own ventures or went to work in established organizations, Wertman says they’ve been in high demand.
“The world of social impact has now embraced people with a business education and business backgrounds are allowed to play,” claims Wertman. “Non-profit boards and executives are saying, ‘OK, I get it, just because you went to business school doesn’t make you an evil person. It’s the same way many MBAs think that all people who work in nonprofits are not as smart. And many people in nonprofits think MBAs are heartless. We’re crossing that barrier.”
That’s a barrier Wertman intends on crossing across departments on USC’s campus. He’s been hard at work recently meeting with deans of other colleges and departments on campus. Wertman is inviting them to visit the social enterprise lab he heads up.
“We are still pioneering this world and the next step is to bring in more cross-collaboration,” believes Wertman. “Just like how business students are allowed to play in the game, so are engineering students and students coming from science-focused majors. They can all play in this game.”
And the game is just beginning.
If Wertman has any regret for having left Wall Street, it’s buried deep within him. He speaks of his hand-plucked social entrepreneurs-to-be as if they’re his own. He beams in the shadows cast by university sidewalk lights as he speaks of what the first cohort, graduated in June 2015, is out in the world doing. And then the engine revs and Wertman is speeding away into the breezy, dark Los Angeles night.
