That is how American society is comfortable defining black men. Unfortunately, we perpetuate it, because we as a community will hold them up as role models. We will buy into that. It’s a safe example for white America to see black men doing this as opposed to running a business like I am or being Robert Smith of Vista.
That’s different. That doesn’t fit the box. Jay Z fits the box, and he fits the code. Think about: Did Mick Jagger have that kind of influence over Richard Nixon or Ronald Reagan? Did Frank Sinatra become the spokesperson for the Reagans?
Entertainment is a business, but the entertainers are not those that are setting policy or are role models held up for their kids. Very few white parents want their kids to grow up and be Justin Bieber or Britney Spears. They’re not saying put all your eggs into being Britney Spears. They’re saying put all your eggs into getting an education and that the American Dream is fully accessible to you.
As the founder, chairman and CEO of the Peebles Corporation, Don Peebles runs the largest African American-owned real estate development and ownership company in the United States. The 56-year-old entrepreneur has also been very active in Democratic politics, and he is an author of two books.
Currently great wealth is being amassed by technology companies, yet women, Hispanics and African Americans make up only 30%, 6% and 3% of employees in the top 75 Silicon Valley tech companies, respectively, according to a report from the Equal Employment Opportunity Commission.
Let’s examine this problem as a pipeline problem. The New York City Department of Education educates more black and Hispanic student than any other school district. In March 2017, a select group of eighth graders in New York City found out that they were being offered a spot at some of the nation’s best high schools, the eight “specialized” city public high schools that include Stuyvesant High School, Brooklyn Tech and Bronx Science. About 28,000 students took the multiple-choice test required for admission, and 5,078 did well enough to secure a place.
Even though black and Latino students make up nearly 70 percent of public high school students in the city, they routinely represent only 10 percent of those offered admission to the specialized high schools. In 2017, the city offered admission to only 524 black and Latino students.
The numbers are even lower at some of the most desired schools, such as Stuyvesant, which has space for nearly 1,000 freshmen and offered admission to only 13 black students. Stuyvesant is about 74 percent Asian, 18 percent white, 3 percent Hispanic, 1 percent black, with 4 percent multiracial or other.
While there is merit to the fact that what is going on in Silicon Valley and New York City is unfair, let’s contrast it with the 2017 NBA All-Star game. It is far more difficult to become a starter in a NBA All-Star game than it is to get a job at Google or Facebook, or a seat at Stuyvesant High School. Yet all the NBA All-Star starters were black.
To start effectively addressing these deficiencies, we need to first recognize that contemporary black culture is more optimized to produce basketball player, football players, rappers, singers, and preachers than it is optimized to produce computer programmers, Fortune 500 CEOs, doctors, and high-earning trade people. The situation will not get better until we change black culture. Don Peebles and Robert Smith didn’t spend a great deal of their time asking white people to change.
Are the NBA and the hip-hop industry unfair to white people? By no means, most NBA owners and label executives are white.
Robert Smith is the second wealthiest African-American and is number 268 on the Forbes 400 list. He is the founder, chairman, and CEO of Vista Equity Partners, one of the best performing private equity firms of the last 15 years, yet certain people refuse to invest in his funds because he is Black.
Vista currently manages equity capital commitments of over $14 billion and oversees a portfolio of over 30 software companies that employ a combined approximately 30,000 employees worldwide. Mr. Smith has delivered investors a staggering 31 percent average annual rate of return since founding Vista in 2000. A consulting firm that tracks the industry, reports that Vista’s third fund returned $2.46 for every dollar invested, better than every other big fund raised between 2006 and 2010, the boom years for private equity.
The firm has acquired more than 110 companies and never lost money on an investment, according to people familiar with its performance. Yet despite Vista’s impeccable track record, Mr. Smith, one of the few Black private equity titans, says he has faced an uphill battle to get some investors on board. At times, he has felt the unspoken pressure to work twice as hard to get half the respect of his peers, especially in the clubby world of private equity. The issue, he believes after decades in finance, is his race.
Mr. Smith’s rise — from newly desegregated Colorado classrooms to the top of private equity rankings — is a little-known Wall Street success story, shaped by epochal changes in civil rights, technology and finance. And his success, in spite of long odds, has inspired him to take a counterintuitive approach to managing investments and hiring.
Instead of stripping out costs from the companies it acquires, Vista usually adds sales and engineering talent. And instead of searching for candidates with Ivy League degrees and prestigious internships, Vista looks for workers who have leadership potential and innate analytical abilities.
Using a personality test first developed by IBM that gauges technical and social skills, as well as a candidate’s interest in the arts and humanities, Vista assembles a decidedly unusual work force. The firm used the test to pare down more than 125,000 job applicants and offered just 6,000 jobs, often to unlikely candidates.
One of Vista’s best software salesmen used to be a roofer. Another previously worked at a Verizon store, and went to making $240,000 a year, from $22,000. In Iowa, a pizza deliveryman took the Vista aptitude test, got an A, and was offered a job paying $43,000 annually. Not only are many of these workers less expensive than their better-credentialed peers, but to Mr. Smith, they are often more driven to succeed. And employing them, he believes, provides a social good.
“We find those kind of people and put them to highly productive use for decades,” Mr. Smith said. Vista says turnover at its companies is the lowest in the software business. After Vista acquires companies, Mr. Smith says, they release more reliable software more frequently, customer satisfaction rises and profitability improves. And most Vista companies have 25 percent to 60 percent margins, he adds.
And while many buyout shops strive for diverse portfolios, owning everything from energy companies to theme parks, Vista is content to specialize in software, and focus on a diverse work force. Black, Hispanic and Asian men and women occupy leadership roles across the firm and its portfolio companies. It is all part of Mr. Smith’s push to repair the damaged reputation of his industry.
“Everyone thinks that private equity is very transactional: Buy a company, do some financial engineering, and sell it,” he said. “We’re looking to transform the culture of that company, transform the way they think about themselves and the industry they serve.”
What Vista is doing is also very profitable. “Right now our returns are better than Warren Buffett’s,” said Mr. Smith, 51, without going into specifics because Vista was in the process of raising money for its next fund.
But when many people meet Mr. Smith for the first time, they find not a brash money manager, but an effusive intellectual with a passion for engineering. Bill Haack, founder of Zywave, first encountered Mr. Smith in 2008. Vista wanted to buy his firm, which provided insurance software. They met over dinner in San Francisco. Instead of discussing revenue projections, however, Mr. Smith wanted to talk science. “He started talking about quantum mechanics,” Mr. Haack remembered. “And everything he said made sense.”
When Mark Zuckerberg was about eleven, his parents hired a computer tutor, a software developer named David Newman, who came to the house once a week to work with Mark. “He was a prodigy,” Newman told The New Yorker writer Jose Antonio Vargasme. “Sometimes it was tough to stay ahead of him.” (Newman lost track of Zuckerberg and was stunned when he learned from the interview that his former pupil had built Facebook.) Soon thereafter, Mark started taking a graduate computer course every Thursday night at nearby Mercy College.