Supporting and Scaling Black Businesses

Kate Cooney (00:00):  

This is CitySCOPE. 

Eun Sun Cho (00:01):  

A podcast on cities and inclusive economic development from the Yale School of Management. 

Kate Cooney (00:07):

Are we ready? 

Manuel Morales (00:08):

Let’s go.

Kate Cooney (00:24):

Welcome to season 3 of the CitySCOPE podcast. I’m Kate Cooney, senior lecturer at the Yale School of Management and founder of the Inclusive Economic Development Lab. I will be your host for the season. This year, our theme was inspired by one statistic, a shocking statistic, but one that was not entirely unexpected. I remember where I was when I read this statistic, I was sitting at my kitchen table, the morning of June 18th, 2020, about two months into the COVID-19 lockdowns, when I came across the analysis of Robert Fairlie in Lauren Leatherby’s article in the New York Times titled “Coronavirus Is Hitting Black Business Owners Hardest.” We knew businesses were getting hammered. We suspected some more than others, but still I was floored. 41 percent of Black owned businesses closed between February and April 2020. This season on the CitySCOPE podcast, we feature conversations with economists, sociologists, historians, and practitioners about the origins of initiatives to support and scale Black owned and Black led businesses, how they work well, where they fall short, and we feature ideas and analysis from folks on the ground about how to proceed in more transformational ways. In our final episode, through a collaboration with James Johnson-Piett, CEO and principal at Urbane Consulting, we hear from a group of entrepreneurs in Philadelphia about how they’re navigating the current moment. James is a regular guest on the CitySCOPE podcast, and this year we partnered more closely. To kick things off, I asked James about the importance of the current moment.

James Johnson-Piett (02:12):

We have these moments in our history where we are shocked and sometimes they are, those reverbs are short, and then we go back to our typical behavior. And then there’s times where you actually see some change that occurs, and so this one’s still a work in progress, so it will be interesting to see how it plays out long term.

Kate Cooney (02:27):

There’s a hopefulness about what’s possible when the window of opportunity opens for more structural change. But at the same time, anyone who has lived through more than one of these moments and who more often than not does this work in the face of indifference and even resistance, knows that the window can close all too soon.

James Johnson-Piett (02:46):

I was on Instagram in June and I just remembered the whole blackout day, when it was like June 2nd and everybody had their blackout patch. And I’m really obsessive compulsive, so I would look at people’s feed and see like what was going on for you in April and May, or maybe even last year. And then what changed? And so, you know, it was like really bizarre to see a sea of white or something else and then to have like the one literally the one black square in their feed. And they’re not saying they don’t have, you know, Black friends and vibe with Black friends is, who knows what they’re doing? But I think again, if you think about it at a meta-level, how both performative and profound the moment was and we’re still working through both of those elements I think.

Kate Cooney (03:34):

There’s a long history in the United States of white allies joining African-Americans in their fight for equality. Students of that history also note a familiar pattern where white allyship surges after catalytic moments like the ones we find ourselves in, and then just as quickly wanes. In June 2020, according to the Pew Research Center, 67 percent of the US public supported the Black Lives Matter movement, including 6 in 10 whites and 40 percent of Republicans. A year later, the numbers are already dropping. However, the big questions raised by the past year can crystallize into some important insights that shift things on the ground in ways that carry forward.

James Johnson-Piett (04:20):

There’s been enough conversation where they talk about Colin Kaepernick kneeling, where they’re talking about the George Floyd issues, where they’re talking about the longer term disparities when it comes to redlining and sort of investment in Black communities, generally, that’s getting more of the brass tacks of the sort of devaluation of assets in Black communities. So, there’s all this swirl between the social, the economic and even the physical that sort of came to a head, I think, this summer. And so I think, you know, when you have something as egregious as what happened to George Floyd, mixed with these echoes of what should be happening in the new generation of folks that are coming up through Gen Z and whatever they’re calling the next generation who frankly aren’t carrying as many of the historical biases that folks of my generation and folks before that are carrying and so actually for them as consumers, as influencers is very much the idea of what happened with George Floyd being egregious and they move with their dollars and they move with their eyeballs. All those things came to a head. So, for Black businesses, there was this really moment where all of a sudden you went from almost no one hearing what your issues were or being part of an echo chamber to really having this moment in the sun, where now everyone wants to support what’s going on. The question is going to be, you know, there will be a moment where this isn’t the top thing on people’s minds. Can we build the infrastructure to create some change? Can we create the opportunity where this becomes, you know, sort of girded and solidified infrastructure that moves and allows for folks to have agency, right, versus just have this sort of compulsion to be able to do something right now because you’re supposed to?

Kate Cooney (06:00):

Part of what we’ll be exploring with our guests this season is the current state of the infrastructure for supporting and scaling entrepreneurs of color. We’ll be asking how the money flowing into the space right now can be targeted to bring that infrastructure up to the next level. From his work at Urbane Development, James gives us an overview of the main elements of that strong foundation.

James Johnson-Piett (06:23):

Just a ton of money on the street now. So, I was talking to some friends of mine at an intermediary company called Lisk, that’s national. They’ve raised $2 billion between COVID and the sort of racial uprisings, $2 billion in the last 12 months. So, I think for Black businesses at this moment, as so many people are thinking about what’s next for them, that we’re building new infrastructure and so particularly around risk capital, being able to get equity and revolving credit and the important risk capital that’s going to really help our business grow, that you’re not going to be able to have with just debt to be able to think about the critical supports that Black businesses need, same professional services, the legal, the accounting, the marketing, having all of those professionals that cost reasonably speaking, hundreds of dollars per hour for the services, needing to have access to that, having mentorship, having networks, having advisors, having all the infrastructure that lays around the entrepreneur is critical. And that’s something that’s been constantly missing in the Black community when it comes to growing, even stabilizing your businesses.

Kate Cooney (07:25):

Capital, professional services, mentorship, advising. That’s crucial. Figuring out how to provide technical assistance in the right combination, at the right time, in affordable ways by trusted people. That’s also important. These key ingredients are both obvious and also harder than they sound. There’s another layer of the work that’s related to mindset. For entrepreneurs, but also investors, infrastructure builders and customers as well.

James Johnson-Piett (07:54):

I think the other big thing just in general, we have all these conversations, these heuristics between Black people and impoverishment that tends to happen and we’re going to devalue their assets, whether it’s their housing or their businesses. The influence around being able to invest and invest in a sustainable way in these businesses is a game changer for not just Black businesses, but for the entire economy. If they’re performing at the level that they should and could be performing, you know you’re talking about increasing the asset value for a family or creating economic mobility for workers. There’s all these sort of ancillary and induced effects that will impact people in general, not just in that community, but throughout the entire economy, an entire sort of spatial ecosystem. That’s important. There’s always been a sort of hole that we have, and we filled, that maybe we can fill now, but it’s not just going to be about throwing money at it or some black boxes on Instagram. It’s going to have to be some hard work around restructuring what’s been built for over the last, you know, 450 years plus.

Kate Cooney (08:53):

So we’re living through one of those big moments in history when the window of possibility opens. It’s been 50 years since the civil rights legislation was passed. We’re taking stock of how far we’ve come, how deeply our history as a racialized society threads through our present, and we’re asking how we might take advantage of the current moment to build a different foundation for a more equitable future. There’s one more thing that needs to be said before we launch into a podcast series about supporting and scaling Black owned and Black led businesses.

James Johnson-Piett (09:26):

We are not a monolith, and so that seems to be the 2021 statement. So, but it’s true. When you say Black business, it’s so diverse in terms of what that means. As you know, we run a marketplace in Brooklyn that’s 35+ Caribbean vendors coming from various parts of the Caribbean islands. And just amongst that group, their mindset, the stage of business, their ability to be able to lean on friends and family or not, what they’re focused on around their preparedness, around running a business, etc., those are all very, very different, but they all represent sort of the same core grouping. Our work in Philadelphia really gets the heart of this. You have an African-American residential population and neighborhood we’re working in, and West African immigrant entrepreneur population. If you just look at them at first blush, they look the same. You’re like, Oh, you know, it’s the same sort of population, but completely different ethos around whether you’re an immigrant, whether you’re first generation or second generation, whether you’re coming from lower income or not. So, you know, the story of Black businesses is very spatial. The congregation in Philadelphia, we have 33 percent concentrated poverty versus congregation in Atlanta or a Los Angeles or other places that are seen as Meccas for Black business, where you can have that revolver happening, are huge.

Kate Cooney (10:41):

I’ll continue this conversation with James in the episodes to come. For now, let’s get a preview of some of the other voices you’ll be hearing from this season.

Gerald Jaynes (10:50):

I’m Gerald Jaynes and officially, I’m the A. Whitney Griswald, Professor of Economics, African-American Studies, and Urban Studies at Yale University. There were some true entrepreneurial geniuses operating. Human beings strive for recognition. And there’s two kinds of recognition: what I call public recognition, the affirmation from others that you are a good person, a successful person, but also, self-recognition, self-respect that you, in fact, are proud of the person you think you are. My proposition is throughout most of American history, those two things were in absolute conflict for African-Americans.

Fred McKinney (11:43):

My name is Fred McKinney, and I’m the Carlton Highsmith Chair for Innovation and Entrepreneurship at Quinnipiac University and the Director of the People’s United Bank Center for Innovation and Entrepreneurship, also at Quinnipiac University. One of the things that Blacks were not supposed to do was to become wealthy. Blacks had a very difficult time accumulating capital and generating wealth because as they generated wealth, they had a target on their back. Not just, you know, a target from all this sort of a metaphorical sense, but this was a literal target on your back. And Tulsa wasn’t alone. I mean, you had these enclaves of Black entrepreneurial success throughout the country.

Marcia Chatelain (12:30):

My name is Marcia Chatelain and I’m a professor of History and African-American studies at Georgetown University. Some of these people that I write about, you know, they grew up under so much deep segregation and racial violence, and here they are a millionaire in 1980. This is a big deal. And this is really poignant, right? Like, this was supposed to be the thing that was supposed to deliver you from a series of injustices. And here you are, just dealing with these injustices at a higher economic bracket. It doesn’t retire any of the issues. And I think this is why I’m so nervous about the discourse about Black owned businesses, right? A Black owned business does not retire the problem of police violence. A Black owned business doesn’t retire the problem of housing discrimination, right? It does none of those things. But on the other hand, it can feel like a triumph.

Stanley W. Tucker (13:23):

Stanley W. Tucker and I’m President and Chief Executive Officer of Meridian Management Group. We went down to SBA and asked for their data, and they pointed us to a closet. And we went to the closet and literally, all of that data was there, no analysis had been done on the data. And so we dug through it and did the analysis. And what jumped out at me was lack of access to capital. That’s what jumped out at me. And I think back to my dad, capital was a problem, they had to maneuver and do all kinds of things. And that hit me. Capital, because my mantra is capitalism without capital does not work.

Kylie Jiwon Hwang (14:17):

I’m Kylie Jiwon Hwang, and I’m currently a PhD candidate at Columbia Business School, and I am joining Stanford GSB as a postdoctoral fellow. Most of the individuals that I talk to would come out of prisons or jails and first start by looking for employment. So not many of these individuals would start out from day one, and they want to start their own company. For example, one person told me that they were rejected from around 50 jobs after coming out, and just the fact that they face so many closed doors makes them end up pursuing entrepreneurship.

Brian Argrett (14:50):

I’m Brian Argrett. I’m the President and Chief Executive Officer of City First Bank of D.C. The one thing that I always enjoyed more than anything else was sitting across the table from the entrepreneur and them coming in and pitching their idea. And you’re just hearing the level of passion and enthusiasm and just all the ideas that you would never have thought about on your own, like fasteners. OK, well, I guess somebody has to make those. I guess there’s a business there and you start to you start to appreciate those individuals, their passion, what it takes to build something.

Caron Gugssa-Howard (15:27):

My name is Caron Gugssa-Howard and I am the Strategic Program Manager at ICA. The grit, the bootstrapping, just making things happen with very little. We have some entrepreneurs who have expressed they need investment amounts that are much lower than what they actually need, but they’re so accustomed to making a lot happen with very little that there just has to be the shift in education that that has to happen there. But to an investor that doesn’t have that lens that we have doesn’t have that insight to entrepreneurs that could with this person. This entrepreneur doesn’t know what they’re doing.

Marissa King (16:04):

I’m Marissa King. I’m a Professor of Organizational Behavior at the Yale School of Management. If we want to start to address these long term issues around equity or have conversations about how do we increase social cohesion, all of that fundamentally means that we have to take very seriously issues around how do we start to build networks that are more integrated and more diverse? You can have a city that’s very racially diverse, but if the neighborhoods are segregated, you’re still going to end up with segregated networks because everything comes down to the spatial proximity.

Banu Ozkazanc-Pan (16:38):

My name is Banu Ozkazanc-Pan. I’m a Professor in the practice of engineering at the School of Engineering at Brown University. I’m also the founder and director of the Venture Capital Inclusion Lab, which is part of the Nelson Entrepreneurship Center, also at Brown University. So network effects are quite important. What we saw in St. Louis, and I would say this is not specific to St. Louis, but what was happening in St. Louis is that women were circulating in networks. Hence, they were getting information only from networks of other women around what opportunities and information and resources were available in the ecosystem, and it turns out that they were quite disconnected from the main set of resources and activities and supports that existed in St. Louis that were commonly known by the men. Some entrepreneur support organizations or accelerators and incubators are very proud of their word of mouth advertising. And in reality, what that does is keep a lot of people out.

Donna Marie Lecky (17:40):

My name is Donna Marie Lecky and I’m the CEO and co-founder of Health Venture, Managing Director of Health Venture Capital, and co-founder of the Health Haven Hub. If you’ve come from a family as an African-American and your parents are physicians and their parents were physicians, and now you’re in the health care sphere, you have a wider network and a broader network to be able to think about, OK, maybe you have the capital and the resources to be able to say, I want to be an entrepreneur. But if you are first generation and you’re looking to pay off your student loans, but you have a great idea in mind. The first question you have to ask yourself is, “So where do I go?” That access does not, it’s just not necessarily apparent that it exists for someone who still has to work, pay off student loans, but has an innovation and has a great idea. And so those kind of ideas get sort of maybe lost in the sauce.

Topiltzin Gomez (18:41):

My name is Topiltzin Gomez and I am the chief of staff at Honeycomb Credit. The rungs to bankability are really, really steep. And unfortunately, not a lot of entrepreneurs are able to climb it. There was a study done by the Kauffman Foundation that found that 83 percent of entrepreneurs launched their venture without receiving outside funding.

Boris Sigal (19:04):

My name is Boris Sigal. I am a graduate of the School of Management, the class of 2014. I’m currently the Chief Finance officer for the Community Purchasing Alliance Cooperative, a D.C.-based member co-op. It’s not a wholesale transformation of the way they do purchasing, but I think on a case by case basis, what it adds up to is something I think pretty staggering. As we gather spend data, we have about $18 million that gets purchased through the cooperative. Last year, fifty five percent of that, so I think over $9 million stayed with local minority owned businesses or businesses owned by people of color in D.C.

Dianna Tremblay (19:43):

I’m Dianna Tremblay. I’m the Chief Program Officer at ICA. Everyone has gotten to the spot of understanding that when your workers are taken care of in the way that you can afford to do it because you can’t afford to do everything all the time. A good jobs only gets an employee so far, though, which is why we are always thinking about wealth creation opportunities. So for an entrepreneur who’s thinking about themselves and building wealth and thinking about the jobs that they’re going to offer, they are aligned in that I don’t want someone else to have to struggle so that I can then be the only one to build wealth.

Kate Cooney (20:14):

Tim Bates, Professor of Economics Emeritus at Wayne State University.

Tim Bates (20:18):

We’re talking about nine hundred sixty thousand minority owned firms with eight point seven million plus employees. That’s significant. That’s actually huge. Why is the story unknown? How could we have this tremendous operation potential? Precisely in the geographic areas where it’s most needed? And the story is not known?

Zulema Valdez (20:45):

And Zulema Valdez, and the Professor of Sociology at UC Merced and also the Associate Vice Provost for the Faculty. That’s what I say after doing the work that I’ve done for 15 years. I think you can’t beat 40 hour workweek with a paid vacation and a 401K and health care. But that’s not what people want to hear. As my contribution to the entrepreneurship literature is kind of like, throw it in this critical space and start pushing people to think it’s a really good idea? But I also recognize that if you do have six hundred dollars and it’s the first time you ever had that much money to do something with, that’s your shot.

Kate Cooney (21:26):

I learned a lot from these conversations and I’m excited to share them with you. Stick around for episode two, which we’re calling the American Dream, Part One.

Manuel Morales (21:40):

This podcast was created by Kate Cooney in collaboration with James Johnson-Piett and the students of the Spring 2021 Lab.

Eun Sun Cho (21:50):

All engineering and production by Ryan McAvoy and Kate Cooney.

Kate Cooney (21:53):

Special thanks to Rhona Ceppos for administrative support and to Ryan Carpenter for assistance with Zoom.

Eun Sun Cho (22:01):

Music from the album City Trees, composed and performed by the artist K-Dub.

Manuel Morales (22:05):

For more information and show notes, visit our website at IEDL.yale.edu.

Eun Sun Cho (22:11):

Thank you for listening.

[Music]