Category Archives: Business

Three Terms Hindering Africa America’s Institutional Development: Affirmative Action, Diversity, & Minority

By William A. Foster, IV

“All cruel people describe themselves as paragons of frankness.” – Tennessee Williams

This article will probably get me in trouble with the politically correct police and let’s all hold hands and get along crowd who typically have an idealistic view that all the resources in the world can magically be distributed evenly across all populations. However, truth is truth especially as it pertains to social, economic, and political (SEP) interest and until we have their idealistic world we have to consider that groups will continue to battle over power to control the resources much like what happens with every one of God’s other creations – imagine that. SEP interest drives every group’s institutional and individual decision-making except for one – African Americans. African America continues to chase the ever elusive ghost of assimilation and inclusion into the (European) American Dream to the expense of its own power. Below are the three terms that to me psychologically have and continue hamper our development and why.

Affirmative Action

Simply put this has been one of the most damaging policies toward a stronger African-American institutional power development. Affirmative Action was a bill pushed for by certain Civil Rights Movement (CRM) groups and was signed into law by Lyndon B. Johnson in 1965. It owes its roots to desegregation and the court case Brown v. Board of Education of Topeka, KS in 1954.

Desegregation’s ultimate culmination into the affirmative action law was all but the signature that wiped out African-American institutional development. Prior, we built towns such as “Black Wall Street” in Tulsa, OK and Rosewood, FL and countless self-sufficient African-American towns. These towns would be torn apart ultimately because of our lack of ability to obtain political retribution for social and economic attacks against us which is where the aim of the CRM should have been. Instead, a movement within the CRM decided that equality meant to be assimilated into European American owned and controlled institutions. We would all but abandon towns which we built, businesses we started, and colleges that were founded for our interest and then begin to define success not by what we owned or controlled anymore but by being the “first” to break through into institutions where we weren’t wanted and out flanked socially, economically, and politically. Despite an understanding that in capitalism the ultimate power lies in what you control directly or indirectly and what you own.

Today, less than 15% of African-Americans who can go to college attend HBCUs despite the institutional implications that a college and university can bring to a community as noted in The University of Power & Wealth. “Success” is defined as moving out of our neighborhoods and then we wonder why our elementary and secondary schools are weak. They are weak because the demand that drives home values up which in turn increases the amount of taxes available to fund our schools and then allows them to develop and pay quality teachers was abandoned so that we could live in a “good” neighborhood. The educated and professionals instead of being a permanent presence in the community for children to see (positive social capital) instead leave children to look up to those hanging on the corner (negative social capital). It use to be that our doctors, teachers, and other professionals lived in the community and therefore set the barometer of that community. Yet, we’ll claim they can find role models or they should seek out mentoring programs missing the point of setting the rule in a community for kids instead of hoping they’ll find a way to be the exception. Before affirmative action, we started companies like C.R. Patterson, the only African-American owned automobile manufacturing company. Now, most of define our success by the car we drive not the ones we build.

Minority

The problem for African America allowing itself to be labeled a minority are numerous but I’ll address specifically as it relates to economic policy and actions. In 2008, Dr. Verna Dauterive, alum of Wiley College, donated $25 million to the University of Southern California in memory of her late husband. The money would be used to fund a scholarship for minority students that pursued a doctorate in education. Who is a minority? The answer is simply anyone who is not a European-American male. That means the scholarships from that donation, at a school whose African-American population is not even five percent, never even have to be used for an African-American. It means that if USC so chose they could give that scholarship to anyone that’s not of African descent from here on out and they would be meeting the requirements of that donation. It should also be noted that USC has a $3.5 billion endowment while her undergraduate alma mater Wiley College has a reported $50 million endowment. To say the $25 million would have gone further at Wiley impacting African-Americans is without question.

Recently it was noted by Jarrett Carter, Editor of HBCU Digest, that many HBCUs lead their states in minority purchases. In fact, Prairie View A&M University, Mr. Carter noted leads the state of Texas with 38% of its contracts awarded to minority businesses. Again, it should be pointed out that does not mean $1 has to go to African-American businesses. As a former employee and graduate assistant at Prairie View A&M University it was not unusual for us to hear stories about European American families with businesses making the wife 51% owner of the business in order to access minority contracts. You have to love loopholes.

Diversity

Every year certain business magazines release “Most Diverse Companies” and they are always speaking of the labor that works for these major corporations. The reality is that while the labor might be diverse the ownership is still typically 99.9% European American. The current idea of diversity just means you were able to get the most talented of other groups to work for another group’s economic interest. Again, I can’t state enough that it is ownership who gets rewarded the most long-term not labor. We see this in college football where schools like the University of Texas have 50,000 students of which only 500 are African-American males and 50% of them are on the football or basketball team. A football team composed of almost 70% African-American males, and is the most profitable college football program in the United States. The profits then go into non-revenue athletic scholarships which are predominantly European American (see golf, softball, swimming, baseball, etc.), along with aiding research, faculty salaries, and much more. The 1% of the population with no SEP power at the university providing immensely to the 99% with all of the SEP power. Now that’s a change.

It is always important to note who is defining what. I always get annoyed by “diversity” often being hijacked and/or pigeon holed to only mean multiple cultures. Diversity is also always talked about from a European American majority. That is to say in a room of 10 people if you have 7 European Americans, 1 African-American, 1 Asian American, and 1 Latino American you have diversity. However, if you have 7 African-Americans, 1 European American, 1 Asian American, and 1 Latino American it is not perceived as diversity. This is the hurdle that HBCUs often face in perception by not only society as a whole but even sadder by African-Americans themselves. Every time a conversation about diversity comes up I have to point out there are a number of variables by which one can create a diverse setting beyond ancestry. If I have a room of eight people of African descent with two from Jamaica, two from Ghana, two from America, and two from Brazil and each of those two is a mixture of male/female then do I not have a diverse room? Yes, I do. I just happen to have one foundational link of ancestry. I can add variables such as but not limited to geographical upbringing, economic class, education, gender, etc. Just for the record HBCUs have always been willing to take poor and underserved European Americans and others. The reverse still is not true unless of course you can do something exceptional on a football field.

We must define things from our point of social, economic, and political interest and not just blindly follow someone else’s idea of what is “good” as their idea of “good” is always from their point of view and interest. I was on a radio show where one of the guests proclaimed to me that Martin Luther King, Jr. was fighting for our right to move into someone else’s neighborhood. A clear problem of what happens when you allow someone else to control your history. Even a man who screamed for our self-sufficiency as many seem to forget has had his image and message watered down over the years. In capitalism, everything is ownership or labor. This is neither good nor bad. It just is and we all know that knowing is half the battle.

Dwayne Wayne And Ron Johnson Dropped The Ball – HBCUpreneurship

By William A. Foster, IV

The more an idea is developed, the more concise becomes its expression; the more a tree is pruned, the better is the fruit. — Alfred Bougeart

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What if Sergey Brin and Larry page, founders of Google, went to Hillman? Would Google still have been created? Yes. Would they still become billionaires? Probably not. The two men combined are worth an estimated $37.4 billion. Their combined fortunes are greater than Harvard’s endowment, almost 30 times the size of all HBCU endowments, and over 90 times the size of all HBCU research expenditures combined. The last being vital because it was the very thing that allowed the two men, PhD research students at Stanford, to create the search engine that is now a verb. Instead, it could be argued they would end up creating a great new search engine and selling it for pennies on the dollar to Microsoft. Ensuring of course that whichever one (ended up being Dwayne) and wanted to work for said company would have secured themselves employment. Notice, I said very distinctly employment and not ownership.

It is in one of the final episodes of the legendary show “A Different World” Ron Johnson or Ron, the loveable sidekick and best friend of Dwayne Wayne, and ironically the one who has the most entrepreneurial spirit of all the characters on the show comes up with a video game concept that helps children learn. It is no coincidence that him growing up with a father who owned a car dealership inspires his constant risk taking, so the entrepreneurial bug pops up constantly throughout his time at Hillman. One of the more classic Ronpreneurial moments is when he and Mr. Gaines, who ran The Pit at the student center, purchase a nightclub together. An all too typical expression of African-American entrepreneurship and one that has little to no substantive impact. Dwayne Wayne on the other hand is the math genius who seems destined to “succeed” by programming amazing products for the likes of Kenishewa. In fact, in the episode this is exactly what happens as Dwayne takes Ron’s concept and uses his programming skills to bring the game to life. Dwayne tells Ron about bringing the concept to fruition and in the excitement Ron excitedly says “this could be the start of Wayne & Johnson”. For all of Dwayne Wayne’s brains his entrepreneurial IQ never got past zero. He never hesitated to cash in for the short-term payday, subsequently putting his friendship with Ron in jeopardy for not acknowledging it was his idea,  and never once thought about the long-term wealth and institutional impact their own company could have. The brains of these two men would have been the perfect balance that business relationships often need. Ron’s ability to create ideas, generate sales, and risk taking balanced with Dwayne’s ability to bring ideas to life, analytical strategy, and risk aversion would have made for an absolutely powerful business combo. Now, instead of this being the launching of a software company Dwayne Wayne runs with Ron’s concept develops it and simply sells it to Kenishewa and secures a job. Ownership? None. Paycheck? Sure. Bigger picture? Missed.

What could have been? One could ultimately imagine a very successful software company (See Google, Baby Einstein, Electronic Arts, or Microsoft) being born out of the Wayne & Johnson partnership. Years down the line Wayne & Johnson would be giving internships and employment opportunities for Hillman students and donating hundreds of millions back to Hillman for a new research facility, new stadium, higher faculty salaries, and scholarships to reduce Hillman student debt loads. Oh did I mention Wayne & Johnson becomes so successful that they end up acquiring Kenishewa?

No matter a student’s academic department at their HBCU there should be an entrepreneurship class specifically designed for their major and/or department that teaches them how to turn their major into a business that they can take back to our communities and build. From mathematics, engineers, psychology, and beyond every single major should be able to understand how to transform their entity into a business that they own and/or co-own. They should also be able know how to cross-pollinate with other majors. Biology major meets engineering major? What do they create? Behold a bioengineering firm. Mathematics meets sociology? I have no idea but the fact that the conversation is being had leads me to believe the brilliance in our students would come up with an answer and more important a company. We should not be producing labor but ownership as well from our institutions. Our HBCUs too often promote their “successful” students being those who go off and work for large European American companies (making their companies stronger and wealthier) while the masses of their students wait exorbitant amounts of time searching for employment hoping to become an affirmative action quota. It is ownership which will bring down our unemployment rate which is always double the national average, it will help close the wealth gap, provide the wealth to influence the political system in our favor instead of always begging for favor, and pump much-needed infrastructure capital back into our HBCUs and communities so we can compete. We know that when America catches a cold we catch pneumonia. If the latest AP report shows that 50% of recent graduates are unemployed or underemployed what do you think that number is for HBCU recent graduates? It is time for us to do for self as we know our ancestors did in places like Tulsa, Rosewood, and countless other African-American towns across this country. We can compete but we have to compete to be more than just labor. I’ve always said and continue to say capitalism doesn’t reward hard work. It rewards the ownership of hard workers.

Yahoo’s Only Chance: A Merger With Twitter

William A. Foster, IV

Enemy of my enemy is my friend. – Proverb

Yahoo recently filed a lawsuit against Facebook to the dismay of pretty much everyone in the tech industry. It reeked of a desperate attempt by Yahoo to take attention off the reality that they have yet to figure out how to remain a relevant company since Google came on the search scene, why it can not seem to figure out its own management issue, and is in the midst of major shareholder revolt. Again.

Then, there is the loveable new but not so new kid on the block Twitter who launched in 2006 and caught fire with well over 100 million users that pump out over 340 million tweets a day. The company produced $140 million in revenue and had a valuation of approximately $8.4 billion toward the end of 2011. However, even with such a strong valuation the business model at Twitter still leaves much to be desired from an investor’s standpoint to believe the company could grow sizable revenues over time. The company has had its own share of musical chairs in management primarily because of its inability to figure out its business model but there is no denying its management has been with the platform and its growth. While things seem settled with co-founder Jack Dorsey taking the helm (again) there is still an air of uncertainty if this company can produce sizable revenue growth expected out of a young company based simply off its ad revenue. I believed then and I believe now that the boat Twitter truly missed was charging its business and non-profit organization users for accounts.

All that leads up to why these two companies need each other. Yahoo is completely absent as it were in the social media space and could use a more visionary management team which I believe Twitter has. Twitter on the other hand needs a stable source of revenue and a way to monetize users toward products it can actually sale with growth. Something Yahoo has with the likes of Yahoo Travel and other products. Offering specials to its users that could easily spread like wildfire given Twitter’s application of the ‘Retweet’  which is a unique feature that neither Facebook or Google has found a way to mimic. This would allow the new company to have a diverse mix of ad and product revenue. Both companies weaknesses would be offset with the others strengths which is exactly what a merger is suppose to create. The company indeed would put Facebook & Google on notice. Finally, the tables would be turned and the move could potentially spark off a much needed consolidation arms race of the tech social media space. Pinterest anyone?

Disclaimer: There is no ownership of any of the companies mentioned in this article by myself, my business, or my family as of this article’s publishing.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

The Shake Up At OWN

By William A. Foster, IV

In great attempts, it is glorious even to fail. – Cassius Longinus

There appears to be a storm brewing on the horizons at OWN. Maybe, it could even be described as a hurricane. SNL Kagan yesterday reported that OWN, the 50/50 partnership between Oprah Winfrey’s HARPO & Discovery Communications, is hemorrhaging money. In 2011, the network posted a loss of $107 million and is expecting to post a 2012 loss north of $142 million. It is cliche but “OWN, we have a problem.”

OWN this week shook the place up by releasing 30 people and letting go of Rosie O’Donnell. This probably still won’t resolve OWN’s ratings issues. Oprah Winfrey is learning that there is a ocean of difference between operating a one hour program and being responsible for twenty-four hours of programming. The short-term answer has been more Oprah. She has been interviewing the likes of Lady Gaga and Bobbi Kristina Houston. The latter coming shortly after her mother’s death which seemed to leave a bit of a bad taste in some people’s minds and leaving the network still searching for its strategical footing.

It appears both HARPO and Discovery overestimated just how much Oprah Winfrey people really wanted. There is the reality that when Oprah Winfrey backed Presidential Candidate Barack Obama and promoted a controversial religious book that her ratings started a steady decline among her conservative viewership. Ms. Winfrey and Discovery were banking that she would be riding a wave of popularity into their new partnership. Her decision to abandon her apolitical and neutral stances on political and religious topics apparently cost her more viewers than they thought. Up until that point she was essentially Teflon on sensitive issues but those issues were rarely if ever political or religious, which are more divisive than your typical hot button issues.

I’ve made the argument previously that Oprah Winfrey would do well to become a NFL Owner and work out a deal to feature her team on OWN. Whatever the solution is however, let’s hope the leadership at HARPO figures it out quickly or we could see Discovery dissolve the partnership and network. HARPO’s ownership at 50% is the largest current African American owned stake in a network and its potential failure would be a serious setback in our need for more not less institutional ownership.

Disclaimer: There is no ownership of Discover Communications by myself, my business, or my family as of this article’s publishing.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

Dell Buys Research In Motion – In My Dreams

William A. Foster, IV

All is for the best in the best of possible worlds.  — Voltaire

On Friday we watched the Apple (AAPL) insanity behind the IPad 3 consume the world. In New York it was reported a man flew from Brazil and waited 30 hours in line to buy his IPad 3 because they would not be released in Brazil for another 2 months. I would love for someone to name me the last time any sense of this type of excitement or euphoria surrounded a Dell (DELL) product or Research In Motion’s (RIMM) release of a Blackberry. I dare say waiting on that answer might require me to as the Snickers commercial says “Not going anywhere for awhile?”

There are so many issues for both of these companies that its honestly scary to even try and begin to name them. The people at Dell can’t possibly tell me that they have not observed how a company like Apple, once on the brink of collapse, has not only surpassed them but is now worth —- wait for it —- a market cap 18 times Dell and is now the world’s most valuable company at over half a trillion dollars. I can’t even remember the last time anyone told me they were considering buying a Dell. To say Michael Dell is no Steve Jobs is like saying Evander Holyfield is no Muhammad Ali. On the other side the Research In Motion leadership does not want to accept that its strategy and course of action simply isn’t working, flawed, misguided, and a number of other adjectives that all lead to the same place. Research In Motion made the fatal mistake believing it needed to get into the consumer/retail to compete with Apple and other smart phone makers instead of securing its place in the small business and enterprise (SBE) sector. It also failed to invest in a processor that provides a much faster interaction with the Blackberry device.

Both Dell and Research In Motion missed a great opportunity to create the cult and vertical integration in the small business and enterprise sector that Apple has created on the consumer side. A merger would really allow an exciting and global opportunity to vertically integrate the SBE sector onto the Research In Motion platform for its mobile device and Playbook tablet which could be transferred onto the Dell desktop and laptop systems.  This in turn would allow Dell to get out of the consumer and retail business itself and have both companies focus on serving the SBE sector solely and be a leader in emerging markets like China, India, and Africa who are experiencing booms in business creation. Dell could break itself of the Windows platform and the new company could then focus its R&D on the Blackberry processor which greatly needs improvement and marketing in which it could sell itself as the most secure SBE hardware company on the planet based on the Blackberry platform which could be implemented into Dell’s hardware.

These two companies could create the SBE sector version of Apple. Fully integrated with customers who want the complete ecosystem of products within it and pander for release of the next product that makes their lives easier as business people. Unfortunately, I’m not sure that the leadership at either company would be creative enough to create exciting new business products anymore than I believe they’d have enough imagination to see why they need each other and are destined to become relics in their industries. They’ll continue to try and be jack of all trades companies attempting to appease both consumer and SBE customers and masters of neither.

Disclaimer: There is no ownership of Apple, Dell, or Research In Motion by myself, my business, or my family as of this article’s publishing.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.