Leaning into Business Diversity
John Rogers is the Co-CEO of Ariel Investments, the global value-based asset management firm he founded in 1983 and first African American-owned asset management firm in American history. Chanda sat down with John to talk about moving away from supplier diversity and into business diversity, along with the importance of creating multigenerational wealth for Black and Brown communities.
John W. Rogers 00:00
When I was Park District President in Chicago years ago, in the Nine Museums on Parkland, I realized we’re not doing business with black companies. It’s outside of construction, and catering. So, I, we call them all in and we put them on the spot, they agreed to put together a symposium, where they would bring, we then invite minority entrepreneurs to meet with the leaders of the museum community to be able to do business. So they came up with an invitation for that event, and on the front of the invitation was a man with a hard hat on and a shovel in their hands, and the tagline was digging up business. So when these museum heads thought about black entrepreneurship, they thought about us, using our hands to dig. They didn’t think about us being Bill Gates or Steve Jobs, or being a lawyer or an accountant or a money manager or consultant or an advertising executive. They thought about us, you know, in that way.
Souphak Kienitz 01:04
You’re listening to Conversations with Chanda, a Minneapolis Foundation Podcast that unpacks the community’s grittiest most vexing problems, hosted by Chanda Smith Baker. Up next, we have john W. Rogers, Jr, Co CEO of Ariel Investments, the global value based asset management firm and the first African American owned asset management firm in American history. Chanda sat down with John to talk about the term supplier diversity, and how black and brown communities have gotten trapped in the lowest margins and the least economically viable parts of our community. Instead of the supplier diversity term, we need to move into business diversity. And for the first time start to use black and brown law firms, accounting firms, consulting firms, you get the idea. But what a radical thought, and there’s so much more to unpack. So let’s get right into it.
John W. Rogers 02:07
One of the things I learned from my mom, and she showed me a lot, and she, you know, took me everywhere she went, and I started to see a broader horizon. And you know, as much as she faced sexism and racism being the first black woman to graduate from University of Chicago Law School, she didn’t believe there’s a glass ceiling out there. She always wanted to achieve the highest, you climb the highest mountains and achieve the most. I think she showed me that I should have broader dreams than maybe I normally would have or that my father had. On the flip side, my father is the one that every birthday and every Christmas after I was 12 years old, bought me small amounts of stock instead of toys, you know, $250 of General Motors, and $250 for Commonwealth Edison and, you know, etc. and he let me get to keep the dividend checks that we get mailed every three months from these blue chip companies. And I fell in love with the markets. And he took me down to the South Street to meet the first black stockbroker on the South Street, man named Stacy Adams and I would sit with Stacey and he had shown me how the ticker tape worked and what to look for, and how to do research on companies and understanding the markets. And I just fell in love with it. But it was that exposure even though my dad again wasn’t wealthy, and he was a Tuskegee Airmen, and he had gone to Teachers College and, you know, come up with both his parents had passed away by the time he was 12, he grew up with very little, but he wanted me exposed to the same thing to white Americans were exposed to. And the stock market was one of those key things. And he was determined when I got to be 12, I was gonna have a modest school stock portfolio.
Chanda Smith Baker 03:46
Did you envision where you are now, when you started? When you started the company?
John W. Rogers 03:50
I thought it was a good idea at the time. You know, I was inspired by the great entrepreneurs I mentioned already today here in Chicago. He couldn’t help but be inspired by John Johnson building Ebony and Jet at an early age. George Johnson creating Apple Sheen and Ultra Sheen at an early age. You know, George Johnson also started soul training with Don Cornelius. He started Independence Bank that became the largest black bank in the country. He was just an extreme role model. So that was an inspiration. But there never been an African American money management firm the country’s history. We started in 1983, and so I saw a real opportunity to where I thought that enlightened institutions be willing to work with a black money management firm and that individuals we will learn to work with a black owned mutual fund company. I remember John Johnson told me at dinner one day I was fortunate enough to know him. He said, I’m not sure this is going to work. So I’m not sure why Americans will trust you with their money. He thought that was a really big risk. But we ultimately have performed really well. Our aerial fund that started in 1986 is compounded in over 11 and a half percent a year after fees since 1986. And we were really proud that we can show our performance ahead of our peer group and our benchmarks over that entire 35 year period. It has been good times and bad times under performance and great performance over the long term, we’ve been able to demonstrate performance, and that’s how we’ve been able to grow and succeed in building our firm. And I always thought that if we performed well, with our investment strategy, and small and mid cap value investing, that we would really grow into something significant. I always saw that as a real potential. And things I didn’t realize we’re going to happen, of course, was that I’d meet someone like Mellody Hobson, when I was recruiting minority students for Princeton, and he was an eager 17 year old. And she came and no, summer intern here at Ariel and then joined us 31 years ago, and she graduated. You know, having that kind of leadership has been extraordinary. I never dreamed Arnie Duncan, when he was working here running all of our community affairs, and one day be the Secretary of Education. And, you know, and that then, of course, never dreamed that my former teammates at Princeton, Craig Robinson, who stayed with me, I was recruiting visit, we came to visit Princeton when he was 16. And we were teammates when I was a senior on the team, and Craig was a freshman phenol could have never seen that one day, Craig’s sister, Michelle, would be the first lady in the United States, and have a chance to be a part of that journey. Having never having helped recruit Craig to Princeton, so there’s some things you could have never received never would have had a chance to dream would happen. And we hopefully now we’re just starting to reach our potential at Ariel, I think we can do a lot more, and grow a lot more with the team we have today in the product, diversified product mix that we have and the kind of performance that we should be able to hopefully get to a whole another level over the next five years.
Chanda Smith Baker 06:59
I have two thoughts, but I don’t know why when you were talking, I thought about my grandmother, and she was about 90 when President Obama was elected, and she started to lose her memory. But she’d left the news on all the time. So you would go over there, she would be counting her pennies, you know, she just count pennies, and then she would, someone would say and President Barack Obama, and she would look at the TV and she goes, What? We got a black president, then she go back to count her pennies. And then like, you know, 30 minutes later, they say his name again, and she goes, I never thought I’d see this in my lifetime, and then there’d be tears, but like she was just on this cycle, and it was like excitement every hour. And you think about her being born in 1915 in Alabama to being of an age to both be emotional excited about something that she could never envision that came true. So that came up for me. The second thing that came up for me is that you were instrumental in starting a school. If I read that correctly, and that school does focus on exposing children to investment and money and financial literacy. Why did you see that was important?
John W. Rogers 08:14
Well, it happened when Arnie Duncan was running our philanthropy. He along with his sister, Sarah came up with an idea that we should help start a new small public school in Chicago. And the idea behind the Ariel Community Academy in the beginning was that you needed to have a smaller public school, with smaller class sizes, robust after school programming to make a difference. And they want it to be a remodel of a small public school when they created the Ariel Community Academy. Before they created that they had been part of the I Have a Dream Program that Eugene Lang made famous. We had a sixth grade class we had adopted and been very involved in those kids lives. And Aryan Sarah decided we needed to start earlier. And that’s why it was Pre K through eighth grade is the Ariel Community Academy. After we’ve been up and running for a short time, maybe was a year or two, I’m not exactly sure how long, I realized that there’s no reason why we shouldn’t have a financial literacy curriculum in the school, and try to emulate what my dad did, give the kids real money to invest in real stocks. And so the idea was that every first grade class would get a $20,000 class gift, they would watch us manage it the first six, seven years, and then they would start to take over manage the portfolio themselves picking real stocks with real money. And they would work with our analysts down here, Ariels offices, and we would go down and talk to the kids about how to do research and how to, you know, do their homework and pick the right stocks. It’s really worked out the way we had hoped. I mean, it’s, we have over 500 kids there at the school. When the kids get to eighth grade, they take $20,000 of the corpus and give it back to the next first grade class and just save the, if the 20,000 has grown to 50 or 60,000, they take a portion of the profits that are left over and create a philanthropic gift, often for the school of the local community. I already thought teaching kids philanthropy, which you’d appreciate, was really important, and then what’s left over, the kids would divide among themselves. And if they agreed to put the money into a 529 program, we would match it with $500 to teach the kids about matching, having put some money away for their future college tuition. And so you know, it’s still a work in progress, even though it’s 25 years old. We can make this program stronger and better. And we used to have and we need to get bring this back, we used to have a newsletter, let’s call it that All Highlights Publication, where we show the kids in, sort of, colorful terms, how to think about the markets. We will send them age appropriate statements, showing how the money was growing each and every quarter. So one of the things we didn’t anticipate, in the beginning, a couple things we didn’t anticipate one, the kids would spend a lot of time after they learned about the markets, going home and teaching the parents or grandparents about the markets, you know, and that was a bonus we never thought about. And then finally, a lot of the kids they saw that financial services, careers could be something they could think about. They saw someone like myself or Melody or others, folks of color, doing research picking stocks, they started to think about doing that themselves. And so many of the young people have gone into financial services, and some have started their own businesses, have become entrepreneurs. We’ve created kind of a mini Alumni Association. And last thing, I’d say in the old days when Don Thompson was the CEO, and President of McDonald’s. We would take them every year 40, 50 kids out to the McDonald’s annual meeting, where I serve on the board, and the young people get to ask a question at the annual meeting. One kid would get picked to ask one question, and then afterwards, they will spend an hour with Don Thompson and his wife, Liz, and the chairman of the board, Andy McKenna. But they would, you know, talk to Don about how did you become CEO, one of the most iconic brands in the country. And Don, of course being this, you know, down to earth, African American guy would really tell them all the hard work and all the uppers and all the things that he did that got him to that position in his life. And that was always a favorite. We tried to bring great speakers down to the school to talk to the kids and, and expose them to as much as possible. We needed to get better and better at it and be more consistent with the execution. He hoped we could can be a model of how financial services companies could partner with urban public schools in this country as we keep dreaming.
Chanda Smith Baker 12:50
Yeah, for sure. I mean, my mom is not here. She passed away a little bit over a year ago, but she would always talk to me about this banking program in our school. And she was like, if you could just do one thing, you know, like in all your leadership and community, if you could just get a banking program back in the school every Friday, we would bring money from school when she was in elementary school, and they would get their bank books, and they would get to see their statements once a year. And she talked about it as her favorite thing all the way through K12. That was the thing that she looked forward to the most in what she felt like was most impactful. So you really does want up in so I wish she could hear than what you just shared with us. And then, you know, I had the opportunity to listen to Ursula Burns, one time, I think it was that she was speaking at Target. And I remember her sharing that when she came to Xerox and it stuck with me. She said I don’t even, when I got there, I didn’t even know what the CEO was. And the importance of all of the things that you just said that are so deliberate. But in the last piece of just being able to see folks that look like you. CEOs that are African American, black men, black women, in these roles, folks of color, the impression and the inspiration that it leaves in our communities is tremendous.
John W. Rogers 14:14
Well, it’s self serving for us to say this, but I do think I tell people all the time, you know, Ariel would have never made it through his first three years of the City Treasurer Cecil Partee, hadn’t convinced hadn’t convinced the city’s pension fund to give us a million dollars to manage. You know, so all the, whatever good things we’ve done with the Ariel Community Academy, The Black Corporate Directors Conference with developing leaders like Melanie or Jason Tyler, who’s the CFO of Northern Trust Bank, and Sean, John Thomas and Northern who’s on on the Management Committee there. They all started their careers at Ariel, and all the community work that we do with knowledge sharing after school matters here in town and all the rest, that wouldn’t happen without customers. And this idea that so many of the anchor institutions in our community don’t work with black money managers. If we hadn’t had those early company, customers, we wouldn’t be in existence. And so I do think it is important for all progressive institutions, if they care about our community, they’ve got to work with our community and allow us to have economic empowerment. You know, Dr. King often talked about how white Americans to poor prejudice, but accept or ignore economic injustice. And that continues to be the state of our society today. And slowly but surely, after the George Floyd murder, and a few enlightened people are starting to think about this. I’ve actually talked to two wealthy white women just in the last few months who’ve called up just I’ve met them through various circumstances think, they realize they can be doing more, you know, and it’s starting to dawn on people that this economic justice issue is is big, big deal. But it still is gonna take a lot of work, and we got to use these role models. He said earlier, those that have done this, well, hopefully, it’ll help shame people into doing the right things. You know, and because sometimes humans don’t know how to do and they’re afraid of it, and they, or they have this unconscious bias. You know, last example, I always give this when I was Park District President in Chicago, years ago, in the Nine Museums on Parkland, I realized we’re not doing business with black companies, it’s outside of construction, and catering, you know, supply chain stuff. So I we call them all in and we put them on the spot, because the park district, they were on the park district land, they were getting direct subsidies from Chicago and taxpayers. So they agreed to put together a symposium where they would bring, we’d invite minority entrepreneurs to meet with the leaders of the museum community, be able to do business. So they came up with an invitation for that event, and on the front of the invitation was a man with a hard hat on and a shovel in their hands. And the tagline was digging up business. So when these museum heads thought about black entrepreneurship, they thought about us, using our hands to dig. They didn’t think about us being Bill Gates or Steve Jobs, or being a lawyer, or an accountant, or a money manager, or consultant, or an advertising executive, they thought about us, you know, in that way. And that continues to be too much of a problem in our society today. This implicit unconscious bias is still prevalent in so many ways, and so many institutions and, and people because of the unconscious bias, they don’t even know what they’re doing, and that’s why it’s up to us to call them on it.
Chanda Smith Baker 17:37
Yeah, when we talked briefly on the prep talk, yesterday, I had mentioned that an article had come out that talked about black businesses dropping by 40% over the last year, and I, you know, a lot of it is likely due to the pandemic. But we’re here in Minneapolis, where George Floyd’s death was recorded, people went to the streets, lots of social unrest afterwards, and our community really suffered from it. As such, lots of companies have been moved in new ways to think about black wealth, investing in black communities and how to support black leadership. And I would really love it if you could offer any perspective on just how they might lean in differently than how perhaps they’ve thought about those investments historically,
John W. Rogers 18:23
They’ll tie them together a little bit. Because one of the things that when I analyze the fact that it’s been such a tough, tough year for African American businesses, it’s partly because we’re often in the lowest margin parts of the economy. You know, often we’re doing the catering, the construction, the janitorial services, the supplier diversity, parts of the spend of major anchor institutions in our community. And, of course, when the economy got destroyed, because of COVID, all of a sudden, those types of opportunities dried up completely. We had no more jobs or businesses closed. While most of white American where the economy is the strongest where people are investment bankers, their lawyers, their consultants, their private equity leaders, that they’re in technology, all those businesses thrive, even throughout COVID. So I start with that to say that part of the problem is we fall into this trap of the term supplier diversity and have gotten trapped in the lowest margins, least economically viable parts of our economy. And it’s something that we have to transform if we want to be able to create multi generational wealth and opportunity for our communities. So one of the things we hope the corporate America will do and the anchor institutions, our local hospitals and universities and museums and foundations will start to do business with black and brown people in the parts of the economy where the wealth created today and get rid of the term supplier diversity in place with what the University of Chicago calls business diversity, the signal that these anchor institutions are willing to do business with. in all aspects of their spin, and for the first time start to use black law firms, black accounting firms, black consulting firms, public relations firms, advertising agencies, technology firms, money managers for their endowment, etc. And if these anchor institutions, they say they care about our communities talk to us as in everything that they spend money on, we will have an opportunity to build businesses of scale, and have multi generational wealth opportunities. But that’s a transformative thing. And I tell people all the time, all the time that the term supplier diversity is kind of like Blockbuster Video versus Netflix, you know, we’re blackberry versus the iPhone, it’s literally 40 years out of date. And if we want to transform the world, we have to use the term business diversity, and start to think about using us and everything the money gets spent on.
Chanda Smith Baker 20:50
I was part of an effort to increase women on corporate boards this last year. And it was very interesting to go through this process, and I think that they’re a bit related. But I’m very surprised when you look at the data that the corporate board, Roman and some of our large scale philanthropic organizations, and nonprofits that those boardrooms have not gotten more diverse, do you see build wealth strategies? And who’s that on those board seats sort of one in the same or necessary for that to happen?
John W. Rogers 21:20
Well, there’s a lot to unpack there, and I’ll try to do that in hopefully in a follow up if I don’t quite get to the answer. So I think the one of the things I would start with is to say that being on nonprofit boards of corporate boards can have an enormous impact on creating black wealth. If you have black and brown board members who are willing to lean in and not accept the status quo, so most of the time we get into these, you know, the rare air of a corporate board room or a big university or hospital or foundation, we’re happy to be there. You know, we’re one of the few black folks all the white leadership, and we don’t challenge the way things have been done. And we don’t follow and Congressman John Lewis’s footsteps when we see things that are not right, and not just, we don’t have the courage to make good trouble, and push and change the agenda. So at Ariel, what we try to do is not just admire a problem called solutions. We created a conference 18 years ago with my friend Charles trivet from Russell Reynolds, African American on corporate boards. It’s called the Black Corporate Directors Conference, and over the last 18 years, we’ve had extraordinary speakers from Ursula Burns and Ken Tional, Valerie Jarrett, President Obama, Shonda Rhimes, Kerry Washington, Magic Johnson, you know, we’ve just had, you know, we have white CEOs, Jamie Diamond, David Rubenstein, Jeff Immelt, you know, great leaders that have come. But the highlight of the conference every year is what we call the conscience of the conference. On Friday night, we’ve had people like Harry Belafonte, we had the late Congressman John Lewis. We’ve had congressman Cliburn, we’ve had Andy. We’ve had Reverend Jackson, Reverend Sharpton, Sherlyn Eiffel, Marc Morial, people to remind those of us that are in the board room that we have a responsibility to fight for economic justice once we’re in the board room. To keep track of how the economic opportunities are either coming to our communities or not. And so that content to the conference every year, we think has been transformative, and hopefully, slowly but surely bring a few more board members into the spirit of we want to speak up and speak out and fight for our community wants to those leadership roles. Because as I tell Reverend Jackson all the time, and Reverend Sharpton, having more of us on the board who don’t speak out, it often is more of a problem than a solution. Because if you’re sitting in that boardroom, and you don’t speak out about the unfairness of how the money’s being spent, and who’s being hired for this data, the other thing and the white CEO says, I diversified my board, my diverse board members aren’t saying anything wrong. I’m gonna keep doing things the way I’ve always been doing. And you get cover from the status quo to stay the same, if you sit in that boardroom and don’t speak up, speak up. So we have to get the Ken, the John Lewis types of leaders in that boardroom. People are willing to fight for us once we’re there. Otherwise, getting on the board seat doesn’t move the needle at all and sometimes can be counterproductive.
Chanda Smith Baker 24:28
Yeah. I appreciate hearing it in that way. I also, you know, I sit inside of a community foundation, I’m often in conversations about typically on the development side of foundations, it’s less diverse than on the impact side, the folks that are working in community. And there’s lots of conversations around that and not just who’s advising our investments, but who staffing the work. And it’s been very challenging to diversify, who’s showing up and sort of those investment committees and into those roles in our city. We are in conversations all the time about it with that, but we haven’t been able to make any headway. And I know that you are in that space as well. Are there things that you would recommend in philanthropy in the way that they are approaching it? Do you see it the same?
John W. Rogers 25:12
I see it the same, and when I have to tell the, I know, you know, Jai Winston, who represents the Knight Foundation in Minneapolis, and I was on the Knight Foundation Board for 13 years. And Alberto Barglen has created the best program of any foundation in the country. And there are a model of how a major foundation can work with minority firms and push them majority firms and minority leadership on the relationship with the foundation. And they’ve just been very intentional about it. They said, this is consistent with our values that we care about creating wealth and economic opportunity for black people, and brown people. It’s inconsistent, we spend all our money with white folks, because by definition, if you spend all your money with white people, you’re part of the problem, not part of the solution. The wealth gap gets larger and larger every time we’re locked out of an economic opportunity, and it continues to go to the same wealthy parts of our economy that is controlled by white males. And as you know, especially when it comes to investments, wealthiest people in our country are people in private equity, hedge funds, venture capital, full stop, you know, in Illinois, the wealthiest guy in Illinois is a hedge fund guy. You know, a former governor Bruce Rauner, was in private equity, you know, it’s just, that’s just the way the world is. So if you really in this, you know, well, being the foundation world, all the challenges that we face are all tied directly to wealth. We have poor schools, we have poor housing, get poor health care, we’re much more likely to be incarcerated. All those things are directly correlated to wealth. So if you’re part of a system of creating more wealth for white America, and least wealth opportunities for black America, I just don’t see how you square that circle. You know, because you’re giving donations and grants to communities, but again, if you create more and more wealth for white America, at the same time, and white, and wealth is tied directly to all the horrible outcomes that we have in our society. And we haven’t been able to create wealth in our economy, because of all that it’s all tied back to Jim Crow and slavery and being locked out of our ecosystem. It’s just, it’s just to me, it’s morally wrong, and so but to answer your question directly, it’s a wonderful we have a couple of role models out there. The Knight Foundation has been doing the best work. Chicago Community Trust is doing great work in this area, and then in nonprofits, the University of Chicago is creating the best program to work with minority owned professional services firm than any other university in the country. By far, you know, Bob Zimmer, they’re the president University created a program 12 years ago, and they went from basic zero to 95, minority on professional services firms worked for the University of Chicago that didn’t 12 years ago. And they have a symposium every year for two days, where they bring in minority entrepreneurs to work with their vice presidents and Chief Investment Officer, General Counsel, CFO, head architect, etc. And it’s been this extraordinary success story. And universities very, very proud of it. Again, they created this term business diversity. The woman who runs the program, Nadia Chorals, has been there from the beginning as world class. And we’ve had everyone speak to the group of entrepreneurs every year from our Governor Quinn to my video, Michelle Obama, former Secretary of Education, Arne Duncan, etc. So there are some good actors out there, and hopefully that will catch on, and more and more institutions will follow in their footsteps to help achieve, create real wealth in our communities that will help make a dent in our, in this wealth gap, it gets worse and worse every year.
Chanda Smith Baker 28:58
Yeah. We often talk within our work around the Build Wealth Strategies. We are becoming more accepting or more familiar or more embracing sort of the history of this country as it’s becoming, I think, more exposed than shown. The Tulsa massacre, the centennial coming up, people talking about people who have never heard of it. And there are some that we’ve encountered that know the deep history of wealth extraction in communities of color and the native communities. And then there’s are others that see it as an isolated incident. You know, how have you talked about sort of the extraction of wealth, right, because it is one way in which you pass on to each generation opportunity. And do you think that this country or do you think that we completely understand sort of to the extent in which wealth has been extracted from our communities?
John W. Rogers 29:56
Well, most of, I know, for sure, America doesn’t know how much worse things are today than even since the Civil Rights Movement was at its height. So I start with that to say, you know, the data from Ray Bashara at the federal reserve of St. Louis, shows that between 1992 and 2016, roughly 25 years, college educated blacks saw their wealth declined 10% while college educated whites saw their wealth increased 96%. That’s amazing when we bring that data up, and this is the federal reserve of St. Louis, we had them come and speak to our black directors conference, people were just incredulous of how much the wealth gap is getting worse, even for college educated folks. You might know Dean Karlan Charles who’s the Dean of Yale’s Business School has an enormous amount of data in this field. He talks about the wealth gap was doing moving in the right direction from 1940s to the 1970s. But he says since the 70s, African Americans relative to white Americans were worse off today than our grandparents were. And that’s just fundamentally the way it is. And here in Chicago, if you look at our business leadership group, as recently as 20 years ago, three of the top 150 privately held companies in Chicago were owned by African Americans, three of the top 150 2%, you know, not good in the seats, majority minority. But today, 20 years later, we have zero, the top 150 privately held companies in Chicago are African American. And so it’s just getting worse and worse and worse every year, as wealth gap gets larger and larger. And so what’s been the bank’s been working, hasn’t been working since. So your point, white America has no idea how bad off we are how we have no businesses of scale, that can employ us create our own philanthropy, create our own political empowerment, create our own jobs, because all the data shows that when an African American businesses is successful, we hire other African Americans. And we support our local churches, our local charities. That was our legacy with John Johnson here, from Ebony and Jet, and George Johnson here in Chicago, with Afro Sheen and Ultra Sheen, and many, many other entrepreneurs, but we’ve lost all of them. And it’s because these anchor institutions in our community do not work with us, you know, and we can’t be successful without customers, you know, and it’s just something that it’s just the lack of understanding. And the final part of it is, this goes back generations. You know, my great grandfather was JB Stratford on the Stratford Hotel in Tulsa. It was burned down in the Tulsa Race Massacre. He lost all that wealth and all that opportunity to create multi generational wealth. You know, when you look it up, throughout history, whenever we started to get our head above water, we would get destroyed. You know, we know what happened with the Freedman’s bank, you know, after slavery, and we lost all the money that we put into that bank, because of dishonesty, and when it occurred, we’ve seen that happen with people’s grocery in Tennessee, when you built a great grocery store that was out outperforming the white grocery stores, white community came in and lynch, the owners of that food store. When we get our head over the water, it’s always something that comes in returns from reconstruction all the way to the Jim Crow era. We haven’t been able to build on our success and in all the talent that we have in our community.
Chanda Smith Baker 33:27
One of the other bits of news that we have in our city is that there’s a black bank that’s coming to town, First Independence Bank. It’s one of only 18, black owned full service banks in the US. And that announcement came out yesterday, and again, watching sort of the comments of community, even within the black community, people feeling excited and skeptical. And then other people saying, why does the race of the person who’s opening up the bank mad or like, why does it matter? And it is, it is still fascinating to me every day, even though I’m in this work, why people don’t, sort of, understand why that matters. But it’s an exciting moment for us, and this has been tried in the past. And I’m sure we have had black owned banks here that just simply did not do well. And, you know, it is my hope that people are willing to invest in make this successful. But I’m wondering if you have any thoughts in terms of things that we can do here in the Twin Cities to ensure its success?
John W. Rogers 34:31
What I tell people about this issue all the time. It’s very interesting to me, and it’s continues to be a problem today and it was a problem 40 years ago. Black banks are often very focused just on lending, which is often the least profitable. Again, I talked about earlier, we always somehow find a way as black folks to be in the least profitable parts of the ecosystem. If you look at JPMorgan Chase or Wells Fargo or the large black the large white banks, they lending, but they also do investment banking, and they do private equity and they do venture capital, and they get involved or have over the last 40 years in all aspects of the spin. And if you look at the profitability of the large white banks, it diversified over all these high margin parts of the ecosystem. So if we’re going to be successful with the black bank, we need to do lending, that’s important, it’s important to lend to our local communities, but we have to diversify. There’s no reason why black banks can’t do what I do, and be in money management. There’s no reason why they can’t do what Jim Reynolds does, and Chris Williams and others and being an investment bank, and if they had done that, they would have had a diversified revenue stream, in high profit margin margins. They would have been able to employ many, many more people, create much more profitability, and then have the wherewithal to lend to local communities and local entrepreneurs that need that lending capacity. So we’ve got to figure out a way to get out of this siloed view of what a black bank is, and follow what the white banks have done. You know, I just don’t get it. I remember having this conversation, literally 40, almost 38 years ago, 37 years ago with the head of independence bank thing. You guys should get into the business I’m and maybe we can do this together, me and money management as well as lending. This was not part of their thought process.
Chanda Smith Baker 36:26
And as we as we wrap you talk about the two donors that came to you, this is a common question that we get in particularly, and I don’t even know, but I’m in Minneapolis, right? I’m sure it’s happening everywhere, but George Floyd, it’s been so immediate and urgent and concerning, to just watch what happened in our city. You know, Minneapolis is one of the most generous cities. There are people that are doing lots of great work. But if you’re not paying attention to the biases that you’re holding, and the differences you’re making, and where you’re giving your money, and how you’re giving money, and I get asked all the time, how should I invest in community? Like how does my biases show up in my giving? Like, where should I be thinking differently? Like, what, what advice do you have for individuals with means that are thinking about how to get involved differently on issues of equity?
John W. Rogers 37:26
The two things that we’re doing at Ariel, because again, we try not just to admire the problem. We learned that from a friend John McCarter, who’s run the Field Museum, he said, you know, don’t just admire a problem, try to find out solutions. So one, as I touched on earlier, I think finding ways to get financial literacy curriculum into public schools in this country is a big, big deal. There’s a great program in New York City, now New York City rise, where they’re getting young people, real dollars to invest for the long run early in their lives. And it’s gonna make all the difference in these kids lives getting exposed to the markets, they see the magic of compound interest. They see it growing over time, so engaged and involved and not only financial literacy, but giving kids real money to invest in real stocks, teach them about private equity and hedge funds in these lucrative parts of the economy. I think, you know, progressive donors can do that with your public school system. The second thing that I say, well, we’re doing the University of Chicago and everyone can do this their local universities, we created a program for minority students to get paid internships, to work in the investment offices of major endowments. And we’ve had now over 70 kids go through this program in the last four years, everywhere from Kresge Foundation, Knight Foundation, MacArthur Foundation, JPB Foundation. Young people of color, are entering into a world they didn’t even know existed, most of them, when they got to the University of Chicago. They didn’t know there was an endowment office overseeing $11 billion. They didn’t know that you could learn about a career in endowment management. Or also, when you’re working in an endowment office, you’re gonna learn about all the different asset classes that the endowment invest in. So we think this is something that any progressive leader can do is to make sure that Foundation’s have robust internship programs that recruit minority students learn about this magical industry. We’re so much wealth and power and influence is created today. And as I said earlier, wealthiest folks in our community are often the people in private equity, hedge funds, venture capital. We’re best to learn about that than being in the Investment Office of major endowment, or working in so many young people, they care about purpose, working for a wonderful endowment like yours, and knowing that every day as you pick better and better money managers and make better and better asset allocation decisions, that you’re going to create more wealth to be given to communities that need, you know, if you’re at a university, they need more dollars for scholarships for kids in need. You’re a young person of purpose getting exposed to this whole downward ecosystem, we think some big, big deal and think that our program with the University of Chicago could be a model for the country.
Chanda Smith Baker 40:10
Yeah, I really do appreciate your time, I know that you have had a packed schedule. I keep you down to 45 minutes, as promised. I appreciate really good nuggets offered here. And you certainly got me going the supplier diversity thing hit, right where it needed to hit for this podcast, because that is the conversation that we are in all the time in our city and to take it up a level and to have our businesses and corporations think about that differently is a tremendous gift to our city. So thank you.
John W. Rogers 40:44
Thank you. This has been really fun, a great conversation. I really hope we can stay in touch.
Chanda Smith Baker 40:49
Yeah, hopefully when I get to Chicago and get to Joyce and I’ll tell Paul, I met you and Linda, you know, firstly, I hope you have a great weekend and I hope your evening is not much longer.
John W. Rogers 41:00
Yeah. Well, I look forward to seeing you when you get to Chicago.
Chanda Smith Baker 41:04
Sounds good. Take good care.
John W. Rogers 41:07
Souphak Kienitz 41:08
And there you have it. That’s our guest, John W. Rogers Jr. and our host, Chanda Smith Baker. Have the courage to make good trouble. That’s a quote I took away from this episode. If you loved what you hear and want to provide any feedback or questions, please don’t hesitate to reach out to me. You can find my information on our website minneapolisfoundation.org. I also want to congratulate our newest team member in our podcast team, John Cuoco, our new multimedia content curator. Thank you again to Sarah Gillund for making our artwork and copy for this episode. And thank you to Darlynn Benjamin for coordinating and making this conversation happened. This is Souphak Kienitz from the Minneapolis Foundation. Thanks for listening and I’ll talk to you soon.Close Transcript -
John W. Rogers, Jr.
John W. Roger’s passion for investing began at age 12 when his father began buying him stocks as Christmas and birthday gifts. His interest in equities grew at Princeton University, where he majored in economics, and over the two-plus years he worked as a stockbroker for William Blair & Company, LLC. In 1983, John founded Ariel to focus on patient, value investing within small- and medium-sized companies.
John has been highlighted alongside legendary investors Warren Buffett, Sir John Templeton and Ben Graham in the distinguished book: The World’s 99 Greatest Investors by Magnus Angenfelt. His professional accomplishments extend to the boardroom where he is a member of the board of directors of McDonald’s, NIKE and The New York Times Company. John also serves as vice chair of the board of trustees of the University of Chicago. In 2008, John was awarded Princeton University’s highest honor, the Woodrow Wilson Award. Following the election of President Barack Obama, John served as co-chair for the Presidential Inaugural Committee 2009, and more recently, he joined the Barack Obama Foundation’s Board of Directors.