These last four weeks have been filled with pain and hope. The pain is seeing racism and the inexcusable police killings of Black people, once again rearing its ugly head. The recent killings of Ahmaud Arbery, Breonna Taylor, George Floyd, Rayshard Brooks along with the interaction between Christian Cooper and Amy Cooper in Central Park are painful reminders of the systemic racism that continues unresolved in this country. The hope is that this time with the video of the vivid and brutal killing of George Floyd choking to death under the knee of a White police officer, there seems to be a movement happening with a real commitment to change. The worldwide protests for George Floyd have gone on for weeks and have included crowds of all types of racial backgrounds, age, and gender who are united against the senseless killing of Black people. There also seems to be a movement in the business community, compelling CEO’s to make public declarations that systemic racism exists and must be eliminated from our society.
So far, the 100 largest U.S. companies have committed $1.6 billion to organizations fighting racism and inequality. PayPal announced a $530 million commitment to support Black businesses, strengthen minority communities and fight economic inequality. Softbank announced a $100 million investment fund devoted exclusively to companies led by people of color. McKinsey announced a set of actions to include doubling their Black leadership ranks and increasing their hiring of Black colleagues over the next 4 years, adding an anti-racism and inclusion program to existing unconscious bias training, the doubling of spending with diverse suppliers in 3 years, and pledging over $205 million in donations and pro bono work to combat racism and advance racial equity and economic empowerment in Black communities.
These are bold announcements and unprecedented actions by well established companies. We can only hope that other organizations will follow these examples. I hope my expectations are not dampened by having seen this movie and its sequels over several decades. The protests spark lots of debate, discussion and fanfare. Companies and politicians follow with announcements, and the protests go silent after a few months and nothing changes. Black people have been telling White people for over 400 years about this problem of systemic racism and how it affects people of color and our broader American society. So, let’s hope that now is a new day, and that we are ready to work on real solutions to bring this shameful and ugly part of our history to a close.
What is ICV Doing?
ICV is going to re-commit our efforts to do what it has always done to combat the systemic racism that exists is this country, and certainly the private equity industry is not exempt from this problem. It is well publicized that diverse investment managers manage less than 1% of the available investment capital of $75 trillion. There is an obvious lack of diversity in the private equity industry—at the investor level, the general partner level, and in middle market investment banks.
We are going to be our best selves by being the best investors we can be, operating with integrity and professionalism that just shatters the stereotypes and biases held by many in our industry. We will continue to grow our firm, increase our scale and build our capabilities. We are going to make sure we give people who look like us and who have likely faced systemic racism an opportunity to get into the private equity industry. This includes: the mentoring of our young professionals who join ICV for our distinguished Associate program, hiring executives and board members at our portfolio companies who are people of color, seeking out mature minority owned businesses in need of capital, and encouraging and coaching the next generation of diverse alternative asset managers who are entering the industry.
We have employed and mentored as Associates some 24 young people of color. Several came back from business school to join the firm permanently and have progressed to senior levels. Seventeen of our Associates left ICV to enroll at top business schools – including Columbia, Stanford, Wharton and Harvard. Many of our Associates have gone on to be successful entrepreneurs creating opportunities for other professionals of color. For us at ICV, it’s not just a job but our mission to seed more talented people of color in the world of business and to prepare them to defy the odds they face in pursuing their dreams of being successful. We are very proud of our contributions.
Lastly, we are going to continue to support causes and organizations that are focused on improving the conditions of people of color. We are longtime supporters of organizations like Toigo and SEO, organizations that are working with young people of color who have an interest in investment banking and private equity. We are also long-time supporters of Historically Black Colleges and Universities (HBCUs), having hired several graduates over the years and also serving in leadership roles at the Trustee level.
We don’t have to make any breaking announcements because we have been fighting inequality for over two decades. The very founding of ICV came from a few students at Harvard Business School in 1992 during the Rodney King incident. The students, including myself, decided something had to be done to rebuild the inner city communities that were impacted by the riots that stemmed from the terrible incident when a Black man was beaten badly by a group of White police officers on video for all to see, then acquitted from any wrong doing by a jury.
That led to a business school field study project sponsored by our professor, Michael Porter, where we spent time working with the Los Angeles business community on what businesses should be rebuilt in the inner city of Los Angeles based on the competitive advantages unique to its location. This led to the creation of ICV and a nonprofit called Initiative for a Competitive Inner City or ICIC that focuses on working with cities to strengthen their inner cities through partnership with government and the private sector and through research and telling the positive story of inner cities. Here we are almost 30 years later still dealing with the same challenges of police brutality and racial injustice.
What Actions Should Happen?
The very first action is acknowledgement that systemic racism exists in this country, particularly against Black people. We must all agree that this systemic racism has limited the opportunities for Black people and is a big contributor to their income and wealth inequality. According to the Brookings Institute, the net worth of an average white family is nearly ten times that of a Black family, a ratio that has gotten worse since the turn of the century. The reasons for this are straight forward. It is driven by the cumulative effects of inequality and discrimination that have happened for centuries. This can be traced back to the lack of power and opportunity for Black people since the nation’s inception. It started with 246 years of slavery, followed by 100 years of the discriminatory Jim Crow era, to now the modern-day slavery of mass incarceration where Black men make up 40.5% of the prison population but are only 6.5% of the U.S. population.
The president’s recent decision to hold a political rally in Tulsa, OK caused many to reflect on the Greenwood Massacre that occurred in that city 99 years ago. Greenwood was a center of black business excellence referred to as the Black Wall Street because of the financial success of many of its businesses and residents. The massacre was a stunning reflection of the deep-seated hate and contempt the white power structure held towards Blacks and the extent of the violence that Whites were willing to resort to in order to limit Black economic progress. I could fill this page with countless examples of my own personal discrimination moments. Black people have just simply learned to deal with it and work around it which is frankly a lot of extra unfair work for us.
These inequalities are not limited only to economics but also in education, the criminal justice system and healthcare which has been evident in the COVID-19 pandemic where Black people have been dying at an enormously disproportionate rate. If we can’t acknowledge and accept that systemic racism is real and bad for our society then we can’t take the actions necessary to fix it.
Once acknowledgement happens, then actions can be taken with the seriousness needed to create change. Actions include some of those described above: such as investing in Black owned businesses, Black communities, Black institutions such as nonprofits who are supporting Black people for the good, and HBCUs who are uniquely educating our black youth to become leaders and people of service to their communities. We must stamp out both conscious and unconscious biases so that more opportunities are given to Black people as employees, partners, investors, leaders, managers, and vendors. A tracking and measurement system is needed to ensure accountability and the delivery of real results. Leaders of all organizations need to conduct an honest assessment of where their organizations are today with the number of Black employees in influential positions. If you are nowhere on this, then you know you have a problem.
In June of 2020, it is simply ridiculous and unacceptable to say “we tried but couldn’t find anyone qualified” when addressing the low numbers or even absence of Black leadership or talent in your organization. The use of this statement must be canceled! Today, leaders must create cultures that say in no uncertain terms that diversity is needed and that fairness rules.
Lastly, each individual White person must be accountable for themselves and their families when they have that racial bias moment, intentional or unconscious, to check themselves and commit to stopping it. Systemic racism continues partly because it passes from generation to generation. Children learn it from what adults around them do and do not do. So stopping this in our homes and with our families will help make it better for the future generations of Black people.
I am reminded by an incident with my youngest son. He attended a well-known academically rigorous New York City private high school where there are only four Black boys in the entire class out of 115 students. A few years ago, he came home clearly distraught and vividly upset about something. I noticed and asked what was wrong. Like a typical high school student, he said nothing was wrong and he didn’t want to talk about it. After I continued to pry, he shared with me that he felt his White classmates were constantly discounting his opinions and views and that they never listened to anything he had to say, and he was simply tired of this. He then asks me the following question, “Dad why do these people think they are so much smarter than me when I am the one in honors Spanish and honors math and the star theatre person at the school?” And sadly, all I could say was this was just how our society works is in this country for Black people and that you will be faced with this problem your entire life with White people thinking that they are better and smarter than you for no apparent reason other than you are Black. You must ignore them and continue to show by your work, why they are not smarter than you.
While systemic racism has been without question problematic, ICV has enjoyed the benefit of working with non-Black people as partners in the starting of our firm, with CEOs and Founders of the many businesses we have owned and currently own who decided they wanted to work with us, and investors who felt we would be good managers of their assets. For this I am grateful to those partners, CEOs, Founders, and investors for their support and confidence. This is perhaps the greatest reason why I should have hope.
Let’s all commit to bringing an end to this disease that has plagued our country for way too long. Now is the time when all of us—champions, advocates, victims, allies, critics, and bystanders—must come together to solve this problem.
On Behalf of ICV Partners LLC
Co-Founder and President