Earl G. Graves
Founder, Chairman and CEO
Black Enterprise Magazine
From the "Explorations in Black Leadership" series
October 10, 2001

Earl Graves: I have been invited to give you my outlook on business today. There is no way to do that without the consideration of last month’s terrorist attack and the aftermath. I could see the smoke coming from the twin towers from the Fifth Avenue office of the Black Enterprise Magazine. Like all of you, I was struck with disbelief. Followed by dread and the deep sadness of the horrific waste of human life, I also knew that the world, as I knew it when I woke up that morning, was gone forever. It was too soon to say, with certainty, just what kind of world had replaced it, and it still is too soon. But, I knew then that things would never get back to normal, or what I thought was normal, not in my lifetime. The slaughter of several thousand innocents has left none of us unscathed. My own son, Earl Jr., lost a friend in this tragedy, a young, successful investment banker with a wife and two children. I know all of you have been touched as well, and my prayers go out to all of you who grieve at this time. For those who lost loved ones, as well of those who live in uncertainty of the many souls who still remain unaccounted for. Of course, uncertainty is a feeling we all are living with in the wake of this tragedy regardless of our proximity to the attacks and their initial victims. We have uncertainty about the safety of our families, uncertainty about the future of our civil liberties, and uncertainty about the prospects of a protracted war on terrorism. And, of course, all of these factors contribute to the uncertainty and anxiety about the United States economy. Such concerns are well founded. I sat on a board of American Airlines, and you can imagine the tough choices we are facing in the wake of this horror. I also sit on the boards of the insurance giant, or I should say the Health Company care, now, and federated department stores. Both industries have been among the hardest hit, and the fallout is only beginning to be felt. And then there is Chrysler AG, where I sit on the supervisory board, and certainly we have concerns where we are fighting ourselves in the third best year of the auto industry. Now we are looking at ourselves and saying, "What comes next year?" And, finally, there is a Roman house corporation (??) which I have served on and am its oldest director in serving time. They are a special chemical company out of Philadelphia. When you look at the price of oil and you look at the issues in Europe, you have to ask yourself, "how will that company do?"

So, you see, the economic landscape has changed--no question about it. But one thing remains certain: We must rebuild. New York City is the heartbeat of our nation’s economy. It is a leader in business and culture. Our recovery of this nation requires, I think with these demands, a strong business community. It demands a business community built in fairness and equality opportunity. Unfortunately, none of this is a given. Because, added to the multitude of tragedies we experienced on September 11, is a potential lack of involvement of minority businesses in New York City’s recovery effort. The fact is that even before September 11, New York lagged far behind other major U.S. cities with regard to the inclusion of already owned businesses in its infrastructure. There was not one African American or Latino owned construction company doing more than $20 million at this present time in New York City. This may sound like a lot of money, but in terms of Manhattan real estate that barely covered the doorknobs in the new high-rise building. You’d have a hard time finding an other American city that discludes our involvement to this degree—Atlanta, Detroit, not even Birmingham are as far behind as is New York City. I mention this because, even in the midst of this great, national tragedy, we cannot suspend our push for equality. Even as America comes together in this war against terror, and as Americans, you and I must be a force for unity. We cannot ignore racism when it raises its ugly head.

Here is a telling story regarding the world trade statistic for you:

In addition to the 6,000 people who were killed or are missing, having to do with the World Trade Center or the Pentagon, there may be as many as 200 people who will never be accounted for. Who are they? Immigrants working in this country illegally—men and women from Asia, Africa, the Caribbean, Central and South America—many working under aliases, people who never existed who had gone up in that building, literally to be cremated, never to have existed. They were there because they occupied many of the lower-level jobs and had to show up early: maintenance people, restaurant workers, window washers, all of the above.

I have read that some movie stars have helped save pets that were stranded when their owners were killed in the attacks. Well, that’s fine. But, there are literally hundreds of people, many people of color, who died and whose names the world will never know. They had families and children who depended upon them. The question, then, is "Who will see to their welfare?" The point is clear and New York City has a long way to go, but we must be united as Americans to make change. Indeed the most compelling reason I had for honoring my commitment to be with you this afternoon was to encourage each of you to do your part, to move ever forward with your business goals. In order for you to move forward, you must be prepared for the trends you will face—trends that were redefining our lives in unexpected ways before the tragedies, and continue to do so in this aftermath, starting with globalization. New, untapped markets are emerging worldwide as developing nations progress and trade restrictions loosen their holds. Look at China, for example, where there is an enormous potential consumer base and high expectations for economic growth. Look at the dramatic social and economic restructuring going on in Europe. Again there is uncertainty and risk, but also opportunity for those that work to facilitate positive change. The point is that trade will go only so far. If thirty years of business has taught me anything, it is that the odds for success increase tenfold when you take an active roll in shaping the environment in which you do business. For example, I have worked to foster business and investment in Africa for many years, and I know it as a continent. That was a joke, really, because for those of you that watch television, the president mentioned it as a country and I know it as a continent. I see you don’t have time to watch television. I understand that. You’re lacking a sense of humor; you have got to ease up, there. After the fall of Apartheid in South Africa, I was one of the investors in the Pepsi distribution center there, and if you ask me, I’d be happy to go back to that in Q&A. I firmly believe that success and failure in the Twenty-first century rests on what happens in Africa, which is only beginning to emerge from the legacy of colonialism and exploitation. The challenges are enormous on that continent--famine and civil unrest, debt, and an AIDS epidemic that threatens to wipe out a generation and decades of productivity along with it. In today’s global economy, Africa’s fate is not of global concern, but an all-encompassing economic imperative, as I see it. It must be addressed not only through investments and opening up trade, but also through broadening access to health care, human rights, education, and technology. This leads me to the second trend—the technology revolution.

New technologies are rapidly opening new doors, eliminating geographic, cultural and commercial borders. The flip side is that, those without access to new technology are being pushed further and further into society’s margins. In the United States and around the world, whole populations are in danger of being left behind. The source of the technology gap rests with education and the lack of it. Even in the United States, the worlds wealthiest nation, a disproportionate number of minority and poor white children are not acquiring the skills they will need to survive in the emerging high tech economy. The worth of your legacy is the next generation of business leaders, all of you in this room, won’t be measured only by how much money you personally make, but will be measured by how well you address this nation’s educational gap.

A race in distinction and disparity, particularly those based in race, brings me to the third and final trend I want to touch on—the long-predicted browning of America. It has definitely arrived. An analysis of the latest U.S. census shows that, for the first time, nearly half of the nation’s one hundred largest cities are home to more blacks, Hispanics, Asians and other minorities than whites. That represents a major shift in America’s cultural identity as well as in political representation among long, disenfranchised groups. This is especially relevant in light of recent events. Arab-Americans have potted the grounding of America, too. They are a vital and productive part of the United States’ economy. The violence and outright discrimination that has been directed against the Arab-American community in recent weeks is tragic. It must stop. This is not the time to let prejudices and ethnic divisions overwhelm our best instincts, our common sense. Now is the time I submit to you to understand that the browning of America is not about "us against them." It is about accepting the new diversity of American faces as America faces this new millennium. Black, white, Hispanic, Arab, Indian, Asian—this is who we are. This is America. Funny as that sounds, maybe we can hear America the Beautiful playing in the background. It is the truth. We must be united as Americans, not just in our efforts against terrorism, but in our daily struggle to make this country what it needs to be—a nation that is worth defending precisely because it lives up to the promise of justice and equality that it stands for. As tomorrow’s business leaders, you will be the ones who have to navigate the new American landscape and all its diversities. Each of these trends presents immense challenges, but they also set the stage for enormous opportunity for those who prepare themselves to take full advantage of them. If you are in business, you can’t succeed if you refuse to reach out to the markets. You can’t succeed if those people that operate those markets can’t afford to buy the products that you would sell.

In the same measure, America can’t succeed with its children undereducated and its workforce under-equipped. It can’t succeed with two-thirds of the world’s nations marred in economic collapse. It can’t succeed if it allows itself to be blinded by racism and fail.

Here, at the University of Virginia and other colleges, I sense a serious commitment to embrace these trends. I sense a commitment to erase stubborn social barriers that limit opportunity. Will the going be tough? You bet. But, it was rough in 1968 when I first hatched the idea for Black Enterprise Magazine. At the time, there was no magazine catering to the black business of professional class. I had to seek investments from people who didn’t believe in such a thing as a black business or professional class. But, I proved that that is wrong. Black Enterprise has been profitable in its first ten issues and has been profitable ever since (clapping, himself). You have got to loosen them up, Dean!

I submit to you that you can write a success story of your own if you decide that nothing and no one can stop you. I would only add this: whatever business and financial goals you had before September 11^th, whatever five or ten-year plans you had in your head, it might be wise to rethink them. But, this is important, do not abandon them. Move forward, ever forward, with your business goals. Whatever happens, don’t lose confidence in the business management. America is right for business, and we are about business. Moreover, don’t lose confidence in yourselves, in your abilities as individuals and as collective to rebuild and recover. Together, I think we must continue our focus on bolstering our wealth and strengthening our business in this economy. W e must do it without sacrificing our common humanity—our grasp of what is right and wrong. Each of you has a role to play. Strive for success? Yes. Make money? Yes, all you can. But don’t forget the big picture. Don’t forget to give back. Invest in your community with time and money, create and support education programs for young people, be a voice for the disenfranchised, use your influence and expertise to keep the doors of opportunity open for future generations of entrepreneurs.

Whatever your race or background, you represent what is possible for people everywhere—you have the chance to succeed in this country like never before. You have the chance to accumulate wealth like never before. You have the chance to create opportunities for the future generations in this country like never before. But, a chance is only as good as your willingness to take it. Seize this time, this moment. See if for the moral imperative that it is. Do this and the result will be a new era in business and social leadership, one in which economic success is not limited by race or gender. Do this, and I promise that a fair, just society can be achieved, where equal opportunity is a birthright enjoyed by all men, where no man, woman or child on any part of the globe is left behind. It seems to me appropriate that I find a quote from a very famous person, who said, as he took over the position of dean at his school:

"What makes this truly a rare opportunity is the chance to lead an institution for all of its nearly fifty years, the school has been dedicated to developing leaders who make the world a better place."

And then, he said:

"The key to meeting fiercely competitive and difficult challenges in the marketplace, is building upon sound foundations. That is why I have such tremendous confidence in Darden’s future as a global leader and management education. Our sense of purpose, extent of our people, and the quality of our partnership, would a great university unparallel."

Now, let me tell you about this stool. First, I don’t think I am in a bar. But, I like to ski, so I decided that I was going to have my left knee operated on for the third time so that I can race ski downhill. My wife thinks I’m crazy. I got on an airplane three weeks after the operation I have a little blood clot in the back of the leg. I can’t stand up too long because, otherwise, funny things happen to me and I don’t want to disrupt this class.

Q. A lot of magazines have been having trouble with the economy (for instance the shut down of Mademoiselle). I was wondering how you addressed that in your magazine.

A. We have had less than a happy year that comes after last year, which was a very profitable year. Our business is off 20%, and our profits are off a little less than that. I hope my son is completely responsible. I have three sons working in the business with me. I am very fortunate. My youngest son just joined the business after working for our Pepsi business for ten years. We sold it back to Pepsi. He will now be working with us in New York. They have done a great job. If everyone else has been off by 20%, then that means that they have really been doing the heavy lifting, and they have done a good job. The first thing you do is to drop the magazines that don’t count and are not important. We have stayed the course because in most businesses like this make and ‘A’ list and a ‘B’ list. We are on the company’s ‘A’ list because of the importance of our environment. And so, we are not cut back to the extent of other magazines.

Q. What were some of the challenges that you faced entering South Africa after apartheid?

A. Well, in facet, I had not been there at all, so we had to go back and explain to people what Pepsi was. Of course Coke is an excellent competitor, not as good a product, but an excellent competitor. In fact, none of their products are as good as ours. Of course, you have to believe this to work for Pepsi, and I do. And so, they were willing to spend millions to stop us if they could. And, they did (in terms of slowing us down). They had stayed in South Africa and what they did was turn over the franchises to the South Africans and said that, corporately, they were not involved. Of course that was nonsense since it says, "Coca Cola," it looks like a Coca Cola can, and it tastes like Coca Cola. As a result, our coming back in was a tough battle. And what caused them to go back out was that they were not making the numbers they wanted to make. At the time, the chairman and CEO of PepsiCo said that we were losing and that we needed to get out. He called on a Wednesday and said we needed to leave by Friday, so that did not give us much time for planning ahead. I think we will go back eventually because that market is too big to just leave it alone.

Q. There was talk about the public voucher system versus the education system, as is, with some enhancements? Do you favor the voucher program versus the education program, as is? What is your take on that?

A. I am opposed to vouchers and I am opposed to charters. I think that it is a waste of money that is supposed to be allotted to the education systems of those who live in the cities or anywhere in the country. I think that the vouchers are a hype—a way to get money into certain spheres of our educational system which have lost money in the past. It is unfair and not the right thing to do. I don’t think that it is going to be a success. It has not been a success so far.

Q. You are involved in a number of different businesses and I know that one of the factors that is important to you is to make a difference and to contribute back to the community. What are some of the principles that you use when you evaluate different business opportunities to get involved—to decide which businesses will allow you to make an impact, and which others will be just businesses?

A. I can’t think of anything, at this point, that is just a business. The things that we have entered into, thus far, whether it is the private equity fund or not. I can’t think of anything that we entered where we just did it because it was business. I was not in it to be a social worker; our Pepsi franchise made a ton of money in Washington D.C. We went in and there was no college that I didn’t speak at in Washington D.C., there was no organization that we didn’t give money to, there was not air-show that we didn’t participate in. We were everywhere in terms of giving money. I am still a trustee at Howard, in Washington D.C., even though I am no longer in the business. And so, those two things do go hand-in-hand: You can do well while doing good. That has been the premise that I have tried to follow.

Okay, private equities. One of the things we looked at three or four years ago was that we realized there were many mid-sized companies, $30-$40 million a year, that did not have the resources to expand their businesses. So, Citibank and I, we decided to form a private equity company. So, between us, we put in several millions of dollars and then we went out and talked to other people. We raised about $100 million dollars. This is allowing us to go out and find mid-sized minority owned-businesses and lend them money for their expansions and either going public or being sold. Then we will obviously make a profit. We have around $50 million and we’ll start a new fun in late 2002.

Q. I am interested in your view on the U.S. and the world policy to the AIDS crisis in Africa and, also, if you are concerned that one of the worst legacies of September 11^th is not the immediate impact, but how it is going to detract from other valuable causes as this becomes the only thing that the world is focused on.

A. Let me answer the second part first. I think that Americans has contributed something like $700 million to the Red Cross, the most ever contributed to this organization. My sense is that there are going to be some things that suffer and the bills that are important to the president—the education bill and the look toward health care—have taken a back burner. I think that we will eventually go back to work as usual. Some of the programs that are important are going to take a hit because we can’t run or fight a war and rebuild New York, which is going to cost billions of dollars.

Q. You talked about globalization and a business tends to be in global language. Do you have any strategy in mind for making Black Enterprise include global business stories—that it doesn’t just have to be minorities? And, are you thinking of starting another magazine, publication, or medium that is not solely targeted to the black audience?

A. I’ll answer the last one first. Because of the demise of some of the other magazines, we are looking at other opportunities in the magazine business. We are not necessarily sure who or what, but it is not skewed towards t he African American community. I don’t look at a business opportunity in terms of a racial community, I look toward what will help us make money and do well. As far as skewing it to globalization features, we are concentrating on the opportunities in Asia and China. What you do when you get there is not how you do it as an African American, but simply how you do it. There is no set of rules, black and white. You are not being taught how to do that here. You are being taught how to do business on Main St. on the corner of 42^nd and Madison.