Despite the uncertain climate for start-ups, launching a business continues to hold irresistible appeal for aspiring entrepreneurs. For many African-Americans, entrepreneurship is seen as a means of building community as well as personal wealth, suggested Harvard Business School professor Laura Morgan Roberts at a recent conference.
But what are the nuts-and-bolts details of starting and sustaining a minority-owned business in today's tough economy? Panelists at the 2003 H. Naylor Fitzhugh Conference emphasized the well known need for focus and determination, yet each told a strikingly different story when it came to describing the personal goals and challenges that drive their individual enterprises.
The marketplace today has recognized that without brown people you can't win.
—Keith Clinkscales, Vanguarde Media
After stints with several Fortune 500 companies, Angelo Wright's father, who was terminally ill, asked Wright when he was going to go into business for himself. "That was the catalyst—after my dad died, I walked in and quit my job." In 1989 Wright began establishing endorsement opportunities for Bay Area athletes, and in 1992 founded SportsWest Football, a firm offering nationwide negotiation and representation services to professional athletes.
"I didn't have a lifelong desire to be an entrepreneur," said Paula E. Groves (HBS MBA '91), founding partner of Axxon Capital, a venture capital firm targeting women and minority businesses. In 1999, she said, only 4 percent of the money raised by venture capital funds went to women- and minority-led business plans; at the same time, these ventures were growing at two to three times the rate of other businesses.
"What really motivated me was a market opportunity," she explained, adding, "I also feel an overwhelming obligation to take good care of the money given to me by investors. The resources in this domain are so scarce—I want to succeed so more money will flow into the sector."
"I was driven by the lack of representation of people of color in the media," said Keith Clinkscales (HBS MBA '90). As an undergraduate at Florida A&M, Clinkscales said he was exposed to the power of the urban entertainment culture and wanted to start a business that captured that energy. After serving as president and CEO of VIBE magazine, in 1999 Clinkscales founded Vanguarde Media, Inc., publisher of Heart & Soul, HONEY, SAVOY, and impact! magazines. "The marketplace today has recognized that without brown people, you can't win," he stated.
L. Londell McMillan, president and CEO of L. Londell McMillan, P.C., and Northstar Business Enterprises, Inc., named his mother—the owner of a beauty parlor—as one of his earliest entrepreneurial influences. By tidying the shop and running errands for her, McMillan absorbed a simple lesson that continues to serve him well as a lawyer representing entertainment moguls such as Prince, Stevie Wonder, and Spike Lee: "Do for yourself. Do for your people. Provide a quality product."
Finding The Money
"Let's dig a little deeper now," Morgan Roberts said. "How did you obtain capital? What are some of the early-stage issues and challenges that face entrepreneurs?"
For his part, Clinkscales remembers frequently hearing the word "no" when the question of money was raised with potential investors—publishing seemed hopelessly outdated during the dot-com boom of the late 1990s. "Get extremely comfortable with that word," he told the audience. "If you ever want to have your ego kicked down about twenty-five pegs, go out and try to raise $5 million." McMillan said he "earned, saved, and projected for the long term" before starting his firm with $25,000.
If you ever want to have your ego kicked down about twenty-five pegs, go out and try to raise
—Keith Clinkscales, Vanguarde Media
"Many of my colleagues stepped up their lifestyles and encumbered themselves with big houses once they began making money," he said. "For me, it was about being comfortable in my 'hood, investing, and developing relationships with people well before I had launched my business. Start planning early. Save money. And go back to your community."
Feeling profitable, McMillan said, is not only about economics—it's about earning respect from clients and the business community at large.
Wright told of a scrappier start with very little upfront money. Through a trading card deal, free tickets from a relative who worked for an airline, and lots of time on the phone and on the road, he gradually built a roster of clients.
Create Value As You Go
"Use some street ingenuity," he said. "Do your research, figure out what's going to be hot, and be adaptable to the market. Brand yourself and create value by using whatever resources you have at hand."
Groves outlined a few common characteristics of companies that have weathered well over the past two years. Besides servicing customers "beyond the call of duty," these firms were able to foresee the macroeconomic shifts already in the works and drop their valuations to get VC cash in the door. "Take the cookies when they're passed," she advised.
"It's not about having millions of dollars to get your enterprise off the ground," Groves added. "It's about vision, commitment, and dedication. We are already wealthy," she told the young, MBA-dominated audience. "Let's use what we have."