The Real Deal

blog Apr 01, 2022

            The word icon gets thrown around very loosely these days, but it’s spot-on in describing Bob Johnson. It’s no exaggeration to say he may quietly be the single most-influential Black business figure of the 21st century.

            That’s because while, as America’s first Black billionaire, he has made his share of headlines, it’s the largely untold back-story that really reveals his full impact. The groundbreaking entrepreneur and businessman didn’t just open the door for others to follow—he held it open so they could walk through after him.

              Beyond his personal breakthrough achievements—his was the first Black-owned company traded on the New York Stock Exchange—he set in motion a ripple effect that has paved the way for many more to enjoy success as he has. For example, in establishing BET Networks as the go-to showcase for Black culture, he essentially created a new marketing platform for the music and fashion industries.

            In the years since, his move into other sectors—such as hotels, gaming and the automotive industry—has given similar opportunities for others to follow his lead. In sports, Johnson was the first Black majority owner of a national sports team, the NBA’s then-Charlotte Bobcats (now Hornets), paving the way for basketball legend Michael Jordan’s acquisition of the team in 2010.

            Johnson’s varied business interests have also provided a proving ground for a long list of successful executives who have worked for him and gone on to greater things. Among them: Thomas Baltimore (now Chairman, President and Chief Executive Officer of Park Hotels & Resorts; Lisa Wardell, executive chair of Adtalem Global Education; Debra Lee, former CEO of BET Holdings.

            It has all been a remarkable journey for one of 10 children, the first from his family to go to college. How did it all happen?

            “A question I get quite often is what makes someone an entrepreneur or what makes the visionary, and there’s no easy answer,” Johnson says. “The one thing I can say is, I don’t think there’s a school or a program that you can go to and say, ‘I want to sign up to get a master’s degree in visionary.’

            “I think it’s something that is a little bit in your DNA, a little bit in the forces around you—the opportunities you get that you hadn’t planned to get—and a little bit of what I call luck. And I would throw in this… the grace of God. You are put in places that you don’t expect to be and when you’re in those places, something motivates you to do something.”

            Johnson speaks of the “serendipity or whatever you want to call it” of his being introduced to the cable industry when it was in its infancy—though that downplays his foresight in anticipating what a cultural and business force it would become, and his willingness to try something new with the fledgling BET.

            In a video message marking the 40th anniversary of the now-celebrated network he founded with a small personal loan, he spoke of how he has always believed that “if you have a dream or vision, you go in search of it.” BET’s emergence as a significant cultural voice has “proved without question” that “Black Americans, given a chance to succeed, we can do that,” he went on.

            Speaking now, Johnson acknowledges the people who saw something in him and were ready to take a chance on him. “All of those forces, you can try to pick out which one was more defining, but it was all those forces that came together in an opportunity. And, fortunately, I was able to take advantage of them. And that’s sort of the quick snapshot of the Bob Johnson story.”

 

The sequence of success

            Some may see his different business dealings since selling BET Networks as divergent, but Johnson traces a common thread through them all, from his majority ownership of the Charlotte Bobcats to establishing the largest Black-owned automotive dealership in the country.

            Success “leads you to be exposed to people who say, ‘Hey, there’s this Black guy who started this company, it’s publicly traded. He has white investors, most of them, and he’s recognized for creating a business like we in, quote, white America, do, so therefore he’s somebody we should talk to.’ And out of that comes a board seat, so you get on boards, and you get to know other people who are in a position to help you or believe in you, and out of that comes [other] opportunities…

            “All of these things bring you to the attention of people. They bring you to the attention of people who have capital. They bring it to the attention of people who have ideas that they want to engage in and that means you get an opportunity to say, ‘I can help you do this,’ or ‘I can meet this,’ and they get comfortable that you can do it.”

            Capital comes together with ideas and ideas come together with talent, he goes on. “Talent creates value. The visionary entrepreneur is someone who is, by faith or by luck, put in front of people who believe in what they say they can do. In other words, they believe the vision, they embrace the person’s goals and then put their support behind them…. all of a sudden, you find yourself able to do things because forces, people, ideas all come together to allow you to engage and something in you says, ‘I want to do this.’”

            Part of this successful trajectory involves what he calls being in the deal flow—something he observes in all top high-net-worth Black achievers. “Somehow they got in the deal flow and the deal flow in America means that at some point, a Black American has come in contact with a white American to bring the assets that has made white Americans successful to a black American to see if they can deploy those assets to achieve something for themselves and their family and the people who work with them,” he says. “That’s the deal flow.”

            Of course, this doesn’t happen on a regular basis to ordinary people, Johnson acknowledges. And why not? “The reason is that white America has yet to come to grips with the idea that every Black American—not just the Bob Johnsons, Michael Jordans, Oprah Winfreys, Magic Johnsons and so on—deserves an opportunity, a chance to prove that they can create value, create wealth and be a part of the economic system of this capitalistic economy.”

            Indeed, economic injustice is the major racial divide he spotlights, pointing to the big difference in median net household incomes—$17,000 for Blacks and $170,000 for whites. How many Black people can walk into a bank and secure a loan with those kinds of limited assets, he wonders? Then there’s the small number of chief financial officers at publicly traded companies who are Black—maybe 2-3%, he says.

            Despite this, there’s a sense in which the color people in business are most concerned about is green, not Black or white. Johnson points to how white-owned businesses moved in to acquire Black-centric businesses they had previously ignored, like Black hair care products, when they realized they were moneymakers.

            Looking ahead, Johnson sees technology, health care, entertainment and travel as ripe growth areas. “But you have got to start with an idea,” he says. “There is plenty of money in the U.S. economy, in the global economy. But it’s not the dollars that drive you to success until you have the ideas to put those dollars to work.

 

The greatest systemic racism

            Important as issues like housing, public transportation and voting rights are, Johnson says that “the greatest form of systemic racism is a belief by the broad society that Black people are not capable of creating wealth. We can be a source of wealth by our talent or our ability, but we’re not creative.”

            Believing access to capital is the key, he would “put more focus on passing a bill that caused capital to flow dramatically and significantly into the hands of Blacks, with ideas on how to generate wealth, jobs and economic opportunity. It’s probably because I am a business guy. I’ve never been a social activist… I have never been denied the right to vote.”

            Johnson has floated the idea of what he calls the Boost Act, which would set aside $30 billion of tax certificates or tax preferences for companies that make loans or investments in Black businesses.

            It would work like this: a company that invested in a successful Black business could get a reduction in its capital gains return. “That would do two things,” Johnson explains. “Companies who really want to do this would have a chance to fulfill their personal goals and objectives. And two, if they were successful, the returns would be so great to mitigate the risk because they wouldn’t have to pay the higher tax rate on that tricky or what they would call risky investment.”

            This isn’t new, he points out; cities have long given tax breaks to businesses that invest in projects that benefit the community. The approach has just not been used “to move capital and move wealth into the Black community.”

            Johnson also wants to see some action taken to ensure that businesses honor the commitments they made to serve Black America better, in the wake of the racial unrest that followed George Floyd’s murder in Minneapolis, last year. Some $50 billion in pledges were made—some of that a knee-jerk reaction, he says.

             “And a knee-jerk reaction to a problem is not a business, it’s not a strategic effort,” he says. “It’s an emotional behavior and what happens with emotional behavior is it starts at a high, but without a long-term plan, it invariably drifts to a low.”

            The answer, he proposes: a verification committee to evaluate businesses’ performance in following through on their promises. “That, to me, would say that these companies are serious in their intent,” he says, noting that publicly traded companies do this kind of thing all the time for investors, having to report on how they performed and explain why they didn’t meet forecasts.                                             

            “This is no different,” Johnson says. “There’s nothing like a little bit of encouragement in the form of disclosure, commitment to perform as measured by an outside group, to make companies do what I’m going to assume that they really want to do. And if they really want to do it, having a little bit of a, what I’d call a soft encouragement in the form of transparency, best practices, public awareness wouldn’t hurt at all.”

 

The source of power

            When asked about the financial hurdle facing young people wanting to get an education, Johnson responds that he puts it on the political leadership in the Black community, which “has not lived up to its responsibilities of 40 million Black Americans in this country.” He believes the Congressional Black Caucus has lost its way and needs to return to its founding philosophy, that Black voters should have no permanent friends, no permanent enemies, just permanent interests.

            “We walked away from that,” he says, while observing that the balance of power in the House is currently fragile. “If Black Americans move towards becoming somewhat of an independent-thinking party—not an appendage of the Democrat party, not an appendage to the Republican party, but an independent party—they could control legislation coming out of the House and do it at no risk.”

            Rarely does a sitting Black member of Congress get run out of office by another Black person running against them, he says. So, by uniting over shared issues, “now you’ve got an opportunity to wield power for Black people.”

            Some are trying, “but they’re not doing it as a unified group. They’re not taking their full power potential and deploying it in a way to become the balance of power to return to the philosophy of no permanent friends (‘No, we’re not locked into the Democratic party’), no permanent enemy (‘We hate the Republicans’). Permanent interests: ‘You do what we think is that in our interests, our votes go with you.’ That’s power that’s being wasted.”

            Johnson laments the tendency he sees for people to “go along and get along, when we have all this power.” Think about how Joe Biden is president right now because one Black man—James Clyburn—delivered him South Carolina in the election, he adds.

            At the end of the day, much of the stress experienced in the Black community that people talk about with concern is financially rooted, Johnson says. It’s all about capital: “All you have got to do is ask white America: a lot of problems will be solved by having money.”

            Stress comes from not having what you need to care for your family. “If you had $50 million and your roof leaks, you’re not stressed because you get it fixed. If you’ve got $25 million and your refrigerator goes out, if you have got $10 million and one of your family members in the hospital, you aren’t stressed,” Johnson says.

            “But if you’ve got $17,000 and your roof leaks, you’ve got a lot of stress because you can’t go to work because you’ve got to be there when a guy comes to fix it, and you’ve got more stress when they tell you it’s going to cost you $5,000. And that comes from being economically discriminated against.”

 

From an interview with Louis Carr.