The Redlining of Black Corporate America

June 18, 2020 | Courtesy of Marker via Medium

Written by Steve LeVine

https://marker.medium.com/the-redlining-of-black-corporate-america-903f0403a4f5

Near midnight in early March 1991, a California Highway Patrol team spotted a white Hyundai sedan speeding on the Foothill Freeway in the northeast San Fernando Valley. Inside were a jobless construction worker named Rodney King and two friends, just closing out an evening of drinking. The police switched on the lights. King, who was 25, took off. Barely three months out of prison on a robbery conviction, he was violating parole by driving while intoxicated, and with several patrol cars and a chopper in pursuit, he sped onto residential streets. He went through a stop sign, a red light, then another. Finally, with one companion screaming at him to stop, King pulled over in a suburb called Lake View Terrace.

Police ordered King and his friends out of the sedan. In a flurry, four officers struck King with their aluminum batons. They Tazered him twice, stomped and kicked him. By the time they stopped, they had hit him at least 53 times, inflicting nine fractures to his skull, a shattered eye socket and cheekbone, and a broken leg.

What no one involved knew was that, in probably the first such viral incident in the then new age of home video, a bystander had captured a seven-minute film of King’s ordeal on his Sony Handycam. A few days later, when it aired on TV news shows, Americans were jolted. Never before had the country been exposed to the sustained police beating of an unarmed fellow citizen, an assault carried out with seeming normality before gathered onlookers. The Soviet Union was breaking apart, the Cold War screeching to an end, and President George H.W. Bush basking in the glow of the just-finished first Gulf War, but the United States and the world were suddenly transfixed by a case of police abuse in Los Angeles.

Given the video, the outcome of the trial of the four officers seemed preordained. All was quiet in South Central Los Angeles, the majority Black district of the city, where, as in the rest of the world watching the trial, people assumed the officers would be spending the next several years in prison. The only remaining question was how many years. But that isn’t what happened. After hearing two months of testimony, a mostly white jury acquitted the men.

Within hours, South Central was aflame. Protestors set streets, stores and buildings alight, looted, and attacked strangers and each other. For six days, Los Angeles seemed at war. With the sky choked with smoke, flights to Los Angeles Airport were told to reroute. At the state’s request, Bush deployed 8,200 Army, Marine, and National Guard troops. The protests spread to Atlanta, Las Vegas, New York, and San Francisco, but the main violence was in Los Angeles, where more than 50 people were killed, some 2,300 injured, and 3,000 buildings destroyed.

When it was over, reporters again and again heard a refrain: Los Angeles’ Black and Hispanic populations had been the victims of years of unchecked police abuse. The King attack differed only in the presence of a camera.

These were tough economic times, too — hundreds of thousands of middle-class aerospace and manufacturing jobs had moved out of Los Angeles since the 1970s, driving up Black unemployment to 25%. South Central had descended into a slum and needed to be restored to a more stable place, with a lot more middle-class jobs, a lot fewer liquor stores, and a lot more groceries and other commerce.

With Los Angeles still burning, Mayor Tom Bradley announced a major initiative that he called Rebuild L.A.: Dilapidated and abandoned buildings would be demolished, with factories and new businesses going up in their place. And there would finally be employment — young Black people and Latinos would be trained for 57,000 new, well-paying jobs. These would not be makeshift jobs, but skilled work created by the private sector.

Within months, the Rebuild L.A. initiative as a whole faltered. A national recession took hold, pummeling Southern California and forcing the corporate sponsors to retrench and, rather than create jobs, cut them by the thousands.

Already, CEOs were highly motivated to swoop in, feeding off the massive public goodwill toward King and the rest of L.A.’s Black community. They would get tax breaks, too, as a sweetener. And to make it all the more real, Bradley dispatched a helicopter to pick up the city’s best-known businessman, who would ensure it all went off without a hitch. In 1984, Peter Ueberroth had been TIME’s Man of the Year for reimagining the Olympics as a profit-making event, coming out of the 1984 L.A. Summer Games with $240 million in the bank. After that, Ueberroth became commissioner of Major League Baseball. Now he would do his magic in South Central.

Ueberroth got right to work. He assembled a board consisting of 96 Fortune 100 executives and rapidly raised $8.5 million to run the initiative for the five years everyone thought the job would take. He got IBM, GM, Coca-Cola, Exxon, and the New York Stock Exchange to sign on, committing to millions in investments. Shell and Toyota both built jobs centers and began to train an eventual 3,600 people between them. Bank of America anteed up $1 million for a special bank to disburse small business loans. GM donated 100 vans. But within months, the Rebuild L.A. initiative as a whole faltered. A national recession took hold, pummeling Southern California, forcing the corporate sponsors to retrench and, rather than create jobs, cut them by the thousands. One by one, the companies lost enthusiasm. The next year, Ueberroth quit; the initiative itself folded not long after. Twenty-eight years after the King beating, much of South Central has been rebuilt, but with largely Latinx- and Korean-owned businesses. Many of its middle-class Black residents fled to communities outside Los Angeles, leaving African Americans today a shrinking minority in the district.

As CEOs navigate the crises in our midst, many have sought answers in history — the 1918 flu pandemic as an analogue for the coronavirus and the Great Depression for the deep recession. Similarly, Rodney King has become a touchstone for private and public figures attempting to chart a course after the brutal killing of George Floyd.

Across the country, CEOs are vowing to improve the lives of Black Americans, pledging more than $1.7 billion so far to the racial justice movement, the public adoption of which has soared since Floyd’s May 25 death. Among the highest-profile voices of support have been technology companies, venture capitalists, and Silicon Valley writ large, a preserve of America that is just 2.8% Black. A number of VC firms have made commitments, including Softbank, which launched a $100 million fund for startups led by people of color. On June 12, Apple and YouTube both launched $100 million racial justice initiatives. PayPal is committing $530 million to support Black and minority-owned businesses and communities. Yesterday Google announced its own pledge of more than $175 million to support Black entrepreneurs.

The question is what happens this time? The challenge is immense, sweeping, and deep. Though 2020 feels distinct in many ways, the Rebuild L.A. initiative may be a cautionary tale about well-meaning corporate promises that can be diminished or even abandoned once public attention is gone.

Richard White, a history professor emeritus at Stanford and author of The Republic for Which It Stands, the seminal history of Reconstruction, suggests that such fickleness has been the norm in the ferment of American social movements. Consider the hopes after the Civil War. “Many of the heads of the railroads in the 19th century were ex-abolitionists,” White said. “[But] they did not challenge the suppression of Black [people] in the South or Jim Crow when it would cost them money.”

History sits as an uneasy bookend to the new age of Black rights, from the turncoat railroad barons to the abortive Fortune 500 pledges to South Central L.A. to thousands of episodes in between. When the attention has passed, the economy has turned, or both, promises have gone unkept.

The question is what happens this time? The challenge is immense, sweeping, and deep. We are not talking about the creation of jobs per se, such as the hourly, low-wage positions ordinarily created by the tens of thousands in these times. Instead, this is about opening up the higher-paid, white-collar professions and C-suite jobs that can lift a family firmly into the middle class and beyond, many of which have been hostile to college-educated Black people.

There is a starkly rare Black presence in physics, biology, and entomology; in economics, engineering, and artificial intelligence; in advertising, fashion, and media; and in venture capital, banking, and computer programming. Winston Justice, a vice president at investment advice firm AllianceBernstein and former offensive tackle for the Philadelphia Eagles, says he rarely encounters another Black executive in the boardrooms he frequents. “It is the embedded stereotypes that we all struggle with as a country, a people, and a world that have led to the lack of Black entrepreneurs, engineers, and finance professionals,” Justice told Marker. A half century after the last Civil Rights movement, 13% of the U.S. population has been largely absented from the jobs where much of the future economy will be based, held back by profound stereotypes, bias, blockages, and hundreds of years of disadvantaged beginnings. When you look at the numbers, the boundaries in the tech and science space as a whole resemble the urban redlines that, until they were banned in the 1960s Civil Rights era, banks maintained to keep some American neighborhoods white. In theory, you could move there. In reality, just try. Now, the continuous street demonstrations across large cities and small towns, apparent bipartisan support for the protests, and pure gut feel have some observers convinced that we are experiencing a watershed moment in which economic justice has been pushed ahead decades in just weeks. They foresee finally cracking open the full range of staff and management ranks of the Fortune 500 and beyond, forcing uncomfortable and potentially game-changing conversations in company town halls that push businesses to confront their often unintentional but deeply damaging anti-Black racist ways. Racial justice can be expensive and require unusual commitment: In 1833, after abolition in England, Britain agreed to compensate slave traders, but the last payment for the bank loan was made only in 2015, 182 years later. If so, the movement will join a number of other major trendlines that have gotten a sudden strong shove into fast-forward this year. Automation has sped up, office towers are under threat by a mass shift to remote work, and the United States and China are hurtling faster toward an economic decoupling. Until now, Covid-19 has been the presumed accelerant, placing stress on society and all its parts, eliminating weak trends and sending the stronger ones into overdrive. Now, George Floyd’s killing is doing to the cause of boosting Black economic and social power what prior high-profile deaths of Black men and women by police over the past decade had not. But the movement arrives amid a decade or two of immense upheaval in which global systems and norms have been shaken and overturned, including the financial system, world trade, and the post–World War II system of global cooperation.The big picture CEOs contend with is a world moving from one chaotic event to another, separated by illusory periods of calm — from the financial crash to the Arab Spring, the Russian invasion of Crimea, Europe’s migrant crisis, Brexit, the election of Donald Trump, and so on. “This is a moment when each disequilibrating event sets things up for the next disequilibrium,” says Paul Saffo, a futurist at Stanford University. Racial justice can be expensive and require unusual commitment: In 1833, after abolition in England, Britain agreed to compensate slave traders, but the last payment for the bank loan was made only in 2015, 182 years later. This time, Bank of America has pledged $1 billion to a racial inequality fund, and Amazon and Goldman Sachs announced separate funds to combat racial injustice. Given the past, many Black professionals are skeptical about the promises made thus far. In an interview with The New York Times, Dorothy Brown, a law professor at Emory, called the flood of corporate support “performative” art. “It’s complete BS,” she said. Silicon Valley considers itself a meritocracy, where a simple idea and some tech know-how can change the world and make you a billionaire in the process. But it hasn’t been that way if you are Black. According to a recent paper on the Kauffman Fellows website, 77% of seed and Series A rounds — the stage at which a founder is struggling just to try out an idea — go to all-white startups, meaning those without a single nonwhite person on their founding team. Just 2.1% of venture funding goes to Black founders. In all, Black people hold just 7.8% of core information tech jobs across the country. The Valley’s stiff-arm to Black people seems to hold almost regardless of the company or VC firm. There are almost no Black decision-making partners in the its venture capital firms — and that is the way it has always been. From 1990 through 2018, only 1% of VCs in Silicon Valley were Black, according to a study published by Harvard Business School. Google’s staff is 3.7% Black. Intel’s engineering and tech staff is 4.8% Black. Facebook’s staff is 3.8% Black. At a meeting last week, Snapchat CEO Evan Spiegel conceded that he conceals the company’s diversity numbers so as not to look as white as it is, Business Insider reported. These numbers have helped to trigger the tech equivalent of the Black Lives Matter street protests on Twitter. On Monday, Ifeoma Ozoma, former public policy and social impact manager at Pinterest, wrote in a thread that she left the company last month after “I fought for over a year to be paid and leveled fairly.” A Yale graduate who formerly worked at Google and Facebook, Ozoma said she suffered doxxing and other retaliation after raising her pay and stature concerns. Within the hour, Aerica Shimizu Banks, who headed Pinterest’s D.C. policy office until last month and worked with Ozoma, also tweeted that she had resigned. Banks, who has a Master’s degree from Oxford University and worked for six years on patent policy for Google and in the Office of Management and Budget in the Obama administration, called her time at Pinterest “a period of glaringly unfair pay, intense discrimination, and terrifying retaliation.” In a statement, a Pinterest spokesperson said, “We took these issues seriously and conducted a thorough investigation when they were raised, and we’re confident both employees were treated fairly.”

What precisely ails Silicon Valley? White technologists are desperate to know, and many of them have apparently been telephoning to get a read from Omar Johnson, the Black former vice president of marketing at Apple and founder of Opus United, a marketing firm. On Sunday, Johnson finally took out a full-page ad in the New York Times to answer all his white friends, old and new, at once. “Dear white corporate America,” Johnson wrote. “You’re not nurturing your Black talent. You’re not benefiting from Black experiences, relationships, perspectives, insights, and ideas. And most importantly, you’re not doing the right thing.” From 2000 to 2018, all-white executive startup teams on average returned two times the investment in an acquisition or IPO, compared with a larger 3.3 multiple with diverse executives, according to a study Nichols co-authored. Marlon Nichols, managing general partner at CaP Venture Capital, also sees financial justice as a problem of what American business is losing. Nichols, one of the few Black decision-makers in Silicon Valley venture, says that failing to add Black talent is costing businesses money. Management consulting firms from McKinsey to BCG have argued that diverse entrepreneurial teams are routinely more profitable. From 2000 to 2018, all-white executive startup teams on average returned two times the investment in an acquisition or IPO, compared with a larger 3.3 multiple with diverse executives, according to a study Nichols co-authored. Yet startup teams remain by and large all white. The problem starts at the nation’s main computer science universities, which, like the tech industry, have themselves failed to build up Black enrollment. Stanford’s student body is 4% Black, MIT’s is 3.5%, and Georgia Tech’s is 5%. When you telescope in specifically to the computer science programs, the numbers become even more minuscule. In fall 2019 at Carnegie-Mellon University (CMU), there were 34 Black students in a total of 2,460 in the School of Computer Science, or 1.3%. Martial Hebert, dean of computer science at CMU and who is white, says the problem begins with an admissions process that penalizes students lacking the first-rate preparation available to candidates from well-off families. When Black students from underserved communities are admitted, there is often too little structure to help them feel comfort in a new, highly stressful environment. Charles Isbell Jr., dean of the college of computing at Georgia Tech, the only Black head of a major computer science program in the country, said that black high school students routinely start out the most interested of any single cohort in computer science. But by the time they reach college and experience the doubts that nag all students, the competition and cultural norms, many of them — already feeling isolated as a very small minority at the school — switch to other majors. The schools are not entirely welcoming for Black faculty, either. Elaine Nsoesie, a Black professor and data scientist at Boston University, says that a researcher once asked her some questions about machine learning. Later, she says, the researcher was “told by her mentor that she should have asked another professor, who was white and male, instead of speaking to me.” “These experiences can be discouraging, especially when one is just starting in the field,” Nsoesie says. Venture, which holds the keys to which entrepreneurs get money, has acted like a closed society. Becoming a VC is not like going into consulting or banking, Nichols explains. Jobs are rarely posted, but instead are shared among friends and trusted acquaintances in the community. If you are a Black graduate of, say, Howard University and not Stanford or Harvard, and are therefore outside the network, “How do you find out about the job?” Nichols says. “And if you are not networked, how do you compete for it versus those who have been in it for however long?” Entrepreneurs who are funded will continue to look the same — vastly white and male — “unless the check writers begin to look different and teams begin to look different.” The problem is not intent — the tech community genuinely thinks it is meritocratic, Nichols says. “What we fail to realize is that business is always personal and never fully objective. And this business is hugely subjective.” Nichols, the co-founder of MaC Venture, is among a small but growing number of Black-run venture firms that are directly targeting underserved founders, including Backstage Capital, Collab Capital, and Harlem Capital. An unfortunate reality in Silicon Valley, Nichols says, is that “we like to be around people with similar experiences.” Entrepreneurs who are funded will continue to look the same — vastly white and male — “unless the check writers begin to look different and teams begin to look different.” Americans are deeply unproud of the country’s centuries-long racist past. In just a few weeks, the groundswell of public-minded pledges to Black Lives Matter and other racial justice groups have felt strikingly like our memory of the civil rights era of the 1960s, grounded in hope that this time the country will do better. But will it? As with the #MeToo movement, perceived bad actors are rapidly being swept out of their jobs. The first industry to be struck is media, taking New York Times opinion editor James Bennet, Bon Appetit editor in chief Adam Rapoport, Philadelphia Inquirer editor Stan Wischnowski, and Refinery29co-founder Christine Barberich. CrossFit CEO Greg Glassman has been forced out, as have Second City executive producer Andrew Alexander and Audrey Gelman, feminist founder of women’s co-working space The Wing. As with the #MeToo movement, perceived bad actors are rapidly being swept out of their jobs. But some of the innocence of the 1960s is absent. On June 6, NFL commissioner Roger Goodell apologized for banning players from taking a knee to protest police brutality. But it took him three years to do so after quarterback Colin Kaepernick did in protest of police brutality, and then an additional nine more days — until Monday — to say publicly that NFL teams should consider signing Kaepernick, who was blacklisted by the league. Meanwhile, Silicon Valley has struggled to find its footing. Despite the big money being thrown around for anti-racist causes, there have been all but no visible or audible signs of how Black numbers will rise in Silicon Valley anytime soon. Is the tech world ready to make the kind of massive, systemic cultural and personnel changes that Black America is seeking? The movement is skeptical but not jaded. Lolita Taub, a Latina former VC with Backstage Capital and a racial justice activist, grew up in South Central L.A. and lived through the 1992 riots. She says something feels different this time. “Our standing our ground influences people,” Taub says. “People are feeling the fire under their butts. There are more of our voices, and we are not going to stop. We are keeping an eye out for who is talking the talk and walking the walk. Who is actively executing on it. Our bullshit meter is pretty good.” In an essay last week, astrophysicist Neal deGrasse Tyson said that back in 1992, when he was 25, he was not surprised by the King beating. “Based on what I already knew of the world, my first thought was, ‘We finally got one of those on tape.’ Followed by, ‘Maybe justice will be served this time.’” Justice was not served that time, nor in many other bright moments for economic justice. But it could be — as long as corporate America and Silicon Valley are not simply waiting this out until the noise dies down. Omar Johnson, the Opus United founder, is one of the clearheaded optimists. In his ad, he advises white CEOs with guilty consciences: “This is a business problem, too. And you fix business problems all the time. So, you got this.”