Does Race Still Matter? Ten great minority entrepreneurs weigh in on affirmative action, the old boys' network, and whether to sell out.
By Brian Dumaine; Maggie Overfelt; Sakina Spruell; Jason Tanz; David Whitford

(FORTUNE Small Business) – It may seem like an obvious question to ask. But when we went to ten of the country's best-known African-American, Asian-American, and Hispanic business owners for their views on the changing role that race plays in business, we got reactions as diverse as the entrepreneurs themselves. Read how the creators of some quintessential American companies--from Robert Johnson to Magic Johnson, Joseph Unanue to Gilman Louie--answered one of the most divisive questions of our time.


Johnson Publishing Co.

The elder Johnson, 85, formed his Chicago-based company--publisher of Essence, Ebony, and Jet--in 1942. His daughter, Linda Johnson Rice, took over as CEO of the firm in 2002.

JOHN: I didn't try for a bank loan when I first started in 1942 because I knew I couldn't get one. Instead I wrote letters to names I got from the insurance company where I worked and offered a charter subscription to the magazine for $2. Three thousand people answered and sent the $2. I got started with that $6,000. And today I still don't have any investors. Johnson Publishing is a privately held company, and we have only three shareholders: myself, my wife, and my daughter.

LINDA: Being a minority business owner today is a little bit easier because there are more minorities doing business and the general market is more receptive. But there are still areas in magazine advertising where it's difficult, and that is mainly with some luxury retail brands. Although the average African-American household income is fairly high, we still have difficulty landing those.

JOHN: Today more companies are willing to do business with anyone If they can show them how to make more money. It doesn't make a difference that my magazines are black-owned. It matters that we give readers and advertisers what they want. I don't believe in people doing business with us because we are black. Do business with me because I give you what you can't get anywhere else.

LINDA: We've been approached to sell our business, but the answer Is always no. I have a great deal of affinity for this company, and honestly this is my life. And I'm not ready to relinquish control of my life. My family roots and my sense of pride in ownership override capitalism. Some may say that's a foolish sentiment, but that is how I feel.

JOHN: I've had many offers for my business, but I don't even answer their letters anymore. I worked too hard to build it. I'm the same way with my overcoat. When the stewardess on the plane asks for my coat, I say, "That's okay. It took me too long to be able to buy a dress coat. I'd rather not take it off."


Alvarado Construction Inc.

The 51-year-old founder and CEO of Denver construction company Alvarado sits on the board of four Fortune 500 companies and was the first minority to have an ownership stake in a Major League Baseball team when she bought into the Colorado Rockies 12 years ago.

In 1977, when I first started submitting work proposals, I learned quickly not to sign my full name. Instead I signed my initials. Not only was I a woman, but I was Hispanic. With both factors I was considered too "high risk" to be taken seriously in the construction business.

I grew up with my parents telling me to expect bias regarding my ethnicity and gender but to not ever allow it to be the reason I didn't try to succeed. They taught me that to spark change, I had to do more than merely be a member. I had to be a leader.

What Hispanics have lacked in the past is not talent or ability; it's opportunity--so we must create it. We need to band together as Hispanic-owned firms and put together joint ventures to reinvest back into the community. Soon our legacy should be as great as those of the Rockefellers, the Carnegies, and the Vanderbilts--you'll be seeing the Montoyas, the Esquivels, the Vargases. There cannot just be one or two success stories. We need success en masse if we're going to create an America that is strong and economically vibrant. Hispanics will play an extremely important role in that as our population continues to grow.


Black Entertainment Television

Johnson sold his cable network, BET, to Viacom for $3 billion in 2000. Since then he has become the first African-American owner of an NBA franchise, the Charlotte Bobcats, and is building a national bank catering to blacks.

When it came to selling bet, it was purely a business decision. Some people at the time thought the company should stay in black hands, but keep in mind that BET has always had white investors, so it was never a 100% minority-owned business. I sold it because it was the right time, the market value of media properties was at an unbelievable high based on the Time Warner/AOL deal. [Time Warner is the parent of FSB's publisher.] Besides, there was the fact that there was no African-American company or individual who could pay $3 billion for BET. That really limits your chance to keep it minority-owned. Either you run it forever and pass it on to your kids with no guarantee that they want to run it or will run it as well as you, or you can put it into the hands of a large company like Viacom, which has a commitment to the minority community. So it was an easy decision for me to sell.

One of the biggest problems black businesspeople face is access to capital. It's hard for African Americans to borrow money from banks or raise money from venture capitalists. Part of the problem is that we're still not part of the good-old-boy club. We're kept out of the stream of deals. To rectify this, African Americans should join as many clubs, associations, and organizations as they can. More blacks need to get into the deal flow, and then we'll see more progress.


Vitria Technology

Born and reared in Taiwan, Silicon Valley entrepreneur Chang founded Vitria, a software company that pioneered the concept of application integration for businesses, in 1994.

Does race still matter in business today? I've found that if you've got something good to offer, the smart people are going to listen, and race or ethnicity will not be an issue. You definitely can't blame your failure on ethnicity. You can only blame yourself and what you've brought to the table.

In my years in this business I have noticed that people tend to identify better with people similar to themselves--whether it be in ethnic background, gender, philosophy, or outlook on life. They can look at me and identify me as a Chinese woman. But I've found it's more important that I perceive myself as an inventor and entrepreneur first--before my being Chinese. That gives people something else to identify me with, instead of my race and gender. People have a tremendous amount of potential to get somewhere. They're not limited by environment, they're limited by themselves.



Before becoming the CEO of In-Q-Tel, the CIA's $100 million not-for-profit venture capital fund (his past investments include Language Weaver, a language-translation software company), Louie was a career entrepreneur in the videogame business. The fourth-generation Chinese American started his first company, Spectrum HoloByte, which gave us Tetris, when he was in college. (He sold it to Hasbro for $70 million in 1998.)

I think race still does matter. I think all minority business Owners carry with us, in the back of our heads, the fact that we had to work harder to get into areas where there are not a lot of us. If you look, particularly in the high-tech arena, very few CEOs are minorities unless they have founded their own companies. That's especially true of companies that are staffed by venture capital firms. There are some forward-looking firms, but in general, as a minority, you know that you are not in many VCs' Rolodexes of go-to executives.

I remember my father and mother saying to me, "As an Asian American, you're going to have to do things and overcome things that other people may not." Everybody has gone through it. Wherever you have come from, somewhere along your generational path your relatives or ancestors had to face discrimination, and they overcame it. It is not something that minority entrepreneurs should let stop them. But they have to understand that while we would love to be in a colorblind society, people are not colorblind.

The flip side is, maybe it's okay not to be colorblind. We should celebrate our backgrounds and our cultures. So a colorblind society may be the wrong goal. The better goal may be to have a society where you can celebrate where you've come from, but it's not a disadvantage to anybody. We don't have to ignore what our ancestors had to go through. That's part of our rich heritage. Why would you want to erase that?


Johnson Development Corp.

Trading in his nickname, "Magic," for "Mr. Johnson" around the office, the NBA Hall of Famer runs a $500 million inner-city empire that includes movie theaters, restaurants, athletic clubs, and shopping malls.

Yes, race matters. I've based my business on it. I wanted to show the business world that you can be successful in minority communities. It was uncharted waters and took some convincing. I would drive companies through places like South Central and say, "I want to bring your business here," and they would look at me like I was crazy. I knew it would work, though.

When I was an NBA player, I was always dreaming of business plans. As a black man you have to. Minorities make money, but we don't generate wealth. But a business generates wealth--it is power, it is something that you can pass on to the next generation. That is what is needed in the black community. We can pass on problems--it's about time we passed on wealth. Kids look to ballplayers as idols, but [BET founder] Bob Johnson is my idol. I'm watching his moves.

For me the best part about being a CEO is creating black vice presidents, black presidents, black general managers, black managers. That is the kind of legacy that matters.


Rush Communications

As co-founder of Def Jam Records and founder of Rush Communications and the Hip-Hop Summit Action Network, Simmons introduced rap music and hip-hop culture to mainstream America.

Race matters a great deal in many businesses. In my business, race and culture can be used to your advantage. Hip-hop has transcended race, and the African-American cultural experience has become the leading brand-building experience for all Americans. Decades ago, jazz and blues and rock & roll only became popular when white faces were attached to it. Today the racial tension in this country has lightened so much that now African Americans can carry the torch of African-American ideas. Snoop Dogg is on MTV, not only Eminem.

Limited integration damaged, to a great extent, black economics--the black lawyer, the black doctor, the black drugstore on the corner. Integration made those things less important. At the same time it opened doors for those who could provide insight into this new market. For instance, I moved to Malibu to make movies. [Producers] John Davis and Brian Grazer and Jerry Bruckheimer were open-minded about being my partner. They wanted something that was authentic. They thought I could bring an additional cultural relevance.

We African Americans have a built-in audience. But that's only because race exists. There's still the negatives of race--prejudice and inequality, for instance. The idea of repairing the past is common sense, but there's a racial factor that keeps people from accepting that. So I think race does matter a great deal, but not as much as it has in the past.


Goya Foods

Second-generation CEO Unanue, 78, runs Goya with his family. By tailoring product lines to fit the tastes of Hispanic immigrants, the Unanues have built Goya into the nation's fourth-largest Hispanic-run company.

Race in business is definitely still important. It's what you are. But I think that entrepreneurs of ethnic backgrounds need to try to meld better into the rest of the country. It's important to help yourself and your heritage, but it's equally important to help the country, in the business sense, as well.

About a decade and a half ago we decided to focus on getting our products out into the general market. That's because our core market--Hispanics--was starting to buy more and more in grocery stores as opposed to neighborhood bodegas. But at first the general grocery-store circuit--the A&Ps, the Safeways, etc.--didn't want anything to do with selling to a Hispanic demographic.

It took a while, but finally they realized that Colombians, Puerto Ricans, and Mexicans pay with the green dollar too. We just kept on promoting ourselves not only as the company that markets to Hispanics but as Hispanics also. The other players out there didn't understand our culture or foods. Plus, we knew how to talk to the new, growing demographic--the immigrants. Starting with a Safeway up in Harlem, we began to win them over. Then came A&P. But it was because of our heritage, our ethnicity, that we got the advantage.


Doley Securities

Investment banker Doley, 56, was the first--and is still the only--African American to own a seat on the New York Stock Exchange.

In the '70s I was on Wall Street Week and Louis Rukeyser asked me something like your question. I said, "Race permeates our society, and concern over race is ever present." That was deleted from the transcript of the show. He meant, "Did they try to stop you from buying your seat?" The answer is no. I gave them a check for $90,000, and they sold me the seat.

In 1975 the Archdiocese of New Orleans lent me the capital to go into business. They had a program to assist small and minority-owned businesses. I believe in true economic development. I would not take some of the draconian deals that have since been offered to minorities by white investment banks. They gained capital but lost control. I call them "Al Jolson firms." These social-engineering programs have a short shelf life.

There's a race industry out there that some people make a very good living off of, and that's an industry that should no longer be funded. I think there is a need for diversity. But you should have affirmative action based on socioeconomic differences, not racial differences. I don't have any aversion to those who have benefited from affirmative action. But at some point you must graduate from the affirmative-action benefits program. You have to move on and make room for others.