Magazine industry icon Susan Taylor makes the case for mentorship.

This week on The Urban Business Roundtable, UBR Contributor Renita Young, speaks with youth advocate, author, speaker and magazine industry icon Susan L. Taylor. As Editor-in-Chief Emeritus of Essence Magazine, Taylor is the inspirational role model to several generations of black women and one of the most influential African American women in journalism. She is the first black woman to earn the Henry Johnson Fisher Award from the Magazine Publishers of America and was inducted into the American Society of Magazine Editors Hall of Fame in 2002. Taylor was also named one of 40 “Titans: The Most Powerful African Americans in Business–and How They Shaped Our World” in the 40th Anniversary Issue of Black Enterprise.

Today, as founder of the National CARES Mentoring Movement, Taylor leads an organization dedicated to recruiting and matching mentors to black youth in an effort to help them to succeed academically as well as socially. Taylor speaks with UBR’s Young about her mission to help African American youth and what’s at stake for black business and the nation as a whole.

READ Mentoring Insider: National CARES Mentoring Movement at BlackEnterprise.com

Rabb tells entrepreneurs how to indentify sources of "invisible capital."

Also on this week’s edition of The Urban Business Roundtable, our Executive Producer TaQuoya Kennedy speaks with speaker, writer, researcher and business consultant Chris Rabb, the author of Invisible Capital: How Unseen Forces Shape Entrepreneurial Opportunities. A fellow at Demos, a non-partisan public policy research and advocacy organization based in New York City, Rabb is also a visiting researcher at Princeton University’s Woodrow Wilson School of Public and International Affairs. In 2001, Rabb was awarded an American Marshall Memorial Fellowship by the German Marshall Fund of the U.S.

In addition, every week on UBR, you’ll get motivation and inspiration from author and entrepreneurial icon Farrah Gray, a weekly wrap-up of business news from USA Today Business Correspondent Charisse Jones, our Patient Investor Report from Ariel Investments and key economic intelligence for small business owners from our UBR Economists Derrick Collins and Rasheed Carter.

And of course, I’ll give tips to entrepreneurs who want to reduce energy expenditures, one of the biggest costs of running many small businesses. For more ways to gain energy savings for your business, read “Biz Expert Q&A: Greening Your Business on a Budget” at BlackEnterprise.com.

If you have a question you want answered or a topic you want addressed on The Urban Business Roundtable, send me an e-mail at edmonda@blackenterprise.com or to me at Twitter or Facebook.

Alfred Edmond Jr.

Alfred Edmond Jr. is the editor-in-chief of BlackEnterprise.com and the host of the Urban Business Roundtable, a weekly radio show, sponsored by Ariel Investments, airing CST Wednesdays at 8:30 a.m., Thursdays at 6:30 p.m. and Saturdays at 9:30 a.m. on WVON-AM 1690, the Talk of Chicago. You can also listen live online at WVON.com. Check back each Wednesday for The UBR Morning Post, which features additional resources, advice and information from and about the topics, entrepreneurs and experts featured on the show.

Susan L. Taylor

For 40 years, Essence has celebrated the beauty and potential of African American women. Ed Lewis and Clarence Smith, among the original founders, handled finance and operations and generated sales while Susan Taylor, the face of the publication, maintained the editorial direction after becoming editor-in-chief in 1981. It was a perennial on the BE 100s until Time Inc. acquired a majority interest in 2005.

Ed Lewis

In celebration of our 40th anniversary, Black Enterprise is taking a look both forward and backward at the world of black business. Our list of 40 “Titans: The Most Powerful African Americans in Business–and How They Shaped Our World” recognizes and pays homage to the entrepreneurs and business men and women who paved the way for all of us. (Editor’s note: Essence magazine, founded in May of 1970, is also celebrating a 40th anniversary this year.)

Follow our exclusive 40th anniversary countdown of the most important black business leaders of the four decades since Black Enterprise Magazine was founded in August 1970.

Clarence Smith

These are the men and women who fought the odds, suffered setbacks, regrouped, and eventually emerged victorious. Whether they conducted business from their own offices or the executive suite, their professional excellence, deal-making prowess, and unwavering advocacy converted promise into channels of prosperity and levers of power. These are the pioneers who withstood the elements—institutional racism, resistance from the business establishment, and lack of resources—to plant a flag on their own patch of territory.

These are The Titans: bold leaders who shattered conventional modes of commerce. Because of their contributions over the past 40 years, the world of business has been transformed forever.

Be sure to pick up the commemorative 40th anniversary August 2010 issue of Black Enterprise, which contains the entire Titans list.

“Reshaping our organizational design will help ensure that we continue to evolve with the ever-changing media landscape,” said Linda Johnson Rice, chairman & CEO, in a statement.

The changes are being put into place to continue the 67-year-old company’s “long-term success and ensure [its] future as the entire publishing industry navigates the tumultuous economic climate,” explained Staci R. Collins Jackson, a spokesperson at Johnson.

Jackson says that Johnson has not “laid off” any employees, and that Bryan Monroe is still employed with Johnson as vice president and editorial director for Ebony and Jet magazines, contrary to reports by other news outlets that his position had been eliminated.

Monroe was recruited by Rice in August of 2007 to provide a creative edge to the two magazines, help update the Website, and increase circulation by targeting a younger audience. Since he started, Ebony has launched a redesigned Website with a more contemporary interface. Prior to Johnson, Monroe worked as an assistant vice president of news at Knight Ridder before it was sold to McClatchy Co.

Circulation at Ebony, a monthly general interest magazine, increased by 3.5%, and circulation at Jet, a weekly news magazine covering entertainment, news and lifestyle stories of interest to African Americans, rose 2.2% through the first half of 2008. Their numbers were slightly better than the industry as a whole, which was flat for the same period, according to Neal Lulofs, senior vice president of communications at the Audit Bureau of Circulations.

On the other hand, year-on-year, ad revenue at Ebony fell by 18.8% and by 40.9% at Jet for the fourth quarter of 2008. Among media targeting ethnic populations, Johnson Publishing, the largest black-owned publishing company, is not alone in trying to survive the economic washout. Revenue decreased at Vibe magazine, an urban music publication, by 15.2%, and by 22.2% at Essence, a fashion, beauty, and lifestyle magazine targeting black women.

“The magazine business has been hit pretty hard by this very severe drop-off in ad revenue and difficulty at newsstands in the past year,” says Lucia Moses, a senior editor covering print media at Mediaweek. “Optimists say that year-to-year declines will start to ease in the second half of this year, but let’s face it, nobody really knows. It could get worse before it gets better.”

Indeed, general market publications are slashing jobs by the hundreds. Condé Nast, publisher of Vanity Fair, The New Yorker, and Vogue, has cut 5% of its work force and has shuttered Domino, a three-year-old home magazine, Time Inc. has let go more than 600 people, and Reader’s Digest purged 8% of its work force.

“If you look at the overall industry and what is being done to maintain jobs and maintain the bottom line, what is happening at Ebony and Jet is not unusual,” says Barbara Ciara, president of the National Association of Black Journalists. “We are seeing downsizings, pay freezes, and hiring freezes throughout the industry. We can’t hold up Ebony as the sacred cow that does not have some of the same issues regarding the economy as any other media entity.”

One account from Richard Prince’s Maynard Institute blog Journal-isms reports that Lynn A. Norment, Walter Leavy, and Malcolm West, three of the four managing editors at Ebony and Jet, are accepting buyout offers. Jackson would not confirm or deny that these individuals accepted buyouts, but affirmed that out of the 340 full-time employees, some did opt to participate in a voluntary early retirement package that the company offered in 2008 as one of the early initiatives of the multi-phase reorganization.

Ciara cautions all publishing companies to be strategic about whom they let go. “When you look at those salaries, [editors at the top] are an easy kill if you are looking to eliminate the most money from your budget,” Ciara says. “You have to ask yourself the value that those people bring to the development of your product and whether it is worth it to sacrifice them for plain economic reasons knowing that you still have a publication to put out. I hope that with whatever restructuring is happening that the content will remain a priority.”

Taylor joined Essence in 1970 as a freelance fashion and beauty editor, becoming editor in chief in 1981. She held that title until 2000, when she was promoted to publications director of Essence, which was purchased by Time Inc. (a division of TimeWarner) in 2005 . Most recently, Taylor, 61, had been the magazine’s editorial director and author of it’s “In The Spirit” column.

With Taylor tied to the image of the magazine, her departure marks a significant change for Essence. “The timing would never be right,” says media expert Keith Clinkscales , senior vice president of content development and enterprises of ESPN. “If there was a Mount Rushmore of black media, her face would be right there. But she was smart enough to build a successful brand that can survive and be successful without her.”

For Taylor , the timing was prime for her to pursue her good works. “For me, 37 years in publishing and at a company I love is a hell of a run. With some of the most extraordinary and committed people on the planet, I did what I came to Essence to do. Together we built a brand that is one of the most respected throughout the black world, is the hallmark of excellence and commitment to the community,” says Taylor, who will release her fourth book this month, All About Love (Urban Books).

“The truth we middle-class African Americans must face is that millions of our young are in peril, and the state of emergency is only worsening on our watch. In some cities fewer than 20% of our children are graduating from high school; 58% of black fourth graders are functionally illiterate; failing schools are the pipeline to a for-profit prison system sucking the life out of our communities; murder is the No. 1 cause of death among our boys. These chilling statistics pushed me to create Essence Cares and its parent, the National Cares Mentoring Movement. For me, it’s now or never.”

Troubles at Fisk
Fisk University, founded in 1866 to educate newly freed slaves, is currently facing battles on several fronts. According to GuideStar.org, which tracks the finances of nonprofits, Fisk had operating losses totaling more than $7 million in 2005 and 2006. In addition to this, the university is embroiled in a legal battle over art donated by painter Georgia O’Keeffe, which includes O’Keeffe’s 1927 painting Radiator Building – Night, New York and works by Pablo Picasso, Pierre-Auguste Renoir, Marsden Hartley, Charles Demuth, Paul Cezanne, and Alfred Maurer.

Fisk’s efforts to sell the 101-piece art collection have been snagged by a lawsuit. At press time, Fisk was seeking court approval to sell a 50% stake in the art collection to the Crystal Bridges Museum of American Art for $30 million. The Georgia O’Keeffe Museum in Santa Fe, N.M., is fighting the sale because of O’Keeffe’s wishes that the collection not be sold. According to lawsuit, Fisk is also violating a condition that the collection, which has been in storage since 2005, be actively displayed.

Jay Z Leaves Def Jam President Post
After speculation in the music industry rumor mill, Shawn Carter (Jay-Z) announced on Christmas Eve he would be leaving his post as president of Def Jam Records after three years at the helm. Carter, who said he would be pursuing new ventures, will remain a signed artist under Def Jam’s Roc-A-Fella label, which he co-founded in 1996.

While the music industry overall has reported declining CD sales, Carter remained a top-selling act and is credited with signing one of Def Jam’s most successful artist, R&B singer Rihanna.

When Def Jam founder Russell Simmons departed from the label, many industry insiders feared the worse for the label. And with the high-profile Carter, many are wondering who will fill the post. But D.A. Johnson, an executive director at Malaco Music Group , says as long as the new label leader has a clear vision, Def Jam should continue to flourish.

“It is a plus to have someone so well known in such a position if you want to instantaneously attract the attention of the hottest talent, create the buzz in the industry, and receive enormous press. Everyone wants to be associated with the hot label or the label that appears to have the greatest momentum, but after it is all said and done, the label still has to perform and if it doesn’t, that decision turns into a minus just as quickly,” he notes.

“The success of any record company starts with the vision and leadership capabilities of the record label president which trickles down through the entire system so his or hers influence on sales is utterly monumental.”

Carter already has his hands in several outside ventures, including his chain of sports lounges, 40/40, and part ownership of the New Jersey Nets. The latest speculation is that he may join forces with Apple Inc. to launch another record label.

But on Jan. 4, Time Inc., the magazine publishing arm of media giant Time Warner, announced it will acquire the remaining 51% of Essence Communications Partners . When the sale is approved by federal regulators, ECP (No. 30 on the BE INDUSTRIAL/SERVICE 100 list with $136.2 million in sales) will leave the ranks of the BE 100S for good. Financial terms of the deal were not disclosed by ECP or Time Warner but it has been reported that the transaction is valued at roughly $170 million.

The acquisition, announced as Essence approaches its 35th anniversary in May 2005, ends five years of speculation. In 2000, when the media giant acquired 49% of the company, industry observers projected it would buy the rest. To some, the 2000 transaction was viewed as the takeover of yet another black institution—especially since it was completed on the heels of Viacom’s $3.9 billion acquisition of Black Entertainment Television and after a decade of mergers and acquisitions that virtually wiped out African American ownership within the black haircare industry. The deal also decimates the number of major black-owned media companies: ECP was one of a triumvirate of national black publishing companies that includes Chicago-based Johnson Publishing Co. (No. 4 on the 2004 BE INDUSTRIAL/SERVICE 100 list with $488.45 million in gross sales), publishers of Ebony and Jet, and Earl G. Graves Ltd., parent of this publication.

The story of how Essence became part of Time Inc. is one of high ambitions to forge an international empire and an internal fight for the soul of an institution. The overriding question is whether black women will lose a strong voice that spoke to their aspirations and has faithfully served as the bully pulpit in the fight against racism, sexism, and other barriers to their ascension.

THE LOSS OF A FRIEND
When the acquisition was announced, Chairman and CEO Ed Lewis, who will turn 65 this year, said in a statement: “Time Inc. has distinguished itself by recognizing the impact of African Americans on a global scale and their influence within the cultural landscape. Thanks to our partnership with Time Inc., Essence Communications is a stronger, more competitive publisher.”

For Time Inc., the transaction enables it to expand its portfolio of publications and make inroads into the lucrative black consumer market. “[Essence and Suede, both targeted to African American women], are an incredible group of magazines,” says Time Inc. Executive Vice President Nora McAniff, who oversees all of the company’s women’s magazines. “The one thing that’s very unique about our Time Inc. brand is that we have not only huge titles but we also have diversity. So it’s a great fit and a great complement to our brand.”

But many did not view the transaction in such rosy terms. The announcement of the acquisition ripped through quarters of the African American community like a shockwave. In fact, a number of black women were crushed, responding to the news as if they had lost a dear friend. A blackenterprise.com poll found that 34% of respondents felt that ECP had “sold out” vs. 14% who felt the transaction made good business sense. Another 46% of those who replied were concerned with how the new ownership structure would affect the magazine and other events. For instance, Leslie Mays, president of the National Coalition of 100 Black Women and an Essence subscriber, found it “extremely disappointing on a personal level” to learn ECP surrendered control and ownership of the publication. “It enables Time to reach an influential market segment—black women—directing our dollars away from reinvestment in our community and businesses and into the deep pockets of another multinational corporation,” she asserts. “I also have a worry that such a deal almost certainly guarantees loss of editorial control and content on subjects of interest and concern to black women as a primary audience. Time Inc.’s purchase of Essence seems to be somewhat incongruent with the stated aspirations and goals of its parent company’s commitment.”

Ken Smikle, president of Chicago-based Target Market News, a market research firm that tracks consumer trends, approved of the deal but explained that the Essence sale hit a raw nerve because it represented the loss of one of “our cultural guideposts” like Motown, BET, and black haircare companies. “These are institutions that we share a common experience with. They are woven into our everyday life,” says Smikle. “We feel that we lost something because these institutions and their ownership by extension represent a part of us.”

Adds Marcia Gillespie, who served as editor-in-chief of Essence from 1971 to 1980: “As a people in the 1970s, we were searching to own and control our own businesses. It was about black entrepreneurship and all that implies so [the sale] is counter to that. I have mixed feelings about the sale because it signals that we are headed in a different direction than what our dream was about. We lost a piece of our history.”

Others like BET CEO and founder Robert L. Johnson size up the deal as part of an evolutionary model of the black media business—a paradigm shift that includes deep-pocketed corporate partners and, in some cases, acquirers. “The only reason Time Warner would want to buy [Essence] is because of the strength and power of Essence’s voice that has been built up over 30-plus years that Ed ran the business,” he says. “It’s just a sheer economic fact of life that over time, as black companies become very valuable for their brand and market penetration, it’s going to be very difficult for African American [potential buyers] to offer the kind of financial transaction that’s going to maximize shareholder value for the seller.”

Smikle, too, believes the deal is part of Essence’s evolution as a company. “Essence is not Johnson Publishing or BLACK ENTERPRISE,” he says. “It’s not family-owned and there wasn’t an heir apparent. The comparisons are inaccurate at best and unfair at worse.”

However, the founder of one BE 100S company with a major multinational corporate partner managed to keep the institution in black hands. When Thomas J. Burrell decided to step down from his post as chairman and CEO of his Chicago-based firm, Burrell Communications Group (No. 3 on the BE ADVERTISING list with $190 million in billings), he carefully crafted a succession plan that gave his three top managers an even share of the 51% majority ownership the firm retained after its merger with Publicis Groupe. The French global advertising and communications agency still retains its 49% minority stake.

Says Rev. Al Sharpton, president of the National Action Network, a New York-based activist group, “in this era of megamergers, we must be careful as we expand our resources that we do not eradicate black institutions with an independent voice. If we are not cautious, we will become a community with no independent institutions to combat racism and discrimination as well as interpret our culture and tell our story.”

The former presidential candidate says he met with Lewis shortly after the announcement of the sale. Sharpton said Lewis told him that he sold Essence to Time Inc., in part, “to do what Bob Johnson did”—use the proceeds, clout, and connections from his corporate dealings to build other black institutions. But Sharpton counters that there are a number of African Americans in the financial community with the ability to raise the capital to purchase Essence and, at the same time, maintain black ownership. He argues that black entrepreneur
s and financiers should have at least been given the option to make a bid. “Although blacks may have not been able to amass the $3.9 billion it took to buy BET, they could have put together the funds needed to purchase Essence,” Sharpton asserts. “I told them that we should bring these opportunities to the dinner table [before bringing them to] the neighbors first, so we can keep things in the family.”

Sharpton says that the preservation of black institutions is such a pressing issue that he intends to call an emergency summit to assemble black entrepreneurs and financiers to develop strategies and create funds that would have the available capital to acquire black-owned businesses.

Since its inception, the Essence that was co-founded by Lewis and his partner, Clarence O. Smith (along with Cecil Hollingsworth and Johnathan Blount), was rooted in the same basic editorial and business philosophy as the other two top African American publishing companies—one of black independence and empowerment. In fact, when Essence forged the alliance with Time in 2000, Lewis asserted the company would maintain its commitment to black ownership. As the partnership with Time was set in motion, however, it became clear that Essence would eventually surrender control.

INTERNAL STRUGGLES
When ECP and Time became partners five years ago, the merger was considered an example of a workable partnership between a black entrepreneurial-based firm and a corporate giant. In fact,

Lewis had said that Essence would benefit from a reduction in production costs, increased exposure, and access to myriad divisions under the Time Warner umbrella, which includes titles such as Money, Fortune, People, and InStyle.

But within two years, the alliance created internal strife within the corridors of ECP. A number of Essence employees, in areas such as sales, marketing and research, were replaced with Time Inc. employees in what had been characterized as housecleaning after the 2001 Essence Music Festival. Clearly, the most damaging rift, inside sources told BE, was the one between the two founders on strategic and management issues. Smith, who had served as a CEO of Essence Entertainment and oversaw the music festival, awards show and website, had become increasingly resistant to the influence of Time Warner. In 2002, Smith resigned, but sources said that he was removed as part of “the slow takeover of Essence” that would take place within three years. Smith’s departure brought to a close one of the longest-running entrepreneurial partnerships in black business. (See “Essence of a Breakup” in the blackenterprise.com archives.) Smith declined to comment for this article.

A CHANGE IN MANAGEMENT
Under the new structure, Lewis will serve as nonexecutive chairman. Group Publisher Michelle Ebanks, a Time Inc. veteran, will take the helm of ECP as its president. Editorial Director Susan Taylor, the face of Essence, will continue in her role as chief visionary for the magazine. While both Lewis and Ebanks declined to comment for this article, an Essence spokesperson told BE that “African American women should maintain their confidence that Essence will remain true to them because there will be no change in the editorial voice of the magazine. Essence will remain focused on our mission to inspire and empower African American women.”

Despite the top management changes at Essence, Time Inc.’s McAniff says all parties will basically continue to perform the same duties. “[Ebanks, who came to Essence from Time Warner in 2001], really was running the day-to-day as it was,” she maintains. “So we’re just making it more official. [Lewis] couldn’t have the title of executive CEO anymore because Time Inc. has a CEO. But he’s very much going to be a presence at the [Essence Music Festival].” In his capacity, McAniff, says Lewis will continue to promote the Essence brand to advertisers and professional organizations at industry and marketing events.

While concerns abound about the shift in the editorial vision, McAniff assures that Essence and Suede magazine readers as well as participants of Essence events won’t notice any differences, insisting that “all of our magazines have to maintain [their] staffs to do their own thing.”

Some longtime readers of Essence, however, remain skeptical. “I think it matters in the sense that Essence is no longer black-owned, which is one of the appeals of it,” says Angela Polk, a 32-year-old attorney from Bowie, Maryland, and Essence subscriber. “I won’t know until new issues come out whether the direction of the magazine has changed.”

One area where the synergy between Time Inc.’s various titles will be evident is in the advertising arena. McAniff says Time often sells ads as packages in multiple magazines and plans to continue that practice with Essence and Suede. For example, a company could purchase advertisements in both Suede and InStyle and, as a result, increase the new division’s revenue stream.

Even if the deal brings no immediate changes, it signals the end of another African American-controlled institution. Says Richard Prince, a media columnist for the Robert C. Maynard Institute for Journalism Education: “Now anytime Essence does something that people are suspicious of, they’ll probably consider blaming it on its ownership by Time.”

But BET’s Johnson believes the thrust of Essence will stay intact. “[You] don’t buy a strong brand, trash it, and then try to convince customers to come back, ” he says. “[You] say, ‘Here’s a strong brand. Let’s do everything we can to make it better.’ ”

Maintains Gillespie: “When we start talking about media, we are talking about the power of information. Those who control the messaging have enormous clout. I would hope that the central mission of the magazine would not be tampered with. I certainly know that as long as Susan Taylor is there, that will be so.”

For now, the readers of Essence are waiting to see if the sale of their magazine is tantamount to the loss of their voice.
—Additional reporting by Tamara Holmes and Sakina Spruell

This year was different though. The participants of the mammoth event may have been oblivious to it, but a major behind-the-scenes player was missing. Absent was Clarence O. Smith, the visionary who gave birth to the festival eight years ago. He was the smooth-talking rainmaker who held myriad meetings with the top city officials and assembled a relentless sales force to snare millions in sponsorship dollars. And although the entrepreneur was key in organizing this year’s extravaganza — the most successful ever with an attendance of 223,000 — he was nowhere in sight.

Several days before the event, Smith, the man who helped build Essence into one of black America’s most recognized brands, became a man without a company. At the New York City headquarters of Essence Communications Partners (No. 25 on the BE INDUSTRIAL/SERVICE 100 list with gross sales of $144 million), Smith signed documents severing ties with a company he spent half his lifetime building. In effect, he was granting a divorce to Chairman and CEO Edward T. Lewis, his partner of 33 years, in what was considered one of the longest-running marriages in black business.

The press release issued by the company on June 28 stated that the 67-year-old “had been planning his resignation for some time and is currently making arrangements to pursue existing and new media projects outside of Essence.” But BE learned that Smith did not leave willingly, nor was his split with the company amicable. Inside sources say Smith was forced out of the company following a board vote. In an interview with BE, Lewis says: “We wanted him to retire, but he decided to resign. That’s all I can say on the matter.”

The move represents the latest jolt to the leading media entity targeted to black women since it entered into a historic partnership with Time Inc., the publishing arm of AOL Time Warner. When Smith and Lewis closed the deal in 2000, Time Inc. walked away with a 49% ownership stake, while Essence gained the opportunity to align itself with a multimedia octopus that has tentacles in publishing, cable, and interactive media. With the capital and resources to expand the brand, the two partners asserted at the time that Essence could be a mainstream media powerhouse.

But the deal is proving to exemplify the challenges inherent in a strategic alliance between a revered African American institution and a sprawling corporate leviathan. Over the past two years, Essence has benefited from the partnership through a reduction in production costs, increased exposure, and counsel from the editorial and business staffs of Fortune, Money, America Online, and other entities under the AOL Time Warner umbrella. But the joint venture has also fueled management turmoil, cultural conflicts, and, as evidenced by Smith’s exit, boardroom intrigue.

Moreover, inside sources say Smith’s removal is part of “the slow takeover of Essence” by AOL Time Warner, an action that will be complete within three years when Lewis turns 65 — an age when many CEOs check out. The recent action further compounds the sentiment of a skeptical and protective segment of the black community that believes it will lose yet another institution. There was a similar outcry when Berry Gordy’s Motown was acquired in 1988 by a white investment firm, and when Johnson Products, the legendary Chicago-based haircare products company known for its Afro Sheen and Ultra Sheen brands, was sold to the majority-owned cosmetics and pharmaceuticals conglomerate Ivax Corp. in 1993. After all, it took a decade of mergers and acquisitions for African Americans to cede their dominance of the black haircare market. (See “Bad Hair Days,” November 2000.)

As a media property, Essence, many believe, holds a public trust — one that is responsible for preserving the image and voice of black women. “When these large companies ‘buy’ us, there’s money on the table and perhaps an expansion on the business side, but the community factor is lost,” says Hermene Hartman, publisher of N’Digo, a black lifestyle magazine in Chicago. “That’s just part of the hazard when these large companies buy our companies — they change them. And I’m sure that’s a factor at work here.”

Lewis calls such allegations “poppycock.” Says the soft-spoken chief executive: “Ever since we did the deal, people have been saying that we’ve been acquired and I sold out. Time Inc. made an investment that will help us expand in our space.”

BE interviewed members of Essence’s current management as well as corporate insiders, former employees, and industry observers — some who requested anonymity — to find out the impact the AOL Time Warner-Essence joint venture may have on the management, marketing, and mission of an African American business icon. Smith, however, declined to comment for this article.

THE END OF AN ERA
Smith’s departure — which the company admits has been in the works “for some time” — ends what was once considered the most successful partnership in black business. Lewis and Smith were recently hailed in BE’s June 2002 issue as “Marathon Men,” chief executives who have run the five companies that have been listed on the BE 100S since its inception 30 years ago.

But sources say the merger further exacerbated conflicts between the two partners on strategic and management issues. For instance, Smith became increasingly resistant to AOL Time Warner’s influence on the organization. The Lewis-Smith split became so nasty it was prominently featured in an item written by popular New York Post gossip columnist Cindy Adams — a rare and inauspicious occasion for black business. She wrote that “bad blood is coagulating at Essence” and that Smith had been “beheaded.” She further alleged that the joint venture “may have been the spark but the triggerman was Lewis.”

Despite the turbulence, Essence Communications Partners remains a BE 100S company. It has retained its 51% black ownership status through Essence Communications Holdings (ECH). African American shareholders include top executives Lewis and Editorial Director Susan Taylor; board members Camille Cosby, wife of famed entertainer Bill Cosby; financier J. Bruce Llewellyn, CEO of Philadelphia Coca-Cola Bottling Co. (No. 3 on the 2002 BE INDUSTRIAL/SERVICE 100 list with $419 million in gross sales); and venture capitalist Frank Savage, former chairman of Alliance Capital Management International. Another major shareholder is John H. Johnson, chairman of Johnson Publishing Co. Inc., publisher of Ebony and Jet magazines (No. 4 on the BE INDUSTRIAL/SERVICE 100 list with gross sales of $412 million). Smith’s shares have been acquired by ECH and redistributed among its shareholders.

Smith, who Lewis and others have credited as being integral in generating millions of dollars in revenue through ad sales, developing the entertainment division, and building the Essence brand, will now be recognized as president emeritus and co-founder. Smith’s former partner will assume his duties — he was CEO of Essence Entertainment at the time of his resignation — and will also now oversee the Essence Music Festival, the Essence Awards television program, and the essence.com Website.

CHANGES IN MANAGEMENT
Smith’s exit is the latest development in a series of recent changes. Last July, Target Market News, a Chicago-based newsletter that covers African American media and marketing, reported that bed-and-breakfast and restaurant owner Monique Greenwood was replaced by Diane Weathers, a 30-year magazine publishing veteran, amid rumors of “friction” between Greenwood and Taylor. As editorial d
irector, Taylor, one of the company’s strongest brands, controls the overall vision and direction of the publication. Since the management change, “In The Spirit,” Taylor’s monthly column of inspiration, has been moved from the middle of the magazine to a page before the table of contents, signifying her long association with the magazine and her connection with its readers.

Although the revamped editorial management team was not associated with the joint venture, sources say AOL Time Warner did have an influence on business personnel adjustments. Over the past year, a number of Essence employees in sales, marketing, and research have been laid off — a sort of housecleaning after last year’s festival — and most of them were replaced with Time Inc-ers. The most prominent appointment was the instituting of Michelle Ebanks as group publisher in April 2001. She comes to the position with general-market experience and impressive credentials over her six-year tenure with Time Inc. Ebanks served as a vice president for AOL Time Warner’s publishing division, working closely with then-CEO Don Logan, the chief negotiator on the partnership on business and strategic initiatives. She also served as CEO and president of Mutual Funds magazine and as general manager of Money magazine. Reporting to Lewis, Ebanks maintains “a strategic leadership role overseeing and expanding the publishing franchise.”

Lewis says, “Time Warner is not involved in day-to-day management decisions, just long-term strategic issues as investors and board members.” The identification of such new hires, he says, is simply a function of “getting the most talented executives.”

Keith Clinkscales, CEO of Vanguarde Media, the fledgling publisher of Heart & Soul and Honey magazines, two titles that compete with Essence, says that such criticisms leveled at the partnership and the subsequent management changes are without merit. “If you say only black people should run black magazines then you have to say the contrary — only white people can run white publications. There are more mainstream magazines than there will ever be black magazines so that thinking would be detrimental in the long run,” he says. “Owner[ship] and editorial [leadership are] separate. Editorial [leadership] should be done by people who have an affinity and passion for the audience they are dealing with. Now the owners don’t have to do that. In an ideal world, [it would be great] to have a black-owned and black-edited magazine speaking to a black audience. But that model is tough to follow in today’s environment.”

One ex-employee of Essence holds a more practical view of the round of dismissals. “They’re basically doing what any other corporation does when new management comes into place,” says LaJeanna McKnight, who worked as merchandising manager for Essence until last December, “They want to bring in people they have relationships with.” McKnight was identified as one of Ad Age’s Women To Watch in 2000.

But some believe new management will translate into a watered-down editorial focus. In Columbia University’s New York Review of Magazines, Newsday Assistant Managing Editor and columnist Les Payne said: “You cannot go to bed with an 800-pound gorilla and not expect things to change. At the very least the bed will tilt.”

Others share that view. “I’ve seen editorial changes in Essence; there’s more fashion in it, less human interest, and fewer compelling stories on black women’s issues,” says N’Digo’s Hartman, who has always been a fan of the positive images reflected in Essence’s editorial and advertising. Ebanks says Essence will continue to “do what we have been doing, which is speaking directly to black women.”

Operating in one of the toughest environments for magazines, Essence is more than holding its own. It faces competition from such publications as Heart & Soul, Honey, and O, the ultra-successful joint venture between the Hearst Magazine Group and Oprah Winfrey’s Harpo Inc. (No. 9 on the BE INDUSTRIAL/SERVICE 100 list with gross sales of $285 million). Asserts Ebanks: “Nearly 15% of all black women subscribe to Essence [and] one in three African American women read [it]. It is unheard of to have the level of penetration Essence has.”

WILL ESSENCE STAY BLACK-OWNED?
Lewis, Taylor, and Ebanks are focusing on how to further leverage the relationship with AOL Time Warner, which just a couple of months ago was dealing with its own management turmoil as well as a flagging stock price. In fact, Lewis says the company will continue to benefit from its relationship with AOL Time Warner’s Richard D. Parsons, the first African American CEO of the media monolith, and Logan, who recently became chairman of the newly created Media and Communications Group when COO Robert Pittman was ousted. Besides achieving critical cost savings in such areas as printing and production, Lewis seeks to expand the franchise through the acquisition of new publications or related businesses. “We’re in a virtual candy store,” he quips. “We haven’t taken full advantage of it yet.”

Will Essence follow the path of BET Holdings, which became a unit of Viacom when it was acquired for $3 billion two years ago? “I don’t know what’s going to happen in the future,” asserts Lewis. “Right now, I’m focusing on how we can expand this company.”

In the end, it comes down to one question: Can a black company coexist with its corporate partner and stay true to its mission? In the coming years, Essence’s continuing drama may provide the answer.

– Additional reporting by Sonia Alleyne, Alan Hughes, Matthew S. Scott & Sakina P. Spruell

The Time for Essence

• 1969: Edward Lewis, Clarence Smith, Cecil Hollingsworth, and Jonathan Blount form the Hollingsworth Group, the parent company of Essence magazine.
• 1970: The first issue hits newsstands in May. The press run was for 250,000 copies.
• 1971: Blount and Hollingsworth leave Essence after a dispute.
• 1973: Essence Communications appears on the first BE 100S list at No. 63 with gross sales of $2 million.
• 1976: Blount and Hollingsworth sue to regain control of the company.
• 1978: Blount and Hollingsworth’s case is thrown out of court.
• 1981: Susan Taylor, the magazine’s fashion editor, is named editor-in-chief. She becomes the face and voice of the magazine for the next 20 years.
• 1984: Smith and Lewis start Essence By Mail, which puts the company into the mail-order retail business. Essence launches a nationally syndicated TV show.
• 1987: The company holds the first Essence Achievement Awards, an annual televised salute to the subjects who have appeared in the magazine.
• 1995: Essence launches the highly successful music festival, a three-day event that this year drew more than 200,000 attendees.
• 1996: Smith and Lewis develop Essence Entertainment, the division that houses the company’s music festival, awards show, and music label. Essence also teams with Latin publisher Christy Haubegger to launch Latina, a bilingual, women’s lifestyle publication.
• 2000: Smith and Lewis enter into a deal with AOL Time Warner, giving it 49% ownership of Essence Communications.
• 2001: Michelle Ebanks, a former Time Inc. vice president, becomes group publisher of Essence magazine. Smith assumes the role of CEO of Essence Entertainment.
• 2002: Smith resigns from Essence, ending one of the longest marriages in b
  lack business.

 

Arguably, Being In The Right Place At The Right time with the right idea played a role in helping these five BE 100s businesses get established. But chance does not a successful business or lasting prosperity make; it takes faith, determination, patience, perseverance and just plain guts to keep a business going when all others have given up.

Two of these five companies, Johnson Publishing Co. and H.J. Russell &: Co., were firmly established and enjoying some measure of success when the first list of the top 100 black-owned businesses, then called the BLACK ENTERPRISE 100, was compiled and published in June 1973. The other three, including Earl G. Graves Publishing Co. Inc. (BE), Essence Communications Inc. and Conyers Riverside Ford, were all launched in 1970 at a time when the clarion call was for black America to get a piece of the economic pie.

Said Pat Patterson, the magazine’s first editor, on the 20th anniversary of the founding of the BE 100s: “It was a brilliant stroke. Not only did it give the magazine national credence, but it gave added recognition to those black businesses that were outstanding in the country. Now, it’s the standard by which you can judge the progress of black business in this country.”

Many businesses have made the BE 100s over the 25-year history of the list. Several companies currently on the BE 100s were also featured on the first list, but only these five companies and their six chief executives have been on every one published since 1973. For that, we salute these Marathon Men, who have paved roads where others feared to tread, with the 1997 A.G. Gaston Lifetime Achievement Award, presented at the second annual Black Enterprise/NationsBank Entrepreneurs Conference at Walt Disney World Resort in Orlando, Florida.

Now, at the dawn of a new century, their outlook for the future bodes well. All have expanded their companies from its core to new markets or to related lines of business. They are now faced with the challenge of passing their businesses on. For some, a gradual passing of the torch and day-to-day responsibilities to their heirs is well under way. Others are relying on key company executives to help run the business while their off-spring get up to speed. Some are going global; still others may go public. All say they don’t plan on ever selling their business– too much blood, too much sweat, and too many years have gone into them.

John H. Johnson has run this race before, only to come around and run it again. The rest intend to do similarly. But then, the race is not only to the swiftest or mightiest, but to him that endureth over time.

Success comes to the ordinary individual, even to ordinary ability. But triumph over the disasters and fears of mortal life is only granted to great men… You may be a great man, but if Fortune gives you no chance to demonstrate your merit, how am I to know your greatness?. . . No one knows what he can accomplish except by trying.
–Seneca, On Providence, IV

JOHN H. JOHNSON, CEO JOHNSON PUBLISHING CO.
VITAL STATISTICS
Headquarters: Chicago, IL
Business interests: Publishing, cosmetics, hair care, broadcasting
Key executives: Linda Johnson Rice, president; Eunice Johnson, secretary/treasurer

Johnson Publishing Co. Founder John H. Johnson

When John H. Johnson started the Negro Digest 5 5 years ago, it was the predecessor of what would become,,Ebony magazine, which would spawn Jet. and this would lead to other, now defunct spin-offs. But those failures would lead to his most recent successes–Ebony Man, and Ebony South Africa, which marked the company’s foray into international publishing. Along the way, Johnson bought and sold three ratio stations, started a book publishing division and produced the former syndicated television show Ebony/Jet Showcase, and now produces the annual American Black Achievement Awards for television sign, which first aired in 1978. Johnson also created two beauty care lines–Supreme Beauty Products and the world-renown Fashion Fair Cosmetics.

While he is loath to consider himself an old man at 79, Johnson had run the gauntlet for some 30 years before the first BE 100s list was ever published. When it was, he was listed second only to Motown Industries. For that, he’s the veteran iron man in black-owned business–always fighting, always finishing at the top among the BE 100s companies. But like most, he’s faced his share of hurdles.
“The first 25 years were difficult, trying to get circulation and to break through in advertising to get large companies to recognize that black consumers had money and would respond to advertising directed to them,” Johnson says. “The first 20 years or so in business, we couldn’t get a bank loan. Even the largest businesses in the world need bank loans at some time or must have some other way to access capital.”

The second 25 years have been easier. Johnson has seen the company mature, circulation double, start new businesses and change the method by which its flagship properties are handled. “You have to meet the new challenges [of the 21st century], so in 1993, we took all three magazines–Ebony, Ebony Man and Jet–desk-top. Now we can send them to the printer via e-mail, and in South Africa, it’s the same thing,” explains Johnson.

The legendary publisher says the hurdle for black businesses in the next 25 years will continue to be the same–”money, money, money,” he scoffs. “But if you have the staying power and wherewithal, that is assuming you have a good product and market to sell to, you’ll be successful.” Johnson’s mission over these next years is to see the company survive and grow. To do so, he says that he will take advantage of all new opportunities and embrace new technology to get there. “Never say never about new things,” advises the venerable publisher.

Johnson has no plans to retire. “I enjoy myself, I don’t work. When you love something, it’s not work. I don’t know anything that gives me the same amount of pleasure.” But he began putting a succession plan in place when he brought daughter Linda Johnson Rice on board. “I see her playing an increasing role in the management of the company and myself, a lesser role, but never disassociated,” says Johnson of his daughter who is now president of the company. ” Parents never give up their children, and this is my child,” he adds.

He also has no plans to sell his company or take it public. And he says his daughter couldn’t agree more. “I could sell it and get a lot of cash, but I don’t see that I could do anything else that would bring me as much fulfillment as this. I’ve spent 55 ears being my own boss; I’m too old to have another.

“If you go public, stockholders, the lard of directors, SEC (Securities Exchange Commission) are all your bosses and you’ve got to listen to them,” he says. “We only have three board members: Linda, her mother [Eunice Johnson] and I. Linda will succeed me. Even now, I don’t do anything that she doesn’t agree on, and she me. There’s a mutual love and respect, so it’s s a joint veture now.”

HERMAN J. RUSSELL, CEO H.J. RUSSELL & CO.
VITAL STATISTICS
Headquarters: Atlanta, GA
Business interests: Management and development of real estate, construction and airport concessions
Key executives: R.K. Sehgal, CEO and vice chairman; H. Jerome Russell, president and COO; Michael Russell, vice presiden
t, construction division; Joia Johnson, vice president and general counsel

H.J. Russell Construction Co. Founder Herman Russell

Herman Russell says he started on the entrepreneurial path as an eight- year-old shining shoes. He had his own paper route by 10 and bought his first piece of real estate for $125 at 16. That real estate deal became the base of the H.J. Russell Construction Co., buying and developing real estate and working as a major minority contractor on most projects built south of the Mason-Dixon line. Post-’60s and after the hotbeds of the riots, there were 10 construction firms on the original BE 100s list. Forty years later, Russell’s company is the only one left from the original list, one of the few black-owned construction firms on the current list, and the largest minority-owned general contractor in the U.S.

“You must make a decision early about what you want in life,” says Russell, whose dad taught him to save something out of everything he made. “The competition is keener now and you have more qualified people competing for the jobs,” he explains.

Russell says the biggest hurdle to staying in his line of business, ironically, has not been capital. but training and developing the people he needed for the jobs, and then getting them to stick around. “Most people are not willing to wait or to pay the price as an individual to develop. When you do, you have more to bring to the table,” he explains.

Russell has spent the time developing both his company and his craft. But even when the first list was launched, Russell Construction was a seasoned business. Many of Atlanta’s neighborhoods have residential homes and commercial buildings that Herman Russell has worked on. And when it came time to build a new municipal airport under then first black mayor, Maynard Jackson, Russell, a neighbor, was poised and primed for the roughly $19 million job. He was also a primary subcontractor on projects during last summer’s Olympics in Atlanta.

It’s these blue-collar jobs that proved to be the foundation of black middle-class America and the early source of black economic progress. Russell says that emphasis is now missing–to African Americans’ detriment. “There’s a generation now that when they were coming along, we didn’t emphasize the trades, only white-collar jobs, and we missed the boat. You don’t have to have a white-collar job to be successful in life,” he adds. “When I walk out on a construction job and it’s 25% Latin American working all phases of the job, I’m concerned. I remember when I was serving my apprenticeship, most were black Americans, but we don’t see that today.”

Going forward, Russell has tried to prepare his children, H. Jerome Russell, president/chief operating officer and head of he housing and property management division, and Michael Russell, vice president and manager of the construction division, to take over the company’s reigns. But he says they’re not quite ready to take on the challenges of a firm with international projects and consulting on many more. To wit he’s brought in an outsider to get the firm over his progeny’s learning curve. In November 1996, Russell appointed R.K. Sehgal chief executive officer and vice chairman to report to him as chairman of the board.

“They’re working me harder, and there’s more to do now with the new CEO getting lots of my input, but as the months go by, I’m hoping to go from 14- to eight-hour days and have more time for myself,” Russell says.

Like his CEO/chairman counterparts, Russell says he wouldn’t sell his company outright, but confesses that one day, it will go public, probably soon. “I’m almost sure the family will keep the majority share of it, but we’ll probably go public within five years.” With its diversified holdings, including construction and management, property and real estate management and development, and airport concessions, it would make an attractive IPO. But whatever happens, Russell says “whoever becomes the next CEO must be prepared to take on and carry on the business.”

EDWARD LEWIS, CEO, PUBLISHER CLARENCE SMITH, PRESIDENT ESSENCE COMMUNICATIONS INC.
VITAL STATISTICS
Headquarters: New York, NY
Business interests: Publishing, licensing, entertainment
Key executives: Susan L. Taylor, editor-in-chief and senior VP; Elaine P. Williams, vice president and director of human resources; Harry P. Dedyo, CFO and vice president

When the Hollingsworth Group (now Essence Communications Inc.) launched its magazine for black women in May 1970 with a portrait-sized close-up of a brown-skinned woman wearing a high, round `fro, nothing could have shaken the publishing world and white and black America more. Twenty- sever years, two less partners and four editors-in-chief later, co- founders Edward Lewis and Clarence Smith have pushed Essence Communications Inc. (ECI) from a magazine to a diversified brand name synonymous with African American womanhood.

On the publishing front, there’s its flagship property, Essence magazine; then there’s Income Opportunities, a general market magazine targeted to start-up businesses; and two years ago, it started Latina, a magazine aimed at the Hispanic women’s market. There’s s a licensing c division with a collection of items from eyewear and hosiery to children’s books and a mail-order catalog. Finally, there’s its entertainment division, which once produced a weekly syndicated television program and now focuses on an annual awards show and three- day festival.

Success has been manifest, but not without a tough start. “We thought we’d be a lot further,” says Smith, president of ECI. “We didn’t anticipate how milch resistance there would be by marketers to an African American women’s magazine,” he says. Just getting out of the starting block posed challenges. “We had a business plan that called for $1.5 million in capital; we opened with $130,000,” adds CEO Lewis.

Smith says they underestimated the struggle it would take for not only cash and advertisers, but even newsstand space. “We also had to overcome the inexperience of not running our own businesses before. We learned that we could do with less,” explains Lewis.

Start-up pains and racism aside, the key to the company’s growth has been its diversification, pushing the balance sheet upwards. But to remain successful into the next decade, the company “must be leaner, nimble and able to take advantage of opportunities globally to continue to grow,” says Lewis. “There will be more opportunities to expand this brand, especially in West and South Africa, and this will continue to be the direction the company heads in,” adds Smith.

To that end, ECI still faces a number of challenges, namely financing for future projects. “There are absolutely more avenues, but it is still difficult for small and minority businesses to get the capital they need. And with the mergers taking place in banking, these banks are not geared to small business; we’re going to have to seek out other banks and venture capitalists for money,” Lewis says. While neither partner has plans to sell the company, neither would rule out the option. “Anything’s possible,” adds Lewis, “but we have to see how the world is conducting business and be mindful of our shareholders’ interests.”

The other cornerstone is developing the company’s next generation of leaders. While neither they have a suc
cession plan, Lewis has no children and Smith’s two sons are not involved in the day-to-day affairs of the company. But that has not stopped them from tapping the talent of the company’s limited partners and employees, most notably, its highly recognized and respected editor-in-chief, Susan L. Taylor.

Lewis says he doesn’t see himself running the magazine daily in 25 years. “We intend to encourage others and prepare middle managers to move forward and run this business. Black women will continue to be in the forefront.”

Adds Smith: “I think we have one of the best-known brands in the world and the future for our shareholders, associates and employees is very, very good.”

NATHAN G. CONYERS, PRESIDENT CONYERS RIVERSIDE FORD INC.
VITAL STATISTICS
Headquarters: Detroit, MI
Business interests: Ford auto dealership
Key executives: Steven Conyers, general sales manager; Nancy Conyers, business managers; Peter Conyers, business manager

When auto industry executives at Ford Motor Co. in Detroit went looking for a few good men to start a dealership to quell an economically disenfranchised, predominantly black inner-city, they found one in the Conyers family. The patriarch, John Sr., had spent his working life along the Chrysler assembly line, and his successful lawyer sons, John Jr. and Nathan, were ready to plunk down the needed capital to get the cars rolling.

But willingness isn’t enough. When Conyers Ford appeared on the original BE 100, comprised of both industrial service companies and a auto dealers, it was one of 13 dealerships. Today, it’s the only one left from the first list, making it the oldest black-owned auto dealership in the country. It has been a school of hard knocks, pings and repairs, but the engine is still running strong.

Conyers, who assumed responsibility for the dealership a coin toss with his brother John Jr., the congressman, says there meets that will give a business, better opportunities for success: location, capitalization, an understanding of the business and a commitment to becoming part of the community you serve.

“For many black dealers, the location was not viable and the auto manufacturers put them in areas that they couldn’t put whites,” he says of the black dealers lost over the years. “It was a problem to get capital at competitive rates 25 years ago, and it’s still a problem today. And, if you’re not in the right location, that’s compounded.” Also, many dealers go through a manufacturer’s dealer development program, “often coming from other businesses,” only to be offered a store in a locale that they know little about in a community that knows little about them–points three and four.

Conyers admits his company started at a time when government entities were more inclined to promote minority businesses. He fears those days of government support and private partnership are limited.
On the flip side, he explains African Americans can do very well under that kind of pressure. “If you increase the odds, it increases the will to succeed.” But he cautions this will come at a price: more successful black-owned businesses in the future, but fewer of them.

Conyers has mastered the “art of the soft sell.” It is just those qualities that have helped him build a loyal clientele. Part of our mission statement says, “We’re here to serve and earn the business of our community and customers.” It’s a credo he stresses everyone keep before them.

Conyers says the other part of  his corporate mission is to train new dealers. To his credit, that mission has spawned 35 African American dealers, many of whom are women, who’ve moved out of his shop and into their own dealerships.

Besides those 35, he’s training five children, two sons and three daughters, to take over all facets of the business. His eldest son, Steven, is general sales manager. Daughter Nancy is the business manager for new cars, and son Peter is business manager for used cars. Another daughter, Susan, is the former Quality Commitment Performance manager. Daughter Ellen is an attorney, handles contracts and collections and is currently waiting to get into a dealer training program to buy her own store.

A quiet pride exudes from his eyes; the legacy continues. “The issue of succession is a whole new issue for black businesses now that we have them in some number.” Conyers says he and his family have been working on a plan for the past five years. “I have qualified one of my children to be on the dealer agreements so that if something happened to me, they could step into the business,” he explains.

He has also virtually ruled out selling the business. “We’ve always said no because we’ve put too much of our blood, sweat and tears into this,” he asserts.

Equally important to Conyers is that more African Americans pick up the banner of entrepreneurship moving into the 21st . century. “We need to convince our best and brightest that getting into business for themselves is the thing to do. Before, it was getting a factory job, then into the professions–teachers, government workers–then into the corporate world. Now we need to look at the entrepreneurial world.”

EARL GRAVES, CEO EARL G. GRAVES LTD.
VITAL STATISTICS
Headquarters: New York, NY
Business interests: Magazine publishing business products and services
Key executives: Earl G. Graves Jr., executive vice president/COO, Luther M. Ragin Jr., vice president/CFO; John C. Graves, senior vice president, B.E. Unlimited

Black Enterprise Founder Earl G. Graves

Imagine–or remember–the surprise many Americans, black and white, got after the disturbances of the ’60s when they opened their mailboxes during those hot, hazy summer days of August 1970 and found a copy of BLACK ENTERPRISE magazine. Inside, publisher Graves had assembled a prestigious of advisors made up of black business and politics of the day the question, Why BLACK: PRISE?” It put the civil rights into perspective–now that we’ve right to vote, would we be free to pursue a slice of the American economic pie?

Fast forward three years. Graves it was time to quantify and qualify and size of black businesses in Am produced the first BLACK ENTERPRISE listing the top 100 black-owned business in the United States.
In a letter to his father on the Publisher’s Page of the June 1973 issue, Graves “We have arrived at a point in history we can identify thousands of black-owned and black- controlled business–many still embryonic and still struggling for survival–that have been and are being established across this country. These are humble beginnings. But they are significant.”

Fast forward again to 1997 and Grave now older and a lot wiser, reflects on the early years. “I was trying to run a business myself, while telling others what they needed to know about trying to start or run their businesses,” he says. “It was like being the teacher and reading five chapters ahead of the class, like a student-teacher.”

Assisting him in the process was his wife Barbara, who gave up her job as a teacher to help her husband pursue his goal. The magazine set out to tell readers “how to” do it. In the process, its circulation has grown from a controlled subscriber base of 100,000 to a current list of 300,000 and 3.1 million readers.

Along the way, Graves bought and sold two radio stations and a marketing research firm, and established another division of the company, Black Enterprise Unlimited. This new brand is responsible for the Entrepreneurial Conference and the B.E./Pepsi Golf and Tennis Challenge. He also entered into partnership with PepsiCo to purchase Pepsi-Cola of Washington, D.C., L.P., a soft drink bottling franchise, and is a general partner of Egoli Beverages, L. P., a Pepsi-Cola franchise in South Africa.

In the process, the magazine has set standards of professional and entrepreneurial achievement with its lists of the 25 Best Places for Blacks to Work, 40 Most Powerful Black Executives, and Top 25 Blacks on Wall Street, while coining vernacular like BUPPIE (Black Urban Professional) and Kidpreneur Trademark.

But many of the challenges posed to black businesses and professionals in 1973–access to capital, corporate glass ceilings, disparities in service and the perceived value of the African American market and its dollars–remain in place today. “Since I wrote that letter to my father 25 years ago, we’ve made enormous progress, but not enough has changed,” Graves points out.

For the man with the signature mutton chop sideburns, knocking on closed doors and inviting himself in, much like Fred “The Hammer” Williamson did in his films, Graves has called on corporate America to give equal access to African Americans in banks, boardrooms and businesses.

“The challenge in the next 25 years is to eradicate the stereotype of us as the underclass,” he says. “America is the greatest country in the free world. Our best history is in front of us if we are willing to accept the reality that African Americans must share in its bounty.” To wit, Graves has served on many corporate boards, most recently, AMR (the corporate parent of American Airlines), Aetna, Chrysler Corp., Federated Department Stores Inc., and Rohm & Haas Corp.

Unlike some of his entrepreneur peers who have not outlined a clear succession plan for their businesses, Graves has. “The future bodes well for us because business is really people–the people you have handling it–and our young people are good,” he says, referring to a list that includes his three sons, Earl “Butch” Jr., executive vice president/COO of BLACK ENTERPRISE magazine; John, senior vice president business ventures and head of B.E. Unlimited; and Michael, vice president/general manager of Pepsi-Cola of Washington, D.C.

Graves anticipates developing more new lines of business. He foresees Kidpreneur Trademark, a development program for budding entrepreneurs ages five to 18 held during the annual Entrepreneurial Conference growing into something significant that might lead to other lines of business. “We are also looking at a line of financial services that will assist in the growth and development of black-owned businesses,” he says. “And, I hope to see the expansion of the Pepsi franchise, which is doing very well, through more franchising area contiguous with where we are or somewhere else.”

While he hasn’t relinquished his seat yet–”retire,” he laughs, “I’ll never be fully retired”–day-to-day operations have been turned over to his sons and other senior officers. Instead, Graves plans on continuing in a broader fashion by shifting his attention from running his businesses to focusing more on his corporate ant volunteer activities. Currently, he serves as a trustee on the board of Howard University, the board of directors of the Associates of Harvard University’s Graduate School of Business, and as vice president of relationships/marketing on the executive board of the National Office of the Boy Scouts of America. He also helped to raise $1 million for his alma mater, Morgan State University, which has renamed its business school the Earl G. Graves School of Business and Management. And, says the grandfather of six, “Barbara, my wife of 37 years and former vice president/general manager, and I will be spending more time with our grandchildren and skiing six months a year.”

But asking an activist to stop being active for the causes he believes in–education, enterprise and opportunity–is no easy feat. “Some of our businesses are reaching a level where we’ll be overcoming just basic business obstacles–developing a market and building market share. Getting these economic business issues resolved in another 25 years will be a struggle, but we must make it happen.”

A. G. Gaston Lifetime Achievement Award
Arthur G. Gaston Sr. was a major force in shaping the development of black entrepreneurship in Birmingham, Alabama. His business achievements served to inspire other business owners about what they could achieve, while the businesses themselves provided services in and to the community.

He launched Booker T. Washington (BTW) Insurance Co. in 1932, of a time when white insurance companies ignored black consumers. Gaston and a group of investors started Citizens Federal Savings Bank, a savings and loan association, after raising $350,000 in 1957. Besides Citizens Federal and BTW, Gaston’s empire included BTW business College, A. G. Gaston Construction Co. the A. G. Gaston Home for Senior Citizens, Citizens Drugstore, Smith & Gaston Funeral Directors Inc., New Grace Hill Cemeteries Inc., Zion Memorial Gardens and Mausoleum, Vulcan Realty & Investment Co. Inc. and BTW Broadcasting Service Inc., which includes radio stations WENN-FM and WAGG-AM. In June 1992, he was named Black enterprise Entrepreneur of the Century.

This award recognizes that entrepreneurial spirit and the guiding light of the individual for whom it is named. It is given to an entrepreneur who has consistently distinguished record of business success.

BE salutes these six entrepreneurs for 25 years of outstanding business achievement and success on this the 25th anniversary listing of the BE 100s.