He Speaks Volumes on Success

Earl G. Graves is publisher and chief executive of Black Enterprise Magazine. Founded in 1970, the magazine is a business service publication targeted to upscale black professionals, executives, entrepreneurs and policymakers. The magazine has annual sales of more than $24 million and circulation over 300,000.

Graves’ book, “How To Succeed in Business Without Being White,” was published last year by HarperBusiness. He is chairman and CEO of Pepsi-Cola of Washington, D.C., the largest minority-controlled Pepsi-Cola bottling franchise in the United States, and a director of several Fortune 500 companies. He lives in Westchester County, N.Y. with his wife, Barbara. They have three grown sons, all of whom work in the family businesses. Graves was interviewed by Times staff writer Lee Romney.

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Q: From 1965 to 1968 you were an administrative assistant to the late Sen. Robert F. Kennedy. After his assassination, you formed a consulting firm to advise corporations on urban economic development. How did the assassination affect you and your decision to go into business?

A: The Ford Foundation decided to give some of us work study grants. I went to Barbados. My grandparents were born there on both my mother and father’s side, so an entrepreneur’s spirit was inculcated in me by my father. “You have to own something, you have to get an education or we’ll practically take your name from you and put you out of the family.” I lived on a block in Brooklyn where there was 80% homeownership. I swept the sidewalk once a day and God forbid if I didn’t bring the garbage cans in after the garbage had been collected. From that environment came the idea of wanting to do something of my own, and I made up my mind that I was not going to take one of the jobs that were offered to the Kennedy people. I thought it was a junction in my life where I could break away and do my own thing. The enormity of his death stayed with me. When I went back a year later to Los Angeles, I sat up all night staring out the window thinking, “What would it all have been had Kennedy lived?” I believe this would be a different country than we have today.

Q: What can Black Enterprise Magazine and your average black professional do to promote economic development for African Americans?

A: The magazine is showing readers where opportunities are, that in some instances you’re probably going to have to be better or prove that you’re better to get where you want to go, but there’s a piece of the economic action in the country that can be yours. That action comes from investments in your 401(k) and other financial instruments. It comes from saving, from being prudent in terms of joining savings organizations and clubs. It comes from understanding the tools that you’ll need in corporate America--not just education but also understanding the politics. Black professionals also need to stand up for what is right. If I’m African American and I know there’s a job opportunity at IBM or a promotion and I haven’t told another African American executive about it, then I’ve failed at what it is I represent.

Q: Black consumers have $400 billion in combined annual income. Has corporate America realized that, or is getting that point across still a struggle?

A: In 28 years we have convinced a good part of corporate America that that’s the case. We have some of the most upscale companies, whether it’s Tiffany or Jaguar or Mercedes or BMW, or top-of-the-line liquor or computer companies advertising, Merrill Lynch selling financial instruments or American Express co-sponsoring financial seminars. The problem is, every time there’s a change in hierarchy you have to go back and start all over again, educating the executives. There are many instances where my son, Earl Jr., now president and COO of the publishing company, is treading some of the same ground that I treaded 28 years ago.

Q: The magazine looks at how African Americans survive in a marketplace where a lot of factors still work against them. What are the challenges of surviving in that marketplace?

A: Racism. But one of our greatest assets is our culture. And that culture is that we grew up with our parents telling us we were going to have to be better because we understood what it was to get turned down for a job, to get turned down for acceptance at an institution, and to get turned down for a mortgage, which still happens, and not so subtly. In major urban areas, people are still being redlined. When you were told you had to be better, that sunk in. When you were told you were going to have to try harder, that sunk in. When you were told you were going to get knocked down and you were going to have to get back up, that sunk in. And so that really did give us a competitive edge.

Q: Access to capital is still identified as a huge problem by African American small-business owners. Why?

A: Access to capital is a difficult issue in general for small-business people because you don’t have a way of collateralizing, so you turn to all kinds of different ways to do it and one easy way is family. For African Americans, because of the racism that is still certainly very prevalent in this country, the options open as to where we might borrow money are clearly not as great as they are for our white counterparts. That does not mean you should not try. It does not mean that you cannot make it. It just means it’s going to be more difficult. [Travelers Group Chairman] Sandy Weill and I last year launched a private equity fund to lend to mid-sized and expanding minority-owned businesses. We are closing that fund out sometime in late October, capitalized at about $75 million, which is where we had hoped it would be.

Q: More and more corporations are reaching out to African Americans and other minority franchisees. What are the advantages and disadvantages of franchising for black entrepreneurs?

A: Some of these people who think, “I want to franchise,” they think McDonald’s. Well, for McDonald’s you may need a million dollars. That’s unrealistic. But there are franchises you can invest in for $5,000 or $10,000. You’ve really got to believe in the product. You have to know what you’re buying into, you need to investigate the company, you need to go to the Better Business Bureau in your community. Franchises differ in terms of what the contract might represent and what the company will do for you. If done right it can clearly work.

Q: If you had to encapsulate your advice to black business owners, what would it be?

A: You’ve got to come prepared. You really have to have a junkyard-dog mentality, the tenacity that it takes to hold on, and you’ve got to have that competitive spirit that comes from the culture in terms of having to be better, having to try harder, and having to be prepared to get up after you get knocked down.

Earl Graves will give a keynote address at 1:30 p.m. Saturday at The Times’ Small Business Strategies Conference at the Los Angeles Convention Center.