Vista’s Robert F. Smith Talks with CNBC in Davos

Andrew Ross Sorkin, who was reporting for CNBC, spoke with Robert F. Smith, Founder, Chairman and CEO of Vista Equity Partners, about the impacts of technology on generating wealth and solutions to the digital divide at the World Economic Forum (WEF) in Davos, Switzerland in January 2020. Smith is a long-standing proponent of the World Economic Forum. Smith participates annually and has been invited to speak at a variety of sessions and interviews during WEF sessions.

The following is a transcript of the video of Smith and Andrew Ross Sorkin of CNBC at the WEF Davos. In the interview Smith talks about the future of capitalism, the digital divide and onramps to prosperity:

Andrew Ross Sorkin: So the big theme here as we all know is this idea of the future of capitalism where it said in this idea of multi-stakeholder capitalism and you’ve had lots of success but you’ve also had a lot of just thinking about these different stakeholders.

So how do you see it?

[0:15]
Robert F. Smith: So, the dynamic for us is one of necessity and always has been since really the founding of Vista…and I’ll unpack that a little bit. When I think about the world I live in, enterprise software, one of the dynamics enterprise software has done is create massive productivity in companies and existing businesses because it’s business-to-business software, you know?

That’s a dynamic that created huge wealth. And you know, for capitalists, those who held capital in those companies, in the course and after you actually create income opportunities for people who work in those businesses.

[0:47]
So that’s what you’re seeing, you know, you’re seeing that disparity of income and wealth driven by the fact that technology has this massive protocol impact on these businesses. And now it’s being recognized and the recognition of it is something people say, oh my goodness we’re seeing, you know, for the first since 1930 the biggest disparity in both wealth and income and we have to do something about that, you know? In the ESG initiative concept of it, the world of enterprise software, we’re actually pretty good on the E side, for the most part, we generate, use a lot of power, and we also have good footprints associated with travel. But, for the most part
we’re pretty clean, but it’s the ESPer, okay? The impact that followed, you know, Social. How do we make a more inclusive environment? We have had to do it by necessity, because we need talented people. And, if you stuck to the traditional pools of people, you couldn’t actually fill the roles and the jobs.

I’ve got seventy five thousand plus employees. I have five thousand open recs. I just go to the same places everyone else has gone, I can’t fill those recs.

So we have had to always open up our aperture for people and so in doing so we have the most diverse workforce and private equity; the most diverse workforce in technology, by any measure any standard objective measure really across the planet.

Sorkin: But when you started doing it.. But when you say necessity though? Was it a necessity or did you say to yourself, “You know what, I want to do it differently.”

[2:03]
Smith: It’s… it’s a bit of both, right?

You know, the necessity was we needed the people and if you go to the same place, you can’t find them. So, where do you wanna go? You go to places where you have very smart and talented people who need on-ramps into this economy.

And when you look at the world of private equity in software and our companies and business in particular, the business and applications we have. We paid two times the average private wage. So it actually transforms an opportunity for an individual worker in our business.

And of course if they are a stakeholder in the business, a stockholder, etc., it transforms the wealth dynamic for them.

[2:32]
So we always talk about, you know, the Trojan horse of our business, you know? Being African American, I have the opportunity to actually think about; how do I transform a community of Americans, African Americans, into this fourth Industrial Revolution which you and I have been talking about for four or five years here.

So, you know part of it is by design, and a part of it is, you know, an obligation to a great extent, to actually make the changes that I know are right.

Sorkin: Do you think these changes are happening outside of your firm? I mean, there’s a lot of talk here about these things, but is there a lot of action?

Smith: You know, the good news about Davos and all its criticisms: it gives people like me, and not me, can actually connect with senior executives to affect a change. So, we developed a program through the Fund II Foundation called internX. And the whole point: my career started at Bell Labs, 17-years old as an intern. Well, how do we get more African Americans and women into internships? So we created a platform in essence, a matching platform, but now I come here and get real commitments from Chuck Robbins at Cisco, okay? Backed in, John Donham from AT&T, and you know, Dan Schulman at PayPal and just got one big commitment. And got the number, yes, from AIG.

So, the whole point is not just an on-ramp. By having these CEOs commit to — you know what this would make sense Robert — we want to do it; how many; if they… John will say, “Oh Robert I’ll give you 500 internships.” Great, and now we’re able to fill those. Now 500 African Americans or women now have a chance to participate in the Fourth Industrial Revolution as interns and then ultimately become full-time employees. So, it works. It matters. But here’s a place for you to actually connect.

Sorkin: And it’s not just hype.

Smith: No. For us it isn’t.

Sorkin: Because that, but, but that is the, the critique here in Davos, right? Is that a lot of people?

[4:04]
Smith: Yeah, but I’ll tell you, you know, my experience, but I came here on a mission. Right?

Sorkin: Right.
Smith: So, my experience actually leads to real outcomes and otherwise I wouldn’t bother.

Sorkin: When you think about the idea of capitalism though — just even the concept in the United States right now. There’s a debate about whether it even works. And I’m especially curious about how you think the African American community thinks about the idea of capital reserve.

Smith: Sure. That’s a long conversation. If you think about it, capital, this whole idea of capital versus… like capitalism still is the most efficient system on the planet for uplifting humanity generally. But of course, you know, in general we go up, but we have individual pockets who don’t necessarily participate. African Americans have traditionally not participated. In fact, you know, you go look at the, you know, the Homestead Act, the southern Homestead Act, you know? Redlining around their communities; inability to actually gain a foothold in the capital part of capitalism. And so, they’ve always been part of the labor part. Right?

Sorkin: Right.

[5:02]
Smith: Right and that’s the dynamic. So part of what we have to do and what we do do is how do you move them into capital. There’s been [announced] about how do you drive capital into these communities, some of which are policy driven, okay? Some of which are actually individual and some are philanthropic.

So I think we now have, in the first time in the history of this planet, where you can actually generate capital — not owning capital, i.e. intellectual property, using technology, okay? In one generation. But you have to get on-ramped onto this technology revolution.

You got to get on the internships, experiences, that actually get you into these software companies, technology companies. That’s what I’m working on.

Sorkin: Do you think young people today in America appreciate that? Especially given the political climate we’re in in which there really is a stark contrast between the two parties and even within the Democratic Party around this idea of capitalism and socialism.

[5:52]
Smith: I don’t think we’ve done an adequate job explaining to young people what are the benefits or profits in a corporation. And the corporation’s haven’t done an adequate job of taking and showing how those profits improve the community in the station.

The good news, you know as with Chuck yesterday at Cisco we’re talking about — listen, here’s how we’re educating and training and dealing with homeless problems in Santa Clara, California. One of the wealthiest counties on the planet. But of course as as people got, you know, wealthier …and that it displaced people. And but how do you now take care of that?

The government doesn’t necessarily handle some of those issues but folks who are running businesses can because they realized if we don’t make our communities sustainable, we will not have sustainable businesses.

All right? But we haven’t done, I think, a great job as companies explaining the virtues of capital, the virtues of profit. And I, you know, as you know, Andrew Carnegie has been a big hero of mine.

[6:39]
We don’t go through the gospel of wealth with people who help them understand the role of folks like me is to actually drive and manage the disparities, using philanthropy as a tool and as an instrument to actually manage some of the some of the issues that come from, you know, capitalism and profit has been my primary motivators.

Sorkin: President Trump’s often talked about what he says is his record for employment for African Americans in the United States under his administration. Do you think the African American community appreciates that point?

Smith: I think, you know, if you didn’t have a job and you have one now you do appreciate it, you know? When did it start? Is it now a gesture? But now we’ve got record employment that, from what I can tell, that is true.

Now the real question is: is it just leading to income or is it actually leading to wealth? You know, part of what I think about it is how do you convert that income to wealth? Well typically in America, it’s been through land ownership.

[7:29]
What does that mean? Buying a house. Having to afford that house to actually appreciate the neighborhood: to borrow, and use the capital to send your kids to school. So they have the next opportunity to improvements of capital for your family.

So, like all things. It’s a great start to get income, but we now have to convert that income to capital into these communities. That’s what African Americans are looking for — is we didn’t participate in, like I said, that you know, some of the the land grants and the Homestead Act and some of the southern Homestead Act.

That led to a basis of capital for a lot of non-Black Americans that their families have been for generations, you know, taking advantage of. Well, the whole point is now how do we ensure that this this group of folks, African Americans, have a chance now to participate in it, in that economy. But they’ve been excluded for you know, eight, nine generations.

Sorkin: Tell me about the Morehouse donation. Tell me how you thought to do that. How did it come about?

Smith: The whole inspiration really comes from, you know, I call it an ideological position around how do you liberate the human spirit?

[8:28]
I don’t think there’s anything more beautiful than the liberated human spirit. And, you know, the work that I do at Carnegie Hall for instance. We get to about 600,000 kids a year bringing a music education where it was taken out of the public school systems.

And when you see a child liberated; and music can liberate you; education can liberate you; in some cases the liberation of a burden of debt. Because you took the initiative to go to a college to get educated, take on debt. And in your family, your mother, your grandparents took on debt so that you could be the first one in your in your family to graduate from college, to go get a job. And now you have a burden of debt that may prevent you from actually buying a house for another 20, 25 years.

So when I thought about my capacity: as human being; as an African American; as an African American male businessperson. What’s a good way to liberate a spirit? What’s the way to liberate 400 spirits, 400 years after 1619.

And so when I thought about it I said, “this is a good way to do it.” There’s multiple ways that I thought this was a good way to liberate 400 people and say the only thing I want you to do is go give back to your community in ways that you think are important. That’s why I did it.

Sorkin: And how did you decide to do it the way you did us a surprise?

[9:40]
Smith: Because if you know how it is. You know how you journalists are. If you tell anybody in advance it leaks and it loses the impact. I wanted these young men to really think about graduating what it meant to their parents, their grandparents, in the audience. When you meet some of the parents and grandparents who’ve come from all sorts of places; who saved money; borrowed money. You know? You want them thinking about just the joy of them graduating and then at the end saying here’s something else. When someone from our community, our community, is gonna help you.

Sorkin: When you saw that joy, what did you think? It was something just to go… I saw it on video. I know you were there in person you saw right there.

Smith: It was one of the most beautiful expressions I’ve ever seen: a human spirit liberated en mass. It was wonderful.

Sorkin: A related political question. There have been some presidential candidates and other politicians who suggested that one of the things the U.S. government should do is forgive college debt across the board. Do you believe in that?

Smith: It’s complicated, you know, there are some folks who have college debt for 20 years. And if you forgive it, the past, what about the future? One of the things I’m working on now, which we hope to announce, I’ll call it, “in the coming months.” I have actually a very brilliant friend — he used to be a former commissioner for the IRS — Fred Goldberg, working on a program, where if we do it the right way, we will be able to eliminate the student loan burden for all African Americans who study STEM going to HBCUs. And that’s kind of forever going forward but not how do you do it with the pieces with people who have that debt today? Is it fair to them don’t know. So government can do some things with past. Question is what we do for the future? Or you can do things to the future — what do you for — focus on the past burden. The short answer is we have a problem: that student debt burden is bigger then I think the consumer debt at this point. We don’t have a mechanism, so it’s sustainable, yet.

And the most important thing that lifts people in their station life is education and we have to make it in a way that’s affordable and effective, not just affordable but effective. And they actually have something to do afterwards that can contribute to the you know, that contributes to society.

[11:50]
Sorkin: Technology question that relates to Vista.

There’s a huge debate in Washington and elsewhere about big tech and the role of big technology companies in terms of stifling innovation. Not just in terms of competition, but in terms of actually the ability for example for companies where who you’re gonna sell to eventually if you buy a company, create a company, who you’re gonna sell to. Do you think there’s a problem?

Smith: I don’t. Let me tell you. You know, what we, you know, as big as we are really the fourth largest enterprise software company in the world if you aggregate all of our holdings. The key is aggregating all the holdings. You have sixty five. We just sold a software company, so sixty four software companies. And each of them sell to specific verticals or horizontal and provide specific services to that event or instance. The key in my mind as an investor is, think about: do we actually have the ability to create value for our customers? And that’s the most important thing. On average our companies have a 650 percent ROI for the products we sell to our customers. So there’s massive demand for it because it creates massive productivity into their, into what they do.

[12:56]
So that’s kind of point number one. Point number two, enterprise software at least, has a high free cash flow component to it. So, while you may not be able to quote unquote, sell one of our businesses. They deliver a fair amount of cash. So you can always return capital to your shareholders at a fair rate.

Sorkin: How much you worry though that the AWS is the world the Google clouds the Microsoft Azures are gonna start building in some of this type of functionality, though, into their quote unquote stack.

Smith: Yeah. Yeah, there is there is always that that’s the nature of competition. That’s the nature of capitalism. Right? And so part of what we have to do is be thoughtful and anticipate and still be the best debrief. You know, enterprise software and software companies still are, you know, winner-take-most type of businesses. Those who have a superior product will often dominate that market for periods of time, you know. We have seen this many times in history.

[13:40]
The last time we saw the wide disparity in wealth and income, what happened? You had a concentration of wealth in businesses that actually dominate certain segments. The government stepped in at that point in time. You tell me was the aftermath worth it or not? Who knows? Right? But there’s a dynamic here where you’re actually seeing that. Because, if you are a first mover and you’ve built walls around those organizations technically or through, you know product superiority or some execution excellence dynamic, you might be in an on that market for four decades.

And the question is, does it make it anti-competitive or does it make it just more efficient for everyone that you serve and create a lift in the rest of the industry. I would argue today, because of this massive distribution of technology and computing power and connectivity. And now the applications that are part of it. We have as society, on whole, benefited greatly, lifting people out of poverty, education, you know health care. All those sorts of things are because we’re utilizing this technology well. But not everyone has the same sort of opportunity.

[14:36]
We did great on the whole and not in all of the parts. And so that’s where government steps in and tries to figure out what it is, is the right answer or as we as business people thinking about, here’s the place I can make things more efficient through investing in technology and R&D.

That’s a complicated question. But I think, you know, I like the free markets as the best way of the answer, as opposed to regulated markets in that context.

Sorkin: Robert Smith. You’re an inspiration.

Smith: Thank you.

Across our Communities

MBE Entrepreneurship & Supplier Diversity

1. Provide technical expertise: offer subject matter and technical expertise to catalyze and support community initiatives 

E.g., tax/accounting experts to help MBEs file taxes

E.g., business experts to help MBEs better access capital and craft business plans to scale their teams and operations

Access to Capital (CDFI/MDI)

2. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance

Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years

Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years

Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

Education/HBCU & Workforce Development

3. Offer more paid internships: signup onto InternX and offer 25+ additional paid internships per year to HBCU/Black students 

Digital Access

4. Issue digital access equality bonds: issue equality progress bonds and invest proceeds into SCI’s digital access initiatives

5. Fund HBCU campus-wide internet – up to $50M in donations or in-kind: Partner with the Student Freedom Initiative to deliver campus-wide high-speed internet at ~10 HBCUs across SCI regions

Advocacy

6. Be an advocate for SCI priorities: engage federal and state agencies to drive policy and funding improvements to better support SCI’s near-term priorities

E.g., Engage the Small Business Administration and Minority Business Development Agency to increase technical assistance programs and annual spend to better support Minority Business Enterprises (MBEs) with capital and scaling needs

E.g., Ask the Federal Communications Commission (FCC) to include multi-dwelling unit connectivity in its new broadband connectivity maps and ask the National Telecommunications and Information Administration (NTIA) to allow non-FCC data in state broadband plans to unlock ~$285M in potential government broadband funding for 5 SCI regions

Directly Fund SCI

7. Invest directly into SCI (coming soon): provide funding for SCI to pool and invest in community initiatives that are most well-positioned for funding and can drive direct community impact.

Memphis, Tennessee

Lead community organization: The Collective Blueprint

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Scale technical assistance – $15M: fund* to expand technical assistance through business coaches and wrap-around services for 500+ MBEs over 5 years to help them scale from <$1M to $5M+ in annual revenue

2. Standup MBE fund – $15M: standup/scale MBE fund* to offer more flexible access to capital arrangements 400-500 MBEs over 5 years

 * Lead organization: The Collective Blueprint; Contributing local organizations for community strategy include (but not limited to): Community Unlimited, Women’s Business Center South, Epicenter, others

Estimated impact (of all initiatives): 2.3x increase in MBE value & 20K+ new jobs, boosting Black community’s net worth by ~$3B+

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

3. Provide loan guarantees – $15M: create a fund* to provide 80% loan guarantees over 5 years to encourage lender participation and inject more capital into the community

4. Conduct advocacy: ask US Treasury & Tennessee State to allow Tennessee CDFIs/MDIs to retain SSBCI capital & offer loan guarantees to boost loan issuance

5. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs** over 5 years modernize their core systems, hire and train staff, expand marketing and standup a SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance

  • Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years
  • Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years
  • Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* Leading organizations for community strategy include (but not limited to): Community LIFT, Memphis CDFI Network, etc.

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: Community Unlimited, Hope Credit Union, River City Capital, United Housing Inc, etc.

Estimated impact (of all initiatives): ~$330M+ in additional loans per year to support ~30K+ MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

6. Standup training hub – $30M: fund* the establishment a world-class training hub that offers certificate-granting STEM and innovation programs in advanced manufacturing, health care, etc. to 10K+ youths

7. Fund SFI program – $7M: fund the Student Freedom Initiative’s Income Contingent Alternative to Parent Plus to support ~15 Black STEM students per year forever at 4 HBCUs**

* Lead organization: The Collective Blueprint; Contributing local organizations for community strategy include (but not limited to): Greater Memphis Chamber and Workforce Midsouth

** Minority Serving Institutions / HBCUs with STEM programs being considered: Le Moyne-Owen, Baptist Memorial, University of Memphis, Rust College

Estimated impact (of all initiatives): 8K+ additional college graduates and 10K workers with high-paying wages to drive ~$1B+ in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

8. Accelerate digital access initiatives – $75M: partner with local orgs* to invest in setting up internet connections / installing hotspots, offering laptops and supporting adoption (through government subsidy technical assistance and digital literacy) to connect ~135K homes to high-speed internet in the Memphis region

9. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~135K unconnected households 

 * Lead organization: The Collective Blueprint; Contributing local organizations for community strategy include (but not limited to): CodeCrew

Estimated impact (of all initiatives): ~135K households connected to high-speed internet to unlock ~$2B+ in economic potential

Houston, Texas

Lead community organization: Greater Houston Partnership

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Scale team – ~$3M: hire 3-4 FTEs over 5 years for One Houston Together* to help companies increase MBE spend from ~2% to 5-10%+ as well as BIPOC workforce advancement and BIPOC board representation 

2. Increase MBE certification and scale technical assistance – ~$2M: partner with One Houston Together* and the Houston Minority Supplier Development Council (HSMDC)** to certify additional MBEs, develop Minority Business Finder database tool and provide resources and services to help local MBEs scale and participate in Pathways to Excellence program

3. Commit to increase racial diversity in supply chain and procurement: increase MBE spend in Greater Houston region* to 5-10%+

* One Houston Together serves as lead (please contact if you are interested in funding these initiatives)

** Houston Minority Supplier Development Council (HSMDC) serves as a partner organization (please contact if you are interested in learning more about this initiative)

Estimated impact (of all initiatives): 2.5x increase in MBE value & ~55K new jobs, boosting Black community’s net worth by ~$12B 

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

4. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs* over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance

  • Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years
  • Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years
  • Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: Unity National Bank, Unity Bank of Texas, PeopleFund, Houston Business Development Inc, etc.

Estimated impact (of all initiatives): ~$330M in additional loans per year to support ~30K MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

5. Fund SFI program – $120M: fund the Student Freedom Initiative’s Income Contingent Alternative to Parent Plus* to support ~1.2K Black STEM students per year forever at 7 HBCUs**

* Student Freedom Initiative serves as lead (main contact if you are interested in learning more and funding this initiative)

** Minority Serving Institutions / HBCUs with STEM programs being considered: Texas Southern University, University of Houston, Prairie View A&M University, Houston Baptist University, University of Houston-Clear Lake, University of Houston-Downtown, University of St Thomas.  

Estimated impact (of all initiatives): 5K+ additional college grads & ~600 workers with senior exec positions / high-paying wages to drive ~$0.2B in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

6. Accelerate SCI’s digital access initiatives – up to $80M in donations or in-kind: invest in setting up internet connections / hotspots, offer laptops/Chromebooks and support adoption (through government subsidy technical assistance and digital literacy) to connect ~145K homes to high-speed internet in the Houston region*

7. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~145K unconnected households 

* Community organization(s) being identified 

Estimated impact (of all initiatives): ~145K households connected to high-speed internet to unlock ~$3B in economic potential

Greater New Orleans, Louisiana

Lead community organization: Urban League of Louisiana

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Scale Black Business Works Fund – $10M: grow the Urban League of Louisiana’s Black Business Works Fund to support ~3K-4K MBEs over 5 years with emergency working capital needs to support/sustain ~$1B+ in annual revenues

2. Scale technical assistance – $20M: fund the Urban League of Louisiana, New Orleans Business Alliance, Thrive New Orleans and Propellor to scale bookkeeping, B2C payment, marketing support & subsidized rent to scale 200+ MBEs from <$1M to $5M+ in annual revenue

Estimated impact (of all initiatives): 2.5x increase in MBE value & 8K+ new jobs, boosting Black community’s net worth by ~$2B+

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

3. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs* over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT teams to conduct needs diagnostic, implement tech solution & provide technical assistance

  • Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years
  • Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years
  • Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: New Orleans Business Alliance (community convener), Liberty, TruFund, LiftFund, NewCorp, etc.

Estimated impact (of all initiatives): ~$330M in additional loans per year to support ~30K MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

4. Subsidize internships & apprenticeships – $40M: fund the New Orleans Youth Alliance, YouthForce NOLA and the Urban League of Louisiana to place and help subsidize apprenticeships, internships and other work-based learning experiences for ~20K young adults in high-pay sectors (e.g., energy)

5. Fund SFI program – $12M: fund the Student Freedom Initiative’s Income Contingent Alternative to Parent Plus to support ~120 Black STEM students per year forever at 3 HBCUs*

* Minority Serving Institutions / HBCUs being considered: Dillard University, Southern University – New Orleans and Xavier University of Louisiana

6. Scale career prep – ~$10M: scale the New Orleans Youth Alliance and YouthForce NOLA with 15-20 coaches over 5 years to equip ~20K young adults with skills for high-paying industries, job search & prep and subsidized transportation

Estimated impact (of all initiatives): ~2K additional college graduates and ~20K workers with high-paying wages to drive ~$1B in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

7. Accelerate SCI’s digital access initiatives – up to $35M in donations or in-kind: partner with New Orleans’s Office of Information Technology & Innovation and Education SuperHighway to invest in setting up internet connections / hotspots, offering laptops/Chromebook and supporting adoption (through government subsidy technical assistance and digital literacy) to connect ~55K homes to high-speed internet in Greater New Orleans region

8. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~55K unconnected households

Estimated impact (of all initiatives): 55K households connected to high-speed internet to unlock ~$1B in economic potential

Charlotte, North Carolina

Lead community organization: Charlotte Regional Business Alliance

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Offer in-kind FTEs: provide 2-5 in-kind FTEs to the Charlotte Regional Business Alliance (CRBA) over 5 years to convene corporate partners, assess their MBE spend, develop pipeline to increase MBE spend to 5-10%+

2. Offer technical assistance expertise: partner with the Charlotte Regional Business Alliance (CRBA) to advise/mentor ~200 MBEs on capital/loan access to help them scale from <$10M to $50M+

3. Commit to supplier diversity: increase MBE spend in Charlotte region to 5-10%+

Estimated impact (of all initiatives): 3x increase in MBE value & ~13K new jobs, boosting Black community’s net worth by ~$2B+

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

4. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs* over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance; in-kind experts to also help build out the MBE ecosystem through CDFIs/MDIs, market CDFI/MDI offerings and programs and help draft final loan agreements to qualify borrowers between investment fund(s) and CDFIs/MDIs

* CDFIs/MDIs being considered (examples and not exhaustive): Security Federal Bank, Institute / North Carolina Community Development Initiative, Sequoyah Fund Inc, Self-Help Credit Union, BEFCOR, Aspire Community Capital, etc.

  • Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years
  • Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years
  • Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: Security Federal Bank, Institute / North Carolina Community Development Initiative, Sequoyah Fund Inc, etc.

Estimated impact (of all initiatives): ~$330M in additional loans per year to support ~30K MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

5. Fund SFI program – up to $10M: fund the Student Freedom Initiative’s HELPS program to support ~1.5K+ students per year at HBCUs* with emergency expenses – e.g., unexpected health costs, late rent payments, etc.

* Minority Serving Institutions / HBCUs in Charlotte that are being considered: Johnson C. Smith University, Johnson & Wales University – Charlotte, Charlotte Christian College

6. Provide in-kind staff: offer 2-5 FTEs to the Charlotte Regional Business Alliance (CRBA)over 5 years to track Black-/Brown-executive representation, convene corporate partners to develop executive pipeline and hiring plans and support corporate partners to increase representation from ~10% to 30%+

Estimated impact (of all initiatives): 2.5K+ additional college graduates and 2.5K workers with high-paying wages to drive ~$0.2B in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

7. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~35K unconnected households

Estimated impact (of all initiatives): ~35K households get connected to high-speed internet to unlock ~$700M in economic potential for Charlotte

Birmingham, Alabama

Lead community organization: Prosper Birmingham

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Fund startups and give access to investor network – $70M: grow the Prosper Health Tech Fund – powered by Gener8tor – and offer venture capital technical assistance to scale 50+ startups from <$1M to $5M+ in annual revenue; near-term priority is to secure $4M in venture investment by end of May 2022

2. Fund technical assistance – $25M: fund Prosper Birmingham, Magic City Match, and Birmingham Business Alliance to establish/expand business advisory programs, renovate and subsidize retail/office space for MBEs and scale coaches & support services (e.g., digital footprint, B2C platforms, accounting & bookkeeping, recruitment, etc.) to help 100+ MBEs scale from <$1M to $5M+ in annual revenue

Estimated impact (of all initiatives): 3x increase in annual MBE revenue & 8K+ new jobs, boosting Black community’s net worth by ~$2B+

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

3. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs* over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance

  • Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years
  • Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years
  • Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: First Bancshares, Commonwealth National Bank, TruFund, Sabre Finance, Bronze Valley, etc.

Estimated impact (of all initiatives): ~$330M in additional loans per year to support ~30K MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

4. Fund scholarships and hire coaches – ~$35M: scale Birmingham Promise fund to financially support 200-250 students per year over 4 years to increase college retention and graduation rates

5. Fund endowment – $2M: support 50 University of Alabama at Birmingham college students per year with housing to reduce their financial burden and increase college retention and graduation rates

Estimated impact (of all initiatives): 6.5K+ additional college graduates & 35K workers with high-paying wages to drive ~$1.2B in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

6. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~35K unconnected households

Estimated impact (of all initiatives): 48K households get connected to high-speed internet to unlock ~$700M in economic potential for Jefferson County

Birmingham, Alabama

Lead community organization: Prosper Birmingham

MBE Entrepreneurship & Supplier Diversity

Our ambition:

Increase the volume and value of Black-owned businesses – through corporate MBE spend and MBE startups & scaling

1. Fund startups and give access to investor network – $70M: grow the Prosper Health Tech Fund – powered by Gener8tor – and offer venture capital technical assistance to scale 50+ startups from <$1M to $5M+ in annual revenue; near-term priority is to secure $4M in venture investment by end of May 2022

2. Fund technical assistance – $25M: fund Prosper Birmingham, Magic City Match, and Birmingham Business Alliance to establish/expand business advisory programs, renovate and subsidize retail/office space for MBEs and scale coaches & support services (e.g., digital footprint, B2C platforms, accounting & bookkeeping, recruitment, etc.) to help 100+ MBEs scale from <$1M to $5M+ in annual revenue

Estimated impact (of all initiatives): 3x increase in annual MBE revenue & 8K+ new jobs, boosting Black community’s net worth by ~$2B+

Access to Capital (CDFI/MDI)

Our ambition:

Modernize CDFI/MDI systems and tech as well as recruit and upskill talent to increase CDFI/MDI capacity and ability to inject more capital into Black communities

3. Fund modernization & capacity-building and provide in-kind subject matter experts – $30M: help 4-5 CDFIs/MDIs* over 5 years modernize their core systems, hire and train staff, expand marketing and standup SWAT team of experts to conduct needs diagnostic, implement tech solution & provide technical assistance

Systems and technology modernization – $10M-15M: Add/upgrade core banking systems, hardware and productivity tools, train frontline workforce on new systems & technology and hire engineering specialists to support customization and news systems rollout – over 5 years

Talent and workforce – $10M: hire and train additional frontline lending staff and invest in recruiting, training, compensation & benefits and retention to increase in-house expertise and loan capacity – over 5 years

Other capacity-building and outreach – $8M: hire additional staff to increase custom borrower and technical assistance (e.g., credit building, MBE financing options, etc.) and increase community outreach to drive regional awareness and new pipeline projects – over 5 years

* In partnership with National Bankers Association and Appalachian Community Capital; CDFIs/MDIs being considered include: First Bancshares, Commonwealth National Bank, TruFund, Sabre Finance, Bronze Valley, etc.

Estimated impact (of all initiatives): ~$330M in additional loans per year to support ~30K MBEs

Education/HBCU & Workforce Development

Our ambition:

Lower financial burden for Black students, increase number of Black college graduates, increase Black workforce and executive representation and their access to high-paying jobs

4. Fund scholarships and hire coaches – ~$35M: scale Birmingham Promise fund to financially support 200-250 students per year over 4 years to increase college retention and graduation rates

5. Fund endowment – $2M: support 50 University of Alabama at Birmingham college students per year with housing to reduce their financial burden and increase college retention and graduation rates

Estimated impact (of all initiatives): 6.5K+ additional college graduates & 35K workers with high-paying wages to drive ~$1.2B in economic growth

Digital Access

Our ambition:

Increase accessibility, affordability and adoption of high-speed Internet

6. Raise community awareness & adoption of Emergency Broadband Benefit: increase door-to-door and community outreach in low-income neighborhoods to get households onto EBB to help connect ~35K unconnected households

Estimated impact (of all initiatives): 48K households get connected to high-speed internet to unlock ~$700M in economic potential for Jefferson County