Saturday, September 24, 2016

The Second Richest Black Person in the United States is...Robert Smith. Who is Robert Smith?

The second richest Black person in the United States is...Robert Smith. Who is Robert Smith ?

Robert Smith is supposed to be worth about $3 billion according to Wikipedia, 2nd to Oprah at $3 billion plus. He recently gave gave $20 million to the African American museum.

Robert Smith is the Founder, Chairman and CEO of Vista Equity Partners. The company uses leveraged buyouts to take over specialized software companies that dominate small, specialized software markets such as auto dealers, event management, fleet management, government compliance, and others. None of the companies are large outside of their specific markets. The only widely known company on the list is TIBCO, a data and interface integration company.  

Vista Equity buys and/or invests in niche market software leaders.  The company then brings in corporate (conglomerate) benefits such as humans resource management, legal, financial reporting, executive development and consulting while letting individual companies handle development, technology, and growth. Strategically, they are moving their portfolio of software to the cloud model of Software as a Service (SaaS). 

Vista Partners is also making a lot of acquisitions lately.  They are hoping to benefit from the consolidating software market and reduced competition. They buying market share and wiping out competitors.

The Washington Post had a nice story on Robert Smith. Here

Here is a link to Vista Equity Partners. Robert Smith has famously not put his picture on the web site. He is concerned about driving away business. Vista Equity Partners is on it's fifth round 

If you want to better understand how Vista works, I recommend looking at their list of software companies, here, and open positions, here. The opens positions are mostly in sales.

Version 3.

Sunday, September 18, 2016

Black Banking is a Great Idea. Are Black Consumers Finally Waking up ?

We support the Bank Black Movement !!! And we are moving some of our money from the local credit union to OneUnited Bank. We have long championed Black Economic Empowerment. Now it is time to do something about it. We hope it is a sign of a larger awakening by Black consumers.

Black consumers spend and estimated between $1.1 and $1.2 trillion dollars a year.

The Bank Black movement started when rapper and activist Killer Mike (Michael Render) gave a radio interview after the killing of Philando Castile and Alton Sterling.  During the interview Render called for Black people to withdraw their money from banks and corporations that "don't speak no our behalf."

Here is Killer Mike interview on 107.9 in Atlanta. Call to Bank Black starts at 2:07

Eight thousand people heard Mr. Render, took his advice and opened a bank account at Citizens Trust Bank in Atlanta, GA. The call to action moved an estimated $1 million dollars. Other Black banks have also benefited from the #bankblack movement. Ebony has the story.

There are several Twitter accounts and web site discussing the Bank Black movement.


The mainstream press also likes the idea. There has been a lot of coverage.  Here are some sample articles. All are supportive.

The Takeaway: Black Banks could help narrow the wealth gap
Forbes (a conservative view)
Huffington Post

Quick History of US Banking since the 1980's

Banking has changed drastically since the 1980s when bank deregulation was passed. Banks could no longer lend to their traditional corporate customers, so they began to seek new customers and charge new fees.  Many unprofitable banks went under. Larger banks consolidated into the big four large US banks we have now.  The big four control 80% of the US banking market.

In the new, degregulated environment, banks searched for profitability, Some tried sub-prime real estate lending. Other sell investments and insurance. During this time, retail banking exploded and so did the pressure to sell financial products to new customers. Banks shifted to making money from fees and financial products rather than loans. They added or increased fees on account maintenance, overdraft, and ATMs and on debit and credit card use.

Current Bank Environment

Banking today is like any other such mass market consumer business. It is much more like fast food and retailing than traditional banking.  The goal is to minimally service the low profit customers using technology and cheap labor while lavishing personal service on high profit customers. Retail banks also use their geographic monopoly to squeeze out competitors. In my small town in New Jersey we have over 10 banks and Chase has three banks with 1/2 a mile.

Banks have another thing is common with fast foods restaurants: low pay. and part-time hours. On, GlassDoor, starting pay was $16.00 for tellers at Chase. The next level job at a bank branch is "Personal Banker." PB's are really salesmen work on low salaries and high incentive sales commission plans. Banks are no longer great places to work. If you want more details, go to  GlassDoor, enter Chase, Citibank, Wells Fargo or BOA and read the reviews.

 Current Black Bank Environment

There are 24 Black banks in the US according to the FDIC Minority Depository Institutions Program. You can read more about the FDIC program here.

My experience with Black Banks

I have long supported Black banking.  The results have been mixed.

I have banked at a number of Black Banks over the years.  I have used Citizens Trust Bank, Industrial Bank, City National Bank, Carver Savings Bank, and Amalgamated Bank(Union). And, if I can brag a little bit, one of my ancestors help found the first Black bank, Consolidated Bank and Trust, in Richmond.

However, Black banks have failed to keep up technically with mainstream banks and failed to compete with check cashing and money transfer services. They seem to be one-step behind as competitors, like the RushCard, check-cashing business and Western Union.

Over the years, I have been charged high fees and had limited access to my money at Black banks.. Fees ate up the balance at two locations. And ATM surcharges used to hit me all the time.  It was hard to get access to my money or talk to someone at the bank during none working hours.

What do consumer want in a bank ?

Consumer want the traditional bank where the teller knows you along services such as check cashing, easy ATM access, a debit/credit card for electronic payments, low cost banking services, and on-line banking and bill payment.  No one expects a free bank with no fees.  They do expect reasonable fees.

Investment options are few for Black Banks

In banking, there is a supply side and a demand side. Banks are in the middle trying to make a balance.

Unfortunately, there are limited investment options for Black banks. No bank(Black or otherwise) can hold a full portfolio of mortgages in a community. The number of mortgages would exceed the banks risk/capital ratio. And the loans are too geographically concentrated.  Instead bank sell their loan portfolio to other banks. Selling the loan requires the loan meet a certain standard and quality. Many Black home owners do not meet the basic lending criteria.  So only by bundling together lots of mortgages can the risk be reduced to meet bank standards

There are also relatively few Black business to invest in.  They are concentrated in certain industries such as clothing, restaurants and food service. Those industries are highly risky and unprofitable. Concentration means risk. So even when a Black bank has excess funds to invest, it still may not invest in the Black community.

OneUnited Bank

Hopefully, OneUnited Bank will bring Black banking into the modern age. One United Bank see a market opportunity.  One United Bank, is a local and online bank available in all 50 states. They are using the #bankblack movement to increase deposits. The link to OneUnitedBank is below.


EBE proposals for the future of Black banking

1) Recruit top talent and be open to change. Give options to employees and shares to customers.
2) Give long time customers special treatment.  Use a CRM to ID "good" customers.
3) Build the brand.  Advertise, Marketing and Sell the Black bank brand !!!
4) Tackle check cashing head-on with longer hours
5) Make micro-loans. Make people earn their credit rather than use rating agencies.
6) Give business advice.(Clients can sign a waiver)
7) Look for sub-prime mortgage loans that are really prime
8) Set-up personal banking for sports starts, celebrities, and high net worth individuals
9) Focus on HBUCs and educational loans

I believe in Blacks working together to control their financial future. Black people in the US spend an estimated $1.2 trillion dollars a year.  Its obvious we should try to use some of that money to build up the Black community.  We support the Bank Black movement.

Version v8

Tuesday, September 13, 2016

The Big Sellout: Economists succumb to the lure of big money and big data

If you want to know where retailing is heading, look at Amazons job postings. Amazon has defined internet retailing in the US and the world for the past 20 years. Their immense profitability means they will continue to denominate.

I was dazzled by the more than 16,000 open positions. The jobs are broken down in 32 different categories. Many are plum jobs in categories you don't see advertised any more such as medical, supply chain management, and quality control.  They have 5600 job open in software development. They also have 460 spots in their business intelligence division include 35 jobs for economists.

35 economist positions

Amazon has figured out that economists are the right people to bridge the gap between big data and detailed consumer behavior.  They are trained in finding patterns in large and confusing data sets. And Amazon certainly has the data. Their data gathering operation is among the best in the world. The have Pizzabytes of data (a 1 followed by a million zeros made of pepperoni).

If you look at the job postings, the positions for economists are in the area of consumer behavior such as evaluating the success of marketing plans, determine merchandising strategies or forecasting and evaluation.

Cosmic Fairness 

The jobs pay well.  I would guess they pay two or three times what an assistant professor of economics makes when they start their careers.  We assume the people at Amazon are smart (and good looking), the data is awesome and the facilities top notch ("hey, it's 6pm, do you want to get some free beer and food in the cafeteria"). How can you beat fairy-tale-data-land,

Well, the good news for the rest of us is that many of the problems the economists might work on at Amazon are boring, and simple and based on selling more stuff. Problems like knowing if Bill, will respond to a 4am coupon on cat toys, or Mandy will abandon her shopping cart after 107 seconds, are not going to lead to great journal articles or books.

Opportunity Costs Wasted

What's concerning is that Amazon may hire a great economist who's work we will never see. Amazon's hiring of economics could lead to a case of opportunity costs wasted. Amazon could scoop up some brilliant Piketty, Friedman or Stiglitz before they construct their initial, core ideas.  Before they can discuss and argue with peers, before they can present at conferences or publish. They can deprive the profession of some of it's best thinkers, some of it's "seed corn."

The economic profession is one of the few fields where most of the results are for the public good. We should try and keep it that way.


Airbnb Tries to Handle Discrimination by Hosts.

Airbnb is in the hot seat for facilitating discrimination in the overnight stay marketplace. Many people have complained publicly.  An academic study documented discrimination by hosts on Airbnb. Hosts in the study were found to discriminate again customers with African-American names.  There was a class actions suit against Airbnb for racial discrimination.  The suit claims Airbnb did nothing to correct discrimination by hosts using it platform. And, numerous people posted discrimination stories on twitter at #airbnbwhileblack.

Interestingly, competitors have popped up, such as, which offer hosts who don’t discriminate.

Airbnb claims they are only a service that links buyers and sellers in a private marketplace. They say they are not subject to anti-discrimination laws. 

The federal government prohibits discrimination in public accommodation and faculties under Title II of the Civil Rights Act of 1964.  Title II prohibits discrimination based on race, color, religion and national origin in public accommodations (inns, hotels, motels, restaurants, theaters, sporting events and gas stations).  There is an exemption for private, owner occupied residences with less than five rooms for rent.

However Airbnb hosts, as private citizens renting private rooms, are not subject to the law.  As a result discrimination based on race is widespread.

Airbnb, which fears bad press and possible law suits, has put together a group of lawyers and academics, to make recommendations. The team was led by Laura Murphy from the ACLU and featured Eric Holder, ex- US attorney general. There were also other lawyers and academics. They reported to Brian Chesky, the CEO of Airbnb.

The report was delivered on September 8th, 2016.  The full report was not made public, but some of the recommendations appear on the Airbnb web site. The changes include making hosts sign a stronger non-discrimination agreement, reducing the prominence of photos in profiles, allowing booking without host refusal (instant book) and hiring a more diverse workforce.  They also created an internal group to handle discrimination complaints and developed anti-bias training sessions for hosts.

Airbnb also claims that their “data science team” will look for “tech tools” to “help enforce their anti-discrimination policy.” Not sure what that means. But it does make you wonder how active they will enforce their new anti-discrimination problem. In fact, Airbnb already has the data to prove discrimination.  It could easily look for a racial pattern in host denials.  

Airbnb also forces all users to accept “section” 34(see entry below) which restricts class action lawsuits. Class action litigation is an important civil rights tool because it can show a pattern of bias across multiple injured parties rather than the more expensive individual claims.

Overall, it looks like Airbnb is making a half halfhearted attempt at ending discrimination. It looks like a PR campaign. We know it has the data to do way more. It could use it's data to expel blatant racist and thereby publicly send a message to all hosts they will be held to the same standard as title II of the civil rights act.

Airbnb Bad Press

Airbnb Links

In addition, Airbnb Terms and Policies prohibit class action law-suits

Section 34 of the Airbnb terms and conditions includes the following text.

“You acknowledge and agree that you and Airbnb are each waiving the right to a trial by jury or to participate as a plaintiff or class member in any purported class action lawsuit, class-wide arbitration, private attorney-general action, or any other representative proceeding. Further, unless both you and Airbnb otherwise agree in writing, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of any class or representative proceeding.”

Sunday, September 4, 2016

Black Wealth, Black Assets, Black Real Estate. Or how not to be rich v6

Most Middle Class people have one Major Asset: their home. Other people have a car but no home. And it turns out that owning a home is the same as owning a savings account that will make you rich. There, in 10 seconds is the essence of the Black/White wealth divide. More White people own more expensive homes in more desirable neighborhoods. And smaller relative percentage of Black people own fewer homes in less desirable locations which are worth less.

Which leads to today's topic, how to own a home (or how to get rich)

People ask me how to get rich all the time.  And I say the same thing: "Invest in Real Estate" but I warn them that it takes a long time, it's boring and it's defined by racial and class segregation. Cars on the other hand are fun. They just won't make you rich. But real estate is almost always worth more than what the buyer paid for it. Real estate is the best way to build Black wealth.

Black Wealth

Black wealth (or the lack there of) has been the subject of several stories over the past year.  All lead to the same conclusion, Black people take a hit financial for living in Black neighborhoods.  They all mention lower valuations and growth rates and higher foreclosure rates.  They never cover the hyper-segregation of Black people in residential neighborhoods in the US. I live in NJ and can count about 30 or less integrated communities on paper out of about 650 municipalities. Jersey City is a good example.  The White, Black, Hispanic (multiple) and Indian communities don't really interact. But on paper, it's integrated.

In 2013, Pew Research says: The average White family has a median net worth of 13 times more than that of the average Black family and 10 times more than the average Hispanic family.

News stories in the media on Black Wealth and Real Estate

There are lots of stories in the popular press.

NPR: For The Black Middle Class, Housing Crisis And History Collude To Dash Dreams

Forbes: The Racial Wealth Gap: Why A Typical White Household Has 16 Times The Wealth Of A Black One

More in depth news stories are available here

Pew Research: Wealth inequality has widened along racial, ethnic lines since end of Great Recession

Demos: The Racial Wealth Gap

And, unbelievably, Forbes has some solutions

Forbes: 10 Proposals For Eliminating The Racial Wealth Gap

All the Forbes proposals are standard liberal proposals that require spending money or helping the poor.  The current voting majority of Americans basically oppose such programs.

Tools for Building Wealth: Daily Ambition

The key to being rich is daily ambition.  It really is just like in the movies: You have to want to be rich. Then you have to make daily sacrifices. Like working a crappy job you don't like to make extra money. Living around people who may not like you. Moving away from your friends and family or studying hard in school.

Earning Money

If you cannot save at least a $1000 dollars a year toward owning real estate, you should look for a better paying job. Or get a second job.  You can also look for places to cut back on spending. It can take a long time to build a down payment. And the key to real estate is to build that first down payment.  It should take about 5 years of savings to build a down payment on a condo or apartment.

Investment Returns for Education

Education and Real Estate have the best risk to return profile for each dollar invested. Education multiplies you earning potential. Education grants access to more jobs and hiring paying salaries.

Investing in Real Estate

So we are back to Real Estate. Real Estate is one of the lowest risk ways to build wealth.

With real estate, you will definitely get your money back.  Real Estate also provides shelter. You are your own landlord and your rent money is going toward your own pocket.

Real Estate is like anything else, the more you know, the better decisions you make. Grab a couple books from the local library or read up on the internet. Make sure to cover the buying and selling process.

Key Strategies for Investing in Real Estate

Buying distressed property / foreclosure, buying a fixer upper or buying a standard home

The location is the most important thing about a house.  Location controls everything.

1. Make the right investment. Research locations over and over.  How stable is the area. What do the big trends look like. Look for high growth rates, high turnover and population pressures.
2. Buy in up and coming areas with high growth rates.. Consider a fixer upper in the right area.
3. Be prepared to wait while you build equity (usually about 5-7 years before flipping)
4. Leverage one property to acquire additional properties. Pay down mortgage faster to build equity.
5. Keep an eye on taxes. Low tax jurisdictions may have bad services and schools. High tax locals can eat away your profit.

Basically real estate is a waiting game but if you are in the right location you will get a good return on your investment.

Real Life Examples

I know two guys who are millionaires because of real estate. And a third who is not.  One bought a condo in Park Slope, Brooklyn, when the area was dicey. It turned around as people could no longer afford Manhattan. The other bought foreclosed properties in Waldorf and La Plata, Maryland and Fredricksburg, Va. He got rich as people expanded out from Washington, DC. Both cities have high growth rates.

The third person lives in Philadelphia and has basically broken even. His property is in North Philadelphia and the greater northeast. Philadelphia has a negative growth rate.

The two millionaires told me to invest in their areas and I did not listen.

Saturday, September 3, 2016

Washington Post: Madam CJ Walker Descendants discuss her Fortune

The Washington Post has a story on the descendants of Madam CJ Walker. We have always wondered what happened to Ms. Walker's fortune.  Here is some of the story.

Washington Post: Black wealth, racism and the legacy of the legendary Madam C.J. Walker

NPR:Housing Foreclosures in Prince Georges County

NPR released a story on September 2nd, 2016 on the the large number of foreclosures in Prince Georges Country, MD.

NPR: For The Black Middle Class, Housing Crisis And History Collude To Dash Dreams

Friday, August 26, 2016

Movement for Black Lives -- Policy proposals -- in the news

CNN: The next battle for Black Lives Matter: Economic Justice

Movement for Black Lives -- Policy Paper -- Organizations and People

People representing over fifty organizations were involved in developing the policy recommendations.

We are also going to look at the backgound of some of the members and organization who helped prepare the document.

Patrick Mason, National Economic and Social Rights Initiative
Anja Rudiger, National Economic & Social Rights Initiative
Cathy Albisa, National Economic & Social Rights Initiative
Karl Kumodzi, Black Youth Project 100, Blackbird

Thena Robinson Mock, Education Law Center
Ruth Jeannoel, Power U Center for Social Change
Rachel Gilmer, Dream Defenders
Chelsea Fuller, Advancement Project
Marbre Stahly-Butts, Center for Popular Democracy

Mark-Anthony Johnson, Dignity & Power Now
Rachel Herzing
Mary Hooks, Southerners on New Ground

Black Alliance for Just Immigration
Black Youth Project 100 (BYP100)
Project South
Southerners On New Ground
Philadelphia Student Union
Alliance for Educational Justice
Black Lives Matter Network
Dream Defenders
Baltimore Bloc
Freedom Inc.
Organization for Black Struggle
Highlander Research and Education Center
Million Hoodies Movement for Justice
The National Conference of Black Lawyers
Black Women’s Blueprint
Ella Baker Center for Human Rights
SpiritHouse Inc.
The Worker’s Center for Racial Justice
The BlackOut Collective
Open Democracy Project at Crescent City Media Group
National Black Food and Justice Alliance
Coleman Advocates for Children and Youth
Dignity and Power Now
Center for Media Justice
Environmental Justice Advocates of Minnesota
BIG: Blacks in Green
Mothers Against Police Brutality
Color of Change
Black Leadership Organizing Collaborative
Black Liberation Collective
Black Organizing for Leadership & Dignity
Center for Constitutional Rights
People of Color Beyond Faith
Central Illinois CBTU
Racial Justice Action Center (RJAC)
Solutions Not Punishment Coalition (Snap Co.)
Million Women March Cleveland
The National Committee for Responsive Philanthropy
Women of Color Network, Inc.
Right To The City
Freedom Side
Jobs With Justice
Philly Coalition for REAL Justice
Race Forward
Center For Third World Organizing
PICO’s Live Free Campaign
Southeast Asian Freedom Network
National Economic & Social Rights Initiative
Center for Popular Democracy
Chicago Anti-Eviction Campaign
Project NIA
Community Justice Network for Youth
Institute of the Black World 21st Century
National African American Reparations Commission
Brooklyn Movement Center
The Truth Telling Project
New York State Prisoner Justice Network
Good Jobs Now
The Ordinary People’s Society
People’s Justice Project
Missourians Organizing for Reform and Empowerment
Urban Youth Collaborative
European Reparations Commission (ERC)
Showing Up for Racial Justice (SURJ)

Organizations working on this topic

Advancement Project
Alliance for Educational Justice
Dignity in Schools Campaign
Genders & Sexualities Alliance Network
NAACP Legal Defense Fund

Alliance for Quality Education (New York)
Baltimore Algebra Project (Baltimore)
Boston Youth Organizing Project (Boston)
Community Justice Project (Miami)
Critical Exposure (District of Columbia)
DeSoto County Parents and Students for Justice (Mississippi)
Dream Defenders (Florida)
Desis Rising Up and Moving (New York)
Families and Friends of Louisiana’s Incarcerated Children (New Orleans)
Girls for Gender Equity (New York)
Labor Community Strategies Center (Los Angeles)
Nollie Jenkins Family Center (Mississippi)
One Voice (Mississippi)
Padres y Jóvenes Unidos (Denver)
Philadelphia Student Union (Philly)
Power U Center for Social Change (Miami)
Portland Parents Union (Portland)
Project South (Atlanta)
Racial Justice Now! (Ohio)
Rethink (New Orleans)
SpiritHouse (North Carolina)
Tenants and Workers United (Virginia)
Tunica Teens in Action (Mississippi)
Urban Youth Collaborative (New York)
Voices of Youth in Chicago Education (Chicago)
Youth Justice Coalition (Los Angeles)
Youth United for Change (Philly)

Movement for Black Lives Releases Policy Agenda -- Bravo !!!

In a move surprising critics, The Movement for Black Lives released a detailed policy proposal. The proposal was the work of 67 groups and organizations according to the website. The proposal extends the work of the Black Lives Matter movement to economics, social justice and political participation in the US.

You can read the proposals here...
A Vision for Black Lives: Policy Demands for Black Power, Freedom and Justice

The Policy demands are split into six areas: Criminal Justice Reform, Reparations, Investment Priorities, Economic Justice, Community Involvement, and Politically Related matters including other.

Each sections starts with the policy recommendations followed by the description of the problem and then how the recommendations form a solution. .  Next, come proposed changes at the federal, state and local level. Finally, each section ends with how the policy would affect Black people who have the worst-off.

We are going to look only at the economic related issues in all six areas, but we encourage you to read the full document.

Section #1: Criminal Justice Reform.

In the criminal justice section there are three economic proposals: End "defendant" funding of the criminal justice system, end bail and end the privatization of the criminal justice system.


The failings of the criminal justice system are well known. There are many cases across the US where poor defendants to extract court fees and penalties. Privatization in the the criminal justice system has resulted in any improvements only profits and worse prison conditions. And bail keeps "low-risk" suspects locked up because they are poor.

This section also includes a long section on educational changes. It also proposed to limited the use of past criminal records in employment, licensing, housing and financial transactions.

Section #2: Reparations

The Reparations section calls for free college education, support for HBCUs and universal basic income.

Section #3: Invest - Divest

The investment section suggests better uses for funds spent in the US and "spent" on Black People. The money would come from reduce military and criminal justice spending. It should be redirected toward education and employment programs and universal healthcare.

Section #4: Economic Justice

The Economic Justice platform calls for making the tax code more progressive, creating a jobs program, reforming banks to support small and Black banks, supporting workers right to for unions, ending the TPP, support for Black Co-ops and improving worker protections


Many of the proposals have been circulating on the left for years.  We have long supported government jobs programs, universal income, free college education and police and military cuts, But never specifically for Black people. Maybe that approach is all wrong.  Maybe, in this country, with the long and deep history of racism, you need you specifically label something as Black to cut through the noise and get people to pay attention.

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