Wall St. and Business Wednesdays: Exclusive Q & A With Professor William D. Bradford Co-Author Of The Kauffman Foundation Study, "Minorities and Venture Capital"
Historians may one day refer to the release of the Kauffman Foundation study, "Minorities and Venture Capital" as a leading indicator of a critical turning point in the evolution of entrepreneurship and access to capital for Blacks and other minority groups in America. The benchmark study, only weeks after its publication, promises to become a definitive study on both the subject of the state of the minority venture capital sector, as well as the quality of the performance of minority business enterprises (MBEs) backed by that sector. The study, made possible by the participation of active members of the National Association of Investment Companies (NAIC), provides, for many, the long-awaited empirical evidence needed not only to support a plethora of anecdotal evidence about the promise of minority entrepreneurship; but also the research necessary to help minority-focused venture capital funds attract more funding - from their traditionally non-minority capital providers.
The "Minorities and Venture Capital" report is the intellectual work of two men - Timothy Bates, Distinguished Professor, Wayne State University; and William Bradford, Endowed Professor, University of Washington. BlackElectorate.com Publisher, Cedric Muhammad, spoke with Mr. William Bradford - Professor of Finance and Business Economics at the School of Business at the University of Washington in Seattle - last week for a wide-ranging conversation regarding the nature and findings of the Kauffman Foundation report; a possible paradigm shift in Black America - from politics to entrepreneurship; the meaning of "access to capital" and the impact of culture and public policy upon it; the impact of integration and gentrification on Black businesses; the indictment of money manager Nathan Chapman; the role that discrimination and Black institutions of financial intermediation play in fostering entrepreneurship; and much more.
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Cedric Muhammad: I wanted to know more about the premise of the Kauffman foundation study. Specifically, I am referring to these three questions juxtaposed to the survey participants around which your analysis revolved: 1) When investments in minority business enterprises are sold off or liquidated, what kinds of monetary returns are earned by the venture capital funds? 2) What kinds of minority business enterprises attract venture capital investments and how do the funds interact with their minority business clients? 3) Where do minority venture capital funds raise their financial capital?
Professor Bradford, what was the premise, why were these three questions central to your study, and what were you looking for?
Professor William Bradford: The idea is that past studies have found that minorities have not had the access to the capital markets that the majority population has. And one aspect of that is venture capital. So, if you then create firms that can invest venture capital, focused on minority businesses, then there is a new reality. But there are two opposing influences at work in this issue of access to capital. One, because of the restrictions (the dedication to financing minority business enterprises - MBEs), they (minority-focused venture capital funds) forfeit other opportunities in the non-minority sector. This may be a "negative". But the positive influence is that if other venture capital firms are, and have been biased against these firms (minority business enterprises - MBEs), and don't provide access to capital; there should be some attractive opportunities available in that sector of business. And so the study that we put together was aimed at looking at the net effect of both of those influences. Is it positive, is it negative? Are there opportunities for these minority-focused venture capital firms; where do they get their money from; how well do they do when they invest; and what are some best practices? So all of this is surrounding the question of, how do you get money to this particular area of opportunity? That is number one. But, Cedric, if we step back for a moment, we can identify the fact that minority businesses are going to grow in terms of sheer numbers; and their revenue will grow faster than White-owned businesses - as we look into the future - simply because there are going to be minorities making up a larger proportion of our population. So therefore it behooves us as a country to determine how well we can support the growth of these businesses because they are going to be making up a larger proportion of who we are, as an economy. And a part of that is venture capital. And another focus of the Kauffman study is to ask and see: how well is venture capital doing as it supports minority businesses? So on two fronts - from looking at the profitability of these businesses, as well as the general overall importance of the area that these businesses are operate in - there is reason to seriously examine and consider these venture capital firms.
Cedric Muhammad: Professor Bradford, could you as precisely as possible, in layman's terms, distinguish between venture capital and private equity firms?
Professor William Bradford: Yes, typically, venture capital is focused on financing newer ventures and new types of undertakings. Private equity includes not just that set of businesses - new ideas and getting them started - but also investing in mergers and acquisitions, and leveraged buyouts for businesses that are changing hands, but which already exist and operate...
Cedric Muhammad: And the angel investors would come before even venture capitalists, correct?
Professor William Bradford: Typically angels can come in early and before venture capital, but realistically, an angel investor is someone who is coming in and investing as an individual, anywhere in the process. They get attention as the earliest and most influential investors, but they can and do come in anywhere in the capital-raising process.
Cedric Muhammad: I thought that the benchmark - the Standard and Poor's 500 (S&P 500) [the S&P 500 incorporates a broad base of 500 stocks, including 400 industrial companies, 20 transportation companies, 40 utilities and 40 financial companies] - used for the study was very interesting. And of course we were pleased to see how well the MBEs performed compared to the S&P 500. But I thought that a better benchmark would have been how well the MBEs performed against the Russell 2000 - the smallest two-thirds of the largest 2000 U.S. companies. Had you thought of using the Russell 2000 in comparison?
Professor William Bradford: No, we used the S&P 500 because it is so well known by all sophisticated and semi-sophisticated individuals in the investment community. But the best benchmark, of course, would be other venture capital firms that are investing broadly in the market. And if we look at that ratio, of the "mainstream" venture capital firms (2001 Venture Economics Private Equity Performance Index), they were yielding approximately 20% over the comparable 10-year period that we were looking at for our minority-focused funds.
Cedric Muhammad: Now of the 24 minority-focused venture capital funds, how many of those were "Black-owned" or "Black-run"?
Professor William Bradford: We did not ask in that way, but of the twenty-four funds, those that were run by Black partners were definitely a majority. But we did not ask, as part of the survey, the color of the owners. But we know because we met most of them - but we did not meet all of them. At least three-quarters to 80% were minority. Most are African-American.
Cedric Muhammad: Well, I am not sure if you know, but we interviewed Fred Terrell, who according to Black Enterprise (B.E.) magazine, runs the 6th-largest private equity fund in Black America. I wanted to know, say, how many of the B.E. 10 Private Equity firms were included in your study. For instance did Fred Terrell's firm participate, Provender Capital?
Professor William Bradford: Well, I don't have the list right in front of me, but I don't think so...
Cedric Muhammad:...well, I have the list of the B.E. 10 Private Equity and venture capital firms and if it would not violate any of the confidentiality terms of your study, I would like to know from you, if they were participants in your study.
Professor William Bradford: No problem, sure, you can ask...
Cedric Muhammad: Ok, the largest firm, ranked number one is Fairview Capital Partners Inc.
Professor William Bradford: They participated.
Cedric Muhammad: The second one was TSG Capital Group, L.L.C. in Stamford Connecticut
Professor William Bradford: Yes, they participated too.
Cedric Muhammad: How about the Black Enterprise/Greenwich Street Management Co.?
Professor William Bradford: They participated. Yeah, we basically got all of them but there are probably one or two that we missed.
Cedric Muhammad: Great, and this is important because it leads right into a question that connects with a June 5, 2000 Barron's magazine article that mentions the following quote about the venture capital industry: "...the reality is that our profession is made up predominately of Caucasian males; our deal flow comes from our peers; in other words, there are too few minority members in the general venture capital community to steer money toward firms run by women or Hispanics, African-Americans or other minority groups..."
One, I want to know if you agree with that depiction of the industry, and two, there was a study published in the Spring 2001 issue of The Review Of Black Political Economy that showed that Black-owned banks were more likely than their White-owned counterparts to make loans to Blacks. Were you able to find out, on the equity side, if Black founded or run venture capital firms were more likely to make investments than their White counterparts, in Black businesses?
Professor William Bradford: The answer is yes, and of course that is the focus of these funds, covered in our study. There are general partners and limited partners. And the general partners are the ones who run the fund. The Black-run funds have focused primarily on minority ventures. Now, I will say that there are some funds that are operated by Blacks, that don't focus on minority businesses. I would say that the majority of the Black-run venture funds do focus on MBEs and of those companies, (MBEs), the majority of them are Black
Cedric Muhammad: OK, that makes a point I want to get into later, about what I refer to as "indigenous" capital institutions versus those that operate throughout the country, even in the Black community, but are not run by Blacks or minorities. But you have an interesting finding in your report regarding how the federal government is fading as a source of capital for these venture capital firms, why do you think that is?
Professor William Bradford: Well, the government program itself, the SSBIC (Specialized Small Business Investment Company), has been found to have impediments and has not been as effective as hoped. So the funds created under those regulations have not done as well in the past. I will say, though, that there have been some changes and improvements made to, and in, the program, but the jury is still out on them, to see if there is sufficient change to make these government programs and sources of capital viable.
Cedric Muhammad: One piece of legislation and public policy that we have looked at for years is this merging of Rep. J.C. Watts' Community Renewal Act with the Empowerment Zone and New Markets initiative of President Clinton, which resulted in the creation of these "APIC funds"; and Rev. Jackson has been in support of this, through his Wall St. Project. It is this idea that you would provide similar incentives and "insurance" for investments made in the inner cities and distressed rural areas, as you do in developing countries throughout the world under The Overseas Private Investment Corporation (OPIC) program. And I know that in line with this Goldman Sachs has established an urban fund (The Goldman Sachs Urban Investment Group - a private equity initiative within The Goldman Sachs Group, Inc., that invests capital in ethnic minority-owned or targeted businesses and urban real estate. ) that makes targeted investments in these areas. Have you looked at the Goldman Sachs fund?
Professor William Bradford: No I haven't although I am fairly familiar with it.
Cedric Muhammad: A larger, some might say "philosophical" question, but a very important one that people are trying to quantify is this term "access to capital". So many people use it and have so many different things in mind when they do. What I have identified are essentially two major streams of thought in the reference and use of this term and concept. There is a political stream; and one that is used in the context of entrepreneurship. Let me give you an example of the political context.
Professor William Bradford: OK.
Cedric Muhammad: That would be Rev. Sharpton's speaking in St. Louis, at the request of minority contractors who believe they are not getting a fair shake. So in that context, "access to capital" is referring to opportunities to procure government contracts, or contracts in private projects that receive public funding; as well as access to loans. And Rev. Jackson has advocated the same. That is more of a political and civil-rights oriented approach to "access to capital". The other approach, or entrepreneurial stream would be a little more in line with what we see covered in Black Enterprise magazine, the emergence of more Black-owned small business owners, the "Hip-Hop-preneurs" and essentially what your study examines. These are groups of entrepreneurs that really don't concern themselves, as much, with quotas, set-asides or government contract or business procurement programs. Do you see a fundamental shift away from the "political" toward the "entrepreneurship" stream of "access to capital"; or do you see it as pretty even-handed; or even, that there is an intermingling between the two major streams that we have identified and track at Black Electorate.com?
Professor William Bradford: I think there is some intermingling because you can invest in minority businesses for two reasons. You can invest in a minority-owned business because it makes you money and you can invest in them because you want to balance out and diversify - in terms of who owns businesses in this country and who is doing well. I think that the Rev. Jackson "political" approach has been very helpful in terms of creating and even educating a class of potential managers. Even managers of these venture capital funds. Although many of us have a hard time connecting it; there is a significant economic impact of affirmative action. The people who are doing good things today were educated 10 to 20 years ago as a result of the affirmative action approach to "access to capital". I think it is all connected. The Rev. Jackson-approach is good to keep the influence going. But at the same time, ultimately it is going to have to wind up being the standard of "what makes money?" that is the key driver of the business process. So if we can increasingly do things, directly and indirectly, to make investing and lending to minority firms a primarily earnings-related phenomenon, that would be the outcome we want, because we can't depend upon the political process in the long-term. In the short-term, yes, to give us a foothold and foundation, but over the long-term we are going to have to make certain that we raise the standard of good business plans and decisions as the key determinant of whether or not we get access to capital.
Cedric Muhammad: A follow-up to that question relates to what I stated earlier about indigenous institutions. At BlackElectorate.com I have spoken to people on the point of this issue like Robert Patrick Cooper, senior counsel at the nation's largest Black-owned bank, One United. And as I mentioned earlier, we recently spoke to Fred Terrell of Provender Capital. And as I have these public conversations and private ones, with a host of others, including civic, religious and political leaders there is something that I am recognizing and increasingly concerned about. I am concerned that in this "access to capital" debate, that perhaps not enough attention is being directed toward the cultural sentiment of the masses and opinion leaders in advocating more Black-owned venture capital funds; and more Black-owned banks; and maybe even more importantly the support, investment, and patronage in and of these financial intermediaries. So while I recognize and appreciate that there are two powerful streams within the Black community - one seeking access to the capital markets to fuel entrepreneurship, and a second, which is approaching the government and political process seeking business procurement, quotas and affirmative action - I have some anxiety over the lack of attention these two streams give to developing indigenous institutions of financial intermediation. One group is hitting up Wall St. with business plans and the other is hitting the government for programs; but am I right to see a void in the lack of attention given to supporting, maintaining and creating Black-owned financial intermediaries?
Professor William Bradford: Well, the way I look at it, the government, in its procurement process can influence the success of businesses, but lenders and investors - private equity and venture capital firms, which are private entities, by-and-large - only invest and make loans because of their interest in earning sufficient income. So the government can influence by making certain that the revenue is there for these businesses, and the private sector then steps in, and to the extent that the private sector itself is not biased, it can then invest and then earn the income. So we need to make certain that the private sector is not biased in terms of banks, venture capital companies and all of those that make investments in these businesses. Well, studies have shown that simply is not the case. And that, again, would be a government issue to make certain that things are balanced. I don't know that I am directing this at your question but I see all of this as connected in that we need both the political and the economic pressure in order to correct the imbalance...
Cedric Muhammad: What I think I am dealing with, on the "economic" and private sector-side that you alluded to, is trying to make a distinction among those institutions on the private side.
Professor William Bradford: Yes.
Cedric Muhammad: You can attempt to legislate the hearts of men through ending redlining practices and using the Community Reinvestment Act (CRA); as you alluded to - a justice and fairness role to be played by the government; but by the same token, I am personally concerned that proper emphasis is not being placed, in the private sector on those institutions that may have a positive bias toward Black-owned businesses...
Professor William Bradford: Oh yeah, yeah...
Cedric Muhammad: As you know, we have $588 billion in purchasing power - and I know you are probably tired of hearing about that too, but...
Professor William Bradford: You probably don't know this, but I am one of the pioneers...of course Andrew Brimmer (former member of the Board of Governors of the Federal Reserve System) did the first study in this area, but I have done a number of studies on Black savings and loans institutions so I am very familiar with the subject, so please, go ahead with a question.
Cedric Muhammad: Yes, my question, is that we have Black entrepreneurs - people like Russell Simmons, and many powerful business leaders who are going to find the attention of venture capital firms and be able to go to Wall St. for financing; and then you have others who are in position to get government contracts. Fine, but that is only a certain group of entrepreneurs. What I am not hearing - from the Congressional Black Caucus (CBC), or the NAACP, and others who operate in Black civil society, is a clarion call that says "we need more Black venture capital firms, we need more financial intermediaries", or that "we need to redirect more of our financial capital to these institutions." Consider that out of the $588 billion in spending power that Blacks have, only $3.6 billion of it is placed in deposits in the top 25 Black-owned lending institutions in this country. $3.6 billion out of $588 billion
Professor William Bradford: Hmmm.
Cedric Muhammad: So if that study that I quoted earlier is accurate - that Black-owned banks have a positive bias - in relative terms - toward bank consumers and entrepreneurs; I am thinking that the bias could work in our favor if we would create "indigenous" institutions on the equity side, as well.
Professor William Bradford: Yeah. That could work. And that is what I see as these minority-focused venture capital firms; and Black-owned banks. And the issue becomes, over time, and particularly with the banks, what is their ability to draw funds? That has been a key challenge with the Black banks. With the minority-focused venture capital funds, they can get money from the public pension funds, the corporate pension funds, and you can promise them a yield that is commensurate with their risk. And you can do that and then these minority venture capital funds would invest in these minority-owned businesses. But the Black banks get their money from individuals, and by definition, Blacks, as individuals, are going to have a lower average deposit size, and if you cater to that set of borrowers you are going to have a lower average loan size. Now, that means that your operating costs are going to be high and it is going to be difficult for you to diversify them away. All that I am saying is that some indigenous institutions can make it and are right-on, and others are not. I don't think insurance companies can be successfully indigenous. Banks? Some yes and some no. It depends upon the type of Black customer that walks into their door. Historically we have had problems in terms of the Black customer that has walked into the door of these banks - in terms of making money from them and getting a sufficiently large size of deposits to grow on. That has been the banks' problem. Some have worked around that, but by and large, the Black banks, as a set of organizations, have not been able to do that. But other types of institutions I think will. And I think a worthy goal for us would be to look at those organizations and institutions that we can use in a positive way and as an example or model - to sort of capture their revenues, and then reinvest those revenues right back into those institutions so that there is a growth process. That is the way to go. But again, the types of institutions we can do that with are limited.
Cedric Muhammad: In light of everything that we have just talked about; and in light of the Kauffman foundation report, and your years of dedicated study and analysis in this area; how do you juxtapose this study, and our conversation, to the closing of Paschal's - the famous restaurant in Atlanta, and which has been open since 1959? And in addition to that, we constantly, at BlackElectorate.com provide links to articles in our news section that chronicle the plight of Black business districts. For example, we recently featured an article from The Denver Post about Welton Street, the famous Black main street, where all the shops are shuttering their windows and closing down.
Professor William Bradford: Oh yeah.
Cedric Muhammad: How do you balance that with the findings of your report and what do you make of it all?
Professor William Bradford: We, as Blacks, even if we have good ideas, just like the mainstream business sector, are going to have failures. That is part of the learning process and that is part of the growth process. Money is going to go from the Paschal's toward other investments that can be more profitable and can be owned by Blacks also. There is an evolution going on. But the key is: a) We, as Blacks, should have the opportunity to implement our good ideas b) have them financed c) and have no biases or discrimination at the customer, supplier or borrowing ends. In other words, the whole flow of who we are in business should not be biased against us because of any background of ethnicities. But to focus on the examples you have provided, we are going to see, Black businesses being successful and unsuccessful. That is the nature of business. But the issue is that we want to have the opportunity to succeed, just as well as anybody else.
Cedric Muhammad: So you are not concerned in an entrepreneurial or economic sense, about gentrification or "social integration" where the money in the Black community leaves Black business districts and goes into shopping malls in the suburbs? You see that as being overcome.
Professor William Bradford: I can see it as being overcome and I see it as being an evolution. For example, here in Seattle, Blacks had moved out of a community, Whites moved in and then they moved out, and Blacks are moving in again, but this is a more middle-class group of Blacks than the first group; so those stores and banks around there are going to be stronger institutions for that. So I don't see it in terms of (wealth destruction), whereby when Black businesses fold or Black people are moved out (in gentrification) that we are gone forever. We should talk about evolutions and the fact that things will be renewed. We go from one area to another but at the same time, I think we should do it in such a way that we have the opportunity to succeed, where we are just as qualified as anyone else. And to the extent that equal access to opportunities does not occur, to me, that is bad. But as a community we are going to go up and down. Some businesses are going to disappear while others are appearing. So, to me, I see the process as an evolution. Money from Paschal's is going to go from Paschal's to other entities, where it can be used successfully. Sometimes it takes time but if you stand back and look at the whole evolution and look at where the money has flown to, if Blacks are doing well we are still going to thrive and be successful. We are going to see some losses but we are going to see some gains.
Cedric Muhammad: Now you have listed in your report, the eight sources of capital for the minority-focused venture capital firms, and one of these you have listed as "fund of funds". Are you referring to mutual funds by that term?
Professor William Bradford: Well, there are some funds, and what they do is get money from other funds, as opposed to getting the money directly from a commercial bank or corporation. They will get money from other funds and combine it with what they already have.
Cedric Muhammad: Well, I am thinking about one of these entities, on the receiving and giving end, in particular and want to ask you a double-ended question about it. Nathan Chapman's mutual fund, the DEM Equity Fund, made investments in Blacks, Latinos and Women-run and owned companies. And I wanted to know if you had looked at any funds or businesses that may have been recipients of investment from the DEM Equity Fund and secondly, do you see a "Nathan Chapman-effect" where we might soon see nationally, what we saw in Maryland, where the Maryland Pension funds and others who say they gave him (Nathan Chapman) money to manage - allegedly primarily just because he was Black - in light of the indictment against him and their supposed laxness, will use his case to justify not making investments in Minority-owned funds?
Professor William Bradford: Well, I think they are going to do due diligence. With a public pension fund, the key consideration will be a) whether or not the money is earning what it needs to be earning and b) they will perform due diligence to make certain that the ownership and the goal and portfolio of the fund meets the state description on the offering circular. So I see it as a matter of these public entities performing greater due diligence rather than them stopping the flow of funds on a conceptual basis.
Cedric Muhammad: Out of the eight major sources you have listed in your report as principal providers to minority-focused venture capital funds (1. public pension funds; 2. commercial banks and insurance companies; 3.intermediaries known as "fund of funds"; 4. corporate pension funds; 5. corporations; 6. state and local governments; 7. federal government; 8. miscellaneous sources, including foundations, endowments, families and individuals) different fiscal, monetary, and regulatory policies would affect each of them. What policies do you favor that would lead to more capital pouring from these institutions into minority-focused venture capital firms?
Professor William Bradford: What I would like to do, if at all possible, is avoid a government requirement. But more so have these institutions be aware of and acknowledge opportunities that exist. In other words, public pension funds, for example, would be made aware, and acknowledge that they are aware of the risks and return of minority-focused venture capital funds. Now, when they state this awareness, that in and of itself, will increase the funds going into this area. Because the pension fund, is now saying, "Yes, I document the risk and returns of these different segments, including the minority venture capital fund segment." And then, one can recognize, because they (the public pension fund) are part of a public decision-making process and because they have to protect a public fund, and are in effect (serving a public interest); they would have to invest in the minority-venture capital sector (based upon acknowledging the empirical evidence regarding the profile/risk-to-return ratio of the investment category). Now, politically, if we talk about corporations and banks; we already know that banks have to follow the community reinvestment bank provisions. So we already know that any money you put into an SBIC that is focused on urban areas will get credit in terms of the Community Reinvestment Act (CRA). So making banks aware that minority venture capital firms are an option too, for them to comply with CRA is important. So I think that we could accomplish most of what needs to be done in the area of access to capital for minority venture capital funds, by making these eight sources of capital more aware; while having them acknowledge the opportunities that exist in this sector. Because once that is done, the private sector and the people in charge are going to say, 'look, we are going to have to invest in this area'.
Cedric Muhammad: So, you are not too concerned with specific policy objectives to increase liquidity and the supply of financial capital? For example you are not too concerned with arguments that state that Federal Reserve Chairman Alan Greenspan over the past 6 years has been too tight with monetary policy and in supplying liquidity to the banking system - and the argument that if there were more liquidity in the system, it would naturally find its way to Black institutions and companies. And in addition to the impact of monetary policy you aren't concerned that taxes on capital, like the capital gains tax, may be too high, affecting the incentive to invest and the availability of investment capital for these 8 sources to pour money into minority venture capital funds?
Professor William Bradford: To me, the problem is that if you talk about capital gains taxes and all of these other issues you are talking not just about money pouring into these minority venture capital funds, but it would also flow into all other funds. So on a relative basis there would not be a change. Now one could also say that the minority venture capital funds should receive a different capital gains tax rate than other sectors. But I don't think that needs to be done. I think that distortions to the system are sufficiently great and then, there is the larger issue of when you reduce taxes – where are you going to reduce expenditures on the other side of the ledger if you do not want to have a budget deficit. Where do we take the money from? We get more money placed over here, but where do we find money to make up for the redistribution? The argument could be raised that you are helping one group of minorities - venture capitalists and the businesses they invest in - at the expense of other minorities on the other side of the ledger. The gains on the investment side might be off-set by the losses on the expenditure side.
Cedric Muhammad: So you think that the political debate can't handle the initiative because the public and political establishment thinks in terms of a zero-sum game?
Professor William Bradford: And it can be a zero-sum on the bottom line. Money does not just emerge. If you get money from A, that means B has more. Of course you can increase a deficit to foster the favorable treatment of taxation for these firms but you still have to deal with what the long-term effect will be on those who are disadvantaged...
Cedric Muhammad:...you can reasonably be concerned about whether social unrest will occur as a result of a reduction in the social safety net.
Professor William Bradford: For me, at this stage what is most important is to not seek to distort the system too much, but to stay within it and provide information and attract acknowledgement that if the incentives of an entity are to earn more income; these minority venture capital firms provide that opportunity and incentive, without question. That is all we need to get funds slowing into that direction. And that is the objective that we are after.
Cedric Muhammad: So essentially you are advocating an improvement in the quality of the matching process between the eight capital providers and the minority venture capital sector; rather than an effort to improve the quantity of capital?
Professor William Bradford: Yes.
Cedric Muhammad: My final question, is why would Blacks be 50% more likely to be entrepreneurs and start businesses, than other groups?
Professor William Bradford: I think you would have to deal with more sociological issues to get a definitive answer, but it would seem to me that if we look at the potential opportunity sets, you can get a clear picture of why this is. It is my opinion that at major private firms and even minor private firms there is still not a level playing field - there are still biases. So you see that your ability to achieve in the majority-owned firms is going to be limited. It would be limited anyway just in terms of competition but then you overlay that with the biases that are embodied in the system. Recognizing that, you would lean more toward creating your own outcomes, individually as a self-employed individual. So the more biases there are working for somebody, the greater that would lead you to work for yourself. So part of the reason for that 50% figure reflects the fact that there are some biases perceived and if you create your own outcomes, you at least avoid those biases in the major corporations. That is just one reason. Another reason, of course, is that you see that you can use your wealth better and more favorably on your own - with your ideas and desire to work harder. And many Blacks, today see that they now have the skill-set and professional background necessary, and now they can achieve and even out-do their competitors - and starting a business is a direct way to achieve that
Cedric Muhammad: I thank you so much Professor for this discussion and your time
Professor William Bradford: Sure, thank you as well.
Wednesday, August 6, 2003