Thursday, September 29, 2016

Racism in America – Let Justice Roll Down


I was on the Earth a year before Dr. Martin Luther King, Jr. was gunned down.  And while I didn’t ever know him, I certainly knew of him.  My father, Aaron Martin, was active in the Intercollegiate Peace Fellowship during his college days and took part in enough of the Civil Rights movement to instill in his sons a particular appreciation for race relations.  Stories of hotels refusing black patrons lodging, segregated lunch counters, and protests marred by police actions were no stranger to my young ears.  As an adult, I met many civil rights personalities who remember my dad and delight in the fact that a next-generation Martin is still in the thick of dealing with the scourge of racism in America.  Together with my dear friend Rodney Woods (founder of Diversity in Promotions), I’ve been working for years to deal with racism in the capital markets from disproportionate FDIC bank closures in traditionally black regions of the country to limited access to growth finance for robust minority owned enterprises, I’ve seen the continued injustice that mars our socioeconomic fabric.

Against that backdrop, about three years ago, I met with a number of people to whom I’d been introduced through the National Minority Supplier Diversity Council (NMSDC), Rev. Jesse Jackson’s RAINBOW Coalition, and my own business contacts to discuss the establishment of a new vision for Black enterprise in America.  While Dr. King, my dad, Rev. Jackson and thousands of others were committed to the laudable goal of opening the doors of access to persons of all races, I wondered why Dr. King’s dream didn’t seem to include industry-leading aspirations.  Since the late 60s and 70s, set-asides and quotas were seen as a concession to accommodate “disadvantage” but where were the voices suggesting that maybe, just maybe, black leaders could excel equal to and even surpassing their white counterparts?  In a world where the odds of making it to the NFL and NBA are held out as the longest odds in most diverse communities, where was the discussion of the even more improbable odds of making it to CEO, Board Chairman or Managing Partner in corporate or finance America?

Two years ago, I developed a modification to our very successful quantitative equity fund.  Rather than simply measuring the quality of innovation deployed by companies for market advantage and investing in those firms, my team at M·CAM went a step farther.  We decided to include another screen: the commitment on the part of companies to support diversity in their supply chains.  Using the NMSDC data, we modeled a fund that would invest in companies based on their innovation and their social responsibility with respect to diversity in supplier relationships.  And it turns out that using this approach, with no additional market risk, investors can out-perform the S&P500.   That’s right!  Companies committed to supplier diversity out-perform their racist or indifferent peers.  This, I thought, would be a perfect product for pensions, endowments, and institutions who want to expand their investment allocations into diversity values.

I set out to meet several of the top minority managers and principals with an eye towards offering this diversity-tilted equity product in the active management or exchange-traded funds (ETF) space.  Was I in for a surprise!  At a $9 billion dollar minority manager of pension money, I was told that a diversity product would compete with their existing managers (many of whom were underperforming the market).  At a $6 billion dollar minority manager of pension money I was told that the market “doesn’t care” about diversity and would prefer a yield-optimized S&P500 product.  One of the world’s premier minority asset managers scoffed at the notion of developing a diversity equity product saying that he wouldn’t want to associate his personal brand and reputation to something that was overtly minority focused!  And while New York, Virginia, Texas, California, Illinois and many other state teacher, police, fire, and employee pensions have mandates for allocating to diverse managers, not one actually has gone to the level of demanding that diversity actually trickle down to the Diversity Owned Companies that are actually making a difference in their communities! 

Now, last time I checked, most of the race news these days is about police shooting black men in the streets of America.  Tearful “How much longer?” has replaced the 1966 hopeful “We shall overcome.”  And the fact of the matter is that as long as economic injustice is not only tolerated but expected, there’s precious little we can expect to see change.

But, just on the eve of my frustration boiling like the pavement in Selma and Charlotte, I felt the cool waters of opportunity start to trickle.  Two very courageous men – both former NFL players – have decided to stand up and take up the challenge to lead America into a new day of race in America.  Two amazing men are studying for the Securities and Exchange Commission licenses so that they can step into a future where access is not the goal – rather it is excellence!  And like every great undertaking, the first tentative steps have just begun.  But one month from today, those first steps will be surrounded by dozens, hundreds or thousands more and before long, we’ll have justice rolling down!  And while I don’t know if I will enter the promised land where dreams of equivalent access go hand in hand with the daily news, I do know that I’ve been to the mountaintop, and from there, I’ve seen a much taller mountain worth climbing!  Thanks Charles.  Thanks Lee.  We’ve only just begun!