If there was one commonality among the two keynote speakers of Winning Workplaces’ 2007 Top Small Workplaces Conference & Celebration on October 4, 2007, it was the aspiration to change the world. This, of course, is no surprise when dealing with leaders of successful small and midsize businesses. Yet, both speakers left no room for ambiguity – they underpinned their idealism with thoughts that were quite grounded in terms of how they got to where they are on their respective topics, and how they plan to move forward.
Mellody Hobson, president of Chicago-based Ariel Capital Management, LLC, delivered the morning keynote, a self-described wake-up call to a “crisis unfolding in real time” – namely, the wide gap between white Americans and minorities when it comes to saving and investing habits. She argued that factors such as the Social Security funds crunch, the move from pension plans to defined contribution plans such as 401(k)s and improved life expectancy have disproportionately affected minorities.
|Ariel Capital Management President Mellody Hobson.|
How has this happened and what does it mean? Hobson pointed to her firm’s annual Ariel/Schwab Black Investor Survey, which has examined for the last decade the saving and investing habits of white and black Americans who earn $50,000 or more per year. She said the survey has revealed some startling results. In 1998, for instance, while white respondents said they had saved or invested an average of $90,000, black respondents had done so for half that amount.
Hobson said this illustrates just how far behind minorities are when this trend is compounded over time. She added that this could spell trouble for all Americans, as minorities who are unable to save or invest wisely will be more dependent on public programs to sustain themselves, which means higher taxes.
What can we do to solve the problem? Hobson first outlined what she and Ariel are doing. Most notably, the firm assembled its first Ariel/Schwab Black Summit in New York last month to present the latest survey findings and present “a plan of action.” The event featured Charles Schwab himself, Hobson’s business partner at Ariel, CEO John Rogers, Jr., and leaders in the financial services industry, government and academia.
Ariel also sponsors a school in Chicago, Ariel Community Academy. What’s unique about this school is its curriculum emphasis on saving and investing. Ariel supplies each first-grade class with $20,000 in real money in invest. As the kids, who are from the inner city and don’t come from families who invest heavily, reach the next grade, they gain more control over their funds and receive earnings statements in the mail that gradually resemble real earnings statements.
When it comes to education across the country, Hobson believes more should be done to help future generations learn good saving and investing habits early on. “It’s mind boggling that you can take wood shop in high school, but not a class on investing,” she said.
Hobson also framed her discussion in terms of what the business leaders in the audience can do within their organizations to improve the saving and investing habits of their employees. A good first step, she said, is to ask retirement plan administrators to provide a participation breakdown by race. Hobson said she asked several Fortune 500 companies to do this, and they found that at the same title and income level, minority employee participation rates were much lower.
She also said more open and honest communication – in workplaces, homes and everywhere else – is needed to really get a handle on the problem. “This is starting to change, but the image you often see on the covers of retirement plans is a white couple walking down the beach,” Hobson said. “My dream is a beach in Florida with black grandmothers in bathing suits. That will tell me I’ve done good work because they will have retired like everyone else.”
|iRobot Corp. CEO Colin Angle addresses attendees.|
In the early afternoon on October 4, Colin Angle, co-founder and CEO of iRobot Corporation, delivered a much different presentation on “Why Failure is a Frequent Pit Stop on the Road to Success.” Angle said his goals were to show where iRobot came from and to convey to the audience what it felt like during the early days of the launch of the Roomba, the company’s most profitable and popular product.
While today the company’s innovative floor-cleaning robots are almost ubiquitous, Angle painted a very different picture of the Massachusetts-based firm’s offerings in the early 1990s, after he founded the company with the help of some fellow grad students. Showing a chart of iRobot’s revenue starting in 1990, the CEO noted that they went three to four years “before we even rated a pixel.”
But it was a time of intense learning that set the stage for future success. Angle said a short-lived partnership with SC Johnson to create industrial floor-cleaning machines taught the company how to clean floors. Similarly, a three-year partnership with the toy company Hasbro taught iRobot how to manufacture. Eventually, although Angle says the company was considered unfundable for several years, it reached a stage where “we talked to venture capitalists and they wouldn’t throw us out.”
The Roomba debuted in 2002, and when the company supplied its PackBots to the U.S. military for use in bomb-diffusing missions in Iraq and Afghanistan later in the year, revenue finally caught up with the company’s inspiration and drive.
Angle also provided some unique views on entrepreneurship, having failed with 18 business models in 12 years – the first one being to fly a robot to the moon and sell the movie rights – before finding success.
“A lot of people say entrepreneurs are great risk takers. I say hooey. If I were a great risk taker, I would have died on business model two,” Angle said. “I think successful entrepreneurs are great at understanding what risk really is. The vast majority that succeed understand what they’re getting into, the pros and cons. So when you bet the company, know why you’re betting it, and know what your chances are of recovering if it does, in fact, fail.”