On Feb. 10, 2007, Senator Barack Obama launched his bid for the White House in Springfield, setting himself on a course that has become one for the history books. But Obama might not have made it even to the Old State Capitol Building that frigid day if not for a private meeting he had with friends and advisers in late 2002 as he was mulling a run for the U.S. Senate. In a South Side high-rise overlooking the lake, the junior state senator vetted his lofty political ambitions with a group of Chicago's African American business elite that included Frank M. Clark Jr., Valerie B. Jarrett, Quintin E. Primo III, James Reynolds Jr., and John W. Rogers Jr.
Truth be told, his executive sounding board was present chiefly to talk Obama out of entering the contest. The Chicago Democrat had already lost a race for the U.S. House of Representatives, his funds were low, and his public stature even lower. Another loss so early in his political career would be disastrous. But over bacon and eggs in Jarrett's condo in Kenwood, the group debated the pros and cons. In the end, they agreed with their ambitious friend: Obama should run, and they would all pitch in. Jarrett recalls Obama saying, "Part of what I am expecting you to do is broaden my reach far beyond the African American community."
They have done their part. Though much of Obama's success must be attributed to his considerable personal skills and appeal, no small amount of credit goes to a powerful troupe of black business leaders in Chicago. They have been Obama's key source of fund-raising—employees at Exelon's (EXC) ComEd, where Clark is chief executive, have already contributed more than $180,000. And this group has been his link to moneyed Chicagoans, such as Penny S. Pritzker and James S. Crown. But Obama is not their only cause. These black executives have a span of influence that spreads beyond Presidential politics to impoverished school kids aspiring to enter the nation's prestigious corporations.
You might call these chief executives the Fab Five. Besides Clark, there's Jarrett of real estate management firm Habitat; Primo of Capri Capital Partners, a commercial real estate developer; Reynolds of Loop Capital Markets, an investment bank; and Rogers of mutual fund outfit Ariel Capital Management. Though each has his or her hands full running a business, they always make time to help each other and the larger black community. Their spirit of mutual support reflects a mix of Midwestern values and the African concept of Ujamaa, a Swahili word for "extended family" that embodies the value of sharing work and wealth through business relationships.
Chicago's altruistic black executives extend far beyond this quintet, of course. Little happens inside Chicago's black business community without the involvement of such others as Linda Johnson Rice, chief executive of Johnson Publishing, whose flagship is Ebony magazine; Obama buddy Martin H. Nesbitt, president of Parking Spot and chairman of the Chicago Housing Authority; Charles A. Tribbett III, managing director of executive search firm Russell Reynolds Associates; Anthony K. Anderson, Midwest managing partner of Ernst & Young; Samuel C. Scott III, CEO of Corn Products International (CPO); and Cheryle R. Jackson, CEO of the Chicago Urban League.
These execs have worked largely incognito to form the world's largest organized conference of black directors of publicly traded companies. They're also setting precedents with megaprojects in real estate. They're sponsoring schools and mentorship programs. They're behind the first minority-owned banks to manage major bond offerings by corporations. And they're creating the country's biggest funds dedicated to community investment. "I don't think anybody can just sit in a room and start a business or launch a major project on their own," says Rice. "You need people you can reach out to and share information with. We have no problem helping each other out."
They have miles to go, however, before they can rest. In many categories, Chicago's blacks lag African Americans of other big metropolitan areas. Along Michigan Avenue's roughly 2.5 miles of prime real estate from Roosevelt Road to Oak Street, only one building is black-owned. Of Chicago's top 50 companies, only one has a black chief executive (Corn Products' Scott) vs. four in greater New York. With an African American population twice as big as Chicago's 1.1 million, New York has almost three times more black businesses—98,076 to Chicago's 39,424. And 94% of Chicago's black-owned businesses are mom-and-pop shops with no more than one employee.
Outside the business sphere, Chicago often ranks poorly, too. The percentage of black males in Chicago Public Schools who go on to graduate from college is a dismal 3%. Crime, imprisonment, and unemployment among blacks are on the rise here, while they're declining in other big cities. Chicago is no longer even the Second City, laments Rogers. "I want to challenge Chicago to get us back where we were, and not let the business power structure in this city think that everything is O.K."
Today's black leaders are building on the work of their predecessors—at Johnson Publishing, hair-care marketer Johnson Products, Independence Bank, Harold's Chicken Shack, and Leon's Bar-B-Q. "The thing that has kept us together over the years is the commonality of our visions for what we want the city to be like, and what we want to see the minority business community be like," says Reynolds, a 53-year-old native of Chicago's tough Englewood neighborhood who co-founded Loop Capital in 1997 after 21 years at such brokerages as Smith Barney and Merrill Lynch (MER). "We always know that when we talk, we are in the same place."
The Fab Five
It's early April, and the Fab Five literally are in the same place, in Ariel Capital's 29th floor offices in the Aon Building. Sitting around a circular conference table, they tease each other and laugh as if they are at a family reunion. For instance, Clark, 62, and Jarrett, 51, rib each other like uncle and niece.
"What makes us jell and work so well together is that we have mutual respect for one another," notes Clark, who started in ComEd's mailroom in 1966 and, after a tour of duty in Vietnam, worked his way up to president in 2001. Then comes the zinger: "Although we don't always agree. I think Valerie made the mistake at least once of not listening to me."
As the others chuckle, Jarrett jabs back good-naturedly. "Well, one time he gave me very bad advice."
Clark and Jarrett met 22 years ago as fellows in Leadership Greater Chicago, a program to enlist the support of emerging city leaders in tackling local problems. In fact, many among Chicago's black business elite have known each other for decades. It's part of what unites them and allows for mutual trust. Jarrett and Rogers grew up together in Hyde Park and attended the University of Chicago Laboratory Schools. The Fab Five all live within a few miles of one another. And they sit on the same nonprofit organizations: the Chicago Urban League and the Alliance of Business Leaders & Entrepreneurs.
They also are similar in personality. Rogers is generally self-effacing in public. But inside the boardrooms of McDonald's (MCD), Aon (AOC), and Exelon, where he is a director, Rogers seldom lets a conversation go by without stressing the need for minority advancement. Although he runs one of the nation's largest black-owned investment bank, Reynolds is publicity shy, too. But behind the scenes, he has worked as a partner in Reverend Jesse Jackson's Rainbow PUSH Coalition and is now chairman of the Chicago Urban League.
Even less public is Primo. As the five banter, Jarrett refers to Primo as a "phantom" because she can go months without seeing or talking to him. Primo, 53, was born in New York and bounced around until he graduated from Homewood-Flossmoor High School. A Harvard Business School grad, he founded Capri in 1992 and has become one of the nation's top real estate developers in urban areas. Yes, he and the others are competitive, but unlike in other towns, he notes, blacks in Chicago are a "different breed of cat because we can put down our swords and do great things together."
In late March, for instance, the Urban League's Jackson was pondering how she could give a lift to black women in business. She zapped an e-mail to some of her friends, including Rice of Johnson Publishing, Peoples Gas President Desiree G. Rogers, and former WBBM-TV anchor Diann Burns. Jackson proposed a small get-together to discuss how to raise money for a formal program that would help black women launch businesses and climb the corporate ladder.
Two dozen women showed up for a reception of champagne and hors d'oeuvres that Rice hosted at the Ebony/Jet building on South Michigan Avenue (the only black-owned building on the avenue downtown). Rice got things rolling by agreeing to turn over a portion of the proceeds from the upcoming Ebony Fashion Fair to the cause. The others quickly pitched in, buying $2,500 and $1,200 balcony tickets on the spot. They all agreed to help sell more of the balcony tickets as well as $125 individual seats. "That just goes to show the power of that group," Jackson says.
The executives are just as passionate about education. Rogers founded Ariel Elementary Community Academy on the South Side, while Clark is a co-benefactor, along with Exelon Chairman and CEO John W. Rowe, of Rowe-Clark Math & Science Academy on the West Side. Concerned about the dismal college graduation rate of black males, Ernst & Young's Anderson hosted a breakfast last October to enlist mentors for male students at E&Y-sponsored Perspectives-Calumet Charter School on the South Side. Reynolds attended, along with several others. Two months later, at a follow-up breakfast, the Urban League's Jackson outlined objectives that became the league's Initiative for African American Males, or I AM.
This group also extends its ethos of community empowerment to African Americans who've made it to the top. A couple of years ago, for example, Rogers met with Richard D. Parsons, who was chief executive of Time Warner (TWX), and Ann M. Fudge, the now-retired CEO of Young & Rubicam Brands (WPPGY). Rogers wanted to attract the most important players in Corporate America to a conference for black directors of publicly traded companies.
Rogers and Tribbett, of Russell Reynolds, hatched the idea of a forum back in 2001. They had been attracting otherwise isolated black directors to Chicago for a summit that gave these board members a rare chance to learn from one another. But it wasn't quite good enough. So over dinner in Manhattan, Tribbett, Fudge, Parsons, and Rogers—along with Ariel Capital's president, Mellody Hobson—batted around ways to take the gathering up a notch.
They all agreed the atmosphere should suit the importance of the occasion. Like investment banker Herb Allen Jr.'s swanky annual retreat for media and technology moguls in Sun Valley, Idaho, this conference should send the message that any executive worth his or her Ermenegildo Zegna suit ought to be there. It does. Held at the luxurious Montage Resort & Spa in Laguna Beach, Calif., with such entertainers as Quincy Jones and Jennifer Holiday, the gathering boasted 95 of the country's most powerful executives—black and white—in 2007, including Jeffrey Katzenberg, CEO of DreamWorks Animation (DWA), Wal-Mart Stores (WMT) Chief H. Lee Scott Jr., McDonald's USA President Donald Thompson, and Boeing (BA) Chief Financial Officer James A. Bell.
It's a summit that New York's business leaders could easily have organized. But despite its size and power, the Big Apple's black business network doesn't operate that way. Its dog-eat-dog competitive culture often trumps racial consciousness.
Reynolds recalls a conversation with a high-ranking African American at one of New York's premier investment banks. Reynolds inquired about the difference between Chicago's black executives and New York's. The New Yorker told him of a recent mixer at the Harvard Club in Manhattan, where several of New York's top black executives chatted among themselves. They were some of the same New Yorkers who have houses near each other in the Hamptons. They interact socially, but they rarely talk in detail about business, Reynolds was told. "I was just stupefied," he recalls. "This senior investment banker interacts regularly with black CEOs, vice-chairs, managing directors, law partners, other bankers," he says. "But they don't talk about business?"
Walking the Talk
Chicago's black power brokers, on the other hand, seem to talk about little else (except politics). They also act. It is no mistake, for instance, that ComEd is Loop Capital's largest customer, or that the utility's $115 million bond offering in 2006 was managed by Loop, the biggest energy-industry sale ever handled by a minority firm.
Some might see favoritism. But ComEd's Clark and Loop's Reynolds argue their business deals demonstrate that if corporations conduct fair and open bidding, qualified black-owned businesses can win. Loop is definitely no slouch. Its nearly 100 staffers provide direct coverage of more than 450 institutional accounts. Since its founding, Loop has been involved in more than $800 billion of equity and fixed-income underwritings and is ranked 13th nationally among all municipal underwriters. "Most corporations get comfortable doing business with people they've worked with for years. So it's extremely hard to get in, even if you demonstrate competence," Clark says. "We would not have done this with Jim if Loop had been inept."
Politics unites the Fab Five, too. Black politicians and business leaders have a history of supporting one another in Chicago. Former Mayor Harold Washington launched a push for black contractors to get city construction projects. State Senate President Emil Jones Jr. has pushed for black financiers to manage city funds. A similar kind of networking enabled Primo to initiate what could become a model for inner-city commercial development.
When she was still in the City Council, former Alderman Dorothy Tillman had been trying to rebuild South State Street into the bustling African American business district it had been back in the early 1900s, when it was known as Metropolis. Tillman met Primo in 2006 through CHA Chief Executive Terry Peterson, another mover and shaker inside black Chicago. In short order, Tillman became convinced that Primo "could bring quality" to the site, she says. "He would mentor and bring forth other African American businesses."
Next fall, Primo's Capri Capital is expected to break ground on a $155 million project with more than 1 million square feet of office, residential, retail, and hotel space, with a stylistic nod to Mies van der Rohe, whose architecture so defines nearby Illinois Institute of Technology. By comparison, New York's Harlem USA, built in 2000 and credited with rekindling inner-city development in the U.S., cost $66 million and features 285,000 sq. ft. of space. "We're using this project as a means to foster black businesses," Primo says. "It was demanded that we create something that would be a shot heard round the world."
The power of Chicago's black business leaders may soon reach the White House. There was a time when Obama could barely scrape up a few thousand dollars. Then Martin Nesbitt and S. André Rice, president of Muller & Monroe Asset Management, introduced Obama to billionaires Jim Crown and Penny Pritzker. Later, Nesbitt recruited Pritzker to chair Obama's finance committee. "Barack has relied on his friends in the African American community," Jarrett says. "I think it's the first time that a nucleus of African Americans has had such a broad reach." But if the Fab Five have their way, it won't be the last.