Black Capital Matters

An open letter to my African American friends and neighbors 

It’s been a tough year. The pandemic has killed many of us, and black people are more likely to die than others due to income inequality and economic disadvantage. 

I am not black, and I do not know what it’s like to be black, but I am an American. If you listen to me speak, you may be able to determine that I am from somewhere in the Midwest. If I listen to some of you speak, I might be able to determine that you are black. Other people I speak with I can identify as Bostonians, New Yorkers, or Southerners. That’s my point. We speak many dialects here, but we all understand each other.  

Growing up, there were many dialects spoken in my neighborhood and I understood them all. When I hear an African American speak in a “black” dialect, that’s just one of the many I learned growing up there. Half the mothers in my neighborhood were black, and when I wasn’t sitting at their kitchen table eating a sandwich with their sons, their sons were eating sandwiches my mother made for us between sandlot baseball and football games. 

If you were ten years old and you wanted to be a top dog in Lansing, Michigan you earned that title on the sandlot. Anybody could play, but there was a pecking order determined by age and/or skill. The better players called the plays and got to throw and catch passes. If you weren’t one of them you were relegated to blocking. Totally unglamorous, but it was still infinitely better than staying home. There were a lot of tough and aggressive black boys who were good athletes and if I wanted to be anything but a blocker I had to get some game. However, the black boys didn’t call the shots, nor did the white or Hispanic boys. The best ballers called the shots. We were all equally franchised on the playground. 

I mention these things because I want you to understand that I’d like to see all the kids I grew up with become fully franchised in the United States of America.

Sadly, right now if you are black, you have nowhere near equal footing than your white counterparts and until you realize a few things, nothing and I mean nothing will change. We are a capitalist society, and those with the capital make the rules. 

Financial capital is the money, credit, and other forms of funding that build wealth. 

However, money alone is not the only form of capital that matters. Anyone wishing to build a large enterprise needs plenty of several other forms of capital.

Political capital refers to the trust and influence that politicians or organizations earn or build up through the pursuit of policies that people like or respect.

Intellectual capital refers to the intangible assets that contribute to a company’s bottom line. These assets include the expertise of employees, organizational processes, and sum of knowledge contained within the organization.

Legacy Capital is the capital you were born with or inherit. It includes money, family ties, connections and advantages not available to others born into less fortunate circumstances.

It is how these forms of capital are deployed by the power structure of the nation that determines society’s haves and have nots. Only when we fully examine and understand the power structure of our country in its entirety and how capital is allocated and preserved will we see a level playing field. What few people understand is just how unlevel it is. 


Let's look at the power structure of the American economy...

Private Investment Groups

Here’s how a private equity group operates.They raise a fund, typically $500,000,000 or more. In a typical scenario, they invest that $500m by buying into ten companies, with an average capital injection of $50m each.

They then borrow $50m for each acquisition from an investment bank, bringing the value of the portfolio to $1 billion dollars.

They manage and grow the portfolio, eventually turning their billion dollars into three billion.

They sell the portfolio, pay back the investment bank, distribute the profits to their investors while taking a hefty management fee. Private equity is how wealth is created. You cannot bootstrap an Oracle or a Microsoft. At some point, you need outside capital and expertise.

Investment Banks

If you want to build a skyscraper, an industrial park, a factory or any large scale project that generates income and wealth you need the help of an investment bank. They can lend you a billion dollars and if you need more, they can syndicate an offering to their counterparts an another investment bank. They generate massive fees for doing this, they are regulated by the government, and the government does not allow anyone else to do what they do. Another thing that investment banks do is take successful companies public, creating incredible wealth for the owners. These companies are almost always built and backed by private equity equity firms. Massive wealth is created in this manner.

The Public Markets and Publicly Traded Companies

The New York Stock Exchange and NASDAQ are the two major stock exchanges in the United States. When privately held companies go public, the founders find themselves with incredible wealth that will sustain their families for generations.

Law Firms and Certified Public Accountants 

Lawyers and accountants are to these entities what referees and statisticians are to the NFL. Without order there would be chaos. The biggest and best law and accounting firms in the country protect the wealth and influence of their clients, the investors and bankers. 

The aforementioned groups have the majority of the capital in all the forms we mentioned.. They are in control. They make the rules. They fund the new companies that become market leaders and generate massive wealth for their investors.  

Notice I did not mention the government as one of these power centers. That’s because they are entirely controlled by the investors, bankers, and their hired guns. who donate to political parties and make no mistake about it, they own the government.

Now let’s look at how black people participate in the exercise of power in relation to the power centers of the American economy, group by group:

Private equity in relation to the black community:


Let’s look at one private equity group, Thompson Street Capital Partners in St. Louis, MO, They recently raised their sixth fund with $1.5 billion dollars. If they conservatively double the value of the 1.5 billion they just raised, the 49 members of the group will split 20% of that upside, an average of $6.12 million, with most going to the more senior members. Click the link below to view their team:

Do you think I just cherry picked that all-white management team? Let’s take a look at another group, Warburg Pincus in New York. One of the biggest in the country. Managing $60 billion of institutional capital. This link goes to their “team page”, where they showcase their personnel:

I encourage you to load their  entire 72 person roster. Notice anything? Hint: They are not hiring you.

Big companies do not become big without outside investment. You cannot bootstrap an Oracle. If you want to grow and scale a company you will eventually need outside investment. Thompson Street Capital Partners posts interviews with the entrepreneurs they have backed. Take a look: 

What did you notice about them? Hint: They are not investing in you.

Do you think I just cherry picked that all-white group of rising entrepreneurs? This is standard all over the country. Go to Warburg’s website and look at the roster of companies they have invested in. I picked one at random and here’s the link to their team page:

Now let’s look at Blackstone. The biggest private equity group in the country with 649 billion dollars under management over four major business units.

Their website prominently features a black executive sitting at the head of a conference table:

But below you see the real Blackstone. This must be an annual meeting or other major event. They have a hundred or more people packed around one of the bigger conference tables on the planet. Important decisions are being made. No one at this table or even those relegated to the sidelines are black. You definitely do not belong at Blackstone.

The takeaway: Private equity is not hiring you and they are certainly not investing in you.

Publicly Traded Companies in Relation to the Black Community

The CEO’s of the Fortune 500 weild incredible power and influence. One in eight Americans is black but only one in 125 Fortune 500 CEO’s are black.

Law Firms in Relation to the Black Community

Below you will see one of the most blatantly dishonest claims regarding diversity ever:

Cravath has 76 partners, and not one of them is black. Here are the diversity statistics for the 4 most powerful firms in the country:

Cravath, Swain & Moore
Wachtell, Lipton, Rosen & Katz
Skadden, Arps, Slate, Meagher & Flom
Sullivan & Cromwell

At the top 4 law firms in the country, there are 567 partners, and 9 of them are black.

Investment Banks in Relation to the Black Community

Here’s JP Morgan Chase’s published statement on diversity. 

Here are the people who run JP Morgan Chase:

Here’s Bank of America’s leadership team:

Here’s Morgan Stanley:


The word that comes to mind is ‘token”

The financial state of the American dream  in relation to the black community is utterly dismal, but we should take a look at some of the other important forms of capital we mentioned earlier.

Political capital is one form of capital the country distributes equally. One man, one vote, and it’s ultimately what will deterrmine your success. But look what’s happening:

People are chipping away at your right to vote.

Educational opportunities are certainly an important form of intellectual capital. But African Americans are going to college at a declining rate.

Ane the universities they do attend are poorly rated.

After taking a look at the institutions that control the financial capital of the country, what conclusions can we draw?

Only one: You are almost completely shut out of the wealth building process in our country, with little access to the capital it takes to build wealth, but the system is also providing declining opportunity of the other meaningful forms of capital that are pererequisites of success as well. We could go on and on about the staggering inequities of the American business landscape, and we will speak out later on several of the ways we think that things can improve. But for now, we’re going to ask the question no one else has been asking:

Pension Funds are the biggest investors in private equity! So are banks and insurance companies! Here are ten of the largest:

If you are black, and you’re a bus driver in Atlanta or a cop in Chicago you probably have some kind of a pension plan. That pension plan is a pool of capital that has to grow its funds to keep up with its obligations. And if you have a life insurance policy or hold any annuities, or even if you simply deposit money in a bank, you are invested in pools of capital that are used by the same machine that creates and protects wealth that you are almost entirely excluded from.

Of course Black Lives Matter… who could argue that? But you could organize marches ten times bigger ten times more often, and it won’t make a difference. The people who run the power structure right now are completely insulated from any protest activity.  Black Lives Matter has actually handed more political capital to it’s opponents than it’s created for blacks themselves!

If black people are going to stop being victims, it will be because they have real economic power. No legislator in the world would dare to vote to strip voting rights from you if they knew black owned companies would throw money at their opponents. 

Most of the early wealth in this country was produced on the backs of slaves. But has anything really changed? You STILL have no meaningful access to the capital you produce! And your right to vote and access to higher education is under attack!

You can get your ass shot off in Afghanistan or Iraq, but you can’t be a serious entrepreneur or be meaningfully involved in the creation of wealth until you get control of your capital!

Black Lives Matters is a slogan of victimhood.

And Black lives will not matter until…

Coming soon: Potential Solutions

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