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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  January 16, 2022 2:00pm-2:30pm EST

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chairman of the board of
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starbucks and a member of the board of directors of jp morgan. i had a chance to talk with her about an incredible business and now an incredible philanthropic career. right now you are the chairman of starbucks. you are, i think, the only black female who is the chairman of a major fortune 500 company, is that right? >> correct. >> is a surprising >> absolutely. i think it is quite disappointing. >> do you see any progress in this area? >> i don't know. there may be people out there who are headed for the chairmanship. but right now there are 500
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companies in the fortune 500 and i am the only one today, the said it only in history. that is a poor statement about our society and where we need to be when it comes to race in this country engender. >> you have been active in trying to get more african-americans on corporate board and you have a conference you host. you entered me -- interviewed me, i would say, grilled me. i got through it, but your husband said i did better than most. in any event. why are you so interested in this area and what proper do you think you have made in getting african-americans on corporate boards? >> this has always been a beginner -- a big deal to us at ariel. we will be 39 years old in a month. it has a lot to do with the fact that we recognize the board room is where all of the power is.
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at the end of the day for a company to be world-class, we think you need all perspectives. you certainly need to understand all the potential preferences of the customers you have, the buyers that you have. at the end of the day, we think that a diverse boardroom is essential to the well-being of a company and its stewardship. i say all the time that companies that do not understand this are committing corporate suicide. we advocate in a strong way small and mid-cap u.s. names for diversity in those boardrooms. it may not be there when we first make our purchase but we will be pushing and saying, what is your plan for a diverse boardroom? at the end of the day in the last 39 years, we have had diversity added to the board. >> you started out right out of princeton. then you work your way up to be
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co-ceo. let's talk about your background. you are from where? >> chicago. >> you grow up i know wealthy family? >> the opposite. i was the youngest of six kids. my mom was a single mom. my siblings are 20 plus years older than me and always joke that i was found on the doorstep. my mom worked extraordinarily hard in the real estate business. she struggled a lot. we used to get evicted. we used to get our car repossessed. >> your mother was supporting the family and the business was not wonderful sometimes. >> also she was a black woman try to do something on her own and it was very hard in those times. it was -- there were a lot of obstacles for someone like her.
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she did not have my education but she was very wise and imparted hope and wisdom in me that allowed me to be the person i am. >> you did pretty well in high school? >> i was very good at school. >> you apply to college. you applied to harvard and princeton and got in. harvard is a great place. i am on the board. why did you choose to go to princeton over harvard? >> harvard is a great place. i loved it. my mom really wanted me to go there. she told me harvard was like coca-cola and anywhere i went in the world including an african village if i said coca-cola -- if i said harvard people would know what i was talking about and princeton was like sprite, we only knew it in america. after visiting both a princeton alum called me every single day after i got in and told me why princeton was better for me.
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i was invited to lunch with bill bradley and john rogers the founder of ariel. i said any school where people would be this fanatical about the school and having someone go there would be a really great place. so against my mother's wishes i choose princeton. >> you never regretted it, right? >> i loved it in every way. >> you graduated in what year? >> 1991. >> then you decided to go back to chicago. you then -- you joined a then relatively small farm -- firm, ariel. >> it was tiny. i did interview on wall street. but one day after making lots of trips to new york on the train to do the interviews, one day i just called john rogers. then he had the title of
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president. i said i wanted to come to ariel because i could see what i could learn from working with him of close versus the layer is down i would be in the other firms. i think he was surprised by the call. he told me i had an open invitation to join the firm after i was an intern. i you really went there. i knew from the first day -- i eagerly went there. i knew from the first day i would work there my whole life. >> you have worked at ariel your whole life. i think you are the only person at princeton who has the same telephone number you did after you graduated. >> out of 1100 people. loyalty means a lot to me as well as consistency and stability, the opposite of my childhood experience. >> ariel, for those who do not know, is i guess the oldest minority aren't -- earned firm of its type. it is value-oriented. >> we cut our teeth in small and mid-cap u.s. stocks.
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in 2011 we branched out into international and global with the new york office. we do small and mid-cap investing in u.s. stocks and all caps investing in international and robo -- global. >> now you are in the most important business of all, private equity. >> i don't know if it is the most important but it is the hottest now. we are trying to do it differently. >> your firm focuses in value stocks. but the high flyers have done so well in recent years. did that make you think you should get into that business as well? >> as a contrary and i think the opposite. what worked in the past will not work on the future. most people fight last year's war. you want to look and see what has not been successful and that is where you want to be. when we look at the past decade where large-cap and growth has dominated in a way we have never seen before selling us valuations we have never seen before relative to value are
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cheaper stock, we see a tremendous opportunity. people think that we are talking our book. we are not. we are just looking at data. mass has no opinion. -- math has no opinion. when you look at the differences in return between growth and value long-term and the differences we have seen recently you cannot help but see tremendous opportunity in value especially with the backdrop of rising interest rates. >> warren buffett has said that people would be better if they put money in stock index funds rather than picking stocks as your firm does. what do you say to warren? >> he is preuss -- proof positive it is possible you can outperform the broad market. more importantly in our world we believe in the efficient market theory and the inefficiency is in areas overlooked, misunderstood. people do not follow it very well.
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so, the smaller companies tend to be less widely followed. you also see inefficiency in international markets where we work and live, at ariel. we think we can exploit those inefficiencies in those areas. that is where we would respectively disagree with warren buffett. >> david rubenstein peer-to-peer conversations is sponsored by wells fargo, helping clients use profits for a purpose in the communities we serve.
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david: i want to talk about starbucks. you have been on the board for how long? >> since 2006. david: do you go to starbucks every day? do you have to wait in line like
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everybody else? >> yes. that is important to see how everything is working. how long it takes, what is happening in the store. david: when you walk into any starbucks, they must know you. mellody: no, it is good to not be recognized. you can truly assess how things are going. i take pictures of the cases, i do all sorts of things. david: what is your favorite drink? can you say? mellody: i make a joke, i like my coffee black like me. [laughter] david: howard schultz has been a mentor. he is the founder. mellody: very important. david: there are other coffee chains around the world, what did he do that made it the biggest in the world? mellody: he started saying he wanted to create a different kind of company, and he had a point of leading through the lens of humanity. it sounds like it could be a cliché, but it is not at all.
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it's in the dna of the company, how we look at things, it is always through the point of view of people. at the end of the day he put people first, not only in terms of the partners of the company but also in terms of the customer. at the end of the day, that is what made the company so great. david: today you are coming to new york for a board meeting of jp morgan, biggest bank in the world by market capitalization. mellody: largest in america. david: and it is led by jamie dimon who has been ceo for some time. as a board member there, what is your responsibility? is it to help the bank grow? what have you learned from jamie dimon? is he a mentor as well? mellody: any board role you are a fiduciary for the shareholders. howard taught me that. every time he sat in a room, there were two chairs. one is a partner and one is a
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shareholder. he said when you are the boardroom, be proud of everything you say to those chairs and i have taken that to heart and i do the same thing when i went to jp morgan. i assume there is any employee in the room and a shareholder in that room and i'm supposed to look out for them. that is my job. in terms of what jamie has taught me, howard and jamie have taught me different things. i have been with howard a long time and i think he molded me as a person in terms of my professional self from watching him, especially for so many years and so close. with jamie i have not been there as long, but what i can say is i have learned without question how he has put a world-class team around him to run a complex business and at the end of the day you are only as good as your people. that is what i've learned. david: another initiative you are involved in, getting jp morgan and others to invest in minority owned businesses. how is that going?
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mellody: the initiative is really targeted at growing minority businesses by bringing capital and customers together. we think when people talk about growing minority businesses over -- rotate on the idea of access to capital. we think access to customers is just as important. john rogers used to talk about that all the time, saying customers grow minority businesses. i sat in the boardroom at j.p. morgan and i realized quickly and clearly, if you have got a fistful of receivable, that bank will lend you money. so the idea is how can you create sustainable minority businesses of scale. we think you can do that by becoming tier one suppliers to fortune 500 companies. those companies are looking to diversify their vendor list literally and figuratively, especially after covid. david: how is that going? are you raising the money or have you started investing in
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that fund? mellody: it's going very well, we are just off to the races. we feel very good about our progress. we have not had our final close yet and there are a lot of rules around that, but we are very optimistic. david: many people who are minorities, african-americans, latinos, others who are not a majority status, not white feel the system is built against them. in fact, i believe when i was growing up in the american dream, but i'm white and believe in it. i have lived the american dream. many people who are minorities don't believe in the american dream. they don't think they can rise up. your hometown of chicago has had a lot of problems. what do you say to these people about if the country exists for the american dream? is it possible for people to do what you've done? mellody: i'm an example of the american dream being possible
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and i can't say that is not the case. i did not come from anything. i did not know anyone. i had no relationships i could leverage in terms of what i became. it was just hard work and effort. and along the way, i got lots of breaks and miracles. but the american dream is alive and well to me. but that said, i am a capitalist with a c that i think capitalists should work for more people. right now the system is limited. it is not as good as it could be. it has gotten good but it could be better still. it will be better when more people of color can participate in the system. when everyone can play, game gets better. we have learned that time and time again. reverend jesse jackson said it about baseball, it was not as good as it could be until jackie robinson can play. when you can have the best competitors competing, you ultimately end up with a better outcome globally, domestically inside of a company. and so to me, the american dream is possible, but it is failing a lot of people because of some of these racial blinders that exist. david: why do you need to be the co-ceo of ariel?
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why don't you just do nonprofit boards, corporate boards, and other things? mellody: anyone who knows me knows that question does not make sense to me. my heart, my love is ariel. ariel is my first child. ♪ david: ceos are under pressure to say something about public issues. do you think that is a good thing that jamie dimon or the ceo of starbucks should sit things about policy issues outside of the domain of their company? mellody: we are human beings. we have opinions. i don't think that means i cannot have any opinion about some. i put that in context of when i am giving any opinion, this is my opinion. it is not have to represent starbucks or arial or jp morgan. there is truth with a capital t and there is truth of a small t. david: this country is divided
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between the left and the right. the government is not functional in many ways. are you optimistic about the country's future or do you think we are headed to a dark path? mellody: i'm worried about polarization and i think we have to work harder to be more willing to listen to other points of view. i think that warren buffett view -- if you are born in america, you have won the lottery. i think america's promise remains a very great because we have had a certain spirit in this country. i think it is in our dna. if we can realize our best selves, which is what america was founded on -- inclusion in terms of religion and walks of life, the melting pot, if we can realize that, our opportunities are endless. the question is will be allow ourselves to realize that. david: some people would say you are on a lot of corporate boards
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and nonprofits, you have married a wealthy famous person named george lucas, the creator of star wars among other things. who of ariel? why don't you do nonprofit boards, corporate boards? why do so want to do this? mellody: anyone who knows me knows that that does make sense for me, because my heart, my love is ariel. it is my first child. it was the thing i thought of when i woke up. and every night when i went to bed and all day long. it has become a labor of love for me. john joked that he started it and then he jokes that maybe i love more. i don't think we need to compete for the love of ariel but it
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became part of my dna so leaving it is something i would never consider. i have always wanted it to be there. david: let's talk about the nonprofit things you are doing. one that i want to talk about, you're doing with your husband, building a museum in los angeles for narrative arts i guess, dealing with his art he has purchased and the things he has done. can you explain why you are building a museum and what is so unique? mellody: it is the first museum that has ever been built dedicated to the art of storytelling, the narrative. a story that is told in one frame -- many directors can see this clearly. you look at a norman rockwell picture, a painting, you can understand the story in one shot. that is what the whole museum is about.
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we have dedicated the work to building this building, the first of its kind in los angeles. it is with the collection george started collecting for a long time. it also has a component that is dedicated to "star wars," but the bigger issue is to create an environment, a place where anyone can walk in from any walk of life, from a scholar to a six-year-old and feel not only like they belong there, but they understand what is on the wall. david: you are in effect self-funding this, putting up most of the money. mellody: all. david: more than a billion dollars i would say. i don't know anybody who has ever put that much money for a museum. do you think about the cost or you are not worried? mellody: what we have said, and we believe this, is that we are holding society's money. this money is not for us. we have great lives, so please don't think we are struggling here, but it was the wealth that was created from star wars, indiana jones and all of these
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things, was really quite significant and we think it longs in society. david: what's it like to be mellody hobson? everyone knows you, you can see anyone you want to see, the most famous friends in the united states. do you ever say i just want to chill out and relax and get away from all of this? how do you relax? mellody: i want to put in context i spend time with people who i admire and respect, many of them are not famous at all. but they are equally important to me. that is not how i think about any person i have a relationship with. i would say my life has exceeded my own expectations and that is why it is very important not to put expectations around what is possible for you or anyone. in so doing that, i have a sense of gratitude about all the
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people i have been able to interact with and learn from. in terms of what i do when i'm relaxing, we are basic in my house. we do things like binge watch television and we go to the movies although we don't do that during covid. george likes to watch in a movie theater with other people and he likes to experience the crowd experiencing a film, not to watch on his own. david: does your husband say this is not a good movie? does he say what they do wrong? mellody: i love watching a movie with george because he breaks it down for you. it is not about much more than that, he will tell you why the story is solid, he will tell you what is missing, he will give you ideas of how you can make the movie better. i have watched a lot of films with george where he has broken them down for me in ways that are enlightening. david: have you ever thought of running for office?
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you are outgoing, successful, you could get elected in your own state of illinois or running for president or anything like that, serving in the cabinet. mellody: no. david: the reason is, too busy with other stuff or government is complicated for what you want to do? mellody: i'm doing what i meant to do and i love. i'm not a grass is greener on the others of the fence people. you can see that by the fact that i have stayed at ariel so long, that i have relationships that extend for decades. i don't think about how i trade up. that is not how i think about life. if i had that calling, i would do it, but i don't feel that in my heart or soul. i feel that i am better off contributing to organizations like ariel, starbucks, and jp morgan. david: if somebody says i want to bundle the optimism and enthusiasm for life that mellody hobson has, what do you think is the key to being so optimistic and energetic? mellody: gratitude.
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when you have had the life i have had, every day feels like a gift, blessing, feels beyond anything i have ever expected. if that is the way that you look at the world, it ends up being a much better life. that does not mean days are not hard. i told people at ariel my worst day is still awesome. i have had some bad days but in the context of what i know that can be really bad, worrying about where you are going to sleep or eat. nothing is that bad, nothing. it gives me empathy for people who have those struggles. because i never forget, i am always grateful and because i'm grateful, i think i am supposed to work hard and do better. i'm supposed to be optimistic because the contrary is -- it just doesn't seem right given the opportunity i have had. what do i have to complain about? it doesn't mean i don't have moments of complaint, but in the context of my life, i have
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perspective. and that perspective allows me to have gratitude and joy. ♪ david rubenstein peer-to-peer conversations is sponsored by wells fargo, helping clients use profit for purpose in the communities we serve.
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