Mellody Hobson | Security in Knowledge

Hi everyone. Welcome to Grey Matter, the podcast from Greylock where we share stories from company builders and business leaders. I'm Heather Mack, head of editorial at Greylock. In today's episode, we're sharing audio recorded during Greylock's new virtual speaker series, iconversations. In our second event in the series, Greylock General partner Reid Hoffman talked with Ariel Investments President and co CEO Melody Hopson. Melody is an accomplished businesswoman with many roles. She's also the chair of the board of Starbucks Corporation, a a director at JPMorgan Chase, and an active philanthropist and financial educator.

So hi everyone, I'm Reid Hoffman and I'm happy to welcome you to Conversations Greylock speaker series where we chat with iconic figures across tech, finance, media and culture. Today, I'm thrilled to have Melody Hopson join us. Melody easily stands out as a leader in each one of the categories I just mentioned. She's nationally recognized voice on financial literacy and has been named one of the Time magazine's 100 most influential people, although to me that's probably 10 most influential people. She is currently the co CEO and president of Ariel Investments where she has worked since she was a college intern. Ariel just announced a new initiative called Ariel Alternatives and Melody was recently named chairperson of Starbucks Corporation, making her the first and only black woman to chair a Fortune 500 board. Progress is slow, but hopefully inevitable. Melody is always a trailblazer, so I'm so pleased. She's also director of JPMorgan Chase, previously served on the boards of DreamWorks Animation and Estee Lauder. Melody is also deeply involved in philanthropy, arts and education. Last year at our alma mater, Princeton, Melody established Hobson College, which is the first residential college at the university named after a black woman. Melody, thank you so much for being here today.

Thank you for having me. I'm excited to talk to you.

There's so much I want to talk about today, but let's hear a little bit more about how you got to where you are now. Like by all accounts a bunch of our mutual friends from our kind of a whole network together. You've always been very driven since elementary school. You've stood out among amongst your peers for your level of focus and determination and you retain that reputation strongly to this day. Tell us about your upbringing and how that set the tone for your professional career.

Well, I think that we all are a composite of a lot of people in our life and I think my upbringing speaks to that and has a lot to do with who I am. I'm the youngest of six kids in my Family and in my family I'm really young. My siblings are a couple decades older than me. I have four sisters and I had a brother who passed away and so grow in that way. I was technically an only child because they say if you have more than five years between you and a sibling and my, my closest sibling to me had a nine year difference. I think that's very, very important because my siblings had a very different path. My mom was a single mom and she worked extraordinarily hard but often struggled to make ends meet for us. But she was very, very clear and somewhat demanding, I would say not in a mean or aggressive way, but in a very clear and non negotiable way with her expectations. And I think that had a lot to do with the person that I am. I told this quote that my mother used to say to me over and over again as a child growing up. She said, be the labor great or small, do it well or not at all. And that just was drilled into me. It didn't matter if I was doing dishes, washing a floor, studying for a test. She expected me to go all in on everything that I did or not to do it at all. And I think that very much framed how I think about my work and the effort that I put into things. The other thing that my mom did was starting was very young. She didn't think that you should sleep past 6am she worked really, really hard. And she said, if you're sleeping, the world is passing you by. And so that had a lot to do with me wanting to wake up early and attack the day because I felt that that would give me an edge on other people if I could wake up earlier and get more done. So these crumbs of a person became big pieces of me. And I think that had a lot to do with how I attack things. And my focus, lastly, I think was a function of circumstance. I realized that the way that I could have a better life was to exploit every educational opportunity that was given to me because I said education is the one thing that cannot be taken away from you. And so as a result of that, I was like a laser. I'm not easily distracted. I can be in a beautiful day, sitting in a room with lots of windows and not look out the window if there's something I have to get done. So I'm really, really grateful for that level of concentration that I've had actually since I was a child.

And actually we're going to get into some of the current and really important work in a bit. But actually I know you've been working really hard and that's moved you from 6:30 to 4:30. How did you move from 6:30 to 4: 30? Getting up in the morning?

Well, it's actually 3:55 now. It just keeps creeping because I give myself a few minutes to wake up, but it was really never. The 6 o' clock was her sort of benchmark that, you know, even on a weekend, even during vacations, the 4 o' clock for me just became my brain works really, really well in the morning and I really enjoy and appreciate the quiet time. And so I feel like I can get a lot things done.

Yep, yep. Makes total sense. So we're going to get to a number of the hats that you've done in the span of career. Board member, educator, philanthropist. But the constant's been the role as an investor. What drew you to the financial world and how has it captivated your attention, including, you know, all of your innovations in, you know, the last few years as well?

They say the average American has 11 jobs in their lifetime and I've only had one since I graduated from Princeton in 1991. What drew me to the financial industry was my basic desire to understand money. And that desire to understand money was an outgrowth of how I grew up where money was at times very, very scarce. And I know my story is not different than many other people, but I did feel like I wanted to be solutions oriented even as a child. And I didn't say have a lot of money or make money, I said understand it because I thought if I understood it then I wouldn't perpetuate the circumstance that I was in. And so I feel like I had a calling, like something was pulling me towards the financial services industry because that's where all the discovery would occur. And so I don't think it's an accident that I work in the investment business and I don't think it's an accident that I've done this for as long as I've done it, because I think it's very much for every action there's an equal and opposite reaction. It's a countervailing force in the experience that I had as a child. My husband says whatever happens to you as a child really sticks with you because you don't have any advanced reasoning skills. So I can tell you when you're young and you have no control being evicted or having your phone disconnected or lights turned off or your car repossessed, it creates a tremendous amount of anxiety. It's very, very Unsettling when you don't know where you're going to go. Which is why I have so much empathy and why I really do feel an obligation to work hard for people who find themselves in similar circumstances, especially as a fallout of the pandemic. And so that sense of insecurity drove me to the security of knowledge and specifically around finances.

Yeah, well, and it's part of the tales of you and folks who've gone on heroic journeys is to encounter serious challenge and then meet it right. You know, kind of shape it into driving who you are. And that's been part of what's amazing. So you joined Rail college intern. What was the organization like when you joined and where is it today?

It's so funny when I think about those days. So we were small, so tiny at the time. I think technically I was the 19th person. But when you look back to then and you jump forward to today, I think only three of us are still there. John Rogers, who founded the company as the first minority owned investment firm in the Nation back in 1983. My colleague John Miller, who is one of our co portfolio managers and then myself in terms of the old guard, which is crazy to say at 51 years old, I'm the old guard at the company, but that is in fact true. We were tiny. We had I think somewhere in the neighborhood of maybe a billion dollars under management. We were in a little, tiny little office, really close together. But there was so much joy in that work in that time. I mean it felt like we were all founders of the company. I think we all had this founder mentality. Even though John technically had started the company. There was a great sense of teamwork, comradery and belonging. I think it's something you know a lot about in Silicon Valley in terms of that startup environment. I joke about the times that someone would bring in day old Entenmens because they live next to the Entenman's outlet store and they would bring those day old Entenmanns and one role. We'd graze on it for the entire day. That's how small the office was. Today we have 107 people. We are based in Chicago still. We're in the Aon center there on the 29th floor. But we also have offices in New York on Madison Avenue and we have a new office that's opening in San Francisco after the pandemic. It's finished. But none of us have actually worked there. We have people in Australia, we have an office in Australia and we've really grown into A really unique and wonderful culture of ethnic diversity. There's something for everyone inside of Ariel and that's really, really exciting to watch and to witness. We manage about $16 billion, a little more than that, maybe close to 16 and a half right now. Markets have obviously been very strong and good to us. Performance has been really, really strong for especially our flagship. David Rubenstein is the one who taught me that as goes the flagship, goes the firm. So you always want to make sure the flagship is doing well. And we have just a core group of dynamic leaders that are making things happen on a day to day basis. And it's incredibly gratifying for me to see the stage of our company really grow into what it is.

It's category defining in many very important ways. So let's dig a little into your relationship with John Rogers, the founder you just mentioned. And he was a mentor to you early on and now you're co CEO of the firm. Can you share a little bit about.

That's crazy. I will tell you that. So in the beginning when I got hired, I was like this pipsqueak. I used to call myself John's Grasshopper. So my job was to do whatever he needed to get done. Obviously, as I grew up and evolved inside of the organization, I got harder and harder, more significant work to do. But literally I was an intern. Originally I worked at this firm between my sophomore and junior year and between my junior and senior year he helped get me a job at T. Rowe Price. And then I came back the year that I was the intern. John used to go and sit in McDonald's on Saturday mornings and read the Wall Street Journal, the New York Times, Barron's Cranes, the Sunday New York Times. On Saturdays he had this pack of newspapers, the stack. And I found out that he would go and do that every Saturday night, go sit next to him, get the exact same things and just hope that he would talk to me. I know it feels a little stalkerish. And over time he would say, well, did you read this article or did you see that? And ultimately we had this phenomenal mentor, mentee relationship and he put me through my paces. Nothing was ever easy. He'd make me write a letter over and over and over again. And it was in its own way challenging and just incredibly fun and great because he invested so much in me. When I was 24 years old, he called Jack Bogle, the head of Vanguard and said, I have this woman that I work with that I want you to meet. They were on the board of Princeton together. And Jack Said, I'm sure this was not a high priority for him. He said, I'm going to be riding a train from New York to Philadelphia on this day. You can come and ride the train with me. So we flew to New York to get on a train to ride it with Jack Bogle. We sat down in the dining car, and John said to him, she's going to be president of Ariel. And I nearly fell out of my seat. And he said, I want her to meet people who can help her be successful. So he did a lot of work to make sure that I was trained and exposed. Now the thing that got hairy. And John would admit this, as I started to grow and rise through the organization, suddenly the mentee is no longer a mentee. And so, of course, there were times when I felt like I had the better answer or the right answer. And yet we had had this relationship that was tiered. I became president when I was 31 years old and had that job running the firm, basically everything outside of research and investing, until 2019, for almost 20 years. And so ultimately, as our relationship evolved, we became co leaders. It had moments that it was very, very hard. But we always, in our toughest moments, John said something to me that I've never forgotten. When we would disagree, he said, we both disagree on this issue, but the one thing I know about you and I know about me is we want the best for this company. We just have different paths. And once I recognize that, our disagreements became easier. And co is very much in keeping with Ariel. I call it the buddy system. We do everything in twos because we think two are better than one. And it's been a real gift to work alongside John for all these years. He knows there's no one outside of my family that I love more than him and appreciate. He's the godfather to my only child, and he is someone that I just have a tremendous amount of gratitude for. I continue to learn from, but I also push him as well.

Would you give any tips to folks? Because this is probably. It's a stellar example of a common pattern that frequently blows up in some way, which is the mentee grows up. And it's obviously the massive success case where suddenly the mentee becomes a. And a mentor themselves and all the rest. What were some of the things that you learned from that you would point out to other folks who were going through this?

Well, sometimes we had a referee. So, I mean, someone that you could really trust. We have a really, really good board, and so we used our board in some of Those situations, I'm sure it made them uncomfortable. And there were times where I think maybe they thought they were choosing between mom and dad. But we need it sometimes to air a difference with others and to have some opportunity to have that issue litigated when it wasn't just us. The other thing that I think helped a lot is when we started, especially when I became president, John had the title of president, and then he pushed himself up to use the title of CEO and chairman. And so what was really interesting is, you know how you have friends who have children and they stay one size in your mind. So you go to see that friend and you're bringing a child Legos and you're like, my boy is 17. Just like to you, they're six years old. There were people who saw me as like a six year old. She's the one who, like walks after him and makes sure everything gets done. And, you know, she's great, but she's not the decision maker. So having to do that was very, very hard. And it took a lot of discipline for John to literally be the person that they would come to and say, here's the issue. And he'd say, you have to ask Melody. And then they go back to him after I gave the answer, and I had to train him to say, you have to send them back to me. And that was something that, that was not always easy. Last thing, we wrote it down, we just said, this is you, this is me. And when we're not sure, we'll talk to each other, but let's just be as clear and black, as white as we can be. I don't do investing. I don't pick those people. But you lean on me for my Rolodex, you bring me into the room. If you need my help, I have privileges that I can go to any meeting inside of the firm. And then the flip side was, this is me, and these are the things that I make the decision on. But you're also invited. At one point, because John realized that his Persona loomed so large, he decided he no longer wanted to attend any of my meetings because he felt he was overshadowing the meeting. That was also, again, a very thoughtful and kind thing to do. But I was always welcome to his to show that I had that authority.

Awesome. And actually, this is a good time to ask one of the questions that's kind of come in from the audience, which is, you have many times, most often been the first or only in the room. How has that shaped the way you show up? What Guidance can you give to kind of male allies who want to help those folks who are being the first and only. I mean, I also say white male and white probably both in the room to be a successful person.

Well, first of all, I would tell you that I don't take pride in being first and only. I'm actually not the first chair of a Fortune 500 company who's a black woman. Ursula Burns was the first. But currently I will be the only one. I'm elected next week to be chair of Starbucks. I have a friend who races cars, Lewis Hamilton, who's seven time world champion, who's phenomenal in every way. And he had a quote once that he said that I told him gave me chills. He's like a little brother to me. And I think people like us find each other. When you have been someone who's by yourself, I'm not comparing myself to the global Formula one champion, but just saying they're unicorn type personality in your industry. And Lewis said being first and only anything black is a proud and lonely moment. And I thought it was such a profound statement of two countervailing ideas, proud and lonely. And so I think that that's why I take so much solace and comfort in knowing that John was always there for me because he too was first and only so many times. And so we just intuitively understand each other. I think that it also puts a lot of pressure on you because you recognize that if you blow it, no one like you gets a chance. And by being first and only, you're breaking someone's mental model. They have an idea of what investment person should be, do look like, et cetera. And they meet me or people inside of our firm and they have to readjust their expectation. And I can physically see it happen with people sometimes where I can see them look at me and almost tilt their head and readjust because I can hear their mind saying, oh, well, this is interesting, or oh, she's smart. And I say that with humility. So really understanding and owning the fact that you could shape a person's opinion of all the other people who are going to be like you, behind you is heady and heavy. But I'm up to it. And I tell my colleagues all the time I'm not in a field picking cotton. This is not hard relative to what people who came before me had to do. And so I will take up that challenge and that responsibility and recognize all that is at stake and do everything I can to exceed expectations in terms of what others can do. In the room is there are so many verbal and non verbal cues that happen in those moments. You know, the one that I talk about all the time is the number of times people will not actually make eye contact with me. And you're just like, there's something uncomfortable for them. I can see it. Even though they'll tell me how terrific they are and inclusive and make all these statements of diversity, but their eyes keep averting. And so I would just say is you try your best to see where your nonverbal cues are. You could ask women in your life, do you find me doing anything that is off putting or does not suggest that I am as inclusive and concerned about you as I believe myself to be. Last thing I think is those individuals can just make sure there's more than one. Let's not have onlys. I always tell people, first and only is not something to be proud of. And some black and Latinx people are, I want to be first of many. And so having other people in the room is something that I think is really important. I'm fishing for something on my desk because I just actually I got a note today from someone and it was just so profound that I brought it out to read it to my husband a few minutes ago. We're building this office in San Francisco and I got a letter from the architect that did our office and he wrote me a letter saying how wonderful it was to design the office together, et cetera. And then this is a paragraph. It's a personal note. On a personal level. Meeting with your team for the first time was the first time in my 35 year career where people of color outnumbered whites around the conference table for a kickoff meeting. And I smiled in a way that was unexpected. I was so, you know, 35 year career, he's never had that happen. And that said something to me because that told me I had many in the room with me, right? That I'm walking the walk and talking the talk.

And one of the things I've also heard from you in multiple environments because, you know, you're frequently called upon to offer advice and leadership on this is what everyone can do, is make sure you're building out the network. If you look around and say, well, I don't actually have many women in my network, I don't have many members of the black community, My network will change it, work on it, make it happen. Right? Because if you're not doing that, you're part of the problem, not part of the solution. It isn't just, oh, my views are fine. You're like, no, no, no. What does your network look like? And as I think you know, because you've given us a bunch of advice on this at Greylock and we've been extremely appreciative, you know, like for example, building the network with management leaders tomorrow and other kinds of things is exactly the thing that we have been highly appreciative of.

Yeah, I think that, you know that people always say to me, I can't find, I can't find this, I can't find that. And I always just go back at them and I say, there are 330 million Americans. I promise you there is someone capable and qualified to do that job. I promise you. So the question is, you're sourcing. To whom are you speaking? Where do you reach out? The one thing about our minority communities, we know each other. I did something recently and I told people, we're our own headhunters, we know how to find each other. Knowing that having the ability to tap into those networks, I think can become very, very, very powerful. But you have to work at it.

Yep, absolutely. This is probably a good transition to Ariel Alternatives. What do you hope to accomplish with this new initiative and what makes a private investment and a.

We're doing something we've never done before, but we're super excited about it. So Aerial Alternatives is our first foray into private equity, but we're doing something very, very different. An elongated fund structure. We are going to scale sustainable minority owned businesses by bringing two things together, capital and customers. John Rogers is the person that kept saying to me over and over again for almost 30 years, when people talk about minority business enterprises, they over index to capital. Capital is important. When we hear access to capital, access to capital. And of course in Silicon Valley, you know this all too well, but John would say access to customers is as important and maybe even more so because I can promise you, if you have a fistful of receivables, JP Morgan will lend you money. So this idea of bringing capital and customers together was something we said we wanted to do. And we want to scale these minority businesses that will become tier one suppliers to Fortune 500 companies. So many companies have made these pronouncements and announcements about having more diverse suppliers, more diverse vendors, et cetera. We're asking them, by virtue of doing what they already do, their corporate spend, recycling, all of that, to create more impact in scaling large black and Latinx businesses. Now here's the problem. The problem has been what we call the scale challenge. 95% of minority business enterprises in this country have less than $5 million in revenue. 95%. So the Fortune 500 companies out there that want to do business with minority businesses have that scale challenge. Right now 2% of Fortune 500 spend is with MBE's. That represents about $125 billion a year. And yet these companies are saying they want that number to be in the neighborhood of 12 to 15%. Which means there's a trillion dollar opportunity without the scaled organizations to meet that opportunity, we are going to create those businesses. So we're going to target middle market businesses between 100 million and a billion dollars in revenue over the course of a decade. Buy maybe 6 to 10 platform businesses and scale those businesses. Now one thing you're probably thinking it is true they may not be minority owned when we buy them. And this is novel. I had one private executive say to me, well you're just buying white businesses. We can buy white businesses businesses. And I said, but we can't. We haven't been able to do that. So we'll buy these middle market businesses, install and add to the C suite with black and Latinx talent, have a majority minority board, have exceptionally diverse workforces throughout the organization. Give everyone ownership in the business from the rank and file to the top of the house whenever a growth opportunity occurs, domicile growth or new divisions in underrepresented communities in order to leverage the economic impact of those businesses and ultimately create a ripple effect while first and foremost chasing returns. Because without returns, none of this works. What are we doing? We're doing what's in the DNA of aerial investment since our beginning and what we are as a firm. Everyone owns shares of our business. We're exceptionally diverse. Our senior leadership team is exceptionally diverse. We have a majority minority board. Everything we've done, we are actually going out into the world now and saying we're going to scale that for large impact and ultimately being able to narrow the wealth gap in this country.

Yep. And this is by the way, for people that missed it, the reason why you're getting up at four in the morning wanted to make this in order to make this work. What's the reception been like so far for RL Alternative?

It actually has been something we've never seen before. So that's actually really crazy. Within 48 hours we had 600 emails. Now it's thousands. And we've seen people nodding along because they're saying, you're right, this is the. And you know my joke here, white space. This is the place where no one has ever been before. And you're going at it in a way that we get to leverage what we already do. And so that is something that we think will make a huge difference over time.

Yep. It's part of the thing that you and other leaders have taught me is say, look, the fundamental thing you want, systemic, you know, social justice, economic change, economic opportunity, that's key. And I think this is going to be one of the big levers.

And this is what I said. I have taught all of the philanthropy, all of the things that have been done programmatically. You know, people talk about the pipeline, all of that. All of these things are important. But we can all just. We all should admit what hasn't worked in terms of we haven't narrowed the wealth gap in this country. In fact, after the pandemic, it probably has increased. And to this day, there's a lot of academic data on this, that a white person who has not graduated from high school is more likely to make more than a black person who has graduated from college. There's something wrong with that. Or if you use the statistic that you had of me being, as of next week, the only black woman to chair a Fortune 500 company. Or the fact that with Tusun, the Duckett and Roz Brewer will now have six African Americans as CEOs of Fortune 500 companies, which will drop to five when Ken Frazier retires from Merck. 1%. As I like to say over and over again, math has no opinion. This isn't right.

Yes.

And so I'm for just trying something new because I don't think it's right for us to sit around and just hope for a better outcome.

Yeah. No. What is it? Insanity is expecting new outcomes from the same previous behavior. Let's actually take multiple shots on goal experiment. Make it happen. So you bring up boards, and so this month you become chair of Starbucks board after having served as vice chair. You know, what is the state of corporate boards in America? What are the kinds of things we need to do in order to evolve this?

Well, the state is not where it needs to be, but I think we're gonna see some frenzied activity over the last 12 months because post George Floyd's horrific murder, as well as the countless other people, you know, we all know the names Breonna Taylor. I mean, like, we could just go on and on post that I think boards have realized they're exposed. And so I don't think anyone wants to have their next annual report come out and have an all white Male board. The fact of the matter today is that white men make up 30% of the US population and they represent 70% of the board seats. I said this over and over again. Talent and genius do not discriminate. And yet, if you look at the top of corporate America, one would think the most talented and all of the genius lies in one group of people. And that just isn't true. And so I think now that people recognize that this is not acceptable, I think that we're going to see some changes. But there's still almost a Couple hundred Fortune 500 companies that don't have a diverse board member. It'll be interesting to see again 12, 18 months out how all of that, what kind of direction that moves in. If we just look at women where there have been real strides made. 20% of board seats in America represent women. We are way down the list when you compare us to other countries because of the mandates that have taken place in the UK with the 30% club, the laws that have taken place in France or norway. I think 40% of board seats in France are comprised of women. I mean, you wouldn't think America would be lagging in these kind of statistics when we are considered the melting pot of the world. And yet the truth of the matter is that is the case. And the same is true of when you look at black and Latinx representation. We are not tracking with the demographics of our society. And so we have a tremendous amount of work to do here. But I think that bell has rung. And so I do hope that we're going to see real changes. And I know that just based upon the CEOs that have reached out to me, I joked, we're our own headhunters. I must have spoken to three dozen CEOs who asked for names, lists, etc. And then I learned something just to change the outcome. I used to give people lists and never hear back from them. And now I say, if you want a list, I have to be on a call with you. I have to go through each name with you, and I have to tell you why I'm recommending them. That has led to people being selected.

Yep. And actually, I've seen you do that, and I've been the recipient of that, which I've been very pleased with, because I've gotten a whole bunch more interesting color. Because one of the things that I find when I think about myself and kind of I look at as a network of mentors around me, you're also, you know, your mentor on how do we change society. But you're also mentor on boards. And actually some of the discussing through the lessons of kind of like, where do you compile these boards in terms of high capabilities, in terms of high performance, in terms of responsibilities, in terms of abilities to deliver? What do you see as the critical attributes of effective boards and what have you learned from being a board member?

I've learned so much. You know, Warren Buffett says he was a better businessman because he was a board member and a better board member because he was a businessman. And I think that's really, really true. Boards have brought me so much. I used to joke that my boards were my business school because I didn't go to business school. And I don't mean that as some neophyte that's not contributing. But I got so much high level expertise drilled into me just from the people around the table, from the subject matter that we would discuss. And I liberally borrowed all sorts of good ideas that came up in those rooms that I think have made Ariel better. And I know that is true of John Rogers, who has sat on some magnificent boards as well and still does, including Nike and McDonald's and the new York Times. We've been in these world class rooms. What makes those rooms work? What makes those companies so effective? Starbucks, JP Morgan. I mean, literally, I've worked with these iconic CEOs that are world famous and the Lauder family, Jeffrey Katzenberg, David Geffen, Steven Spielberg. I mean, all of them in their own way, these icons. I find that there are two key ingredients and they have been true. Of all the boardrooms I've been in, thank goodness is that there's a high level of collaboration and there's also a very high level of candor, despite even having these mega leaders who are so iconic in their own right. I've been in rooms where people are truth tellers and who would speak their truth, push back on things that they didn't agree with, be, you know, huge cheerleaders to great success and great work. And I just learned a lot from that, that candor and that collaboration are essential. And if you lose one or the other, I think the board effectiveness really does deteriorate very, very, very quickly. Again, I've been very fortunate because I've been spoiled by those environments. I've only known that kind of environment. And I think that's a function of the kind of leaders that lead those companies that are very bold and visionary and tend to be pretty fearless in their thinking. And I think they attract a certain type of person around them. You know, I've had those founder, entrepreneur as people that I've worked with. And even though Jamie Dimon didn't found JP Morgan, it feels like he did. He runs the company like he did.

Yeah, no, well, that's actually one of the really key things about the amazing CEOs is they act like founders. Satya Nadella also is the, you know, I'm going to, I'm actually not going to be a hired gun. Just thing is that, no, no, I, I feel the genetics and the blood of the company and I will take the risks and I the moral authority to what to do to grow the company.

I think a founder mentality is key because I told people all the time, I didn't start Ariel, but you would think I did. A lot of people are surprised by that. And again, seeing that in many of the leaders, how Kevin Johnson has taken over at Starbucks or that having that same DNA, I think is critical to the success of the business 100%.

A quick note to the audience. We do have a couple more subjects, but we are encouraging questions which you can put in the chat. So please do so. Shifting to financial literacy, because as we have been talking about, this is how we actually get racial justice. Social justice is through the actual networks of economic opportunity and their realization. So you're expanding financial literacy. You've done this in highly visible arenas, like in your role as TV host and contributor to financial news on, I think every major network, as well as internal settings like schools. Talk a little bit about your work.

Financial literacy is something that I feel very strongly about. I tell you people, I'm an evangelist, like an evangelist, evangelist, preacher when it comes to financial literacy, because of the travesty that exists in our society, America is financially illiterate. We just are. And it's a tough pill to swallow, but it is the truth. We're financially illiterate because we don't learn about money and finances in school in America, even at the highest levels of education. Maybe you took corporate finance, but you probably didn't take a course in investing, even if he went to a great school. And so as a result of that, I tell people what just boggles the mind. For me, I cannot figure this out, that in high school in America today, you can take wood shop or auto and not a class on investing. Which always leads me to ask audiences the same question. Who's whittling in their spare time? Who's cleaning their own carburetor? No one. Right. And yet that class on investing provides profoundly changes lives or could change lives, the lives of minority students, the lives of young people. Because the one thing about finances and investing, which we know all too well, Warren Buffett calls compounding the eighth wonder of the world. The younger you start, the better off you're going to be. You can even start with little amounts and that can grow to be substantial. I think finance and money is a language. I have a seven year old girl, as you know. Reid, you've met Everest before and you know Everest is fluent in Chinese because we started when she was born. I want children to start learning about money investing at the earliest ages you could possibly imagine. Warren Buffett says you should be able to explain a stock to a 6 year old. I actually believe that that is true. And so if we could, if we could teach the language of money to elementary school, school students, we could have a financially literate society. There's also an added bonus. When you teach children, parents learn, they're like I call the kids, like the gateway drug to teaching parents about financial literacy. Because the kids are coming home with homework that the parents don't understand and that ultimately can influence their financial decisions that they're making. And so this is a mission critical issue. I know plenty of very wealthy people who have children who don't understand anything about money. And I know plenty of people without any money who know a lot. And so this isn't just about how much money is in your pocketbook. It's about the fact that you must educate individuals about the decisions that they make. If we were financially literate, we wouldn't have had a financial crisis where people would have had taken out mortgages that they did not understand. We would not have people taking out credit cards that have interest rates in the 25% range or using payday lenders to bridge their lifestyle between paychecks because of the interest rates that are charged there. All of that would change pretty substantially and we'd be better savers. Last point. America saves when things are bad and we spend when things are good. Not the way it's supposed to work. Our savings rate goes up during the Great Recession, during the pandemic, it should be just the opposite. These are the kind of things that we need to as a society understand.

Absolutely. And one of the questions we've had from the audience, what can we do as taxpayers and parents to advocate for financial literacy and investing classes in public schools?

This one is really tough. Arne Duncan used to work at Ariel. He ran our Ariel Community Academy in our foundation before he went to be the head of the the Chicago public school system and ultimately became Secretary of Education. Arnie and I have had numerous conversations about this because at Ariel, we started a school. We have this saying at Ariel. We've admired the problem long enough. What are we going to do about it? So we have admired this problem. You've heard me with my, you don't learn financial literacy in school. Okay, so it's like, do something about it then. So we started a school. We have a saving investment curriculum. Every first grade class is given $20,000 to invest, and that money follows them through their grade school career with the kids taking over, increasing responsibility for managing the money. But Arne is the one who left Chicago and went to the US Government and was in charge of the Department of Education and could not get financial literacy to be in schools because it's a state's rights issue. So as individuals, we have to go and lobby for our own children, our nieces and nephew, our God children, our grandchildren, whenever it might be, and really push the schools, including great private schools, to put this subject matter on the agenda. We put together a investment curriculum for elementary school students called Financial Futures, and we'll give it to anyone who wants it. It's a curriculum that goes from first grade through eighth. And we said that is to make sure that we can help move the needle in society and pass on the learnings that we've developed over the 20 plus years that we've had. The Aerial Education initiative and Aerial Community Academy.

Yep. And you're so right that it should basically be mandated.

Smart, thoughtful, fantastic, trained, studied people. I will say to them, how is your 401k plan invested? How much money do you put away every month? They can't answer these questions, I'm telling you. So, you know, this isn't about race, it's not about poverty. This is a societal issue.

Yep, I completely agree. So another question that we've had from the audience, which is, you know, to be anticipated, which is, okay, so we care a lot about this. You know, we find diversity recruiting hard in Silicon Valley tech companies. Pointers. Right. It may just be work. And don't like hire one, hire multiple, because then the network starts doing. But whatever the pointers you want to add.

So I'm just like, there's so many that I could have write a couple of notes down here. The first one is, which I think is very, very important. It's a very basic point. It sounds a little preachy, but everything you all do, every single day is hard. You disrupt and disintermediate the world. It's hard. That doesn't stop you from being successful and solving the problem. And yet in issues of race and diversity, it goes into the too hard category for some reason, for a lot of people, or they use a term that makes me crazy, which is we're, quote, working on it. I tell people, I married Yoda's dad. George Lucas is my husband. And what did Yoda say? Do or do not, there is no try. With everything else we do in corporate America, there is no try. It is make or break, or you do not have a job, or you don't get that next round of funding. But something that people say, I mean, this is the term that is in all the annual reports. It's a strategic imperative. It's in all the. For something that is a strategic imperative or mission critical, we don't lean into it the same way we lean into everything else that we do. Pulling all nighters, all the stuff that we are all so used to and trained to do at this point in our lives. So that's number one. Number two, you have to have targets. This is the thing that makes me crazy. You can't hit a goal without a target. So when you ask people, what are you trying to accomplish? Just want to be more diverse. In what way? Is there a number? Is there? Do you want to track with the overall society? Do you want to. Are you trying to increase your senior leadership by a certain percentage a year? What's the goal? So I say that to people and then they say, well, I don't believe in quotas. I was like, there's a difference between a target and a quota. Quota is mandatory. A target is a goal. And again, in corporate America, how many targets do we have? Earnings targets, profitability targets. Let's just go through all those targets. You know, we give estimates and ranges for, you know, quarterly earnings. We don't hit on one number and say, here it is. So it's in the DNA of what we do already. So having a goal is super important. You get what you incent. We all know this. Incentives are hugely important. And so what I say to people is, can you be a superstar in your company, not have any diverse people on your team and get your whole bonus? If diversity is a strategic imperative, if the answer to that is yes, it's not, so stop saying it. You know, I prefer you not to. I've talked to many leaders, interestingly, in Silicon Valley, and I don't say this to be disrespectful. They'll say this is just not my thing. I'm like, well, I appreciate you saying it instead of BSing me that it's super important and you knew you're focused on it. No one's confused by your priorities. So, okay, if it's not your priority, don't pretend it is and then not make progress. So we solve hard problems. You get what you insent. We need targets.

Yep, 100%. And by the way, all companies have hiring targets. How many engineers are going to hire? How many salespeople are going to hire? Hiring targets are bread and butter for corporations.

Absolutely. And the thing is, you know, you. You've said it can't just be one. It doesn't work. You know, it's too much pressure on one. You know, then it's the. In that situation, it's like, I've heard it so many times, the stretch goal for this person or, you know, you need a pool of people and it can't always be the pipeline. You know, one thing I tell people, they're like, well, I can't find this, that or the other. I'm like, listen, Black and Latinx, we go to law school. You could have a general counsel. We need to see some people at the top of the organization or you won't get the best young people at Ariel. Our diversity is a competitive advantage. We get the best resumes. We get them versus our financial services peers. Project Black. Thousands of emails. How can I be with you? Of people coming from great firms because they see, oh, she looks like me and she's at the top of the place, and so is the other guy. And I'm ambitious and I want to be at the top of the place too, or maybe start my own business, etc.

Yep. So, last question before the lightning round. Given the impressive nature and span of your career, you know, today is not obviously the first time you had to navigate drastic challenges in the market economy. Long swaths of uncertainty. What have you learned from past times of economic and cultural crisis, and how has that informed what you're doing?

Well, the economic and cultural are different, even though they also are one and the same. And a lot of the civil unrest in this country is because of economic inequality. I believe that with every fiber of my being, capitalism has to work for more people. You are in the realm of where capitalism works beautifully and you get the benefits of compounding and your money working while you're sleeping, et cetera. I do too. But the rest of the country needs to have more access and more opportunity, and that is slowly occurring. But it needs to be sped up. And part of that access and opportunity has to be come in the form of opportunities inside of corporate America or opportunities to grow businesses, all which you know also. Well, so that is something that I think those two things are inextricably linked. But when I look at the cultural issues and I look at the issues around the economy, there are some differences on the cultural side. I've been calling this Civil Rights 3.0, 1.0 being the Emancipation Proclamation, 2.0 being the 1960s with the Civil Rights act and the Voting Rights Act. 3.0 is different. The two prior civil rights moments were the problem of government. Government had to solve it. It was policies, it was laws, it was new rules and regulations. This time, 3.0, civil rights is at the feet of corporate America as many things are that we didn't necessarily ask for. And when people tell me it's not at the feet of corporate America, I can tell you all the things that are now at the feet of corporate America that were never there before. We weren't having live shooter drills 10 years ago. We didn't have mental health benefits for people a decade ago. And now we have these diversity issues that are, they are not, they have not just bubbled up, they've become significant. And the thing is, now our people and our society are holding us accountable. And it's the viral nature of our society that was born in Silicon Valley that is making that happen. On the economic side, very different set of circumstances. And I'm actually incredibly optimistic. I'm optimistic in general, even though I think we have a long way to go in terms of race in this country. But in terms of the economics of what has happened. We've been to this movie before. In different ways, America has been proven to be very, very resilient. Again quoting Warren Buffet, he said, champions adapt. If we learned anything in the last 12 months, is that exactly is what occurs. We all adapted to a horrific environment and we're able to still not just get the work done, not just survive, but thrive in many cases. And what I do believe coming out of this pandemic, I think we are going to be in that period that we're calling an aerial, the Roaring Twenties. There's so much pent up demand, there's so much liquidity in this market because of stimulus that I think that that is going to propel a lot of economic growth in this country. I think the market will continue to be very, very strong. And I know it's been super heavy. The leadership will change Because I think inflation is likely to come sooner rather than later because of the stimulus and that inflation will change where the market leadership has been because the interest rates won't be able to stay as well. So that should be good for value investors like us. And typically smaller companies outperform in an economic recovery, which should also help value investors like us. So I see a lot of upside from here. Despite the tremendous pain and anguish that has been suffered in this country. Life and Lem first, which you can't get back, but also the economic devastation that has occurred, I am still optimistic coming out of this. And despite the fact that the stimulus bill was very large and it could have been a bit more targeted for my taste, it was absolutely the right thing to do.

Yep, totally agree. So we're going to wrap this up with a quick lightning round. Which actor would play you in the movie version of your life?

My husband would say Janelle Monae, who is a friend of ours, but he thinks that there's a resemblance. Not the blonde version of her now, but her. Her normal version. She's a good friend. And her black hair version. She's a good friend and a good soul. I hope my soul is as good as hers.

Is the thing that you have learned about yourself in Covid that you wouldn't.

In the real world? We were locked down in a pretty dramatic way because George is 76 and we were told this is not the thing he survives. And so you have to be super, super, super careful. And I took that literally. So we spent months not leaving our house. And there isn't a lot that I miss. I miss people. But everything else is pretty perfunctory to me.

Yep. Handwritten notes or note taking notes.

I'm a note writer or something else. I write with hand. I process information better if I can write it out. So I like taking notes. And then when it comes to written notes to people, no one runs to the bill in their pile of mail first. They run to anything they perceive to be personalized. And I think a handwritten note is a very powerful way to communicate with someone.

And last but not least, thing you would be doing if you weren't this.

Meaning this interview right now or this. What?

No, I think Ariel and Ariel alternatives and the move to economic justice and social justice.

You know, George always says we are what we're going to be and that it just. It just takes a form. You just don't know how it's going to come. But your essence is the same. And no matter what job, I would have done, I think I would have still been an advocate. And we did these enneagrams. I don't know if you know what that is in my firm. And I'm an 8, so I seek truth and justice. I was glad to see I put myself in the same breath that supposedly Martin Luther King is an 8. Interestingly, George is supposedly a 9, which would make him one of my wings. And Nines are super creative, so that makes sense. But that idea of seeking truth and justice has always been something that has been in me. So I think whatever I would have done, I would have had that proclivity. I think just in terms of other jobs that I would have loved. I've loved media. I really love media in every way. I've always, I mean love all of those media companies. I just love them. And it's that communication, the ability to communicate with people. Maybe that's why I married a storyteller. George said I could have been a good producer because he says I'm really organized.

So I don't know, I think for sure. And the media love DreamWorks. Everything else. I've seen them in the years. So Melody, thanks so much as always. An incredible conversation. You've been extraordinarily generous with your time and insights. I always learn, I've learned today and I'm sure all of our guests did too. And thanks all of you, our guests, for joining us. Please keep an eye out for the next invitation for the next Iconversation event with Sarah Fryer, CEO of nextdoor, which will arrive in your inbox tomorrow morning. If you'd like to continue the conversation and meet other attendees, you can click on Networking on the left side toolbar. This area will be open for the next 15 minutes. Last but not least, if you'd like to share your thoughts on this conversation, you can fill out the survey via the link in the chat. Thanks again for joining us. And Melody, as always, thank you for everything you do.

You advocate for so many and I learn from you and I am so grateful to have you as a friend.

Thank you.

That concludes this episode of Gray Matter. If you enjoyed this interview and want to hear others, please hit subscribe. You'll be able to catch up on Gray Matter episodes you may have missed, like Reed's recent discussion with his Blitzscaling co author Chris Yeh on the topic of decision making. You'll also get new episodes delivered directly to you, including future iconversation speakers like Nextdoor CEO Sarah Fryer. You can subscribe to greymatteroundcloud.com greylockpartners you can also subscribe on Spotify or wherever you get your podcasts. You can find new episodes and blog posts every week on greylock.com and of course you can follow us on Twitter at greylockvc. I'm Heather Mack and thanks so much for listening.