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Goldman Sachs Foundation President Asahi Pompey joins the All Markets Summit

Goldman Sachs Foundation President Asahi Pompey discusses how to better capitalize minority-owned businesses, as well as new business growth during the pandemic and concerns being voiced by small businesses amid the recession.

Video Transcript

JULIE HYMAN: I'm Julie Hyman. And indeed, I'm going to be joined by Asahi Pompey, who is the global head of corporate engagement at Goldman Sachs and the president of the Goldman Sachs Foundation. And we have this conversation as we are about to witness the closing bell for the markets in what has been a pretty sharp down day for the major averages, although they have backed off a little bit of some of the earlier declines, but the Dow still finishing down by about 2.3%.

We want to talk about the backdrop here for small businesses during this pandemic and economic downturn that we have seen. And Asahi and the folks over Goldman Sachs have conducted some research of small businesses, and specifically, small businesses that are Black-owned, and the results are sobering.

We all know. We've been talking-- having this conversation now for months, if not years, about lack of access to credit, for example, on the part of Black business owners. But still, these numbers put some parameters around that.

So the research they conducted found that rejection rate for Black business owners applying for capital was three times higher than white business owners, so a 27% rejection rate for those Black business owners. Asahi, thank you so much for being here.

So the 10,000 Small Businesses Initiative at the Goldman Sachs Foundation, as well as the 10,000 Women Initiative, has tried to focus on closing some of these gaps. But how do you even begin to address that divide? What are some of the specific steps that you think that you all are taking, but you think still need to be taken?

ASAHI POMPEY: Yeah, Julie, you're exactly right. This data is very, very sobering. As you know, we've been working with small businesses for over a decade now. And we now have a network of 9,700 small businesses. These are growth-oriented, employer firms, real job creators.

And over the last several months, as we tapped into this data, it's really laid bare the pandemic within the pandemic, which is racial disparities that's bearing out in the small business sector. As you said, you know, Black business owners having three times the rejection rate as their white counterparts.

And in terms of solutions, as you asked, you know, we think a number of things are really needed. The first is greater access to capital. There is a misallocation of capital, and we've got to change that. If you ask a Black business owner, what do they need, 66% of the Black businesses that participate in 10,000 Small Businesses said their number one concern was greater access to capital.

Now when you juxtapose that with white businesses, 33% of white businesses said that capital was their number one concern, in fact. Some of them ranked mentorship, sponsorship, labor concerns as higher on the list than access to capital. So we've got to start by fixing this misallocation of capital.

JULIE HYMAN: And so how do you go about doing that? I mean, I know part of what you all do is give tools, both in the form of capital, but also in education to these business owners. But one would think you have to address the other side of the equation as well. That is that access to capital-- the people who hold the purse strings, and getting them to try to eliminate some of that systemic bias that is-- looks like it's at work there.

ASAHI POMPEY: Yeah, and one of the key strategies that we've employed is really funding CDFIs. And year to date, we've made a $750 million commitment to fund CDFIs. And these are the last mile lenders to communities that frequently don't have any banking relationship.

We have a fabulous Black woman entrepreneur in Detroit, Carla Walker Miller, and she likes to say, you know, the worst time to meet a banker is when you need money. And what she means by that is, if you don't have that established relationship with a banker in an organization, it becomes very, very difficult for a Black business owner to get funding. She said she feels like the no is teed up before she walks in the door.

And so really, I think funding CDFIs is one of them. The other thing that we have to do is really fund Black founders, Latino founders, women founders. And we launched last year our launch with Goldman Sachs effort, which is a $500 million for-profit balance sheet investment in diverse portfolio managers and diverse companies. So those are some of the ways in which we have to really move the needle.

JULIE HYMAN: And since you all are making those investments yourselves and sort of seeding investments in these companies, can you talk a little bit to their success rate, right? Because I think for a long time, perhaps, there was this misapprehension that the money wasn't flowing into these communities because there weren't as many opportunities there, or it wasn't as good an investment. And I think that that conversation finally has started to change. What is your data showing on that front?

ASAHI POMPEY: You're right. That conversation is starting to evolve. Dana White, one of our business owners, who owns a hair salon, you know, says, look, they put me in a box I want to scale my business. I want to grow my business. I want to become a national chain. And so the discourse around me and who I am has to really change in order for me to get the capital.

So I think that's one of the key things, is really changing the discussion and changing the frame as to how we're seeing small businesses. The other one is, you know, Black business owners tend to be over mentored and undercapitalized. And so increasing their capital is another one. Advocacy, I think, is particularly important.

And what I mean by that is business owners have to be able to have relationships with policymakers and congressional officials because very often, you know, they're creating the policies that impact small businesses.

And so we've been working through our 10,000 Small Businesses Voices Platform to really muscle up our small businesses to be able to meet with congressional officials and tell them, here's what's happening on the ground. Here's what I'm seeing. Here's what needs to change in order for me to be able to retool and really make my business pandemic future proof and tech enabled.

JULIE HYMAN: Since you brough up the pandemic, I do want to bring that into the conversation. Of course, that is the big event looming over many of these small businesses, some of which were having trouble getting access to credit even before all of this, right?

How has the pandemic changed your thinking or your approach when it comes to these small businesses? And do you think that these small business owners have a bigger voice now than they did before the pandemic? Or do you think that it's sort of been overwhelmed because so many small businesses are struggling right now?

ASAHI POMPEY: You know, I think they do have a bigger voice now. I think people are more willing to listen to what their concerns are. What we've seen is that it was hard being a small business pre-pandemic. And being a small business in a pandemic is even tougher.

As we speak to Black businesses in particular, what they tell us is that they have less cash reserve. They've seen bigger dips in their number of their employees. They're really concerned about reopening. And so those are some of the concerns that are being laid out.

I would really describe this pandemic in terms of seasons, right? So the first season was really the season of emergency, getting emergency funding. Roughly 90% of our 10,000 Small Businesses participants said they, in fact, received PPP grants.

Well, we moved from that emergency season really into the season of pivot, where businesses were cautiously reopening. We had a distillery, a vodka distillery in Utah that was now making hand sanitizers. And so businesses were really trying to adapt to stay alive.

Now we've really moved into that third season. And that third season is the new normal. Businesses are saying-- 90% of them, of our businesses, in fact, say the changes that I'm making today are for the long term, right? So we had a brick and mortar bakery business that's now making DIY cookie decorating kits. She's now also moved to wholesale bakery. And so that's a lot of what we're seeing, is this new normal, making shifts for the long-term.

JULIE HYMAN: Is there another season coming out of this, hopefully, at some point, Asahi? Are you thinking about sort of what the next phases for some of these businesses?

ASAHI POMPEY: You know, I am bullish on small businesses. I've seen them up close. I spend my day job meeting with entrepreneurs. And they are passionate about their business. When the economy turns down, entrepreneurs turn up. And some recently released data, Julie, shows that year over year, we've actually seen a 12% increase in businesses filing new business registrations.

And some might say, you know, is it crazy to be starting a new business in the midst of a pandemic? But entrepreneurs are seeing opportunities, and they're looking to seize those opportunities. Some of them may be that they were laid off from their job. It was an idea that they always had, and now is the time. The time is ripe to launch that business.

Or it could be an entrepreneur whose business failed and now they're launching a new business. So we're seeing some uptick in terms of new business registrations.

JULIE HYMAN: Asahi, one of the big initiatives that you mentioned that we've been talking about is the 10,000 Small Businesses, but another is 10,000 Women. And you had a goal of reaching 10,000 women in five years with your business education program. You far surpassed that number, by the way.

Talk to us about the status of that program because we've been talking about people of color, who we know have been disproportionately affected by this pandemic. Of course, the other group has been women, who have been leaving the job force at a higher rate than men. So what's going on with that program? And where do you see it right now amidst the pandemic?

ASAHI POMPEY: Yeah, our 10,000 Women Program is focused on women entrepreneurs in developing countries. In fact, Julie, the last trip I took pre-pandemic was in March. I went to South Africa, and I met at the South African-- at the Johannesburg Stock Exchange with 300 of our graduates of 10,000 women from across South Africa who had gathered in Johannesburg.

And what we're seeing in that particular program is a couple of things. One is, we decided to launch the program online, translate it into Spanish and Portuguese. And I have to take you behind the scenes. When we did that, I said, you know, if we build it, will women entrepreneurs come? We know that they are on the front lines. They're frontline workers in their home. They're frontline workers at their jobs. And they have multiple responsibility.

And the response to that online course has really been incredible. It's now one of Coursera's top courses. We've had over 70,000 women in 100 countries register for that course. And what that tells me is that women entrepreneurs around the world are really doubling down. They're trying to find ways to keep their businesses alive. They've invested in it. They've been creating jobs through it. And they're not giving up on it. And we're not giving up on them. And so we're finding ways to stay connected with them and to build that education throughout the pandemic.

JULIE HYMAN: So Asahi, you've been talking about some of your big initiatives and how you've been thinking about them during this pandemic. I want to take a step back also and talk about where you kind of sit inside Goldman Sachs and how Goldman Sachs thinks about philanthropy and the interplay between the foundation and the business and how it might be different or the same as other companies. So if you can talk us through that a bit.

ASAHI POMPEY: Yeah, in terms of this interplay of philanthropy and the business, I've been at Goldman Sachs for almost 15 years now. And I'd say, look, history doesn't usually feel historic when you're sitting in the midst of it, right? You see it in hindsight. As a Black woman, as a mother of two young sons, I haven't really seen the kind of discourse I have around Blacks, around women, around Latinos, that I've seen a real substantive discussion and a real commitment to act.

At Goldman Sachs, we think about it across three sleeves. So one, we think about it in terms of our people and really looking at our organization internally to say, are we walking the walk? And we've set a number of aspirational goals as it relates to analysts and associates, but also at the more senior level, as it relates to our hiring of VPs.

The second sleeve we think about it is across our clients. And as you know, in January, pre-pandemic in the US, our CEO David Solomon came out and said Goldman Sachs would not IPO a company that didn't have at least two diverse board members. So that's one way in which we're really thinking about the interplay of business and philanthropy and infusing it into the work that we do.

And the third sleeve is really a community. Because as we looked at the data across, we saw that business owners, in particular, tend to be leaders in their community. Upwards of 75% of our Black business owners in particular mentor another business in their community. So that shows that when you invest in that business, you're really getting a double bottom line because of the ripple impact of that business in the community.

And also, on the flip side, when that business fails the blast radius of that failure is really reverberates throughout the community. So that's the way we think about that interplay of sort of business philanthropy across the board.

JULIE HYMAN: And finally, as we wrap up here, Asahi, I'm just curious, on a personal level, as we have seen this wave of increased awareness that has come with the Black Lives Matter movement to some of the business issues around it, I mean, I'm just curious what your reaction has been. Is it kind of like, ugh, what took everybody so long? Or I mean, are you glad that we're finally, more as a broader culture, starting to make more progress? And are we really making more progress?

ASAHI POMPEY: You know, I think we've got to translate this moment into a movement. I hope it's not a false dawn, right? And I think that in order to make sure that we really seize upon this generational opportunity, we have to use it to create policies, procedures, greater access to capital, greater access to network, greater advocacy, greater education, that really has multigenerational impact.

So what I'd say to your question, Julie, is, I'm optimistic, but I know that it's a journey, and we've got to say persistent and committed to really see long lasting change and not a false dawn.

JULIE HYMAN: A call to action-- I like it. Thank you so much, Asahi. Really appreciate your time. Asahi Pompey is global head of corporate engagement and president of the Goldman Sachs Foundation.