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The Innovators

Meet the Company Creating Jobs for Former Gang Members

Meet the Company Creating Jobs for Former Gang Members
Image credit: Photography by Elizabeth Weinberg
Rising to the challenge: Father Boyle and homies at Homeboy Bakery

The Innovators


WE CELEBRATE AND ENCOURAGE INNOVATION.

Innovators push the boundaries of the known world. They're change agents who are relentless in making things happen and bringing ideas to execution.

At the two-story Los Angeles headquarters of Homeboy Industries, one of the country's largest gang intervention programs, you can purchase pastries, sandwiches, coffee mugs, T-shirts, onesies, freshly baked bread and much more. But the biggest item Homeboy Industries sells is hope.

Founded 25 years ago by Father Gregory Boyle, then a young Jesuit priest at the Delores Mission Parish in the heavily gang-infested Boyle Heights neighborhood, Homeboy Industries takes former male and female gang members and trains them through its social enterprises. It also offers counseling, legal aid, educational programs and services such as tattoo removal.

For the first few years, Boyle focused on job placement for the ex-gang members (or "homies," as he calls them) who were eager to change their lives--especially those with prison records. But he quickly found that the number of homies far outpaced the available jobs. In 1992, with money donated by the late film producer Ray Stark, Homeboy Industries (renamed from Jobs for a Future) bought a dilapidated bakery--simply because it was available--and started Homeboy Bakery. "If it had been an upholstery shop … If it had been a print store …," Boyle muses. "There was no business plan at all. Zero. Stupid."

But what Homeboy Bakery lacked in business acumen, it made up for in second chances. "The lethal absence of hope is basically why a kid joins a gang," Boyle says. "In the old days, prior to us, they would get in a gang, and the fact that there were no exit ramps off this freeway compounded their despair and accelerated violence. We, in 1992 with Homeboy Bakery, for the very first time galvanized the imaginations of gang members … They went, ‘Huh. Exit ramp. I don't need to do this. I can actually get off one day.'"

Father Boyle and homies at Homeboy Bakery
Father Boyle and homies at Homeboy Bakery

(A lasting way out can be hard to find: Boyle recently lost his 189th gang member to violence. "It was a kid who I've known for a long time," he says. "Worked for us twice.")

Today, from its headquarters in Chinatown, Homeboy Industries runs a cluster of enterprises in addition to the bakery: Homegirl Cafe & Catering, Homeboy Silkscreen & Embroidery, Homeboy Diner (a new offshoot, Homeboy Cafe & Bakery, opened at Los Angeles International Airport this year via a licensing deal), Homeboy & Homegirl Merchandise, Homeboy Grocery and Homeboy Farmers Markets. No matter the business, the goal is the same: to create jobs for former gang members. As Boyle is fond of saying, "We bake bread to hire homies; we don't hire homies to bake bread."

Not every venture has been a success. Homeboy Tortillas, for one, was a "black hole." (Boyle bought the equipment from an abandoned farmers market stand. "It's abandoned, which should have been my first clue," he says.) Homeboy Plumbing never caught on. "People, apparently, didn't want to have gang members in their homes," Boyle recalls with a twinkle in his eye.

Boyle's small office stands directly across from Homeboy's front door. It is separated only by a reception desk and a rectangular waiting area teeming with homies applying for the training program or seeing counselors. Some are getting tattoos removed--one of the first programs Boyle established after an ex-gang member with "Fuck the world" tattooed across his forehead wondered why he couldn't find a job.

The front of Boyle's office is floor-to-ceiling glass, so anyone can look in, and, more important, Boyle can see out.

Visitors learn very quickly to sit to his side so he's facing the art- and photo-covered walls and not the glass door. Otherwise, during meetings he is continuously and silently beckoning in homies who need a minute of time with "Father G" or "G-Dog" or "G" (he happily answers to all three). Even his periodic treatment for chronic lymphocytic leukemia, with which he was diagnosed in 2003, doesn't slow him down. Interviewed the day after the third in a series of four treatments, he says the steroids have left him unable to sleep, so he's "tired and wired" but in great spirits.

When he's not encouraging homies, he's personally signing letters to prison-ers who have written to him hoping for a job upon their release, signing business checks or even making out a $50 check from his personal bank account to a homegirl who needs a little extra assistance. "I'm the priest they mistook for an ATM machine," he mutters--although he sounds like he wouldn't have it any other way.

Father Boyle and homies at Homeboy Bakery
Homeboy Industries (Jam & bread)
Photo courtesy of Homeboy Industries

The outflow of money led to a major financial crisis for Homeboy Industries one day in April 2010 (referred to internally as Black Thursday), when it had to let go more than 330 of its approximately 425 workers and found that it was desperately in need of its own second chance. A major retrenchment took place, under the guidance of former KB Home CEO Bruce Karatz, who volunteered at Homeboy after he was found guilty of accounting improprieties. He helped stabilize Homeboy financially, implementing checks to balance Boyle's unending reserve of goodwill, and helping to create new business, including brokering a distribution deal through Ralphs grocery stores (see sidebar).

Following another smaller round of cuts this past winter, Homeboy Industries has fine-tuned its training program, which is limited to 200 full-time positions. Additionally, Homeboy has 70 senior staffers, about 40 percent of whom came up through the training program.

The program now runs 12 to 18 months, and every participant--regard-less of previous job experience--starts in maintenance, which includes janitorial and other cleaning services. "It's what we call the humble place," Boyle says. "Especially with homies, you have to break them down a bit.

Everybody's going to be washing urinals here for the first three months."

Roughly one trainee enters the program per week, via a lottery system. All potential trainees undergo a screening process and drug testing.

After the first several months, they are funneled into one of the social enterprises. From the start, they are paid slightly more than minimum wage.

"We don't want to balance our budget on the backs of the people we're trying to serve," Boyle says.

That thinking may be great for morale, but it's brutal on the bottom line. So learned Tom Vozzo, a former Aramark executive who became Homeboy's CEO last December.

"We have a very expensive model," he says. "We pay people to come get themselves healthy. We pay them for eight hours [per day], and most of that time, in the early months of their tenure, they're working on themselves and then a few hours of work in the businesses. Our businesses probably carry three times as much labor as a for-profit business."

With labor a non-negotiable cost, Vozzo has spent his first year trying to get other expenses in line and training his business managers to control costs, including shrinkage and inventory. "‘We're going to hold you accountable for the bottom line,'" he recalls telling them. "‘If you take out labor, you need to be making money.' They've done a great job of making their numbers. Essentially, we looked at 2013 and said this is going to be the year we're going to live within our means … and very aggressively manage the expense side."

Vozzo has a particular goal in mind: that profits from Homeboy's social enterprises account for 50 percent of the organization's $12 million annual budget, ideally within three years.

Currently they total about 35 percent; the remainder comes from foundation and governmental grants and individual donors. The merchandise and silk-screen enterprises run a profit, as does the Homeboy Cafe & Bakery at LAX and Homeboy Grocery.

As much as Homeboy stumbled into its early business ventures, Vozzo's job is to make sure the next ones are carefully cultivated to position the company for growth and financial security.

As he walks through Homeboy's voluminous kitchen, he sees nothing but possibilities for expansion. In addition to the bread Homeboy sells in the Homegirl Cafe and Homeboy Diner, the bakery supplies daily bread to 50 accounts throughout Los Angeles.

"We can triple our volume of bread out of this facility. There's a big business opportunity if we focus on restaurants that want artisanal bread," he says. "We now have a sales guy. He's a former homeboy. That's a perfect business that fits our character. A lot of hands are needed because it's not machine-made, and it's a delivery business."

Vozzo sees room for an online business for the company's baked goods, including holiday-theme bread baskets. He also envisions e-commerce expansion for Homeboy's merchandise and silk-screening operations, beyond their existing 2,500 accounts.

Homegirl Cafe, which takes up a corner of Homeboy Industries' headquarters, does a bustling lunch business, but not a strong enough breakfast trade. "So we're going to come up with a new menu soon to drive more people in for breakfast," Vozzo says. He wants to bolster the catering business, which he believes could realistically double in size as it expands throughout Los Angeles County. Again, catering is a labor-intensive business--a plus for Homeboy.

The LAX cafe
The LAX cafe

No change is too small if it creates jobs. In addition to the licensed Homeboy Cafe & Bakery at LAX (the only Homeboy outpost that doesn't employ the organization's trainees, because it can't hire ex-felons) and the original Diner at Los Angeles City Hall, in June Homeboy opened a smaller diner in a convenience store located at a 1,500-unit apartment complex.

"We have our coffee shop within the convenience store. We have our baristas; we'll make sandwiches," Vozzo says. The mini-diner employs five trainees.

If successful, Vozzo believes it's a model that could roll out across the county.

"We would start negotiating with developers and be there early in the process," he says.

Everything Vozzo does funnels back to jobs, because he knows that for many of its homies, Homeboy is the last house on the block. "We should have a portfolio of businesses," Vozzo says. "Some are pure job-training grounds, some provide jobs and opportunities and probably break even and others make money that offsets the costs of the other businesses."

The opportunities are out there. Vozzo says he gets at least one call a week from businesses eager to partner with Homeboy and its gritty, authentic brand. "They give us product ideas, and some just don't pan out--they don't represent us. We're not going to do anything that promotes gangs or promotes tattoos," he says, adding that liquor is also on the banned list.

If making payroll keeps Boyle up at night, Vozzo is more concerned with how to move trainees off payroll and into jobs that pay a decent wage with benefits. Homeboy has fewer than a dozen go-to companies in its pipeline for graduates. "If I get on a soapbox, I just want businesses, especially small to midsize, [to realize that] our folks come through with the Good Housekeeping Seal of Homeboy," Vozzo says. "Give them a chance. They're good workers. Don't judge them by some of the tattoos they still have on their face and their background. Come be our partner."

Boyle, meanwhile, is sad to see graduates go after 18 months, but he knows the space will be filled by someone else in need of redemption. "See, this place is kind of like a hospital," he says. "Come here, get better, get healed. As one of the homies who worked here said, ‘Now it's time to go. We need the bed.'"

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This article was originally published in the November 2013 print edition of Entrepreneur with the headline: Off the Streets & Into Business.

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