Robert (Bob) L. Johnson, founder, chairman, CEO and owner of BET
Holdings Inc., likes to quote a line from singer Ella Fitzgerald:
"I've been rich and I've been poor, and rich is
better." Johnson grew up as the ninth child of 10 in a
struggling Freeport, Illinois, family; today, he lives on his own
133-acre horse farm in Virginia.
After graduating with a master's degree in international
affairs from Princeton University in 1972, Johnson worked for the
Corporation for Public Broadcasting and the Urban League before
becoming vice president of the National Cable TV Association. It
was in that capacity he got to know John Malone, the legendary head
of Tele-Communications Inc. (TCI), the nation's largest cable
TV provider.
During this same period, Johnson realized no cable TV company
provided programming specifically targeting African Americans.
After developing a plan for a new channel, he shared it with
Malone. In 1979, at age 33, Johnson received $500,000 (in both debt
and equity) from Malone to launch the first TV channel with
programming especially for African Americans.
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One year later, Black Entertainment Television (BET) began
airing for two hours late on Friday and Saturday nights, reaching 2
million U.S. households. Fast-forward 20 years, and BET now appears
24 hours a day in some 67 million U.S. homes, including 99 percent
of the 6.8 million African-American households with cable.
BET Holdings Inc., based in Washington, DC, is now a
billion-dollar empire whose holdings comprise an exhaustive list:
two movie channels; an internationally distributed jazz channel;
BET Weekend, a weekend newspaper insert with the third-largest
circulation rate among African-American publications;
Emerge, a news magazine; Heart and Soul, a magazine
devoted to health, beauty and fitness; a financial services arm; a
clothing line; a publisher of black-oriented romance novels; the
first two of a planned chain of music-themed restaurants; a dance
club at Disney World Resort; and an Internet programming venture
with Microsoft (MSBET). Next up: a Las Vegas restaurant in
partnership with Hilton Hotels, as well as plans for producing a
new late night TV talk show, 10 TV movies later this year and three
theatrical films planned for next year.
In short, Bob Johnson is a busy man--but not too busy to talk
with his fellow entrepreneurs. In the following interview, he
shares his enthusiasm for business, the secrets to his success, and
his thoughts on the consumer potential of African Americans--who he
feels are being neglected in many markets.
Scott S. Smith: You started very small. What gave you the
confidence to think you could grow BET into a huge enterprise?
Robert L. Johnson: Ask any entrepreneur about his rock,
and he'll tell you he has a mountain. You have to have faith in
what you're doing. I knew blacks watched more TV than any other
group but didn't have programming that appealed to them, and
that advertisers wanted to reach this audience. The same principle
of combining research with an entrepreneurial gut applies to any
new business. You go after something with the conviction that
there's nothing more important than making it happen.
Smith: You'd never run a company, yet John Malone
gave you half a million dollars. How did that happen?
Johnson: He looked at my proposal, and in 45 minutes, we
cut the deal and he wrote a check. He's the kind of guy who
believes an entrepreneur will work harder for himself than as an
employee, and he leaves you alone to do your best--although
he's always a phone call away.
His only advice was "Get the revenues up and keep the costs
down." Some people think I've tried to do business on the
cheap, but too many businesses run into trouble because they
don't keep costs in line with revenue. We waited to launch our
film production arm until we had the critical masses needed to do
something this ambitious.
Smtih: You also had the advantage of a carefully targeted
niche.
Johnson: Once you have a vision of your market, you can
think of many ways to build your brand by diversifying around that
core appeal.
Smith: How do you keep your finger on the pulse of your
target market?
Johnson: Some 90 percent of BET's 572-plus employees
are black, many of them young trendsetters, and they keep us in
touch with the audience. Black consumers want to talk to people in
business who understand their desires and needs. You can't put
your own cultural stereotypes on customers. You can't assume
the guy who comes into your jewelry store in jeans and a T-shirt
only has $5 in his pocket--he might be me, and I could buy your
store many times over. If you don't hire qualified minorities,
you're missing out on the fact that the customer base is
changing.
Smith: How do you see the African-American market
evolving?
Johnson: Blacks number around 35 million, and their
income is rising fast. African Americans spend money--they save
less than whites--and are brand loyal. There will be a significant
opportunity as they become more affluent, buy more homes and so
forth.
Expanding your market to include more minorities isn't a
social program; it's simply damn good business! Minorities want
to be treated with the same respect as everyone else. They want
value and service, not to be taken advantage of because a business
doesn't have much competition in an area.
Smith: What about African-American vendors? Are they
getting a fair share of the economic boom?
Johnson: African Americans make up 12 percent of the
population, and yet black firms that supply products and services
[to other businesses] are getting very little business. It's
disgraceful. Big or small, companies are making little or no effort
to seek out qualified vendors and professionals in the minority
community, whether we're talking about attorneys, accounting
firms, janitorial services, parts suppliers, whatever. I'm not
talking about hiring incompetents [simply because of
race]--I've fired minority vendors who weren't
performing.
Business owners should understand how the economy works. If you
give a little of your business to minority suppliers, then
they'll circulate it in their community, pay taxes, create
jobs, provide a stable community. Ultimately, there would be fewer
people on welfare, crime would come down, everyone would
participate in the economy, and the market would become bigger. If
black-owned firms got just 5 percent of the supply business, it
would have an enormous ripple effect.
Smith: You seem to be betting BET on the notion that
black and white cultures will remain distinct.
Johnson: We're moving toward more market
fragmentation, so markets can become sustainable with smaller and
smaller numbers, customized down to even one person. It isn't
just about ethnic markets but attitudes and behavior. You can
combine strong brand identification with niche marketing if
you're nimble. At the same time, we can unite around core
values like freedom, individual rights, democracy, property rights
and privacy.
Smith: What do you say to business owners who can't
find the time to be politically active?
Johnson: In a capitalist society and representative
democracy, business is affected by politics. If you don't think
so, you're living in a dream world. You need to have a voice,
or your business could suffer. Business owners have to make
government serve their interests, or it'll serve the
bureaucrats.
Smith: Does business also have a social
responsibility?
Johnson: You live in society and expect it to work. You
can't say you don't care about schools or pollution. That
doesn't mean you have to be politically correct, and I object
to flavor-of-the-month crusades. At BET, we take the position that
there's no distinction between hard liquor and beer except the
strength of their industry lobbies, so we run liquor ads. We
don't make a lot of money on them, but it's a matter of
taking a stand on the first amendment.
Smith: In 1991, BET became the first company with an
African-American majority ownership to get onto the New York Stock
Exchange; then in 1998, you and Liberty Media (a TCI subsidiary)
made it private again. Any thoughts on the advantages or
disadvantages either way?
Johnson: There isn't really that much difference
because either way, the investment isn't totally your own.
Whether someone is a shareholder or your uncle, he or she still
wants to know how fast their money will grow or when they can take
some of it out. When you're public, you may change shareholders
when some are upset, while when you're private, you just get
angry relatives.
Smith: How do you attract high-quality employees, and can
smaller companies use the same strategy?
Johnson: [Whether you're a large business or small
one,] you have to get others to buy into your vision and its
potential, and infect them with the desire to succeed. You then
have to balance being a taskmaster and a friend, and, at the right
time, make them part of the decision-making and risk-taking
processes and let them share in the rewards.
Smith: How do you encourage sound risk-taking by
employees?
Johnson: If a decision is made intelligently and you
don't get the result you want, you try approaching it another
way. You have to give employees the feeling that anything goes, as
long as it's put through the rigors of business discipline.
There can't be any kind of punishment, making someone feel
isolated or not a team player. Create an environment where
creativity is rewarded, where there are no bad ideas. Nothing is so
outside the box that it's crazy.
Smith: What types of employees or businesses do you have
difficulty working with?
Johnson: Those who don't do their best. If you have
C-level potential and give it your all, that's better than an
A-potential person who just tries to get by. If someone I do
business with is having problems with cash flow or product control,
for example, I want that person to come to me and explain
what's going on, and we'll work it out. I'll stay
loyal, if the desire to improve is there.
Smith: Finally, where do you get the time and energy to
do everything?
Johnson: I've got a terrific COO who allows me to do
the strategic blue-sky stuff. Once you get the company to the point
where you need someone else to take over some of the
responsibilities, don't let the desire to control everything
get in the way of doing what you're best at. It's hard for
entrepreneurs to give up the ego and let go, even for their own
good.
Scott S. Smith writes about business issues for a variety of
publications, including Investor's Business
Daily.