It takes money to make money, right?
We’ve got a problem.
“Trust me,” he said in a hushed voice, “they’re not ready for that discussion.”
His eyes stared steadily into mine. I could see the lights of downtown Kansas City reflect off of them. He smiled a smile as bright as his eyes, then he continued.
“Entrepreneurship is a major part of the solution when it comes to poverty–and racial inequality–but nobody here really wants to touch the issue.”
Ramon was right.
It’s talked about, but not in the right way.
Ramon is from Boston. He was visiting Kansas City to attend a summit on entrepreneurship. All of the attendees were at the center of their entrepreneurial communities.
Something close to magical happens when people like this gather in one place.
Unfortunately, we fell short of addressing the problems of poverty and racial inequality with entrepreneurship. There was no magic there.
But I’d be lying if I said the topic wasn’t talked about at all.
After all, Ramon and I were talking about it. A few new friends from Atlanta and St. Louis were talking about it. There was even a two-person panel about it with the mayor of Oakland and an influencer from Minnesota. Both of whom are minorities.
The two gentlemen agreed that there are many roadblocks in the way of impoverished communities, especially when talking about starting businesses.
According to them, the most major block is a lack of access to capital.
If you’re familiar with business and entrepreneurship, you’ve probably made an assumption about what kind of capital these two sharp guys are talking about: monetary capital.
And you’d be right!
In other words, they claimed that people don’t have the money to start businesses. That didn’t sit well with me.
It takes money to make money, right?
I asked my new friend from Boston about the claim that the panel had made. His perspective is credible and valuable. He works for a 100 year-old fund that provides monetary capital to different entrepreneurial resources in Boston.
Most of his work takes place in the poorer communities, and mostly with people of color.
I posed a question to him, “Man, is it really monetary capital? Is that really the thing holding us back?”
His head bobbed while he thought it over.
I interrupted his thoughts, “Or is it another type of capital? Like human capital?”
“Man,” he started, “It’s monetary. It’s human. And it’s social. And monetary is the least important of the three.”
Ramon was right, again.
Broke isn’t bad.
When it comes to starting a business, there’s almost nothing worse than having too much money.
It makes you comfortable. It zaps your creativity. It grows your ego in an unhealthy way. There’s a certain power to being broke.
But only when it comes to money.
Growing up without money is a fantastic foundation for making money. There’s a hunger you can’t shake, no matter how much money you make. The feeling might hide for periods of time, but it’s always there.
Fortunately, folks who grow up poor have that hunger.
Unfortunately, it’s nearly impossible to channel that hunger in a positive way if they’re malnourished in knowledge and networks.
Human and social capital leads to monetary capital.
I have no idea of how to use a jackhammer.
If you were to give me a jackhammer, well, watch out. It’d be useless–if not dangerous–to me. Why? Because I don’t have the knowledge to use it. This is an example of a lack of human capital.
One thing I could do is reach out to someone in my network who could teach me how to use it.
But what if there’s nobody I can reach? This is an example of a lack of social capital.
Even worse, what if I didn’t have the knowledge of how to reach out to a network? This is an example of a lack of both human and social capital.
We can all agree that a jackhammer would do me no good.
The same goes for money.
If this seems far-fetched, trust me when I say that it certainly isn’t.
I’ve seen this situation in Miami. I’ve seen it in Chicago. I’ve seen it in New York City, New Orleans, East St. Louis, Selma, and Montgomery. Ramon has seen it in Boston.
And I’ve seen it in Kansas City.
In fact, I grew up in this situation.
While more money seems like the answer to poverty and racial inequality, it’s not. Money is not the capital we need.
We need human capital that convinces the kids that they have the opportunity and ability to pull themselves up. Without the mindset, there’s simply no shot.
In addition to the human capital, we need social capital. We need communities full of believers, mentors, and leaders. We need people who know you don’t need money to start up.
At the end of the day, we need people.
Not just money.
Photo: Flickr/Andrew Moura