The Billionaire Who Was Told: “You Have To Overcome Your Heritage In Order To Be Successful”
Robert was told, “you’re a very smart guy, you just have your heritage to overcome in order to be successful in business”. His company manages $46 billion in investments with a portfolio of more than 50 software companies that employ over 60,000 people around the world.
Robert's parents were both high school principals he is known for not only his wealth but also his generosity in giving wealth away. This act of giving was instilled in him from a young age by his parents. He saw his dad helping kids keep up their PE at the local YMCA. He once asked his mother for a converse all-star and his mother told him, to go earn the money. But at the same time, she wrote $25 checks to the UNCF-The United Negro College Fund every month. His mother wanted to show him the importance of giving back to the community.
“I saw parents who gave generously, their time, energy, effort and intellectual capacity to our community”- Smith
Robert recalls, looking out the window on a snowy day just to notice that the snow removal trucks would only show up after the wealthier neighborhoods were cleaned. When Robert was young his mother took him to Martin Luther King’s speech in Washington DC, the experience made Robert understand that the community stands for something.
Robert saw the effects of the Great Inflation in the 1970s when business were struggling to pay bills; it affected small and medium businesses,
“business owners such as Ms. Russ’s cafeteria, Mr. Magee’s diner, the fried chicken place, the dry cleaners, all those little stores in our neighborhood. They were decimated. Those business owners never came back”
Seeing how hard his parents work and a wish to help out with bills, Robert decided to apply at Bell Labs. But landing a job was not easy, after numerous calls, he was told that he could apply only if he was in college. As Robert was just in high school, he did not qualify. His response:
“while I am only a junior in high school, I am getting A’s in computer science and my advanced math courses, so it like I was in college”
But that didn’t work, Bell Labs told him to try again when he would be in College. Robert didn’t give up and continued to call them every day for two weeks straight, they stopped taking his call after the second day and from there he tried calling every Monday for 5 months. One day, Bell labs called back and said that an intern from MIT hadn’t shown up, and asked if he was interested.
He spends 4 years working at Bell Labs and studied chemical engineering at Cornell University. After graduation, he worked at Goodyear Tire and Rubber and Kraft General Foods, where he obtained two United States and European patents, including one for a coffee brewer filtration device and a coffee brewing element.
While working at Kraft he was invited to give a talk in California where a man approached and asked him, how their product extended the shelf life of rice? As Smith was explaining, the man told Smith “you’re a very smart guy you just have your heritage to overcome in order to be successful in business”
Smith finished business school Smith decided to join, the world of investment banking, as he had met a lot of executives and discovered that investment banking is assets that get transferred on this planet.
“Investment banking is a discussion that involves CEO’s and board members, it is a very strategic discussion and that was quite interesting to me”
He discussed his plans with family and friends, and they all thought Smith was insane, as he was throwing all his schooling away.
In 1994, he joined Goldman Sachs as Co‐Head of Enterprise Systems, he executed and advised on over $50 billion in merger and acquisition activity with companies such as Apple, Microsoft, Texas Instruments, eBay and Yahoo. He was the first person in San Francisco at Goldman to focus solely on mergers and acquisitions of technology and software companies. Working for some time at Goldman Sachs, Smith saw two tech giants emerge. Microsoft and IBM, looking deeper, Smith realized that majority of tech companies were either ran by a code developer or by someone who knew a market opportunity and sold the code. There was no one who knew how to effectively run a software company.
He decided to take the risk and discussed his plans with his co-workers at Goldman Sacks, his peers tried to talk him out of it. “When I left my post at Goldman Sachs just after we had gone public to set up a private equity firm called Vista Equity Partners, my mentors and colleagues at Goldman thought I had lost it”
And so at 39, in 2000, Smith launched Vista Equity Partners, a private equity group that invests in software companies. Vista currently manages about $46 billion in investments with a portfolio of more than 50 software companies. Vista is one of the best-performing private equity firms, posting annual returns of 22%
Smith is also a member of the Giving Pledge, which was founded by Bill Gates and Warren Buffett to encourage the world's wealthiest to donate the majority of their fortunes to charity. Like everyone, Smith has his own way to relax, he likes to fish, standing still in the water, allowing water to pass through his legs
“it helps be more mindful, more thoughtful”
While addressing the graduates at the Morehouse College in 2019, Smith’s told the 396 graduating students that he would pay off their student loans, this move cost Smith $40 million.
“I didn’t realize how many people understood the pain and debilitating effect that student debt has for decades — not just on that individual but on families.”-Smith
Student debt forces students to delay buying a home and participating in this system of creating wealth.
“The short answer is we have a problem, the most important thing that lifts people in their station of life is education, we have to make it affordable”- Smith
Smith also founded the Fund II charitable foundation, the foundation has made grants worth $250 million to a broad range of charities, including The Susan G. Komen Breast Cancer, UNCF, The Opportunity Network and The National Park Foundation.
This act of giving does not stop with Smith, his wife; Hope Dworaczyk once took their boys to a Walmart and told them to buy whatever they wanted. Excited, the boys filled trolleys. On their way back home, she stopped at a collection site for needy families and told her boys to unload everything, the lesson was that they had to give it away.
As we are in a pandemic, Smith remembering the 1970’s took initiative to introduce grants for African Americans-owned businesses. In response, Congress approved a $2 trillion emergency rescue measure called the Cares Act. The package included $349 billion in loans for small businesses that could be converted to grants. All the money was gone in 13 days after launching it. Companies that had well-established ties to big financial institutes were able to easily navigate the process, while millions of other businesses, including those owned by African Americans, were locked out. The crisis was severe. Smith knew he had to live up to his teachings from his parents and decided to do something
“The average business has about two months of sustaining capital to live off, but small and minority-owned businesses only have about two weeks”-Smith
Smith knew that additional legislation would be needed to provide more money. Many of African American-owned businesses were small, with fewer than five employees. They didn’t have access to the banking system or the political system, that bigger companies did.
“I’ve gotten to know quite a few people in my lifetime and have been able to build some long-lasting relationships, I believed now is the time to utilize those relationships if I could” -Smith
In order to get the word out, Smith connected with African American celebrities to provide service announcements from their homes during the shutdown, encouraging minority business owners to apply. The ads ran on social media, to engage black churches and religious institutions, and it worked. It caught the attention of many business owners, one of whom was McRae, the Maryland boutique owner. Who said that “You couldn’t go on social media without seeing them”. After applying she received a loan for $5,600 for her shop of nine workers.
Smith is much more than just creating wealth, he uses his resource to bring good in the community.
“we have to ensure that our society has the ability to actually cure its own problems”
