Research the market. Assess your core strengths. Write a business plan. Go out and follow your plan—and with a little luck and a lot of hard work, you have a business.
That's how entrepreneurship is taught in business schools. But Michael and Steven Roberts have gone about building their businesses in a very different, much more intuitive way. These two St. Louis brothers built a business empire of nearly 70 LLCs currently worth around $820 million, in a dizzying series of zigs and zags, with one project leading to another—or another two. Where most businesspeople would have stuck to a single niche, the Roberts brothers have pursued all kinds of businesses—often several at once —encompassing an array of ventures that includes real estate development, political consulting, TV stations and cell phone towers.
The ‘visionaire' and the ‘functionaire'
How do they make it work? Part of the secret seems to involve their division of labor.
Michael, 57, chairman and CEO, describes himself as “the visionaire” of the team. Steven, 55, the president, is “the functionaire,” Michael says.
Even when they were kids, growing up in a middle-class St. Louis family, the sons of a post office executive and a first-grade teacher, Michael knew how to put a bit of a spin on their entrepreneurial ventures. They didn't just cut grass, he says, “we had a lawn service.” They didn't wash cars, “we had a car spa.” Then brother Steven would work out the details with him.
Today, the two still work the same way—a 50:50 partnership in ventures whose assets extend way beyond a sponge and a bucket. “They are perfect partners,” says Alice Carpenter, the comptroller for the companies, “because Steve is very detailed and runs all the day-to-day stuff, where Mike would lose his creativity if he had to be tied down constantly.”
Michael Jr., 28, explains it this way: “I would say my father is the visionary and my uncle's the glue. He's the one who takes the vision and implements it and makes it happen.”
But what about when they don't agree on what to do? “No, we never have disagreements. Come on!” Steven says, laughing, before explaining that their five-decade-old division of labor tends to limit disputes. “I think that we have different strengths, basically, and we tend to respect the opinion of the person who may have slightly different expertise in an area.”
For the most part, Steven says, Michael goes and finds the deals, and “then it's kind of my responsibility to tweak them to see if they make sense or not.” Usually, Steven says, if he's not comfortable with a deal, Michael will respect his judgment. On a few rare occasions when they have disagreed, one will go ahead and make a personal investment without the other, much as the partners in a venture capital firm might, Steven says.
From politics to business
Although Michael sometimes sounds a bit like an artist who happens to work in the mixed media of capital and personal relationships, the brothers' careers didn't come about entirely by accident. Both Michael and Steven have law degrees, and both spent multiple terms on the St. Louis Board of Aldermen in the 1970s and '80s (Michael from 1977 to 1985, Steven from 1979 to 1983) before they decided to concentrate full-time on business. Except for running as Democratic candidates for mayor (Michael in 1989, Steven in 1993), they've largely stuck to that resolution. Yet Steven remains very involved in politics even now, as general counsel for the National Black Caucus of Local Elected Officials.
That early political career might seem like a distraction from building their business, but the brothers say it was a key part of its foundation. “Let me tell you: If there is any experience that I would encourage any businessperson to have, it would be serving in an elective office,” says Steven. “No matter how great you think you are or how smart you think you are, being a public official you are continuously humbled because there are people who elect you who have certain expectations of you and also, quite frankly, how you will serve their interest.”
Political activism and awareness paid off in other ways as well. Back in the mid-'70s, Michael looked at the lawsuits that the federal government was bringing against companies that had bad records in their treatment of minorities and women, and saw an opportunity in helping corporations develop affirmative action plans that could comply with the regulations.
From that vantage point, he says, he saw that an even bigger opportunity lay in helping these same corporations meet their quotas for minority suppliers and subcontractors. “Remember, I was already in the heyday of my city councilman days, so I'm meeting mayors and councilmen and businesspeople all over the country through that,” Michael recalls. “So then I just said, well, let me connect the dots here.” Companies would hire the Robertses to find local minority contractors, and Michael would tap his political network to identify good ones.
The Roberts brothers started their business ventures in 1974, the year Michael graduated from law school. Through the '80s and '90s, they kept on connecting more dots, often developing the expertise to run a particular business venture only after the opportunity developed.
They got into the shopping center business, for example, when an old Sears store came on the market in an African American neighborhood of St. Louis. They converted the old store into a shopping center and office building. They applied for a local television license that the Federal Communications Commission had earmarked for minority ownership, and then signed a deal with the then-new Home Shopping Network, which forced local cable providers to carry the channel under common carriage regulations—a tactic they repeated in a number of other cities, sometimes with HSN providing the financing. Later, when digital cell phone spectrum became available, they used the cash from HSN to buy some of the spectrum that had been reserved for minority businesses.
The Robertses acknowledge that their company's status as a minority-owned business has offered some advantages. But Michael says financing remains a significant challenge for African American entrepreneurs generally—even when they are running enterprises as large as the Roberts group. Primarily, he says, they have the most difficulty when they are looking for funding in a core inner-city project. Raising money for urban real estate projects “remains a challenge for us,” Michael says.
One reason for that difficulty may be that the Robertses don't have many African American colleagues in some of the industries where they have ventures. Take commercial real estate, for example. Some experts have estimated that less than 1% of commercial real estate executives are African American. In retail development, Michael recently became the first black trustee in the more than 50-year history of the International Council of Shopping Centers. In the hotel world too, African American owners are a tiny minority—there are about 50,000 hotels in the U.S., according to Michael, who is president of the National Association of Black Hotel Owners, Operators & Developers (NABHOOD), but just 235 are black-owned.
Obviously, however, the Robertses haven't let such challenges stop them. They note that their father, Victor Roberts, now 84, always taught them that they could do anything they wanted, if they worked hard and put their mind to it. “All people to me are the same,” Victor says. “Color is just something that's an abstraction. I always felt that way, even when I was a little kid.”
The Robertses' propensity to jump from one opportunity to the next might be too unsystematic for many entrepreneurs, but Michael insists the brothers' system works well for them. “Businesses are a bit like onions,” he says. “Once you peel off a few of those layers, it's still the same. Payroll is the same, HR is the same, insurance programs for the employees are the same.”
The Roberts Companies function a bit like a venture capital fund. “There is no master plan,” Michael says. “For instance, in the case of the hotel group, three years ago, we had no hotels. A year after that we had one hotel. Today we have eight. Tomorrow, we might have 20. However, in five years, that hotel group may not exist at all.”
In Michael's view, the secret of their success comes down to acting on the opportunities as they see them. “How many times have you heard people say things like, ‘Oh, I had that idea'? But they didn't actually follow through with it,” he says. “What stood between you and becoming that multimillionaire? Action.” Michael has written a book entitled Action Has No Season: Strategies and Secrets to Gaining Wealth & Authority, and sometimes calls himself an “actionaire,” a word he coined that he defines “as a person who takes action and creates new opportunities.”
One reason that the brothers have been able to act so resolutely, according to Michael, is that they don't think about failure. “Failure doesn't really exist for us,” he insists. “Failure is one more experience that didn't have the outcome you were looking for. If you're using a word like failure, you're going to be defeated. Instead, our position is, ‘Well, how fascinating. Maybe we could have done something different to change the outcome, but what a great and interesting experience that was.'
“Of course, we have experienced outcomes in our deals that were not as expected,” Michael acknowledges. “However, we view them as gaining additional knowledge, not failure.”
‘A big chest of drawers'
Management of all these enterprises is less daunting than it might seem, Michael says. He describes a typical day's work as being “like a big chest of drawers that may have a hundred drawers in it, and you have things in every one. Now if you open a drawer and you deal with it, fine, then close the drawer and open another one.
“That's how my mind works. I can pick up right where I left off, and that's true with human relationships as well as with businesses,” he says.
The Robertses also hire managers to keep all those “drawers” in shape—essential now that the companies have more than 700 employees—then give them a lot of autonomy. “They hire good people and they let them do their job,” explains Gregg Filandrinos, director of the Roberts Broadcasting division.
Among those people are a lot of family members. Fil-andrinos says the Robertses encourage staff to bring in members of their own family—Filandrinos' son, for instance. They have also hired staff from their political past, including Kay Gabbert, a senior vice president and former political consultant, who met Michael in 1982 when she managed a campaign for president of the Board of Aldermen. Michael didn't win the office, but he did end up with a lucrative consolation prize: a political consulting firm he ran with Gabbert over the next seven or eight years.
And there is a sizable contingent from the Roberts family. Younger brother Mark Roberts is general manager of Roberts Marriott Hotel in Dallas, while sister Lori Roberts is an administrative assistant at Roberts' St. Louis headquarters. Their father, a retired post office executive, has worked with them from the beginning, as a finance officer and a greeter, back when the office was just a single, $300-a-month room. “There's two great things about a retired bureaucrat, if he's your dad,” Michael jokes. “One, he shows up on time and he leaves on time. And two, you can't pay him, because Dad always said it would affect his pension.”
Now a third generation is signing on as well. Although their mothers have had careers outside the Roberts sphere —Michael's wife, Jeanne Roberts, is a vice president of a movie production company, and Steven's wife, Eve Frasier, is a retired physician—their children seem likely to follow in their fathers' footsteps.
Michael Jr. is already working in the family business, as a vice president for business development and head of the hotel group, and he says he expects all his siblings and cousins—Steven's three children and Michael's four children—will eventually join the firm. The business is so flexible, Michael Jr. says, that they are all likely to find a niche that matches their interests and abilities.
They have also been groomed for the jobs, to an extent. Michael Jr. and his twin sister, Jeanne, both studied law at Pepperdine School of Law in Malibu, Calif. Jeanne now practices real estate law at a local law firm. Michael says he expects that Fallon, who also studied law at Pepperdine, will head the restaurant division. Meaghan, an undergraduate at Pepperdine, is just applying to law school.
Michael Jr. says his father believes that for those who do not have a special gift or interest, legal training is a good idea. “If you don't know what you want to do, you might as well just go to law school, because law school teaches you to be a little more analytical,” he explains.
At the moment, it's a bit too early to say yet whether Steven's children will also follow their uncle's advice. Steven II is an undergraduate at the University of Miami. Christian is in high school, and Darci is in middle school, so their entry is some ways off.
And what's next for the Robertses? Michael Jr., who seems to have inherited the “visionaire” gene from his father, says he sees the Roberts Companies as a Fortune 500 firm some day. “I want to be a world leader,” Michael Jr. says. “I want to have the company operating in such a way where we have a wonderful team [and] I can not worry about having to be in the office physically all the time, and travel the world and influence people, and teach them the way that I've been taught about wealth and authority and building legacies. I believe I can pull it off.”
Steven says that while he and Michael have detailed estate plans, they haven't worked out any precise succession plan for the business. Instead, he says, he and his brother believe that each of their children will eventually find a role in the company that fits their talents. “We encourage them,” says Steven. “That is our succession plan.”
Bennett Voyles is a freelance writer based in Paris, France.
The Roberts empire
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