C-W Interview
Interview of José Corona
Executive Director, Inner City Advisors, Oakland, California
Interviewed by Steve Dubb, Research Director, The Democracy Collaborative
October 2014
José Corona is Chief Executive Officer of Inner City Advisors (ICA), a position he has held since 2004. ICA is a nonprofit technical assistance group that helps build sustainable and responsible businesses that create quality jobs, reinvest in the community, and contribute to building a strong and vibrant local economy. Since its founding, ICA has helped to create and retain over 7,000 jobs in the Bay Area, creating or retaining 2,717 jobs in 2013 alone that pay an average hourly wage of $14.50 and generate over $68 million in total wealth for the local community.
Could you talk about your background and how that has impacted your work?
I came to the United States in the early 1980s as an immigrant from Michoacán, Mexico. My father worked in the farm industry, in agriculture. One of the things that really shaped my passion and where I am now was that I always saw and admired my dad as an entrepreneur. He wanted to make a better life for himself and his family. He was lucky to find a great employer who gave him the opportunity to start the business that he has now. It was sometimes difficult not having my dad around because he worked a lot. But that experience really allowed me to empathize with the entrepreneurial journey that I now see in the entrepreneurs whom we serve. They have similar journeys and make tough choices. They give up and sacrifice a lot for the sake of growing their businesses and creating opportunities for others. That kind of framing not only allowed me to be empathetic to the entrepreneurs but also to really understand the hard work, the hustle, and the discipline around that.
My path here was not straight. It was a winding road. My dad was very much into education. He prioritized that. He wanted to make sure my brothers and I got a good education. He put all of us through college. Back then I didn’t know I wanted to come into this world of economic development.
I graduated from UC Davis with a biomedical degree. I went to dental school at UCSF, but then dropped out. It just wasn’t what I wanted to do. Then I needed a job and ended up going through the Macy’s management development program. I found out about them at a job fair. Long story short, it really gave me the business savvy and the tools around management, around operations, and around how to work at a business. I was running a department and then running a region of stores, focused on operations and shortage analysis. They really gave me the tools I needed to use in my career going forward.
Then I came to the nonprofit world. I reached a point at Macy’s where I wasn’t patient enough to stay at Macy’s. So I put in my notice.
I was a friend of someone running the San Francisco Hispanic Chamber of Commerce. They mentioned the Mission Economic Development Association or MEDA. That’s where I got my first pay stub in the nonprofit world doing developing and fundraising. MEDA does homeownership education, land use planning and much more for the Mission District in San Francisco. That was a great experience to learn about economic development, community development, and how and why communities change. You had to address: How do you deal with gentrification? It was great time to be there. It was the time of the first dot-com boom and then there was a huge bust that followed. I saw what all of that meant for the community.
That was a great learning ground for me and, from there, I moved here to ICA to pursue more leadership opportunities. I always look at how I can align my values to the work that I do. I am here. I am doing it and enjoying it and having fun.
Could you discuss the origins of Inner City Advisors? With what vision was it founded? How has it evolved over time?
ICA was founded on the vision that bringing business and the market to inner cities is a good strategy to address a lot of social problems that exist in inner cities. If you bring businesses to locate here, the hope is that they will be active in the community and address the issues that exist. By bringing in, in some sense, the capital market. Market forces, as Michael Porter believes, will transform the community. That was the basis of Michael Porter’s Initiative for a Competitive Inner City. For him, it was a competitive advantage to be located in the inner city: cheaper real estate, transportation hubs, and an accessible workforce.
To some extent that was true, but the organization has evolved. We have learned over time that just because a company is located in the inner city doesn’t mean they contribute back to that community. They might be located there, but for the most part they didn’t hire from that community. It really was a real estate play. It was cheaper. We’ve seen this in many of the communities we have work in now, including East Oakland, West Oakland, and Fruitvale. The location of the company by itself doesn’t necessarily mean that it has a direct impact on the community.
Learning that, we took that and asked ourselves, how do we find the businesses and entrepreneurs who are not only looking to locate in the inner city, but who are also committed to impact the inner city in a positive way through job creation. We are going to find those entrepreneurs and hold them to that by hiring locally and contributing to the community in other ways. First and foremost, this involves hiring locally.
So we help companies in the inner city who are focused on local job creation. It is not enough any more to live in the inner city because inner cities are gentrifying. Just because someone lives in the inner city doesn’t mean that person meets the profile of the people we are seeking to help get employed.
Describe the portfolio approach that Inner City Advisors uses. What businesses are in your portfolio?
We do have a selection process for companies that we serve, based not only on their business and industries, but on their potential for growth. We try to look at companies that are job creators and employers. We don’t work with start-ups. We want to find those that might create 50 jobs in a 3-year period – that is the baseline we use. However, we do serve companies at early stages through different programs, such as our Entrepreneurship Institute.
With the Entrepreneurship Institute, we partner with the Mills College Graduate School of Business. We admit 60-70 entrepreneurs and try to help them understand their business – go from plan to strategy, and how to focus on growth. The 10-week period of the class allows us to get to know and understand which companies have the most potential for growth.
We have 15-20 companies that we dive deep into their business. We leverage skilled business leaders to work as volunteers and which serve as a de facto advisory board. We look to find people with a lot of operational experiences who provide timely, practical and valuable advice to the entrepreneur.
These entrepreneurs include companies like Revolution Foods, which we have worked with for over eight years. They have grown from five people to 1,200 people. Other major success stories include Blue Bottle Coffee, Give Something Back, Premier Organics and Numi Organic Tea.
We have a lot of food manufacturing companies. That is intentional. It is an industry provides a lot of good entry-level jobs with career mobility potential. For us, a good job is one that pays above living wage, offers health benefits, and career ladder opportunities. We believe that a good job has a trickle-down effect on families. We believe that having a good job allows an individual to better support their families.
But in the end, we have to start with helping the entrepreneur and small business to grow first. If they are not sustainable and profitable first, then the good jobs that we seek to create will not be created.
Could you give an overview of the services Inner City Advisors provides?
We look at it as three tracks. The first is a capital preparedness track: financial management, operational support, human resources support, among other areas, which help companies to improve their business – all with a focus of having them access capital.
The second track is Talent Management. As we help companies grow and scale, we help them recruit their people and talent from workforce agencies that work with different populations, such as, formerly incarcerated, immigrants, and people with lower educational attainment levels – we work with workforce development partners out there to get these companies the staff they need. The Talent Management program helps companies build sound, strategic human resources infrastructure so that they can prepare, recruit and promote good talent, which we help recruit from partner workforce development agencies.
Our third track is Capital. Through our partner fund—Fund Good Jobs—which ICA created and launched in 2013, we use a hybrid capital approach (debt and equity) to invest in Inner City Advisor companies. We build in job creation and job quality metrics within the covenants of our investments to ensure that good jobs are being created.
Did you have covenants before the Fund was created?
We didn’t have any covenants. The way we have traditionally worked is that we have demonstrated that we add value. We have helped the businesses we work with connect a lot of the investment they raised. We added a lot of value to build their business. We built trust.
So before we had Fund Good Jobs, we couldn’t enforce covenants. We didn’t say, “You are going to get ICA services and you have to do X”—we didn’t really do that. But that has been the evolution. Over time, year over year, we have become a lot more intentional and picky about the companies with whom we partner. We want to make sure they share our values – there is no legal way to enforce where they hire from or who they hire. All of the consulting we provide is on a pro bono basis. They don’t have to take our advice. They can do something else. And we have seen some companies go in a different direction and we have parted ways and are comfortable with that.
We have come to be a lot better about screening up front for commitment to job creation and for hiring people with barriers to employment. Even now, we have a very trusting relationship with the companies. They see that we are looking out for the best interests of their business. They tell us, “If you are telling us you are working with the target population, we will do it”. But it is because we have built trust and demonstrated value to their business. That is the kind of relationship we build over time. And we try to do that better and faster with the new companies we are serving.
How are you funded?
About 40% of our funding comes from foundations, both local and national. 40% of our funding comes from corporations, banks and other financial institutions. 15% comes from an Alameda County social service agency, and the remainder, about 5%, is from individuals.
You’ve been at ICA for about a decade. Could you discuss the growth of ICA over that period?
When I joined in 2004, we used to be called Oakland Advisors. I was the first employee after the organization had gone through a tumultuous period. They were able to secure funding to hire a new director, and that is when I came in. It was only focused on servicing anywhere between eight and 10 companies a year in Oakland.
The mission has not changed, but the approach has. We have grown from one to 10 staff and from a budget of $95,000 to $2.1 million. We were 100% funded by a few corporations. Now we have a more diverse funding mix. Our reach is broader too. It is not just Oakland, but includes Alameda County [whose county seat is Oakland], Contra Costa County and San Francisco.
We are looking to expand into the Peninsula and the San Jose area and up into the North Bay. We are planning that for 2015 and 2016, but we are doing it carefully and thoughtfully, and in no rush. We have plenty to do where we operate currently. The majority of companies we work with come to us through word of mouth. That is how we get most of our clients, which is great. But we are also trying to be more intentional and strategic in our work.
Beyond food production manufacturing, what are the main sectors you work with?
Food production manufacturing is the highest. We also have health care, such as in-home senior care, and supporting kids with autism disorders. Unfortunately, both of those are growing sectors–a lot of the nursing in-home care providers jobs are good jobs that can be accessible to people who don’t have a high education but have good talent for caring to people. The other that is building is solar, particularly the installation, because of the jobs they create and for whom. The rest is a mixture of retail, services, advanced manufacturing, distribution and repair.
What are the demographics of the workforce of the companies that you support? What are some key indicators of the impact of your businesses?
Of the companies we serve, 58% are minority-owned businesses and nearly 50% are women-owned. The people they employ are from 58% minority populations. The median revenue of our companies is about $460,000. The average wage is $14.50 an hour, and 64% of the employees have health benefits. We are also beginning to track job mobility as part of an indicator of a good job. More to come on this and other indicators in 2015!
You have mentioned that you like to work with practical, action-oriented tools. What are some of the practical, action-oriented tools that you use? How does it work?
We use the Eight Factors framework, which was developed by Michael Bush, a former ICA Board member. He is also a savvy, committed and serial entrepreneur. It looks at areas such as Mission, Cash, Strategy, People, Culture, Processes, Structure and Leadership. We look at these areas of a business and dive into them. Whether it is staff or volunteer advisors, we want to provide concrete steps and to give real world examples that businesses can use. We have amazing volunteers, business professionals who have extensive operational experience of running a business. It is a simple—can someone provide useful information to an entrepreneur so that she or he can put into practice right away? For that reason, we screen our advisors as carefully as we do the businesses.
Have you worked with any businesses with cooperative or employee ownership or non-profit ownership?
We are exploring non-profit social enterprise, but we have not worked with social enterprises yet.
Part of our definition of a quality job is to treat employees well. So we have worked with some of our companies to implement ESOP [employee stock ownership plans] ownership structures. Revolution Foods provides stock ownership for their employees. We help them structure that internally and provide the legal support. But, we do that on a case-by-case basis.
With co-ops, we really haven’t done much. We have tried to work with a couple but really do not have much practical experience.
Does your work intersect with the environment and sustainability? If so, how?
We do, but it is not a focus of ours. It happens to be that most of the companies with whom we work have an angle of environmental sustainability. For us, the impact metric is job creation. We don’t seek companies that are environment sustainable, but many, such as the solar companies, and other implement sustainability practices into their business because it makes business sense for them and because it is just a value that the entrepreneurs possess.
How are Inner City Advisor businesses actually linked to capital?
We work with all banks, including community banks such as Beneficial State Bank, New Resource Bank and other community development loan funds like Pacific Community Ventures and OBDC (Oakland Business Development Council) Small Business Finance. We have great relationships for traditional debt capital. We have links with impact investors and also play in that world.
What we try to do is understand the need of our businesses first and then connect them to the appropriate sources. In a sense, we act almost like an investment bank to our clients, where we convene capital providers to build the capital package and capital stack that makes the most sense for the entrepreneurs. Fund Good Jobs is at the core of this strategy. We are preparing companies so they are well prepared for capital when we get to them.
How does work with business translate into building community wealth?
We are becoming better at connecting companies through communities primarily through hiring practices. We believe that having a good job is a first step to increasing an individual’s financial position and that of their family. We also support our entrepreneurs in building businesses that build other wealth creation and financial incentive mechanisms for their employees, so that if the business does well, the employees do well to.
This moves the dialogue beyond just wages as a measure of the quality of a job. The more families that are supported by employees that work at the companies we support, the more economically sound families and people are created. That local wealth is then reinvested in the community. We propose these practices and make them aware that they can do it and afford it, and we help them get there. But job creation is where it starts for us.
Do you track by neighborhood?
We track results as a whole. We do know that about 80% of those 2,700 jobs are in the inner city communities. We are making a huge impact on hiring locally and we are beginning to dig deeper. We want to understand the families that these individuals are supporting: who are they?
What are their profiles? For instance, $54,000 a year (which is the average salary across ICA companies) supporting one person is OK. It is till not good, but it’s OK. However, $54,000 supporting a family of four, and in the Bay Area? That is not sufficient. So we are looking at how to improve that. Over time, we expect that the impact reporting will become a lot more robust by looking at a lot more indicators.
Revolution Foods operates nationally. Is that the norm or the exception?
They are in the 25 cities. But it is definitely the exception in our portfolio. The vast majority of the businesses we work with are operating and employing only locally, but they distribute more broadly. Blue Bottle Coffee is another example like Revolution Foods, however. All of the other companies have employees located here. They may have sales reps in other states, but 98% of their workforce is here.
When it comes to that, when someone has the capacity to expand, obviously we encourage that. If Revolution Foods can have an impact in the Bay Area, they can also have an impact in Chicago, New Orleans, and Washington, DC.
Given the scale of where they are, we can’t help them on the scale strategy in those cities, we can only support them in what they do in the Bay Area—At least, not yet.
Could you discuss some of the leadings challenges you face in your economic development work?
The entrepreneurship and small business development work that we are in—it is not a level playing field. The entrepreneurs that we serve do not have profile where they can easily access traditional capital. They don’t have the profile that a bank or a venture capitalist would look for. And, banks are getting tighter in their lending—particularly for the profile of companies that we serve. We are helping in the capital piece. But there is a lot more to do.
Another challenge is that the economic development that is happening is not benefitting all communities. You see Oakland in the New York Times as the number 5 place in the world to visit; and that is great. But the economic development activity that is happening in Oakland is concentrated in downtown and uptown. That is not benefiting Fruitvale, West Oakland or East Oakland. So, how do you bring equitable economic development activity in our cities and communities? That is a big challenge.
Finally, technology-based economic development is a big driving force, but it doesn’t benefit everyone or employ everyone and does not solve every problem. We need to look beyond technology as well when we are talking about economic development.
Could you talk about the role of public policy in providing a supportive environment?
If anything, it is really just prioritizing and investing in the businesses that are already locating here. The same incentives that cities use to attract a business could also support local business in expanding. Why can’t you take similar approaches for local businesses if they hire locally? Government and policy has a huge role in creating the environment for someone to GROW in their own city. It is often overlooked. It is not sexy. It is not bring the next Twitter in the world. But how do we grow our next Revolution Foods or Blue Bottle Coffee?
Do you see the ICA model being adaptable to other cities? What would need to happen?
It is definitely applicable. Other communities: Detroit, New Orleans, Philadelphia, even Portland have reached out to us. It is applicable and it is needed.
The challenge is to really come in with a sense of humility. ICA is not the sole answer. Detroit has great organizations. It is about understanding who is doing what and how, or if, can the ICA model leverage or supplement what is already happening. We are not so cocky to say that ICA is the answer to all communities. Communities are very different, with different assets and challenges. Oakland is not the same as Detroit or Portland. The best thing that we can do is to share our learning and experiences. We are not attached to the model. It is a simple model and we hope others can adopt it and build upon it. We want to start the conversation about our approach to scaling businesses and talent management as a strategy for the creation of good jobs. This can be a national model, but ICA does not have to be in every city. We actually know that that approach from other organizations has been tried before and has not worked.
Is there a point of exit in the program or is it open ended?
There is no exit strategy, yet. We want to keep supporting entrepreneurs as long as they keep being receptive to the advice, keep growing, keep adding jobs and employing from their communities. Whether a business has 5 or 100 or 500 employees, here is value ICA can offer, whether it is capital support or talent management.
If you were to highlight a few key accomplishments of Inner City Advisors’ work to date that you are most proud of, what would they be?
The obvious one for me is that we have a really committed and talented team of staff, board, and advisors that are really in line with the values of not only the entrepreneurs but also the mission of creating good jobs. Everyone is aligned and cares deeply about the mission. I’m proud that we created that team.
I’m also really proud that we really built a network of support for entrepreneurs in the Bay Area. They can tap into Inner City Advisors. We have been recognized that entrepreneurs see us as a valuable piece of that ecosystem. We all have a role in improving our communities and we have empowered entrepreneurs to play a vital role in making our communities better places to live, work and play. So it is not only ICA who is talking about good jobs, but the companies are carrying that message too. And that is what creates a movement.
For more information on Inner City Advisors, see: http://www.innercityadvisors.org/#ica