Black History Month Entrepreneurs: Reginald Lewis (1942-1993)
- Put in the hours. Working hard is a habit, practice it
- Recognize your obstacles and work around or through them
- Don’t just be frustrated, do something. Don’t just try again, try bigger
Reginald Lewis died on January 19th, 1993, age 50. He was then the only black businessman on the Forbes 400 list with a net worth of $400M. He was also the first black person to have a major facility at Harvard named in his honor. He was the first black man to found a business worth more than a billion dollars—TLC Group (The Lewis Company)—a leveraged buyout firm whose holdings included Beatrice Foods International which had $1.7B in sales in 1993.
TLC was founded in 1984 to acquire McCall Pattern company for $22.5M. To do this, Lewis borrowed $20M in McCall’s name, sold a stake to the management of the company and put in $1M borrowed in his name. In an era, when barbarians seemed to stalk every gate, Lewis had played the leverage buyout game perfectly. After three and a half years, Lewis sold McCall for $65M in cash keeping about $8M in McCall real estate and a sizable dividend. All told, Lewis ended up with assets valued 90 times that of the money he had borrowed.
Two months after selling McCall, Lewis would pay $965M for a controlling stake in Beatrice International, a global food conglomerate made up of 64 companies operating in 31 countries (mostly Europe and North America). This time, rather than having to scrimp and scrape the money together, Lewis was able to rely on Drexel Burnham Lambert to finance the bid. Beatrice International had $2.5B in sales. The next largest black-owned business, Johnson publications, registered just $173M. Lewis’ investment of $1M in borrowed money had been transformed into ownership of a company with 2500 times the sales. In six short years, Lewis would sell $900M in assets and retire $600M of debt (well in excess of the roughly $500M he needed to finance the original purchase) as he prepared to make yet another acquisition.
An Overnight Success, 40 years in the Making
Lewis’ success did not come overnight and was certainly not due to luck. He grew up in a semi-tough part of East Baltimore. While in high school, he once called on an uncle to protect him from after a man who was waiting for him with a pistol. He started by trading paper routes with other kids in the neighborhood. He was a three-sport athlete at Washington D.C.’s famed Dunbar High School while putting in 4 hour days at a local pharmacy. Lewis worked hard. At Virginia State, he rode the bench as the third-string quarterback and eventually lost his scholarship (in part due to injury). He covered this loss by working the night shift (1am – 8am) at a bowling alley. He later traded up to a commission sales job with a photographic company.
Through sheer repetition and practice he went from failing math his freshman & sophomore years to a D in his junior year. By his final semester, he would receive As and Bs for all his academic courses. This upward trajectory gave him an opportunity to attend a summer program at Harvard Law. He turned his summer school into a regular session spot by arguing that his standing as the top summer student should be the basis for admission. Lewis, used what he had to get more.
After years of frustration at having to prove himself again and again, he decided to move from being a lawyer helping put deals together to being a dealmaker himself. His first tried in 1975 and endured years of failure on small deals before bidding for McCall in 1983. This time, he implied that he was representing investors trying to buy the company, secure in the knowledge that it would be assumed that the lead investor was white. This time, in his most ambitious effort yet, he was successful. Lewis did not let failure discourage him or trim his ambitions. Failure and frustration were merely prompts to find alternative means—the very definition of entrepreneurial resilience.
Lewis’ posthumously published autobiography is entitled Why Should the White Guys Have All the Fun
In honor of Black History Month, our regular Tuesday and Friday posts will highlight black entrepreneurs who have displayed exemplary success and resilience.