For Ujamaa Deals’ Tre Baker (below left) and Lawrence Watkins, focusing on African-American business is the key to black economic empowerment
GROUP BUYING — harnessing the power of crowds to secure great deals and discounts on products from companies both local and national — has a proud Web pedigree; Groupon, which more or less pioneered the concept, has (despite some recent difficulties) been one of the hottest Internet startups of the last decade.
Applying that business model but focusing strictly on African-American businesses is Ujamaa Deals (ujamaa is a word of Swahili origin that has come to signify the notion of cooperative economics), an Atlanta-based business (formally scheduled to launch this fall) founded by Tre Baker and Lawrence Watkins.
The model is straightforward: “The [partner] businesses have no upfront costs, but pay a percentage of the deal amount,” Baker says. “For example, one daily deal may be $20 worth of food for only $10 at a local restaurant. The restaurant would give us a percentage of the $10 for each deal sold. If nobody purchases the deal, the business pays nothing. There will be one main deal and several side deals once we are able to build a sufficient deal flow.” Simple, and it’s been proven to work. The goal of Baker and Watkins is to focus the power of group purchases on the African-American economy, which they estimate as close to $1 trillion annually.
The duo seem well-positioned to pull it off: Baker, a 27-year-old Louisville native, he started his first business eight years ago, at age 19, and has degrees from both Vanderbilt and Harvard Business School. Watkins, also 27 and a graduate of both the University of Louisville and Cornell, is the owner of Great Black Speakers Bureau, a company that connects organizations with African-American speakers for events; he also recently founded a subscription-based Web site called Great Pro Speakers, which helps professionals turn their expertise into income by teaching them the motivational-speech basics.
Baker’s confidence in particular is infectious, and bodes well for the ultimate success of Ujamaa Deals. “I can almost guarantee that none of our competitors has done as much research about how to tie daily deals into the bigger picture of economic empowerment as I have,” he says. “This is my life.”
Give us the “origin story” of Ujamaa Deals.
Lawrence and I are both from Louisville, Kentucky, went to rival high schools, joined the same fraternity and share a mentor — Carl Brazley, President of Mo’ Better Marketing, who got us both interested in entrepreneurship. We’ve both been running our own separate companies for several years now and have kept in touch off and on. During one of our “catching up” phone calls, Lawrence said he had an idea for a black Groupon, and I said I had the same idea. So we did some basic research on the market opportunity and decided to go for it. We definitely have complementary business skills: I’m more of the visionary strategist and business-development guy, whereas Lawrence is more into the operational side of things. He’s also much better at networking, while I like to stay more in the background, like the Wizard of Oz.
The daily-deals market is pretty crowded. Did you choose to focus on African-American businesses because you thought it would be a good way to differentiate yourselves?
Unlike most companies that get into daily deals, we didn’t necessarily intend to be in this space. We didn’t see the daily-deals market and say, “Oh, we should get into that, but how do we differentiate ourselves?” Ujamaa Deals was the solution to a series of problems. We call it the “10-20-30” epidemic: Black consumers spend less than 10 percent of their money with black-owned businesses; the median white household net worth is 20 times larger than the median black household net worth; and the real black unemployment rate is hovering around 30 percent. As a student of economics and history, I know that no economically weak community is likely to gain real social, cultural and political power, not to mention equality. You can’t be equal with someone and financially dependent on them at the same time.
How big a part do you estimate black-owned business are able to play?
First, black-owned companies are about 85 percent more likely to hire black employees than non-black-owned companies. So the most efficient way to increase black employment is to grow black-owned businesses, not beg white companies or government to hire more blacks. But this is easier said than done, and that’s where the second number comes in: Black buying power is approaching $1 trillion. If we could just funnel more of that money to companies that we own and control, we could begin to start tackling those 10-20-30 problems.
Who are your personal business/entrepreneurial heroes, and why?
That’s a long list. The short version: [retired Harvard business professor and prominent corporate-board member] Jim Cash; [former NBA player and current food-industry titan] Junior Bridgeman; [Black Entertainment Television founder] Bob Johnson; [investor] Michael Lee-Chin; [venture capitalist] David Panton; [real-estate and urban-development mogul] Egbert Perry; [Black Enterprise founder] Earl Graves; [Louisville businesswoman] Alice Houston; and Carl Brazley are the ones that are living. We’ve met all of them except Johnson, Lee-Chin and Graves. These people have all grown or helped grow companies from ideas to large, successful enterprises. Mom-and-pop micro-enterprises are good, but to make a dent in this economic disaster, we need major black-owned employers that create significant wealth. We’ve got to think big.
Ujamaa’s business model seems almost infinitely scalable even though blacks are only about 13 percent of the U.S. population. What are your short-term and long-term plans?
Short-term, we want to spend the next year building the national list and launch in at least one city, probably Atlanta, to get the operational and administrative systems streamlined and ready to scale. We’ll also raise money from investors and then start rolling out to more cities with the goal of [adding] at least one every quarter. Long-term, we’ll expand internationally and into various other businesses. I can’t get into specifics, but it involves consulting and financial services.
What do you think makes Ujamaa poised to succeed in an Internet sector that’s currently getting a ton of attention from entrepreneurs and investors?
I can almost guarantee that none of our competitors has done as much research about how to tie daily deals into the bigger picture of economic empowerment as I have. I’m even co-authoring a book — with Isaac Addae, a Ph.D. candidate in economics at Morgan State University — on economic development targeted at black companies, governments and organizations. This is my life. •