♪ This is my kitchen table and also my filing system.

David, voice-over: Over much of the past 3 decades, I've been an investor... David: The highest calling of mankind, I've often thought, was private equity.

[Laughter] David, voice-over: And then I started interviewing.

I watch your interview because I know how to do some interviewing.

David, voice-over: I've learned in doing my interviews how leaders make it to the top...

I asked him how much he wanted.

He said, "250."

I said, "Fine."

I didn't negotiate with him.

I did no due diligence.

I have something I'd like to sell.

David, voice-over: And how they stay there.

David: You don't feel inadequate now because being only the second-wealthiest man in the world, is that right?

[Laughter] One of the most impressive people I've ever met in the business world is Mellody Hobson.

She's the co-CEO of Ariel Investments, a leading minority-owned investment firm in Chicago.

She's also Chairman of the Board of Starbucks and a member of the Board of Directors of JPMorgan.

I had a chance to sit down with her recently to talk about an incredible business career and now an incredible philanthropic career as well.

♪ Right now, you are the Chairman of Starbucks.

You are, I think, the only Black female who's a chairman of a major Fortune 500 company.

Is that right?

Mellody: Correct.

David: Is that a surprise to you in this day and age that not one other Black female is the chair of a major company, a public company?

Mellody: Yes, absolutely.

I think it's quite disappointing.

And do you see any progress in this area?

In terms of being chair, I don't know.

There may be people who are out there who are headed for the chairmanship.

But right now, just the idea that out of 500 companies in the Fortune 500, I'm the only one today, the second only in history-- Ursula Burns was the Executive Chair of Xerox-- that is just a poor statement about our society and where we need to be when it comes to race in this country and gender.

David: You have been very active in trying to get more African Americans on corporate boards.

And in fact, you have a conference that you host.

Mellody: You've attended it.

David: And you interviewed me, I would say grilled me, about my own situation.

Mellody: I wasn't that tough, was I?

I got through it, but your husband said I did better than most.

But in any event, so why are you so interested in this area, and what progress do you think you've made in getting African Americans on corporate boards?

This is always been a big deal to us at Ariel.

I think it has a lot to do with our founding as the first minority-owned investment company in the nation back in 1983.

We'll be 39 years old in a month.

And I think it also has a lot to do with the fact that we recognize the boardroom is where all the power is.

And at the end of the day and for-- in order for a company to be world class, and that's what we aspire to invest in, we think you need all perspectives around the table, and you certainly need to understand all of the potential preferences of the customers that you have, the buyers that you have, what have you.

And so at the end of the day, we think a diverse boardroom is essential to the well-being of a company and its stewardship.

And I say this all the time, that companies that don't really understand this are committing corporate suicide.

And so we advocate in a very strong way in terms of the companies that we own, the small and mid-cap U.S. names, for there to be diversity in those boardrooms.

It may not be there when we first make our purchase, but you better believe we're going to be pushing and saying, you know, what is your plan for having a diverse boardroom?

And at the end of the day, in the last 39 years almost, we can point to, I think, somewhere in the neighborhood of 50 companies where we've had diversity added to the board.

So let's talk about a company, Ariel, that you started out as a person right out of Princeton, then you worked your way up-- Mellody: I was an intern.

David: to be co-CEO.

But before we get into all that, let's talk about your background.

You are from where?

Mellody: Chicago.

David: And you grew up in a very wealthy family?

Mellody: No.

Just the opposite.

I grew up as the youngest of 6 kids.

My mom was a single mom.

I was really late in my family, so my siblings are 20-plus years older than me.

They always joke that I was found on the doorstep.

And my mom worked extraordinarily hard.

She was in the real estate business, and it was--I don't even call it feast--famine or food, not feast.

And she really struggled a lot.

We used to get evicted.

I tell these stories all the time because they were foundational to who I am.

We used to get our car repossessed and had a lot of trouble.

David: Because your mother's-- your mother was supporting the family, and the business wasn't so wonderful sometimes.

Mellody: And also she was a Black woman trying to do something on her own.

It was very, very hard during those times.

There was a lot of-- there were just a lot of obstacles for someone like her.

She didn't have my education, but she was very, very wise.

And she imparted, I hope, that wisdom in me that allowed me to be the person that I am, as did my siblings.

You were able to overcome all this by doing well in school.

You did pretty well in high school, I guess.

Mellody: School.

I was very good at school.

Yes.

David: So, you applied to college, and you applied to Harvard and Princeton.

And you got in, right?

Mellody: Yes.

David: And Harvard's a great place.

I'm on the board of the Harvard Corporation.

So, why did you choose to go to Princeton, which is a great school, over Harvard?

Harvard is a great place.

I loved it.

My mom really wanted me to go there.

I tell the story all the time that she told me Harvard was like Coca-Cola, that anywhere in the world that I would go, including an African village, if I said Harvard, people would know what I was talking about.

And Princeton was like Sprite, she said, we only knew it in America.

And at the end of the day, after visiting both, a Princeton alum named Richard Messner called me every single day after I got into Princeton and told me why Princeton was the better school for me.

And he ultimately invited me to a lunch with Bill Bradley, and between the two of them and John Rogers, the founder of Ariel, I was triple-teamed.

And ultimately, I said any school where people would be this fanatical about the school and having someone go there must be a really great place.

And so, against my mother's wishes, I chose Princeton.

David: And you never regretted it, right?

Mellody: Oh, I loved Princeton in every way.

You know, Princetonians, we're hardcore.

As we say, we bleed orange and black.

David: OK, so you graduated from Princeton what year?

Mellody: 1991.

David: And then you decided to go back to Chicago.

I assume you could have had a lot of jobs in New York or the East Coast, but you went back to your hometown and joined a then relatively small firm, Ariel.

Is that right?

Mellody: It was tiny.

It had $1.6 billion in assets.

Maybe one billion at the time.

And I did interview on Wall Street, but one day after making lots of trips into New York on the train to do the interviews, one day, I just called John Rogers, then he had the title of president, and I said I want to come to Ariel, because I could see what I could learn from working with him up close vs. the layers down that I would be in some of the other firms.

I think he was surprised by the call.

He told me I had an open invitation to join the firm after I was an intern, and I eagerly went there.

I knew from the first day, and I know it's going to sound crazy, that I would work there my whole life.

I knew it.

You have worked at Ariel your whole life.

In fact, I think you're the only person in your class at Princeton who has the same telephone number that you had when you graduated.

Is that right?

Mellody: That's right.

Out of 1,100 people.

So you can tell that loyalty means a lot to me, as well as consistency and stability, which is the opposite of what my childhood experience was.

David: So Ariel, for those who don't know, is, I guess it's the oldest minority-owned investment firm of its type, and it's a value-oriented firm.

Is that right?

You buy stocks that are, let's say, value oriented.

Cheap, in other words.

Mellody: That's right.

We buy stocks that are out of favor, but show strong potential for growth.

We cut our teeth in the small and mid-cap space, U.S. stocks.

And in 2011, we branched into international and global with a New York team in a New York office.

So we do small and mid-cap investing in U.S. stocks, and then we do all cap investing in international and global.

And then very recently, we went into your business.

David: Now you're in the most important business of them all, private equity, right?

I don't know if it's the most important, it's the hottest one right now.

We're trying to do it differently.

So your firm specializes in what's called value stocks, which means cheap stocks.

You're not into the high technology, high fliers.

But the high fliers have done so well-- Mellody: Crushed it.

David: in recent years.

So has it made you think maybe you should get into that business as well?

As a contrarian, I think just the opposite.

So, whatever worked in the past, won't work in the future.

Most people fight last year's war.

That's not how we think about things.

You want to look and see what hasn't been successful, and that's where you want to be.

So when we look at this past decade where large caps and growth have dominated in a way that we've never seen before, selling at valuations that we've never seen before relative to value or cheaper stocks, we see a tremendous opportunity.

People think we're talking our book.

We're not.

I'm just looking at data.

I love that line, math has no opinion.

When you look at the math, the differences in returns over long periods of time between growth and value and the divergence that we've had recently, you can't help but to see a tremendous amount of opportunity and value, especially with the backdrop of rising interest rates.

Warren Buffett has often said that people would be better off just put their money in stock index funds rather than people who are picking stocks, as your firm often does.

You pick stocks.

So what do you say to Warren about that?

Mellody: Well, first of all, he's outperformed by not owning an index, so he's proof positive that it's possible that you can outperform the broad market, but more importantly, in our world, we believe in the efficient market theory, and the inefficiency is in areas that are-- that are overlooked, misunderstood, people don't follow it very well.

And so that smaller companies, they tend to be less widely followed.

You also see that inefficiency in international markets.

That's where we work and live at Ariel.

And so we think we can exploit those inefficiencies in those areas, which is where we would say we would respectfully disagree with Warren Buffett.

Let me talk about Starbucks for a moment.

You've been on the board for how long?

Mellody: Wow, a long time.

Since 2006.

David: OK. And when you got on the board, did you have to go to Starbucks every day and...?

Mellody: I drink Starbucks a lot, yes.

David: And when you check in, do have to wait in line like everybody else?

Mellody: Yes, I wait in line like everyone else.

That's an important part of the process, to see how everything's working, how long it takes, what the-- what's happening in the store.

David: But now that you're the chair, when you walk in any Starbucks in the world, they must have your picture there.

They know you.

Mellody: No.

That does not happen.

It's actually like being a secret shopper.

It's pretty good not to be recognized in any way so that you can truly assess how things are going.

I take pictures of the cases.

I do all sorts of things when I go in now.

David: So what's your favorite drink?

Can you say?

Is that a state secret?

I make a joke about this.

So I like my coffee black like me.

David: OK. Now, Howard Schultz has been a mentor to you a bit.

Is that correct?

He's the founder of Starbucks.

Mellody: Oh, for sure.

For sure.

Very important.

David: So what did he do that made Starbucks so successful?

There are other coffee chains around the world, and wasn't like he invented coffee chains.

What did he actually do that made it the biggest in the world?

He really started off from the very beginning saying that he wanted to create a different kind of company and that he had this point of view about leading through the lens of humanity.

It sounds like it could be a cliché, but it's not at all.

It is very much in the DNA of the company, how we look at things, how we do things.

It's always through this point of view of people.

And so at the end of the day, I think he put people first, not only in terms of the partners of the company, but also in terms of the customer.

And at the end of the day, that is what has made the company so great.

David: OK.

So today you're coming to New York for a board meeting of JPMorgan, which is, I think, the biggest bank in the world, or at least by market capitalization-- Mellody: Eighth largest, I think, in the world.

Largest in America.

David: In terms of American banks, it's the largest.

And it's led by Jamie Dimon, who's been the CEO for quite some time.

So as a board member there, what is your responsibility?

Is it to help the bank grow?

What have you learned from Jamie Dimon?

Is he a mentor to you as well?

So, we'll start it off with any board role, you're a fiduciary for the shareholders.

Howard is the one who taught me this best.

He told me that every time he sat in the room, he pictured two chairs, and--that were empty.

One chair was a partner at Starbucks, another chair was a shareholder.

And he said when you're in that boardroom, be proud of everything you say to those two chairs.

And I've taken that to heart, and I do the exact same thing when I'm at JPMorgan.

I assume that there is an employee sitting in the room of JPMorgan and that there's a shareholder in that room, and I am supposed to look out for them.

That is my job.

And in terms of what Jamie has taught me, Howard and Jamie have taught me different things.

Obviously I've been with Howard for a very long time, and I think he molded me as a person in terms of my professional self from watching him, especially for so many years and so up close.

With Jamie, I haven't been there as long, but what I can say to you is I've learned without a question how he has put a world-class team around him to run an extraordinarily complex business.

And at the end of the day, you're only as good as your people.

I think that is what I see and I've learned from Jamie.

David: Another initiative you've been involved with, which is to get JPMorgan and other companies to invest in minority-owned businesses.

And how is that going?

Mellody: So the initiative is really targeted at growing sustainable minority businesses by bringing two things together--capital and customers.

We think people when they talk about growing minority businesses, they often rotate, over rotate, on this idea of access to capital.

We think access to customers are just as important.

And it's actually--this became clear to me.

John Rogers used to talk about that all the time, saying, "Customers, Mellody, customers grow minority businesses."

And then I sat in the boardroom at JPMorgan, and I realized very quickly and clearly, if you've got a fistful of receivable--receivables, that bank will lend you money.

And so the idea is, how can you create sustainable minority businesses of scale?

And we think you can do that by becoming tier-one suppliers to Fortune 500 companies, because those companies are looking to diversify their vendor list, both literally and figuratively, especially after Covid.

David: So how is that going?

Are you raising the money?

Have you started investing that fund yet?

Mellody: We are.

It's going very well.

So we're just off to the races.

We announced on February 17th.

We feel very good about our progress.

We can't say a ton because we haven't had our final close yet and there are a lot of rules around us, but we are very, very optimistic.

David: Many people who are minorities feel that African Americans, Latinos, others who are not a majority status, not white, feel that this system is built against them.

In fact, I believed, when I was growing up in the American Dream, but I'm white and I believed in it, and I've lived the American Dream, but many people who are minorities, don't any longer believe in the American Dream.

They don't think they can rise up.

Your hometown of Chicago's had lots of problems, of course.

What do you say to these people about whether this country really still exists for the American Dream?

Is it possible for people to do what you've done?

So first and foremost, I'm an example of the American Dream being possible, and I can't in any way say that that's not the case.

I didn't come from anything.

I didn't know anyone.

I had no relationships that I could leverage in terms of what I have become.

It was just hard work and effort.

And along the way, I got lots and lots of breaks, and miracles did happen.

But the American Dream to me is alive and well.

Now that said, I'm a capitalist with a capital "C." But I think capitalists should be working for more people.

Right now, the system is limited.

It is not as good as it could be.

It's gotten better over time, but it can be better still, and it will be better still when more people of color can participate in the system.

When everyone can play, the game gets better.

We have learned that time and time again.

Reverend Jesse Jackson says it about baseball.

It wasn't as good as it could be until Jackie Robinson could play.

When everyone can play, when you can have the best competitors competing, you ultimately end up with a better outcome, globally, domestically, inside of a company.

And so to me, the American Dream is possible, but it is failing a lot of people because of some of these racial blinders that exist.

David: Today, CEOs are under pressure to say something publicly about public issues.

Do you think that's a good thing that Jamie Dimon or the CEO of Starbucks should say things about policy issues that are really outside of the domain of their company?

Or do you think that they should really stick to the company's kind of domain and not really address public policy issues?

We are human beings.

We have opinions.

And I don't think being CEO, co-CEO, chairman, et cetera, means that I can't have an opinion about something.

And so I always put that in the context when I am giving my opinion, this is my opinion.

It doesn't have to be an opinion that represents Starbucks or Ariel or JPMorgan, but I think I'm allowed to say what I think.

It doesn't also mean that I'm right.

At Ariel I talk about truth.

There's truth with a capital "T" and there's truth with a small "T." And if it's my opinion, it's truth with a small "T." David: Now, this country is bitterly divided between the left and the right, it seems.

The government's not functional in many ways.

Are you optimistic about the country's future or do you think we're heading to a dark path where we won't be able to bring the country together?

I'm very worried about the polarization, and I think that we all have to work harder to be more willing to listen to other points of view.

At the same time, I take that Warren Buffett view.

I think that if you're born in America, you've won the birth lottery, as he says.

And I think that America's promise remains very, very, very great, because we've had a certain spirit in this country that I don't--I think it's in our DNA.

And I think if we can realize our best selves, which is what America was founded on-- inclusion, in terms of religion, in terms of people from all walks of life, all of these things, being a melting pot, if we can realize that, our future and our possibilities are truly endless.

The question is, will we allow ourselves to realize that?

Now, some people would say, Mellody, you are on a lot of corporate boards, you're on a lot of nonprofits we'll talk about.

You've also married a very, very wealthy, famous person named George Lucas, the creator of Star Wars, among other things.

So why do you need to be the co-CEO of Ariel?

Why don't you just do nonprofit boards, corporate boards, and other things?

Why do you still want to do this?

Anyone who knows me knows that that question doesn't make sense for me because my heart, my love is Ariel.

Ariel is my first child.

It was the thing that I did that I thought about every morning when I woke up and every night when I went to bed and all day long, and it really became a labor of love for me.

John joked that he started it and that there became a point that he thought maybe I loved it more.

I don't think that's true.

We don't compete for the love of Ariel, but I do think it became a part of my DNA.

And so leaving it is not something I would ever consider.

I've always wanted to be there.

So let's talk about some of the nonprofit things you're doing.

One of them I would just want to talk about, one that you're doing, talk about first, you're doing with your husband, you're building a museum in Los Angeles for narrative arts, I guess it would be, dealing with his art that he's purchased, and all the things he's done.

Can you explain why you're building a museum?

And when it's going to open and what it's going to be that's so unique about it.

Mellody: Well, it's the first museum that's ever been built that is dedicated to the art of storytelling, the narrative.

So the way to think about it is a story that is told in one frame.

Many directors can see this very clearly.

When you look at, for example, a Norman Rockwell picture, a painting, you can understand the story just in one frame, one shot.

And that's what the whole museum is about.

We dedicated this work to building this building.

It will be the first of its kind.

It's in Los Angeles.

It is--it is seeded with the collection that George started collecting for a very long time.

It also has a component of it that is dedicated to Star Wars, but the bigger issue is to create an environment, a place where anyone can walk in from any walk of life, from a scholar to a 6-year-old, and feel not only like they belong there, but also that they understand what's on the walls.

Now, you are in effect self-funding this, putting up most of the money for this, so it-- Mellody: All.

Not most, all.

David: All right, so that's more than a billion dollars, let's say.

Mellody: Lot more.

David: I don't know of anybody that's ever put up that much money for a museum.

You ever think about the cost, or you're just not worried about that so much?

Mellody: What we have said, and we really do believe this, is that we are holding society's money.

So this money is not for us.

We have great lives, so please don't in any way think that we're, you know, struggling here.

But it really was that the wealth that was created from Star Wars and Indiana Jones and all these things was really quite significant, and we think it belongs back in society.

David: So what's it like to be Mellody Hobson?

Everybody knows you pretty much.

And your--you can see anybody in the world you want to see.

You have the best, most famous friends in the United States.

So, do you ever just say, I want to just chill out and relax, get away from all this?

And how do you relax?

Mellody: Well, first of all, I just want to put in context that I get to spend time with people who I really admire and respect who are world class people.

Their fame--many of them are not famous at all, that you wouldn't know, but they are equally important to me.

So that is not how I think about any person that I have a relationship with.

What I would say is that my life has exceeded my own expectations, and I think that's why it's very important not to put expectations around what is possible for you or anyone.

And in so doing that, I have a great sense of gratitude about all that I've been able to experience and all the people I've been able to interact with and, most importantly, learn from.

In terms of what I do when I am relaxing, we are really basic in my house.

So we do things like binge watch television, and we usually go to the movies, although we don't do that so much during Covid.

George likes to watch in a movie theater with other people, and he likes to experience the crowd experiencing a film, not to watch on his own.

And does your husband say, well, this isn't a good movie.

Let me tell you what they did wrong, or he doesn't do that?

Well, actually I love watching a movie with George because he really breaks it down for you.

It's not about it being good.

I mean, it's much more than that.

He will tell you why the story is solid and the foundation of it is good.

He'll tell you what's missing.

He'll give you ideas of how the movie could be better.

And I mean, I've watched a lot of films with George where he's broken them down for me in ways that are just so enlightening.

Now, have you ever thought of running for office?

You obviously have an outgoing personality, you're very successful.

You presumably could get elected in your home state of Illinois.

Or running for President or anything like that, or serving in the cabinet?

Mellody: No.

David: And the reason is too busy with other stuff, or government is a little complicated for what you want to do?

I'm doing what I'm meant to do and what I love.

I'm not one of those grass is greener on the other side of the fence people.

You could see that by virtue of the fact that I've stated at Ariel for so long, that I have relationships that extend for decades.

I just don't--I don't think about, how do I trade up?

That's just not how I think about life.

And if I had that calling, I would do it, but I don't feel that in my heart or soul.

I feel I'm better off... contributing to organizations like Ariel and Starbucks and JPMorgan.

So if somebody says, "I want to bundle the optimism and enthusiasm for life that Mellody Hobson has," what is the secret?

How do you get to be so optimistic and energetic?

And what do you think is the key to that for people who want that?

Mellody: Gratitude.

So when you have had the life that I have, every day is a gift.

Every day seems like a blessing.

Every day feels beyond anything I would have ever expected.

And so if that is the way that you have, you know-- if you look at the world, I think it ends up being a much better life.

You can put--that doesn't mean days aren't hard.

I tell people at Ariel, my worst day is still awesome.

I mean, I've had some really bad days, but in the context of what I know that can be really bad, like worrying about where you're going to sleep or where you're going to eat, nothing is that bad.

Nothing.

And it also gives me a great amount of empathy for people who have those struggles.

And so, because I never forget, I'm always very grateful.

And because I'm grateful, I think that I'm supposed to work hard.

I'm supposed to do better.

I'm supposed to be optimistic.

Because the contrary is... just doesn't seem right given all the opportunity that I've had.

What do I have to complain about?

It doesn't mean I don't have moments of complain, but in the big context of my life, I have perspective, and that perspective allows me to have gratitude and, therefore, to have joy.

♪ ♪