1042-2587 © 2007 by Baylor University Homeboy Industries: E T&P An Incubator of Hope and Businesses David Y. Choi Fred Kiesner This case presents the story of Homeboy Industries, which was founded by Father Greg Boyle, S.J. to offer employment opportunities to former gang members in East Los Angeles. Homeboy Industries has successfully launched several businesses to hire and train “homies” who otherwise may not have found jobs. Michael Baca, the new operations director, is faced with the decision of whether to pursue expansion of the promising mer- chandising division. Complicating the decision is the need to balance both the social and business objectives of Homeboy Industries while dealing with the organization’s extreme shortage of managerial and financial resources. This depiction of an unusual entrepreneurial environment also illustrates several organizational challenges and philosophical dilemmas that are common among social ventures. The cool, pleasant morning was rapidly turning into a typically steamy summer day in Los Angeles. Michael Baca, a retired firefighter and since 2003 the operations director for Homeboy Industries, drove along First Street toward the organization’s headquarters, where a staff meeting would soon begin. He had pondered all morning what to do about Homeboy Industry’s merchandising division, whether to make the investment of capital and effort to expand the division’s business or to leave it the way it was. Several people in the organization had become excited about the market potential of Homeboy Merchan- dise over the years, and now in 2004 they were eager to take the next steps. They wanted to propose an expansion plan for the division to Father Boyle, the founder and Executive Director of Homeboy Industries, and they wanted Michael’s support. Others in the organization thought that the merchandising division was a poor fit with Homeboy Industries. Father Boyle and others worried that its merchandise might become gang wear—the last thing that the organization wanted to have happen. Michael knew that all the staff members wanted his opinion. As he pulled into Homeboy’s parking lot and entered the building, he knew he had only a few minutes to make a decision one way or the other. Please send correspondence to: David Y. Choi, tel.: (310) 338-2344; e-mail: [email protected]. The case was prepared solely to provide material for discussion and is not intended to illustrate either effective or ineffective handling of managerial situation. September, 2007 769 Boyle Heights To a middle-class visitor driving down First Street, the Boyle Heights neighborhood of East Los Angeles felt like a different world, both familiar and strange. A local market sold milk, and children were walking to school. A group of heavily tattooed young men in baggy pants and Los Angeles Raiders football jerseys also walked along the street, their eyes seeming to show both fear and anger. Beyond a police station, a building adorned with graffiti came into view: Homeboy Industries. Across the street from the police station, children milled around their school yard. Farther down the block, a pushcart vendor sold fruit to two older women. Boyle Heights, named in 1875 for Andrew Boyle of the Boyle-Workman family, was notorious for having one of the worst gang problems in all of Los Angeles. Within its 16 square miles, 60 different gangs claimed 10,000 members—among an official population of 90,000. Their presence ensured violence and plenty of action for the Los Angeles Police Department (LAPD). The neighborhood’s intense gang activity had historical roots in the rapid migration of illegal immigrants to Los Angeles, where the poorest of them concen- trated in East Los Angeles. The center of Jewish and Japanese-American life in the early twentieth century, Boyle Heights was now 94.95% Hispanic or Latino.1 Two large housing projects, Pico Gardens and Aliso Village, made up much of the neighborhood; most kids lived in one or the other. Attempts to slow the growth of the gangs had proved futile. Community Resources Against Street Hoodlums (CRASH), the LAPD’s special gang unit, constantly patrolled Boyle Heights. Even so, gang violence continued to wreak havoc.2 Something else needed to be done. Needless to say, Boyle Heights (like much of East Los Angeles) offered its children few opportunities. Instead of jobs, kids found themselves looking for member- ship in the local gangs. They saw their brothers and sisters, for some their only role models, running with gangs. For some, gangs were all they knew and the only way to get what they wanted in this neighborhood. Homeboy Industries Inside the Homeboy Industries building, there unfolded a study of contrasts and juxtaposition. The fashionably decorated, air-conditioned lobby displayed a hub of PCs no different from a customer service center at a larger corporation. The receptionist was a polite young Latino, professional in dress and appearance. A closer look revealed multiple tattoos on his fingers and face, all related to the gang life he formerly called his own. Young men and one woman worked at the PCs, answering phones and working busily. They wore baggy shorts and either black shirts bearing the Homeboy Industries logo or Raiders jerseys. A tattooed “LA” showed through the stubble of one recently shaved head. Another employee had horns tattooed on his forehead. The art displayed on the office walls included pictorial collages of life in the rough housing projects of Boyle Heights. They served as a reminder to Homeboy’s employees that they had good reasons to stay out of the gang life. 1. U.S. Census 2000, U.S. Census Bureau, available at http://www.census.gov/. 2. See, for example, Earl Ofari Hutchinson (2002, Nov 24), “L.A. Has to Gang Up on Violence.” Los Angeles Times. pg. M.5, which discusses how years of antigang campaigns have been unsuccessful over many years in spite of the CRASH program. 770 ENTREPRENEURSHIP THEORY and PRACTICE Father Greg Boyle founded Jobs for a Future (JFF), a nonprofit employment referral center, in 1988. He believed that to eliminate gang violence, it was necessary to root out its cause—the lack of hope arising from a lack of opportunities. He was confident that gang violence in Boyle Heights would disappear if its young people had the opportunity to “plan their futures not their funerals.” JFF’s slogan expressed its objective: “Nothing stops a bullet like a job.” Here, former gang members could receive counseling, job placement assistance, and coaching in interview skills, all in an attempt to provide a new future. Many of JFF’s clients had been ordered to receive individual or family counseling as a condition of probation. JFF employed two professional therapists on-site to provide these services to the probationers and to anyone in the community who needed the extra support that counseling could not provide. Both JFF employees and volunteers acted as “navigators” for JFF’s clients. Navigators helped juveniles released from detention facili- ties to enroll in school, register for any required classes, check in with probation officers, obtain driver’s licenses, and attend job interviews. One of the more interesting and unusual services provided by JFF was free tattoo removal. “Ya ‘Stuvo3 Tattoo Removal” offered gang members a way to erase a link to their past and start clean. The program was available to anyone who wanted it done, although priority was given to facial tattoos. Because of its popularity, there was a nine-month wait for this service. JFF annually placed over 350 clients in jobs—an achievement that was only a small fraction of the more than 1,000 gang members who passed through the office in a typical month. Demand far exceeded supply! The organization desperately wanted to have a greater impact. Many clients continued to struggle against obstacles to their employment, such as felony records, visible gang tattoos, and lack of work experience. It was for these most challenged individuals that Father Boyle created Homeboy Industries in 1992, following the Los Angeles riots. Homeboy shared the building used by JFF. Homeboy developed several business enterprises, each of which hired the “homies” who attended JFF’s training programs. Homeboy Industries started with the purchase of a bakery that became Homeboy Bakery. It grew to include Homeboy Silkscreen, Homeboy Merchandise, and Homeboy Graffiti Removal and Maintenance. These busi- nesses and the Homeboy headquarters employed over 70 homies at any one time. Employ- ees learned to clock in on time, to build lasting work habits and skills, and to work side by side with former members of enemy gangs. Avisitor to the Homeboy Industries office in 2004 would likely notice its playful mood. The teenagers laughed and told stories. The receptionist spoke with evident pride about everything Homeboy Industries had done to help him and the community. He pointed to the Homeboy brochure, which quoted an employee: “Because Homeboy Industries decided to believe in me, I decided to believe in myself. And the best way I can think of paying them back, is by changing my life, and that’s exactly what I’ve decided to do.” “Father G” For over 20 years, Father Greg Boyle, who was known throughout the neighborhood as “Father G,” just “G,” or even “G Dog,” had embraced the boys and girls others shunned. (See Figure 1 for a picture of Father Boyle.) Visiting them in hospitals and prisons, he had prodded hundreds of gang members to trade their lives of violent crime for honest work. He had become a legendary figure in the barrio, where widespread stories told of Father Boyle driving his car or riding his bike into the middle of a gunfight in an attempt to part 3.