‘Black Man on Wall Street’
Valley native recounts journey from Youngstown to financial capital
Growing up around the steel mill laborers of 1960s Youngstown, J. Derek Penn had never heard of Wall Street. Nor was how to negotiate on the trading room floor discussed in Rayen High School football huddles.
“I literally did not know what Wall Street was until I was 23, 24 years old and in business school,” Penn said in a phone conversation this month from his Hudson Valley, N.Y., home.
Penn, 64, recently retired from 34 years of living in Manhattan and dealing for such financial giants as Morgan Stanley, Merrill Lynch, Lehman Brothers, Fidelity Investments, Pershing and BNY Mellon. A world traveler and executive, Penn now serves as an independent trustee on the corporate board of Charles Schwab Corporate Individual Fund and Exchange Traded Funds.
His path includes college football stardom, attempts at the NFL and CFL, world travels and surviving the Sept. 11, 2001, terrorist attack on New York. Penn recounts his wild ride with honesty, humor and poignancy in “Diary of a Black Man on Wall Street: From Youngstown, Ohio to the Big Apple,” released in June by Word Association Publishers.
“I wrote to inspire some young people of color to pursue a career in financial services or, quite frankly, a career in corporate America,” he said. “If they see that I, a kid from Youngstown, made it, they might feel they can, too.
“I also wrote it to inspire people in early and mid-careers to keep pushing and going around obstacles,” he said. “Obstacles simply are opportunities to re-orient.”
BUSINESS AND BLACKNESS
In his memoir, Penn tells of being followed by security for two hours while shopping at a high-end store, being warned away from talking to white women, to be redirected to lesser ventures because “you people don’t belong here.”
Penn admits to not letting everything slide. He writes of the time a man demanded of Penn if a blue-blooded firm like Morgan Stanley hiring him was merely an affirmative action ploy.
“To which I responded, ‘Yep, they affirmed that I was a better candidate than your white cousin who had 400 years of affirmative action and still came up short.”
Not that people of color should use bias as an excuse to fail, Penn said.
“Too many people refuse to climb the fence,” he said. “They turn around. They call it racism, but it’s something else.” Sometimes, the word racism is tossed out as an excuse to quit when the hard work is needed, he said.
But, racism definitely exists, and a person of color typically receives fewer chances, is granted less trust and puts up with attitudes that many people in the majority don’t believe exist anymore, Penn said.
“Realize that all of us have biases,” Penn said.
“You have biases. I have biases. It isn’t always fair. Life isn’t fair. It isn’t fair for an 8-year-old to have cancer. Don’t stop because someone has biases.”
That is one of the 10 points Penn pushes when he mentors young business people. Others include:
Educate yourself — knowledge cannot be stolen; hone your craft; learn multiple skills; grow a thick skin (that’s true for business people of any color); politely but firmly call out racism; don’t show weakness in the workplace; don’t self-ostracize — you need others to succeed; and be proud of who you are, what you are and where you came from.
“I came from Youngstown, Ohio, and I’m damn proud of it. And I’m proud of what Youngstown represents,” he said. “We didn’t know what true racism was. These are good, salt-of-the earth people trying to make it. Lace all that with integrity and authenticity.”
Penn’s father, William Penn, preached education.
The elder Penn labored at steel mills and worked part time in a fancy restaurant where he couldn’t be a customer while majoring in business with double minors in history and politics at then-Youngstown College. He earned a scholarship to a prestigious university — and had it yanked away when the dean met him in person. “This scholarship is for a white person. I’m terribly sorry.”
Derek said his dad told him that story when he was in high school, adding the wisdom: “Understand that you have to be head and shoulders above the majority to maybe get the same chances and opportunities. It may not be fair, but understand that (the) fair is only for pigs and cows.”
Penn said that growing up in Youngstown prepared him for a world he didn’t know.
“You realize the value of hard work. I can’t remember a day in my life when my dad didn’t go to work.” He said he learned competitiveness. Two hundred kids would try out for 45 spots on the school football team. People got cut. Parents didn’t demand that everyone deserves to play. “That’s not real life,” he said.
“You learned how to deal with success. You learned how to deal with failure,” he said. “I saw people (from Youngstown) go on and succeed.”
Also, “if I got in trouble three blocks away, someone picked up the phone and told on me. Everyone had the authority to discipline me.”
Much of Penn’s growing up years were in a Jewish neighborhood, and he was the only black and only gentile in his Boy Scout troop. He was an academic standout and violinist as well as a four-sports star.
After graduation from Rayen High School in 1975, Penn enrolled in Duke University in Durham, N.C., on a full football scholarship. The 6-foot-1, 250-pound linebacker and scholar had received nearly 100 scholarship offers.
“I wanted to be a doctor,” Penn said. “I took all the requirements. If I had become a doctor, I think the mortality rate in the U.S. would be higher. I didn’t feel it. I didn’t have it. I wasn’t good at it.”
His college play netted him a tryout with the Miami Dolphins in 1979. When he finally got into a preseason game, he put a monstrous hit on Pro Bowl running back Chuck Muncie of the New Orleans Saints, dropping him for no gain on a third and three.
“I don’t think my feet hit the ground on the way to the sideline, as I felt I could have tackled the entire Saints team on that play,” Penn writes. It wasn’t until he’d already been celebrating with anyone he could on the sidelines that he realized he was whooping it up with Saints players, not Dolphins. “My teammates were laughing hysterically. That was a very long 140-mile bus ride back to Miami.”
Penn was cut the next day — not, legendary coach Don Shula explained, for running to the wrong bench, but because the Dolphins had too many backs. Instead of slamming out of the office, Penn seized his opportunity to quiz Shula on management philosophies.
“Coach Shula said he learned a long time ago that a coach needs to know what made different players tick. Some players and people shut down when disciplined. Some respond well to structure. Some excel when given some freedom. Some go off the rails with their freedom. He also said that one must have some general and broad parameters that no one can violate, but it was important to treat players as individuals within those parameters,” Penn writes.
“In a nutshell, what I took from that conversation, other than an airline ticket back north, was to treat people who work with me as individuals. Get to know their personalities, understand their positive and negative triggers, and hopefully massage and maximize their strengths while giving them some individual room and freedom.
“Shula’s philosophy worked well for me during my many years of managing people on the trading floor,” Penn said.
In August 1982, Penn took his English degree and a penchant for writing and returned to North Carolina to enroll in Duke’s Fuqua School of Business.
“I went to business school with no career in mind. A couple people mentioned to me that a number of ex-athletes worked on Wall Street. I’m talking sales and the trading floor,” he said. “It’s very similar to football. It’s rough and tumble, it’s the same language. If you do well, you’re going to get paid. If you do poorly, you’re going to be out on your keister, just like football.”
On June 25, 1984, his Wall Street career began officially on the sales trading floor as a Merrill Lynch intern. Penn was hooked.
“I loved the transactional nature of the business.”
The same competitive drive and thirst for knowledge that served him well in early life powered the success he achieved on Wall Street.
LEVELING THE FIELD
When corporate boards consult with him on how to level the playing field between majority and minority employees, Penn shares a 10-point plan that includes hiring and promoting people of color, paying equal wages, providing companywide opportunities to shine, not being afraid to place more than one minority person — a token — on a project, and providing mentorship and feedback.
Allow minorities to “fail up,” he said. Penn noticed that white colleagues are more likely to get a promotion after muffing an investment than black colleagues. He also recommended challenging minority hires with roles outside their comfort zones to encourage growth. And don’t forget to appoint minorities to the board room.
“Recognize that people of color are different. They think, act and dress differently than you.” An example he gave is that generally speaking, “At a white party, there will always be alcohol and maybe some music. At a black party, there will always be music and maybe alcohol. We’re wired differently, we’re groomed differently.
“The majority rarely adjusts to us, we have to adjust to them,” he said. “Respect our holidays. I always go to church on Martin Luther King Day. We respect Jewish holidays. Why do we get grief with Martin Luther King Day?”
In his memoir, Penn writes candidly about mistakes he made, times that he lost his cool, and resulting punishments that helped him grow. People need to remember that there are consequences for actions, he said. “You just hope they aren’t fatal consequences.”
There also are rewards for discipline, preparation, drive and perseverance. And for being a kid who grew up with the blue collar work ethic of Youngstown.