A Discussion with Barbara Morrison, Founder and President, TMC Financing

Emily Chang: Hi. I’m Emily Chang, author of Brotopia. Welcome to the SHEconomics series honoring women who are blazing trails as founders and CEOs. Today, our guest is Barbara Morrison, CEO and founder of TMC Financing which helps secure real estate financing for small businesses.

Barbara, thank you so much for joining us. It's wonderful to be here with you.

Barbara Morrison: Thank you, Emily. It's a pleasure to be here. And how great to be part of SHEconomics.

Emily: We're happy to have you. I want to start at the beginning, when you were growing up, did you set out to be an entrepreneur?

Barbara: Absolutely not. I never set out to be an entrepreneur. My parents had no expectations for me that I would even have a career.

Emily: Really?

Barbara: Oh, no. Oh, no. I mean, really, not at all. No. My parents were very traditional. And they definitely thought, you know, "Okay, Barbara is gonna go to college and then she'll maybe do a little something and then she'll marry and that will be that."

Emily: So how did you break out of that?

Barbara: Well, I knew that I wanted a career. That was the one thing I definitely knew. And being a child of the '60s, I also knew that I wanted to do something that had an impact that was going to somehow make a mark, make something better for somebody. That was about as much as I knew.

Emily: Talk to us about the path you took. You know, you went to college. You know, at what point did you say, "I'm getting a job too"?

Barbara: Well, getting a job, you know, just was you just took whatever job you could get. And what I found was a position at PaineWebber, which was a local stock broker company, a national firm. And I didn't know a stock from a bond, but I was in the back office. And that was my first job out of college. And then moved to California, ended up going to work for the same company in San Francisco, ended up getting my license. I was in graduate school, I needed to make a little bit more money than I was making as an admin and I decided that the trading desk was a lot of fun. Traders all had more fun than anybody. And so I went looking for a job on a trading desk, found that, but it was always a means to an end and left there and went to the mayor's office.

Emily: What was it like working on a trading desk as a woman in the '70s?

Barbara: The difference between the '70s and today for women in the workplace is that when I first started, discrimination against women was acceptable. It was explicit. There was no reason to hide it. And so for example, my first job, I noticed that there was a guy in the office about my age who had been hired about my same time who was doing about the same job. And I discovered that he was being paid more than me. And I said, you know, to my boss, "Why?" And very matter of factly, the answer was, "He is a man and he will have a family to support and so we pay men more." I mean, that was the answer.

Emily: Well, I don't know how you define winning, but here you are with your own company that you've been running for a couple of decades. You know, talk to us about how did you leave that? How did you get to the next step?

Barbara: In my mind I thought I wanted to work in the mayor's office. As soon as I left the trading desk, that was my goal. And luckily enough, I was introduced to the newly formed Mayor's Office of Economic Development. And the man who was running it said, "Well, I don't have any money to hire anybody new." And I said, "Okay, that's fine. I have to do an internship for my graduate program and I'll just work for you for free for the summer. And if you get some money, hopefully you'll hire me." And that's what happened.

And it really was the most fortuitous move of my life because as time went on, very quickly, actually, the SBA program was being rolled out nationally. And for me, it checked all of the boxes. My public policy background was all about economic development. The '70s was the antithesis really of the '60s in terms of the idea for creating jobs was the way that you rose people out of poverty. Rather than writing them a check, job creation. How do you create jobs? Well, you support small businesses. And that's when the whole concept of small business is the engine of the economy, that's when that happened. That's when that recognition came to the forefront. And so for me learning the SBA program was like, "Oh, my God, this is what I was always hoping to do." And so that was the best thing that ever happened.

Emily: This was the late '70s. You are working in Mayor George Moscone's office and then shortly thereafter he was assassinated.

Barbara: Yes, he was.

Emily: So how did the recovery from that sort of impact your trajectory in the work that you were doing?

Barbara: It didn't. The support for the SBA program in the mayor's office was there. What happened, unfortunately, and what prompted me to leave was I just couldn't stand the bureaucracy.

Emily: And you left to try to do what you wanted to do, right....

Barbara: That's right.

Emily: ...but in the private sector.

Barbara: Right. Because I didn't see any other way of doing it. And, again, so I was an unlikely entrepreneur. It wasn't something I set out to do. It really was I just didn't know what else to do. And most of my life, whenever I'm facing a risk, my attitude is, "Okay, what's the worst that can happen?" Right? And I was young. I was single. I wasn't making any money in the mayor's office. So, you know, it just didn't seem like there was much downside.

Emily: So talk to me about how you got that start? How did you get the business off the ground?

Barbara: Well, we started in a warehouse South of Market long before there were any tech companies South of Market. We were on the fourth floor of a warehouse that had no heat and it had no elevator except for the freight elevator. But all of our clients were industrial guys that had businesses nearby. They weren't the slightest bit intimidated by coming to our office. But it was very funny because, you know, I started and for a long time, in the very early days, there were six of us and we were all women. And it was just one big room basically, right? And so the clients would walk in and you could see them sort of looking around going, "Hmm. Well, let's see. Where's the boss here?"

So, talk to us about the evolution of the business. How different does the business look today than it did back in the late '70s?

Barbara: Well, keep in mind, this is a small business. And we are never going to be a business that's going to scale and go public and have a $14 billion valuation. Just like the companies that we work with, you know, small businesses are important for the community for many, many reasons. They don't get a lot of publicity. They're not on the front page of "The New York Times" or "The Wall Street Journal" and they're not on Bloomberg and they're not on CNBC. And so I think people forget that the businesses that we work with are companies that start oftentimes in their garage and then they grow. You know, we have the pleasure of working with many, many immigrants, for example, for whom finding a job is very difficult. And so entrepreneurship is one of the best avenues for them to actually just feed their families. And then they work hard and they grow their business.

Like just, for example, there's a food distributor that we met in the East Bay and he started out with a handful of drivers delivering food to grocery stores and restaurants. He's known for fish. He would just work around the clock to go to the boats and get the fish and deliver fresh fish. Today, he has office warehouses up and down the West Coast that we have financed for him. He has seven, I think. And he has 400 employees. And that's the kind of growth that we relish, that we have the privilege of being a part of.

Emily: So talk to us about why it's so important to be able to own your own property as a small business owner rather than renting that property. Because really what you're doing is you're giving small business owners more control of their future, right?

Barbara: Exactly. Really, I should tape you because that's exactly what we were to put on our website, right? It's just like owning a home for a family. You know, partly, it's security, partly, it's the fact that you have control over your expenses. And partly, it's a wealth-building opportunity, you build equity. And the same is true for a small business. Only for a small business, let's just say you're a manufacturer and if your landlord raises the rent beyond what you really feel capable of paying, what are your options? You can't move down the street because the rent is going to be the same. Move to another community farther out, you are going to perhaps lose some of your workforce. And think of the disruption to the business and the cost to the business. So being able to control your overhead costs for many, many businesses is really the way they do secure their future.

And the other thing is that small business owners are loath to put money aside for anything other than every penny that comes in the door goes into the business to help it grow. And so, what our clients do is they take title to the real estate in their names as individuals, they lease the building to their company. And then when they come to retire, they sell the business, keep the real estate and that's their retirement income. Or, you know, they have an asset. You know, so many of the companies that we keep track of, maybe they bought a building even 15 years ago for $3 million. Well, industrial real estate in California is very profitable investment. And now that asset is worth $10 or $12 million. So that gives the business a cash cushion. Also, if they get in trouble, they can pull money out in their equity.

Emily: The pandemic was devastating for many small businesses. How did that impact your clients? And how did that impact TMC?

Barbara: Well, it was very counterintuitive. When the pandemic first hit, business really basically stopped because everyone was so uncertain. No one knew what to expect. And we thought, "Oh, my gosh, you know, what are we going to do?" But then, by June and July of 2020, all of a sudden, companies started calling. We're buying this building. We're buying that building. And from March of 2020 until for 18 months later, we hired 35 people from... Let's just say we have a base of 50, typically, in our company, we hired 35 people. And it was like drinking from a firehose. We couldn't keep up with all of the business that was walking in the door. Very counterintuitive. Who would think in the middle of a pandemic that these businesses are taking a leap of faith in buying a building, but it was the right time.

For one thing, of course, interest rates are so low. You know, everybody knows they're not going to last forever. I also think that the talk of inflation might be somewhat of an impetus because, you know, if inflation hits, well, guess what? Your asset is going to go up in value, so buy it now. That kind of thing. And the small business market is a very, very long trajectory. There's the businesses that we work with which are sort of a top-end of the small businesses that have been in business for a long time. They have a cushion of cash and they're able to survive. It was the small, small businesses at the other end of the spectrum that we work with in our microloan program. They were the ones that were so devastated because they have no cash cushion.

Emily: Now, you have two children. Over the years, how have you managed that mix of work and family?

Barbara: I personally think that entrepreneurship is one of the best ways to make that work. And I preach that to a lot of young women who say, "You know, how do you make your work life balance?" Well, balance is a sort of realistic term.

Emily: Right. Does it exist?

Barbara: Right. But the idea is, I really believe that the freedom that you have when you are the owner to decide when you're going to be with your kids and when you're going to be working. And, you know, the two can overlap. My kids will tell you that. You know, they had to endure a lot of being present while I should have been at home working. But nevertheless, I felt as though, A, I was a really good role model for them, which was really important to me. I wanted them to understand the importance of being a woman and being able to support yourself. And they are. They both do support themselves.

Emily: So what do you have to say to women who might be thinking, "Oh, I don't know. Maybe I want to start my own company, but I don't think I can. I don't think I can and also have the family that I want." What would you say to them?

Barbara: I think that there are a lot of resources today. There are a lot of nonprofit programs that will give you the training to get started, to give you, you know, the foundation. And entrepreneurship isn't for everybody. And it depends on where you are at what point in your life, but it's a great road if you can make it work.

Emily: How have you infused some of these values and beliefs into the culture of TMC?

Barbara: I feel as though TMC... well, of course, we aren't all women anymore.

Emily: Right. Well, absolutely.

Barbara: Right?

Emily: You eventually hired someone in addition to the male receptionist.

Barbara: Right. Right. And so, over the years I've taken a lot of teasing because the company is still, you know, more than 50% women.

Emily: Which is totally okay.

Barbara: Right? And so, what I often say is, "Well, we're like the U.S. Marine Corps. We have a few good men." The women that have come to work at TMC, the young women know that my heart is in helping them if they want to grow and learn and expand their horizons. Hopefully, they can do it at TMC and we can grow them there and promote them. If we can't, you know, I'll be the first to help them find whatever they prefer to do.

Emily: What's your approach to mentorship? And what's your advice to those seeking that relationship with somebody who has come before them?

Barbara: Well, again, one of the good news for women today is that there are a lot of women in senior leadership positions. So, you have a lot of options. You can see a lot of women who have blazed the path before you, right? I tend to throw women into things. We have young women in our office that I've thrown into management just by thinking, "I think they're ready." And, you know, it's contagious. I think everybody in the company knows that I'll give you the chance if you exhibit any interest.

Emily: Your daughter also now works for you or maybe I should say with you. What is that like?

Barbara: It's one of the best things that have ever happened to me. And I never in a million years would have guessed that it would happen. After she graduated from college in Southern California, she a few years later said, "I'm going to move back up to San Francisco and I want to work at TMC." And I said, "Absolutely not. Absolutely not. You know what? Go to work for some startup South of Market where there's a keg in the back room and you'll have so much fun." And she just would not. She was relentless and said, "You know, I feel like I grew up in the business. I worked there every summer. What you do matters. It's important to me. I want to be a part of it." Now, there's just no way saying no to that, right?

Emily: That's wonderful. What advice would you give to your high school self?

Barbara: Oh, boy. Yeah, be brave. Just be brave. Take the risk. Don't worry if you fail. Failure is okay. And learn from it and just be willing to say, "Okay, that didn't work, move on. Plan B."

Emily: You bring in people of diverse backgrounds. You're often bringing in people with diverse points of view. And that can lead to more disagreement. But I love that you pointed out that that's okay and, in fact, it's good and can be productive. Can you talk about how diversity has helped your business or having a diverse group of people in the room has helped the business?

Barbara: In our world, you know, one of the things that has changed for us, although not as much as I had hoped, when we started out most of our clients were men. You know, again, it's the industrial world. There are manufacturers, wholesalers, distributors, auto body thing, you know, that sort of thing. Over time, we have seen women take on founding and leadership roles in companies. Like construction, for example, there are a number of women now that run construction companies that I wouldn't have seen 40 years ago. But even so, I mean, not enough. I wish that our portfolio had more women owners.

Emily: So where do you think Barbara Morrison will be in five years? And if you decide to leave the company, how do you make that calculation and leave your first child?

Barbara: Exactly. And I think that's the hardest thing for founders is knowing when to go and then what to do when you aren't there anymore. And I don't play golf and I never want to. So that's not the answer for me. Probably moving into the community of Sonoma, as I have done since the pandemic. I have become so impressed with the nonprofit work that's going on in Sonoma. And I've just now actually joined a new board in Sonoma and I see myself doing nonprofit work.

Emily: So looking back then, what are you most proud of?

Barbara: Gosh, I mean, I am super proud of the company, of course, but I'm probably most proud of my kids. And what wonderful, wonderful young women they've turned into. So, it's just remarkable to see where they are in their life and be able to say, "I can't wait to see what's next for them."

Emily: That's beautiful. Well, they certainly have a wonderful role model as you had such foresight to imagine they would all those years ago. Barbara, thank you so much for joining us. It's been wonderful to have this conversation.

Barbara: Emily, it's been terrific. Thank you so much for the opportunity.