The Stanley Tucker interview

Kate Cooney (00:00):  

This is CitySCOPE. 

Eun Sun Cho (00:01):  

A podcast on cities and inclusive economic development from the Yale School of Management. 

Kate Cooney (00:07):

Are we ready? 

Manuel Morales (00:08):

Let’s go.

Kate Cooney (00:24):

Welcome to episode 5 of season 3 of the CitySCOPE podcast. I’m Kate Cooney, senior lecturer at the Yale School of Management and founder of the Inclusive Economic Development Lab. In this episode, we talked to Stanley Tucker from Meridian Management Group in Baltimore, Maryland, about his decades of work, opening up access to capital for entrepreneurs of color.

Stanley Tucker (00:47):

Stanley W. Tucker and I’m President and Chief Executive Officer of Meridian Management Group, which provides financing and surety bonding and various kinds of debt and equity financing for small minority women owned businesses in the state of Maryland.

Kate Cooney (01:03):

Stanley Tucker has been in this business since the 1960s, and throughout his career, there has been a kind of North Star to his work, a mantra.

Stanley Tucker (01:14):

But at the end of the day, our mantra is capitalism without capital doesn’t work.

Kate Cooney (01:22):

As a graduate student at Carnegie Mellon in the late 1960s. Stanley wrote a dissertation analyzing the SBA records of lending to minority businesses and has worked in various capacities directing lending programs to minority and women owned businesses ever since. So he knows a lot about the capital landscape. But long before that, he understood the value of access to capital.

Stanley Tucker (01:46):

Both parents were entrepreneurs. My grandparents were entrepreneurs and my great grandparents were entrepreneurs. My father has his own construction company, and when I was six years old, I was on a truck going down to the job. His father also had two entrepreneurial areas. He was a farmer, as well as he was a contractor. And my great grandparents back at that time, particularly on my mother’s side, was a farmer and a home builder. Do a history on these folks, they were a very shrewd. I’m originally from South Carolina, so we were always taught that land is the basis of all independence, and so they were very big on owning land. When I say land, lots of land, OK, that’s the whole story behind that, but I won’t bore you with that. But they were landowners. They were builders. And passed it on to my father, who had his own construction business, and that’s where I learned business, period. So we grew up in an entrepreneurial environment from day one, six years old, I was on the truck going to work with my dad.

Kate Cooney (03:06):

Watching his dad, learning about his grandparents and great grandparents, Stanley developed a real understanding of the creative workarounds required to access the capital needed for their family businesses when traditional lending pathways weren’t available.

Stanley Tucker (03:21):

Just from working around them and seeing how they made ends meet because there was not a whole lot of capital. You know, my father and my grandfather, they couldn’t go to the banks, so they had to really work with each other and what they did, just to give you an example of how entrepreneurial and creative they were, my dad, I could take you down to South Carolina and show you, take you to whole subdivisions that his company built. I can remember years ago my dad was building whole high schools, you know, and then you need surety bonding, so how can you get surety bonding back then? When it’s extremely difficult for small minority businesses to get surety bonding now. But they had different strategies and whatnot that worked, and I realized how brilliant they were and really weren’t making it work for them and our whole community. You know, in a very racist environment, but they have strong skills and they came to them to get their skills to build these bills and these schools, et cetera. So that’s a whole study within itself as to how they were able to overcome the challenges to be successful entrepreneurs.

Kate Cooney (04:44):

Even though it wasn’t the focus of our interview. I couldn’t resist learning more about how Stanley’s father and grandparents worked around these constraints. Strong skills, deep connections in the community, the ability to bring a team of laborers together, but blocked on the capital side.

Stanley Tucker (05:01):

What they did was this. They approach the owners of the subdivision. Obviously, they were white guys and their expertise was so highly in demand because they were very, very, very good. And they can get a job done within a certain period of time. And the faster you get to build these houses, et cetera, the faster the all of the developer could sell them to get their money back. And they knew that. And so they negotiated with them, and said, “Hey, look, if we can get this how within a certain period of time, your margins can increase.” Ordinarily, it would take three, four months or longer to get a house done, but we could do that faster. You know, and you could get it on the market faster than they would benefit, you know, from the owners in terms of the amount of money they make, you know, et cetera. And they were also best what they would do if they don’t take all of it back. They would negotiate with the owners for the next job and the way they did it, the different skill levels that was needed on the job. They all came together and made some sacrifices initially to get the work. And then they were really in a way they were equity investors early on, probably didn’t even know it, but they were equity investors in this, and so they brought their expertise to the table. As I look back and thinking about these, these guys and ladies, they were really very good entrepreneurs.

Kate Cooney (06:41):

Growing up in a family of entrepreneurs, Stanley knew entrepreneurship was in his future.

Stanley Tucker (06:46):

My father, who has his own construction business and that’s where I learned business, period. I always knew I was going to be an entrepreneur. I just didn’t know what. Because that’s all I knew growing up in my family.

Kate Cooney (07:03):

Stanley went to Morgan State and began to formally study business. It was an exciting time.

Stanley Tucker (07:08):

My family moved from South Carolina to New York when I was in the ninth grade and I was a decent athlete. I actually went to Morgan on an athletic scholarship. Football and basketball. And that was probably the best experience in my life. I met my wife of 51 years there, and the quality of the education there were really superior because when I look back, they overprepare us, because they say, “Look, you know, you’re going to be an African-American in a predominantly white community, society, your skill set has to be very, very sharp.” So they worked us to death, you know? But we really appreciated it. I think back to my professors back then, they were excellent. I mean, we used to get upset with them because they were working us so hard. But in hindsight, they really, really prepared us to become professionals, whatever direction we were going. If you look back at the quality of the school and the rating of business school at Morgan State University, it was very high. And the other thing is, one of my professors there was a gentleman by the name of Ray Haysbert. He owned a meat manufacturing company. Way back then called Parks Sausage, you probably never heard of it. What they were, they were all in the grocery stores around the country and we heard the saying, “More Park sausages, Mom.” He was my marketing professor, so we had practitioners teaching us not just the book, not just a theory, but actually teaching us how to be entrepreneurs. And I would say back then about 75 percent of my professors there, they were also entrepreneurs, so we were blessed to get not only the theory behind it, but also the practical aspects of what really what does it take to make a business work? When I finished undergrad, I went to Carnegie Mellon University for my graduate degree. And if you’re familiar with Carnegie Mellon, they’re heavy research and professors wanted me to work on their research projects, and research projects were very time consuming. You know, and none of them interested me. And so I went to the dean of the school at that point, Professor Toby Davis, and I said, “Toby, you know, I’m not interested in any of this, man. You know, I want if I’m going to spend this much time, you know, on something, I want to make sure benefit me. Not these professor’s research. You know, it benefits them, but it doesn’t benefit me.” So he said, “Well, Stanley, what do you what do you want to look at?” I said, “Let me think about it, I’ll come back to you.” So I left and I thought about it and I thought about my dad and I thought about the problems of getting access to capital for minority businesses. So I went back to him and I said, “Toby, I like to look at federal policy and its impact on access to capital for minority businesses.” And he said, “Well, do you have some folks.” I said, “Yes, I’ll recruit some guys,” which I did. I recruited some of my, some of my classmates, and he approved it. And what we did, we looked at federal policy and specifically we looked at SBA. OK. And we went down to SBA and asked for their data. And they pointed us to a closet. And we went to the closet and literally all of that data was in there. No analysis had been done on the data. And so we dug through it and did the analysis. And what jumped out at me was lack of access to capital. That’s what jumped out at me. And I think back to my dad, capital was a problem, they had to maneuver and do all kinds of things. And that hit me. Capital, because my mantra is capitalism without capital does not work. I said, OK, where’s the money? I see the money in banks. So I went and got into a credit analysis training program at Equitable Bank in Baltimore. And I worked there for a couple of years, really understanding how they made decisions. It was not my intent to be a career banker because that’s too conservative for me. I wanted to understand how they made decisions. And then I left and went up into this real, real hard core community. Raised some funds there for the minority businesses, a small minority and women owned businesses in that community. And then I was approached by a friend of mine and said, “Stanley, there is an opportunity here that that you may want to take a look. I said, “Well, what is it?” He said, “Well, the state of Maryland has this program called the Maryland Small Business Development Financing Authority, and it’s designed to provide financing for small, minority and women owned businesses. And they’re looking for an executive director. I can introduce you to the guy that’s running it, blah blah blah.” So I went, I interviewed and I got the job and I was the only person in the organization. So literally I build it literally from ground zero.

Kate Cooney (13:16):

What did you do and what were some of your early ideas there?

Stanley Tucker (13:21):

Well, from the research that I did when I was in graduate school, I realized there’s different kinds of capital. There’s short term capital, there’s long term capital, there’s equity capital. There’s debt capital. And if a company is going to grow, the company needs all that kind of capital. You need equity capital for startups, you need growth capital for business that’s going to grow. And there are times where you need a combination thereof. There is always a need for surety bonding. I don’t know if you all are familiar with surety bonding, but it’s a critical piece of financing in the construction industry. So I had to recruit a whole team. So you want to have very competent people. The first person I hired when I took over the state program was a young lady by the name of Catherine Lockhart. She worked with me at the bank and the primary reason I hired Cathy because she was 10 times smarter. I mean, she was really brilliant. OK. And so I had to build a team, so I said Cathy has what I need. I just had to tell her what to do and bam, it’s done. And internally, she ran the shop and she knew that was my mantra. You have to have smart, confident, intelligent people around you. Some folks don’t like that, by the way. OK. I relish it. And that was really how we as a team really built the organization. When I got there, a maximum loan was one hundred and fifty thousand dollars specifically focused on government contracts. And so over the years, we introduced close to 35, 40 pieces of legislation to really build this organization so that it can really, really be very effective, but not only that, but can sustain itself over a long period of time.

Kate Cooney (15:30):

This is where things get really interesting. Stanley Tucker had a vision for creating a continuum of capital, a one stop shop for the capital a firm needed from equity at startup to growth, capital and exit, and everything in between.

Stanley Tucker (15:43):

A strategy what we call a continuum of financing products where we can birth a company with equity and stay with that company to a strategic exit, including going public. And we’ve done that several times as well, so we can birth them with equity. We can provide growth capital with term financing, equipment financing, etc. and we could provide lines of credit. All of the kinds of financing that a company needs from birth all the way to exit. If in fact companies get to the point where they want to, they want to exit, they want to sell their business, et cetera. So we call it a continuum of financing product. So when a company walked in our door, it depends on where they are in the lifecycle of their business. So we could birth them, okay, they may be in a growth strategy. Okay. So depending on where they are birth strategy, stay with us from birth to exit.

Kate Cooney (16:56):

How did he do this? From a state fund with a maximum loan of 150,000, you might wonder? To truly build the continuum of capital Stanley knew was needed, he had to get creative.

Stanley Tucker (17:07):

Over the years, my partners and I became very skilled at writing and introducing legislation. We actually privatized. And what I mean by that is. The state only can provide a certain amount of money, and so we wanted to go outside and raise money from different sources, both public and private. And so we had to introduce legislation to do that. We did. We were successful. And we also approached the Small Business Administration. They have this program, the small business investment companies where you could get a license, if you will, and you could get leverage from SBA, and it used to be at one point three to one. Now I think it’s about two to one. And so we wanted to do that. SBA said, “Hey, guys, you don’t have any private money. We need your private money to leverage public money.” So we’ve always been very creative. Long story short, in the federal SBA legislation it said private, so we went to our congressmen and asked them to help us get the definition of private capital changed. So we could use our public capital to leverage, and we got it through. SBA hated us, still hate us to the day we did that, but what we are able to get it through and we have helped a lot of a lot of companies. And so that’s actually how we became private. State allowed us to set up a private entity but continue to manage the state financing program.

Kate Cooney (19:03):

I see. And how who were you raising funds with on the private side at that point?

Stanley Tucker (19:07):

We were going to banks. We were going to some individuals, some corporations. So it a combination of sources that we were going to raise funds and those funds that we raised, most of it was private. And then with that, we can leverage that to get SBA dollars are as well. And so we did that and then we did a number of other sources. Now, you know, because of, you know, access to capital is very prominent now, particularly for minority businesses. And given the environment that we have here in this country now, folks want to, you know what we call, get in the habit, you know, and we want to help them get it. So we are working with both private and public to get dollars to invest in our communities. And the returns has been good, though we’ve had losses. Yes, absolutely. Matter of fact, you’re not taking any risk, if you don’t have losses, right? Yes, there’s no question about it, but it’s been a combination of our strategy to leverage initially public dollars from the state, get legislation through so to supplement and complement itself. And then, you know, also get capital from the private sector. That has really helped us in terms of the number of kinds of businesses that we’ve been able to grow and develop, et cetera.

Kate Cooney (20:38):

One way Stanley Tucker has been able to create this continuum of capital is by creating a firm that manages multiple funds, both public and private. Another innovation Stanley spearheaded in Maryland is the only state to have done this is to include in the gaming bill that 1.5 percent of the gross revenues from casinos flow to a small business development fund for minority and women owned businesses. This is a model he hopes to replicate in the bill legalizing recreational cannabis.

Stanley Tucker (21:10):

OK. As a matter of fact, we are putting language in the recreational marijuana bill that’s going to be introduced probably in Maryland next year. And what we want to do is really duplicate when gaming came to Maryland, we were able to work with the Maryland Legislative Black Caucus to introduce language in the gaming bill that essentially says one and a half percent of the gross proceeds for video lottery terminal coming from video lottery terminals were going to a fund to invest back into small, minority and women owned businesses, so we want to duplicate that with the recreational marijuana. They’ve already passed medical marijuana in Maryland. But the real serious money is in recreation. So we want to duplicate a way of taking advantage of the time. 

Kate Cooney (22:08):

Has that been a big revenue stream, the one and a half gross proceeds?

Stanley Tucker (22:16):

Yes. So much so that some of the legislators tried to dip into the pot. For various, you know, projects they saw, they saw this money, all this money coming. Okay. And so it’s been a double edged sword. However, you know, we not, they are the fund managers, even though it was our idea and we it took us 10 years to get it through. So anyway, you know, we want to duplicate that strategy with recreational marijuana. And actually, as you see, all of the states are doing, especially in the time of COVID, whereas we had a very damaging impact on state revenues. And so you know with this is going to actually help state tax revenue. And so it’s going to happen. There’s no question about that. We just want a small one and a half percent. You know, and it is, it will be in the bill.

Kate Cooney (23:23):

Many states are including equity amendments in their cannabis legislation, but these typically set aside a certain number of cannabis licenses for entrepreneurs coming from communities differentially affected negatively from the war on drugs. Stanley’s approach offers another avenue to equity, one that doesn’t require someone to enter the legal cannabis industry, but instead creates a steady flow of capital from that industry to fund a range of business development activities to support entrepreneurial ambitions more broadly. Over the years, Stanley’s firm has become very adept at catering to the public sector’s return on investment requirements.

Stanley Tucker (24:01):

Part of the state’s funding, they’re also looking for economic impact analysis. They want to know for every dollar we spend, what is the economic impact of that dollar? They want to know what their return of investment is, if we put X number of dollars into the Maryland Small Business Development Financing Authority etc. What’s going to be the return? They are looking for jobs and they are looking for taxes coming back into the state and local coffers. This is where my Morgan and Carnegie Mellon training really, really came in because we knew how to analyze data. We know how to collect and analyze data and tell the story that needs to be told quantitatively, not what we think, here are what the numbers say. And you can bring in your economists and look at it and whatnot. And we help and economists develop their econometric model that would determine what our economic impact analysis has been over the years.Yeah.

Kate Cooney (25:08):

Was it a real hodgepodge of businesses that you worked with or were there a certain set of industries that did really well from birth to exit? And can you tell us a little bit more about the variety of exits?

Stanley Tucker (25:22):

We felt as though we can’t be good at everything, even though we knew a lot about the job because our first program dealt with government contracts. We started off with financing government contracts and we still provide a lot of financing for government contracts. And so the key to dealing with government contracts is that you want to make sure the entrepreneur knows what he or she is doing. OK, because if you provide the work, you know you’re going to get paid. And we started off there, this group grew from there and we financed a ton of business and government contracting arena. As a matter of fact, one of the gentlemen that we financed, we birthed and took him public in about seven or eight years. And we still do a lot of government contracts because one of the things we do, we control the money, we make the investments and we get what we call an assignment of the proceeds. So when the check is cut, it’s cut jointly to the entrepreneur and us and it comes to us. And so we help them manage their cash as well. And that’s always something very, very important in helping these entrepreneurs manage the money that they have. In addition, you know, we make sure we get our funds too as well, you know, so it’s a win-win.

Kate Cooney (26:48):

Yeah. Do you think like, let’s say, the state of Connecticut? Let’s say they want to use a supplier procurement program to build capacity in businesses because there’s a gap between what the state needs and that’s a perennial gap. That gap becomes the excuse as to why those procurement dollars don’t go one direction or another. What are some strategies there that you’ve seen work pretty well in terms of, you know, using that those procurement dollars in a way that can help build women owned or minority owned businesses? That might be close, but there’s maybe a capacity gap or just they haven’t done something that big yet.

Stanley Tucker (27:29):

It is a great way to build a company because you provide that product or service, you know you’re going to get paid. All right. And that was what happened to those dollars, once you get paid. I know Maryland both as a state and federal level by law, they have to do a certain amount of work with small business and also with minority and women owned businesses. I think what’s really missing in there is good quantitative analysis of the technical assistance, they have some organizations that do that, but if you have someone in between there, if you will, that they get the contract, usually most our experience and most of the entrepreneurs who provide the product or service. Actually, that’s really not been a problem. The problem has been really, how do they manage their resources. Do they have the infrastructure? That’s what we do with our SAM model. We help them put the infrastructure in place so that they collect the data and analyze the data. And also, it turns out when they bid for the contract, what’s your bid strategy? I mean, that’s a science in itself. Bidding on government contracts is a serious science. OK, so what is your bid strategy and going after a contract? What’s the probability you know of you winning this one, you winning that one? Well, you know, I mean this this stuff is real serious strategy. OK? How they how they go at is is masterful when entrepreneurs really understand the politics behind it, too, OK, because it’s playing politics. But as I said, we had birth government contracts and stay with them all the way going public. So we’ve had that run. We’ve done that two or three times. Government contracting is a great way to get in the business because, you know, by law, they have to do a certain amount of procurement. Then the entrepreneur has to be savvy enough to position themselves with the various organizations, with the various elected officials, et cetera, with the various contractors such as, you know, to position yourself so that you could be in a position to bid on some of these contracts coming down the way, doing the due diligence to make it a real business, but also one of the things we do is when we first deal with a new entrepreneur, we ask them a very fundamental question, “What’s your end game?” And you’d be surprised the people that are in business that don’t have an end game. I want to make money. Okay, everybody want to make money. But how are you going to get there? As Kobe said, “Begin with the end in mind.” And that is so true. And that’s a question we ask all the time. You know what? What do you want to do with this business? Do you want to grow it and ultimately sell it? Do you want to grow it? You have some children that you want to take over? What do you want to do with it? So we can understand what your end game is, then we could make that endgame straight line versus, you know, going all over the place, you know, to get back to the straight line. That’s a very critical question we have to entrepreneurs. That’s one of the first questions we asked entrepreneurs. And depending on how they answer that question, we know we either we have a lot of work to do or this may be one of these straight line. Well, you know, that understand what the end game is and we have to just, you know, help them get to that endgame. The other piece that’s important here is do we as the as the lender, investor and the entrepreneur, is there what we call an alignment of interests? Now, what do I mean when I say alignment of interests, entrepreneurs, the entrepreneurs, because they want to do their own thing. That’s why the entrepreneurs. They don’t want anybody telling them anything. They know everything. And that’s cool. You do whatever you want to do. But if you’re going to use our money, we have to have an alignment of interests, you know, and some entrepreneurs may be the smartest people in the world and we tell them, that’s great, we want you to be smart, but tell us the whole story because we are trained to find out what the real deal is. We’ve been doing this 50 years. So we are trained. So tell us upfront what is happening with you. Because if you don’t, then that becomes what Cathy call a credibility rob. If you don’t tell the whole story because we will find out, you know, we are trained to find out. Tell us the whole story so we can make the straight line and so that we can help you do your thing. Make your money. Get rich. Hire people. Create jobs, taxes back into the economy if we want to help you. Ideally, we really only want a company in our portfolio three to five years, ideally. Doesn’t always happen. We say, look, we only have so much time, we only have so much money, so we want to maximize our relationship. So please tell us what’s going on in your company. What’s going on with you? Because if you don’t, we’re going to find out. OK and sometimes entrepreneurs think they’re the smartest people in the world, but please. Honesty is very important. Make sure we have an alignment of interests that we are working on the same path to help you grow, develop your business, get rich, hire people, strengthen the economy, create jobs, et cetera.

Kate Cooney (34:01):

It sounds like you were being the smartest people at the table for a lot of these companies through this continuum of capital model where they could come in, have an idea or maybe be in the middle of a business that needed some growth. And they were not only getting this portfolio of capital available to them, but some technical assistance. Was there technical assistance?

Stanley Tucker (34:23):

Oh, absolutely. Technical assistance was a very, very important part, as a matter of fact. And by the way, my team was based on, the skill set that I wanted for my team was and is accounting because finance accounting is the basis of finance. And so I didn’t want a building fill of people, so to work for me, you needed to have two three skills and you do them well. What are your skills is accounting. And so as an accountant, and given the market that we are dealing with, we want to be able to go into the company and look under the hood, if you will. We will go in, our folks who are trained to go in and do audits looking at the model, the capital structure. Does it fit the business that they are in? We develop what we call SAM model, success assurance model, and that comes with the financing because a lot of time financing isn’t always the answer. It’s what you do with the money was once you get it. And so we develop this success assurance model where we’ll go in initially. Sometimes we just do it upfront. We’ll go in and look, here’s our process. We want to come in and do an audit. But you haven’t given us any money. Well, that’s true. OK, I said before we have that, we are considering it. All right. That’s part of what makes us comfortable in lending or investing in your company. You know, we will look under the hood. Now, some folks don’t like that. And that’s a signal. Oh, okay. But typically, you know, we feel as though we have a pretty good reputation. You know, we are looking to help people. We looking to help businesses grow and develop and hire people to strengthen the economy and make money. So I would tell you, you can’t do that. So that’s one issue. Along with the finance, comes this success assurance model up front and on an ongoing basis, depending on the skill set of the folks in the company and the companies that we are looking at investing. Some of them have a good group of folks have the right kind of skill set. Some of them don’t. But it’s the willingness, you know, if they want to grow their business, they’re willing to help us get where we know they want to go and where we want them to go, so that we can get our return on investment and go and help some other folks.

Kate Cooney (37:06):

So is there anything else about the SAM model that you want to mention?

Stanley Tucker (37:10):

As I said earlier, we’ll go into the company and do an audit, and we have the people to do that. OK, and we’ll go in. When I say we go, look underneath the hood. We’re going in and doing audits of their books and records. OK, we’re stripping it down and see, you know, do forensic audits. You know, folks try to hide with the numbers and whatnot. We have experts going in and doing that. And that’s been one of the keys to developing the SAM model. Really understanding what’s going on in the company, accounting and financially, OK, you understand what’s going on in the company accounting financially. You know, you have a good feel, what’s going on in the company. There’s the marketing aspect and whatnot, et cetera. But at the end of the day, it was happening with that company accounting wise and financially.

Kate Cooney (38:06):

Can you tell us a few stories of some entrepreneurs who you’ve worked with, maybe from birth or maybe shorter term, just to give a flavor for some of their stories?

Stanley Tucker (38:16):

Sure. This guy, his name is Maurice Tasse. He was a Naval Academy grad, and he came to us and said that he wanted to start a government contracting business. So we said, “Maurice, what do you know about government contract?” He said, “Well, Stan, not a whole lot,” he said. “But you know, I have these relationships I’ve developed in the Navy and, you know, some of them pretty high up, in the Navy, I’ve got one of, you know, talk to them about doing the work.” And Maurice, when he first came to his initial concept, we said, “Well, OK, what kind of security do you have? What kind of collateral do you have?” He said, “Man, Stan, I don’t have anything. The only thing I have is my mother’s home.” We said, “Really?” He said, “Yeah, I don’t own anything. I haven’t built any, you know, wealth and whatnot. I’ve been in military, the navy working, you know.” So I said, “Is your mother willing to put up her home?” And he said, “Yes.” So I said, “You know what, we’re going to take it because we know you’re not going to have anything happen to your mother’s home.” OK. So Maurice was that guy that we birth. Ultimately, he wound up going public. He developed some technology, but in between, Maurice was at a point, he was doing everything, that he did well, he went down to Alabama and bought a manufacturing company. We said, “Maurice, what are you doing buying a manufacturing, you don’t know anything about manufacturing.” He said, “Well, it’s in line with the business and whatnot.” I said, “Okay, well, you don’t know anything about manufacturing. What do you doing man, you know?” You know, so he wound up blowing that. Because he didn’t know anything about manufacturing and it was in Alabama. He was also a guy that once he got to $10 million, he didn’t have a CFO. We said, “Maurice, you must have a CFO. You can’t do all this stuff in here yourself. You have to give this to other folks, man, because you know, you’re not an accounting guy, a finance guy, you know, you’re an entrepreneur.” And so we had to do some things and get him on track, you know? But he ultimately wound up selling the company, you know, for a nice piece of money and we made up very well because we were equity investors early on. There was another lady who was very smart and she was actually in the accounting business. And early on, she wanted to develop. She didn’t call them franchises at that point. She wanted to basically opening offices around the country, and she wound up doing pretty good. There was another company that young lady that came to us and she was in bankruptcy. And she had a contracting business, construction business, and she was in bankruptcy. She came to us. She had some jobs and we did our due diligence on her and the folks in the community said that she was a good contractor, just that, you know, the financing part of it was a challenge for her. And, you know, her team wasn’t strong but in terms of being a good entrepreneur and knowing how to bid on the contract, knowing how to make money on the contract. She knew it. She just need a structure built around her. So we brought in, you know, someone to help her structure her business. She wound up doing well, actually and selling the business. Now we’ve lost. We’ve lost a many of folks that we thought were great, but we lost our share. You know, so it’s been an interesting experience over the years, but you know, we love it. And I have a great team. I’ve been blessed with a great team. OK.

Kate Cooney (42:51):

Just to clarify, the Meridian is the privatization of the public entity. And so that’s.

Stanley Tucker (42:59):

Well, Meridian is the private management company that manages the public entity. Got it. Got it. OK, so now we’ve managed that for the state, but we have other funds that’s under Meridian’s management as well. 

Kate Cooney (43:16):

Yeah, we’ve been thinking a lot about the entrepreneurial ecosystem here in Greater New Haven, and there’s a real split between innovation driven entrepreneurship, and we’ve got the university tech transfer group and the sort of barbershop, you know, small, medium enterprise. How do you guys think about those two sets of opportunities? And do you only go for an innovation oriented entrepreneurship? What’s the state of things just in terms of thinking about the kind of businesses you see having potential from where we sit, we’ve got the retail transforming, we’ve got automation bringing so much to a new level. You know, what’s your view on, you know, where we are now? What are the businesses you’re excited about when you see them show up in your pipeline? 

Stanley Tucker (44:07):

The tech stuff is very sexy and exciting and whatnot. And in Maryland, it’s pretty technology driven, particularly given our proximity to Washington, D.C. and all of the government contracting opportunities. And that’s really a lot of it is driven by technology and you have the universities around it tapping into all those government contracts and, you know, developing all the weaponry and all of that stuff. OK. And we like that. But also simultaneously, we are looking at the opportunities zone areas. And how can we develop businesses that have products and services that’s needed in these communities to really help these communities grow and thrive? And so, you know, my partners and I, we look at communities and connect up with Morgan because it has a urban institute. And look at how do we build the economy, how do we help strengthen the economy? How do we help influence the powers to be to make good public policy decisions? Let me give you an example of one that was really a really bad decision. You know, transportation drives everything. And in Baltimore, they were in the process of building what they call a red line in. This red line was designed to get the folks in the city out to the jobs in the suburbs. Great idea. And the current governor basically came and cut the funds for rapid transit. To get the folks in and out. And put in place a bus system that has been horrible, I mean, really horrible. So it has negatively impact the economics of Baltimore City. So the folks in the city can’t get out to the suburbs to get to the jobs. OK, so because they don’t have transportation. And the bus system was so, nobody uses the buses, is so screwed up. That was a horrible decision. So what do we do as lenders, investors etc to have some impact on what’s going on in Baltimore? So we are sitting down with the current mayor because the current governor that made that decision about transportation and so we want to sit down with the current mayor and say, “Okay, how can we help you? What’s your strategy? What kind of funding? What kind of business or strategy for building the infrastructure of the city?” The city has some pretty good transportation and other items to work with. You have some strong institutions, you have John Hopkins there, you have Universal of Maryland there. You know, you have some major corporations. There is a seaport city. Washington, D.C. is right down right down the road from us, you know? And so there are a lot of positives. How do we really develop our interconnected strategy to strengthen the core of Baltimore and maximize this potential?

Kate Cooney (48:04):

There is one infrastructure project coming down the pike that is generating a lot of excitement, both in terms of what it can do for the regional economy and because of the opportunities it will generate for businesses to work directly on the project.

Stanley Tucker (48:18):

One of the projects we are very, very excited about is this maglev project. You heard of it or not, but it’s essentially the bullet train and eventually it’s going to come up to Connecticut too. But right now, this maglev project is serious winner. The train will leave out of Union Station. And get to New York in an hour. Wow. So the economic impact is huge, they’re going to be spending billions and billions and billions of dollars. The train comes out of D.C., goes underground and goes right underground all of Prince George’s County, which is highly political and comes up at the airport. Next up is Baltimore City. Next stop in Wilmington, Delaware. And then I think the next one is Newark, then New York, in one hour. The economic impact is absolutely huge. This Northeast Corridor, I’m told, is the most populated corridor on the planet. So imagine you can live in Baltimore, work in New York. I mean, now, right now, if I have a meeting in New York, I can catch a 6:30, 7:00 train. Get to New York, have my meeting and whatnot and be back home for dinner. That’s now. So imagine what happens when you have this maglev, this bullet train getting from D.C. to Penn Station in an hour.

Kate Cooney (50:09):

Yeah, that’s going to be a game changer.

Stanley Tucker (50:15):

Yes. And by the way, it’s going to ultimately go up to Boston. But this project is going to be a game changer. Now we in the middle of it, so we will get it over that, you know. There are going to be all of these contracts. They are spending billions and billions and billions of dollars and then the rippling effect of those billions and billions of dollars. Well, here’s the challenge. I went to the opening. They’re putting it out, hey. We’re going to be doing this.  Had all the politicians there. Oh, you know, everybody having a great time. You know? Yes. So I’m sitting there and I’m saying, I haven’t heard anybody talk about access to capital and bonding for the small, minority, women owned business, no one. I’m sitting here waiting. OK, I’m pumped, you know? So the guy came up who invited me and said, “Well, you know, has we are, you know, had all the politicians, had everyone there, etc.” You know, so I raised my hand. Right now, I’m fuming, right. I raised my hand and said, “Hey, look. Well, that’s great. Absolutely is a wonderful project. It’s a game changer, but no one has mentioned access to capital and bonding for these small minority and women owned businesses that you say you want to be actively engaged in this. So if you’re going to be actively engaged in this, how are they going to get access to capital and bonding?” So the person that they chose to oversee this thing was a company. He got there. “Well, Stan, I think we can get the banks involved.” I said, “Listen, I’ve been doing this 40 plus years. Is that your answer? Come on man, are you kidding me? This is a, this is public money, you’re required to have a certain amount of small, minority own business by law. And none of you guys have access to capital or bonding.” I couldn’t believe it. OK. So afterwards the guy’s CFO came forward to me and said, “Stan, your points are well taken. Let’s let’s let’s get together, et cetera, et cetera.” I said, “Look. I’ll be happy to meet with you. But you guys are here ill prepared. Matter of fact. I take it as an insult. That something so basic as access to capital and bonding, which is required, on these federal projects. You guys don’t have a, you guys walk in here without an answer for this? Are you kidding me? So they reached out and whatnot you know, “Hi, Stan, we can work it out.” I said, “Man, come on.” So is still a serious problem. They’re going to build this maglev bullet train and spend billions and billions and billions and billions of dollars, it’s going to take seven years. I mean, a serious game changer. Haven’t addressed one of the most important issues for small minority, women owned businesses to participate. It’s mind boggling. 

Kate Cooney (54:11):

If you had been the one in charge of that dimension, what would you come in with the offer around those?

Stanley Tucker (54:19):

Well, I would use some of these funds to be used for these basic things: working capital, OK, and hopefully we will be forced, we would love to manage it, working capital, the surety bond. There some technical assistance and whatnot that you would have to do as well. OK. Well, without the capital and the bonding, nothing happened. And so, the CFO came over to me afterwards and said, “Stan, look, your point’s well taken. Let’s get together, et cetera, et cetera.” I said, “Look.” I think his name was Phil. I say, “Phil, I think you see, I’m pretty straightforward, guy. Okay. And I do know a few people in Washington. You guys got it. You guys got to fix this. You have to fix this fast.” 

Kate Cooney (55:12):

It just highlights the lack of foresight and the way in which this is something that we’ve observed, you might have an era where everyone’s getting in and working together, and then somehow that knowledge dissipates, a couple of people leave and you have to recreate the whole thing all over again.

Stanley Tucker (55:31):

Yeah, but Kate. Access to capital and bonding is imperative.

Kate Cooney (55:41):

For everybody, right.

Stanley Tucker (55:44):

Okay. And they didn’t even discuss it. So the battle continues. The struggle, the struggle continues.

Kate Cooney (55:52):

Big infrastructure projects like this require coordination between many levels of government. And in that coordination, if someone like Stanley Tucker is not in the room pushing for the suite of policy supports that we know work to spread these opportunities to a broader group of contractors, the economic opportunities can be out of reach by design.

Stanley Tucker (56:15):

Most of the funding is coming from a federal, but a lot of politics associated with it because it goes dealing with Washington DC, dealing with Maryland to deal with all of these jurisdictions. Going up the East Coast and everyone want to have their say so in this project because it will be so impactful to their economies. Actually, all the way up the East Coast, so it can be complicated in getting these jurisdictions to working together. Let me just give you an example. Prince George’s County was the first county coming out of D.C., but right now, the train, there’s not a stop in Prince George’s County. The train actually comes out of D.C. and goes underground. And when it comes up from underground, it’s going to be at Anne Arundel county. So right now, there’s not a stop in Prince George’s County. That’s a huge problem, political problem for this project. Now, ultimately, I think it’s going to work out because there’s negotiations going on right now with Prince George’s County because it’s going to create a huge number of jobs, very good paying jobs, and they’re trying to negotiate where they will have maintenance facilities in Prince George’s County that will hire a lot of people, very good wages, et cetera, so they don’t have to change the route. So there’s a lot involved and a lot of politics associated with it, lots of money. But it’s going to happen. There’s no question about that because the economic impact of this all the way up the East Coast is so huge that politically it will happen. The test case is going to be D.C., really to New York. That’s going to be the test case because I think in that corner there’s a huge minority population continuing to grow and they are going to have. This will be, have to be dealt with head on and everybody is gearing up. And that’s why we’re also looking at it from a small minority and women owned business point of view so that they don’t get cut out, particularly certain communities don’t get cut out of this huge economic thunderbolt for lack of a better term, that we want, you know, this economic impact to be to be as broad as possible and not concentrated. And that’s going to be a real challenge. As I mentioned earlier, to not have the access to capital for these small, minority and women owned businesses, to maximize this opportunity is a tragedy. Now I think it will be corrected. Because it’s such a high profile project and it’s a project that impacts everybody, so I think I’m being optimistic. Okay. I think it’ll be front and center because there are a lot a lot of folks, the studies at my alma mater have been studying this for years, it’s not news, have been working on for years. How do we get around, you know, the segregation and redlining so that, you know, all the communities will thrive with this project. And it’s going to be challenging, though, OK, because certain folks that’s in power want to control it, but it’s so high profile. And there are some key people that’s involved with this that I trust and won’t be able to get bought off, if you will.

Kate Cooney (01:00:29):

As we ended our conversation with Stanley Tucker, we asked him, given his many decades of work in this space, how far he thought we had come and what his sense was of where the next 10 to 20 years could take us.

Stanley Tucker (01:00:42):

Based on all of my experience, and based on, you know, what I see is happening and particularly what’s coming down the road, it’s always going to be challenging and I know the change will happen with your generation. And so that’s a heavy lift because of the mindset. But you guys, now that you’re talking about this, you’re seeing what’s happening and you’re getting this information exposure early on in your career and seeing what was going on and you’ll have to be committed to the change. I grew up during the 60s and during the 60s it was the Black Power movement. And we took risks knowing that will create some problems for us. We came up during Martin Luther King and Malcolm X and all of these folks and dealt with a certain philosophy. We wanted out, okay. And we were aggressive about it. I think your generation can go a long way in changing the whole environment here in this country and you want to have the commitment to change, and that could be risky at times, but the world doesn’t move forward without you young folk being committed, being committed to making the change and doing things the right way so that everyone benefits. But I think there’s a tremendous opportunity for you all to have significant impact on change in this country. And when you have this kind of impact, the change in this country, this impact will also have it around the world. Now this is a serious responsibility. But the question my professors told us, “Stanley, what are you going to do to change society? What are you going to do to make things better for everyone? God has blessed you. You’re healthy, you get an education or whatnot. What are you going to be committed to?” Stanley Tucker decided to be committed to access to capital. You see, there’s a lot of challenges in this country right now. But you guys could make a serious change.

Kate Cooney (01:03:52):

Stanley Tucker has spent the last 50 years innovating to provide a steady flow of capital to women and minority entrepreneurs. He is focused not just on access to capital, but on developing the range of capital products to bring a business from birth to exit and providing a rock solid financial accounting foundation for businesses to thrive. He says he’s happy to help investors who want to get to heaven by showcasing their commitment to racial justice by investing in his fund. And in this episode, he took us to church. Join us next week on episode six when we continue our exploration of supporting and scaling Black owned and Black led businesses in a conversation with Marcia Chatelain, Pulitzer Prize winning historian and author of the book, Franchise: The Golden Arches in Black America. Stick around.

Manuel Morales (01:04:51):

This podcast was created by Kate Cooney in collaboration with James Johnson-Piett and the students of the Spring 2021 Lab.

Eun Sun Cho (01:04:59):

All engineering and production by Ryan McAvoy and Kate Cooney.

Kate Cooney (01:05:03):

Special thanks to Rhona Ceppos for administrative support and to Ryan Carpenter for assistance with Zoom.

Eun Sun Cho (01:05:10):

Music from the album City Trees, composed and performed by the artist K-Dub.

Manuel Morales (01:05:15):

For more information and show notes, visit our website at IEDL.yale.edu.

Eun Sun Cho (01:05:21):

Thank you for listening.

[Music]