Sherry Deutschmann on Women and Entrepreneurship
In this episode, you'll hear from Sherry Deutschmann, founder of BrainTrust, a collective of diverse women business owners committed to building financial independence, wealth, and influence. Sherry shares how she and her fellow BrainTrust members leverage their collective experience and networks to help one another scale their businesses. Before founding BrainTrust, Sherry built her own company, LetterLogic, into a $40 million enterprise using an innovative employee-first approach. Tune in to discover Sherry’s insights on leadership, entrepreneurship, and the power of community in driving business growth.
About Sherry Deutshmann
Sherry Stewart Deutschmann is a serial entrepreneur, author, and passionate advocate for entrepreneurship. In 2019, she founded BrainTrust, a company dedicated to empowering women entrepreneurs to scale their businesses to $1 million in annual revenue and beyond.
Before establishing BrainTrust, Sherry was the founder and CEO of LetterLogic, Inc., a company she successfully grew to $40 million in revenue before selling in 2016. Under her leadership, LetterLogic was recognized as an Inc. 5000 company for ten consecutive years, showcasing its status as one of the fastest-growing privately held businesses in the U.S.
Sherrys innovative approach has earned her features in prominent publications like The New York Times, Forbes Magazine, Business Leaders, Inc. Magazine, and Fast Company. In 2016, she was honored by President Barack Obama as a White House Champion of Change.
Sherry’s book, Lunch with Lucy: Maximize Profits by Investing in Your People, further reflects her commitment to fostering a people-centric approach in business.
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Spencer Patton 00:00
Sherry. Deutschman, welcome to signature required. Thank you.
Sherry Deutschmann 00:08
Thanks for having me.
Spencer Patton 00:10
You are the founder of brain trust, a collective of diverse female entrepreneurs committed to building financial independence wealth and influence at brain trust, members leverage their collective experience and networks to help one another scale businesses. Before founding brain trust, you grew your own company, letter logic into a $40 million enterprise using an innovative employee first approach that's pretty amazing, $40 million enterprise. What was letter logic?
Sherry Deutschmann 00:39
Letter logic printed and mailed hospital bills for hospitals and physicians groups nationwide. So we were in the healthcare revenue cycle space, in the non sexy side of that, okay, if there is a sexy side of healthcare, we printed and mailed hospital bills. Wow.
Carli Patton 00:55
How did you even know that a third party vendor could do that?
Sherry Deutschmann 01:00
I worked for a company that did it, and they began right it, right at the very beginning of that, becoming an industry, and the company was acquired, and I just learned every part of the business and decided to start my own company competing with them.
Spencer Patton 01:15
It makes a ton of sense. I work with aspiring entrepreneurs all the time, and and the first point that every presentation that I do begins with is to say those that understand the pain of their customer is the one best suited to solve for it. So if you want to have an entrepreneurial success, start with a place where you uniquely understand the pain of the industry, and I think you perfectly embody that, having suffered through that, I feel like that's a uniquely painful space. I don't know that anybody has ever received a hospital bill and felt like that it made sense or that they were any happier having received it. So Sherry, we dug up five things on the internet about you, of letting our audience know five things to know about you, and the fun part of this is you now I'm scared. Yes, that's right, you get to choose any of these five to begin our conversation on. Number one, you moved to Nashville with dreams of becoming a singer, but pivoted and started working at a car dealership. Number two, you were raised at Jehovah's Witness knocking on doors, and you say that gave you all the preparation you needed for rejection as an entrepreneur. Number three, the company you founded, letter logic, had an employee profit sharing arrangement where individuals from the CFO to the janitor received equal payouts. Number four in Tennessee, 35% of entrepreneurs are women, and in recent years, women are actually starting the majority of the businesses at faster rates than men. And five, though women are starting more businesses, only 1.7 of women owned ventures have annual revenues of 1 million or more.
Sherry Deutschmann 03:06
Actually, only 7% of men do okay. Shocking, isn't it? Yeah, but it lets you see how important small businesses to our local economy, because if you look around it, you see all these little businesses and realize they do less than a million. They do less than a million. I think the average McDonald's does like 2 million, and some McDonald's don't even do a million. So just to get in that rarefied air of doing a million or more in revenue is fantastic. And I'm just doing all I can to help more women get to that point, and then to scale to 5 million or 10 million, or or 50 million.
Spencer Patton 03:41
What do you think is causing more women to want to start businesses? That's one thing I picked out from the piece. I mean, you're right in the middle of it. What's the why that women are bringing to entrepreneurship?
Sherry Deutschmann 03:53
For a lot of women, it's necessity. It is realizing that they're not making ends meet with their current jobs or with their day and their spouse both are working, and they see an opportunity. I think we've had so many women over the last five or six years have extraordinary success to let other women see, oh, I could do that too. I could even do that better. So the more women that we can highlight having successful, having built successful companies, then the more we're going to turn young girls onto the idea of owning their own business.
Carli Patton 04:26
As you're working with women, whether they be under a million of revenue or more, what do you see as the biggest challenge that they are facing as female entrepreneurs in today's market?
Sherry Deutschmann 04:38
The most critical is access to capital. So especially that's especially true for women of color. So if you grow up in a in a Brentwood neighborhood, you're exposed to a lot of neighbors who have means to maybe do an angel investment in your company, or two doors down as the local banker and. Yeah, but when you grow up in underrepresented neighborhoods, you don't have that. You don't have people who can chip in $25,000 or 50,000 and you certainly don't have that, you know, and with your relatives don't have that money. So access to capital is a major thing. Women only get 2% of venture capital, which is shocking, yeah, because the data shows that women produce a much higher ROI than men do. So the Kauffman Foundation says that women produce at least 38% better return. Boston group said 68% better. Wow, we take a lot less money and we make it go a lot further. And so that's that's the hard part for me, that we're getting so little of venture capital, even though the data shows we're a better bet. It's maddening to me.
Carli Patton 05:51
See that makes so much sense, because even if you look at our business, Vince, it is run predominantly by women, if you look at our different profit centers, we have female CEOs in our company that are just killing it, and so I see that in our own company, and they we're having a baby boom amongst our C suite too. So these are women that are young, that are having their babies, that are loving what they do, and still coming to work and making it work for their family and for the business. So what you say has a lot of relevance to what I think we even see in our own backyard.
Sherry Deutschmann 06:28
Well, it's, it's personal to me, you know, because you mentioned me, you know, driving, coming in from North Carolina. As a single mom, I had only a high school education. The only work I had done until that time was I had a route where I cleaned gas station bathrooms and I cleaned homes for some of the wealthy people who had cottages and chalets on beach mountain and sugar mountain. And when I first moved to Nashville, thinking I was going to be a star, which I'm just totally delusional, it was really tough. My daughter and I lived in a tiny apartment over in Hermitage, and often I couldn't I didn't have enough money to pay the light bill and the daycare bill, so I had to pay daycare because I had to go to work. So we went without electricity often. And you know, sometimes it would take me a couple of weeks to scrape up enough money to pay the light bill, just knowing it was going to be turned off in 30 days or more again. So for me to go from that, not having an education, not having any money, having zero influence, to being featured in The New York Times, to being invited to address Congress, to being honored by President Obama. All of those things happened because I started my own business and I had a really unique approach to the business of the idea of just putting employees first. And so not only did I build first, you know, financial independence and be able to buy a house and own a car and things that you know, everybody wants to do, I built wealth. But most importantly, I built influence, and I want more women to experience what I experienced. So this work that I'm doing now, I'm really passionate about it, because I see how how much power having my own business gave me, and I want more women to experience that.
Spencer Patton 08:39
Will you help separate that some for us and that you build wealth and you build influence. Yeah, will you help distinguish those two? Because I think a lot of people listening might feel like that wealth is influence and influence is wealth and those are equivalent. What are some of the things that you can tease out that are distinct between the two.
Sherry Deutschmann 09:02
A lot of people start their businesses with the idea of doing something good, you know. And so that's why a lot of especially women, start nonprofits, because they want to do good in the world. And I tell them, your ability to do good is predicated upon your ability to do well yourself, to take care of yourself. And so the ability, maybe not necessarily for wealth, but the financial independence part, to be able to have enough money that you don't have to stay in a bad relationship, an abusive relationship, that you can make your own decisions and determine what you're going to invest in, if anything, and the wealth of freedom to choose a path forward for yourself and your family.
Carli Patton 09:51
Really interested to learn about your employee first model, because it sounds like you've created this freedom of. Wealth and influence for yourself, but you've been really passionate about creating it for the other people that work in your company. So can you tell me a little bit where did that even come from? This idea to do an employee first model when you were first starting your company?
Sherry Deutschmann 10:15
Well, I was working for a company that promoted me to Vice President pretty quickly, and they gave me a little equity in the company in the form of phantom stock. But even with that, and I was the Rainmaker, I was responsible for 100% of the revenue that came in the door. I was not respected or valued and our company started having just really serious customer service problems, where I would sell an account and we would lose two accounts, and I would sell another account and we would lose two more, and it was just maddening. And all of the problems seemed to be simple human error, just silly little mistakes that were being made, and I couldn't figure out why nobody cared. And so I started talking to some of the coworkers and realizing that the mistakes that they were making was because they didn't care, and they didn't care because they knew nobody cared about them. And I thought about we were in a factory where those of us who worked in the office could look down through glass and see the people working on the factory floor, but we never went down there. We didn't engage with them. And I thought how lonely and unappreciated I felt when I was up in that in the office space, the ivory tower, the ivory tower, and how alone I felt and how much more so they must have felt. And I had read the book nuts by Herb Kelleher about how he started Southwest Airlines with his belief that if you if he took great care of the flight attendants and the pilots and the baggage carriers, that they would be happy at work, and then all of the passengers would be happy, and that would turn into a great business. And that really resonated with me. So I ran to my boss and said, Hey, I think I've got this thing figured out. I think we could solve all of our customer service issues if we could improve morale, and if we could just make everybody feel like they mattered. And instead of him saying, Wow, I cannot believe that one of my employees is thinking about my company in that way. Thank you, Sherry. Let's talk about that, he just reached across the table and patted my hand, and he said, You don't know anything about business. Why don't you just go off and sell something? No. And what he didn't know was that the week before, I had been approached by a very wealthy businessman here who said, I've been watching you, and I'm watching your company, and I think you should leave them and start your own company competing with them. Wow. And he said, I will Outback you financially. I'll and he was going to give me a $35,000 salary and 5% of the company. So even with my high school math, I knew that wasn't a very good idea for me, but that inspired in me the belief that, oh, if he sees that, and he started several healthcare companies and he's very wealthy, then maybe I should look in the mirror and see what I might have. So when my boss treated me that way so cavalierly and dismissively, I walked out the door that day and I never went back. I went and bought every book that I could on how to write a business plan, because I'd never even read one, and I decided I needed $350,000 to start this business. And I went around town and asked people for the money, and several said yes, they had seen what I had done with that company, taking it from zero to at that time, 15 million in revenue, pretty quickly. And so when I told them how I wanted to run the company, you know, really inspired by Herb Kelleher, they started balking. And so I said, Never mind, all of you, keep your money. I'll do this myself. So I cashed in my 401, K had a week long yard sale, sold everything I owned, and started dialing for dollars. I started calling hospitals and say, If I solved this problem for you, would you give me your business? And they said, Yes.
Carli Patton 14:51
You did all this as a single mom. Let's not forget you also had a kid that you had to take care of.
Sherry Deutschmann 14:57
And at that time, when I started the company, I. Was a single grandmother too. My 18 year old daughter had just given birth, so I was really raising two children. It was pretty scary going from not having enough money to keep the lights on to giving up a six figure job to start your own company when you don't when he wasn't wrong. I didn't know much about business, but I believed in what I had read, knowing that who doesn't want to be heard and to have a voice, and knowing that that's what my coworkers wanted. They wanted to be seen, they wanted to be heard, they wanted to have a voice. And so I thought, I'm going to build a different kind of company.
Spencer Patton 15:43
You told that story so well, and I just can't help but ask what your boss's response was upon seeing you start up a competing business. Did you get to have closure to that story in the future where you kind of want them to come and say, No, come back. What a mistake that I've made. But I wonder if the story played out that way
Sherry Deutschmann 16:05
They did immediately before they realized that I had actually, you know, started a business. They sued me. Okay, a violation of it might not compete. I counter sued them because they owed me some money, and we quickly settled out of court, and they just, I just agreed not to go after their primary clients. And so I think they were shocked that I did so well. It was maybe four years later, the New York Times came and spent a day with me and wrote an article, and when they interviewed me, I had no idea what they were going to write or what photographs they were going to take, when the article wasn't going to come out, or anything. I had zero control over that. And the morning the article came out, the title was, I couldn't believe it. The title was, my former boss is now my customer, and that is because the guys that I had worked for, had acquired one of the businesses that were my customers, and so I knew they would fire me immediately. They didn't, but I thought, Man, I hope they don't read this article. And I was in Naples, Florida that day for a health care conference, and I walked into the hotel, and the first person I saw was my former boss. Oh my gosh. I hope he doesn't hurt the New York Times. And he said, Love the article today. That's amazing. How did you get in the New York Times? So I think they've been, you know, shocked that we had so much success. And you know, when I run into them, they're complimentary.
Carli Patton 17:38
As we work with leaders and talk to leaders, I notice one common thread is that there's this decision point right where you get the pat on the hand, and you know from the fire in your belly that you are capable of more, yes, and you have this moment of choice right, where you Say, will I be a victim of this chauvinist outcome moment in time, or will I do something different with my life? And I've seen that from leader to leader is that moment of decision, and in that moment, did you know that you were at a pivot point, or was it just, this is not who I am? I have to choose different right now.
Sherry Deutschmann 18:21
It was just a pivot immediately, and I never looked back. It was just, it's like his comment that day just pushed me off a cliff that I've been standing there for a while, and instead of falling to the ground and crashing a sword,
Spencer Patton 18:41
I think that's a lot of how change really begins and lasts is that you arrive at that moment where you say, not another minute, not another second, not another hour. I am changing, and I'm never looking back. And that's what propels you through being able to go and then experience a lot of people's worst nightmare of getting sued and the risk and, you know, trying to just make it and do something for yourself. So it's great how your story, I think, is so relatable and consistent with the types of battles that a lot of new and aspiring entrepreneurs are going to face. So that might be a perfect way to talk about brain trust and tell us what that's all about, because it seems as though that you're taking the opportunity to educate people about your experience and the types of skills that they're going to need in order to be successful. So tell us some about brain trust.
Sherry Deutschmann 19:45
Well, when I sold a letter logic, I sold it to private equity in 2016 I had all these young women calling me to say, can you be my mentor, and can you help me? And I had to say, No, I'm. Terrible mentor, and at one time, I was mentoring like 20 women, but what I do is I'm a problem solver, so I would try to solve your problem for you, and that's not what a mentor does. And so I started bringing them together in small groups in my home to say, y'all can help each other. I'm a member of EO, The Entrepreneurs Organization, and love the way that process works, where you're in a membership with small groups of seven or eight entrepreneurs that meet every month for four hours, and you just help each other solve your problems and overcome challenges and vet opportunities. And so I was telling all these young women join EO, but they couldn't, because you had to have at least a million in revenue if you were service based, and 2 million if you're product based, and you have to own 50% of the business. And so that leaves about 14 million of us women out in the cold, wow, and with no place to go and no organization doing that, peer membership, peer learning that was done through EO for, you know, smaller companies. So I started one, and it's almost magical the way it's working with the women, helping each other, holding each other accountable, sharing resources, sharing investors. And so what I thought would happen was that we would get these women, as soon as they got to million, they would move over and join another organization, either WPO, which is the women's president's organization, Oreo. And they didn't. They said, No, this is how I got to a million, and I'm not going anywhere. And so now in Nashville, we have almost 50 women who are over a million, they're from a million to a billion, and we have 220 now, I think that are on their way to getting over that threshold. So the process works. Just just last year in Nashville alone, their revenue increased on average, by 227%.
Spencer Patton 22:15
What a testament it's results. It's measurable. What you can't measure, you can't manage, and for you to be able to measure and show the results, speaks to what you're doing. Is it the same format as EO, where you've got seven or eight and a cohort and you meet on a monthly basis? What's what's different and similar between EO and brain trust?
Sherry Deutschmann 22:35
It's similar in that it is a monthly meeting that's four hours long. It's dissimilar in that it is the accountability part is so critical. So unlike any other organization that I know about, when these women meet every month for their meeting with walls up and total confidentiality, they report to each other their revenue from the previous month. So not we did about 120,000 but we did $119,811 Oh, wow. So there's no pretending to be some place you're not. And I, I think of it this way, if you call me and ask me how to get to Chicago, I have to know where you are. I have to know your starting point. And so these women have to level set every month to tell everybody this is where I am now. And then our software portal that we created tracks it graphically. So when a woman logs in to the portal, she sees the revenue on a graph, so it's there as a reminder constantly, she's it's flat, it's growing, it's declining, and it reminds her your number one goal is to build this company into something that is solid, profitable and scalable.
Spencer Patton 24:00
And what about the thresholds to be able to be involved? You commented that EO has kind of restrictions that leave 14 million women out in the cold. So what are your minimum hurdles to be able to be part.
Sherry Deutschmann 24:11
Ours is 100,000 in revenue. So we want to make sure that it's not a hobby and it's not a side hustle, that the woman is taking it seriously, and then that she has to at least 25% of her business. So we know that she's got the ability to make change into like and to be a driver within the business. And then, if a woman is raised, we've got some women that are pre revenue still, but they have serious unicorn potential. So we have three or four in Nashville who will have billion dollar companies. And so if I think, if she's raising money, she's raising more than $350,000 the ability to raise money and the ability to to to think big, like that, is what we need, and we will allow those members in but even though they're pre revenue.
Carli Patton 25:01
One thing Spence and I have talked about a lot on our journey in business, is, I mean, we started our business and had babies at the exact same time. So we're building our business, we're building our family. We're trying to stay married through the whole process, if you will. And so I wonder if you could speak a little bit to maybe the personal nature for these women, they're sharing their revenue. But also entrepreneurship can feel so lonely. You're working odd hours, you don't feel like you have a safety net net. You are your own safety net, you know. And so do you think that that plays a role in the connectedness.
Sherry Deutschmann 25:41
Absolutely so you know, with entrepreneurship and the main problems that we're tackling Are you don't know what you don't know, and it is so lonely so often. You know, your friends don't understand why, like for me, they didn't understand why I gave up a good paying job to to work 70 hours a week for less pay, and you can't talk to your spouse about it all the time. After a while, they get sick of hearing it. Your friends don't want to hear it. You can't talk to your employees when you're having problems because you don't want them to worry. And so it is a very lonely space, but the women bring their whole selves, their fact that they're mothers, sometimes grandmothers, that they're sisters, wives that bring that their whole person to their meetings. And the best example I can give you of that is last year we have an annual conference called Brain Trust Live, which is always focused on learning from the mistakes of others. So we feature outrageously successful women who are willing to come and share the biggest mistakes, the biggest screw ups, the darkest moments of of amazing building their business and and we always feature at least one woman who's failed big, big time publicly, who's willing to tell the story of how it happened. So last year, one of our speakers is a young mom, I think her baby was about eight months old, and the sitter was supposed to show up at the conference to take care of the baby, and wasn't there. So everybody's like, what are you doing? I'll take her with you on stage. This is real. This is what moms have to do. We are, you know, juggling a household and babies. She did, and I love, you know, seeing that photograph now of these women on a panel, and she's holding her baby, and that's a difference from EO, too. You know, you're, you're everybody recognizing that women have a greater burden with the household chores. I mean, I'm sure it's not true in your house
Carli Patton 27:46
Never, but never happens.
Sherry Deutschmann 27:49
But in caring for aging parents and caring for children and getting the kids to and from school and soccer practice and all those things that all falls in a woman.
Carli Patton 27:59
Do you think that's why the ROI on a female leader is showing up in data as being so profoundly Great? Is that this multi tasking this well, I got to figure it out, because I can't give the baby back, and I'm not giving my company back, so I got to find out what to do in the middle. Perhaps that has something to do with it. Yeah, yeah.
Sherry Deutschmann 28:20
They say, in general, women, we get less money, and we just make it go a lot further, so we just look at things differently. And I believe, you know, a key to success for women is empathy, and empathy that is innate to us, but also that we culture and nurture as we become parents and caregivers for everyone else in the family.
Carli Patton 28:43
One thing I love about my husband is how much he loves a female leader like I've said, our business is basically run by female girl bosses that we just try to put in the right place. And then proud girl, dad of three girls, he's spectacular. And so I do want to ask the question of, what about the men in the room? What about our listeners that are all for this, that want to cheer on female entrepreneurship, that want to hire really powerful women into their companies? What would be your advice for the cheerleaders, the male cheerleaders, that want to see braintrust be successful and our community be successful by empowering female entrepreneurship
Sherry Deutschmann 29:24
To be the change you want to see. So hire women, promote them at the same rate, pay them exactly what you would pay a man in that role. Look for women vendors to use. They're everywhere in every aspect, from architecture to building, to plumbing, to building technology to manufacturing. They're there, if you just look and to bring bring women into your circles. When you see an extraordinary woman in a field, bring her into the. This or to other? Yes, yes, just do it.
Spencer Patton 30:08
Sure. I'd love to hear some of your thoughts around the childcare crisis that is not only here in Tennessee, but certainly across the United States. And just for the detail of it. As you well know, a lot of women look at the cost of childcare assuming that it's even available, which oftentimes there are multi year wait lists, and the burden of how expensive childcare is, kind of leaves them with the question, What am I doing even working? Because by the time I'm paying for childcare, what I'm truly netting out is not nearly what I need to so when you are working with aspiring female entrepreneurs, many of which are mothers or grandmothers, what are you counseling and coaching them In the regard to how they take care of a really tough situation, because you lived that coming as a single mom, then with your daughter at 18 giving birth, what has been your experience that you speak life into the challenges when they express that to you?
Sherry Deutschmann 31:18
I'm encouraging them to like in their own companies, to build what they needed and you know what they wanted to have. And so it my company letter logic. We allowed the parents to bring their kids and their pets to work anytime they wanted. It started out justice as bringing your kids, but then some people said, Well, my pets are my kids, so why can't I bring them? So they did. And you know, if you're a single mom or a married mom, and the kid has a runny nose, they can't go to daycare that day. And yet, you need to be at work. You need to be earning a living and and it's just a vicious cycle that keeps you home, keeps you from earning money, puts you further behind. So at letter logic, we just said, bring your kids with you. And on snow days, I was the babysitter, so we bring all the kids together in my office, play games with them, feed them and let the parents be out there working. Oh, wow. And that was for, you know, for the men and women of the company. So I encourage women, when you when you're building companies, build in policies, build in great maternity and paternity policies that will allow husband and wife, a father and mother, to be a home for, you know, six weeks, 12 weeks, to parent the children, and to start that way, with building what we needed and what we wanted, and to recognize that it's really hard. It's really hard. I don't I think you can have it all, but you can't have it all at one time. And so, you know, women hiring other women who have taken time off, maybe they've taken off six years to have the children, then women seeking those women to bring them back into the workforce is what I encourage women to do.
Spencer Patton 33:14
It's such a paradigm Buster to say you can bring your kids into work, and you've built a really significant business, I mean, a $40 million enterprise company. You've done it at a really high level. So for those entrepreneurs and business owners and managers that hear that comment and say, oh my gosh, Sherry, like, how am I going to have my employees with infants and toddlers and kids and the noise that would come with all of that, like, how would you maybe I'll ask it this way, how did you deal with that in a workplace setting where you had a sophisticated business to have to run?
Sherry Deutschmann 33:57
It's simple. We were successful, not in spite of all that chaos of bringing the kids in and nurturing them and taking care of all their needs, we were successful because of it. Wow. So we were actually in a highly commoditized at the time, I didn't know what that meant, highly commoditized industry with very low margin and so many places where we could make mistakes, which is what I was doing in my former company, all these little mistakes that caused us to lose clients and lose money. And so my thought process was, how do I get everybody here so engaged that they take great care of the customer. The way I'm going to do that is by putting the employees first, not the customer. So I would meet with prospective clients who were in a big healthcare systems from Bon Secours up in Virginia to Dignity Health in California and university Stanford University Medical Center. Are huge healthcare systems that we serviced, and I would sit with them and say, I want your business. I really want your signature on this contract when I leave today. But you have to know that I don't believe the customer comes first. My employees come first. And let me tell you what that means and why that's going to benefit you. And so I told them that I paid them the highest wages in the industry, that we paid for 100% of their medical, dental, disability and life insurance, that we help them all buy their first home with a gift for the down payment of their first house, that we let them bring the kids and their pets to work, and that every month, I shared the profit with them evenly, and I really do want to talk with you all about that in a minute, and that what that did was create an atmosphere where their needs were met. They knew they were cared for. They weren't worried about whether or not the lights were going to be when they came home, or whether or not they could make their car payment. They knew the company was taking care of them, and so they took care of the company, and what it did, the profit share was the most critical part of that. Can I talk about that?
Spencer Patton 36:16
Yeah, for sure. I mean, this is just amazing to hear, because this is like cannonballing into the pool of business where you're doing stuff that you can't read about this in a book somewhere. I mean, this is truly unique and standing on its own. So I'm just soaking all this up. So please talk to us about the profit share.
Sherry Deutschmann 36:33
Well, I made it up because it had to be something that I with my high school education, could understand and then explain it to my employees, some of whom were highly educated and and many of whom were factory workers, you know, like me and and so it had to be no smoke and mirrors, just this makes sense, and this is what we're working toward. And so every month, I pulled them all together in the same room. At first, it was sitting on the floor in our little conference room because we had no furniture. And then as time went by, you know, we were actually out in the factory, but we had lunch catered in, and I handed out the PnL from the previous month and showed them exactly to the penny, how much money we brought in the door, and how much profit we made. And then we talk about why. So this month was amazing. Everybody did exactly what they were supposed to do, and say, look at the profit. This is great. And then when we had, when we messed up big jobs and that cost us. We would talk about why and not pointing a finger at anybody and say, Hey, you you missed that, but everybody knew, and we just they became very attuned to how we made money and what caused a situation that would make us lose money. And they cared more, and they started changing their behavior. And it was in small things and huge things where they totally changed their behavior that made us so profitable, and we were the most expensive in the nation, and still were on the Inc 5000 list for 10 straight years. But we were growing so fast because we didn't lose customers, we didn't lose employees. We had, you know, very high retention rate, because not really about the money, although that mattered too, but it was they had a voice. They were cared for. Their family was cared for. So when we had company events, the families were invited, so we had the kids there. And I knew all the kids because they were hanging out, hanging out of my office
Sherry Deutschmann 38:50
It was fun, yeah, but that closeness and that appreciation that everybody was responsible for. The bottom line, the prophet wove them together so tightly and made them respect and honor each other. It made them care when somebody had to be out for a day, for an afternoon, or got to be off for a day, that everybody pitched in. There was no complaining about doing someone else's work. It made them think differently about training a new person and wanting them to get up to speed as soon as possible, because when you're sharing that profit, which I didn't even get at that point. So what I did at that meeting was we took the bottom line, whatever it was, I took just 10% of it and split it evenly, which meant Harvey, who's our custodian, got exactly the same thing Jennifer, our CFO got, and that more than anything, that equal profit sharing. Let them see that, yes, I might be the janitor, but I. Matter here. I matter just as much as this CPA, who's our CFO, and it was magical. So I think the first profit share check we did was $7 what can you do with that? But they loved it, and then it grew and grew. And this was a monthly thing, and that was really important that it be monthly, because we could remember what had happened in the past 30 days and tie the results to our actions or inactions. And so it grew, and then it was $70 every month, and then 700 every month. And the last check that I signed the month I sold the company, it was $1,500 so if you're making 25 bucks an hour, and then every month, somebody's handing you a check for 700 the loyalty that you'll have to that company is tremendous. Life changing money.
Sherry Deutschmann 40:58
It is, yeah, so, but it it all of that came about because we just took the stance that the employees are most important, and if we take care of them, they will take care of the customer. And that worked, and that's how we built a really solid company. And I see other companies now following that strategy. So I have a book Lunch with Lucy about our company practices, and so a lot of following that profit share model. And they say it is game changing the way everybody gets vested in how do we make this company more and more profitable?
Multiple Speakers 41:38
That's the book we need. It's amazing.
Spencer Patton 41:41
You're definitely not going to find it in traditional business and economics. It's really paradigm breaking in so many ways of what you're doing and how you're teaching people to reject what we've been taught about how businesses run. And who better to do that than you know, high school coming out, single mom, having to do it all yourself, overcome impossibly long odds, and then to have the heart of an educator on the other side of it is really close to my own heart in seeing what you're doing for these young women. And it is what's so powerful about entrepreneurship is you embody a trait that nearly every successful entrepreneur embodies, and that is, they don't forget where they came from. Entrepreneurs, when they succeed, they come back to their community, whether it's their physical community or the community of peers that they came from, and they give back, and they create jobs, and they change trajectories. And that's why entrepreneurship is just one of the most powerful vehicles of change that I think the United States has to offer. And so I just love what you're doing.
Sherry Deutschmann 42:57
Thank you. I saw firsthand how powerful it is. Two years ago, a young woman came to me, and she was making $20 an hour, single mom, and yet she was certified in every area of dementia care. And I'm like, You're doing $20 an hour having food stamps because you can't support a kid kids on $20 an hour. And so I encouraged her to start her own business, and I said, I'm going to help you find your first customer, and I think you should be charging like $85 an hour. I'm going to help you find your first and you're on your own after that, almost three years ago now, and she's doing $600,000 a year and has a couple of her own employees. So the power of just starting your own business and changing her life, but the lives of her children, and their opportunity to get a great education and to like they went on vacation this year. They hadn't been on vacation in years. Go ahead.
Spencer Patton 43:59
Maybe just, can you speak for a second about those that hear about brain trust and want to find a way to help? Is brain trust? A nonprofit? Is brain trust? A for profit business? Is there any way if someone says, Hey, that's something that I believe in, something that that they want in their own community, how can somebody interface with brain trust if they are impassioned by what you're talking about.
Sherry Deutschmann 44:23
So brain trust is a for profit entity for multiple reasons. One, I didn't think I could model for women how to build a successful, profitable company if I was doing as a nonprofit. I love that, and I've been on the boards of many nonprofits, and see that they have to spend all of their time chasing the funding so they don't get the opportunity to do the very thing that they're most passionate about.
Spencer Patton 44:49
I love that answer, Sherry. That is just great. I wish more people would view it exactly that way, because I've sat on those same boards and it is just no money, no mission. Mission, no mission, no money, no money, no mission. And you live in a world of scarcity when you're not educated about how you keep a business healthy. And it doesn't mean nonprofits are not amazing. Many of them are, but if you don't have business leadership, then you end up having the best mission in the world, but you are broke with a capital B,
Sherry Deutschmann 45:29
that's why I go back to what I advise everyone else. Your ability to do good in the world is predicated upon your ability to do well for yourself. Yeah. And so build a successful company, and from that that now to give us the opportunity to invest in more women, I'm an angel investor, and I've invested in 27 women owned businesses trying to contribute in that way. But so, you know, we had, we made it a for profit entity, and the best way that companies and other people can support us is by sponsoring our events. Okay? So we have this annual event that we're doing in a few weeks. It is so powerful. Last year, we had the founders of the Elf on the Shelf as our keynote speakers. They really they were amazing.
Carli Patton 46:15
Did they have to share a mistake you said?
Sherry Deutschmann 46:16
Oh yeah, they talked about some of the mistakes that they had made early on in starting the company this year, our keynote speaker is Amy Bucha, who is the CEO of a company in San Francisco in New York that does user experience for Apple and Oracle and Amazon. And she's going to share some of the darkest moments that she had building this 100 million dollar company. And we always feature a woman who's had a public failure. A couple of years ago, it was the woman who invented the weighted blanket and started the whole weighted blanket movement here in Nashville, and got it to 5 million in revenue by year two, which is fantastic, and ended up having the bank auction off her assets because she outgrew her working capital. She didn't know that could happen.
Multiple Speakers 47:08
A lot of entrepreneurs don't know that can happen. Grow yourself into bankruptcy.
Sherry Deutschmann 47:11
So she shared that story with us on stage, tears just rolling down her face. She had all of us crying too, but the vulnerability and the willingness to come and talk, talk about those mistakes and those dark moments. We learn so much more from that than we can, you know, somebody saying, I did this, and it worked out great. It was wonderful. So sponsoring that becoming a champion. So we have lots of local businesses that say, I love what you're doing, I want to support it, but I also see those women are building outrageous companies that I want to do business with them. So they're coming in as what we call champions, which are, you know, sponsors that get access to our members through workshops. And we've got lawyers and banks and HR companies and wealth managers who are saying, We want access to these women, and they're smart to do that. We have. Just last week, I was in with a small group of them talking about, you know, building your pitch deck to raise money. Just in this small group downtown Nashville, I think there were 23 of them. There was 200 million in revenue. Million in revenue here in this town. And if you can think about the impact of women on the economy, if every city had this incredible it'd be incredible. It will be incredible, because that's, you know, that's our goal, to take it national.
Spencer Patton 48:41
You got a franchise opportunity there Sherry.
Sherry Deutschmann 48:42
yeah, franchisor or else.
Carli Patton 48:46
Okay, I know this isn't a parenting podcast, but we have four kids, three daughters, one of which already says, What do I want to be when I grow up? I want to be an entrepreneur. How do I do this? She wants to be her daddy, but her right? And so what piece of advice would you give those of us raising the future female entrepreneurs of this country? What should we be telling them? Besides that, they're awesome and they can do anything they put their mind to. What should we be telling our girls
Sherry Deutschmann 49:17
The truth. And, you know, teach them finance, I think we teach, we start out setting our daughters up at a disadvantage to begin with, because studies show that we give our sons more allowance than we give our daughters, and yet, the guys get to be outside doing something fun in the sunshine, and we've Got the girls in the house getting less allowance, but washing dishes or vacuuming floors. So from the very beginning, set the girls up to realize that treat them fairly, treat them the same. And then I started with my granddaughter. I didn't do so well with my daughter on this but with my granddaughter. Her when she set up her lemonade stand like here's I'm investing $20 in this, and at the end of the day, regardless of what happens, you have to give me $20 back and letting her understand profit, what profit really looks like, and then how to spend that, and encouraging them to give back to the community by whatever money you share with them, to make them give something to charity, and let them choose the charity, choose the calls, and let them give some of their money to a cause that they care about, to get them used to paying it forward and to being kind and generous.
Spencer Patton 50:45
Sherry, thank you so much for sharing your story, not only having been there and done that, but to come and teach it in the capacity that you are. I think arguably, you're making 100 times the impact now than probably you ever did on all the lives that you very much did impact in your own business, because you're showing a pathway to a very different type of business ownership. Things that break paradigms in ways that you've importantly said, Be the change that you want to see. Which I take is you don't have to do everything that Sherry does. Like there will be some businesses that it just does not work to bring your kids into a manufacturing workshop floor. So okay, we can't have that one. But you know, what we can have is that we can rethink paternity leave. We can rethink maternity leave, we can rethink employee benefits and what we allocate the profits of a company for. We can think about ESOPs again, all sorts of really important paradigm shifting concepts that you're investing into women of the future. And I think that's just a really special story that we're excited to give you a little bit of a megaphone to shout into to help more people learn about what brain trust is up to. So thank you so much for being such a positive force for so many women and so many people that will never know your name but are impacted by the policies that you are teaching entrepreneurs to believe in
Sherry Deutschmann 52:21
Thank you. Thanks for having me here. It was a blast.
Spencer Patton 52:31
The podcast today we have Sherry Deutschman of braintrust, I think a couple things, if I had to boil it down into what I took away. One, she's talking about entrepreneurship in a way that not a lot of people are talking about it. First, it's female focused, and as she talked about, venture capital is going to 98% men and 2% women. Yet the data shows that women are getting between 30 and 70% more.
Carli Patton 53:03
I loved that stuff so much. Yeah, I feel that. I feel like I get so much mileage out of my day, and it's it's really uniquely female, how multitasking, and how we take one resource and just pull it as hard as we can and keep going. So I feel like that put data to something that I feel innately in my bones is true.
Spencer Patton 53:26
You know, I feel really confident that the trend that she's pointing to, to say female entrepreneurship is growing and is going to continue to grow, is best supported by that data point, because I tell you what venture capital loves more than a heartwarming story about female entrepreneurship. They love money. Okay? Mr. Wonderful.
Multiple Speakers 53:45
That's just the truth the money. But
Spencer Patton 53:48
How great though, that her cause is also supported by a higher ROI. So having a higher ROI means that more people are going to believe and lean into what Sherry's teaching rather than do it as a charitable nod the pat on the hand that she told about, I think it's consistent. And I think a lot of women come to a business world either expecting that or fearing that imposter syndrome that all of us feel that I sit across the table wondering in my head, are you going to figure out that I'm actually not as educated on this as I should be, or that I'm not as qualified to sit at this table as I should be? And the truth is, all of us feel that way.
Carli Patton 54:40
I'm glad you said that, because I do feel that way all the time. But you know what really triggered a memory in me? What I love about our guests is that you can always relate to them through your own stories, and you don't really know what's going to pop into your head. But when my parents got divorced, I was so young, I was baby, right? One or two I. So I went to the office with my mom as a kid all the time. I went with my dad. I mean, they were kids having kids, so I remember watching them grow their careers, coloring in the corner or going on sales calls in the car. And I think those moments prepared me for what we're doing today because I saw my parents. Nothing was an excuse, no runny nose that kept me out of daycare, kept them from work, and they did it before there was a book, before there was an idea to do. It is they just had to make ends meet, because they were both single parents, doing their best. And so thinking back, I really think those were the formative moments that made me think, maybe we can do this, babe, maybe we can grow something and do something and have a family at the same time. So I love how she gave voice to the very real struggle, but also made it not unique. I mean, there are millions of parents doing the same thing all day, every day, just trying to figure it out.
Spencer Patton 56:00
I think you could really sense her humility as well. For sure, is that she had not forgotten her roots. You know, she led with, I did a gas station route of cleaning bathrooms. You get an assessment of what are real problems and what are not real problems when she has had to do every job all the way literally as the janitor to the CEO of the business. And those are some of my favorite people to talk to, because they know and can speak with an authenticity about entrepreneurship that is immediately recognizable by other entrepreneurs that have done the same thing.
Carli Patton 56:39
Well, it's no different than your story. I mean, you were on a FedEx truck for years. I didn't see you at Christmas time. You would go, I would pack you lunches, and you may wouldn't see the kids for days on end because you were on a truck, and it gave us a new appreciation for that labor force. I mean, to this day, I set out cokes and waters and granola bars during peak on our front porch, because I know those guys and gals, that may be the snack they get that day. And I think it is true entrepreneurship like you like to say when you know the pain point, but also when you have empathy for your workforce in a unique way. And it doesn't mean you're not going to handle yourself, and it doesn't mean you're not going to try to grow and make money so that you can do more good and employ more people, but you just now leave a granola bar out along the way.
Spencer Patton 57:28
I remember to this day, specifically, some of the houses that would always offer me water and it was so hot, some of those days where I was just dying, and it gave me an appreciation for my drivers when we were no longer driving in a truck. But I knew what was real and what wasn't what it was like to run from a dog.
Carli Patton 57:54
it's always the small dogs that chased you.
Spencer Patton 57:58
That's a good lesson, I tell you. Sometimes it's the big dogs that people are intimidated by, but those small dogs, they'll get up on you too. I mean, they get those little legs and they're just
Carli Patton 58:07
The power of the tiny Oh, yeah.
Spencer Patton 58:09
I mean, that's for sure.
