Terry McCaffrey, TechWrite. With Joyce Query, McCaffrey is co-founder and 50% owner of this full-service technical communications firm. They create and electronically distribute technical documentation for regulated industries (chiefly aviation, pharmaceuticals, mining and chemicals). In business since April 1989, with 15 employees at the time of this interview, the company had 1995 revenues of $1.25 million. This transcript contains a blistering critique of the Fair Labor Standards Act; it also conveys the logistical dramas of running a company while being the mother of three children under the age of 10. Birthyear 1957, phone (412) 429-1656, HQ Pittsburgh (PA).

Part One: Start-Up, Growth and Motivation

Frank Gregorsky: How did you get here?

Terry McCaffrey: It was Joyce Query's idea. We were both working in Corporate America -- very happy, being paid very well, for what we did. Her background was in technical communication skill, mine happened to be in computer science. I was running a staff of programmers and analysts to develop software for a large mutual-fund company [Federated Investors] here in Pittsburgh. She was in charge of the technical-writing department, which happened to be part of our division also. So I met her there. And basically it was pretty much, "You know, we should start our own firm." For maybe six months, we kept talking about it. We also designed business cards and a logo -- things we could do outside of normal work hours. The gentleman we reported to, who is still a very good friend of both of ours, got wind of this. He told us, basically, "You have to make a decision one way or the other." We pretty much had known that -- but here was a final push. Interesting thing: At that point, I was pregnant with my second daughter. And the day we signed our first contract, with Westinghouse Electric, I delivered her. In fact, I was in labor while typing up the contract -- I would not go to the hospital until the contract was in the mail. Those first nine months were difficult: We brown-bagged it, our salaries were cut in half. But, when we left Federated, we had a client already. We had picked up Mellon Bank, which gave us some billable income [right off the bat]. Joyce took care of Mellon, I hit the road to sell.

[Discussion of the division of labor between her and Query. At TechWrite, the "pyramid" is so compressed there is no middle-manager or staff director; thus, when they go on-site to handle the highest-level clients, administration sometimes unravels: "It's very difficult to run a company while being responsible for the day-to-day activity of a project." At the same time, they like to do jobs on-site "because that's where the information and the experts are"...]

We really look at ourselves as text-processing consultants -- that's what we are. We are not technical writers any longer. We are information-gatherers and technical-processing consultants: "What package do I use? How can I transfer this information? How do I get this on the Internet?" Those questions usually come after, "What should I get on the Internet? How should it be organized? Where do I get this information?" So our activity is really [in] two parts: We gather, rewrite and reformat the information -- and then, electronically, we figure out how to distribute it, whether to the guy in the next office or in China.

FG: Why is it so hard to staff your middle-management gap?

McCaffrey: The people we have to pick from [for a promotion into "management"] -- they've been the worker bees. People have to be detailed in our business. It's hard to find one of those individuals who is willing to step up and --

FG: And be an Associate Hive-manager [laughter].

McCaffrey: Right, exactly. For a lot of people, it's scary. Some people just don't have the interpersonal skills. You have to remember, in our business, the type of people we hire -- our employees -- are introverts. Usually writers are very quiet, not aggressive -- that's just not in their character, usually. Yet, to run a project like this, you have to be pretty aggressive: You're dealing with corporate people who throw deadlines down your throat. As a result, it's been difficult to find the individuals who have the right mix. But this niche player will be needed for the growth of our firm.

FG: Funding in those early years -- you started with one good client, which paid your early rent. But was [growth] all cash-flow [from customers]? Did you have to borrow at some point?

McCaffrey: We could write a book -- not on this industry, but on starting your own business. We made a crucial mistake at the very beginning, though we were able to recover from it. You do not leave a well-paying corporate job until you have acquired funding. But we left, and then went out to get a loan. Doesn't work. We visited all the banks, all of the local banks, and they all turned us down. We were lookin' for about $14,000. They said, "If you have $14,000, we'll give you $14,000." And I said, "Well -- no." "Okay then, if you can get your husbands to sign, and use your homes and whatnot as collateral, we'll give you $14,000..." And we said, "Absolutely not." This wasn't [supposed to be] our husbands' business, this was our business. We were calling the shots. We did not want our husbands involved in it! Secondly [we didn't want to put our houses on the block]. So we turned around and funded it ourselves. Each of us put in $6,000 -- from savings. That was enough to buy a couple of computers, get the logo designed and printing done, complete the incorporation, just the basic things. (Remember, we're a service-based business: No inventory, no huge capital outlays. And that's why you see more service businesses being started by women.) As a result, it was only two years ago when we secured a line of credit. We were profitable the very first year -- even paid ourselves $7,000 each in salary -- and [thereafter] funded the business thru its profits. Have we been lucky? Sure. But we haven't been that lucky: I can name 10 major ventures or proposals we were involved in that fell thru -- so we could've been luckier.

FG: I'm not clear on what the original financial mistake was.

McCaffrey: Women [entrepreneurs] use their own money. But you never want to use your own money, you always want to use someone else's, and then write off the interest as an expense.

FG: But didn't using your own money give you a much greater psychological incentive to stick out that first year?

McCaffrey: Yes and no. To be honest, both Joyce and myself were pretty driven people: We didn't need [that extra pressure, though it ended up being there]. Even so, both our husbands worked, and they had jobs. It wasn't like my children were going to be out on the street -- now that would be an incentive. We weren't willing to take that risk, and we didn't take that risk. I've seen some entrepreneurs take some huge risks and lose everything, and their kids are living in shelters. (I know a few gentlemen who've done it over and over. They just keep moving across the country doing this.) Another example: During that first year, we got a large contract at State Street Bank. This meant hiring three people. Well, we went out and we hired three people. It just didn't dawn on us how we wouldn't get paid for another 60-plus days. So, "How the hell are we gonna pay these people?" Those are the kinds of things you learn the hard way. I had been sheltered in Corporate America, and I didn't come from an entrepreneurial background. We had hired all these people, and it was payday -- so we maxed out our credit cards [to pay our new people]. Now we have a $75,000 line of credit, and it is secured. That was another issue: As we learned, some lines of credit are secured, and some are unsecured. An unsecured line of credit is not much better than nothing, because the bank can say, "I'm sorry, we're not giving you the money" -- right when you need it. The first bank we had dealt with gave us an unsecured line, and we found that out, unfortunately, in a roundabout way.

[Discussion of venture-capital players around Pittsburgh. She thinks there are some, but VC is "much more a Silicon Valley and Boston Corridor thing." Pittsburgh does have plenty of "white angels floating around." But they have proven out of the realm for TechWrite, which neither invents nor distributes technology. "We tried to get money from [the] Ben Franklin [Grants] originally, but were turned down "because we weren't manufacturing-based nor were we classified as technology, quote-unquote."]

FG: "Other people's money" has always been the rule for real-estate. Also, if you're starting a concrete company or a used-car dealership, you've got to borrow big. But do you really feel that strongly about [this rule] in the case of a service enterprise?

McCaffrey: Yes, still. You can always start a service-based business with a very small amount. But the problem is how [the "small"] mentality follows them throughout their business's life. So, as a result, jumping to that next level -- $5 million in sales, or $10 million -- runs into a mental block: They don't think about going to the bank and getting lines of credit. Or going out and getting venture capital. Or just speculating [in their planning]: "What could I do if someone gave me $500,000?" Such thoughts don't even enter into their mind, because they are not comfortable with debt. They wouldn't know how to manage that kind of capital. As a result, they stay small. Your average women-owned business is, what, $250,000 in gross sales? Then why even be in business? It's not worth it, for all the aggravation. Get out. In fact, as far as I'm concerned, if you're only making $250,000, it's not a business.

FG: And that's gross sales. Your salary from that may be only $20K, or it may be only three.

McCaffrey: Most of the time it's nothing. I can't speak for Joyce but -- I'm doing it "for the money." Why would you run a business if you didn't want to make a profit? All that '90s talk -- about latitude, freedom -- is well and good. Most successful entrepreneurs can say what they want, but they're driven by the cash. In my case, no it isn't the sole objective. But it's a big motivator. And I would think it a big motivator of my employees.

FG: Well, [what drives a workforce is] a whole different issue [from the feel and drive of ownership]. But let me speak up for the '90s mentality. If somebody came to you now and said: "Terry, you can have the exact same routine you've got now, with all the latitude, and I will guarantee you a $200,000 salary -- with no ownership but also no risk" --

McCaffrey [Quietly]: I wouldn't be interested.

FG: There you go! So it's not financial per se.

McCaffrey: No it's not. I can't say it's the sole motivating factor of why I walked out of Corporate America and started my own company. But financial definitely plays a part in the big picture.

FG: Was it half of all the motivation? Or was it less?

McCaffrey: [Pause] It was probably less -- to be honest with you. But to sit here idealistically and claim money doesn't make any difference to me -- that's ridiculous.

FG: Of course it is, but that's the opposite extreme, a caricature [of idealism].

McCaffrey: I would have to say [the biggest single motivator] was just the challenge of, "Can I do this?"

Part Two: Family Dinners and A Country-Club Tale

[Sibling report: Her older sister, an industrial engineer, was with Procter & Gamble and now Texas Instruments. She is four years older than Terry, and was only slightly less extroverted in high school. Back then, Terry felt no draw to business or management. She "had no idea" what she'd end up doing, even during freshman year at the U. of Pittsburgh. But she took a computer-science course, liked it, and made a bet on this sector's career projections as of the late '70s. Three years later, "I had job-offers up the yin-yang, for large dollar amounts, and that was my whole objective... I didn't go to school for four years to be on the unemployment line."]

FG: Any notion of where the technological or science root began?

McCaffrey: My sixth-grade teacher, Mrs. Bridges, taught me both math and English. But she was much more math-oriented. When I think back about it, this must be where the technological root started to grow from. She was a very good teacher, very strongwilled -- but stressed math more than English. From then on, I was geared toward that area.

[McCaffrey's 13th wedding anniversary is coming up in January '96. Husband is superintendent for "the largest coal mine in the Free World," run by Consolidation Coal Company, which has 500 employees. Terry and Jim met back in college, and their kids are now ages 8, 6 and 3. Ice-skating, gymnastics and cub scouts create constant logistical challenges. At least she found a chief-of-staff for home, a full-time nanny who is "just great -- I couldn't do it without her -- a great woman, born and raised in the town that I live in now. She comes to the house about 7:30 and leaves about 6; her days are long, too."]

FG: Maybe you could talk a little bit about the tradeoffs and the tensions of being a committed family person -- a "mom" -- and being an entrepreneur.

McCaffrey: It definitely conflicts. Yet we always sit down to dinner; we always cook fresh. No TV dinners -- I just refuse to do that. So, if we have to eat at 8:00, we eat at 8:00, and we do sit down as a family. The children eat, they put their pajamas on, and they go to bed, after baths and teeth-brushing etc. The tradeoffs? It's tough. We live in an upscale neighborhood, where none of the women work, and they can go to their kids' school events. I hear, "Well Mommy, why can't you come" -- at 2:00 in the afternoon -- "to see our parade for Halloween?" "Well, Mommy works. She owns her own business, honey, and she can't go, and your friends' mothers don't work." "Well, why do you work, Mommy?" "Well, because Mommy wants to work. She really likes her work." They sit at the dinner table and they hear me talk about employee problems and cash-flow issues. (My husband is a good sounding board for such things, because he has 500 people reporting to him.) But it's tough -- it really is. Lunch money needs to be there on Monday, dressing for school pictures Tuesday, it's always something. Do I think that this is good or bad? I think that they miss -- I know personally I would not be happy staying at home. I would become an unhappy mother, and -- it wouldn't work.

FG: You'd be a lot more available, but on the other hand you might take [some of your unhappiness] out on them.

McCaffrey: That's right. But I'm also not good at leaving the pressures of the job at work. I need to get better at this. Because the children, you know -- they, they're affected by that. "Mommy's in a bad mood" or "She's had a long day." My husband and I try to make the time we have [with them], which is limited, quality time. And that's easier said than done. When you come home, sometimes you don't feel like playing with the puzzles or building Legos. But they MISS me.

[On the tape, McCaffrey will later offer a story which fits better here, because it is personal as well as sociological...]

My husband and I just joined a very, kind of, "uppity" country club. And of course we had to be interviewed. They didn't quite know what to make of me. And then I asked, "What are my restrictions on the golf course?" 'Cause [technically] I'm not the member, my husband's the member. "But I want to take clients out on the golf course, and use it for business purposes." This really took them aback. Normally, I was informed, women are only allowed on the course X times and men are only allowed Y times, and they can't play on Wednesday afternoons because that's women's day. So I said, "That sounds very complex. Why don't we just do it by handicap? If my handicap is under 12, then I should be able to play on Saturday morning and Sunday morning [i.e. at the best times]. And if my handicap is over 12, then I can't go out on the course, otherwise I would slow up play -- "

FG: Pure merit.

McCaffrey: It's for pure merit; base it on our handicap. They weren't too keen on that. But that's kind of my whole attitude to this: There's always a way [to manage the situation without irrational discrimination]. But, all told, they were very -- cordial. The interview went on for an hour -- my husband was dreading it.

FG: You told [Jim] later, "We should look for another club."

McCaffrey: No, no -- because they're all run like this. And here's my ultimate attitude: When in Rome, do as the Romans do. You're not going to walk in to this type of [a culture], and think that you will change it because you're a woman -- that's not gonna work. People will just be resentful, and they will exclude you. They will find a way to get around you, and not work with you. So my attitude is, "Hey, I'm gonna join this club, because it will be good for my business. I'll have to work around these rules." I think eventually they will change -- but not overnight. Same in Corporate America.

Part Three: Affirmative Action and 1938 Laws

FG: How much confronting or maneuvering, and what mix, did you wind up doing at Federated during your 20s?

McCaffrey: I really didn't run into this "you're a woman" issue. Instead it was: "You're competent, we're gonna work together" -- and that's the way it was. So I don't feel being a woman has hurt me. The one time I wasn't promoted, it was because of nepotism -- the boss's son got the job: If I had been black, it wouldn't have made any difference.

FG: But you must have friends in higher-level management positions, even though they're also qualified, who got those promotions because somebody was making an extra effort -- to bring in women?

McCaffrey: [Pause] I can't think of one. I really think the more attention [that's paid to Affirmative Action], the worse the problem becomes. Let's see -- what do I want to say here? [Pause] To be a woman-owned business -- I don't really like to advertise that.

FG: Are you Certified?

McCaffrey: Yeah -- oh, in every state of the union, almost. Not in every state, but Maryland, New York, Pennsylvania [and also with] PennDOT, Port Authority Transit, County of Allegheny. Each one was a distinct and separate process. But it has not gotten me one shred of business -- not one shred of business.

FG: That's interesting.

McCaffrey: Maybe that's why I'm not a big believer in WBE. If somebody wants to get around it, they can get around it -- there's a loophole somewhere, something they can resort to. And the bottom line is, if you want to bitch and complain about it, all you're seen as is a "witchy woman." So it's a lose/lose situation. The way I like to look at business is, "Hey, I want to build relationships with these folks." Gender doesn't make a difference -- maybe with some of the older managers [it does], but they're moving out now. And with most of the younger managers, especially the ones I knew at Federated, I just didn't run into this "you're a woman" issue. In some industries, there have not been a lot of women in a lot of those positions -- because they haven't been qualified to get into those positions. And that's why there not there. Now, why aren't they qualified? Lots of reasons why. But more women are becoming qualified to get into those slots. Over time, even in the bad industries, it will change. But it won't change overnight. And forcing someone's hand to the fire -- forcing them to hire somebody they don't want to hire -- [can't make for a] good working relationship. Because then it's not win/win. The guy who is forced thinks, "Why would I want to hire this woman? I'm gonna make her life miserable. Okay, I'll hire her -- fine, I'll hire her. But I won't pay her. Or I'll put her thru the wringer. I'll let her do all this work for me and then find an excuse not to pay her." That's the kind of attitude you get with a "you have to do that" set of policies. Whether it's conscious or subconscious, people react negatively to being dictated to.

FG: Instead of mutual-gain, it's now a power [struggle].

McCaffrey: And more of just a personal "you made me do something I don't wanna do." The relationship could have been, for a person just coming into an industry, "Maybe I could mentor her." If you force this guy to be in a situation he doesn't want to be in, that kind of relationship will never be. So I think a lot of women need to take a proactive role. "How can we work together?" "How can I help you?" "How can I make your business stronger?" Because, without this kind of win/win -- Affirmative Action may get you a couple jobs, no question about it. Might get your foot in the door. But if women business-owners think this is how they're gonna make their money -- it doesn't work like that, either in Corporate America, or in capitalistic society [generally]. Bottom line, it's all about building relationships, and how can I make you a better organization? By giving you these services or by us working as a team together. Our WBE status has been a negative, a turn-off, with some people. "Oh well, she's a WBE, she thinks she's just gonna waltz in here and get this work."

FG: I've also heard how having to go thru the process to obtain Certification is demeaning. "They treat you like a criminal, as if you're a front for somebody, you have to prove you're a real company" -- in some cases.

McCaffrey: I've never found that. My attitude is, They're doing a job. In doing that job right, they're doing you a service -- a favor for women-owned business as a whole. Because the people who do put these fronts up will then be uncovered. I have no problem with this, because I have nothing to hide. Every bank puts you thru the wringer. Setting the hurdles high strengthens the Certification: If you're able to get over them, you're legitimate. The list they come out with has, to vendors, better credibility.

FG: Any proposals or suggestions for changing Affirmative Action as it relates to smaller enterprises?

McCaffrey: I kind of like this whole SERB Certification, more so than the MBE or WBE status. If you're a $3 million company or below, then why not ride the coattails of some company and blah-blah-blah. Once you're $3 million, I don't care if you're run by a woman, or a black woman, or a caucasian or oriental woman. You should be able to stand on your own.

FG: What did you call it -- SERB?

McCaffrey: SERB. "Socially and economically restricted business." Pennsylvania is moving more and more to this, because they've been attacked from a [reverse] discrimination standpoint on MBE and WBE. "SERB" covers businesses under $3 million, with some other qualifications, but it's not because you're a black woman, or a black man. The SERB distinction is by revenues, as opposed to sex or color, and it's based on qualifications. You're socially and economically restricted because [and only because] you're under $3 million. This seems to be the way they're going.

FG: [Let me ask you about] three different types of taxation -- Social Security, capital gains, and the corporate income tax. [She is subchapter-S, so the last does not apply.] You'd probably like them all to be lower, but are there some taxes worse than others in terms of hurting jobs or productivity?

McCaffrey: [Fifteen-second pause] To be honest with you, I don't have a strong opinion on any of those three. I guess my real complaint is the federal government's attitude on telling you how to run your business -- it's regulation more than taxes. One of the big reasons we switched from hourly to salaried employees, two years ago, is the Fair Labor Standards Act [of 1938]. It is so archaic. And then, when you read it closely, you notice all the exclusions: Federal employees, tobacco workers, people in the fishing industry -- all groups with strong lobbies. It is so blatant, and so convenient. I'm not saying this law didn't have a good purpose back in the 1930s. Maybe it has a purpose today. But it is so out of date.

FG: Well, it was to prevent sweatshops and --

McCaffrey: That's what I mean. Now they're trying to apply the same rules and regulations to a computer programmer or analyst who's making $45 an hour. Then they have the gall to say, "This person should be paid time-and-a-half." It's like, "Knock knock, is anybody in there?" This is not the way the world works anymore. They are professional individuals and they work on an hourly basis. Totally, completely professional -- paid engineers, Phd's. So why don't they spend some time updating these laws? For a gas-station attendant making minimum wage, this law has a place, so the people don't take advantage --

FG: But to make "hourly" versus everything else --

McCaffrey: To make it the deciding factor is ludicrous. It's ridiculous. Especially given this whole outsourcing mania that is based on an hourly rate! So they end up throwing these patch-ups into the law, instead of rewriting the whole law. Take a new look at the whole theory behind it. The law has outgrown its usefulness. And it is strangling businesses like mine. You know, a lot of professionals want to be paid straight time for [what are] overtime [hours]. "Just give me straight time for overtime," they tell us. Not the federal government: "If they're paid hourly, goddam it, you owe them time-and-a-half for overtime." Well you know what? We can put 'em on salary -- and that's the end of it. But who loses? The employee, who now works a 75-hour workweek, and gets nothing for the extra 35 hours. Good ol' U.S. Government, sticking their nose in where it doesn't belong. These are professionals. They don't look at themselves as a blue-collar worker in the gas station.

FG: And they also have some say-so over whether Wednesday will be an 8-hour day or a 12-hour day, which none of those old guys ever did.

McCaffrey: Right! You came in, punched a clock, left at 5, and that was the end of it. The world doesn't work like that anymore. Everything is based on flextime. But this law is so based on an eight-four, Monday thru Friday, punch-the-timeclock, blue-collar mentality. Those types of shops are few and far between. So what does the federal government do? Have the whole Labor Department enforcing this stupid law, making TechWrite's life miserable, and a lot of other companies, and screwing the person they're trying to protect, who will now work 35 more hours and get nothing for it. "Well, thank you, Uncle Sam." It's so stupid. In fact, you can't even give 'em comp-time. Because if you give 'em comp-time, based on an hourly rate, the federal government can come back and say, "See, they're hourlies."

FG: That was a dazzling critique.

McCaffrey: I have some problem being the federal government's tax collector, not being eager to do that job. But I have no problem paying FICA. I really have no problem with taxation per se. Sure I'd like to see the capital-gains tax reduced, but where I have the real problem is with regulation. And the FLSA is a good example.

FG: Any closing riposte on lawyers, legalism and litigation? Is that just another cost of doing business, or does it actually skew your strategies and decisions sometimes?

McCaffrey: It's becoming more and more of a factor, in every decision we make. In fact, here sits a two-inch binder, which contains the day of material I sat thru for Buchanan-Ingersoll: "How to Hire and Fire Right." This is what I sat thru for 8 hours. I listened to everything, from how to write an employee handbook, to the FLSA and what it does and doesn't mean [with the new clarifications], and all of the cases brought to the Supreme Court in regards to backing up these suggestions. Pre-employment. How to interview. How not to interview. And this was just 8 hours. The sessions went like this: "Business-owners are more and more required to protect themselves. If you tell Joe in an offhand way, 'I know you'll be employed with us for a long time,' this can be construed as an employee contract. Later, if you fire him, you might be held for damages of half-a-million dollars." The bottom line is: Wake up and protect yourself, or it's just a matter of time before you end up in court. The level of trust in the workplace has really, really diminished.

Related Links:

• Discovery Institute
• Joint Economic Committee
• Women Business-Owners in Post-Corporate America