Convict-turned-CEO sold his Knoxville business to help change prisoners' lives. Here's why.

Hayes Hickman | Knoxville

Show Caption Hide Caption CEO Josh Smith sells successful company to fund criminal justice reform foundation Master Service Companies CEO Josh Smith has sold his company and will use the profits to create a foundation to fund criminal justice reform.

Prison never rehabilitated Josh Smith. And he's grateful for that.

After retribution, incapacitation and deterrence, the fourth traditional purpose of incarceration — rehabilitation — is a misguided one, argues Smith, who has defied the odds in the 15 years since his release from a federal prison camp in Kentucky to become a multimillionaire entrepreneur.

His company, Knoxville-based Master Service Companies, is now the region's largest residential waterproofing and foundation services provider, with nearly $30 million in annual revenues and 180 employees across Knoxville, Indianapolis and Winston-Salem, North Carolina.

Smith and his wife, Tracy Smith, recently sold the business for an undisclosed sum and are re-investing $8 million — almost half the proceeds from the sale — into the newly launched 4th Purpose Foundation, a nonprofit, faith-based prison reform initiative aimed at setting a new goal for inmates returning to society: transformation.

Josh Smith: Master Service founder sells company to start criminal justice reform foundation

Rehabilitation is simply a return to the original state, the one-time convict notes. In his case, Smith grew up in public housing developments in and around Nashville; the product of an abusive home who dropped out of school in the 10th grade and had racked up seven felony convictions by the age of 16.

At 21, he began a five-year sentence on drug trafficking charges.

"I wasn't broken and needing to be put back together," he said. "I needed to be transformed."

Faith and mentorship

Smith notes a Bureau of Justice Statistics study published last year, which found that 83 percent of inmates released from state prisons in 2005 were arrested again within nine years.

Although still in its early stages, the Smiths broadly envision their foundation as a holistic means of mentoring men and women to break that cycle of recidivism and find their true purpose in life.

"How much more potential is locked away right now that, if invested in, could produce the same success as mine?" he asked.

Smith credits his own transformation to the company he kept in prison — he just so happened to be locked up with several white-collar criminals who educated him in finance, real estate and stock trading.

More importantly, Smith says, he found Christianity. Meanwhile, Tracy Smith moved herself and their two young children from Tennessee to Kentucky, living in public housing to be closer to him as he served his time. And when she wasn't visiting her husband on weekends, she attended church.

"I loved him. I just did what I thought you were supposed to do," she said. "And the Lord, he kept us together."

Ultimately, Josh and Tracy Smith each made a commitment to the Lord within a week of one another.

"I broke down," Josh Smith said. "I knew it was the first tangible thing I had found in my relationship with the Lord."

Finalizing the foundation

The Smiths currently are finalizing the foundation's board or directors, which will include themselves and three members with leadership experience in the criminal justice field.

From there, they will begin exploring best practices in the U.S. and abroad to draft the program's curriculum and consider possible locations to test their model.

They also are consulting with the friends they have made through volunteering with prison ministries across the U.S. and in Costa Rica, Panama and Nicaragua.

The foundation's goal is to have a pilot project underway within 12 months.

Inspired by Hobby Lobby founder David Green's book, "Giving It All Away," which challenges business owners to commit to a salary and use their company profits for philanthropic good, the Smiths said they reconsidered how much money they really need to be happy.

The couple has since committed themselves to a maximum net worth and, moving forward, will focus their efforts on the 4th Purpose Foundation full-time.

They are confident the nonprofit can remain self-sustained for the next 20 years without soliciting additional financial support.

"We're not as excited about business," Josh Smith said. "We're more excited about ministry. That's where our passion is."