In this special 100th episode of Take It To The Board, we’re excited to welcome back our very first guest, James Donnelly. When host Donna DiMaggio Berger first sat down with James in 2021, he was leading Castle Group, one of Florida’s largest community association management firms. Now, they reunite to reflect on the extraordinary journey James has taken since selling the company. Together, they explore the motivations behind his decision, the carefully crafted four-year succession plan that ensured Castle’s continued success, and the passion projects that are now shaping his next chapter.
Throughout the episode, James and Donna dive deep into the realities of the acquisition process, offering insights that business owners and industry leaders alike will find invaluable. They discuss the advantages of planning a sale from a position of strength and the importance of developing a leadership team that can thrive independently. Their conversation also examines how the association management industry has evolved—especially in response to the challenges posed by COVID-19 and the Surfside tragedy.
Despite growing consolidation in the industry, James and Donna share an optimistic outlook on opportunities for entrepreneurs. They note that no single company has captured more than a small share of the market, leaving ample room for innovation and growth. They also discuss James’s investment in the future of the field through the James Donnelly Property Management program at Nova Southeastern University, a “farm system” designed to cultivate new talent.
The episode concludes with a meaningful discussion about the personal values that guide James’s life—stretch, smile, live, and give—a daily mantra that he uses to balance his ongoing industry involvement, philanthropy, and upcoming book on life principles. With warmth, insight, and mutual admiration, James and Donna deliver a compelling conversation that celebrates past accomplishments while looking forward to the future, making this milestone episode both thought-provoking and deeply inspiring.
Conversation Highlights:
- The increasing complexity of the community association industry in the wake of COVID-19, the Surfside tragedy, and new legislation
- Key challenges and growth opportunities facing the industry today
- The most unexpected part of Castle Group’s sale process
- James’s practical advice for business owners thinking about selling
- Insights for leaders weighing whether to remain active or begin stepping back
- The passion projects and new ventures James is currently pursuing
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hi everyone, I'm attorney Donna DiMaggio-Berger
and this is Take it to the Board, where we speak condo and HOA.
Welcome to the hundredthepisode of Take it to the Board.
It feels like just yesterday.
We launched this podcast andtoday we're celebrating this
incredible milestone by bringingit full circle with our very
(00:22):
first guest, james Donnelly.
When we first released James'episode on May 14, 2021, he was
the CEO of Castle Group, sharinginsights from decades of
experience in communityassociation management.
Fast forward to today.
James has sold Castle Group andembarked on a new chapter of
his life.
In this special episode, we'llreflect on his remarkable
(00:45):
journey from building one of themost respected companies in the
industry to his decision tostep away and everything in
between.
We'll also discuss the futureof community associations,
leadership, lessons learnedalong the way and what's next
for this industry icon.
It's an honor to have Jamesback on the show for this
landmark moment, so let's divein, james.
(01:06):
Welcome back to Take it to theBoard.
Speaker 2 (01:08):
Thank you, donna, I am so honored.
First of all, I was honored tobe your first guest and to be
your hundredth.
I can't believe you have done ahundred of these in the last
four years.
I'm exhausted.
I went and listened to a coupleof them just to kind of get
ready and good for you,congratulations, and I can't
wait to get going.
And I also want to do say thankyou for supporting me and
(01:32):
Castle on our associationleadership series the last few
years.
Very grateful.
Speaker 1 (01:37):
Oh well, I'm grateful that you gave me that
opportunity.
I mean, I remember four yearsago when we were, you know, we
were really in the thick of itwith the pandemic and you
reached out and Castle hadstarted that series but before,
I think, any other managementcompany had at that point and it
gave us an opportunity to kindof navigate through really rocky
waters together.
Speaker 2 (01:57):
Yeah, what a journey.
Speaker 1 (01:58):
What a journey indeed , and I will say this when I
thought back about the 100thepisodes.
Yeah, this is kind of mypassion project and I want to
talk to you about.
I know you've got a lot ofpassion projects that you've
dealt with and that are on thehorizon.
So I want to first ask you hasyour perspective on the
community association industrychanged since that conversation
(02:21):
four years ago that we had?
Speaker 2 (02:23):
It has, donna.
I think not only has myperspective changed, I think it
has changed.
I think the industry's changedInterestingly, I think, both the
demands on our industry and theway it's been restructured,
with these big players coming inand consolidating a lot of the
smaller players.
It has become more professional, by necessity.
(02:44):
When I got in this business 30years ago it was very much mom
and pop, and it's not thatthere's not still a role for
those companies, but I thinkit's definitely become more
professional, more corporate andI think you would agree,
especially as an attorney in theindustry more complex.
A lot of it's happened sinceCOVID and Surfside and the
(03:07):
related regulation, obviouslyespecially in Florida.
We operate outside of Florida,but Florida has always been a
leader in this industry.
And then just in the last fouryears, the addition of new
technologies has really changedhow we operate, how we respond
to our residents, how we monitor, how we've gone mobile and of
(03:31):
course now everything's on theweb, even by regulation.
So those, I think, are all goodthings.
I will tell you and I blame iton social media, not that I'm
not a fan of social media, butit's become so easy for one
person in any community to kindof stir up whatever they want to
stir up.
I've actually found it also alittle more antagonistic than
(03:55):
maybe.
It was five years and, ofcourse, long time before that.
So, yes, my perspective changed, and I don't think it's just my
perspective, I think theindustry's changed.
Speaker 1 (04:05):
The formalization of the industry, and I agree with
you.
I think you were actually in myparents' kitchen about 25 years
ago when you were pitchingtheir community you may have
been 30, and I think my mom wasmaking you pasta, as you said.
Now it's become a lot moreformal.
You pasta and you know, as yousaid, now it's become a lot more
(04:28):
formal.
What's the impact been on?
You know, a CEO of a managementcompany today wouldn't
necessarily have that kind ofopportunity to go out to each
community and meet with thepeople, because at the time my
dad was on the board of hishomeowners association, even
though I warned him about that,but he did.
He got on the board.
What's that going to be like,as the CEOs of management
(04:48):
industries have less and lessopportunity to really meet with
people in the communities?
Speaker 2 (04:54):
I think it's definitely going to have an
impact.
As you know, I go to theHarvard Business School every
year and it's coming up in acouple of weeks and we're doing
15 cases, and the cases was onAmazon and what the culture was
like, and one of the things thatJeff Bezos whether you love him
or hate him, doesn't matter Oneof his business practices was
to do whatever it took toactually find out what the
(05:14):
customer thought, and so he putin some systems and did some
work himself, and I think that'sgoing to be our challenge as
CEOs as we get bigger and webecome more corporatist.
And I think that's going to beour challenge as CEOs as we get
bigger and we become morecorporatist.
There's too many layers offiltering between you know that
person in the building and theCEO, and so the CEO that can cut
through those filters andreally understand what the
(05:38):
customer is saying, feelingwanting, will succeed, and if we
don't do that, then we'remaking decisions not really
knowing what our customer wants.
Speaker 1 (05:52):
Yeah, I mean, the best way to know what your
customer wants is to be able tosit down and talk to him or her
and have a conversation.
But you know, with the size ofthe industry now, that would be
virtually impossible.
Speaker 2 (06:01):
If you're you know, if you're a startup, maybe One
of my recommendations to him wasalways have skip lunches, so in
other words, have lunch withsomeone in the firm that doesn't
report to you.
And two, make it a habit atleast once a month, go and
literally go to an association,go to a board and talk to the
board, and that's the only wayyou're going to get pure data.
(06:22):
And that's hard, by the way.
What I just said is hardbecause the CEO's plate is so
full.
Speaker 1 (06:28):
Well, I want to talk about Jordan later in the
episode, but you mentionedSurfside and we've had some
significant legislation over theyears since that tragedy
occurred.
What kind of pressure has thatput on the management industry?
And let me be specific In theChamplain Towers case the
manager was not a manager from amanagement company, it was an
(06:51):
in-house manager.
I imagine the ripple effects inthe industry would have been
even more significant had thatbeen a management company that
was managing that building.
Can you talk to us a little bitabout what you've seen since
that legislation has come outand kind of the pain points with
management companies?
Speaker 2 (07:11):
Yes, first of all, tragedy and it, you know, for
the people who lost familymembers it would be perhaps not,
or I hope it does make themfeel good that there was some
good that came out of thatsituation.
And that is, you know, we areputting regulations in place in
(07:34):
hopes that it never happensagain.
And so you know I'm not a bigregulation guy.
But look at, you can't have 40year old buildings with deferred
maintenance and no funds todeal with it.
That had to stop.
So I'm completely supportive ofthe legislation that passed.
(07:56):
It's not perfect, but nolegislation is perfect.
From a management company, andespecially from a CEO's
perspective.
What is our job as CEO?
Our job is to come up with theright strategy, put the right
team in place.
And then the third piece isrisk management at all times.
And can you imagine if therewas a management company in
place there?
(08:16):
I think they probably would beout of business.
So you do want to at all timesrisk manage, and you and I have
had common clients where we'veactually resigned account
because the board won't make thedecision that they need to make
.
And if there's consequences tothat, we don't as a management
company or as you as attorney.
I know you've resigned accountsfor this reason.
(08:37):
So I think that I thinkSurfside was a tragedy.
I think that we as a state andas an industry have done a good
job not a perfect job ofresponding so it doesn't happen
again.
But you know there'sconsequences of that.
First of all, we're going tohave safer buildings, but also
there's a liability consequenceto that, there's a risk
(08:58):
management consequence to thatand, as we're learning right now
, there's a huge costconsequence of that for people
living in associations.
Speaker 1 (09:05):
Yeah, it's you've.
You've articulated it perfectly, because one of the big issues
is going to be theindemnification Right.
So because the legislature hascome out and said you must do X,
y and Z, and here are thedeadlines to do X, y and Z, and
here are the consequences if youdon't.
Deadlines to do X, y and Z, andhere are the consequences if
(09:28):
you don't, there may be a fingerpointing situation here where
if those deadlines are missed,if things are not done according
to the statute, if thoseobligations are not met, one
side will certainly be looking.
Perhaps I've hired management,that was their job.
Management is saying we chasedyou board and you wouldn't you
refuse to do this.
So I do think theindemnification provisions are
(09:49):
going to become crucial in thesemanagement agreements.
I'm seeing some very onerousunilateral indemnification
provisions.
I'm a big fan of just mutual,fault based indemn.
It's mutual and it'sfault-based.
Whoever's at fault shouldindemnify the other party that's
impacted by that person's fault, whether or not and I don't
(10:13):
want to get too into the weedsin terms of the standard of
gross negligence versus gardenvariety negligence or willful
misconduct.
But do you thinkindemnification is going to be a
big issue for the managementindustry going forward?
Speaker 2 (10:28):
It is, it has been and, of course, it's going to
become more so.
The complexity of compliancewhich rests on the management
company has gone up.
Every month you have to auditevery website.
We literally have a full-timeteammate at Castle.
I keep saying we I'm not goingto get rid of those pronouns.
Speaker 1 (10:48):
We get it.
Speaker 2 (10:48):
Yeah, so we have a full-time person whose only job
at the end of each month on 500associations is to make sure the
website's compliant, and wedon't get compensated for that.
And we can talk about costs andthe profitability of the
industry later.
But I think that on theindemnity clause specifically,
(11:09):
I'll say this and I'm completelyin agreement with what you just
said in terms of a balancedclause and having it lie where
fault lies.
But the thing I always hadthese discussions with attorneys
like you in the industry andwith boards is it's your
community, it's not my community.
So if we did something wrongand there's a fault, then we
should be responsible for it,but if it's not directly related
(11:32):
to, then it's your community,it's not our community.
So I always got intodiscussions I won't call them
arguments with boards,associations and their
representation with thisclarifying concept that the
management company should beresponsible for anything they do
wrong, but if it's not theirfault, then I think it should be
(11:54):
on the insurance company or theassociation's insurance company
, because it's their community.
Speaker 1 (11:59):
Well, and I agree with you, because the manager
and management company are theassociation's agent.
So from a pure agency standard,you want to protect your agent.
I think where the managementindustry in the coming years is
going to get even more in theweeds is with all these related
affiliated companies that arereally acting more as vendors.
(12:21):
Acting more as vendors.
So you know, if now I'm usingyour security company or I'm
using your pool company orwhatever it may be, that's
really more a vendorrelationship, not an agent
relationship.
And I think that's wheremanagement companies and their
counsel are going to have toreally give some thought to the
difference between an affiliatedcompany and a vendor type
(12:44):
relationship versus the veryclose management board
relationship, which is an agencyrelationship 100% agree and I
do believe that the conflict ofinterest legislation that
Florida passed last year thatrequired the disclosure was a
good move.
Speaker 2 (13:02):
We as management should 100% be transparent on
what we have interests in,because that does take you
outside of agency.
Speaker 1 (13:11):
And you know, look, a lot of clients are okay with it
, as long as they're informed.
They actually feel okay knowingthat everything's kind of under
one umbrella.
So I think you're right.
I think just disclose theultimate decision rests with the
board and if things go off thetracks down the road, that
(13:33):
disclosure is going to becritical.
Speaker 2 (13:34):
Agreed.
Speaker 1 (13:35):
So when we talked three and a half years ago, you
talked about how you builtCastle Group and since then you
sold the company, which I thinkis every business owner's dream
Maybe I shouldn't say every.
Some people want legacycompanies, but most business
owners, in the back of theirhead, they're always kind of
calculating what could I get formy company with what I've built
(13:57):
?
So I want to ask you whatmotivated your decision to sell
Castle Group and was there aspecific moment, james, when you
felt the time was right?
Speaker 2 (14:07):
Yes.
Well, first of all, you know Igrew up with nothing, so I grew
the company and, you know,really never took a lot of money
out of the company along theway.
So, obviously, like mostentrepreneurs, the Castle Group
my ownership in it was mylargest asset by a factor of a
lot.
So, again, getting back to riskmanagement, I mean there
(14:31):
certainly was going to be a timeand I say that because I don't
have kids in the business and Icompletely respect family
businesses that want to pass iton to the next generation but
that wasn't my circumstance.
Number two I was 59 years oldand I was fairly certain to
maximize the value of thecompany, I would need to stay on
(14:54):
and oversee a succession planso that the company never missed
a beat.
So it turned out to be fouryears, so that was going to make
me 63, which is what I am todayand I have so much on my bucket
list that I want to do.
There was a time constraint.
So, number one, I didn't haveheirs.
(15:20):
Number two I in the business.
Number two, there was achronological pressure and
because I had so many morethings to do.
And then the other obvious oneis what are valuations doing and
what happens when interestrates go down.
Multiples go up, and sointerest rates were down
multiples.
It was good timing, but that'sreally what made me make the
decision.
It was a hard decision.
(15:40):
This is my baby, and with mypartners Greg and Rob, hard
decision.
This is my baby, and with mypartners, greg and Rob.
I think the last part of thatis and we can talk about some
things that happened when we diddo the sale, but as of this
moment, we had put together anincredible management team
that's performed admirably, andso there was great confidence.
(16:02):
There was not one lost accountas a result of the transaction.
So I think if you did this witha weak management team, that
would have maybe a differentoutcome.
So those were my stacked uprationale, and when you put them
on a piece of paper, you knowpros and cons.
It wasn't actually that hard adecision.
Speaker 1 (16:23):
When the kids were little.
Did you and Kathy ever talkabout making it a legacy company
?
Did you ever look at themrunning around in the backyard
and think maybe someday they'llrun this?
Speaker 2 (16:34):
No, never.
I did ask the boys.
As you know, my sons are all intheir 30s now.
When they were younger and theywere choosing their education,
I said you know, do you have aspecific interest?
And none of them did.
And you know, one of my sonssaid that I never want to work
as hard as you do.
Like he just saw that as acrazy thing.
That's.
The other piece I didn'tmention is when you're an
(16:55):
entrepreneur.
It's 24 seven, and the biggestthing I've noticed and recently
is just the pressure off myshoulders because I'm not, I'm
not responsible even more, eventhough I can't stop saying we
you're sure you're going to bein it forever and ever.
Speaker 1 (17:12):
Listen, my dad owned a company, hollywood Bread, and
I'm one of four kids and he toldall of us don't that?
You're never coming here, so itwasn't even an option for us.
He said you're not, it's nothappening.
I do question whether or notyour belief in time compression
is accurate, because if youlisten to any biohacking podcast
(17:34):
, james, you could live to be120.
Probably got a lot of life anda lot of runways still ahead of
you.
Speaker 2 (17:42):
It's funny you say that because, as you know, I'm
fairly fit guy and uh and takegood, good care of myself.
But yeah, I got nicks and, youknow, arthritis here and sore
shoulder there and I'm thinkingI'm not making 120 at this at
this rate listen.
Speaker 1 (17:59):
Now you've got the time and and and the focus and
the funds, you can's a guy outthere.
I think he's spending like $2million a year on his body.
I think you know who I'm.
We're only capturing the audio,but James is nodding.
And yes, james, we're going toget into all your different
fitness activities later in theepisode.
(18:20):
Was there anything about thesales process that was
surprising to you?
No, I know you mentioned youhad a great management team and
you couldn't have done itwithout them.
There were no hiccups.
Was there anything that wassurprising?
Speaker 2 (18:36):
I think we were in a bit of a unique situation.
We signed our agreement inDecember of 2020.
But that negotiation started atthe beginning of 2020, before
COVID, and so we had a verbalagreement.
And then, but PMG, who holdingsout of Dallas, john Corona, who
(19:00):
bought our company they're nota public company, so they
financed their acquisitions withdebt Well, the credit market
stopped, so our deal stopped ona dime, and it wasn't until June
when the credit markets hadprocessed okay, covid's not
going to end the world wherethey came back.
So that was.
That was the first shock.
The second is negotiation.
(19:22):
It's hard, you know.
I would tell anyone who wastelling the business make sure
you don't wait until you have tosell, because the best place in
negotiation is if they didn'twant to agree with what I needed
and wanted, then there wasn'tgoing to be a deal because I
could just keep going.
And then, if you sell to alarger company, like most people
(19:44):
do, it's very rigorous, formal,attorney run, due diligence
process.
I mean that was shocking.
It was the extent of they'redigging into your company.
It was almost like an invasionof privacy.
Speaker 1 (19:59):
Well, I was going to ask you, listen, it's all about
the valuation too.
So had you taken those stepsahead of time to figure out what
Castle's valuation wasindependently?
So you went into it armed withthat information.
Speaker 2 (20:13):
Absolutely yeah.
And and I think and I think wemay talk a little later what my
advice would be to people doingthis and we'll get there.
But you just don't pick arandom year.
You want to manage your incomestatement and your balance sheet
so that when it's time to sell,it's in good shape.
(20:33):
So I'm a CPA, as you know, bytrade, so this was not outside
my wheelhouse and I think weForget.
Speaker 1 (20:41):
You're a CPA by trade .
You just don't seem like it.
I have a brother who's a CPA.
I have friends who are CPAs.
I'm not going to denigrate CPAs, but they're not as extroverted
as you are for the most part.
Speaker 2 (20:56):
Yeah, there's obviously stereotypes, right.
Speaker 1 (21:00):
There's a few, but let's talk about now.
If you don't mind, I want tojump into that in terms of
maximizing your appeal to apotential suitor.
If you know, as a managementcompany CEO who may be listening
to us right now, james to thisepisode and you already have in
your head, well, maybe in threeto five years, I want to sell
(21:23):
this thing.
Is that the time to start goingbig and ambitious with
different ideas, or to stayconservative and just keep so?
Is that the time to reallystart rolling out new ideas or
is it more prudent to just staythe course with what you have
and just try to keep, you know,adding more accounts?
(21:45):
Does that make sense?
What I'm asking?
Speaker 2 (21:47):
Donna, that you'll find.
Most sophisticated acquirers ofcompanies put little value on
recent and lots of value on whathappened for a long period of
time.
We just stayed the course, butthe course was going pretty well
.
We were going at a good pace.
So I don't think I would wastetoo much energy into trying to
(22:13):
do new if the acquirer is justgoing to discount that value
anyways.
The other thing about new issometimes it takes a while to
get new profitable or to get newto work.
So and again, I'm not an expert, I haven't done a lot of M&A,
but I've done.
One of the attractiveness of theCasa group was its long-term
(22:35):
consistent.
You know brand performanceculture, so that's for sure, but
I do.
What you said in the beginningis if someone is considering
selling three to five years,that is the timeframe.
You don't want to decide andthink I'm going to do it next
year.
You want to get a runway to getready.
That's the timeframe.
You don't want to decide andthink I'm going to do it next
(22:55):
year.
You want to get a runway to getready.
That's for sure.
And the other thing I'd say isyou better be convicted, because
there's no going back.
You better make sure this isabsolutely the decision you want
to make.
It took a year of my life to dothis transaction and you
wouldn't want that to not happen.
So I think conviction is a bigthing.
I think you want to sell whenyou don't need to sell because
(23:19):
your negotiating power isunbelievable.
I think you better prepare, asI just referenced.
If you don't know what anacquirer is going to look at, go
ask someone and then make surethat your company would show as
well as it could.
But one of the problems withacquiring companies is
leadership and management,because if it's entrepreneurial
(23:39):
driven like Castle was well, theentrepreneur is leaving.
They're selling the business.
So I don't think sellers ofbusinesses put enough weight on
the strength of the managementteam, because that's what the
buyer's got to be convinced thatwhen the entrepreneur leaves,
the company will continue toperform.
Speaker 1 (23:58):
So that was a big but you stayed on, and you and
Craig and Rob, you stayed on.
I think that's fairly typicalwith an acquisition like this,
that you want the main, theexecutive team, to stay on board
for a while, just to have asmoother transition.
Would you say that that'stypical?
Speaker 2 (24:17):
Well, I'm not sure it's typical.
It just depends on the size ofthe acquisition.
I mean, castle is a big company, so I mean we for sure had a
plan.
In fact PMG has done over 100acquisitions and I will humbly
tell you they've never seen asuccession plan like us.
We never lost an account.
The company is now twice as bigas it was when we sold it.
(24:38):
We put a succession plantogether where I would be CEO
for two years, then promotesomeone it happened to be Jordan
Goldman I would move myself toexecutive chair and then chair
and then out.
And then my brother Rob.
He retired one year before me.
And then Craig, our thirdpartner, is staying at least
another year because he loves it.
But to have that we, you knowwe brought the right people in
(25:02):
at the right time and had usleave it at the right time.
I think and I mean I amknocking on wood here because I
think that it's gone so smoothlyand the best two years Castle
Group's ever had have been whenI'm not CEO.
It's very humbling, but thebest two years have been under
Jordan Goldman as CEO, not JamesDonnelly.
Speaker 1 (25:21):
Now under good to great.
That would make you the levelfour leader, I believe.
Speaker 2 (25:25):
Or is it level five?
Is it level four or level five?
Speaker 1 (25:28):
Level five leader.
Speaker 2 (25:30):
Well, I think that's the other thing for people
considering to sell theirbusiness, especially
entrepreneurial built companies,is it takes that skill set to
go from zero to 100 million orwhatever the scale is in that
industry as an entrepreneur.
It's hard.
It takes a different skill setto manage a business of that
size and continue to grow it,and so I'm telling you the facts
(25:53):
that it's done its best in thelast two years.
But I also think it probablywouldn't have got there if there
hadn't been an entrepreneur toget it to where it was when we
sold.
But the succession plan is notonly good for the acquirer, but
often when you sell a companythere's some deferred
compensation or some bonuscompensation, and you might as
(26:14):
well max that out too.
So I think sellersunderestimate the importance of
management and succession plan.
Speaker 1 (26:21):
So your people had to be of huge significance to the
acquiring company because that'sone of your biggest assets.
Right, you said you didn't losea single account, but that's a
testament to the team you havein place, and I'm not just
talking about the executive teamor the management team, I'm
talking about the staff, theonsite managers, everybody.
(26:44):
So at what point?
I guess I have two questionsregarding your people throughout
this process.
One, how deeply did theacquiring company kind of dig
into your team across thecompany, your teams across the
company?
And number two, when do youstart cluing in your people
about what's happening?
Because I got to imagine, I mean, I've seen this in other
(27:06):
industries that there can besome instability or concerns
when people are hearing therumors oh my gosh, we may be
sold.
So can you talk about those twothings?
Speaker 2 (27:16):
The first question.
I don't think most acquirerslook too far past the executive
team.
The executive team is runningthe company.
The executive team is puttingthe team in place below them.
It would be even more extensivedue diligence to go too far
down the org chart.
In our experience they didtheir due diligence on the
(27:39):
executive team and very little.
We gave them our org charts.
Obviously, we gave themeverything that they wanted to
know.
But the challenge we had was ifthe deal didn't happen?
We didn't want anyone to knowthat it was even been a
discussion.
So we were extremely tight withit and in fact when we
(28:01):
announced the sale it wasshocking.
It was like an earthquakethrough our company because
Castle Group had always beenJames Donnelly and Rob Donnelly
and Craig Vaughn.
In fact, we lost three seniorpeople within the first six
months.
They were so upset with us fornot telling them.
(28:21):
Looking back, I wouldn't havechanged a thing.
First of all, it's theirbusiness, it's their right to do
that.
And two, if it had not closedwe could have just kept
operating.
And, side note, all three can'treturn to the business.
Yeah, we have 100% of theexecutive team we had four years
(28:43):
ago.
We promoted a couple since then.
Obviously, as Jordan went up,everyone kind of filled in
behind them, but our entireleadership team has been there a
long time, even though a coupleof them left and came back
after a short period of time.
Speaker 1 (28:55):
So I was going to ask you how you feel about watching
Castle Group evolve under newownership.
That's number one.
I know how you feel about itevolving under Jordan's
stewardship because I have toimagine you feel very proud
because you brought him up.
I mean, we have that at our lawfirm.
Gary Rosen was mentored to bethe managing partner to take
(29:16):
over from Alan Becker Okay, andAlan was still around.
Alan and Gary, our foundingpartners, were still around with
different management in place.
Tell us about both.
How does it feel to watch thecompany evolve under new
ownership?
How does it feel to evolveunder Jordan's leadership?
Speaker 2 (29:31):
Feels fantastic and I hope I don't sound too
Pollyanna, because not everytransaction out there goes well,
but ours went really well.
From you know, we were happywith the proceeds and the buyer
couldn't be happier with theresult, and we put together a
(29:52):
great succession plan.
I mentioned I'm going toHarvard business school, which I
do every year.
I just love it.
I just learned so much.
And I mentioned the Amazon case, but there's also one on
Starbucks and I don't know howmuch you've been reading about
Starbucks, but they've just hada terrible succession plan with
CEOs and I think one of thethings I'm most proud of is is
how good a job and I'm readingthis case and going Starbucks.
(30:14):
You know how did you screw thisup?
This is not that hard.
So I do feel like a proud papa.
I do still call it mymanagement team.
I'm very proud of Jordan andhis team and I'm truly humbled
by what they have done in thelast couple of years.
Proud and humble those would bemy two words.
(30:34):
Especially thrilled, becauseI'm where I want to be too.
Like it's, not like I'm.
Oh, I wish I were still.
No, it was the right time in mylife.
The company's doing great,kathy and myself and our family
is doing great.
So you're always looking forwin-wins in life and this is a
win-win.
So you asked me how I feel.
(30:56):
I feel fantastic for both myfamily and for the business.
Speaker 1 (31:00):
Do you think there'd be any time in your schedule to
do some consulting work in theindustry, both with regard to
best practices for managementcompanies or for companies that
are looking to sell?
Speaker 2 (31:12):
I probably won't have the time.
It's not that I wouldn't helpanyone that wants to help.
It's kind of.
My defining question is how canI help someone today?
But my plate is so full.
I still own Crown Residential,which is our multifamily.
That wasn't sold in thetransaction and I'm the chairman
of that company and LindsayNorman is doing a great job
(31:34):
running that.
As you know, I endowed theJames Donnelly property
management program at the NovaSoutheastern and we're now one
of eight bachelors of propertymanagement in the country and
I'm putting a lot of time intothere.
We just hired a director of theprogram and I have great
aspirations.
I think you and I have had theconversation before.
Every great sports team needs afarm system and I think we as a
(31:57):
management company need farmsystems.
I believe our school and othersacross the country which I
believe will grow, can be thatfarm system, so I'm gonna put a
lot of time into that.
Speaker 1 (32:09):
And that farm system, as you say, the program which
never existed before, becauseit's so hard and we've got
people listening all over it'sso hard to find enough people to
fill all these positions incommunity associations.
Everybody in the industry isgoing to benefit from that.
Any management company can goseek out a graduate of that
(32:29):
program.
Speaker 2 (32:30):
It's true, and Castle Group, under my leadership,
initially funded the program.
I have personally funded theschool now, and I think why I'm
mentioning that is I believe theindustry will no longer see me
as a competitor.
I'm going to go to each of theleaders of our old competitors,
and this isn't just residential,we've got commercial,
(32:51):
institutional facilitymanagement.
So one of my jobs this yearwill be to go and solicit
support from all the majorplayers in the country.
And what does that support looklike?
Well, number one we want tocontinue to endow further the
program, because the more it'sendowed, the more people we can
support who don't have money togo.
And then also directscholarships for students that
(33:13):
would love to be in the programbut can't afford it.
And then, finally, internships.
I mean Castle fills itsinternship fully every summer,
so I need more people in theindustry to do that.
So my job is to go get supportfrom the industry to support the
school, which would be asnowball effect that supports
the industry, and you can tellI'm pretty excited about it.
Speaker 1 (33:35):
So glad you mentioned the word competitor.
I have wanted to talk aboutthis for a long time and I don't
know if Florida is unique inthis, but it seems to me that
there is a ton of competitionand it's not always the
friendliest of competition,whether it's the management
industry, the legal industry,other industries that serve
(33:57):
community associations.
Isn't there enough work to goaround for everyone, that the
competition can be a little lesssharp, elbowed, so to speak?
What do you think about that?
Now that you're kind of out ofit and you can pull the camera
lens back a little bit and takea wider view, do you feel that
some of our competition inFlorida amongst management
(34:20):
companies is a little lessfriendly than it could be?
Speaker 2 (34:24):
Yes, I don't want to suggest though that that's
unnatural.
Florida is probably the mostcompetitive market in the
country and I think if you lookat any industry, there's some
sharp elbows in highlycompetitive industries.
But it is interesting.
I've been involved withnational organizations and
traveled and been withcompetitors from other cities
(34:48):
and states and it is a bitshocking the friendliness,
cities and states, and it is abit shocking the friendliness,
the collegial discussions thatyou know.
I sat there one time andthinking, well, you guys are
really nice to each other, orthey wouldn't even go after an
account because you know someoneelse had it and I'm like, I'm
not that friendly, I'm acompetitive guy and I want to
(35:08):
grow my company and I thinkthat's the true of my
competitors.
By the way, I think you couldhave any of my old competitors
on this show with you, don, andthey would all say I always was
extremely gracious and I neversaid a bad word about another
company.
I always highlighted what Ithought we did great.
But I do agree with you andit's in your industry and it's
my industry the elbows are sharp.
(35:29):
But that is our environmenthere in Florida and it's
two-sided sword, with thehighest concentration of managed
real estate in the country.
That's fantastic and we alsohave the most extreme
competition and that's somethingyou've got to manage.
Speaker 1 (35:45):
I imagine you felt the way.
I feel that when you aredealing with a competitor who's
being gracious and reallyfocusing on what they can do, as
opposed to trying to run downthe competition, it's refreshing
.
I think negative advertisingdoesn't work.
I don't think it works to sayso-and-so doesn't do what we do.
I think you just focus on yourpositives and don't run down the
(36:08):
competition.
And it is refreshing when ithelps.
I go to the annual CAI C-CALlaw seminar, not every year, but
frequently, and you're right,Sometimes I see these attorneys
in the same market in otherstates and they're really.
They collaborate, they refer toeach other and I said that'd be
(36:29):
nice, That'd be nice if wecould do that too in Florida.
Speaker 2 (36:32):
Don't hold your breath, Donna.
Speaker 1 (36:34):
I'm not going to hold my breath.
I did want to get back and talkto you a little bit about
consolidation in the managementindustry, particularly in
Florida.
Again, is there going to stillbe an ability for the next wave
of entrepreneurs, the next JamesDonnellys, to start a little
management company in Floridaand build it up, or is really is
(36:56):
there not going to be any spacefor that in our market because
of the consolidation?
Speaker 2 (37:01):
I think there'll always be a room in our industry
for the startup.
Two reasons.
One, even with all theconsolidation we have, there's
no player that even has 5% ofthe market.
So we our perception may be, oh, everything's getting swallowed
up by the big guys, but thefacts are that's not true.
Secondly, our industry, at itsfoundation, is people serving
(37:22):
people.
It's a manager taking care ofthe board of directors and the
residents of the community, andthat's a very special
relationship.
And I think there's a place forthe very able.
I'm going to say young doesn'thave to be young, but that's
what I was when I got startedEnergetic, committed, customer
(37:43):
oriented.
And they're going to get oneaccount and then they're going
to get a second account and thenthey get a third account.
I also think that, even thoughscale is important, technology
is allowing the smaller playerto play in a big field, so the
software that the big guys areusing can be bought in a smaller
contract, so there's a lot oftools that are available to
(38:06):
everybody.
I believe there is anopportunity for the next great
young entrepreneur in Floridathat we're going to talk about
in a few years.
I mean, 30 years ago Castledidn't exist and I think we
became the largest privatemanagement company in the state,
so someone else can for sure dothat.
I'm confident it's not going tobe me.
Speaker 1 (38:25):
No, you've got other things to do that we'll talk
about.
But that is encouraging to knowand I do think when you have a
newcomer into the market it issometimes like a breath of fresh
air and it is easy for them toplay off of the you know 800
pound gorilla that's been in themarket for years and years to
say, hey, we're new, we'resmaller, we're going to do
things a little differently.
(38:45):
So that's good to know.
You said at the outset that youhad listened to some of these
episodes.
I don't know if you listened tothe episode with the anonymous
unit owner, bob, who was theretired attorney.
He is living in a luxury highrise in Broward County.
It's a relatively new building.
(39:05):
They're still going through the558.
Bob was a retired corporateattorney.
He had four decades ofexperience in corporate law and
I had him on and one of thethings he talked about was not
his biggest beef was that he'san owner.
He doesn't just own his unit,he owns his prorated share of
(39:26):
the amenities and he didn't feellike the service that the
management company was providingand certainly the board.
He felt like he was treatedlike an inmate.
Now I know Castle always saysroyal service.
Can you tell us about thedifferent kinds of services Some
communities, I see, do havethat concierge level service
where they will go above andbeyond and they will, you know,
(39:47):
call you before they place asticker on your car or they'll
try to talk.
It's just a different level ofservice, a concierge level of
service.
Can you talk about that alittle bit?
Because Bob, I think, mighthave been trying to stick a
square peg into a round hole.
I'm not sure, but I want tohear your take on it.
Speaker 2 (40:05):
Well, first of all, I did not listen to that episode,
I'm ashamed to say.
Secondly, I think that ownersmaybe don't fully understand the
power that they have, but thepower that they have for the
most part is to elect a boardthey want to run for them, and
if they didn't vote, or they didvote, care about what you get.
(40:27):
That's very powerful and you'veseen it where whole slates will
come in and say enough isenough.
So my first comment to Bobwould be look, you've got the
vote, and it's pretty much onevote a year, with the exception
of some things that requiremembership votes.
I also have some empathy and Ilive in a 300-unit condo here
(40:49):
and sometimes I'm just shakingmy head at what's happening, but
it is a lot of moving parts.
There's 300 different peoplethat have different expectations
of what management should do.
Having said that and this is mymantra for the rest of my life
why can't we just be nice?
And even management companyteammates and I'm sure there
were some at Castle like theresident is your customer, the
(41:12):
resident is going to be the onethat votes for the board that's
going to keep your managementcompany on.
I'm always amazed at how someof the teammates don't
understand that relationship,and there's one simple one, I
think, and that is this happensin, I'm sure, every building,
every community.
There's a problem, there's abad actor, there's a couple of
bad actors that are doingsomething, and the whole
(41:34):
community gets blasted with.
You guys need to do this.
And it's and it feels likeyou're living in a prison, and I
think that's where Bob wascoming from.
Speaker 1 (41:42):
Absolutely.
You're speaking his language.
That was his, his maincomplaint.
But do you feel like themanagement company?
Sometimes they become thescapegoat for everything that's
going wrong, or maybe even theboard is sometimes hiding behind
them and is directing them andthey're the cushion and they're
the scapegoat.
Speaker 2 (42:00):
A hundred percent, but that is you know.
You and I have talked before.
You know why do you haveprofessional management versus
self-management, and one of thereasons is to have that buffer,
so we get paid for the buffer.
I don't have a big issue withthat.
What I will tell you is thiswith the software available and
our technology available, we cannow communicate.
If you think of a high-rise,you've got stacks and you've got
(42:22):
floors.
There's nothing to stop youfrom communicating where the
communication needs to happen.
And what I find in buildings,and I'm sure some of the ones
that we manage, is we do blanketinstead of tailored
communication and we all feellike we're in prison because
we're being painted with thesame brush.
You know all owners.
(42:42):
You cannot leave your towels on.
It was two owners, socommunicate to the two owners.
So my singular piece of adviceto boards and management and
communities is the day youtailor your communications is
the day you're going to have amuch happier constituency.
Speaker 1 (42:58):
I know that you have been a huge proponent of
technology.
I've been to your commandcenter, your main campus.
I ask a lot of guests on thepodcast how they think
artificial intelligence, or AI,is going to impact their
industries.
You've already seen it and justalong the point that you said
(43:19):
you just mentioned abouttailoring your communications,
how do you think AI can help youget there?
Speaker 2 (43:24):
Firstly, I'm not an expert, but what I've already
seen is stunning and I'll giveyou two examples is stunning and
I'll give you two examplesRight now, if you're an owner or
a resident in a community inour case, I think we have
600,000 people live in ourcommunity, something like that,
and all they want is data.
They want their questionanswered, they want their
(43:46):
service request responded to and, honestly, they don't want to
stay online waiting for someoneto answer at a call center.
So now you can go on to thebigger companies' websites and
ask questions and in thebackground, ai is going to find
that answer.
So I believe what I callself-help and people love
self-help is going to begeometrically better than it was
(44:10):
.
So that's one.
The second thing is, as you know, in every community there's a
data set.
There's the owners, there's theroster, there's the rules,
there's the regulations, there'sthe violation history, there's
data, and right now, if amanager or whoever's running,
you know, an assistant managerneeds data, they don't even
remember where they filed that.
(44:30):
Well, with AI, all AI needs isa data set and it'll go find
anything.
So I believe you're even goingto have management reports
written by AI.
It doesn't mean that themanager shouldn't obviously
review it and edit it, but Ithink, both in terms of using a
large data set and gettingexactly what you need to
(44:50):
communicate, and for self-helpfor our residents, I think it's
fantastic.
Speaker 1 (44:56):
It is too, but there's always the fear of loss
of jobs, right?
We keep hearing about this.
Is it possible that in thefuture, in some communities they
will have an AI manager?
Speaker 2 (45:06):
I doubt it, but you know you can use a couple of
examples that would support that.
You know you've heard of thesefirms that put a camera at the
gate and there's no longer aguard and then you talk to
someone in some central stationand they're going to let you in
or they're not.
So there's an example.
But here's my answer to that,donna.
We have one of the lowestunemployment rates in the US
(45:28):
ever, and the Internet was goingto do it, the telephone was
going to do it, the wheel wasgoing to do it, everything's
going to do it.
The US is so innovative.
I have absolutely no concernthat we won't innovate to the
point of creating more jobs withthe next technology.
Speaker 1 (45:45):
I'm right there with you.
I'm optimistic.
I think AI is going to makepeople do their jobs quicker,
easier, but I also think it isgoing to create more jobs.
So we'll see.
Hopefully, you and I are righton that point.
I did want to ask you if youcould rewrite the playbook for
managing community associations.
What would you change?
What would you emphasize?
Speaker 2 (46:05):
It's interesting.
You're asking me that becauseBecker did write the playbook at
our industry in Florida.
I think, donna and you knowthis better than I, and you and
I have talked about it on ourAssociation Leadership Series.
The whole governance of thesecommunities can get off on the
wrong foot and I'm not blamingdevelopers, because developers
hire people to put the documentstogether and, honestly, they're
(46:27):
more worried about sellingunits or renting units and
building than these pieces ofpaper.
So there's no judgment here.
But, as you know, the documentssupporting our industry right
now are terribly weak.
They need amendment.
No one wants to spend the money.
No one even knows what to do tothe amendment.
So I do think that there's agovernance reset that needs to
(46:51):
happen and that's bothregulatory so we can get it
right out of the box, and ourexisting communities need to
redo their documents to support,40 years later, of laws and the
state of their building andwhatnot.
So I think that is a part of aplaybook that I would redo.
(47:19):
I think on the insurance front,we haven't talked about
insurance, but I just don't knowthat we can't, that Florida can
survive.
And now look at Californiawithout some government
participation, because you knowwe're going to have for sure, in
Florida, beautiful people olderthan me on fixed income.
They're going to lose your unitand and that's it is what it is
going to lose your unit and itis what it is.
We need to have these buildingssafe and insured, but I do
(47:46):
think there's got to be anotherpiece of the playbook on
insurance.
I also think on the talent side,we struggled for so long.
Salaries were so low.
In our industry you pay little,you get less ability.
One of the things I'm soexcited about the property
management program is it'staking off, partially because
you need to figure out how tomonetize your education.
If you're a lawyer, a doctor,an accountant, you got some
predictability.
(48:06):
I believe you now havepredictability in monetizing
your property management degree.
Like we have many managersmaking north of $200,000.
That was unbelievable 10 yearsago.
So I think if I were redoingthe playbook, I would have set
up talent differently andeverything from compensation to
(48:28):
licensure to, you know, managingcareer paths.
Speaker 1 (48:32):
Well, can I talk to you about the credential for
managers.
So in the state of Florida it's19 hours to take the course,
take the test.
There's similar protocolsaround the country.
Other than those 19 hours, whatother credentials could
somebody who wanted to be amanagement professional acquire?
I know CAI had the PCAMdesignation, but this new
(48:56):
program you have at NovaSoutheastern, what kind of
degree do they get?
Speaker 2 (49:00):
It's a Bachelor of Science in Property Management.
Every property managementcompany should be lining up
because you're right 19 hoursversus four years of becoming
highly educated property manager.
So I know I'm tooting my ownprogram here, but I couldn't be
more excited, and I hope another20 schools open up across the
(49:21):
country and I think they will.
We're going to be the best.
Speaker 1 (49:25):
Undoubtedly, but how do we educate these boards to
become better consumers?
This was our struggle too.
So I'm a board certifiedcondominium and HOA attorney.
I'm also a fellow.
I don't know if you know this.
I'm a fellow, yeah.
Speaker 2 (49:39):
I saw that.
Speaker 1 (49:40):
Association of Lawyers.
How do we but I don't know thatevery board understands the
credentialing differences, andit's the same thing in the
management industry how do weeducate them to say you know
what you are going to wantsomebody who's really invested
in his or her career as amanagement professional by
acquiring this designation,whether it's PCAM or getting the
(50:03):
Bachelor of Science in PropertyManagement, as opposed to
somebody who you know has donetaken the course and taken the
test.
And that's not to disparage themanagers who do that.
But how do we educate boards tomaybe dig a little into those
credentials?
Speaker 2 (50:18):
Well, I think, first of all, a lot of this
credentialing is new, like therenever was a Bachelor of Science
in Property Management.
So there's going to be asocialization process.
You know I'm always veryappreciative of the board's
commitments and their sacrificeand you know I really feel badly
when they're now being forcedby legislation to go to school.
And I know it's the right thing.
But I'm very careful not to putoverly burdened board members.
(50:41):
You know they've taken onenough responsibility for no
compensation to help theirneighbors.
I think that this will taketime.
I know when we are pitching anaccount and when you're pitching
your services, you're going tohighlight the things that your
firm brings.
You know we have four fellowsof the property management law
in our thing, so I think it's upto us to educate them.
I don't know any kind ofcentral body that would do it.
Speaker 1 (51:03):
And even then they say but how much Thank you,
thank you for all yourcredentials.
How much?
I did want to circle back towhat you said about the
developer and their documentsand I want to ask you how
successful Castle has beennavigating the turnover process.
Before I get to that, I willsay that if I were rewriting the
(51:23):
playbook when it comes to theway developers create these
communities, a lot of the issuesthat we hear as council is in
mixed-use communities or incommunities with different
phases, differentsub-associations and master
associations.
It's always a mess operationally.
They feel like there'sunder-representation.
One building has 98 people, 98units, one has 180.
(51:47):
Maybe they have the samerepresentation on the master
board, maybe they don't.
A lot of times it's thedevelopment scheme overall that
long-term some of the people whobuy in that community, they
really feel it's inequitable.
Not much we can do about thatother than to say do your due
diligence before you purchase inthat kind of community to make
(52:07):
sure you're okay, because youmay not be able to untangle this
later on.
I do wish that developers, whenthey're going through the
turnover process and they'vealready sold out of all or the
vast majority of their units atthat point, will unilaterally
amend the documents to ensurelong-term operational ease for
(52:30):
the owner-controlled board.
Do you know what I'm saying?
There's things they can dounilaterally.
They're already out, they'vealready sold their inventory.
It's going to make it easierfor that first board and
subsequent boards.
Speaker 2 (52:42):
Yeah, and I think that you know they're not going
to again.
That's the least of theirconcerns.
So I think it's going to beincumbent on firms like yours
and ours to go and make theserecommendations.
Speaker 1 (53:02):
They look at, this community is going to be here
for 50 more years.
If you did these five things,it would really help and they
probably would.
Well, they do.
Some of them do.
I make that standard with myturnover checklist is hey, let's
generate some goodwill here andlet's make it easier.
You know, maybe rather thanhaving two thirds of the total
voting interest in a 500 unitcondo to amend the documents,
maybe we make it two-thirds ofthose who are actually voting
present and voting, or we evenlower it a little more and we
make it a majority.
Those are the type of thingsthat developers can do that will
(53:26):
generate goodwill as they'regoing out the door.
I think developers should alsoif we've got some developer
attorneys listening trademarkthe association's name and a lot
of these luxury buildings we'reseeing all throughout Florida.
They have very specific logos,they have names, trademark it.
(53:47):
It's a nice value add that youcan deliver to the community and
it doesn't cost, I agree.
Has Castle been successful interms of staying on
post-transition?
Speaker 2 (53:58):
Yes, you know that's always that tug of war, in that
you know you represent developer, you know my we could talk all
day about this one, but mysingle piece of advice for
management companies and,frankly, for the community is
they may not get elected, butget the owner rep group together
.
They're going to go throughtheir 558 process or the
(54:19):
equivalent.
Get the communication goingearly.
First of all, it helps theresidents because they don't
really know what's going on, andhelps the management company
because you're building arelationship and you know most
of our communities havenon-competes on the team and so
if they love the team, they'renot going to get rid of the
company, and that's the natureof the business.
Speaker 1 (54:38):
You know a lot of these newer luxury buildings
which are going up not by thebig name developers we hear, but
they're more one-off.
I call them vanity projects.
Sometimes A lot of them arehaving in-house so they're
creating, as a developeraffiliate, a management company
and they're sticking them inthere for 30, 40 years.
(55:00):
Of course in Florida thepost-transition owner-controlled
board has an ability to cancelthat contract.
Many of them won't if they'redoing a good job.
But what do you think aboutthat trend that these developers
in these luxury high-rises areoften creating management
companies that are developeraffiliates?
Speaker 2 (55:18):
I don't like it because I want that contract.
That's the real reality.
But, in fairness, if you have agood brand and you want that
brand consistency right throughthe management, then you're not
confident that you can go hire athird party that will be so
consistent.
Think of Ritz Carlton.
I appreciate it.
You know, one of our castle wasalways kind of the higher end
(55:40):
of the service level.
So we would pitch thatdeveloper, say, look, you're a
great developer, let us do thisand you can micromanage it and
put the standards if they'reslightly different with your
brand.
But please let us do it.
And sometimes it works,sometimes it didn't.
Speaker 1 (55:58):
I think we're going to see more of that, as we see
more of these buildings going upand a lot of them based on
luxury car brands.
Speaker 2 (56:05):
I know, I know I'm looking for my Tesla building
next.
Speaker 1 (56:09):
Can we switch gears before I let you go?
Speaker 2 (56:12):
Yeah.
Speaker 1 (56:12):
Did you already go to Japan and you were skiing
Because we talked about Japan?
Speaker 2 (56:16):
I have.
I lived in Japan when I wasyounger and I've skied there two
years ago and loved it so muchI'm going back.
Speaker 1 (56:21):
I am going to Japan, as I mentioned, with my daughter
, lauren for two weeks in Mayand it got me thinking.
So I've been doing you know me,I prep.
So I've been reading a lot andI came across the Japanese
concept of Ikigai, which meansfinding one's reason for being
so.
From my research, the Japaneseculture doesn't really embrace
(56:43):
retirement.
Okay, they feel that you needto align with what you love,
what you're good at, what theworld needs and what you can be
rewarded for.
So, james Donnelly, lookingback at your journey with Castle
Group, and now you're steppinginto a completely new chapter,
what would you say your ikigaihas been throughout your career,
and has it shifted or evolvedsince selling the company?
Speaker 2 (57:07):
Yeah, great question.
I mean, first of all, I grew upwith nothing, so you know I'm
not overly proud, but it's true,my number one goal right out of
the box.
I did not want to live the wayI grew up, so I was huge
financial motivation probablyzero to 30.
But there's the way my parentsraised me.
(57:29):
It was always about helpingothers.
And so one of the great thingsabout property management is we
exist to help others, and so oneof the great things about
property management is we existto help others.
So that has been and I thinkalways will be.
I went to we all go to theseseminars, and one of the ones
they asked me is what is yourdefining question, what is the
question that you ask yourselfevery day?
(57:51):
And that's a great question andI thought long and hard about
it, but I I'm going to actualizethat will change as much as I'm
(58:18):
retired from the Cassidy Group.
I certainly don't feel retiredat all.
I don't think I've ever been sobusy in my life.
But I think you know what do Ilove?
I love helping people.
What am I good at?
I'm really good at strategy.
I'm good at communicating, I'mgood at people.
So what does the world need.
Honestly, this world just needsa little peace, love and
(58:40):
happiness.
What I'm preaching now is whycan't you just be nice, I mean
at a geopolitical level whycan't we just all live in our
own country and be happy withthat?
But even in our own littleworld here and I know social
media is making this verydifficult, but I can tell you
there's not one time you walkthrough the Becker office and
you give someone a big smile,they don't give a smile back.
So I think that's what theworld leads.
(59:02):
How do you reward that?
I've been rewarded.
I need no more reward.
I call Hall of Fame that we didvery well on the sale of our
company.
So I don't need any rewardother than the self-reward of
feeling good.
So what am I going to do now?
I mean, I had lunch with Jordanyesterday.
I'm going to support the Castleteam.
I'm no longer involved.
(59:23):
I have no compensation.
I have no relationship otherthan these are my people.
So I'm definitely going to dothat and I'm really going to put
a lot of energy into theproperty management program.
I've been given a platform todo that because of my standing
in the industry and obviouslyhave the resources.
And now time.
And then Kathy and I, you know,have a fairly significant
(59:44):
philanthropic function and shedoes most of that.
But I I chime in there when Ican.
And then I think I told you inour last one I, four years ago,
I put on hold writing my bookcalled Life Shaping.
I got to tell you I cannotbelieve James Donnelly, this
little guy from Bell's Corners,is living this life.
I mean, I have such a rich lifefrom health, from family, from
(01:00:08):
relationships, from friendships,in the greatest country in the
world.
How did that happen?
If I could codify andcommunicate to anyone and I
don't care if you're 16 or 60you could learn from what I've
learned in terms of you know howto get from a to b and uh, I
spent the last 10 years puttingthe data set together to write
(01:00:30):
that book.
Speaker 1 (01:00:30):
So I, if I, if one person reads it, I'll feel
satisfied that it's had its rolewell know there's going to be a
lot more than one personreading that book and I want an
autographed copy.
But listen, I said in theintroduction I referred to you
as an industry icon and I didn'tjust say that because you know
I like you a lot and it's true.
So I want to leave this episodewith you talking to the person
(01:00:53):
who's listening and is trying tofigure out how did James
Donnelly go from the I rememberin the first episode you talking
about the growing potatoes onyour lawn in Canada to who you
are now.
I mean, not everybody.
James is a bold thinker, a boldstrategist.
Some you know, not everybodyembraces change the way you do,
(01:01:15):
but you know, not everybodyembraces change the way you do.
I do, perhaps, but for thatperson right now who's not quite
as bold, not quite ascomfortable with change, what
piece of advice could you givehim or her if they're thinking
about starting a new chapter, toactually take the leap?
Speaker 2 (01:01:29):
I'm certain I would have mentioned this in our first
episode, but I believe sostrongly it will be part of my
book, the Success Cycle, whereyou got to decide what you want,
you have to come up with a plan, you have to implement the plan
, and that's when most peoplefail, because they implement the
plan and it doesn't work.
No plan works.
That's the fact.
So the steps that are missingare evaluation and adjust, and
if you just keep going aroundthat circle, you have no choice
(01:01:51):
but to achieve.
And I really think a lot haslot has to do, donna, with what
habits you create for yourself,and there's all kinds of habits
about health and lifelonglearning and improving.
But what I do and I may havetold you this before is I've had
a mantra that I do and we're onvideo.
It's not going to be on thepodcast, but mine is to stretch,
smile, live and give, and I dothat every morning and you can
(01:02:17):
come up with your own, but thinkabout that.
Every morning I say how am Igoing to stretch myself?
And I don't normally meanphysically, but I could be Smile
.
It reminds me if I project.
You know, smiles have regretsabout the past and we were like
I'm enjoying this conversationwith you right now, and so this
(01:02:40):
recenters me every day to livein this day and then give,
stretch, smile, live and give.
And so every day I figure outhow can I give like today I hope
someone's listening to thispodcast We'll take something
away.
It'll warm my heart because Iwill check the fourth box.
But if you can come up withyour own empowering habit, like
I did, of stretch, smile, liveand give or whatever it is, even
(01:03:02):
if you're an introvert by theway, I am an introvert, no one
believes that because I I've hadto lead all my life but I
believe if you commit to thisplan, this cycle of adjustment,
and support it with some habits,I think I honestly I think
anyone can do anything.
Speaker 1 (01:03:18):
I think you're an ambivert, because you can go
either way.
But you may be an introvertwho's just forced yourself to be
extroverted your entire life.
But I will tell you this Ialways feel better after I talk
to you.
I feel better about theindustry, I feel better about
the US, I feel better about thecountry, I feel better about the
world.
You have great energy and I'mso excited to see the new
(01:03:41):
projects and things you do andI'm kind of living vicariously
through you, james.
Speaker 2 (01:03:46):
So thank you so much.
I you know your and my careershave paralleled each other and
it was very rewarding for me todo the series together with you
because you know we you were theattorney initially on all of
these accounts and sometimeswe're all in alignment, but I
(01:04:08):
think we were really aligned onthat and I want to congratulate
you again on this series.
It's just been fantastic.
Such a variety of guests andI'm very honored to be the first
and hundredth interview on yourpodcast.
So congratulations, and I willbe on the sidelines cheering you
(01:04:28):
on now that I'm no longer CEOof the Cast Group.
Speaker 1 (01:04:32):
That means so much.
Thank you so much, James.
Speaker 2 (01:04:35):
Thanks, Donna Bye.
Speaker 1 (01:04:36):
Ceo of the Couch Group.
That means so much.
Thank you so much, James.
Thanks, Donna Bye.
Thank you for joining us today.
Don't forget to follow and rateus on your favorite podcast
platform or visitTakeItToTheBoardcom for more
ways to connect.
Hi everyone, I'm attorney Donna DiMaggio-Berger
and this is Take it to the Board, where we speak condo and HOA.
Welcome to the hundredthepisode of Take it to the Board.
It feels like just yesterday.
We launched this podcast andtoday we're celebrating this
incredible milestone by bringingit full circle with our very
(00:22):
first guest, james Donnelly.
When we first released James'episode on May 14, 2021, he was
the CEO of Castle Group, sharinginsights from decades of
experience in communityassociation management.
Fast forward to today.
James has sold Castle Group andembarked on a new chapter of
his life.
In this special episode, we'llreflect on his remarkable
(00:45):
journey from building one of themost respected companies in the
industry to his decision tostep away and everything in
between.
We'll also discuss the futureof community associations,
leadership, lessons learnedalong the way and what's next
for this industry icon.
It's an honor to have Jamesback on the show for this
landmark moment, so let's divein, james.
(01:06):
Welcome back to Take it to theBoard.
Speaker 2 (01:08):
Thank you, donna, I am so honored.
First of all, I was honored tobe your first guest and to be
your hundredth.
I can't believe you have done ahundred of these in the last
four years.
I'm exhausted.
I went and listened to a coupleof them just to kind of get
ready and good for you,congratulations, and I can't
wait to get going.
And I also want to do say thankyou for supporting me and
(01:32):
Castle on our associationleadership series the last few
years.
Very grateful.
Speaker 1 (01:37):
Oh well, I'm grateful that you gave me that
opportunity.
I mean, I remember four yearsago when we were, you know, we
were really in the thick of itwith the pandemic and you
reached out and Castle hadstarted that series but before,
I think, any other managementcompany had at that point and it
gave us an opportunity to kindof navigate through really rocky
waters together.
Speaker 2 (01:57):
Yeah, what a journey.
Speaker 1 (01:58):
What a journey indeed , and I will say this when I
thought back about the 100thepisodes.
Yeah, this is kind of mypassion project and I want to
talk to you about.
I know you've got a lot ofpassion projects that you've
dealt with and that are on thehorizon.
So I want to first ask you hasyour perspective on the
community association industrychanged since that conversation
(02:21):
four years ago that we had?
Speaker 2 (02:23):
It has, donna.
I think not only has myperspective changed, I think it
has changed.
I think the industry's changedInterestingly, I think, both the
demands on our industry and theway it's been restructured,
with these big players coming inand consolidating a lot of the
smaller players.
It has become more professional, by necessity.
(02:44):
When I got in this business 30years ago it was very much mom
and pop, and it's not thatthere's not still a role for
those companies, but I thinkit's definitely become more
professional, more corporate andI think you would agree,
especially as an attorney in theindustry more complex.
A lot of it's happened sinceCOVID and Surfside and the
(03:07):
related regulation, obviouslyespecially in Florida.
We operate outside of Florida,but Florida has always been a
leader in this industry.
And then just in the last fouryears, the addition of new
technologies has really changedhow we operate, how we respond
to our residents, how we monitor, how we've gone mobile and of
(03:31):
course now everything's on theweb, even by regulation.
So those, I think, are all goodthings.
I will tell you and I blame iton social media, not that I'm
not a fan of social media, butit's become so easy for one
person in any community to kindof stir up whatever they want to
stir up.
I've actually found it also alittle more antagonistic than
(03:55):
maybe.
It was five years and, ofcourse, long time before that.
So, yes, my perspective changed, and I don't think it's just my
perspective, I think theindustry's changed.
Speaker 1 (04:05):
The formalization of the industry, and I agree with
you.
I think you were actually in myparents' kitchen about 25 years
ago when you were pitchingtheir community you may have
been 30, and I think my mom wasmaking you pasta, as you said.
Now it's become a lot moreformal.
You pasta and you know, as yousaid, now it's become a lot more
(04:28):
formal.
What's the impact been on?
You know, a CEO of a managementcompany today wouldn't
necessarily have that kind ofopportunity to go out to each
community and meet with thepeople, because at the time my
dad was on the board of hishomeowners association, even
though I warned him about that,but he did.
He got on the board.
What's that going to be like,as the CEOs of management
(04:48):
industries have less and lessopportunity to really meet with
people in the communities?
Speaker 2 (04:54):
I think it's definitely going to have an
impact.
As you know, I go to theHarvard Business School every
year and it's coming up in acouple of weeks and we're doing
15 cases, and the cases was onAmazon and what the culture was
like, and one of the things thatJeff Bezos whether you love him
or hate him, doesn't matter Oneof his business practices was
to do whatever it took toactually find out what the
(05:14):
customer thought, and so he putin some systems and did some
work himself, and I think that'sgoing to be our challenge as
CEOs as we get bigger and webecome more corporatist.
And I think that's going to beour challenge as CEOs as we get
bigger and we become morecorporatist.
There's too many layers offiltering between you know that
person in the building and theCEO, and so the CEO that can cut
through those filters andreally understand what the
(05:38):
customer is saying, feelingwanting, will succeed, and if we
don't do that, then we'remaking decisions not really
knowing what our customer wants.
Speaker 1 (05:52):
Yeah, I mean, the best way to know what your
customer wants is to be able tosit down and talk to him or her
and have a conversation.
But you know, with the size ofthe industry now, that would be
virtually impossible.
Speaker 2 (06:01):
If you're you know, if you're a startup, maybe One
of my recommendations to him wasalways have skip lunches, so in
other words, have lunch withsomeone in the firm that doesn't
report to you.
And two, make it a habit atleast once a month, go and
literally go to an association,go to a board and talk to the
board, and that's the only wayyou're going to get pure data.
(06:22):
And that's hard, by the way.
What I just said is hardbecause the CEO's plate is so
full.
Speaker 1 (06:28):
Well, I want to talk about Jordan later in the
episode, but you mentionedSurfside and we've had some
significant legislation over theyears since that tragedy
occurred.
What kind of pressure has thatput on the management industry?
And let me be specific In theChamplain Towers case the
manager was not a manager from amanagement company, it was an
(06:51):
in-house manager.
I imagine the ripple effects inthe industry would have been
even more significant had thatbeen a management company that
was managing that building.
Can you talk to us a little bitabout what you've seen since
that legislation has come outand kind of the pain points with
management companies?
Speaker 2 (07:11):
Yes, first of all, tragedy and it, you know, for
the people who lost familymembers it would be perhaps not,
or I hope it does make themfeel good that there was some
good that came out of thatsituation.
And that is, you know, we areputting regulations in place in
(07:34):
hopes that it never happensagain.
And so you know I'm not a bigregulation guy.
But look at, you can't have 40year old buildings with deferred
maintenance and no funds todeal with it.
That had to stop.
So I'm completely supportive ofthe legislation that passed.
(07:56):
It's not perfect, but nolegislation is perfect.
From a management company, andespecially from a CEO's
perspective.
What is our job as CEO?
Our job is to come up with theright strategy, put the right
team in place.
And then the third piece isrisk management at all times.
And can you imagine if therewas a management company in
place there?
(08:16):
I think they probably would beout of business.
So you do want to at all timesrisk manage, and you and I have
had common clients where we'veactually resigned account
because the board won't make thedecision that they need to make
.
And if there's consequences tothat, we don't as a management
company or as you as attorney.
I know you've resigned accountsfor this reason.
(08:37):
So I think that I thinkSurfside was a tragedy.
I think that we as a state andas an industry have done a good
job not a perfect job ofresponding so it doesn't happen
again.
But you know there'sconsequences of that.
First of all, we're going tohave safer buildings, but also
there's a liability consequenceto that, there's a risk
(08:58):
management consequence to thatand, as we're learning right now
, there's a huge costconsequence of that for people
living in associations.
Speaker 1 (09:05):
Yeah, it's you've.
You've articulated it perfectly, because one of the big issues
is going to be theindemnification Right.
So because the legislature hascome out and said you must do X,
y and Z, and here are thedeadlines to do X, y and Z, and
here are the consequences if youdon't.
Deadlines to do X, y and Z, andhere are the consequences if
(09:28):
you don't, there may be a fingerpointing situation here where
if those deadlines are missed,if things are not done according
to the statute, if thoseobligations are not met, one
side will certainly be looking.
Perhaps I've hired management,that was their job.
Management is saying we chasedyou board and you wouldn't you
refuse to do this.
So I do think theindemnification provisions are
(09:49):
going to become crucial in thesemanagement agreements.
I'm seeing some very onerousunilateral indemnification
provisions.
I'm a big fan of just mutual,fault based indemn.
It's mutual and it'sfault-based.
Whoever's at fault shouldindemnify the other party that's
impacted by that person's fault, whether or not and I don't
(10:13):
want to get too into the weedsin terms of the standard of
gross negligence versus gardenvariety negligence or willful
misconduct.
But do you thinkindemnification is going to be a
big issue for the managementindustry going forward?
Speaker 2 (10:28):
It is, it has been and, of course, it's going to
become more so.
The complexity of compliancewhich rests on the management
company has gone up.
Every month you have to auditevery website.
We literally have a full-timeteammate at Castle.
I keep saying we I'm not goingto get rid of those pronouns.
Speaker 1 (10:48):
We get it.
Speaker 2 (10:48):
Yeah, so we have a full-time person whose only job
at the end of each month on 500associations is to make sure the
website's compliant, and wedon't get compensated for that.
And we can talk about costs andthe profitability of the
industry later.
But I think that on theindemnity clause specifically,
(11:09):
I'll say this and I'm completelyin agreement with what you just
said in terms of a balancedclause and having it lie where
fault lies.
But the thing I always hadthese discussions with attorneys
like you in the industry andwith boards is it's your
community, it's not my community.
So if we did something wrongand there's a fault, then we
should be responsible for it,but if it's not directly related
(11:32):
to, then it's your community,it's not our community.
So I always got intodiscussions I won't call them
arguments with boards,associations and their
representation with thisclarifying concept that the
management company should beresponsible for anything they do
wrong, but if it's not theirfault, then I think it should be
(11:54):
on the insurance company or theassociation's insurance company
, because it's their community.
Speaker 1 (11:59):
Well, and I agree with you, because the manager
and management company are theassociation's agent.
So from a pure agency standard,you want to protect your agent.
I think where the managementindustry in the coming years is
going to get even more in theweeds is with all these related
affiliated companies that arereally acting more as vendors.
(12:21):
Acting more as vendors.
So you know, if now I'm usingyour security company or I'm
using your pool company orwhatever it may be, that's
really more a vendorrelationship, not an agent
relationship.
And I think that's wheremanagement companies and their
counsel are going to have toreally give some thought to the
difference between an affiliatedcompany and a vendor type
(12:44):
relationship versus the veryclose management board
relationship, which is an agencyrelationship 100% agree and I
do believe that the conflict ofinterest legislation that
Florida passed last year thatrequired the disclosure was a
good move.
Speaker 2 (13:02):
We as management should 100% be transparent on
what we have interests in,because that does take you
outside of agency.
Speaker 1 (13:11):
And you know, look, a lot of clients are okay with it
, as long as they're informed.
They actually feel okay knowingthat everything's kind of under
one umbrella.
So I think you're right.
I think just disclose theultimate decision rests with the
board and if things go off thetracks down the road, that
(13:33):
disclosure is going to becritical.
Speaker 2 (13:34):
Agreed.
Speaker 1 (13:35):
So when we talked three and a half years ago, you
talked about how you builtCastle Group and since then you
sold the company, which I thinkis every business owner's dream
Maybe I shouldn't say every.
Some people want legacycompanies, but most business
owners, in the back of theirhead, they're always kind of
calculating what could I get formy company with what I've built
(13:57):
?
So I want to ask you whatmotivated your decision to sell
Castle Group and was there aspecific moment, james, when you
felt the time was right?
Speaker 2 (14:07):
Yes.
Well, first of all, you know Igrew up with nothing, so I grew
the company and, you know,really never took a lot of money
out of the company along theway.
So, obviously, like mostentrepreneurs, the Castle Group
my ownership in it was mylargest asset by a factor of a
lot.
So, again, getting back to riskmanagement, I mean there
(14:31):
certainly was going to be a timeand I say that because I don't
have kids in the business and Icompletely respect family
businesses that want to pass iton to the next generation but
that wasn't my circumstance.
Number two I was 59 years oldand I was fairly certain to
maximize the value of thecompany, I would need to stay on
(14:54):
and oversee a succession planso that the company never missed
a beat.
So it turned out to be fouryears, so that was going to make
me 63, which is what I am todayand I have so much on my bucket
list that I want to do.
There was a time constraint.
So, number one, I didn't haveheirs.
(15:20):
Number two I in the business.
Number two, there was achronological pressure and
because I had so many morethings to do.
And then the other obvious oneis what are valuations doing and
what happens when interestrates go down.
Multiples go up, and sointerest rates were down
multiples.
It was good timing, but that'sreally what made me make the
decision.
It was a hard decision.
(15:40):
This is my baby, and with mypartners Greg and Rob, hard
decision.
This is my baby, and with mypartners, greg and Rob.
I think the last part of thatis and we can talk about some
things that happened when we diddo the sale, but as of this
moment, we had put together anincredible management team
that's performed admirably, andso there was great confidence.
(16:02):
There was not one lost accountas a result of the transaction.
So I think if you did this witha weak management team, that
would have maybe a differentoutcome.
So those were my stacked uprationale, and when you put them
on a piece of paper, you knowpros and cons.
It wasn't actually that hard adecision.
Speaker 1 (16:23):
When the kids were little.
Did you and Kathy ever talkabout making it a legacy company
?
Did you ever look at themrunning around in the backyard
and think maybe someday they'llrun this?
Speaker 2 (16:34):
No, never.
I did ask the boys.
As you know, my sons are all intheir 30s now.
When they were younger and theywere choosing their education,
I said you know, do you have aspecific interest?
And none of them did.
And you know, one of my sonssaid that I never want to work
as hard as you do.
Like he just saw that as acrazy thing.
That's.
The other piece I didn'tmention is when you're an
(16:55):
entrepreneur.
It's 24 seven, and the biggestthing I've noticed and recently
is just the pressure off myshoulders because I'm not, I'm
not responsible even more, eventhough I can't stop saying we
you're sure you're going to bein it forever and ever.
Speaker 1 (17:12):
Listen, my dad owned a company, hollywood Bread, and
I'm one of four kids and he toldall of us don't that?
You're never coming here, so itwasn't even an option for us.
He said you're not, it's nothappening.
I do question whether or notyour belief in time compression
is accurate, because if youlisten to any biohacking podcast
(17:34):
, james, you could live to be120.
Probably got a lot of life anda lot of runways still ahead of
you.
Speaker 2 (17:42):
It's funny you say that because, as you know, I'm
fairly fit guy and uh and takegood, good care of myself.
But yeah, I got nicks and, youknow, arthritis here and sore
shoulder there and I'm thinkingI'm not making 120 at this at
this rate listen.
Speaker 1 (17:59):
Now you've got the time and and and the focus and
the funds, you can's a guy outthere.
I think he's spending like $2million a year on his body.
I think you know who I'm.
We're only capturing the audio,but James is nodding.
And yes, james, we're going toget into all your different
fitness activities later in theepisode.
(18:20):
Was there anything about thesales process that was
surprising to you?
No, I know you mentioned youhad a great management team and
you couldn't have done itwithout them.
There were no hiccups.
Was there anything that wassurprising?
Speaker 2 (18:36):
I think we were in a bit of a unique situation.
We signed our agreement inDecember of 2020.
But that negotiation started atthe beginning of 2020, before
COVID, and so we had a verbalagreement.
And then, but PMG, who holdingsout of Dallas, john Corona, who
(19:00):
bought our company they're nota public company, so they
financed their acquisitions withdebt Well, the credit market
stopped, so our deal stopped ona dime, and it wasn't until June
when the credit markets hadprocessed okay, covid's not
going to end the world wherethey came back.
So that was.
That was the first shock.
The second is negotiation.
(19:22):
It's hard, you know.
I would tell anyone who wastelling the business make sure
you don't wait until you have tosell, because the best place in
negotiation is if they didn'twant to agree with what I needed
and wanted, then there wasn'tgoing to be a deal because I
could just keep going.
And then, if you sell to alarger company, like most people
(19:44):
do, it's very rigorous, formal,attorney run, due diligence
process.
I mean that was shocking.
It was the extent of they'redigging into your company.
It was almost like an invasionof privacy.
Speaker 1 (19:59):
Well, I was going to ask you, listen, it's all about
the valuation too.
So had you taken those stepsahead of time to figure out what
Castle's valuation wasindependently?
So you went into it armed withthat information.
Speaker 2 (20:13):
Absolutely yeah.
And and I think and I think wemay talk a little later what my
advice would be to people doingthis and we'll get there.
But you just don't pick arandom year.
You want to manage your incomestatement and your balance sheet
so that when it's time to sell,it's in good shape.
(20:33):
So I'm a CPA, as you know, bytrade, so this was not outside
my wheelhouse and I think weForget.
Speaker 1 (20:41):
You're a CPA by trade .
You just don't seem like it.
I have a brother who's a CPA.
I have friends who are CPAs.
I'm not going to denigrate CPAs, but they're not as extroverted
as you are for the most part.
Speaker 2 (20:56):
Yeah, there's obviously stereotypes, right.
Speaker 1 (21:00):
There's a few, but let's talk about now.
If you don't mind, I want tojump into that in terms of
maximizing your appeal to apotential suitor.
If you know, as a managementcompany CEO who may be listening
to us right now, james to thisepisode and you already have in
your head, well, maybe in threeto five years, I want to sell
(21:23):
this thing.
Is that the time to start goingbig and ambitious with
different ideas, or to stayconservative and just keep so?
Is that the time to reallystart rolling out new ideas or
is it more prudent to just staythe course with what you have
and just try to keep, you know,adding more accounts?
(21:45):
Does that make sense?
What I'm asking?
Speaker 2 (21:47):
Donna, that you'll find.
Most sophisticated acquirers ofcompanies put little value on
recent and lots of value on whathappened for a long period of
time.
We just stayed the course, butthe course was going pretty well
.
We were going at a good pace.
So I don't think I would wastetoo much energy into trying to
(22:13):
do new if the acquirer is justgoing to discount that value
anyways.
The other thing about new issometimes it takes a while to
get new profitable or to get newto work.
So and again, I'm not an expert, I haven't done a lot of M&A,
but I've done.
One of the attractiveness of theCasa group was its long-term
(22:35):
consistent.
You know brand performanceculture, so that's for sure, but
I do.
What you said in the beginningis if someone is considering
selling three to five years,that is the timeframe.
You don't want to decide andthink I'm going to do it next
year.
You want to get a runway to getready.
That's the timeframe.
You don't want to decide andthink I'm going to do it next
(22:55):
year.
You want to get a runway to getready.
That's for sure.
And the other thing I'd say isyou better be convicted, because
there's no going back.
You better make sure this isabsolutely the decision you want
to make.
It took a year of my life to dothis transaction and you
wouldn't want that to not happen.
So I think conviction is a bigthing.
I think you want to sell whenyou don't need to sell because
(23:19):
your negotiating power isunbelievable.
I think you better prepare, asI just referenced.
If you don't know what anacquirer is going to look at, go
ask someone and then make surethat your company would show as
well as it could.
But one of the problems withacquiring companies is
leadership and management,because if it's entrepreneurial
(23:39):
driven like Castle was well, theentrepreneur is leaving.
They're selling the business.
So I don't think sellers ofbusinesses put enough weight on
the strength of the managementteam, because that's what the
buyer's got to be convinced thatwhen the entrepreneur leaves,
the company will continue toperform.
Speaker 1 (23:58):
So that was a big but you stayed on, and you and
Craig and Rob, you stayed on.
I think that's fairly typicalwith an acquisition like this,
that you want the main, theexecutive team, to stay on board
for a while, just to have asmoother transition.
Would you say that that'stypical?
Speaker 2 (24:17):
Well, I'm not sure it's typical.
It just depends on the size ofthe acquisition.
I mean, castle is a big company, so I mean we for sure had a
plan.
In fact PMG has done over 100acquisitions and I will humbly
tell you they've never seen asuccession plan like us.
We never lost an account.
The company is now twice as bigas it was when we sold it.
(24:38):
We put a succession plantogether where I would be CEO
for two years, then promotesomeone it happened to be Jordan
Goldman I would move myself toexecutive chair and then chair
and then out.
And then my brother Rob.
He retired one year before me.
And then Craig, our thirdpartner, is staying at least
another year because he loves it.
But to have that we, you knowwe brought the right people in
(25:02):
at the right time and had usleave it at the right time.
I think and I mean I amknocking on wood here because I
think that it's gone so smoothlyand the best two years Castle
Group's ever had have been whenI'm not CEO.
It's very humbling, but thebest two years have been under
Jordan Goldman as CEO, not JamesDonnelly.
Speaker 1 (25:21):
Now under good to great.
That would make you the levelfour leader, I believe.
Speaker 2 (25:25):
Or is it level five?
Is it level four or level five?
Speaker 1 (25:28):
Level five leader.
Speaker 2 (25:30):
Well, I think that's the other thing for people
considering to sell theirbusiness, especially
entrepreneurial built companies,is it takes that skill set to
go from zero to 100 million orwhatever the scale is in that
industry as an entrepreneur.
It's hard.
It takes a different skill setto manage a business of that
size and continue to grow it,and so I'm telling you the facts
(25:53):
that it's done its best in thelast two years.
But I also think it probablywouldn't have got there if there
hadn't been an entrepreneur toget it to where it was when we
sold.
But the succession plan is notonly good for the acquirer, but
often when you sell a companythere's some deferred
compensation or some bonuscompensation, and you might as
(26:14):
well max that out too.
So I think sellersunderestimate the importance of
management and succession plan.
Speaker 1 (26:21):
So your people had to be of huge significance to the
acquiring company because that'sone of your biggest assets.
Right, you said you didn't losea single account, but that's a
testament to the team you havein place, and I'm not just
talking about the executive teamor the management team, I'm
talking about the staff, theonsite managers, everybody.
(26:44):
So at what point?
I guess I have two questionsregarding your people throughout
this process.
One, how deeply did theacquiring company kind of dig
into your team across thecompany, your teams across the
company?
And number two, when do youstart cluing in your people
about what's happening?
Because I got to imagine, I mean, I've seen this in other
(27:06):
industries that there can besome instability or concerns
when people are hearing therumors oh my gosh, we may be
sold.
So can you talk about those twothings?
Speaker 2 (27:16):
The first question.
I don't think most acquirerslook too far past the executive
team.
The executive team is runningthe company.
The executive team is puttingthe team in place below them.
It would be even more extensivedue diligence to go too far
down the org chart.
In our experience they didtheir due diligence on the
(27:39):
executive team and very little.
We gave them our org charts.
Obviously, we gave themeverything that they wanted to
know.
But the challenge we had was ifthe deal didn't happen?
We didn't want anyone to knowthat it was even been a
discussion.
So we were extremely tight withit and in fact when we
(28:01):
announced the sale it wasshocking.
It was like an earthquakethrough our company because
Castle Group had always beenJames Donnelly and Rob Donnelly
and Craig Vaughn.
In fact, we lost three seniorpeople within the first six
months.
They were so upset with us fornot telling them.
(28:21):
Looking back, I wouldn't havechanged a thing.
First of all, it's theirbusiness, it's their right to do
that.
And two, if it had not closedwe could have just kept
operating.
And, side note, all three can'treturn to the business.
Yeah, we have 100% of theexecutive team we had four years
(28:43):
ago.
We promoted a couple since then.
Obviously, as Jordan went up,everyone kind of filled in
behind them, but our entireleadership team has been there a
long time, even though a coupleof them left and came back
after a short period of time.
Speaker 1 (28:55):
So I was going to ask you how you feel about watching
Castle Group evolve under newownership.
That's number one.
I know how you feel about itevolving under Jordan's
stewardship because I have toimagine you feel very proud
because you brought him up.
I mean, we have that at our lawfirm.
Gary Rosen was mentored to bethe managing partner to take
(29:16):
over from Alan Becker Okay, andAlan was still around.
Alan and Gary, our foundingpartners, were still around with
different management in place.
Tell us about both.
How does it feel to watch thecompany evolve under new
ownership?
How does it feel to evolveunder Jordan's leadership?
Speaker 2 (29:31):
Feels fantastic and I hope I don't sound too
Pollyanna, because not everytransaction out there goes well,
but ours went really well.
From you know, we were happywith the proceeds and the buyer
couldn't be happier with theresult, and we put together a
(29:52):
great succession plan.
I mentioned I'm going toHarvard business school, which I
do every year.
I just love it.
I just learned so much.
And I mentioned the Amazon case, but there's also one on
Starbucks and I don't know howmuch you've been reading about
Starbucks, but they've just hada terrible succession plan with
CEOs and I think one of thethings I'm most proud of is is
how good a job and I'm readingthis case and going Starbucks.
(30:14):
You know how did you screw thisup?
This is not that hard.
So I do feel like a proud papa.
I do still call it mymanagement team.
I'm very proud of Jordan andhis team and I'm truly humbled
by what they have done in thelast couple of years.
Proud and humble those would bemy two words.
(30:34):
Especially thrilled, becauseI'm where I want to be too.
Like it's, not like I'm.
Oh, I wish I were still.
No, it was the right time in mylife.
The company's doing great,kathy and myself and our family
is doing great.
So you're always looking forwin-wins in life and this is a
win-win.
So you asked me how I feel.
(30:56):
I feel fantastic for both myfamily and for the business.
Speaker 1 (31:00):
Do you think there'd be any time in your schedule to
do some consulting work in theindustry, both with regard to
best practices for managementcompanies or for companies that
are looking to sell?
Speaker 2 (31:12):
I probably won't have the time.
It's not that I wouldn't helpanyone that wants to help.
It's kind of.
My defining question is how canI help someone today?
But my plate is so full.
I still own Crown Residential,which is our multifamily.
That wasn't sold in thetransaction and I'm the chairman
of that company and LindsayNorman is doing a great job
(31:34):
running that.
As you know, I endowed theJames Donnelly property
management program at the NovaSoutheastern and we're now one
of eight bachelors of propertymanagement in the country and
I'm putting a lot of time intothere.
We just hired a director of theprogram and I have great
aspirations.
I think you and I have had theconversation before.
Every great sports team needs afarm system and I think we as a
(31:57):
management company need farmsystems.
I believe our school and othersacross the country which I
believe will grow, can be thatfarm system, so I'm gonna put a
lot of time into that.
Speaker 1 (32:09):
And that farm system, as you say, the program which
never existed before, becauseit's so hard and we've got
people listening all over it'sso hard to find enough people to
fill all these positions incommunity associations.
Everybody in the industry isgoing to benefit from that.
Any management company can goseek out a graduate of that
(32:29):
program.
Speaker 2 (32:30):
It's true, and Castle Group, under my leadership,
initially funded the program.
I have personally funded theschool now, and I think why I'm
mentioning that is I believe theindustry will no longer see me
as a competitor.
I'm going to go to each of theleaders of our old competitors,
and this isn't just residential,we've got commercial,
(32:51):
institutional facilitymanagement.
So one of my jobs this yearwill be to go and solicit
support from all the majorplayers in the country.
And what does that support looklike?
Well, number one we want tocontinue to endow further the
program, because the more it'sendowed, the more people we can
support who don't have money togo.
And then also directscholarships for students that
(33:13):
would love to be in the programbut can't afford it.
And then, finally, internships.
I mean Castle fills itsinternship fully every summer,
so I need more people in theindustry to do that.
So my job is to go get supportfrom the industry to support the
school, which would be asnowball effect that supports
the industry, and you can tellI'm pretty excited about it.
Speaker 1 (33:35):
So glad you mentioned the word competitor.
I have wanted to talk aboutthis for a long time and I don't
know if Florida is unique inthis, but it seems to me that
there is a ton of competitionand it's not always the
friendliest of competition,whether it's the management
industry, the legal industry,other industries that serve
(33:57):
community associations.
Isn't there enough work to goaround for everyone, that the
competition can be a little lesssharp, elbowed, so to speak?
What do you think about that?
Now that you're kind of out ofit and you can pull the camera
lens back a little bit and takea wider view, do you feel that
some of our competition inFlorida amongst management
(34:20):
companies is a little lessfriendly than it could be?
Speaker 2 (34:24):
Yes, I don't want to suggest though that that's
unnatural.
Florida is probably the mostcompetitive market in the
country and I think if you lookat any industry, there's some
sharp elbows in highlycompetitive industries.
But it is interesting.
I've been involved withnational organizations and
traveled and been withcompetitors from other cities
(34:48):
and states and it is a bitshocking the friendliness,
cities and states, and it is abit shocking the friendliness,
the collegial discussions thatyou know.
I sat there one time andthinking, well, you guys are
really nice to each other, orthey wouldn't even go after an
account because you know someoneelse had it and I'm like, I'm
not that friendly, I'm acompetitive guy and I want to
(35:08):
grow my company and I thinkthat's the true of my
competitors.
By the way, I think you couldhave any of my old competitors
on this show with you, don, andthey would all say I always was
extremely gracious and I neversaid a bad word about another
company.
I always highlighted what Ithought we did great.
But I do agree with you andit's in your industry and it's
my industry the elbows are sharp.
(35:29):
But that is our environmenthere in Florida and it's
two-sided sword, with thehighest concentration of managed
real estate in the country.
That's fantastic and we alsohave the most extreme
competition and that's somethingyou've got to manage.
Speaker 1 (35:45):
I imagine you felt the way.
I feel that when you aredealing with a competitor who's
being gracious and reallyfocusing on what they can do, as
opposed to trying to run downthe competition, it's refreshing
.
I think negative advertisingdoesn't work.
I don't think it works to sayso-and-so doesn't do what we do.
I think you just focus on yourpositives and don't run down the
(36:08):
competition.
And it is refreshing when ithelps.
I go to the annual CAI C-CALlaw seminar, not every year, but
frequently, and you're right,Sometimes I see these attorneys
in the same market in otherstates and they're really.
They collaborate, they refer toeach other and I said that'd be
(36:29):
nice, That'd be nice if wecould do that too in Florida.
Speaker 2 (36:32):
Don't hold your breath, Donna.
Speaker 1 (36:34):
I'm not going to hold my breath.
I did want to get back and talkto you a little bit about
consolidation in the managementindustry, particularly in
Florida.
Again, is there going to stillbe an ability for the next wave
of entrepreneurs, the next JamesDonnellys, to start a little
management company in Floridaand build it up, or is really is
(36:56):
there not going to be any spacefor that in our market because
of the consolidation?
Speaker 2 (37:01):
I think there'll always be a room in our industry
for the startup.
Two reasons.
One, even with all theconsolidation we have, there's
no player that even has 5% ofthe market.
So we our perception may be, oh, everything's getting swallowed
up by the big guys, but thefacts are that's not true.
Secondly, our industry, at itsfoundation, is people serving
(37:22):
people.
It's a manager taking care ofthe board of directors and the
residents of the community, andthat's a very special
relationship.
And I think there's a place forthe very able.
I'm going to say young doesn'thave to be young, but that's
what I was when I got startedEnergetic, committed, customer
(37:43):
oriented.
And they're going to get oneaccount and then they're going
to get a second account and thenthey get a third account.
I also think that, even thoughscale is important, technology
is allowing the smaller playerto play in a big field, so the
software that the big guys areusing can be bought in a smaller
contract, so there's a lot oftools that are available to
(38:06):
everybody.
I believe there is anopportunity for the next great
young entrepreneur in Floridathat we're going to talk about
in a few years.
I mean, 30 years ago Castledidn't exist and I think we
became the largest privatemanagement company in the state,
so someone else can for sure dothat.
I'm confident it's not going tobe me.
Speaker 1 (38:25):
No, you've got other things to do that we'll talk
about.
But that is encouraging to knowand I do think when you have a
newcomer into the market it issometimes like a breath of fresh
air and it is easy for them toplay off of the you know 800
pound gorilla that's been in themarket for years and years to
say, hey, we're new, we'resmaller, we're going to do
things a little differently.
(38:45):
So that's good to know.
You said at the outset that youhad listened to some of these
episodes.
I don't know if you listened tothe episode with the anonymous
unit owner, bob, who was theretired attorney.
He is living in a luxury highrise in Broward County.
It's a relatively new building.
(39:05):
They're still going through the558.
Bob was a retired corporateattorney.
He had four decades ofexperience in corporate law and
I had him on and one of thethings he talked about was not
his biggest beef was that he'san owner.
He doesn't just own his unit,he owns his prorated share of
(39:26):
the amenities and he didn't feellike the service that the
management company was providingand certainly the board.
He felt like he was treatedlike an inmate.
Now I know Castle always saysroyal service.
Can you tell us about thedifferent kinds of services Some
communities, I see, do havethat concierge level service
where they will go above andbeyond and they will, you know,
(39:47):
call you before they place asticker on your car or they'll
try to talk.
It's just a different level ofservice, a concierge level of
service.
Can you talk about that alittle bit?
Because Bob, I think, mighthave been trying to stick a
square peg into a round hole.
I'm not sure, but I want tohear your take on it.
Speaker 2 (40:05):
Well, first of all, I did not listen to that episode,
I'm ashamed to say.
Secondly, I think that ownersmaybe don't fully understand the
power that they have, but thepower that they have for the
most part is to elect a boardthey want to run for them, and
if they didn't vote, or they didvote, care about what you get.
(40:27):
That's very powerful and you'veseen it where whole slates will
come in and say enough isenough.
So my first comment to Bobwould be look, you've got the
vote, and it's pretty much onevote a year, with the exception
of some things that requiremembership votes.
I also have some empathy and Ilive in a 300-unit condo here
(40:49):
and sometimes I'm just shakingmy head at what's happening, but
it is a lot of moving parts.
There's 300 different peoplethat have different expectations
of what management should do.
Having said that and this is mymantra for the rest of my life
why can't we just be nice?
And even management companyteammates and I'm sure there
were some at Castle like theresident is your customer, the
(41:12):
resident is going to be the onethat votes for the board that's
going to keep your managementcompany on.
I'm always amazed at how someof the teammates don't
understand that relationship,and there's one simple one, I
think, and that is this happensin, I'm sure, every building,
every community.
There's a problem, there's abad actor, there's a couple of
bad actors that are doingsomething, and the whole
(41:34):
community gets blasted with.
You guys need to do this.
And it's and it feels likeyou're living in a prison, and I
think that's where Bob wascoming from.
Speaker 1 (41:42):
Absolutely.
You're speaking his language.
That was his, his maincomplaint.
But do you feel like themanagement company?
Sometimes they become thescapegoat for everything that's
going wrong, or maybe even theboard is sometimes hiding behind
them and is directing them andthey're the cushion and they're
the scapegoat.
Speaker 2 (42:00):
A hundred percent, but that is you know.
You and I have talked before.
You know why do you haveprofessional management versus
self-management, and one of thereasons is to have that buffer,
so we get paid for the buffer.
I don't have a big issue withthat.
What I will tell you is thiswith the software available and
our technology available, we cannow communicate.
If you think of a high-rise,you've got stacks and you've got
(42:22):
floors.
There's nothing to stop youfrom communicating where the
communication needs to happen.
And what I find in buildings,and I'm sure some of the ones
that we manage, is we do blanketinstead of tailored
communication and we all feellike we're in prison because
we're being painted with thesame brush.
You know all owners.
(42:42):
You cannot leave your towels on.
It was two owners, socommunicate to the two owners.
So my singular piece of adviceto boards and management and
communities is the day youtailor your communications is
the day you're going to have amuch happier constituency.
Speaker 1 (42:58):
I know that you have been a huge proponent of
technology.
I've been to your commandcenter, your main campus.
I ask a lot of guests on thepodcast how they think
artificial intelligence, or AI,is going to impact their
industries.
You've already seen it and justalong the point that you said
(43:19):
you just mentioned abouttailoring your communications,
how do you think AI can help youget there?
Speaker 2 (43:24):
Firstly, I'm not an expert, but what I've already
seen is stunning and I'll giveyou two examples is stunning and
I'll give you two examplesRight now, if you're an owner or
a resident in a community inour case, I think we have
600,000 people live in ourcommunity, something like that,
and all they want is data.
They want their questionanswered, they want their
(43:46):
service request responded to and, honestly, they don't want to
stay online waiting for someoneto answer at a call center.
So now you can go on to thebigger companies' websites and
ask questions and in thebackground, ai is going to find
that answer.
So I believe what I callself-help and people love
self-help is going to begeometrically better than it was
(44:10):
.
So that's one.
The second thing is, as you know, in every community there's a
data set.
There's the owners, there's theroster, there's the rules,
there's the regulations, there'sthe violation history, there's
data, and right now, if amanager or whoever's running,
you know, an assistant managerneeds data, they don't even
remember where they filed that.
(44:30):
Well, with AI, all AI needs isa data set and it'll go find
anything.
So I believe you're even goingto have management reports
written by AI.
It doesn't mean that themanager shouldn't obviously
review it and edit it, but Ithink, both in terms of using a
large data set and gettingexactly what you need to
(44:50):
communicate, and for self-helpfor our residents, I think it's
fantastic.
Speaker 1 (44:56):
It is too, but there's always the fear of loss
of jobs, right?
We keep hearing about this.
Is it possible that in thefuture, in some communities they
will have an AI manager?
Speaker 2 (45:06):
I doubt it, but you know you can use a couple of
examples that would support that.
You know you've heard of thesefirms that put a camera at the
gate and there's no longer aguard and then you talk to
someone in some central stationand they're going to let you in
or they're not.
So there's an example.
But here's my answer to that,donna.
We have one of the lowestunemployment rates in the US
(45:28):
ever, and the Internet was goingto do it, the telephone was
going to do it, the wheel wasgoing to do it, everything's
going to do it.
The US is so innovative.
I have absolutely no concernthat we won't innovate to the
point of creating more jobs withthe next technology.
Speaker 1 (45:45):
I'm right there with you.
I'm optimistic.
I think AI is going to makepeople do their jobs quicker,
easier, but I also think it isgoing to create more jobs.
So we'll see.
Hopefully, you and I are righton that point.
I did want to ask you if youcould rewrite the playbook for
managing community associations.
What would you change?
What would you emphasize?
Speaker 2 (46:05):
It's interesting.
You're asking me that becauseBecker did write the playbook at
our industry in Florida.
I think, donna and you knowthis better than I, and you and
I have talked about it on ourAssociation Leadership Series.
The whole governance of thesecommunities can get off on the
wrong foot and I'm not blamingdevelopers, because developers
hire people to put the documentstogether and, honestly, they're
(46:27):
more worried about sellingunits or renting units and
building than these pieces ofpaper.
So there's no judgment here.
But, as you know, the documentssupporting our industry right
now are terribly weak.
They need amendment.
No one wants to spend the money.
No one even knows what to do tothe amendment.
So I do think that there's agovernance reset that needs to
(46:51):
happen and that's bothregulatory so we can get it
right out of the box, and ourexisting communities need to
redo their documents to support,40 years later, of laws and the
state of their building andwhatnot.
So I think that is a part of aplaybook that I would redo.
(47:19):
I think on the insurance front,we haven't talked about
insurance, but I just don't knowthat we can't, that Florida can
survive.
And now look at Californiawithout some government
participation, because you knowwe're going to have for sure, in
Florida, beautiful people olderthan me on fixed income.
They're going to lose your unitand and that's it is what it is
going to lose your unit and itis what it is.
We need to have these buildingssafe and insured, but I do
(47:46):
think there's got to be anotherpiece of the playbook on
insurance.
I also think on the talent side,we struggled for so long.
Salaries were so low.
In our industry you pay little,you get less ability.
One of the things I'm soexcited about the property
management program is it'staking off, partially because
you need to figure out how tomonetize your education.
If you're a lawyer, a doctor,an accountant, you got some
predictability.
(48:06):
I believe you now havepredictability in monetizing
your property management degree.
Like we have many managersmaking north of $200,000.
That was unbelievable 10 yearsago.
So I think if I were redoingthe playbook, I would have set
up talent differently andeverything from compensation to
(48:28):
licensure to, you know, managingcareer paths.
Speaker 1 (48:32):
Well, can I talk to you about the credential for
managers.
So in the state of Florida it's19 hours to take the course,
take the test.
There's similar protocolsaround the country.
Other than those 19 hours, whatother credentials could
somebody who wanted to be amanagement professional acquire?
I know CAI had the PCAMdesignation, but this new
(48:56):
program you have at NovaSoutheastern, what kind of
degree do they get?
Speaker 2 (49:00):
It's a Bachelor of Science in Property Management.
Every property managementcompany should be lining up
because you're right 19 hoursversus four years of becoming
highly educated property manager.
So I know I'm tooting my ownprogram here, but I couldn't be
more excited, and I hope another20 schools open up across the
(49:21):
country and I think they will.
We're going to be the best.
Speaker 1 (49:25):
Undoubtedly, but how do we educate these boards to
become better consumers?
This was our struggle too.
So I'm a board certifiedcondominium and HOA attorney.
I'm also a fellow.
I don't know if you know this.
I'm a fellow, yeah.
Speaker 2 (49:39):
I saw that.
Speaker 1 (49:40):
Association of Lawyers.
How do we but I don't know thatevery board understands the
credentialing differences, andit's the same thing in the
management industry how do weeducate them to say you know
what you are going to wantsomebody who's really invested
in his or her career as amanagement professional by
acquiring this designation,whether it's PCAM or getting the
(50:03):
Bachelor of Science in PropertyManagement, as opposed to
somebody who you know has donetaken the course and taken the
test.
And that's not to disparage themanagers who do that.
But how do we educate boards tomaybe dig a little into those
credentials?
Speaker 2 (50:18):
Well, I think, first of all, a lot of this
credentialing is new, like therenever was a Bachelor of Science
in Property Management.
So there's going to be asocialization process.
You know I'm always veryappreciative of the board's
commitments and their sacrificeand you know I really feel badly
when they're now being forcedby legislation to go to school.
And I know it's the right thing.
But I'm very careful not to putoverly burdened board members.
(50:41):
You know they've taken onenough responsibility for no
compensation to help theirneighbors.
I think that this will taketime.
I know when we are pitching anaccount and when you're pitching
your services, you're going tohighlight the things that your
firm brings.
You know we have four fellowsof the property management law
in our thing, so I think it's upto us to educate them.
I don't know any kind ofcentral body that would do it.
Speaker 1 (51:03):
And even then they say but how much Thank you,
thank you for all yourcredentials.
How much?
I did want to circle back towhat you said about the
developer and their documentsand I want to ask you how
successful Castle has beennavigating the turnover process.
Before I get to that, I willsay that if I were rewriting the
(51:23):
playbook when it comes to theway developers create these
communities, a lot of the issuesthat we hear as council is in
mixed-use communities or incommunities with different
phases, differentsub-associations and master
associations.
It's always a mess operationally.
They feel like there'sunder-representation.
One building has 98 people, 98units, one has 180.
(51:47):
Maybe they have the samerepresentation on the master
board, maybe they don't.
A lot of times it's thedevelopment scheme overall that
long-term some of the people whobuy in that community, they
really feel it's inequitable.
Not much we can do about thatother than to say do your due
diligence before you purchase inthat kind of community to make
(52:07):
sure you're okay, because youmay not be able to untangle this
later on.
I do wish that developers, whenthey're going through the
turnover process and they'vealready sold out of all or the
vast majority of their units atthat point, will unilaterally
amend the documents to ensurelong-term operational ease for
(52:30):
the owner-controlled board.
Do you know what I'm saying?
There's things they can dounilaterally.
They're already out, they'vealready sold their inventory.
It's going to make it easierfor that first board and
subsequent boards.
Speaker 2 (52:42):
Yeah, and I think that you know they're not going
to again.
That's the least of theirconcerns.
So I think it's going to beincumbent on firms like yours
and ours to go and make theserecommendations.
Speaker 1 (53:02):
They look at, this community is going to be here
for 50 more years.
If you did these five things,it would really help and they
probably would.
Well, they do.
Some of them do.
I make that standard with myturnover checklist is hey, let's
generate some goodwill here andlet's make it easier.
You know, maybe rather thanhaving two thirds of the total
voting interest in a 500 unitcondo to amend the documents,
maybe we make it two-thirds ofthose who are actually voting
present and voting, or we evenlower it a little more and we
make it a majority.
Those are the type of thingsthat developers can do that will
(53:26):
generate goodwill as they'regoing out the door.
I think developers should alsoif we've got some developer
attorneys listening trademarkthe association's name and a lot
of these luxury buildings we'reseeing all throughout Florida.
They have very specific logos,they have names, trademark it.
(53:47):
It's a nice value add that youcan deliver to the community and
it doesn't cost, I agree.
Has Castle been successful interms of staying on
post-transition?
Speaker 2 (53:58):
Yes, you know that's always that tug of war, in that
you know you represent developer, you know my we could talk all
day about this one, but mysingle piece of advice for
management companies and,frankly, for the community is
they may not get elected, butget the owner rep group together
.
They're going to go throughtheir 558 process or the
(54:19):
equivalent.
Get the communication goingearly.
First of all, it helps theresidents because they don't
really know what's going on, andhelps the management company
because you're building arelationship and you know most
of our communities havenon-competes on the team and so
if they love the team, they'renot going to get rid of the
company, and that's the natureof the business.
Speaker 1 (54:38):
You know a lot of these newer luxury buildings
which are going up not by thebig name developers we hear, but
they're more one-off.
I call them vanity projects.
Sometimes A lot of them arehaving in-house so they're
creating, as a developeraffiliate, a management company
and they're sticking them inthere for 30, 40 years.
(55:00):
Of course in Florida thepost-transition owner-controlled
board has an ability to cancelthat contract.
Many of them won't if they'redoing a good job.
But what do you think aboutthat trend that these developers
in these luxury high-rises areoften creating management
companies that are developeraffiliates?
Speaker 2 (55:18):
I don't like it because I want that contract.
That's the real reality.
But, in fairness, if you have agood brand and you want that
brand consistency right throughthe management, then you're not
confident that you can go hire athird party that will be so
consistent.
Think of Ritz Carlton.
I appreciate it.
You know, one of our castle wasalways kind of the higher end
(55:40):
of the service level.
So we would pitch thatdeveloper, say, look, you're a
great developer, let us do thisand you can micromanage it and
put the standards if they'reslightly different with your
brand.
But please let us do it.
And sometimes it works,sometimes it didn't.
Speaker 1 (55:58):
I think we're going to see more of that, as we see
more of these buildings going upand a lot of them based on
luxury car brands.
Speaker 2 (56:05):
I know, I know I'm looking for my Tesla building
next.
Speaker 1 (56:09):
Can we switch gears before I let you go?
Speaker 2 (56:12):
Yeah.
Speaker 1 (56:12):
Did you already go to Japan and you were skiing
Because we talked about Japan?
Speaker 2 (56:16):
I have.
I lived in Japan when I wasyounger and I've skied there two
years ago and loved it so muchI'm going back.
Speaker 1 (56:21):
I am going to Japan, as I mentioned, with my daughter
, lauren for two weeks in Mayand it got me thinking.
So I've been doing you know me,I prep.
So I've been reading a lot andI came across the Japanese
concept of Ikigai, which meansfinding one's reason for being
so.
From my research, the Japaneseculture doesn't really embrace
(56:43):
retirement.
Okay, they feel that you needto align with what you love,
what you're good at, what theworld needs and what you can be
rewarded for.
So, james Donnelly, lookingback at your journey with Castle
Group, and now you're steppinginto a completely new chapter,
what would you say your ikigaihas been throughout your career,
and has it shifted or evolvedsince selling the company?
Speaker 2 (57:07):
Yeah, great question.
I mean, first of all, I grew upwith nothing, so you know I'm
not overly proud, but it's true,my number one goal right out of
the box.
I did not want to live the wayI grew up, so I was huge
financial motivation probablyzero to 30.
But there's the way my parentsraised me.
(57:29):
It was always about helpingothers.
And so one of the great thingsabout property management is we
exist to help others, and so oneof the great things about
property management is we existto help others.
So that has been and I thinkalways will be.
I went to we all go to theseseminars, and one of the ones
they asked me is what is yourdefining question, what is the
question that you ask yourselfevery day?
(57:51):
And that's a great question andI thought long and hard about
it, but I I'm going to actualizethat will change as much as I'm
(58:18):
retired from the Cassidy Group.
I certainly don't feel retiredat all.
I don't think I've ever been sobusy in my life.
But I think you know what do Ilove?
I love helping people.
What am I good at?
I'm really good at strategy.
I'm good at communicating, I'mgood at people.
So what does the world need.
Honestly, this world just needsa little peace, love and
(58:40):
happiness.
What I'm preaching now is whycan't you just be nice, I mean
at a geopolitical level whycan't we just all live in our
own country and be happy withthat?
But even in our own littleworld here and I know social
media is making this verydifficult, but I can tell you
there's not one time you walkthrough the Becker office and
you give someone a big smile,they don't give a smile back.
So I think that's what theworld leads.
(59:02):
How do you reward that?
I've been rewarded.
I need no more reward.
I call Hall of Fame that we didvery well on the sale of our
company.
So I don't need any rewardother than the self-reward of
feeling good.
So what am I going to do now?
I mean, I had lunch with Jordanyesterday.
I'm going to support the Castleteam.
I'm no longer involved.
(59:23):
I have no compensation.
I have no relationship otherthan these are my people.
So I'm definitely going to dothat and I'm really going to put
a lot of energy into theproperty management program.
I've been given a platform todo that because of my standing
in the industry and obviouslyhave the resources.
And now time.
And then Kathy and I, you know,have a fairly significant
(59:44):
philanthropic function and shedoes most of that.
But I I chime in there when Ican.
And then I think I told you inour last one I, four years ago,
I put on hold writing my bookcalled Life Shaping.
I got to tell you I cannotbelieve James Donnelly, this
little guy from Bell's Corners,is living this life.
I mean, I have such a rich lifefrom health, from family, from
(01:00:08):
relationships, from friendships,in the greatest country in the
world.
How did that happen?
If I could codify andcommunicate to anyone and I
don't care if you're 16 or 60you could learn from what I've
learned in terms of you know howto get from a to b and uh, I
spent the last 10 years puttingthe data set together to write
(01:00:30):
that book.
Speaker 1 (01:00:30):
So I, if I, if one person reads it, I'll feel
satisfied that it's had its rolewell know there's going to be a
lot more than one personreading that book and I want an
autographed copy.
But listen, I said in theintroduction I referred to you
as an industry icon and I didn'tjust say that because you know
I like you a lot and it's true.
So I want to leave this episodewith you talking to the person
(01:00:53):
who's listening and is trying tofigure out how did James
Donnelly go from the I rememberin the first episode you talking
about the growing potatoes onyour lawn in Canada to who you
are now.
I mean, not everybody.
James is a bold thinker, a boldstrategist.
Some you know, not everybodyembraces change the way you do,
(01:01:15):
but you know, not everybodyembraces change the way you do.
I do, perhaps, but for thatperson right now who's not quite
as bold, not quite ascomfortable with change, what
piece of advice could you givehim or her if they're thinking
about starting a new chapter, toactually take the leap?
Speaker 2 (01:01:29):
I'm certain I would have mentioned this in our first
episode, but I believe sostrongly it will be part of my
book, the Success Cycle, whereyou got to decide what you want,
you have to come up with a plan, you have to implement the plan
, and that's when most peoplefail, because they implement the
plan and it doesn't work.
No plan works.
That's the fact.
So the steps that are missingare evaluation and adjust, and
if you just keep going aroundthat circle, you have no choice
(01:01:51):
but to achieve.
And I really think a lot haslot has to do, donna, with what
habits you create for yourself,and there's all kinds of habits
about health and lifelonglearning and improving.
But what I do and I may havetold you this before is I've had
a mantra that I do and we're onvideo.
It's not going to be on thepodcast, but mine is to stretch,
smile, live and give, and I dothat every morning and you can
(01:02:17):
come up with your own, but thinkabout that.
Every morning I say how am Igoing to stretch myself?
And I don't normally meanphysically, but I could be Smile
.
It reminds me if I project.
You know, smiles have regretsabout the past and we were like
I'm enjoying this conversationwith you right now, and so this
(01:02:40):
recenters me every day to livein this day and then give,
stretch, smile, live and give.
And so every day I figure outhow can I give like today I hope
someone's listening to thispodcast We'll take something
away.
It'll warm my heart because Iwill check the fourth box.
But if you can come up withyour own empowering habit, like
I did, of stretch, smile, liveand give or whatever it is, even
(01:03:02):
if you're an introvert by theway, I am an introvert, no one
believes that because I I've hadto lead all my life but I
believe if you commit to thisplan, this cycle of adjustment,
and support it with some habits,I think I honestly I think
anyone can do anything.
Speaker 1 (01:03:18):
I think you're an ambivert, because you can go
either way.
But you may be an introvertwho's just forced yourself to be
extroverted your entire life.
But I will tell you this Ialways feel better after I talk
to you.
I feel better about theindustry, I feel better about
the US, I feel better about thecountry, I feel better about the
world.
You have great energy and I'mso excited to see the new
(01:03:41):
projects and things you do andI'm kind of living vicariously
through you, james.
Speaker 2 (01:03:46):
So thank you so much.
I you know your and my careershave paralleled each other and
it was very rewarding for me todo the series together with you
because you know we you were theattorney initially on all of
these accounts and sometimeswe're all in alignment, but I
(01:04:08):
think we were really aligned onthat and I want to congratulate
you again on this series.
It's just been fantastic.
Such a variety of guests andI'm very honored to be the first
and hundredth interview on yourpodcast.
So congratulations, and I willbe on the sidelines cheering you
(01:04:28):
on now that I'm no longer CEOof the Cast Group.
Speaker 1 (01:04:32):
That means so much.
Thank you so much, James.
Speaker 2 (01:04:35):
Thanks, Donna Bye.
Speaker 1 (01:04:36):
Ceo of the Couch Group.
That means so much.
Thank you so much, James.
Thanks, Donna Bye.
Thank you for joining us today.
Don't forget to follow and rateus on your favorite podcast
platform or visitTakeItToTheBoardcom for more
ways to connect.
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