Take It To The Board with Donna DiMaggio Berger
Take It To The Board with Donna DiMaggio Berger
Take It To The Board’s 100th Episode Milestone--- From Building Castle Group to Industry Icon: A Conversation with James Donnelly
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
Related Links:
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 hundredth episode of Take it to the Board. It feels like just yesterday. We launched this podcast and today we're celebrating this incredible milestone by bringing it full circle with our very first guest, james Donnelly. When we first released James' episode on May 14, 2021, he was the CEO of Castle Group, sharing insights from decades of experience in community association management. Fast forward to today. James has sold Castle Group and embarked on a new chapter of his life. In this special episode, we'll reflect on his remarkable journey from building one of the most respected companies in the industry to his decision to step away and everything in between. We'll also discuss the future of community associations, leadership, lessons learned along the way and what's next for this industry icon. It's an honor to have James back on the show for this landmark moment, so let's dive in, james. Welcome back to Take it to the Board.
Speaker 2:Thank you, donna, I am so honored. First of all, I was honored to be your first guest and to be your hundredth. I can't believe you have done a hundred of these in the last four years. I'm exhausted. I went and listened to a couple of 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 thank you for supporting me and Castle on our association leadership series the last few years. Very grateful.
Speaker 1:Oh well, I'm grateful that you gave me that opportunity. I mean, I remember four years ago when we were, you know, we were really in the thick of it with the pandemic and you reached out and Castle had started that series but before, I think, any other management company had at that point and it gave us an opportunity to kind of navigate through really rocky waters together.
Speaker 2:Yeah, what a journey.
Speaker 1:What a journey indeed, and I will say this when I thought back about the 100th episodes. Yeah, this is kind of my passion project and I want to talk to you about. I know you've got a lot of passion projects that you've dealt with and that are on the horizon. So I want to first ask you has your perspective on the community association industry changed since that conversation four years ago that we had?
Speaker 2:It has, donna. I think not only has my perspective changed, I think it has changed. I think the industry's changed Interestingly, I think, both the demands on our industry and the way it's been restructured, with these big players coming in and consolidating a lot of the smaller players. It has become more professional, by necessity. When I got in this business 30 years ago it was very much mom and pop, and it's not that there's not still a role for those companies, but I think it's definitely become more professional, more corporate and I think you would agree, especially as an attorney in the industry more complex.
Speaker 2:A lot of it's happened since COVID and Surfside and the related regulation, obviously especially in Florida. We operate outside of Florida, but Florida has always been a leader in this industry. And then just in the last four years, the addition of new technologies has really changed how we operate, how we respond to our residents, how we monitor, how we've gone mobile and of course now everything's on the web, even by regulation. So those, I think, are all good things. I will tell you and I blame it on social media, not that I'm not a fan of social media, but it's become so easy for one person in any community to kind of stir up whatever they want to stir up. I've actually found it also a little more antagonistic than maybe. It was five years and, of course, long time before that. So, yes, my perspective changed, and I don't think it's just my perspective, I think the industry's changed.
Speaker 1:The formalization of the industry, and I agree with you. I think you were actually in my parents' kitchen about 25 years ago when you were pitching their community you may have been 30, and I think my mom was making you pasta, as you said. Now it's become a lot more formal. You pasta and you know, as you said, now it's become a lot more formal. What's the impact been on? You know, a CEO of a management company today wouldn't necessarily have that kind of opportunity to go out to each community and meet with the people, because at the time my dad was on the board of his homeowners 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 industries have less and less opportunity to really meet with people in the communities?
Speaker 2:I think it's definitely going to have an impact. As you know, I go to the Harvard Business School every year and it's coming up in a couple of weeks and we're doing 15 cases, and the cases was on Amazon and what the culture was like, and one of the things that Jeff Bezos whether you love him or hate him, doesn't matter One of his business practices was to do whatever it took to actually find out what the customer thought, and so he put in some systems and did some work himself, and I think that's going to be our challenge as CEOs as we get bigger and we become more corporatist. And I think that's going to be our challenge as CEOs as we get bigger and we become more corporatist. There's too many layers of filtering between you know that person in the building and the CEO, and so the CEO that can cut through those filters and really understand what the customer is saying, feeling wanting, will succeed, and if we don't do that, then we're making decisions not really knowing what our customer wants.
Speaker 1:Yeah, I mean, the best way to know what your customer wants is to be able to sit down and talk to him or her and have a conversation. But you know, with the size of the industry now, that would be virtually impossible.
Speaker 2:If you're you know, if you're a startup, maybe One of my recommendations to him was always have skip lunches, so in other words, have lunch with someone in the firm that doesn't report to you. And two, make it a habit at least once a month, go and literally go to an association, go to a board and talk to the board, and that's the only way you're going to get pure data. And that's hard, by the way. What I just said is hard because the CEO's plate is so full.
Speaker 1:Well, I want to talk about Jordan later in the episode, but you mentioned Surfside and we've had some significant legislation over the years since that tragedy occurred. What kind of pressure has that put on the management industry? And let me be specific In the Champlain Towers case the manager was not a manager from a management company, it was an in-house manager. I imagine the ripple effects in the industry would have been even more significant had that been a management company that was managing that building. Can you talk to us a little bit about what you've seen since that legislation has come out and kind of the pain points with management companies?
Speaker 2:Yes, first of all, tragedy and it, you know, for the people who lost family members it would be perhaps not, or I hope it does make them feel good that there was some good that came out of that situation. And that is, you know, we are putting regulations in place in hopes that it never happens again. And so you know I'm not a big regulation guy. But look at, you can't have 40 year old buildings with deferred maintenance and no funds to deal with it. That had to stop. So I'm completely supportive of the legislation that passed. It's not perfect, but no legislation is perfect.
Speaker 2:From a management company, and especially from a CEO's perspective. What is our job as CEO? Our job is to come up with the right strategy, put the right team in place. And then the third piece is risk management at all times. And can you imagine if there was a management company in place there?
Speaker 2:I think they probably would be out of business. So you do want to at all times risk manage, and you and I have had common clients where we've actually resigned account because the board won't make the decision that they need to make. And if there's consequences to that, we don't as a management company or as you as attorney. I know you've resigned accounts for this reason. So I think that I think Surfside was a tragedy. I think that we as a state and as an industry have done a good job not a perfect job of responding so it doesn't happen again. But you know there's consequences of that. First of all, we're going to have safer buildings, but also there's a liability consequence to that, there's a risk management consequence to that and, as we're learning right now, there's a huge cost consequence of that for people living in associations.
Speaker 1:Yeah, it's you've. You've articulated it perfectly, because one of the big issues is going to be the indemnification Right. So because the legislature has come out and said you must do X, y and Z, and here are the deadlines to do X, y and Z, and here are the consequences if you don't. Deadlines to do X, y and Z, and here are the consequences if you don't, there may be a finger pointing situation here where if those deadlines are missed, if things are not done according to the statute, if those obligations are not met, one side will certainly be looking.
Speaker 1:Perhaps I've hired management, that was their job. Management is saying we chased you board and you wouldn't you refuse to do this. So I do think the indemnification provisions are going to become crucial in these management agreements. I'm seeing some very onerous unilateral indemnification provisions. I'm a big fan of just mutual, fault based indemn. It's mutual and it's fault-based. Whoever's at fault should indemnify the other party that's impacted by that person's fault, whether or not and I don't want to get too into the weeds in terms of the standard of gross negligence versus garden variety negligence or willful misconduct. But do you think indemnification is going to be a big issue for the management industry going forward?
Speaker 2:It is, it has been and, of course, it's going to become more so. The complexity of compliance which rests on the management company has gone up. Every month you have to audit every website. We literally have a full-time teammate at Castle. I keep saying we I'm not going to get rid of those pronouns.
Speaker 1:We get it.
Speaker 2:Yeah, so we have a full-time person whose only job at the end of each month on 500 associations is to make sure the website's compliant, and we don't get compensated for that. And we can talk about costs and the profitability of the industry later. But I think that on the indemnity clause specifically, I'll say this and I'm completely in agreement with what you just said in terms of a balanced clause and having it lie where fault lies. But the thing I always had these discussions with attorneys like you in the industry and with boards is it's your community, it's not my community. So if we did something wrong and there's a fault, then we should be responsible for it, but if it's not directly related to, then it's your community, it's not our community. So I always got into discussions I won't call them arguments with boards, associations and their representation with this clarifying concept that the management company should be responsible for anything they do wrong, but if it's not their fault, then I think it should be on the insurance company or the association's insurance company, because it's their community.
Speaker 1:Well, and I agree with you, because the manager and management company are the association's agent. So from a pure agency standard, you want to protect your agent. I think where the management industry in the coming years is going to get even more in the weeds is with all these related affiliated companies that are really acting more as vendors. Acting more as vendors. So you know, if now I'm using your security company or I'm using your pool company or whatever it may be, that's really more a vendor relationship, not an agent relationship. And I think that's where management companies and their counsel are going to have to really give some thought to the difference between an affiliated company and a vendor type relationship versus the very close management board relationship, which is an agency relationship 100% agree and I do believe that the conflict of interest legislation that Florida passed last year that required the disclosure was a good move.
Speaker 2:We as management should 100% be transparent on what we have interests in, because that does take you outside of agency.
Speaker 1:And you know, look, a lot of clients are okay with it, as long as they're informed. They actually feel okay knowing that everything's kind of under one umbrella. So I think you're right. I think just disclose the ultimate decision rests with the board and if things go off the tracks down the road, that disclosure is going to be critical.
Speaker 2:Agreed.
Speaker 1:So when we talked three and a half years ago, you talked about how you built Castle Group and since then you sold the company, which I think is every business owner's dream Maybe I shouldn't say every. Some people want legacy companies, but most business owners, in the back of their head, they're always kind of calculating what could I get for my company with what I've built? So I want to ask you what motivated your decision to sell Castle Group and was there a specific moment, james, when you felt the time was right?
Speaker 2:Yes. Well, first of all, you know I grew up with nothing, so I grew the company and, you know, really never took a lot of money out of the company along the way. So, obviously, like most entrepreneurs, the Castle Group my ownership in it was my largest asset by a factor of a lot. So, again, getting back to risk management, I mean there certainly was going to be a time and I say that because I don't have kids in the business and I completely respect family businesses that want to pass it on to the next generation but that wasn't my circumstance. Number two I was 59 years old and I was fairly certain to maximize the value of the company, I would need to stay on and oversee a succession plan so that the company never missed a beat. So it turned out to be four years, so that was going to make me 63, which is what I am today and I have so much on my bucket list that I want to do.
Speaker 2:There was a time constraint. So, number one, I didn't have heirs. Number two I in the business. Number two, there was a chronological pressure and because I had so many more things to do. And then the other obvious one is what are valuations doing and what happens when interest rates go down. Multiples go up, and so interest rates were down multiples. It was good timing, but that's really what made me make the decision.
Speaker 2:It was a hard decision. This is my baby, and with my partners Greg and Rob, hard decision. This is my baby, and with my partners, greg and Rob. I think the last part of that is and we can talk about some things that happened when we did do the sale, but as of this moment, we had put together an incredible management team that's performed admirably, and so there was great confidence. There was not one lost account as a result of the transaction. So I think if you did this with a weak management team, that would have maybe a different outcome. So those were my stacked up rationale, and when you put them on a piece of paper, you know pros and cons. It wasn't actually that hard a decision.
Speaker 1:When the kids were little. Did you and Kathy ever talk about making it a legacy company? Did you ever look at them running around in the backyard and think maybe someday they'll run this?
Speaker 2:No, never. I did ask the boys. As you know, my sons are all in their 30s now. When they were younger and they were choosing their education, I said you know, do you have a specific interest? And none of them did. And you know, one of my sons said that I never want to work as hard as you do. Like he just saw that as a crazy thing. That's. The other piece I didn't mention is when you're an entrepreneur. It's 24 seven, and the biggest thing I've noticed and recently is just the pressure off my shoulders because I'm not, I'm not responsible even more, even though I can't stop saying we you're sure you're going to be in it forever and ever.
Speaker 1:Listen, my dad owned a company, hollywood Bread, and I'm one of four kids and he told all of us don't that? You're never coming here, so it wasn't even an option for us. He said you're not, it's not happening. I do question whether or not your belief in time compression is accurate, because if you listen to any biohacking podcast, james, you could live to be 120. Probably got a lot of life and a lot of runways still ahead of you.
Speaker 2:It's funny you say that because, as you know, I'm fairly fit guy and uh and take good, good care of myself. But yeah, I got nicks and, you know, arthritis here and sore shoulder there and I'm thinking I'm not making 120 at this at this rate listen.
Speaker 1:Now you've got the time and and and the focus and the funds, you can's a guy out there. I think he's spending like $2 million 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 to get into all your different fitness activities later in the episode. Was there anything about the sales process that was surprising to you? No, I know you mentioned you had a great management team and you couldn't have done it without them. There were no hiccups. Was there anything that was surprising?
Speaker 2:I think we were in a bit of a unique situation. We signed our agreement in December of 2020. But that negotiation started at the beginning of 2020, before COVID, and so we had a verbal agreement. And then, but PMG, who holdings out of Dallas, john Corona, who bought our company they're not a public company, so they financed their acquisitions with debt Well, the credit market stopped, so our deal stopped on a dime, and it wasn't until June when the credit markets had processed okay, covid's not going to end the world where they came back.
Speaker 2:So that was. That was the first shock. The second is negotiation. It's hard, you know. I would tell anyone who was telling the business make sure you don't wait until you have to sell, because the best place in negotiation is if they didn't want to agree with what I needed and wanted, then there wasn't going to be a deal because I could just keep going. And then, if you sell to a larger company, like most people do, it's very rigorous, formal, attorney run, due diligence process. I mean that was shocking. It was the extent of they're digging into your company. It was almost like an invasion of privacy.
Speaker 1:Well, I was going to ask you, listen, it's all about the valuation too. So had you taken those steps ahead of time to figure out what Castle's valuation was independently? So you went into it armed with that information.
Speaker 2:Absolutely yeah. And and I think and I think we may talk a little later what my advice would be to people doing this and we'll get there. But you just don't pick a random year. You want to manage your income statement and your balance sheet so that when it's time to sell, it's in good shape. So I'm a CPA, as you know, by trade, so this was not outside my wheelhouse and I think we Forget.
Speaker 1: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:Yeah, there's obviously stereotypes, right.
Speaker 1:There's a few, but let's talk about now. If you don't mind, I want to jump into that in terms of maximizing your appeal to a potential suitor. If you know, as a management company CEO who may be listening to us right now, james to this episode and you already have in your head, well, maybe in three to five years, I want to sell this thing. Is that the time to start going big and ambitious with different ideas, or to stay conservative and just keep so? Is that the time to really start rolling out new ideas or is it more prudent to just stay the course with what you have and just try to keep, you know, adding more accounts? Does that make sense? What I'm asking?
Speaker 2:Donna, that you'll find. Most sophisticated acquirers of companies put little value on recent and lots of value on what happened for a long period of time. We just stayed the course, but the course was going pretty well. We were going at a good pace. So I don't think I would waste too much energy into trying to do new if the acquirer is just going to discount that value anyways. The other thing about new is sometimes it takes a while to get new profitable or to get new to work. So and again, I'm not an expert, I haven't done a lot of M&A, but I've done.
Speaker 2:One of the attractiveness of the Casa group was its long-term consistent. You know brand performance culture, so that's for sure, but I do. What you said in the beginning is if someone is considering selling three to five years, that is the timeframe. You don't want to decide and think I'm going to do it next year. You want to get a runway to get ready. That's the timeframe. You don't want to decide and think I'm going to do it next year. You want to get a runway to get ready. That's for sure.
Speaker 2:And the other thing I'd say is you better be convicted, because there's no going back. You better make sure this is absolutely the decision you want to make. It took a year of my life to do this transaction and you wouldn't want that to not happen. So I think conviction is a big thing. I think you want to sell when you don't need to sell because your negotiating power is unbelievable. I think you better prepare, as I just referenced. If you don't know what an acquirer is going to look at, go ask someone and then make sure that your company would show as well as it could. But one of the problems with acquiring companies is leadership and management, because if it's entrepreneurial driven like Castle was well, the entrepreneur is leaving. They're selling the business. So I don't think sellers of businesses put enough weight on the strength of the management team, because that's what the buyer's got to be convinced that when the entrepreneur leaves, the company will continue to perform.
Speaker 1:So that was a big but you stayed on, and you and Craig and Rob, you stayed on. I think that's fairly typical with an acquisition like this, that you want the main, the executive team, to stay on board for a while, just to have a smoother transition. Would you say that that's typical?
Speaker 2:Well, I'm not sure it's typical. It just depends on the size of the acquisition. I mean, castle is a big company, so I mean we for sure had a plan. In fact PMG has done over 100 acquisitions and I will humbly tell you they've never seen a succession plan like us. We never lost an account. The company is now twice as big as it was when we sold it.
Speaker 2:We put a succession plan together where I would be CEO for two years, then promote someone it happened to be Jordan Goldman I would move myself to executive chair and then chair and then out. And then my brother Rob. He retired one year before me. And then Craig, our third partner, is staying at least another year because he loves it. But to have that we, you know we brought the right people in at the right time and had us leave it at the right time. I think and I mean I am knocking on wood here because I think that it's gone so smoothly and the best two years Castle Group's ever had have been when I'm not CEO. It's very humbling, but the best two years have been under Jordan Goldman as CEO, not James Donnelly.
Speaker 1:Now under good to great. That would make you the level four leader, I believe.
Speaker 2:Or is it level five? Is it level four or level five?
Speaker 1:Level five leader.
Speaker 2:Well, I think that's the other thing for people considering to sell their business, especially entrepreneurial built companies, is it takes that skill set to go from zero to 100 million or whatever the scale is in that industry as an entrepreneur. It's hard. It takes a different skill set to manage a business of that size and continue to grow it, and so I'm telling you the facts that it's done its best in the last two years. But I also think it probably wouldn't have got there if there hadn't been an entrepreneur to get it to where it was when we sold. But the succession plan is not only good for the acquirer, but often when you sell a company there's some deferred compensation or some bonus compensation, and you might as well max that out too. So I think sellers underestimate the importance of management and succession plan.
Speaker 1:So your people had to be of huge significance to the acquiring company because that's one of your biggest assets. Right, you said you didn't lose a single account, but that's a testament to the team you have in place, and I'm not just talking about the executive team or the management team, I'm talking about the staff, the onsite managers, everybody. So at what point? I guess I have two questions regarding your people throughout this process. One, how deeply did the acquiring company kind of dig into your team across the company, your teams across the company? And number two, when do you start cluing in your people about what's happening?
Speaker 1:Because I got to imagine, I mean, I've seen this in other industries that there can be some instability or concerns when people are hearing the rumors oh my gosh, we may be sold. So can you talk about those two things?
Speaker 2:The first question. I don't think most acquirers look too far past the executive team. The executive team is running the company. The executive team is putting the team in place below them. It would be even more extensive due diligence to go too far down the org chart. In our experience they did their due diligence on the executive team and very little. We gave them our org charts. Obviously, we gave them everything that they wanted to know.
Speaker 2:But the challenge we had was if the deal didn't happen? We didn't want anyone to know that it was even been a discussion. So we were extremely tight with it and in fact when we announced the sale it was shocking. It was like an earthquake through our company because Castle Group had always been James Donnelly and Rob Donnelly and Craig Vaughn. In fact, we lost three senior people within the first six months. They were so upset with us for not telling them. Looking back, I wouldn't have changed a thing. First of all, it's their business, it's their right to do that. And two, if it had not closed we could have just kept operating. And, side note, all three can't return to the business. Yeah, we have 100% of the executive team we had four years ago. We promoted a couple since then. Obviously, as Jordan went up, everyone kind of filled in behind them, but our entire leadership team has been there a long time, even though a couple of them left and came back after a short period of time.
Speaker 1:So I was going to ask you how you feel about watching Castle Group evolve under new ownership. That's number one. I know how you feel about it evolving under Jordan's stewardship because I have to imagine you feel very proud because you brought him up. I mean, we have that at our law firm. Gary Rosen was mentored to be the managing partner to take over from Alan Becker Okay, and Alan was still around. Alan and Gary, our founding partners, were still around with different management in place. Tell us about both. How does it feel to watch the company evolve under new ownership? How does it feel to evolve under Jordan's leadership?
Speaker 2:Feels fantastic and I hope I don't sound too Pollyanna, because not every transaction out there goes well, but ours went really well. From you know, we were happy with the proceeds and the buyer couldn't be happier with the result, and we put together a great succession plan. I mentioned I'm going to Harvard 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 how much you've been reading about Starbucks, but they've just had a terrible succession plan with CEOs and I think one of the things I'm most proud of is is how good a job and I'm reading this case and going Starbucks.
Speaker 2:You know how did you screw this up? This is not that hard. So I do feel like a proud papa. I do still call it my management team. I'm very proud of Jordan and his team and I'm truly humbled by what they have done in the last couple of years. Proud and humble those would be my two words. Especially thrilled, because I'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 my life. The company's doing great, kathy and myself and our family is doing great. So you're always looking for win-wins in life and this is a win-win. So you asked me how I feel. I feel fantastic for both my family and for the business.
Speaker 1:Do you think there'd be any time in your schedule to do some consulting work in the industry, both with regard to best practices for management companies or for companies that are looking to sell?
Speaker 2:I probably won't have the time. It's not that I wouldn't help anyone that wants to help. It's kind of. My defining question is how can I help someone today? But my plate is so full. I still own Crown Residential, which is our multifamily. That wasn't sold in the transaction and I'm the chairman of that company and Lindsay Norman is doing a great job running that. As you know, I endowed the James Donnelly property management program at the Nova Southeastern and we're now one of eight bachelors of property management in the country and I'm putting a lot of time into there. We just hired a director of the program and I have great aspirations. I think you and I have had the conversation before. Every great sports team needs a farm system and I think we as a management company need farm systems. I believe our school and others across the country which I believe will grow, can be that farm system, so I'm gonna put a lot of time into that.
Speaker 1:And that farm system, as you say, the program which never existed before, because it's so hard and we've got people listening all over it's so hard to find enough people to fill all these positions in community associations. Everybody in the industry is going to benefit from that. Any management company can go seek out a graduate of that program.
Speaker 2:It's true, and Castle Group, under my leadership, initially funded the program. I have personally funded the school now, and I think why I'm mentioning that is I believe the industry will no longer see me as a competitor. I'm going to go to each of the leaders of our old competitors, and this isn't just residential, we've got commercial, institutional facility management. So one of my jobs this year will be to go and solicit support from all the major players in the country. And what does that support look like? Well, number one we want to continue to endow further the program, because the more it's endowed, the more people we can support who don't have money to go. And then also direct scholarships for students that would love to be in the program but can't afford it. And then, finally, internships. I mean Castle fills its internship fully every summer, so I need more people in the industry to do that. So my job is to go get support from the industry to support the school, which would be a snowball effect that supports the industry, and you can tell I'm pretty excited about it.
Speaker 1:So glad you mentioned the word competitor. I have wanted to talk about this for a long time and I don't know if Florida is unique in this, but it seems to me that there is a ton of competition and it's not always the friendliest of competition, whether it's the management industry, the legal industry, other industries that serve community associations. Isn't there enough work to go around for everyone, that the competition can be a little less sharp, elbowed, so to speak? What do you think about that? Now that you're kind of out of it and you can pull the camera lens back a little bit and take a wider view, do you feel that some of our competition in Florida amongst management companies is a little less friendly than it could be?
Speaker 2:Yes, I don't want to suggest though that that's unnatural. Florida is probably the most competitive market in the country and I think if you look at any industry, there's some sharp elbows in highly competitive industries. But it is interesting. I've been involved with national organizations and traveled and been with competitors from other cities and states and it is a bit shocking the friendliness, cities and states, and it is a bit shocking the friendliness, the collegial discussions that you know.
Speaker 2:I sat there one time and thinking, well, you guys are really nice to each other, or they wouldn't even go after an account because you know someone else had it and I'm like, I'm not that friendly, I'm a competitive guy and I want to grow my company and I think that's the true of my competitors. By the way, I think you could have any of my old competitors on this show with you, don, and they would all say I always was extremely gracious and I never said a bad word about another company. I always highlighted what I thought we did great. But I do agree with you and it's in your industry and it's my industry the elbows are sharp. But that is our environment here in Florida and it's two-sided sword, with the highest concentration of managed real estate in the country. That's fantastic and we also have the most extreme competition and that's something you've got to manage.
Speaker 1:I imagine you felt the way. I feel that when you are dealing with a competitor who's being gracious and really focusing on what they can do, as opposed to trying to run down the competition, it's refreshing. I think negative advertising doesn't work. I don't think it works to say so-and-so doesn't do what we do. I think you just focus on your positives and don't run down the competition. And it is refreshing when it helps. I go to the annual CAI C-CAL law seminar, not every year, but frequently, and you're right, Sometimes I see these attorneys in the same market in other states and they're really. They collaborate, they refer to each other and I said that'd be nice, That'd be nice if we could do that too in Florida.
Speaker 2:Don't hold your breath, Donna.
Speaker 1:I'm not going to hold my breath. I did want to get back and talk to you a little bit about consolidation in the management industry, particularly in Florida. Again, is there going to still be an ability for the next wave of entrepreneurs, the next James Donnellys, to start a little management company in Florida and build it up, or is really is there not going to be any space for that in our market because of the consolidation?
Speaker 2:I think there'll always be a room in our industry for the startup. Two reasons. One, even with all the consolidation we have, there's no player that even has 5% of the market. So we our perception may be, oh, everything's getting swallowed up by the big guys, but the facts are that's not true. Secondly, our industry, at its foundation, is people serving people. It's a manager taking care of the board of directors and the residents of the community, and that's a very special relationship. And I think there's a place for the very able.
Speaker 2:I'm going to say young doesn't have to be young, but that's what I was when I got started Energetic, committed, customer oriented. And they're going to get one account and then they're going to get a second account and then they get a third account. I also think that, even though scale is important, technology is allowing the smaller player to play in a big field, so the software that the big guys are using can be bought in a smaller contract, so there's a lot of tools that are available to everybody. I believe there is an opportunity for the next great young entrepreneur in Florida that we're going to talk about in a few years. I mean, 30 years ago Castle didn't exist and I think we became the largest private management company in the state, so someone else can for sure do that. I'm confident it's not going to be me.
Speaker 1:No, you've got other things to do that we'll talk about.
Speaker 1:But that is encouraging to know and I do think when you have a newcomer into the market it is sometimes like a breath of fresh air and it is easy for them to play off of the you know 800 pound gorilla that's been in the market for years and years to say, hey, we're new, we're smaller, we're going to do things a little differently. So that's good to know. You said at the outset that you had listened to some of these episodes. I don't know if you listened to the episode with the anonymous unit owner, bob, who was the retired attorney. He is living in a luxury high rise in Broward County. It's a relatively new building. They're still going through the 558.
Speaker 1:Bob was a retired corporate attorney. He had four decades of experience in corporate law and I had him on and one of the things he talked about was not his biggest beef was that he's an owner. He doesn't just own his unit, he owns his prorated share of the amenities and he didn't feel like the service that the management company was providing and certainly the board. He felt like he was treated like an inmate. Now I know Castle always says royal service. Can you tell us about the different kinds of services Some communities, I see, do have that concierge level service where they will go above and beyond and they will, you know, call you before they place a sticker on your car or they'll try to talk. It's just a different level of service, a concierge level of service. Can you talk about that a little bit? Because Bob, I think, might have been trying to stick a square peg into a round hole. I'm not sure, but I want to hear your take on it.
Speaker 2:Well, first of all, I did not listen to that episode, I'm ashamed to say. Secondly, I think that owners maybe don't fully understand the power that they have, but the power that they have for the most part is to elect a board they want to run for them, and if they didn't vote, or they did vote, care about what you get. That's very powerful and you've seen it where whole slates will come in and say enough is enough. So my first comment to Bob would be look, you've got the vote, and it's pretty much one vote a year, with the exception of some things that require membership votes.
Speaker 2:I also have some empathy and I live in a 300-unit condo here and sometimes I'm just shaking my head at what's happening, but it is a lot of moving parts. There's 300 different people that have different expectations of what management should do. Having said that and this is my mantra for the rest of my life why can't we just be nice? And even management company teammates and I'm sure there were some at Castle like the resident is your customer, the resident is going to be the one that votes for the board that's going to keep your management company on. I'm always amazed at how some of the teammates don't understand that relationship, and there's one simple one, I think, and that is this happens in, I'm sure, every building, every community. There's a problem, there's a bad actor, there's a couple of bad actors that are doing something, and the whole community gets blasted with. You guys need to do this.
Speaker 2:And it's and it feels like you're living in a prison, and I think that's where Bob was coming from.
Speaker 1:Absolutely. You're speaking his language. That was his, his main complaint. But do you feel like the management company? Sometimes they become the scapegoat for everything that's going wrong, or maybe even the board is sometimes hiding behind them and is directing them and they're the cushion and they're the scapegoat.
Speaker 2:A hundred percent, but that is you know. You and I have talked before. You know why do you have professional management versus self-management, and one of the reasons is to have that buffer, so we get paid for the buffer. I don't have a big issue with that. What I will tell you is this with the software available and our technology available, we can now communicate. If you think of a high-rise, you've got stacks and you've got floors. There's nothing to stop you from 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 blanket instead of tailored communication and we all feel like we're in prison because we're being painted with the same brush. You know all owners. You cannot leave your towels on. It was two owners, so communicate to the two owners. So my singular piece of advice to boards and management and communities is the day you tailor your communications is the day you're going to have a much happier constituency.
Speaker 1:I know that you have been a huge proponent of technology. I've been to your command center, your main campus. I ask a lot of guests on the podcast how they think artificial intelligence, or AI, is going to impact their industries. You've already seen it and just along the point that you said you just mentioned about tailoring your communications, how do you think AI can help you get there?
Speaker 2:Firstly, I'm not an expert, but what I've already seen is stunning and I'll give you two examples is stunning and I'll give you two examples Right now, if you're an owner or a resident in a community in our case, I think we have 600,000 people live in our community, something like that, and all they want is data. They want their question answered, they want their service request responded to and, honestly, they don't want to stay online waiting for someone to answer at a call center. So now you can go on to the bigger companies' websites and ask questions and in the background, ai is going to find that answer. So I believe what I call self-help and people love self-help is going to be geometrically better than it was. So that's one.
Speaker 2:The second thing is, as you know, in every community there's a data set. There's the owners, there's the roster, there's the rules, there's the regulations, there's the violation history, there's data, and right now, if a manager or whoever's running, you know, an assistant manager needs data, they don't even remember where they filed that. Well, with AI, all AI needs is a data set and it'll go find anything. So I believe you're even going to have management reports written by AI. It doesn't mean that the manager shouldn't obviously review it and edit it, but I think, both in terms of using a large data set and getting exactly what you need to communicate, and for self-help for our residents, I think it's fantastic.
Speaker 1:It is too, but there's always the fear of loss of jobs, right? We keep hearing about this. Is it possible that in the future, in some communities they will have an AI manager?
Speaker 2:I doubt it, but you know you can use a couple of examples that would support that. You know you've heard of these firms that put a camera at the gate and there's no longer a guard and then you talk to someone in some central station and 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 lowest unemployment rates in the US ever, and the Internet was going to do it, the telephone was going to do it, the wheel was going to do it, everything's going to do it. The US is so innovative. I have absolutely no concern that we won't innovate to the point of creating more jobs with the next technology.
Speaker 1:I'm right there with you. I'm optimistic. I think AI is going to make people do their jobs quicker, easier, but I also think it is going to create more jobs. So we'll see. Hopefully, you and I are right on that point. I did want to ask you if you could rewrite the playbook for managing community associations. What would you change? What would you emphasize?
Speaker 2:It's interesting. You're asking me that because Becker did write the playbook at our industry in Florida. I think, donna and you know this better than I, and you and I have talked about it on our Association Leadership Series. The whole governance of these communities can get off on the wrong foot and I'm not blaming developers, because developers hire people to put the documents together and, honestly, they're more worried about selling units or renting units and building than these pieces of paper. So there's no judgment here. But, as you know, the documents supporting our industry right now are terribly weak. They need amendment. No one wants to spend the money. No one even knows what to do to the amendment. So I do think that there's a governance reset that needs to happen and that's both regulatory so we can get it right out of the box, and our existing communities need to redo their documents to support, 40 years later, of laws and the state of their building and whatnot. So I think that is a part of a playbook that I would redo.
Speaker 2:I think on the insurance front, we haven't talked about insurance, but I just don't know that we can't, that Florida can survive. And now look at California without some government participation, because you know we're going to have for sure, in Florida, beautiful people older than me on fixed income. They're going to lose your unit and and that's it is what it is going to lose your unit and it is what it is. We need to have these buildings safe and insured, but I do think there's got to be another piece of the playbook on insurance.
Speaker 2: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 so excited about the property management program is it's taking off, partially because you need to figure out how to monetize your education. If you're a lawyer, a doctor, an accountant, you got some predictability. I believe you now have predictability in monetizing your property management degree. Like we have many managers making north of $200,000. That was unbelievable 10 years ago. So I think if I were redoing the playbook, I would have set up talent differently and everything from compensation to licensure to, you know, managing career paths.
Speaker 1:Well, can I talk to you about the credential for managers. So in the state of Florida it's 19 hours to take the course, take the test. There's similar protocols around the country. Other than those 19 hours, what other credentials could somebody who wanted to be a management professional acquire? I know CAI had the PCAM designation, but this new program you have at Nova Southeastern, what kind of degree do they get?
Speaker 2:It's a Bachelor of Science in Property Management. Every property management company should be lining up because you're right 19 hours versus four years of becoming highly educated property manager. So I know I'm tooting my own program here, but I couldn't be more excited, and I hope another 20 schools open up across the country and I think they will. We're going to be the best.
Speaker 1:Undoubtedly, but how do we educate these boards to become better consumers? This was our struggle too. So I'm a board certified condominium and HOA attorney. I'm also a fellow. I don't know if you know this. I'm a fellow, yeah.
Speaker 2:I saw that.
Speaker 1:Association of Lawyers. How do we but I don't know that every board understands the credentialing differences, and it's the same thing in the management industry how do we educate them to say you know what you are going to want somebody who's really invested in his or her career as a management professional by acquiring this designation, whether it's PCAM or getting the Bachelor of Science in Property Management, as opposed to somebody who you know has done taken the course and taken the test. And that's not to disparage the managers who do that. But how do we educate boards to maybe dig a little into those credentials?
Speaker 2:Well, I think, first of all, a lot of this credentialing is new, like there never was a Bachelor of Science in Property Management. So there's going to be a socialization process. You know I'm always very appreciative of the board's commitments and their sacrifice and you know I really feel badly when they're now being forced by legislation to go to school. And I know it's the right thing. But I'm very careful not to put overly burdened board members. You know they've taken on enough responsibility for no compensation to help their neighbors. I think that this will take time. I know when we are pitching an account and when you're pitching your services, you're going to highlight the things that your firm brings. You know we have four fellows of the property management law in our thing, so I think it's up to us to educate them. I don't know any kind of central body that would do it.
Speaker 1:And even then they say but how much Thank you, thank you for all your credentials. How much? I did want to circle back to what you said about the developer and their documents and I want to ask you how successful Castle has been navigating the turnover process. Before I get to that, I will say that if I were rewriting the playbook when it comes to the way developers create these communities, a lot of the issues that we hear as council is in mixed-use communities or in communities with different phases, different sub-associations and master associations.
Speaker 1:It's always a mess operationally. They feel like there's under-representation. One building has 98 people, 98 units, one has 180. Maybe they have the same representation on the master board, maybe they don't. A lot of times it's the development scheme overall that long-term some of the people who buy in that community, they really feel it's inequitable. Not much we can do about that other than to say do your due diligence before you purchase in that kind of community to make sure you're okay, because you may not be able to untangle this later on. I do wish that developers, when they're going through the turnover process and they've already sold out of all or the vast majority of their units at that point, will unilaterally amend the documents to ensure long-term operational ease for the owner-controlled board. Do you know what I'm saying? There's things they can do unilaterally. They're already out, they've already sold their inventory. It's going to make it easier for that first board and subsequent boards.
Speaker 2:Yeah, and I think that you know they're not going to again. That's the least of their concerns. So I think it's going to be incumbent on firms like yours and ours to go and make these recommendations.
Speaker 1: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 my turnover checklist is hey, let's generate some goodwill here and let's make it easier. You know, maybe rather than having two thirds of the total voting interest in a 500 unit condo to amend the documents, maybe we make it two-thirds of those who are actually voting present and voting, or we even lower it a little more and we make it a majority. Those are the type of things that developers can do that will generate goodwill as they're going out the door. I think developers should also if we've got some developer attorneys listening trademark the association's name and a lot of these luxury buildings we're seeing all throughout Florida. They have very specific logos, they have names, trademark it. It's a nice value add that you can deliver to the community and it doesn't cost, I agree.
Speaker 1:Has Castle been successful in terms of staying on post-transition?
Speaker 2: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 my single piece of advice for management companies and, frankly, for the community is they may not get elected, but get the owner rep group together. They're going to go through their 558 process or the equivalent. Get the communication going early. First of all, it helps the residents because they don't really know what's going on, and helps the management company because you're building a relationship and you know most of our communities have non-competes on the team and so if they love the team, they're not going to get rid of the company, and that's the nature of the business.
Speaker 1:You know a lot of these newer luxury buildings which are going up not by the big name developers we hear, but they're more one-off. I call them vanity projects. Sometimes A lot of them are having in-house so they're creating, as a developer affiliate, a management company and they're sticking them in there for 30, 40 years. Of course in Florida the post-transition owner-controlled board has an ability to cancel that contract. Many of them won't if they're doing a good job. But what do you think about that trend that these developers in these luxury high-rises are often creating management companies that are developer affiliates?
Speaker 2:I don't like it because I want that contract. That's the real reality. But, in fairness, if you have a good brand and you want that brand consistency right through the management, then you're not confident that you can go hire a third party that will be so consistent. Think of Ritz Carlton. I appreciate it. You know, one of our castle was always kind of the higher end of the service level. So we would pitch that developer, say, look, you're a great developer, let us do this and you can micromanage it and put the standards if they're slightly different with your brand. But please let us do it. And sometimes it works, sometimes it didn't.
Speaker 1:I think we're going to see more of that, as we see more of these buildings going up and a lot of them based on luxury car brands.
Speaker 2:I know, I know I'm looking for my Tesla building next.
Speaker 1:Can we switch gears before I let you go?
Speaker 2:Yeah.
Speaker 1:Did you already go to Japan and you were skiing Because we talked about Japan?
Speaker 2:I have. I lived in Japan when I was younger and I've skied there two years ago and loved it so much I'm going back.
Speaker 1:I am going to Japan, as I mentioned, with my daughter, lauren for two weeks in May and it got me thinking. So I've been doing you know me, I prep. So I've been reading a lot and I came across the Japanese concept of Ikigai, which means finding one's reason for being so. From my research, the Japanese culture doesn't really embrace retirement. Okay, they feel that you need to align with what you love, what you're good at, what the world needs and what you can be rewarded for. So, james Donnelly, looking back at your journey with Castle Group, and now you're stepping into a completely new chapter, what would you say your ikigai has been throughout your career, and has it shifted or evolved since selling the company?
Speaker 2:Yeah, great question. I mean, first of all, I grew up with 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 way I grew up, so I was huge financial motivation probably zero to 30. But there's the way my parents raised me. It was always about helping others. And so one of the great things about property management is we exist to help others, and so one of the great things about property management is we exist to help others. So that has been and I think always will be.
Speaker 2:I went to we all go to these seminars, and one of the ones they asked me is what is your defining question, what is the question that you ask yourself every day? And that's a great question and I thought long and hard about it, but I I'm going to actualize that will change as much as I'm retired from the Cassidy Group. I certainly don't feel retired at all. I don't think I've ever been so busy in my life. But I think you know what do I love? I love helping people. What am I good at? I'm really good at strategy. I'm good at communicating, I'm good at people.
Speaker 2:So what does the world need. Honestly, this world just needs a little peace, love and happiness. What I'm preaching now is why can't you just be nice, I mean at a geopolitical level why can't we just all live in our own country and be happy with that? But even in our own little world here and I know social media is making this very difficult, but I can tell you there's not one time you walk through the Becker office and you give someone a big smile, they don't give a smile back. So I think that's what the world leads.
Speaker 2:How do you reward that? I've been rewarded. I need no more reward. I call Hall of Fame that we did very well on the sale of our company. So I don't need any reward other than the self-reward of feeling good. So what am I going to do now? I mean, I had lunch with Jordan yesterday. I'm going to support the Castle team. I'm no longer involved. I have no compensation. I have no relationship other than these are my people. So I'm definitely going to do that and I'm really going to put a lot of energy into the property management program. I've been given a platform to do that because of my standing in the industry and obviously have the resources.
Speaker 2:And now time. And then Kathy and I, you know, have a fairly significant philanthropic function and she does most of that. But I I chime in there when I can. And then I think I told you in our last one I, four years ago, I put on hold writing my book called Life Shaping. I got to tell you I cannot believe James Donnelly, this little guy from Bell's Corners, is living this life. I mean, I have such a rich life from health, from family, from relationships, from friendships, in the greatest country in the world. How did that happen? If I could codify and communicate to anyone and I don't care if you're 16 or 60 you could learn from what I've learned in terms of you know how to get from a to b and uh, I spent the last 10 years putting the data set together to write that book.
Speaker 1:So I, if I, if one person reads it, I'll feel satisfied that it's had its role well know there's going to be a lot more than one person reading that book and I want an autographed copy. But listen, I said in the introduction I referred to you as an industry icon and I didn't just say that because you know I like you a lot and it's true. So I want to leave this episode with you talking to the person who's listening and is trying to figure out how did James Donnelly go from the I remember in the first episode you talking about the growing potatoes on your lawn in Canada to who you are now. I mean, not everybody. James is a bold thinker, a bold strategist. Some you know, not everybody embraces change the way you do, but you know, not everybody embraces change the way you do. I do, perhaps, but for that person right now who's not quite as bold, not quite as comfortable with change, what piece of advice could you give him or her if they're thinking about starting a new chapter, to actually take the leap?
Speaker 2:I'm certain I would have mentioned this in our first episode, but I believe so strongly it will be part of my book, the Success Cycle, where you 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 people fail, because they implement the plan and it doesn't work. No plan works. That's the fact. So the steps that are missing are evaluation and adjust, and if you just keep going around that circle, you have no choice but to achieve. And I really think a lot has lot has to do, donna, with what habits you create for yourself, and there's all kinds of habits about health and lifelong learning and improving. But what I do and I may have told you this before is I've had a mantra that I do and we're on video.
Speaker 2:It's not going to be on the podcast, but mine is to stretch, smile, live and give, and I do that every morning and you can come up with your own, but think about that.
Speaker 2:Every morning I say how am I going to stretch myself? And I don't normally mean physically, but I could be Smile. It reminds me if I project. You know, smiles have regrets about the past and we were like I'm enjoying this conversation with you right now, and so this recenters me every day to live in this day and then give, stretch, smile, live and give. And so every day I figure out how can I give like today I hope someone's listening to this podcast We'll take something away. It'll warm my heart because I will check the fourth box. But if you can come up with your own empowering habit, like I did, of stretch, smile, live and give or whatever it is, even if you're an introvert by the way, I am an introvert, no one believes that because I I've had to lead all my life but I believe if you commit to this plan, this cycle of adjustment, and support it with some habits, I think I honestly I think anyone can do anything.
Speaker 1:I think you're an ambivert, because you can go either way. But you may be an introvert who's just forced yourself to be extroverted your entire life. But I will tell you this I always feel better after I talk to you. I feel better about the industry, I feel better about the US, I feel better about the country, I feel better about the world. You have great energy and I'm so excited to see the new projects and things you do and I'm kind of living vicariously through you, james.
Speaker 2:So thank you so much. I you know your and my careers have paralleled each other and it was very rewarding for me to do the series together with you because you know we you were the attorney initially on all of these accounts and sometimes we're all in alignment, but I think we were really aligned on that and I want to congratulate you again on this series. It's just been fantastic. Such a variety of guests and I'm very honored to be the first and hundredth interview on your podcast. So congratulations, and I will be on the sidelines cheering you on now that I'm no longer CEO of the Cast Group.
Speaker 1:That means so much. Thank you so much, James.
Speaker 2:Thanks, Donna Bye.
Speaker 1: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 rate us on your favorite podcast platform or visit TakeItToTheBoardcom for more ways to connect.