Larry Connor
Founder and Managing Partner, The Connor Group
I came up with a strategy and vision about how we could do real estate differently than the industry by approaching it more as an operating business versus a passive real estate investment. That's why I would hire absolutely nobody from the industry, even people in leadership, management, sales, service, everything. And that's why our model has been unique.
Summary
This week on Leadership Matters, Alan is joined by Larry Connor, founder and managing partner of The Connor Group, a real estate investment firm that owns and operates luxury apartments around the United States. Prior to founding The Connor Group, Larry founded and ran several other businesses across industries, garnering significant entrepreneurial experiences through his endeavors.
Over the course of their conversation, Alan and Larry discuss his early life and upbringing, his inspiring career journey, The Connor Group’s unique culture and structure, Larry’s philanthropic support and the many lessons in leadership he’s learned along the way.
Mentions & Resources
Guest Bio
Doctors take an oath to care for their patients. Military recruits take an oath to defend the Constitution.
Larry Connor lives as if he has taken an oath to his principles and values. This deep commitment drives his decision-making even in difficult circumstances – especially in difficult circumstances.
As the son of a Marine who fought in the Pacific in World War II, and whose mother aided soldiers with her Red Cross service half a world away in Europe, Larry makes decisions based on a sense of responsibility and self-accountability.
Larry’s urgency around decision-making and communication comes from a deep-seated sense of responsibility for the people in his life – it always comes back to people. Always.
He commits to his decisions after consulting with people who are knowledgeable and believable, and then he aggressively pursues audacious goals.
Today, having established himself as a successful real estate and technology entrepreneur and avid adventurist, Larry hustles through his day with the vigor of someone who won’t or perhaps can’t slow down, but always makes time to help others.
Early Life
The traditional school environment did not suit Larry. He lacked focus and couldn’t sit still in the classroom. His parents were told he should consider trade school. But Larry values education and has dedicated himself to life-long learning – it may just not look like the traditional classroom.
After graduating from Dayton’s Alter High School in 1968 with a 2.0 GPA, Larry attended Ohio University. It is here where Larry had a lightbulb moment and would go from being a C student to excelling academically and getting straight As.
From the first day he set foot on campus, Larry was determined and relentless in his pursuits. He would be elected Treasurer of the student government his freshman year and would go on to become the President of the Sigma Phi Epsilon fraternity. In his time at Ohio University, Larry was also one of 22 students out of 4,500 undergrads selected to the Ohio University J Club and would be named a Who’s Who of College Students twice.
Who would have guessed that a kid whose parents were told that he would not be a good fit for college would go on graduate summa cum laude from Ohio University and someday invest in a ground-breaking private school dedicated to disadvantaged children who all too often are written off before they even have the chance to prove themselves?
Education is still an integral part of everyday life for Larry. He has made a habit of seeking the most astute trainers in their fields when he wants to learn something new whether it’s flying a fighter jet or starting a private school to lift children out of generational poverty. Larry will conduct nationwide searches to find the best people in their respective fields and he will do the same for those with whom he works. Investing in people absolutely falls in line with Larry’s principles and values. It always comes back to people. Always.
Entrepreneurship
Despite graduating from Ohio University in 1972 with two degrees – English and History – Larry always knew he was destined to start and run a business. Larry’s entrepreneurial endeavors began as early as high school when he started a house painting business with his good friend, Mike McQuiston. They went door to door and networked among family and friends to get customers. What started as a scrappy, two-man effort became a full-fledged staff of high school and college students who had built their reputation so well that they had more work than they could possibly do.
Freshly armed with a college education, audacious dreams, and a relentless mindset, Larry was eager to make his mark on the business world. But where to start? The answer to this question would come in the form of advice from a friendly neighbor – “if you really want to learn about business, go sell something.” So that’s exactly what he did, taking a job selling Volkswagens at a local dealership in Dayton.
His experience selling cars eventually led to him taking a position for EF MacDonald as a travel advisor for company incentive trips, a job that would find him living in Morocco and Mexico in addition to traveling to Europe 10-12 times a year.
After gaining experience in the automobile and travel industries, Larry reverted back to his original goal of starting his own business and opened Newcom’s Tavern in Dayton’s historic Oregon District in 1977. With no prior experience in restaurant or bar management, Larry was aware of the challenge that lay before him, but he was willing to make mistakes along the way – fail, fail again, and fail better. Two years later he would sell Newcom’s Tavern earning his investors a 300% return.
In the 1980s, Larry would venture into the technology sphere starting Orlando Computer Corp., where he would put his experience and guiding principles to good use. Starting from nothing, he quickly earned a Ph.D. in mistakes and failures. But with each mistake and failure would come a worthwhile lesson. Larry would take these lessons and soon grow the company to become the second-largest re-seller of IBM microcomputers in the state of Florida.
The Connor Group
In 1991, Larry saw an opportunity in the real estate industry and founded Connor, Murphy, and Buhrman. He only had one investor. He owned nothing. He was running on borrowed time. The only thing that was his was an idea. The idea that he could bring a completely different model and mindset to this industry based on values and principles that had guided him thus far. Failure was never an option.
Larry would eventually buy out his partners, creating The Connor Group in 2003. Today, The Connor Group is a thriving real estate investment firm specializing in luxury apartment communities with over $5 billion in assets across 18 different markets in the US.
Episode Transcript
Alan Fleischmann
I’m joined today by an entrepreneur who's founded and led several companies over his successful career across a range of industries. Larry Connor is the founder and managing director of the Connor Group, an investment firm that specializes in the real estate industry with over $5 billion in assets under management. Prior to founding the Connor Group, Larry gained experience in the tech and restaurant industries after founding Orlando Computer Corp and Newcom’s Tavern. Larry is also an avid philanthropist, supporting causes such as healthcare and oceanic research. He consistently gives back to his own community in Dayton, Ohio, creating schools to assist students who need extra guidance and care, and supporting organizations that promote educational access and excellence, mental and physical health care and breaking prison pipelines, among so much more.
I'm excited to have Larry on the show today to discuss his upbringing, his early influences, his inspiring career journey, his philanthropy and the many lessons in leadership he has learned along the way. Larry, welcome to leadership matters. It is such a pleasure to have you on the show.
Larry Connor
Thank you, Alan.
Alan Fleischmann
So you were born and raised in Ohio. You're an Ohio man. Tell us a little bit about your early life, where you grew up with your parents, did you have any brothers or sisters, and what life was like around the house, and anything special about the place you grew up in.
Larry Connor
Actually, I was born in upstate New York, in Albany, and then when I was four, I moved to Boston for five years. I moved to Ohio when I was nine years old. But net, effectively, I'm, you know, I'm from Ohio. You know, middle-class upbringing, really good, high integrity, highly responsible parents, so nothing especially noteworthy or outstanding. So I'm sure in my high school class, where there were 303, I can guarantee you I was not forecasted as the person most likely to succeed,
Alan Fleischmann
Although, am I right when I say that you started some entrepreneurial endeavors early on in your young age?
Larry Connor
Yeah, I did. I started some different businesses when I was in high school, and those continued on, and those veins and different veins in college.
Alan Fleischmann
Tell us a little bit about what those businesses were when you started in. Any lessons learned, good, bad and ugly?
Larry Connor
Well, you know, that's actually a great question. So when I was a teenager, it was hard to find a job during the summer, and I didn't want to sit around. I wanted to work. I wanted to try to make money, and so more out of necessity, a friend of mine and I started a house painting business. Now let's be clear, neither one of us had ever painted a house before, so we didn't have a clue about the business we were entering. By the way, even today, we're willing to take on what other people would say is maybe one, we're not qualified for, two, impossible to do, so we started that business. We knocked on doors for three weeks. We finally found a really nice, older couple who let us paint their house. We guessed at an estimate. It turned out good.
A couple years later, we had a crew of four people, and we had a backlog of almost the entire summer. When we started the summer of houses that people you know wanted us to paint, and why? We learned about quality and exceeding the customer's expectations. And those hold true, whether it was then, you know, or today, in college, I started a couple of different businesses. I went to school at Ohio University in Athens, Ohio, which is a small college town. And at the time, wine was becoming popular, and so I found through a friend of mine a wine distributor in Dayton, and we would go and buy cases of wine that had labels that were destroyed, that they couldn't put in retail stores. And we would load them into cars and truck them down there, and I'd sell them to sororities and fraternities. Again, I didn't know a thing about wine but I told them how good this Riesling was. Just, you know, from a little bit of dollars to the less, rest was kind of guesswork. So that was popular. Also in Athens, there was a real need for transportation, but there weren't affordable cars, so we would buy cars in Dayton, and back then, by the way, I don't want to date myself, but this was like early 70s, and we could buy a car for a couple hundred dollars and take it to Athens, Ohio and sell the same car for $600. And for the people who are buying it, they were good transportation. They were really happy. So it was a win, win. And we'd also, you know, sometimes transport the wine, you know, doing that during that same period of time. By the way, just as a footnote, I worked at a funeral home in Dayton, and I'd go back on the weekends, and I did two things. One, I picked up dead bodies. I got $5 a body, by the way, for that and and then I worked that graveyard shift, no pun intended, from 5pm at night until 8am the next morning at the funeral home. So we had a wide range of business experience.
Alan Fleischmann
Was those experiences at the same time? Were they simultaneous? Are they all different periods?
Larry Connor
Yeah, well, they did overlap. Some of them did, in fact, overlap. So between going to school, which I was pretty serious about, I was a bad student in high school. That's why I went to Ohio. You know, most college kids will go out and look at schools, you know, in their junior, senior year to try to pick. I didn't have that problem, because there was no school in the US that would take me. The only school that had to take me at the time in the state of Ohio, if you graduated from high school, which I barely did, but I did,was Ohio University. And they literally, in the state of Ohio, that was the one university that had to accept you, but they did on orientation. As part of the orientation, essentially said, look to your right, look to your left. One or both of those people will not be here at the end of the freshman year. Their flunk out rated Ohio University at that time was over 50% in the freshman year.
Alan Fleischmann
Wow.
Larry Connor
That proved to be true. It sounds like a lot of this. Rooms were not there. It was the dorm I was in, which was Washington. The hall was filled. We were overbooked with students. So a little small room that you should have two in. We had three in, and by the spring, you could look down the long hallway and not see another soul. Wow.
Alan Fleischmann
You majored in English and history. How did you choose that?
Larry Connor
Well, so I started out in economics. By the way, I probably should have stayed there, but there were certain courses in the business curriculum that I didn't want to take. And I was very intent on writing the ship, so to speak, in terms of my historical academic performance, shall we say. And so I thought liberal arts was a better strategy, and I took English and and even more, maybe worthy of note, I was an English major with a concentration in Shakespearean literature, which, by the way, from a business perspective, qualifies you for nothing, but –
Alan Fleischmann
From a lifetime perspective, I bet you've found ample opportunity to bring up Shakespeare when you needed to, or quote Shakespeare.
Larry Connor
You know, if I'm being very honest, Alan, and if we started to have a conversation, I would remember virtually nothing from that period of time. But at the time, you know, it's all about people. And so the English teacher who taught Shakespeare in literature, a wonderful lady, and I really was enamored. She was a great teacher. And Shakespeare is a very interesting topic, so I think that's maybe what drew my interest.
Alan Fleischmann
What and then, were there mentors along the way at Ohio University, for example?
Larry Connor
No, I've never had a mentor. I'm not suggesting that as a good strategy. In fact, quite the opposite. That's a very bad strategy. I'm simply stating the fact I've never had a mentor.
Alan Fleischmann
Wow. After graduation, you went to work in the car. You weren't a car salesman, but that was different than what you were doing early with cars or no?
Larry Connor
Accurate question. So the neighborhood that I grew up in, the next-door neighbors owned a small business, a grand total of the husband and wife and two employees, and Mr. Wick was his name, Ed Wick. I always thought he was a pretty sharp fella. And so in my senior year, I walked across the yard and I said, Mr. Wick, any advice for me as I graduate from college? And he was a big barrel-chested fella and smoked these big cigars. And so he essentially told me, son, you don't know anything. What you need to do is go sell something to the public. And for some reason, that really struck a chord with me. Cuz he said, no matter what you do, he knew I was kind of interested in starting my own business. He said, no matter what you do, you're always going to have to sell yourself in whatever product service you have. And I'm like, and I was always kind of interested in cars, so I went to a Volkswagen dealership. Knew nothing about Volkswagens, and they were obviously desperate for salespeople, so they hired me. I spent a year there and some of those fundamentals about selling in honesty and integrity and asking the right qualifying questions and filling the customer's need, I still use today to build trust.
Alan Fleischmann
I would say there's something you said now a couple times, is that you went into businesses where you didn't know anything. And that's a huge statement when you think about it, because so many people will use reason as irrational excuses why they can't do something, even if they're interested, because they don't think they know enough. And what you're pretty much saying was dive in and learn it. You learn it. Get to know it, but, well, not but, but building trust is probably the most important ingredient. You actually offered no question.
Larry Connor
So the question you asked, I think, is of vital importance. So someone said to me a long time ago, you will never outperform your own self-image. If you believe that you can do something, whether it's in sports, academics, business, in my mind, you really have a chance. But if you think you can't, well, you're also right. And so love that line. We are with our foundation of operating different businesses. And by the way, the fundamentals that you talked about. What are the fundamentals? Well, ethics, integrity, do the right thing. Build trust. You know, build relationships. Well, all of those are people traits. So in our mind, if you get the right people and you create the right culture and the right mindset, and then you have the right systems and processes, and then you're willing to persevere. It's kind of what we call the Big Four, which is people, plans, processes and perseverance. You can be successful even in areas that maybe you don't have all of the technical expertise, like house painting.
Alan Fleischmann
Yeah, or cars or wine.
Larry Connor
Yeah, or technology. When we started our first technology company, I didn't know anything about technology, but this phenomenon called the microcomputer came out, and I'm like, this is the wave of the future.
Alan Fleischmann
That's so cool.
You're listening to Leadership Matters on SiriusXM and at leadershipmattersshow.com. I'm your host, Alan Fleischmann, I'm here with Larry Connor, Founder and Managing Partner of the Connor Group, an extraordinary entrepreneur, leader, business leader and philanthropist, and we're discussing his life journey.
I do love what you just said. It was so profound. You know you'll never, you'll not ever outperform your own self-image. That is, to me, so true. There's no way you could. So if you really want to do something, you want to do something big and you talk yourself down, you'll never get even halfway there. It's a powerful statement, what you went to work then from there, you went to work as a Travel Advisor for EF McDonald, which allowed you to live and gain experiences abroad. Tell us a little bit about that role, some of the places where you lived and worked, and how that experience helped broaden your horizons as well.
Larry Connor
Did that for three and a half years, traveled and lived all over the world. I was single at the time. I was out on the road 10 and a half to 11 months out of the year, I lived in Tangiers, Morocco, one time for six months. I lived in Mexico City for almost six months. I used to go to Europe, at least, kind of once a month. I went to Asia, Caribbean, and essentially what we did was, the company EF McDonald really had a travel company geared for the Fortune 100 biggest companies like General Motors, Ford, Chrysler, companies like that. And so if they wanted to put on a business meeting or a new car show, or they want to take their top 100 dealers to Mexico for a vacation and some conference meetings. We would handle all of the logistics, hotels, airfare, transportation, activities, everything else like that. And so it was a great learning experience how to run complex operations, because we might move, let's just say, for example, we were going to take people to Hawaii. We might move 5,000 people in a couple of different groups in a matter of seven to 10 days, and handle how to get them there and make them happy and have great experiences and do business meetings, and then make sure that we had the logistics so they and their luggage would get home safe and happily. So I learned a lot about organization, a lot about mindset, a lot about, because these companies had big budgets and their VIPs wanted to, you know, do the impossible. And so we figured out ways that whatever they wanted to do we could do. And, you know, it was long days, but invaluable experience.
Alan Fleischmann
That's amazing. And then what made you involved in the hospitality service business, which it sounds like you were intensely involved in. Is that when you got the idea for Newcom’s Tavern, or did that come later?
Larry Connor
No, I finished that trip after three and a half years, and I knew I wanted to start a business. And a friend of mine and I, you know, we were both single, and we would go to the local bars here in Dayton, and we'd sit there and go there's gotta be a better place than this. And so finally, one night, we said, ook, we think we understand what our potential customer wants, and our target group was people 21 to 35 and there was a brand new historical district being formed downtown. And we said, well, look, we don't have any knowledge. We don't have any expertise, and, oh, by the way, we don't have any money, but we don't think any of those should be barriers or things that we can't overcome. So, you know, we went and did it, and we raised money from people, and we found a bank that believed in us, and we opened it, and it was wildly successful, but it's a difficult and challenging business. So after two years of huge success, we sold it.
Alan Fleischmann
Really returning enormous returns to your investors. I mean, you did extremely well,
Larry Connor
Yeah, we gave it up. But again, it's like, serve the customer, be organized. Have a plan. Have attention to detail, control cost, you know, but give them a different experience. We returned, like, a 300% return to our investors after basically two years.
Alan Fleischmann
And then is that when you went into tech? Is that when you decided that was your moment?
Larry Connor
Well, I veered left into real estate for about 18 to 24 months, starting a company called the Connor Company, where we bought some small apartment communities, office buildings, retail, and then I learned about this new phenomenon called the microcomputer, and decided to go headlong into that industry. So that was Orlando Computer Corporation. Orlando Computer Corporation that we had for nine years was based in Orlando, Florida. At one time, we were one of the two largest sellers of IBM microcomputers in the state. We were also the largest seller of what were called, at that time, local area networks that were manufactured by Novell.
And that's about where the good news of the story ends. And so after nine years of trying to grow and under-capitalize and then the industry, when we started out, the margins were 40 to 50% and by the time we got out of it, the margins were under 10% so I essentially got my PhD in the Hard Knocks of business doing that, and we closed the doors. We didn't go bankrupt. We closed the doors, went out of business, and I lost all of my money and all of our investor money.
Alan Fleischmann
So that must have been a very difficult time to say the least.
Larry Connor
That is a kind way to put it. So I, by the way, this gives hope to all your listeners, so I'm 40, I'm broke, I got a wife, two kids and a farm in Ohio. Actually, I'm worse than broke, because broke means you got nothing. But I borrowed $900,000 from various small banks in Ohio, and even though I had no job and no money, I was bound and determined to pay every dime of that back. So I was worse than broke, but fortunately, through some good fortune and hard work, I was able to pay all that money back four years later.
Alan Fleischmann
That's amazing. I'm sure, when you looked back and I'm sure one of your proudest thoughts, memories when you're looking back and reflecting is the fact that you didn't give up, because you could have, I mean, you could have just drowned in all that. I guess you had no choice but to work to pay off the debt. But there's a part of you that could have had a different journey. You went into investing. You went into real estate, I guess you were in real estate. You just went into real estate investing. That was a pretty bold thing to do.
Larry Connor
Yeah, well, I think your assessment is spot on. And so again, we talk about the 4P’s to success, and the last P is perseverance.
Alan Fleischmann
So tell us the four Ps again.
Larry Connor
So the keys to success are in any endeavor, by the way, not just business. You gotta have the right people. Number two is you gotta have a plan. Number three, you need processes, systems. And number four, ultimately, great perseverance. So no matter where you are, no matter how difficult the circumstances, no matter how many failures, there's suntil opportunity, and you still have a chance. But you gotta believe that, and you gotta have the perseverance, grit to, you know, stay in the fight, so to speak.
Alan Fleischmann
And were there investors in you who decided to bank on you, and even though you had that business that didn't work out. They said, you know, I believe in you. I'm going to stay with you and invest in you again.
Larry Connor
Yeah, very accurate assessment, because if you're honest with people, and you're straightforward, even if you had failures, you can build what you talked about earlier, Alan, trust and credibility. And so I came up with a strategy and vision about how we could do real estate differently than the industry was doing by operating more or approaching it more as an operating business versus a passive real estate investment. And by the way, that's why I would hire absolutely nobody from the industry, nobody, even people in leadership, management, sales, service, everything. And that's why our model has been unique and not only for our residents and our associates, but our investors have returned. You know, exceptional results.
Alan Fleischmann
And when yu say, when you're hiring people, you're hiring people without the – you're going after the grit, the guts, the perseverance, the personality and the drive.
Larry Connor
So we hire for competencies and commitment, and it's personality based. And so I can give you a real quick example if we hire anybody in leadership. They have to have the big six, and by the way, they're all important, and I'll walk you through them. Number one is they gotta be able to motivate and inspire people. Two, they've gotta be really organized and good at multitasking. Three, accountability, starting with self-accountability and honest, fair, constructive accountability of others, or they gotta be culturally aligned with our philosophies and beliefs. Five, they need grit. We define grit as passion and perseverance. We're going to if you tell us it's impossible, we're like all in because we just don't think that exists. And lastly, they need a work orientation if you want to come in at eight o'clock and leave at 4:30, hey, that's great, but not for us here, if you have the big six, we think we can teach you everything else.
Alan Fleischmann
I'm letting this sound great. I love this. I actually believe the three, my three favorite words in the English language, to me, anybody that works with me, is I don't know, and the word that I can't accept is the word no. I always believe there's got to be somewhere we'd have to go back to the drawing board. But I don't mind with nos, I don't know. I trust them. They'll come back with the answers, hopefully soon. But I love the idea when you're saying here, there's a level of perseverance and grit humility, though, but also you want the hunger and the appetite that they're willing to do that. I love what you said, motivate and inspire. You know that they have to stretch and grow and kind of make understand that it's we're not, we're not in this alone.
Larry Connor
You’re spot on. And I think it takes courage and leadership to say, I don't know we love it when people and then we say, use your resources. We have lots of resources here, especially starting out. You're not expected, but you need to be open-minded and curious enough to go, I don't know, because no matter what the problem, there's always a solution. The challenge is, and what I think happens with people, the solution may not be a pair. So in our culture, we will identify what we call the root problem, not the surface problem, the root problem. And then we will channel all of our energy into finding the solution. It may be different, it may be innovative, and we will embrace the fact, embrace the fact that there is a problem. Because if you want to be the best, if you want to strive for excellence, if you want to be a leader, you've got to be willing to take on big problems and big challenges and then find the solution. The other problem is, you know, too many people get stuck on the problem, and that's all they want to talk about, and they don't want to look for the solution. Now, what we don't do, it's not acceptable. One of our non-negotiables is, if you identify the problem, you must come up with a solution, by the way. I'm not saying it's always correct, but you have to think to the end, what's the root problem and what's the workable solution?
Alan Fleischmann
What about the word assumption? I always say you have to go through the gut. There's an intuitiveness in each one of us, but you also shouldn't assume. You know that these people make these assumptions about this down the other they don't ask the right questions, but they're assuming, I'm curious. Your point on that is, I imagine you think about that a lot too.
Larry Connor
First off, assuming things is a dangerous proposition. Yeah, you need to be more analytical. And how you do that is start with asking lots of questions, especially open-ended, and then you have to seek the right solution for the right situation. And frankly, it's hard work, and that's why people give up, or they just assume that this is the likely outcome. Well, you can have a lot more control of the outcome than people realize.
Alan Fleischmann
That's right, this is great. Did Connor, Murphy and Berman, which was the firm, yep, did that, or was that a hit? Was that a success right from the beginning? Did it kind of come slowly, or was it, I mean, you had not been, you had not had experience as an investor, I guess in the industry, you took this risk. Obviously there's something, there's a serial nature to your leadership, of experimenting and succeeding, with the exception of one time, which I think became a great trampoline for the next phases of your life. But I'm curious, was that successful initially, or was it a bit of a journey?
Larry Connor
So the short answer is we lost money the first year, and we never lost money any year, ever again, and in most years, it kept climbing. But the path to success is never a straight one, and it's never an easy one. So, you know, we would go up, and then we'd make some mistakes, and maybe we'd level off. We would identify and own the problems. We wouldn't make excuses. We'd focus our energy on solutions, and then we'd move up to, you know, the next level. But if you looked based upon financial results, yes, overall, you would say it was extremely successful at almost any point in time in the journey.
Alan Fleischmann
What made you decide to have partners initially, before you bought them out, was that something just because that was the nature where you were in life? Or was it interesting?
Larry Connor
Yeah, that's a very simple answer. I had no money. I was broke, so I needed people who had some capital and then some people with maybe some other expertise. So if you said, well, is that out of necessity? Absolutely.
Alan Fleischmann
And I'm curious, would you actually buy your partners out so when successful financially, you decide I want to go alone with your different vision? Why that moment in time, and have you since transformed the business to be very different, because it was that, because it was up, because it was, I want to go in a different direction. I see a different business in the future. I'm curious what made you go in your room.
Larry Connor
So, yes, I think it was a couple things. One of the partners strictly brought a financial investment. We paid him back, bought him out, and then the other partner was more interested in commercial real estate, I decided that the real opportunity was in large luxury apartment communities that really have almost all of the characteristics of a typical operating business, versus some commercial properties that really don't and so I ended up buying him out.
But I will tell you as a footnote that we or I fundamentally believe you should share the wealth. What does that mean? So 20 years ago, we started a partner program, and unlike most partner programs for senior leaders, C suite, whatever, anybody in the company can become a partner. Today, we have 71 partners. All of their ownership comes from me, so there's been no dilution to our outside investors. So I'll give you an example. We have two partners who are grounds people. What that means is they pick up trash at an apartment community, we have people in accounting, recruiting, sales, service, administrative, who are partners. And by the way, to give you some context, what that's worth. So once a person becomes a partner, generally, five to seven years after they're a partner, they make, they may make, in any given year, more money from their partnership interest than they do their salary.
Alan Fleischmann
That's amazing. That's incredible. It's an unusual model, to say the least.
Larry Connor
What's unique about it is you also, you know a lot of partnerships, you're a partner. You have to recertify every year, and our criteria is three fold. You have to be excellent in your job responsibilities. Two, you have to be a role model in the company. Three, you have to help others. And if you do that, you get recertified. And by the way, in any typical year, generally, 95% of our people get recertified. But this is not like being a tenured professor, that once you're in, you're all set, and you can coast. You have to keep earning that partnership. And by the way, that program continues to expand. Within four to five years, we'll have over 100 partners in a company right now. Today, we have 435 associates.
Alan Fleischmann
That's great, and most of them are in Dayton?
Larry Connor
No, they're spread throughout the country. We operate in 18 cities. So every single city is represented by at least a partner in some role.
Alan Fleischmann
So you actually, when you just start with it, be a role model, obviously, be excellent. And then that third one is a bit like being a mentor, right? You have to take care of others.
Larry Connor
So absolutely. If you're a partner, you're an owner, you have to think like an owner, and you have to act like an owner. Or if you're an owner of a business, you don't just take care of yourself. You're responsible to take care of all the other people that you're working with. And so it's a powerful strategy. And yes, I'm just surprised, and by the way, people have asked me, maybe some of your listeners, well, you're giving up, you know, 15, 20% of your total ownership. Why would you do that? Well, it's a real simple analysis, and if you think about the shape of a pie, and I know we're just on audio, but would you rather have a small pie that maybe is six inches in circumference and you have 100% of that? But would you rather have a pie that's 24 inches in circumference and you own 80% of that? Well, that's how you can leverage your most important asset, which is people, to create that much bigger pie. And even though you've taken 80 or 80% versus 100% you're a lot better off, and so are all your other people. So in a world of what I think aren't a lot of win-wins, this is a true win-win.
Alan Fleischmann
That's awesome and their attention becomes really high, too. People stay, they become part of it. And that culture you're building, yes, so you've grown. Then it counters a $5 billion private equity real estate firm, and you generate over 38% annual ROI rate of return since the firm's inception. And you have a kind of a model that is unique, if I, from what I understand, what do you contribute to this model and this outsized, long-term performance, and tell us a little bit about that model, actually, what stands out?
Larry Connor
I mean, so, yes, we're not, there's a differentiation. We're not private equity, but we are a real estate investment firm, private 5 billion is correct. The 38%, it's actually 30.4% and that's after fees, and that's an annual IRR business of 32 years. And that's our average each year, in the aggregate over 32 years. And if you look at the last five years, it's 38% in the last 10 years, I think it's 31 or 32% so we've been able to do it in up markets, down markets, static, and so the only – first off, most people think that that's impossible. We're used to hearing that, or they think somehow we're playing fast and loose in the numbers, which we're not. We have things audited. Or three, somehow it's smoke and mirrors. You can't do that and have those returns for that long of a period of time, but the only way you can be really, truly exceptional, you have to be dramatically different, and you have to be disruptive. And so if you look at how we operate these businesses, whether it's on the customer service side, the people productivity side, the revenue side, or the expense side. It's a totally different model than anybody else runs in the United States.
Alan Fleischmann
That’s incredible. And again, you're also hiring people outside of the real estate industry, which only double underscores the fact that your culture is the winning part of this. You're bringing, obviously you're hiring, as you talked about earlier, extraordinary people with hunger, perseverance, grit and strong empathy skills, I imagine, and humility, but then they kind of become part of what you said. You'll teach them everything else. This, this core values, this counter core values. What are those values and how do you believe they contribute to that success? It sounds like it's a huge part of the winning formula here.
Larry Connor
Great question. First off, we don't have a mission statement. In our experience, mission statements are plaques up on the wall when nobody actually ever does anything. So core values, by our definition, are the two things that you live by. It's your deeds and actions. And so I'll walk you through it. Number one is, do the right thing. The reality is, we all know what that is, and that's non-negotiable. I don't care who you are. If you don't do the right thing here, you won't work your period. Two people count. This is not an endeavor. It's a we. It's a team endeavor. We will not be successful as individuals. We will win together by having the right group of people. Okay, three, think long term, not short term. Frankly, we'd be a lousy public company, because we always think about what matters long term, and we're willing to take short-term pain, short-term retrenchment. Sure, we're willing to take a step back in order to take three steps forward, if it's long-term been sustained for relentless pursuit of excellence, and by the way, that's in everything we do.
And it can be small, it can be big. It could be here at the central office. If you ever visit our offices here, you'll see our offices are very unique in terms of how they look and how they're designed. So we are fanatical about excellence in everything. And then the last is what we call the Circle of Success. And this is a leadership philosophy. And, as a leader, you need to do four things on the circle at the top: set clear expectations; second measure, ou can measure everything; three, accountability, individual accountability, whether with yourself or others; and then four, reward and recognition, people need to be recognized in tangible and many times unique ways for the tremendous contributions that they're making. So if you aggregate all of those core values together, you can end with some exceptional results.
Alan Fleischmann
I missed one. It was set clear expectations, measure and then rewarded and recognized, what?
Larry Connor
Well, there are four. So set clear expectations. Number two is measure. Number three is accountability, starting with individual and self accountability, and then number four is reward and recognize.
Alan Fleischmann
Yep, that's great. That's powerful and practical as well, right? That's the other thing too, right? It's, you know, the idea that you've been giving people recognition, talking about it makes people feel accountable, is also about them owning it and owning the excellence you talked about earlier. Yeah.
Larry Connor
I mean Alan. You know, it's easy, especially as you grow to make things complicated, bureaucratic, slow, moving. We think brilliance is simplicity. So the bigger you get, the simpler you need to make it.
Alan Fleischmann
Love that. And you know what I love about this, too, in the age of AI, where we're talking all about innovation, technology, the role of human beings from every part of your career, including right now, there may be wonderful ways in which AI can be certainly helpful. I'm curious if they are. But at the very core, you're really about the human dimension, the human dynamics, the human leadership, the human promise and potential.
Larry Connor
At the very core here, once again, a very accurate and on-point assessment. So think about AI. And by the way, generally, especially in our industry, we're very much because of our background and technology, probably at the forefront. And so we have two very specific strategies which we think are groundbreakers, one in marketing and the other in recruiting. And keep in mind, it's in vogue now for everybody to talk about AI, but when I ask business leaders, in most cases, it's a general term, but they can't really say what they're going to do and exactly how we can so how we view it is. It's not the end all be all, but it's a great tool.
Alan Fleischmann
With your humans leading in, rather than it being led by it.
You founded two other companies I know, Heartland Regional Power and First Billing Services. Are they complimentary to the day-to-day business, or is that, are they separate on different lanes?
Larry Connor
Yeah. So the short version is Heartland has been rebounded, called Regional Billing Services, and it's an integral part of our current business. So it's still operating. It does a great job.
The other company was an offshoot of that, called First Billing, that we spun out in 2012 utilizing, we had designed the software in the Heartland Regional probably eight years before that, so we separately licensed that and went into another vertical. You know, in typical fashion, we went sailing into unchartered waters, but we thought we had the right structure. We got into it. We were essentially a FinTech company doing back office payment processing and for you water utility companies, kind of small to medium-sized communities.
The interesting part of the story is, you know, we thought, well, we know a lot about business. We all have experience, you know, we'll lose money for a year or two, and then we'll make money, and everything will be great. Three years later, we're losing $150,000 a month, and the burn rates get worse, not better. So we faced reality, we identified the root problem. We were willing to make the difficult decision to kind of restructure the company. And three years after that, we sold the company to private equity for just shy of $58 million.
Alan Fleischmann
Well done. There you go. Goes back to the perseverance part, to the vision, the plan and the perseverance. Yeah, so you are one of these. I'm also very struck by, you're a huge advocate of breaking the cycles of generational poverty. And the Connor Group has a nonprofit investment arm, uh, kids and community partners, which invests in dozens of organizations that contribute positively through education, mental and physical health care, breaking the prison pipeline like I mentioned before, and then you could contribute more recently, I guess, about $1.25 million to the Mental Health Organization, Lindner Center of Hope. Why is this cost so dear to you and as the one you chose?
Larry Connor
So we have to go back to fundamental beliefs, and we've been very fortunate. We as a team, as a group of people, and so we think we have both the obligation and opportunity to give back. There's lots of good endeavors and lots and lots of needs here in America, whether it's addiction, homelessness, you name it. And so we said, okay, in all the things we do, we try to be narrow, deep and focused. And so we picked under-resourced kids, whether we're doing it locally, regionally or nationally.
And so today, we have some 21 different programs, most of which are centered in that vein, in terms of dollar amount. So for example, this year, we've contributed almost $25 million to various endeavors just this year, and our game plan and commitment is to invest. By the way, we call it philanthropic investing. Other people would call it, you know, donating. We don't just write checks. We act like investors in good programs. We can help make great programs that we start and I can talk about one or two of those that we started from the ground up. And so our commitment is to make not for profit investments, quote, unquote, of $800 million in the next 10 years. And if people were to ask us why, it's really simple – kids are the future of America, and we believe that if we can level the playing field for some of these kids in terms of opportunities and resources that these underserved, under-resourced kids can do as well, if not better than their peer groups.
Alan Fleischmann
You tried to name your son after also also or named after your son?
Larry Connor
Well, one of the strategies is, my son has Down syndrome, the youngest son, and he's a super great person. And we have a strategy that we develop called Collins Lodge, and it's for adults. And unfortunately, those people, you know, they go through school, they have IEPs, grade school, high school, and then they're in free fall after that. So in most communities, there's no structure, there's no strategy. And so we created that here in Dayton, and we have Collins Lodge and members, and it's been extremely successful. Again. We kind of build our own model. We didn't follow what other people did. We got really good at leadership. We're in the throngs of probably expanding that to Cincinnati. So that's one example, by the way. Probably a bigger example is we started the first private nondenominational school in the state of Ohio, preschool through 8th grade called the Greater Dayton School, and it has a unique approach to really focus not just on academics, but the entire child and the family. And the results that we've been able to do have been extraordinary.
Alan Fleischmann
Which is amazing actually, because you're covering areas where there's such need, such impact, it's amazing actually. And you've done a lot, you know, you've done a lot, actually, across a whole bunch of different schools as well. I love what you're doing with Collin’s Lodge. You also have spent 17 days on the International Space Station, and I did not expect that in partnership with Mayo Clinic and Cleveland Clinic to conduct groundbreaking research, and that's around microgravity, focusing on the heart, the brain, the spine, aging. Talk a little bit about that mission. I know we're running out of time, which is bothering me, because I could spend a whole hour on this topic. But tell us a little bit about that and, you know, you've been dealing with the ocean, you've been very much involved in space in general. I'm just curious how that came to be, and what are you hoping to get out of it?
Larry Connor
I'll give you the short version. So I had the good fortune to be the pilot on the AX One mission that launched in April of 2022, the first all-private astronaut mission ever to the International Space Station, and we were there for 17 days. Myself and my three crewmates conducted over 200 hours of groundbreaking research on 25 different research projects, some of which we were supporting both the Mayo Clinic and Cleveland Clinic.
Alan Fleischmann
It's amazing between the science of space and the science of the ocean, which you've also, you know, you've also traveled to the deepest parts of the ocean. It's amazing.
Larry Connor
Yeah, they're the same, but they're very different. So I had the good fortune to do three research dives in the Marianna Trench down to depths of 36,000 feet, supporting the research of seven different scientists.
Alan Fleischmann
That's amazing too now, and I mean, that's a big part of your life when you're not running the company and doing your philanthropy, I imagine it's the science of the medical, uh, breakthroughs that you're hoping to discover through this working space and in the ocean.
Larry Connor
So we have a fundamental belief, Alan, that you should take on as you probably sense, what some people would say is impossible tasks or goals, but we don't do them unless they meet two criteria. Number one is they have to have a purpose, and number two, they need to be challenging. And yes, those things you just described checked all the boxes.
Alan Fleischmann
That's amazing. What advice, in our last minute or two, what advice would you give other entrepreneurs? I mean, there's no one quite like you, I would argue, Larry, but what would you give other entrepreneurs who are looking to create, you know, dynamic, challenging cultures in their work and cultures of accountability? But it's not just about business success, which you certainly had like no other, but how do you create economic well-being for others, for your employees who've shown it? You're doing it for the community. You're doing it for greater society, and you're coming up with breakthroughs, again, built on this, essential ingredient, which is you're not necessarily applauding expertise. You're, you know, where people come in and they lecture you, you're actually applauding discovery and having everybody feel that they actually are that scientist, that discoverer, you know, the explorer. And that's something that actually is probably the greatest gift to humanity. I'm curious, is that kind of what you're telling people, you know, again, goes back to this idea that you're only going to be as successful as how you value yourself, and if you're not going to see yourself that way, then you'll never get there.
Larry Connor
So I've not had anybody Alan really explain it that way, but I think you're dead right, that a lot of it is about a willingness and desire with people to discover things. And so if someone was to ask me, entrepreneur, I would have a few thoughts.
One, aim high. Don't let people tell you what you can't do. You decide. Two, it's a journey if you're doing it just because you want to make X amount of money, it's not the right reasons to do it. And frankly, when I've seen people like that, most of the time they haven't been successful. You've got to have some passion and purpose around whatever your endeavor is, get the right people who are like minded, you know, and do it together. And do it as a, you know, as a team. For you, I don't make excuses. Well, I can't do this because I don't have money, or I can't do this because I don't have the training, or I can't do this because I don't have whatever, X, Y or Z. You can't get to where you want to go by talking about the “can't, you get to talk about what you can do, and then maybe the last is looping back to what we talked about earlier. I can assure you it will not be easy. You will face challenges and obstacles, but if you have belief and you have perseverance, the journey can be extraordinary.
Alan Fleischmann
And the imagination and that, you know, there's a stubbornness to this openness. It's an irresistible combination of humility and confidence. Actually, you know, the idea that I don't know everything, therefore I can discover is so exciting that just the curiosity muscle is developed into a high level. And then this idea that if not me, then who isn't just there's no arrogance in that. What I love about this, Larry, it actually goes back to what you said at the very beginning of the show. There's a level of responsibility and accountability. If I am, if I am going to be given the privilege of being an employer, a partner, an investor, you know, then I have to play my role in the community and elsewhere. And I think that's not only commendable, it's extremely powerful. So I'm looking forward to diving into inundate me so I can and then come back on the show again, and let's talk more about these principles, because what you're doing is something that can be adapted to all kinds of entrepreneurial activity, both in the civil society world in the private sector, world, and frankly, I would argue, in public sector as well, how you lead and how you define your leadership, and then enjoy the journey I get. There's a level of joy, there's hardship, there's burden, there's responsibility, there's difficulty, there's adversity, and there's even sometimes, by definition, I won't say failure in your case, because you turn into a challenge, but they're setbacks, but yet you just keep moving forward. And that's a great ingredient for everything, including public life as well as civil society and the private sector as well. That's leadership.
Larry Connor
Alan, I appreciate your kind words, and yes, I'd be happy to come back. And one of the things you may find of interest is we wrote a book about our culture, probably, I don't know, seven or eight years ago, and we really did it for all our associates and the new people we hire. And we like helping people, and we don't really have an agenda, and so we're not interested in trying to sell the book or make money, but for you, or any of your you know listeners, we'll get you a copy, and you may find it of interest.
Alan Fleischmann
I'm looking forward to it. Send me a digital one today, if you can. I'd love to read it starting today, and then let's get a hard copy. And then if you're willing, let's come back on and talk about the book.
Larry Connor
The book, the good news is it's an easy read.
Alan Fleischmann
The easy reads are the best ones, because we can actually absorb them and learn from them and live by them. I hope so.
Well, you've been listening to the leadership matters on SiriusXM and leadershipmattersshow.com. I'm your host, Alan Fleischmann, we just spent the last hour, and I wish more, with Larry Connor, who's an extraordinary business leader, philanthropist, author, and I would say, you know, philosopher, you've been a little bit a practical, pragmatic philosopher, but how we can live our lives, because there are many lessons in leadership that you've shared today, and those about building culture and how culture matters is really what defines us and needs to define us going forward. So Larry, thank you so much for the time you.