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Foreign.
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Welcome to the Trepwire Podcast, the show where commercial real estate needs data and insights. This is a special guest podcast. I'm Hayley Keene with trep, a data modeling and analytics firm for the CMBS commercial real estate and CLO markets. I'm with Steven Bushbaum, head of Applied Research and Analytics. Today we're joined by Larry Conner, founder and Managing Partner of the Conner Group, one of the largest privately held multifamily investment firms in the United States. Larry founded the Conner Group in 1992 and has since built it into a multi billion dollar platform focused on acquiring and operating high quality apartment communities across major US markets. The firm is known for its disciplined underwriting, operational excellence and performance driven culture. Beyond real estate, Larry is also an accomplished adventurer. He served as the first private pilot to reach the International Space Station on the Axiom Mission 1 in 2022 and has particip participated in deep sea expeditions to the Challenger Deep, the deepest part of the ocean. He is also deeply committed to philanthropy, dedicating significant time and resources to initiatives that support underserved youth. Larry, thank you so much for joining us today. We're so excited to explore not only your real estate journey, but also how risk leadership and responsibility intersect across everything that you do. Maybe we can have you from your perspective. Start with your background and how you built the Conner Group. Can you walk us through how you got into real estate in the first place and what led you to create your firm in 1992?
[01:42]
C
Sure. Failure.
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A
I like it. It's a great motivator.
[01:46]
C
I had been in the computer industry from 1981 to 1991. We had started out in the retail sector of the computer industry, quickly realized that was not the place to be. And keep in mind in 1981 there was this revolution called microcomputers with Apple leading the way and IBM shortly following. So we spent nine years growing the company. We were actually based in Orlando, Florida. We became the second largest reseller of IBM microcomputers in the state. We were also a leading provider of lans LAN local area networks. Unfortunately, the industry exploded, margins dramatically compressed. It became very, very capital intensive, which we started on shoestrings. So we didn't have much capital. And I got what I would call a PhD in business. And how that translates is through failure. And the reality is you learn a lot more through failure than you do success. So we learned a lot in that nine year period of time and then we closed the doors. We did not go bankrupt. Actually we closed the doors in 1990. So I'm 40 years old, I have a wife, two kids and a farm. I have no company and I'm broke. I'm actually worse than broke because if you're broke you have no money. In this case I had no money and I had borrowed from various lenders some $900,000, which probably today is worth 3 or 4 million. And I was determined I was going to pay every single lender back. So that was the problem. But the hidden gift that I had was almost a decade of being involved in a incredibly fast moving, ever changing industry. And so I and another fella who was not in the computer industry decided that we could start a real estate investment firm, build it a different way and intentionally build it all with people who had never done it before. And rather than treat it as a passive real estate investment, we were going to treat it like any other high performing operating business based upon people plans and processes. And so that was the genesis for starting the Connor Group.
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A
This is really interesting to hear given where we're at currently. When you've heard so many folks say where we're at with AI is in very much. There's some very interesting similarities to where we were at say in the 1980s with the introduction of the computer for how that could shape business and the economy. We're kind of doing that all over again with AI. Looking back after more than three decades, what's maybe changed the most for you and the industry and what has stayed more or less a constant?
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C
So let's talk about the constants first, or what we would call the fundamentals. Real estate and specifically apartment communities are about execution of a number of fundamental things, or at least that's the way we look at it. And it actually starts with something that's really not talked about in the industry, which is customer satisfaction or resident satisfaction. We are able, by the way, using AI to real time, gauge whether our residents are satisfied. We have real time data from the last 30 days, last 90, and that's what we focus on. Because if they were satisfied two years ago, doesn't mean they are today because this is where they live. And so it's constantly changing, either better or for worse. So for example, are you happy with the maintenance technician who came there yesterday to fix your heat, especially this time of the year? Or are you happy with the office and how they handled your work order? Or are you happy with the physical facility this time of year? Maybe it's the snow and the other time, maybe it's how the outside is being maintained. So by having this real time information, it actually forms the foundation of one of our beliefs, which is you're far better off retaining residents than making a transactional business. The reality is most, not all people in the real estate apartment industry think of it as a transactional business. People move in, people move out. We don't think of it that way at all. And in fact, our whole renewal process starts roughly four months out with a visit with the apartment resident and determining, hey, are you satisfied? And then if you're not addressing that before we ever talk about renewals, the difference of that is, is if you really look in the industry and the numbers are a bit fragmented. Steven, as you, as you're well aware of, you know, you might retain, depending upon the apartment community, 45 to 50% of our residents, we routinely retain 60 plus percent. And so it well may not sound like a huge number. If you have 16,000 units like we do, well, that may mean that you have to turn over 2,000 less units and have 2,000 of them not sitting vacant for 45 to, you know, 90 day period of time. So again, our whole thesis is based upon operations. And the key there is the people that you have, service, sales, management, the plans and the processes that you execute.
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A
I absolutely love the elegance and the simplicity of that plan because let's face it, at my, I don't need to tell you, you know, firsthand, executing on that business plan is not necessarily easy or straightforward, but it's a very clear core mandate to go by. And I can tell you from being a tenant firsthand, that matters the world from a tenant's perspective for how you think about where you're living and how you treat the building. Let's face it, the turnover and maintenance costs for unhappy tenants. I can't say I've ever seen an exact stat here, but I have to imagine it's an economically meaningful number compared to happy tenants.
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C
Yeah, so that's a good point to bring up. Steve, Here's a simple map. Somebody moves out and let's just say they're paying rent of $2,000. I know people talk about they can turn and re rent and have it reoccupied in 30 days. The reality is, after doing this for 33 years, it doesn't work that way. If you're doing a really good job, you can have the people vacate, turn the unit re rented, have them move in with a quality resident in 60 days. You're doing a really good job. So let's say $2,000 a month, two months, that's $4,000. And let's just say you spend $1,000 and all the cost to not only turn it, but advertising and everything, it's $5,000 per unit, okay? And so then if you say, well, geez, we got a 300 unit apartment community and we are turning 10% less units, so that's 30, you know, units, and then it's $5,000 a unit, you just saved straight to the bottom line, $150,000. And the reality is the numbers are actually bigger than that because you don't get all of those units rented inside of that 60 days and or you have to provide a lower rent or a concession with someone moving in. The hidden real benefit here is another thing that people don't either talk about or realize. The fact is, if you provide great, what we call customer service, resident service, that resident will pay a higher rate than the new resident that's moving in. So for example, in this current market, if you go across the country and you look at rents, most markets you have negative re rents and negative renewal rates. In our case, almost without exception, we have positive renewal rates that are anywhere from $80 to $150. And again, if you spread that over 16,000 units, it's a massive difference from a valuation calculation. I mean, you understand the math. If you have, let's say a 400 unit apartment community and let's say that 230 of the residents stay and they take a simple math $100 increase, you just built a rent roll in a positive manner. $23,000. Well, that's 23,000amonth times, you know, roughly 12 months. So if you round up the numbers, you're close to 300,000. Just put that in a 5 cap. Well, heck, that's $6 million of incremental value by doing one thing, keeping your residents and getting an increase.
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A
It's beautiful. It's such an executable business thesis. Much better to me than the complexity that comes with the difficulty of a value add strategy. I'm a big believer and fan of the satisfied consumer premium for multifamily rents. Having had lived in two drastically different buildings in New York City myself, I was more than happy pay that premium.
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C
Well, to your point, are you going to move over $200 a month increase if you're happy? Well, $200 a month, that's $2,400. You can't move for that. Right. And plus all the hassle of moving. Okay, and so by the way, interesting point. Many people in the industry Talk about, oh, it's a value add play. Well, the biggest value add play is, is operations. It's not the physical facility upgrade of units or amenities. And people say, well, I'm going to upgrade the unit and I'm going to spend $15,000 and I'm going to get a $250 increase. If you go to lenders across the country and say, hey look what really happens, they say yeah, they spend 15,000 a unit but we take whatever their proforma rate increase, in this case 250 and we cut it in half because the statistically validated will tell you it's about half what their forecast is. And by the way, our experience has been that's accurate versus improved customer or resident satisfaction, then you may be able to actually reduce costs if for no other reason, turnover, less turnover and your revenue is going to go up both in terms of occupancy and in terms of rates.
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B
Yeah, Larry, it's really fascinating how you've built such a data driven operation. I think this is a good chance to pivot and reflect more on some of your long term strategy here. You've invested and been a part of this industry across multiple downturns and different parts of the cycle. So can you walk us through your experience, through cycles and then maybe we can pivot to get your take on where things stand today in our current environment.
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C
So Haley, two part question, I'll give you, I think a two part answer. So number one is to be successful long term you can't stay the same. You have to continue to change and improve. And our belief is try to simplify. As you get bigger, everybody gets more complicated. What we've tried to do is we get bigger, tried to simplify. So what may have been working for you 25 years ago may not work 10 years ago or today. It's a very interesting question about the future. We actually think you're at the dawn of a seismic change. And what is that? So let's go back and think about that time period between 2011 and 2022, 11 year run period of time, unprecedented factor. What are the interest rates that U.S. economy has never seen before? And by the way, there's a good chance in our lifetime we'll never see again being able to borrow at 3%. The economics and the valuations don't change a little bit. They change dramatically in that kind of environment. So that's 1, 2. The market is awash in liquidity.
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Why?
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C
Well, a multitude of factors. So you certainly had lots of stimulus. Whether it's from the government, the Federal Reserve or other sources. Two, we saw a migration for a number of investors, both private and institutional, out of the traditional equity markets and into harder assets like real estate. Well then inside of that you have the third phenomenon. People aren't going into office buildings and retail because they can figure out that's not a good place to be. So what do they do? They massively crowd into basically two sectors. Sector number one is apartments and sector number two is industrial. So you have the confluence of all these events. And so you go from a traditional marketplace of cap rates being depending upon the market, depending upon the particular type of apartment community, anywhere from a 5 cap to 8. Well then all of a sudden you keep being compressed and compressed where suddenly you're down to cap rates anywhere from 2.75 to a three and a half. And the three and a half are even on B type assets and B or B plus location. Couple that with, for example, here in the Medwest where we're located. Historically, rental rates go up depending upon the city and the particular apartment community. 2 or 3% a year. You may have a year where it's 4%. Well, literally you see a change and double to 6 or 8% and in some cases 10%. We think all of that is over. We think it all changes and you go back to what we would call a more historically normalized market. One that maybe you saw in the 70s or 80s or 90s into the 2000s, which is cap rates in that 4 and a half to 6 and a half percent range, borrowing cost in the 5 or 6% range, maybe some less, some a bit more rental rate increases. Unless you're in a hypermarket with a hyper location. You know, in that 2 to 4%, well aggregate all that together, it's a dramatically different outcome. And so I'll finish with one thought. If you were to take a look at our returns, which have been very unique. So if you look over our 33 year period of time, our annual, this is key, annual IRR returns to our investors after fees is 30.4% annually. Rarefied air. And if you look at our return to our investors after fees over the last 10 years, it's been 35%. We are saying to investors do not expect that in the future. We are saying to investors that it's going to be significantly less. And we are generally the largest monetary investor in all our funds. Our expectation is the returns will still be good, but it's more of 20 to 25% than 30 to 35 so.
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A
I got to ask then, given where things sit today in today's environment, what does a compelling deal look like to you? What, what are you looking for in prospective assets out there?
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C
Great question, Stephen. It's what we call the down the fairway property. We build our own models, by the way, and we constantly go back. Not unlike what you do is look at all the data and analyze, hey, where were we most successful, where did we fail, what did we learn and what do we change? So the down the fairway model for us is as follows. 325 units or less, suburban location, great floor plans. And we have a proprietary grading system based upon what we know. The data tells us that residents are looking for. And so we grade out all the floor plans, whether they're one, two or three bedrooms. We also grade out the amenities. We also look at the realistic opportunity for us to improve the bottom line or net operating income in the first two year period of time. And we aggregate that all together. We have a property weighting score. By the way, one of the big factors is the quality of the schools in that suburban location. And depending upon if it scores, this won't necessarily mean anything to your listeners, but if it scores like a 35 or greater, then we're going to be pretty aggressive in buying that because we know historically those are the deals that we've done exceptionally well on. And our model, again to finish the point is a little bit different. We're not long term holders. So what we're going to do is we think about it as buying a business. Okay, we're going to buy this $85 million business. That's our average that we spend on apartment community. It just happens to be an apartment community. We're going to improve customer satisfaction, we're going to improve the operation, and then in 24 to 36 months we're going to do a capital event. In most cases that means we're going to sell it or we're going to refinance it. So we're going to do a very, very high transactional volume versus just big, this massive portfolio of 50 or 100,000 apartment units.
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A
I love this, by the way, because the timeline aligns with exactly what I'm thinking about in my head, which is this chart that shows the distribution of hold times for multifamily. And what seems to have been the sweet spot for hold times and returns. And it was, I want to say, around like a three to seven year period was really where you saw the most success with a line returnment. And Your exit strategy. So what kind of debt has been the most successful for your strategy given everything that you've told us?
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C
Two part answer. If you said what kind of debt do you like to have like agency debt where you can fix it for five or seven years, but that doesn't match our whole period. So what we've had to do is primarily with banks is shorter term debt that you're either going to buy a cap on or you're going to swap the thing and you're going to try to match it to the whole period. Whether that's two years, three years, things like that, we rarely will float naked. We'll buy some type of, you know, hedging strategy. Now the problem with that is, is that your interest rate costs will be higher than agency. But again it's about the time value of money and the time period you hold it. And so if you model it out, let's say you buy a great property, suburban, 300 units, great floor plans, great schools, great amenities, even if you do well, you hold that deal for five years versus what we call re engineered the operation and improved it and sold it in two, invariably you're going to have a substantially higher return on the two year versus the five year because literally you've held it for less than half the time. So it's a prime value of money.
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A
I love it because the optionality that term and cap structure gives you is so incredibly valuable for your business strategy. So I love getting that insight into your debt structure.
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C
By the way, let me give you one. That's assuming that you execute your business plan, which we have a plan on every single. Again, we think about them as business. And keep in mind these are not inconsequential businesses. I told you, our average acquisition is 85 million. So we're buying a really valuable business and you got the plan. But if you don't execute that plan, it's so time sensitive, your return really goes down. And honestly, sometimes we don't get it. Right now we're good at owning that and recognizing it and fixing it. But sometimes the two years turns into three and a half or four.
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A
But it sounds like when you acquire that asset, your team is hitting the ground running. Maybe, maybe sprinting is the more appropriate term to, to get things rights.
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C
Yeah, as they would call it, the pace of play is pretty exceptional. And that's why again our model is we don't hire anybody from the industry. Regional heads, managers, we call them GMs sales and most service people we bring because our model is so different. We have to kind of home, grow our talent. So for a manager, they come to work for us, they spend five months in training before they ever run a property or in sales and service. It may be a month or two months to do it. And that's why our culture is so critical that you have to get people who really want to be challenged. They want fast pace, they want challenges, they like to see success. They are at the end, high achievers.
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A
So just a curiosity I have, if you don't mind me asking, what's maybe one of the biggest misconceptions people have about multifamily right now, that it's a.
[23:30]
C
Passive investment that you buy the asset and maybe you hire a third party management company and everything is wonderful. Now if you think about a business, businesses have revenues, they have expenses, they have personnel, they have customer service, they have marketplace realities, they have advertising and marketing and do all these various componen. Well guess what? An apartment community has the same. I get it. If you buy a warehouse and it's a triple net lease, that's a financial transaction. You have to think about, understand and recognize that you're buying an operating business that is a great business to be in and has tremendous opportunities. But you can't treat it like a passive or part time endeavor.
[24:18]
B
So Larry, when people hear about the adventure side of your life, the space missions or the high altitude jumps, they probably are focusing on the headline. But I'd love to hear from you what the philosophy is underneath those decisions. How do you think about risk and purpose when deciding to pursue something like that?
[24:38]
C
We've been fortunate to do some kind of interesting things, but underneath that is some common themes. And so we won't really do anything unless it meets two standards. One, it has to be challenging and two, it needs to have a purpose. And you'll see that that's cut across all of our endeavors. The other thing is contrary to public perception is we won't do anything that we don't believe we can do safely and successfully. So if there is risk involved and some of these clearly have it, we have to be able to manage this risk. Or said differently, we will not take any unacceptable risk.
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B
I love it. You talk about challenge, purpose and disciplined risk. So maybe you can step back and look across everything you've built and share one to three endeavors that best represent that philosophy in action.
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C
Sure. So I'm going to think about what has meaning and purpose. I would probably put at the top of the list. We have a pretty large not for Profit called the Connor Group, Kids and Community. We've done a number of very unique things both regionally and nationally. It's a continuing to expand endeavor in a couple of groundbreaking areas. I'll give you one example. We built the first private school that's non denominational ever done in the state of Ohio, exclusively focused on under resourced kids. We've been operating that for about four and a half years. And what we've been able to do is, and again it's about a team of people, nothing short of remarkable. And that's a model that is being looked at in cities across America as a revolution and how you can approach educating the future of America, we believe, which is our kids. So I would say that's one. Probably the second one is the Conner Group. You know, we started out, we had never done it before. I mean you could argue we didn't have a clue what we were doing. There may be some truth to that. That may have also been an advantage. If you look at the returns we've been able to do and the successes we've had not only for ourselves but our associates, you know, our investors. Right now we have a firm of about 400. Over 70 of those people are actually equity owners all through sweat equity. And in a number of cases they make as much from their partnership ownership as they do from their salary and bonus. So that would say probably number two and then number three. It's very hard to pick the endeavors we've done. But I would look at it this way, that we've been willing to try to do what seems maybe impossible to do and we've been fortunate enough to have multiple successes in that arena.
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A
I like that. I just recently read a piece about some of Raj Chetty's research and mixed income developments and trying to improve generational outcomes for underserved youth. And at least from my perspective it sounds like some of the stuff that you've done is right in that arena, just massively impactful. It probably doesn't get enough research.
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C
Well, that's the problem. By the way, we have lobbied in Washington and here in Ohio. By the way, Ohio has been very receptive that the future of America lies in our children and that the public school system in our view is broken and that we don't need an evolution, we need a revolution. There are people and strategies there to do that. And don't think for a moment that kids that are under resourced aren't every bit as capable of achieving like kids from the suburbs. The reality is it's Simply a matter of the right people, the right plans and the right funding. By the way, as an adjunct of that, we are a pilot project for a AI strategy where AI becomes the individual child's tutor. And because at our school every single child has an IP individual educational program, it's a natural transition whereby they're literally just using our their Chromebook and that AI tutor is talking to them and getting to learn them and know them. And while the data is early, it is stunning what the potential is. We're not there yet, but I think in another year or two we'll do it. We can increase the effectiveness of our teachers, of our school by smart employing technology.
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A
This is exciting to hear because I'm just imagining from a real estate context just how wildly impactful some of these programs could end up being for underserved areas. The kind of development we'll see take place.
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C
It's exciting stuff, yeah, but you got to have resolve. And hopefully as I started to allude to both from a federal and a state level and we are seeing certainly greater awareness in, hey look, you got to make the investment in it. It hasn't been politically necessarily at the top of people's priority. We think it's becoming more so and hopefully that'll accelerate.
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B
So Larry, let's zoom in on some of your missions and adventures. Maybe you can walk us through a few stories that really stand out to you. Whether that was because they brought risk and purpose or it was just something interesting that you've experienced in your lifetime.
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C
I can certainly give you two, one kind of more of human interest and then maybe one more of getting close to the edge of danger and then managing through that. In 2022 we embarked on a mission called AX1, first all private civilian mission to the International Space Station. And I had the good fortune of not only being on that mission, but being the pilot, by the way. I have to be honest though, the pilot deal is a little overrated. It's a SpaceX Crew Dragon capsule, really automated and SpaceX is a phenomenally talented company with all kinds of safety measures built in. We took a 19 hour journey from Cape Canaveral to the International Space Station and successfully docked. And the mission was planned for 10 days. But it's complicated when you're going to disembark and reenter Earth's atmosphere and splash down. A lot of things have to be aligned. So we ended up being there for 17 days versus 10. And so it gave a great opportunity. And a little known fact, there is a telephone system there that Cisco actually developed. And keep in mind, you're circumnavigating the globe every 92 minutes. So you literally go in and out of darkness as you go around the Earth every 45 minutes. And depending upon where you are, the system either works perfect or it doesn't work at all. So because we had been very, very heavy on research, doing over 225 hours of research in our first kind of 10 days there with research partners that I had such as Mayo Clinic, Cleveland Clinic and others. So we were working like 14 hour days. But in the last four or five, six days we had some free time. So I started calling people. It would ring on someone's phone. It was a Houston area code. I think that's 2:42. And so it was really unusual when people would pick up. And so I would say, whoever. Hey Joe. Greetings from the International Space Station. Well, the vast, vast majority of it, almost to a person, nobody had ever called them from outer space. I didn't realize it at the time. It was like I ended up talking to about roughly 40 different people. And I'm like, well, geez, I got this free time. I don't call them how impactful it was, especially for kids, and that how many people actually saved that message that I left for them if I didn't actually connect with them or talk to people about it. So it is a different experience. But literally, if I was talking to you, Haley, you'd think I'm just on a cell phone calling you. A little known fact about the International Space Station, a different one is in 2023. This actually started in 2020. Part of the people who provided rescue support for the AX1 mission were a group of former Air Force Pararescue special operators. So I got to know them as part of our training if there was a rescue and they had to do an ocean rescue and everything else like that. So right after our mission finished, I was talking to them about I'd always wanted to do a halo jump, a high altitude altitude skydive. And so we started talking about that and what could we do? And again, when you kind of think with no boundaries, you can come up with some pretty creative things. So we decided to build a hot air balloon. We built the largest hot air balloon ever built in the United States. It was about 12, 13 stories high. Actually a company, believe it or not, there's only really two companies in the world that can do that correctly. One in England, the other one in Ann Arbor. And they did a phenomenal job. We spent Months and months in training. So myself and four Air Force Pararescue special operators took that to Roswell, New Mexico because the temperatures and the winds are very good. And we flew that thing to 38,000ft. By the way. It's an open basket or gondola. Nobody had ever attempted to do that. And we stepped off there, did a five man formation, did multiple records. And one of the, I can probably report it now, but one of the unreported things was we were at and we left it off. And you would think it'd take a long time, but it only took about 50, 55 minutes to go from the ground to 38,000ft. We're all on oxygen, of course, individual masks, and my oxygen supply froze at 33,000ft. And that's a problem because you can't take off the mask. And if you can't breathe, about your only option would be to jump off of the G gondola and hope you got down to altitude before you were unconscious. So I had a bit of a trying moment then until I remembered somebody had told me in training that if you kind of tilted your head and kind of shook it, there's a valve there and it might have become frozen and it might release and unfreeze. We, we had, by the way, a real world kind of renowned O2 expert guy. And I'm trying to, obviously you can't talk, so I'm pointing to him like, hey, I can't breathe, can't breathe. I know, need some help here. And fortunately I kind of shook the thing and all of a sudden I'm like, okay, I'm good, I can breathe again. Now there are. When you're going to do something at the very edge, and certainly going there, we were at the very edge of being able to do it successfully. There are things that happen, like, happen in life and there you gotta, it's gotta be okay, stay calm. Let's figure this out. Oof.
[35:43]
A
Yeah, that one's tense. Just for me, imagining that exact situation and probably what's through your minds, not even by the second, but by the millisecond, evaluating options and troubleshooting. That's amazing.
[35:55]
B
Well, thank you, Larry, for sharing. I mean, it's clear from this podcast episode you've built an incredible business, you've given back significantly, and you're pushing human boundaries. So maybe we can leave our audience with one final piece of advice from you for anyone. Maybe they're just entering the industry or they're building a company or just trying to live life more intentionally. What's a piece of advice you may have?
[36:21]
C
Aim high. Do not self limit. You and your mind are capable of much more than you think you are. Think about it this way. You will never outperform your own self image. So even if you're not sure you can do, at least if you say, well, maybe I can, I believe I can and I'm going to try, you're well on your way.
[36:42]
B
I love it. Thank you so much, Larry. All right, if our listeners want to find out more about the Conner Group or learn about your philanthropic initiatives, how can they reach out or. Or find out more information? Sure.
[36:55]
C
The best thing to do about the Conner Group is our website, which is, yeah, just Google the Connor Group. And if they're interested in the Greater Dayton School, you. We have a website for that, literally the Greater Dayton School. And you'll find out hopefully worthwhile and very interesting information about what we're doing, the mission we're on, and the success we're having.
[37:24]
B
Excellent. Well, thank you so much, Larry, for joining us today. This has been an incredible conversation and we look forward to following everything that you do next.
[37:33]
C
All right, thanks, folks. Appreciate it.
[37:35]
B
And with that, we'll close this special podcast. Thank you, Larry, for joining us today. Join us later this week as we look at what's happened during the week and how it may be impacting you. If you have a question or a comment, send us an email@podcastrup.com until then, visit trep.com for more info and subscribe to the TruckWire Podcast with your favorite provider. Thank you for listening and stay well. All right.

Summary7 min read

Podcast Summary: The TreppWire Podcast – Episode 380

Episode Title: How Larry Connor Built a Multi-Billion-Dollar Multifamily Machine
Release Date: February 17, 2026
Featured Guest: Larry Connor, Founder and Managing Partner, The Connor Group
Hosts: Hayley Keene & Steven Bushbaum
Length: ~38 minutes

Episode Overview

This episode features Larry Connor, renowned real estate investor, adventurer, and philanthropist. Connor shares his journey founding and scaling The Connor Group into a leading multifamily investment firm. The discussion covers foundational real estate principles, execution-driven strategies, lessons learned from failure, navigating market cycles, the importance of resident satisfaction, risk management (in both business and personal adventures), and a deep commitment to philanthropy and education.

Key Discussion Points & Insights

1. Larry Connor’s Origin Story: Turning Failure into Opportunity

(01:41–04:15)

Connor attributes his entry into real estate to failure. After a decade in the computer industry, shifting market dynamics and intense competition led to his company's closure, leaving him deeply in debt.
"We didn't go bankrupt... but I was worse than broke." (Larry Connor, 02:44)
Rather than seeing this as a setback, Connor saw it as a 'PhD in business,' learning more from failure than from success.
The Connor Group began with a focus on applying business-operational rigor—people, plans, processes—to real estate, recruiting team members from outside the industry and running multifamily as a high-performance operating business.

2. Timeless Fundamentals vs. Industry Change

(04:45–07:26)

Despite market evolution, the fundamentals of real estate haven’t changed: execution, operational excellence, and, uniquely for Connor, resident satisfaction.
The Connor Group leverages real-time data (including AI-powered metrics) to monitor resident satisfaction actively.
- "If they were satisfied two years ago, doesn't mean they are today, because this is where they live. So it's constantly changing." (Larry Connor, 05:14)
Resident retention is the key metric: The Connor Group consistently retains over 60% of residents, compared to the industry average of 45-50%, translating to significant bottom-line impact.

3. The Economics of Resident Satisfaction

(08:04–11:18)

Connor details the direct and indirect costs of tenant turnover (vacancy loss, turn costs, concessions), quantifying the savings from higher retention.
- "You just saved, straight to the bottom line, $150,000." (Larry Connor, 08:53)
Satisfied residents are more likely to accept rent increases, contributing to both stable revenue and asset value growth.
- "The biggest value add play is operations, not the physical facility upgrade." (Larry Connor, 11:35)

4. Operating Philosophy: Simplicity Amid Growth & Strategic Adaptation

(13:06–14:22)

Success over decades requires continual change, improvement, and a drive for simplicity as organizations scale.
Connor emphasizes the need to re-evaluate what works as market conditions and organizational size evolve.

5. Navigating Market Cycles: From Boom to “Normalization”

(14:22–17:20)

The unprecedented run from 2011–2022 (with low interest rates and high liquidity) led to compressed cap rates and surging valuations in multifamily.
Connor sees this era as over, predicting a return to historical norms: higher cap rates, normalized rent growth.
"We think all of that is over. We think it all changes and you go back to what we would call a more historically normalized market." (Larry Connor, 15:57)
Historically exceptional returns (30%+ IRR after fees) likely won’t repeat; future expectations are more moderate (20–25% range).

6. The “Down the Fairway” Acquisition Model

(17:32–19:44)

Ideal deal:
- Suburban location, <=325 units
- Great floor plans and school districts
- Amenity and operational upside
Internal proprietary grading system evaluates properties.
The Connor Group is not a long-term holder; targets 24–36 month hold periods, with value created and monetized through sale or refinance.
- "We're going to buy this $85 million business... improve customer satisfaction... and then in 24 to 36 months we're going to do a capital event." (Larry Connor, 18:57)

7. Debt Strategy Tailored to Hold Period

(20:15–21:43)

Prefers short-term bank debt (matched to hold period), hedged with rate caps or swaps. Fixed agency debt is less optimal due to shorter hold times.
- "The optionality that term and cap structure gives you is so incredibly valuable." (Host, 21:32)

8. Talent & Culture: Recruiting from Outside the Industry

(22:30–23:20)

The Connor Group’s operating model requires extensive training and cultural alignment; managers undergo 5-month onboarding.
Fast pace and high achievement are core; most hires have no prior industry experience.

9. Multifamily Investing: The Active Business, Not a Passive Investment

(23:30–24:17)

Major misconception: Multifamily is “passive.” In Connor's eyes, each asset is an operating business, requiring active management and engagement—not third-party management and a “set it and forget it” approach.

Philosophy of Risk, Challenge & Purpose

(24:17–25:21)

Connor's approach to adventure (space, deep sea, extreme sports) mirrors his business strategy: Only pursue endeavors that are both challenging and purposeful, and never accept unmanaged or unacceptable risk.
- “We won’t do anything unless it’s challenging and has a purpose… we have to be able to manage this risk... we will not take any unacceptable risk.” (Larry Connor, 24:42)

Most Meaningful Endeavors

(25:35–27:35)

Connor Group Kids & Community: Pioneering non-denominational private school for under-resourced youth in Ohio, now a model under national consideration.
Building The Connor Group: Scaling a company from scratch, delivering substantial benefits to team members (70 partners through sweat equity) and investors.
Pursuing the Impossible: Willingness to attempt radically ambitious projects and overcome uncertainty.

Education, Philanthropy & Impact

(27:35–29:26)

Advocates for revolutionary—not evolutionary—change in American education, particularly for under-resourced children.
Experiments with AI-powered individualized tutoring to improve learning outcomes, showing initial promise.
- "It's Simply a matter of the right people, the right plans and the right funding." (Larry Connor, 28:22)

[Notable Segment] Connor’s Space & Adventure Stories

Axiom Mission 1 (International Space Station Pilot, 2022)

(30:06–32:43)

First all-private civilian mission to the ISS; Connor served as pilot aboard SpaceX Crew Dragon.
- "It's a SpaceX Crew Dragon capsule, really automated... SpaceX is a phenomenally talented company with all kinds of safety measures built in." (Larry Connor, 30:26)
Unexpected 7-day extension, with free time spent calling friends and colleagues from the ISS—surprising and delighting recipients.

High-Altitude Balloon Skydive Record

(32:43–35:42)

Detailed behind-the-scenes look: Largest US-built hot air balloon, piloted to 38,000 feet over Roswell, NM, before skydiving as a team.
Faced critical equipment failure (oxygen mask froze) at peak altitude, resolved through training and composure.
- “If you can't breathe, about your only option would be to jump off of the gondola and hope you got down to altitude...” (Larry Connor, 34:04)
- “...You gotta stay calm. Let's figure this out.” (Larry Connor, 35:25)

Final Advice for Listeners

(36:21–36:42)

"Aim high. Do not self-limit. You and your mind are capable of much more than you think you are. You will never outperform your own self-image." (Larry Connor, 36:23)

Memorable Quotes

On Failure:
"You learn a lot more through failure than you do success." (Larry Connor, 02:17)
On Resident Satisfaction:
"You're far better off retaining residents than making a transactional business." (Larry Connor, 05:36)
On Value Creation:
"The biggest value add play is operations." (Larry Connor, 11:35)
On Risk:
"We will not take any unacceptable risk." (Larry Connor, 24:58)
On Possibility:
"You will never outperform your own self-image." (Larry Connor, 36:38)

Notable Timestamps

01:41 – Larry’s background and transition to real estate
04:45 – Timeless fundamentals vs. what’s changed in multifamily
08:04 – Hard-dollar math of tenant retention
11:35 – “Operational value-add” vs. physical upgrades
13:06 – Lessons from multiple cycles; embracing change, simplicity
15:57 – Market outlook: normalization after boom years
18:57 – “Down the fairway” property profile & investment thesis
22:30 – Recruiting, culture, building talent in an unconventional way
23:30 – Misconceptions about passive investing in multifamily
24:42 – Philosophy of risk and purpose in business and adventure
25:35 – Philanthropy and educational innovation
30:06 – Story: Calling from the International Space Station
32:43 – Story: Record-setting balloon skydive and dealing with danger
36:23 – Final advice: “Aim high. Do not self-limit.”

Conclusion

Larry Connor’s journey offers a blueprint for building enduring success in multifamily real estate—rooted in operational discipline, people-first culture, and an unwavering commitment to positive impact. The episode delivers both concrete real estate wisdom and larger lessons on risk, resilience, and leadership, capped by high-stakes adventures and extraordinary acts of philanthropy.

For further information about The Connor Group or their philanthropic initiatives, visit their official website or the Greater Dayton School site.

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Transcript43 lines

[00:00]
A
Foreign.
[00:06]
B
Welcome to the Trepwire Podcast, the show where commercial real estate needs data and insights. This is a special guest podcast. I'm Hayley Keene with trep, a data modeling and analytics firm for the CMBS commercial real estate and CLO markets. I'm with Steven Bushbaum, head of Applied Research and Analytics. Today we're joined by Larry Conner, founder and Managing Partner of the Conner Group, one of the largest privately held multifamily investment firms in the United States. Larry founded the Conner Group in 1992 and has since built it into a multi billion dollar platform focused on acquiring and operating high quality apartment communities across major US markets. The firm is known for its disciplined underwriting, operational excellence and performance driven culture. Beyond real estate, Larry is also an accomplished adventurer. He served as the first private pilot to reach the International Space Station on the Axiom Mission 1 in 2022 and has particip participated in deep sea expeditions to the Challenger Deep, the deepest part of the ocean. He is also deeply committed to philanthropy, dedicating significant time and resources to initiatives that support underserved youth. Larry, thank you so much for joining us today. We're so excited to explore not only your real estate journey, but also how risk leadership and responsibility intersect across everything that you do. Maybe we can have you from your perspective. Start with your background and how you built the Conner Group. Can you walk us through how you got into real estate in the first place and what led you to create your firm in 1992?
[01:42]
C
Sure. Failure.
[01:43]
A
I like it. It's a great motivator.
[01:46]
C
I had been in the computer industry from 1981 to 1991. We had started out in the retail sector of the computer industry, quickly realized that was not the place to be. And keep in mind in 1981 there was this revolution called microcomputers with Apple leading the way and IBM shortly following. So we spent nine years growing the company. We were actually based in Orlando, Florida. We became the second largest reseller of IBM microcomputers in the state. We were also a leading provider of lans LAN local area networks. Unfortunately, the industry exploded, margins dramatically compressed. It became very, very capital intensive, which we started on shoestrings. So we didn't have much capital. And I got what I would call a PhD in business. And how that translates is through failure. And the reality is you learn a lot more through failure than you do success. So we learned a lot in that nine year period of time and then we closed the doors. We did not go bankrupt. Actually we closed the doors in 1990. So I'm 40 years old, I have a wife, two kids and a farm. I have no company and I'm broke. I'm actually worse than broke because if you're broke you have no money. In this case I had no money and I had borrowed from various lenders some $900,000, which probably today is worth 3 or 4 million. And I was determined I was going to pay every single lender back. So that was the problem. But the hidden gift that I had was almost a decade of being involved in a incredibly fast moving, ever changing industry. And so I and another fella who was not in the computer industry decided that we could start a real estate investment firm, build it a different way and intentionally build it all with people who had never done it before. And rather than treat it as a passive real estate investment, we were going to treat it like any other high performing operating business based upon people plans and processes. And so that was the genesis for starting the Connor Group.
[04:16]
A
This is really interesting to hear given where we're at currently. When you've heard so many folks say where we're at with AI is in very much. There's some very interesting similarities to where we were at say in the 1980s with the introduction of the computer for how that could shape business and the economy. We're kind of doing that all over again with AI. Looking back after more than three decades, what's maybe changed the most for you and the industry and what has stayed more or less a constant?
[04:46]
C
So let's talk about the constants first, or what we would call the fundamentals. Real estate and specifically apartment communities are about execution of a number of fundamental things, or at least that's the way we look at it. And it actually starts with something that's really not talked about in the industry, which is customer satisfaction or resident satisfaction. We are able, by the way, using AI to real time, gauge whether our residents are satisfied. We have real time data from the last 30 days, last 90, and that's what we focus on. Because if they were satisfied two years ago, doesn't mean they are today because this is where they live. And so it's constantly changing, either better or for worse. So for example, are you happy with the maintenance technician who came there yesterday to fix your heat, especially this time of the year? Or are you happy with the office and how they handled your work order? Or are you happy with the physical facility this time of year? Maybe it's the snow and the other time, maybe it's how the outside is being maintained. So by having this real time information, it actually forms the foundation of one of our beliefs, which is you're far better off retaining residents than making a transactional business. The reality is most, not all people in the real estate apartment industry think of it as a transactional business. People move in, people move out. We don't think of it that way at all. And in fact, our whole renewal process starts roughly four months out with a visit with the apartment resident and determining, hey, are you satisfied? And then if you're not addressing that before we ever talk about renewals, the difference of that is, is if you really look in the industry and the numbers are a bit fragmented. Steven, as you, as you're well aware of, you know, you might retain, depending upon the apartment community, 45 to 50% of our residents, we routinely retain 60 plus percent. And so it well may not sound like a huge number. If you have 16,000 units like we do, well, that may mean that you have to turn over 2,000 less units and have 2,000 of them not sitting vacant for 45 to, you know, 90 day period of time. So again, our whole thesis is based upon operations. And the key there is the people that you have, service, sales, management, the plans and the processes that you execute.
[07:27]
A
I absolutely love the elegance and the simplicity of that plan because let's face it, at my, I don't need to tell you, you know, firsthand, executing on that business plan is not necessarily easy or straightforward, but it's a very clear core mandate to go by. And I can tell you from being a tenant firsthand, that matters the world from a tenant's perspective for how you think about where you're living and how you treat the building. Let's face it, the turnover and maintenance costs for unhappy tenants. I can't say I've ever seen an exact stat here, but I have to imagine it's an economically meaningful number compared to happy tenants.
[08:05]
C
Yeah, so that's a good point to bring up. Steve, Here's a simple map. Somebody moves out and let's just say they're paying rent of $2,000. I know people talk about they can turn and re rent and have it reoccupied in 30 days. The reality is, after doing this for 33 years, it doesn't work that way. If you're doing a really good job, you can have the people vacate, turn the unit re rented, have them move in with a quality resident in 60 days. You're doing a really good job. So let's say $2,000 a month, two months, that's $4,000. And let's just say you spend $1,000 and all the cost to not only turn it, but advertising and everything, it's $5,000 per unit, okay? And so then if you say, well, geez, we got a 300 unit apartment community and we are turning 10% less units, so that's 30, you know, units, and then it's $5,000 a unit, you just saved straight to the bottom line, $150,000. And the reality is the numbers are actually bigger than that because you don't get all of those units rented inside of that 60 days and or you have to provide a lower rent or a concession with someone moving in. The hidden real benefit here is another thing that people don't either talk about or realize. The fact is, if you provide great, what we call customer service, resident service, that resident will pay a higher rate than the new resident that's moving in. So for example, in this current market, if you go across the country and you look at rents, most markets you have negative re rents and negative renewal rates. In our case, almost without exception, we have positive renewal rates that are anywhere from $80 to $150. And again, if you spread that over 16,000 units, it's a massive difference from a valuation calculation. I mean, you understand the math. If you have, let's say a 400 unit apartment community and let's say that 230 of the residents stay and they take a simple math $100 increase, you just built a rent roll in a positive manner. $23,000. Well, that's 23,000amonth times, you know, roughly 12 months. So if you round up the numbers, you're close to 300,000. Just put that in a 5 cap. Well, heck, that's $6 million of incremental value by doing one thing, keeping your residents and getting an increase.
[10:56]
A
It's beautiful. It's such an executable business thesis. Much better to me than the complexity that comes with the difficulty of a value add strategy. I'm a big believer and fan of the satisfied consumer premium for multifamily rents. Having had lived in two drastically different buildings in New York City myself, I was more than happy pay that premium.
[11:19]
C
Well, to your point, are you going to move over $200 a month increase if you're happy? Well, $200 a month, that's $2,400. You can't move for that. Right. And plus all the hassle of moving. Okay, and so by the way, interesting point. Many people in the industry Talk about, oh, it's a value add play. Well, the biggest value add play is, is operations. It's not the physical facility upgrade of units or amenities. And people say, well, I'm going to upgrade the unit and I'm going to spend $15,000 and I'm going to get a $250 increase. If you go to lenders across the country and say, hey look what really happens, they say yeah, they spend 15,000 a unit but we take whatever their proforma rate increase, in this case 250 and we cut it in half because the statistically validated will tell you it's about half what their forecast is. And by the way, our experience has been that's accurate versus improved customer or resident satisfaction, then you may be able to actually reduce costs if for no other reason, turnover, less turnover and your revenue is going to go up both in terms of occupancy and in terms of rates.
[12:38]
B
Yeah, Larry, it's really fascinating how you've built such a data driven operation. I think this is a good chance to pivot and reflect more on some of your long term strategy here. You've invested and been a part of this industry across multiple downturns and different parts of the cycle. So can you walk us through your experience, through cycles and then maybe we can pivot to get your take on where things stand today in our current environment.
[13:06]
C
So Haley, two part question, I'll give you, I think a two part answer. So number one is to be successful long term you can't stay the same. You have to continue to change and improve. And our belief is try to simplify. As you get bigger, everybody gets more complicated. What we've tried to do is we get bigger, tried to simplify. So what may have been working for you 25 years ago may not work 10 years ago or today. It's a very interesting question about the future. We actually think you're at the dawn of a seismic change. And what is that? So let's go back and think about that time period between 2011 and 2022, 11 year run period of time, unprecedented factor. What are the interest rates that U.S. economy has never seen before? And by the way, there's a good chance in our lifetime we'll never see again being able to borrow at 3%. The economics and the valuations don't change a little bit. They change dramatically in that kind of environment. So that's 1, 2. The market is awash in liquidity.
[14:23]
A
Why?
[14:23]
C
Well, a multitude of factors. So you certainly had lots of stimulus. Whether it's from the government, the Federal Reserve or other sources. Two, we saw a migration for a number of investors, both private and institutional, out of the traditional equity markets and into harder assets like real estate. Well then inside of that you have the third phenomenon. People aren't going into office buildings and retail because they can figure out that's not a good place to be. So what do they do? They massively crowd into basically two sectors. Sector number one is apartments and sector number two is industrial. So you have the confluence of all these events. And so you go from a traditional marketplace of cap rates being depending upon the market, depending upon the particular type of apartment community, anywhere from a 5 cap to 8. Well then all of a sudden you keep being compressed and compressed where suddenly you're down to cap rates anywhere from 2.75 to a three and a half. And the three and a half are even on B type assets and B or B plus location. Couple that with, for example, here in the Medwest where we're located. Historically, rental rates go up depending upon the city and the particular apartment community. 2 or 3% a year. You may have a year where it's 4%. Well, literally you see a change and double to 6 or 8% and in some cases 10%. We think all of that is over. We think it all changes and you go back to what we would call a more historically normalized market. One that maybe you saw in the 70s or 80s or 90s into the 2000s, which is cap rates in that 4 and a half to 6 and a half percent range, borrowing cost in the 5 or 6% range, maybe some less, some a bit more rental rate increases. Unless you're in a hypermarket with a hyper location. You know, in that 2 to 4%, well aggregate all that together, it's a dramatically different outcome. And so I'll finish with one thought. If you were to take a look at our returns, which have been very unique. So if you look over our 33 year period of time, our annual, this is key, annual IRR returns to our investors after fees is 30.4% annually. Rarefied air. And if you look at our return to our investors after fees over the last 10 years, it's been 35%. We are saying to investors do not expect that in the future. We are saying to investors that it's going to be significantly less. And we are generally the largest monetary investor in all our funds. Our expectation is the returns will still be good, but it's more of 20 to 25% than 30 to 35 so.
[17:21]
A
I got to ask then, given where things sit today in today's environment, what does a compelling deal look like to you? What, what are you looking for in prospective assets out there?
[17:32]
C
Great question, Stephen. It's what we call the down the fairway property. We build our own models, by the way, and we constantly go back. Not unlike what you do is look at all the data and analyze, hey, where were we most successful, where did we fail, what did we learn and what do we change? So the down the fairway model for us is as follows. 325 units or less, suburban location, great floor plans. And we have a proprietary grading system based upon what we know. The data tells us that residents are looking for. And so we grade out all the floor plans, whether they're one, two or three bedrooms. We also grade out the amenities. We also look at the realistic opportunity for us to improve the bottom line or net operating income in the first two year period of time. And we aggregate that all together. We have a property weighting score. By the way, one of the big factors is the quality of the schools in that suburban location. And depending upon if it scores, this won't necessarily mean anything to your listeners, but if it scores like a 35 or greater, then we're going to be pretty aggressive in buying that because we know historically those are the deals that we've done exceptionally well on. And our model, again to finish the point is a little bit different. We're not long term holders. So what we're going to do is we think about it as buying a business. Okay, we're going to buy this $85 million business. That's our average that we spend on apartment community. It just happens to be an apartment community. We're going to improve customer satisfaction, we're going to improve the operation, and then in 24 to 36 months we're going to do a capital event. In most cases that means we're going to sell it or we're going to refinance it. So we're going to do a very, very high transactional volume versus just big, this massive portfolio of 50 or 100,000 apartment units.
[19:45]
A
I love this, by the way, because the timeline aligns with exactly what I'm thinking about in my head, which is this chart that shows the distribution of hold times for multifamily. And what seems to have been the sweet spot for hold times and returns. And it was, I want to say, around like a three to seven year period was really where you saw the most success with a line returnment. And Your exit strategy. So what kind of debt has been the most successful for your strategy given everything that you've told us?
[20:15]
C
Two part answer. If you said what kind of debt do you like to have like agency debt where you can fix it for five or seven years, but that doesn't match our whole period. So what we've had to do is primarily with banks is shorter term debt that you're either going to buy a cap on or you're going to swap the thing and you're going to try to match it to the whole period. Whether that's two years, three years, things like that, we rarely will float naked. We'll buy some type of, you know, hedging strategy. Now the problem with that is, is that your interest rate costs will be higher than agency. But again it's about the time value of money and the time period you hold it. And so if you model it out, let's say you buy a great property, suburban, 300 units, great floor plans, great schools, great amenities, even if you do well, you hold that deal for five years versus what we call re engineered the operation and improved it and sold it in two, invariably you're going to have a substantially higher return on the two year versus the five year because literally you've held it for less than half the time. So it's a prime value of money.
[21:32]
A
I love it because the optionality that term and cap structure gives you is so incredibly valuable for your business strategy. So I love getting that insight into your debt structure.
[21:44]
C
By the way, let me give you one. That's assuming that you execute your business plan, which we have a plan on every single. Again, we think about them as business. And keep in mind these are not inconsequential businesses. I told you, our average acquisition is 85 million. So we're buying a really valuable business and you got the plan. But if you don't execute that plan, it's so time sensitive, your return really goes down. And honestly, sometimes we don't get it. Right now we're good at owning that and recognizing it and fixing it. But sometimes the two years turns into three and a half or four.
[22:21]
A
But it sounds like when you acquire that asset, your team is hitting the ground running. Maybe, maybe sprinting is the more appropriate term to, to get things rights.
[22:30]
C
Yeah, as they would call it, the pace of play is pretty exceptional. And that's why again our model is we don't hire anybody from the industry. Regional heads, managers, we call them GMs sales and most service people we bring because our model is so different. We have to kind of home, grow our talent. So for a manager, they come to work for us, they spend five months in training before they ever run a property or in sales and service. It may be a month or two months to do it. And that's why our culture is so critical that you have to get people who really want to be challenged. They want fast pace, they want challenges, they like to see success. They are at the end, high achievers.
[23:20]
A
So just a curiosity I have, if you don't mind me asking, what's maybe one of the biggest misconceptions people have about multifamily right now, that it's a.
[23:30]
C
Passive investment that you buy the asset and maybe you hire a third party management company and everything is wonderful. Now if you think about a business, businesses have revenues, they have expenses, they have personnel, they have customer service, they have marketplace realities, they have advertising and marketing and do all these various componen. Well guess what? An apartment community has the same. I get it. If you buy a warehouse and it's a triple net lease, that's a financial transaction. You have to think about, understand and recognize that you're buying an operating business that is a great business to be in and has tremendous opportunities. But you can't treat it like a passive or part time endeavor.
[24:18]
B
So Larry, when people hear about the adventure side of your life, the space missions or the high altitude jumps, they probably are focusing on the headline. But I'd love to hear from you what the philosophy is underneath those decisions. How do you think about risk and purpose when deciding to pursue something like that?
[24:38]
C
We've been fortunate to do some kind of interesting things, but underneath that is some common themes. And so we won't really do anything unless it meets two standards. One, it has to be challenging and two, it needs to have a purpose. And you'll see that that's cut across all of our endeavors. The other thing is contrary to public perception is we won't do anything that we don't believe we can do safely and successfully. So if there is risk involved and some of these clearly have it, we have to be able to manage this risk. Or said differently, we will not take any unacceptable risk.
[25:22]
B
I love it. You talk about challenge, purpose and disciplined risk. So maybe you can step back and look across everything you've built and share one to three endeavors that best represent that philosophy in action.
[25:35]
C
Sure. So I'm going to think about what has meaning and purpose. I would probably put at the top of the list. We have a pretty large not for Profit called the Connor Group, Kids and Community. We've done a number of very unique things both regionally and nationally. It's a continuing to expand endeavor in a couple of groundbreaking areas. I'll give you one example. We built the first private school that's non denominational ever done in the state of Ohio, exclusively focused on under resourced kids. We've been operating that for about four and a half years. And what we've been able to do is, and again it's about a team of people, nothing short of remarkable. And that's a model that is being looked at in cities across America as a revolution and how you can approach educating the future of America, we believe, which is our kids. So I would say that's one. Probably the second one is the Conner Group. You know, we started out, we had never done it before. I mean you could argue we didn't have a clue what we were doing. There may be some truth to that. That may have also been an advantage. If you look at the returns we've been able to do and the successes we've had not only for ourselves but our associates, you know, our investors. Right now we have a firm of about 400. Over 70 of those people are actually equity owners all through sweat equity. And in a number of cases they make as much from their partnership ownership as they do from their salary and bonus. So that would say probably number two and then number three. It's very hard to pick the endeavors we've done. But I would look at it this way, that we've been willing to try to do what seems maybe impossible to do and we've been fortunate enough to have multiple successes in that arena.
[27:35]
A
I like that. I just recently read a piece about some of Raj Chetty's research and mixed income developments and trying to improve generational outcomes for underserved youth. And at least from my perspective it sounds like some of the stuff that you've done is right in that arena, just massively impactful. It probably doesn't get enough research.
[27:55]
C
Well, that's the problem. By the way, we have lobbied in Washington and here in Ohio. By the way, Ohio has been very receptive that the future of America lies in our children and that the public school system in our view is broken and that we don't need an evolution, we need a revolution. There are people and strategies there to do that. And don't think for a moment that kids that are under resourced aren't every bit as capable of achieving like kids from the suburbs. The reality is it's Simply a matter of the right people, the right plans and the right funding. By the way, as an adjunct of that, we are a pilot project for a AI strategy where AI becomes the individual child's tutor. And because at our school every single child has an IP individual educational program, it's a natural transition whereby they're literally just using our their Chromebook and that AI tutor is talking to them and getting to learn them and know them. And while the data is early, it is stunning what the potential is. We're not there yet, but I think in another year or two we'll do it. We can increase the effectiveness of our teachers, of our school by smart employing technology.
[29:14]
A
This is exciting to hear because I'm just imagining from a real estate context just how wildly impactful some of these programs could end up being for underserved areas. The kind of development we'll see take place.
[29:27]
C
It's exciting stuff, yeah, but you got to have resolve. And hopefully as I started to allude to both from a federal and a state level and we are seeing certainly greater awareness in, hey look, you got to make the investment in it. It hasn't been politically necessarily at the top of people's priority. We think it's becoming more so and hopefully that'll accelerate.
[29:51]
B
So Larry, let's zoom in on some of your missions and adventures. Maybe you can walk us through a few stories that really stand out to you. Whether that was because they brought risk and purpose or it was just something interesting that you've experienced in your lifetime.
[30:07]
C
I can certainly give you two, one kind of more of human interest and then maybe one more of getting close to the edge of danger and then managing through that. In 2022 we embarked on a mission called AX1, first all private civilian mission to the International Space Station. And I had the good fortune of not only being on that mission, but being the pilot, by the way. I have to be honest though, the pilot deal is a little overrated. It's a SpaceX Crew Dragon capsule, really automated and SpaceX is a phenomenally talented company with all kinds of safety measures built in. We took a 19 hour journey from Cape Canaveral to the International Space Station and successfully docked. And the mission was planned for 10 days. But it's complicated when you're going to disembark and reenter Earth's atmosphere and splash down. A lot of things have to be aligned. So we ended up being there for 17 days versus 10. And so it gave a great opportunity. And a little known fact, there is a telephone system there that Cisco actually developed. And keep in mind, you're circumnavigating the globe every 92 minutes. So you literally go in and out of darkness as you go around the Earth every 45 minutes. And depending upon where you are, the system either works perfect or it doesn't work at all. So because we had been very, very heavy on research, doing over 225 hours of research in our first kind of 10 days there with research partners that I had such as Mayo Clinic, Cleveland Clinic and others. So we were working like 14 hour days. But in the last four or five, six days we had some free time. So I started calling people. It would ring on someone's phone. It was a Houston area code. I think that's 2:42. And so it was really unusual when people would pick up. And so I would say, whoever. Hey Joe. Greetings from the International Space Station. Well, the vast, vast majority of it, almost to a person, nobody had ever called them from outer space. I didn't realize it at the time. It was like I ended up talking to about roughly 40 different people. And I'm like, well, geez, I got this free time. I don't call them how impactful it was, especially for kids, and that how many people actually saved that message that I left for them if I didn't actually connect with them or talk to people about it. So it is a different experience. But literally, if I was talking to you, Haley, you'd think I'm just on a cell phone calling you. A little known fact about the International Space Station, a different one is in 2023. This actually started in 2020. Part of the people who provided rescue support for the AX1 mission were a group of former Air Force Pararescue special operators. So I got to know them as part of our training if there was a rescue and they had to do an ocean rescue and everything else like that. So right after our mission finished, I was talking to them about I'd always wanted to do a halo jump, a high altitude altitude skydive. And so we started talking about that and what could we do? And again, when you kind of think with no boundaries, you can come up with some pretty creative things. So we decided to build a hot air balloon. We built the largest hot air balloon ever built in the United States. It was about 12, 13 stories high. Actually a company, believe it or not, there's only really two companies in the world that can do that correctly. One in England, the other one in Ann Arbor. And they did a phenomenal job. We spent Months and months in training. So myself and four Air Force Pararescue special operators took that to Roswell, New Mexico because the temperatures and the winds are very good. And we flew that thing to 38,000ft. By the way. It's an open basket or gondola. Nobody had ever attempted to do that. And we stepped off there, did a five man formation, did multiple records. And one of the, I can probably report it now, but one of the unreported things was we were at and we left it off. And you would think it'd take a long time, but it only took about 50, 55 minutes to go from the ground to 38,000ft. We're all on oxygen, of course, individual masks, and my oxygen supply froze at 33,000ft. And that's a problem because you can't take off the mask. And if you can't breathe, about your only option would be to jump off of the G gondola and hope you got down to altitude before you were unconscious. So I had a bit of a trying moment then until I remembered somebody had told me in training that if you kind of tilted your head and kind of shook it, there's a valve there and it might have become frozen and it might release and unfreeze. We, we had, by the way, a real world kind of renowned O2 expert guy. And I'm trying to, obviously you can't talk, so I'm pointing to him like, hey, I can't breathe, can't breathe. I know, need some help here. And fortunately I kind of shook the thing and all of a sudden I'm like, okay, I'm good, I can breathe again. Now there are. When you're going to do something at the very edge, and certainly going there, we were at the very edge of being able to do it successfully. There are things that happen, like, happen in life and there you gotta, it's gotta be okay, stay calm. Let's figure this out. Oof.
[35:43]
A
Yeah, that one's tense. Just for me, imagining that exact situation and probably what's through your minds, not even by the second, but by the millisecond, evaluating options and troubleshooting. That's amazing.
[35:55]
B
Well, thank you, Larry, for sharing. I mean, it's clear from this podcast episode you've built an incredible business, you've given back significantly, and you're pushing human boundaries. So maybe we can leave our audience with one final piece of advice from you for anyone. Maybe they're just entering the industry or they're building a company or just trying to live life more intentionally. What's a piece of advice you may have?
[36:21]
C
Aim high. Do not self limit. You and your mind are capable of much more than you think you are. Think about it this way. You will never outperform your own self image. So even if you're not sure you can do, at least if you say, well, maybe I can, I believe I can and I'm going to try, you're well on your way.
[36:42]
B
I love it. Thank you so much, Larry. All right, if our listeners want to find out more about the Conner Group or learn about your philanthropic initiatives, how can they reach out or. Or find out more information? Sure.
[36:55]
C
The best thing to do about the Conner Group is our website, which is, yeah, just Google the Connor Group. And if they're interested in the Greater Dayton School, you. We have a website for that, literally the Greater Dayton School. And you'll find out hopefully worthwhile and very interesting information about what we're doing, the mission we're on, and the success we're having.
[37:24]
B
Excellent. Well, thank you so much, Larry, for joining us today. This has been an incredible conversation and we look forward to following everything that you do next.
[37:33]
C
All right, thanks, folks. Appreciate it.
[37:35]
B
And with that, we'll close this special podcast. Thank you, Larry, for joining us today. Join us later this week as we look at what's happened during the week and how it may be impacting you. If you have a question or a comment, send us an email@podcastrup.com until then, visit trep.com for more info and subscribe to the TruckWire Podcast with your favorite provider. Thank you for listening and stay well. All right.