He’s Always Right on the Money

Gus Mollasis Interviews Nice Guy Larry Fox.

He hails from Ohio, the heartland of America, where he was born and bred with values depicted in a Norman Rockwell rendering. Humility. Loyalty. Honesty. Integrity. His virtues are from another time when a handshake sealed a deal. A time when guys changed their own oil on Saturday afternoons as they listened to their favorite football team, while the leaves changed from green to gold. Today he continues to root for his favorite team – Ohio State University – and while he doesn’t change the oil any more on his car, he merely collects them. His collection of classic cars almost reaches Jay Leno-like heights. But don’t let his fancy car collection fool you. This man knows the real things in life that matter the most are family, friends and building relationships. From the outset, he took his Mid-Western work ethic and a bit of curiosity, along with a lot of smarts and hard work, and built a number of companies. His honors include being named a three-time honoree as an Inc. 500 “Fastest Growing Company” along with being recognized as the CEO of one of Forbes Magazine’s “Best Small Companies in America.” Like many, his American dream started humbly, in his bedroom in his parent’s house, where he taught himself to program computers on the way to founding a company to develop and sell ERP Software to the manufacturing industry. Who is this American success story? He’s a kid from Cleveland named Larry Fox, that’s who. Today he’s focused on his latest venture, Insula Companies, formed in 2009 with his partner Fred Cochran, to acquire distressed multi-family properties in Florida. Acquiring properties, creating wealth and building relationships is something he’s always been good at. You know what else he is really good at? Being a nice guy. As I sat down with Larry Fox in his downtown office decorated with collectibles and family pictures, I couldn’t help but wonder which of his collectible cars we would drive in as we sped through some scenes from an interview of his life. Would it be his ’67 Corvette?

Where were you born?
Cleveland, Ohio.

Congratulations on the Cleveland Cavaliers championship.
Thank you. I had the real joy of taking my 11-year-old son to game six of the NBA finals. When I was there, we also caught an Indians game. I left Cleveland when I was six years old and moved to Columbus.

What was your first job growing up?
A paper route when I was 14. We had one paper for the neighborhood.

Paint the scene of your childhood growing up.
Midwest. Track house. Middle class family. I can still remember when I went to college, I never thought of going anywhere but Ohio State. At that time, I didn’t even know there were other colleges. When you’re from Columbus and middle class, you went to Ohio State. I can still remember my first tuition bill, $270 a quarter, which my parents paid. Can you imagine $270 nowadays?

Tell me the greatest thing you learned from your parents.
Probably work ethic. I just remember that my dad got up and went to work every day and never complained about it. That was life. I remember when we were a little older that mom got a part-time job for a little extra spending money.

Tell me the greatest thing you hope your children have learned from you.
Work ethic again, although it’s completely different today. My parents were very middle class. We didn’t have any money. Whatever it took to live. My kids are pretty spoiled, I hate to say that. We live a pretty good lifestyle. I don’t want them to get used to that. I want them to become successful on their own by working hard.

As a young man, how did you teach yourself to program computers?
I bought a book back when they came out with the first PCs. I bought my first computer from Radio Shack, and I taught myself how to do it.

As a second act, you founded MICRO Manufacturing Systems (MMS), a company that developed and sold ERP software to the manufacturing industry. Tell me about those days.
After I graduated from Ohio State, I went to Dayton and got a job with the Hobart Corporation as an industrial engineer trainee, and somewhere during that time I went and bought this Radio Shack personal computer, which came with a book that taught you to program in basic. At the time, my duties at Hobart were doing this inventory control, trying to plan inventory. As I’m doing this I taught myself to program dumb things, but eventually I ran out of fun things that I liked to program. So I thought why don’t I write the program that does what we are doing at work – inventory control more or less that keeps inventory and helps plan your purchases and inventory you need. So I wrote that program on that Radio Shack personal computer while I had my day job. They had a magazine back then that I put an ad in for $15 bucks to advertise the program. The next thing you know, people wanted to buy it. My second year doing this I was making $15,000 a year in my job, while I sold $30,000 worth of this software. I was in hog heaven. Here I was a kid just out of college more or less, making $15,000 a year, which I thought was pretty good money. I’d had a windfall, which gave me enough seed money to quit my job, start improving the software and selling it full time. That’s kind of how it started.

MMS became Symix Systems, which eventually became the leading provider of ERP software. Tell me about your drive in taking your baby to another level.
When I started doing this, I was in my bedroom in my parent’s house because I was trying to use the money to get the business started. Then I bought a house and ran the business out of the extra bedroom in my house. It kept growing, so I hired a couple of people. Once you have two or three people coming to your house every day, you need an office. We hired a few more people, and the next thing you know we have 1200 employees.

As you’ve climbed in your career, what’s the key to your growth and taking you and your businesses to another level?
Every day you learn something new. I did everything. When you start with one employee you are everything. Then when it went to two, I did most everything. Then gradually I had people take over what I was doing. Ultimately I was trying to make myself expendable. I tried to hire people that were better than me. I was not a professional programmer. I just taught myself to program. So when I needed a programmer, I hired somebody better than me. When the sales started to take off, I hired someone who was a professional salesman. I just kept hiring people who were better than me. And that was kind of how we kept on growing.

What’s the secret to your success?
Motivation and desire. I was driven to be successful from a young age. That’s all I can remember – trying to do something to be successful. I don’t know where it came from. I didn’t really care about sports, and didn’t care that much about going out with my friends. I just cared about being successful. I was focused on success. That has to be your goal. And that’s not everybody’s goal.

You formed Insula Companies with your partner, Fred Cochran, acquiring distressed multi-family properties. How did that idea and opportunity get on your radar?
Around 2005, I pretty much was retired from doing anything. I was playing a lot of goYou would generally find me on the golf course. Then two things happened. First, I kind of got tired of playing golf, although you never really get tired of playing golf when you love it. The other thing was that my son was born in 2005, and I didn’t think it was a real good thing for him to wake up every morning and see his dad not go anywhere. So, when I met Fred around 2008, he told me that the apartment market had really crashed, and that he knows a lot about apartments, and he was looking for investors for a complex on Bee Ridge Road. He had worked for a company that had several thousand apartments, so he knew the business and presented me with the opportunity. I said, “I know nothing about apartments, but give me some time to research and learn.” I spent a little time learning about apartments and I went to Fred and said you’re right, this is not a bad spot. I invested in the first apartment deal and that went well. Very shortly after that, we bought another one, and then another one. It worked out pretty well. I kid Fred about the deal and this isn’t exactly the stated deal but I joke, “You do all the work. I’ll put in all the money. And we’ll both be happy.”

What makes Insula so successful?
Fred really knows the apartment industry inside and out. He’s done a lot of great things. When we first started buying apartments, there were more apartments out there than there was money. This was right after the crash. There were plenty of apartments around to buy and not enough money out there to buy them, because everybody was nervous. We bought some apartments and I had always been used to negotiating with price and beating them down a little further. Fred said, “Larry, let’s not beat the real estate agents down who are selling these, because we’re going to need them someday.” And that has turned out to be true. Today there is more money chasing apartments than there are apartments. And we have wonderful relationships with real estate brokers. We’ve built relationships. When we do a deal, we’re not going to beat them down on the commission. That’s really paid big dividends the last few years.

What is the greatest challenge in managing multi-family properties?
The biggest challenge is getting the right people in place. Everyone is running their own million-dollar business. The management in each complex are little entrepreneurs themselves running their own million-dollar complexes, some of them being more than a million bucks. You’re hiring, firing and you’re keeping your asset up. Getting the right people in place and then following up is key. We have a regional manager who oversees most of the apartments. And Fred is overseeing them. My philosophy is that we should not be buying anything that we can’t drive to because you have to be able to keep an eye on your assets. All of our properties are in Florida, with the furthest away being in Tallahassee. I’ve found that if they have to get in the car and travel six or seven hours to go and see something or hop on a plane, it just doesn’t get the attention.

Finish the following sentences:
I know a good investment is sound when…
It is brought to me by somebody I trust and respect.

Hard work will get you…
Everywhere.

Working smart will get you…
Almost as far as working hard.

One should treat their money as if …
It’s your own.

A great idea is one…
That’s obvious and that has an obvious benefit.

A successful entrepreneur more times than not will…
Outwork the other guy.

A good business partner is one who…
Shares the same values as you do.

A bad deal is one that…
I try to avoid. (Smiles)

A good deal is one where…
You feel really good about it.

What is your general philosophy on investing other people’s money?
We invest it just like it is our own money, because for every dollar they are putting in, we are putting in our money too.

How is it different from how you invest your own money?
We don’t have an apartment deal where we put investors into where we don’t have our money in. We have skin in the game. Trust me, I’m watching it.

What drives you and puts the fire in your belly to succeed?
I don’t know. I wish I could tell you, because if I knew, that’s what I would give my kids. But I just don’t know what it was. I just woke up one day and I wanted to be successful.

Is the American dream still alive and well?
Yes, but it’s harder to achieve now. I hope that my kids can move on to the next level of success. I think the dream is still alive if we get on the right track. We have had a no-growth kind of posture from the current administration that has not really fed a growth agenda. Lowering taxes and reducing regulations can help, and projects like the Keystone pipeline look like it would create a lot of jobs. I’m not an expert on it, but it looks like it would create a lot of jobs.

What is the most common mistake that most investors make with their money?
Investing in something that they don’t understand. Like when I invested with Fred the first time, I did learn a little about apartments.

What is your greatest quality, and what is the one thing you’d like to change about yourself?
I’m a nice guy, but I have plenty of bad habits.

Is there a quote or mantra that you live by?
Yes and no. My wife says I’m a walking bumper sticker, because I remember things from bumper stickers. Maybe it’s this – “Time is Money.”

Name the first thing that comes to your mind when I mention the following:
Ohio State University
Football.

Dayton, Ohio
University of Dayton.

Your days at Hobart
My first real job and I loved it. But I did work in a car wash from 16 until the day I graduated from college in Columbus that I absolutely loved.

Boys and Girl Scouts of America
My son playing basketball there every Saturday morning.

You have been successful in making money, but just as generous in supporting various charitable causes. Tell me why it’s important to give back.
Woody Hayes said it best – “Pay Forward.” That’s another bumper sticker. Pay Forward. I’ve been involved with Out of Door Academy for a few years, which gets a lot of my time now. It’s just making a big impact on kids. It’s one of the most fun things I have done in a long time. I coached the fifth grade boys’ basketball team and we won. We played in Bill Ivey’s Suncoast Youth Basketball League with a team of ODA boys, and we won the championship. That was my version of Hoosiers. (Smiles) Teaching them to play basketball was the most fun I have had in forever.

Sometimes guys like Bobby Knight don’t get the credit for teaching the kids.
I got to spend about an hour and a half alone with Bobby Knight, which was amazing. Back when I was in Columbus, I was a chairman of an organization called YPO (Young Presidents Organization). We had speakers come in and I got Bobby Knight to come in and speak. Well, I had to go pick him up at the airport and take him back, so I got 45 minutes both ways, just him and I in the car. He is really a wonderful guy. What I learned from him was intensity and focus. You could just tell from him that he was focused.

You were recognized as CEO of one of Forbes Best Small Companies in America. What is the key to creating and maintaining a great company?
As I’ve learned along the way, hiring the right people is the key to any business. You can give them the goals but you have to have the right people. I did well hiring, but as I look back at how I could have improved things, I could have always done a better job of hiring people.

In creating an effective CEO, what qualities would you program into his or her DNA?
First of all, I think it’s a gene. You probably have met people who are good with money and people who are not. I’ve had friends who have money and have always taken care of their money, and friends who “blanked their money away.” I think that’s a gene. I think if you’re going to run a business, you have to be oriented to making money. That’s business. The second thing is having people skills, because when you ultimately grow to a certain level, you have to convince people to do things that they don’t want to do or drive them to other things. If you have someone who is financially-oriented and has good people skills, I think they’ll be successful.

Do you learn more from hard lessons of failure or from the fruits of success?
Way more from failure. Painful lessons stick with you. Have you ever touched the muffler on the side of a Corvette? Trust me, you won’t do that a second time. I don’t know if it’s a good or bad thing, but as you look back, you tend to remember all the mistakes you made. I’ve done a lot of right things, but I don’t really remember all those. I remember all the mistakes I made.

How did you find your way to Sarasota?
My parents came here years ago and bought a place on Longboat Key. I visited them and eventually also bought a place on Longboat. Then I bought a place on Lido Beach. I had just been through a divorce and I needed somebody to decorate my place, so I called an interior decorator that I used at Robb and Stucky and asked her to come and finish decorating my place. It turns out she was getting a divorce and we hit it off. Then the decision became whether she was going to move to Columbus or was I going to move to Sarasota? I think I might have won an argument sometime over the last 15 years. But I lost that argument and got the girl, and that’s how I met and married Jennifer.

How high are you on Sarasota’s economic future?
I’m kind of split on that. I’m high on its economic future, but at the same time I don’t want to see any more traffic.

In Columbus you served on the Development Commission. What is the one thing you would do regarding Sarasota’s future development?
I think there is a nice controlled growth here, but I don’t want to become Naples or Miami. I want to keep this nice small-time feel. I’m lucky enough that I can live anywhere I want like Pebble Beach in California, but I want to live here. I like it here, and it’s a great place to raise my kids. The best thing is our climate and the biggest challenge is that more and more people are going to find out about Sarasota, and the danger it will become overgrown like Naples.

You have quite an impressive car collection. Tell me a little bit about your affinity and love for the automobile.
I love cars and love to collect them. I don’t do oil changes or anything like that anymore. I used to. At one time I could take an engine apart and put it back together, but that was 45 years ago. My favorite of my old cars to tool around with is the ‘67 Corvette. Of the new ones I love to drive the Ferrari F-40.

What is your favorite way to find balance and enjoy yourself in Sarasota?
Spending time with my kids. Three nights a week I’m at Twin Lakes watching baseball.

Many years from now how do you want to be remembered?
I want to be remembered through my kids. I want my kids to do something significant.