CEO Stories: Dee Brown, P3Group

Q:  Hi, I’m Patricia O’Connell, I’m the host of CEO Stories for This is Capitalism. Welcome to our podcast. Today I’m speaking with Dee Brown, the President and CEO of the P3 Group, the nation’s largest minority-owned real estate developer that focuses exclusively on public/private partnerships. Dee has nearly 30 years experience in real estate sales, development, construction and management and is also the host of The Sky’s The Limit podcast, which is produced by Forbes Books. Dee, welcome to This is Capitalism: CEO Stories.

A:  Patricia, thank you for having me.

Q:  Well, Dee, you and I have had a little bit of a tough road getting here. Let’s see, we had some apocalyptic rain, we had some technical difficulties, we had a little communication platform miscommunication earlier today. And I was thinking this says a lot about you, Dee, because a lesser person would have said you know, Patricia, this isn’t just meant to be. But I’m thinking, Dee, that what this says about you is you know something, I’m supposed to do something and I’m going to find a way to do it. I’m not going to be beaten.

A: You’ve got to make it happen.

Q:  I’m not going to be beaten by these things which I can surmount. So tell me if that is an accurate description, Dee.

A: That is a very accurate description. I call it stick-to-it-ness. Everything we do in life, there are always challenges. So if you give up, we’ll never get anywhere.

Q:  How has that attitude played out in the bigger picture of your professional life, not merely doing this podcast with me?

A: Well, I think what I have found in business is that almost all the time the first answer is no. So, I have always had to find a way to overcome objection or rejection and find a way to keep pushing forward to get to the goal that I have set for myself or for my business. So, I think it’s a big part of what makes me who I am in terms of a businessperson.

Q: So, Dee, when people say no and you hear no, how often do you really think they really mean no, or they say no as a negotiating tactic?

A: Well, I think most of the time people say no for a variety of reasons and sometimes it’s not that they don’t necessarily need the services or the products that you’re offering, it’s that they may not be convinced that they want to acquire them from you. So, I think that when I hear no, I try to understand the reason behind the no so I can make a determination is this really a firm no or do I need to educate the individual on why they should continue moving forward with their transaction or business proposition from me.

Q: So, when you say you’re trying to convince them that they should work with you, is it that maybe they’re not convinced that the public/private partnership part of it makes sense, or they’re just not convinced that P3 is the right place for them?

A: Well, you know, just being candid, it could be for a variety of reasons. What we see often times, people are used to doing things a certain way and may not be educated on the benefits of public/private partnerships. Sometimes they have relationships that were preexisting, and they want to try to find ways to allow those relationships to get them to their goal. And so what we have to do is really educate more so than convince agencies and leaders of organizations that our model and our execution strategy is a superior delivery method. So, that’s something that we have obviously been successful at doing.

Q: Talk to me a little bit about the public/private partnership model. How is that an advantage for organizations in terms of getting their projects completed?

A: Sure. So, a public/private partnership is an agreement between a private sector company and a public body, some unit of government, whereby we are trying to accomplish a number of different things one of which is to transfer a risk, the risk associated with executing a project. The biggest part of the risk associated with developing a new project is obviously in the design and construction of the project because that’s where you can run into substantial cost overruns though delays, through cost increase, etcetera.

And so under a public/private partnership model, we provide all the capital and all the technical expertise to actually execute, develop and construct the project. So, the agency is not holding all of these contracts and so if some cost was to increase or anything would happen from an execution delay of the project then that risk is all on us as the private sector company developing that project for the government.

And so the benefit to the government is that number one, they transfer a substantial amount of risk away during the construction phase. They also gain technical expertise in every area of construction from engineering to architectural to all the other professional services required to execute a development. We bring those professional services with us as part of our team. They have the bandwidth, the additional bandwidth, that they may not typically have within the organization to take on a project.

And the public/private partnership model offers speed to market so we can actually execute and get projects under construction at a substantially quicker pace than a government agency can.

Q: You are taking on increased risk though by taking the risk off of the government entity, right? So, how are you mitigating the risk on your side?

A: Sure. So, we use a number of risk mitigation tools to mitigate our risk as the developers. So, number one, we enter into a GMP, a gross maximum price contract, with a general contractor to execute the project. And so, once we enter into that contract, the contractor must give us a payment and performance bond. That payment and performance bond says that he is going to complete that project on time, on schedule, on budget and they are going to pay liquidated damages if they do not complete the project on time.

And so the liquidated damages is another risk mitigation tool that we use because our public partners do not begin to make payments until the project has been delivered to them, typically months after the project has been delivered to them. So if that project is not completed on time, then the contractor begins to pay liquidated damages, which is equivalent to what the government agency would pay for their lease payment. And so essentially the contractor would make the lease payment if they don’t complete the project on time. So that’s one of the risk mitigation tools.

The other one is we use an owner’s rep on each project. The owner’s rep actually manages that construction process for us. They check behind the general contractor to make sure they’re on schedule, to make sure they are paying their sub-contractors, to make sure that the work that they are performing is quality work. And then we also have construction administration services from our architectural partner.

And so through those CA services again we are checking for quality assurance, quality control, making sure the work that is being billed out is actually work that’s in place on the project. And so those are the risk mitigation tools that we use to transfer the execution risk from us and push it down to the general contractor that way.

Q:  So, you have a pretty robust ecosystem with whom you work. And from what I have seen from your website, you also have a pretty deep bench on your own team. So, talk to me about what kind of people work on your team, what kind of expertise you have.

A: Sure. Well, obviously we have business development, it’s kind of the group that we have that are out in the field, meeting with agencies, talking with organizations daily about the services that we provide, using relationships that they have to determine where we are a good fit. And so that is a big part of what we do.

And then within our C-suite we have obviously a chief operating officer who actually oversees all of the operations, all of the business development professionals and runs day-to-day as it relates to maintaining relationships with our clients, servicing the clients and making sure that we are being very in synch with their needs.

And then we have our chief administrative officer who does all the administrative work within the office — maintaining documentation, maintaining minutes from meetings, making sure that the office runs efficiently and that we have what we need to be successful out in the field. And of course we have an executive assistant who also assists the CAO in managing the office, managing our calendars, managing our meetings and making good notes and minutes from meetings that we have and also managing relationships that we have.

And then my son, who has been recently promoted to President of Client Services, has a primary duty of really overseeing relationships, taking care of those relationships, making sure that our clients are being serviced properly and making sure that we do things periodically for those clients to make sure we stay top of mind to them.

Q: Well, congratulations to your son.  Here’s a question, do you see this as becoming a family business and an intergenerational business?

A:  Well, the goal is for it to definitely be a business that is passed along to my son. So, that’s why he’s there. He is part my succession plan. Of course I have non-family members that are also part of that succession plan as well, but this is a business that I hope that my son will be able to one day carry the torch and lead the organization and maybe his son or my granddaughter or one of my other kids will come along and be part of that success as well.

Q:  It’s pretty obvious how your son became interested in this — he saw his dad doing this every day. How did you become interested in this? It doesn’t strike me as the kind of career a six-year-old says hey I’m going to be a public/private partnership guy.

A: [Laughs.] Well, I actually migrated to the P3 world. I started off in just traditional real estate and real estate development. I’ve been in that business for 28 years. And I guess around 2008, I got into highway, street and bridge construction during the recession.

Q:  I was going to say, 2008, Dee, an interesting time to make a switch.

A:  Yes. There was a lot of money in infrastructure work during that time frame because that’s where a lot of dollars went to try to pull us out of the recession. So I began to perform highway, street and bridge construction by acquiring a company that my wife’s dad was running and bringing his crews and him under me to execute the work.

And as we began to grow in the construction world, I began to get contracts with the Army Corps of Engineers and Fish & Wildlife and a number of federal agencies. And we were doing public/private partnerships but not necessarily on real estate transactions. And as I began to execute these P3s with various branches of the federal government, I began to think about how I could bring together what I was learning in the government, the federal P3 space, back to the real estate part of public/private partnerships.

Q: Talk a little bit if you would about some of the kinds of projects you work on. Because I’m not sure that people recognize the kind of community impact that the kinds of work you do has.

A: Right.

Q:  When I look at the list of the kinds of projects that you do, they are ones that really make a difference in communities.

A:  Oh, absolutely. And a lot of the communities are actually underserved communities. So we are doing projects such as fire stations, we’re doing municipal court houses, public safety complexes. We have health units that we’re developing, corner offices, student unions, health clinics, student housing. We are doing energy systems, doing a lot of renewable energy programs within communities to offset the electric generation and consumption from the utility companies. And anything government. We are looking at water, wastewater solutions, hospitals..

So if you can pretty much dream it we are in that space right now. We have about a billion dollar’s worth of projects in our pipeline that are in various stages of either development or pre-development. And they span the gamut of everything that is central to communities.

Q:  Is it intentional that you work with underserved communities or is that just the way it has worked out?

A:  It’s very intentional. That is actually our niche. It’s not that we want.. that we are not willing to work in other communities, which we do, but no, we are very intentional that we want to provide our services to underserved communities because as a company we feel that those are the communities that actually benefit from our services more and that’s because typically they don’t have the sophistication within their staff to execute these projects. And from the standpoint of even going to the markets to secure funding for the projects, we typically are going to get them a better interest rate because we’re going to know how to structure a transaction to maximize the credit rating for the project.

Q:  What does it mean to you to be the largest minority-owned company in this space?

A:  Well, I think the old saying, to whom much is given much is expected, right? So, for us, it’s important that we lead by example, that we provide services that are unmatched by companies of any size, magnitude or ethnicity. We feel that we have a duty to serve, to serve the community to serve the people. The projects that we do aren’t about us.

So, we are not those type of developers. We don’t go into communities and try to figure out what we want to do. We go into communities and figure out how can we help them solve a problem, how can we help them provide needed services for the community. And these projects are transformational. I mean, they are changing the landscape of communities.

Q:  Talk to me a little bit if you would, Dee, about how you grew up. Did you grow up in an underserved community? Did you grow up in a place where you saw that there was a need that wasn’t being met?

A:  Yes. I grew up in the Mississippi Delta in a very impoverished community. So coming from that community you wouldn’t obviously expect me to have the outcome that I have had in life. So I have had to beat a lot of odds to get here. But in that community, and to this day, there’s still a lot of need, a lot of hopelessness amongst a lot of people where you have a small number of people that are doing well and a large number of people that are still impoverished. And it’s reflected in the mentality and the attitudes of the people within the community. So being able to go into a community and provide services that bring hope, that inspire, is important.

Q:  How do you serve as an example to people who you say might be bereft of the right mindset or bereft of the belief that they can get out of a community like that?

A:  Well, one of the things we try to do, we run internship programs, we give a lot of money to communities and to colleges for scholarship programs and we try to be a good example of what you can be if you put your mind to it and you make good, sound decisions. So what we try to do is to really be visible in the communities, we run a math and reading academy through our non-profit organization where we try to go and get kids that are young and help them to be enriched educationally during the summertime and just being visible and doing things to give back to the community.

Q:  How young does the math and reading program start?

A:  Kindergarten.

Q:  Wow.  You are getting them young.

A:  Yes. Our focus is K to three in that program because we know that those are the critical years. By the time a kid gets to the third grade, if they are not reading at grade level they are going to have challenges, they are less likely to graduate from high school as well. So we are trying to catch them early and we are trying to work in communities where we have worked from a professional perspective, we try to give back to those communities through those type of programs.

Q:  How long have you had your non-profit arm?

A:  The non-profit arm has been around for two years as an actual 501C3. But from the standpoint of the foundation being formed before we received 501C3 status we were actually formed in 2014. And so we have been operating since 2014 as a foundation.

Q:  Would you like to see other programs spring out of the foundation?

A:  Oh, absolutely. Because the function is intimately involved with P3-owned.. some developments. For example, one of the programs we’re doing with the foundation, we are going to HBCUs, and we are executing projects for those HBCUs using our foundation so that they can get projects delivered that they need without having to go to the credit market themselves to take on debt. And so we are developing student housing projects through that model, student union projects through that model as well as a variety of other projects.

Q:  You did not grow up it sounds like in an environment where you saw a lot of examples around you of success.

A:  Only a handful.

Q:  So, how did you develop that mindset of I can do more, I can be more?

A:  I tell people all the time that I think it’s something that’s in your DNA. I don’t know that you can necessarily just teach it. I don’t know if you can necessarily teach it to someone, but I have always had in my mindset that I wanted to succeed, I wanted to be successful. And so even as a young kid, I would always try to find ways to.. little entrepreneurial type avenues to try to make money. And because of that, I have never punched a clock for anyone. From the day I left college till today, I’ve always been.. As I say, I’ve always eaten what I’ve killed, I haven’t gotten a paycheck from anyone.

Q:  Tell me your metaphor about the lion. I loved that.

A:  Sure and it goes back to what I was describing earlier about mindset. The lion is the king of the jungle, but the lion isn’t the fastest animal in the jungle, that’s the cheetah. It’s not the smartest animal in the jungle, that would be the orangutan. And it’s not the largest animal in the jungle because that’s the elephant. But it’s the mindset that makes it the king of the jungle because when that lion sees an elephant, as big as the elephant is, the lion thinks about lunch.

And when the elephant sees the lion, he thinks about running. It’s that difference in the mindset is what allows the lion to be king of the jungle. And I think that’s part of my mindset is that of a lion. I always look for ways to succeed, to be competitive. I tell people all the time, you could be a little smarter than me, you could be a little faster than me but I’m going to always have the edge on you because I’m going to outwork you.

So I get up every morning at three-thirty in the morning and I work. When I’m on vacation I get up at three-thirty in the morning and I work. On Christmas Day I get up at three-thirty in the morning and I work. I very rarely take a full day off because I always feel like there’s something I can do to continue to give me that kind of competitive edge. So I never get complacent and say I got this all figured out, I’m always looking for another angle to take me to that next level in the game that I’m in, in the P3 space.

Q:  Well it certainly sounds, Dee, like it’s a combination of DNA and discipline.

A:  Oh, absolutely discipline, absolutely discipline. A lot of people do not have the discipline to be successful.  Because being successful requires you to develop habits and routines that you have to repeat consistently. So that means that when everyone else wants to go out and party and have a good time you have to go to bed because you have work to do tomorrow. And some people can’t get away from that mentality of having to be like everybody else or fit in with the crowd in order to be liked and loved by people.

Q:  Well there was that very famous book, “The Seven Habits of Highly Successful People.” I think we live in a much more accelerated world now. So Dee, tell me the three habits of highly successful people.

A:  I think number one, reading. I think most people can’t be successful because they don’t read. I give people information all the time and they will ask me questions that they can find within the information. People come to me and ask me questions; they have their phone in their hand and they’ll come ask me a question and I’ll say the answer.. you can google it and get the answer. You came and..? Why are you asking me? Because it’s easier to ask than to just take the effort to read.

So I think reading is one habit, consistency is the other one. People start things, they start businesses, they start projects, they start whatever they want to think about, they start it and then they quit for a variety of reasons – it’s too hard or I just give up or it’s not fair, whatever the case is. So, consistency.

And then the final thing is being able to fail. Being able to fail at something and then recover from that failure and start down that path again and continue to do that until you get to success. Because a lot of people think that success is just a smooth journey but it’s not. There’s a series of failures that you have to overcome for some period of time to get there. And so for whatever reason, people don’t see it like that.

I have people come into my office all the time when they’re working, interns, and the first thing they say is how can I be rich or how can I..? It’s always the end goal, the end result. And you can’t start at the end, you have to start at the beginning. Because if your only goal is to get rich or if your only goal is to make money then you’re not going to get there because it requires so many other motivating factors to get you to the money aspect of it. So when you go and you do a deal and you don’t make no money, that’s when you quit because our goal was to make money.

But we have to do what we do even if we don’t make money doing it. There’s an old saying I heard years and years ago, a guy told me, he said if you don’t do more than you’re paid to do, you won’t get paid to do what you do. And that’s the attitude you have to have.

Q:  Any last pieces of advice for would-be entrepreneurs out there, Dee?  You’ve been an entrepreneur your whole career.

A:  Right. Follow your dreams. Find something that you’re passionate about, something that you believe in, something that inspires you, and then use that to build your business model around. A lot of people try to get into businesses just for the sake of money or just for the sake of they think it’s glamorous, but they don’t really like what they’re doing. The reason I don’t have a problem with working every day is because I love what I do. I love the challenges I face; I love when I overcome those challenges and I love the impact that my business has on communities that I serve. So find something that you’re passionate about and make a career of it.

Q:  So you started out being passionate about real estate?

A:  Yes. For whatever reason, I was always attracted to it. I found it to be a very intriguing business and I went through the whole ranks of residential sales into residential development, rehabs, subdivisions, commercial developments. And over the years I was able to take all of the knowledge that I gained to build the company that I have now. And it was all of that knowledge that I gained over the years that allowed me to build this company and execute at the level that I execute at now.

Q:  If I might add to one of those habits we talked about, it sounds like keep learning is also one of them.

A:  Oh no doubt about it. This is an everlasting process of education because things change and if you..  You probably read the book “Who Moved My Cheese?” right? So things change. And if you don’t change with it, you’re going to be left behind. So we have to always stay on top of the education.

Again, it goes back to what I was saying about reading, keeping up with current trends, keeping up with current events, understanding how you can improve yourself as a businessperson because you’re never at the top of your game, it’s always.. you can always get better. And that’s the way I view myself, that as good as I may be at doing what I’m doing, I know I can always get better.

Q:  Dee, where can we find out more about your company and you?

A: Sure, so the web address for the company is thep3groupinc.com. And my personal web address is deebrownceo.com.

Q:  Okay. And Dee, someday I’m looking forward to interviewing your son.

A:  Absolutely, I would love that.

Q:  And hear what it is like to be a second-generation CEO of a great family business.

A:  Thank you, I appreciate that.

Q:  Okay well Dee, thank you for appearing with us on CEO Stories: This is Capitalism. And again, thank you for getting past all those little obstacles that life was throwing in our way. A good lesson here.

A:  Oh, you’re more than welcome and I appreciate the opportunity.

Q: Okay, have a great day, Dee.

A: You too, Take care.