Familia: The Carroccios and TPW Management
Second homes represent a significant piece of the Vermont economy, and a father-son team, Paul Thomas Carroccio and Paul William Carroccio, both engineers, have built a successful business servicing resort-area communities. Now, with the help of IDX founder Richard Tarrant, the two Pauls are taking their experience national.The Carroccios have owned and run TPW Management - the "T" is for "Thomas, the "W" is for William and the "P," of course, is for Paul - in Manchester since 2001. It is a privately held company, with the Carroccios owning the majority interest.
The firm manages about 10,000 second homes in 150 condominium communities in Vermont, New Hampshire and, more recently, in Delaware. They now employ about 100 people in seven offices - Bondville, Manchester, Ludlow, Killington, Mt Snow, the Upper Valley and Rehoboth Beach. Their slogan is "Go play. Leave the work to us." TPW has been on Vermont Business Magazine's list of "Best Places to Work in Vermont" for several years. This year, it also made Inc. Magazine's "500/5000 List" which ranks by three-year growth the 5,000 fastest-growing private companies in America. TPW was ranked #2219 overall, with 115 percent growth. It was 28th in its industry category, real estate.
In 2009, TPW had sales of $3.8 million. In 2010, it expects that number to jump to $5 million. But in 2011, thanks to the new Delaware acquisition and a new contract to manage rentals in Killington, it expects to see revenues increase to somewhere between $8 million and $9 million. In other words, in the past few months, the Carroccios have doubled their company's size in spite of a faltering economy.
In fact, the faltering economy has helped their business. "In the last two months, we made some leaps and bounds that we had hoped to make in the last two years," Paul W said. "The economy stalled a lot of our growth efforts. Not to knock the economy, because now we're seeing a huge benefit to us. The economy has provided us with some great people. We've been able to hire great project managers coming out of the construction trade, which doesn't have the projects anymore. People we never dreamed of having five or six years ago are available, eager and affordable to us. Also in a down economy, when businesses aren't operated as efficiently as they could be, they start to suffer pretty rapidly. Three years ago, it was happy days. Now it's tighten-your-belt-and-figure-out-how-to-make-money. Those companies that can't figure it out become opportunities for us to buy."
TPW's business plan has three parts. The first is managing the day-to-day business lives of second-home communities. "We manage condo associations -town houses, clusters, gated communities and ski-in ski-out trailside condos," said Paul W. "We manage the businesses of these communities. In the back part of this office, we do the bookkeeping for about 150 businesses, or about $60 million in cash flow. That's not our revenue. We charge a fee to manage that. We report to the board of directors of the associations. We collect the dues from the owners and manage the vendors who provide the services -like the lawn mowers and the utility company. We pay the property taxes. We pay insurance. We repair the roofs, siding windows and doors. That's about half our business in terms of revenue." The second part is customer service. "We'll renovate your kitchen, put a quart of milk in the refrigerator before you get up here for the weekend, pick you up at the airport or paint your bedroom," Paul W said. "We do all that." The third piece, which follows logically from the Carroccios' roots in engineering, is consulting on long-range technical planning. "This is close to our hearts," Paul W said. "When do you think your roofs need to be replaced? You should be putting this amount of money away for future repairs. And when something bad happens, like a well pump goes down, we have the expertise to redesign something. That's a growing part of our business. As these condos grow older, the need for that service increases. They're getting older and rotting and falling down. They need to be kept repaired." All these pieces are joined together by a proprietary workflow technology, designed by Paul W, that cuts down dramatically on cash flow problems. "What usually kills a service business is cash flow," Paul W said. "You pay these guys out in the field to go out and do the work, and you charge the material at the local hardware store. But it takes months to actually bill your customers, and they're not actually going to pay you for another 30 days. So we've advanced that cash flow to almost being paid for the service before we actually have to pay for the service to be done." The system works because life is now electronic. "I've come up with a transparent system accessible by anyone in the company, as well as by our customers," Paul W said. "You make a service request on your Blackberry or iPhone. It gets routed through our Web-based work order management system to the person who can do that work in that location. Each location has a manager, like an air traffic controller, who manages the work load. The technician out in the field can record the labor on a mobile device, do it, put the cost on, close the order and create a customer invoice. That closing gets acknowledged. The customer can see it. Then the manager says, 'OK, bill it.' So we've done the service and billed it and sent the customer an e-mail with the bill. They authorize it and pay it by credit card. And this can be before the technician in the field gets back to the shop. We're at the very leading edge of this process." It is because of this workflow control system that Tarrant calls TPW "a technology company." "While it is, technically, a homeowners association management company, I looked at it as a technology company because their unique and sophisticated systems are the real value-add," Tarrant said in an e-mail. "It gives great control over costs, worker availability, job status, etc. And I always want to partner with people who are smart, hard working, and with a ton of common sense. The Pauls meet the criteria in spades." Technology is only half of the TPW success story, however. The other half is working with good people. "Create great systems that are easy to use by positive, proactive people and you'll achieve good results," Paul W said. "A lot of companies out there do what we do, but they don't manage their workflow like we do. And good people stay with us because they don't burn out." TPW's vendors appreciate working with the Carroccios. "I've known the Carroccios for about 22 years," said Tami Blanchard, who, along with her husband, owns Homestead Landscaping in Bondville. "They're great guys. They're huge advocates of small businesses in our community. I can't say enough good things about both of them. They're very professional and very personable. There isn't anything we wouldn't do for either one of them. And I feel confident that that would always be reciprocated. There is a lot of loyalty and trust between us. They've put together a great business." TPW's employees feel the same way. "The greatest strength of the company is loyalty," said finance manager Nicole Krayer. "I love working here. The Carroccios brought us along with this company and they instill a lot of faith and respect from us. They're great guys. Generous, understanding and compassionate. I definitely feel appreciated." Praise like that is important to the senior Paul because early on in his career - he has had several other successful businesses - he tended to micromanage his employees. "I was more of a manager than a leader and more of a micromanager than a good manager," Paul T said. "As I've grown older and had a couple of businesses and learned a lot from other people, I've become more of a leader. I have far more trust in employees than I ever had before. I empower them to make mistakes - hopefully they don't make big ones or make them too often - and I allow them to grow into their positions and do their jobs. I say this emphatically: I've had thousands of employees over the years, but collectively, these employees here and in Delaware are the best people I've ever had the opportunity to lead." I met with the junior Paul in the company's office, an attractive homelike place buried in a rural part of Manchester. I met with the senior Paul in a cafe in Brattleboro. Both men came to their interviews wearing blue broadcloth shirts with the TPW logo embroidered on the front; Paul T. added a TPW fleece vest. Branding is important to them. "Image is huge in our business," Paul W said. "We meet customers and vendors all day long. We have 40 or so vehicles out on the street that are clean and new and decaled. We have a strict protocol. Be in your TPW clothes. Keep your vehicles clean. If you're using a TPW tool, make sure it says TPW on it. If you're sending up documentation, make sure it has the TPW letterhead. We're very much about that image and our slogan: 'Go play - leave the work to us.' That is truly what we believe in and we want to market that along all fronts." Paul T, 62, is a bluff, tough and extroverted bulldog of a man with a round face, a shock of white hair and deep blue eyes. He's been in business ever since he was a teenager, when his father died and he left high school to run his family's Connecticut supermarket. A former long-term Winhall Selectman who is active in Republican politics, he now serves on the governor's Council of Economic Advisors. In his spare time he writes and flies planes. He got his first pilot's license in 1982. "I am a commercial pilot with multiengine, instrument and seaplane ratings," he said. "I have flown DC-3s and am also a certified flight instructor. I teach flying in Rutland and Argyle, NY - on a grass strip."
Although he has his dad's blue eyes, Paul W, 32, couldn't be more different. He's tall, quiet and more earnest. He appears to be an introvert, but looks might be deceptive in this case. Besides being an engineer and IT geek (remember, he designed the systems that the company is planning to export to the rest of the nation), he's a rock, jazz and fusion drummer and a sharpshooter - he helped put himself through Purdue University on a shooting scholarship. Paul T is the company's CEO. Paul W is the COO. I asked each of them about father-son relationships in a family business.
"At the time we started, my wife was also involved," Paul T said. "My daughter became involved later. And I was still playing father too often. Most parents try to protect their kids. Paul was always interested in business. 'Listen to me,' I would say. 'I made a lot of mistakes. Listen to me and then you'll have more time to make your own mistakes.' His attitude was, 'I have to make my own mistakes and take my own risks.'"
So at first things were a bit rocky. "We were having more than our share of discussions that were less than productive," Paul T said. "I engaged a consultant and came to find out I was communicating more like a father. I had to change my style because in the workplace, they were not my children. They were employees and somewhat equals. I think we've come a long way. Paul and I occasionally butt heads. He's a forward thinking, fast moving, multitasking guy who understands technology. You would think his degree was in computer science. I'm more deliberate. I'm fast-acting, but I think things through. I look at the downside a little more than he does. I think we have a good balance." Paul W agreed. "My dad is a great natural salesperson," Paul W said. "We identified that was a skill I don't necessarily have developed. I'm a process person. It works really well because day-to-day operations are what I eat up, while he's the cheerleader, paving new ways, looking for new acquisitions and monitoring our relationships with banks and large vendors. Also, every business has to have some relationships in politics, and he's keeping that alive." So while emotion is part of the relationship, the business plan takes precedence. "We literally have a road map for this company," Paul W said. "We have goals, a business plan, we know what we want to hit for figures and margins and service levels.
If there's anything my dad and I argue about, it's that we're messing with each other's areas. And we're both guilty of that." TPW's emphasis on service means it enjoys a remarkably close relationship with its clients. "I met Paul and his dad over 12 years ago when we first bought our Vermont home at Piper Ridge at Stratton," e-mailed Anthony Conroy, a managing director for Convergex, a division of The Bank Of New York, from New York. "I found them to be one of the reasons we bought our second home. Not only were they honest and straightforward, but they made us feel at home. They were there for us 24 hours a day, 365 days a year. There was no problem too big or too small for them to handle." One weekend, the Conroys left for New York without realizing that one of their children had left the front door open. "A snow storm rolled in late Sunday night, hours after we left," Conroy wrote. "We received a call about 11 p.m. from Paul that our front door was open and it looked like some of the pipes had frozen. We were expecting a disaster when we got up there the following weekend but Paul had everything fixed - carpets cleaned, tiles redone, and everything looking better than when we left. They have become like family to us. We have since moved from Piper Ridge and would not think of using anyone else but TPW to handle our every need." Another client, Robert Watts, who has had a second home on Okemo Mountain in the Trailside Condo Complex since 1998, has known the Carroccios for five years. "Our experience with TPW is excellent, both as a property owner (they are very responsive on service calls and as a contractor, they did a super job replacing our windows and doors) and as association president of Village IV," Watts e-mailed. "They truly care about the job they do, are fair in their pricing and are very reasonable and balanced when it is necessary to work out problems that come up. I do like that TPW can leverage their size in negotiating volume purchase contracts for such things as vendors and especially bulk propane to generate cost savings for the condo complex. Personal stories: The joy of watching Paul Jr evolve from eligible bachelor to family man."
Paul T: Early Years Paul T's grandparents were born in Sicily, and he proudly claims to still speak fluent Italian. But he grew up in East Harlem and Queens in New York City. "My father had an Italian cheese business," he said. "Later, he bought a supermarket in Connecticut. But he passed away a year later. I had to leave high school to run the business." Paul T. got a BA in civil engineering at night school at University of New Haven and started an engineering firm in Connecticut in the 1970s. "I built it up to about 25 people and sold it in 1990," he said. "We moved to Vermont in 1987. Why? Because we had good friends, another engineer, who moved to Vermont in 1974. We kept visiting and we fell in love with the place. We bought a camp in about 1979, then bought a lot, built a home and decided to move into it. That was in Winhall. We lived there until 2008, when we moved to Manchester." In Vermont, Paul T. started doing some consulting. "I wasn't retired," he said. "I was only 42 or so in 1990. Absolutely didn't want to retire, and have no plans to retire now. I started doing some building. And I telecommuted for an insurance company on the West Coast. a professional liability company that insured engineers and architects. I went around the county for them. Then I flew freight airplanes out of Bennington at night, old DC3s. I flew freight all over the East Coast and Midwest." Then, in 1998, Carroccio was approached by the Piper Ridge community near Stratton to submit a bid for some engineering work and management. "We got the contract," he said, "My wife Roberta worked with me. I still have that contract to this day. And in November of 2001, my son came on the scene. He was tired of playing music in Indiana." Roberta Carroccio, is now a nurse at the Mt. Valley Medical center in Londonderry. Their oldest child, Amy, recently returned to the business.
Early Years: Paul W Paul W. was born in Connecticut and was nine when the family moved to Vermont. "We got to spend a lot more time with our parents," he said. "When my dad was a selectman in Winhall, I'd go to the meetings with him and learn how local government worked." Early on, Paul W showed a strong interest in business.
"When I was around 10, I established a line of credit with my parents," he said. "I would borrow money for things I wanted and pay it back with interest, either with cash from jobs or by working it off mowing the lawn or something. Every time I mowed the lawn it was worth $30. So I learned the idea of borrowing and about risk and reward." Paul W. learned about branding from his maternal grandfather, who had a tire store in Connecticut.
"He was a great sales person," Paul W said. "He could sell anything. It didn't matter that it was a tire shop he inherited from his father. One of the best things I learned? He really marketed his business beyond selling tires. He created a calendar - now lots of places do that, but he did it a long time ago. He went to the extent of having ashtrays, pens, rulers, paperweights, ice scrapers that all said McNiff's Tire Shop. That concept of marketing makes so much sense to me. How many people smoked cigarettes back then? Lots of them. So why not make an ashtray that says on the bottom McNiff's Tires? Every time you put your cigarette out, you see McNiff's Tire Shop. We do that here - with coffee mugs. pens, shirts." Paul W. used the money he made working to support his two hobbies: drumming and competitive shooting.
"I'm still a drummer in some bands, and I always had an interest in competitive shooting. Those are two expensive hobbies. You've got to own a drum set, and you've got to own a gun. So my parents would loan me the money in some cases, and I'd pay it back. When I was 14, for example, I won the local contract for mowing the town's cemeteries. It was three or four thousand dollars for the summer. I went out and got insurance and I had a lawn mower. It's what I liked to do. My high school friends always gave me a hard time because I was always wanting to work." The work-play pattern continued while he attended the Burr and Burton Academy in Manchester. "I'd play sports or go to a job," he said. "I used the some of the money to restore vehicles. I fixed up a couple of cars, including an old GMC pickup from my grandfather. I did some traveling." He had a shooting scholarship and worked in the materials lab at Purdue University to pay his way through college. And in 2001, he decided he wanted to come back to Vermont. "I don't see any reason to go anywhere else," Paul W said. "It's a nice state to live in. Dad was developing the business, and we decided to see if we could do it together. We tested the waters and it seemed to be a great working relationship early on. We developed a business plan and some core principals of providing a technically- minded service business to resort area communities, specifically condo and homeowner's associations around the ski resorts. We thought we could provide an engineer's mind to a business that had been historically under-served and under-managed. I can see Vermont as being a very good place to start and build a national business."
Political Action Paul T met Governor Jim Douglas when he was first campaigning for the governor's job. "I didn't agree with Howard Dean," Paul W said. "I felt I could help the state of Vermont and businesspeople and employees if I could help Governor Douglas get elected. I worked hard for him. Later, I applied for the Economic Advisory Council and got on it. I felt I had something to bring to the table." Paul W said he made a point of speaking at every meeting to let people know what was happening in Bennington County - he calls it "the forgotten kingdom" - and with real estate. "It allowed the governor to hear voices from downstate," Paul W said. "From an economics point of view, they heard about the struggles we were having. I served on the Bennington County Investment Corp. I was proud of the fact that through our efforts, we were able to develop an industrial park and develop and sell an incubator building. I brought these struggles to the council. That helped formulate state plans and the budget. It's all woven together." Second-home owners carry a big part of the state's property tax burden, Paul T said. "It's nice to think we can rely on rich out-of-state homeowners to carry the tax burden," Paul T said. "They're why communities like Winhall and Manchester survive. And I'm not seeing an exodus. But a lot of people are choosing to sell their properties in Vermont and go elsewhere because of the tax burden. This is eventually going to come back to bite us." Second-home owners are important supporters of the Vermont economy, Paul T said. "They don't just support TPW," he said. "We hire electricians, plumbers and carpenters. We buy materials from lumber yards. We buy fuel oil. Any service or product homeowners use, then second-home owners do also." Higher property taxes means taking more money out of the second-home owners' pockets. "It means less money to spend in Vermont," Paul T said. "There are some of them that are absurdly wealthy. But others are most like middle class people who have saved enough money to put a down-payment on a second home in Vermont like I did. If you came up here and bought a second home in 1996, your taxes were absurdly low - which they were, I'm not arguing. But then, after Act 60, instead of $500 or $1,000, they're $10,000. That means $9,000 has to come from somewhere. And it's coming from people's spending in Vermont. It's affecting Vermont negatively. Until we come up with a better way of funding education, or better yet, a more appropriate way of spending for education, these taxes will negatively affect everyone in Vermont." With that in mind, a few years ago Paul T organized his second-home owners and started hosting an annual lunch with Douglas, who speaks and answers questions. The lunches are popular and give second-home owners a voice in Montpelier. "The annual luncheon that they host with all association board members and the governor is a great opportunity to get together to share common issues and problems," said second-home owner Bob Watts. "We get a sense of political representation in a state where we are not permanent residents or voters!" Carroccio senior speaks for business in a variety of forums. "I'm an active person," Paul W said. "I get involved. I'm not a believer in people sitting back and doing nothing and complaining about it. If you're going to talk about it, do something." Vermont is difficult for business, Paul T. believes. "I've done business in Connecticut, New Jersey and now Delaware," he said. "While we pride ourselves on our employees, we do find that oftentimes, the state leans much more in favor of employees than employers. When we have a difficult employee who has broken rules, been warned a number of times and is discharged for cause, on a number of occasions we've had that reversed. The employee has been awarded unemployment benefits. We document, warn and follow procedure, and yet we've been told that our reasons for dismissal were not appropriate. This has happened on two or three occasions." Being unable to buy health insurance out-of-state is another issue that Paul T. believes holds back business expansion. After TPW acquired its Delaware company, they tried to buy health insurance for all their employees through Blue Cross Blue Shield of Delaware, which was significantly cheaper than it was in Vermont. "We were told that Vermont Blue Cross Blue Shield would not allow it," he said.
The Future Is Growth Three years ago, when the Carroccios started thinking about expanding across the country, they pitched their idea to Tarrant, an old friend. He liked what he saw, joined their board and became an investor.
"Our strategy is a roll-up one," Tarrant said. "Namely, buying other similar companies, installing our systems and values and moving on to the next. This has worked extremely well so far, again because of the technology and people skills. There is no question TPW will continue to expand on a national basis." It took a little time for the Carroccios to be clear about where they were going. For example, they were originally unsure about investing in the Upper Valley because it contained a mix of rentals, primary homes, commercial buildings and condominiums. "We had this mindset that all we're going to do is manage second homes," Paul W said. "So we stayed away from the Upper Valley. And we missed the opportunity early on of picking up some business - because it was mixed. In actuality, it's not that different. It's business we can do. And it fits pretty well into our model. It may not be our primary goal or source of revenue, but we neglected to think that we can bring in some stuff on the fringe, outside of our primary scope. Now we're there, and wow! It's a thousand units and half are second homes and half are primary homes. And we're doing well at it, and that staff has brought good practices to the firm."
Delaware was the company's fourth acquisition and but its first with borders not contiguous to Vermont. TPW acquired Guardian Property Management in August of 2010. It employs about 30 people and had 2009 sales of about $1.5 million. "It's our fourth acquisition in two years," said Paul W. "We acquired a management contract at Killington early in 2006. Then we bought Wallace Properties at Mt. Snow and Simpson Property Management in Norwich in May of this year. We bought Guardian in August." The Carroccios have family in Delaware.
"We were looking to expand," said Paul T. "Opportunities presented themselves. We've vacationed down there, and I decided it was time for these old bones to get some warmer weather. I identified a number of companies and chose one that seemed to be close to our operating model and philosophy. Their primary business is resort homes - condominiums at the beach. It's a similar business to ours, but different seasons. None of the companies were for sale. I approached the woman at Guardian and over two years we came to terms." Paul T. would not disclose the purchase price due to "a confidentiality agreement with the seller."
"But there are others on the horizon," Paul T said. "Same kinds of business." One of the benefits of Delaware is that it's easy to reach. Look for that to be a hallmark of other TPW acquisitions. "Resorts are not always easy to get to," Paul W said. "Think of Vermont ski areas. It's not easy to get there. Delaware is easy to get to. You fly out of Albany and into Baltimore. You drive an hour and a half or two hours. It takes me three and a half to get to Smugglers Notch from Manchester. Utah is more amazing. Take a plane in Albany, go through Chicago, get to Salt Lake City. It's only a five-hour trip because you pick up two hours on the time change. You could leave on a 6 a.m. flight and be in an office in Park City, Utah, at noon. So that's an opportunity for us. So is Colorado."
The Carroccios feel that knowing the second-home community business will help them no matter where they go next. "We can nail down those second-home resort communities," said Paul W. "They all need systems or good direction or guidance. Guardian was a great business and had a great culture. But they got to the point where they needed systems and some direction. That's what we brought to the table. We brought our work flow system, and we've already increased revenues and margins. There are going to be some curve balls, but you have to go back to the idea that my dad and I are engineers. There's a design for all of this." The trick is remaining close to the ground in locations that are not your home turf. "Some businesses can be run on shoestring," said Paul W. "We've picked up some. They were successful because those people had relationships in the community. And those relationships are more valuable than the processes we want to put in place. Specifically, In the Mt. Snow area , we should have preserved the relationships with vendors and local people and local employees. It would have been better than putting in better systems and bringing in more sophisticated vendors. We're now wanting to be a local company there, and the local people are saying, 'No, you're not local.' And it's only across a couple of mountains. But because we tuned up things, we lost that local flair." It's a common problem in mergers and acquisitions, Paul W said. "Think about banks that buy community banks and then forget about the word 'community,'" he said. "They spend the next five years trying to reestablish that. Had we gone into Mt. Snow knowing community ties was a valuable asset to that acquisition, we wouldn't have spent the past three years trying to get it back."
Killington The new partnership with Killington is another example of how the Carroccios are stretching their business model. It the first time they've managed rental units. "Killington had new owners who were selling the opportunity," Paul W said. "I thought about it and went to them. It's profitable for them because of the shoulder season - they staff up for winter and then have employees they don't need. That's also a risk is for us, but we have ancillary services we can use the employees for when the winter is over."
The Future The future is continued growth, according to the Carroccios. "I'm driven by a sense of urgency," said Paul W. "Once I have a vision of what something can be, I'm on the freeway speeding faster than the cops can get me to get to it. TPW is one of those visions. I want to be that visionary who saw the efficient, effective way to make the industry have a good reputation and a meaningful purpose. A lot of customers feel second home management is a necessary evil. I want to become the service provider you want to have." Today, TPW manages 45 public water systems for its condominium customers. Paul W sees water as "the next gold." "It's cutting edge," he said. "It's the next thing. We can manage people's water, make sure it's pure and safe to drink and it's the next gold mine for an entrepreneur. Retirement? No such thing." His father agrees. "The company's going to continue to grow," Paul T said. "My son and I have a lot of energy. We have a lot of vision. We've only just begun to explore our capabilities as leaders." Joyce Marcel is a freelance writer and author from Dummerston. Her new book, a collection of her columns called, "A Thousand Words or Less," is now available. Learn more about her and how to order the book at her Web site: www.joycemarcel.com.‹ Back to Press