We had a chance to talk with Darren James, President and COO of KAI Texas, about architecture and project planning.
Please excuse any typos, this was a hasty transcript.
Matt Register: Hey guys, welcome back to the show. We’re going to continue to bring you innovative CEO’s. CEO’s that are doing something really special in the marketplace. We are at the Vistage Executive Summit 2017 in Dallas. Which is at the Irving convention center at Las Colinas, here in Irving Texas. If you’re trying to grow your company there is no better place for you to be today than right here at this facility. Eight hundred CEOs in the same room learning about how to improve their business. How to make themselves better. How to make your business better. Remarkable event. So we’re going to jump right into it. I’m your host Matt Registered. Jay Curry’s is our co-host. Jay.
Jay Curry: We’re going to talk about architecture and it’s a great, great industry here in Texas, just very important. And you guys are in a couple of cities. This going to be interesting to see how you do professional services like this across multiple cities.
Matt Register: Well that is interesting because that is exactly right. So go ahead and get your calls in, 844-814-8144 is our 24 hour call line. And call in now, call in later. We’re going to get the experts in here to get those questions answered. But let’s jump right into it. Darren James is an architect. He’s is also the president and CEO of KAI Texas. Darren welcome to the show.
Darren James: Thank you. Glad to be here.
Matt Register: KAI Texas what do you do and who do you do it to?
Darren James: We are a architect an engineering firm that does programming construction management as well. We do a lot of work for Dart DISD. A lot of the local school districts, not only locally but across the state and across the country. We got in with Dallas.
Jay Curry: Is your specialty area schools?
Jay Curry: K-12 as well as higher education.
Matt Register: All right so you guys design. You’re not the contractor but you’re the designer and engineer of the project before a contractor will go execute that. Correct?
Darren James: The contractor will come execute our design.
Matt Register: So you have locations in Dallas, you have locations in San Antonio.
Darren James: That’s right.
Matt Register: All right, tell me a little bit about that. You know anytime you have professional services, you’re trying to run them in multiple metro areas same time is always a challenge. Right? Tell me a little bit about your decision to expand and how that works and how do you manage and control it?
Darren James: Okay, so we were having a little conversation before we went on the air talking about demographics and growth. And as I look across the state of Texas, San Antonio is the second largest city in the state.
Jay Curry: That blew me away. I assumed it was Dallas.
Darren James: That’s when I moved to Texas in 2002 and about two thousand six or seven. San Antonio surpassed Dallas and it kind of shocked me. So that’s what put it on my radar and I notice this had a ton of potential. The federal government was pouring of a lot of money into their military bases. And so there was an influx of military and retired military but also it’s just a great city from a climate perspective. It was kind of a hidden jewel. I mean geographically it’s a great city.
Matt Register: OK got it. So it’s someplace you decided you wanted to be.
Darren James: That’s correct.
Matt Register: Right. How did you go about finding that opportunity to be able to open up and have operations?
Darren James: Based on our relationship I had with a local firm in San Antonio. I was looking to do some work in Dallas. So we looked at how do we swap. How do I help him in the Dallas area and how does he help me in the San Antonio area? And through that relationship I was able to kind of find some other opportunities. In addition to K-12, we do affordable housing. So we’re doing a 220 unit apartment complex on the east side of San Antonio. Right now we’re also doing a clinic. So I was able to kind of parlay one opportunity into additional opportunities.
Matt Register: You know it’s interesting, you know, in the investment banking world we call that, you know, betting the jockey versus the horse. Right? You went and found the jockey, you went and built the horse. Ready to put him in business. Now that’s very interesting. The other thing we were talking about during the break that I find fascinating. This is a family business.
Darren James: It is.
Matt Register: That is not your family.
Darren James: No, I’m the only non-family member that’s an equity owner or a partner in the company. And so business was founded in 1980. I’ve been with the business… I started in 93. I came down as an employee of the company, the assignment I had, the owners asked me to join their company or join the university and I left. Three years later the owner called back and said “hey we’d like you to come back in.” So we talked for about six months and I came back as an equity partner.
Matt Register: Good for you. That’s interesting. We love family businesses. Family businesses however are rife with minefields, Right? You have to be very careful as you go through. Being a non family member in the family business is a whole another set of minefields. Right? How did you guys set that deal up? Because obviously it’s successful. Right?
Darren James: Right
Matt Register: And that’s not something I think most people get right.
Darren James: Exactly. I think a lot of it came from the vision of the founder. He looked strategically. The reason it’s KAI is his last name is Kennedy. And so you start to look at a transition plan a long time ago and he and his son, his son is a few years younger than I. So we kind of came up and he kind of sat us in a war room where we said “you guys sit here and watch and learn and observe” and he kind of took us through. So we can learn some of the principles from him but we’ve also internalized and brought some of our own personal experiences. And strategically we kind of aligned and so we do strategic plans about once every five years to make sure it is going on the right track.
Matt Register: Good for you.
Darren James: And in line with the economy.
Matt Register: Talk to me about the regulatory environment for what you do. Because you know lawmakers and bureaucrats writing regulations as quick as they possibly can and they don’t go away once they get written. Right? They just get added too. How has that changed what you guys are doing? I would imagine EPA has a significant emotional event for you guys, right? Dealing with that and there are others, correct?
Darren James: The biggest issue right now is the electrical code. So everybody is looking at how do we conserve energy. And so the electrical codes and the things that we have modified and deal with to make sure that the buildings function efficiently and properly. Get a little bit harder to deal with over the course of years but you just adjust,and you just modify. And what we’re looking at is how do we become great stewards of resources and as architects we look at health, safety and welfare and so on. How do we become better stewards for the earth?
Matt Register: I tell you what with with technology the way it is now. And I have certainly seen this in a residential side. Building materials have become so efficient.
Darren James: Yes.
Matt Register: That, you know, you’re looking at a new house with electrical bills that are completely unheard of. As far as on the low end. I’m assuming that is applied to the commercial space maybe to a greater degree. Right?
Darren James: It is. So think about the question you just asked and the answer was the energy code. Before buildings were a little more porous. You can get a lot of air infiltration throughout buildings. Now we actually have to build that in mechanically because the buildings are sealed up so tight that there is no fresh air. So we have to build it in mechanically. So there is a cost implication of that. But it is also a little bit more complication in size. This all goes into making the budget ballon a little bit but it makes the environment a little bit healthier.
Matt Register: And they also gain it back in lack of purchasing, paying for energy. Right? I mean there is a return on it. Well I’ll tell you what. By all measure you guys have a remarkable company.
Jay Curry: And it’s not a small one as you’re what 20.
Darren James: I’ve got 20 in this market we’ve got 150 nationwide.
Matt Register: All right. Good for you. Darren James, President and CEO of KAI Texas Commercial Architects extraordinaire, right? That’s what you guys do. What is easiest way to get in touch with you guys should somebody be interest?
Darren James: 214-742-0400 is our telephone number or you can reach us at www.KAItexas.com
Matt Register: Wonderful. KAITexas.com. We’re going to have that link. From Texasbusinessradio.com as well. So if you can’t take notes don’t worry about it. We’re going to have links to everybody we’re talking about right there on the front of the Web site. Darren thank you very much for joining us.
Darren James: Thank you.
Matt Register: And guys we got to go pay some bills. We have to go to break. We’re going to be back right after this. We’re still getting warmed up and we have more people to talk to, then we have time to talk to them. Absolutely. Don’t go anywhere.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.