Liz Lambert Interview | The Tim Ferriss Show | Transcription

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Introduction

Intro (00:14)

Hello boys and girls, this is Tim Ferriss and welcome to another episode of the Tim Ferriss Show, where it is always my job to deconstruct world-class performers of various types and across many disciplines and today we have Liz Lambert on the show. So Liz, thanks so much for taking the time. So happy to be here.

Liz Lambert'S Professional Journey And Texas Background

Liz Lamberts background (00:31)

I'm thrilled to have you finally in front of me and I'm going to give people a little bit of context. So who is Liz Lambert? Liz Lambert @TheLizLambert at Instagram and Twitter first purchased a seedy motel on South Congress Avenue 23 years ago and transformed it into Hotel San Jose, which has become known today as the Quintessential Austin Hotel. The success of Hotel San Jose, which sparked a revitalization in the city's now thriving South Congress district, which we'll definitely talk about, led her to launch Bunkhouse Group, a hospitality company founded on the pillars of design, music and community-driven experiences. Since then, she's expanded Bunkhouse's unique hotel portfolio to include El Cosmico, which has been recommended to me about a thousand times, the community lodging concept in Marfa, also a place worth talking about, the iconic Austin Motel, a renovated motor court hotel and Hotel St. Cecilia, where I was just two nights ago, in fact, a 14-room secluded estate in Austin, Hotel Havana, Havana, depending on where you are, the historic property on San Antonio's Riverwalk, and most recently has added Bunkhouse's first international hotel, Hotel San Cristobal Baja in Todos Santos, Mexico, and the first non-Texas property, domestically the Phoenix Hotel, to their hotel portfolio. Lambert and Bunkhouse also operate Joe's Coffee, the popular Austin coffee shop, which I frequent myself, and that currently includes three locations and an eastside event space fair market, also located in Austin. They've really gave you a full, you know... Oh, we're covering all the bases. Lambert's fourth Austin hotel, the Magdalena, is currently in development and is slated to open on South Congress in 2020. Maybe 2019, we'll see. Maybe 2019, wow, ahead of schedule, that's unusual, I would imagine. It's a moving target. And there's so many places that we could start with this, and we have some mutual friends, which makes me always a bit more comfortable and excited to jump into things, but I thought we would begin with the last days of San Jose. Now, this is a documentary, and I hold you fully accountable for keeping me up way past my bedtime. Oh, awesome, you signed. Good script. I've watched most of it. I haven't seen all of it, I'll be honest, because I had to go to bed last night at some point. There's a surprise ending. Not really. Well, it's a documentary on Hotel San Jose's origins, and I thought I would share a note from my assistant. So my assistant doesn't add notes to much of my prep documentation at all, and this is her note. Quote, "I've watched most of the documentary on and off throughout the day. Just listen to her talk to the humanity of people that San Jose tells you everything important you need to know about her." And I wasn't sure quite what that meant. It seemed a bit cryptic. And I have to say, A, very impressed with the doc. B, you must have captured so much footage, and you did a really nice job of editing for emotional impact. That wasn't me, by the way. I didn't edit, and I never could have edited that, and I never would have been in the doc had it been my edit. Your choice. Could you tell people who don't know, and I imagine that's-- A lot of people. A lot of people. Yeah, I never released it. About the doc, and why didn't you release it? I was trying to find it online so I could push it out to people. You know, it's terrible. It is every year-- this is one of those things. Every year it's on my list to do, and I could never-- So this is a documentary, and I'll tell you why I talked about why I never did. This is a documentary that I did when I first bought the San Jose, which I used to be a lawyer. It was sort of a change of career inadvertently. And I bought an old motel down on South Congress. I have terrible Austin allergies today, so sorry about that. That's OK. We were chatting that this is audio verite. Yeah. Truthfully. In the mid '90s, I bought an old motel down in South Congress. I was a lawyer at the time, and I basically just walked up to the door, knocked on the door, and there was a Taiwanese couple there that owned the motel. And at the time, there was nothing on South Congress, which is, as you know, a very popular area in Austin. Super hot spot, cool area, very hip. But it wasn't a car on the street back then. I mean, honestly. And they were about to put the motel on the market. And I told them, don't do that yet. Let me see if I can do something about it. I ended up buying the San Jose, not knowing anything about what I was doing. For $500,000, my mother co-signed a note, and suddenly they handed me the keys, and I was on my way. And I knew nothing about running a hotel or a motel or anything. Knew nothing about business, really. Now, paint a picture for people as to the clientele and what was the state of affairs. Because people think South Congress now, and they're like, oh, cool. I can have fancy Japanese food, and I can go have some mezcal. Oh, no, no, no. It was dicey. I mean, people didn't go down there at night. There were no businesses on the street. The Continental Club was there, and had been there since 1957, and it remained. But really, there was no place to eat. The first Schlotzky's was actually on South Congress, really tiny place. But there was nothing down there. And I had moved back into the neighborhood, but I would go to the Continental Club a lot, so sit on a bar still there. And I've watched the San Jose across the street, which was an old motor court built in the '30s, Spanish colonial revival style, painted sea foam green at the time. And it looked like it was empty, but it was really because there were people. It was full all the time. But it was $25 to $30 a night, and nobody really had luggage or cars, and nobody really came out during the day. So it looked very quiet. But at night, it was teeming with life.

Film impact ( July filmed the motel) (06:40)

And it was junkies and prostitutes, but a lot of good people, too, that were just down on their luck for one reason or another, couldn't pay a deposit, first and last month's deposit, or somehow something in life had happened that dislodged them. But they could get a hotel room for either a couple of nights. Or some people lived there. There were residents that lived there permanently, but they just paid by the day or by the week. I have so many questions. I could do an hour just on this dock. And it's not-- obviously, because I have anything to gain financially from pushing the dock, because it's not even available. So I was going to tell you why it's not available. Yeah. OK. I shot the dock, which was following-- as an undergraduate, I was a creative writing major with a concentration in poetry, which was-- So just for background for folks, and this is my nonlinear style. I apologize. Where did you-- just a quick kind of bullets. Where did you grow up, and where did you do your undergrad? Yeah. I grew up in West Texas. And I did my undergrad. I started at TCU in Fort Worth. I had a brief stint at Stanford. And then I finished at UT. It's a way of seeing the world there. And creative writing. And humanities. And humanities. So I had a lot-- with a concentration in poetry. So I had a lot of friends who were writers or who-- I wrote a lot at the time, even back then, just whether it was journaling or poetry or whatever it was. Friends would encourage me to write down. I stopped my law job at some point when I knew I was in over my head, or in a good way over my head at the San Jose. But I needed to do something with the motel.

The Story of Macartney (08:24)

I couldn't continue on at $30 a night with people stealing sheets and bleeding on sheets and burning sheets, you name it. But people kept encouraging me to write down things that happened during the day. Because I would tell stories at dinner. I'd go to dinner with friends. And it would be absolutely absurd or crazy. Within the first five or 10 minutes, you see quite a few examples. Yeah. So I didn't have time to write it down. Because I was literally like-- the place had been redone in the '70s, I think was the last time. So it had shag carpet still. So you can imagine, as you tried to vacuum that shag carpet, what it was like. I mean, there were definitely people-- it was definitely a place where you did drugs. It was definitely a place where you had whatever homeless pet you might have. I mean, it was just like-- the housekeeper that had been at the motel before I bought it, there were a husband and wife, the Soos, who were awesome people. But they were the only employees besides Mr. Wu, who I swear to God, was like two years older than God and almost blind. And he was the housekeeper. So the state of the rooms when we got there were just a thing to behold. And I cleaned rooms for quite a while. So I was so busy that I wasn't writing things down. There was no journaling. There was no that kind of thing. But I did find a camera. It was right when those little pocket cameras came out. There was a little Sony PC7. And I got one of those. So I just started talking to people. People knew the camera was there. I put it up. The front desk had a little glass thing that you slid money through. And I just duct taped it to the front for a while. And then when I would go out to knock on doors or kick people out or collect money-- because it wasn't like you came and paid on a daily basis. I had to chase down money. And so I would just take it with me. And when I was done, I was really lucky at the time that I had a friend who was at AFI in cinematography. What is AFI? American Film Institute. Got it. Her name is Jen Lane. And she just now is a producer of the new "Queer Eye." Oh, no kidding. It's been really super popular, yeah. And she was one of my good friends. And then she had a friend named Uta Brzezowicz, who is a producer now as well, but a very well-known cinematographer before she became a producer. She shot the first three seasons of "The Wire." And that's why "The Wire" looks like it does. So they were both in film school. And they came down. I said, you guys come help me shoot, because they were both directors of photography, what we're studying. And they were awesome, because not only did they shoot some B-roll, and then when I was ready to shut the motel down, they shot the last three weeks. But Uta also encouraged me. You said, "Audio verite." That's exactly what she told me. I was really worried about a big microphone and stuff, but nobody would have talked to me. She was like, and don't worry about your film style. Just talk to people. And the story is compelling enough. And those were words of wisdom. And as long as you could hear it, it was going to be OK. You didn't need a huge microphone to stick in somebody's face. Just make sure it was audible enough. So you have some incredible footage. And you really do capture-- I'm searching for a word besides humanity, because it seems too high concept, maybe for what I'm trying to convey. But you captured the vulnerability and the sincerity of so many different types of people of all different colors, of all different types, who are completely marginalized, discarded, these sort of invisible people. And I watched this. And I was having just a bitch of a day yesterday. And I was feeling sorry for myself. And I was talking to friends. And we were commiserating about various things. And I've had what I would consider in my life a bit of a hailstorm of a week. And then I watched this. And I was just like, you asshole. God, you should get down on your knees every day and just thank God that you have the bed that you have to sleep in, that you have the food that you have to eat. It was really humbling. And you're holding this footage. You have these stars to be helping you. Why not put it out? I got busy. I mean, here's the thing. I will help you put this thing out. Let's do that. I would love that. The last three years, it's been at the top of my list. And I keep having people that say they'll help. And then everybody's busy. And so it becomes this-- I will commit right now publicly that I will help you put it out. I'm so happy about that. OK? It's very-- as long as you're not expecting a full-blown red carpet theatrical release, if you just want it to be available to people-- I just want it to be available. So what happened was right when I was done, you'll see the doc ends as I close the door when we close the San Jose. During the footage, during the documentary, we follow five or six people that are permanent residents at the San Jose. Again, I was just shooting on the fly, kind of keeping a video diary. And so I would turn the camera on myself every once in a while. I never-- even when I began editing and realized I couldn't edit it, I had 90 hours of footage. I mean, there's so much good stuff in there. But there was no way I was going to be able to tell a story. So another friend of my friend Jen's from AFI, Tina Gazaro, who works in the business still today, I hired her to edit. But I didn't have her edit until about four or five years into the San Jose being open. And so it was hilarious, because she would see people that might have passed through the footage or the documentary. And they would have no idea who she was. But she spent hours and hours watching them. And she would be, hey. And they'd be like, you know way too much about me, kind of thing. But she did an amazing job. And she gave compelling reasons that I should also be a character in the movie. Because it wasn't just about-- it was also about my story and about me living there as part of a community and the struggle I was having. Everybody had a struggle, different struggles. But one of the remarkable things is that they're all behind me, the folks that live there generally. So can I pause for a second? Yeah. So there are a few lily pad hops that I want to know more about.

Cared about (15:25)

So first is you went to three places for undergrad, focusing on creative writing with an emphasis on poetry. Why did you go to three places? And how on earth do you go from there to law? Let's start with that. I went to three places because my family were-- I'm from West Texas. My parents met at TCU. My grandfather played football for TCU. My dad played football for TCU. My oldest brother played football for TCU. Everybody in the kind of cousin group, everybody started at TCU. And I got there. And Fort Worth is a lovely place. I'm crazy about Fort Worth these days. But I always knew it wasn't really going to be a fit for me. And once I kind of got interested in creative writing, the program there wasn't that strong. I went to Stanford because I think it was aspirational. I thought that's where I would transfer. I went there for summer school. And then I was accepted as a regular student at Stanford. And I deferred. There were things going on with my family that I needed to come back to Texas. And once I came back, I-- Just in terms-- if you're comfortable saying it, just in terms of sickness?

Texan through and through (16:43)

Divorce. My parents-- yeah. And I was really close to my mom. And so I felt like I needed to be closer. And I deferred a semester. And then I ended up just going to UT. I always loved Austin. And in the long run, I'm really happy I did. I mean, when I arrived in Austin in the early '80s, it felt like the place was made for me. It just felt like home. What about it? I'm a Texan through and through. But there were a lot of reasons that I didn't really fit comfortably into other parts of Texas. I was gay. At the time, I wasn't even out. And I was a little more creative, maybe. I haven't found my place in Texas, except for West Texas. And Austin, it was the state capital. The university was huge. It was this liberal place and a more conservative state. The blueberry and the-- The blueberry and the tomato soup. And the tomato soup. And the music was amazing. And there were rivers and lakes. And it felt like home. For those people who have never been to Texas-- and there are certainly lots of international folks listening. And they may have the image, certainly, of the cowboy hat and the boots, but that's about it. When you say Texan through and through in other respects, for you, what does that mean?

Like if you werent born here Heres Texas (18:08)

I'm from West Texas. And there are a lot of people that grow up in Texas and never even make it to West Texas. It's a big state for you guys who don't know. Although Jeff Bezos may be unbeknownst to many people, would be one of those people. Right in the middle of West Texas. It's a good place to launch a rocket ship from. And so I'm, I think, sixth or seventh generation in the ranching business. My family still ranches cow and calf operation. And so there is a certain way Texas-- Texas is like another country for some people. It really is. I mean, I have friends-- The Republic of Texas. That's right. And that comes with a good and bad. But for me, mostly, it's a good thing. A friend of mine asked me when I was young and traveling, he said, if people were to ask you if you were in Europe, where are you from? I would say West Texas. It's like, that's really odd. Most people wouldn't say that. They would say, not only do you say Texas, you give the region of Texas you're from. I'm like, well, West Texas is so different than East Texas. It is an enormous, enormous state. Yeah. So you end up in Austin. How does the law come into the picture, and why? Well, so as I said, I was a humanities major, which I'm forever thankful for. And then I doubled down with the concentration of poetry, which is-- they're not looking for poets out there, I don't think, so much. And so I applied to go to-- I could go get my MFA, was really the path I was on. Your graduate degree in writing. Right. And I applied to one program at Sarah Lawrence, and didn't get in. And I was like, OK, what now? I knew that I was going to need a little further education or some other direction. So actually, the first thing I did is I got an internship at Texas Monthly, and worked there for-- I then went on to work as a paid-- I don't even know what it was-- paid employee, I guess, at Texas Monthly for about a year, and applied to law school during that time. My father always argued that law school education was something I'd never be sorry about, and it was actually the best liberal education you could get. Do you agree with that now? I do, actually. I was afraid at the time that it would kill every bit of creativity in me. That somehow learning to think logically would dampen my ability to be creative. And I don't think that's true at all. So you finished law school. Do you work in the law profession before Hotel San Jose? I did, indeed. So I went straight from law school to the DA's office in Manhattan. And worked there for three and a half years or so. And then moved back to Austin and worked at the Attorney General's office. So I was a trial lawyer. And again, something I'll never be sorry about. I made amazing friends that I'm still in touch with on a regular basis, from a text thread to occasional reunions. But it also taught me how to think in a way that has served me really well in business and just in the world. It teaches you a form of rigor, I think, to be a trial lawyer, to understand all the facts of any situation.

Do law (21:48)

And again, to put it together. So understanding the facts, then, of your situation at the time, if I contrast-- contrast isn't the right word, it sounds too judgey. If I look at your path side by side with the paths of other former lawyers I know, which are many. So maybe they say, I don't want to do law, but I'm going to do management consulting. I don't want to do law, I'm going to start a company with my friend or go to business school. There aren't many who say, I don't want to do law, I'm going to buy a hotel that's full of drug addicts and prostitutes and so on. So why that particular choice? How did that come to pass? I think partially it was serendipity. I was in the right place at the right time on the right street. What appealed about it to you? Because for a lot of people, it would have a repellent effect. But for you, it had an attracting effect. Well, if you think about it, I come from the DA's office. And a lot of the work I did was with a lot of the same-- I don't know exactly where that concentric circle is, but a lot of the people I dealt with in New York and in the criminal justice system, whether it was from a police ride along or just looking at the stories of people every day down and out or in trouble or when things get crossed in one way or the other in their lives was not something new for me in that way. And I wasn't scared of junkies and hookers. Like I said, again, there were a lot of really good people there. But we're at a moment in their lives-- Which is really clear in the doc, which is part of the reason why-- yeah, it's going to get released. But there were a lot of people-- That's right. But there were a lot of people hustling, and whether that be a good hustler or a bad hustler.

My professional journey (23:59)

And I'm a big believer in hustling. But there were some pretty good grifters in there as well. So it wasn't an unfamiliar milieu for me. But I always was interested in design. It's something that I had always enjoyed. And one of my brothers worked for ICF, International Contract Furnishings, kind of like Knoll. And was-- I wish I knew Knoll. No. Knoll is a business that probably started in mid-century that was known for Florence Knoll and issued a lot of classic furniture that you would see. And Mies van der Rohe did stuff for Knoll. Got it. OK. Design. He was in design, I should say. And so it's a world that I was always fascinated by. And there was really not this clear path. And I've also always been-- I've always loved hotels. Did you dislike law? You know, I actually really liked the DA's office. I liked criminal law a lot. There's a line in the Carolyn Forche poem where she says, "There's nothing no man won't do to another." And that's fascinating to me, like why we do what we do. And why does our criminal justice system do what it does and respond to the human condition the way it does? And what are our rules and laws? I found that fascinating. And I also like trial work. I like talking to a jury. I liked the whole, not just pageant of it, but the actual truth-finding mission. I also liked being a lawyer where it wasn't-- a lot of people think that at the DA's office, their whole purpose is to get a conviction or be an arm of the police in one way or the other. And it's not. It's really to do justice or to do the right thing. And that's an amazingly powerful thing. A lot of people with my politics would have probably gone to the public defender's office. Can you explain why that's the case? Well, because-- why is that the case? Why do people with more liberal politics go to the public defender's office? I think that the DA's office is often seen to be in alignment-- The pit bull. Yeah, and in alignment with the police. And you've got to fight the good fight. You've got to be the person that is on the side of justice in the way of making sure that the constitutional principles are upheld. And you're down in the trenches with folks that often are sometimes wrongly accused. And so it tends to separate out that way. But at the time, I really thought, when I was in law school and thinking about going to a DA's office, that it made sense to go to the place that had the power. And the prosecutor's office is the place where you can choose to bring a case or not. I was also the first openly gay person hired at the Manhattan DA's office in 1991. Yeah, crazy. '91. Plenty of queers there. Yeah, openly. Yeah, openly. And so the first year that I was there, we actually marched in the Manhattan Gay Pride Parade right behind the police department and in front of the fire department. And my girlfriend at the time, she worked at the Minority Task Force on AIDS. So of course, she was marching with the House of Africa. And they were having a blast. And I was there with the DA's office and the police and the fire department. I'd be like, come march with us. And she's like, no. Hell no. I'm having too much fun over here. But yeah. So there was a lot of things that I-- you could talk for hours about that and what I learned. And yeah. I guess I'm just curious, why stop? I mean, a lot of people stay in law for a very, very long time. So you did have this moment. You're at the Continental Club. You see Hotel San Jose across the street. You have this deep interest in design. You have empathy for the people who are mostly not seen indoors during the day there. You have all of that. But you also have this potentially safe career in the legal profession. So why stop? Well, there were a couple of jumps between there. So I stopped at the DA's office. You had a three-year commitment. And so I stopped about three and a half years in. Right before you go on the homicide chart, I think in year four.

I had other jobs again (29:05)

I came back to Texas. I think if you stay in New York too long, you become a New Yorker. Yes. Speaking of someone raised in Long Island, you have to be careful about that. You have to be very, very careful. Yeah. Don't let that happen to you. So I came back here and worked at the attorney general's office. And that was a little bit different. I was traveling all over Texas trying cases. And it wasn't as fascinating to me. But I still like being a lawyer. And a couple things happened. A friend of mine died of AIDS-related causes. And that was a real jolt to the system. It was one of those moments where I felt, you better do what you want to do and not what you're supposed to do. Or this is your one life and your one chance. So I think that probably happens for a lot of people. You face mortality up close for the first time. And that's either you just kind of push it away or if you really invite it in and grapple with it. I think it's a life-changing thing. So it was for me. It made me-- I always wondered about the San Jose down on South Congress. And I would look at it and kind of dream about it a little bit. But that was the thing that got me out of the chair and across the street and knocking on the door to find out if they'd ever sell it. And we could spend the entire conversation just on the first few months of easily-- the first month, the first day of your experience at San Jose. And I'm struggling with where to go to next, because I kind of want to stay there. But maybe what I can do, since it's sitting right here, is talk about Christopher Alexander and certainly the other authors. But I'm curious how you found your footing and your approach to doing what you now do. And so you kind of land there.

My experience at the San Jose (31:21)

Oh my god, you're doing every possible job. I mean, you're using a toothbrush to take some god-awful stuff out of a sink. I couldn't even identify what the sludge was. You don't want to know. Yeah, you don't want to know. And syringes and-- I mean, you're doing every job imaginable. How do you figure out your playbook? And when does Christopher Alexander-- not to overweight the importance of these books, but for those people who are watching, you can see this is a book called "A Pattern Language," "Towns, Buildings, Construction," which has come up a surprising number of times on this podcast. Has it?

Starts growing interest in Austin & learning development (31:58)

It has. Yeah, interesting. Well, so at the time, I thought that I was going to take the San Jose, which was a 24-room motor court built in the '30s down in South Congress, an area of town that was still pretty abandoned. It was one of those places that-- and not unusual at the time-- that there were urban cores, that when highways had come in, it had redirected traffic. And those small kind of mom and pop stores and urban downtowns were bypassed. But obviously, there was a lot of interesting architecture still, or buildings that were-- because they were older-- and built at a time where they were on a really important avenue. So Congress, for those of you guys who don't know, is a main thoroughfare in Austin that leads directly to the state capital. And at one time, it was the main avenue that went all the way to San Antonio, probably 60 miles to the south. And so it was a major thoroughfare. So there were a lot of old buildings and businesses, historic and otherwise, along the way. So I thought that I would just redo this 24-room motel. What I didn't realize was that it was $30 a night. That if I were-- my idea was maybe it could be $75, and we could just redo it room by room. And then it would be this amazing place close to downtown. I had lots of friends that would-- from musicians to creative people to people that were going to visit their friends in the neighborhood that would stay there. Once I started trying to crack that plan a little bit, I realized it was a marketing nightmare. That most people that were going to pay $60, $75 were on the highway. And they wanted something that they can rely on, like a Motel 6. And if I did lure somebody downtown onto South Congress where there were no other hotels, they weren't going to want to stay next to the crack head, next door. Mom and pop in their van didn't want to rent next to somebody with an arrest for murder. A warrant out for murder. So I mean, it was true. You saw a little bit of the documentary. The police were around. I remember when the police first came, they would drive around the San Jose because there was a big courtyard that was just a parking lot.

Godley, Texas woman charged with Aggravated Assault (34:30)

And when I first got there, I was like, no, no, don't do that. That looks bad for business. And by-- is there a week? And I was like, can you guys come more often? So I started to realize that I would go and get new things and kind of try to redo the rooms one by one. And I'd get something new, and it would be stolen. Or I would get-- it just wasn't going to work room by room. I finally realized. Yeah, there was some footage also. We're like, what happened to the TV? The TV's destroyed. Oh yeah, the last person who was in here left a gift for the new person. Every one of these is a fucking mess, but they're saying it's a fucking mess. Let's see what's in here. And it's like, oh, I know. It's one of those things. It is if you clean something up, people are much more like-- if you respect people, people are much more likely to respect a place or a thing or a person. And the people that were living there, I mean, it was the mattress was-- bed strings were cutting you at night sometimes. So it wasn't like-- of course you were going to throw a TV out the window. It was a cycle that was-- now I had this place. Now I was trying to keep it afloat. I had to have a plan. And my plan at 24 rooms with not much money wasn't going to work. And then I started going to banks to see if I could-- I had gotten through school without even taking a math class. And so now suddenly I needed to understand the basics of business or writing a business plan. And I couldn't read a spreadsheet. I didn't. I couldn't read the financial statement. I didn't know what all of those small numbers meant. And suddenly it became really important that I learned that skill. And so I went and audited some classes at the business school at University of Texas. It has a great business school. And I took some management and the service industry classes. And I tried to finally work my way through how to do a business plan. And it was so hard. We do them all the time now. And we do studies. And we do market studies. And it's a skill that I rely on as we look at different hotels and different markets now. We do it all the time. And it was such a foreign language to me. So then I finally got through a business plan. And I had to go try to convince some banks that they should loan me a bunch of money to redo this motel on South Congress, which at the time you couldn't convince a lot of locals to even set foot on South Congress at night, much less spend the night down there.

Negotiations And Community Building

Loaning Money for the Gamble (36:56)

So it was a process. So what happened? This is a cliffhanger. I finally took on some partners that believed a bit in the idea. And so they had some track record. So they gave me some legitimacy. How on earth did you convince the first person? So banks are saying, thanks, but no thanks. Yeah. People were intrigued, though. Remember, I was a lawyer. And so I was really selling it. And there was a change afoot in Austin. You could feel it in the air. People were starting to return to that neighborhood. It was a time that-- it was in the mid '90s. And there was starting to be some urban infill downtown. And so I was right on the edge of that being not completely implausible. But it didn't help that I had absolutely zero experience running a business. I mean, that's what really got the banks. They're like, what? No, I can do it. I promise. That's not good enough. You look at my poetry resume. Yeah, exactly. So it took a local bank at the end of the day, a guy named Eddie Safady, who was at-- it's now Prosperity Bank. It was Liberty at the time, basically, to underwrite it. But it also was remarkably inexpensive, the work we did in the bigger picture. It's something that we would never get away with now. But I was there all day, every day. It was really lucky to have Lake Flato, the architecture firm out of San Antonio, now also out of Austin, to be my partners and believe in the project as well. So I hate to bother you with just halting the story and jumping into the nitty gritty. But these are such important inflection points. If you don't get the money, ostensibly, not good things proceed from there. So we're talking about liberty and then prosperity, both good words.

Convincing Liberty and Prosperity Bank (39:14)

How do you convince that person? How did you convince them? What was the conversation where they're like, OK. I mean, I also applied for an SBA loan. And it finally got-- it was partially funded by the SBA. So that was great. I have a business partner now that I'm still in business with who is a great guy and had a lot of experience in business. And his wife had brought him the Performa for the San Jose. How did she get it? From a friend of a friend, basically. It got passed around somehow. So you were just-- Yeah, totally. Just in case. Let me get these into circulation. Exactly. Again, I didn't know what I was doing, right? I didn't know. So it was just who knew who. And she brought it home and wanted to invest. And he still has the copy of it because when it showed that we would get $110 a night, in year three or so, he wrote in the margin of the Performa, no way. He totally didn't believe. But I don't know how-- I'm tenacious. And I don't know how I finally convinced the bank. Again, they did take a leap. I'm sure there was some kind of personal guarantee that I didn't even know what a personal guarantee was at the time. I'm like, sure, take it, take my blood. I mean, at that point, I thought about selling the San Jose. Probably took two years to really close. About at '95, we closed in '97, December of '97, to start renovations. So it had taken all that time. I quit my law job just to go try to find money to do some kind of renovation. And in the meantime, we decided to-- So just so I'm clear, you were doing your law job simultaneous with running the San Jose up to that point? In the beginning. And then at some point, I realized I had to go work behind the front desk. And I quit my law job, which was crazy, too. I have to give it-- my mother's been gone for about five years now, but I can't believe that they didn't think it was the craziest thing I'd ever done. I mean, like making no money. My father would have pointed out that it was just at the point I became a really good trial lawyer, that I just jumped ship. Which I guess, I don't know. Even in hindsight, I don't know. But I felt compelled in some way. Again, I'm really dogged and really-- I'm going to follow it down once I decided that that's what I wanted to do. But I got to say, there were nights-- I don't know why is it always nights-- that I laid awake and really thought about selling the San Jose. Probably two or three times. I got really serious about it. I thought, there's no way I'm ever going to be able to do this. It's too hard. And I just somehow powered through. Why didn't you sell it? Who would have bought it, right? Good answer. That is a fair answer. So you finally get the money. You close for renovations. What do you do? Is there anything that you did that you no longer do?

Would You Ever Sell the San Jose (42:39)

Were there things that you did where you're like, oh, that actually became part of my palette as an artist, so to speak? Yes and no to both. I mean, there are ways that-- it was extremely inefficient. Nobody would ever let me do what I did then now. But I was learning on the job. It was also really low risk. I mean, when you think about it, in the hotel business, you look at the price you pay per key when you talk about selling or buying a hotel. Per key. Yeah, per key. Per key. Per key per room. Per room. So the general notion is when you're talking about what a hotel is selling for, what you're into it for, what you can develop it for, whether it's a good deal, you take the total price of the project from the land, all the soft costs, all the hard costs, all the working capital, everything you have in it to get the doors open, all the furniture, fixtures, equipment, put that in a bucket and then divide it by the number of rooms. And that gives you the price per key of what the hotel costs, if that makes sense. It does. So we were into the San Jose at the day we opened the doors for $100,000 per key, which is super inexpensive. Inexpensive? Inexpensive. At the end of the day. So it was low risk. And I was on the front lines. I'm sure, again, I had a personal guarantee and I was there every day working like crazy. And Lake Floto, the architecture firm that I've worked with repeatedly since, they were also there every day. And so again, the question was, are there things that I did then that I would never do again? And then are there things that I did then that became part of my palette? Yes. And looking back on it, I think what I did intuitively there is something that we do as an organization on a regular basis now, whenever we're looking at a hotel. And that is to say that I was interested in what the neighborhood wanted and needed. And the place had been there since the '30s in this South Austin neighborhood. And so I wanted to look around and look at the hotels that are most interesting to me are part of a neighborhood or part of a community. There's a place-- when I was growing up, my granddad, who was a rancher, didn't have an office. So he would go to the local hotel and sit in the lobby and do business deals. And get his shoes boot shined.

Community Hubs (45:31)

Get his hair cut. You could do that in the lobby of a hotel. It was a place where people met, whether you were from out of town or you were a local. Oftentimes, like a real cornerstone of the community or a real important place to meet for the community. So those were the kinds of things that interested me the most. So one of the first things I asked is, how do we serve this neighborhood and South Austin? And obviously, the first things were we were directly across the street from the Continental Club. So what do musicians need? Because at the time, musicians were some of our most frequent guests when we were $30 a night. Because they were coming through town in a van. And they were looking for a cheap hotel. And a lot of times, they might be wasted enough that they didn't notice how bad the bed was with carpet or anything else. And we also had people that were spilling out of the Continental Club sometimes late at night. And the neighborhood was starting to change. And people were starting to buy homes downtown again, or in traffic sites. We also started a coffee shop that opened-- my brother and I did-- months before the San Jose opened. And that, again, was a need of the community. So you were looking to fill the need. That's what drove it. It wasn't, we want to make a coffee shop. It is, what do people need? People need a coffee shop. Let's do a coffee shop. More than that, we needed a coffee shop. This is really-- I want to underscore this, because it comes up so frequently in people who ultimately succeed in some capacity in entrepreneurship is it so often starts with scratching their own itch. And at least that way, you know you have a market of one. It's not complete-- maybe two. It's not complete speculation. So not to interrupt, but-- No, so when you think of a pattern language, and you think of Christopher Alexander, what I was doing intuitively-- This gigantic book that those on audio can't see. It's big. You bludge in a badger with it, but-- What I was doing intuitively was a lot of what-- for those of you who don't know, Christopher Alexander is a writer and a thinker about architecture and about how we build. And more than that, but for me, he wrote a book called "A Timeless Way of Building." Which I have not written. Yeah. And he wrote a pattern language, which was basically his idea was looking at all the old villages and towns and communities throughout the world that have been there for centuries. And his point was that people figure out how to build intuitively, more so than current at the time, and probably today, current architects today, who are responding to how a thing looks rather than how it functions. And his argument is, or his thesis is that we know intuitively where to put a fireplace, or a hallway, or a hub and spoke model in a small community.

A Timeless Way (48:42)

Because it's those ways of building that make a place feel more whole and more complete, and makes you as a person feel more whole and complete.

Quality without a name (48:58)

He calls it-- I think he calls it the quality without a name. Yes. The quality without a name. What does that mean? What does it refer to? Well, you know those places that you've been to, the buildings you've been in, or places you've been in, where it just feels right. And it feels calming rather than agitating. It feels like you are part of something in a bigger sense. And I think part of that would be, people design things today-- this happens all the time-- that they've never even been to the place where the Tuscan village in the suburbs is going to be put. His argument is that you look around you, and you see how things are built in the place you are. And you don't bring building materials that would never exist in a place. You look at the ways of doing things that have been done for a long time. And that way you become the fabric of the place itself. Yeah, this book is so simultaneously intimidating-- It is. --and fascinating. I mean, I just turned to a random page, 599. Activity Pockets. And there's a diagram with the average number of people, area of 150 people to 300-- oh, wait, no. P must mean something else-- 300 something square feet. And it's looking at the placement of umbrellas in what looks like an Italian pavilion. And there's another section, a pocket of activity which bulges into the square with a picture from Italy. And then there's a separate section. I was actually looking at this because I had a cabin construction project not too long ago. And there is a section on the integration of outside and inside. Right. Well, OK, so I don't think that the book actually is-- I think you're reading it in the right way, meaning you should not sit down and read that book from cover to cover. Oh my god. I mean, it really is something that he became-- and he's still around today-- but he became a software-- what would you say it is-- designer of software. His idea is about patterns. And so patterns are a thing that happens over and over again. You see in the natural order of things. So if you're talking about an Italian plaza where the umbrellas are, think in your head how many times you've seen that. Well, there's a reason. People on the ground design that themselves, because that's where human activity went to. When we were doing El Cosmico, which is-- Can you describe that? Because El Cosmico has probably been recommended to me by Texans more than any other hotel. And then there are Austinites who do staycations at some of your places. But let's describe El Cosmico. Because when I did the introduction, how did I describe it? But I think the community lodging concept. So when you were designing El Cosmico-- I don't mean to interrupt, but-- No, that's quite right. El Cosmico is now 21 acres in far West Texas, in the city of Marfa, town of Marfa.

Approach To Business And Unexpected Challenges

Community Lodging (52:16)

Marfa is one of the darkest places. It is also about a mile high, about as high as Denver. And it is more clear nights and clear days than your average place. And there's no real-- there's very little light, because it's such a sparse area of the country. In terms of light pollution. Yeah, so if you think about it, there's two main counties out in far West Texas, Brewster and Presidio. And there's something like, you can fit like 17 Rhode Islands into one of those counties. And I forget what the number is, but the acreage per capita per person-- that's redundant, but-- is enormous. Every person has something like four square miles. It's just like sparsely populated. Not a lot of cloud cover, and not a lot of light pollution. So for that reason, my understanding is that astronomers, or amateur astronomers, but with nearly professional grade equipment or professional equipment travel from all over the country to go specifically to Marfa. That's true. For the new moon and things like that. Yeah. It's incredible. You can see the Milky Way, which when I was growing up, you could regularly see the Milky Way. And how often do you see it now in places that aren't like Marfa, or like Baja, California, or there's too much light pollution. We just don't see that anymore. And you forget what an amazing feeling that is in the order of things to see another galaxy. So you have 21 acres. OK. So I digress. There's 21 acres. We're right on the edge of Marfa. It's a town of about 2,400 people. And I had done a small motel in Marfa and it called the Thunderbird and walked away from it. It was a bad partnership. It wasn't going anywhere. But I did know that I wanted-- it was interested in Marfa as a community. Marfa as a community-- again, my family ranches in the region.

Approach towards houses (54:38)

I'd moved back from New York. I really wanted to spend more time in far west Texas. And Marfa was a little bit on fire, if you can say that for a community of 2,400 people. Because Donald Judd, who is one of the 20th century's most renowned sculptors, had made a home in Marfa and it had become an art mecca for a lot of folks. So you have this crazy mix of artists and creative people and ranchers and people that work on the land. In this beautiful place that, for those of you guys who are from overseas might think of it as the myth of the American West. When you see those-- when you've seen "Giant" or you've seen movies, Westerns, the landscape we're talking about looks a lot like that, just stretching on forever in distant clouds. So El Cosmico, I bought this pasture, basically, that was on the edge of town. And I wanted to build a hotel or a lodging experience of some sort there. And I realized that it needed to be indoors and outdoors, because that's one of the reasons you go out there. And I didn't know exactly what I was going to do, again, at the time. But realized that old trailers, vintage trailers, were a great way to get started putting hotel rooms up quickly. And so I bought a few trailers and we redid them. And I started falling in love with trailers of the '50s, '60s time period. Because those old Spartans and vagabonds and things like that are made with this beautiful birch interior. It was before they were making Airstreams with-- I don't even know what the walls of an interior and Airstream are. But trailers of that vintage had these beautiful wooden interiors. I mean, you felt like you were in the belly of a ship or in a ship's cabin. And we finished them with a yacht varnish at the time. And so it was like we put the first few trailers out there and it was like ships on the desert. And I just fell in love with the whole notion of these kind of nomadic ways of living. And so we got some yachts eventually. We got teepees. We have safari tents. And it became this grand experiment to see how we would use the land. So all of the rooms were movable. And so we kind of lived our way into it. That comes back to Christopher Alexander in a pattern language. It was really starting to have music festivals and parties there and people living out there to determine what did the place need and how would people use it. So we've been talking about the outside-inside integration. And Christopher Alexander gives some great contrasting photographs for illustrative purposes. It seems, based on the homework that I've done at least, that you also think a lot about-- well, I'll quote here. And the internet misquotes a lot. So you can correct me if I'm wrong. But here's the quote. And this is part of a longer conversation, of course. But "I hate it when I visit a hotel that hasn't put thought into the products they place in their room. It's all part of the language of the place and the details that affect the guest experience there." So if we look at El Cosmico, or you could choose a different example, what are the things that people might notice inside?

Hotels: immersive smells (58:22)

Inside and outside. And outside, yeah. I think for us at Bunkhouse, it is a whole experience. Like being at a hotel should be. And you think of some of your favorite hotels, it's not that you liked the bedspread, or it was close to the highway. You might have liked both those things. But I think probably the places you like the most are the most immersive. And I think of it as storytelling in a way. So every hotel that we do has everything from a soundtrack to oftentimes a color, or a color scheme that repeats throughout, a smell, an incense usually. Like at the St. Cecilia, we put nogchampa, big sticks of nogchampa in the garden. So as you're walking through the courtyard, it's really subtle. But it's something that strikes your senses. And it will remind you of the St. Cecilia. Of all the smells that you could possibly choose, why did you choose that? The St. Cecilia is a small hotel we have. Further back in the neighborhood off of South Congress. Very good selection of tequila also. I bet. It's only 14 rooms. But the main part of the St. Cecilia is an old Victorian that was built in the 1890s. And then it has some bungalows that are scattered around about an acre, an acre and a half of land. And in order for us to do a hotel, for me, there has to be a skeleton, a story, that everything is hung upon or proceeds from. And so my business part at the time, we were looking. The St. Cecilia came up for sale. It wasn't the St. Cecilia. It was just an old Victorian on an acre of land near downtown Austin. And he's like, what's the story here? It's like you had to describe this to somebody. And for me, I always loved that whole period of rock and roll that was about going to really nice hotels and the super decadence. Not the throwing the TV out the window, but the great silver, slightly tarnished in the white tablecloth from room service. And the contrast of Dylan taking tea somewhere or drinking a bottle of whiskey, the stones at Nelcott, just that there's something so awesome about where elegance kind of meets rock and roll. And so there was this Victorian. And it felt like that I'd seen a photograph of like-- maybe it was the stones-- somewhere in full-on 1970s awesome clothing. And there was a chauffeur washing a Bentley in the background kind of thing. And so this place where those things met immediately became the St. Cecilia to me. And St. Cecilia was a patron saint of music and poetry. And so if you ask where Nogchompa comes from, it's like that smell of Nogchompa is the hippie smell of that time. And putting it in a place as elegant as the St. Cecilia makes perfect sense to me. So many questions.

Calming stores (01:01:53)

I would think of myself in general as at least an aspiring minimalist when it comes to certain aspects of design. And certainly have very, very limited experience compared to someone like yourself, but have had projects, one in San Francisco before I moved to Austin, where this place was stripped down to the studs and just became an art project. And I've spent a lot of time in Japan, so it was sort of a combination of a green and green Esalen type feel plus Japanese. And it's very simple in some respects. And I have a particular dislike of clutter, I guess, even though it's an ongoing battle in my own house. So I think it was your brother who said the following. And you can correct me if I'm wrong, but let people be the color in the room. Could you expand on that or explain what that means? It was my brother, Lyndon. Some of the best advice ever. I think that you look in hotels at any point, particularly the last 20, 30 years, I look at someplace and I'm not given a bad shout out, but the loft or something or the indigo. And they think design is fun and whimsical, and it is. But oh my god, how do you sleep in a place? How do you walk through the hallway? You're just assaulted by so many different patterns and so many different-- like what people think is cool or hip or now. And it's just like a constant onslaught. And to me, the best hotels or the best places are places that are more calming. And so doing things through massing or through a pattern where you take the language of a place and repeat it and repeat it and repeat it. It may be so subtle that people don't really notice. But I think if you give people-- all of our own lives are so cluttered in so many ways. But if you strip away everything to a certain degree and let the people be the color in the room, it's infinitely more interesting. I think people feel better about everything that way as well. You know, the San Jose was the first hotel I did. And I kind of think of it as Mexico meets Japan. For you guys who don't know, we did a real sort of minimalist job on the place. At the time, we developed a furniture system that would work in the rooms, because all the rooms were very different. Over the years, they've been cut up in different ways. So we needed something where we could use something repeatedly throughout. And we ended up using some pine, loblolly pine, which is a localish material from East Texas, and in sort of a Judd-like way, Judd being the Marfa minimalist, although I know he would hate the word minimalist. But I think Judd is very informed by Schindler. And I don't know if you know Schindler. Schindler is an architect from the '20s that was working in the LA area, but very influential and with a very-- simplicity. And so the San Jose has concrete floors. Where we took out walls, we put in an aggregate so you could see where the walls used to be. Could you explain what that means? Yeah, so when you have old cement or concrete floor, a lot of times when you remove a wall, you'll have a hole in the floor. So what we would do is we'd take a concrete mixed with rock and fill it in and then sand it. So instead of trying to fit in with the existing floor, you could actually see the remains of the-- The footprint of the dinosaur. Exactly. And so the San Jose, although it's very simple with just wood and concrete, and some people would think of as cold, there's a ton of plantings, a ton of gardens. It feels really lush. It feels sort of like living indoors and outdoors. But we have comment cards. And early on, I really paid a lot of attention to comment cards. And I'm sure the staff does now. But one of my favorite ones that I had up on the wall for a while was somebody had written, this is the most expensive fucking garage I've ever seen. So what do you do in response to something like that? Or are you like, you know, not everyone's going to get it, and that's OK? It was really hard at first, because not everyone was going to get it.

Chips sales at Joie de Vivre (01:06:42)

And you have to decide if you want to please everybody, or if you just keep doing what you're doing, and know that intuitively there is something that you will find your audience. And again, I was very lucky in life to be in the right place at the right time, because Austin was changing. And when we first opened the San Jose-- And now just to not discount your skill set completely, I mean, you're in the right place at the right time. But you've also now-- how many properties do you have? I don't know. Maybe eight, I think. Yeah, yeah. So I mean, once you're lucky, twice you're good, eight times? OK. But continue. Yeah, OK. But at that time, with the first project, you don't know what you don't know, and you don't know-- I have a lot more confidence now. I mean, I had confidence then, but not necessarily as a designer. But I remember when we first opened, we opened in March, which is spring break, but it's also South by Southwest, which is a huge conference. It used to be more music-centric, but now it's tech and film. And a lot of people descend on Austin. There's not-- Yeah, it's got to be-- I don't know the exact size now, but it's got to be 50,000 to 100,000-hour guests. So there's not a hotel room in town. Well, we sort of did a soft opening, which is crazy. What does that mean? Soft opening is where you invite people that might be friendly towards you, or at a very discounted price, to a property or a restaurant, and let the staff practice on you, knowing there's going to be some mistakes. So you did your south opening during South By. Well, right before. It was like February 14. And I remember February 14 was the first day that we had-- so it was Valentine's Day-- had anybody that actually spent the night in the hotel. And I put a banner outside that we sold rooms for $69 for Valentine's Day. And so that was a special. And I mean, trying to just get people in the doors was the whole point. We opened during South By Southwest, totally sold out. Crazy, because of course we had something was in the waste pipe that was going to the street, like an electrical fixture had fallen down into it. So the entire wing of the hotel flooded with sewage. People were running out of the hotel with their stand-up base or whatever. There was no place to put them. All right, so it's in the middle of South By, complete chaos.

The sewage backup at South by Southwest (01:09:21)

Everything is stretched to max capacity. I'm sure that stress is running high for a lot of people who have flown in to perform or whatever. So you have sewage flooding half the hotel. How do you handle that? I don't know. I mean, you have to be on the front lines of it and with rubber boots and the whole thing. And again, really, I don't know. It's hospitality. Yeah, I mean, usually people don't know this, but behind the scenes, a lot of places overbook knowing-- because they're counting on cancellations. Just like airlines. Yeah, exactly. And so hospitality business is really interesting, because hotels really are behind the scenes. Usually, most likely, want to be friends with each other. You can say it's competition, but you're sharing information all the time. Yield management and what's going on in town. And rising tide raises all boats to a certain degree. But you're also going to have to walk somebody sooner or later to another hotel, which means that you're going to pay for their room somewhere else, because you've either overbooked or-- Made a mistake or had sewage flood the rooms. But there was no hotels to walk anybody. I don't know how we managed. I put it out of my mind now. You've blocked it. But if you try to unblock it, though, is there any-- did you get them to stay? They're not sleeping on the street, presumably. No, I think we did get them to stay. I think that we went in and cleaned like crazy and disinfected like crazy and remade the rooms all hands on deck completely. Do you comp the room, discount? Yeah, totally. They say in the service industry, a good recovery is going to make a bigger, more loyal guest than if you hadn't fucked up at all in the beginning. That's true. That's very true. Because you'll tell 10 people if somebody really makes something right. Right. Well, I mean, because everybody's all smiles and high fives when everything is going smoothly. It's like, how do they handle things, and do they own the problem when things go sideways on their watch? Kind of hard not to own that one, wasn't it? That is hard not to own that one. How dare you flood your own room with sewage? Chip Conley. Chip Conley is someone we both know. Chip, if you're listening or somebody passes this along, miss you, would love to see you. It's been a long time since I've spent time with Chip.

Personal Philosophy And Business Ethics

Chip Conley (01:11:43)

But I've heard you describe him as a mentor. I don't know if that-- or I haven't heard you. I've read it, so who knows if it's accurate. But could you describe for folks who don't know the name, who is Chip, and what have you learned or gleaned or observed from Chip? So much over the years. Chip is a mentor to this day. I saw him last week. For those of you guys who don't know, Chip started a hotel company called Chua de Vivre that was based in San Francisco. And he started when he was fresh out of business school, probably early 20s. The Phoenix was his first hotel, which was a motor court, not unlike the San Jose or the Austin Motel, and was a favorite of bands on tour, musicians, that kind of thing. Chip continued to grow a very successful hotel company and decided at some point, around 50 or so-- I don't know how it was Chip when he sold Chua de Vivre. It might have been right afterwards. I remember I was at Chip's-- we didn't talk about this-- Burning Man camp. I was too. Oh, no kidding. Yes, I totally was. All right, so what was it, Maslatopia? Yeah. So that's crazy. That's the only time I've ever been to Burning Man. That's really funny. I would have one of the yurts that was-- Air conditioned. The fold up air conditioned yurts. Of course I did. That's wild. All right, so we were at the same camp at Burning Man and just didn't bump into each other. Or maybe we did. Who knows? The catered Chip food. Which, by the way, I mean, it was such a contrast. My first experience-- not to digress too far-- but my first experience at Burning Man was trying to build a geodesic dome with my friend on the spot that we had put together based on internet instructions when I was in San Francisco. And then realizing none of it would fit together, we ran out of water. The RV we had broke down so the air conditioning didn't work. It was just absolute survival mode. And then-- Inversity. And then I came to Chips and I was like, oh my god, this is like the four seasons of the salt flats. Like he really-- he did the whole camp with some friends. And basically you could get food at any point you wanted. There was a full service bar. I had an air conditioned New York. It was only like six feet across. And it was made out of some kind of building. It was like fold up. The whole thing folded up into a very small package. But it wasn't a bad way. I kind of in and out. Yeah, that's so wild. I can't believe we were there at the same time. So he sold the company around 50-ish. Sold Joie de Vivre. He's still a very young man, by the way, if you're listening, Chip. And the guys from Airbnb tapped him on the shoulder and said, come help us a little bit. And what was helping in an advisory role for a while, he became the head of global hospitality for Airbnb. And along the way, he's written a lot of great business books that we often have our managers read, like "Peak" and "The Emotional Equation." What is that book called?

The place where I call from (01:14:54)

Yeah, well, I'm blanking on the title, but I will tell people that Chip's been on my blog a few times. And if you search "how to become an effective CEO chief emotions officer" and my name, or just search Tim Ferriss "Chip Conley," and that'll pop right up with that book. Right. Chip has written many books. And he has done a TED Talk and is often a lecturer on business and just on being a more complete person. And so Chip continued throughout-- so the way I met Chip is I cold called him. I bought the San Jose, didn't know what I was doing, had no idea what I was going to do. And I saw his name in a trade magazine. And so I called him up. Unbelievably, he called me back in about 30 minutes. What was your-- do you leave a voicemail? I think I did. I don't remember exactly. Yeah, I think I did leave a voicemail. How I got his number. What would you have said? I have this motel in South Austin. And I just wanted to talk to you about it. Click. Or something like that. Sweet and simple, yeah. Of course, I think he thought I wanted to see if he wanted to consider buying it. But the fact that he called me back was I have cursed him from that day to this day. Because now, people constantly-- now they email me. Or in some way, ask if I could spend a few minutes in for advice. And you know there just aren't the hours in the day. But he just pops up in my brain every time. Like, what would have happened had he not called back? And I don't know. But over the years, he was one of the first guests at the San Jose. He was passing through. He came to see it after giving advice. I went and met him in San Francisco. He looked at my numbers that I didn't really understand and tried to make sense of them. But I could have had that conversation now much better. And then most recently, we have a hotel in Baja, California in a little town called Todos Santos. Right outside of a little town called Todos Santos. That is about 45 minutes from Cabo. And he is the one that got me into that. Because he had sold his hotel company. And I don't know if he had a non-competer, just not supposed to be in the business. And he was very interested in the community. And so he kind of pointed them in my direction. And now we have a really great hotel there. And Chip lives part of his life in Todos Santos now. What other best practices or principles or do-nots or dos have you picked up from Chip or other people?

Operational Integrity (01:17:35)

Well, actually, I had our president now at Bunkhouse. I worked for Chip for 10 years. A guy named Christian Strobel. And here's the thing. You can be as creative as you want to be and dream as big as you want and create an incredible experience and programming and everything along those lines. But if you can't keep the lights on, if you can't return money to investors, if you can't keep your employees happy, then you're never going to have a successful business. I mean, you've got to keep the lights on. And you've got to do a little better than keeping the lights on. But I think a lot of people fail in business because they don't have operational rigor. And that can manifest in a lot of different ways. But I think that Chip was influential from early on about operations and how important not just your guest was, but your employee and your investor as well. Chip is-- and peak, I mean, as it relates to Maslow's hierarchy of needs, and hence Masletopia, as the name of the Burning Man camp, is something that he would apply also to these various stakeholders.

How to balance your ambitions (01:18:51)

So another mutual acquaintance, Larry Maguire, of Maguire Mormon Group here, many different restaurants, I texted Larry to ask him what topics or questions might I want to explore with Liz. And he said, oh, well, there are so many things we can explore. But one of the things he brought up was the question, how do you balance-- and I'm paraphrasing here, but it's not that far off-- how do you balance the desire to be an artist with the desire to be, say, a business tycoon? Right. It's a really interesting question. I mean, it's such a balance. Larry's actually very good at what he does. Larry has several restaurants here in town. And I've known Larry since he was about 16 and started work for my brother. But Larry is one of those rare people that understands both, again, rigor in operations, which is going to be really important at the end of the day for somebody to have the right experience, and the artistry of creating an experience. To me, if you don't-- like, people make hotels. People design hotels. And then they walk away. And so that is always going to get diluted over time. If you don't remain involved in the experience or what your vision was in the first place, then what you created is not just an object. It's a living, breathing thing that has employees, people that work there, that spend their lives there. It has guests that come and go as part of an ever-evolving community. And it has people that have part of the ownership in the place. So I think your vision is not complete if you just create something and walk away. It is in other genres of art. But in a hotel or in a restaurant, it begins anew every day, in a way. And so to create a guest experience that is right for that hotel takes constant vigilance in a way. And that is always going to translate to the bottom line. I mean, we don't market most of our hotels in a certain way. But people market them for us. Instagram is obviously great. And so are a lot of other social media platforms. But we get a fair amount of print as well. And that comes a lot not from us necessarily pitching stories, but for people becoming real believers in what we do. And so I don't know if I'm really answering that question, except to say you have to have both things, whether it's you doing it or someone else that believes in your vision and you believe in theirs. You've got to have both the artistry in the beginning and the good practice to continue-- and the good business practice to continually tend the fire. Do you have an idea of-- if you're going to be continuing to develop hotels and put your craft into the world in that way, do you have an idea for, say, how many properties you'd like to have in five years? If you want to scale-- Oh, the only five-year plan. If you don't want to scale three years, doesn't really matter. I'm just wondering if you have something like that. It's such a crossroads right now, really, about this. You know, the pressure in business and the bigger your business gets is to grow, grow, grow, and then sell it. That seems to be-- I wonder if we'll be 30 years from now and that won't be the thing, or if it wasn't 50 years ago. We live in a time where it's about growth and making your business worth as much as you possibly can and then selling it. And to me, it makes no sense in the world to me, because I'm a bit of a the journey is a destination kind of person. And so I think that I'm both doing-- if I grow at an enormously rapid pace, if I push not only myself but my team to grow as fast as possible, we're not going to do the quality of work that we want to do. And while we might have a higher value in five years as a company, I don't think that the end game is to sell.

Life is the real goal, not money (01:23:47)

Larry McGuire, I think, believes the same thing I do. And a lot of people that I look around at, and I'm interested in their careers and their lives, also are people that are interested in what they do from the people they work with day to day. And creating an asset like a hotel that can just get better over time, rather than-- we live in a time where you have hotels that they're redone every seven years or every five years. There's a big repositioning or whatever. The most interesting places to me just get better as time goes on, and layer upon layer, and texture upon texture. And get better not by reinventing themselves every seven years. Exactly. What was the second title? Not a pattern language. "Timeless Way of Building." "Timeless Way of Building." So can you have a good life and have employees who are invested in that business, and also keep an asset, and have it-- I'm going to digress for a second. But the hotel business as we know it today is a result of a lot of things. But we've come to a time where most hotels are not owned by the management company. So you have a group of owners, and you have a management company that is a brand. So from the Four Seasons to the Hilton to you name, the Marriott, whatever it is. Or even Ace, those guys over there, great friends of mine. Every Ace you look at is owned by a different ownership group. And we can talk all day long about why that is. A lot of times a management company wants to say, stay asset light, because the hotel business is in waves. So you don't want to get caught in a downturn owning a property, et cetera, et cetera. So you mitigate your risk by having-- And you're growing a brand. And that's easier, or much easier, when you are a Marriott and you're going to be the same everywhere. And there was a time in the hotel business that-- or a time in hotels, and those of us as consumers of hotels wanted that.

How we judge hotels (01:26:16)

Because before that, you could take a trip across country, and all these hotels were independent. And God knows what you might find. Or it might be delightful, or it might be horrible. And there was no way of judging the quality of a place. And then we got Hiltons and Holiday Inns. And what was great is that you knew what to expect. You knew the level of service you could get. A cup of Starbucks is the same everywhere you go. Yeah. And so you can depend on that. I read something from-- the other day, I was looking at some stuff about why musicians in hotels, why that love story, and they're interdependent in one way or the other. And somebody was saying-- I don't remember. It was probably Keith Moon or somebody who was well known for just totally trashing hotel rooms. It's like, yeah, it's the fifth-- it's the 20th fucking Holiday Inn we've woken up in. And just as many days, and they all look the same, anybody would be mad at it. But that time began to change with what we think of as a boutique hotel or lifestyle hotel, from Schrager to Chip Connelly. I think you asked me about what do the next three, five years hold? What's my plan business-wise or hotel-growth-wise? And I feel like I'm at such a crossroads there and trying to determine what's-- it's not only what's best for me, it's also what's best for the company, but also the people I work with every day. And so you want to grow because you want to be able to give the people you work with more equity, more of a chance for higher fulfillment, moving into other jobs, just all those things.

Life Perspectives And Goals

Path mindset (01:27:55)

I think that we have a natural propensity toward growth. But then the question becomes how fast and how much, and what is the end game there? And in this business, I think, and in this day and age, people just mindlessly want to grow and explode. The bigger you are, the better you are. The more people know about you, the better. But I think that a lot of the qualities that you appreciate in day-to-day living become lost. I think one of the reasons we're successful as a company, internally at least, is because we are like a family in some ways. And so how much can you maintain that as well? I guess the answer is I don't want to mindlessly grow. I want to thoughtfully grow. And that may not be at the pace that a lot of companies would want you to grow. And it's also about the end game. And I don't think my end game would be to grow really fast and to sell the business, which is you find a lot of brands want to do now. Well, it sounds also to me, just based on what you've been saying, that your philosophical lens through which you view your life, which is the journey, is the destination, is a fundamental juxtaposition with what a lot of external pressures would want to impose on the business. Absolutely. It's so true.

What is the end game (01:29:37)

It's tricky. No, it's such a balance. And it's a struggle in a way. It is. But there are outside pressures. There are inside pressures. But it's a really good question because I'm in the middle of it right now. And I have lots of thoughts about it. But it could go on and on and on. But I do know that I could get hit by a bus tomorrow. And we all could. And you're not going to care about that IPO five years from now. My wife is pregnant. And I'm older. And she's young enough to be pregnant, clearly. And that's a whole other life change. So again, when you see-- I am a big believer in the realization mortality. All those things really point me in the direction of living a quality life in relationship to other people. And in those ways, I think you find meaning in a much more real manner than you find meaning in making a lot of money. I agree. Money's supposed to be fuel, in a sense, for transferring it, transmuting that into other things like experiences and so on. Ostensibly, right? Money is a representation of value. I'm not against money. And it's super important for a business. And it's super important for the people you work with and for and all those things. It's just the means to the end. No, it is. I mean, if we look at-- there's a really fascinating book called "The Biography of a Dollar" or "The Biography of a Dollar," which walks through the history of money in some respects, which becomes even more interesting when we start looking at more recent developments like cryptocurrency and so on. But at the end of the day, at least traditionally speaking, it's a medium of exchange. And so then the question is-- For what? --an exchange for what. Let me ask just a handful more questions, because I think we could have many, many more conversations. And hopefully this isn't the last. We mentioned a few books. Are there any other books that you have gifted often to other people or reread a lot yourself? I love that you asked that question that way, because it really puts it in a different perspective. It's like not what your favorite book is. It's what you've given as gift, which I thought about a little bit this morning. And I mean, it's so clear. I have an immediate answer. And then I had to think, why did I do that?

When Things Fall Apart (01:32:31)

But I think when I was younger-- and still to this day, I sometimes gift a book of poetry by Adrienne Rich called "A Dream of a Common Language." "A Dream of a Common Language." Yeah, which was a book written-- she wrote in the late '70s. And she's a poet that-- I was trying to think why was that book so important to me. And it's really funny when I read Cheryl Strayed's "Wild." That was one of the books that was most important to her that she had as she hiked the Pacific Rim. That's right. I totally forgot about that. Yeah. I gift a lot "Slouching Towards Bethlehem," a book by Joan Didion, which is a collection of essays that I love that book so much. And it's a lot about what the kind of writing Joan Didion is doing. And those essays are both-- of the time, there's one about John Wayne, about California. But there's also this collection of personal essays she does that one's called "On Keeping a Notebook" that I go back to again and again, and I share a lot.

Peachumdoon Compilation (01:33:31)

There's one called-- "On Keeping a Notebook." "On Keeping a Notebook." There's one called "On Self-Respect." There's one on morality. But it's an awesome collection of essays. And there are other books by Joan Didion, but that's one I tend to gift the most. The other one that I'm sure people mention to you-- I can't imagine they don't-- is "When Things Fall Apart" by Pema Chodron. Does anybody recommend that? That has come up, I think, only once. Seth, I apologize. I'm mis-tributing, but he does recommend Pema Chodron, at least one of her audio books. But no, this is not a book that has come up a lot. So if you could explain why that book-- SETH MACFARLANE-MILLS So "Things Fall Apart" I think has been important to me. I've given to people in my life because it had an impact on me. But I don't know. I could be wrong that it was Pema Chodron's first shot across the bow. I mean, it might have been the first book she did. I don't know if that's true or not. But it was really my introduction into-- Pema Chodron, for those of you who don't know, is a Buddhist monk who became a Buddhist monk, I think, probably 30 years ago. When she found out her husband was having an affair and he left her, and she was left in this place of what to do about that. And she kind of accidentally found her way into Buddhism. But to me, it really revealed this struggle we have day to day in the face of anything-- loss, adversity, all those kinds of things, how we tighten up and struggle, or we get angry, or we get bitter, or we just continue doing the same things over and over that don't necessarily work-- watching TV, movies as an escape, drinking, even exercise sometimes. I mean, whatever it is we're doing. And how we always think if we would just get to that next perfect place, it would all be OK. Like if we had the next job, or if we move to this new city, or if we just had this relationship, it would all be OK. And then as it turns out, when you get to that place, lo and behold, on the next horizon, you feel uncomfortable because you need this next thing. And it's really the idea of-- again, the journey is a destination-- being able to, on the way to that island, rowing across the ocean, you need to find comfort in being on that boat in the rolling sea. And the idea of impermanency and how-- I think anybody who's lived their life with loss, or death, or anything of the sort understands what a jolt it is to understand that things aren't permanent. And that when we do accept the impermanency of things and learn how to live in the moment or on the rolling sea and live with that discomfort, it's a life changer. And so when things fall apart-- I realized just in saying all that, the Joan Denion book "Slouching Towards Bethlehem" is taken from the same poem, the Yates poem, "Slouching Towards Bethlehem." What's it called? Is it "Slouching Towards Bethlehem," right? Oh, god, you're far more literate than I am. I'm failing my exam here. We'll definitely put-- Things fall apart the center cannot hold. Anyway. We'll put all of these in the show notes. And we've talked about mortality a few times. I've had quite a bit of revisiting mortality in the last few years with very close friends, and even now currently some of the effectively family members. And I have a coin that sits on my kitchen counter, which says "Memento Mori." Remember, you're going to die with iconography on it. Coincidentally enough, I should give him credit, made by a friend of mine here, Ryan Holiday, who's an author in the Austin area who writes a lot about stoic philosophy, which is highly compatible with a lot of Buddhist thought and contemplative practice, in my experience, in any case. Do you have a favorite-- favorite's a weird word to use here-- but a favorite failure, or a failure that you feel like taught you a lot or set you up for later success? I've failed so often. And I've been successful very often, too. I think if it were a formative favorite failure-- and again, sometimes don't we all feel like we're beating our head against the wall? Why am I doing that same thing over again? I mean, that's a whole-- I think I'm still doing that. That's a whole other subject. But when I was young, when I was in high school, there was a thing called youth in government. And from all over Texas-- they did it in other states as well-- but you would learn about government by this kind of mock government thing.

Youth in Government (01:38:46)

And it came through the YMCA tour. And there were little social clubs and all of that. But youth in government was something I got involved in probably when I was a sophomore, junior high school. When I was a senior in high school, I ran for youth governor of the state of Texas, which was a big state. But you had to run on a local level. And then you had to run in a regional level. And then you came to state. And my grandfather at the time was a rancher. And one of the men I admire most was at the time older. And I think at that point, he had broken his hip. And he was bed-bound at home. But as I ran for youth governor, I would read the paper with him on a pretty regular daily basis, if not every other day, and discuss current events and current issues. And it was an awesome period of time, having those discussions with him. And we came here to Austin for the Youth in Government week. And they do it at the Capitol. And they do it in the chambers, so in the Senate and in the House of Representatives. And it's right after the real thing has let out. And so it's really awesome, because you're in these great big hallways and all that kind of stuff. Anyway, I ran for youth governor. And the night that-- I had already taken the vote. And we're staying in a hotel right over here, not far from here at all, the La Quinta over there. And I was staying in a room with three friends who were there for the party, for sure. I was very serious. They were there to be in Austin. One of them had an older boyfriend who lived here in Austin. So they started drinking in the room. And I knew that we weren't supposed to be drinking in the room. And so I left the room and went and visited some other friends down the hall. They got caught. And I got called to whoever our supervisor was. And she said, did you know they were drinking? And I was like, yeah, I knew. And I left. Well, it turns out that the whole thing was running on the honor system. I'm sure I knew that at the time. And because I did not report them, I was kicked out and sent home with them. And by that point, they knew that I had won the election for youth governor of the state of Texas, which meant that in the next year, you were going to go to nationals. You were going to do all this stuff. But instead, the morning of the announcement, I went to the next person in line. And I was sent home on a bus with them, sitting with them. And when my mom went to report to my grandfather what had happened, because he was following play-by-play, he said, tell Liz we're really proud of her. And to me, that was this formative moment of realizing that there were rules, and there was authority. And the honor system was what this whole system was running on. And it was a system I was part cog in will. And I realized that he was really proud of me. I'd grown up with brothers and with a whole community that really believed that you didn't rat on somebody else. You didn't call somebody out. It was right to remove myself. But I think there was a whole system of belief that I'd grown up with that it would have been wrong just to run and tell on somebody else. And I think it was the first time that I, over the years and looking back at it, I think I learned more from this thing going wrong than I would have learned from it going right. And it was about questioning systems and questioning values. Just because somebody says, these are the rules and this is what it is, doesn't mean that that's really the rules you need to incorporate. That's a great story. What a lovely experience. Also not that particular time in the capital, but with your grandfather. That sounds so great. I never had that chance. My grandparents passed all of them when I was very young. Really? Yeah. I was lucky that way. Yeah. And we all lived in different states. Even when they were alive, we only got to see them very briefly. Just a few more questions. If you had a gigantic billboard, metaphorically speaking-- I think I do, actually. So if you had an additional billboard on which you could put a word, a quote, a question, anything non-commercial, just a message to get out to millions or billions of people, what might you put on that billboard? We do, over down by the San Jose and the Austin Motel, there is a big billboard. But of course, we rent it to advertisers.

Dont Break Your Tenderness (01:43:58)

But on the side of-- there are a couple things on the side of Joe's. One is that iconic "I love you so much" that people take pictures of all the time. It's a longer story. But on the backside of Joe's, there is a quote from Jack Kerouac that says, "Don't break your tenderness." And I love that quote. I think that's a good thing for everybody to remember. "Don't break your tenderness." Don't break your tenderness. I love that. I've never actually heard that before. I think it's something we all-- So this is right on the backside of Joe's on South Congress? It's when you're sitting there, you can see it. It's kind of blue on the corrugated, so it doesn't bounce out. Maybe we need to repaint it. But it's been there since we opened. It's from, I think, Mexico City Blues. In a very real way-- I know you wouldn't take full credit for this, and there were macro forces at work and so on.

Community Development

Neighborhood Evolution (01:44:47)

But the fact that-- the first thing I just thought to myself was, wow, I should go check that out next time I go for a nice walk down South Congress. If you had not looked out or perhaps gazed across the street from the Continental and taken the San Jose upon yourself as a project, who knows what that neighborhood would look like? I mean, you have played a formative role in making it what it is. That's a big deal. It is a big deal. I mean, it's an interesting-- we could talk for hours about that, too. I think it's about to change yet again. I mean, it would have changed, and it would have grown. And everything is always changing, and neighborhoods are always changing. But I think we're about to see a whole next wave of South Congress happen. Oh, I agree. Yeah. I'm excited to see it. Yeah. Well, Liz, this is so fun, and I'm really glad that we finally had a chance to sit down. Me, too. Do you have any requests of the audience, asks of the audience, suggestions of the audience? Anything you'd like to say before we wrap up? No, but I'm very excited about getting the last days of the San Jose out there. Yes. Yes. And we were just chatting in between a brief cut that we made about a handful of things that probably need to be done, just in terms of clearing rights, music, and so on. So for those people listening, it might not be immediate, but we did clink tea glasses. So last days-- Sooner than never. --of San Jose, sooner than never. Yes, that is something that I think we're both comfortable committing to. And people can find you @thelizlambert on Instagram and Twitter, @bunkhousehotels, Instagram and Twitter, and bunkhousegroup.com. Definitely, if you're in the Austin area, and if you have never been to Austin, for God's sake, take a visit. It's a very cool town. The self-proclaimed but believable live music capital of the world. And it's been really lovely spending time with you today. You too, as well. It really has been. Thank you. And for everybody listening and watching, potentially, links to everything we've discussed, maybe even the doc. We'll see how much progress we make is available on the page with show notes for this episode and every other at tim.blog/podcast. And until next time, thank you for listening and watching. you