[RWS #725] Real Estate: Airbnb’s Chief Mentor as “Modern Elder”

Picture of plant for Real Wealth Show Podcast Episode #725

I was honored to be the keynote speaker at five different conferences this month, all over the country — from San Francisco and Los Angeles to Denver and Philadelphia, and I just got back from New York.

And, what I noticed at all of these events, and previous ones during the past few years, is that I’ve seen a lot more Millennials attending real estate events. It’s been incredible to see how quickly some of these young people can build a business. For some, it seems like their energy and tech savvy creates companies overnight. And while these brilliant people know technology better than perhaps other generations, what they don’t have necessarily is life experience.

What would happen if you could merge wisdom with fresh ideas?

Our guest today is Chip Conley, the founder of Joie de Vivre Hospitality which he began in 1987, at age 26. In 2010, after having created and managed 50 boutique hotels that are mostly in California, he sold his company. A few years later, he was asked by the three co-founders of Airbnb if he could help evolve the company into a hospitality company with more than one million hosts in 191 countries. He accepted the challenge and became the Head of Global Hospitality and Strategy for Airbnb, working closely with CEO Brian Chesky as a mentor.

Podcast Transcript

Kathy Fettke: Welcome Chip. It’s great to have you here.

Chip Conley: It’s great to be with you. Thanks so much, Kathy.

Kathy: I really appreciate it. I got to hear you on stage at Singularity University and I was blown away by your message. it’s a very similar message we have at RealWealth which is really bringing in the wisdom, with the new young brilliant minds of the millennials and bringing that together so if you would tell me a little bit about the beginnings of you and Airbnb.

Business Mentor, Tech Newbie

Chip: Thanks for asking. For many years, for about 24 years, I was the founder and CEO of Joie de Vivre Hospitality which grew into the second-largest boutique hotel in the U.S.-based in San Francisco. The vast majority of our hotels were in fact in Northern California. I sold that company in 2010 and wasn’t sure what was next for me. Then I got tapped on the shoulder by the three founders of Airbnb who are all three young millennials who had stumbled upon the idea of urban home-sharing based from their own personal experience and the company had become a tech company focused on building a platform.

They grew and then all of a sudden they realized none of them had any background in entrepreneurship, leadership, hospitality, travel, et cetera. They reached out to me in early 2013. The company was already of a moderate size but it is still only about maybe one-twentieth of the size of this today. I joined them. I joined them as Brian Chesky founder co-founder and CEO as his in-house mentor while also being the head of global hospitality and strategy.

Learning as Much as You Are Teaching

Kathy: In house mentor so kind of like the movie a little.

Chip: Thank me I love the Robert de Niro Anne Hathaway movie. Here’s the big juicy wrinkle that’s different. Robert De Niro joined Anne Hathaway as the intern and that’s the name of the movie. He was the intern and he became the mentor. I came in as the mentor and became the intern. What do I mean by that is that I was supposed to come in as this knowledgeable sage twice the age of the average employee in the company.

What became clear is on my third day I was like, “Wow, I am in a tech company and I have no background in tech.” While I was at times dispensing wisdom, often I was looking for a little bit of wisdom around technology or Silicon Valley, things that I didn’t have much experience with. What I had to do that was really quite an exercise in sometimes humility, was be open to being as curious as I was wise and that’s what to me defines a modern elder is the traditional elder of the past or somebody just dispensing wisdom but a modern elder is learning as much as they’re teaching.

Kathy: I love that. I feel that way at our company at RealWealth because we have so many millennials, they are so brilliant. We learn so much from them and hopefully, they’re learning from us as well. Oh great. All right. Are you still with the company?

Chip: I had four years of full-time work helping to steer the rocket ship with Jeffrey Sanders and the leadership team. Now for two and a half years actually more than two and a half, almost three years I have been a strategic advisor to the company. For example, tomorrow I go over to Brian’s house and spend an afternoon with him just to help him look at where things are and where it’s going and as well as his own leadership growth.

One of the things that a few people have mentioned independently is like, “Wow, if Travis and Uber had had a modern elder inside, he might still have his job”, because one of the things that can happen in a relationship between an older person and a younger leader is that mutual mentorship occurs where I’m learning something from Brian, he’s learning something from for me.

Self-Confidence Tempered by Humility

It creates a reciprocity and a certain humility for both of us. Also, what happens for many young business leaders especially in the disruption era that we’re in, is they think that disruption is the way you’re supposed to be every day and you’re supposed to have hubris not humility. I think one of the things that Travis at Uber found was that hubris can only go so far and ultimately in many ways led him to not having a job anymore.

In Brian’s case I think that level of humility he had to go and seek out people who were more knowledgeable or smarter than him on a subject, he ended up showing up on my doorstep around the subject of hospitality and leadership. For what ended up happening more than anything was we both had to be humble and I think you know this, an undervalued part of the business world especially in the valley.

Kathy: Oh yes. Isn’t that the truth. I agree. It allows you to open your mind and see where you can improve. Speaking of which Airbnb has had to fight so many battles for such a beautiful concept, such an opportunity for people to become real estate investors, that’s really what our show is about. Actually Rich and I were doing the Airbnb model 20 years ago when we first got married. We bought a very large house that we really couldn’t afford. It was six bedrooms, but we were able to buy it and we rented through Craigslist, not the safest way but we would have two rooms rented at all times.

That helped pay off our mortgage for us. Oftentimes we would bring in people that we really liked maybe it was a single mom and her kid would play with our kid or whatever. We were doing the model. It’s such a beautiful model, such a great way for people to build wealth and a great way for tourists to meet locals and you’re running into so many roadblocks. We just met with some people from Sweden who bought a home in Madrid and they’re not able to Airbnb it.

From Wild West to Home-Sharing Regulations

Chip: Well, there’s all kinds of reasons for this but I’ve been in the belly of the beast during the core of that time when regulations came around. I think there’s two sides to this too. One is Airbnb created a new idea which is urban home-sharing. There was technology-enabled and in so doing the company, in essence, the founders didn’t even know there were a bunch of regulations or in some cases no regulations. The Wild Wild West that needed to be considered.

At the end of the day when I joined Airbnb, I said, “Listen, we need to pay occupancy tax because we are a hospitality company and occupancy tax is what hotels pay and are hosting to pay and we need to figure out a way to do that. Secondly, we need to get to a place where regulations are going to legitimize the idea of home-sharing”. Be careful what you wish for. There’s a famous Gandhi quote from the 1930s talking about India versus the British and he said, “First they ignore you, then they ridicule you, then they fight you, then you win.

That arc of ridicule, ignore, ridicule, fight, win — has been something that Airbnb has had to do in many different markets going out and trying to create regulation that is sensible. What’s been interesting is that sometimes there’s regulation that’s created but there’s not enforcement and regulation doesn’t seem like it’s working well and so then stronger and more stringent regulation gets put in place. I would say that at its stage frankly in this marketplace that it’s become maybe too hard for many people to actually be in the Airbnb business or in the home-sharing business.

I think that’s too bad because I do think there’s a nice middle ground where it could work well and there’s some metropolitan markets that have got very sensible regulations that work, that still address the need for affordable housing. There’s one of the challenges that did happen, Kathy. It was that real estate investors would go in and buy an apartment building like say a four-unit apartment building, figure out how to potentially vacate the tenants. Now that’s hard to do in markets like the Bay Area where there are tenant rights in place but in many places, they’re not.

You could go and empty the building of people and then go from having people stay monthly and pay monthly to staying nightly and if that’s a writ large it can have a negative effect on the housing market. Airbnb recognized that and thought that there were some good compromises and in some markets, we’ve got numbers. In some markets, I think there’s been an overreach by the government.

Solutions Come with Compromises

Kathy: What are the compromises that appear to be working?

Chip: It varies in the market. If you’re in a vacation rental market, it’s very clear there’s some kind of regulation around. It has to be your primary home doesn’t make any sense at all. If you don’t live in the Lake Tahoe and you have a second home there, and you want to rent out your second home, you should be able to rent out your second home. People have been doing that forever. Then you have to look at a market like San Diego or Seattle or even San Francisco to some degree, where it is a vacation rental market and sometimes people are not there full time, then you start getting into some of the gray areas.

I think where it works best is, either it was not a big fan having people register, but if the registration process is simple and affordable and online, then actually it’s not a bad way and I think Airbnb is being more and more open to saying that’s an important piece of it because, the process of registration, in essence, it legitimizes you as the city and it makes sure the cities are getting paid their taxes, et cetera.

Where I think overreach is way too much is — actually having a limit on the number of days a year, depending on the market can make sense in a market where a city wants to preserve its affordable housing. I think another way that some of the cities have done it and it actually works pretty well is to say, “As a host, you can’t have more than five units available on any of these sites.”

Now, that would never work in San Francisco or New York, that just is way too lenient but in some markets, where there’s not a housing crisis, it’s actually a perfectly satisfactory way to handle it because it allows — especially from residential markets where there’s some dodgy neighborhoods and some residential spaces that are not too far from popular places where people stay. It’s a way to actually upgrade the neighborhood.

The Future of Housing

Kathy: Since you are a part of Singularity University and boy are they forward-thinking, it’s such an incredible organization. Let’s fast forward 10 years from now where do you see the housing market short term and long term? That’s a big question I realize.

Chip: Yes, of course, it varies in lots of places. I was about three weeks ago in London. I was a mentor for Brian and now mentor for Reza Merchant who’s based in London. His company is called The Collective. I think I’ve seen the future and I’ve actually stayed in the future. That’s interesting.

Kathy: That’s interesting.

Chip: I stayed in a collective building. The Collective is a co-living company, co-living developer. What they’re doing is creating buildings that are actually sort of a hybrid. The building I stayed in at Canary Wharf in London, had 705 units in it, so it’s a big building. What’s true at co-living is, you tend to have a very small footprint for your room where you stay, and then you have a lot of social spaces, and you have co-working spaces, you have co-cooking places and  a lot of your life is lived outside of your room.

What’s interesting about this, is that this building was one-third people staying three months or longer, one-third people staying one week to three months, and one-third people staying less than a week. In essence, it was a combination of long-term tenants, extended-stayed guests from a week to three months and hotel guests all in one building, all in a community.

I think we’re going to see more and more of that, because it really solves four things. Number one is affordable housing. In this case, as in somewhere is subsidized by the other two groups, the people who are staying shorter term plus the smaller footprint of a guest room to stay in means someone can actually live in a place like London, relatively affordably.

Secondly, more and more hotel guests are saying they want to live like a local, which is Airbnb’s model and the idea that you could actually feel like you get to know locals. Well, if you’re living in a building with people who actually are staying long term, you’re getting that opportunity. Then thirdly, there’s more and more digital nomads out there who are not just looking for a home away from home, they’re looking for a home instead of home. They don’t have a primary home, as long as they’ve got their laptop and a Wi-Fi connection, they can work anywhere in the world.

I meet these people all the time and they love Airbnb, but in this case, they would love this place because actually, it has a co-working facility right within the building. Finally, there’s a growing number of people who are talking about the, in the digital era, the growing amount of loneliness people have. The loneliness is coming from the sense of people being dislocated or disconnected and when you have a community, almost like a vertical neighborhood in the form of a co-living building, it creates all kinds of new connections. For all these reasons, I think that is the future of housing.

Kathy: Oh my God, that’s so exciting. I love it. We raised money for a startup with a similar concept, but it didn’t quite have the right leadership. Leadership is everything. An idea is one thing, getting it to come to fruition is a whole other deal, so let’s talk about that and what you’re doing now, which is really exciting.

Chip: My experience with Airbnb really led me to being called the modern elder at Airbnb, which was not something I was aspiring to.

The Modern Elder Academy

Kathy: Oh, but that was your name, the modern elder?

Chip: I will tell you why — yes, it was. What I started realizing is that, in a world where power is moving younger people faster than ever before, and yet, we’re all going to live longer, there’s an element of couldn’t we create a collaboration, almost like an intergenerational collaboration across millennials and Gen Xers and Boomers. There’s actually five generations in the workplace for the first time. That led me to writing a book called, “Wisdom At Work: The Making Of A Modern Elder,” and then creating an academy on four acres of land, an hour north of Cabo San Lucas in Baja, California, in Mexico, right on the beach, and it’s called The Modern Elder Academy.

It’s a place where people go in midlife to sort of reimagine themselves like, “What is it that’s next for me?” Because if we’re going to live longer and power is moving younger and the world is changing faster, all of that leads to a lot of bewilderment for people. That’s why I created the world’s first midlife wisdom school.

Kathy: It’s fantastic, we’re doing something similar with a mentorship program. We work with very seasoned developers because we are investing people’s retirement funds and we want to make sure we’ve got the elder on board, right, the person who’s been through many recessions, who knows how to maneuver through different life’s storms but at the same time, you need the creativity of the young people and the energy and motivation. We started a mastermind where I could bring the elders and the young people to the table and we could do deals together. We’re doing something very similar.

Chip: That’s great.

Kathy: I love it. All right. Well, is there any last advice you would maybe give to old fashioned real estate investors, people who buy homes and rent them out for the long term, nothing fancy, or good old fashioned apartment owners? Do you see that changing in the future?

Making Sure People Feel Connected

Chip: No, I think that’s going to continue to have value. I do think the idea of making sure that people feel somehow connected to their community. This is my hospitality

hat I’m wearing, but what are you doing if you’re having someone stay with you and rent with you for an extended period of time? How do you introduce them to the community? What are the things that you do to help them to understand all the interesting things to do in the area?

That sounds like something you normally do for somebody who might come for a short visit but, yes, it’s very welcome if your landlord says, “Here’s my favorite 10 restaurants in the area and why,” that shows the level of friendliness that I think someone might be willing to say, “Yes, I want to have that person, that man or woman as my landlord, because they seem to care.”

Kathy: Yes, I actually have had that experience. It really does make a difference. People feel like it’s their home and their neighborhood and if they have roots, they’re probably going to stay.

Chip: Yes.

Kathy: [background music] Excellent. All right. Thank you so much.

Chip: All right. It’s great to connect with you, Kathy.

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