Unleashing Flow in Business with Chip Conley

Welcome to Flow Radio. I'm Ryan Wicks, Chief of Staff at the Flow Research Collective. Today we have a special live episode with our Executive Director and bestselling author Stephen Kotler. Stephen sits down with an extraordinary entrepreneur, business leader, and all-around amazing human, Chip Conley. Chip has revolutionized the hospitality industry twice. First as the founder of Joy de Vivre Hospitality, the second largest operator of boutique hotels in the US, and then as the head of global hospitality and strategy at Airbnb, where he played a crucial role in transforming the company into the global leader it is today. Now Chip's on a new mission. He co-founded the Modern Elder Academy, MEA, the world's first midlife wisdom school dedicated to helping individuals navigate midlife with a renewed sense of purpose and possibility. And so, inspired by his experience as a modern elder at Airbnb, where intergenerational mentoring was key to the company's success, Chip has authored several books, including the New York Times bestsellers Learning to Love Midlife: 12 Reasons Why Life Gets Better with Age, and Peak: How Great Companies Get Their Mojo from Maslow. Tune in to learn the groundbreaking strategies Chip used to revolutionize the hospitality sector. Discover how positive psychology, flow science, and Maslow's hierarchy of needs can improve your business today. Hear about Chip's journey using these ideas to increase employee engagement, customer satisfaction, and investor returns, even when his back was against the wall. Let's get started with our host Stephen Kotler and our distinguished guest Chip Conley.

Chip Conley, welcome to Flow Radio.

Thank you, Stephen.

I am really excited to have this conversation.

And welcome back to New Mexico.

Well, thank you, sir. Thank you for inviting me back to New Mexico. Um, we are doing our first Flow Radio live in quite a bit, and we are at the new MEA Santa Fe, well, Galisteo facility. We're gonna talk a little more about this facility as we go along. For those who don't know much about Chip's background in the audience, he came up in hoteling, started out with the Phoenix Hotel, which I believe when you bought it was a—

It was a pay-by-the-hour motel.

Pay-by-the-hour motel.

Yeah, it was very popular at lunchtime.

In the inner city of San Francisco. And you turned that into a giant hotel empire. Which you sold off, and then you became head of content for Airbnb?

Head of global hospitality and strategy, and the modern elder of Airbnb.

Of Airbnb. That led into 3 or 4 other ventures that we'll cover, and then you founded MEA, which is dedicated to midlife and beyond, which is, I think, the first of its kind wisdom institute in the world.

First, according to the New York Times, the first Midlife Wisdom School.

So we're going to get more into that. I want to start at the beginning. Um, you were one of the first people I knew of when I was sort of starting to work on Flow. You were trying to take Abraham Maslow's psychology ideas into business. So why don't you give me a little bit of backstory about how that happened? And then I want to drill into what you did.

So I don't have a psychology background. Um, I took one psychology class at Stanford. At Stanford University with Dr. Philip Zimbardo, who did the famous prison experiment. But I was always intrigued by psychology. I just didn't think it was a practical major. Then I became an entrepreneur, and I realized that psychology is the most important subject I could have learned in college. And when I was going through a really rough time during the dot-com bust and 9/11, my company was about 15 years old at that point. We had about 22 hotels. And at that point, all of them were in the San Francisco Bay Area.

[Speaker] Oh, which was hit the hardest by the dot-com.

[Speaker] Yeah, the dot-com bust in the early part of this millennia just hit the Bay Area really hard. We also had 9/11, and that hit big cities hard. Also had SARS, which hit Asia hard, which hit the Bay Area hard. So everything that could go wrong was going wrong. And one day, I went into the local Borders bookstore in Union Square, and I went looking for a business book. Now, I went to business school, and I figured like, okay, I'm clueless right now. I don't know what I'm gonna do to solve my woes as the CEO of this company. And I spent about 10 minutes in the business section, and I quickly went to the self-help section of the bookstore, because I realized my issues were bigger than just the business. And that's where I got reacquainted with one of Abraham Maslow's books. And I sat down there on the floor about 2 hours until the manager of the bookstore said, you got to buy that book. You can't, you can't just sit here in the, in the sitting on the floor reading it. And I started reading Maslow's books and about the idea of the hierarchy of needs. And what I loved about Maslow was that he was one of the sort of leading— I mean, there's something called positive psychology today. In Maslow's era, that didn't exist, but he was sort of a precursor to it. Instead of studying neuroses like Freud or Skinner did. Neuroses are just like, you know, sort of humans that— like rats. He said, like, let's study people at their peak when they're having a peak experience, and let's study people who've been healthy and happy and maybe use best practices in human behavior to apply to other people. And that's how the hierarchy of needs came about, with the idea of physiological needs at the base and 5 levels up leads you to self-actualization, being all you can be. I got this really weird idea, which is like, what if our company could use Maslow's hierarchy of needs to understand our employee hierarchy, hierarchy of needs, our customer hierarchy of needs, and our investors' hierarchy of needs? And I took the 5-level pyramid down to 3 key themes. Survival is at the base. Success is in the middle and transformation's at the top. And so we created 3 pyramids, an employee pyramid based on survival, succeed, transform, which is money, recognition, meaning. And then the second one was employee, the customer pyramid was the survival need was meet your expectations, the succeed need is meet your desires, and then the transformational need is when a customer, when a company addresses the unrecognized needs of the customer. Customer didn't even know they needed that. And then the investor pyramid was the most weird of the three pyramids because like, are investors human? [Speaker] Right.

Open question.

[Speaker] And the three levels are transactional alignment, relationship alignment, and mission alignment. And so that book, Peak: How Great Companies Get Their Mojo from Maslow, became a bestseller, and yeah, and that was my third book, but it was the one that really, I think, put me on the map as a writer and as this weird crossing guard at the crowded intersection of psychology and business.

Not crowded at the time, though.

No, that's true.

Really not crowded at the time, because, you know, especially bringing in humanist psychology and Maslow. You also had a personal relationship with Chick Semihai. Yes. First of all, I should just point out that Chip has stalked almost every major figure in psychology from the 20th century. Absolutely stalked, including Chick Semihai, the godfather.

I'm a psych stalker. Psych stalker.

How did that happen? How did you meet Mike?

Well, I met Mike— so I'd known of flow and I was fascinated by it because there's so many comparabilities around peak experiences and flow experiences. In fact, I mean, you could call them very similar. So that as someone who was really intrigued by the idea of how do we help people seek their peak, I also was intrigued by the idea of how do you get into that flow state. So a few years later, well, only 2 or 3 years later after I wrote Peak, I was gonna write this book called Emotional Equations, and it was the idea—

We talked about it.

Yeah, exactly. It was the idea of writing a book for almost, I don't want to say it, but I will, for men about emotions, because men don't understand emotions nearly as well as women do on average. I don't know what you're talking about. I wanted to take emotions and put them in the form of equations. There was an equation in the book around flow. Guess what? I had to go to the person who really helped to put flow on the map, and that was Stephen Kotler. No, that was Mihaly Csikszentmihalyi, Mike. We started having some conversations. We had a couple meals together. Weirdly enough, we were speaking at the same positive psychology conference. And that's where he and I had a meal and he said, without me asking, he said, "Would you like to come up to Montana with me and Isabella and spend 3 days and just walk along the river and talk about flow?" I was like, "Are you kidding me?" Yes, because there was gonna be a chapter on flow in that book, Emotional Equations. So I did, and I think my greatest lesson I learned from him in the 3 days there beyond the fact that his wife Isabella was a great cook, was the idea of the challenge-skill stair step. And we know the idea of the graph and the idea of the 45-degree angle for challenge and skill around flow. But what he really said to me that hit me was like, it's not always 45 degrees. Sometimes it's going straight up. You're going vertical. So the stair step is ultimately 45 degrees like a staircase, but sometimes it's like a staircase, it's going up and having the challenge and then building the skill. And then it's challenge, skill, challenge, skill. So—

Oh, that's interesting. That's a really interesting way of thinking about it.

That's how he described it to me. And I was like, okay, well, that's interesting. Over time, then I started really looking at this and saying like, Fixed versus growth mindset, Carol Dweck's work, and the idea that that staircase— the more you have a fixed mindset, meaning you're— you don't think you have the capacity to improve, grow, or get better at something, the more it's like walking upstairs with like 2-inch treads between the stairs, meaning that's really hard. Staircase to go up.

Steep staircase.

When, when it, when, yeah, steep staircase where you don't have enough tread. So that's like a fixed mindset. With a growth mindset, you have a bigger tread. So in essence, the channel, the flow channel is wider. And when the flow channel is wider on this challenge-skill stair-step, you actually give yourself more time and space to actually get into flow. And instead of ping-ponging from anxiety to boredom, you're staying in the flow channel long enough to actually potentially get into that state of flow. Does that make sense?

Yeah, it totally makes sense.

I mean, I hear—

I know one of the things that makes a lot of sense, and one of the things I was thinking about, well, based on Mike's comment to you, and was there is something like you, because you rise to the challenge and you have to automatize the skill, right? You have to learn it so well that it's unconscious before you can actually get into flow. So he was actually also sort of giving us a description of the neurobiological process of what goes on in walking up that challenge skills ladder.

And I think over time, I think it is a vector more than it is stair steps. But I think in the early days it is stair steps, if you know what I mean.

Oh, so you're saying when you're first coming to a skill—

I think when you're first coming to a skill, it is a little bit of a vertical. And meaning it takes a little while to actually get to a place where you've built, starting to build the skill. The challenge, and for some people that challenge can actually feel like a daunting cliff and you're not willing to go up the cliff.

Well, that's, you know, if you bring in Herb Benson, right? He named the stages of the flow cycle. He called that stage struggle, like for a reason, you know what I mean? It's a loading phase. And working memory holds 4 concepts. So if you're trying to learn something and it's harder than 4 concepts, and most everything you're trying to learn is, you're gonna be frustrated by design. It's built into the process.

Which is why, you know, one of the things we have to do for each other and for ourselves is to encourage that during that struggle period. Because it's really easy to lose faith. When I was at a, one of my favorite questions to ask, we were asking this week in our workshop with you was, 10 years from now, what will you regret if you don't learn it or do it now? And when I asked that question at age 56 or 57, you know, when I'd moved to Mexico because our first campus for MEA is in Baja on the beach, that question helped me to see that I will regret if I don't learn Spanish or learn to surf now. And so But when I first started both of them, it felt like a lot of struggle. And what I had to do, and there's a great TED Talk by a polyglot, she knows 8 languages, and she talks about how do you learn the difficult things. And what I learned, what I took away from that TED Talk was laughing equals learning. And let me explain. So when I would go out and surf, when I was taking it really seriously, with Christine, one of my co-founders, and Jeff, my other co-founder, who are better surfers than me, I would be self-conscious. I would like get scared that everybody on shore was watching Chip and like laughing at Chip. And so therefore I would like feel like, okay, I don't want to do this anymore. It felt a little bit like it was not fun at all.

It's amazing, by the way, how much your mind can push yourself out of the challenge-skill sweet spot.

Oh no, exactly.

Completely made-up challenges that don't exist in the real world. That's right. I was talking to Christine earlier and she did tell me they were actually watching you from the shore.

Oh, probably.

So it wasn't just actually in your head.

They've got pictures of silly Chip trying to get up on a surfboard. But I learned from my Spanish teacher, Yvonne, who I just loved. We became really good friends. She just said, we're going to laugh. And I said, well, you're going to watch this polyglot on TED. She did. And she's like, yes. So let's have fun because you're taking this too seriously. So she was recently in a new relationship with this guy named Orlando, and Orlando was sort of hot. And so she said, Chip, we're gonna talk about my romantic relationship with Orlando. And so I learned Spanish by talking about sex, and she led me to, like, and we, I, once we got into the laughter of it all, and then I wasn't, like I wasn't being self-conscious about it. Instead, I was sort of seeing it as fun. And that's, I think, a really key piece of this, is getting into the flow and being willing to stick through the struggle phase, is learning how to laugh at yourself and have fun with others and not take it all so too seriously.

Hey everybody, what's going on?

This is Steven Kotler, executive director of the Flow Research Collective and one of your hosts here on Flow Radio. I just want to start out by asking you a question. What do you think the cost of not performing at your absolute best actually is? What's the cost to your life? What's the cost to your dreams? Maybe your unfulfilled dreams. What do you think the cost to your family of not showing up in the world at your best is? What's the cost to your organization, the company you run or that you work for? What's the cost to your friends? I ask you all this as a way of introducing Zero to Dangerous, flagship training program at the Flow Research Collective. This is the same training we use with everybody from companies like Meta, Accenture, Audi, Bain Capital, all the way to the U.S. Air Force and the San Francisco Police Department. Navy SEALs have taken this course. NBA coaches have taken this course and everybody in between.

Literally everybody.

We train people in 130 countries. We train people in over 28 industries. Our training is award-winning and it is definitely successful. On the back end of Zero to Dangerous, our customers see a marked increase in the amount of flow in their lives.

Flow.

That's the optimal state of peak performance. It's the reason you're tuned into Flow Radio. Our customers see a 70-80% boost in the amount of flow in their lives. Peak performance moves from something reserved for very special occasions to a regular part of their day-to-day experience. And as flow increases, people see focus, motivation, productivity, creative problem solving— they all start to soar. Simultaneously, our customers see a marked decrease in anxiety and stress and burnout. So, if you're interested in harnessing flow to amplify focus, motivation, productivity, to fire up the fire in your belly, to get you really chasing your dreams, to offer the best you have to the world, you should check out Zero to Dangerous. It might be the right program for you. This might be time to take everything to the next level. Check out the link below.

Additional technical details, laughter improves learning because it pumps you full of dopamine.

Yeah.

And dopamine enhances pattern recognition. So there's a laughter learning cycle that is, you know, underneath play, which one of the reasons play is such a powerful tool for learning is it produces dopamine and amps pattern recognition and increases learning. I want to circle back on something because I want to hear the second half of the story. Hotels were in a lot of trouble.

Yeah.

You saw this in Abraham Maslow. You imported the pyramid. First of all, tell me what was the hardest part about bringing Maslow and those ideas into business? Like, what didn't work? What did you have to really steer from? And then what worked great? And then tell me about, like, what's the conclusion? Did it— how did it save your ass?

Oh my God, it did. And so the— so it got progressively harder when you went from employee to customer to investor. So for the employee pyramid, money, recognition, meaning. So money being the survival need. Recognition being the success need. Meaning, having a sense of meaning in one's work and what the company's doing was at the top. That actually felt so familiar that that was not a hard one. And we as a company were pretty much operating like that. But then we went to the customer pyramid, like, okay, what's the survival need for a customer? And I got really clear, like, okay, if your expectations are not met by, you know, whatever, whoever you're buying from, you're not gonna come back, and therefore you're not even on the pyramid. So the survival need is like making a person feel like, you know what, I made a good choice here. But just a good choice pre-internet was fine, and you had loyal customers, but the internet created promiscuity in your customers, meaning there are a lot more choices. And so moving up to that second level where a customer felt desire That actually really helped, I think, once you understood what's the difference between the expectations of my customers and the desires, and we would take it through all of our hotels, all of our, we had all of our housekeeping staff, our night audit staff, our bartenders, we would take them through the pyramids. We had 3,500 employees that went through the peak pyramid to sort of say like, okay. But what was great about the customer pyramid was this idea of unrecognized needs. How can we mind-read our customers and imagine what they wanted? How did you do that? Well, what we actually did was at each of our hotels was based upon a magazine and 5 adjectives. So the Phoenix, the first hotel, the rock and roll hotel was based—

Yeah, but the Phoenix, I, living in San Francisco in that hotel, and that was when I was coming up as a journalist and covering music, I can't tell you how many debauched nights I had at that hotel.

It is a hotel that's seen, you know, when it closes, it's gonna close, we have a 40-year lease that's about to come up next year.

Oh, I didn't know that.

Yeah, I don't own the land. I own the building and the 40-year lease. But it's a landmark. It's a landmark, you can't do that. I know, I know. So I will write a book about all the stories. Oh yeah. But you know what was really interesting is each time we created a hotel, and we created 52 of them, It was based upon a magazine and 5 adjectives.

A magazine, literally, like the Phoenix was Rolling Stone?

The Phoenix was based on Rolling Stone. And so the 5 adjectives that defined Rolling Stone were funky, irreverent, adventurous, young, or young at heart, and creative. And what we did in creating the hotel, the design, the kinds of staff we hired, we hired funky, irreverent, adventurous staff. What we came to learn over time is that that this organizing principle of using magazines was a great way to create soulful hotels. But it was even better because what we realized over time is that the people who fell in love with the hotel would use those 5 adjectives to describe themselves.

[Speaker] Oh, wow.

[Speaker] So at the peak of the pyramid for us, for Joie de Vivre, my boutique hotel company, was identity refreshment. We were not in the boutique hotel business We were in the business of refreshing identities. And so how we did that at each hotel was different based upon what the 5 adjectives were.

So what was the weirdest?

The weirdest— weirdest—

5 adjectives, weirdest hotel.

I mean, we had it. We had a— we had a boutique campground that was— was Outside magazine meets Vanity Fair. This is 7 years before glamping was even a word, so we were way ahead of the glamping. And the 5 adjectives I don't even remember the 5 adjectives there, but you could only imagine Outside magazine with Vanity Fair, but it was all about cushy camping. But we had some really weird ones. We had the Hotel Vitali down on the waterfront across the street from the Ferry Building, and that was Dwell magazine meets Real Simple, and it was modern, urbane, fresh, natural, and nurturing, because what we believed is there was a customer out there who's a bourgeois bohemian who was post-W, pre-Four Seasons. They wanted a wellness boutique hotel in an urban center, like a downtown, that had all kinds of wellness and spa services. And again, we were way ahead of the game there. So the top of the pyramid, how our employees helped us to see, like, for— so at the Vitali, we did something that my investors in that hotel saw, like, this chip, that's stupidest thing I've ever heard of. But what we knew is the following. We knew that our customer wanted to be healthy on the road. Now this was 27, 26 years ago we were thinking about this. And this is way before yoga was a big deal in corporate America. And what I said is one of the fastest-growing magazines out there is the Yoga Journal. And while that's not one of our two magazines, our magazines are, you know, out our dwell meets real simple. What if we actually, on the top floor of the hotel, the penthouse level hotel, had a 400-square-foot yoga room in which we do a morning 1-hour yoga class every day? My belief was there are all these people traveling, getting scrunched up, and this is, you know, again, the hotel opened after 9/11, so going through security and getting— and like, the experience of traveling was just awful and then getting to where they're going and working too hard and not having the healthy kind of thing.

So this is from a man who doesn't like yoga. This is from a man who doesn't like yoga.

That is true. I mean, and so long story short is I said, let's take our best real estate, let's have both an outdoor space and an indoor space, and let's offer a free yoga class for our customers every day. And like my, my, uh, investor said, like, what a terrible use of the real estate. You're not charging for it. It's the best real estate in the building, etc. And I said, you know what? The word of mouth on this and getting in the Wall Street Journal and New York Times and things like that will be worth it. And as it turns out, there was a line out the door when it opened. And I'll never forget, I got an email from this woman from New York. And she said, thank you for creating Hotel Monica. And I was like, I don't have a Hotel Monica. That was her subject headline. So, I had to open the email like, like, And she said, "You created the Hotel Vitaly, and my name is Monica, and I have been on the road. In fact, do you know that the fastest growing segment of travelers on the road are women business travelers? And guess what? You know what we need is we need a yoga studio in the hotel because guess what happens in my normal experience when I go to San Francisco? I get up early in the morning and I want to go to a Bikram yoga class, so I'm going to get all sweaty." and the only one that is like in the Mission. And so I'm gonna go all the way to the Mission. And so I have to like get up really early for like a 6 o'clock class in order to do my hour and a half workshop there, or hour and a half yoga class there, and then get back and then hopefully get back in time to shower, clean up, and then go to my meeting at Wells Fargo at 8:30 in the morning. And she said, you know what, yoga's really stressful for me when I come to San Francisco. Because it doesn't work. And so having a 1-hour yoga class, not Bikram, that allows people to just come down, or actually go up to the penthouse level, see beautiful views, and have that experience, that was meeting the unrecognized needs. To finish your question, the investor pyramid was hard because what is it that's the survival need? What's the survival need for investors? I wanna get my money back. And that was where like, okay, transactional alignment about what creates a return on investment. But then this idea of what's in the middle of the pyramid? What does an investor care about in the middle? And I really started looking at Warren Buffett because Warren Buffett said like, as an investor, the most important thing you could do is have relationship alignment with the entrepreneurs and CEOs that he invests in. And so that's what became this middle of the pyramid is, and if you think about it, levels 3 and 4 of Maslow's pyramid were social belonging needs So very relationship-oriented and esteem needs. And so that became the middle. And then the top of the pyramid was like, okay, well, what's a self-actualized investor look like? And it was an investor who's legacy and mission-oriented. And so that's how that pyramid came along. But that was the hardest one of the three.

You also found ways to measure this, if I'm not mistaken, right?

Oh yeah.

So how did you start measure— I mean, you took a bunch of positive psychology ideas, turned them into business, not just ideas. You started measuring all of this.

We measured all three of those. So, well, with our employees in our customer satisfaction surveys, we would start asking questions about money, recognition, meaning. It wasn't like we weren't asking the questions before, but we now asked them in a way where we could actually have a tool to measure what level we are, we're at every one of our hotels. We have 52 hotels and 27 restaurants and 4 spas. So we wanted to see where each of those businesses were on the pyramid. So ultimately, a general manager of a hotel could see like, oh, here's a visual based upon the data that shows where you are on the pyramid. The customer pyramid, we actually started changing our online surveys that we would offer that helps us to understand that. And then on the investor side, I gotta tell you, when we sent out our first investor survey asking them, saying we're gonna give you an annual survey that helps us to understand how happy you are with us as your partner, if we were partners, or as the management company of your hotel. These guys would look at me like, are you kidding me? No one ever asked that question. But it was interesting because we really gave them the opportunity to give us feedback that helped us to get better at what we did and helped us to see where we were on that pyramid. So yeah, I mean, it was, It was amazing, and when I then wrote the book about it and it came out, and then my God, it went—

It went everywhere.

It went very viral. Whole Foods Markets was using it, Southwest Airlines was using it. Tony Hsieh at Zappos was so all over it that he said, can I write the foreword for the book? And the book was already out and there was no foreword, and I was like, okay, Tony, write the foreword for the book. So it was, yeah, it was really, and it's when I realized in my life that I had wanted to be a writer when I was a kid, and my dad made me feel badly. Like, he said, Chip, writers— at age 12, my dad said to me, Chip, writers are either poor or psychotic, and most are both. And I did not know what psychotic meant, but it didn't sound good. And so I quit.

It resembled that comment.

I quit the creative writing magazine I was on in high school. I did AP English, and 5 of us from my high school all passed, so we would not have to take English in college. And they had a ceremony where they show everybody who was the best at English, and it was me and 4 girls, 4 women, you know, I would call them girls because they were 17 years old. And I felt embarrassed to be the only guy up there. In college, I took not one English class, no creative writing classes, and it wasn't until I was about 38 years old and 12 years into running Joie de Vivre that a literary agent was in the audience when I was giving a speech on Joie de Vivre's growth, because at that point I was a pretty well-known CEO and young CEO and also young gay CEO, which was particularly unusual. And I was telling my story, and after the speech, this woman came up to me. I didn't know her, and she said, I'm a literary agent, and I work with New York publishing houses all the time, "You have a book inside of you. Have you ever thought about being a writer?" And I said, like, "Yeah, a long time ago, but I don't think I could do it because I've never really pursued it." And it was when my third book came out, which was Peak, that I really realized, yeah, I'm a writer for sure.

[Speaker:MALE SPEAKER] What's the flowiest thing you do? Is it writing?

Yeah, I have a daily blog, and so when you have a daily blog, you better be flowy with it because that's a big commitment. So I—

You have a daily blog?

I have a daily blog.

What's wrong with you?

I know. That's insane. No, I love it, I love it. I love my daily blog, I love it. It's called Wisdom Well. How does that go? It's on the MEA website, MEAwisdom.com. You can get a free subscription. A little microdose of wisdom every day. So I think that's the flowiest thing I do, but I mean, what else is flowy for me? Swimming. I played water polo at Stanford and—

That's a hard sport.

That's a very hard sport.

Wow.

And I loved it, and swimming is, when I'm in my flow and swimming, I'm lucky here that I have a lap pool on our campus.

Isn't that the great— the balance for me, the balance between athletic flow and writing, because they both feed each other to me, and it's just the greatest balance.

It works incredibly well. My perfect day is a Sunday, and my perfect day is waking up, meditating, which I do every day.

You've been meditating a very long time.

I've been meditating for 41 years and started at the Esalen Institute in Big Sur. And so meditation grounds me. Then I will do a little bit of writing. I'll check emails. I definitely, Christine will tell you, Chip checks emails very early. I do. I'll do a little bit of writing many mornings, especially if I'm writing a book or if I'm in the flow with writing a few blog posts at once. I'll go for an early morning hike, and I find that's very flowy for me too, especially in the season where I can start a hike at 6:00 AM. Here on the ranch, we have dozens of hiking trails. This last Sunday, I woke up and did all of that, and then at 6:40 in the morning, I went for a 10-mile hike. I went on the perimeter trails for the whole, we have 2,600 acres here, and so I just, I went and I was just flowing, and I was part of the time asking the question, "Nature, what do you have to teach me?" and then I will just observe nature. And then part of the time I was in a flowy podcast mode, listening to podcasts. I came back here after that and I swam, so I had another flowy thing. And then I did something really weird. I came into this room and I turned music up, the Ohio Players up full on. From my high school days. I went to an inner city high school in Long Beach, California, Snoop Dogg's high school. And I just danced by myself.

Wait, wait, wait, where you learned to play water polo?

I played water— yes, because the reason I learned to play water polo there, which is, yes, very interesting story, is because I was a basketball player, but white men don't jump, or white boys don't jump, and I went to a high school that is the number one feeder high school for the NBA. And so I was not gonna play on that team.

Clearly.

And so a bunch of us, you know, in 8th grade, together and said, we're going to create a great water polo team in this inner-city high school, which made no sense because the school had no history of being very good at swimming or water polo. And then we became the CIF champions. We became the third-best water polo team in the country for a high school team. And then—

That you and your friends founded?

Yeah. And then my best friend and I went to Stanford to play water polo. He was better than me. I lasted a year and a half. And he went on to the Olympics. Yeah.

Wow.

Yeah.

Really high level of water. That's an amazing story.

Yeah.

That's a crazy story. Okay. One, I want to talk— so you went on to Airbnb. How did the— how did you take positive psychology from there? It's a totally different business from, you know, owning this and being able to control the space.

—so the thing that was interesting with Airbnb, when Brian Chesky, the co-founder and CEO, approached me, he had read the book Peak, so my Maslow book, and he said, I want us to become a peak company. And this was 12 years ago. The company had about 125 employees. It was a tiny little company. Most people had never heard of it. And I had barely heard of it. And here I was, a hotelier in San Francisco, and they were based 12 blocks from my home. But he said, I really wanna do Peak. I really want us to become a Peak company. And so I started spending some time with them. It turned into full-time work and I spent 7.5 years with them. What we really learned, Brian and I together, first of all, I had to learn technology. I was 52 years old, head of strategy and all the hosts globally, and I'd never worked in a tech company before. I didn't understand any of the lingo. So I was supposed to be the mentor, but I was as much the intern, and I called myself the menturn, and they called me the modern elder, someone who's as curious as they are wise. What I learned from that experience early on was, you know, it is true that it's hard. How do you create a great experience for guests when the hosts are not your employees? That was the conundrum. That was like, that was like the thing that the code I needed to crack. And when I joined, the company had not cracked that code. There had been a real focus on quantity, how many listings we had, very little of a focus on quality. So long story short is I used psychology, and I used Dan Pink and his book Drive. Dan's a friend of mine.

So you stalk more psychologists?

Yeah, and Dan's not exactly a psychologist, but he writes about psychology a lot. And he became a good friend. And, and I looked at motivations and how do you create the motivations for hosts to do a great job. And so it's a combination of carrot and stick. The carrot was creating a Superhost Program and then growing that, which became huge, which was the idea of I want actually to have extrinsic value in the world so I can present myself as a Superhost because I met these 5 different criteria and that Airbnb rates, or that guests rate hosts on, and Airbnb tells me how I'm doing. And so every host had their own scoreboard that we created for them.

So you created a fast feedback system.

Created a fast feedback system. And what was really interesting was because all, 70% of Airbnb hosts and guests review each other, and in the hotel business, only about 5% of guests fill out an online survey, 5% here, 70% here. That feedback loop was fast. And the thing that a lot of people hadn't thought of, we think like, okay, well, the employees in a hotel are gonna, you know, because their job's at stake, are gonna care about, you know, what the feedback they get. Well, on an online survey, it's almost never specific to an individual employee. So it's hard to take that information and make it clear about like who's doing a great job. When it was the host for a single listing, You know who did a good job and they're an entrepreneur. And so the motivation for them to actually feel like, okay, using psychology, my whole thing was psychology. I'm gonna use psychology to crack this code. And then we had to also use the psychology of the stick. So the carrot and the stick, the stick being like, okay, Brian, I know you don't want to get rid of listings. I know you want to have lots and lots of listings around the world. The only way we're ever gonna grow into a an effective hospitality company is if we have quality in the experience. And you will have, as I used to say this all the time, you'll have your worst experience of your life in an Airbnb, but you'll also maybe have your best experience of your life. And that was in the early days. And then I could get to a place where over time, guess what? When I joined the company, our NPS, net promoter scores, our customer satisfaction scores were half of what the hotel industries were. When I left Airbnb 7.5 years later, we were 50% higher than the hotel industry, which is shocking for people to believe. Like, really? Like, against hotels? Well, for people who are used to staying in luxury hotels, yes, that's hard to believe because we were comparable to Four Seasons ratings. But if you're used to staying in a Motel 6 or in a Holiday Inn or in an independent hotel that isn't very well run, the experience isn't always that great. So yes, there's safety concerns. Yes, I mean, we had all kinds of things we had to deal with. But using psychology and applying it in a whole different place and having that fast feedback, allowing people to get into the flow as a host.

[Speaker] So one of the things I've noticed in working with companies, there's 28 flow triggers. And if you're training individuals, You sort of train individuals up in all of them. But with companies, even the ones who are best at it, they focus on 2 or 3 flow triggers, right? Toyota with kaizen, that's autonomy and the challenge skills balance, right? You look at most technology companies are autonomy and fast feedback, right? So you use fast feedback at Airbnb. Was there another one? And the same question about your hotels.

Well, I think fast feedback, I would say fast feedback, the hotels are doing it. We have a doggy here, hi!

Awesome, welcome to the podcast. Come on! Flow Radio, we're very dog friendly on Flow Radio.

As you might imagine. So the fast feedback for hosts was important, but I have to say that Superhost program paid the best ROI I've ever seen. Because people would actually share their Superhost status with their friends. They would put it up on social media and say, "I've become a Superhost!" And so the extrinsic and the intrinsic value of that was huge. In the hotel business, the number one variable for loyal customers for our boutique hotels was the can-do attitude of our of our employees. So the key thing we focused on is can-do attitude. How do we help our employees, whether it's someone valeting the cars or it's someone cleaning rooms or someone, you know, the bartender at the bar, how do we give them a sense of can-do attitude? And we really trained people and gave people a sense of can-do attitude and we had a monthly award for the example of the best can-do attitude in the company. And that's what we focused on. And helping people, and what people needed in order to feel can-do as an employee, they had to feel autonomy. They had to feel like they had a voice. And so the key was there was a, we created like a sort of a, we called them the—

[Speaker] So it was autonomy and feedback.

[Speaker] Yeah, we called them cultural ambassadors, but what they really were were the city council of the company. And they would give us feedback from the various hotels about how we could improve the culture in the company and especially the can-do attitude and autonomy needed to do that. How do you—

So there's a lot of maids. There are a bunch of jobs in hotels that are really at the bottom of the menial labor ladder. That was not English.

The menial labor ladder. Yes. Thank you, sir.

The rude way of asking this, how do you sell meaning to those people? How do you convince people who are working just sort of above minimum wage that this is a job about meaning and that's at the top of the pyramid? How does that work? And does it work?

It does, it works for sure, and it works at MEA, it's worked at Airbnb, although we didn't have a lot of hourly people at MEA. Number one is to assume that people who are working hourly don't care about sense of purpose and meaning is a bad assumption. Yeah, I agree with that. It's sort of where people go with it, but you know, as if it's like, okay, all they care about is the paycheck. The paycheck's really important. So in that pyramid, success has 75% of that pyramid may be the money piece, because if you're paying, if you're living paycheck to paycheck, it's important. But the differentiator is the recognition and the meaning. The key that we learned was depending upon the job classification and sometimes the location of and the type of hotel it was, meaning may be different for different groups. For example, for the front desk hosts, we didn't call them clerks. Back in the early days when I started, all front desk clerks were like clerks. Like, we called them hosts, which is interesting because ultimately my Airbnb era was all about hosts too. So what we learned was The number 1 thing that gave them a sense of meaning was feeling like they built relationships with the revolving door of people who were staying in the hotel. And so, the thing we did as a basic practice and it costs no money was at our monthly all-staff meeting where everybody comes together from all departments. Depending upon who is in the hotel at that time as guests, we would often have loyal regular guests. So we would ask 2 guests to come in and tell their story about why they love that hotel. And we asked them to say, "Please use at least 3 of our employees' names and specifics around why they love those employees." That experience, which cost nothing, the guests— we didn't have to pay the guests. The guests actually were like, "So, yeah, I mean, I'd love to come in and tell a story." That is an example of giving people a sense of meaning, knowing that the front desk host cared about that. For the housekeepers, 96% of whom were immigrants, the number one thing they wanted, and we learned this over time from one hotel when one general manager did this and it worked for them and then we spread it out through everybody, was the number one thing they wanted was a sense of community amongst the other maids, housekeepers, because they were often in a new country didn't know a whole lot of people, and so the thing we did for them is normally they had 30 or 45 minutes off for lunch. We would give them an hour and a half off for lunch once a month, and it was a potluck. And they would all bring in from, you know, they might be Vietnamese, or they might be Nigerian, or they might be Polish, and they would bring in their favorite foods that they had cooked the night before from their country. And they would have an opportunity, and then at each one of those times, not only would they eat the food of different people, but 2 or 3 of the maids would get up and talk about their country. Amazing. Cost nothing other than a little bit of extra time, you know, of payroll because they got more time for lunch that day. And then for the bartenders, you know what gave them a sense of meaning? Was being able to take great vacations. So our bartenders, They came up with the idea, which was a simple idea, is like, why don't, once a quarter, if you're in good standing as an employee, why don't you give us 2 free nights at any of Joie de Vivre Hotels, and all of our hotels are in California, so they're all pretty close by driving. Give all employees 2 free nights per quarter to go out and just have a fun time, and then a bar bill at, so, like a $25 bar bill that allows them to order some drinks. And so that was what gave them meaning. So the more we got to the place of saying you individualize what's meaning for employees based upon what's truly meaningful to them as opposed to what I think is meaningful, that was the evolution of this idea.

Thanks for tuning in to this special live episode of Flow Radio. I'm Ryan Wicks. And it's been a pleasure to bring you into this conversation with our guest Chip Conley and our host Stephen Kotler. Until next time, stay curious, stay inspired, and we'll see you on the next episode of Flow Radio.