Brad Guidi + Jason Brown

Stacy Shoemaker Rauen: Hi, I’m here with Jason Brown and Brad Guidi, from Blue Flag Development. How are you guys today?

Jason Brown: Doing really well. Thanks, Stacy. Thanks for having us.

SSR: Thanks for being here.

Brad Guidi: Yeah, doing great. Thank you.

SSR: We’re excited. Okay, so since there’s two of you, we’re going to divvy it up and we’ll start with you, Jason. Where did you grow up?

JB: I grew up in Newton, Massachusetts, right outside of Boston.

SSR: Awesome. And was there any early inkling that hospitality would be something you pursued later in life? Any early moments of hospitality or travel?

JB: Yeah, I won’t bore you with a very long story of it, but my mom’s family are developers in New York, and amongst many other things, they built a hotel called the Soho Grand, back in 1996. And I was lucky enough to convince them to let me intern there and live in the hotel for two summers. That combined with seeing them build what will become the TriBeCa Grand now is the Roxy Hotel in New York, was like this light bulb that went off that I just thought that was the coolest thing in the world, spending your time, figuring out where the bar should go and the guest journey and all that. Prior to that I had no idea that there was even anything like a hotel school, and someone introduced me to the fact that there was a place called Cornell that had one and was lucky enough to go there. So, that is the very short version of what happened.

SSR: What were some of your memories or stories from those two summers and living and working there?

JB: Yeah, a lot. That was the place when it opened for really, celebrities and going into what will become more the entertainment business going to New York. Soho, previously, had been a pretty bad area, which a lot of people don’t remember, and the hotel was kind of on the forefront of that before 60 Thompson opened down the street, and then Mercer and a couple of the other big boutique ones. So I got to see lots of crazy stuff. We had a lot of artists that were living in residence. The York was there, Britney Spears was living there and recording, Sex in the City was shooting its first couple seasons.

But my craziest night, it was night number three of doing the overnight shift of engineering, and you just get whatever weird call comes in, and there was some party happening in the penthouse. I went up there and swear to God, we went in, it was like me and this 20-year-old guy, and I was 14 at the time. And there was a cheetah in a cage, straight out of a movie thing, and we just shut the door and we’re like, “We got to call the police. I don’t know what to do about this.” I was just like, “Does this happen every night?” And he’s like, “No. That was a pretty rare… I haven’t seen that one before.”

SSR: How did you get the cheetah out? 

JB: I don’t know. Way above my pay grade on how to deal with the cheetah in the penthouse.

SSR: Have you seen a cheetah since? Just curious.

JB: No.

SSR: No. Okay, good. That is amazing. And you said your parents developed the hotel?

JB: My mom’s brother is a developer, a guy named Leonard Stern. He developed through a company that he owns called Hartz Mountain with his son Emmanuel. He was my cousin.

SSR: Did you learn a lot from him?

JB: It was unbelievable. I mean, I think that was my first introduction to hospitality as theater. All my hotels stays, growing up, were not extravagant like that by any means, and this was a real window into, one, bringing furniture and FF&E and scent and lighting that they all used in their estates and their amazing penthouses in Manhattan to the broader audience of folks like us that could experience it. But also, how they actually went through and set up that guest journey from the second you arrive to the second you leave and treating mainly the public spaces as different set designs as theater. The people that worked there, they were very specific about who those people were and why they were working there. And that I think, in a lot of ways kicked off my interest in the boutique side of the industry and it’s why it’s always where I’ve come back to time and time again.

SSR: Yeah, for sure. Were your parents at all involved in anything hospitality or?

JB: My dad is a pediatrician named Charlie Brown. To this day, other than him getting to go to our restaurants in our hotels, I don’t think he could tell you what we do at all. My mom is many things, but definitely not in our world either, so I think they just appreciate the fact that Brad and I get to build places where they can go and get treated like VIPs.

SSR: Love it. Okay, so you went to Cornell. Did that help cement your love for all things hospitality and hotels?

JB: Yeah, I think a lot of people say this, but I wasn’t really sure what to expect going to the hotel school. Certainly, you had no real kind of experience other than those two summers with it. It was amazing. They forced you to take both tracks. So you do things like I went to cooking class for eight hours every Wednesday. My partner in the class is this guy Kevin Booth who played football at Cornell and would go on to wings when Super Bowl rings with the Giants, and chose the hotel school because he thought it was easy. So we were in there together being the worst chefs in the room. And you did stuff like that on one side to learn all the true operations. You had to run a restaurant as a class and the grade was who made the most money plus got the best guest scores and all this stuff.

And then on the other it was just strict, like you were in business school case study after case study after case study for four years, learning how all of these companies from huge mega public companies to smaller entrepreneurial ventures got built and what they experienced along the way and combining the finance development track with the actual hands-on experience. At least for me was an amazing foundation to go into what we do today. And the best part about all of it was really just the people that were there. A lot of the folks that we were there with and just the Cornell community outside of the hotel school is really tight and helps us in many different ways all the time for everything I think that we do.

SSR: And then you went on to Ernst & Young, right?

JB: Yes. This was 2005, so a good time to be alive and coming out of school. There still weren’t investment banking jobs like banks and big private equity funds, and institutions still looked at hotels as daily leases. So they didn’t really think about it as a good place to invest their capital when you could go invest into an office building or a apartment building with long-term leases in there. We all know EY, they had and still have a small hospitality consulting group in their real estate arm that just…

Basically, they just hires from these hotel schools. And there’s three people in those classes every time, and I was lucky enough to get hired into that and it was a great place to learn. Same kind of dynamic where we worked on everything from individual development deals in Manhattan, advising those developers on what brand to choose and how to capitalize the deal and underwriting and all that jazz. To one of the early projects was for us looking for the Prince of Saudi Arabia, Prince Al Waleed, at the time and Cascade, which is Bill Gates’ private family office, to buy and combine the OpCos and the PropCos of Raffles and Fairmont. So ran around the world. I was 22 and got to jump around to all the Fairmonts and Raffles and decide what a spreadsheet told me they were worth. So, it was pretty good.

SSR: Pretty interesting. Does that top the cheetah, just out of curiosity?

JB: It definitely does not top the cheetah. I’m still waiting for Brad and I to walk into one of our suites and see a cage, and then we can retire.

SSR: Yeah, then you’re done.

JB: We did full circle.

SSR: From EY, you went on to Kimpton and then Yotel, very interesting juxtaposition, I’m sure, between the two. Can you tell a little bit about what you took away from both experiences and is there one, I hate to say deal or asset, but hotel project that really sticks out to you or accomplishment along the way?

JB: Sure. Kimpton, I was really lucky to get that opportunity. It was right at the time where, as I call it, the new guard was coming on board. Guy named Mike Depatie was the CEO at the time. My direct boss was a guy named Ben Rowe who would go on to be CFO and then now is a founder and one of the managing partners of KHB Capital, which is the spin out of the private equity fund business that we had at that time. But Kimpton was going from a bunch of family owned hotels to thinking about should they put their name onto it, should it be a hard brand, should it be a soft brand? We had these Palomars, these Monacos and these one-offs and then to actually raising true private equity funds with discretionary capital to go off and actually build the portfolio, even though they were still managing for other folks and building the Kimpton brand both ways.

That was really fantastic for me for many different reasons, but one, just because of how unique that was, where you could wear your private equity owner hat one day, your brand building hat the other day, and then an overarching corporate strategy of both those things kind of all intertwined. What do you do and how do you do it? Those folks taught me most of the stuff that I know today. They’re still some of the smartest people that I’ve ever met. One of my favorite deals when we were there, and again this went from 2007 to basically the end of 2011, so right into the great financial crisis and then coming out of it. We were really bullish on Brad’s hometown, Philly, and we bought a building right off of Rittenhouse Square that would later become the Palomar.

That was my first entry into, really going into a location sort of like Soho Grand, that was amazing at one time, kind of fell off over the years and being able to acquire at a really attractive basis and turn it into something that I think was one of many pieces of the puzzle of bringing that area into its next phase. And it was this old amazing architects building that was historic. We got historic tax credits which people didn’t really do before. We used this thing called EB-5 financing, which at the time was totally novel and really difficult to figure out how to do. And ultimately, Brad can tell you his answer whether he liked it or not. I think we delivered something pretty cool for the constraints we had at the time budget-wise. But that deal really stuck out at Kimpton.

SSR: And then Yotel, such a different-

JB: Wild, wild. I had gotten asked to move from San Francisco to New York, where I’d obviously lived before, to run acquisitions development for that part of the world for Kimpton on our funds. I got introduced to this guy named Simon Woodroof and another guy named Gerard Green. And Simon has this aura over in the UK as a mini Richard Branson. He had many ventures that didn’t work, many that did. He had this thing called YO! Sushi that he sold for a lot of money, bought a house book on the Thames, lived kind of the dream. He really came up with this idea of, “Hey, look, if the first class seats that I’m sitting on in a BA plane can move, can I create a smaller room that has a bed that kind of moves in the same mechanism? And there should be this affordable luxury segment of the industry.”

So when I met Gerard, who was really the CEO at the time, running things day to day, he had brought in a backer from the Middle East and they had purchased from Related, a big condo portion of a project called MiMA in 42nd and 10th. It was back in 2011. And me being the dumbass that I am, was like, “That’s the worst part of New York. You’re buying in Hell’s Kitchen.” And they were building a property-

BG: What don’t know is I was living four blocks away during that time in the worst part of New York.

SSR: At the Lincoln Tunnel?

JB: Guidi is always at the forefront. You just have to follow where he is and that’s where you want to buy real estate. Well, I was wrong, obviously. And this thing was in north, it fits 700 rooms into about 200… Normal-sized rooms would’ve been like 250 rooms. So I saw this thing and also was what I deem, and I say this lovingly to all my friends at Yotel, I know I say this, like a giant purple spaceship in the middle of Hell’s Kitchen. I just didn’t think that it could translate into the American kind of ethos that you could have this 170 square foot room, sparse, no amenities, you can’t get room service, you can’t do anything else. And kind of this very Japanese inspired, European, then overlay with the under lighting and the LEDs and all this stuff.

That’s what I kind of said to them. I was like, “Look, I got a great job, amazing people that believe in me. I’m still really young, I’m going to just keep doing what I’m doing.” But ultimately, they kept in touch and they kept showing me how much money they were making and they were running 90 plus percent occupancy out of the gate, 45% margins, just stuff I had never seen before. And thankfully, this goes back to the Kimpton experience where we’re just working with the most amazing people. At that time in my career, the CEO that I was talking about, Mike Depatie, I called him and I said, “Listen, they got this opportunity to go jump into the founding team of this thing.” And he had created a couple similar brands earlier in his career and sold them to Marriott’s and other places, and he’s like, “Look, just go try it, if you believe in it. If it doesn’t work, come back here.”

I think that gave me the confidence to go jump over to Yotel. And as soon as I landed at Yotel I knew it was way out of my depth. I’d gone to Canada once. I’m the oldest of six kids, so traveling anywhere was prohibitively expensive for us. And they were like, “You’re going to be global chief development officer.” And I was like, “I haven’t been anywhere ever.” And they’re like, “You’ll figure it out.”

SSR: Like, here we go.

JB: My most proud deal, because there’s a bunch of them over there, if I were to really think about it, we built an 800 key hotel, the one development a year at Alice a long time ago, on Orchard Road in Singapore. That was one where we just had no idea what we were doing. We didn’t know anybody in Singapore. We literally just showed up and cold called a bunch of people. And for that to come to fruition and be the hotel that is today in an area that just literally is on the other side of the world, that was a pretty proud moment to see that all kind of come together.

SSR: Amazing. Awesome. All right, let’s switch over to Brad. So Brad, where did you grow up?

BG: Yeah, so I grew up outside of Philadelphia in Montgomery County. And from there, lived in D.C., lived in New York, went back to Philly and ultimately landed here in Boston about nine years ago.

SSR: Got it. Okay. So what were you like as a kid? Did you have a love of design or any kind of inclination that-

BG: Yeah, as a kid, I was always into art. My grandfather, who I kind of look at it as my mentor, he came from Italy. He was an artist, a self-taught musician, just an absolute Renaissance man. I kind of put him on a pedestal throughout my whole childhood. So anything he liked, I immediately liked, from art to music. So I wasn’t as much into sports as most young boys are. I was spending my days brawling and making movies and I thought I wanted to be a filmmaker at one point, and my parents sent me to the New York Film Academy for a summer. So I always had interests more in the world of design and art.

SSR: Yeah. Did you end up going to school for that?

BG: No, I went to Georgetown and I was a major in finance.

SSR: Perfect. Well, at least you have both sides now.

BG: Yeah, I mean, my brain works like that. It actually works well for development, being able to balance the design side and the financial metrics on both sides of the brain.

SSR: Yeah, you have both brains. So what did you do after college? Did you stay in finance for a bit or did you-

BG: Yeah, no, so I took that finance degree and I went into advertising. Moved to New York and worked at Saatchi & Saatchi. Made no money for a few years, but absolutely loved it. Thought it was super interesting. Worked with Procter & Gamble, was flying out to Cincinnati. I was on the Olay skincare account, which as a 21-year-old living in New York, it was a really great time.

SSR: Did you know a lot about that at the time?

BG: Yeah, so interestingly, I always kind of had this entrepreneurship drive and there was an opportunity to buy, essentially, a chain of music stores. It was kind of a weird convoluted way, I got there and we got to the finish line on this buying this chain of music stores and I left New York and I moved back to Philadelphia and the whole deal fell apart. So at that point, I grew up… One thing I didn’t tell you about my grandfather, he was also a builder and my family are third generation builders and developers outside of Philadelphia. So I also grew up on a construction site, learning how things were built from day one. My dad kind of looked at me and said, “You left the city, you’re here. Why don’t you come work for us for a few months until you get back on your feet?” And those few months turned into 12 years.

SSR: As they do.

BG: Yeah, I learned everything from my dad, being on the site. I never thought of myself as a designer. I was never confident enough to say that because at that point I was a builder in taking orders from designers and homeowners. And what I soon realized was, I think I know more than these people. I’m just not confident enough to say it. I think learning that and gaining that confidence was kind of big part of me growing in my career.

SSR: Yeah. So was your grandfather still at the business at the same time too?

BG: No. My grandfather retired several years before and I worked with my dad and my two uncles.

SSR: What was it like working in a family business?

BG: It is difficult. It was great and difficult, and working with your dad has moments of absolute glory and just absolute pains. Ultimately, I kind of just had an itch that needed to be scratched and it was hard. Leaving your family’s company, especially a place where you’re there for 12 years and you’re so intricately intertwined, was the toughest decision I ever made. But we left and my wife and my six-month old at the time, kind of left our whole life in Philly and moved to Boston where we started Blue Flag Development. We started with four houses on Nantucket, as residential developers.

SSR: So that’s how you guys started. Okay. Real quick… Well, maybe we can get into it later, but that itch that you had, was it ever to go more into commercial or hospitality or was it just to do something different?

BG: No, absolutely. I always loved hospitality. I always loved, this is a weird one, I always loved casinos. I don’t know if it was that-

SSR: Because you lived outside of Atlantic City?

BG: I remember telling my parents I wanted to be a set designer, just weird stuff that kids don’t say, but it’s always been a fascination of mine. In fact, when I was living in Philadelphia, Starwood was opening a new hotel and I was working for my father and I heard that the creative director of W Hotels was going to be at this launch party for this hotel they were opening. And I was like, “I need to go, I need to meet this person. I need to get a job, somehow.” I went and I totally clammed up and I was terrified and I hid in the corner and I left that party totally defeated and I’m like, “you know what? It will never come true. This is what I do. I’m a home builder.” So it was always an absolute passion of mine. I just didn’t know how to get from point A to point B.

SSR: Got it. Okay. Do you bring a lot of that residential sensibility, do you think, into what you do now?

BG: Yeah, absolutely. I think that the way we kind of approach all our hotels, a lot of hotels use architectural lighting, they have a much more architect’s view on the design. We kind of look at it more of building a house, and I think that’s what people feel at home in our spaces. If you walk through a lot of our properties, you’ll notice most of our lighting is done with decorative fixtures, not recessed lights and LEDs. So, we approach everything from this residential eye and I think that’s what makes our properties feel different.

SSR: And you can feel it too, just even in the photographs. Okay, hold on one quick second. My TV, if I yell too loud, turns itself on by itself. I don’t know why. So, how did you two meet?

JB: Yeah, so we got introduced through a mutual connection. A woman who was in the hospitality industry. As Brad was saying, Blue Flag Development was building houses in residential and getting interested in some commercial. They had a hospitality type project they were looking at. And this was right for me as I was coming to the end of Yotel, we had this transaction upcoming, which would’ve been Starwood Capital coming in and buying a big chunk of it. We did what we wanted to do over the six years. I, for personal reasons, my family’s from here, my wife’s from here. We had kids, wanted to stay in Boston and took a pause and was like, “What am I going to do next?” And I think as I got introduced to Brad, it was pretty clear that I had some ideas on the hospitality side that he also thought were interesting and that we should kind of collab.

It just kind of, I think, serendipitously came together that way. We then looked at a bunch of stuff, which got us to looking at a couple different thesis. One is why we built this AutoCamp project, which we can talk more about. And two, what will become now Faraway Nantucket, is Robert’s Collection. We purchased both, basically, same time before the pandemic. Clearly, we think that the thesis on these Faraway and other hotels on these islands are really interesting. Fast-forward almost seven years or so, here we are running Blue Fag Capital together.

SSR: So wait, okay, let’s backtrack too. So you met, and I know people always talk and this is what I love talking to entrepreneurs about. When was it, “Okay, we’re going to take the leap”? Or what was that kind of reason that you’re like, I like Brad enough to leave my job and start this or I like Jason enough, I think this is going to work? I feel like a lot of people have ideas, they have them, they want to do something, but actually stepping out and doing it is a whole different conversation.

JB: Yeah, I’ll answer first from my perspective. I think Brad can answer from his. I think that’s part of the beauty of doing stuff together. Look, there’s been lots of iterations of what we’ve done. That’s part of being entrepreneurial, right? It’s hard. So you have to be able to pivot and kind of believe in yourself. I think as he was saying, we both have that entrepreneurial itch for better or for worse, sometimes for worse, sometimes hopefully for better. But I think ultimately, it’s very rare for me when I meet other people who just kind of want to put light back into the world and do really, really cool stuff. If you really want to build very authentic, very cool projects and you’re kind of like, “I can make more money elsewhere, it’s much easier. I don’t have personal guarantees up to go get this done. And if it all goes away, explain to my wife and kids why I wasted all of our time and our money, we lost our house.” You just don’t find people like that a lot.

Certainly, in my experience, you didn’t find it back then in Boston. In New York, maybe. In Chicago, in LA, in London. I think there’s more of those types of people, in the hospitality industry, that are looking to do that. So when I first met Brad, it was really this connection over just, “Hey, we really want to build really cool stuff and we really want live at the bleeding edge and just see if we can make it work.” And I think that for me, was something that happened over a couple of months of us just kind of getting to know each other. I was crashing in Brad’s office space on Newbury Street in Boston and we were testing a couple of these things out.

And then over the years we’ve restructured the company in a bunch of different ways to now end up where we are today with a real staff and all the capital we have under management, all the projects we have going on. But along the way, it’s all of that trusting that you’re going to be there with somebody who is going to live and die there together. Certainly, neither of us want to do this alone, and you really only learn that, like a relationship, over a long period of time going through really hard things. So from my perspective, that was… I’m grateful to the universe for aligning that and making that happen for us.

SSR: What was the name Blue Flag? Was that just something that you already had or does it mean something?

BG: Yeah, no Blue Flag, actually, well, it has several meanings. The first meaning is that the blue flag iris is a flower that’s indigenous in Nantucket. And the first project that we built, which had these four homes on it, had a blue flag iris growing out of it. There is a nautical flag called the Blue Peter, which is essentially a blue square with a white square in the middle, and that is the flag that the ship raises when it’s about to launch. So it just seemed like kind of a natural name to give a new company starting out, and it stuck.

SSR: I love that. Okay. All right. So what was the first hospitality project, was that AutoCamp?

JB: So we had two at the same time. The way that we approach the world, which is, I think again, nice that we have institutional backgrounds on this, is really thematically. We’re not just kind of picking projects and seeing what happens. And at the time, we were super interested in this idea for many different reasons, that being entrepreneurial in hotel space because, and this goes back to what I was saying before when I was looking for a job, now hotels have been institutionalized. There was a ton of real, both REIT money, private equity money and real banking money going into the hospitality ecosystem, as you know Stacy.

That was really looking at, of all of those classes, boutique hotels as a really interesting way to not just deliver a product that the guests wanted, and that was kind of pushing a segment forward in the industry. But also, had really good financial returns because traditionally you’re just going into bad areas, “even though they’re not bad”, but up and coming or reverberated areas of these cities that already are amazing cities, right? New York, Philly, all these places, and then you’re helping to kind push these neighborhoods back.

That had kind of been done, in our opinion. And if you looked at winning interesting deals, it was now just cost capital. The REITs will always win, at least back at that time, 2018-ish when we were looking at this. We really had to go outside and say, “Okay, where could we go to deliver great product but also great returns and be entrepreneurial?” I had always been trained, never go into a seasonal market, never do a small deal under $150 million, just as hard. You just don’t get paid as much. And we wanted to challenge that. So this was, again, pre-pandemic, early 2018 and we said, “Look, we have an opportunity to buy a hotel on Nantucket,” which obviously was Brad’s backyard, and we also had an opportunity to build this auto camp out in Cape Cod. Let’s do that in different ways and see which one works.

For a bunch of different reasons, we were more interested in the hotel on these kind of buried entry markets that really were constrained as an overall thesis than the glamping side, which we thought there were a bunch of interesting brands doing this already. We didn’t really see how we were going to add more to that. So ultimately, that led us down the path of not just acquiring Robert’s Collection, which will become the Faraway, but also starting to pretty quickly acquire other assets around that. And then surviving the pandemic, which was a fascinating time for us to be alive. We were pretty sure the whole company would just shut down.

BG: Not only surviving, we were opening Faraway during the pandemic. It got to the point where we couldn’t hire people to move the furniture, so we were literally carrying in furniture up three flights of stairs in these old historic buildings, just to get this thing open in time. It was a wild, wild time.

SSR: So how do you think you survived the pandemic? I know everyone has a different story, but I mean, you’re brand new, you’re starting out, you’re opening these two properties. What do you think made you come out on the other side?

BG: There was definitely a call where we all kind of looked at each other, we were like, “Are we going to be in business or not?” And we doubled down on it.

JB: Yeah. I mean, I think Stacy, look, there’s probably books we can write one day about all this, because there’s a lot of different factors that go into it. But I think ultimately, we had put ourselves in a place where we didn’t have real employees, it was just us. So our carry costs were as low as we could make them at a time that was really uncertain. We had projects in development that were still kind of creeping forward even though there were all these orders to stop stuff. And kudos to Brad and his development side of the business, of being able to figure out how to skirt around some of those gubernatorial orders and issues of who could be building and who couldn’t be building. So we looked at that combined with just, as Brad was saying, our real… We had a lot of conviction that this was just going to work. And why don’t we just kind of do it until someone tells us we literally can’t do it anymore.

BG: Ironically, we kind of hit the timing perfectly. What no one predicted was the pandemic was going to spawn all of these people wanting to go to these drive-to markets. We didn’t know that at the time, but when we opened, it was kind of the perfect timing for opening a hotel in Nantucket.

JB: And I think, Stacy, to Brad’s point of us building and opening into that environment, I think this is good for other people to know because it’s a story that we certainly didn’t know it was going to turn out well. When we opened that Faraway Hotel, we were all geared up to open the summer and literally the governor, at the time, of Massachusetts came in and shut down the ferries, shut down all travel and shut down all hotels. So we’re sitting on this hotel that we have spent tens of millions of dollars on, with private investors, all of whom know where we live and are way richer and more powerful than we ever will be, and they’re going to come find us for that money. And saying ourselves, “It’s over. It’s done. We have a loan from a bank on this thing, we’re not going to make it.” Right?

We were able, finally, towards the end of that summer to open for about six weeks. Basically, right into the second week of August through September we made positive net operating income, NOI, on that asset for just those six weeks being open than the entire year. And that was a light bulb moment because we were like, “Wow.” One, in addition, Urban Core Hotel, you can’t flex staffing and all the stuff we were doing there to that point. And two, this really is our thesis on fire now.

What I think also really gave us a lot of confidence is we have incredible investors, and we called a lot of them and their advice was, “Listen, you guys just don’t have the information to see the trends that are going to come in, the inflationary environment that’s going to come out of this. Double down on what you’re doing. Go raise private equity funds. Go faster, and don’t look at shiny pennies. There’ll be tons of shiny pennies that come in that aren’t in your thesis, but you could probably push them as close as you could and justify it. Just go do what you guys are focused on and we’ll be here with you. Even if it takes a couple of years to just buy these things and then they cash flow, that’s what we would like you guys to do.”

I think having that support system and having those folks that are giving us real time feedback and information, that helped us through that period of time that was really, really choppy, and has allowed us to be in a position that we are, I think, today. Because that was managing that risk profile with investors and partners that are going to just be there together through it. And that’s super, super important. I think us really focusing on that side of the business post pandemic, and that’s 100% of what we do today, is that private equity hospitality side. That has allowed us, I think, to make really good decisions and never get ourselves too over our skis in ways that may truly threaten our ability not to run Blue Flag Capital as a business or the individual properties as assets.

SSR: Also, AutoCamp must have had great returns too. I mean, as an outdoor hospitality venue, that probably did really well as well. No?

JB: Yeah, it did. I mean, they’ve got a great partner in this firm called Whitman-Peterson that I think they’ve grown with since then. I think the product that was delivered on Cape Cod was unlike anything. Absolutely. I mean, all these drive-to markets, I think, really experienced a big boom after the pandemic. And I think to an extent, depending on where you are in those drive-to locations, you’re still seeing the rewards of that going forward.

SSR: Yeah, it was crazy to watch. I mean, just the pent-up demand, everyone thought hospitality was dead and then it was like, “Oh no, just kidding. Here we go.” So talk to me about Faraway Hotels. So you got the first one open, more coming. What do you want to create for the brand and what’s your outlook for it?

JB: Sure. I can give you a little background on how he came to it and then Brad can take it away as that brand’s creative director on where we’re going with and what we’re thinking about. But I think like all great brands, it didn’t start as a brand. We acquired a bunch of old captain houses in what we thought of as the center of Nantucket. We wanted to figure out how to bring those all together in a really cohesive way. Everything we do, and this isn’t new, but all the brands that we really like and the folks that are our heroes in this world do this, has to be based on storytelling.

So we sat down and started to come up with a real story that Brad can tell you more about, even before we picked the name or what it was. That basically translated into an opportunity for us to buy something that… As a kid, I grew up going to Martha’s Vineyard in addition to Nantucket, and had been staring at this old Kelly House complex. Very similar to a bunch of old captain buildings, a lot of stuff in need of desperate repair and no cohesive, really, story to what it was, even though it was kind of a big chunk of the town of Edgartown. And we had the opportunity, because of COVID, to acquire that asset.

When we bought it, we sat down and said, “Listen, we think we can translate this story we’ve created for Faraway.” It’s a very similar type of feel, this urban core, if you will, in an island. And it just seemed like the right thing to do. We weren’t thinking about, “Should we go build this and scale,” is because our thesis is not built around that. Our thesis is around building, just like a Kimpton, lots of different types of hotels in these markets that we really like and delivering great two-star product, great three-star product, great four-star product. And it’s evolved, I think, into something that is exciting for us. So that’s kind of the groundwork of where that came from.

Brad, I think, can tell you more about the origin story of Faraway and what we’re thinking about going forward. Again, not just for Faraway, but we’ve got a lot of branded hotels that we’re pretty excited about, and we really like leaning into the building brands of one as well.

BG: Look, Faraway is all about drama, and that’s probably not surprising based on what we’ve been talking about as hospitality, as theater. We go as far as to tell our staff, especially in these seasonal markets, you have 60 days, we’re putting on a Broadway show for 60 days, and every single day, every single night we need to nail it. After that, you can take off the rest of the year and take a break, but for those 60 days, this Broadway show has to be perfect. So before we open a Faraway, we actually write what we call the script. And it’s a real story. And I think storytelling is kind of an overused term in hospitality. I kind of hate saying it, to be honest, I want to come up with a new word for it. But we write a real story, like Faraway Nantucket.

The story was we imagine up this girl who grew up in Nantucket in the 1700s into the 1800s, and when she turned 17 or 18, her and eight of her closest friends stole a ship and they went out and it was supposed to be like a month-long voyage and instead it lasted 15 years. 15 years later, they returned and they had came back from traveling the world with art and recipes and spices and all these things that Nantucket’s never seen before. And Faraway became kind of this center for all that. In Martha’s Vineyard we did another story. And as we developed Faraway into this idea of there’s always going to be a heroine, and then we developed the story around the heroine, which that informs the design, which informs the F&B, which informs the guest experience, which informs the scent in the lobby. So it’s real storytelling. It’s not just a term we throw around. There actually is a real story grounded in each one of these properties. And I think that’s what makes Faraway kind of different.

The properties themselves lean into maximalism. There’s definitely a lot of pattern on pattern, a lot of use of colors. It is about escapism, for sure. I think that one of the big things that we did in Nantucket that was really cool with the design, is we had this courtyard. So the old Robert’s property was surrounded by a courtyard, four buildings and it was full of hydrangeas and some picnic tables and some benches. We looked at this courtyard and we’re like, “Man, this is so underused, the public doesn’t even know this is here.” We turned that into Sister Ship. And that’s our restaurant that sits at kind of the heartbeat of our Faraway Nantucket property.

Part of what we did there, is we built these ivy walls, these walls of ivy, and we created outdoor hallways with these ivy walls. So you can check-in in the lobby in one building and go through kind of hallways outside and not have to interact with guests eating at Sister Ship. So, having these kind of moments of privacy when you want them and moments of being involved in the activity when you want them. So we’ve taken that and have applied that to all our properties now.

SSR: Well, and going back, too, what you said about the residential approach, it feels dramatic and like you said, maximalism and texture and pattern and photographs and everything layered, but it also feels welcoming in a home. So you guys found that-

BG: It’s kind of like going to your most stylish friend’s house and you’re like, “Wow, this is what I want my house to be” It’s amazing, we get calls and emails all the time of people asking for fabrics and paint colors and sort of replicate it at home.

SSR: Sure, they do. The second one was Martha’s Vineyard, right?

BG: Yep. The second property was Faraway Martha’s Vineyard, and it was the same sort of property. It was one main building with several captain’s houses around it. Now, that property was bigger and we were able to remaster plan that property. When we purchased it, the pool was in a different spot. We actually did this little pop-up restaurant. We didn’t know what to do with this outdoor bar and we’re like, “Why don’t we do a pop-up?” So we sat around and came up with a name and called it The Pelican Club, which is really silly because there hasn’t been a Pelican in Martha’s Vineyard for like 35 years. We hired a sushi chef and brought in $20,000 of palm trees and opened up Pelican Club, and it was like a huge smash hit for Martha’s Vineyard. People loved it.

So when we went to master plan, the real kind of iteration of the Faraway there, we purposely built Pelican Club. And now we have this beautiful outdoor restaurant that was built and designed for Pelican Club. We moved the pool kind of into the center of the property and created this absolutely gorgeous pool and gym area that all the buildings are anchored around. Again, we used storytelling there. There we came up with this heroine who grew up in Martha’s Vineyard, and the whole idea there is leaning into the botanicals of Martha’s Vineyard. She grew up with these gardens and she was making elixirs and having these big outlandish parties with her friends. Now, those buildings were built… They didn’t have the historical context of Nantucket and we didn’t want to apply kind of fake history to them. So we leaned more into the mid-century approach, and we brought in this idea of James Taylor and Carly Simon and weave that in with the record players in all the rooms. So again, it’s through the same storytelling lens, but it’s a much different story than what is happening in Nantucket.

JB: And I think just to add to that, Stacy, because this is where the fun pieces come in for us. We’re super interested in experiences like I think a lot of people are, and that’s also an overused term. We’re telling people about why we’re doing the things we’re doing. One of the coolest moments when we really reopened, was Carly Simon came through with her daughter, and the album that we had put in with James Taylor into all the rooms, because as Brad was saying, all of them have record players. Her daughter’s literally like, tell her she’s pregnant with this girl. They both came in and signed a record for us and left it at the front desk, and were so grateful that we were reintroducing people to her music.

And we were telling a story about a time that was really happy, I think, in that, not just for her, but for the island. Of what it was and what it is. There are lots of pieces in Vineyard, unlike Nantucket, because it’s just bigger in size, has a lot of places of that island you’ll never get to if you’re only there for a couple of days, and you just choose either up-island or Chilmark or Aquinnah, or you’re in Edgartown, you’re in OB. So we’re trying to bring elements, as Brad’s saying, through that design and that storytelling piece. Those are the layers that we want people to unpeel like an onion.

A real surprise is like, we think, in places where it’s really unbelievably hard to build this stuff. You can’t just go and build a purpose-built hotel in Edgartown, and it’s going to be whatever you feel like. You’ve got to take a gigantic jigsaw puzzle, put that together, hope that works financially, and deliver something that the people you’re including in the story actually don’t come and hate you for. But they’re like, “This is actually really cool. Thank you.” It doesn’t always happen, but that’s the goal.

I think even for the other brands of one, as we were talking a little bit about, Beachside is a good example in Nantucket that’s coming, Brad and I, we also kind of build for ourselves and the people on our team, and I think just like Andre Blas, one of our heroes did for himself, that’s been a real key to our success because we are the consumer. So trying to tell those stories and walk through those guest experiences and walk through what the layering and the texture should be, really, we’re looking at that truly through a residential lens as well. Because we always want these places to, as Brad was saying, kind of be these estates that you get welcomed to, and as home away from home.

BG: More specific about Beachside, Jason and I both have young kids, and what we found is these family resorts in these seasonal markets, they do a great job, but they’re not always necessarily a place that you want to hang out or your kids want to hang out. They-

SSR: One or the other.

BG: Yeah, they’re one or the other. So what we set out to do with Beachside was create a place where your kids would have an absolute blast and you could also have an absolute blast. There we were really inspired by this common notion of growing up, the summertime is your first taste of independence. It’s the first time your parents let you ride out on the bike and go out into the neighborhood by yourself. And we’re like, “Man, what if there was a place where the kids could be totally independent and they could roam the property and be safe, and you knew they would be safe and you could sit by the pool or at the bar and totally enjoy your vacation as well.”

Totally unprompted, and this is the honest to God truth, we all were there this past fall and my nine-year-old daughter came up to me afterwards and she’s like, “Dad, that place is so fun. We can just roam around and do whatever we want.” And we’re like, “Man, it worked. That’s so great.” So it’s a really cool property. But again, to Jason’s point, we kind of built that for our own psyche.

SSR: Yeah, well you have to, right? I do think there is something, I mean, it’s a whole long other story, but about re-looking at family travel and re-looking at what people need today, right? Because it’s very different than what it was 5 years ago than 10 years ago. And I think it constantly evolves as people have less or more time, and time is now luxury more than anything. So, what else are you working on? What’s next for Blue Flag? What other cool concepts can we look out for?

JB: Oh, man, so we, like all good arbitrators, can’t help ourselves with piling it on.

SSR: One thing you got to do.

JB: We’re definitely piling it on. So we’ve got a lot of stuff going on right now. So on Nantucket, we own a handful of other hotels. We own a hotel called Brass Lantern, which is an amazing little B&B downtown that we’re just kind of reopening for the season right now, actually. Up the street from Faraway, we purchased an old inn that we turned into a hotel called Blue Iris that is an amazing little 12 room hotel, super luxury. Really, really fantastic design. And those hotels are up and running. We own a hotel called Life House Nantucket that we built back at the same time as Robert’s that’s still open and operating for the summer. We have some other pieces of the puzzle that we’re always adding on. You can probably infer that with these old 1700s, 1800s buildings, there’s always something to do, always something to fix. You can literally spend all your time doing that. But there’s some pretty interesting stuff that we are working on looking at there.

On the Vineyard, same thing. There’s some entitlement pieces that we’re working on there that we’re pretty excited about as we work through them. And then we’ve expanded to other markets. So over the last year and a half, two years, we expanded to Long Island. We purchased a property called the Greenporter in Greenport, which we think is a really cool town, with a lot of stuff going for it. And we’re in the process right now of trying to re-entitle that into a brand of one that will, I think, really speak to what Greenport is.

We’re in Sag Harbor where we purchased last summer, something called Barron’s Cove, which is a fantastic hotel right in the water. So we’re in the middle of re-imagining that right now. And then we purchased adjacent properties in Montauk that we are also in the process of final entitlements and re-imagining those. It’s in North Montauk, sort of on the way to Gossman’s, which just got repurchased, and there’s a lot of exciting stuff happening there. Gurney’s Star Island proper is now running, very close to our little campus up there. So those are really exciting for us.

And then about a year ago, a little over, we purchased two assets in the Mountain West for the first time. So in Jackson Hole we purchased a hotel called the Snake River Lodge. And adjacent to that, an amazing old Bavarian lodge called the Alpenhof. Those basically sit adjacent to each other on the mountain next to the Four Seasons, just kind of ski in, ski out to the main gondola there in building Bridger. We are also in the process of a massive redevelopment of both of those. All consistent with our overarching ideas, which is there are these really scarce, super high-end markets that are just on kind of generational turns of some of these assets that need a lot of love, and we want to be the ones to steward them into that next phase and provide a product on the hotel side, the F&B side, the spa side, the retail side, you fill in the blank, on what we think, personally, is kind of missing from our experience in those markets.

We’re lucky enough to have dedicated capital to be able to move quickly on those and amazing creative design team that can help us think through those stories each time. So it’s a lot. But again, I think for us, these markets all kind of speak in a similar language to a similar type of clientele. And we’re learning every time we do it, and what’s a better job than us being able to go and have to fly to Jackson Hole and Sag Harbor and Nantucket Martha’s Vineyard? I think we’re okay.

SSR: It sounds terrible. Very well. All right, well, just two quick questions because I know we’re almost out of time. So collaborators, I know you work with various people, design collaborators, obviously, to make these a reality. What do you look for? How do you choose who to work with? Question?

BG: A lot of times I fashion ourselves as matchmakers, because not… Look, we have the best partners in the world. We work with amazing design teams, some of the best in the country, and not every one of them is right for every job. So we kind of let the property speak to us first, and then we kind of pull from our design teams that we’ve worked with in the past and we create that match. So far we’ve been pretty successful in matching the right partners with the right project.

SSR: Awesome. And then looking back, seven years now, is that what you said? Seven or so years? Is there something you wish you’d known then that now, or was it just diving in and figuring this out organically the best part?

JB: The level of personal guarantees Brad and I had to take on. I think if we would’ve slept a lot better, Stacy, if we just had the expectation, like, you’re going to have to do it, just what I wanted to know.

SSR: I love it. We always end the podcast with the question that is the podcast, and you can each answer individually. So what has been your greatest lesson or lessons learned along the way, not just with Blue Flag Capital, but with your entire career?

BG: I can start that one. I think my biggest lesson was, and I think it’s important for people to know that it’s kind of never too late to gain the confidence in really what you want to be. I didn’t start Blue Flag till age 37, 38, which is arguably in a lot of people’s minds, way too late to start a company, and it’s not at all. You just need the confidence to actually get out and do it.

SSR: Yeah. Jason?

JB: Yeah, I think there’s this phrase that I got taught really early in my career that I love, which is, “Kill your ego before it kills you.” I think a lot of my mistakes or things that I wish I hadn’t done were driven by whatever ego thing was happening for me at the time. If I had just listened to wanting to make the world a little bit better and build really amazing stuff and put some light in the world with incredible partners like Brad, I think this would’ve been a much easier journey. And I think that’s true today too. For me personally, and I know it flows through to Blue Flag in general. We’re really trying to do things in a way that is right for ourselves and the people around us and the partners and the collaborators we have, and the communities we’re in and the guests we’re serving, ultimately.

I’ve found a lot of times in our industry, it’s not really thought of that way. A lot of it now is what makes you the best return in the shortest amount of time. And that’s just something that doesn’t really align with Brad and our ethos. I wish I understood that that’s the balance of where the industry was before I got into it. But also glad for every single turn of the path or we wouldn’t be here.

SSR: Right. Got you to where you are today. Well, thank you so much for taking the time to share your story today. It was really awesome to hear and can’t wait to see the next brands of one that you all create. So thank you, thank you.

BG: Thank you, Stacy. This was fun.

JB: Thanks, Stacy.