Episode #553: Merging Hospitality and Real Estate: JaJa Jackson's Blueprint for Flexible Living Success

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I am super excited to announce that we now have a formal

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partnership with the Prospect Wizard. And when I say

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wizard, I mean wizard. Obviously you have a website.

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This allows you to convert your website traffic visitors

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it's. Not AI but it allows a visitor to call, text or leave a

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voicemail immediately. Goes to you, your sales team or anyone else in the

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club instantly. MIT shows a study that if you contact

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the league within 10 minutes, chance of them converting goes up nine

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times that of the average. We got the Atlanta clubs

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on it. Vita Fitness, Gold's Gym, Mountainside

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City Fitness, Philly, College Park. Become one

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of the next Halo companies to deploy the Wizard.

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It's easy to use. Go to the prospectwizard.com

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get a free 30 day trial. Talk to my boy Dave Gallen. He will get

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you all set up. And let the leads flow based on the

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Wizard. Go get him.

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This is Pete Moore on Halo Talks nyc. I have the pleasure of bringing a

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friend of mine from 27 years ago when we entered

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Harvard Business school. Class of 1999,

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Jaja Jackson. We reconnected at our

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alumni event back in Boston several months ago and

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he's been one of the leaders on the investment side in the

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hospitality sector. So, zsa, good to have you on the

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show. It's a pleasure to be here, Pete. Great to see you,

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Captain Halo. Thank you, thank you. Yeah. H A L O.

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So we're trying to replace the word wellness with health, active lifestyle,

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outdoors, and my desire to become

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a superhero at some point and get that award and take over Batman and

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Spider Man's role in leading this industry is,

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is where I'm headed. So I got my hat of EBITDA on. I know you've

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created a lot of EBITDA over the years on the real estate side.

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So can you give our listeners a little bit of background? Maybe talk about being

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at Airbnb on the ground floor and now at Iconics Capital?

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Yeah, sure, sure. So Airbnb, back in

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2014, I joined the the

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strategy and real estate function. There we were. It was

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a very interesting time in the world where Airbnb had

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moved from its startup phase into its

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mainstream phase. It was still a private company

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and Airbnb was trying to figure out how it could

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participate in the world of class A, multifamily

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and just apartments in general. And having done

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14, 15 years as a real estate developer creating

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homes, safe homes and communities for people in some of the world's

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best cities, I was able to partner With Chip Conley,

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who is a hospitality guru, to figure

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out how Airbnb and the multifamily world could work

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together. That then turned into an introduction to

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iconic capital, where I'm on the team today.

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And we created a platform that merges the very best of

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Airbnb with the very best of multifamily living.

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And that's what we do today. So when you took the leap

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and worked for Airbnb, which now obviously looks like a no brainer

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decision for you, was there an entrepreneurial cord that, that

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struck at the time for you? Oh,

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100%. Prior to

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entry into the Airbnb world, I had created a startup

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coming out of Harvard business school in 99. With my partner Jason

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Palmer, we created a platform for colleges and universities.

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So I had a taste of what it meant to go from zero to one,

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work with venture capital, put a board together, build a team. We did all those

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things, but prior to that, I had been working with really

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institutional blue chips McKinsey & Co.

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Emerald fund. So getting into the entrepreneurial

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part of a very mature business like multi family

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real estate or residential real estate was kind of a perfect

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combination of experiences I had had and very

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mature business businesses and then working with entrepreneurs

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and what it takes to be lightning quick, figure things out, be creative

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and invent. So it was a very special time.

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And what you accomplished through that, obviously you

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had like, permitting, you had, you know, local

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communities that were kind of fighting against, like, hey, I don't want this. I don't

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want my apartment complex turning into like a hotel at the

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same time. Know, the way I looked at it is,

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you know, we're living in the United States. You have property rights. You should

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be able to, you know, take that property and do pretty much

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what you want with it in order to generate ancillary income.

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So what are some of the things that were like key takeaways or

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learnings or like milestones? You're able to say, like, here's the problem

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and here's the solution that we figured out strategically how to make this work

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for everybody, all the stakeholders involved, 100%.

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So let's break this response into two parts. The first part

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is during the Airbnb years, that was about five years of,

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of time where we began with some of the

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largest multifamily REITs in America.

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EQR, Avalon Bay, others like that. And we

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really just sat down, I went into the offices and said,

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hey, I think you've got an opportunity to make your residents

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happier and to make more money. If you will

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embrace this hospitality concept called home

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sharing. And mostly what I heard

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back was, we don't want to do that. And Here are the

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12 reasons why. Most of them were fear driven. You know, many

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of the people who were leading apartment

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providers at that time had never actually experienced Airbnb.

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Today, millions, hundreds of millions of people have,

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but at that time, they had not. And, and of course,

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when you, when you're running a 300 unit multifamily building,

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it's a precious commodity. You've got to make sure that the hallways are always

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right for the resident. You've got to make sure the asset is maintained. You got

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to make sure things don't break. And if you have someone who you don't know

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coming in for a night or three nights or a week or a month, that's,

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that's a no go. So after canvassing all these

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different blockers, what we were able to do is figure out

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ways to respond to the safety issues and the trust issues.

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That's really what it takes whenever you're merging two platforms,

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hospitality plus anything, you're talking about people

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engaged with product, and it all has to start with trust. So we

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built software and policies at Airbnb that would

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allow the multifamily businesses, the blue chip class A

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players, to slowly walk into the

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hospitality space called Friendly Buildings Program back in

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the day has been taken over by some great people, like Jesse Stein, who

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leads that business now at Airbnb, and Nate Placharczyk and

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others who were all instrumental in creating that. And then

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the second part of the response is because that was moving

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in the right direction. Iconic Capital, who was an early

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investor in Airbnb, saw an opportunity to use that investment

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thesis that multifamily could outperform

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if it was willing to have a hospitality element. And we

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put together over $800 million. They asked me to come over

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to Iconic and work with Jeff Felder, where we launched this

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platform about six years ago. It's interesting because a lot of

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people, we run this Halo academy. We talk about business models

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and we talk about almost like to creat of a new asset

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class or like taking an asset class and basically like

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optimizing or like changing some of the levers of it, you

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know, to create outsized returns, you know, off of the risk return

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line, diagonal line. So, you know, what, what's

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the magnitude, you know, either percentage wise or,

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you know, return wise, to say, hey, we took an asset class that had like

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a 10 or 12% return, you know, capital appreciation

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adjusted and we were able to basically drive more revenue through it.

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And that revenue was not a blip. That revenue is

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now like embedded in the asset class. Yes, yes. All right. I

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love how you describe that because that's the way we do it. I think that's

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the right way to think about it. So for this asset class, which we will

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call flexible living, for the. What we call it

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flexible living, it's a multifamily baseline

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product that would produce. Let's just call it, let's call the

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baseline. Your net income is

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zero. Okay. Let's just call it zero. Because I want you to see the magnitude

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of the change when you use the Central

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S E N T R A L. That's the name of the platform, the

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manager that we created to do this. When you employ Central

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to manage your class A property, you, you will increase

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your net operating income by between 15

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and 40%. Wow. Which is unheard

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of in multifamily. Without doing either a

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massive renovation or a brand new

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construction, things that require a tremendous amount of risk. In

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this case, all you're doing is changing the operator and in some

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cases investing in furnishings to

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extend the value and the operation

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of your amenities in common spaces.

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So that translates into an unlevered yield

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increase of, you know, that can be between 1 and 5 or

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6%. And it's tremendous.

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This is something. Now We've seen over two or three years of consecutive

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operation in our own portfolio of 4,000 plus

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Class A multifamily units across the United States. And now

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we've seen it with 10 or 12 other institutional owners who are

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using Central today.

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This is Pete Moore. I want to let you in on a little secret. There's

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this company called Promotion Vault. And what they do is they give out rewards

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from retailers that allow you to incentivize your

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members without having to do zero down and one month free

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or giving away shakes or giving away T shirts. What you want to

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do is build a rewards program that lasts, that people value

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and that doesn't discount your own products and services. So here's the

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deal. There's something called Rewards Vault. The Rewards Vault is going

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to allow a member to set up their own profile. They are

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going to answer questions, you are going to get those answers. You're going to be

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able to target those members and you're going to reward them inside your

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club, inside your spa, and outside of the club and outside

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of the spa to get them to become loyal, to get them to pay

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their monthly dues and to be rewarded properly

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for the actions A lot of companies are cutting back on rewards. You shouldn't

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be promotion vault. Your answer, Trust me, this is real.

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If I take a look at iconic, just to give people an

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understanding of now, you basically have created a competitive

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advantage in as a buyer, right? So now you're

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not just like it. I'm not just a financial buyer. I actually

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became a strategic buyer because I've got a technology

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and I've got a system in place that I can potentially pay more. I

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probably don't need to pay a significant amount of dollars more,

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but I might have to pay a little bit more on the, on the entry

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point. However, my exit is already now embedded in

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an appreciation like on day one, because I know what I'm deploying. Is that

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a fair summary? I like exactly how you summarize it.

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However, I would just adjust this. When you buy that

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multifamily asset, that class A

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property, and you decide you're going to operate it as flexible living,

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you're going to change the asset class from core multifamily

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to flexible. You're going to purchase that

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asset at a traditional multifamily cap rate, right?

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You're not going to pay a premium at all. And then you're going to

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deploy the right manager to operate it in a different way.

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And there you're not going to pay a higher price either unless

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you start to get that extra revenue and that extra bottom line.

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So it's an all upside proposition if you do it properly. We

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underwrite everything just like multifamily the way we always

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have. All of it is in the lift. So, so let's take

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like the way you think and the things that you've actually done successfully,

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such as deployed this. And I know you're, you're, you're an active

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lifestyle guy. You, you, you're, you know, at the end of the day, you probably

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still think you're, you're a college athlete because you never, you never not right?

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I'm going to, I'm going to the gym right after this. All right,

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awesome. So we won't hold you up too long, but from a standpoint of like

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looking at the, the health club industry, which you've been

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a participant in and an avid user of,

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what are some of the things that, that you walk into your club right now

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and you're like, I can't believe like they don't do this or like,

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why, why is the health club industry not the

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equivalent of like the four seasons? From a standpoint of like, how does

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I used to go to Summer camp, right after the first week. You know 600

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kids names, right? Every kid, you know their name somehow.

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And then I go into the health club and they were looking at their phone

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when they check you in. They don't know anything about

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what I'm, what I'm looking to achieve. They don't know if I've got an event

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coming up that I'm training for. They're not using really you as a, it's not

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a relationship. It's like a relationship with your credit card or your bank account. What

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is some of like the low hanging fruit that if I said hey Zaja, do

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me a favor, like you've accomplished your mission over there. Like come come a pine

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on the halo sector. Like what do you see personally that you're like

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guys, you got to think about this differently. Yeah, yeah. Well

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this is, this is, I'm happy to respond to that. And I'm going to pull

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some of the best of from the multifamily

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central operating model. Right. Because we had

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to solve the same problem in multifamily. It was a, it's a

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sleepy industry that's done very, very well with, with

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sometimes without much effort and gotten very happy in

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some, some old ways. The innovation was around

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delivering a higher quality experience to the resident.

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In this case in your question, Pete, we're talking about when I walk into

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a health club or my gym or fitness facility and

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the first thing we do now inside of our multifamily

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buildings is we make sure that the person who is working that front

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desk, the first point of contact with the customer is an

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employee of the business, not outsourced

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third party. And this is important. That

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person owns a little bit of

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central, they own part of the property management company because

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we need everybody to think like an owner, okay.

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From day one and from point one in the customer

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relationship. So this means instead of the phone, when they're looking

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down at the phone, they're looking for the customer before they even walk in the

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door. We make sure that the people in most cases are standing

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up so that there's engagement at

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the eye to eye level. There's some physical contact and a

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connection between these two individuals or the groups.

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We have people wearing the appropriate outfits that set the

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tone for what's going to happen next and what that person wants to do.

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And then perhaps I was going to say most importantly but

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equally important is the technology that's backing up this human

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being. Okay. So our experience teams

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have software that helps them to know every person who's going to walk in the

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door if they're a resident or a guest who is expected at the property.

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Gotcha. And this is how they're able to then know what's the mission

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of the particular day, Know a little bit about that person. If it's

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possible and if all those things aren't true, just simply create a relationship

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right there on the spot. Awesome. So how important

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is the fitness or workout recovery

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amenities at the properties you guys have

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flexibilized? Yeah. Yeah, that's a new word.

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Yeah, I make up all the time, bro. I'm just going to keep going. Yes.

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Yeah. Remix. You know, when. When Central is

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the operator and Central will

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select multifamily buildings that have

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really good fitness facilities. Okay. And when I say that, I'm

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talking about the physical space, the equipment that is there

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a range of things from sauna or to

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cold plunge to all the necessary upright equipment, freeways.

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Okay. So that's kind of your baseline. That's your standard.

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The thing that we found is important to do is to make sure

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that the community and this could be either you're visiting

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your membership community or your residents. In our case at Central,

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we're talking about the residents that they have a platform to meet

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each other before they're working out, to join

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groups of people who are interested in the same type of fitness culture

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and to coordinate meetups with

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professionals. Now the professionals, this is really interesting.

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Who are your trainers in your club or your ambassadors is really

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important in a central.

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They have recruited former professional athletes in a lot of

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cases and people with the necessary certifications to

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live in the building. Oh, wow. Okay. Now

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what this does is it creates an opportunity for those

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relationships to be less transactional and much more

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of a culture of engagement.

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Fitness, health and wellness. Not just a transaction

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that's, you know, X number of push ups, pull ups and sprints. We're

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talking about healthy psychology,

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building friendships, having experiences that transition

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from the gym onto the patio into the.

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Into the morning's breakfast or some other type of food

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event. So we're integrating health and wellness, the physical part,

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into the psychological part. Because we all know now science is telling

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us that loneliness is a stressor on the body that makes

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people not okay. And so we need to address both the physical and the

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psychological elements. The culture of wellness needs to always

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think about that. Yeah. So about eight years ago, I was at the Clinton

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Health matters conference and I paid to speak there.

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And the thing that struck me is

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Clinton was doing a panel with the top four health insurance

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CEOs and he goes to this guy, Bruce Broussard, who is the CEO of

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Humana, and he says, what's the biggest issue in the healthcare industry right now?

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And the guy took a pause and he says, loneliness is the biggest issue. This

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was eight years ago. So I, like, grabbed onto that,

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and it would basically change the mission statement of

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Integrity Square to, like, I'm trying to connect capital with companies

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to solve loneliness, obesity, and diabetes. Like, that's what I'm trying to do.

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And now loneliness is kind of like top of mind with everyone. So

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I'm usually on the front end of something. It takes like eight years for me

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to, like, get to, like, mainstream. But the fact that you mentioned that is

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such a huge title wave change in

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the way an executive like yourself would say, like, hey, I'm

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like, redeveloping this property. You know, I got xyz. But it's like,

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embedded in the why of what we're doing and the how of

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how we execute it. Yes. And your point about professional

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athletes and for our audience here, I want people to, like, just

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pause and take note. Like, my favorite thing to do is catch

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footballs. Okay. Like, I wasn't allowed to play tackle football

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as a. As a goalie in soccer. My mom wanted to preserve my brain,

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which now I guess I want to thank her. At time, I was pissed.

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Yeah. And I. I mean, I still got four years of eligibility left, so I

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mean, I could become tight end if I invest in school someday.

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But the point is, you're talking about having

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talent at the location, and that talent needs

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to be proliferated to everyone. So if my health club

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that I belong to hires a personal trainer who used to be a

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wide receiver at Rutgers, I need to know that. Right. I

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need to know if there's a quarterback that is part of your staff. So when

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I want to throw a football, I could hit that guy up, and that becomes

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a personal training session to me. So.

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So the focus on talent, I think, is like a really big takeaway of, you

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know, what we're talking about here. Yeah. As well. And if it's okay to interrupt,

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I'll add, of course, an element of that is inspiration.

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You know, when you. When you see a professional athlete and they've had a

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career of any type at that level, there's a certain amount

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of inspiration that comes along with that person's presence

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and experience. And that can be what

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gets people off the couch. You know, just to use the metaphor, get me off

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the couch, I'm curious about this person. Make that person accessible

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Non threatening. Take some video of that person, talk about, see that this

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is a real human being who you can engage with and is going to make

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your life more interesting. That's how you can connect with that community

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and get them into the club. You got to get them off the couch.

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This is Pete Moore. Here's the last tip for you of the podcast.

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We are partnered up with a company called

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00:21:54,430 --> 00:21:58,030
higher.hiredose.com they are the

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00:21:58,030 --> 00:22:01,830
leader in workout recovery products, infrared

355
00:22:01,830 --> 00:22:05,090
technology, LED light masks, neck

356
00:22:05,090 --> 00:22:08,250
enhancers and other products such as

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00:22:08,250 --> 00:22:11,890
PEMF mats and sauna blankets. If you have

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00:22:11,890 --> 00:22:15,170
not gotten on the workout recovery train yet,

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00:22:15,490 --> 00:22:19,290
your time and your stop is now. You got to get these products

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00:22:19,290 --> 00:22:22,690
in there before these workout recovery and spas end up

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saturating your market. Having your members walk out of the club and going

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00:22:26,410 --> 00:22:29,890
into one of their locations for 200 bucks per month

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00:22:30,310 --> 00:22:33,710
where they're paying 39 to you. Let's become an expert in

364
00:22:33,710 --> 00:22:37,510
workout recovery. If we are already an authority in workouts,

365
00:22:37,830 --> 00:22:41,510
higher dose, check it out. There's a wholesale code

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00:22:41,750 --> 00:22:45,470
and we look forward to helping you augment your products

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00:22:45,470 --> 00:22:48,950
and services to meet the demands of your members. And

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00:22:48,950 --> 00:22:52,750
hey, let's get people happy, healthy and sweating. And

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00:22:52,750 --> 00:22:55,350
the recovery should be just as good as the workout.

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Yeah. One of the things we were when I was kind of market framing

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the health club industry years ago was like

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Planet Fitness. That's a return on marketing and parking. Right. That's basically I want

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to get people in, I want to run them through here as quickly as possible

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like a Southwest airline. If I build a lifetime, I'm building like a trophy

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asset and if you can afford to pay, you come in. And I used to

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tell these middle market clubs like if you want to be relevant and

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you want to succeed, you got to play this game on return on

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relationships and results. So it's like R O R R is the way.

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So the way your, your whole. It's not just you like kind of

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ingraining this in the people that are around you. But how do

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big companies that you've been involved in actually either hire

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the people that get it or how do you educate them on becoming

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knowledgeable about like this is like in your DNA now or

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00:23:51,560 --> 00:23:55,280
I'm going to put it in your DNA. Yeah, yeah. Well, you know

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00:23:55,280 --> 00:23:58,960
there, there are two ways like you just mentioned. You can recruit it

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in, identify the talent and bring it in or you can

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grow the talent internally from raw

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material. The raw material route. Let's talk about that. First,

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if you can get intelligent People to understand your

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business and be willing to make a commitment

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to, to join the team. You know, and it's interesting, a lot of times

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when I was doing the interviewing, I would ask a person if I, if things

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had gone well in the interview process, can you give me a two year

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commitment to this, to this work? Love that. And if they, if they

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can't say that or they're hesitant, that's not my person.

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And here's why. Because if I'm bringing you in,

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I need to be able to invest in you and put, and

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build out the skill set necessary to create the culture that has

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to exist in my business to be successful. So that's on the

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green shoot side. Or if you're, if you're building it, you can get intelligent

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00:24:55,290 --> 00:24:58,850
people. They've got to have personality, they've got to understand your business, they've got to

402
00:24:58,850 --> 00:25:02,530
have charisma. But they also need to be committed so that I can train

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00:25:02,530 --> 00:25:06,370
them or that the organization can train them. Then there's the other, the

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00:25:06,370 --> 00:25:09,850
other path is that you identify people who already have these skills.

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And in that road, the mistake I see people make is they're not willing to

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pay for the people who are fully developed in the

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skill set you need. You've got to invest just like you invested in your

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00:25:21,610 --> 00:25:25,450
business to get it going. You've got to invest in a person to

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bring them onto the team. Long term pay for a high quality

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00:25:29,290 --> 00:25:32,690
individual. I think it pays off. That return on relationship

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00:25:32,690 --> 00:25:35,970
concept you just mentioned starts with your employee

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and then you can have your return on relationship with your membership or

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your residence or your guest in your, in your, in your hotel or your

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apartment building. Yeah. So I gave you a copy of the book when I saw

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00:25:47,430 --> 00:25:51,190
you back in Boston. Right. So like chapter one

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is, you know, pay for talent. So I love that you said

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that. And the second thing is I always tell people like, go

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and hire someone. Ask them that question, like, I'm hiring you for this

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season. Like, can you commit to me for like this,

420
00:26:05,750 --> 00:26:09,550
this 2025 football season? Right. So I want

421
00:26:09,550 --> 00:26:12,550
to hire you. I don't want to be people like hire people like all the

422
00:26:12,550 --> 00:26:16,350
time. It's like, I want to hire January 1st and be like, you're in or

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00:26:16,350 --> 00:26:19,790
you're out, right? You're in. And then I'm not hiring anybody else.

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And if somebody lose, somebody leaves. It's like somebody going on the injured reserve

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00:26:23,750 --> 00:26:27,510
list, right. And like it's the next man up. So I

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00:26:27,510 --> 00:26:30,710
feel like that's, that's like a way to think about it. Well, look, we got

427
00:26:30,710 --> 00:26:33,950
to get you to the gym. We can probably talk for hours. Let's get this

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00:26:33,950 --> 00:26:37,110
podcast ripped and get it out into the market. And I want everyone here to

429
00:26:37,110 --> 00:26:40,270
think, like, zaza things and the way you can, like,

430
00:26:40,270 --> 00:26:44,030
reframe what you're doing inside the four walls of your club

431
00:26:44,510 --> 00:26:47,950
and also just change the culture by hiring athletes

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00:26:48,350 --> 00:26:52,150
and people that have already shown up. Know what it takes to win, know the

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dedication, and actually, like, be present, you know, and

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build those relationships. I love that. I want to add a couple other things

435
00:27:00,370 --> 00:27:03,810
for this community of people. Consider partnering with

436
00:27:03,810 --> 00:27:07,090
apartment owners. Okay. Apartment owners have

437
00:27:07,090 --> 00:27:10,530
hundreds, sometimes thousands of individuals inside of

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00:27:10,690 --> 00:27:14,530
buildings that already exist with great fitness

439
00:27:14,610 --> 00:27:17,730
centers and wellness centers built into the product.

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00:27:18,210 --> 00:27:21,890
But we they don't know how to operate it, and they may not have

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00:27:21,890 --> 00:27:25,330
figured out the importance of health and wellness to retention of their

442
00:27:25,330 --> 00:27:28,330
residents. If you've got a great product,

443
00:27:28,970 --> 00:27:32,730
reach out to Central S E-N-T R A L.com

444
00:27:33,050 --> 00:27:36,570
and tell them what you want to do, and they can

445
00:27:36,570 --> 00:27:40,330
connect you with owners around the country who really understand

446
00:27:40,490 --> 00:27:43,690
this. Great. All right, buddy. Great to see you.

447
00:27:44,090 --> 00:27:47,770
Let's continue this. I'll give you a call after this podcast launches, but

448
00:27:47,770 --> 00:27:50,730
appreciate the words of wisdom and I told you you needed no prep for this.

449
00:27:51,210 --> 00:27:53,700
Hey, feels good.

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Sa.