Founders Focus

Stick to Your Values During Crisis – with Jeff David, President of The Fitler Club and Founder of Jeff David Hospitality

Episode Summary

Leaders in the hospitality industry like Jeff David have had to make difficult decisions over the past year. The lessons learned and predictions for the future are worth paying attention to.

Episode Notes

The hospitality industry was rocked at the onset of the pandemic, and those businesses that have survived have had to make difficult decisions.

We connected with Jeff David, President of The Fitler Club & Founder of Jeff David Hospitality, to hear how he's adapted his business and supported his team. We also dig into his predictions for the future – what trends will stay or fade.

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Episode Transcription

Scott Case  0:00  

Hey everybody, this is Scott Case, I'm the co-founder and CEO of Upside. And welcome to a bonus podcast for Founders Focus. I am thrilled to be joined today by Jeff David, who is the founder of Jeff David Hospitality and a wizard in the hospitality space. He's worked on more of the coolest projects than anybody that I know. And he has figured out lots of ways to win in the pandemic anyway, and we're going to talk a little bit about his observations in a moment. But let me start by letting Jeff introduce himself and maybe tell us a little bit about what you're working on.

Jeff David  0:39  

Hi everyone. Yes, Scott just put me up a little too high on the pedestal. I'm Jeff David. And I founded Jeff David Hospitality because I was a traditional luxury hotelier - nine years with Four Seasons, and I started boutique brands like Viceroy, and I went into the independent world. And I think my common denominator was opening luxury hotels in all different markets from Anguilla to Time Square to Washington, DC to Santa Monica and Aspe. And I started connecting the dots, I think I pivoted, and that's a terrible overused word this year, but Scott helped me pivot from being a traditional luxury hotelier that caters to the 2% to a founder, which is guided by being pathologically collaborative and intellectually curious and embrace failures. And I turned that role into startups for all hospitality from marine to private aviation and my current project is this amazing new evolution of a club called The Fitler Club in Philadelphia, which for lack of a better adjective is a combination of WeWork, Equinox, and Soho House under one campus. And it's a scalable club. And there's other evolutions on the way with this year from ghost kitchens to financing, hospitality and limited time stays and repurposing apartments. That's kind of like the sum of all parts. So I think I'm just a big mismatch of trends. And I'm getting paid for it, to just understand these trends and make money off of it. And that's how I made my career out of it.

Scott Case  2:35  

That's awesome. Well, thank you. I think that the thing I want to dive into today is constituent behavior, and by that, our stakeholder behavior. Obviously, customers, employees, investors and others. And I want to start with your experience in the early part of the pandemic, and talk about whatever are the most important stakeholders as you think about it for the hospitality space, and your experience during that time about that abrupt change. And what were the biggest behavior changes that you had to either help support and lead or that you observed from everybody that was around you at that time?

Jeff David  3:22  

Yeah, it's really interesting. I think, obviously, in March, and I think we're calling it like Wuhan before it was COVID, when everyone had a different name and sentiment and speculation around it, and this is before it got politicized. It was just all about watching the news cycle. And I think obviously, there was a lot of denial like it's not going to hit us, it's not going to hit us, until it just clobbered us. So there was definitely a segregation of like generations, you kind of see it all the way to now, where we blast millennials for gathering and having parties and they're going to recover it because they're gatherings and having parties, right. So whatever we blame them for, I think they're going to be pivotal in the rebound of everything, just because of the exact same behaviors. But pre-pandemic, more specifically, which you asked, yeah, I think it was a lot of speculation. I think it taught us to share, much like you did, it taught us to gather and share and understand and I think it humbled people. It was a common denominator, there was no subject matter expert ever on how to weather a storm of a global pandemic. So I thought it taught humility, it taught collaboration, and it really forced us to network, which is an interesting paradox to being sheltered in place. It forced us to network more. I think that's kind of how pre-pandemic behavior started.

Scott Case  4:55  

Let's start with your team. How did your team's behavior change? What did you have to adjust in your team? And then you have a membership base for the club, so what was the dynamic there and how did that play out?

Jeff David  5:13  

It was interesting. It was definitely interesting. Because I was actually new to the club, I think I was three weeks tenured when we shut down. A) I sat with the board of directors and ownership, and we decided that we're going to ride this out. We speculated this is a few months, and we quickly just promised that everyone's on health care, albeit furloughed, and we also set up food banks that every two weeks we'd give them about $200 worth of groceries that we would use our pricing model and just make it like an Amazon distribution place, our ballroom. So I think that was a big win, because our company stuck with core values. In times of panic and crisis, you stick with a core value. And if our core values were diversity and community, we start it within. So I think that was a big win for us. And it was probably a two hour meeting when we decided we're going to commit all this cost. So that started us on the right foot. 

Jeff David  6:14  

And then it started to turn a little bit, and we were non-union, almost like Lord of the Flies. We started to have people on site because you can't cook over Zoom. But then we had people off site like marketing and accounting, and it started to turn into resentment - that why aren't they here, do I incur hazard pay, because it was so speculative on you know, the disease. So it was a really interesting social experiment. And then we just had a virtual employee party, and I just noticed the love fest of the critical mass of employees who are back to work, and the fear of missing out of all our employees that were still on zoom kind of felt like an outsource vendor. And the only explanation I have that is just the human dynamic. There's like this genuine watercooler talk, or I have a one on one with someone at three o'clock on Tuesday. It just really just turned into an interesting dynamic that split the team, unfortunately, but once you acknowledge it, you try to get more inclusive about it. Because you want to respect everyone's sentiment on contagions, right? Like you can't declare everyone must be on property. That's a hard thing to do. So yeah, that was some of the observations I had.

Scott Case  7:33  

It's interesting. Did that bleed into your membership experience? Because I know you figured out a way to open back up as the summer came around, and I assume you're still open now. So how did your members experience things through that whole process? Because your employees are a big part of delivering.

Jeff David  7:58  

Exactly. We did what everyone did was adapt. Our programming is so robust. Just yesterday, we had cross training with electronic stimulation to tarot card readings, to almost like a TED talk of the foremost business leader at Wharton School. So we have this dynamic series of programming. We shifted 90% of our programming to virtual and that was another experiment, where cooking classes virtual, we loaned out all our light equipment from the gym, we just gave it away like library cards, like just tell us you want you want to set a dumbbells, we got to set dumbbells, so we just gave all our kettlebells and dumbbells out. So they appreciated our effort of creativity. 

Jeff David  8:06  

We had a suspension policy where you could pause your membership for up to 12 months, not knowing in a crystal ball that there's a pandemic that would shut down the city. So about 30% suspended for obvious economics, I can't go there. And the others stuck with us, and was curious to hear what we were going to do about this and appreciated our booze delivery. All this stuff is legal, so I wouldn't say it if it wasn't. But the city was sometimes too strict and sometimes they understood. So we could do cocktails to go. We just mobilized the delivery service. We put all our programming virtual, so they appreciated it. And like I said earlier, the early adopters are coming back with consumer confidence were the ones not that had parents of kids. They were the singles that missed the bars. And we started to understand that, so they were getting criticized for these like underground parties, but they're the ones that are keeping us afloat with their spend right now. So it's just really interesting how it's playing out.

Scott Case  8:56  

So talk more about that. You talked about the fact that there are definitely very clear segments in the market that you serve that are behaving differently. And whether they're being criticized or not is one element but talk more about that. Those singles that are missing the bars and how they're behaving differently than the parents, then perhaps the retirees or empty nesters?

Jeff David  10:23  

Some might call it cavalier. I think they're longing for normalization. Obviously, that's a whole different discussion on dating during a pandemic, but I think as more people are missing community normalization. And so I don't really think they are that cavalier, I just think that they probably, it's also around the new cycles, they learn, that they'll take their chances instead of federal mandates that many countries were good at and some were bad. I think they weren't as cavalier as some times they posture, I think they're just people looking for normalcy. And it was like the network effect. Well, if my friends going and my friend is going, I could go, and they might have in best interests, worn a mask, and then socialization checks in. And that's when you get all these pictures on the media of these of these parties, so I don't really blame them.

Scott Case  11:23  

So as you look out at the next, let's say, 12 months, so in the nearer term, do you see any big behavior shifts that you're starting to plan for? Either in the way that you're operating the club or the different stages that your members might be at on vaccines? Or your staff might be at on vaccines? How do you see the next 12 months this transition period playing out?

Jeff David  11:58  

I think the more that restrictions are lifted, the more it's up to the individual, whether they feel safe or not. So step one, never defy compliance. If they say no eating in a movie theater, we have a movie theater, there's no eating in the movie theater. Right. And I think there's no big deal to have, I call it sanitation theater, where it's like, stand here, and six foot and sanitary and the acrylic barriers, I think people need that as like a placebo of comfort. So I don't think it's a big deal to keep up the dividers, but it's a big deal if we never had them. And I think slowly, those are going to go away. And people will get back into the stride and normalization. Because, during the time of new cycles and speculations, do you have to wear an N95? Is a gator acceptable? You know, what does the shield do? So there's a lot of, depending on what you read, you're either in compliance or out of compliance, and we just said, stay above board, you're only as good as your public opinion of your constituents, and you're only as good as your whistleblower. So those are the sort of guiding principles that we collaborated and just headed for, so it was a good exercise.

Scott Case  13:22  

So say more about the compliance piece? Was that a central tenant? anyway, given that you're in hospitality, you have all kinds of regulations, health regulations, and was it just about dialing that up? Or because of the nature of the situation that we're in, it got elevated to number one, two, and three?

Jeff David  13:44  

Yeah, I think the best way I could say it is compliance was gray. It was just like a stimulus package or even like Obamacare, you have a great idea, but the technicalities of it. They ban swimming pools, we have an indoor swimming pool, so we interpreted that you could rent the whole swimming pool for yourself for 45 minutes, and we have 15 minutes to sanitize the whole thing, but you could also read it that they ban swimming pools, right. So compliance was very gray because the governor and all the doctors had to throw something on paper, but it's not a silver bullet. So when the whole world closed, we had a co-working space that didn't fit in any of the categories, so we stayed open. So, our co-working space was like a non non essential like it was a double negative, like you know, non essential business closed, but like they acutely said restaurants and bars and movie theater and retail, and so co working so we painted gray, and tried to interpret it to the best we can and did it for our business.

Scott Case  14:52  

Did you find that you documented that interpretation more than you might have in the pre pandemic? So that you had some position that you had taken and say, Look, we did our best, here's what the position we took. So if someone came in and said, hey, you're not supposed to do that, we said, well, this is how we read it, this is how we interpreted this, and we executed on it, so that you could demonstrate that you attempted compliance?

Jeff David  15:14  

Yeah. And I was proud. I think we were the first to do a playbook in our space. But our playbook was a Frankenstein of all the playbooks that were the first early adopters. So we saw common denominators from hotel chains and restaurants. You need street credit. So a lot of them paired with the Mayo Clinic, or Lysol or scientists or doctors. So we needed credibility. We have great members that are doctors and surgeons and board of directors and infectious disease specialists. So we needed credibility from the legal and scientific way. So we did that. We did a hell of a lot of research. I think our playbook was like founded off 90 different playbooks that we just scribbled and highlighted and saw best practices. And then basically, people will glance at it and say, they're incredibly conscientious, thoughtful and proactive. And that was a game changer for us.

Scott Case  16:21  

I want to move then, kind of out to the future. So let's look to three years from now. And when you look at the behaviors that you and your team have adapted and what your members have adapted, which things do you think will stick? And which things do you think might stop? So, an example you talked about having transitioned 90% of your programming to virtual, do you see yourself still continuing to offer a set of classes and opportunities in programming that remained virtual? Can you imagine your lending library of dumbbells continuing? Like, what of those things do you think might still be around in three years?

Jeff David  17:16  

I think the intellectual part of our programming. Like just say, a guest speaker. I think that that helps us scale in everything, and I just think that the things that you do just out of necessity, like coach spin over the Internet will probably just go away, just like the sanitation theater. I think it's easier to add what will go away, and I think all the stickers and the consciousness and wash your hands for 30 seconds, I think people are pretty either fatigued or just numb to it that it has no impact. 

Jeff David  17:51  

But I think what will stick, I honestly think and from a commerce point of view, people who streamlined, and I restructure for a living, I just don't do startups, I do restructuring. People who used the cover of a closure and crisis to streamline their operations for greater profitability - that was a win if you could survive. So I think staffing levels are there. I hope this doesn't stick, and there's so much written about it, but the decentralization of business where you can work from home and embrace it. I hope as a person that doesn't do it, because I think that's a slap in the face to human nature, I think it's gonna ruin generations, if we're kind of used to just talking to people through Zoom. I think zoom is a necessity, and in context, it's great for a lot of things. But I just think when there's an energy about an office building that's decentralized, again, probably to my comparison to like outsource vendors, I think the camaraderie, the water cooler talk, and everything like that, I just think you can exude your personalities and camaraderie that way. So I hope that there's a happy medium in the middle. And I hope people just don't get used to being decentralized.

Scott Case  19:17  

You've worked in environments before where you had teams of teams that were in different geographies or even timeshifted, right, you're running a hotel, you have employees that are the 24/7 piece, you've got at least three shifts, you've got weekend crews, you might have five or six different teams that could be some of which may never have interacted with each other and yet you needed to create a culture. Is there anything to be learned from that experience that you might have been all in the same building, but you weren't there at the same time?

Jeff David  19:49  

Yeah, I think that's the positive part of Zoom. In the Zoom, it gave me face time with everyone in a very convenient way. And we shared. Much like your style. We just shared so we didn't have structure, we just did what we called around up, everyone kind of reported in what they're doing. And then we had humor and small talk to pepper in. So that was sort of, it was like kind of self healing. So I think that's probably a positive thing about Zoom. But then again, if that's a continuation of what the future is going to be like, I think we lost our soul in hospitality, at least in my market there is.

Scott Case  20:30  

Well, a big part of hospitality is going somewhere and experiencing something new and being in a different place. And so I can see the kind of the tension there. Do you see, and staying within that hospitality in your case, you're working on a membership, but broaden it out to the entire hospitality space, whether it's hotels or restaurants or Airbnbs, you know, you've worked in a lot of different environments – Do you see any fundamental shifts for people, because they've been through this experience, changing the way they go about leveraging hospitality in the future?

Jeff David  21:15  

I personally don't think so. I think if anything, like health Inspection used to like check your fridges and how hot your dishwasher is and everything, I think health inspection will get into airborne, and they'll get into more like bacteria chemicals. I think from a customer confidence point of view. Looking three years, you said two to three years, I think they'll have short term memory. I think that maybe the Yelps and TripAdvisors may say this, cleanliness is going to be a weighted scale heavier than service on some people. But I just think that it gets normalized. I think 9/11 is a perfect example where, we're all just used to going through TSAs and taking out our laptop and our shoes, and that's a nuance, that's not a shift, that's just probably five to 30 minutes of inconvenience that is normal when you travel now. So I don't think that there's going to be that big of a shift. Definitely data empirical driven, of course, there's got to be a ramp up. And of course, business travel is hurt. And of course, all that, I just think in three years, this pandemic we'd learned from it and to be a memory. I think developers got to keep carrying on, because they just have to survive it. And so that's probably the optimistic side, there'll be some nuances. Like you said, the health inspector will have new compliance, and the online reviews will have a new weighted category, like cleanliness, and I think the world will get normal.

Scott Case  23:01  

I'll wrap up here. Do you see any key behaviors that you think leaders that are in the hospitality space, like you are and to some degree that that we are at Upside, do you see any behaviors to keep an eye on? You talked a little bit about that hey, do we end up with lots of people working from home on Zoom? Or do we end up going back to something where people are much more centralized? Are there other behaviors you see as like, this could break one way or the other and we're just gonna have to see?

Jeff David  23:38  

I think, like I said, don't forget, I think this pandemic was also peppered with civil unrest and bipartisan views, right. So I just think that there's going to be more of a harmony moving forward, as far as, masks won't be controversial. But honestly, I don't really see that big of a behavioral shift. I think people are looking for normalcy and resilience. But there are best practices, there's definitely best practices. 

Jeff David  24:20  

I think that the emergence of long term stays with kitchens. I think the airbnbs that don't have lobbies are just going to get stronger and stronger as you've been watching since the few years of its inception. But I really think Tahiti's Tahiti, and Time Square is Time Square, and you could get purist and talk about the 4.5 star report points on rev par. But I also think that there's got to be some resilience, I think future developments, I think banks won't lend to hospitality as generously. I think that was a cold shower for them. But I think mixed use of like anything that could pivot long term stays like an apartment that could get repurposed for short term stays a la Airbnb or sonder, domio, I think that's going to get a strong headwind, I think they're a winner in all this from a financing point of view. Because you could lend to mix use, but you say hotel, they'll be like, wait a minute, you know? So that's it. 

Jeff David  25:27  

And I think from a tax point of view, we have so much stimulus that kept people float, that I think just taxes have to be rethought out because we used every penny of stimulus and we were thankful for it. And that's just not free money all the time. So that's what I see. I think rubber gloves for food runners and restaurants probably could stay. It's not totally ornamental or cosmetic. I think it's just, people are just more sensitive to cleanliness. So, yeah, I hope that answered your question.

Scott Case  26:12  

So really, the last one this time is, Will your members still be able to get drinks delivered to them from you in two years? 

Jeff David  26:21  

No, I think they're gonna come because we have a DJ and a bar, and they're surrounded by other like minded, creative, beautiful members. So yeah, I think that that beer deliveries a novelty right now. It won't go away cuz there's a need for it, but it won't be a necessity how you drink. For sure.

Scott Case  26:47  

Excellent. Very good. Well, thank you so much, Jeff David, from the Jeff David Hospitality Group who's currently leading the charge with The Fitler Club in Philadelphia. And I really appreciate you being on. Thanks.

Jeff David  27:00  

Take care of Scott.

Scott Case  27:01  

You bet. Thanks. 

Scott Case  27:02  

Thanks for tuning in to this episode of Founders Focus. What did you think? You have any feedback for us? Got a topic that you'd like us to discuss, or maybe a future co host? We'd love to hear from you. Just hit me up on LinkedIn at T Scott Case. And join us at to stay up to date with the latest episodes and join us live every week at our Founders Focus sessions. Hope to see you there.