Chip Conley on Creating Peak Experiences in Business and Life

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Hello. Hello. Welcome to another episode of the podcast. In this episode, I interview someone whose work, uh, I, I really like, uh, his name’s Chip Conley. I read, he’s, he’s written several books, but I read one of his books called peak and that’s kind of, you know, that’s the book that turned me onto him. And, uh, the book talks about some, some research that was done by, by a guy named Abraham Maslow.

Uh, I think it was done primarily in the fifties and sixties, uh, Maslow’s a psychologist looking in and what he’s best known for is something called the hierarchy of needs, which is kind of his outline of the, of the core needs. Uh, that that people have ranging from basic survival stuff to all, you know, at the bottom of this pyramid to transformational self actualization type stuff at the top.

And, um, that I’ve always kind of found that that research interesting. So, uh, that that’s what turned me on to chip’s book because chip’s book is about how he has applied that, uh, construct, uh, in that research [00:04:00] to his. Business and his business, which, which actually he sold, uh, now, but, but he, he had a hospitality group, a hotel company, which he started when he was 26 and he built it up over the course of, uh, I think 24 years and now, now he’s involved in their Airbnb and he does a lot of speaking, you know, he’s featured on Ted and he writes books and he consults, he does all kinds of things.

Uh, very interesting guy and I wanted to get chip on the podcast because, uh, I know that a lot of you are either entrepreneurs or are people that are all are striving, not just to get a fit body, but you want to, you know, get ahead in other areas of your life. And I thought that, uh, chips. Uh, just his viewpoints and, and his philosophies, uh, for, for living and for working and for, for the workplace as well.

Building organization, building team. Uh, I thought that you could benefit from him cause I, I’ve really liked what he has had to say. So let’s get to the interview. All right. So, Hey Chip, thanks a lot for coming on the podcast. I’m a fan. 

Chip Conley: Great to be with you. [00:05:00] 

Mike Matthews: Thanks. Yeah. So I found you through your book peak, which I had read a few months ago.

Um, and really, really liked and recommended to the guys that work with me and I’ve recommended it to, uh, you know, on the podcast, actually on my website and stuff. And I liked a lot of what you had to say in that book and just your overall philosophy and kind of, you know, you get a sense of who you are and, um, I thought it’s pretty cool.

So that’s, that’s why I thought it’d be fun to have you on the podcast. 

Chip Conley: Thank you. You are a peeker. You are a peeker. 

Mike Matthews: I try. I try. Um, all right, so let’s just kind of start with the title. So, and then which kind of brings it to that point of peeker, like what, why that word, what, what are you referring to exactly?

Chip Conley: So, um, yeah, the story behind it is that there’s a guy named Abraham Maslow, uh, who wrote a, uh, series of books as a psychologist in the forties and fifties here in the U S. And, uh, his books were some of the first books. The idea of people having a peak experience in their life, and how positive psychology could actually, uh, enrich people, uh, [00:06:00] psychologically.

Most psychologists prior to that point were more focused on Bad things in people as opposed to the good things in people, 

right? 

Chip Conley: so peak refers to the idea that you can create peak experiences in your life and The book is really about how to do that organizationally not just for yourself But actually how to use Maslow’s hierarchy of needs the famous pyramid and do that for an organization Cool.

And so what is 

Mike Matthews: a peak experience? 

Chip Conley: Peak experience as an individual tends to be something that’s memorable is timeless. And it’s when you’re in a flow where you actually feel like something’s coming through you that you’re channeling that you’re just an amazing channel for some passion or skill that, um, that you’re providing for an organization.

It’s when a group of people are in that flow zone. I like to think of it, um, from an athletic perspective as crew, When you have a crew, it’s in unison, [00:07:00] rowing all together, um, this phenomena happens that doesn’t make sense in physics, but actually as everybody’s rowing, the boat actually starts to lift out of the water, and they call that swing.

And 

Chip Conley: when a crew is in that swing state, swing state, um, It really means that they are so together that they actually are able to basically lift up above the friction that happens in rowing, it’s water, in life, it’s the problems we have in an organization and you lift out of that and that’s what a peak crew can or organization can do.

Mike Matthews: That’s awesome. I like that metaphor a lot. So let’s talk a bit about, uh, Maslow’s hierarchy. Can you just break down, you know, what’s the kind of basic theory of this construct? You have the, the, the different levels of it. 

Chip Conley: Yeah. So, uh, he’s known for the five level pyramid. He did actually have a seven, eight level pyramid later in his life, but we’ll just focus on the five levels.

The basic premise is this, uh, [00:08:00] in life as a human, you have some basics that you have, you need food, water, sleep, air, your physiological needs. If you actually are being deprived of any of those four for any period of time, any extended period of time, nothing else really matters. But once you get those basic needs met, you sort of, not fully, but maybe 50 to 70 percent met, you go to the next level.

The next level is safety. And then once that’s met, you go to the next level, which is esteem. And then the fourth level is, I’m sorry, third level is social belonging needs. Fourth level is esteem, and the fifth level is self actualization. Self actualization was really defined by the U. S. Army as be all you can be.

Now, Maslow’s defined it that before the U. S. Army created an ad campaign around that, but that’s the most distinct way for me to describe self actualization. So that’s really what, um, Maslow’s Hierarchy of Needs was about. The problem is that, I mean, it was great, and it was very much individual focused.

But Maslow died at age 62, just as he was starting to look at the, how do you take Maslow’s [00:09:00] hierarchy of needs for an individual and apply it to a collective, like an organization for nonprofit, whatever, and that, or a team, and that’s really what I did is I took his work and I took it to the organizational side.

Mike Matthews: Awesome. Yeah. So let’s get into that. So, uh, in your book, you kind of give three levels of, of need here. And this is, this is with employees, your own team, right? So you have money recognition and meaning. Can you explain a bit more about these and kind of how do you go about fulfilling these for your employees or helping them fulfill their needs?

Chip Conley: Sure. So you have a five level pyramid. I, one of the things, one of paradigms I tried to create here was the idea that there’s three basic themes in life. There’s survival, there’s succeed, and then there’s transform. And so, uh, with the, the survival being physiological and safety needs. Succeed being social belonging and esteem and think about it when you feel successful in life It usually relates to you feel connected 

Mike Matthews: recognized or 

Chip Conley: the law like you belong if you’re recognized and you [00:10:00] feel That esteem from it and then at the top of the pyramid transformation, uh is is the state of for self actualization So survival succeed transform applying that to work.

It’s like a job a career or a calling and a job is when you’re Exclusively focused on the tasks and the money and so money’s at the base of the employee pyramid when I say money I mean a full comp package not just your salary now Most leaders think that that’s the only thing or the primary thing that employees care about and the truth is it’s the fourth Might most likely reason a person leaves their job Money is not the primary person a reason a person leaves their job.

The primary reason a person leaves their job Job in the United States is because of their boss. And so the second level of the employee pyramid is recognition. So money and then recognition. And so what it means basically is as a boss or a leader, it means you actually need to understand what it is that would actually recognize, be it be, um, a recognition for you or for these group people.

And [00:11:00] everybody has different needs for recognition. For some, it’s public. For others, it’s private. 

Some, 

Chip Conley: some. You have particular goals that they actually want to hit and they want you as their boss to be totally there for them coaching them And like when they hit it, they want you to say You get it.

Others actually, frankly, want the recognition to happen sporadically. They’re not expecting it. So part of it is actually being smart enough psychologically about what’s going to be, um, a recognition that people appreciate. And then the top level of that pyramid, uh, for the employee is meaning. So money, recognition, meaning.

And there’s really two sides to meaning. There’s meaning in work and meaning at work. Meaning in work means the work that you’re doing on a daily basis. You love what you’re doing. You would do it anywhere. It doesn’t matter the country It actually matters that you’re doing this kind of work. Meaning at work is I really appreciate the noble purpose of this organization and the mission of the organization.[00:12:00] 

And by just being in that organization, I feel like I’m doing great work. I may be actually collecting paperclips, um, which I don’t like. So the meaning in work for that person would be really low. The meaning at work would be what is lighting them up. Ideally, you get both 

right. 

Chip Conley: Great companies get meaning in work and meaning at work, right?

And if you do that, well, you’ll have people living their calling 

Mike Matthews: and in your experience just building your businesses and doing everything you’ve done How do you help people find meaning in work? Because that’s such a thing out there You know that the stereotypical attitude that work sucks and oh is you just grind it out and you do it You know life is about everything you do outside of work.

Chip Conley: It’s a really good question. Um, The truth is, most companies are full of people with just jobs and not with callings. So, um, just to give some context, I, I started my own company when I was 26, grew it, uh, a company called Joie de Vivre Hotels, um, Grew it for 24 years as the ceo, uh became the second largest [00:13:00] boutique hotelier in the u.

s based in san francisco Sold it, uh, and then now have been helping to lead airbnb for the last two and a half years As the head of global hospitality and strategy, but really I didn’t even know that. 

Mike Matthews: That’s awesome 

Chip Conley: Yeah, basically helping and mentoring the three founders and helping the company become you know, the world’s best hospitality company um, so What I can say in both of these contexts is that, uh, understanding first on your own, for your own side of what actually gives you that sense of meaning in work.

It’s usually when you’re having a peak experience, meaning you lose track of time, you absolutely get so engrossed in what you’re doing. That you actually, what you’re doing and who you are are completely the same thing, what you’re doing and who you are and who you’re being sort of feel like they are fused together.

It’s, it’s something that actually, once you finish doing it, you don’t usually feel tired. You just feel energized. 

So a 

Chip Conley: job depletes you and a calling energizes you in the [00:14:00] context of being a leader. Some of that trying to figure out, okay, if I want only people who are living there, so much of it goes back to who are we hiring?

You want to hire people who are well suited at a hotel on the front desk of a hotel. We call our front desk clerks hosts at a host hotel. You want someone who’s Not, um, an introvert. You can have an introvert, but it just an introvert. Francisco motel is going to get worn out pretty quickly because they will get depleted by the amount of people interaction going on.

It doesn’t mean you can’t 

Mike Matthews: probably wouldn’t do very good. There’s a point where I just wouldn’t want to talk anymore. 

Chip Conley: That’s right. Exactly. And so you have to helping people to see. What’s right for them. And you having a good sense of that is a really critical part of being a great leader and a great creative team that actually can have a sense of the qualities of what will make a person successful in a particular job.

Mike Matthews: And so that’s just tailing your hiring process and over the years learning what kind of personality traits and it [00:15:00] reminds me of, um, you Meyer’s book setting the table recently and you know, 

Chip Conley: Very well, yeah. 

Mike Matthews: Yeah. So his, his whole thing of looking for people that want to create pleasurable experiences that really get personal pleasure from just giving someone else a joyful or pleasurable type of experience, he found those were the best people to work in his restaurants.

Chip Conley: Exactly. 

Mike Matthews: Yeah. It makes sense. Um, okay. Awesome. So that’s, that’s kind of the employee thing. Let’s not talk about the needs of customers. So in your book, then you talk about, um, kind of the, the risk of being comfortable with just satisfying customers, which would be that bottom, you know, just giving people what they expect to pay for it to thing it does, whatever it’s supposed to do rather than delighting the hell out of them.

So kind of how does that work and what are some examples about how you’ve gone about doing that? 

Chip Conley: Yep. So you take this three level pyramid, what I call the transformation pyramid of survival, succeed, transform. Now you go, we’re applying it to the employee. Now let’s apply it to the customer. The customer would be the survival need is meet my expectations.

Now think about that for a moment. Think about you being [00:16:00] a customer, no matter what kind of customer you are, the baseline of what actually creates satisfaction is having your expectations met. There’s a great, uh, equation. I love disappointment equals expectations minus reality, 

right? 

Chip Conley: That’s very appropriate to sort of say, okay, so what’s the expectation of our core customer and are we delivering on it?

But that only that, that only creates satisfaction and satisfaction in the world we live in today does not necessarily create loyalty or commitment. So the next level, the success level for a customer is when they actually have their desires met. So a desire as a hotelier, um, I would just say an expectation for a customer usually is a physical thing.

My room is clean. Uh, it’s not too noisy. The bed is comfortable so I can sleep in it, etc It doesn’t 

Mike Matthews: smell like cigarettes. 

Chip Conley: Yeah, I mean again the more you pay the higher your expectations go Um next the next level like desires could still have physical components So they gave me [00:17:00] a room that was bigger than I expected.

I got a suite Well, getting a suite might make you feel like your esteem needs are met. So what tends to happen on the desires level, a lot of times it’s, it sort of moves from the physical assets of the, what you got to a little bit of the social belonging and esteem parts. So like, oh wow. The general manager of the hotel wrote it, wrote a a note to me and said, we’ve upgraded you to a suite with a view.

Ah, okay. I’m a guess. I’m a special person. The front desk staff. Remembered by name because I was here three weeks ago and before I even like got to the front desk, they say, Hey, Hey, Mr. Connelly, great to see you. Um, so the desire level is not exclusively related to social belonging and receive needs, but it is the start of how you’re differentiating yourself as a product.

So your product at the baseline, the survival level is pretty much commoditized. Now you move up to this level. Desires are the way you’re starting to differentiate yourself. The way a company goes way beyond differentiation, though, is to get to that third level, the transformation. So going to the third level of the customer [00:18:00] pyramid is the unrecognized needs level, and it’s the transformation.

And if you do this well, you create customers who are evangelists. And like, Apple did it well. Apple took the idea of The Sony Walkman and said, why don’t we create a, an iPod and, you know, Sony should have done that, but you know, the truth is once you become sort of a, you have a, a certain approach to doing a business, you don’t necessarily want to disrupt yourselves.

So it wasn’t Hilton or Hyatt or Marriott that created the Airbnb. It was these three guys in their mid twenties who did it. So, um, the key here is to understand. What are the things that a customer wants that they actually never thought anybody could deliver for them? And once you deliver that and then consistently do that and actually get better, you actually get to a place where you’re creating evangelists because nobody else is providing that.

So as you move up the pyramid, you create more and more differentiation and much, much more commitment and loyalty from the customer. 

Mike Matthews: And what are some examples [00:19:00] of how you’ve done that, you know, in 

Chip Conley: Yeah. Let me give you an example. So each time we created a hotel at, at, we created 52 boutique hotels. We imagined a magazine and five adjectives to define the hotel.

Now, the reason we did this was because it helped us to understand the psychology of the customer. So let me use an example. We have a hotel in San Francisco called the Vitali, Hotel Vitali. Um, it’s a really great luxury hotel on the waterfront on the bay. Uh, in creating that hotel, we came up actually with two magazines that define the hotel.

A real simple magazine and dwell magazine and the five adjectives that define those two magazines together were modern, urbane, fresh, natural, and nurturing in creating this hotel. 15 years ago, I decided if we’re gonna have a modern urbane, fresh, natural, nurturing hotel. That’s going to deliver that experience for its guests.

We are going to probably attract guests who would use those five adjectives to describe themselves. That’s why I say boutique hotels [00:20:00] are really like a mirror or an identity refreshment for a guest. You stay in the hotel and it feels like the hotel’s personality rubs off on you. Well, in the case of this hotel, the hotel Vitaly.

It meant that on the top floor of the hotel when we launched and for the first 10 years, it was open. We actually had a yoga studio on the top floor and 400 square feet of the top floor. Now, nobody, it never made sense in a financial district to have a yoga studio in the penthouse. Didn’t make any sense at all.

But I knew that this is something that was a growing desire of people is to figure out how, when they’re traveling as business travelers, they can still feel connected to their body and connected to actually tranquility and relaxation. Um, and so we decided to do this. My investors thought I was crazy. I was taking the best real estate in the building and turning it into a yoga studio.

But it turned out to be the best marketing thing we’d ever done because the wall street journal and LA times and New York times all wrote stories about it because there’s this cool hotel, business hotel, luxury [00:21:00] hotel that actually has a free yoga class every morning. Um, so it was really a great way to position the hotel.

Mike Matthews: Yeah, that’s a great example. I mean, I can relate to that. Even in, I have a business that sells workout supplements and one of the things that set us apart is we spend a lot more money on our products than, than a lot of our competitors because in the retail world, you know, where if, if, if a supplement costs 5, that’s going to be 40 to 50 in GNC, the problem is you can’t make good supplements for 5.

You just can’t. So you make crap and then you just, you know, use marketing spin to sell it. So it’s similar thing in the beginning where I was like, well, why don’t you just, Why don’t we just spend three times, four times as much on these products and sell them direct to consumer and forget the retail.

Retail doesn’t work. And so it was just in a similar way where it was, but that’s become now, and that’s something now we’re known for that people know. Then you can go look at the form of people that are informed, look at the formulations and they go, uh, you know, they love it for that. But from a business standpoint, in the beginning, I had people telling me that I’ll never work.

You, you know, yeah. Okay. [00:22:00] The margins would be fine direct consumer, but if you don’t have retail, you’re just never going to take off, blah, blah, blah. 

Chip Conley: Congratulations. 

Mike Matthews: Um, so in your book, you also say, you know, you talk about, well, first let me back up. So, you know, out, just out, I guess, out and about talking to people, a lot of people kind of associate capitalism kind of with, with greed.

Uh, and in your book, you talk about the power that business has to create long term good in the world. And that’s something I really liked about just you and your message. Um, can you tell us a little bit about that? 

Chip Conley: Yeah. I mean, let’s, let’s use Airbnb for a moment as an example. So Airbnb is on the path to being the most valuable hospitality company in the world.

Uh, surpassed Marriott, about to surpass Hilton. Uh, and that’s for a company that’s barely seven years old and really has only been growing to the kind of size we are now for the last four years. So why is that? Well, there’s a basic mission and mantra to the company that we sort of summarized about a year ago, uh, in an ad campaign that we’re now running, which is called belong anywhere.

The whole premise of [00:23:00] Airbnb, in terms of what we want to do, is not to just be the biggest hospitality company in the world. We want to actually turn strangers into friends all over the world by allowing people to open their home, so that people can stay with them in an extra bedroom, or maybe even take their whole place if they’re traveling themselves.

Now, you know, there’s controversy attached to this on many levels, that’s not the purpose of why I’m bringing it up. It’s maybe to say, instead, That the fact that we actually had a mission that was saying we want people to feel like they can belong anywhere in the world. We’re in 34, 000 cities, 191 countries.

No hotel company could ever say that. They’re just not. So we are able to, based upon an initial premise, that we want people to feel like they can go stay anywhere in the world and live like a local, get to know the locals, be able to have more space for less money. Um, but most importantly, have a sense of belonging anywhere that, that basic theme helped us to grow to what we are.

Joie de vivre, the theme was the name of the [00:24:00] company. Joie de vivre means joy of life. It’s the French phrase for just going out and experiencing the joy of life rather than calling ourselves the ABC hotel company or naming it after me. Hilton Marriott, I think at the core of most companies is a noble purpose.

Mike Matthews: Yeah, I totally agree. And, you know, I think it’s just kind of, I feel like we’re coming out of the industrial age type of mentality of where people were just cogs in a machine. And, you know, we’re getting, you had guys like Carnegie literally working his workers to death so he could make another, you know, whatever he was in today’s dollars, he was worth 400 billion.

Like what more do you want? Why are your people dying in your factories when you’re worth 400 billion? It doesn’t even make sense. And from that came, you know, management, whatever. So I think I, I like that a lot. Um, all right, last question. Cause I know you, you know, your time, you gotta go. Uh, so what are three books made and can be on work or business or success that you think everyone listening right now should read besides your book, of course, which.

Chip Conley: Well, I, you know, Tony Shea is [00:25:00] a great friend of mine and he’s written the forward for my last two books. Uh, my last book was called emotional equations. So Tony wrote a book called delivering happiness. Um, you know, Tony’s Tony was basically grew Zappos into the company. It is, but he’s also had other Uh, financial successes as an entrepreneur.

So I think that’s a great book just in terms of understanding how do you actually use happiness and creating happiness as a, um, a competitive advantage. 

Yeah. 

Chip Conley: Yeah. Um, big fan of that book. You know, there’s a book called Man’s Search for Meaning. This is not a business book, but it’s a business book that I think is very relevant to, it’s a book about meaning that’s relevant to leadership.

Uh, it’s about Viktor Frankl who was in a concentration camp in World War II and in, in being in the concentration camp, he. Had this epiphany, uh, and it’s really having a sense of meaning and that is really in many ways How I got to that pyramid of money recognition meaning so that’d be a second book I think that you know That’s a it’s a tough read the first half is basically his story of what it was like to be in a concentration camp And it’s a [00:26:00] psychological book as well So if you don’t like abstract psychology, not great, but if you do it an incredibly compelling, uh read 

Mike Matthews: yeah 

Chip Conley: Tribal leadership, uh Uh, you know, a third book, uh, I’d say is really speaks to the idea of teams, but actually even another one I’ll say is, uh, the five dysfunctions of teams, uh, by Pat Lencioni.

We’ve used that very, uh, much here at Airbnb in terms of trying to understand how do you build teams that are doing that thing that I sort of called earlier, swing. Uh, out there on the water. 

Mike Matthews: That’s great. No, I haven’t read. I haven’t read the last two, but they’re actually on my list of my never ending list.

Okay. Well, great. This was, uh, this was awesome. Chip, as I said, I’m a big fan of yours and I really appreciate you taking the time to do this. And, um, I know that everyone’s going to like it because whenever, you know, get talk about stuff like this, I get asked for more. So that’s what, that was why this came up.

Chip Conley: Well, I appreciate you being a peeker. Mike, I appreciate it very much. 

Mike Matthews: Yeah. Thanks a lot. 

Chip Conley: All right. 

Mike Matthews: See you later. Okay. Bye. [00:27:00] Hey, it’s Mike again. Hope you like the podcast. If you did, uh, go ahead and subscribe. I put out new episodes every week or two, um, where I talk about all kinds of things related to health and fitness and general wellness.

Also, head over to my website at www. muscleforlife. com, where you’ll find not only past episodes of the podcast, but you’ll also find a bunch of different articles that I’ve written. Um, I release a new one almost every day, actually, I release kind of like four to six new articles a week. Um, and you can also find my books and everything else that I’m involved in over at muscleforlife.

com. All right. Thanks again. Bye.