One Airbnb Condo Turned Into $1 Billion In Real Estate | Ep. 441 with Sky Mitchell Founder and CEO of Everwild Nordic Spa & Hotels

0:00The biggest learning was at the very beginning, all the banks said no. No one wanted to finance me. We now have over 700 investors because we have made people money. This is Sky Mitchell, founder and CEO of Everwild Nordic Spa and Hotels, fired 30 days into a six-figure job. She started with$19 ,000 and one Airbnb, bought a 99-room Holiday Inn, and turned it into 400 employees and almost a billion dollars in real estate. Every bank in the country said no, so she found another way. I just took that BMW I mentioned I bought for$38 ,000, right back to the dealership with a whopping 500 kilometers on it and said, I need a refund, and used that as a deposit for the first base camp resort in Canmore.

0:47We've since raised over a hundred million dollars. It's just insane. Your ability to have success, sum it up with one rule. What would that be? The only way to grow.

1:04So Sky, I was just watching a video around how people are, especially in the 30s and below, maybe even 40s and below, they don't want material things like before. they want experiences. And I think all the changes with technology and such, people want to go somewhere and they want to disconnect and they want to have an experience. How have you seen that change in the last 10 years? Well, someone once said more money, more problems. And I would say it's more things, more problems. And so I couldn't agree with you more that people aren't interested in owning a bajillion cars and houses and all this stuff and having a million monthly payments.

1:45They want to take that money and spend it on something like our offering at Everwild Nordic Spa, for example. Go out, spend a lot of money on nice food, nice wine, an amazing thermal cycle, a great hotel room. And that's why you see all these luxury hotels are really taking off because the experience is so much more important than it used to be, where it was like, where can I find a hotel for$119 a night and no more than that. And I think this trend is going to lead to exceptional opportunities in hospitality. And you obviously saw the mixture of the hospitality piece with the health, wellness and longevity piece.

2:21Are you seeing that morph now where people want to do all of those things when they stay somewhere versus what you said? I just want to go to a hotel because I want to find a bed to sleep in. Correct. The experience and to top that up, the experience in health and wellness is, you know, so important. You'll see all the big brands are trying to team up with different spa experiences, introduce new spa experiences, build new spa experiences. Saunas are, you know, popping up on every street corner. And I don't think this is a trend. I think this is here to stay, which is really exciting. So let's go back to when you got fired after 30 days.

2:57What happened? Well, like you see in the movies, I was handed this cardboard box, the one from Staples or Home Depot or where they buy these things. Put your stuff in here and you're out. And I was under probation, so I had no choice. Not that you have a choice and you get fired anyway. And off I went. I couldn't believe it. They had just pulled me from another job, offered me this fancy office, six figure salary. I had just bought a brand new little BMW for $38 ,000. Like I thought this was it. I'm an executive. Everything's going to be amazing. I'm going to go and buy a house and get married and have kids and do all the things you're supposed to do after you get an MBA?

3:31And instead, 30 days later, I was sent packing and I cried so hard that the basement tenant in my house thought like, you know, someone had died. Wow. Okay. I was so upset. I was so upset. It was terrible. I imagine that. I've been fired twice. So I know the feeling of we think it's a secure job, but not realizing that there is no job that's secure. Did you think at that moment, okay, I'm going to go into business or did you think I need to go find another job? Oh, no, I knew I was never going to work for someone again. I had two job offers just through the industry, real estate development, and I couldn't do it.

4:09I was like, there's no way I can go and give up on my dreams to slave away for someone else's. A lot of work. People don't realize when you go into business, you think I have freedom. Did you realize though early on that the definition of freedom is different? Oh, absolutely. It's not like do whatever you want, whenever you want. You're married to that business. Like you can, I might be on the beach, but I'm on the beach on my headphones on the business on the beach. Let's go back to when you started with$19 ,000 and in one Airbnb condo, which has now turned into almost a billion dollar in developments.

4:47When did you realize that this is going to be huge? I don't think I ever did. To be honest, I was just like blindly hustling Because when I got fired, the$19 ,000 was a down payment for my Airbnb condo that I had been running on the side while I was working. So then here I am with no job. And I'm like, well, I'm going to rely on this Airbnb income. I'm going to go couch surfing. So I start staying with my friends. And then I'm going to go on Tinder and see if I can find a boyfriend and stay with him instead. So then I meet this guy, Tim. And all the while, while I was working, I had actually bought another house in Calgary that I was renovating.

5:21And I'm like, Tim, nice to meet you. You're a carpenter. Great. wait, how about you finish my house renovation? At that point, I get fired. And hey, I've known you for like two months. Let's build a hotel together. So it was all just very serendipitous how it all worked out. We're now married. So it's not just this random guy anymore. But yeah, it was really just taking that Airbnb model, having two Airbnbs that I was running while I had a job, getting fired, then relying on the Airbnb income and staying wherever I could find somewhere to stay and then deciding I was going to start a hospitality company.

5:53So when you started, you had to refinance your car to put it down payment for land. Did you think that was going to be reckless or did people tell you that, hey, Sky, this is super reckless? I didn't tell anyone because it was just so out there. I just took that BMW I mentioned I bought for$38 ,000 right back to the dealership with a whopping 500 kilometers on it and said, I need a refund. And they're like, this isn't Costco or Walmart. We don't issue refunds on brand new cars. But the guy was a great salesperson and he said, however, since you paid cash, I'll upgrade you to a$75 ,000 car, give you a loan.

6:31And at the time it was 1.9 % financing for$75 ,000, which in turn got me the 38 grand that I went to the bank, check out the door and use that as a deposit for the first base camp resource in Canmore. So there's very creative ways to raise funds, essentially. I think we always think, okay, I just need to raise money from venture capital, private equity. I need to go get an SBA loan, depending on where you're at in the world. But it sounds like you found very creative ways to enable you to have the funds to start up. Did you ever think that maybe I need to just go the traditional route of fundraising?

7:13Never. No, I've met a ton of family offices, private equity firms. At the beginning when we were doing base camp resorts, it was basically a purpose built Airbnb. They were townhomes, but they were a hotel. So anybody institutional was like, that's not a hotel. That's a townhouse. That's multifamily. No, it's not. It's actually a hotel and it's branding the Airbnb experience. So you don't get like Jack's Basement Suite with like pillowcases or Susie's house where the air conditioning breaks and you have no one to call. At base camp, you get the multiple bedrooms, the laundry room, the multiple bathrooms, the full kitchen.

7:46And hey, you can call base camp if something goes wrong. So that was the initial thesis. Nobody wanted to invest who is institutional or as you say, like the traditional route. And I'm so happy they didn't because it would have made my life a nightmare. I've always loved the retail investor. So our average check size is$127 ,000. It started with friends and family and grew from there. How did you come up with this idea? Because you were very early on and it was very unique. and many times these ideas go bust. It's almost harder, I think, to do something that has never been done before than to take what's already being done and just tweak it.

8:25Well, as I mentioned, I had these two Airbnbs and I was doing everything. I was cleaning the toilets. I was doing the bookings. I was paying attention to the customer profile, to the feedback. You know, it's all about the customer. Everyone says that, but I was like neurotic. What can I offer? What can I do different? Do they want a Banff Parks Pass? Do they want some cookies when they show up? like all these little things, right? And this was just my side hustle. I never in a million years thought I would end up in this full time. But as I was watching the trends at the time, I could understand why people didn't want to stay at like the Best Western or the Super 8, nothing against those brands, but they wanted to have the kitchen and the laundry room and all that.

9:03But again, I had been on Airbnb and I had Jack's basement with the pillowcases and I had Susie's kitchen with the mouse in it. And I've had those experiences where there's nobody to call. And I was like, I never want my customers to feel that feeling that I felt in those moments. So I'm going to offer this hospitality product that's a branded Airbnb experience that they have, but they, you know, always endless towels for the hot tubs, 24 seven front desk service, like the things you want at a hotel. wow, but here's your code. Here's your door number. Call me if you want. Don't call me if you don't want.

9:37So it's really optional. And people like to call. It was at the time, it would look like people were going this remote key, you know, no front desk. And it's not, it didn't work. It was a fail. Like we had no front desk and we had to add a front desk. Wow. What were some of the biggest learnings beyond just that one that you thought it was going to be this, it ended up being something different? The front desk was the biggest one. We had this thing called the bat phone. And it was like, oh, I don't want the bat phone. I don't want the bat phone. Because we didn't have a front desk at the beginning, it was like a hot potato throwing this phone around.

10:09Who's going to answer the phone this weekend? Because people would call like 24-7. We had 32 townhomes. And, you know, they were two and three bedrooms. So you add up all those people, that's a lot of people to call. So no one wanted the bat phone. And the other thing was the average length of stay was 2.4 nights. So I thought with these larger, you know, two to three bedroom townhomes, people would stay five to seven nights. No, it was actually 2.4 nights and it's gone down since then. At Everwild spots, 1.7 nights. So people are in, they're out, they're moving on, shaking around. So that was a really big learning.

10:40The biggest learning was at the very beginning, all the banks said, no, no one wanted to finance me. It was so hard to get investors. I have never hustled so hard as I did on that first deal. I was scraping pennies together to get it built. I painted the railings. I did all kinds of stuff just to get this thing off the ground. Oh, I saw that you couldn't raise from traditional. You raised over a hundred million starting with Instagram. What was that first post? Well, that was a little bit along the way. So we did our first base camp and then we did a bunch of other hotels. And, you know, like most industries, once you're in it, you're kind of addicted, right?

11:15You like the deal. You like the business. We're hiring people. The guest experience was what people were looking for. So we bought this hotel in Canmore that was It's a Holiday Inn. It's 99 rooms. And I said, let's turn this into Everwild Nordic Spa and Hotel. Obviously, it's a way longer story than that, but to cut to the chase here, let's turn it into this. We need$25 million of equity. The rest will be funded by debt. Bing, boom, renovate the rooms, add the Nordic Spa. And this is going to be, you know, the best asset in our portfolio and the best asset in Canva. So we had$18 million and this private equity company comes in, really small shop and says, We'll give you the last seven, which, you know, by private equity standards is like not very much.

11:55And we say, great. And so we go through due diligence with them as though we were like getting a billion dollars. Six months of time, they approved it internally, externally. We're basically cutting the check. And the guy calls and says, I just can't wrap my head around the spa business. What is this Nordic spa? What is thermal cycle? What is wellness real estate? like we have done all of our ticks and all of our dotted eyes and all of our t's and this spa thing makes no sense and i couldn't believe it i was on the side of the highway i'll never forget where i was sitting and i was like are you for real like i am i have spent all the money i was effectively bankrupt at this asset because the investor money was out the door and the no debt was getting funded until i had this seven million dollars which i now didn't have and so i phoned jeff um my brother-in-law who runs our marketing department and I said guess what buddy I got an idea post an ad on on Instagram and say hey do you want to invest in like the next big thing wellness real estate we're opening Everwild Nordic spot and hotel thinking I don't know 50 grand 100 grand even if we only got a couple hundred grand out of the ad it's worth the you know the effort we've since raised over 100 million dollars which is insane like when I think back to that moment of calling Jeff and being like, we're so desperate.

13:10I'm in tears. The business is going to fall apart. Everyone's going to say, I told you so. You took on too much. You grew too fast. Like, you know, all the things you always hear as an entrepreneur. And we did it and we're still doing it. And now we have a team and there's a ton of compliance involved in that. Like I should, I should, you know, say that very clearly. This was not just done on a whim. It was at the beginning, but now it's very controlled. We've got in-house general counsel. We've got a team. We've got compliance of the yin yang, but we are looking to launch in the United States in the next six months with the retail investment structure.

13:44What was it like when that first person invested? Oh, I couldn't believe it. I couldn't believe it. I was like, how does somebody click this button, like find out about us and then take their hard earned dollars and invest them through the internet. But if you take a step back, it makes total sense. We'd been doing this at the time for six to seven years. I had a local reputation. All of our investors had made average returns of, you know, 18 to 22 % IRR. So our track record was good. The, you know, word on the street was really good. People can come and have a guest experience at any of our properties at the time we had seven or eight.

14:25So as an investor, they could do all these like, you know, little checks on us and and we're real and we're here. And at the beginning I was taking the phone calls and the phone was ringing off the hook. I was like, I can't do this. This is like the bat phone all over again. I've got to like hire people. So then I started hiring people to answer the phone because not only was it shocking when someone wrote a check, it was shocking the amount of people phoning every day. We had to like create new phone lines, get new phones. We're like building the canoe as we're, you know, going down the river, uh, the internet, the website broke this.

14:54Oh my gosh. So many people want to invest. We've got to do something. It was, it was a wildest, wildest thing. I like the analogy instead of the plane, you're building the canoe. That's very Canadian of you. Right? Building the canoe as you're going down the rapids of the river. I think, do you find that people are more apt to invest because they can experience it? You think of like all the things that people can invest in, whether it's like stocks or apps, you can't really always experience the thing that you're putting the money into. But this though, So if you invest in something, you could go and actually experience it.

15:28Do you find that helps people? Absolutely. And, you know, if you haven't heard of wellness hospitality or wellness real estate, you're basically living under a rock like this is such a prominent trend. And when we decided to build this Nordic squat, it wasn't, you know, all over the place in your face. But now it is. And people really want to be a part of it, because once you come and you do hot, cold rest repeat. So for example, sauna, cold plunge, rest, do it three times. There is nobody who can look you in the eye and say they don't feel better. Nobody. So it's like a tangible feeling. And when you have it, you want it more.

16:03And it's good for you. I know. You know, I used to do a lot of cold plunge. And then when I stopped doing a cold plunge, I tried to go back. It was hard. I feel like the more I did it, the more I wanted to do it. But it's a rush. Like you're saying, when you do those hot, cold, it's amazing. It's the best feeling. You almost went bankrupt three times. Which one of those times nearly broke you? I would say the first one. So back it up again to Basecamp Resorts number one. I take the car loan. I get the cash. I put the deposit. And I needed$2 million of equity to get a$5.5 million loan to build a$7.5 million building.

16:44which for like the record today, this would cost like 22 million. So that's how much costs have increased since, um, you know, 2016. Nevertheless, we had, um, a term sheet and a commitment letter from a real bank, not the private lender we ended up going with. And at the 11th hour, when I had already spent all of the investor equity, the bank says, ah, this one little thing in the commitment letter doesn't really line up with this little thing over here. And I had used a broker. So I was 100 % relying on the broker. And the bank said, no, we're not doing it. Although all along the broker had said, oh, it's all good.

17:21We're good. We're funding. Everything's great. I couldn't believe it. I had spent other people's money, which is like, you know, the biggest responsibility of my life is their money. trusted this broker who was recommended to me that this loan was going to fund and then it didn't fund and then I had to hustle to find five and a half million dollars and I didn't know anyone like I didn't come from parents who have money and all their like highfalutin country club friends like I didn't know anyone to call and so I was like oh my goodness we got to find a private lender because no a bank is gonna finance a purpose-built Airbnb hotel I couldn't even call the investors and tell like there was no way I was telling anyway I was like solving this or I was disappearing off the planet because there was absolutely no way I could ever tell any of those two million dollar investors we don't have a loan and we're uh have foundations in the ground it was horrific the one the best moment of my entire life after getting the private lender was um they advanced the first draw which was a million dollars so we had spent the two million and then you know we needed a million to start paying the trades and keep the project going and then they fund and, you know, draws thereafter.

18:31I got that draw and I cried. I'll never forget where I was. I was like, wow, that was close. And, you know, when you start something, there's so many people saying, what are you doing? Get a job. You're crazy. This is nuts. Go do something else. Like, why'd you get an MBA to go do this? Go get a job. Go make some money. Oh my gosh, every day. I finally stopped telling people what I was doing because I was so sick of the naysayers. Does it inspire you, though, or motivate you to have naysayers? Or is it more about people that believe in you? Now it's about, you know, people that believe. At the beginning, it did inspire me because, of course, I was young and I'd never done this before.

19:09I need to prove you wrong. I don't need to prove anyone wrong anymore. You know, we just need to surround ourselves with people who are who are positive and inspirational and who are supportive. And it's always great to ask questions and want clarification. But to just put people down, it's outright awful. That's that's the tough part about being an entrepreneur. And I think when you add on social media and expectations and you're down and out, but you see everyone else, they seem like they're having the best life ever, even though they're probably down and out seeing you thinking you having the best life ever.

19:43It's really funny. Do you believe that desperation, though, really pushes people to solve problems maybe more so than not? Absolutely. If I had rich parents and they were cutting me a million bucks a month to make this work and I didn't have to hustle, I don't know if I would have the same grit as I do. I had to do this all and there was nobody to help me. There was nobody to hold my hand. It was all on me. And of course, I have a team now and that's different. But at the beginning, it was me, my dog Moose, the living room floor and make this happen. And like I said, I had other people's money.

20:22I finally found a private lender, which was like a miracle to fund this building. And then not only do you have to get it built, which is crazy at the time. And there's like not very many women in real estate and construction in this part of the world. And then on top of that, we had to open. We had to accept customers. And then like, what do we do when they start calling? What do we do when they show up? We've got to find housekeepers. We've got to clean the rooms. We've got to have systems and processes. And it was just wild. if you could tell yourself all the things that you just said right now back in 2016 do you think you would have just gone to get another job no way not a chance no it's like for me if you're an entrepreneur you know it somewhere in like the depths of your soul you just you know that you're meant to be an entrepreneur and you know you're meant to you know create jobs and grow the economy and all that stuff.

21:17But really, you're just meant to move mountains. And I would never be able to get another job. I think, I know. I think that call, I think we're unemployable. Yes. Oh my gosh. Yes. You're absolutely right. My wife always says unemployed. But do you fall in love when you're in a sauna? If I'm not mistaken, you were in the sauna and you realized that you love the sauna and you want to do something more with this. Can you tell me that story? Yeah. So there's actually a Nordic Spa 45 minutes from here. And I knew it had been quite popular since it was open. And I was like not a sauna person. So I'm the first person to say like when someone tells me they hate sauna, I'm like, I used to hate it too.

22:01So I can relate. And now I love it. And I am like going to build Nordic Spas all over North America. But I didn't like it. And Tim, my husband, who's the, you know, the boyfriend from Tinder who turned into my husband, he always loved the sauna. So we have a sauna in our basement. and he would always use it and I never used it. And finally, I kept hearing about this Nordic Spa down the road. So off we go to the Nordic Spa. And then I start kind of using the sauna a bit in the basement. I'm like, huh, maybe this isn't so crazy after all. Kind of feel good. And so one thing led to the next. And at the same time as this like sauna experience was evolving for me personally, we bought that hotel, that Holiday Inn that was 99 rooms and we wanted to rebrand.

22:40And there was this extra piece of land that came with it. and we were originally just going to build more hotel rooms. Why wouldn't we? That's what we do is run hotels. And I said, stop the plans. Saunas and Nordic Spas are where this industry is going. We're building a Nordic Spa and everyone's like, oh, here we go again, another pivot. As an entrepreneur, you've got to be able to pivot, by the way. And I'm like the master at pivot. And so we pivot. We turf the plans that had cost us$50 ,000 or$100 ,000 to build this next hotel and we're building a Nordic Spa. what enables you to be able to pivot unemotionally not having a private equity partner that's what but no it's also um it's it it's it's going to sound really corny but it's an instinct um everything starts with an instinct and then gets backed by facts numbers research all of the you know smarter than me people things um but i start with like this makes sense there's a business case here, I could tell that the customer was looking for the experience that you mentioned at the beginning of this podcast.

23:43People were, after COVID, just jonesing to get out and to do things together and to have a social experience. And I'm no longevity expert, so I'll never say I am, but I know that you need to socialize and that contributes to longevity. And so I was like, let's take wellness into its simplistic form of the thermal cycle and social. And let's put this all together and have a social wellness experience at our hotel. And that's how Everwell was born. So you think intuition and gut feeling are something that some people just really can hone in on and others cannot? Absolutely. Because it sounds like that's what you're saying.

24:23If somebody could have you sum it up, it might even be hard to explain because it's a feeling, but you're really almost analyzing everything subconsciously and then coming up with a reason. Because I look to I'm looking at what separates other people from doing the same thing. I always think about that. It's a risk thing. Most people see an idea or hear an idea and see risk right away. Like my dad, you know, I tell him an idea and right away it's like this is risky. This is risky. This is risky. Where's my exposure? And it's like you're never going to do this idea. Like, let's not talk about something else.

24:58But for someone like me, I see the idea. I see all the reasons to do it. And then, of course, I bring in, you know, we have a finance team now to do the pro formas, bring in the risk analysis and all that. But all the ideas start with there is like a million ping pong balls in my brain going like the bingo thing. Right. And I'm doing all the analysis in my head. And then you combine that with a gut feeling and out comes this great idea. And have there been, you know, not so great ideas along the road? Absolutely. But the big ones have been pretty good. And I really believe in the Nordic Spa idea, the Nordic Spa future.

25:42and the future of our brand Everwild. Let's go back to your childhood. Because I feel like the person you are today is because of something in your childhood. What happened in your childhood that's enabled you to be this person? There's so many things, but there's one thing that is like particularly clear and explains the madness. And that's my mom was a real estate agent before I was born. And then she went back to her previous career as a teacher. and my dad was a mechanical engineer by trade and ran an engineering department at a company. And my mom marched my dad and me around to these open houses on the weekend.