Invest Like the Best with Patrick O'Shaughnessy Episode: Devin Zugal: How To Create A New Town - EP.413 Release Date: March 4, 2025

In this enlightening episode of Invest Like the Best, host Patrick O'Shaughnessy engages in a deep conversation with Devin Zugal, the founder and president of the Esmeralda Institute. Devin shares her ambitious vision of creating a new town, Esmeralda, in California's Wine Country, inspired by the Chautauqua community she cherished growing up. This discussion delves into the intricate processes of town-building, the profound impact of environment on human behavior, and the financial and logistical challenges inherent in such a monumental project.

1. The Genesis of Esmeralda: Inspiration from Chautauqua

Devin Zugal's passion for creating Esmeralda stems from her nostalgic experiences in Chautauqua, a small town in western New York known for its rich cultural and educational programs. She reflects:

“[00:05:34] Devin Zugal: It was a movie almost. And I was like, wow, that's a great question. Why isn't there? Because I'd been a fish in water.”

Her upbringing in Chautauqua instilled in her a desire to replicate its vibrant, multi-generational community spirit. This inspiration propelled her to envision Esmeralda as a modern reinvention of such a community, fostering environments that support and enhance human potential.

2. Environment Shapes Behavior and Decision-Making

Devin emphasizes the profound effect that environments have on our daily lives and decisions. She shares personal anecdotes to illustrate how subtle changes in surroundings can influence behavior:

“[00:06:35] Devin Zugal: If I have my phone next to me as it is right now versus behind my computer screen where I can't see it, I will not use my phone...”

On a macro scale, she discusses how proximity affects social interactions and community building:

“[00:07:02] Devin Zugal: How close you live near a friend makes a huge difference in how likely it is that you'll see them.”

This understanding drives her approach to designing Esmeralda, ensuring that the town's layout encourages meaningful interactions and fosters a strong sense of community.

3. Urban Design: Street Layouts and Cost of Space

A significant portion of the conversation revolves around urban design principles that Devin deems crucial for Esmeralda's success. She highlights the importance of street design as the foundational building block of a city:

“[00:12:50] Devin Zugal: I've been really obsessed with urban design and in particular street design...”

Devin explains how the cost of space influences the character of a community. Using Manhattan as an example, she contrasts high-cost urban areas with more affordable regions, illustrating how real estate prices dictate the pace and style of social interactions:

“[00:07:42] Devin Zugal: I think another really interesting one is cost of space...”

By carefully considering these factors, Esmeralda aims to balance accessibility, affordability, and aesthetic appeal, creating a space conducive to creativity and collaboration.

4. Financial Challenges: Navigating Mortgages and Equity

Financing a new town presents unique challenges, particularly in an environment like California where regulations like Proposition 13 significantly impact property taxes and development costs. Devin delves into the complexities of securing funding:

“[00:34:26] Devin Zugal: Yes, mortgages make buying a home a lot more affordable for people...”

She advocates for an equity-driven approach to land purchase and infrastructure development, minimizing reliance on debt to preserve long-term vision and flexibility:

“[00:36:02] Devin Zugal: We strongly prefer to do land purchase with all equity...”

Devin also touches on the limitations imposed by traditional real estate financing structures, which often deter innovative projects due to their conservative nature and short-term focus.

5. Learning from Exemplary Communities: Las Catalinas and Seabrook

Devin draws inspiration from existing models of successful town-building, notably Las Catalinas in Costa Rica and Seabrook in Washington State. She highlights Las Catalinas' commitment to preserving natural rainforests while developing a car-free, walkable Italian-style hill town:

“[00:49:38] Devin Zugal: Las Catalinas has a really interesting model of development where they've decided that they're going to preserve a thousand out of the 1,200 acres as natural rainforest...”

Seabrook serves as a financial success story, demonstrating the viability of patient, equity-focused development over extended periods:

“[00:67:01] Devin Zugal: It's a place that a lot of people in Seattle go for vacation. And that's been a helpful one to have because Seattle and San Francisco have a lot more similarities than Atlanta or Birmingham.”

These examples reinforce Devin's belief in the potential for innovative town-building to yield both community and economic benefits.

6. Prototyping with Edge Esmeralda: Learning Through Pop-Up Villages

To mitigate risks and refine her vision, Devin established Edge Esmeralda, a pop-up village hosted in Healdsburg, California. This temporary community serves as a testing ground for Esmeralda's core concepts, allowing for real-time feedback and iterative improvements:

“[00:17:44] Devin Zugal: We're putting in infrastructure and are building buildings. And that is what real estate development is...”

Edge Esmeralda employs an unconference format, encouraging attendees to create and lead their own sessions. This peer-to-peer model fosters organic collaboration and innovation, exemplified by the spontaneous creation of solar-powered campsites by attendees:

“[00:19:54] Devin Zugal: One of the activities that I enjoyed seeing really blossom was the creation of solar A frames...”

These experiential insights are invaluable for shaping the permanent Esmeralda community, ensuring it aligns with the desires and needs of its future residents.

7. Building Community Trust: Engaging with Local Stakeholders

Devin underscores the importance of fostering positive relationships with existing communities and stakeholders. Rather than approaching development with a top-down mentality, she prioritizes trust-building and collaboration:

“[00:21:33] Devin Zugal: We're building relationships in the local community so that when we do get to the point where we're building something, we actually are embedded.”

Hosting panels with local city managers and collaborating with regional businesses during Edge Esmeralda are strategic moves to demonstrate commitment and integrate seamlessly with the surrounding area.

8. Marketing Insights: The Power of 'Show, Don't Tell'

A key takeaway from Devin's experience is the effectiveness of experiential marketing. She emphasizes the importance of allowing potential residents to experience the lifestyle Esmeralda offers rather than merely describing it:

“[00:68:12] Devin Zugal: She lived the lifestyle for that week... a few days in, she was like, oh, I get it.”

Through hands-on experiences like the pop-up village, Devin successfully conveys the tangible benefits of Esmeralda's design, facilitating a deeper emotional connection and understanding among prospective residents.

9. Vision for the Future: Scaling the Model and Inspiring Innovation

Looking ahead, Devin envisions Esmeralda serving as a proof of concept that inspires the creation of similar communities nationwide. She hopes to establish a network of such towns, each embodying the principles of community, sustainability, and human-centric design:

“[00:71:47] Devin Zugal: We prove out this model and I and my team get to go build many, many more of these in the world.”

Devin is optimistic that as more examples of successful town-building emerge, the conservative capital landscape will gradually shift to embrace and support innovative development projects.

10. Personal Motivation: Empowering Human Potential

Underlying Devin's professional endeavors is a personal mission to unlock and maximize human potential. Her experiences caring for her brother with special needs and the empowering support from her family have profoundly influenced her commitment to creating environments that enable individuals to thrive:

“[00:76:27] Devin Zugal: Being given the opportunity to have that experience and to really be taken seriously meant a lot.”

This drive translates into Esmeralda's design, which prioritizes environments that foster learning, creativity, and collaboration, thereby empowering its residents to realize their fullest potential.

Conclusion

Devin Zugal's ambitious project, Esmeralda, embodies a visionary approach to community-building that prioritizes human-centric design, sustainable development, and financial innovation. Through meticulous planning, prototyping with Edge Esmeralda, and learning from exemplary models, Devin is pioneering a new paradigm in real estate development. Her dedication to unlocking human potential and fostering vibrant, collaborative communities offers invaluable insights for investors, entrepreneurs, and urban planners alike.

Notable Quotes:

• [00:06:09] Devin Zugal: "It's way easier to make better decisions if your environment supports and enables it."

• [00:12:50] Devin Zugal: "Streets are the single most important building block in a city."

• [00:34:26] Devin Zugal: "We strongly prefer to do land purchase with all equity. We think that if you're playing a long game and you really think that this is going to be a long-term value, it's worth not taking a loan."

• [00:57:11] Devin Zugal: "I'm really obsessed with the question of coordination and what are the key small things that you can do to get people to behave in the ways that they want to."

• [00:75:39] Devin Zugal: "We only get to live one life. Getting to do the most with that time that we can is really great."