In 1887, Watson and his wife leased the Tahoe House, a popular wayside inn, and for the next decade they ran this establishment together. During this period, the Watsons had five children: Alice May, Edna Nevada, Herbert Sydney (Bert), Francis Gilbert (Frank) and Robert Howard (Rob).

In 1897, Watson found himself lured by the call of the Klondike gold rush, and with his oldest son Frank, who was then 14, he set out to gain his fortune in the Yukon gold fields, leaving the remaining family members to operate their Tahoe City business. On Watson's return to Tahoe City in 1900, son Frank remained behind to work their mining claim.

Soon thereafter, Watson built another log structure in Tahoe City, to be occupied by the resident Gatekeeper who tended the dam which controls the flow of water down the Truckee River. Though this building was later destroyed by fire, its replica stands on the site, on the south bank of the river, and is today the Gatekeeper's Cabin Museum, open to the public from May through September.

On his return from a second trip to the Yukon in 1904, Watson was appointed the Tahoe area's first Constable, an office he held for the next 28 years, supplementing this livelihood with work as a guide, mill operator and trailfinder. Watson was among the town's most revered citizens, and was fondly known as "Grandpa" by all the local youngsters. It was said that there was no horse in the area which would fail to answer his beckoning whistle, and every dog in town knew his friendly pat.

In the last years of his life, Watson devoted himself to the marking of early trails in the region, and in 1930, accompanied by his faithful army horse Brownie, he traced one major route taken by California's early settlers, building a stone monument just west of the head of Squaw Valley, which he dedicated to the many pioneers who had helped to settle the west as well as to those men who had served their country in the first World War.

Watson's youngest son Rob, for whom the cabin was built, was born in 1886 in San Francisco. He was a student at the first school in Tahoe City, which had been built by his father, and later attended Oakland Technical School. When Rob married Stella Tong in 1909, the couple moved into the little log house on the bluff, and Rob became involved in the local building trades, constructing many piers and breakwaters along the west shore of the Lake.

Stella Tong was born in 1890 in Clarksville (14 miles west of Placerville), and had come to know Tahoe at an early age. Two of her sisters had married two brothers of the Scott family, who owned Deer Park Springs (now the site of the River Ranch at the entrance to Alpine Meadows), and for years her brother Wert managed the Tahoe Inn. Stella drove the Tahoe school bus for many years, and was a devoted friend to local school children.

The Watsons' daughter Mildred was born in 1910, and the family continued to occupy their log residence each summer. They did spend several winters in the little log cabin, but found it too cold and isolated for their liking, eventually relocating to the Foresthill area when the first snows arrived, returning each summer to operate a lumber company on Front Street (Hwy. 28) purchased from Walter Bickford in 1920.

By the mid-1920s, the family had begun to find the traffic and noise of Tahoe City's downtown intolerable, and in 1926, they bought several hundred acres of land northeast of Burton Creek, where they established a sawmill. Thereafter, the family lived on this property in the summer, spending their winters in Gold Hill, in western Placer County.

In 1947, the Watsons leased their log cabin to E.P. "Husky" and Fern Hunt, who operated it as a gift shop each summer through 1976. The Hunts sold gifts from around the world, including a renown collection of Navajo Indian rugs.

From 1976 until 1990, Betty Layton and her daughter Judy leased the property, selling handcrafted pottery, Navajo rugs and Mrs. Layton's watercolors under the name of The Potter's Wheel.

The North Lake Tahoe Historical Society and the Tahoe City P.U.D. were able to purchase the property in 1979, and it is now listed in the National Register of Historic Sites as the oldest home, built on-site, in Tahoe City. It also claims the town's first private indoor bathroom, and is certainly among the area's most picturesque residences, with its chinked log construction and sweeping Lake vista.

Admission to the Museum is free, however donations are gratefully accepted to aid in the restoration and preservation of the Watson Cabin.