STARR Restaurants: Stephen Starr. How a Non-Foodie Built Thriving Restaurants on Gut Instinct

Stephen Starr didn’t plan to get into the restaurant business. He set out to be a radio DJ. Then a nightclub owner. Then a music promoter. Along the way, he booked a young Jerry Seinfeld for $75, promoted shows for U2 and Madonna, and spent years pretending to be more successful than he really was. Then, in his late 30s, Stephen walked into a glitzy martini bar in New York. He was so taken with it, he decided to start his own version in Philadelphia. Today, Starr Restaurant Group generates nearly half a billion dollars in annual revenue and includes some of the most successful independent restaurants in America: Pastis, Buddakan, Le Diplomate, Parc, Makoto, and dozens more. The surprising part? Stephen did not start out as a foodie. Instead, he became obsessed with the theatre of dining: design, upholstery, lighting, music. A “wow!” feeling when you walk in the door. In this conversation with Guy, Stephen talks about the hard lessons he learned in the comedy and music business, and the unexpected path he took to redefining dining. What You'll Learn: The unglamorous economics of rock concerts and restaurantsHow rejection, romantic heartbreak, and failure can become powerful motivatorsWhy he believes he's spent his career "throwing the party" without attending itHow building the right team of designers can make a restaurant feel magicalWhy Stephen says today's entrepreneurs have a much harder path than his generation didThe model Stephen says new restaurateurs should follow today Timestamps: 00:06:03 — A lonely childhood: Making up skits in his room00:09:49 — Losing his mother at age 1900:11:17 — Starting a comedy club: Deli by day. Stand up at night00:20:49 — Going broke and reneging on a bank loan00:28:26 — Music promotion: Feeling like a fraud while promoting U2, Madonna00:36:52 — A New York martini bar inspires Stephen to start his own00:42:20 — The bold design behind a line-out-the-door restaurant01:03:31 — Opening Buddakan in New York: “I can’t do anything better. This is Sgt. Pepper”01:09:08 — Starting a restaurant today: “I would say don’t do it … but if you do, keep it smaller” This episode was produced by Alex Cheng with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Sam Paulson. Our audio engineers were Patrick Murray and Robert Rodriguez. Follow How I Built This: Instagram → @howibuiltthis https://www.instagram.com/howibuiltthis/ X → @HowIBuiltThis https://x.com/howibuiltthis Facebook → How I Built This https://www.facebook.com/howibuiltthis Follow Guy Raz: Instagram → @guy.raz https://www.instagram.com/guy.raz/ Youtube → guy_raz https://www.youtube.com/channel/UCNSfrxNEmCruNtjIzxCBHjg X → @guyraz https://x.com/guyraz Substack → guyraz.substack.com http://guyraz.substack.com Website → guyraz.com http://guyraz.com See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

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• 3:45Guy Raz?

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• 4:23Guy Raz?

  I saw something that you talked about in this business and it would just stress me out so much, which is, somebody might go to your restaurant five times, love it, and then the sixth time, something might happen that is big enough that they'll never go back and they're really mad.

• 4:37Speaker 01

  Yeah. You know, the more you say what you just said, the more I realize what a stupid business this is to be in. One of our landlords, Seymour Rubin, said to me, goes, "Why would you want to be in a business where one guy, a dishwasher, could just stop the whole operation?"

• 4:53Guy Raz?

  Yeah.

• 4:54Speaker 01

  "One guy could decide, that's it, I'm leaving," and the whole restaurant falls apart that night.

• 5:07Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 5:19Guy Raz?

  I'm Guy Raz, and on the show today, how Stephen Starr built one of the most beloved and lucrative restaurant groups in the country, one hit at a time.

• 5:38Guy Raz?

  Compared to almost any other small business, owning a restaurant makes almost no sense. The startup costs are high, you have to take out a long-term lease, your inventory is perishable, finding staff is a nightmare, the hours are crushing, the customers can be demanding and annoying, and if you execute well, at the end of the month, your net margins are around 5%, 10 if you're lucky. If you really want to make money in the restaurant business, you're better off trying to buy a Taco Bell franchise where margins are closer to 20%. Or you can do what today's guest, Stephen Starr, has done: build really awesome restaurants

• 6:19Guy Raz?

  that serve lots of guests, do it consistently, and replicate the model multiple times. Right now, Stephen Starr owns nine of the 100 highest grossing independent restaurants in the United States. These include places like Pastiche in Utacon in New York, Le Diplomat in Washington DC, and Makoto in Miami. In each one of Starr's 40 restaurants, you'll find a unique, dazzling design in addition to great food. And together, these restaurants pull in nearly half a billion dollars a year in revenue. Now, you may have heard the statistic that around half of all restaurants in the US don't make it past year five. Even Steven Star has had to shut a few restaurants down over the years.

• 7:02Guy Raz?

  But his incredible track record at building restaurants that even 10 or 15 years in are still hard to get a reservation at has a lot to do with so many things that most of us don't even notice. The lighting, the temperature inside, the music in the background, the way you're greeted when you walk in. These are things Steven's been obsessed with ever since he opened his first restaurant, The Continental, back in 1995. And here's the other thing, he's not a foodie. He doesn't really know much about cooking at all. In fact, before he even got into restaurants, he had a whole first chapter as a comedy and music promoter. And as you'll hear, for a guy who's launched such forward-facing, crowd-pleasing businesses,

• 7:47Guy Raz?

  he kind of prefers to stay in the background, which makes sense when you consider his childhood. Steven Star grew up in the mid-1950s and 60s in New Jersey, just outside of Philadelphia. He says he didn't have many friends when he was young, so he had to create his own entertainment.

• 8:05Speaker 01

  You know, I was surrounded by televisions because my father was a television repair guy. So the whole house, I had TVs everywhere. I watched every TV show in the world and very much fell in love with The Dick Van Dyke Show back then. And I wanted to also be a comedy writer. You know, what I watched on TV was the shows, but you know what I was more obsessed with? The credits. Like, I knew the producers. I knew the writer. I remembered, hey, Sheldon Leonard, he did that other show too. And I had a real-to-real tape recorder, and I created my own little environment in this room. I know, I was obsessed with music, mainly The Beatles and Elvis Presley, so I'd have

• 8:48Speaker 01

  my little fantasy imagination periods where I would do. Beatles versus Elvis, and I do that for three hours. I play one song versus another song and I rate them. So basically, loved TV. I used to do my own skits and, and radio shows. And then I became sort of intrigued by being an announcer on the radio.

• 9:10Guy Raz?

  So like, radio was a thing that you were really want. You actually got a license, I read, like, when you were a teenager, like, to be on the radio.

• 9:19Speaker 01

  Yes. I went to the federal courthouse in Philadelphia. I took my test and I passed. And what I used to do, I used to go in and sneak into a college radio station. And in one part of the station at night, the young college kid was, who was, seemed like an old guy to me, was on the air. And I would kind of sneak in and go into the production studio. And then I learned how to do production by myself, just by trial and error. And I'd take the albums from the radio station and I would do my own audition tapes. One day, however, the guy that was on the air caught me. And I thought, oh, boy, I'm in, I'm in big trouble. And he said, listen, you can't let just sneak into a radio station. Like, it's not cool.

• 10:03Speaker 01

  You can get arrested or whatever. He says, but listen, I'll help you. And then I came in like twice a week and he taught me how to edit, splice tape and all that. And I just made all my little audition tapes. I pretty much mimicked the FM DJs at the time, you know, by talking like this, this is Steven Starr at WMMR.

• 10:23Guy Raz?

  Right.

• 10:24Speaker 01

  And then I wanted to be a concert promoter. And I promoted my, my first big concert in my high school, which was a band called Mat the Hoopla.

• 10:34Guy Raz?

  Oh, yeah.

• 10:34Speaker 01

  Which has had a hit record called All the Young Dudes.

• 10:37Guy Raz?

  All the Young Dudes, right.

• 10:38Speaker 01

  Right, written by David Bowie. I got that bug of wanting to be a concert promoter. I loved it, became friends with the band, brought the band to my house. My mom cooked them dinner. So the entertainment bug was now really in me.

• 10:53Guy Raz?

  I'm just wondering, as an 18 year old, 17 year old high school kid, how did you become a concert promoter? I mean, who's gonna like, how did that work? I don't understand. I'm imagining today, an 18 year old saying, I want to bring Mott the Hoopla. Or that's not just, you can't just snap your fingers, I'm a concert promoter.

• 11:11Speaker 01

  I wanted to break out of the normal lifestyle that I was in in New Jersey. It was boring. It didn't satisfy me. I wanted to do big things. I became the student council president of the school. And somehow they allowed us to have a concert once a year.

• 11:28Guy Raz?

  Ah.

• 11:29Speaker 01

  So we had the opportunity to book Moby Grape, Alice Cooper, who wasn't big yet. We're Mott the Hoopla and we chose Mott the Hoopla.

• 11:38Guy Raz?

  Um, Stephen, when you're, I know that you went to Temple to study communications.

• 11:45Guy Raz?

  But I also know that you're, you lost your mom at a pretty young age. You were just 19.

• 11:53Speaker 01

  Yes.

• 11:54Guy Raz?

  Which I can't imagine how, I mean, what that would have been like to be a kid and, and for that to happen.

• 12:03Speaker 01

  I mean, it was awful. I was 19. I had younger sisters, three younger sisters, six, seven, 13, something like that. That was horrible. And it definitely did something to me that made me want to work really hard and maybe try and forget. But even prior to that, when I went to college, my goal was to be, I wanted to be rich. Cause we didn't, we had a middle class family, but we didn't have much. And I wanted to take care of everybody. And I remember sending my, typing a letter to my mother, telling her that, don't worry, by the, by the time I'm 21, mom, I will be a millionaire.

• 12:44Guy Raz?

  Okay. And there's conflicting, I've heard conflicting things that you did graduate or that you left before you graduated. First of all, let's just clarify that. Did you finish or did you leave early?

• 12:55Speaker 01

  I left early. I left like the third year because my sisters were young and I couldn't, I had to be there and help them. So I had no choice at that point.

• 13:06Guy Raz?

  But I guess from what I gather, in 1977, right, so you are roughly 21 years old, you open a diner and a comedy club in Philadelphia called Grandma Minis. Tell me the story of how you, of how that came about. Because you were, what was the idea for that?

• 13:26Speaker 01

  I just wanted to do something that could make some money for myself. And not that I thought it was beneath me, but it just wasn't in my DNA to like work in a restaurant or be a waiter. So I went to this deli and the deli was called Grandma Minis. And I befriended the owner. And I said, you know what? At night here, what are you doing? He goes, nothing. We closed. I said, I have an idea. What if you did comedy? Because I had been going to New York to see comedy shows at Catch a Rising Star in New York City. And he said, sure, I mean, I'm open to it. So I started going back to Catch a Rising Star and I'd watched the show and the comedian would get off the stage and you'd go over to the bar

• 14:08Speaker 01

  and I'd say, hi, my name's Stephen Starr. I'm thinking I'm going to open a comedy club in Philadelphia. Would you be interested? And they all go, yes, of course. And I get their phone numbers. And then we finally had our first show and I start booking comedy there.

• 14:24Guy Raz?

  All right. So just one back. So Grandma Minis was a, an existing diner? It existed?

• 14:28Speaker 01

  It was a deli. It was a deli.

• 14:29Guy Raz?

  It was a deli.

• 14:30Speaker 01

  We put a stage up, like after it was closed, there was enough room in there.

• 14:33Guy Raz?

  How big, how big was it?

• 14:35Speaker 01

  It probably only hold around 80, 90 people. That's it.

• 14:38Guy Raz?

  And you, you just got to know the owner or you? And he said, yeah, you can use this place at night and we'll just split the ticket sales or something like, how did that work?

• 14:48Speaker 01

  No, basically, no, no, he said, you keep the door and I'll keep the bar and food.

• 14:52Guy Raz?

  Got it. And how did you like, again, you're such a young guy. You know, sometimes you hear about, you know, young people in their 18, 19, 20, who are doing these things that you often hear people in their 40s doing. And then you find out that, well, maybe they looked older, they were taller, they were bigger, they, they had a presence that kind of enabled them to kind of get away with it. Did you have any of those things?

• 15:16Speaker 01

  No, I wasn't a look older, I wasn't like special in that way. You know what I think it is? This is why I heard you're a good interviewer. You're like Barbara Walters.

• 15:26Guy Raz?

  I don't know about that.

• 15:27Speaker 01

  I mean, my kids have asked me that question. My, my wife, my, I have a couple of wives have asked me that question. I do believe I must have had charisma. People liked me. You know, I remember one guy in the very beginning, when I first opened my first real nightclub, he was the guy who owned the building and he was a tough guy. And he told me, he says, you know what? You're very disarming. That was the word he used for me. He goes, you're very disarming. I just think I was, I had a thing.

• 15:57Guy Raz?

  Yeah.

• 15:58Speaker 01

  But there's another, there's another piece here. I also worked on the boardwalk in Atlantic City, which is a big piece of who I am and how I became who I am.

• 16:08Guy Raz?

  You worked on the boardwalk when?

• 16:10Speaker 01

  In when I was 16 and 15, 16, 17.

• 16:14Guy Raz?

  Yeah.

• 16:15Speaker 01

  Boardwalk in Atlantic City as a salesman in a store that sold everything. It sold watches, rings, stereos. And I learned so much from working on the boardwalk in Atlantic City. I learned about human nature. I learned how to, to talk to people. I learned how to sell. You know, we were paid on commission and we got paid based upon how much profit we made on each item that we sold. In the beginning, we felt terrible. We didn't know how to do that. We, you know, a ring that was worth 20 bucks, we were being encouraged to try and sell for 200 bucks, and we thought that was wrong. But eventually, just like, you know, a Navy SEAL or a Marine,

• 16:56Speaker 01

  we got to be trained killers. And we learned how to sell and how to convince people. So I think the ability to feel confident, my confidence, was being a salesperson on the boardwalk in Atlantic City.

• 17:09Guy Raz?

  Yeah. Okay, so you have this burgeoning comedy club at Grandma Minnie's, and you start to bring comics. And how does it do?

• 17:18Speaker 01

  It became very popular. And then the gentleman who owned the place, and then all of a sudden, one day, he goes, you know what? This doesn't make any sense for me. I could, you're keeping the door. I could do it. I want you to leave. I'm doing this myself.

• 17:32Guy Raz?

  Oh, he said he was gonna, why am I, why are you making all the money for booking these gigs? I'm gonna just book the comics myself.

• 17:40Speaker 01

  And he threw me out. I was devastated. And I then said, you know, kinda like Rocky, I said, you know what? I'm gonna, I'm gonna, can I curse on this thing?

• 17:52Guy Raz?

  Yeah, yeah, sure.

• 17:53Speaker 01

  Yeah. I was gonna say, you know, fuck him. I'm gonna come back. I'll fucking put you out of business.

• 17:59Guy Raz?

  Okay.

• 17:59Speaker 01

  Because I was, I was the one that knew these comics, you know, I'm, people I had befriended. So I started, I started looking for a place to open another club. I found a bankrupt building that was a restaurant, somehow convinced the bank, I had no money, to sell it to me.

• 18:17Guy Raz?

  Where was it?

• 18:18Speaker 01

  At Second and Bainbridge Streets in Philadelphia. Price was $150,000.

• 18:22Guy Raz?

  Okay. And how are you gonna buy that with zero collateral and zero assets?

• 18:28Speaker 01

  I didn't even know what collateral was. I saw the sign on the building, somehow got the appointment with Continental Bank at the time, met with the man, and told him my idea.

• 18:39Guy Raz?

  What was your idea? What was, what was the pitch you gave him?

• 18:41Speaker 01

  Pitch was to open a comedy club, like I had opened for someone else.

• 18:46Guy Raz?

  And how, why would? Why would a banker even take you seriously as a 22-year-old with no collateral and no cash?

• 18:54Speaker 01

  I have no idea, except that I think it was a time that wasn't like, I think people still believed in people. Like bankers still would go on an instinct or a feeling.

• 19:06Guy Raz?

  Yeah.

• 19:06Speaker 01

  So it was probably a sort of a dead building. Maybe he couldn't lease it or rent it or sell it for a long time. And this kid came in that sort of disarmed him, to use that word. So he let us, he let me $40,000. And then there was someone else, I forgot who it was. I either borrowed or whatever 10. And for 50 or 60 grand, I piecemealed this thing together.

• 19:30Guy Raz?

  Yeah, it's so interesting because I've heard, we've had stories like this on the show in the past, like where people got a property or a lease in the 70s or early 80s. And it's so clear, the contrast between that time and today. You know, the, the red tape today, the regulations, the corporate-owned banks, like it's just a completely different.

• 19:52Speaker 01

  It could never happen again. I could never do what I did back then.

• 19:56Guy Raz?

  Yeah, I mean, it's just a different, sorry. So you, and what did you call this club, by the way?

• 20:02Speaker 01

  So there was Catch a Rising Star in New York, which is really the godfather of all comedy clubs. And I called it Stars, S-T-A-R-S.

• 20:11Guy Raz?

  And presumably you could get some of the comics from New York to come to Philly because it's only an hour and a half, two hours by train.

• 20:18Speaker 01

  Oh, yeah. I mean, I'd already known them and lined them up.

• 20:21Guy Raz?

  So tell me some of the people you, you brought in.

• 20:23Speaker 01

  So the first, I believe the first show was Richard Belzer.

• 20:28Guy Raz?

  Wow.

• 20:29Speaker 01

  Went on to be on Law and Order, right?

• 20:31Guy Raz?

  Yeah.

• 20:31Speaker 01

  As the cop. Pat Benatar.

• 20:35Guy Raz?

  Pat Benatar, the singer?

• 20:36Speaker 01

  Yeah, but she was known as Patty Benatar back then.

• 20:38Guy Raz?

  She was a comic?

• 20:39Speaker 01

  No, no, no, she wasn't a comedian. Because the shows consisted of a comedian and a musical act ending with a headlining comedian.

• 20:47Guy Raz?

  Okay.

• 20:47Speaker 01

  And Patty Benatar back then was, she sang all cabaret songs. It wasn't like rock and roll then. So that, that was one of our first shows. I booked, Jerry Seinfeld played there. He was a, the host of Amateur Night. I paid him $75. Bob Saget starred in our club.

• 21:06Guy Raz?

  Wow.

• 21:06Speaker 01

  So I tried to run it seriously, but I had no idea what I was doing. Classic story is the opening night. We put all it sold out, put all the cover charges, which I forgot what they were then. Five dollars, eight dollars. We put them on the check as opposed to taking the cash at the window.

• 21:23Guy Raz?

  Oh.

• 21:23Speaker 01

  Put the cover charge on the check and the people drank and they ate on the check. Around 65% of the audience walked out on the check that opening night.

• 21:33Guy Raz?

  Hmm.

• 21:34Speaker 01

  So they didn't pay and I had no money. I remember crying that night. What did I do? Cause I didn't have the money to pay the comedians.

• 21:42Guy Raz?

  And how did you do the food side of it? I mean, again, like that's a different business. How did you even know what to do?

• 21:50Speaker 01

  I didn't know. I hired a chef. He was a young guy. I don't know how good he was, but we figured it out. This is why, like even today with all the restaurants I own, I see what we do to open a restaurant. The tens of thousands of dollars we spend on training and this and that and audio visual and crazy stuff that we do. And I look back at what hell I did this and I say to myself, what the fuck? I didn't, we never did any of this now. All this training.

• 22:17Guy Raz?

  It was just, you just say come, come into the door. You have a young chef, but he would say, hey, we need a deep fryer. We need a grill. We need a prep space. And, and you would say, well, just do what you need to do. Just make it happen.

• 22:30Speaker 01

  I mean, I learned as I was going along and we kept the food light. I mean, we, we did burgers and fries and whatever we did. So it was, it wasn't very complicated. I, I remember at one point, this is the sad, sad story. You know how when, when you open a new business, the old days, you put the first dollar, like you hang it on the wall.

• 22:48Guy Raz?

  Yeah, right.

• 22:48Speaker 01

  You know, that first buck.

• 22:50Guy Raz?

  Yep.

• 22:50Speaker 01

  So at one point it got so bad, we couldn't pay our bills. I had to take the money down off the wall. To use it to pay for something that was like COD.

• 23:02Guy Raz?

  Yeah, I mean, I imagine that a comedy club, even with a two-drink minimum, you got staff, you've got, right, you've got to pay back the loan, I mean, and from what I've read about it, about it, Stars, it just, as awesome as it sounds like it was, I wish I was there, I wish I was there right now. But as a business, it doesn't sound like it was sustainable, that it was not, it was hemorrhaging money.

• 23:24Speaker 01

  Yeah, it wasn't sustainable, I wasn't making any money, maybe I was able to eke a couple hundred bucks a week for myself. But I was always getting behind the eight ball. And then eventually that comedy club evolved and morphed into a club that did mainly music.

• 23:40Guy Raz?

  So you just kind of switched it over, the same venue, the same exact place? And you still called it Stars?

• 23:46Speaker 01

  Called it Stars and did some mind-blowing shows, man, I mean, great jazz artists, Nina Simone, Buddy Rich and the Four Tops and Temptations, and then the punk thing started. So then we started doing The Ramones, The Clash, and all kinds of punk bands. Just very, very memorable shows, and it's such an intimate environment.

• 24:09Guy Raz?

  How many people could you fit in?

• 24:12Speaker 01

  Not much, like 120, 120 people.

• 24:14Guy Raz?

  Okay, so this, so you switch over to music, and how did that do as a business?

• 24:19Speaker 01

  It did okay, and it really was the thing that was the catalyst for me to become a real concert promoter. And that motivated me to look for something bigger, which I did, and Stars eventually went, you know, went away.

• 24:30Guy Raz?

  Okay, so this was the transition to a new venue, I think called Ripley Music Hall, right?

• 24:35Speaker 01

  Yeah.

• 24:35Guy Raz?

  And from what I read, it's 500-seat venue, so it's a bigger place, also in Center City in Philadelphia?

• 24:42Speaker 01

  Yeah, a few blocks away, it was on South Street.

• 24:44Guy Raz?

  Okay, going back just quickly to Stars, you got a loan from a bank in 77 to open it up, did you, were you able to pay that back?

• 24:51Speaker 01

  I don't think so, no, I didn't pay it back, I was too stupid to realize, I just walked away from it. Because, I mean, the building was $150,000, I should have tried to sell it, but I didn't, I just walked away. And nothing happened, there was nobody, I didn't get sued or...

• 25:08Guy Raz?

  Right, the bank just repossessed it and then they probably figured out, okay. God, again, amazing, different time, right, because today... That could have ruined you for a while, right? Like, it just, it's.

• 25:21Speaker 01

  No, no, but it's, it's true. When people ask me, hey, what's your advice? I, I feel so bad because the way things are constructed now, there's very little room for entrepreneurship.

• 25:33Guy Raz?

  Yeah.

• 25:33Speaker 01

  Unless you have a lot of money or your family has money. I mean, just to have an idea and have virtually no money, it's hard, man. It's hard. It's not the same, it's not the same country.

• 25:45Guy Raz?

  Yeah. Okay, so you, you go, uh, move to music. So now music really becomes your thing, Ripley Music Hall.

• 25:53Speaker 01

  Mm-hmm.

• 25:54Guy Raz?

  And this is the early eighties. You're bringing in, I've read U2 and Bruce Springsteen and Cyndi Lauper and Miles Davis and, I mean, James Brown, Ray Charles, just incredible artists to a 500-seat club.

• 26:09Speaker 01

  Yeah. I had this thing in my head that really carried on to the restaurant business that I never wanted to do the same thing every day or all the time. So every night, it was, my goal was to have something different. So one night you'd have Ray Charles and the next night you'd have, you know, Eurythmics. It was like my own Ed Sullivan show.

• 26:30Guy Raz?

  And just to kind of go back on the business side, how were you able to finance the Ripley Music Hall? Like, how, I'm assuming you didn't buy that building, maybe you leased it, but how were you able to do that?

• 26:40Speaker 01

  I did that one initially kind of on my own, similar to Stars. But eventually I got an investor who was participated in transitioning to concerts. Because when you did concerts, you needed real money for deposits and stuff like that.

• 26:57Guy Raz?

  And Stephen, here's what I'm wondering about. I mean, running a, a music venue, it's hard, right? And, and you were not a guy out of business school or, you know, you were really kind of learning as you were going along. But it sounds like, again, just figuring out how to make this sustainable was tough for you at that time. Like, you didn't, it was not easy to make a profit doing this.

• 27:22Speaker 01

  No.

• 27:22Guy Raz?

  Or actually, you weren't making a profit.

• 27:24Speaker 01

  No, very little. And if I, if I had been, if I had gone to business school, I never would have done it. Because none of it, none of it made sense. You know, a little of this is, you're almost an imposter, you know? You're pretending to be something that you're not. You know, I was this promoter, bringing in this act, that act. We're doing great, convincing somebody to play for me as opposed to my competitor. When at the end of the day, what was left over was very little. But a lot of the brands started developing, right? People started knowing that I was this success, but I wasn't.

• 28:01Guy Raz?

  What about you? I mean, this strikes me as a kind of a business which really depends on relationships. Like, I'm in San Francisco, so I think of Bill Graham, the legendary promoter here, right? Who lived here. And, I mean, what gave you an advantage, do you think? I mean, were, did you have particularly good music taste? Were you like, quote unquote, cool? Were you just, like, why, why do you think you were able to even successfully bring these artists into Philly?

• 28:28Speaker 01

  Of course, I was obsessed with music. I loved music. Many of the promoters back then were older than me. And they were not in it so much for the music as they were in it for the business of it.

• 28:38Guy Raz?

  Right.

• 28:39Speaker 01

  You know, I met, I met Bill Graham a couple of times. And I think he was the real deal. But a lot of these guys were just in it because it was a good business and they can get chicks and, you know, do drugs.

• 28:50Guy Raz?

  That's what I was getting at. Like, you don't strike me, maybe I'm wrong, like, you don't strike me as that kind of guy.

• 28:55Speaker 01

  No, it wasn't me. Girls, I always liked and tried to get, but not drugs and all that. No, that wasn't my motivation. And at the end of the day, I was always very, very good to the bands. I gave the bands not just what they asked for, but more. I always felt I had to perform better than my competition because I was younger, not as successful. So I just tried harder.

• 29:18Guy Raz?

  Right.

• 29:18Speaker 01

  And there's one other thing here that you may have read also, that a lot of my motivation. When I was in college, I had a girlfriend. You know, my mom had died. And around nine months after my mother died, the girlfriend, who I was in love with, left me, broke up.

• 29:40Speaker 01

  Messed me up for a long time. That may have been a more of a catalyst for my success than my mother actually dying. In the end, my motivation to open that club was two things, to get her back or to like, say, fuck you. Look, I made it. So I have to tell you that because it's such a big part of what motivated me back then.

• 30:02Guy Raz?

  It's like that Michael Jordan line in the, in this Hall of Fame speech where he talks about another, another log on the fire. Maybe you were motivated by proving yourself, maybe even being a little angry or having a little chip on your shoulder.

• 30:13Speaker 01

  Yeah, for sure.

• 30:16Guy Raz?

  All right. So from what I gather, the Ripley Music Hall business side was just not sustainable and that eventually closed, I think in the mid eighties. But you stayed with being a concert promoter. That really became your, from what I've read, your main thing. Like, and it sounds like that was actually a much more sustainable, profitable business to do.

• 30:39Speaker 01

  Yes, because the nightclub part of it, the Ripley Music Hall, all that really was, was a way to get the big agencies to do business with you. See, so they have a new act and they say, listen, we have this new band in excess or R E M. We need you to book them for $3,000. You'll probably lose money, but stick with us because if you do us a solid, when they get big, we're going to take care of you. And that's, so we ended up just losing money to hopefully make money later. It was like a lost leader thing.

• 31:10Guy Raz?

  Right.

• 31:10Speaker 01

  So the club didn't work out after a while. It was just too much. It was hard to make a living there. And then I continued with the concert promoting and did, did fairly well with that.

• 31:20Guy Raz?

  And for people who don't really know what that means, so if you had a, like a Madonna, because I know you did promote concerts for Madonna in Philly, like a huge act like that, right? You know, there's a minimum guarantee for her and maybe a share of the profits. And then there's all the ticket sales and you got to do the promotion. You're not, you're not paying for the venue. That's a different cost, right?

• 31:38Speaker 01

  No, no, no. You pay for the venue.

• 31:40Guy Raz?

  You pay for the venue. Okay. So basically they're saying, hey, You're like the contractor of for my house. You're doing everything, right? You're handling the whole thing. And then whatever's left is yours. What would be a sort of a good margin you could make on that?

• 31:55Speaker 01

  I think you make after all the expenses are over, you're only making around 15%. So, you know, in nowadays, it's a whole different thing. Nowadays, the act gets everything. And then the promoter, which is really basically one promoter, Live Nation now, they own a lot of the venues. They get the parking and they, because they own Ticketmaster, they get that ticket charges. Back then, when I was doing this, we only got the ticket sales.

• 32:20Guy Raz?

  Right.

• 32:21Speaker 01

  So it'd be a modest profit.

• 32:23Guy Raz?

  But you probably were making more money than you were running comedy clubs.

• 32:26Speaker 01

  Oh, absolutely.

• 32:27Guy Raz?

  Right.

• 32:27Speaker 01

  Absolutely, much more.

• 32:29Guy Raz?

  And did you, it seems like a very like sharp elbows business. Like you kind of have to be a son of a bitch a little bit to succeed. Is that true, do you think?

• 32:38Speaker 01

  Hmm. No, for me, it was different because I was David and there was a Goliath in town who was, you know, had been there longer and more entrenched. I had to be the good guy. I had to be the schmoozer. Because in the end, the bands only cared about one thing. How much you gave them. Money and what the catering was backstage. It was pretty a simple formula.

• 33:04Guy Raz?

  And what about like dealing with the egos of like, you know, when you, I'm always amazed by like real estate agents. They have this ability because they're dealing with people who can be really petty and just petulant and difficult. And they're generally very calm and because they're in the client services business. Similarly, when you're dealing with artists, they can be jerks, right? They could just be, and their people around them can be worse.

• 33:29Speaker 01

  It never bothered me, honestly. I looked at it like.

• 33:34Speaker 01

  The acts themselves were so, they were bigger than life. They were not even real. They were almost like cartoons. And whatever it is they wanted that was overwhelming or overbearing. It was part of the game. I knew I was playing the game. I was enjoying, it was fun to be in the game and have an act tell us, "Don't look at us when we walk down the hallways on our way to the stage." The people that weren't fun were the people that worked behind the scenes. The agents.

• 34:02Guy Raz?

  Yeah.

• 34:03Speaker 01

  Their booking agents. Those were the real assholes back then, obnoxious. Because, you know, there was a food chain. And the concert promoter was the lowest on the food chain. We were at the bottom.

• 34:14Guy Raz?

  I mean, I think there's also something just like a sort of a intrinsic temperament that some people have. Like, I couldn't do that. I would lose my mind, you know? I mean, do you lose your temper? Do you, or are you just kind of even keeled all the time?

• 34:29Speaker 01

  No, not even keeled. I lose my temper. The restaurant business is what brings out the temper in people.

• 34:35Guy Raz?

  Yeah.

• 34:35Speaker 01

  That's when you become like a dictator, like Saddam Hussein. But the music business, no, I didn't lose my temper. It was, it was stressful, but it was fun. And, you know, when you're watching something that you love happen, music, comedy, it's so satisfying and you could put up with the other stuff.

• 34:54Guy Raz?

  Yeah.

• 34:55Speaker 01

  But it was also, it was a challenge. How do I get this guy who is treating me like shit? Who is not giving me the acts that I want? How can I convince him somehow, some way that I'm better at this than my competitor? And I was young, so I loved that challenge. And by sheer force of my will, I was able to turn people's minds around. I was able to take, I was to be a nobody in this music business and convince the biggest agents in the world to take me seriously. And that to me was, I won.

• 35:35Guy Raz?

  You know, it's interesting because you mentioned that as a kid you would be in your room with a reel to reel and on your own a lot of the times and maybe even a bit of an introvert, but you were doing a job that really required, because you just, you'd mentioned this idea that I'd out schmooze these people, but you don't strike me as somebody who really likes to do that or feels comfortable doing that. So, am I right about that?

• 35:58Speaker 01

  You're right and you're wrong. You know, I don't like going to parties and hanging out and let's have dinner, let's go out for a drink. I hated that part.

• 36:07Guy Raz?

  Yeah.

• 36:08Speaker 01

  Yeah, but you know, in my, ever since I was a kid and then the music, the nightclub business, the music business, and now the restaurant business, we're always throwing the party, right? I've been throwing the party for years, but I'm never in the party.

• 36:23Guy Raz?

  I know exactly what you mean, by the way, because I love throwing parties. We throw parties all the time. And I'd cook and I make sure everyone's glass is filled and I'm just making sure that somebody has somebody to talk to, but I actually am not in the party. I totally, and I actually like that role a lot more.

• 36:40Speaker 01

  I used to be sad about it because I remember going to, I own nightclubs, I went to shows and I'd be like in the back, my arms folded, watching everybody, just watching them. And I thought I was pathetic. You're not having fun, you're not part of the event. But eventually, I, like you just said, I kind of liked that role because I was like, I was watching over my little creation and everybody was happy and that was my satisfaction.

• 37:08Guy Raz?

  So, I read, and I don't know if the year is exactly right, but around 1990, you sold this company, this promotion company and production company to a bigger or different promoter.

• 37:19Speaker 01

  To the big guy, Electric Factory Concerts.

• 37:22Guy Raz?

  I imagine you did it because the offer was pretty good.

• 37:24Speaker 01

  The offer was pretty good. Also, I saw the way the music business was going. The bands were getting more. They were all, sometimes getting 100% of the door. And if we didn't have some sort of Ticketmaster deal, which I didn't have, it was going to be harder and harder to compete. So yeah, I sold my company to my competitor. I felt bad about it, but I felt it was time.

• 37:48Guy Raz?

  Makes sense because you could see where this industry is going. What were you thinking about doing? I mean, did you think, all right, I'm done with the music business and I've got to find something new? Or did you already, when you sold the business, did you already have an idea in your mind?

• 38:03Speaker 01

  No, I had no idea. I pretended I was still in the music business because I kept the office. I would go to work every day and look at my Rolodex and make some calls and then go out to a deli and have coffee and go back to my office and look at my Rolodex. And then it became, it hit me, oh shit, I'm not in this business anymore. So at that point, I had a child. So I spent a lot of time with my daughter, Sarah, a lot of time going to the gym, a lot of time pretending I was still in business. And then eventually I said, I gotta do something.

• 38:35Guy Raz?

  Because you didn't have like money for the rest of your life, right? From that sale.

• 38:39Speaker 01

  Rest of life money? No, no. So again, just through traveling and stuff, I was in New York one night and went to this restaurant called Global 33 on First Avenue. And I, I just was totally blown away by this place. It was so cool.

• 38:57Guy Raz?

  What was so cool about it?

• 38:58Speaker 01

  The walls were cool. They were padded like vinyl walls that were beige and there were greens and the girls were extremely good looking. And I saw these like martini glasses. And I didn't even know what a martini was really. I never drank martinis. And there was a DJ there and I said to this DJ, I said, what is this? He goes, it's a, it's a martini bar. And I went back again a couple of times and it was packed, line to get in. And then I said, this is something, I gotta try and do something like this in Philly.

• 39:33Guy Raz?

  When we come back in just a moment, Stephen opens his first bar and restaurant, even though the food part really scares him. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 39:58Guy Raz?

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• 40:43Guy Raz?

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• 41:28Guy Raz?

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• 42:12Guy Raz?

  That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on. NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work.

• 42:55Guy Raz?

  And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization and how to position your business to prosper from it. If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 43:32Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's the mid-1990s, and Stephen is looking for something new to do after selling his concert promotion company. He's inspired by a martini bar he visits in New York City, and he starts looking for a location in Philadelphia to do his own version.

• 43:49Speaker 01

  I saw this diner at Second Market Street in Philadelphia. It was called The Continental. And it was a Greek guy that owned it. His last name, I think, was Pulos. And I said, you know what? Would you ever think about renting this out to me? He goes, why? Why would I do that? I said, because I think I could do something here. He goes, what are you gonna do? I'm doing 3,000 a week. What are you gonna do? Five, six? Eventually, he gave in because he wasn't busy. And he leased it to me.

• 44:17Guy Raz?

  And it had this, I don't want to jump into it too much. It had this neon sign out front that said Continental?

• 44:23Speaker 01

  Yes. And it was built in 1962. So it wasn't a 50s diner. 50s diner would not have been cool. This was a 60s diner. It had a little different vibe to it.

• 44:33Guy Raz?

  And I say that about the neon sign because anyone who's been to Philadelphia knows that restaurant now. But that sign was there. It was called The Continental Diner.

• 44:42Speaker 01

  Right, exactly. So I went through several different ideas, talked to a few different designers, and came back to the idea of doing the martini bar. And I hired the guy that did Global 33. His name was Miguel Calvo. He happened to be the DJ. He was both the designer of the restaurant and the DJ back then.

• 45:02Guy Raz?

  Okay.

• 45:02Speaker 01

  And then a local friend of mine named Owen Kamihira, who was an artist in Philadelphia. And the three of us put together the idea and the concept for the design of the restaurant. So I did the whole thing for $90,000.

• 45:16Guy Raz?

  How, like drywall? What was, Home Depot?

• 45:21Speaker 01

  So the diner was the diner. We took the existing booths and reupholstered them in green. Olive, right? Green with red piping. There's the pimento.

• 45:30Guy Raz?

  Yeah.

• 45:31Speaker 01

  So existing booths, reupholstered. The bar top, which was formica, we encased it in concrete. Kept the bar stools. And we reupholstered them in red and green. And then Owen Kamihira, the artist, brilliant idea. Brilliant idea. He created lighting fixtures that were big olives with giant toothpicks through the lighting fixture. So from the street, it was this incredible postcard that you could see through the blinds. And Miguel came up with this, we had a drink rack, a glass rack above the bar. And all the martini glasses, he filled them in Lucite. So all the cocktail glasses were hanging above you and they looked like they were full.

• 46:14Guy Raz?

  Ninety grand to do all that.

• 46:16Speaker 01

  Ninety grand. And I remember the heat, the heater would go out every 20 minutes. I'd have to run down and light the pilot because I didn't have money to replace the heating system.

• 46:27Guy Raz?

  You opened it in 1995 and how, what happened?

• 46:32Speaker 01

  Opened in 95, had this, a lot of incredible buildup. I put these like full page ads in like these sort of hipster local papers.

• 46:42Guy Raz?

  Yeah.

• 46:42Speaker 01

  It was like Studs Terkel, like these little quotes. And people were just, they were sort of intrigued by this thing, martini bar. And it was packed from the day I opened it, there was a line around the block. And just like the concert business, I always thought, you know, you knew when a show was a success. And the first five minutes, you put the tickets on sale. Hit that ticket machine, boom, you start seeing the tickets flying out. Done, you knew you had a winner. I used to have the same theory about restaurants. If it wasn't packed from the day I opened the door, we're gonna fail. So this place had lines around the block to get in. People loved the food. It was sort of global tapas food. And it just was this huge, huge success.

• 47:26Speaker 01

  And this little restaurant that did $3,000 a week, being this previous owner, eventually ended up doing $100,000 a week.

• 47:33Guy Raz?

  Wow. And I imagine like at the time, there were places like this in New York City, which is two hours from Philly, but there was probably not that much like this in Philly. So, I mean, I lived in Washington DC around that time. So I remember if something like that opened in DC, everybody'd be like, wow. You know, because New York was the center of gravity, still is in a lot of ways. But I imagine it was so popular because it was so different from everything around, around there.

• 47:58Speaker 01

  Absolutely. You know, and then that movie came out, Swingers.

• 48:01Guy Raz?

  Swingers, 96.

• 48:02Speaker 01

  It came out right afterwards and man, I said, God is good to me.

• 48:07Guy Raz?

  And then Sex and the City and the Drinking Cosmos and that whole, and then.

• 48:11Speaker 01

  And it was all young people coming out who never knew what a martini was. They were getting drunk on martinis because they didn't know how to handle them.

• 48:18Guy Raz?

  Okay, in that bar, obviously martinis were the star, but was food? I mean, actually, before we, I ask you about the food there. Are you a food person or like, and I say that as somebody who is, I love food. I'm, I'm a, I'm gonna be a modest here. I'm a very good home cook. People listening to the show know I talk about it. I have dinners at my house all the time. I love to cook. It's my, I've worked in kitchens. It's a huge passion of mine. Is that who you are? Are you like a food person?

• 48:46Speaker 01

  No, I wasn't. It certainly wasn't then. Back, I was a rock and roll guy. I was a music guy. I was a, loved comedy and food was just something to do as part of my social life. I sort of matured and grew into it. And now I know it very well, obviously, and I have a great respect and reverence for it. Back then, going to a restaurant was just something to do. It was like going to the movies.

• 49:12Guy Raz?

  Right, but when you opened the Continental, you, you knew that you wanted the martinis to be great.

• 49:17Speaker 01

  Yeah.

• 49:17Guy Raz?

  And was food also important? Were you obsessive about food?

• 49:21Speaker 01

  Yes, but there's another part of the story. I hate doing this to you because I'm skipping something. In between, when I was still in the music business, a friend of mine wanted to open a restaurant that was based upon a 50s concept, like Johnny Rockets or something like that. And I opened a place that was like a fast food restaurant. It was called Shake Burger and Roll. Cool name and great little design. I came up with with a guy from, a good interior designer from New York. The place was packed. You couldn't get in and it went out of business in nine months.

• 49:56Guy Raz?

  And why is that?

• 49:57Speaker 01

  I couldn't figure out how to run it. It was like Yogi, Yogi Berra, who said, nobody goes there anymore because it's too crowded. It was just so crowded. We couldn't get the food out. I mean, I remember one time the local police department came over to get like 40 burgers. Awesome. The burgers go out. The cop comes back 20 minutes later. He goes, what the hell is this? He opens up the thing. He opens the bun. All the, there's 40 buns, but no burgers inside the bun.

• 50:23Guy Raz?

  No.

• 50:24Speaker 01

  So, the reason I'm telling you this story, I was scared to death of food. I was afraid to do food. So when I did the Continental, I knew I had to have it, but I actually was so scared, I just wanted to hire a chef and give him or her a percentage of the business, just to take care of it, because I didn't know what I was doing.

• 50:43Guy Raz?

  And is that what you did? You would do?

• 50:44Speaker 01

  Oh, I tried. They, they all turned me down.

• 50:47Guy Raz?

  They wanted a salary?

• 50:48Speaker 01

  They just wanted a salary.

• 50:49Guy Raz?

  Yeah.

• 50:50Speaker 01

  And thank God, I would have shot myself if I had given them like 30% of the business. And look, you know, you learn by making mistakes, and I knew all the mistakes I made. And, you know, I couldn't manage a restaurant. I remember at the Continental, Sunday nights, I was the manager. And I hated it. I hated being there all night. I hated dealing with drunks. It was, uh, it was tough.

• 51:12Guy Raz?

  Yeah, it's a tough business. Um, I want to point something out because, and I think it's important to point out, not everything you touch as a restaurateur was gold. Like, you have had things that didn't work out. And I think early on, you tried a Soviet-themed eatery that I'm assuming served Russian food or pierogies or maybe, and, and that didn't quite, I guess it didn't quite work out.

• 51:34Speaker 01

  I hate using the word Soviet. It sounds very, very, uh, I feel like treasonous. Uh, it was Russian. It was called Cafe Republic. It served great cocktails, Russian vodka. We had the Siberian six-pack, which was six little shot glasses of vodka, one of which was a brand name that I found called Karl Marx vodka.

• 51:53Guy Raz?

  Hmm. I'm sure he would have been proud.

• 51:55Speaker 01

  Yeah. And we had a statue of Lenin in the bar. And we had Russian food, beef stroganoff, pierogies, uh, caviar. But it was in a weird neighborhood in Philly, had no parking, and it didn't work out.

• 52:11Guy Raz?

  Meantime, the Continental was doing very well.

• 52:14Speaker 01

  I mean, Continental became an iconic restaurant in Philadelphia. It was, I'd say, the most popular restaurant in Philly. And it created a renaissance in the Old City section of Philadelphia. It really was the, uh, the catalyst for that renaissance with restaurants and retail.

• 52:32Guy Raz?

  All right. So, on the strength of that, you, I guess, see the potential to really lean into restaurants, right? And

• 52:41Guy Raz?

  You then open Buddakan, also in Philadelphia, which, describe it for people, I've been there, but describe for people who don't know what this restaurant is.

• 52:51Speaker 01

  Buddakan, the original Buddakan was a Pan Asian restaurant, so it was sort of fusion. It's very theatrical in its design and centerpiece of it is a like, you know, 12 foot golden Buddha. Again, I don't take credit for the culinary concept. I did not create all my own. It started with Wolfgang Puck at a restaurant he had in California called Shinwa on Main. Then another gentleman opened a place called China Grill in New York and in Miami. And I had gone to all these places, loved the energy. And I went and spoke with different designers to ask if they would design my restaurant,

• 53:34Speaker 01

  one of which was Philippe Stark, who turned me down, but said, there's ways of buying my furniture, call these people. So I ended up designing it myself with my friend Owen Kamihara.

• 53:46Guy Raz?

  This is the same guy who helped you redesign the Continental for $90,000?

• 53:50Speaker 01

  Owen, yeah.

• 53:51Guy Raz?

  And Philippe Stark in the late 90s was, I mean, he was doing hotels around the world and he had it aligned with Target, maybe not, not then, but he would. He was already, I mean, I can't imagine you could have afforded him at that point.

• 54:02Speaker 01

  I didn't even think about it, but he didn't, he wouldn't, he didn't want to do it because I think it was in Phil-, it was in Philadelphia. But Owen and I said, come on, let's do it. We bought his furniture, we made it look like his restaurant. Boom. Again, when Owen and I walked out of that restaurant, it just got dark and we looked through the windows and we saw this thing and it was just like, we got choked up. It was so awesome.

• 54:26Guy Raz?

  And the cash flow from the Continental could support opening Buddakan or did you, did you also?

• 54:32Speaker 01

  No. And for Continental was all mine. Buddakan, we got an investor.

• 54:37Guy Raz?

  Okay.

• 54:37Speaker 01

  It was actually a friend of mine who had a venture capital fund and one of his clients was willing to do this. So this particular client put up a 1.9 million. Today kitchens cost 1 million, just a kitchen.

• 54:52Guy Raz?

  Just the kitchen in the restaurant, okay.

• 54:53Speaker 01

  Yeah.

• 54:54Guy Raz?

  So, all right, the interior, it was going to be like? That was going to be part of the experience, right? It was dark wood and moody and.

• 55:03Speaker 01

  Absolutely. I was very much a part of that.

• 55:05Guy Raz?

  Where do you think that instinct came from? Because again, like if you were to do, I don't know, a profile, right? Like an AI profile of a guy or a woman, anybody, who is going to design a restaurant like this? You wouldn't say, this was a concert promoter and comedy club manager and, you know, like you wouldn't naturally think like, oh, that's the person who's going to have these amazing, interesting ideas. Where do you think that came from?

• 55:33Speaker 01

  The design aesthetic is something that was just in me that I unleashed once I started seeing things. I, you know, I wasn't the director. I was the executive producer in the movie business. So I was, you know, Samuel Goldwyn.

• 55:48Guy Raz?

  Right.

• 55:48Speaker 01

  But I kind of had an aesthetic of what the right aesthetic to know, the right director to hire, the right lead actor and actress, and maybe what the soundtrack sounded like. It just was there. I don't know where it came from.

• 56:00Guy Raz?

  And you knew what you liked?

• 56:02Speaker 01

  I knew what I liked, but I also knew what people liked. And back then, restaurants were a little mundane. People wanted to feel sexy and escape. And that's what we did in the beginning. We took you to another place.

• 56:13Guy Raz?

  So you were sort of like the guy who could unleash other people to kind of make it happen, to focus on the big picture, and then hire the right people. But they would still come to you with design schemes that you might suggest tweaks to or say, well, let's think about maybe something a little darker or maybe, you know, teak wood instead of the light blonde wood, whatever. Is that fair?

• 56:38Speaker 01

  Yeah, but I, again, if you talk to any of the designers that worked with me, they'll tell you that I'm a unique client in the sense that I respect what they do. Most business people, and I don't look at myself as a businessman. I think it's insulting to be called a businessman. I'm a creative person that happens to end up being a businessman because I have to be. But where a business guy will go, those damn designers, they spend money because they don't give a shit what they spend. They just wanna, and I don't look at it like that at all. I look at it like, give me the best that you can give me. If it's too much, I'll tell you. I wanna blow people away, man. Shock and awe. And, you know, part of it

• 57:20Speaker 01

  is a bad thing because I have to be concerned with money, too, with budgets.

• 57:25Guy Raz?

  Yeah.

• 57:26Speaker 01

  When I saw that movie, The Aviator with Leonardo DiCaprio, about, what's his name, Howard Hughes?

• 57:31Guy Raz?

  Howard Hughes, yeah.

• 57:32Speaker 01

  It scared me because it felt, it felt like me because he, Howard Hughes, kept going, no, more. Let's do it again. Shoot that scene again. I don't care. Let's bring in the, and it was frightening because I said, oh shit, I do stuff like this, but on a much smaller level with these restaurants. You know, you gotta control yourself at a certain point, too.

• 57:52Guy Raz?

  And I think it's just worth kind of noting, a quality of, of many successful entrepreneurs is not that they're the smartest, or they have the best ideas, or, you know, they got the top grades. It's that they're very good at building teams. That's really critical.

• 58:08Speaker 01

  Mm-hmm.

• 58:09Guy Raz?

  And it sounds like that was a, just a talent you had.

• 58:12Speaker 01

  I make all these connections to the music business. So it's like being in the A and R guy. You know, you're out looking for new bands?

• 58:19Guy Raz?

  Yeah.

• 58:19Speaker 01

  I'm really good at recognizing talent. Also, last night when I was on Instagram, I saw this thing that Steve Jobs said that freaked me out because I say it all the time. He was being interviewed by Dan Rather. What's your business model? He went, The Beatles. Because these guys collectively were the most brilliant people in the world. Individually, they did really good work, but nothing like they did when they were together.

• 58:45Guy Raz?

  Yeah.

• 58:46Speaker 01

  I'm not enough by myself. To have that group, that core of two to three other people, made me stronger, made me better.

• 58:55Guy Raz?

  Yeah. All right. So you are, you now have, Buddakan has really proven the concept, right? And I, I mean, just to put this in perspective, and again, I love Philadelphia, an amazing city, but it's not New York and it's not Los Angeles. It's not the focus of the world. And yet, this restaurant, you were getting like, major celebrities coming to Philadelphia to eat at Buddakan. Like, I read that at a certain point, the wait to get a table on a Saturday night was like, two months.

• 59:23Speaker 01

  Yes. It was a, it was like a nightclub. It was like Studio 54 of restaurants. You know, back then, people were still allowed to smoke in the restaurants.

• 59:33Guy Raz?

  Yeah.

• 59:34Speaker 01

  So we had a smoking section, but then there was like this whole singles thing at the bar and people, it was surreal how popular it was.

• 59:42Guy Raz?

  Were you seeing profits pretty quickly?

• 59:44Speaker 01

  Mm hmm.

• 59:45Guy Raz?

  From the get go, from continental on?

• 59:48Speaker 01

  Yeah, you know, I was still old school, didn't have computers. I had a checkbook. And I remember, I just figured it wouldn't be that profitable. I'd make some money out of it. I never thought I'd make a lot of money. And all of a sudden, I remember telling my wife at the time, I'd say, you know, I just looked at the checkbook last week. She goes, yeah, how much was in there? I said, $30,000. And then four weeks later, I said, something's wrong. Why? I have $75,000 in the checkbook. Are you sure you paid everything? Yeah. So it just kept growing and growing.

• 1:00:21Guy Raz?

  When we come back in just a moment, Stephen makes the big leap from Philadelphia to New York City. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 1:01:41Speaker 04

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• 1:02:18Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's the late 1990s, and Steven has another hit with Budokan in Philadelphia. And he's realizing just how great that city is as a launchpad for new restaurants.

• 1:02:33Speaker 01

  With Philly, here's the deal. It was like the Wild West. It was like opening. It was like the West Coast when the New Yorkers all moved in and took over Hollywood. There was nothing here. It was all old-school restaurants. They were boring. So you open Continental, people freak out. You open Buddakan, they'd never saw anything like it.

• 1:02:51Guy Raz?

  Yeah. All right, so you start to open a succession of restaurants. I think between 98 and 2001, after Buddakan, you open Tangerine, Blue Angel, Pod, Alma de Cuba in succession. And in terms of like the... Is the formula for a successful restaurant kind of... I don't want to downplay it, but is it basically like, get butts in the chair, keep costs low, and keep tables turning over? Like, is it as simple as that?

• 1:03:20Speaker 01

  I mean, no, that's not the formula. That's the goal. But the formula is... A lot of it's magic. I mean, it just happens. You gotta do... Basically, you gotta do something that people really like when they walk in. There's gotta be something that touches them. Like, you have to hear that sound in their voice, like, like that. Like, you take your breath away a little bit. And it could be from a light, a lighting. It could be from a vibe, a smell, whatever. And it's not an easy for... It's not... There's no recipe for it.

• 1:03:50Guy Raz?

  So by 2001, I think you, at that point, you had maybe six, maybe seven restaurants in Philadelphia operating. And you were, according to the reporting at the time, they were, they were doing very well, 30 million in, in sales, five and a half million in profit, which is pretty great for restaurants. I mean, a restaurant is lucky if it's doing 10%.

• 1:04:12Speaker 01

  Yes.

• 1:04:12Guy Raz?

  Not lucky, but it's like, it's doing a pretty good, like that 10% is kind of standard, right?

• 1:04:17Speaker 01

  Yes. We were doing way more than that in the beginning. And that's because things, again, the world didn't completely change yet. You know, the same guy that was able to build a restaurant and open it for $90,000 was able to make a 20 or 25% profit. Today, not possible. Today, between the rent, labor costs, this cost, that cost, that regulation, this thing, that thing, whatever thing, you're lucky, like you said, to make 10%.

• 1:04:42Guy Raz?

  And your restaurants were still, I mean, you still needed investors to help build the next restaurant. But did you have the same investors who helped you kind of finance the six or seven restaurants that you had in the city?

• 1:04:55Speaker 01

  Yeah. We, it was only me, myself, and one other, the venture capital guy, who had his client. It was just me and them in the beginning for the first 10, 12 restaurants, at a bank loan. So it was good. Most people you, you read about or you talk to in the restaurant business, they got like 15 people that invest money in them, and it's a nightmare. Because you, you don't want 15 different people who think they own the restaurant.

• 1:05:20Guy Raz?

  How were you, what were you doing on a day-to-day basis? Were you going from one place to the next place? Because you weren't managing them, you, you admitted, you hated that part of it. So on a day-to-day basis, were you just like jumping from one place to the next and checking in on them? Like what, tell me what you were doing.

• 1:05:35Speaker 01

  I had a staff of people under me, the directors, that were basically, if you look back at old, they're checkers. I had a bunch of checkers. What does that mean? They go out and check stuff. Go check that, go check, go check that restaurant. Now they have fancy names, but they're just checkers. And that's what I did. I just checked on things. But my emphasis was on the food. Even though I was not a chef, I was not a self-proclaimed foodie, but I had a very good palate and good palate memory. So I remembered what things should taste like. And my obsession even to this day is to taste the food and make sure the food is consistent. I am the number one person doing that. But basically, the ambiance, the people

• 1:06:19Speaker 01

  will tell you that work for me, I'm obsessed with the air conditioning, the lights, the sound, along with the food.

• 1:06:25Guy Raz?

  Yeah, it's interesting because we don't always think of those things as diners when we're sitting in a restaurant. So at this point, I guess you decide that you want to expand out to New York City, which is the restaurant capital of the country. So again, it makes sense. And in 2006, you indeed, you opened two restaurants in New York, Buddakan and Morimoto, which you already you'd already created in Philly. So I assume you're thinking, like, if I'm going to expand and build, I've got to go to New York, like where the action is.

• 1:06:56Speaker 01

  Yeah. And I wanted to do it. I wanted to, you know, I guess part of it was ego. I had also been nominated for James Beard Award a few times when I was in Philly. And I would go there and I'd get nominated and I never would win because, you know, there was, I was, I don't think I was really taken seriously. And I didn't think the people in New York, the chefs and the restaurant owners, took me that seriously either. I wanted to, like, make it, Big Apple. So I did it. We did it for Buddakan and Morimoto. Buddakan, I got scared with Buddakan because Buddakan basically wasn't that novel. I mean, really was like kind of a little bit of a knockoff food-wise from China Grill. So I knew I had to change the food, make it different, and come up with a design that was spectacular.

• 1:07:41Speaker 01

  So who did I go to? I went to Philippe Starr again. And it just didn't work out. And I went to Plan B and went to Christian Liagre, which is another French architect designer who's a genius. He agreed to do it for a giant amount of money. And he put together probably the most spectacular restaurant that I've ever done.

• 1:08:01Guy Raz?

  Buddakan in New York.

• 1:08:03Speaker 01

  It's just breathtaking. I said to people around me, I said, you know what? This is it. I said, what do you mean this is it? I said, I can't do any better than this. This is Sergeant Pepper. I just did Sergeant Pepper. How am I going to do better than this?

• 1:08:16Guy Raz?

  It seems like really what just gets you out of bed is working with teams to develop a concept and then like grinding and spending a year or two years just like focused on bringing that concept to life. Like, that's what you actually love doing.

• 1:08:34Speaker 01

  Absolutely. What gets me out of bed, other than having to go pee now as I get older, is the excitement of creating. And after it comes to life, I'm not so excited anymore. But I love the process. I love the stress.

• 1:08:50Guy Raz?

  You mean, you love the process and once it actually opens, like, then you're kind of...

• 1:08:56Speaker 01

  Over it. No, no.

• 1:08:57Guy Raz?

  You want to move on?

• 1:08:58Speaker 01

  Move on. It's sad. That's my sad time, when it opens. It's no longer... I mean, of course, I pay attention to it. I go to the restaurants all the time. I'm always eating the food, unfortunately. But the thrill is gone the day after it opens.

• 1:09:12Guy Raz?

  You know, I saw something that you talked about in this business, and it would just stress me out so much, which is, you know, somebody might love you, and love you, talk about it, and then 30 seconds later, if something goes slightly wrong at the restaurant, they're going to hate you with all their passion. Like, you're in a business where somebody might go to your restaurant, five times love it, and then the sixth time, something might happen that is correctable, but is big enough that they'll never go back, and they're really mad.

• 1:09:38Speaker 01

  Yeah. If all of you are honest with yourselves, you've done that before. You've gone to a place, and then one time, they kind of screw you. That's it. Fuck them.

• 1:09:49Guy Raz?

  And you can't physically make it great. Like, you've got to rely on the waiter, the maître d', every part of that working. How do you make sure? I mean, I guess you can't guarantee it, but are there things you can do to... To try and get close?

• 1:10:08Speaker 01

  Yes, you can. And I'll tell you what they are. But you know, the more you say what you just said, the more I realize what a stupid business is this is to be in. You're right. You're right. Look, one of our landlords, Seymour Rubin, said to me, he goes, "Why would you want to be in a business where one guy, a dishwasher, could just stop the whole operation?"

• 1:10:28Guy Raz?

  Yeah.

• 1:10:28Speaker 01

  One guy could decide, "That's it, I'm leaving," and the whole restaurant falls apart that night. I said, "You know what, Seymour, you're right. It's a stupid business." You know, when you send an army into battle, the generals give you a statistic of how many casualties you're gonna have. Like, every so often, there's gotta be something that's too salty. A waiter that was rude, a host that didn't look up when you walked in. There's gotta be a cook that walked out, a server that said that he or she were sexually harassed. I mean, it happens all the time. I mean, I have a big staff of people now, but I'm still on the phone at 11:30 at night dealing with fires.

• 1:11:03Guy Raz?

  Yeah.

• 1:11:04Speaker 01

  You know what? It's made me a smarter, wiser person dealing with all this. And probably, hopefully, will delay dementia quite a few years because my brain is constantly having to think.

• 1:11:17Guy Raz?

  As an operator, yeah. And then customers, right? Like, in San Francisco, many restaurants add a fee for mandatory healthcare that they have to provide to their employees. And that is passed down to the customer who gets mad at the restaurant. It feels like there are so many challenges.

• 1:11:38Speaker 01

  Yes, there is. And that's why I will say this, that I could never, ever, ever do this again. I don't think anyone could replicate what I did without having some giant money behind them from the beginning. By the way, when we open new restaurants, I'm not financing them myself anymore. We go in, landlord wants us to open, they have to put up a good, significant part of the money now. To open a restaurant that would cost 16, 17 million dollars, it's impossible. So, you know, the best advice I have, if you want to go, I would say, don't go into the restaurant business, but if you do, keep it smaller. There's a sweet spot of around, I think, around 85 to 95

• 1:12:21Speaker 01

  seats. Try and turn the tables two and a half, three times. And I think you're, that's the best, the best model right now. And if I continue to do this, I'm gonna try and stay within that, that model.

• 1:12:34Guy Raz?

  Okay, I want, I mean, we can't mention all your restaurants, there's 40 plus restaurants and you've got Michelin stars now in some of these restaurants and you've won a James Beard Award for restaurateur and, I mean, again, Michelin star is not something that I probably was even on your radar, right?

• 1:12:50Speaker 01

  No.

• 1:12:50Guy Raz?

  Was that important to you to be?

• 1:12:52Speaker 01

  No, it wasn't important. It's still not important. I shouldn't say that because now they won't give it to me.

• 1:12:57Guy Raz?

  No, and now they're gonna take your stars away.

• 1:12:58Speaker 01

  Yeah, no, I mean, it's still, it's nice. Look, the James Beard Award, that was the thing, man. It was like the Academy Award or an Emmy. Like, people could say it's not important. It was important. It felt good. It was emotional to be recognized like that, for sure.

• 1:13:15Guy Raz?

  Yeah. Okay, let's talk about a low point here. Covid. You've got, at that point, almost 40 restaurants, 37, I think, and then overnight, this entire industry, and it's still in recovery in many cities in the United States, collapses.

• 1:13:35Speaker 01

  Yeah. So this thing happened, I was devastated, of course, like everyone else. And then I looked and I said, how much, how much money do we have in the bank? A few million dollars? Five? Seven? I said, okay, cool, we're cool. They said, but what about the accounts payable? 15 million.

• 1:13:57Guy Raz?

  Wow.

• 1:13:58Speaker 01

  10 to 15 million. So I said, how could we possibly ever, what are we gonna do? But what happened is that everybody was very, all the vendors, except for maybe one, was very understanding and we paid a little bit to everybody, so they knew our intentions were good. But I had, and then we laid everyone off, but I couldn't lay everybody off because we were too big to do that.

• 1:14:23Guy Raz?

  How many employees did you have at that point?

• 1:14:24Speaker 01

  Four, 5,000.

• 1:14:26Guy Raz?

  5,000?

• 1:14:28Speaker 01

  Yeah. I mean, well, the servers, managers.

• 1:14:30Guy Raz?

  Wow.

• 1:14:31Speaker 01

  Couldn't pay them anymore. And we had to lay off most of the office, but I couldn't lay off all of the office because... He couldn't lay off the controller. He had the books and I didn't even know how to pay a bill. So there were millions of dollars of salaries we had to continue to pay. And then I said, you know what? We know we used to do these gift certificate things every holiday, always sold star gift certificates. So I said, you know what? Let's, what the hell? We need to raise a few hundred thousand, maybe a couple hundred thousand bucks. So I said, let's do buy one, get one free.

• 1:15:07Guy Raz?

  One meal, get one free.

• 1:15:08Speaker 01

  Buy one, yeah, one gift certificate, get one free. Well, in like 36 hours, we did like $10 million.

• 1:15:19Guy Raz?

  Wow.

• 1:15:19Speaker 01

  It was very emotional because we had our people like believed in, like it was almost therapy for them saying, you know what? It's a good deal. Let's take advantage of this star thing right now. Cause you know, we're going to come back from this thing. And then the thing that saved everyone was the PPP money, the government thing. Without that, gone, we would have been gone.

• 1:15:41Guy Raz?

  You think the Star Group would have been, would have been gone?

• 1:15:44Speaker 01

  Absolutely. No question. That saved us.

• 1:15:47Guy Raz?

  No question.

• 1:15:48Speaker 01

  No question. Never could have survived it.

• 1:15:51Guy Raz?

  Because your restaurant, I mean, your, your main asset is your brand, right? It's your aesthetic, your brand. It's not, you don't physically own these buildings that you're in.

• 1:16:00Speaker 01

  Well, I own a couple of them. They're not, I mean, it would be great to own a lot of them, but we only own two or three.

• 1:16:06Guy Raz?

  Yeah. All right. I want to ask about opening a restaurant today because you still open restaurants, right? And you still have ambitions to open more, I imagine. Are you, are you probably working on restaurants right now? Right?

• 1:16:17Speaker 01

  We're working on a few. I have some changes of mind here that I'll talk to you about.

• 1:16:21Guy Raz?

  Yeah, tell me.

• 1:16:22Speaker 01

  I think that, again, I'm going to scale down the model. We still want to make it special and sort of take your breath away in a different kind of way. But I think opening restaurants that are 200 seats, the expense of those restaurants is just, it's too risky.

• 1:16:37Guy Raz?

  And how many years does it take before you can recover that money?

• 1:16:43Speaker 01

  You can't. In other words, if you open it up on your own and you borrow $12 million, it's going to take you 10 years.

• 1:16:50Guy Raz?

  At least.

• 1:16:51Speaker 01

  Yeah, not worth it. So that's why to open the things that I do, you have to have landlords that want you for other reasons other than your rent. You're helping get tenants and build neighborhoods. That's what it boils down to. Otherwise, I just open small restaurants. You're better off doing something like that.

• 1:17:09Guy Raz?

  Why did that happen? I'm just curious to get your take on why that happened and why you were able to do this 30 years ago. And now it's just even for you, it's so hard.

• 1:17:20Speaker 01

  Well, affordability, right? The key word in the next election. Things are too expensive. Covid happened, everything doubled, the air conditioning, what used to cost 600,000 is now 1.7, 1.8 million. They said, oh, it'll come down. It didn't come down. Kitchens, $500,000 kitchen normally, 1.5 million, 1.8 million. It's just off the charts. And, you know, minimum wage went up. And, you know, I think minimum wage should have gone up. I think it's the right thing to do. But I think at a certain point, especially with tipped employees, I don't know if it should keep going up. Because, I mean, it's going to be impossible for restaurants to really keep to stay in business.

• 1:18:03Guy Raz?

  And I mean, is there, I imagine that with 46 restaurants now?

• 1:18:07Speaker 01

  Yes.

• 1:18:08Guy Raz?

  Is there a point where it stops? Or is it just, you just naturally are always looking for new opportunities and new places and new concepts to open more restaurants up?

• 1:18:20Speaker 01

  I think it naturally will stop. I mean, it's, I mean, I've done so much. And, you know, we'll see who, if we sell, or if my daughter, Sarah, or my son, who's not old enough to do this yet, Julian, maybe they'd be interested. But the other thing I'd like to do is the opposite of what I've done. I'd like to do like a fast casual thing, like Shake Shack.

• 1:18:41Guy Raz?

  Like what Danny Meyer did with Shake Shack?

• 1:18:43Speaker 01

  Yeah, that's the sort of warrior in me. I'd love to compete with Shake Shack and do my own version or a different, you know, something else that's fast casual.

• 1:18:51Guy Raz?

  Yeah. You are not quite 70 yet, right?

• 1:18:56Speaker 01

  Mm hmm. Not quite.

• 1:18:58Guy Raz?

  Not quite. Okay. But approaching. And so you mentioned your daughter, who's involved in the business. Is that your kind of hope that maybe she will take over the Star Group?

• 1:19:10Speaker 01

  No, I don't think she wants, I don't think she would. It's a brutal, brutal business. The best thing for everybody is to have an exit.

• 1:19:19Guy Raz?

  Right.

• 1:19:20Speaker 01

  Private equity probably be the last thing you want to do, but I would do it. The perfect exit is to be acquired by a company that has some sort of a synergy and relationship to what you do. My fantasy, you know, we run the Louis Vuitton restaurant in New York City, would be that LVMH come in and acquire Starr Restaurants or part of us. Luxury brand, great taste, great design, aesthetic. I'd be proud to have somebody like that come in and buy us. Or even like a Disney, you know, I don't know why they would buy it, but a Disney, somebody like that, somebody that I look up to, that I admire. You know, private equity, you know, it's about money.

• 1:20:03Speaker 01

  Who knows if they'd take care of it the way that I would.

• 1:20:06Guy Raz?

  Well, that's the thing. I mean, your name is on the, I mean, your name is associated with these restaurants and there's a certain expectation. And so, you know, there's always a risk that whoever buys it, even if they write a big fat check, you know, and then within three years, you know, diners are saying, oh, it's not the same, it sucks, quality's gone down.

• 1:20:25Speaker 01

  I mean, that would hurt, but you know, it's like, you know, when Bob Dylan and Bruce Springsteen sold their publishing. It hurt them, but like, there were like a few hundred millions of dollars. So that kind of, at some point, you gotta take care of yourself and your family.

• 1:20:40Guy Raz?

  So, you know, your restaurants generate over $4 million now a year. I mean, even though they're not in every city in America, a lot of people know these restaurants. It's a, you know, and for a guy who really came from a completely different world, had no experience in this business, you know, you built something that's had impact, certainly on the restaurant industry. I mean, how much of where you got to, do you think had to do with your hard work and your, you know, your skills? And how much you think had to do with being lucky, being at the right place, the right time?

• 1:21:16Speaker 01

  Percentage-wise, I don't know. Lot of hard work, right? I could not stand being bored. I always had to have something to do, so part of it was that. But there's a lot of luck, a lot of luck. And again, back to the music analogy. You know, you talked to Bruce Springsteen about his career. He said, "It could never happen again." It was a different time. Radio was a certain way. People, you know, they toured, bands played clubs. It's a different time now. I couldn't do it. So a lot of it's luck. A lot of it.

• 1:21:49Guy Raz?

  That's Stephen Starr, founder of Starr Restaurants. By the way, if you've seen Sex and the City: The Movie, you might remember the rehearsal dinner scene. It was actually filmed at Buddakan in New York. And after the movie came out, for about six months, reservations there became almost impossible to get. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Alex Cheng, with music composed by Ramtin Arablouei. It was edited by Neva Grant, with research by Sam Paulson.

• 1:22:33Guy Raz?

  Our audio engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Kerry Thompson, Carla Estevez, Casey Herman, J.C. Howard, Sam Paulson, Chris Messina, Catherine Seifer, John Isabella, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.