An Unlikely Empire | J.W. Marriott

The world's largest hotel company spent its first 30 years without a hotel. It started as a root beer stand in 1927. The first room didn't open until 1957. The man behind it was J. Willard Marriott. In this episode of Outliers, we explore how Marriott turned one root beer stand into a hotel empire, without a master plan. Oh, and along the way, he invented the airline catering business. This is the story of J. W. Marriott ----- Approximate Timestamps: (00:00) Introduction (03:58) Ice Cold Root Beer (10:35) The Hot Shoppe Expansion (12:07) Building the Machine (20:07) The Airport Expansion (24:20) The Marriott Lessons (26:22) The Hotel Empire (30:53) Handing Over the Presidency (35:01) The End of an Era ----- Upgrade: Get a hand edited transcripts and ad free experiences along with my thoughts and reflections at the end of every conversation. Learn more @ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership ------ Newsletter: The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ------ Follow Shane Parrish: X: ⁠⁠⁠⁠⁠⁠https://x.com/shaneparrish⁠ Insta: ⁠https://www.instagram.com/farnamstreet/⁠ LinkedIn: ⁠https://www.linkedin.com/in/shane-parrish-050a2183/⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 01

  In 1927, a man from a farming town in Utah opened a nine seat root beer stand in Washington, DC with six thousand dollars to his name. By the time he died, that stand had become one of the largest hotel companies in the world, with billions in annual sales, over a hundred thousand employees, and a name you see all over the world. His name was Jay Willard Marriott, but everybody called him Bill. And here's what's strange about the Marriott story. You'd assume the man who built the world's largest hotel company was a hotel guy, but he wasn't. He didn't open his first hotel until he was in his mid-50s, and he fought against it the whole way. Hotels terrified him.

• 0:44Speaker 01

  He'd watched every major hotel chain in America go bankrupt during the Depression, and he wanted nothing to do with them. So, how did a man who was afraid of hotels end up building the world's largest hotel company? Marriott was never really a hotel company. And how Bill built it surprised me. Let's get into it. When Bill Marriott was twelve years old, his father pointed at a field of sugar beets baking in the Utah sun. Son, these beets sure need thinning. You're old enough to take care of that, aren't you? He hitched up a horse and drove off to town. Bill didn't pick up a hoe.

• 1:20Speaker 01

  Instead, he rounded up his seven brothers and sisters and made them an offer. How do you all like a nice bottle of soda pop, a whole bottle all for yourself? Well, all you gotta do is a little thinning out in the beet field. He gave the meet a row. and rode to the store with a wagon. He came back holding a bag of cold bottles like a trophy. Finish your rose and it's all yours. They worked faster and faster. All afternoon, his sister Doris remembered, we'd hoe the beetrose, just dying for a drink of that cold soda pop. Bill sure got a lot of work out of us. He was a born organizer. But it went deeper than just organizing. At twelve years old he cracked one of the hardest principles in business. If a job is too big for one person, don't work harder.

• 2:03Speaker 01

  Find the right incentive and let other people help you carry it. To understand how a kid thinks this way, you need to know where he came from. Marriott Settlement, Utah was a tiny farming community named after Bill's grandfather, who had trekked West with the Mormon pioneers. Life was simple and hard, planting and harvesting bitter cold and baking heat. Bill's father, Will, raised horses, but when a sugar factory went up about a mile south of the farm, he didn't keep doing what he'd always done. He switched the whole operation to sugar beads. He grew huge acreages and sold the beets to the factory for processing, then carted back the leftover pulp to feed the livestock. Bill was young, but he was watching. His father never talked about strategy. He just showed what it looked like to read a changing landscape and move toward it instead of away from it.

• 2:52Speaker 01

  His father had another instinct worth noticing. He believed in giving his children real responsibility early without any instructions. When I was a little fellow, Bill said later, my father always gave me the responsibility of a man. He would tell me what he wanted me to do, but never told me much about how to do it. It was up to me to find out for myself. And that philosophy produced the soda pop moment in the beat field. But it also produced something far more dramatic. When Bill was 15, his father put him in charge of shipping 3,000 sheep to San Francisco for the Panama Pacific Exposition. Alone on a freight train nearly a thousand miles to a city he'd never seen, his mother protested, but his father overruled her. Bill's not a boy anymore, he's a young man.

• 3:37Speaker 01

  I'd trust him with my life. Sure as anything, we can trust him with a flock of sheep. Bill made the journey. He marveled at the exposition and came home wearing his first suit. But the real thing he brought back was more important than a new suit. It was the knowledge that he could handle whatever got thrown at him because somebody had trusted him with something that mattered. Before the world said he was ready. After a two-year Mormon mission in the eastern states, Bill stopped in Washington, DC on his way home. It was 1921 at the time, late summer, and the heat was brutal. That's when he noticed a pushcart peddler selling lemonade and ice cream to tourists. The man would roll down the street and get cleaned out in minutes. Then he'd rush off, restock, and do it all over again.

• 4:19Speaker 01

  Bill stood there and watched him make trip after trip and kept thinking about that scene over and over. He filed it away and headed home to Utah. But what he found there changed everything. His father owed the bank fifty thousand dollars. Every farmer in the valley was in the same position. All borrowed to the hilt, all tied to market forces that had collapsed after World War I. Bill looked at it clearly and saw the math for what it was. His father would work this farm for the rest of his life, not for himself.

• 4:47Speaker 01

  But for the bank, it wasn't a question of effort. Will Marriott worked harder than anybody Bill knew. The problem was the game itself. When you can't control the price of your crop and you can't control the weather, the system owns you. That understanding would stay with Bill forever. This instinct to never build a life that depended on forces he couldn't influence. The way out of this was education, but there was a problem. Bill hadn't even finished high school. So he went to see Aaron Tracy, a professor at Weber College, who remembered the boy from middle school. Tracy bent the rules and admitted Bill despite the missing credits. More than that, though, he found him campus jobs and set him on a path that would lead to the University of Utah. By the time Bill finished his degree, two things had crystallized. He was good at selling, but he wanted to build something of his own.

• 5:32Speaker 01

  And he couldn't shake the image of that pushcart peddler in Washington. Bill Marriott wanted to be that man. But back in Utah, he was courting a woman named Alice Sheets. She was smart and hardworking, and she had a better head for numbers than he did. He'd eventually marry her, and that would turn out to be one of the best decisions he ever made. But we'll get into that. Around the same time, Bill started visiting N AW Root Beer Stand in Salt Lake City. The place was always packed. Most people would just enjoy their drink and moved on, but Bill couldn't help himself. He started asking questions. How many mugs a day do you sell? 5,000 at a nickel apiece. He did the math and realized the owner was earning more in four summer months than most businesses made in an entire year, selling five cent root beer. And that's when the image of the pushcart peddler flashed back.

• 6:20Speaker 01

  Washington, D.C. gets hot in the summer, but DC didn't have an AW. So in early 1927, Bill secured the franchise rights, partnered with a friend named Hugh Colton, and together they scraped together $6,000, rented eight feet of frontage from a baker on 14th Street, and installed a nine-stool counter AW. It wasn't a restaurant, it wasn't even close. It was nine stools and a root beer tab. They opened on May 20th, 1927. And by pure luck, that same day, Charles Lindenberg took off for Paris. Customers kept coming in asking what was happening with the flight. So Bill ran out and got a radio. And now people had a reason to sit, drink root beer, and stay. The crowds were enormous. By the end of the first summer, sales were soaring. And that financial management, Alice bought a small red ledger with four headings date, receipts, expenditures, balance.

• 7:09Speaker 01

  That was the whole system. As long as we were taking in more than we spend, Bill said, I knew we were doing all right. There's something almost painfully simple about it, but simple isn't the same as easy. The crowds that had lined up in July disappeared by October. Most AW franchises at the time just closed for the winter, hoping customers would remember them come spring. Bill didn't like that idea. If he closed, people might think he was gone for good.

• 7:36Speaker 01

  Plus, he had borrowed money to repay and capital, sitting idle. He knew he wouldn't sleep if he went without cash for eight months. So instead of accepting it, he asked a better question. What do people want in the winter? And the answer was obvious warmth and hot food. Bill and Allie had grown up on Tex Mex, chili, and tamales, foods popular in the Southwest, but almost unknown in the East Coast. Bill saw the solution hot food in the winter, root beer in the summer, all from the same nine stools. But Allie stopped him. You're forgetting something. The AW franchise says we can't sell food. And she was right, they had a contract.

• 8:12Speaker 01

  If we're going to stay in business, we've got to, he told her. We can't get by on winter root beer sales. They won't even pay our rent. So two days later, he was out west talking to AW founder Roy Allen in person. He came back with something no other franchisee had a special authorization granted to him alone to sell food at a stand. Every other operator accepted the contract as written, but Bill went and just asked to change it. That's a pattern you'll see over and over in his life. Where other people saw a rule and stopped, Bill saw a conversation that hadn't happened yet. He realized that the person who wrote the rule might say yes if you actually showed up and just made a case to change it. So now he had permission. And then came the next problem. Where? Ali asked him, are we going to get our chef? Chef?

• 8:56Speaker 01

  What chef? We can't afford a chef. Well, I never saw you cook a hot tamale.

• 9:01Speaker 01

  What Bill did next sounds almost comical, but it actually was brilliant and it worked. That afternoon he put on his hat and walked down 14th Street until he reached the Mexican embassy. He knocked on the door and asked the chef for recipes. An hour later, he and Allie were on their way back to the root beer stand with a sheet of handwritten recipes in Allie's handbag. The chef had been enchanted by her fluent Spanish and her genuine interest in the food of his country and said he'd be happy to help. He also connected them with a supply house in San Antonio for the proper beans, peppers, and spices, since no grocer in Washington carried them. Now Bill had the recipes, but he needed a restaurant. So he worked through the night like a carpenter. Out came the orange AW barrel, in went a storefront, a plate glass window, a steam table, pots, and pans.

• 9:49Speaker 01

  When a friend stopped by and asked him how the hot shop was coming along, that gave them the name. Allie thought it was too planned, so Bill added another P and an E. Hot Shop, Allie said. That's so bad, it's good. It stuck. They hired a man to carve barbecued beef right at the front window where passerbys could see them and smell it. And it worked like a charm. Government workers flooded in for fast, affordable lunches. And then Bill noticed something he hadn't expected. The spicy food made people thirsty. So beverage sales actually went up in winter. He turned a seasonal business into a year round one. But it wasn't enough to support two families. So Bill borrowed $5,000 from Mr. Stunts at Park Savings Bank.

• 10:30Speaker 01

  and bought out his partner, Hugh Colton. With Hugh out, Bill opened a second hot shop on Ninth Street, but he was already thinking about something bigger. He'd been watching the rise of car culture in America. People were falling in love with the automobile. And in other parts of the country, drive in restaurants were popping up where customers could eat in their cars, while car hops Delivered food on trays that hooked right onto the window. Bill found a location with ample parking on Georgia Avenue and decided to try it. The local officials, however, said no. Drive-in restaurants, young folks in cars after dark.

• 11:03Speaker 01

  They'd heard stories about petting parties and hit blast gin. Nobody wanted to open the door to that in the nation's capital. Bill could have found a different location or dropped the idea, but instead, he leaned into the problem. Here's how he tackled nearly every problem. Every employee he hired actually got a card with four questions. What is the problem? What is the reason for the problem? What is the solution to the problem? And what is your solution to the problem?

• 11:29Speaker 01

  And that's how we thought about everything. An obstacle wasn't a reason to stop. So he enlisted some influential friends and went to work on the officials. He promised his drive-in would tolerate neither romance nor moonshine, and then he backed up that promise. His car hops wore uniforms. The parking lot stayed well lit. He hired security to keep things orderly. Parents felt comfortable bringing their kids because Bill made sure they would be safe. The Georgia Avenue Hotshop did $18,000 in sales in its first month. The original Root Beer stand hadn't done that in its entire first year. And the parking lot, which had seemed so spacious on opening day, was already too small. Then came the depression. The stock market crashed in October 1929. Banks failed and unemployment reached 25%.

• 12:14Speaker 01

  Restaurants and businesses everywhere went under. But Washington wasn't like other cities. Most government workers still had jobs. Federal spending was actually increasing, and Bill's hot shops were priced perfectly for people stretching a paycheck. A nickel for a root beer, a dime for a sandwich. While competitors folded, Bill held on. Not every location survived. The 9th Street shop deteriorated with the neighborhood overrun by panhandlers. Bill asked for a rent reduction and he was refused. So he found someone to take over the lease and made sure to get a written release before walking away. When the bank later sued, anyway, he won.

• 12:53Speaker 01

  Because he had the paper. He never forgot that. But the worst of it wasn't a bad location. It was actually his banker. Remember Mr. Stutts, the man who lent Bill $5,000 to buy out Hugh Colton? Bill and Allie had $15,000 in personal savings at his bank. One evening, a senator pulled Bill aside and told him to get his money out. The next morning, Bill called and Stunts begged him to stay. He promised he'd call personally if there was ever any risk of the bank closing. So, against his better judgment, Bill withdrew $5,000 but left $10,000. And two months later, Park Savings shut its doors.

• 13:29Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus.

• 13:54Speaker 00

  Hey Spotify listeners, when you travel with American Airlines, you'll enjoy comfort and convenience at every altitude. Before takeoff, unwind in the Admiral's Club Lounge with curated self serve offerings of hearty bites and refreshments. In flight, stay connected with High Speed Wi Fi, sponsored by ATT. Your journey is designed to feel easy from the moment you check in to the moment you arrive. No matter where you're going, American gets you there. Book now at AA.com.

• 14:19Speaker 01

  Stunt did not call, and the next day he shut himself. Auditors discovered he'd embezzled a quarter million dollars gambling on horses. Bill had already watched his father spend a lifetime working for the bank instead of himself. And now he watched his own savings vanish because he trusted the wrong man. Years later, he came across something Emerson had written and copied it down. The true way of beginning is to play the hero in commerce, not begin with a borrowed capital. But he must raise an estate from this seed, must begin with his hands, and earn one cent, then two, then a dollar, then stock, a basket, then a barrel.

• 14:58Speaker 01

  Then a booth, then a shop, then a warehouse. That was exactly what he and Allie had done. And they weren't finished. When the corporate expansion later required borrowing, Bill insisted on long-term loans from insurance companies. Nothing that could be called back on short notice. Nothing that could put someone else's hand on the steering wheel. He'd seen what happens when other people control your money and he wasn't going to see it again. This is a lesson that Warren Buffett understands. He has said many times, we will never become dependent on the kindness of strangers. So while other businesses hunkered down during the Depression, Bill expanded. He sank just about everything he and Allie had into a new property on Connecticut Avenue where the land was cheaper. When it opened in July 1930,

• 15:42Speaker 01

  With fifty smartly uniformed car hops, they soon needed fifty more. The place became the spot to go, to see friends and be seen. The drive-in was thriving. The sit-down restaurant inside was turning people away, and everyone said it was the biggest drive-in in the whole United States. It sounds reckless to expand during a depression, but Bill had done something that made it a lot less risky than it looked. He was obsessed with finding the best location. So he and Allie would park at intersections and count cars. They would sit there during lunch and come back from 5 to 8 for dinner trade, and then again from 10 to midnight for the after-theater crowd. They learned which side of the street got more traffic, which corner had more parking, and where cars naturally slowed down.

• 16:27Speaker 01

  They even tracked which streets had more women drivers versus men, figuring those were more family-friendly neighborhoods. When Bill couldn't be there himself, he hired neighborhood boys to count traffic after school. For a dime an hour, they'd sit on milk crates, clicking push-lever counters as cars went by. Location, location, location, Bill would say, borrowing the line from hotel magnate E. M. Statler. He said it so often his family could have screamed, but he meant something specific by it. The location had to be right for now and right for 10 years from now. By the time he signed a lease, he knew they were not taking location risk. By 1932, Bill had five hot shops and a lawyer telling him to quit. My advice to you, young man, is to get out of the restaurant business, quick.

• 17:12Speaker 01

  I've got a lot of clients in this business and they're all going broke. Your trouble is you want to expand, but you'll never get anywhere by expanding because then you can't control it. When quantity goes up, quality goes down. Well, Bill listened politely. He disagreed. The way he saw it,

• 17:28Speaker 01

  Owners didn't lose control because they expanded. They lost control because of bad debt, bad people. Both variables, like location, could be isolated and removed. He looked at the chain store successes of the time, Woolworths and Piggly Wiggly and AP, and saw a bit of a blueprint. One person to handle the purchasing, all food prepared in a single, closely supervised commissionary using standardized recipes, and tight roving supervision by himself, Ali, or one of his brothers possibly at any location, any time of the day. That last part was key. Bill worked relentlessly hard, visiting each location personally, one after another, day after day. He'd check the temperature of the food. Was it hot enough? Was the root beer cold enough? He'd check whether the floors and windows were clean.

• 18:14Speaker 01

  He'd run his fingers under the shelves for dust, inspect the parking lot for litter, and talk to customers about what they liked and what they didn't like. Every single detail mattered. Then he'd relay everything to the manager and drive to the next one. His managers never knew when he'd show up to raise hell over a dirty shelf or a lukewarm sandwich, so they were always prepared. When his car pulled into the parking lot the news spread quickly from the cashier to the cook to the car hub. Big Tamalee's here. Everyone stood a little straighter and moved a little faster. He preached frugality the same way. A penny saved is one penny more profit, he told his managers, repeating that phrase so often they heard it in their sleep. He introduced a bonus system that tied incentives to each location's profits.

• 19:00Speaker 01

  Managers felt like park owners and began to act accordingly. One manager began checking the gas and the electric meters weekly, looking for inefficient refrigerators and lights that were left on overnight. That manager got the largest bonus of the year. The next year, every manager in the company was checking meters. Expenses went down across the board and profits flowed into both Bill's pocket and his employees. And he built a test kitchen where they designed and tested recipes for quality, taste, and ease of preparation. When a new menu item launched, he tracked the sales. If it was unpopular, it got yanked.

• 19:34Speaker 01

  He installed air conditioning at every location in January when prices were low. And then the following summer, sales went up at every single one. Food costs were climbing through the 1930s, but Bill knew he couldn't pass them along to customers without losing them. Times were tough. This was the Great Depression after all. But he had to cut costs somewhere. Many businesses at the time started with wages, but Bill refused. He paid well and expected everyone to help reduce operating costs in return.

• 20:01Speaker 01

  That was the deal, and it worked because people could see he meant it. He started profit sharing and medical benefits long before most companies did, before any new deal legislation required it. And he did it during the height of the depression. He and Ali gave every employee a Christmas present, a day's pay for each year of service. The longer someone stayed, the larger their annual gift. And then there were the smaller things. When a carhop won the Washington City Golf Championship but couldn't afford the trip to the regionals, Bill paid his way. When a chef needed $200 for an eye operation, Bill paid for that too. He treated his employees like family, and he included his actual family in the company. Just as he'd done years earlier when he incentivized his brothers and sisters with Soda Pop to thin sugar beet rows, he now brought his brothers into the business and trusted them to manage their own pieces of it.

• 20:49Speaker 01

  One Marriott executive later put it Marriott believes that the customer is great, but you come first. Mr. Marriott knows that if he takes care of his employees, They'll take care of the customers. Hot shop number eight was near Hoover Airport. The manager noticed that pilots and passengers kept stopping in to eat before their flights, often enough that he mentioned it to Bill the next time Big Tamalee came through. Bill called Eastern Air Transport the next day. Commercial aviation in the 1930s was rough. Planes were small, noisy, bumpy.

• 21:19Speaker 01

  The food on board, if you could call it that, was maybe a cold sandwich wrapped in wax paper. Airlines had no kitchens or infrastructure to feed anyone. They knew they needed food for their customers, but they didn't have a solution. So Bill proposed something simple. What if Hotshop prepared fresh box launches and delivered them plain side before takeoff? Marriott would handle everything. Eastern said yes. The first meals were pretty basic: a ham, cheese, or a chicken sandwich, a small carton of coleslaw, and a frosted cupcake and maybe an apple. Hot coffee and cold milk came in thermoses and jugs. Deliveries arrived in company issued orange panel truck with hot shops on the side. What started out needing only one person soon required six.

• 22:00Speaker 01

  Bill handed the operation off to his brother Paul and asked him to see what he could accomplish. This involved preparing large quantities of food, packaging it for transport, and coordinating with constantly changing flight schedules. It was as much about logistics as it was about cooking. But Bill had been doing food at scale for years. The commissary, the standardized recipes, the quantity controls, all of it transferred. Within months, they were catering 22 flights a day for Eastern and American Airlines. By the 1960s, Marriott would be the largest airline food provider in the world.

• 22:34Speaker 01

  And it all started because a manager mentioned something and Bill picked up the phone the next morning. He was always asking the same question where are our customers going that we're not serving them? World War II disrupted everything. Gash rationing meant fewer people driving to restaurants. Meat and dairy were scarce. The draft siphoned off his workforce. Many businesses were just trying to survive one more day. But Bill was asking himself a different question where are the people now and what do they need? And the answer was in the war plans. War production was creating massive concentration of workers in factories and government complexes, tens of thousands of people working around the clock on three shifts, all of whom needed to eat. For months Bill and his brother Woody spent their spare time talking to people in government agencies and factories, figuring out how to serve them.

• 23:19Speaker 01

  The model they landed on was simple. The agency provides the facilities. Marriott provides the organization, management, and food. The first customer was the Engineering and Research Corporation in Riverdale, Maryland, with 3,000 workers producing radar components. Marriott fed all three shifts from rolling lunch wagons that went from section to section through the plant. Then came the Naval Communications Annex Cafeteria, feeding thousands daily. Then the apartment house catering at the McLean Gardens complex. It was the same instinct that put them on the phone with Eastern Air Transport, and the same instinct that turned a root beer stand into a restaurant when winter came. The business changed shaped every few years, but the underlying question was constant. Where are people now and what do they need? By the war's end, Bill's business to business operation had grown from one airline contract in the late 30s, defeating the US government and some of the largest corporations in the country.

• 24:11Speaker 01

  And through it all, despite wartime rationing and belt tightening, Bill refused to cut corners on quality. While he was a fanatic about cost, he focused on the cost that didn't affect the customer. His buyer drove to the farmer's market every night at 10 o'clock when corn was in season, brought fresh corn in from Virginia farms, and stored it overnight in cold storage meat lockers so it would go out to every shop, still farm fresh the next morning. Even during a war, the corn had to be as fresh as possible. That was just how Bill operated. After the war, Marriott had three distinct businesses retail restaurants, airline catering, and institutional food services. The businesses had different customers, different revenue patterns, and different contract structures. When one slowed down, the others carried it. There's a lot to be said for diversification.

• 24:56Speaker 01

  Don't put all your eggs in one basket. If a business slumps in one division, there are other divisions to carry it through. All businesses fluctuate. Diversification takes care of it. There was no master plan. It was just showing up to work, asking where customers were and what he could do to serve them. By the end of the war, Bill was in his mid forties. He'd been in business for nearly two decades, and without ever writing a management book or giving a lecture, he developed a set of operating principles that would carry him through the next 40 years. First, watch before you move. Bill never jumped into anything blind.

• 25:30Speaker 01

  He watched the AW stand in Salt Lake City before opening one in DC. He watched pilots eating at the hot shop number eight before calling Eastern Air Transport. He watched war workers before launching institutional feeding. He watched the cars drive by before opening a new location. Every major move started with his eyes, not his wallet, to serve the need, not the product. Bill was never in the root beer business. He was never in the restaurant business. He was in the business of feeding people wherever they happened to be. And because he saw things that way, it was easy to adapt when things changed.

• 26:05Speaker 01

  The operators who thought of themselves as root beer people stayed root beer people. How you identify yourself becomes a prison. 3. Be boring on purpose. He standardized recipes, maintained obsessive cleanliness, and never lost sight of the basics. Bill's customers knew exactly what they'd get at any location, and that predictability built a brand no advertising budget could buy. 4. Survive first and then grow second. Bill's father worked a lifetime for the bank. His banker embezzled his savings and shot himself. Those memories never faded, and Bill ran his finances accordingly. No downturn, no bad actor, and no called in loan could kill him. That's why he could expand during a depression while his competitors were closing their doors.

• 26:48Speaker 01

  Five, take care of your people before your customers. In a service business, your product is delivered by human beings, and if those people feel disposable, your customers will feel disposable too. People who feel taken care of take care of other people.

• 27:03Speaker 01

  These five ideas sound simple because they are, but knowing them isn't the same as doing them every single day for 40 years. Keep them in mind because the next chapter of Bill's life, tests them all. Now we arrive at the pivot that would define the Marriott name for the next century and why everybody listening to this podcast has heard of them. It almost didn't happen because Bill Marriott did not want to get in the hotel business. Hotels were capital intensive real estate ventures that required massive upfront investment and enormous fixed costs. They were the opposite of everything Bill believed in.

• 27:37Speaker 01

  I couldn't help it, he said. I'd never forgot how just about every big hotel in the country went bankrupt in the depression. But Bill's son, Bill Jr., saw something different. He saw the interstate highway system and the jet age creating a wave of demand for lodging, and he envisioned something called a motor hotel, a hybrid between basic roadside motel and the downtown luxury hotel. Drive up registration borrowed from the Hotshops drive in model, but with real amenities meeting rooms, restaurants, air conditioning, king size beds, TVs in every room.

• 28:10Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus.

• 28:36Speaker 00

  Hey Spotify listeners. When you travel with American Airlines, you'll enjoy comfort and convenience at every altitude. Before takeoff, unwind in the Admiral's Club Lounge with curated self serve offerings of hearty bites and refreshments. In flight, stay connected with High Speed Wi Fi, sponsored by ATT. Your journey is designed to feel easy from the moment you check in to the moment you arrive. No matter where you're going, American gets you there. Book now at AA.com.

• 29:01Speaker 01

  Bill Jr. had been put in charge of the project and ran the final months of construction himself. The location was near the 14th Street Bridge in Arlington, Virginia, close to the Pentagon and the airport. Bill had bought the eight acres years earlier for an office building, but as traffic pattern shifted to serve the newly built airport and the Pentagon, it became obvious this was something much bigger. If you flew into Washington and sat on the right side of the plane, you couldn't miss the Marriott property on final approach. It was the kind of location Bill had spent his entire life learning to spot. He just hadn't realized it was perfect for a hotel.

• 29:36Speaker 01

  In April 1955, Bill announced Marriott would build a 370-room motor hotel on the site, the largest in the world at the time. It would have air conditioning, soundproofing, drive in registration arcades, and a glass walled hot shop overlooking the swimming pool. The price tag was $7 million, which terrified him. The opening night of the Twin Bridges Marriott Motor Hotel in January 1957 tells you everything about who these people were.

• 30:03Speaker 01

  Despite being wealthy, running a company with thousands of employees, Bill Alley and Bill Junior were up past midnight hanging guest room pitchers. They weren't supervising other people doing it, they were doing it themselves, making sure every little detail was perfect. The hotel was an immediate success, and something clicked for Bill that he hadn't expected.

• 30:23Speaker 01

  I like the hotel business, he said. You served the people so much more basically. You took them in, you provided them with food and shelter and safety and rest, which when you think about it was the same thing he'd been doing since 1927. Cold drinks for hot tourists, warm food for cold winters, meals for passengers, lunches for factory workers, and now shelter and rest for travelers. Bill Jr. was becoming the engine of the company. He was compulsively competitive, kind of person who hated losing a ping pong. After the Navy, he joined the company in Washington and worked through every department. At 26, the board elected him executive vice president in charge of the new motor hotel program. His expansion plan called for 15% annual growth, financed by millions in debt. The company needed $2.7 million for a Philadelphia hotel, then another $12 million within two years for Dallas, Boston, and Atlanta.

• 31:14Speaker 01

  Bill Sr. couldn't sleep. The company was plunging into debt, and it was Bill Jr.'s hotel division that was responsible. He'd been watching people go broke on borrowed money his entire life. There were days when he doubted his own effectiveness and knew he ought to step aside. But then he'd visit a new Marriott Hotel, see the landscaping, and cheerfully bustle in the lobby. Those moments made him want to hold his job forever. What kept this from becoming destructive was Bill Senior almost never completely stopped his son. Sure, he pushed back.

• 31:46Speaker 01

  questioned, lost sleep, and made his concerns known to everyone, but he allowed Bill Junior to take risks while serving as a sounding board to mitigate the downside. The father provided the brakes, the son provided the engine. Together they moved faster than caution alone would allow, but more carefully than ambition alone would permit. The results were hard to argue with.

• 32:06Speaker 01

  Under Bill Jr., hotel sales increased tenfold as airlines and the interstate highway system sent a wave of travelers across the country. Hotels operated at 80 to 90% capacity, regardless of the season. The company broke the $100 million barrier in 1966 and kept climbing. By 1968, Bill Jr. could joke in the Washington Post that his father owed $2,000 when he first came to Washington in 1927, and now he owes 20 million. And that, he says, is progress. One of the most important documents in the story is a letter Bill wrote at four in the morning. Unable to sleep, the night before handing over the presidency to his son, it was January 20th, 1964.

• 32:48Speaker 01

  He lay in the dark thinking and then finally got out of bed, went downstairs to his study, and turned on the reading lamp, and he found a pad of paper and a pen and wrote what was on his mind and his heart to say. And it goes like this Dear Bill, I'm mighty proud of you. Years of preparation, work, and study have shown results. A leader should have character, be an example in all things.

• 33:10Speaker 01

  This is his greatest influence. In this, you are admirable. You haven't taken advantage of your position, my son. You remain humble. And then he added, It's not often that a father has a son who can step into his shoes and wear them on the basis of his own accomplishments and ability. Being the operating manager of a business on which probably 30,000 people depend on a livelihood is a frightening responsibility. But I have the greatest confidence you will build a team that will ensure the continued success of a business that has been born through years of toil and devotion by many wonderful people.

• 33:46Speaker 01

  And then Bill wrote down 15 guideposts distilled from four decades of building a business. One, keep physically fit, mentally, and spiritually strong. Two, guard your habits. Bad ones will destroy you. Three, pray about every difficult problem. Four, study and follow professional management principles. Five, people are number one, their development, loyalty, interest, team spirit. Develop managers in every area. This is your prime responsibility. 6. Make crystal clear what decisions each manager is responsible for. Have all the facts, then decide and stick to it. 7. Don't criticize people, but make a fair appraisal of their qualifications with their supervisor only.

• 34:28Speaker 01

  Anything you say about somebody usually gets back to them. 8. See the good in people and then try to develop those qualities. 9. If inefficiency cannot be overcome, find a job the employee can do or terminate now. Don't wait. 10. Manage your time. Short conversations to the point. Make every minute count. 11. Delegate and hold accountable for results. 12. Let your staff take care of details. Save your energy for planning, thinking, promoting new ideas. Don't do anything someone else can do for you. 13. Ideas keep the business alive. Know what your competitors are doing. Spend time and money on research and development. 14.

• 35:08Speaker 01

  Don't try to do an employee's job for him. Counsel and suggest. 15. Think objectively and keep a sense of humor. Make the business fun for you and others. More than a third of those are all about how you treat, develop, and lead people around you. This wasn't an accident. If you want the results too big for one person to achieve, you have to take care of the people who achieve them for you and with you. Most companies lose their culture when the founder leaves because the founder was the culture and they never took the time to put it on paper.

• 35:39Speaker 01

  Bill did, and at four in the morning because he couldn't sleep. At the stockholders' meeting that November at the Twin Bridges Hotel, Bill read a brief statement. For nearly four decades, I have headed our company's operations, and with the help of many dedicated talented people, I have been privileged to see the business grow from a small root beer stand to the major national chain with annual sales, which are now approaching nearly $90 million. I feel it is my responsibility to our shareholders to turn over the operating management of the company to a younger man. Of the company's 7,527 stockholders, about 400 were present.

• 36:16Speaker 01

  Hotshop employees, housewives, car salesmen, and government workers, mail carriers, and retired accountants. A cross section of America. Bill asked for a vote, and every right hand went up. Some raised both hands. On the platform, every officer stood. Bill and Allie converged on their son, and the stockholders broke into cheers. It was all in the family. The whole thing was so unbelievable, so corny, and so wonderful. It made them feel as if they belonged to the family too. Bill handed over the presidency, but he couldn't hand over the habit, so he remained the chairman, traveling constantly to inspect hotels and restaurants and to advise his sons. In January 1967, he suffered a heart attack.

• 36:58Speaker 01

  The doctors were pretty blunt. Another one would probably kill him, but Bill couldn't stop. I sweat terribly and overdue, he wrote in his diary, but I loved to work. And at 73, standing before 23,000 students, he told them, discipline yourselves, discipline is the greatest thing in the world.

• 37:15Speaker 01

  Where there is no discipline, there is no character, and without character, there is no progress. In February 1976, sitting in a reclining chair at the Camelback Inn in Arizona, the first existing hotel his company ever acquired, Bill reflected on his life with his friend and biographer, Robert O'Brien. He spoke simply about what had driven him. I just had three general ideas in my mind, all equally important. One was to render friendly service to our guests, the second was to provide quality food at a fair price.

• 37:45Speaker 01

  The third was to work as hard as I could day and night to make a profit. When we added more hot shops, it just wasn't to get bigger. It was to build up a pool of capable, dependable employees who knew our ways of doing business and liked to work for us. Then when we added the in flight service and the hotels and the specialty restaurants, it was a natural and logical extension of what we were already doing and knew how to do. Three ideas friendly service, fair prices, and hard work. That was it. That was the whole thing.

• 38:15Speaker 01

  J. Willard Marriott died on August 13, 1985, at the age of 84. He passed away peacefully after a cookout at his New Hampshire summer home. His entire family, except for two grandchildren, was with him. The company he'd built had over $4 billion in annual sales and more than 154,000 employees. President Reagan called J.W. Marriott a living example of the American dream. Reagan was right. But the reason Bill Marriott's dream outlived him, the reason it's still growing, still the name you see all over the world, isn't because he was a dreamer, it's because he was a builder. What started with nine stools on Fourteenth Street selling root beer has turned into billions in sales. While the results compounded, the principles stayed the same.

• 39:01Speaker 01

  Thank you for listening and learning with me. I'll see you next week.