In Search Of Excellence - Tony Capuano: CEO Of The World’s Largest Hospitality Company | E77

Episode Date: September 5, 2023

Welcome to another episode of In Search of Excellence. It’s a true pleasure to have Tony Capuano as our guest today! Tony is the President and CEO of Marriott International, the world's largest hospitality company with nearly 8,600 properties in 139 countries and over 31 brands, including JW Marriott, St. Regis Hotels & Resorts, BVLGARI Hotels & Resorts, The Ritz-Carlton, Westin Hotels, and Resorts and Sheraton Hotels & Resorts, among many others. Marriott also has the travel industry's largest customer loyalty program, Marriott Bonvoy, which has more than 186 million members! Tony sits on the board of directors of McDonald's Corporation and Save Venice, a nonprofit organization dedicated to preserving the artistic heritage of Venice, Italy, which since its founding in 1971, has funded the conservation of nearly 2,000 individual artworks. 01:56 Tony’s family, childhood and early years- The importance of work ethic- The impact of Tony’s father and grandfather- His parents divorced, lived with his father- Very self-sufficient from an early age- Played lacrosse at school- First job as a pot washer at Toby’s Dinner Theatre- Fell in love with the hospitality business- There are no bad jobs, everything can be a learning opportunity 09:39 Interns and the operating side of the business- Tony’s experience with his interns- A member of the Dean's Advisory Board at the Hospitality School at Cornell- Students who have a passion for the operating side of the business- Tony has a lot of optimism for the future of the industry 12:58 Job interviews after graduation- Cornell School of Hotel Administration- After 8 job interviews, got 7 offers and 1 rejection from Marriott- The importance of humility- Tony had deep admiration for the Marriott Company- Joined them in 1995 16:24 Working in a consulting firm- “A and B work” message from his boss that changed his perspective- Your work impacts your team, customers, and investors- Catchphrases from Bill Marriott and his father- Success is never final 22:02 Joining Marriott during their hardships- Worked under Kenneth Leventhal as a consultant- Got to do significant international work- But he had a burning desire to be inside the projects- Was always impressed with Marriott’s intellect, integrity, and innovation 24:36 The importance of being in the right place at the right time- Working until 10 pm- Raised with a strong work ethic- Carol Wagner and a trip to New York- Working until the job was doneSponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

I was lucky enough to interview, as you point out, with eight companies and felt privileged to get seven job offers, but I did get one rejection and I kept that rejection letter, I still have it, and it was from Marriott. I had made a lot of relationships during the course of my eight years in consulting with folks that worked with Marriott. I was impressed with their intellect, I was impressed with the innovation the company had showed i think whatever industry you pursue learning with granularity the nuts and bolts of the industry that you choose is invaluable there are no bad jobs there are things you can learn that will

serve you well later in your career welcome to in search Excellence, where we meet entrepreneurs, CEOs, entertainers, athletes, motivational speakers, and trailblazers of excellence with incredibly stories from all walks of life. My name is Randall Kaplan. I'm a serial entrepreneur, venture capitalist, and the host of In Search of Excellence, which I started to motivate and inspire us to achieve excellence in our lives. My guest today is Tony Capuano. Tony is the president and CEO of Marriott International, the world's largest hospitality company with nearly 8,600 properties in 139 countries and territories and over 31 brands, including JW Marriott, St. Regis, Bulgari, Ritz-Carlton, Westin, and Sheridan, among

many others. Marriott also has the travel industry's largest customer loyalty program, Marriott Bonvoy, which has more than 186 million members. Tony serves on the board of directors of McDonald's Corporation and Save Venice, a nonprofit organization dedicated to preserving the artistic heritage of Venice, Italy, which, since its founding in in 1971 has funded the conservation of nearly 2,000 individual artworks. Tony, it's a true pleasure to have you on my show. Welcome to In Search of Excellence. Well, I'm delighted. Thanks so much for having me.

You were born and raised in Baltimore. Your dad was 20 years old when you were born. He was going to John Hopkins during the day and loading UPS trucks on the graveyard shift at night while he worked his way through school. When he graduated, he went to work for AT&T. He moved all around Baltimore and ended up in Columbia, Maryland. Can you tell us about the impact he had on you and your future? And as part of this, talk to us about the value of work ethic in our search for excellence. Sure. So obviously, he was an extraordinary influence on my life from my earliest memories.

And not just the work ethic, but whether it was him, whether it was his father or my grandfather, there was an extraordinary work ethic accompanied by this idea that that's just what you do. And you really don't complain about it. You do what's necessary, both to take care of your family, but also to advance your ambitions. And so I think about my grandfather as well. He came to this country, not particularly well-educated. He had to care for his four siblings, and he was a professional boxer. And as a result of that, he ended up with detached retinas, ended up fully blind in one eye, partially blind in the other eye. Rather than feeling particularly sorry for himself, he said, what am I going to do now? And he started a second career with the National Federation for the Blind. My dad,

similarly, I'm sure with the demands of Johns Hopkins, wasn't necessarily that excited about coming home for a couple of hours and then heading to graveyard shifts at UPS, but that was necessary. And so from my earliest memories, this notion of strong work ethic and doing what was required was instilled in me and remains with me today. Do you remember him actually coming home from school, trying to study, and then going to work? Was he exhausted all the time? And how old were you when you actually recognized the sacrifices he was making for your family?

Yeah, I probably didn't recognize it until much later. My earliest memory, no matter how rough a day, there was a small newsstand between where he went to school and where our row house was in Baltimore. And I always remember no matter what a rough day he had, he always stopped by and bought a candy bar for me. And so the highlight was wondering what candy bar he got me and whether he could sneak it to me before my mom took it away. But, you know, I remember I have a lot of great memories from those early days. I'm sure he was exhausted, but he sure never showed it. He just dusted himself off and went about doing what was necessary. Tell us a little bit about what you were like as a kid growing up from, say, five to 12 or 13 years

old. We're going to talk about high school and some of the things you did then in a minute. Sure. Before then, what were you like as a kid? Well, I was an only child, and my parents split up when I was about 12 years old and I ended up living with my father. And again, our age gap is 20 years old. So you think about that. He was 32. He was still relatively early in his career and trying to build a strong career for himself. And so I spent a lot of time by myself at that age, very self-sufficient, played a lot of sports,

spent a lot of time with my friends, by necessity, a self-starter, learned to cook at a very early age, again, by necessity, learned to do laundry after in the early days of the two of us living as bachelors. Because he didn't know any better at the end of a long week of work, he took all of his suits and put them in the washing machine because he didn't know they had to be dry cleaned. So he had to buy all new suits. And so he and I figured it out together. But I would say very self-sufficient from an early age. So you mentioned sports. You were a lacrosse player in high school and a coach and also an investor in a place called Toby's Dinner Theater, which was your

first exposure to hospitality. Can you tell us about your first job as a pot washer and your progression from that job to being able to carve a steamship of round beef at the end of the breakfast buffet? And what's your advice to everybody in the workforce, in particular, those graduating from college who are in the early stages of their career, who don't want to work in what we call unsexy jobs and don't want to do the nitty gritty work? So my, my, you're right. My lacrosse coach was one of the owners of Toby's. And as a result, myself and many of my teammates had part-time jobs there. And it didn't matter whether you were the star player or you rode the bench, you had the same career progression at Toby's. You

started as a dishwasher. If you worked hard, or excuse me, as a pot washer. If you worked hard, you got promoted to dishwasher, then salad prep, then hot food runner. And the pinnacle of your Toby's career was you got the paper chef's hat and you stood at the end of the buffet and carved that steamship round of beef. But again, it was all about work ethic. And it was a great job for me. I really fell in love with the hospitality industry during that job. I loved the culinary side of the business. And even when I went away to Cornell and in hospitality, while I had an affinity for the real estate and finance side of the business, I spent every one of my summers interning on the operations side of the business.

And so to your second question, I think whatever industry you pursue, learning with granularity the nuts and bolts of the industry that you choose is invaluable. And I would suggest to any student, there are no bad jobs. There are things you can learn that will serve you well later in your career. And that should be the approach you take to any opportunity you have.

Rather than grousing about that it's unsexy or it's difficult or it doesn't pay well, use that as a learning opportunity. Hopefully someday you'll have some measure of success and you will understand the challenges of those frontline jobs, why it's hard to find folks for those jobs, what you can do to make those jobs more appealing, what you can do to remove friction for the employees that fill those jobs, and to really have some true empathy and understand how challenging those frontline jobs can be. This episode of In Search of Excellence is brought to you by Sandy.com, S-A-N-D-E-E.com.

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The link is in our show notes. Stay sandy, my friends. I have 36 interns each summer. We got, this summer we had 750 job applications. We recruit from all different colleges, both lower ring schools and the Cornell's of the world. We had four kids from Cornell this summer. And what I've learned over the last 20 years of having this program is there's definitely a shift from when I went to school and maybe when you went to school, I'm 54. It's a little different today. The mindset of these students,

they want to do something sexy. They want to work at Facebook. When you start talking about going to work at some very, very low level, they simply don't want to do it. We're building a beaches company. We built the Yelp for beaches. We cataloged over a hundred categories of data

for more than a hundred thousand beaches in 212 countries. It's the world's most definitive beach resource for the $5 trillion a year beach tourism business. The interns worked on data all summer long. And we tell them when they come in, this is going to be an interesting job. You're going to learn how one person, me, there's a thousand ways to build a company. But the work is going to be grueling and boring and beneath your intelligence level and capabilities. But this is what it takes to create a company. Can you just comment on that and what you're seeing in your own company and the workforce?

Is it the same or is it different? Well, you know, it's top of mind for me. Just last week, I gave a parting address to about 114 headquarters interns. We had it married across disciplines. And I actually came away from spending a couple hours with them quite optimistic. They were engaged. They were inquisitive. And I asked them, I said, did we keep you busy? Did we keep you interested? Did we give you work that was substantive?

And the reactions and the responses I got gave me a lot of optimism about the future of the company and the future of the industry. Because almost to a person, what they said was, you gave us real work. We felt like the work we did really mattered. And even tasks that weren't terribly challenging, we tried to figure out how they might be applicable to what our long-term goals were. And so rather than being dismissive or suggesting that's work that was, quote, beneath us, they took it on as an opportunity to learn and to figure out how it

might have applications to their long-term aspirations. So I'm lucky enough to sit on the dean's advisory board at the hospitality school at Cornell. And one of the things we talk about is many of the students there aspire to go into investment banking or private equity or real estate. And that's terrific. But we want to make sure there's still a cohort of students that have a real passion for the operating side of our business. And one of the nice things about the cohort of interns we had here this summer is you had a nice distribution. You had some folks that absolutely wanted to push me down the stairs and take my job. But he had other folks whose real dream is to be the general manager of one

of our hotels or resorts. And that gives me a lot of optimism about the future of our business. At some point when you're younger, you want to be a fighter pilot. You received a congressional nomination to the Naval Academy or you had a vision issue. And then on the advice of a family friend, you applied and had an interview at Cornell where you graduated from the School of Hotel Administration. And by the way, love Cornell. My daughter goes there. She's a senior. I think she knows your daughter. I think they met at some point. My daughter, Bianca Kaplan, super proud of her. When you graduated, you had eight job interviews and earned offers from all of them except for one. Talk to us about

the one you didn't get, the importance of humility in our success, and the letter you still carry with you. Yeah, so the career services team at Cornell does a remarkable job. They work very hard to cultivate real relationships with companies across the industry. And if students apply themselves and really get engaged, they are lucky to get lots of interviews and hopefully they have a number of offers to choose from. I was lucky enough to interview, as you point out, with eight companies and felt privileged to get seven job offers, but I did get one rejection and I kept that rejection letter, I still have it,

and it was from Marriott. And people sort of laugh at that story and it's an entertaining story, but when I reflect on it and I tell that story, And it's an entertaining story. But when I reflect on it, and I tell that story, I have a little different perspective. And one of the things that I treasure about this company and its culture is its humility. Bill Marriott, who is a true icon, who has really shaped the hospitality industry in ways that'll be felt for decades, if not centuries, is as humble a man as you'll ever meet. When Kate Walsh, the dean of the hotel school,

had the chance to meet Mr. Marriott, she said to him, all the kids in Ithaca know that I'm here. The minute I get back on campus, they'll say, what did he say? What advice did he have? And she said, if you had one bit of advice, what would you share with the students? And without pause, he said, tell them to be humble. And I think he really believes that. And when I reflect on that rejection, I think the company did me a huge favor. I think they thought, here's this brash kid. He's graduating from this wonderful school.

He thinks he knows more than he really does. We might be interested in him someday, but he needs to go out and realize how much he doesn't know. And that stuck with me. I went and worked in consulting for about eight years, but always watched from afar the company. I had deep admiration for its culture, the fact that its core values guided everything they did. I watched with great interest some of the financial challenges they had in the late 80s and the early 90s. I was extraordinarily

impressed with the innovative approach they took to navigating those difficulties and ultimately splitting the company and spinning off now the company that I lead, Marriott International, and was lucky enough to take another shot in 95. And they were gracious enough to give me another chance. And I joined the company in early 95. Let's go back in time. Your first job, you began your career, as you said, in a consulting group or consulting firm, Laventhal & Horwath in Boston in their leisure time advisory group.

At the time, it was a premier real estate consulting firm. You're there for two months and you turn in your first feasibility study on a Friday afternoon and had an awesome and super fun weekend. When you got to work on Monday morning, your boss asked to see you, what did he tell you and what was the lesson you learned?

And what's your advice to all of the students and all the recent graduates of good and great schools with good or great grades as they enter the workforce and think that what they did in college or where they went to school actually matters once they walk in the door. Yeah, my boss at the time is a gentleman named Fred Tim, who's still a dear friend of mine. And the phrase he used was, you can't take a B anymore. And I said, what do you mean by that? And he said, listen, I'm not that much older than you. I was in college not long ago. And I remember this calculus. I remember it would be a Wednesday night and there was a great party

that I was thinking about attending, but I had an exam Thursday morning and I would do that calculus and I'd say, well, I should stay home and study for a few more hours, but I'd really like to go to that party. I probably have done enough work to get a B. If I stay in and I can probably get an A, I'm going to take the B and I'm going to go to the party because the only one that's going to hurt is me. And that's an acceptable trade. He said, the work you did here is a B. He said, the problem is we're paying you for A work. Our clients are paying us for A work. And you have a decision to make. You know, if you don't want to be here that much longer, then continue to turn in B work.

If you'd like to stay here a lot longer, you certainly have the intellect and the potential to be here longer. But you've got to decide if you want to do a work on a consistent basis. And as you can imagine, as a newly minted graduate, that was a terribly difficult message to receive, but it was probably the most valuable professional message I've ever received. And he said, go home. I want you to go home today and think about what your future looks like here. And I did go home, but I went home and redid the feasibility study. Stayed up till four o'clock in the morning. And the next morning I came in and I turned it in. And he said, great,

do that every time. And you've got a future future here. I have told that story often to folks that have worked on my team. It's a great way to phrase it. You don't have the option of taking the B anymore because the work you do does not simply impact you. It impacts your team. It impacts your customers. It impacts your investors. It impacts all the folks that are relying on terrific work. exotic beach locations around the world. It's the perfect housewarming gift, a great addition to any home or office, and a fun and creative alternative to bringing a bottle of wine to somebody's house

for dinner. Bliss Beaches is available for purchase on Amazon, where it has glowing reviews and a five-star rating. Get your next amazing gift and order a copy of Bliss Beaches by clicking the link in our show notes. That's a message that I tell my summer program exactly what you just said. We don't accept Bs. We don't accept As even. If you want to work here after graduation or you want to work at an investment bank or Goldman Sachs, A isn't going to cut it.

A plus will cut it because there's someone behind you who can do the same amount of work. And for us, it starts with the most commonly asked question in the world, which is, how are you? And you're going to say that probably 10, 20 times a day, depending on what your life is like. And 99% of people will get it wrong. They say I'm good. And I always give, I tell them a 3.0 and that a good is a 3.0. Very good is a 3.3. Do you want to be a 3.3 or do you want to be a 4.0? So we train people to say, great,

couldn't be better, fantastic. And we even use something called verging on superb, which the vice chairman of a company I used to work at, Sun America used to say, and it's good to borrow phrases from people who make a difference. You want to have, starting with the first communication with people,

something that starts out as great. And that one is a layup for us. You know, there are some catchphrases here, most of which came from Bill Marriott or his father that really guide what we do. An example of that is success is never final. And, you know, we take about 30 seconds when we achieve some measure of success to say, that was great. What's next? You know, I experienced it over the last couple of weeks. For the first time in our 96-year history, we broke through a $200 stock price. And as you might expect, around the building and around the world, a lot of high fives, a lot of pats on the

back. And somebody said, isn't that amazing? What do you think? I said, that's great. It's a nice milestone on our way to a $300 or $400 stock price. And that's really the mindset. I don't want anybody to be satisfied. It's a nice achievement, but it's a milestone on what I hope is a journey to greater and greater achievement for the company. So you leap off to your next job. You pack up to LA, where you work as a bartender and played a lot of volleyball before joining Kenneth Leventhal and Company's hospitality group in LA, where you worked for nearly six years, working on mostly failed saving and loan deals. Then in 1995, as you said, you went to work at Marriott as part of the market planning and feasibility team.

That's a group that looks at prospective new hotel projects. What made you join Marriott, which was going through some very hard times back then? It was a very different company than it is now. I'd say two things. one, my experience at Kenneth Leventhal, maybe two facets of that experience were the catalyst for me gravitating towards Marriott. Number one, it was the first time in my career that I got to do significant international work. At the time, Kenneth Leventhal was world renowned for its expertise in Japanese investment in US real estate. If you think back to the early 90s, the Japanese were aggressively acquiring trophy assets.

I think they owned the Chrysler building. They bought Pebble Beach. And so I was spending a lot of time in Japan. I was underwriting a lot of acquisition work. And it was eye-opening to me about the global nature of real estate. Secondly, as I worked on all of these transactions, the best analogy I can give you, if you love cars and you're walking down the street and you see a beautiful Ferrari parked on the street, you can peek in the window, you can walk all the way around, but you don't get

the chance to drive it. And sometimes that's an analogy for being a consultant. You maybe get to touch it, but you don't really feel like you have ownership. And so I had this burning desire to be inside those projects rather than just happen to sort of touch them as they drove by. And I saw Marriott growing more and more internationally, and the combination of those two interests really had me gravitate. Further, I had made a lot of relationships during the course of my eight years in consulting with folks that worked with Marriott. I was impressed with their intellect. I was impressed with their intellect. I was impressed with

their integrity. I was impressed with the innovation the company had shown. And all of those factors drew me towards the company. You're there for two months and you're in your cubicle at 10 o'clock at night when a guy named Jim Sullivan said he had an idea to buy Ritz Carlton, which you did. Two years later, Arnie Sorensen, who we're going to talk about in a little bit, who was running M&A at the time, came by your cubicle again at 10 p.m. at night and had the idea to acquire Renaissance Hotels for a billion dollars, which you also did. And you got to work on that. How much of our success is being at the right place at the right time, which requires a tremendous amount of hard work to get there, like working at the office till 10pm every night? Yeah, you know, I think it's like anything else, the, you've got to have the table stakes, right? You've got to have basic knowledge, basic work ethic, but some of it is

putting yourself in those positions by working hard, by being in the right place, by networking, by making folks aware of your ambition and your capabilities. In that case, you started our discussion talking about my father and even my grandfather's work ethic. I wasn't doing it for effect. It's just how I was raised. The first month I worked for the company, I was in feasibility. And my boss at the time, a woman named Carol Wagner said, a host Marriott at the time, I was looking at acquiring a portfolio of hotels. This tells you how long ago it was. There were still physical data rooms. And she said, there's a data room in New York. I need you to take the train up to New York, get all the data you need and put together

pro formas for these five hotels. I said, great. When do you need it? She said, as soon as possible. And so I took her literally. So the next morning I took the train up to New York. I collected all the data. I took the train back that afternoon. I sat in my cubicle. I started working on the pro formas. And the next morning she came in. She was an early riser. She came in about 6 a.m., saw me in my cubicle. And she said, what are you doing here so early? And I said, I'm so sorry. I got four done. I have one left. She said, how's that possible? I said, well, I came back from New York and I started working. She said, have you been here all night? I said, well, you said you needed them as soon as possible. I said, I should have the last one

done in about an hour. And again, it was not kind of to show off or to get FaceTime with my boss. That's just how I was raised is to do what I've been asked to do. And so the two examples you give with Jim and Arnie, I had responsibilities that had deadlines. And so I stayed in the office to make sure that I could meet those deadlines. And thankfully, you know, I used to joke with both of them. They didn't come down the hall looking for me. They came down the hall looking for a warm body. And thankfully, I was the only warm body that happened to be down at that end of the hall that night. But I sure took full advantage of it and learned an extraordinary amount from both of them. They were both extraordinary deal

makers and extraordinary mentors. Thanks for listening to part one of my amazing conversation with Tony Capuano, the CEO of Marriott International. Be sure to tune in next week to part two of my awesome conversation with Tony. you