In Search Of Excellence - Tony Capuano: The Non-Negotiables In Business | E78

Episode Date: September 12, 2023

Welcome to the second part of our interview with the incredible Tony Capuano, the President and CEO of Marriott International. 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. 00:45 Becoming the CEO of Marriott- FILO (First In, Last Out)- Control the factors that you can control- Arne Sorensen died of pancreatic cancer    - Arne was a friend, mentor, humble, iconic leader- Tony became the new CEO six days later    - Had to compartmentalize his grief and start working immediately- Buying Starwood and a round-the-world tour- Bill Marriott’s advice to Arne Sorensen- Randall’s experience with Arnie    - Arnie knew how to listen and connect with people 11:00 The biggest 3 lessons Tony learned from COVID- Core values and culture have never mattered more than in the pandemic- The value of authentic and transparent communication- The value of thoughtful stewardship of the company's financial position- The resilience of travel and wise business plan- Arnie’s pandemic video 16:22 Interaction with employees and customers- Reads every email he gets- A face-to-face business 18:04 The importance of Extreme reparation- Prepares extremely for earnings calls- Prepared for the audience with the Marriott board for 4 nights 22:12 The importance of giving back- It’s critically important to give back- Tony responded to every person who reached him out 23:52 Fill in the blanks to Excellence- The biggest lesson I've learned in my life is    - Listen to the advice of your parents- My number one professional goal is    - To give back- My number one personal goal is    - To give back- And more!Sponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

I feel like I am telling the story of hundreds of thousands of Marriott associates and the extraordinary work they do every day. I don't want to miss a single detail. I want to make sure I am telling their story thoughtfully and comprehensively. The ability to actively listen is a rapidly evaporating skill, and if you can master it, you are going to be light years ahead of many of your peers. There will always be someone with a better education or more experience or taller, less gray hair. All those factors are beyond your control. But the one variable that you do control is whether someone outworks you.

That is 100% within your control. You're listening to part two of my awesome conversation with Tony Capuano, the CEO of Marriott International. If you haven't yet listened to part one, be sure to check that one out first. Without further ado, here's part two with the amazing Tony Capuano. I'm a big believer in work ethic. It's probably the most important determinant of my success. And I tell everyone that having a great work ethic is probably going to be the most determinant factor in your success,

especially when we're talking about being the first person in, last person out. Again, not for FaceTime, but I tell my mentees, we have something called Philo. And that means first in, first out. And I tell everyone, no matter where you work, if you're that person, Mr. or Mrs. Philo, you're going to have an incredible career. And I remember I was an unsuccessful lawyer, had an opportunity to be the assistant to the chairman for a Forbes 400 person, Eli Broad, and I'd already

met with him. And now I was told that Jay Wintraub, who is a former person in that role, wanted to meet with me as well. And he was going to call me and my phone rang at 7am and I was in my office at the law firm. And sure, I could have called them back, but it made an impact that I was there and picked up the phone at seven in the morning. I was also the first person in the office that day. It works. It does. And, you know, my dad gave me a bit of advice one time and I gave my daughter as she was getting ready to graduate from Cornell, the same advice. And what he said to me was, there are lots of factors that you can't control. There will always be someone with a better education or more experience or taller, less gray hair or whatever, more gray hair, whatever it might be. All of those factors are beyond your control.

But the one variable that you do control is whether someone outworks you. The only way someone outworks you is if you allow it. That is 100% within your control. And that bit of advice always stuck with me and hopefully will stick with her as well. You became CEO of Marriott on February 16, 2021 after your former CEO, legendary Arnie Sorensen, died after a two-year battle with pancreatic cancer at the age of 62. You were only the fourth CEO in the company's 90-something-year-old history at the time.

By the way, most people don't know that Marriott started in 1927 as a root beer stand. That's right. When Steve Jobs died, Tim Cook took over and there was a lot of talk about whether he could progress from being a great number two who shunned the spotlight to being a great CEO and the front man of probably the most important

and iconic company in the world. And he's done that and then some. You've done the same thing and you've had to follow a legend. You've done an incredible job. How hard is it to follow a legend and take over from someone who is so universally loved by everybody? Yeah, it's an interesting set of questions.

Maybe I'll try to answer it a couple ways. Number one, you know, for all of us, not only was Arnie a generational leader, he was our friend, right? He was our mentor. He was, you know, I talked about the humility of the company. If Bill Marriott's the most humble, iconic leader I've ever met, Arnie is sure a close number too, right? I mean, cut from the same cloth, just a remarkable person as well as leader and friend. And he passed, as you point out, on President's Day in 2021. And I was appointed the following Sunday, so six days later. And when Mr. Marriott

called me to tell me that the board had appointed me, one of the things he said to me, it was late Sunday evening, and he said, I know you are as devastated as I am about the loss of our friend. And if I had the ability to stop the world from spinning for a few weeks so that we could properly mourn the loss of our friend, I would. He said, but you are going to have to somehow figure out not to suspend mourning, but to somehow compartmentalize your emotions. He said, and the reason you're going to have to do that is whether you like it or not, at seven o'clock tomorrow morning, 800,000 people are going to pin a Marriott name badge on their lapel. And whether you're ready or not, they're going to expect you to lead them. And by the way, not lead them in a normal business environment, but lead them in the

middle of this pandemic, which is the most extraordinary, perhaps existential threat that our company and our industry has ever faced you know and then he sort of laughed and said so good luck with that i'll see you tomorrow and um you know just a remarkable challenge and and that night as you can imagine i didn't sleep much but one of the things i thought about at the time i had this conversation with Arnie, I clearly never thought it would be personally relevant to me. But right after we bought Starwood, we did what he called an around the world tour. And the whole leadership team of the company got on planes and we went and visited every Starwood office in the world to start to harmonize the culture of the two companies. And during one of the legs of that trip, he and I found ourselves together on a plane one night and we were chatting. And

I said to him, do you ever think about the challenge that you took on a following Bill Merriam, this, this icon of the industry, his names on all the buildings. I mean, what a remarkable challenge you took on and you've done it so incredibly. And he said, when Mr. Marriott told me that I was going to succeed him as CEO, the one bit of advice he gave me said, Arnie, you were selected for this job because I believe Arnie Sorensen can lead this company. I think the only way you might fail is if you try to be Bill Merriam. He said, don't try to emulate me. Hopefully, I've taught you a couple things along the way.

But the only way you'll succeed is if you're Arnie Sorensen. I believe Arnie Sorensen has the ability to lead this company. And so that Sunday night, as I laid in bed trying to figure out how the hell I might do what was being asked of me, that story sort of rung in my head. Arnie was remarkable in so many ways. I would never dishonor his memory by trying to be him. He was one of a kind and he was incredible. And I only know how to be me. I don't know how to be anybody else. Thankfully, I learned some incredible lessons from him.

I learned some incredible lessons from Mr. Marriott. I luckily get the chance to continue to learn those lessons from him. It is a privilege to talk to him a couple of times a week, which I continue to do. But that was the only option I had. I had a chance to meet him at the Skift conference. You've probably been there. Of course. And I just went up to him and said, hi, I have a promotional products company called ColorCard. I think we have 86 Marriott Hotels as clients. I just went up to him and said, hi, I have a promotional products company called ColorCard. I think we have 86 Marriott Hotels' clients. I just want to thank him for all of the business. Of course, he didn't know the product.

I gave him one and I sent him a nice note, email, and he wrote back within two hours, but couldn't have been any nicer. When I met him, he said, tell me more about you. And I thought that's pretty remarkable. I mean, you've been to Skift, all the big CEOs from Delta to Marriott, every major hotel company is there. And there's a ton of people there. They actually took the time to ask me, how are you doing? Tell me a little bit about your background. It made an impression on me because none of the other CEOs did that, that I met with at the conference, which was about 20. And I think, you know, on that sad day when we lost Arnie, when you read

all these beautiful tributes that were written about him, the thing that really struck me, not a lot of them were written about his professional accomplishments, which were significant. They were stories like the one you just told. And oftentimes when young professionals or students ask me for advice, one of the things I always encourage them to do is work on being active, engaged listeners. And on the long list of skills that Arnie had, that might've been his best skill. And you saw it in these tributes that were written about him. Somebody that may have spent five minutes with him in the lobby of a hotel or in the port cashier waiting for their car, for those five minutes they spent with him, he looked them in the eye. He was not distracted. He wasn't thinking about his next

meeting. He wasn't staring at his phone. He actually engaged for those five minutes. And as a result, that person left feeling like they had really connected with him, even though it was only a short interaction. And I encourage young professionals and students, the ability to actively listen is a rapidly evaporating skill. And if you can master it, you are going to be light years ahead of many of your peers. This episode of In Search of Excellence is brought to you by Sandy.com.

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You mentioned you joined the company at a crazy time in the middle of the pandemic. You've already described it as the most challenging crisis in the history of the company and the travel industry. Occupancy levels at Marriott in North America and Europe had fallen below 20% to right around 70% pre-COVID. Revenue per available room, known as Revpar, dropped around 90%. Your stock price went from $153 per share to $59 per share, losing more than $20 billion of market value. You posted a loss of $260 million in 2020, which was Marriott's first loss since 2009. And you drew down $2.5 billion of your $4.5 billion of credit. What were the biggest three lessons you learned from COVID?

And how important is culture and team to our success? So, I mean, I think you hit on the first most important lesson. Core values and culture have never mattered more than in those dark days of the early days of the pandemic. those core values have been the true north that have guided this company through wars, the impact of 9-11, the great financial crisis, and the pandemic. And there is a comfort knowing that when you're trying to feel your way in the dark, it's those core values and the strength of that culture that really you can lean on to guide you through those most difficult periods. I think the second most important lesson is the value of transparent communication.

I am quite certain you've seen the video that Arnie recorded for our associates in the very early days of the pandemic. I am quite certain that video will be shown in business schools for the next hundred years. There is no better illustration of the importance of authentic, transparent communication. And boy, no better set of circumstances to learn the value of that sort of communication

than what we went through in the early days of the pandemic. And I would say, no, I was just going to say third, you know, I've been with the company coming up on 30 years. I have always viewed us as being, if we erred, we erred on the side of maybe being a bit conservative stewards of our balance sheet. But I can assure you in the 29 years I've been here, not once did I ever see somebody run a financial model that said, I wonder how the model looks if revenue drops 92% overnight. And so I think the third lesson was really about the value of thoughtful stewardship of the company's financial position.

And maybe lastly, the resilience of travel. a period in our history, two and a half years ago, where there were real, probably internal, certainly external questions about the long-term viability of the enterprise to posting quarter after quarter of record financial performance. I think that the speed and the steepness of that recovery, to me, illustrate two real and obvious truths. Number one, the strength and resilience of travel on a global basis. And number two, the wisdom of our business model. And the combination of those two factors have produced just extraordinary financial results. Congratulations on all that. I think the stock price, 200, huge milestone. Congratulations to you and to your team.

Yeah, it's really on the shoulders of the team. And to me, the most gratifying facet of my time in this role is getting back on the road, visiting with our associates, and really seeing the joy on their faces. These are folks that have chosen jobs in the service of others. And so they're at their happiest when our hotels are full, and they get to do what they've chosen to do, which is to take care of each other and take care of our guests. And so, you know, I appreciate your kind words, but those congratulations really go to our frontline associates that are doing such amazing work.

Tell us in 30 seconds or less about the video and what it was and what he said on the video that there were members of the team that thought he should do an audio message because he had lost his hair as a result of his cancer treatment. He said, absolutely not. The fact that he was so candid about how little we knew about the pandemic and how long it might last and how impactful it might last, and how impactful it might be. And he was so authentic in saying how difficult it was for him to recognize the impact this was going to have on associates who had nothing to do with what was happening to them. First, they announced your CEO. You got almost 20,000 emails from associates, most from people who have been furloughed. And you travel, as you said, a lot, more than 200 days a year visiting Marriott properties. A lot of us have this vision of big CEOs in the tower.

They're not in touch. They don't, if they're an airplane company, they actually are not flying back in coach, right? They're in first class. They're treated like kings or queens. Do you respond to every email you get? And how important is it to have face-to-face interaction with your employees and customers? Yeah, I do respond to every email I receive. Not as quickly as I used to, to be sure, but I do. I'll admit I used to, maybe I have a little OCD. I used to take great glee from clearing out my inbox. Maybe I've given up. It'll never be at zero,

but I do endeavor to respond to every email that I get, both from associates and from guests. There is arguably no more important part of my job than getting out into the field, seeing our associates, being with our customers, and meeting with our owners and our partners. Ours is a face-to-face business. And we muddled through with technology by necessity. But I think the steepness of our recovery is the best illustration that people understand business is conducted face-to-face. One of the elements of my success has been something I call extreme preparation. I'm talking about preparing 10 times more than someone else does for a meeting, a job interview, a presentation, going way above and beyond. If someone prepares one hour, I'll sometimes prepare 40 hours. Can you give examples of things you've done using extreme preparation in your career? And how

important is it to our success to stand out a lot more than the average person and show that you've actually done the work? Yeah. I mean, um, I could give you a few, I think, um, to this day, every earnings call, uh, I prepare, um, for hours and hours and hours. One, I feel like I am telling the story of hundreds of thousands of Marriott associates and the extraordinary work they do every day. I don't want to miss a single detail. I want to make sure I am telling their story thoughtfully and comprehensively.

And so if you saw the binder I take into the earnings call, I should buy a lot of 3M stock because it's got hundreds of post-it notes all over it because I want to make sure I have a full and comprehensive command of all the facts in in that binder so i i prepare um probably over prepare a bit for those calls i talked a little bit about that extraordinarily difficult week after arnie passed and the board had a tough decision to make they had to they also had to compartmentalize their grief because you could argue among the most important responsibilities of a public company board is the selection of a CEO, particularly in the face of the loss of such an incredible leader and in the face of the challenges that the pandemic had created for our company.

I think I did four all-nighters that week because I was given an audience with the board to give them a perspective on what my vision and strategy might be for the company going forward if I were lucky enough to be selected as CEO. I had several hours to make that presentation for the board. I think I wrote 30 pages of preparation. And when I finally got to the board, I'm not sure I looked at them at all. I had written and rewritten, written and rehearsed so many times that when it came time to make that presentation, I don't think I memorized it, but it was so embedded in my head that I felt comfortable just talking to the board for a few hours. Are you looking for your next great gift to surprise a friend, colleague, or loved one? Bliss Beaches makes the perfect gift.

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for lack of a better term, preparing for all-nighters, I think most people would say, no one is going to do that. But that's the advice I give. When someone says, who does that? I respond, nobody, which is exactly why you should. And I think it's- They probably also wouldn't guess that I had a shirt and tie and jacket on and then Nike shorts and flip-flops because it was on zoom.

So I figured they wouldn't see me from, uh, you know, anywhere, but here up. Hopefully you had a good pair of kicks on some, some nice Jordans or something, something cool just to make you feel cool and relaxed when you were, when you were doing it. Let's talk about the importance of giving back. You advise students to remember the nobility of serving others. How important is it to give back in our success? I think it's critically important. I, you know, I think about all of the blessings that I and my family have, and I give an extraordinary amount of credit to Cornell and all that Cornell did for me, all my professors, my advisor, the dean that was there when I was there, the years, I've had thousands of students reach out to me from Cornell, whether it was for assistance on a school project, for internships, for full-time jobs, for career advice. I can tell you with absolute certainty, I've responded to every one of those inquiries.

And when I have the privilege to speak at Cornell, one of the things I say to them, I'm not unique. That school has an incredibly passionate alumni base, all of whom want to pay back the blessings they've received similarly. And if I have any frustration with the students there, the phrase I use with them, I say, the day you started here, you were given a big, shiny, golden treasure chest. And very few of you ever opened the lid of that treasure chest. You have this passionate alumni base that want to help you. They want to give you counsel. They want to give you advice. They want to help you as you navigate your career in this amazing industry. Take advantage of it. Before we finish today,

I want to go ahead and ask more open-ended questions. I call this part of my podcast, fill in the blank to excellence. Are you ready to play? Okay, ready. Biggest lesson I've learned in my life is? Listen to the advice of your parents. My number one professional goal is?

To give back. My number one personal goal is... To give back. My number one personal goal is... To give back. My biggest regret is... To not have taken more advantage of what Cornell had to offer. The one thing I've dreamed of doing for a long time but haven't done is... Get my pilot's license. You're going to do it?

I don't know if they'll let me. Maybe. If you could go back in time, the one piece of advice you would give your 21-year-old self is? Be humble. If you could meet one person in the world, who would it be? Do they have to be alive? Let's go dead and alive.

Dead would probably be Da Vinci. Love it. Alive would probably be Cal Ripken. Wow. I'm a Baltimore guy. All right. For those of the listeners of viewers who don't know, Cal Ripken holds the MLB Major League Baseball record for most consecutive games played.

I don't remember, Tony, what it is, but I think it's... 21-48. 21-48. I was going to say more than 2,000. Incredible. The one question you wish I asked you is... Why should a student that's trying to figure out what they want to do for a living consider the travel and tourism industry?

And the answer is... I'm going to give full credit to my hero, Bill Marriott. Every year we do a senior leadership meeting. And one of the highlights of that meeting is some words of advice from Mr. Marriott. And in the middle of the pandemic, I sat down and did a little fireside chat with him. And I said, Mr. Marriott, our folks, especially in the middle of the pandemic, I sat down and did a little fireside chat with him. And I said, Mr. Marriott, our folks, especially in the field, have gone through just an extraordinarily difficult period coming out of the pandemic. What words would you give them to energize them as they continue to work through recovery? And he said, I'd remind them what a fun business this is. And he sort of joked and he said, can you imagine spending your whole career working

for a box manufacturer? So that sounds horrible. He said, think about what we do for a living. He said, travel is such a fun industry. And if we do our jobs well, we end up being part of the fabric of people's lives. They celebrate the most important milestones of their lives with us. Their weddings, their anniversaries, birthdays, family reunions.

And if we're doing our jobs well, we're making those memories even more significant for them. He said, what we do for a living is enhance people's lives. It's a great profession. Tony, this has been awesome talking with you. I'm grateful for the time you've given us. I appreciate your responding. I sent you a cold

email and you responded right away. So this has been incredible. Thank you so much for your time and congratulations on all of your huge success. I'm looking forward to more great things from Marriott. Well, thank you. And thanks so much for having me and good luck with your daughter's graduation. I'm going to send you some Kleenex. That was a blubbering mess. So get ready. Oh, me too. No, no doubt about it. Thank you. I have the privilege to do lots of these sorts of conversations. I know extreme preparation is a buzz phrase for you. Boy, did you do your homework? I felt like this is an episode of This Is Your Life. You dug deep. You did terrific research. You certainly were extremely prepared,

and I appreciate it. It made for a much richer conversation. So thank you. you