Invest Like the Best with Patrick O'Shaughnessy - Danny Meyer - The Power of Hospitality - [Invest Like the Best, REPLAY]

Starting point is 00:00:02 Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest like the best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of positive sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc.

Starting point is 00:00:55 I guess today is Danny Meyer, the founder and CEO of Union Square Hospitality Group, which compromises some of the most acclaimed restaurants in New York. City, like Gramercy Tavern and Union Square Cafe. Danny is also the founder and chairman of Shake Shack, which began in New York City but is now a publicly traded company with hundreds of locations worldwide. Our conversation focuses on how great hospitality leads to great business, regardless of the sector that it's in. We discuss why hospitality is the starting point for Danny's business philosophy, why first impressions matter, Danny's concept of ABCD, which stands for always be connecting dots, how to scale hospitality, and how to build a business with essential

Starting point is 00:01:32 and soul. Just the other day, when my son went ice skating for the first time and fell a lot, he said to me, well, you learn from your mistake, so you try to make as many of them as you can. You'll hear Danny say something powerfully similar late in our conversation. It's a lovely thought then that I found out that my son, my firstborn, was a boy in one of Danny's restaurants, in a reveal orchestrated by his incredible team. I hope you enjoyed this wonderful conversation. So Danny, I thought a neat place to begin this conversation, which will probably go a lot of different directions, is to go all the way back to some early experience that you had as a tour guide in Italy and ask what that experience at a very young age taught you about

Starting point is 00:02:10 hospitality. And then I want to explore the idea of hospitality in as many ways as we can. I'll start by saying my dad was at that point in the group tour business. And he had established footholds in about eight different European cities. And interestingly, as a summer job, By the time my older sister and then I and then my younger brother each turned 20, we got to pick a town in which his tour business was based to be tour guides and work for his on the ground local teams who were always citizens of whatever that city was. I wanted to be in Italy. So when I turned 20, I picked Rome. My dad had picked out an interesting niche to sell these group tours to. they were airline employees and their families.

Starting point is 00:03:00 And the reason he picked them out is that he was able to aggregate these extraordinary discounts that were afforded to airline employees and their families. Everything from the travel itself, which usually amounted to about $40 round trip on an international carrier, to additional deep discounts for hotels. he was able to negotiate all kinds of deals with restaurants and siting tour buses. A typical airline pilot or flight attendant or baggage handler or gate agent could get a four-day trip to Rome or to London, including going to plays and you name it. But they could get a four-day trip for some amazingly low number like $499, including their round-trip airfare.

Starting point is 00:03:52 I just want to set the stage. So I'm 20 years old. I go, I want to go to Rome. And it was great. I got to live in a hotel where he put up all of his people, which happened to be about a block away from the Vatican. And it happened to be the summer the two different popes died, Pope Paul, and I went to that funeral.

Starting point is 00:04:14 And then some short weeks later, Pope John Paul the first died. You may remember that was sort of a mysterious death. and I went to his funeral. I said, this is kind of interesting. In one summer, I get to go to two papal funerals. Most people never get to go to one. I was the guy that they sent every single morning, or three or four mornings a week,

Starting point is 00:04:36 to go pick up a tour at the airport, a tour group. And you know how it is when you traveled overseas. You're groggy the next day and jet lagged, and a lot of people don't sleep too well. And believe me, these people are not flying first class in order to get those rates. And everybody was grumpy. And I was the guy on the bus after collecting everybody's baggage and getting it on the bus,

Starting point is 00:05:00 who would get on the loudspeaker, the microphone, and start talking about the tour that was ahead. You could just tell. I could tell from standing up, looking at the people, half of them were nodding their heads because they were happy. Half of them were shaking their heads because they were unhappy. And maybe the third half, I never was good at math, were sleeping through the whole thing.

Starting point is 00:05:22 But I could just tell, knowing that I was going to be with these people for four days, five days, there was one tour that would be seven days. I could tell who was going to be the hardest nut to crack, who was going to be the easiest. And I just kind of made a game. I kind of loved it of trying to figure out how I was going to turn around the unhappy people and make them happy and build a group of people that would really have a, fun time together. I wasn't thinking about the word hospitality. I wasn't thinking about any of this except feeling it intuitively. And I was actually learning like crazy. I got to learn how to give a

Starting point is 00:06:02 Rome by night to her. I got to begin to learn the language. I got to get to know many local trotterias where I would not only bring these groups for their included dinners, but I would get paid a thousand lira commission for every head I brought in. there. This became hospitality experience, culinary experience, group psychology experience, and ultimately it began my love affair with Italy, which continues to this day. I love the line in your book that it's human nature for people that take precisely as much interest in you as they believe you're taking in them. I think that's a really nice summation of, or an introduction into your conception of hospitality. I would love to hear you describe

Starting point is 00:06:49 why and how hospitality is sort of the starting point for your business philosophy, generally. Maybe some of it has to do with having established my business in New York City that has always had really good food and a lot of it. And you can't win here on food alone. And you can't even win here on wine alone. Everybody's got good wines on their list. Certainly enough people do. And so I feel like A long time ago, I realized that food was the starting gate. If you didn't have really good food and good wine list and fair pricing and a nice environment, you just weren't even going to get anybody to want to come back. But I was more interested in turning first Union Square Cafe, which was my only restaurant

Starting point is 00:07:36 for the first 10 years of my career, and then Gramercy Tavern. I was more interested in turning those into your favorite restaurant. And in order to make it your favorite restaurant, we not only had to be really good at what we did, but we had to be even better at how we made you feel. We had to make you feel like we were on your side, which is hospitality. But then take it a step further, we had to really make you feel like you belonged. And it was this unlocking of a human emotion, which is that more than anything else, I think human beings long to belong.

Starting point is 00:08:11 You first get to belong to a family. Then you get to belong to whatever school you grew up going to and whatever team they rooted for. And maybe you had an organized religion and you belong to that congregation. Maybe you were in a fraternity and you belong to that fraternity. But whatever it is, it's such a deep drive to belong to something. It's really the reason that our industry exists. Now, that's different perhaps if you're talking about chain restaurants.

Starting point is 00:08:41 that you find on an exit of the highway, which is one of a thousand units, that's not necessarily a place that exists for belonging as much as it exists to refuel people. But I think restaurants, especially full-service restaurants, really exist for the purpose of creating a place to belong to. I want to go all the way back to the earliest lessons you learned at Union Square Cafe. I think you were in your late 20s when you set that restaurant up. It sounds like from the Italy store, you had some natural instinct for hospitality or natural skill, but I think one of the things you've written about and talked about is just always getting better at this. What were some of the key early lessons that you learned at creating that environment of hospitality? Because

Starting point is 00:09:22 it just seems very hard to do. You get someone for a first initial meal, hopefully they come back. It's somewhat transactional when it starts and you're trying to transition it into something much more, I think you say, dialogue, not a monologue, which is a neat way of thinking about this. What were the mistakes or the early lessons you learned at Union Square Cafe that started to lay this foundation for all these other great restaurants? I learned that it was all about the front door. The front door is the first signal that you get when you go to a full-service restaurant as to whether this is going to be a transaction, i.e., give me your name and I'll give you a table, give me your order and I'll give you food, pay your bill, and we're done.

Starting point is 00:10:01 Okay, it could either be that or it could be recognition, eye contact, a smile, a sense that I'm happy to see you, a sense that I do see you, a sense that you matter. that can all happen right at the front door or not. And that's when you know with any place you go to, you can go to a pick your favorite coffee bar in your neighborhood. We all have stories of the chain that over the last 10 years, maybe you've gone there 500 times, and you always order your coffee the exact same way,

Starting point is 00:10:33 and they never remember, which is a great way of expressly letting you know that you don't really matter, and they don't really see you a transaction. By the way, if it's quick and the coffee is hot and you keep coming back, then the transaction was fine. I can do it quickly and it doesn't take me any longer while I'm taking your money to smile and thank you. And remember, all I have to do is say what you like the usual. And now you feel like you belong there. And now I've become essential in your life.

Starting point is 00:11:04 And that's what we strive for. And that's frankly the reason that I love this business so much. I am really focused on this challenge that I don't think I've seen a lot in our industry. And that is, can you successfully scale hospitality? Can you successfully scale a feeling of welcome? Very, very different than the massive success that Ray Kroc had in our industry and so many others afterwards, which is can you successfully scale a system to consistently produce a flavor, whether or not you ever go to eat fast food,

Starting point is 00:11:43 you've got to give some credit to the fact that the fries are going to taste exactly the same coast to coast, country to country. They nailed the systems for consistent flavor. But I will also tell you that I promise you that the way you are made to feel, coast to coast, country to country is going to be vastly different because it just was never part of their calculus. Should we be able to scale a human feeling of belonging? And that's what I'm kind of transfixed on, is can you actually scale hospitality? I want to explore that idea in some depth. But before we do lay a couple examples that I so love about the method, if you will, for creating good hospitality.

Starting point is 00:12:24 Two things come to mind. Your acronym ABCD and this great story around learning from a trout fisherman who overturned a certain rock when you were fishing with him. Can you describe how those two things might relate to each other and relate back to hospitality? A, B, C, D simply means always be collecting dots, so you can always be connecting dots. And in this case, dots, some people would rather call it data. But when I talk about a dot, I'm talking about a morsel of information that matters to you. And if it matters to you, then it better matter to me. Because if I want to matter to you, I better care about something important to you. So if you're coming to dine in our restaurant, ABCD, always be collecting dots.

Starting point is 00:13:11 I better take a minute and check out who Patrick O'Shaughnessy has interviewed in the past. I might even want to take it a step further and ask myself if I know any of those people. When you and I first met and we established that we each know Bill Gurley, that was connecting a dot. You did it for me. I would have done it on my own because I'm a big fan of bills. but that is ABCD so you can ABCD. This gets back to this notion that people really want to belong to something. I think people also want to connect with people.

Starting point is 00:13:46 And we look for things that we have in common, which is the root of the word community, which we're all craving. I want to belong to a community. I better start by finding things we have in common. It could be a sport team that we root for. It could be that we live in the same state. and now maybe we have that in common. It could be we went to the same college or we were in the same fraternity at two different

Starting point is 00:14:11 colleges. But we're looking for that stuff. That's the collection of dots. And then when you connect those dots, you're showing an interest in someone else. And what happens is you get that interest back. The people component of all this and this will circle us back to the ability to scale hospitality just obviously seems central. I love the idea that in your companies, people were evaluated with.

Starting point is 00:14:32 51% emotional performance, 49% technical performance. Very deliberate, I'm sure, which way that scale tips. Say a bit about that. And again, I'm thinking about this trout fisherman, you know, turning over the rock and the care that it takes and how you engender that care to make sure that all the people that are interacting with customers have that same standard. How do you start to scale beyond just Union Square Cafe to this much larger collection of restaurants and businesses around the country. Let's just take a second and tell the story about the turning over the rocks. And that is, I'll start by saying, I love fishing. I have never developed a love for fly fishing. And this happens to be a fly fishing story. But what I got out of fly fishing has helped me in business.

Starting point is 00:15:19 And that is that the expert fly fisher people, even before they show their physical dexterity in fishing, they have to actually show an interest in the fish themselves before they can possibly catch a fish. And the way they show interest in the fish is to figure out what is actually hatching in the water at that moment. What kind of insects are actually hatching? Because the fish are smart enough to not eat something that isn't hatching at that moment. A really good fly fisherman wades into the water, turns over a rock, underneath which is a whole community of things hatching. And the really good fly fisher sees what's hatching, says,

Starting point is 00:16:07 aha, I've got a tie, a fly that's going to actually look just like what's about to hatch. And that's when I'm going to tie at this moment if I want to catch those fish. So that's where this all came from. How does that apply to business? Well, I think if you're in business, you want to catch as many fish as you possibly can, also known as customers, it sure does help to have a product that the customers actually want at that moment. And furthermore, as marketers, and we're all marketing our product all the time, it sure does help not only to have the product people want, but to deliver it in a way that they cannot miss it.

Starting point is 00:16:49 It all has to do with taking an interest in who is your customer and having what they want. That's kind of what I think about all the time. And then how do you surround yourself with people who get that as well? I feel like leadership is about setting priorities and then exemplifying the behaviors that you want to see in other people. It is a priority of mine and it is an example that I do try to set all the time with everybody who works for us to follow through and care as much about the customer you want as you hope that they'll care about you. If somebody writes you an email, you don't just write them back. It's inexcusable not to figure out something about them before you write them back. Does that take extra time? Yes, of course it does. However, it's going to most likely lead to a much richer opportunity if a good opportunity exists at all.

Starting point is 00:17:43 I'd love to hear a bit more about the challenges of scaling hospitality that you've encountered as you thought through this. I don't know whether Shake Shack's appropriate to touch on here since it is a much more scale. up repeated experience than a single restaurant. As you sit back and try to solve that French fry problem on the service side rather than the product side, what are the major challenges that you've encountered in ways you've gotten around them? Well, I think Shake Shack's a great example because it's a scaled business. There's over 300 Shake Shacks in the world, and there are at least last time I checked something like 14 different countries in which Shakeshack operates. In Shakeshack's case, you're not only scaling hospitality, but you're scaling.

Starting point is 00:18:23 a culture across many, many, many different cultures. It's a great example. It's an example of what we've been talking about, which is taking an interest in other people so that they'll take an interest in you. You better go in to a community, whether it's in the United States or abroad. Number one, with humility, because no one in the world wants you to come in saying, we're the big, smart New York people, lay down for us and eat our hamburgers. That's just not how world works at all. So you go in with humility and you learn as much as you possibly can about the community. The same way I talked about learning as much as you can about a prospective guest in one of your fine dining restaurants. Here's an example. And this could be for any city. It could be for

Starting point is 00:19:10 any country. We send in a team of people and take Los Angeles. Los Angeles was a great laboratory for this theory. Los California is sort of hamburger central in the United States. They know everything about drive-ins. It's a driving culture. They know everything about burgers and shakes. And the last thing California needs is a New Yorker telling them how to eat burgers. We knew that going in. We did in California.

Starting point is 00:19:39 We started in Los Angeles. In fact, the first shake shack was in West Hollywood with a huge amount of humility. And that starts with two months beforehand using the advantage of coming from the fine dining industry. to send our team to the best restaurants in Los Angeles as ambassadors and getting to understand the restaurant community, understand who they buy their products from, understand the products they make that they're really proud of, understand the distributors and the suppliers and the farmers that they work with, understand how they recruit people, understand who the players are in the media world, on and on and on.

Starting point is 00:20:19 Lo and behold, Shake Shack opens with four items on its menu. In addition to the 80% of the items that are consistent at every Shake Shack, 20% of the items are customized. And by doing that in every city we go to, even in a close city, like in New Haven, when Shake Shack first opened in New Haven next door to Yale, the walls were made from recycled bleachers. seats from the original Yale Bowl. The special hot dog was named after the Yale mascot and a special recipe went with it. It's that 80, 20 percent consistent, 20 percent all about you showing an interest in you,

Starting point is 00:21:05 which makes you feel like this is my shake shack. I now belong here. And guess what? You can actually do that with a scaled business. We do the same thing also where each shake shack shack actually picks one menu item and gives a percentage of the proceeds of that menu item to a local not-for-profit, different in every shake-shack. And that local not-for-profit usually gets to take part in the opening night event. Members of the staff get to know the not-for-profit and volunteer there in many cases. It's just a way of showing interest if you expect to get that interest back. And it's a great way to just avoid being a cookie-cutter transactional business, which doesn't really interest me. I absolutely love the 80-20 rule. I won't forget that one.

Starting point is 00:21:54 What are the characteristics shared by the people that make an organization like this hum? Thinking back to that 51% emotional, what have you learned about the people that fuel all this? Because I guess every business is just about people, but certainly yours is even more so about the people delivering the service and the hospitality. What have you learned there about building a bigger organization? Well, we've learned that there is an answer to a question that I was stymied by for years and years and years. Almost everywhere I would go giving speeches to different organizations, most of which were not even in the food business. They just wanted to know about hospitality. They would always ask consistently two different questions.

Starting point is 00:22:34 One was, how do you guys always manage to hire so many awesome people? I love the food, but it's your people that really make me come back. I would talk about looking for what you just accurately described as 51 percenters, people who are emotionally wired to be happier themselves when they deliver happiness to you. Now, that's not a good thing and it's not a bad thing if you're not that person, but it's an essential thing if you're going to succeed in a hospitality driven business. Okay, so we're looking for people who have six emotional skills at a very, very high level. Kind optimism, curiosity, intellectual curiosity, amazing work ethic, highly empathetic, highly self-aware, and a high degree of integrity. Those are the six emotional skills.

Starting point is 00:23:28 That's 51% of what we're looking for in a hopefully 100% higher. The other 49% are all performance issues. Like, are you a really good cook? Are you a really good sommelier? Are you a really good dishwasher? I don't really care what the role is. We're looking for 100%, and 51% of that has to be what we call a high HQ, high hospitality quotient. And when you add up those six emotional skills, it generally adds up to someone who while they're doing the thing they do really, really well, are doing it in the service of making you feel better than you would have felt. if we had never come into your lives. And that gets down to a bigger sense I have that to have an enduring business built to last, it needs to become essential in the lives of people. It needs to be the kind of business that makes your life better because it exists. Here's an example. Within

Starting point is 00:24:26 three blocks of my apartment in Manhattan are five different dry cleaners, four different nail salons. Go figure. I go to the nail salon myself, but I do ask myself if any one of those went out of business or any one of those five dry cleaners went out of business, would I notice? Would I care? Well, I don't want to start a business that didn't actually make a difference in people's lives. You would know that that had become an essential place in people's lives if they really felt that something went missing. The cool thing is there's a lot of examples of a sense. things in the world. There are essential pieces of art. There are essential books you've read. There are essential songs you've heard that your life got better because that song was written.

Starting point is 00:25:16 And you actually can't even imagine your life if that song had or that group had never been formed. I can't imagine my life that the Beatles had never been formed or Paul Simon had never been born or Crosby, Sills, and Nash. Now, obviously, I'm dating myself, but I just feel good when I hear their music and that made my life better. And it would make my life really, really sad if someone told me, you can never listen to one of those songs again. That means it achieved essentiality. And guess what? There are millions of songs that have been written that didn't achieve that. There are millions of restaurants that have been built. I think I've built restaurants that never achieved essentiality. But that's not what we strive for. And you only get there when you start with people who exist for the

Starting point is 00:26:03 purpose of doing the thing they do really well in the service of making other people feel better. And if you can do it for a long enough time, that business develops soul. I absolutely love the acid test of is what we're building here. Does it have the potential to reach that stage of essentialism and soul? I think the answer is often going to be no. It's a great way to move on from something of an idea early on. I also imagine that sticking sort of with the emotional theme here, the leadership component as the organizations get bigger becomes obviously different and new challenges. And I love this framework that

Starting point is 00:26:36 you've laid out for, I think the three words were constant, gentle and pressure as ways of being a leader and trying to align a couple of those things with your personal style. Can you walk us through that framework for leadership? I feel like so most leaders have a vision for where they're trying to take you. And good leaders not only have a vision, but they're able to communicate it. then it becomes a lot of hurting cats and you can do it with a command and control approach. I just don't think that lasts very long. Do as I say because I've got all the power. Do as I say because otherwise you're fired.

Starting point is 00:27:13 I don't think you're going to get the best work out of people working in that kind of environment. What that also means is that I think really strong leaders need to be really good at not only having a vision and communicating the vision, they have to be equally good at persuading people that it's worth your while to come along and do it. And oftentimes the vision is going to involve some type of change, change in your behavior, change in the way we do things around here, a change to your expectations about how life was going to go. You know, most people don't really like change. Most people don't really like uncertainty. The notion of constant general pressure is that I believe you need all three words.

Starting point is 00:27:56 words as a leader, you better be consistent with it. The reason I use the word gentle is that if you're too harsh while you're trying to reel in a fish, the line is going to break. If you're constantly playing the fish and reeling it in in one direction and you're keeping the pressure on, you don't let up on any of those things. You don't let up on the constant or the gentle or the pressure. I think that more great people are going to do more great work for more time in your company. Just the way I am. I know that there are sometimes, especially in times of crisis, when you do have to shift into, I know what I want, do it. You've got to shift into that mode, command and control mode. But I don't think most people will want to be part of a team

Starting point is 00:28:49 for a sustained period of time in that environment. And I think those are the kind of work environments that tend to see a ton of turnover, which never equates to a great morale and often does not correlate to the best talent. Because the best talent I know in the world would love to buy into a vision and then sort of be left alone to do their best work and not have a micromanager at every single. step of the way, say, do it this way, do it this way. So constant channel pressure, I tend to use much more when it has to do with our culture. This is why we do what we do. This is what I expect the results to be. I really let people figure out how to use their expertise to execute on that.

Starting point is 00:29:39 If I knew all the answers, I wouldn't need them in the first place. Another aspect of leadership you mentioned a bit earlier is just this notion of embodying the things that you're trying to preach. and I love this line in the book, The Road to Success is paved with mistakes well handled. Is there a particular mistake that you remember that you were personally involved with? Maybe you were in the restaurant yourself and to say a little bit more about handling mistakes well

Starting point is 00:30:01 and the role that that plays in this notion of hospitality. Well, my notion of mistakes is that they are the greatest renewable resource on earth. There's always another one. You're never going to run out of it, ever, ever, ever. as long as the human race occupies parts of the earth, there will be mistakes. You can disagree with that. I've never met anyone who doesn't make mistakes, but if you agree with that notion, then you say, all right, we can either let mistakes do us in. We can either hide from our mistakes. We can either deny that we made mistakes. We can either lie about our mistakes. Or what if we could actually put those mistakes to work for us?

Starting point is 00:30:42 What if we could say, hey, as long as there's this constant waterfall or constant waves of mistakes coming, think about the waves in the ocean, there's always another one. You don't know when it's going to come. You don't know how big it's going to be. Water might be calm enough for a while to make you think there's no waves, but there's going to be another one. That's what I like to do with mistake making. And it's like, all right, as long as it's an honest mistake, I have zero patience whatsoever for dishonest mistakes, but an honest mistake, it's like, great, let's use it to our advantage. Let's learn from it. Let's own it. Let's name it. Let's teach from it. Let's employ what I call the five A's of mistake

Starting point is 00:31:24 making, which are be aware you made it. That's A number one. You wouldn't believe how many mistakes get made where you didn't even know you made it. So be aware. Number two, acknowledge it. Number three, apologize for it. Number four, act to fix it. And number five, apply additional generosity. Those are the five A's of mistake making. People are blown away when you do those things because unfortunately in our society, there is so much either shame or just natural muscle reflex to be afraid of acknowledging that you made a mistake or ashamed to apologize or whatever, that it blows people away when you do those five things.

Starting point is 00:32:05 And you can actually end up in a better spot with someone for how well you embraced and overcame a mistake than if you had never made it in the first place. To your first question, I would not even know where to start because there's just not a day that goes by. I mean, there's the obvious kind of mistakes like in the restaurant business like spilling on somebody or forgetting somebody's birthday candle that they had requested. We've made more macro mistakes, like picking a subpar location for a restaurant. In each case, if I've learned one lesson, it's not only apply the five A's of mistake making, but really trying to do it more quickly than ever. Don't be so afraid of the response that you keep this acknowledgement and apology and action in your pocket for too long.

Starting point is 00:32:56 Fail quickly is a really good piece of advice. One of the things that is imbued throughout the restaurants and the business in general is creativity. And you've opened many different kinds of restaurants. Obviously, I'm sure many of these themes we've talked about pervade them all. But there's probably some sort of creative spark at the beginning of each. And as a repeat entrepreneur, I'm sure these are moments that you live for, these sort of primordial ooze stages of a new enterprise. And there's this concept you have of whoever wrote the rule that I would love you to explain as a device for this early stage of entrepreneurial spark and creativity. That spark you describe is something that I haven't really used.

Starting point is 00:33:37 analyzed a lot. I know that great musicians are often asked, I've heard interviews with Paul McCartney, how did you come up with Blackbird or Eleanor Rigby? And I don't know how he did it, but he did. And maybe he woke up in the middle of the night singing a song. I haven't actually thought about when it happens or how, as much as I probably should, except for this. I know that my life experience plays into it and I like to collect experiences. In fact, one of the things I can cannot stand about the pandemic is not being able to travel because I collect experiences. And it's not only in restaurants. It can be window shopping.

Starting point is 00:34:16 I can see the names of companies. I can see what trade signs look like. I can see how a butcher cuts things differently in one country or another. I love going to markets to see how people eat. I love seeing art. I love seeing plays. And I'm bringing this up because by just being voracious, when it comes to collecting life experiences. We're putting these experiences in our mind, in our heart,

Starting point is 00:34:44 in our memory bank. I think inspiration, that spark moment that you were describing, happens when you find the right time to make a withdrawal from the bank that is appropriate to the current spending opportunity you have. So in my business, I know that sometimes it's the context that really helps me to figure it out. Jack wasn't an idea that I was just dying to do. I didn't wake up one morning having been focused on three-star New York Times restaurants, like Gramercy Tavern, 11 Madison Park, the modern Unitswear Cafe, and wake up one morning saying, now what I really have to do is frozen custard and hot dogs and cheeseburgers and crinkle cut fries. It was basically looking at

Starting point is 00:35:32 the context of trying to help revive a park. and having food that would be in the public domain at a price point that anybody could afford, who could afford to go to New York. And I just jotted out the menu very, very quickly. And we haven't really veered much from that menu in all these since 2004. It's basically this. I think I do some of my best work from the frame inward. The great artists that you see in museums generally paint on a canvas.

Starting point is 00:36:05 and then someone figures out what kind of frame to put it on, which kind of wall to hang it on, and how to light it. And I feel like I do some of my best work artistically. When you give me the frame and you say, what do you think belongs in that frame? You actually give me the frame and the wall and the lighting. And you say, what do you think belongs in there? And that's what led to doing things like working in city field with the Mets,

Starting point is 00:36:32 where they said, here's center field, a place that nobody goes, create a community out there. What are you going to do? Or the Museum of Modern Art says, here's the space we're going to give you. And it's at the intersection of three generations of architects of MoMA. What are you going to do there? I feel like increasingly, that's the kind of challenge I love, which is you show me the frame, you show me the context I love working inward as opposed to outward. What is the tension between wanting to start new things? And, you know, obviously you're not serial entrepreneur, so you've started a lot of new things. How do you, how do you deliberate at any point in your life or career, whether it's better to expand or to pause and go deeper

Starting point is 00:37:17 into what you already have? Probably in the same way that a winemaker decides, is this a teher wine? Is this a wine that needs to taste exactly like where it was grown and only like, like where it was grown? Or is this a flavor that we can and should replicate many, many, many times? So if you think about wines, the brands of wine that have sold the most globally, I don't even know what they all are. Yellowtail doesn't taste like anywhere. It just tastes like something. And it's obviously a combination of a good enough flavor and a good enough price and good enough name and packaging that it can sell everywhere. But then you take wines from burgundy where every village, even though it's five blocks from the next village, actually

Starting point is 00:38:11 tastes a little different. And then within that village, a vineyard, same great pinot noir or chardonnay, but a vineyard within that village is going to taste different than another vineyard within that village. I often feel that way about Union Square Cafe, my first restaurant. I feel that way about Gramercy Tavern, my second restaurant. They not only taste like where they were born, but they're named for where they were born. Not unlike those wines we're talking about. Most of the great French wines are named for where they're grown. It's not a marketing name.

Starting point is 00:38:44 And I feel like we have a lot of those kind of restaurants, Gramercy Tavern, the Modern. We also have restaurants that are more about another place than they are about this place. So a restaurant like Maillino, which is based on my love affair with Rome, not just Italy, but Rome. Maulino actually has scaled because we have a restaurant in Washington, D.C., called Maillino Mari, which is a seafood version of Maulino here in New York. So every now and then we'll get one that just feels like there's not going to be hundreds of them, because that doesn't really excite me that much with a full-service restaurant. We have a new business, new-ish business called Daily Provisions.

Starting point is 00:39:27 are two of them now, one in the Flatiron District on 19th Street and one on the Upper West Side that I believe not only will grow, but should grow. It's an interesting hybrid because daily provisions, the spark of inspiration for daily provisions came because we were moving Union Square Cafe after 30 years to a new location on 19th Street, very close to Union Square, 19th and Park. And the space that we got happened to come with another space next door. And we were completely focused on not screwing up moving a 30-year-old beloved brand Union Square Cafe. Meanwhile, we had to figure out what to do with this little space next door, which became daily provisions. We basically said two things. This one has to be a gift to its neighborhood. It has to be

Starting point is 00:40:21 a gift to people who live near here and a gift to people who work near here. And it has to have, because it's so small, really, really good versions of the kind of food that you crave at any time a day. So you better have really good coffee. It better have really good bread. It better have really good breakfast sandwiches. It better have the world's best cruller. It better have the world's best cookie. It better have the world's best rotissory chicken to take home at night. And we just started thinking about that neighborhood. And if you live there, and I happen to live very close by, I don't need a lot. I just need one of the top three versions of 15 different things that I could eat every day of my life. And in order to have a license to get on that

Starting point is 00:41:09 little menu in that little place, it better be a really essential version. of that. We don't need another Me Too croissant. We don't need another Me Too grilled cheese sandwich. The ticket to get on that menu is you better be an amazing version of whatever that category is. So it turned out that Daily Provisions was a smash hit the minute it opened, which is why we opened a second one. And the second one was jam packed with people. COVID hit. And now Daily Provisions is finding a way to be really, really strong in the pickup and take out and delivery business, because it has to because people can't gather anymore. But I'm telling you that story because it's a hybrid. We created a place of its terrar. And yet it turns out to be something that

Starting point is 00:42:03 we found people were kind of coming from all over just to pick up their cruller in the morning or just to pick up their roast beef sandwich in the afternoon. And we said, we should do more of these because this is a really cool thing. I love the comparison of locality and extensibility as a way of thinking about any kind of business and the frame inward. I mean, it's such an interesting creative exercise to sort of bookend our conversation around and unite many of the themes that we've walked through. I'd love you to tell maybe a story from your own experience of this. I think you call it the excellence reflex, just like you have a reflex if someone gets thrown at you and you duck. There's certain people or companies that have this excellence reflex.

Starting point is 00:42:46 I think that will put a bow on this notion of obviously not everyone's in the restaurant business, but in our own ways, we're all in the hospitality business. And I'd love you to just tell a closing story from any experience, doesn't have to be food or can be a meal, can be anything, just to nail home that point of excellence, reflex, and why that can be so powerful for us all. If you're a part of an organization that wants to compete to, win, you better surround yourself with people who want to win themselves. We use the expression, excellence reflex. As you just said, doing something as well as you can do it and learning to do it even better tomorrow is a journey. I'm telling you right now, I'm not the least bit interested

Starting point is 00:43:25 in perfection. It doesn't exist. It's a recipe to be pretty unhappy in life. I'm very, very interested, on the other hand, in the notion of excellence. And I do believe that excellence is a journey. And I believe excellence is honoring the work you did yesterday, all the mistakes and everything. You gave it your best, but damn it, figure out how you could do it a little bit better today. And when you see something that can be better, you fix it. Restaurant workers are famous for a lot of things, but there's this consistently weird thing I've noticed through the years where they don't often know how to look down. They walk right over the little pink sweet and low wrapper that somebody,

Starting point is 00:44:06 drop from their table. That's not using your excellence reflect. That doesn't belong there. And by the way, I'm not trying to put down restaurant people at all. I'm putting down myself when I say this. It's like, if it's not right, you got to fix it, whatever it happens to be. There's a great expression, always leave your campsite neater than you found it, which I really, really believe in. That implies some excellence, which is, here's what I saw when I got here. I'm going to make it even better. but I'll be damned if I'm going to leave it even worse. There's just no way I'm going to do that. We think a lot about that.

Starting point is 00:44:39 I also think a lot about competition. I'm a sports fan, and I love learning about what motivates championship performance because in business, that's our sport. It's a game. We are paid to be problem solvers. I've learned over time that I need to surround myself with people who are motivated to be champions. I've also learned that there are three primary differences in the kind of motivations that champions have. And not one is better than the other.

Starting point is 00:45:12 But it's important as you build a team to think about where people come from. And so you've got the really, really competitive champion whose motivation primarily comes from a desire to beat the competition. That jazzism. And the image I get in my mind is Muhammad Ali standing atop sunny list. with his fist in the air. And you can tell he loves that he just beat that guy. And then you got the champion, great champion, who's primarily motivated by a hatred or fear of losing.

Starting point is 00:45:46 It's like there's just nothing worse than losing. And I'll be damned if I'm going to lose, which is why I'm going to win. And I think of John McEnroe yelling at the umpire, how could you call that shot against me? And then you got the champion. I was just reading a great article. about a great track and field star who just passed away, Rayford Johnson.

Starting point is 00:46:06 And you can tell that his primary motivation was outdoing his own personal best. It's not that he really cared who he beat. And he didn't really care that much. Losing just wasn't even on his mind. He just said, you know what? If I jumped X far yesterday, I'm going to jump X.2 tomorrow. I'm just going to. Or I'm going to run X. Point two faster tomorrow.

Starting point is 00:46:30 I think it's important for any of us who are in a competitive field. Look, I bet you check out how many people listen to your podcast all the time. And if I know you well enough, you might even be aware of how other podcasts are doing in the category. It's just a good thing to have the self-awareness of what motivates you to want to be the best. Well, it's a wonderful closing thought and analogy and an excuse for me to ask my traditional closing question that I ask everybody. And that is to ask what the kindest thing that anyone's ever done for you is. The kind of thing anyone's ever done for me was to say yes when I asked her to marry me. I just cannot imagine any of my business life or family life or who I've become had it not been for

Starting point is 00:47:14 Audrey Heffernan saying yes and becoming Audrey Heffernan Meyer. She is an amazing mom of four kids who I adore, who I learn so much from, and probably more than anything, in addition to the, isn't it great how she has supported me, which it is, but she's, I think more than anything, helped me to become real. I think there's a fine line between wanting people to be happy so much that you end up losing a piece of your own authenticity. And that never happened to me, thank goodness. And I give her all the credit for that. Well, Danny, this has been easily one of my favorite conversations that I've had in this format. It's been an absolute pleasure.

Starting point is 00:47:58 Thank you very much for your time. Thank you, Patrick. If you enjoyed this episode, check out join colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning. You can also sign up for our newsletter, Colossus Weekly, where we condense episodes to the big ideas, quotations, and more, as well as share the best content we find on the internet every week.

Invest Like the Best with Patrick O'Shaughnessy - Danny Meyer - The Power of Hospitality - [Invest Like the Best, REPLAY]

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