How Chip Conley Plans on Making Business More Positive and Empowering for All

How Chip Conley Plans on Making Business More Positive and Empowering for All

[music] [00:00:26] Chip: I’m on, right? Can you hear me? Perfect. Okay. We had acknowledgements a moment ago. I think it’s time we acknowledge him a little
bit. So how about a standing o for the Awesomeness
Fest and how awesome it’s been. Vishen: Thank you. Chip: Now…Take that in. Vishen: I am. Chip: Stay standing. You’re welcome to sit now. If you felt that this was not an awesome experience
and you don’t admire Vishen because it wasn’t a good experience, but you admire him actually,
even if it wasn’t a bad experience, this is a long sentence, because you appreciate his
courage and his team’s courage for doing something as audacious as the Awesomeness Fest. So stay standing if you just appreciate his
courage. So even if he had flubbed up, and his team
has done a terrible job, which they’ve not done. This has been an awesome experience, you’d
still love him. But more importantly, would you love him if
he actually hadn’t done this at all? Stay standing if that’s the case. All right whoa! So thank you. Vishen: Thanks. Chip: Thank you. I really appreciate it. Just one more, one more hand for Vishen. Vishen: Thank you guys. Chip: If there’s message, in there… Yes, thank you. If there’s a message in there, it is that
we have a tendency to get wrapped up in our identities as human doings when in fact, as
you, all of you stood standing, telling us that even if he’d flubbed up, and this was
not awesome fest, this was the…you know, a different kind of fest. Or if he hadn’t even tried, but you appreciated
him for who he was as a human being, he’d still be worthwhile. And one of the things we need to learn in
our lives, especially those of us who strive and strive and strive a lot, and I’m one of
those, is that we are lovable for just being a human being and not for being a human doing. So my talk today is gonna actually revolve
a little bit about humanity, what I’ve learned about it in my few years on this planet. I just wanna say a big acknowledgement to
Sean [SP] though. Sean, I’d never heard you speak in person. I never actually seen you on YouTube. I’ve now watched you on YouTube with your
dance party which I did while I was down here. You reminded me, I’m writing a book right
now, a new book called ”Emotional Equations.” And you just reminded me that, in your exact
words, emotions are the currency that connect us as humans no matter what our size is, what
our language is, what our gender is, what our age is. I’m an old man relative to most of you in
the audience. I’m 50 years old. I just turned 50 a month ago. And I have a grandson, I have three grandkids. One of my grandsons is 6 feet 4 inches, 200
pounds. We play basketball together. This is up here for me here on stage because
I was hanging out figuring out what I was gonna say. And Renee and Isabella were out there fetching
me because it was 10 o’clock and I was reading, I said, wow, I’m sort of the why…you know,
I’m the opening act for Srikumar Rao who’s older than me. But so this is for Srikumar and me just to
have our rocker, but I’m gonna get out of my rocker and say we’re here to get out of
our rockers. And to say that age is just one of the ways
we can actually define ourselves. For me, I, you know, I started my company,
I’ll talk about that today a little bit more than a half a life ago or how about a half
a life ago. Twenty four years ago. I’ve been a CEO for 24 years until I sold
my company about 6 months ago. In fact, six months ago today, I sold my company
to a billionaire whose father started Hyatt, a guy named John Pritzker. His father was Jay Pritzker and he took a
majority stake in the company. And after 24 years of being a CEO, I stepped
down to actually now be..or actually stepped up to becoming executive chairman in the company,
which is giving me more time to write and speak and to go out and tell you about the
mistakes I’ve made in the last 24 years. Because part of the thing that does come with
age is experience and wisdom and a certain amount of scar tissue that actually scar tissue
from life and business. And that’s what I’m gonna share with you a
little bit today. So let me make sure I didn’t forget something
there. No, that’s how I wanna get started. I wanna actually start that with a little
story because a couple of days ago, is Mike here? Yeah. So Mike, Vishen’s partner Mike is here and
a couple of days ago got up in the morning, was gonna go for a run, then went out and
looked at the beach and saw, wow, that’s a beautiful beach, but it’s not that long. It’s got sort of volcano lava on either end. And instead of actually going and running
on the beach, instead, I went into the gym and I worked out in the gym. And I actually ran on even on the treadmill
in the gym, which is the most stupid thing to do in Costa Rica. And then Mike came out back from a run and
he was all sweaty and he was, you know, he’s younger and fitter than I am. And he told me that he also saw the beach
was pretty short, so he went running on a country road and later that day he asked me,
do you wanna go running? We didn’t go running. We had lunch yesterday. But what was interesting yesterday that I
learned in the morning, and it’s very relevant to our talk today, is that beach, which is
rather small and limited in terms of how much I could run back and forth is much…it’s
like our brain, actually. I don’t know how many of you have actually
gone beyond the lava rocks to the south. You know you’re going to the south when you
go left. One? Couple of people? There’s a woman named Sharon. Is that Sharon back there? I actually ran into her this morning and I
ran into Carol [SP] yesterday. Well, if you actually go, walked out to the
beach and take a left, you’ll think that the beach ends. It’s just that beach ends, there’s another
beach. You actually go around the corner and it’s
gorgeous. It is about a….maybe a two mile, three mile
long beach with a river that also can actually stop you in your tracks if you wanted to be
stopped in your tracks. In my case, I took off my shoes because I
was actually running with shoes on the beach and I said, what the hell am my shoes
on the beach? I’m gonna keep running and just run without
my shoes. So I ran yesterday morning. I ran this morning. That experience of looking at life as the
beach in front of you and the limitations of volcanic rock on either side being what
you can do or what you can be because as I said today, it’s not all about being a human
doing. It’s about being a human being too. Those limitations are those that you set on
yourself without me having the courage to say, okay, I’m gonna go around the corner. It didn’t take a lot of courage. Just took a lot of curiosity to say what’s
around the corner. I was able to actually see a spectacular beach. And if I can be the wise sage in my rocker
today for you, if nothing else you learned today, is that there’s a better beach just
to the south. I suggest you stray south and that’s what
you’ll learn from me. So in the 21st century, I think leadership
is all about straying south or straying. Learning how to stray, learning how to actually
be off the path of what’s most obvious to you and in front of your face. So one of the things, how many…you know,
all of us learned at a young age, how to count. We learned how to count. One of the things we were not taught in school
is what to count. We were taught how to count, but we weren’t
necessarily taught what to count. In the 20th century, leadership was all about
learning how to count. And we used to count some things that were
not as important as they are, as what is important today. I know this is a little abstract. I’m gonna make it a lot more clear in a couple
of minutes. But if I could ask you to think today that
I’m gonna help to reteach you how to count and more importantly what to count. That’s what we’re gonna do today over the
next hour or so. But first I have a question for you. What’s the most neglected fact in business? What’s the most…raise your hand and…People? Thank you. Good job. It was that class you were in this morning. It just, it….those brain cells. The most neglected fact in business in my
opinion is that we’re actually all human. We are humans doing work with each other and
that gets lost in spreadsheets. That wasn’t something I was necessarily taught
at Stanford Business School. And it’s actually something that we all can
actually use. One of the things that’s most interesting
in the business world today relative to when I went to Stanford Business School and graduated
in 1994 is…there’s a guy named Daniel Goleman. Have you heard of Daniel Goleman? He’s written a book, a couple of books on
emotional intelligence. Fascinating statistic. Two thirds of success in business today is
not related to your IQ or your level of experience. It’s related to your emotional intelligence. Two thirds of success in business today is
emotional intelligence. One third is those other two things, IQ and
your level of experience. So knowing how to connect with each other,
knowing the emotional currency that we have with each other and how to actually spend
that currency is really important. So let me tell you a story. So this is Van Quash[SP]. She’s from Vietnam. In fact like Vishen…Vishen actually when
he was actually working at that company in New York had…or is it in New York or Dallas? You had to change your name to Vincent. Where was that? In San Francisco even. So you’re on the phone with people. So he had to change his name to Vincent because
he wanted to fit in and because he was on the phone with people and Vishen was harder
for people to understand in America. Van change her name to Vivian. And she came to San Francisco in 1986. And her first job was working in a broken
down, no tell motel. Do you know what a no tell motel is? Oh, you do? You’re nodding way too hard. Okay. Okay. Okay. Well, there’s this little place in San Francisco
called the Caravan Lodge and very few…. any of you here from San Francisco at all? It’s amazing. Only like one or two of you. So there’s….Caravan Lodge was this sort
of infamous little motel. It was the kind of place where people…it
was very popular at lunchtime. You understand what I mean? It was an hourly motel and you walked into
the lobby and the nightly rates were posted $49 a night. And then in a slightly smaller font, the hourly
rates were posted, $20 an hour. So Vivian was working in this little motel
in 1986 and she’d been working there for three months when I actually bought this motel. On my 26th birthday, I made an offer to buy
the motel, it was in bankruptcy and foreclosure. It was in a terrible neighborhood. And December 31st, 1986, we closed escrow
and I went out and raised $1 million because I’m not from a wealthy family. And I got to meet Vivian. Actually, it’s funny, my first day in the
business was actually January 1st. It was the night after New Year’s Eve. New Year’s Eve, the place was rocking. It was like…it was very popular. And the next day it was like a mess everywhere. And then for the next week there were like
no guests. I was like, ah, I’m in trouble. How am I gonna make this work? But I got to spend time with Vivian and the
staff. There are 13 people on staff, the total staff,
44 room motel. And I called my company Joie de Vivre. And joie de vie vivre means what? Joy of life in French. That’s what I was looking for. Quite frankly. I’d gone to Stanford Business School. I was a type A person. I was very aggressive. I was gonna go out and take on the world. And I graduated from Stanford Business School
at age 23. So I was a very young graduate from Stanford
Business School. And my job out of business school I hated. And so within two years I was like, I can’t
do this anymore. And I had a midlife crisis in my mid-20s,
sort of like Lisa. Didn’t you have one in your mid 20s? No. Yes. Kim, Kim, Kim, Kim Kim. Yes. Kim. Did you have your midlife crisis in your mid
20s? Kim: Oh yeah, 21 actually. Chip: Oh 21, well that’s really early 20s. Kim: Get it over with. Chip: Get it over with. Yeah, exactly. So I had this midlife crisis at age 25 and
I just said, I wanna love what I’m doing. And so I started this company, I called it
Joie de Vivre for myself, joy of life. It was not a practical name, not easy to pronounce,
not easy to spell, not everybody knows what it means. But it actually defined the business that
I wanted to create. I wanted to create joy of life for our employees
and our customers and for myself. What I learned as I spent time with Vivian,
the housekeeper. She was a housekeeper, a maid in this no tell
motel. I renamed the hotel The Phoenix rising from
its own ashes. And what I learned in spending time with Vivian
is that she had sort of a joie de vivre, a joy of life in being a maid. How is that? That made me very curious. How could someone actually have joy in actually
cleaning a toilet for a living? And what I started to learn from Vivian was
it wasn’t the task of cleaning a toilet was what gave her joy. And in fact, in life, I will tell you, life
when it comes to…one of the things we learn in life is you have one of three relationships
with your work. You either have a job, a career, or a calling. When someone has a job, they’re cleaning toilets
or they’re doing whatever the set of tasks are that they’re responsible for in their
8 hours of work, 10 hours of work, however long they’re working. When someone actually moves beyond the task
and looks at the purpose or the impact of the work that they’re doing, it moves to a
career or to a calling. And if you have work that actually depletes
you, it’s probably a job. If you have work that actually energizes you,
you do your 8 or 10 hours of work and you’re just pumped, then that’s probably a calling. So as I started to spend time with Vivian
and the other staff there, I realized that Vivian wasn’t all excited about cleaning toilets. She was excited about the relationships she
created with other employees as well as the relationship with our customers. Because you see Vivian was from Vietnam. She didn’t have a whole lot of family with
her in San Francisco. Most of the community she knew was back in
Vietnam. So she was creating new community in San Francisco
with employees. And she knew what it was like for someone
to be far away from home and a little vulnerable, like our hotel guests. And so she had a certain empathy that came
for taking care of the hotel guests. So Vivian taught me a lot about this pyramid
of job, career calling. And the reality is if someone can actually
have a calling creating toilets for a living, you probably can have a calling in whatever
you’re doing. So as I spend time, you know, I grew the company,
we actually grew from being this little motel, The Phoenix, this rock and roll hotel. That was my strategy is the initial group
of people that I went after to market to was the people that nobody else wanted. The Marriott and the Hilton did not want rock
and roll bands. I did. I was 26. I was like, hey, cool, all the bands can come
stay with us at the hotel. And all of a sudden everybody from David Bowie
to Linda Ronstadt to REM to the Red Hot Chili Peppers to Nirvana started staying in my funky
little motel called The Phoenix. That hotel, that motel grew into Joie de Vivre
and Joie de Vivre ultimately grew to being, well now we’re the second largest in the country. But by year 2000, we were actually the largest
hotelier in the Bay Area. We had 20 hotels. So I’d grown from one little motel to actually
having 20 boutique hotels all around the Bay Area. Now in year 2000, that was a really good thing
because between 1995 and 2000, the Bay Area was the place to be. It was the most rocking economy, micro economy
anywhere in the world because that dot com boom was a major help to anybody who had a
business in the Bay Area. But in 2001 things changed for all kinds of
reasons. The dot com boom became a bust and then a
911 happened, 911, 2001. Well 911 happened and when 911 happened did
you want to jump on a plane anytime soon? No. And if you were from outside the U.S. trying
to come in, Vishen told his story about just how immigration started actually putting up
a big barrier, well guess what? It became harder to get people to come into
the U.S. And in fact, then there was a recession and
then, oh, and then yes, we went to war in the U.S. with initially Afghanistan and then
we went to Iraq and when the U.S. went to war with Iraq, we sort of got into a little
bit of a war with France. Now I don’t know how many of you are Americans
here. Okay. A lot of you are. So you remember during that time, many Americans
stopped eating french fries? Well, that’s not true. We actually still…we kept eating french
fries. We just called them something else. What did we call them? Freedom fries. And we started boycotting French products. Now, what’s the name of my company? Joie de Vivre. So I got these emails from Alabama and I don’t
know my hometown area of Orange County, southern California saying to me, we’re boycotting
you because we’re boycotting all French companies. And I write them back and say, wait a minute,
we’re not a French company. We’re actually based in San Francisco. And I get a tourist email back saying, oh,
that’s worse. So San Francisco is a bit like left of Paris. So I went from actually being in a place where
I was the genius because all of my hotels were in the best hotel market in the country
to being an idiot because between 2001 and 2005 San Francisco Bay Area hotels went through
the largest percentage revenue drop in the history of American hotels since World War
II other than from a natural disaster. So all of my hotels are in the bad market. So it was about that time that I ended up,
at that point, I had a 1,000 employees and not very deep pockets and 1,000 employees,
not deep pockets, money running out pretty quickly. It was in October of 2001 that on my lunch
break, I ended up in a little bookstore around the corner from my office. And I went there initially looking for a business
book thinking, okay, I’m gonna channel that energy I had when I was at Stanford Business
School and try to remember some of that really good Stanford Business School wisdom so I
can figure out how to make payroll next month because I could make payroll this month, but
next month didn’t look good. And within about five minutes of time in the
business section in the bookstore, I realized I needed something more serious. So I quickly ended up in the self-help section
of the bookstore which is where people go when they need sort of psychological support. And I came across a book by Dr. Abraham Maslow. How many of you have heard or are somewhat
familiar with Abe Maslow’s work? Okay, a good number of you. This is what he’s best known for, his hierarchy
of needs pyramid. Now, later in his life, he ultimately turned
it into a seven-level pyramid. And Carol….Carol, are you here today? Carol’s gonna actually talk a little bit about
that and how they actually line up with the [inaudible 00:21:19] the seven actual levels
of his pyramid. But what he’s best known for is his five-level
pyramid. And in essence, for those of you who don’t
know it, the basic premise behind Maslow’s hierarchy of needs is that whoever we are
in life, we have some basic physiological needs. There are four, you will think there’s a fifth,
but there are really only four that you have to have water, air, food, and nope, not shelter. You can live without shelter. Sleep, not sex, sleep. Some of you might have a fifth physiological
need that you have to have, otherwise you’ll die. But for most of us, there’s just four. Safety, shelter is a step above that. There are people who have lived without caves. And so what I learned from Maslow was that
I was the guy who started a company and called it Joie de Vivre. And in 2001, 2002 I wasn’t feeling much Joie
de Vivre. And I was looking for that self-actualization
because that’s what Maslow said is at the top of the pyramid. People who in their lives are living the most
fulfilled lives get to a place where they realize what their purpose on this planet
is. And it’s quite unique to them. And I hate to use this, but, there’s an actual
ad campaign that lasted 14 years in America by the U.S. Army that defines self-actualization,
which is be all you can be. Be all you can be is the best definition I
could ever give for self- actualization. So I was a person who wanted to be self-actualized
at a time when I was full of fear, but I started asking myself, well, my company, and this
is a hierarchy of needs for individuals, for humans. And my company, if I don’t have it wrong,
is full of humans. What if actually we applied this hierarchy
of needs to how we did business? So initially we looked at it and said, what’s
the hierarchy of needs for our hotel customer? And ultimately, I turned Maslow’s hierarchy
of needs into what I call the transformation pyramid because there’s really three key themes
in Maslow’s hierarchy of needs. Survival is your physiological and safety
needs. Success are your social belonging and esteem
needs. That’s when you feel successful and you feel
in a transformative state when you’re in a place of self-actualization. Survival, succeed, transform. This is the pair of glasses with pyramid glasses
that I wear when I look at life today and it’s the pair of glasses I wore when I actually
looked at how we were gonna remake our company at a time where we were either gonna reinterpret
how we do business or we were gonna die. We were gonna go out of business. What was interesting is as we started to look
at how we did business in 2002, 2003 we started to realize that in business as leaders, one
of the things I was taught at Stanford Business School was to manage what you can measure. Have you ever heard that before? Manage what you can measure? It’s sort of a basic premise in business is
if you can’t measure something, you don’t know if you’re having an impact on it. Does that make sense? Has anybody ever heard a different version
of that? Yes. Man: What gets measured, gets managed. Chip: Yeah. What gets measured gets managed. Exactly. So same idea. What gets measured gets managed. What we manage…manage what you can measure. Well, what I started to see as a leader, as
the CEO of a company is that when we were measuring things, we were always measuring
things at the bottom of the pyramid because what’s at the bottom of the pyramid is easily
measurable. Let me ask you for a second. Did you have breakfast this morning? No, for those who didn’t have breakfast, you’re
gonna have some physiological need problems soon. And can you feel it? You can feel that you didn’t have breakfast
this morning. Okay. Our physiological needs are tangible. You know if you didn’t sleep well, you know
if you need some water. When you went to bed last night after you
had a few drinks and you put your head on a pillow and if you asked yourself was I self-actualized
today, that’s a much harder question to answer, right? Does that make sense? Well, that’s true in business too. We can benchmark and we did at Joie de Vivre
back then whether our compensation for our employees was comparable to other companies,
but we didn’t benchmark whether our employees had a sense of meaning and a sense of mission
and purpose and whether they felt transformed and self-actualized in the workplace. And back in 2002 we started doing that. We started measuring things that people hadn’t
measured before. We started measuring what emotions our customers
felt when they stayed with us. Very strange. We’re actually a mo… You know the classic thing that a hotel does
when they’re actually measuring whether you like…had a good experience or not, was your
check-in efficient? Well, efficient check-in is like base of the
pyramid as a customer. But if a customer had an awesome experience,
it’s probably top of the pyramid. So we started asking ourselves, how do we
start measuring the things that are intangible in life? How many of you have seen that Mastercard
commercial about, you know, what’s…the priceless commercial, what’s most important in life
is what’s priceless? That’s what they’re saying. It could be you as a husband, a father, or
a mother buying Janie or Johnny, a baseball bat and a baseball hat. But to actually see Janie or Johnny hit a
home run is what’s priceless. So there’s some things in life that are priceless. The problem in business and in leadership
is we tend to get so wrapped up in managing at the bottom of the pyramid what’s tangible
that we forget about what’s higher up the pyramid. So I started actually doing some research
on this and I actually found a study that showed that 94% of business leaders around
the world believe that the intangibles in their business, which are things like their
company reputation, their ability to innovate, their employee engagement, their customer
loyalty, their customer evangelism. I mean we live in an era where customer evangelism
with word of mouse as opposed to word of mouth, is much more meaningful. In the word of mouth era, I would just tell
anybody who is around me. In the word of mouse era, it’s anybody who
wants to read whatever I write on any website. So I started… what I saw is 94% of business
leaders said intangibles are important. Do you know what percentage of business leaders
also said they manage around the intangibles today in the 21st century? Five percent. Ninety four percent said it’s important and
5% actually are actually measuring it. So who’s that? This guy knows how to manage intangibles exceptionally
well. This is Steve Jobs back in the 1980s with
the original Apple. This is Steve Jobs today with the Air. What do you notice that’s different beyond
the fact that I’m trying to be Steve Jobs wearing black and jeans here. But beyond the fact that he’s got gray hair
now, what’s different in these two pictures? Woman 1: Smile. Chip: Well, he is smiling. That’s true. He is in a happier place. And I mean what else? Wiser. What else? Forget about him for a minute. What’s different about the machines? What’s that? He’s relaxed. But what about the machines? The size. That’s true too. And guess what? On the left, it’s all about the tangible. It’s the hardware. In the 1980s, 80% of the cost of a personal
computer was in the hardware and 20% was in the software. Today it’s the software. Eighty percent of the value of a personal
computer is in the software and not in the hardware. Today, intangibles are important. This is the most admired company in the world,
according to “Fortune” magazine. And they focus on intangibles. And you’ve been nodding your head, so yeah. What’s your name again? Yeah, yeah, yeah. You’ve worked for some of the best and you’re
at Pepsi now, right? And your CEO knows this. She’s very good at this. She’s…I’m very impressed with her. Pepsi gets it too. So I’m actually going out, so this is what
I’m starting to look at. Now, this is a bit abstract. I’m gonna bring it back to how it’s relevant
to you in a few minutes, but one of my main points of today is the world of leadership
in the 21st century has changed. It is no longer about managing what you can
easily measure at the bottom of the pyramid. It’s more important to actually look at what’s
the intangibles. Whoops, I went wait too far there. So that is….I wrote a book called ”Peak.” I’ll tell you about it in a second, but this
is three pyramids we’re gonna look at later. The employee pyramid at the bottom, customer
pyramid at the top, investor pyramid in the middle, but there’s something in the middle,
I’m sorry, investor pyramid on the bottom right, in the middle is a heart. And this is the business model we use to run
the company because what a few Harvard Business School professors wrote about called the Service
Profit Chain in early 1980s is that if you can see it here, if you create a great culture
in an organization, it tends to…that’s number one on the heart, it drives employee loyalty. And if employees are loyal…I’m sorry employee
satisfaction. If employees are satisfied, that drives customer
loyalty. And if customers are loyal, that drives and
maintains a profitable and sustainable business. So I learned this from Southwest Airlines. Some of you are familiar with Southwest. For the last 40 years by far the most successful
airline in American, not even a close second. And this is how they do business. It’s all about driving culture because that’s
where the pump of the blood goes from the heart. And if it goes well, the heart actually beats
and it actually relates to everything else here. So you’re gonna see these three pyramids in
a little while, so don’t worry. So I ended up writing a book about this called
”Peak: How Great Companies get their Mojo from Maslow.” And my basic premise is that employees, once
their basic money needs met, they have meaning needs, and we actually as leaders need to
focus on what are those meaning needs and those recognition needs. I love the idea of the sugar cubes as a means
of recognition. It’s a great thing you could do in your company. Customers are looking for their unrecognized
needs to be met. I’ll talk about that in a few minutes. And then finally, investors, while most investors
are at the bottom of the pyramid, they’re just like, give me as much money as quickly
as possible, there are a lot of investors who actually are looking to put their money
where their heart is. So I started going out and talking about this
because this book became a big seller and a lot of well-known companies started actually
taking it on as part of their way of doing business. The person you’re probably most familiar with
is Tony Hsieh from Zappos who has a book out called ”Delivering Happiness” right now. He wrote the foreword for the book and Zappos
basically made this their embedded culture. This is how they do business. So, but as I was going out and talking with
people about leadership in the 21st century, someone brought up an Einstein quote to me
and it was the one that…it was like a bit of a mind tease. This person in the audience raised their hand
and without even looking at a piece of paper, just cited this quote from Einstein and said,
”Not everything that can be counted counts and not everything that counts can be counted.” It’s a tongue twister as well as a mind tease. What he’s basically saying, this guy in the
back of the room and he let left me speechless for a moment is well, maybe we’re not supposed
to try to count the things that are most important in our lives. Maybe we’re just not supposed to count those
things because they’re not actually countable. Well, that’s a really interesting question,
but as a leader and in business, I’ve learned if we don’t count, if something actually isn’t
showing up, it may actually not be valued. And the fact that we can’t count it may mean
we don’t value it, and if we don’t value it, it’s not gonna be part of our business plan. If it’s not part of our business plan, we’re
just gonna be managing at the bottom of the pyramid. All right, so that actually meant I started
having this weird thought, like I need to go study someone who’s done this better than
anyone else. Who’s the guru of the world, to actually show
me how to measure intangibles? I don’t know. I googled that and I didn’t get anything,
but what I did get was this guy. Very funny that we’re here in Costa Rica right
now. Costa Rica, according to surveys in the world
right now is the happiest place on earth. Did you know that? Okay. Yes, yes. So Vishen, thank you for bringing us to the
happiest place on Earth. But 38 years ago in 1972, no one measured
the happiest place on Earth. No one…you know, the happiest place on Earth
was Disneyland, supposedly. But 38 years ago, there was this guy who was
17 years old who is the new king of Bhutan. For those of you who don’t know Bhutan or
Bhutanese, I’m gonna show you on a map in a moment, but this new kid…it’s in Asia. So if you would just need some general ideas,
it’s near Nepal. It’s right near where Tibet used to be or
Tibet still is, depending upon your politics. This guy was 17, and he became the king of
his country. So he was in India, right next door, at age
17 on a tour talking about being the new king of Bhutan. And an Indian journalist raised his hand and
asked him, what’s your GDP? Or back then they called it GNP, your gross
national product in Bhutan. And this king answered in a way that has basically
changed how the world has been ever since. He said off the cuff, why is it that we’re
so obsessed? Oh honey, look at what you’re wearing. Whoo! Wow. You have to leave the room. That’s too distracting. Lisa. Yes. Yeah. A hand. Well, you know what? Is that orange? Woman 2: No, it’s yellow. Chip: Okay. I can’t tell from back here because I’m slightly
colorblind and color dumb. But I was just going to say if you’re wearing
orange and black, those are San Francisco Giants’ colors. And I’m born on Halloween, so those are my
colors too. But back to Bhutan and India. So what he said was, he said, why is it we’re
so obsessed with gross national product? Why aren’t we more focused on gross national
happiness? Now, the journalist chuckled and like, duh,
like, like this…this 17-year-old king from this Buddhist country. That’s like Buddhist economics. I mean, come on, this is crazy stuff. But for the next 36 years, this king who stepped
down a year or two ago for his son to become king, actually spent 36 years preparing Bhutan
to actually focus on how they can measure the intangible of happiness. And they actually started a movement that
I’ll talk about in a moment. So I decided to go to Bhutan. I’m a CEO, I’m going to Bhutan, I’m gonna
leave my company for a week and a half. I’m part of an organization called YPO, Young
Presidents Organization. And I joined a YPO trip to Bhutan, which gave
me the opportunity to learn about the gross national happiness index because if there’s
any intangible that’s hard to measure, it would seem to be happiness because happiness
evaporates. It’s not something you actually have and you
can hold in your hand and say, I have happiness. Happiness evaporates. In fact, the more you actually try to clutch
it, the more it actually probably goes away. So I’m in Bhutan and lucky enough to spend
some time with the prime minister of Bhutan because I’m with YPO and they know…they
get all this access. So I’m sitting next to the prime minister
at a dinner, and I ask him, so how do you create happiness especially if it’s something
that evaporates? This is like an intangible. How do you measure something that actually
goes away? He said, ”We don’t create happiness.” He said….he’s very wise man. He says, ”We don’t create happiness. We create the conditions for happiness to
occur because no one can create happiness for someone else, but you can create the conditions.” And Abe Maslow once said….he taught…the
reason that my book’s called “Peak” is because Abe Maslow created the expression peak experience,
which is what we’re having for four days here, we’re having peak experiences. What Able Maslow said is we can create the
conditions for peak experiences to happen in our lives or conversely, and perversely,
we can create the conditions for them not to happen in our lives. So what the prime minister of Bhutan said
to me is we create the conditions for happiness to occur. And he went on to tell me that Bhutan has
all these ways of measuring happiness, measuring the conditions for happiness, and there’s
four key essential pillars. There’s 9 key indicators and then there’s
72 different metrics that they use to measure happiness in Bhutan. Like, let me use one example because that
may sound like what would they measure? Well, one of the nine key indicators is are
people happy with how they spend their time. Are people happy with how they spend their
time? Now, I promise you that the GDP index that
we have, which is our primary definition for success in the world for countries, does not
actually have anything to do with are we happy with how we spend our time. For those of us who are here right now, we
are happy with how we’re spending our time. But on a daily basis, if you ask yourself
in the modern world, are you happy with how you’re spending your time, most people would
say no. But in Bhutan they said that’s one of the
nine key indicators of how we create the conditions for happiness and let’s benchmark how people
feel about how they’re spending their time over a time and feel and figure out how as
leaders, we can help them with that. So as I spent this time in Bhutan, it was
fascinating. It was fascinating. I mean, it’s not a perfect country and it’s
a relatively primitive country. It’s definitely a developing country, but
it is amazing for many different ways in terms of just the level of happiness that I saw
there. And what I started to see was that there was
what I call an emotional equation. That’s the name of my next book that quote,
oh, I didn’t give you the quote, I didn’t give you the quote from Mark Twain, did I? I’ll give it to you later. So I was writing a chapter yesterday, and
there was a Mark Twain quote that’s great. It sort of relates to this, but I’m writing
this book called ”Emotional Equations.” And so I started to see that there was an
emotional equation that defined the Bhutanese, the people from Bhutan. So happiness equals wanting what you have
divided by having what you want. I know that’s hard to understand too. Let me explain it. Wanting what you have. Think of gratitude. Appreciating what you have, learning to actually
appreciate gratitude. Having gratitude in your life. That is what wanting what you have means. Having what you want sounds like the same
thing, but it’s a little different. Having what you want is going out and gratifying
yourself with something, going out and pursuing something for gratification purposes. Does that make sense? I want to have what I want. I have a want, I need to go out and have it. So the difference between wanting what you
have is gratitude. Having what you want is gratification. One of them is a practice, the practice of
happiness. And one of them is a pursuit. The pursuit of happiness. The bottom of this equation is the pursuit
of happiness. Now, I’m not gonna actually beat up Thomas
Jefferson right now. Because Thomas Jefferson was the last leader
in the world before the king of Bhutan to talk about happiness is a government goal. In the actual Declaration of Independence,
he says, “life, liberty and the pursuit of happiness.” Now, I don’t wanna say that America or places
in the world that are pursuing happiness are actually getting it wrong because I am a pursuing
kind of guy. I would not have graduated from Stanford Business
School at age 23 if I was not a pursuing type A person. But I will say when it comes to happiness,
having practice of happiness in the numerator and the pursuit of happiness in the denominator
will make you happier because if you look in the dictionary under the word pursuit in
some dictionaries, the way they define pursuit is to chase with hostility. Do we chase happiness with hostility? In many cases we do. Just to stay up with the Joneses next door. Speaking of staying up with the Joneses next
door, this is where Bhutan is located. Look who’s next door? Thirty eight percent of the world’s population
is next door to Bhutan. Maybe Bhutan may have an impact on 21st century
happiness with the growing middle classes in both India and China. But what I do know is that Bhutan’s had an
enormous impact on the fact that at this point, as of when I gave my TED talk in February,
it was 40 countries. Now it’s 52 countries. Fifty two countries in the world, not including
the United States are now measuring happiness as a means of determining whether they’re
getting it right as a government. And the most recent….the most recent government
to do this is David Cameron in England. And a lot of times you will say, oh, all that
happiness stuff, it’s just all those liberals and all those… You’re a San Franciscan, you’d like that kind
of stuff. David Cameron’s a conservative and his toy
government in England is now measuring happiness. And there’s a great book called ”Gross National
Happiness” by a conservative writer talking about how this is the most important 21st
century intangible that leaders can actually manage around. All right, so this is pretty abstract and
it’s really interesting because even before the king of Bhutan in 1972 even started talking
about this stuff, Robert Kennedy gave a speech in 1968 four months before he died. And I’m going to have to turn around to actually
read this to you, but this is what he said in 1968. ”Too much and for too long, we seem to have
surrendered personal excellence and community values in the mere accumulation of material
things. Our gross national product counts air pollution
and cigarette advertising and ambulances to clear our highways of carnage. Yet the gross national product does not allow
for the health of our children, the quality of their education or the joy of their play. It measures neither our wit nor our courage,
neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything in short except that
which makes life worthwhile.” Wow, that’s a mouthful. 1968, he was way ahead of the game. This is….if you’d had to actually take current
GDP, gross domestic product and turn it into a balance sheet, this is what GDP counts. These are the things that actually are from
Robert Kennedy’s speech. If you took Robert Kennedy’s speech and turned
it into a balance sheet, these are the things he mentioned in his speech that are part of
what GDP is and these are the things he mentions in his speech that GDP doesn’t count. Pretty different lists, huh? The left and the right. What I wanna ask you is in your own personal
life, do you have a balance sheet? Do you have a collection of things on the
left and a collection of things on the right in terms of actually what counts for you,
the tangibles and the intangibles? I’ll come back to that. All right. Just again, to get his final, you know, part
of that quote is, “it measures everything in short, except that which makes life worthwhile.” Oh, not yet. Abe Maslow had a quote that you’ve heard before,
but you had no idea it was Dr. Abraham Maslow who said it. Have you ever heard the quote, ”If the only
tool you have is a hammer, everything starts to look like a…” Together: Nail. Chip: That was Abe Maslow. He said that to the psychology community because
back in the 1940s when he sort of started talking about the hierarchy of needs, the
psychology community’s approach to psychology was like that small beach in front of our
resort here. They said it’s all about neurosis. It’s all about worst practices in human behavior. As psychologists, we’re gonna study people
who are broken and fix them. And Abe Maslow said, wait a minute, there’s
a much bigger world out there. There’s people out there who have good lives
and are fulfilled in life. And those people should be studied too because
we can learn from best practices of those people and help the people who are not in
a good place by learning some of those things about being fulfilled in life. And that was what self-actualization was about. So Abe Maslow said in essence, we’ve been
fooled by our tool, excuse the expression. We’ve been fooled by our tool in that the
tool we’ve used in the world as leaders, as country leaders has been GDP as our definition
of success. And in fact, GDP is really good at measuring
tangibles. But do you know that today in the world, there’s
three kinds of different industries you can be in. You can either be in the services industry,
manufacturing or agriculture. What percentage….And manufacturing and agriculture,
they’re very tangible. Services, a little more intangible, right? What percentage of the world’s economy today
is in the service industry? Sixty four percent. The world is intangibles today and yet we
are using a means of measuring things that is way old. So the ultimate intangible in my business
is Vivian. It’s how Vivian treats our customers. Because you know what, economists, I was an
economics major in college. Economists measure things, you know, they
are very good at measuring everything, may measure things in units of production and
units of consumption. Any economics majors here? Units of production, units of consumption. Well, the truth is it’s based upon the unit
of production for Vivian as an hour of her work, but an hour of Vivian’s work is not
like an hour of most other people’s work and the way we measure things doesn’t get that. This is Dave Arringdale. Dave Arringdale has stayed in The Phoenix
hotel, Vivian’s hotel. Vivian is still there 24 years later. Vivian and I have been working together longer
than some of you’ve been alive. Vivian….Dave Arringdale stayed in Vivian’s
hotel 100 times in the last 20 years. And what he said to me about a year ago when
I interviewed him, I started interviewing. I went out and I interviewed 100 customers
in our company that actually have been the most loyal over all these years. I went out and talked to 100 customers face
to face or voice to voice and I said, just tell me what we’re doing right. Just like Abe Maslow says, tell me what we’re
doing right in life. And what he said is, ”It’s all about Vivian.” He said, ”Vivian makes me feel like I count. Vivian makes me feel like I’m in a home away
from home. Vivian’s way of treating me makes me feel
like I’m in a habitat of happiness.” And he used that expression. A habitat of happiness. It’s like, whoa, okay, that’s the business
I’m in. I’m not in the hotel business. I’m in the habitat of happiness business. So what’s interesting though, in the world
of business and just selling my company to a billionaire and spending a lot of time going
out and talking to private equity firms and venture capitalists and all of the kinds of
people out there in the world who actually looked at wanting to buy our company or put
a majority inter….put an investment in our company is most of them don’t look at things
this way and they’re so silly because when it comes down to it, most people sort of look
at things back to that heart, which we’ll look at in a minute again. They say it’s all about profitability. Profitability is measurable. Cash flow is measurable, but those are the
outputs that happen once you’ve done the input first. The input is making people happy, making your
employees happy, making your customers happy. And that actually leads to the profitability
over a longer period of time. Why isn’t it that the business world can see
that you don’t have to choose between inspired employees and sizable profits? In fact, inspired employees usually help create
sizable profits. So I think what the world needs now is we
need to actually rethink how we count. We ask ourselves, what are we counting and
what’s most important that we can start counting in our own lives. So I want to tell you a quick story. Everybody has had some really poignant stories
up here and I guess I wasn’t gonna tell you this story, but I’ve decided I’m going to. I’m a guy who talks about self-actualization
and called his company Joie de Vivre. My name is Chip. I live in San Francisco. I mean, I’m a cliché. I mean I’m a cliché for happiness, but a
couple of years ago, two or three years ago, I wasn’t very happy. I was not in a good place. I was not in a good place, partly because
job career calling, I used to have a calling, which was being that CEO and going out and
making my company like the best in the world at boutique hotels. But I was starting to realize that that calling
that I used to have, gravity was occurring and starting to become a career and more like
a job. And what I really loved doing was going out
and writing books and giving speeches and helping to make a shift in the world. Well, all that was happening and a lot of
other things were happening in my life. You know, in a two-year period, a year and
a half period, five of my friends committed suicide, one of whom was named Chip, my best
friend named Chip in the world. We’re gonna actually do a chip party in Costa
Rica of all things. This is my first time here. So it’s been really interesting to be here. And I wasn’t, I almost felt like I was gonna
join them, those five who committed suicide. I was not in a good place. And I was in my YPO group. They have a little forum and you talk about
what’s going on in your life and I said, I’m not in a good place. I’m thinking about car accidents. I’m dreaming about cancer. I am actually imagining that I want my life
to end, this life, because I feel so overwhelmed with the responsibility of running this company
as we’re going into another downturn. I did that last downturn, that dot com downturn
and we did really well, we tripled in size after doing that peak stuff. And now we’re doing another downturn, we’re
having like two once in a lifetime downturns in the same decade, and I’m not built for
this one. I feel like a prisoner. And so I started talking with my friends about
it and I started talking about all these things that could go wrong in my life and how it
might be good if like some little problem happens so that I could sort of just no longer
be CEO. Well, I ended a relationship, an eight-year
relationship was ending at the same time. And my son, who’s now 34 year old son was
wrongly accused to go to prison. He’s now out, you know, he was exonerated. But long story short, everything was going
wrong, that could go wrong. So I went…there’s a guy named Gavin Newsom,
who’s now the….he’s going to be the lieutenant governor of California. He was the…he’s the mayor of San Francisco
and he’s a friend and he had his bachelor party at AT&T ballpark, which is where the
San Francisco Giants play baseball. And I went there and I hit a ball way out
to the warning track, almost a home run. Yeah. Yeah. I was so….like I was 48 year old guy doing
that. I’m like, whoa. And I tried to…but then I tried to run and
I was running, running, running round the bases and I decided I was gonna slide into
third base. I hadn’t slid in three dozen years and I didn’t
slide right. In fact, I wish I could see the photo of me
sliding and I broke my ankle sliding into third base. So, you know, I limped off. A week later, my ankle that was a broken ankle
turned into a bacterial infection. And so I ended up…and they almost had to
amputate my leg in Montana at Gavin Newsom’s wedding. And so they put me on some antibiotics and
they weren’t working. So I was put on a stronger antibiotic and
then I was going to give…going on a speaking tour, which was not a good idea. I was going to Toronto and….St. Louis, Toronto
and Houston. I get to St. Louis, I’m taking a very strong
antibiotic and I’m on crutches and I’m giving my first speech of six speeches in a three-day
period. And I get up there, I’m feeling nauseous and
these antibiotics are supposed to create some nausea. And so I’m sort of like in a place of like,
okay, I’m nervous about the speech and…but I feel a bit nauseous and didn’t notice it. At the end of the speech, I didn’t feel well
until I sat down. It was because I was on crutches and then
they….people came up and I started signing books and I went unconscious in my chair,
just like slumped in my chair. They got me on the ground. I was on the ground for about three minutes. I came to, had no idea where I was. Paramedics….I went unconscious again, put
me in a chair, unconscious again. Paramedics show up, heart monitors on me,
put me in a gurney. I go flat line. Flat line, flat line, flat line. I died. I died. And…I mean not for a long time. My heart came back about five to seven seconds
later, but over the next hour they had to have paddles out. They had to like say, this guy’s got a problem. Long story short, they still don’t know what
it was. Two and a half years later, they still have
no idea what it was. I call it divine intervention instead of cancer
or a car accident. I had the wake up call that said to me, what
counts in my life such that I had to have that kind of wake up call. So I’ll keep it at that. I have more I can tell you, but I’m gonna
keep it at that for now. What I’m gonna actually say is I started counting
things in my own life differently. I…you know, after that experience, I spent
some time with my best friend Vanda’s [SP] boyfriend of 10 years, Frank, who’s the world’s
preeminent authority on death and dying. He’s really smart, really well-known. And he goes out and he talks to people about
death and dying. And he says, the number one thing people want
to actually say on their deathbed or want to know on their deathbed is, was I well-loved
and did I love well? So that’s what I started measuring. Love. How did I do it? In the form of how I actually spend time with
friends. How do I spend time with friends? How am I spending time with myself? What are the things that I love in my life
and how can I start counting that? So I hope that over the course of the next
day, you’ll actually ask yourself, go for a walk on the beach. Go for a walk beyond the lava rocks. I’m gonna read my Mark Twain quote here right
now because it’s a really great, great quote. He said, “20 years from now you’ll be more
disappointed by the things you didn’t do than by the ones that you did do. So throw off the bowlines, sail away from
the safe harbor. Catch the trade winds in your sails. Explore, dream and discover.” Now, let’s apply for a moment how you can
start counting in your business. I’m gonna go through something that you saw
earlier very quickly because I’m almost at the end of my time. You can start measuring things related to
your employees, higher up the pyramid. If you don’t do a work climate survey, an
employee satisfaction survey at least once a year with your employees, start doing it. Start asking your employees how they’re feeling
about their work. There’s outside companies that can do that. If you want to look for me at lunchtime or
something, look for me and I can tell you some companies. You can do it yourself. Start measuring your turnover of your employees. That’s something that a lot of companies don’t
measure very well is like employee turnover. Our employee turnover as a company is about
one third of the industry average in our industry. So that says something, people like staying. Customer pyramid, the baseline for the customers
is their expectations need to be met and then their desires need to be met and then their
unrecognized needs need to be met. Apple is successful partly because Apple customers
are evangelists and they go out and tell the world. So ask yourself, how are you measuring yourself
in social media for example. And a year ago I thought you couldn’t, I thought
there was no means of being able to go out and measure what people out there in the world
are saying about your company on the internet. There is now, there’s a company called Revinate
in Palo Alto that actually has a tool that says, here’s how you can actually measure
your company. And it’s called Revinate. And I have nothing to do with it as a company,
but we use them. And it’s just one way of measuring an intangible
that in the past was not measurable. You can even actually start measuring things
with your investors. I’m not gonna spend any time on that because
I don’t have a lot of time. Or you can measure things with your community. You can ask, what are you doing to give back? How are you measuring? We measure our general managers in our hotels
on their profitability, on their employee happiness, on their customer satisfaction. We also measure them on how much they give
away to the community. And there’s a minimum standard that every
general manager at every hotel has to give away every year otherwise they don’t get a
promotion. So we measure how we give back to the community
at every different property. So in sum, life is about being a human being,
not a human doing. Mark Twain suggested we explore, we dream
and we discover. And if I can just remind you that at the end
of the day, what counts and what I learned when I had my flat line experience. And I talked with the most wise man in the
world about what people say when their death and dying is when people are on their deathbed,
they don’t ask their family and friends around them about all their successes. What they really wanna know and what really
counts and if there was a way to measure it, what would really count in their lives is
knowing their scorecard for how they loved and how well they were loved. With that, I love you. Thank you for letting me to come up here,
and for joining me. [01:01:20]
[music] [01:01:52]

Comments (5)

  1. How wise, how interesting, I wish I could have been there in person!!!!

  2. Just starting my own business…and i like the philosophy. As I was thinking of the content of my website, i was to entrenched in what the norm of my business would write. I decided to just write what my vision without and allow the universe let it manifest.

  3. Pay attention at the 15:55, about the difference between a job and a career / calling.

  4. Career=for your own satisfaction
    Job=just above broke
    Calling=career + it being what your best at.

  5. Share your thoughts, we'd love to hear them 😃 Here’s the link for more hacks to boost your finances with the world’s greatest minds in Mindvalley Mentoring for Business here 👉

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