in 1987 26 year old chip conley fresh out of stanford borrowed a million dollars and bought and renovated a rundown hotel in san francisco's then cd tenderloin district chip had no experience in the hotel industry but turned the 1950s motel into the launch pad for what has become joie de vivre the world's second largest boutique hotel chain so how did he do it at the end of the day i really realized that what i was looking to do was to create an experience for people for the customers and for our employees and that was really what was driving me to get excited about the idea of starting the company converting a kitschy hotel allowed chip to differentiate the phoenix from higher end fare and the more muted budget venues at a low price point of around a hundred bucks a night the phoenix is accessible to everyone from young creative artists to jet set musicians like the shins and the red hot chili peppers the funky hotel vibe and history of famous and loyal guests creates a mystique that adds value to the location without changing its fundamental costs well i can say that when i first bought the property with investors i it was not to necessarily be rocking all the time that is something i figured out over time but quite quickly it became clear to me that that was the fastest way for us to create a tight-knit group of people who were going to go tell their friends and there's always bands coming to town but entry was only phase one to become successful chip had to grow his business into new markets he began acquiring other distressed hotels and motels around the bay area and wine country moving southward into silicon valley and los angeles [Music] as a leader chip is a unique fusion of traditionalist student and renaissance innovator he's a successful author and speaker who focuses on cutting-edge business theory but these theories also helped his company weather a series of downturns from the dot-com bubble and the effects of 9 11 to the recent recession i'm a big believer in maslow's hierarchy of needs but if there's a really good lesson about a pyramid it's that the foundation's got to be strong if the foundation is not strong at the base of the pyramid you never get up to the top so during the last downturn frankly we were the largest bay area hotelier in a region that was seeing the largest percentage revenue drop in the history of american hotels we were in a lot of trouble and what became clear to me is that in order for our employees to have their survival needs met at the bottom of the pyramid we needed to give them a sense that they weren't going to lose their jobs and we chose instead to say okay i didn't take a salary for three and a half years and all of our senior executives took a 10 pay cut and every salaried employee in the whole company took a two and a half year pay freeze but by doing those taking those measures it allowed our our line level employees who made just an hourly wage at the bottom of the pyramid to actually know that they had a job and they got actually their benefits and they know that annually they got a wage increase and everybody actually felt like they're in a better place because the number one emotion in most companies in america today is fear and fear is not a great motivator we learned during that downturn that actually helping our line level employees feel secure and safe actually help them to perform better this strategy of heartfelt service along with the incorporation of personality and culture into each hotel promotes long-term employee satisfaction and customer loyalty part of the reason that people gravitate to joadavi is because our hotels are sort of like a mirror for the aspirations and personality of the customer and uh as one person once said to me this hotel is like my perfect habitat so what it means is that they're more likely to actually come back and we're certainly not a commodity and they go out and they tell their friends about it and that's part of the reason we get by with so little traditional advertising in fact joadavi's unique brand and fierce customer loyalty do such a good job of spreading the word the company spends only about fifty thousand dollars of its near quarter billion a year revenue on traditional advertising by setting a goal and analyzing both his organization's strengths and weaknesses as well as opportunities and threats from the market he entered chip conley took joie de vivre from a whimsy to an iconic brand you