September 17, 2024 • 9 mins
On this episode of Our American Stories, Mike Leven was President and Chief Operating Officer of Las Vegas Sands Corp. One of the great hoteliers of all time—a legend in his business. He is also what you would call a “wise man.” Here’s Mike Leven with the story: The bigger the bureaucracy, the smaller the customer.
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Episode Transcript
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Speaker 1 (00:10):
And we continue with our American stories. And up next
Mike Levin, who was the president and chief operating officer
of Las Vegas Sands and an all around hotel superstar,
one of the great hotel years of all time. More important,
a personal friend and a wise man, and wisdom my
goodness in short supply these days, and he transfers his
(00:33):
wisdom through story. A Jewish guy who loves storytelling like
almost nobody else.
Speaker 2 (00:40):
Take it away, Mike, what I learned about the franchise
business really at the start of the days and has
really made an amazing impact on me. But you have
to understand that my culture of customer orientation was really
exacerbated by the franchise business because what happens in franchising
is you put people in business for themselves, but not
(01:02):
by themselves. And the interesting thing about it is it
multiplies the entrepreneurial spirit of a free capitalistic type of system.
But because many smaller people, small people in terms of
financial capability, don't have the funds to be able to
(01:23):
be in business for themselves at a larger scale, what
franchising does is allow them to do that because the
franchise provides them the ability to finance their growth, so
they're playing off the name of the big franchise or
while being in business for themselves. So it really fits
America perfectly. Now it's international, but it was basically American.
(01:48):
It's basically if you look at the franchise model in Asia,
the fants amount of Europe and usually was a large
company buying somebody's brand, but in America it was small people,
individual people doing it. So you had doctors and accountants
and lawyers and small people buying franchises, and even individuals
buying subway franchises where they're really making the sub sandwiches themselves.
(02:11):
It puts them in for themselves, but not buy themselves.
So the whole concept is very American in its nature.
But the reality is when I first got into the
franchise business and when I learned from my Americana days
in the franchise business, where I wasn't treated very well
by the franchise or that there was a lot of angst,
a lot of aggravation going on, and that when I
(02:33):
got to Day's in what I learned that if you
can treat the franchisee as your customer, they would just
grow their businesses for you, and so you don't have
to use your capital to grow their businesses. They use
their capital and their energy to grow and you take
the money off the top, which has very high margin
(02:54):
of profitability for you because the incremental nature of an
extra franchise doesn't require that much cost. But you have
to be honest and forthright with the money you're taking
in for marketing and things like that. So it really
was an absolutely perfect situation for me because it met
(03:14):
all of my instincts in terms of the customer relationship.
And consequently, when I got the day's in, I learned
that not only could you sell lots of franchises, but
the ability to keep your franchisee happily built in enormous
growth opportunities for you because they just wanted more and
if you treated them well, if you built relationships with
(03:36):
key franchisees, then they grew your business for you. You
didn't have to grow it. All you had to do
was to do it right from the franchise or perspective.
And there are many abuses in franchising because franchise oors
get greedy and they start ordering people. They build bureaucracies
and they order franchises to do things that they can't afford.
(03:58):
They put financial stress on them without thinking about them.
And when I finally had my own company, I did
a franchise agreement that actually represented those values to its
nth degree. Where I had clauses like you couldn't do
a renovation or add an extra costs without two thirds
a vote of the franchise community, you couldn't do encroachment
(04:19):
that I gave them area protections with every franchise I sold,
so you couldn't encroach on their capability. So I built
a franchise agreement that everybody agreed was the best in
the business. From the customer perspective, the end user is
the customer of the franchise e. They are your customer
of the franchise e. The franchise e is going to
help make you successful by being successful themselves, and you
(04:42):
have to reciprocate by helping them to be successful. So
days in opened up my eyes to a whole different
world of franchising. What happens when you start a business.
You spend a tremendous amount of time making sure your
customers are happy, because if they're not happy, you're out
of business. As the business grows and you build more
(05:04):
corporate overhead and bureaucracies. Everybody wants to be managed the business,
and so they forget sometimes who the customers and you
who started the business with your first customer. You're very close.
When you have fifty customers, you're very close. When you
have five hundred customers, you don't know the last four hundred.
(05:26):
Who does know them? Your corporate bureaucrats know them. It's
no different than the US government. When the US government
was small in seventeen eighty two or whatever it was,
everybody knew, everybody knew who their congressman was. Everybody knew
who everybody was. Now you've got, you know, three thousand
people in the FDA, You've got you know this kind
of they don't know who's their customers. When the FDA says, well,
(05:49):
I think you should close the schools, who are their customers?
Their customers are not the drug companies their customers, their
end users, the United State citizen. Are they thinking about them? Well,
they think they are, But some bureaucrats making the decision
that's going to make a decision may not be right
for their customers. So at the end of the day,
(06:10):
I think the best example you might be able to
find a government and bureaucracy in general, is the bigger
your bureaucracy, the further away you're going to get from
the customer, and so they don't understand. You know. I
had a situation on Holiday Inn where the marketing director
(06:31):
was a guy named Ray Lewis at the time, wanted
to clean up the company because we had some old
and tired hotels and anytime somebody would fail and exam,
he'd want to throw them out so he could get
a new hotel built. Well, the reality is the people
who were building new hotels were the same people that
he was throwing out, of course, if you look at
it that way. So we had a situation where we
(06:54):
had a hotel at Ohare Airport and they were having
trouble with their quality levels because it was older and
they couldn't get any money, didn't have any money, so
the marketing guy said, well we should throw them out.
It was a half a million dollar royalty a year
plus a customer who had many other holiday inns, and
(07:14):
they called me because they heard he was going to
get thrown out, and I said, well, why can't you
get this fixed up? He said, we can't get the money.
I need six months to finance it. I said, okay,
I'll give you another six months. Then the six months came,
he didn't have it yet. He said, I need another
thirty days. If the marketing guy was knocking on my daughter,
knock him out, I said, let's wait. Thirty days. Later
they had the money, they rehab the hotel. Hotel then
(07:37):
paid a half a million dollars royalty plus for the
rest of the term, and it helped them. So after that,
you know they were in the system. And so that's
that's what you have to think about. And so but
the further away you are, the ease of it is
that you forget the customers. And you see it all
the time in every business. I had a situation here
(07:58):
where my insuran urance was being held by a company
in Atlanta, my home insurance for here in Atlanta, for
Florida and Atlanta. And I don't hear from the guy.
Every year the flights goes up, and finally I got
an advertisement for insurance here from a competitive insurance broker.
(08:18):
So I called up and I said, can you give
me a quote? I said, yeah, yeah, I said, I said,
when he can come over. He said, well, when do
you need me? I said, well, are you available Sunday morning?
Because oh yeah, guy shows up in my office Sunday morning.
Makes me proposal better than the one in Atlanta that
I never heard from. Same quality of insurance, same everything.
He got the business. You know, even if look, we
(08:42):
have bureaucracy here in the Saint Andrews Club in Florida.
You know, this morning I get a note. I own
a condominium in Atlanta, and I get a note from
the board that they're cutting down trees. They got permission
from Atlanta to cut down trees. I also get a
note from as to say, why are you doing that?
Why did you tell us in advance? Who's the customer,
(09:05):
who's the board's customer and the condominium the owner, the
other owners. Why wouldn't you communicate and say, by the way,
we're talking about cutting that, do you have any opinion? No?
Speaker 1 (09:17):
And you've been listening to Mike Levin tell the story
of Well of Life, and you can go to our
American Stories and click Mike Levin and get so much
wisdom through storytelling. By the way, this American invention franchising
twenty percent of all American businesses are franchises, and this
cuts from hotels to cleaning services, oil changes, restaurants, gyms, plumbing, extermination,
(09:39):
car repairs, and from this system franchising has created tremendous wealth,
tremid his job opportunities, and a tremendous tax base. The
story of so much a wise man, Mike Levin all
here on our American story
And we continue with our American stories. And up next
Mike Levin, who was the president and chief operating officer
of Las Vegas Sands and an all around hotel superstar,
one of the great hotel years of all time. More important,
a personal friend and a wise man, and wisdom my
goodness in short supply these days, and he transfers his
(00:33):
wisdom through story. A Jewish guy who loves storytelling like
almost nobody else.
Speaker 2 (00:40):
Take it away, Mike, what I learned about the franchise
business really at the start of the days and has
really made an amazing impact on me. But you have
to understand that my culture of customer orientation was really
exacerbated by the franchise business because what happens in franchising
is you put people in business for themselves, but not
(01:02):
by themselves. And the interesting thing about it is it
multiplies the entrepreneurial spirit of a free capitalistic type of system.
But because many smaller people, small people in terms of
financial capability, don't have the funds to be able to
(01:23):
be in business for themselves at a larger scale, what
franchising does is allow them to do that because the
franchise provides them the ability to finance their growth, so
they're playing off the name of the big franchise or
while being in business for themselves. So it really fits
America perfectly. Now it's international, but it was basically American.
(01:48):
It's basically if you look at the franchise model in Asia,
the fants amount of Europe and usually was a large
company buying somebody's brand, but in America it was small people,
individual people doing it. So you had doctors and accountants
and lawyers and small people buying franchises, and even individuals
buying subway franchises where they're really making the sub sandwiches themselves.
(02:11):
It puts them in for themselves, but not buy themselves.
So the whole concept is very American in its nature.
But the reality is when I first got into the
franchise business and when I learned from my Americana days
in the franchise business, where I wasn't treated very well
by the franchise or that there was a lot of angst,
a lot of aggravation going on, and that when I
(02:33):
got to Day's in what I learned that if you
can treat the franchisee as your customer, they would just
grow their businesses for you, and so you don't have
to use your capital to grow their businesses. They use
their capital and their energy to grow and you take
the money off the top, which has very high margin
(02:54):
of profitability for you because the incremental nature of an
extra franchise doesn't require that much cost. But you have
to be honest and forthright with the money you're taking
in for marketing and things like that. So it really
was an absolutely perfect situation for me because it met
(03:14):
all of my instincts in terms of the customer relationship.
And consequently, when I got the day's in, I learned
that not only could you sell lots of franchises, but
the ability to keep your franchisee happily built in enormous
growth opportunities for you because they just wanted more and
if you treated them well, if you built relationships with
(03:36):
key franchisees, then they grew your business for you. You
didn't have to grow it. All you had to do
was to do it right from the franchise or perspective.
And there are many abuses in franchising because franchise oors
get greedy and they start ordering people. They build bureaucracies
and they order franchises to do things that they can't afford.
(03:58):
They put financial stress on them without thinking about them.
And when I finally had my own company, I did
a franchise agreement that actually represented those values to its
nth degree. Where I had clauses like you couldn't do
a renovation or add an extra costs without two thirds
a vote of the franchise community, you couldn't do encroachment
(04:19):
that I gave them area protections with every franchise I sold,
so you couldn't encroach on their capability. So I built
a franchise agreement that everybody agreed was the best in
the business. From the customer perspective, the end user is
the customer of the franchise e. They are your customer
of the franchise e. The franchise e is going to
help make you successful by being successful themselves, and you
(04:42):
have to reciprocate by helping them to be successful. So
days in opened up my eyes to a whole different
world of franchising. What happens when you start a business.
You spend a tremendous amount of time making sure your
customers are happy, because if they're not happy, you're out
of business. As the business grows and you build more
(05:04):
corporate overhead and bureaucracies. Everybody wants to be managed the business,
and so they forget sometimes who the customers and you
who started the business with your first customer. You're very close.
When you have fifty customers, you're very close. When you
have five hundred customers, you don't know the last four hundred.
(05:26):
Who does know them? Your corporate bureaucrats know them. It's
no different than the US government. When the US government
was small in seventeen eighty two or whatever it was,
everybody knew, everybody knew who their congressman was. Everybody knew
who everybody was. Now you've got, you know, three thousand
people in the FDA, You've got you know this kind
of they don't know who's their customers. When the FDA says, well,
(05:49):
I think you should close the schools, who are their customers?
Their customers are not the drug companies their customers, their
end users, the United State citizen. Are they thinking about them? Well,
they think they are, But some bureaucrats making the decision
that's going to make a decision may not be right
for their customers. So at the end of the day,
(06:10):
I think the best example you might be able to
find a government and bureaucracy in general, is the bigger
your bureaucracy, the further away you're going to get from
the customer, and so they don't understand. You know. I
had a situation on Holiday Inn where the marketing director
(06:31):
was a guy named Ray Lewis at the time, wanted
to clean up the company because we had some old
and tired hotels and anytime somebody would fail and exam,
he'd want to throw them out so he could get
a new hotel built. Well, the reality is the people
who were building new hotels were the same people that
he was throwing out, of course, if you look at
it that way. So we had a situation where we
(06:54):
had a hotel at Ohare Airport and they were having
trouble with their quality levels because it was older and
they couldn't get any money, didn't have any money, so
the marketing guy said, well we should throw them out.
It was a half a million dollar royalty a year
plus a customer who had many other holiday inns, and
(07:14):
they called me because they heard he was going to
get thrown out, and I said, well, why can't you
get this fixed up? He said, we can't get the money.
I need six months to finance it. I said, okay,
I'll give you another six months. Then the six months came,
he didn't have it yet. He said, I need another
thirty days. If the marketing guy was knocking on my daughter,
knock him out, I said, let's wait. Thirty days. Later
they had the money, they rehab the hotel. Hotel then
(07:37):
paid a half a million dollars royalty plus for the
rest of the term, and it helped them. So after that,
you know they were in the system. And so that's
that's what you have to think about. And so but
the further away you are, the ease of it is
that you forget the customers. And you see it all
the time in every business. I had a situation here
(07:58):
where my insuran urance was being held by a company
in Atlanta, my home insurance for here in Atlanta, for
Florida and Atlanta. And I don't hear from the guy.
Every year the flights goes up, and finally I got
an advertisement for insurance here from a competitive insurance broker.
(08:18):
So I called up and I said, can you give
me a quote? I said, yeah, yeah, I said, I said,
when he can come over. He said, well, when do
you need me? I said, well, are you available Sunday morning?
Because oh yeah, guy shows up in my office Sunday morning.
Makes me proposal better than the one in Atlanta that
I never heard from. Same quality of insurance, same everything.
He got the business. You know, even if look, we
(08:42):
have bureaucracy here in the Saint Andrews Club in Florida.
You know, this morning I get a note. I own
a condominium in Atlanta, and I get a note from
the board that they're cutting down trees. They got permission
from Atlanta to cut down trees. I also get a
note from as to say, why are you doing that?
Why did you tell us in advance? Who's the customer,
(09:05):
who's the board's customer and the condominium the owner, the
other owners. Why wouldn't you communicate and say, by the way,
we're talking about cutting that, do you have any opinion? No?
Speaker 1 (09:17):
And you've been listening to Mike Levin tell the story
of Well of Life, and you can go to our
American Stories and click Mike Levin and get so much
wisdom through storytelling. By the way, this American invention franchising
twenty percent of all American businesses are franchises, and this
cuts from hotels to cleaning services, oil changes, restaurants, gyms, plumbing, extermination,
(09:39):
car repairs, and from this system franchising has created tremendous wealth,
tremid his job opportunities, and a tremendous tax base. The
story of so much a wise man, Mike Levin all
here on our American story
Host
Lee Habeeb
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