Interview with Chip Conley, Founder and CEO of Joie de Vivre Hospitality and author of Peak: How Great Companies Get Their Mojo From Maslow

This week is about new ways to understanding motivation in business. Monday’s blog surveyed the new books on the subject. Wednesday was a book review with Chip Conley.  I caught up with Chip over last weekend as he rushed between events. He agreed to speak about Maslow’s pyramid as applied to Investors.

Question: What stories do you have of working with investors in a way that brings them into  what you call “legacy” ownership?

To start with, we are privately held. The challenge is that most of us see investors monolithically. They are all the same. We would not do that with customer or employees. With customers we work on seeing different niches and appealing to them. But with investors we don’t. But they are not a monolith. There are all kinds of investors with all kinds of needs. With the pyramid of needs, I wear glasses to listen to investor in terms of where they are coming from. Is it survival, success or transformation?

An investor with survival needs (an that is part of all investor’s need) is looking to maximize return and to ensure you are on the same page about how are running the business. This level is about transactional alignment. More investors fall there rather than other two levels of need.

The success investor sees the relationship as important. They go beyond the transaction. Our best-known success investor is Warren Buffett. He invests in the relationship and having a long-term perspective. He wants us to think in longer lengths of time. He is in the relationship for the long haul.

A metaphor may help see the difference between these two investor levels. One is interested in a glass of milk. The other is interested in the cow. The survival investor is focused on the milk. The success relational investors, like Buffet is focused on the cow.

The legacy investor goes beyond these two; he invests with a purpose or mission. An example is a responsible mission, or maybe an Angel investor. The legacy investor has pride of ownership of the company. It may be you remind them of themselves twenty years ago.

In meeting a new investor, I check out where they fall on the pyramid. I ask leading questions to explore. Different types of investors are needed for different ventures. If you are going to be in and out in three or four years, the survival investor, on the bottom of the pyramid, is fine. But if the venture calls for making a long-term investment, then this will require a patient investment. This happens often also when a social good is involved. You definitely need a legacy investor for this. If you do not have one, you will be at odds with them all along the way.

One of our legacy investors is John Pritzker, who is one of the family that founded Hyatt Hotels. It is also a privately held company. He is the first investor that has invested in the company, not just a particular hotel venture. As a way of exploring this level of possibility, you ask emotional questions not functional ones only. You have to get inside one another’s head.  You want to know what turns them on. You want to know, “what about the business excites him”. Our exploration confirmed there was a match in what we saw. John sees the hospitality business as a noble profession. So do I.

Question: Why aren’t more people successful at seeking out and finding Legacy investors?

Most hotels projects do not need a legacy investor. You only need the legacy investor when you have to address the higher needs called for with a long-term investment. But when you do need them, you have to know how to move beyond even the relationship.  You have to get them excited about a mission element. This includes engaging with people who are interested in doing good for the world. Whether it is investing in their community or giving to philanthropic causes.

To get them connected, you may have investors make some decisions in this regard. They are connected with a local community and can be involved in those choices. We have done that and then raised money from our guests.

Some people say, “You get the investor you deserve”.  There are thoughtful CEOs who focus on the short term and they tend to have shorter-term focus investors. It is hard in these cases. To get beyond that short-term focus has a lot to do with developing a vision. If investors can see that the vision gives a competitive edge they will be interested at multiple levels of needs on the pyramid—survival, success and transformation.

Question: How do your investors react to your book and way of managing?

My Investors have held me accountable for diverging from what I have said. They called me to task. That is how much they are aligned.

Question: How do you keep yourself focused to take on your vision with such passion?

You have to put yourself in the right habitat to live up to your potential. If you are not in that habitat and get focused on short term, you will swallow your values. Your habitat has an energetic impact on your level of passion and commitment to what you are doing.