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One of America's Great CEO's Tells The Story of Why Bureaucracy Size Matters

Our American Stories / Lee Habeeb
The Truth Network Radio
March 15, 2024 3:01 am

One of America's Great CEO's Tells The Story of Why Bureaucracy Size Matters

Our American Stories / Lee Habeeb

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March 15, 2024 3:01 am

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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Welcome to 500 Greatest Songs, a podcast based on Rolling Stone's hugely popular, influential, and sometimes controversial list. I'm Brittany Spanos.

And I'm Rob Sheffield. We're here to shed light on the greatest songs ever made and discover what makes them so great. From classics like Fleetwood Mac's Dreams to the Ronettes' Be My Baby, and modern day classics like The Killer's Mr. Brightside.

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Find your perfect Philips Roku TV today online or at your local Walmart and Sam's Club. 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 wisdom through story. A Jewish guy who loves storytelling like almost nobody else.

Take it away Mike. What I learned about the franchise business really it started at days in 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 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 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 franchisor while being in while being in business for themselves so it really fits America perfectly. Now it's international but it was basically American. It's basically if you look at the franchise model in Asia the fancy amount of Europe it 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 and small people buying franchises and even individuals buying subway franchises where they're really making the sub sandwiches themselves it puts them in for themselves but not by 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 franchisor that there was a lot of angst a lot of aggravation going on and that when I got to days 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 they don't 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 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 all of my instincts in terms of the customer relationship and consequently when I got to days 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 key franchisees then they went 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 franchisor perspective and there are many abuses in franchising because franchisors get greedy and they start ordering people they build bureaucracies and they order franchisees to do things that they can't afford 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 cost without two-thirds of a vote of the franchise community you you couldn't do encroachment 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 franchisee they are your customer the franchisee the franchisee is going to help make you successful by being successful themselves and you 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 corporate overhead and more bureaucracies everybody wants to be able to manage the business and so they forget sometimes who the customer is and and you who started the business with your first customer you're very close when you have 50 customers you're very close when you have 500 customers you don't know the last 400 who does know them your corporate bureaucrats know them it's no different than the us government when the us government was small in 1782 or whatever it was everybody 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 so they don't they don't know who's their customers when the fda says well i think you should close the schools who are their customers their customers are not the drug companies their customers their end user is the united states 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 i think the best example you might be able to find about 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 in holiday inn where the marketing director there's a guy named ray lewis at the time wanted to clean up the company because we had some old and tired hotels and he was anytime somebody would fail an 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 the 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 had a hotel at o'hare airport and they were having trouble with their quality levels because it was getting older and they couldn't get any money they 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 uh they called me because they heard he was going to get thrown out and i said 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 30 days if the marketing guy was knocking on my door to knock him out i said let's wait 30 days later they had the money they they rehabbed the hotel hotel then paid a half a million dollars of 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 where my insurance was being held by a company in atlanta my home insurance for here and atlanta for florida and atlanta and i don't hear from the guy every year the price goes up and everything finally i got an advertisement for insurance here from a competitive insurance broker so i called up i said can you give me a quote i said yeah yeah i said i said when can you come over he said well when do you need me i said well when do you need me i said well are you available sunday morning oh yeah guy shows up in my office sunday morning makes me a 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 this even look we have bureaucracy here in the st andrews club in in in florida you know uh here 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 a resident saying why are you doing that why did you tell us in advance who's the customer who's the who's the board's customer in the condominium the owner the other owners why wouldn't you communicate say by the way we're talking about cutting that do you have any opinion no 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 20 of all american businesses are franchises and this cuts from hotels to cleaning services oil changes restaurants gyms plumbing extermination car repairs and from this system franchising has created tremendous wealth tremendous job opportunities and a tremendous tax base the story of so much a wise man mike levin all here on our american stories welcome to 500 greatest songs a podcast based on rolling stone's hugely popular influential and sometimes controversial list i'm britney spanos and i'm rob sheffield we're here to shed light on the greatest songs ever made and discover what makes them so great from classics like fleetwood max dreams to the ronettes be my baby and modern day classics like the killers mr brightside listen to rolling stone's 500 greatest songs on the iheart radio app apple podcasts or wherever you get your podcasts infinity presents a new chapter in luxury the premiere of the all-new 2025 infinity qx80 live march 20th from the edge at hudson yards in new york city featuring a performance by john batiste the all-new 2025 infinity qx80 is an suv designed to help every passenger feel just right be the first to see it march 20th at 7 p.m eastern only on iheart radio's youtube channel save the date at new dash qx80.com don't miss it 2025 qx80 coming this summer ready to celebrate international women's day m&ms and iheart present women take the mic sharing empowering stories of women supporting and celebrating each other and of course 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Whisper: medium.en / 2024-03-15 04:14:22 / 2024-03-15 04:19:25 / 5

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