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 Juan de Viv, the
world's second-largest boutique hotel chain. So how did he do it?

"At the end of the day, I realized that what I was looking to do was to create an experience for people,
for the customers, and our employees. And that was really what was driving me to get excited about the
idea of starting the company."

Converting a kitchen hotel allowed Chip to differentiate the Phoenix from higher-end fare and the more
muted budget venues. At a low price point of around $100 a night. The Phoenix is accessible to everyone
from young, creative artists to jets. Musicians like the Shins and the RedDot Chili Peppers. The funky
hotel vibe and history of famous and loyal guests create 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 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 Titanic 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. As a leader, Chip is a unique fusion of traditionalist
students and rental innovators. 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 911 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 has 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 for our employees to have their survival
needs met at the bottom of the pyramid, we needed to give them a sense that they were 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 allowed our line-level employees
who made just an hourly wage at the bottom of the pyramid to know that they had a job and they got
their benefits. And they know that annually they got a wage increase and everybody felt like they were
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 helping our line-level employees feel
secure and safe helped 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 Juareviv is that our hotels are sort of like a mirror for the
aspirations and personality of the customer. And 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 come back and we're certainly not
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."

Juan Dave's unique brand and fierce customer loyalty do such a good job of spreading the word, the
company spends only about $50000 of its nearly 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 Juan de Vivieve from a whimsy
to an iconic brand