Chapter TwoKarmic Capitalism

Behind every managerial decision or action are assumptions about human nature and human behavior.

Douglas McGregor, The Human Side of Enterprise1

Against all odds, my first hotel became a smash hit. In 1987, at the ripe old age of 26, I bought a virtually out-of-business no-tell motel in San Francisco's gritty Tenderloin district. My slightly delusional business plan was to turn The Phoenix into San Francisco's official rock ‘n'roll hotel so that I could rub elbows with famous musicians, build a business that would enable me to utilize my creativity, and design a workplace where I could live the joy of life every day.

Cheap Trick? Bad Company? While those were some of my favorite bands during my younger years, they also described the clientele I inherited. The hotel's biggest corporate account was Vinny (and his girls)—at least until we renovated the place and terminated the pay-by-the-hour option, which constituted most of the hotel's business. Based on a classic niche marketing plan, a lot of chutzpah in our sales efforts, and a bit of luck, this 44-room motel soon became an internationally acclaimed crossroads for the creative.

I have innumerable stories I could tell about my experience running The Phoenix: babysitting Sinead O'Connor's new child, serving Linda Ronstadt breakfast in bed, loaning cuff links to JFK Jr., and asking Courtney Love to wear a bathing suit when she used the pool are just a few—but they're perhaps more appropriate for ...

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