Chapter 95 - Half Luck and Half Brains: The Kemmons Wilson, Holiday Inn Story
Today’s Chapter is based on the book “Half Luck and Half Brains: The Kemmons Wilson, Holiday Inn Story” by Kemmons Wilson.
Here’s what I learned:
Entrepreneur Spirit
“Focus on observation and seek opportunities from the real environment.”
— Lui Che-woo
As we have previously learned, famous investor Mohnish Pabrai mentioned that when he looks at a CEO, he tries to find out if they ran a lemonade stand when they were 12. He explains, “Because if they didn’t run the lemonade stand when they were 12, they’re not going to be that great a business at 30.” As we have studied a lot of successful entrepreneurs in the past on, you will also notice that it is a common trend to have an entrepreneur mindset at a young age.
For example, Andrew Wilkinson, the co-founder of Tiny, exhibited an intense drive and entrepreneurial spirit from a very young age. When Wilkinson was only eleven years old, he started going to Simply Computing, a rundown Mac store where he started acting as a salesman at the store. His sole goal was to convert customers to buy a Mac instead of a PC. Since he was so knowledgeable about Macs, he was able to get his first real job at the age of twelve to teach a customer how to use a Mac.
By the time Wilkinson was in middle school, he was running the website MacTeens along with other Apple teenagers enthusiasts, where they shared daily reviews and news about technology products. Reviews were actually an ingenious way for Wilkinson to obtain free tech products that he would of never been able to afford. Wilkinson was notoriously a Steve Jobs fanatic. He explained that he slept next to a dog-eared copy of “The Journey is the Reward”, a biography of Jobs and that when asked to write a letter to his future self, he confidently predicted that, by 2035, he would be running Apple Computer.
Even though Wilkinson’s prediction didn’t end up happening, this early entrepreneurial experience helped Wilkinson build an innate ability to identify opportunities gap which would become a valuable asset to him. As a matter of fact, Wilkinson started his first truly successful business Metalab after seeing two individuals making websites at the coffee shop he was working at. He then leveraged the cash flow earned from Metalab into building other businesses as he had developed a mindset to be always on the lookout for the next opportunity from an early age.
“By the time I was in my early twenties and running my own company, I scratched business ideas on scraps of paper sprinkled around my office and in the margins of books.”
— Andrew Wilkinson
Similarly, Kemmons Wilson, the founder of Holiday Inn, is another great example of a life filled with the spirit of entrepreneurship. From his early childhood, he showed a natural inclination to identify business opportunities and to take risks. Whether it was selling magazines at the age of six, building rocking chairs in his uncle’s basement, or selling popcorn outside a theatre, Wilson always had an eye for turning a profit. His ability to spot opportunities and take calculated risks was a key factor in his success.
In fact, Wilson’s first big entrepreneurial move came when he decided to sell popcorn at the local theatre. It was during the Great Depression, and money was scarce. But Wilson saw a gap in the market; movie theatres were packed with people, but no one was selling snacks. He approached the manager and convinced him to let him put up a popcorn machine outside the theatre. However, young Kemmons didn’t have enough money to buy the machine outright. He had to negotiate to buy the popcorn machine by paying a dollar a week.
This early deal set the tone for Wilson’s approach to business. He was never afraid to take risks, even when he didn’t have the capital. His ability to negotiate and convince others to believe in him became a hallmark of his career. Wilson understood that in business, you often have to take leaps of faith—trusting your gut and betting on yourself.
His leap into the motel business is another example of this risk-taking spirit. During a family vacation, Wilson grew frustrated with the lack of affordable, family-friendly lodgings. Instead of just complaining, he decided to do something about it. He told his wife: "I’m going to go home and build a chain of motels that will never charge for children as long as they stay in the same room as their parents."
Wilson’s willingness to take risks paid off. He had a vision for something new, and he wasn’t afraid to put everything on the line to make it happen. Risk-taking, for Wilson, wasn’t just about financial gambles; it was about seizing opportunities when others saw obstacles. In fact, Wilson often told himself to “Eliminate from your vocabulary the words, 'I don't think I can,' and substitute, 'I know I can.’”
"A person has to take risks to achieve."
— Kemmons Wilson
Meet Your Customers’ Need
“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.”
— Steve Jobs
As we have seen from Bill Marriott, embracing change is a fundamental principle in order to have success as an entrepreneur. This is especially true in the hospitality industry. As a matter of fact, Marriott explains that a lot of the company’s innovative ideas came from listening to their customers. As he once said, “Today, electrical outlets are important... If we hadn't been open to our customers' suggestions... we might never have known how much this one simple change meant.”
Similarly, Wilson’s approach at Holiday Inn was also catered around his unwavering commitment to customer satisfaction. He understood that happy customers were key to sustainable business success and that listening to their needs was primordial in order to innovate.
In the early 1950s, there were plenty of motels across the United States, but they were often dirty, cramped, and overpriced. Wilson saw an opportunity to build something better—a chain of motels that offered clean, reliable, family-friendly accommodations at a reasonable price. His vision wasn’t just about building one motel; it was about creating a national network that would be consistent in quality and service. This was groundbreaking at the time.
This snap judgment was the birth of what would become one of the most iconic hotel chains in the world, the Holiday Inn. But Wilson didn’t stop there. He understood that families wouldn’t just want a clean room—they wanted amenities that made travel easier and more enjoyable. He made sure every Holiday Inn had a swimming pool, family restaurant, and vending machines. Importantly, he also ensured that children could stay for free, a policy that remains a standard in the industry to this day. This was his most proudest policy change as he once said, “If I never did anything else in the world, I changed everybody on that.”
As mentioned previously, Wilson’s success wasn’t just about being a risk-taker; it was all about his ability to innovate by seeing opportunities where others did not. Not only did he identify a customers’ need, he was able to come up with a solution that changed the entire industry. Wilson didn’t just build motels; he built an experience.
This reminds me of the concept of exceeding customers’ expectations that we have learned from Andy and Jake Taylor from Enterprise. Taking care of customers was a part of Enterprise’s corporate culture and a big reason for their success. In fact, for Jack Taylor, having “satisfied” customers isn’t enough, you need to exceed their expectations. This is because customers who are completely satisfied are 70 percent more likely to become repeat customers.
Why are repeat business so valuable? The reason is simple; studies shows that it costs 5x or 6x more to gain a new customer compared to keeping a current one. Over the years, Enterprise’s management team believe that there are six reasons why people stop doing business:
1 percent die
3 percent move away
5 percent develop other relationships
9 percent leave for competitive reasons
14 percent are dissatisfied with the product
68 percent go elsewhere because of the poor way they were treated by employees of the company
Similarly, according to a survey done by Enterprise, 70 percent of those in the “completely satisfied” category were willing to use Enterprise again the next time they need to rent a car. However, only 22 percent of “satisfied” customers mentioned they would come back.
“Repeat customers are the quickest way to build a solid business.”
— Jack Taylor
It is fair to say that this philosophy of Enterprise of exceeding customers’ expectations in order to gain repeat customers is largely a differentiation between the company and their other care rental competitors. While others may be concerned about getting renters in and out of cars as soon as possible in order to increase their bottom line, Enterprise are much more committed in making sure customers have a good experience and will come back.
As Andy Taylor once said, "We derive our success from careful adherence to a common sense approach: We treat our customers well, we give our employees respect and opportunities to grow, and we know that if we stick to these two rules, profits and growth will naturally follow."
Reputation
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
— Warren Buffett
One of the most important lessons Kemmons Wilson learned early in life was the value of relationships and trust. Throughout his career, he emphasized the importance of maintaining a good reputation and building strong relationships with partners, employees, and customers. Wilson understood that business is about people, and that having a good reputation is the foundation of any successful enterprise.
Wilson’s ability to build trust with others was a key factor in his success. In the early days, when he had no money, he relied on the trust of others to secure credit and make deals. He knew that if people believed in him, they would be willing to invest in his ideas.
"Young people need to know how important it is to have a good reputation, to keep faith with everybody, to do what you said you would."
— Kemmons Wilson
Wilson’s relationships weren’t just transactional; he genuinely cared about the people he worked with. He believed in treating everyone with respect, regardless of their position. Holiday Inn was run like a family business, where every employee was valued. He implemented an open-door policy where anyone in the company could come to him with ideas and concerns. He wasn’t interested in titles or hierarchy—he was only interested in results and in fostering a positive work environment.
Wilson’s emphasis on building a great reputation extended to his customers as well. He believed that great service was the key to building a loyal customer base. At Holiday Inn, employees were trained to go above and beyond, even finding rooms for guests at competitor motels if Holiday Inn was fully booked. This kind of service created lasting relationships with customers and helped build a brand that people trusted.
"It was Holiday Inn’s thinking that this made two friends—the traveler who was looking for a room, and the innkeeper who needed to sell a room. It worked wonders."
— Kemmons Wilson
In my opinion, Wilson’s success as an entrepreneur is heavily relied on his good reputation. As a matter of fact, he was all about using leverage, both in terms of money and in man power in order to achieve his ambitions. Similarly to how he started his own popcorn business without investing a cent, Wilson never let a lack of personal capital deter him from finding creative ways to secure the financial resources he needed to start his own business projects. As Wilson once said, “Leverage is everything, and you can only make money if you use other people’s money. You never have to be afraid of going into debt.” However, this is only possible if you have a great reputation. Without one, no one would be willing to invest in your ideas.
Similarly, Wilson was also never too shy to trust others to execute on his business ideas. In fact, when Kemmons Wilson started Holiday Inn, he knew almost nothing about building houses. But, as he once said, “No job is too hard as long as you are smart enough to find someone else to do it for you.” This was only possible by the fact that Wilson hired people with great reputation for integrity. By surrounding himself with people he could trust, Wilson didn’t need to be an expert in every aspect of his business; he just needed to be able to identify and manage the right people. As Warren Buffett once said, “You’re looking for three things, generally, in a person: Intelligence, energy, and integrity. And if they don’t have the last one, don’t even bother with the first two.”
This concept reminds me of what we have learned from Chung Ju-Yung, the founder of Hyundai, who believed that it is possible to run a business without any capital, as long as you have a good reputation. As he once said, “a man’s trustworthiness, sincerity and honest are his capital.” As a matter of fact, Chung first success started when he was running a rice shop which he was entrusted by his boss due to his diligence and honesty. He was also able to get capital to start his business because of his reputation for being trustworthy.
“In my life, many business people claiming to have the next “big thing" have asked me for money. They professed that they didn't have anyone else to ask. In those situations, I always said, "What you lack is credibility, not capital. It's not because your character is flawed. It's just that you haven't established trust that would allow a stranger or a third person to lend you money. That's why it's so hard for you to get it. If you can convince the other person that you are trustworthy, money will naturally flow in.”
— Chung Ju-Yung
By consequence, whenever he ran Hyundai, Chung always made sure that his credibility would remain intact. In fact, even whenever he got into a project that would certainly amount to significant loss, he made sure to complete the project in time to make sure that his company held their words. He fully understood the meaning behind’s Warren Buffett’s saying that “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”
When he was once advised his brother to give up on a project, he responded with: “Trust is everything to a businessman. The moment you lose trust, it's all over. It's my dream to create the best construction company in the Republic of Korea, and you're telling me to abandon it all? Whatever happens, we're going to finish this job. We have to.” More importantly, Chung Ju-Yung’s understood that in international projects, it wasn’t just his reputation on the line, but the credibility of the entire country that laid on his shoulders. He once mentioned that “if Hyundai were to have quit after becoming the first Korean company to take an overseas project, we would have been kicking away the ladder for other Korean construction companies trying to enter foreign markets.”
“A contract is a contract. Even if we are in dire monetary straits, we have to build Thailand the high-quality expressway they are expecting within the time we have. That's why we are here. We cannot and will not just cut and run. We have to finish what we started for the good of the Hyundai brand and for the good of the country."
— Chung Ju-Yung
Beyond the Book
Listen "RARE interview with the "Indian Warren Buffett" - Mohnish Pabrai" by My First Million
Read "Warren Buffett: The Three Things I Look For in a Person" by Farnam Street
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