Transcript of Steve Wynn on Stanford’s Uncommon Knowledge

Back in July, Stanford University's Hoover Institution put out a two-part episode of Uncommon Knowledge in which Peter Robinson interviewed Steve Wynn. They talk about everything from the casino and hotel business to entrepreneurship to where Wynn Resorts is headed. (Hopefully to Everett) I've only now gotten around to watching both parts but was taken aback with the breadth of knowledge distilled. Steve Wynn truly is a legend. I took it upon myself to transcribe both episodes for the pleasure of other gaming and hospitality industry enthusiasts. As there is a lot here, I may do a separate post breaking down the interview. Enjoy. Author's Note: I do not own rights to the following content but have simply transcribed it. All rights reserved to the original owners. Uncommon Knowledge is distributed by Wall Street Journal Live and a production of the Hoover Institution. I've dropped in some Wikipedia links sparsely to help you further research some of what's mentioned if desired.
Part 1: Steve Wynn discusses his journey into the Las Vegas hotel and casino business WSJ Live presents Uncommon Knowledge with Peter Robinson Steve Wynn Interview: Part One Robinson: "What I like about casinos is that they allow us to build hotels. A slot machine or a blackjack or a roulette table, they have no power. It's the non-casino stuff that gets people to come back again and again." With us today the man who said that, and who by universal agreement reinvented Las Vegas, Steve Wynn. Shooting at the Wynn Las Vegas, Uncommon Knowledge now. Uncommon Knowledge with Peter Robinson: A Production of the Hoover Institution Robinson: Welcome to Uncommon Knowledge. I'm Peter Robinson. Wynn Resorts, the owner and operator of luxury casino resorts in the United States and China, on revenues in 2013 of $5.6 billion, net income of more than $1 billion, and a stock price that has risen over the last 5 years from roughly $37 to well over $200, more than quintupling in value. With us today, the company's founder, chairman, and chief executive officer, and by wide agreement the man who reinvented Las Vegas, Steve Wynn. Steve, I ordinarily thank guests for joining us but since we're shooting today not only in your hotel, but in your home, this is your villa at the Wynn Las Vegas, thank you for permitting us to join you. Wynn: I was listening to your introduction, and one thought passed through my mind - better to be lucky than smart. Robinson: (laughs) Okay, new kid in town in 1967, 25-year-old Steve Wynn arrives in Las Vegas with money from the family business, a string of bingo parlors back east, he buys a small stake in the Frontier. Steve, this town in 1967, I once heard you say Las Vegas hotels when you got here were like motels. They weren't real hotels. What did this town look like in those days? Wynn: There were 60,000 people. There were 8 or 9 hotels on The Strip. They were, with one or two exceptions, low-rise structures, and if they had a high-rise it was with 300 or 400 rooms. Del Webb had built the Sahara that had 1,000 rooms. The Stardust was basically a motel with 1,400 rooms. The rest of them were 2 and 3-story structures with little small high-rises attached to them, small casinos with 300 slot machines and 40 games and a showroom. And it was a small town, a company town. Robinson: And what brought you here in the first place? From upstate New York, where you grew up in upstate New York, you were operating bingo parlors out - Wynn: When my father died, when I was a senior in school, on the table in heart surgery, we were broke. It was my senior year at Penn and I graduated and I had the business, the family business in the Maryland. I had the bingo that was licensed in Maryland. And I had run it while I was a student, that was how I got my allowance. I would go down from Philadelphia to Washington every weekend and run the bingo. And I wanted to be a developer. And because I was in a county that was adjacent to the Baltimore-Washington International Airport, I wanted to build an industrial park and I could buy a farm for a million dollars that was next to the airport. And I could get it zoned for the airport. Other people might have had a hard time but I knew my way around the county, I thought I could get the zoning. And I didn't have any money. I was worth about 50 thousand dollars or 25 thousand dollars, and I found John MacArthur at Bankers' Life Insurance and Casualty, and offered him half of it if he would lend me the million to buy the farm. He said no, but he asked me a bunch of questions about where I'd gone to school and how was my business legal and all that sort of thing. And I left and I went back to Maryland and two weeks later I got a phone call from his office saying that Mr. MacArthur, he and Getty were the two richest Americans at the time, he owned Bankers' Life and Casualty by himself, wanted to see me again in New York and that he'd pay for my airfare. Well I paid my own airfare and went up to the Plaza Hotel and I sat with him and in effect he told me that the insurance company owned this land on The Strip, a closed hotel called the Last Frontier. The insurance company had tried to sell it to get rid of it and so far had been unsuccessful but a group of men had come to him to lease it for a very, very big price if he would add $5 million for a high-rise, and for more rooms. Robinson: Right. Wynn: And he said that he would like to have someone in the lessee group that represented his interests. Would I like to go there, and he would arrange me to get 2 or 3 or 4 percent for virtually nothing, a few thousand dollars, 25 thousand dollars. And he said he'd pay my way to go check it out. And I said I'd pay my own way, and I ended up on Thanksgiving Eve 1965 in Las Vegas - Robinson: You were 23 years old? Wynn: 23 years old, with my wife Elaine, and I was with a friend of my father's who had arranged for me to meet MacArthur, and we started this whole weekend at Palm Springs. And we were at a restaurant called Ruby's Dunes and - Sinatra was at the next table, with some people. Robinson: Totally by happenstance? Wynn: I had luck. And he walked over to say hello to the guy I was with, and got introduced. He says "what are you doing out here", he said we're going to Las Vegas tomorrow because Steve has been invited to join a deal for a new hotel on The Strip. Sinatra did a double take. I looked like I was about 16 years old, so did Elaine. "What hotel on The Strip?" I quickly sort of described what Mr. MacArthur was doing, and he said "where are you staying?" He said we're staying at the Dunes. "No, you won't. You'll stay with me. You'll stay with me at the Sands, I'll take care for you and the young people here." And the next thing you know, we're in Las Vegas, guests of Frank Sinatra, staying in a suite when everybody in the world is crowded into The Sands to get a glimpse of the Rat Pack. Robinson: Well these were the classic days of the Rat Pack. Wynn: That was it. They were there. You can't really explain to people today what it was like. We went to the showroom, the Sands showroom had 500 seats, the Copa Room where the Rat Pack worked was a tiny nightclub. Robinson: How many seats have you got here at the Wynn Las Vegas? Wynn: Oh 1,500 usually, nothing's big now, but it was a 500-seat joint. We were in line, we're at the end of the line, we come to the maître d, you know typical guy with the card. And we say "Wynn". The guy's eyes (motions big with his eyes) - "Hello, Mr. Wynn, welcome to the Sands." He says to the captain, "take them to booth 5." We taken, and there's 497 people in that room, we walk in and - the older guy and the two of us, we look like we're his kids, and we sit in a booth in the center of the ringside. On the right is Lucille Ball, Elizabeth Taylor, and their - other people. On the left is Gregory and Vernie Peck, and Roger Moore and his wife. Everybody in the room is somebody, or a giant customer of the Sands. Robinson: Right, right. Wynn: They had some dancing girls like the Copa girls and they went offstage. And without an announcement Frank Sinatra, Dean Martin, Sammy Davis Jr., Peter Lawford, and Joey Bishop walk out - the place goes nuts. Everybody is cheering because Sinatra and Martin and Davis knew everybody that was in the room. Robinson: Got it. Wynn: And so they start walking around the apron, the proscenium - "Hi Lizzy, hi Lucy, hi Greg, hi Vernie" - you know - "Hi Rog". Sinatra says, "how do you like the seat, kid?" Robinson: (laughs) Wynn: Everybody looked at me and said what mafioso son is that, you know, or whatever. I mean it was so funny. So cool. Dean Martin - Mr. Cool. Frank Sinatra - the boss. Sammy Davis - the court jester with more talent than anybody. Peter Lawford and Joey Bishop were sort of like furniture. Robinson: Steve, Steve, you're a big-time businessman but what you're telling us is, you came to this, you fell in love. Wynn: I was totally - I had no intention of staying. I just wanted to take my wife on a vacation, when my dad died we never had a honeymoon. Robinson: Right. Wynn: So it was two years later, from '63 to '65, I figure this'll be fun. Robinson: Right. Wynn: The maître d said to me, "when the show is over stay in the seat." We get taken, when the showroom empties, through the back to the lounge. There Louis Prima, Keely Smith, Sam Butera and The Witnesses on stage. Two reserved tables. We sit down at the reserved table. A thousand people in the casino cramming to see this, it was an open lounge. Robinson: Right. Wynn: Five minutes later here comes Frank and Dean and Sammy, sit next to us. My first night in Las Vegas and I end up sitting next to them, watching Louis Prima and Keely Smith. And at that point I am toasted. I'm going, I'm staying, I don't care what the heck is going on anywhere else. I gotta figure out a way to be around here. What fun this is. Robinson: So you buy a small stake in the Frontier - Wynn: I was a slot manager and assistant credit manager. Robinson: It emerges, not long after you buy the stake, that some other shareholders in the Frontier are fronting for the Detroit mob. And you - Wynn: Exactly. Robinson: Nobody accuses you, but you sell out. Wynn: I'll tell you how I got lucky in the Frontier. The only time I myself came within spitting distance of what you'd call 'bad guys' was in those early days when I was a slot manager at the Frontier. The place opened in July of '67, it was sold to Hughes in November. The whole experience lasted 4 months. Now at that time, Howard Hughes' banker Parry Thomas, who owned the Valley Bank, the Thomas and Mack Arena here in town, he's 92 years old, he's become my second father ever since I was that age. Parry Thomas was trying to buy the Frontier for Hughes. I didn't like the people in the hotel because they didn't know what they were doing. I wanted to go home. So I was lobbying other shareholders from California, some other shareholders, that we ought to sell to Hughes. Which put me at odds with the guys from Detroit who didn't want to sell to Hughes. But I was sort of the agent of the Mormon banker, Parry Thomas - Robinson: Got it. Wynn: As it turns out, the U.S. Attorney testified in a letter for me when I got licensed in New Jersey, that on the wiretaps that the government had, the Detroit guys in Las Vegas talking to the ones in Detroit were complaining about me. That I was causing the place to be sold by lobbying the other shareholders. And he wrote a letter that not only did Mr. Wynn not have anything to do with those people, he swore to their efforts to stop the sale to Hughes. So I was very lucky, that I was in the wrong place, but the government happened to be the witness. Robinson: Got it. Wynn: And, at 25 years old, it could have turned out differently. I could have been tainted by that. That's the only time that I became remotely close to that stuff. Robinson: Got it. Wynn: And the banker, he convinced me to stay. Robinson: It was Hughes' banker. [E. Parry Thomas] Wynn: And his son is my colleague who did all our designing with me of the hotels all these years. Robinson: This is another theme in your story. You collect people. People seem to stay with you, we'll get to that in a moment. So you sell the Frontier, you do a couple of land deals - Wynn: The liquor business, with the help of my banker. Became a distributor in Reno and Las Vegas of liquor, wine, and beer. Robinson: And then you buy a big enough stake in the Golden Nugget in town - Wynn: But then I bought - the key thing is that Howard Hughes sold me the corner next to Caesar's for a million dollars, a million one hundred thousand dollars. Robinson: Why? Why did he sell to you? He was famous for holding onto everything. Wynn: It was a strange narrow piece of property that had come into his ownership by means no one quite understood. And it was in his name. I bought it from Howard Robard Hughes Junior, not the usual company. This strange, silly piece of property was purchased in his name. When the people that took over Hughes' operation, when he left town, tried to find out how it came into ownership by Hughes, neither he nor anybody else could answer the question. And he was mystified himself. My banker, Parry Thomas, had Hughes sell me the property because it wasn't next to anything Hughes owned. And he lent me the million two to buy it including a hundred thousand dollars for interest. Ten months later I sold it for two and quarter million to Caesar's Palace. I made my first million dollars, I was 29 years old. And I paid my tax. I had a partner Abe Rosenberg who owned a third of J&B Scotch, who had signed the note at the bank with me. And on my $600,000 I invested in the Golden Nugget and got control of the company and that's been the size of my whole investment from day one. $600,000. Robinson: $600,000. Wynn: Made on a land deal with Hughes. Robinson: You got control of the Golden Nugget, now that's moving pretty quickly through an interesting chapter right there. Wynn: I was 30. Robinson: You were 30, you end up as chairman of the Golden Nugget. Best I can tell - Wynn: No rooms, just a casino. Robinson: Just a casino. Wynn: Little casino, had a million eight hundred thousand shares of stock at $3 or $4 a share. About a $7 million company. And I got 10% of the place for $600,000. Robinson: And you began rebuilding the Golden Nugget. Wynn: Yes. Robinson: You rebuild the Golden Nugget - Wynn: At a time when such things were possible. Robinson: Why do you say that? Wynn: In life, everything is about timing. Robinson: Okay. Wynn: Everyone thought that Las Vegas was the underworld. Robinson: Right. Wynn: It wasn't. They were gone. Robinson: Got it. Wynn: But - it was too early for Wall Street to come yet. But the Mormon banker knew about it and he said to me, when I wanted to go home and we sold the Frontier, "Steve, you should stay here. The town needs young people. You'll end up owning the place." He actually said those words to me. My net worth was fifty thousand dollars. Everything from that point forward was with the help of the Mormon banker. He lent me the money, he got me in control position at the Nugget, he lent me - he and First Security of Utah, the bank of the LDS Church - lent me my first $12 million to build my rooms at the Nugget. I was in the right place at the right time. You know, there's an awful lot of hard work and smart people but they don't always find themselves so, so much the beneficiary of timing of opportunity. In my case I just fell into it. Robinson: Next chapter here. Mid-1970s, New Jersey voters approved casinos in Atlantic City. In 1978 you buy a piece of property in Atlantic City, you rip it down, you build the Atlantic City Golden Nugget, and you operate that profitably for not quite a decade and you sell it in 1987 to Bally's to come back to this town. Why did you go into Atlantic City and why did you get out? Wynn: The business opportunity in Atlantic City, they opened in Memorial Day '78. The same weekend that I opened the Golden Nugget, the 600-room hotel called the Golden Nugget Rooming House. I was a ski friend, I'm a powder skier - Robinson: Right. Wynn: And the president of Resorts International is Jack Davis, was a powder skier with me. We used to ski together in Utah. Jack Davis had invited me the year before to see the boardwalk and said "next year we're opening, it's going to be a big thing, you should be here, Steve." I said I'm building my hotel in Las Vegas, I don't want to come here. I made a mistake. Memorial Day rolls around, I have the best weekend in the history of the Golden Nugget because I have rooms. I'm all proud of myself. And Jack Davis is on television because resorts opened in New Jersey. I call Jack Davis and say Jack, I saw you on TV, it looks great. He says "unbelievable." I say we opened the hotel this weekend. I broke all my records. We did $50,000 in slot machine business for the weekend, and the place used to do $4,000 or $5,000 a day. We did $10,000, $3,000 a day. I said how'd you do. He's - it gets quiet on the phone - he says "actually we did $150,000." Robinson: (laughs) Wynn: I thought, for the weekend, my god, three times as much as the Nugget. And then after a beat he says - "a day." What?! "We did $700,000 the first three days in slots. We're having trouble counting the money from the tables because it's all stacked up in box crates." What? "Steve, get on the plane and come here." The next day I was on the plane and I went to see Jack Davis. And I went to walk into his office at Resorts International, couldn't get through the crowds to get to the elevator. He's sitting back at his desk like "I told you so." I said, okay, we're going to get some land. He says "go see Manny Solomon at the Strand Motel. But at the opposite end of boardwalk." He wanted to put me as far away as he could. And I went to see Manny Solomon and bought the property the next day, and it looked so good. Robinson: Right. Wynn: And everyone was rushing and remodeling these dumpy old hotels. I said, if I build a new one that's all bright and shiny, they want the Las Vegas experience, I'll be the guy that gives it to them. And it took me an extra year - I didn't open until '79, '80. But the advantage we had, even though we were the smallest one, was so great that at the end of three years we had made more money than the other guys including their head start. So, you know, it's again what you offer the public. And the Golden Nugget Atlantic City was a big hit because I got Sinatra to come and be the spokesman and hang out with me and then Dean Martin joined us. Robinson: So why'd you sell? In '87? Wynn: Because no matter what I said to the government, two governors, that they had to take control of that city away from the local government. Robinson: Got it. Wynn: They were so corrupt and stupid. The local government was the pits. And I kept saying to governors of New Jersey, you must take control of the central planning of this community if it's to save itself. Right now you're the monopoly on the east coast, that will end someday. And the infrastructure of this city has to be so big that it's like Las Vegas. Las Vegas is surviving in spite of everything because of the infrastructure. You're so big. The menu for guests is so great. Atlantic City can't just be a local crap game. It's got to be a destination city, but for that the government had to take over. The New Jersey state government, not the Atlantic City local government which was pathetic. Well they wouldn't. And they didn't. And I came, at one point of the view, that Atlantic City was never going to take advantage of its opportunity and would eventually face obsolescence. Which I'm afraid is true today. And so when the opportunity came to sell, I jumped at it. I had already bought the property on The Strip from Hughes' nephew that is Treasure Island and the Mirage. Robinson: Which brings us back to Las Vegas, and here comes the reinvention of this town. While you're operating in Atlantic City, Las Vegas has some tough times. Tourism drops. There's a lack of new construction and a sense in this town, late '70s, mid '80s, that the best days of Las Vegas are behind it. It's losing it's competitive edge. And then Steve Wynn returns and spends more than $600 million building the Mirage, making it the most expensive casino to that point in history. It opens in November 1989 with more than 3,000 rooms, an artificial volcano, lions and tigers in the Siegfried and Roy show, acrobats from Cirque du Soleil. In '93 you do it again, you open Treasure Island, a $450 million casino with a lake and a pirate ship. 1998, again - Bellagio. $1.6 billion resort, 4,000 rooms, more than a hundred thousand square feet of gaming space. To this day one of the big things to do in this town is go over to the Bellagio in the evening and watch the Fountains of Bellagio show. So this is investments of more than $2.6 billion in a town that, when you came back, for Steve Wynn round 2, had grown seedy. So the question here is - what did you think you were doing? Wynn: The analysis of the Hilton, the MGM, and Caesar's underpinned the business plan and the opportunity that was, that would define the Mirage. There'd been 2,000 and 2,500 room hotels but there'd never been a 3,000 room hotel in the world. The MGM was about tourist travel and they had a shopping center downstairs. Hilton was about food and beverage and convention. Caesar's was about the leverage of the casino in international business baccarat. You combine the three, there was clearly a business plan there that would produce a return on $600 million. And the worst case would be 100, 150. We did 225 right out of the box. Now - that proved that you could invest - it was a $200 million town before that, as far as investment. Now all of a sudden we have tripled the capital. And the Mirage - I was asked, while the governor was present and I unveiled a model of Mirage before we broke ground, what's the importance of this facility? I said I think it's going to be a great investment for our shareholders. But really the most important thing about the Mirage will be that it will show Las Vegas is a safe place to invest over $500 million. I didn't realize when I said it how prophetic that statement was. Because it unleashed, as you said in your introduction, a decade of billions of dollars in investment. You know, these things occurred sequentially. And, I might add, again referring to timing - think of the late '70s. late '80s, and early '90s. That was the era of the Japanese investment of America. The wave of - we had customers, one after another, who nobody had ever heard of, who put up a million dollars to gamble. Two million dollars to gamble. I mean, the Japanese - Robinson: So this was the first big international money? Wynn: Big, big, right. It was a wave. Tsunami, to use a current term. When it came into the mid-'90s, I knew that you could buy the Desert Inn. And I had advised Nick Pritzker of Hyatt, when he came to see me, "how do we get in here?" I said buy the Desert Inn, it's got water rights, it's next - the Desert Inn, it's got it's front on The Strip but the back across from the convention center. Robinson: But it was way at the north end of The Strip. Didn't matter? Wynn: No, listen - the development makes a location. Not the location makes a development. Robinson: (puts up hands) Okay. Wynn: I remind you that the Dunes went bankrupt twice, after Caesar's and MGM were open. On the number 1 corner. When I bought the Dunes I paid $400,000 an acre for it. No one wanted it. Can you imagine that in 1994? Nobody wanted 166 acres with a golf course on The Strip except me. And I offered Sumitomo Bank $70 million for 166 acres... End Part One
Part Two: Steve Wynn discusses the future of his business WSJ Live presents Uncommon Knowledge with Peter Robinson Steve Wynn Interview: Part Two [Yes this is the same introduction from the first part] Robinson: "What I like about casinos is that they allow us to build hotels. A slot machine or a blackjack or a roulette table, they have no power. It's the non-casino stuff that gets people to come back again and again." With us today the man who said that, and who by universal agreement reinvented Las Vegas, Steve Wynn. Shooting at the Wynn Las Vegas, Uncommon Knowledge now. Uncommon Knowledge with Peter Robinson: A Production of the Hoover Institution Robinson: I have to ask you sort of a business school question. Do entrepreneurs just have a stomach - they can stand more risk than the rest of us, or doesn't it look risky to them? You could see things that other people couldn't see. Wynn: True. But that's a very good question. And both are true. It's an uncomfortable way to live, you know, in many respects. Because there's always a chance of failure. And there are certain people - very intelligent people - who do not choose to live that way, and they're not wrong. Robinson: They're called commercial bankers. Wynn: Or they're called "regular folks". Robinson: Okay. Wynn: Entrepreneurs have an appetite for living uncomfortably, that is a bit unusual. Truly living uncomfortably because when you get a close-up look at running your own business, it's scary. However, having said that, I will also say that entrepreneurs who survive long enough to be interviewed by you are entrepreneurs that are not guys who fly without a net. It's one thing to be able to sustain risk, and to live with a certain degree of uncertainty, to rely on your judgment. But it's quite another thing to be reckless. When Michael Jackson asked me in an interview he did with me once - when I introduced him to Siegfried and Roy he wanted to do an illusion for his Thriller tour, and I introduced him to S and R. I had shown him a tour of the Mirage just before it opened. Robinson: Right. Wynn: He was amazed, he said "do you get scared?" I said no. "But how, with all that - that thing that you're building?" I said look, Michael, before we broke ground we developed a business plan. We examined, re-examined, re-examined again and again our fundamentals. I said we raised $525 million with some of the toughest people in the world because our story was convincing. By the time we broke ground, Michael, we were so sure of what we were doing that we did not think we were flying without a net or being a huge risk-taker. And I said I think, in answer to your question, I think at the end of the day you can live with the discomfort but you're also self-critical. And I - speaking of myself and my colleagues - we never risk the farm. Never risk the farm. My responsibility to my employees, my stockholders is such that - I can't promise to be right all the time. No one can. You make calls, sometimes they're right, sometimes they're wrong - but the capital structure allows you to survive the inevitable cycles of business, which go up and down as surely as sun rises and sun sets. Except we don't know the timing. They allow you to survive your own miscalculation. Capital structure I learned at a young age, thanks to Mike Milken who taught me the story. Capital structure is everything, and I've always had a capital structure that was bulletproof. Robinson: You said earlier, when you were running your dad's bingo parlor in Maryland and you spotted a piece of land and you wanted to be a developer, and you've also said - I quoted this right at the beginning, the reason you like casinos is they let you build hotels. Still - they're casinos. Your dad was a compulsive gambler, it was a real problem for you growing up, for your mom, for your little brother. He left the family in debt. How - how do you think about - you need the casinos because they give you more revenue than just the rooms, they let you - they let the whole act take place, right? Wynn: (nods) Robinson: But you're still, at some level - are you uncomfortable with the - how do you think about that in your own mind? Wynn: It is a central question, and I love it because I had to come to grips with it myself. 'Come to grips with' is too strong a term - I understand it. My answer is this. There are all kinds of indulgences that people have, that they do with their own money as they see fit if they come by it honestly. People spend money on wine that is outrageous, women buy pairs of shoes that are beyond any need, people buy cars that are extravagant, they build homes that are bigger than shelter. Who is to define the necessities of life? And who is to tell us what our hobbies, our self-indulgences should or should not be? There are people - the definition of a casino customer, a gambler is a person who likes the game more than they like the money. The definition of an art collector is a person who likes the painting more than money. The definition of a wine connoisseur is a person who loves the wine more than money. How can anyone pay $3,000 for an expendable bottle of wine that's gone in 3 minutes? Or gamble for thousands of dollars, or even millions at a table? If it's their own money, and they want to do it, that's their business. Robinson: Okay. Wynn: I am not judgmental about that unless I think someone doesn't know what they're doing, or has got a problem. And we have rules around here about compulsive gamblers - we shoo them off. We don't give them credit. Nobody can get in trouble, who's a compulsive gambler, unless someone gives them credit. If all they can lose is what's in their pocket, they'll never be in trouble. The trouble is when they can get money they don't have, you know. They hawk the future. So my attitude is we don't really hustle people to gamble. As a matter of fact, we're rather standoffish about it. What we do say is - if it is, if it happens to be that you like to play a slot machine or a - shoot crap or baccarat or roulette or any of those games, come here. The experience will be more elegant. The service will be classier and better. The food will taste better. We will - you want to stay at a great hotel, this is the place. And you can surely gamble while you're here. Or you - don't gamble at all, just bring your credit card and pay for it, because we charge for stuff. Last year, this casino won almost $880 million, something like that. Which was the most in the history of legalized gaming in Nevada. But it was a billion one in non-casino revenue. I think that begins to explain to you my attitude towards all this. And I have - my places have gambling rooms. Good - if that's what you like to do, go at it. You don't want to do it, that's fine. This is still the best place to stay in terms of entertainment, food, beverage, conventions, and everything else. And so I've never had any problem, I've never had any cognitive dissidence about gambling because my dad was a compulsive gambler. Any more than I do have cognitive dissidence about the fact that you can buy liquor in this place, and there are alcoholics. What I do think is important is there be places where people can get treated for these miseries that destroy lives. Gambling, drug addiction, alcoholism. I was on the first board of trustees for the Pathological Gaming Institute with Dr. Robert Custer. I helped support it. He was the recognized guru of this field. And he explained to me, Dr. Custer explained that compulsive behavior in drugs, alcohol, and gambling are all related. They come from the same part of the brain, they come into the same personality traits. So if someone's a drug addict they're a possible gambling addict. Or an alcoholic. The most important thing in treating this kind of misery is that there first be a place people can go. But more importantly, in each case the victim of such a compulsion must come to the conclusion they've had enough. With the help of their families, or friends, they have to say "enough". "I won't be victimized by this any more." We learned from Dr. Custer  the existence of a legal casino has absolutely no impact on the amount of compulsive gambling that goes on. Because people that like to gamble compulsively will bet with their bookmaker, find a crap game, play poker privately, they will gamble and gamble and gamble until they get themselves in trouble. Robinson: Steve, on to the current Wynn Resorts, the current company. 2000 - you sell Mirage Resorts to MGM for $6.6 billion. 2005, you open the Wynn Las Vegas in which we're seated right now. More than 2,700 rooms. 2006, you open the Wynn Macau in the People's Republic of China Special Administrative Region of Macau, 600 rooms and more than 200,000 square feet of gaming space. 2007, the Encore, the twin or partner resort to this also, the Encore Las Vegas. 2010 - the Encore Macau, 400 rooms. Under construction right now the Wynn Cotai [aka Wynn Palace], also in the - Wynn: Definite - Robinson: What's that? Wynn: Definite proof of pathological developer's disease. Robinson: (laughs) Wynn: You need no more information than that. Robinson: And then you're also going through this lengthy political and regulatory process to win clearance to build a new resort in Everett, just outside of Boston. [Support that if you haven't already, Ging Gaming sent a letter] That's projected to cost $1.6 billion right there, by itself. Now, business question, Steve Wynn quoted in Time Magazine - Wynn: I'm no danger to anybody, said my doctor, if I stay on my medication, except to myself. Robinson: (laughs) Two thousand - this is you quoted in Time Magazine in 2001, and that's before those billions of dollars of construction that I just read off. Quote - "I'm frightened that in my isolation as a chairman who doesn't see everything the bigger we get, that basically I don't really know what's going on." Steve, how do you make sure - you're seated here in Las Vegas - how do you make sure the standards are being maintained in Macau? For that matter, how do you make sure room - the rooms on the 18th floor are getting cleaned properly or how do you put - there's a question here about span of control when you get to be this big. How do you infuse your standards, your approach into an organization as big as this? Wynn: It's the question of all time, and the answer - as you get bigger - grows in direct proportion to the size of the enterprise. And there is only one answer. The culture. The culture lives and must exist on the most fundamental level, on the line of employees in an enterprise like this. Just as it must exist that way in the government. Who are we? What matters? Is that a simple question, to which there is a simple answer that anybody working here can answer? If it is a simple question - it should be - we're offering people a good experience when they come and stay here overnight. Whether they eat, or play, or go to the spa, or swim, or make a telephone call, or walk down the hallway. What is it that we're all up to? We're giving people a positive experience. And only people make people happy. If I could establish that culture, where each employee feels it's important to them to have responsibility now - for the guest experience - then your question is answered infinitely. So how do you do it? I tell you what - in this world, money's important if you're struggling and you have no security, but if you have a job and you think you're being paid fairly, money is not the issue anymore. What is important is their happiness, their state of mind, and their fundamental identification with the enterprise. If it's possible - that is to say, if performance on the job enhances self-esteem - you've plugged into the ultimate energy source available on this planet. Money doesn't touch it. But if self-esteem is at risk in the way you do your job everyday, now you've got something. When you have programs, like "employee of the month", "employee of the year", they're spotlight programs that give accolades and attention to people who do great work. Robinson: Right. Wynn: It's very important, those think. But they all have one - those programs are important, and we use them. They have one drawback. They require that you be noticed by your supervisor, and nominated for such accolade. So how can we eliminate that liability and turn nomination for accolades into something that the employee does on their own? We came up with that answer years ago. It's called storytelling. We retrained 1,200 or 1,300 supervisors - anybody that met with 3 or more people, up to 15, these shift meetings did small groups. Robinson: Right. Wynn: We train them to a thing. Every day, 3 times a day in this building, or whenever the shift starts, the supervisor says in the small group, "Hey! Anybody got a story of something good that happened yesterday with a customer?" Employee pipes up and says, "Well, yesterday this happened and I did this." And it's really cool. The employee acted as an individual to help a guest on a very personal level. A bellman says, "Uh, I took the people up to their room" - in the suites we tend to take the baggage with them up the elevator, and the last thing that bellmen are trained to do is say to check all your bags, is everything here, and can I explain to you stuff in the room, this sort of thing. And the woman, it was an older man and woman, the woman screeched, "Oh my god, Leonard, I left our bag with the medication on the hall table at home." He was an insulin-dependent diabetic. "Oh my god, Leonard, what are we going to do?" Woman was very distressed. Bellman says, "Calm down, ma'am, ma'am, we'll help you out. Where do you live?" Pacific Palisades. Los Angeles. "Is anybody at your house?" She says yes, our housekeeper. "Listen, my brother lives in Encino, could you call your housekeeper and tell them that my brother, his name is Enrique, will come? I promise you we'll get it here for you. Don't worry. It's four o'clock in the afternoon, when do you need it?" They needed it by breakfast. "Don't worry." She picks up the phone, calls the housekeeper, she says this young man's brother's going to come get it, and is the dot bag with the medicine in it on the hall table? She says yes, Mrs. - whatever her name was. It's there. She looks, she hangs up the phone, he says we'll take care of you. She says, "Are you sure? We could go home" - nope. "My medicine's in there too!" Just relax, we're going to get it. He goes downstairs, tells his boss, listen, tells him what happened upstairs. He said, "Listen, I'm just starting the shift, what the hell - I'll go see my brother. Let me off. I'll go jump in a car, I'll go get it." He says okay. Kid drives to L.A., goes to his brother's house in Encino, picks up the bag, drives back, gets home at 3:30 or 4 in the morning, takes it to the bell. "See that this gets up to room XY" - Now, do you think those people will ever dream of this building as a normal hotel? Robinson: Right. Wynn: Okay. Kid tells the story - and that's a true story, it happened the first month years and years ago. Robinson: Okay. Wynn: Boss says in front of the other employees, "What a story that is!" Presses a button on the phone, and up comes our crew with camera and recorder. On the in-house Internet goes the story. Up on the wall within 3 hours is a great picture of this bellman, and his story in letters 3 inches tall on big paper signs in the staff area. Pretty much the whole city below this building, next to the staff dining room. We made a hero. We publish this story. Two things - the kid self-nominated himself for distinction. We made him famous! Number two - this is the part that matters. The other people in the room saw all this transpire. And every one of them says, "I gotta get me a story!" Robinson: Right. Wynn: Now I got 12,000 employees walking up and down this place, looking for one of you guests with a problem. They can't wait to interact. I got dealers going on break, that see a man or a woman looking around in this big place quizzically - "You look like you're lost, can I help you?" [Dealer] "Yeah, well we're trying to find the Lafite Ballroom." [Guest] "Well you go straight down to the Chinese restaurant, take a left - wait. Come with me, I'm gonna take you." [Dealer] "You don't have to take us yourself." [Guest] "It's okay, I'm on break, come on." [Dealer] They walked them to the - takes a 5 minute walk. Delays his break by a few minutes, he wasn't that hungry anyway. But he's got a story. And he's going up on the Internet tomorrow, and he's gonna be a hero. That culture of making these people responsible - in terms of their own self-esteem - is the power. It's the power that makes a guy like me sleep good at night. Because I'm driving the culture, the employees are driving the experience. It's about my people. You got the culture, you got the problem solved on the 18th floor. You don't got the culture, you can have cops everywhere. Won't mean a damn thing. Robinson: Got it. Steve Wynn, 2011 quote - "I'm saying it bluntly, this Obama administration is the greatest wet blanket to business and progress and job creation in my lifetime." It's 2014, Steve. Do you want to stick with that? Wynn: Absolutely. Robinson: You do? Wynn: Oh sure. And I think that what may have been a sort of outrageously, politically aggressive thing to say in 2011 has clearly come home now. The international president of my union, the restaurant and hotel employee union, has had his program exploded by Obamacare. He's begged the president, in letters and in writing to change it. Along with the Teamsters union. They've attacked their own base with the Obamacare. Here in Las Vegas, the unions gave a $700 a year increase to the union, and 100% of it went to healthcare program. And the head of the union says to me, when my members ask me for $700 a year, and I'm not getting a dime in my salary, it all went to healthcare, what am I getting in my health program that I didn't have last year? And it's absolutely nothing. The exact same program. I mean, whether it's over-regulation in a million areas, the amount of regulations published by the government in the last 6 years is staggering to anybody's imagination. There isn't a businessman in America you can talk to that won't repeat the same mantra. Whether he's a democrat or republican, and I've been more a democrat than republican in my day. And Harry Reid can attest to that. But the direction of the government - that the government's taken in the last few years is a disastrous. From a whole bunch of points of view is disastrous to the future health and vitality of our society. Robinson: You're the chairman of a publicly traded company, and yet when it comes to politics you take sides. Wynn: I take sides only on issues that pertain to the health of my workforce. Robinson: So - Wynn: I am watching my employees get paid in ninety-cent dollars. Although I have brought millions of dollars to the payroll of this American company from China - millions, tens of millions of dollars from China to my employees in America - it has not been able to offset the dramatic decrease in buying power of their paychecks. Walmart's more expensive, gas is more expensive, heating is more expensive, clothing is more expensive, why? Has everything in the world become more precious all of a sudden? Absolutely not. But the value of the dollar, the purchasing power of my employees of the working class of America is getting demolished by reckless fiscal policy in America. Exacerbated by this administration. Robinson: So do you wish more CEOs spoke up? What you're doing is unusual, to get that far out there in politics. Wynn: Listen, if you don't know the difference between good and bad you're a damned fool to begin with. If you don't have a sense of protection for your employees - if you don't understand where your benefit as a CEO lies, it's with the workforce. Then you shouldn't be holding that job. And if you know that it's your employees' welfare that matters, you're real concerned - not as a politician with rhetoric about the working class of America but as a guide that's paying the working class of America - I know what's happening to them. And they're getting squashed by government policy. And so is education in America, suffering from government policy. I mean any - this is not sound byte stuff. Robinson: Steve, last question. Your dad died at 47, leaving you in debt. You took several years to pay off those debts, as I recall, and yet you have said this. Quote - and I'm quoting you - "I'd give up everything for 15 minutes with my father. To have him walk through this hotel and see what happened." What would Michael Wynn say to his son Steve? Wynn: My dad gave me everything I needed to get here today. He gave me a great education, his love and affection, my mom and dad - I had the most perfect middle-class childhood. My father never graduated high school but was a self-educated man who read constantly, and constantly taught me the importance of being respectful who worked hard and were successful because it was hard to do. To be a hustler, to work hard, to not take a breath until you've accomplished what you're after, to have a work ethic. And he gave me all the tools that I needed that a father could ever give a son. To get to the point where I was armed for the battle, so to speak. My father was a pal of mine, a constant man who reinforced my insecurity when it occurred as it does with young men. My dad was the perfect dad. He had a problem with gaming, like so many people of that generation who made their own money, who never had a dime - when they get money they like to spend it. It's what's going on in China. First-generation wealth always attacks, because they think they can make more money. Second-generation's a little bit more controlled and disciplined. My father was like most first-generation Americans that were born before World War I. After World War II came into money and he was a consumer. So my dad had a problem but as a father - everything that he aspired to in life happened to me. And every dream my dad ever had came true with his son. Knowing what that would've meant to my father is so overwhelmingly exciting. That if my dad - there was a man in our city in upstate New York that was a Cadillac and tractor dealer. In then agricultural upstate New York. It was a good business. He flew around with a pilot in a twin-engine prop airplane, the little Piper Apache. My father said, "Hyde Sternberg has a pilot and a plane." That was like - I walk on my Boeing Business Jet, or any jet, or look at a painting, or see a building - my dad was a customer in Las Vegas at the Tropicana - if my dad could've seen these places. In my father's world, I was the perfect success, never mind what it means to me personally. To a guy like my dad, Mike Wynn, what I accomplished was the same thing as if I'd discovered a cure for cancer, if I'd won a Nobel prize. And knowing my father's personality, I can't help but think that one of the most spectacular that a person could experience would be to see his face, or to watch him process this, after the fact. Of course it's a complete fantasy but it's the kind of thing that you love to dream about. Robinson: This past May, Forbes ranked you as the 133rd richest person in the United States. That places you not just in the top 1% but in the top 1% of 1% of 1%. You're in good health - Wynn: Yeah. Robinson: But you're in your early 70s and although you have a lot more money than most people, you don't have anymore time than anybody else. You've got - you were diagnosed with an eye problem at the age of 29, it unfortunately progressive - Wynn: Mhm. Robinson: You said a moment ago that your dad taught you how to hustle. Why are you still hustling? Outside that window is a beautiful golf course. We have here a Picasso, a Lege [sp?], a Giaccometti, and that's just a fraction of your collection. Why don't you knock off? Golf, enjoy your collection. What keeps you hustling? Wynn: 'Cause I'm one of those rarely fortunate, really lucky people who's doing what he loves. Consequently I've never worked a day in my life. I love what I'm doing, I'm a student of creating spaces where people go "whoa, ah, wow". I love that idea. And I've never been able to do it perfectly. I always think I have to do one more hotel because maybe, just maybe, I'll get it right the next time. And that quest to keep doing it, being a student of something that you love, is the most fun a guy can have. And I've been given the privilege of chasing this star to my heart's content. By having the opportunity in China, where budget's not important, you can just build for the ages. It's like being a pharaoh in Egypt where you could build a pyramid! Robinson: Why isn't budget important in China? What do you mean by that? Wynn: Because the return on investment will be good no matter what you spend. Robinson: Got it, got it. Wynn: Gaming has always represented that in Las Vegas for most years. You could build a great hotel, you could justify the cost. I'm hoping that's true in Boston. I believe it is, so we can have the first great hotel in the city. There haven't been any in fifty years! There's no more Waldorfs, or Plazas anymore. The grand hotel doesn't work anymore in cities because the room, food, and beverage revenue doesn't justify the cost of construction. But if you can put a gaming room down the hall, like a ballroom, in a separate space... you can build a grand hotel in Boston. Bring back an age of grace. A beautiful place where you can bring children, because the gaming is off by itself. But I like places where everybody's excited, and it's a tricky thing to do because it's all about the emotion of the space. It's all about the way that a building or a place or a staff make somebody feel. And that's a dynamic assignment. It involves human resources, things like storytelling, and making everybody in the building think that the best thing that ever happened to them was working in this place because we're - you walk out of this room. Forget my interview. With your camera, grab any one of my employees. And you see what happens when you ask them "what's it like working here?" Robinson: I didn't have a camera but I asked a couple people serving bar last night, they like your hotel, Steve. Wynn: The newspaper hired an outside consulting firm - a review journal - to find out who was the best employer in town. And they did these big interviews. And they did a special Sunday section, and we won. And I didn't know what was going on until Mike Weaver called me up and told me, and read me what the employees said. Ah - it was ecstasy! "This is the greatest place to work because they listen to you here." "If you've got a good idea, they'll listen to you." "This is a great place to work because they're sensitive to your family problems. They work with you when you have those problems." "This is the best job I've ever had in my life." We're the best, this was the coolest place. There was this deep pride in belonging to the team, the family here. In other words, it wasn't just the onyx or the marble or the hand-woven carpets or the fancy chandeliers and reflected ceiling plants that are so expensive. It was the living organism that is the family of staff. And if you get all those things going at one time, listen - last thing I got to say. By definition, on this planet, from Asia to Europe from Latin America to Canada, there has to be a best whole place in the world to stay. Why can't it be here? Maybe we're the best hotel in the world. Maybe. Not for me to say. But you know what, from what I understand from anyone who's ever taken and reviewed this objectively, if we're not it, we're in the top 3. Now that's a kicky thing to be able to do. Robinson: (laughs) Steve Wynn - founder, chairman, and chief executive officer at Wynn Resorts, thank you. Shooting today in Las Vegas in Mr. Wynn's villa at the Wynn in Las Vegas, for the Hoover Institution and the Wall Street Journal, I'm Peter Robinson.
Wasn't that brilliant?