Thirty Minute Mentors Podcast Transcript: Former Caesars CEO Gary Loveman

I recently interviewed Gary Loveman on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today was the leader of the largest casino operator in the world, and is a former Fortune 500 CEO. Gary Loveman was the CEO of Caesars Entertainment and is currently the CEO of the healthcare startup Well. Gary, thank you for joining us.

Gary: My pleasure, Adam. Glad to be here.

Adam: You grew up in Indianapolis to a dad who was a factory worker, and a mom who was a homemaker. And you wound up getting a Ph.D. in Economics from MIT before pursuing a career in academia, while you were in your late 20’s. Can you take listeners back to your early days? What were the key experiences and lessons that were foundational to your success?

Gary: Yeah. When I look back on that period, the one emotion that I remember, well, there were two. First, there was a high premium placed on academic achievement in my family. My siblings, although they were quite a lot older than I, were very well educated and the family had historically put a premium on taking one's education very seriously. So I certainly inherited that. But the second was that my father had ended up in part as a function of his age and the incidence of the Second World War in the Korean War, working in this large factory, as a supervisor on an assembly line that made telephones. And I always experienced him to feel as if he was quite an influence, and that he had not been able to accumulate a significant amount of authority or influence in his life, and that that had been a significant frustration. And I felt that manifested a number of issues that the family would address from time to time, not only amongst the five of us, but also among the broader family. And I thought as I was growing up, I really want to be in a position where I can make a difference in a meaningful way. And I found economics to be naturally suited to that. So the idea that there is a discipline that allows you to get more out of a given quantity of inputs, or allows you to enhance the well being of a large population by making better decisions and building better institutions, that seemed like a very good way to think about a whole variety of problems. And it has the added benefit that it is a very orderly discipline. So it forces you to put structure on complex problems and reason through it in an orderly way, which has always, for whatever reason, suited me. I don't have an artistic bone in my body. I competed with people in the casino business who had strong opinions about how things should look and feel, and colors and aesthetics. And I never felt like I could contribute to that. But I did, on the other hand, have an ability to take complicated problems and make them tractable. And so that led me to economics. I got a taste of it right out of undergrad working at the Federal Reserve Bank, with economists seeing what they did and how they thought. I found that very exciting. Hard to imagine economics exciting, but I found it that way. No, I ended up pursuing my Ph.D. and thinking that I would likely be an academic from that point forward.

Adam: Something that you shared, which I love, is even at a really young age you understood your strengths, you understood your weaknesses. You knew what it was that if you spent your time, if you spent your energy, if you spent your focus on, would lead you to success and it wasn't the artistic side of your brain. It was the mathematical side. And that led you to a career teaching at Harvard Business School where you spent close to a decade and your work there drew the attention of some of the largest companies in the country. You are consulting for Disney, McDonald's, American Airlines, and one of your clients was Harrah’s, which we're going to talk a lot about over the course of this conversation. And while you were consulting for Harrah's, that led you to an interesting experience, you wound up writing a letter to the CEO of Harrah's that changed the course of your career. Can you share with listeners how you went from a business school professor to a Fortune 500 CEO, and the best lessons you learn from your extremely unique career trajectory?

Gary: Yeah, I'll tell you a somewhat funny story; that was really one of the most important events in this trajectory. I was a young professor at Harvard and one of the ways that you're brought along there is that senior faculty will bring you to outside teaching opportunities with executive groups that they are engaged with as a means of developing your outside relationships, your knowledge of the practical world. And it also, of course, supplements your income a little bit. So I took one of these assignments with a very well-known senior professor at Harvard to teach a course for what was then a combination of Harrah's Casino executives and the Promise Hotel companies, which at that time owned Hampton Inns, and the C Suite Hotels, among others. And I taught these classes over a period of several days in Memphis, Tennessee, and each time I taught, there were four seats, the same four seats were empty every class session, not only for me, but for the other faculty as well. So after a few days of this, I went looking for these for the individuals, they happened to all be men. And I found them, of course, in the hotel bar. And I asked them, why was it that they were here for this course? They were in town, they were staying at this hotel, but they chose to not attend a single session, and instead, play golf or have a drink or whatever they do. And they told me quite proudly, that they ran very successful casinos in Nevada and New Jersey, and they really didn't have any need for the sort of thing that we were teaching. And that really got my attention that here, there's a kind of proud ignorance that, we don't know a lot about this, we don't need to know it. And we're so confident about it, that we won't even bother to sit through a session or two, that's easily available to us for nothing. So that exposure to the casino business was really thought-provoking for me, I'd really almost never been in a casino, I'd never been in one outside the United States. I think at that point, maybe I'd been in one, somewhere along the way. But I'd spent no time in Las Vegas. And I started to understand that this business has this beautiful underlying mathematized structure, where one party the casino has these games that have certain advantages to them, and the participants play those games and money is generated by the difference in the odds that the two parties face along with all these other things that are sold with it. I thought, Wow, what a really interesting place to work on some of these ideas that I had been teaching. And so I acted as a consultant to the company's then CEO, my predecessor, Phil, and became closer and closer to the company, its executives. Until at one point, I wrote this letter that you referred to. And in this instance, the company was really struggling, it had had new competitors come into many of its markets that had better facilities and more recently built offerings. Phil's wife was quite sick at the time. And he was really out a big challenge to manage the company and look after her health at the same time. So one evening, I just sat down and wrote an unsolicited letter to him as his friend saying here’s what I think we're up against, and here's the way I would think about addressing it. And of course, I expected that he might not ever read it, or if he did, he probably would ignore it. But instead, he embraced it. And one day he asked if I would consider taking a sabbatical and coming to work with him as the chief operating officer for two years under the Harvard rules, and then I would cycle back to Harvard, and the company would go on about its business. And so that's when I made the leap to take this transition. And rather than saying two years, I stayed close to 17.

Adam: I love it. And I want to talk more about your career journey; about the lessons you learned while you were CEO. But before we get into those topics, I want to ask you about the specific topics that you're teaching, and that you wrote about and that have been so central to your career, not only as CEO of Harrah's as CEO of Caesars, but to your work now, and you've been a pioneer in the field of analytics as it relates to consumer behavior. And I want to ask you, what should leaders across all industries understand about analytics, understand about consumer behavior and understand about the intersection of the two?

Gary: I think, Adam, when you ask about analytics, you're really asking I mean, that's become obviously quite the buzzword in it's often off-putting to people, but another way to think of it is what do you want to know about your business in a thorough way as opposed to having hunches or theories about it? And to the degree you want to know something in a much more in depth and complete manner, then of course, you should undertake the approach of learning about it and getting to know it. And that's really what analytics is fundamentally all about is that exercise. And I was just as astonished as I was teaching that there were so many instances where a company could know something and chose not to do anything. So I'll give you what was a seminal example for me- how could an airline know that your last two flights have been canceled and the one before that had involved a lost bag? They knew that through the mileage program that you were suspended, but they made no effort to use that information to sustain your business, even though you are surely unhappy with them. Why would a grocery store do nothing about what it knows about your purchase patterns other than to coupon, often inaccurately, products that, in fact, your behavior shows you don't purchase? So you're a cat owner, but they keep on you for dog, a vegetarian and your coupon is for beef, and so the notion that you could become a leader by really aggressively taking on this opportunity to know so much more about your customer then was currently being used in business struck me as a really exciting and underutilized opportunity. And that path had been blazed by what were called the analytic credit card companies. The first USAA is capital, one who has profited by doing a much better job of underwriting credit risk by getting to know the details of an individual far more carefully than their competitors. And so that idea struck me as very widely applicable in service businesses and consumer-related businesses. And that's where I begin to focus my attention is teaching about and building out ways to do that.

Adam: Gary, what were the best leadership lessons you learned from your time leading in the gaming industry?

Gary: Let me say first, that the industry is now led to a very large degree by people who worked with me along the way. And I am enormously proud of them, their CEOs and presidents of chief financial officers of virtually every company in the casino industry. And I hope that some of the things we shared are influencing what they're doing today. But those lessons would include, first, the primacy of the experience of the guest. That nothing is more important than favorably influencing the experience of the guest, and especially those guests who are most loyal to us or have the greatest capacity to be loyal to us. And building the organization to focus as intently as possible down to every last person, whether they're parking cars, or serving drinks, or making up rooms, to think about what they do in those terms, that all of those actions are not an end of selves, but are a means to the end. That is the experience of the guest. And I think that applies very, very broadly. And the companies that I admire most are the ones that really manifest a great deal of interest in that. The second that I carried from academia with me is that nobody owns a job, we all have a job, so long as we're the best person to do the job. So at Harvard, you don't get to keep your job unless somebody goes before the provost and says that Adam is the best person in the world to have this job. That's a high standard. You don't get to keep a job just because you had it for a while if you haven't done anything offensive. And so I tried to attract and stimulate people around me who could meet that standard, even though many of them had no previous experience in the business that we were in. So, you know, for example, the president of Bumble, and previously the president of Google Cloud was my Chief Marketing Officer and Chief Commercial Officer. And he had never worked in a casino in his life. But he had such transcendent talent, and was such a great leader that I couldn't wait to get him working with me. It is indicated across a number of industries that they see the same capacities in him, for example, that I get. So that would be the second and the third, which is I think, become now very controversial, but frankly, is a dedication to trying to speak truthfully, to the greatest degree possible about what's going well, what's going badly, where you've made mistakes, decisions you've made that didn't turn out well, and to use that as a way to embolden others. Usually people who work in your organization but a lesser place in the hierarchy, a lower place in the hierarchy, to do the same thing to learn from their mistakes to recognize that the problems they face are hard and being honest about how you do is a good idea to

Adam: Such important lessons, universally applicable. On that last point, can you give an example when you faced a time in your career when there was a moment that you had to speak truth to power, a difficult time that you had to step up and it was uncomfortable. It might have had negative ramifications for your career, but you did it. And what did you learn from it?

Gary: I'll give you two, Adam. One you asked for and one you didn't. So let me take the one you didn't first. So we had the opportunity in the mid-2000s to buy a license from Steve Wynn for a casino in Macau under specific terms, and we did a mountain of analysis- we, being myself, my chief financial officer and my management team. We did a mountain of analysis on it, we couldn't make the idea work. And we came back, I came back to win and said we weren't going to pursue it. That turned out to be a very poor decision because we did the analysis incorrectly in a fairly spectacular way, simply because we did it looking backward at what the license should have been worth using historical data. And we failed to see what was about to happen in coastal China, from 2005 to 2020. And so when it was immediately turned it and sold it to a competitor of ours who has gone on to have a spectacular run. And I have on several occasions told this story including to journalists, and I've been eviscerated for it. Many, many times I've joked with my family that my tombstone will say, you know Gary Loveman, born, died, and blew the decision on the cow. But I think it's important to recognize that when you're in an executive position, you're going to make a lot of decisions in it, you got every one of them right, the job wouldn't have been that hard to start. I mean definitionally. So it's important to understand where you get them wrong, own up to it, and take your lumps in a case where speaking truth to power. So we took the company private, it was just the wrong time, you know, 2008 the world fell on a tear shortly thereafter. But one of the lesser-known reasons why the company struggled was that we had a very large position in Atlantic City, and the Atlantic City Market was busy disappearing because of competition all around it. And if we had been smarter, we would have gotten out of that market a lot earlier. And our exposure to it would have been significantly reduced and the company would have been healthier. And that was something I should have seen. And it's something I subsequently said to our owners repeatedly that I blew that. We should have seen that coming faster, we should have reduced our position and gotten out sooner. Similarly, if we had weak performance, if we were going to have a bad quarter, we had a casino that was underperforming. If we had an employee who did something wrong. If we had something that was going to be an embarrassment in the press, I always tried to be the first person to communicate that to my board or to our owners. Leaders have to take charge, leaders have to take responsibility at the end of the day. Leaders are accountable. If you don't want to be in the hot seat, don't be a leader. To your point, if it was easy, if anyone could do it, then it wouldn't be as competitive as it is to become the CEO of a Fortune 500 company. Why would you argue you should get paid these lofty sums if the job was so straightforward that smart people never made errors. I was just driving the other day and listening to a CNBC interview with a very prominent CEO who was speaking just after earnings. And exactly as I predicted, there was never once a mention that anything wasn't going perfectly well. And all the points that I'm sure were drummed into their head by their PR person just came out over and over again. We're very excited. We're very excited. Everything's going great. It's better than we thought. And of course, it's never like that. Some things are better than you thought, some things are worse. Some things you did really well, some things not so well. Some places are outperforming some places under that. We've reached a point, unfortunately, in business discourse where when somebody actually says that something isn't going well you, you almost want to pull your car over and jump out.

Adam: Again, it reminds me of my favorite book of all time. And it's a book that I recommend to the students who I teach in the leadership class. I teach, at UCLA, a book that I recommend to listeners, The Best and the Brightest, which is not a traditional business book. But it's a book applicable to any business leader. And one of the key lessons there, when we were getting into and we were in the Vietnam War, so much of the information that was flowing back was inaccurate, because everyone wanted to paint a rosy picture. No one wanted to accurately portray what was going on, which was not good news. So what happened was leaders were clouded by misinformation, unable to make effective decisions, because the data that they had was bad data. So to your point, if you're not equipped with good information, if you're not equipped with honest information, you're not going to be able to make informed, educated, quality, winning decisions.

Gary: That is absolutely right. And unfortunately, when you're in a position of leadership, there's a tendency among people that are telling you about how things are going to try not to carry a message that is disappointing or concerning for fear that that will reflect on them. So you learn pretty quickly that you're getting a stilted view of the world and you better, as the leader, go out and figure out what's actually going on.

Adam: An important theme in the best and the brightest was the importance of building the right team, which didn't necessarily consist of the people with the best resumes. And a lesson that you shared, which I love is the importance of not necessarily hiring people who have industry experience but hiring people who fit what you're looking for. And I want to ask you, what did you look for in the people who you hired. And, more broadly, what have you found are the keys to building a winning organizational culture?

Gary: What I look for first and foremost is the combination of sheer talent, sheer horsepower, intellectual horsepower, curiosity, and a very holding oneself to a high standard. And I want to emphasize, you can find that in almost every field of human endeavor, you can find that in philanthropic work, you can find it in what you do, to caring for your parents or your children, you can find it in athletics, you can find it in the military, you can find it in business. So if someone sends me a resume of a person who's been out of college or out of graduate school for 20 years, and there's no indication that they've ever done anything at a very high level, where people have said, well, that's truly laudatory work, I don't believe I'm going to get that out of them either. But the fact is that they have a lot of experience in whatever it is I'm doing, and that isn't especially interesting. On the other hand, if you show me someone who's had a career in the military, that they've been promoted repeatedly, they've won various awards and honors, they've done extra things to distinguish themselves. I'm really interested in what makes that person go and how they hold themselves to these kinds of high standards because ultimately, I'm not going to hold Adam to a high standard, I want Adam to hold himself to a high standard, and then I'm going to get the benefit of working with you while you do that. And my job is, as your colleague, to help shape what you're focused on, but not to try to call you every day and ask you to work harder, to check that you've been busy for a certain number of hours a day or things of that sort. Now, there are plenty of people who do it differently. And they're quite successful at it. That's always been my preference is to get a group of very talented people around me that I know are driven to do great work, and then try to help him do it. So I hired a lot of people into the casino business that had never been anywhere like me and never had any kind of professional exposure to it. And with very few exceptions, they did exceptionally well.

Adam: Gary, a key theme of this podcast is the importance of lifelong learning. And something that I've learned over the course of doing this podcast is that the best leaders are those who are most dedicated to lifelong learning, those who are most dedicated to continually trying to grow, trying to take their own skillset, their knowledge to the next level. And along those lines, I want to ask you, why are you doing what you're doing now? You're at a phase in your career where you don't need to run a startup company, you could enjoy life without doing what you're doing. Why did you start and why are you the CEO of this healthcare startup?

Gary: Well, thank you for asking. There are two reasons for it. The first is, if you run a big company, especially a public company, a very large amount of your time is spent on things I would describe as administrative in nature. So you're managing a board, you're reporting earnings, you're dealing with shareholders and analysts, you're talking to politicians to shape the regulatory field of your business, and so on. And there's nothing wrong with any of that. But I have done that a lot for a long time. And I don't miss any of it. And I don't need to ever do it again. But if I never did another earnings call, I'd be delighted. On the other hand, you get a little bit of time to work on the substance of what fascinates you about the business you're in. And for me, that has always been around how do you get consumers or individuals to make decisions they had not otherwise intended to make? And so we got very good at that. In one casino hospitality business, we could get people to come to us if they weren't going to stay longer, bring a friend to Vegas when they hadn't planned on it, and so on. But at the same time, I was observing the health of my employees, and many of them were really struggling, having a very hard time engaging in the pursuit of their health. And this is very well known, of course, in the health economics, literature, epidemiology. And the question kept gnawing at me, why is it that so many of us are so good at making silly consumer decisions, like what podcast we're going to listen to? What shoes are we going to buy? Where are we going to go on vacation, what car do we want? And then we have such a hard time taking care of ourselves consistent with common medical counsel. And I started digging into that at Caesars. I chaired a Business Roundtable committee that addressed this topic. And when I left the casino world, I really wanted to dig in and try to build the capacity to do this for people at an individual level. So not programs that, say everybody who's at UCLA can win a pair of sneakers if they walk 5,000 steps- but rather, what does Adam need to do as opposed to what does Gary need to do? What does Heather need to do? And how do we help each person achieve that? So the best way to do that I thought, and I still believe, of course, was to start a company from scratch with fresh technology. And a group of the very best people I could find who could tackle the consumer decision, the challenges of undertaking the technology challenges of it, as well as the commercial challenges, raising money and getting the first clients and so on. And so that's what I did. And I continue to be fascinated by whether we can make progress.

Adam: And Gary, I think it's a great lesson for listeners that it's never too early, it's never too late. It doesn't matter where you are, in your life or in your career. Take the leap, do what you want to do, do what you believe is right. When you have that idea and you believe that there's an opportunity in the market, and you want to do it, you're committed, you have the resources to move forward to push on it, you have the passion for it. Make it happen. I love it. Before we go, I want to ask you some rapid fire questions. You led the largest gaming company in the world. What are your best tips on the topic of risk management?

Gary: Well, casinos are the games themselves that really risk manage themselves that the odds are in the favor of the house, almost always unless you do something stupid to mitigate that. And so the risk management you're dealing with is really a different sort. It's really how do you avoid missing a turn in the industry that you should have caught, in my case, for example, the explosion of wealth in coastal China, or currently, the arrival of legal sports wagering and casino wagering in many US states, that sort of thing. So the risk management side was largely around trying to be really attentive to where the next big opportunity is coming and at the same time, really attentive to how the next big opportunity might jeopardize an existing business much like the growth of casinos in the northeast putting Atlantic City nearly out of business. So that's really where I spent most of my time focused on this.

Adam: What is the future of gaming?

Gary: I think it's exploding now. I mean, gaming. The funny thing about gaming, if you ask why do people place a wager? And it's a really fundamental thing, people get a bit of an adrenaline rush out of the revelation of an uncertain outcome. So ask yourself, why do slot machines historically realize sequentially? Why does it say 777 instead of just all three at the same moment? Because in that little second between the first the second and the third seven, it's exciting. Why is blackjack dealt the way it is where you get a card that everybody else in, the dealer gets a card and then it comes around? Because if you get a 10, or an ace, that moment until the next card comes is exciting. If you split your cards it’s exciting. That's what all of this is in gaming. So we want it by challenging each other on some sort of, you know, World of Warcraft game, on Madden football, on sports betting. And now what you're seeing is that the regulatory limits are being removed so that you can put a small wager on just about anything you can bet on; who's going to get the next hit in the baseball game, or who's going to hit the next ball, who's going to be the next pitcher when there's a pitching change. And even if the score is 14 to one, there is still something you can get excited about. So I think the potential for this is huge. It's not so much people pulling slot machines, although that will still be fine. It's really about making the ability to make micro wagers. I'm talking about how you can bet a quarter or 50 cents with your friend. You know you're in LA at UCLA, maybe we want to have a Boston UCLA rivalry. So every time an LA team plays a Boston team, we make a bet whether it's football, baseball, basketball, hockey, anything. And that just is something fun for us to talk about. We don't put more than 10 bucks in issues but it can be who buys into that future of that kind of thing is very bright.

Adam: What about the gaming industry would surprise most people? And what about the role of a CEO in the gaming industry would surprise most people?

Gary: I'm not sure this is true anymore, but when I started back in the, you know, I took this job as Chief Operating Officer in 1998. There was a sense among people, particularly in places like Boston, where at that time, there were no legal casinos other than the ones in Connecticut. People had this view of the casino business that they got out of the movies, out of watching Joe Pesci in Casino or some other film, and they really had no idea that this was fundamentally a hospitality entertainment business. Not so different from a lot of others with tremendous volumes of people making lots and lots of transactions across lots and lots of offerings. And in that sense, it was not nearly as unusual or exotic as people might have bought now. You know, it has its moments, of course. It has elements to it that are fundamentally different. And people always enjoy hearing about them. But I think the closer you get to it, the more corporate it really becomes now that a lot of the bigger names in the business are gone. Sheldon Adelson is deceased and wins out of the business and so on. It really does have more of a buzz about it.

Adam: You're a minority owner of the Boston Celtics. What have you learned about the business of basketball since buying into an NBA team?

Gary: Well, I've certainly appreciated how difficult it is to be consistently good. Now the league has become more and more competitive, more and more talented people have bought teams, you know, witness the Mark Lazarus group that owns the box who just won the championship, even teams that were historically struggling, are much, much better now. So for a team like the Celtics that has been historically good, it's tougher and tougher to be consistently better than average. And it's a very difficult business in that respect. But, you know, the rest of it is, I think, as you might expect, is getting the team right, of course, is a big part of getting the fan experience. Right. I think the Celtics have a great job of keeping the fan experience really fun and engaging and making the desire for people to come to the games even if the outcome is what we would want to be favorable. So we have a great group of partners in the Celtics. I'm friends with all of them and I'm really proud to be a part of it. It's been a joy and my family is all rabidly behind the Celtics. So it's given us something to do together. It's been a lot of fun.

Adam: As a Laker fan, I will not hold that against you.

Gary: Yeah, that's okay. You have the same dynamic.

Adam: Gary, what can anyone listening to this conversation do to become a better leader?

Gary: The first piece of counsel I give, Adam, broadly, is be very focused on what you want to achieve. I used to torture my students at Harvard with kind of a trick which was I asked how many of them had heard of the 10 commandments, and I got a big show of hands and I asked them to take out a pencil and write down the 10 commandments, because they indicated most of them have heard of them or they read, they’d seen the movie or they have something. And in a group of 90 adults, in a Boston classroom, very few could write down all 10 commandments. And we make some, you know, we'd have a joke about which ones you remembered and which ones you didn't because you're struggling with them. But the real point here was that 10 is a lot. And a lot of us set out to do things. And we have these long lists of objectives. Most people who become great and really influential at anything at academia, science management, they do so because they set a very specific lofty goal, and they become very focused on that. So at Caesars, I knew I didn't- or Harrah's- I knew I didn't know anything about how to prepare food, I knew nothing about how to remodel restaurants, I knew nothing about 50 other things. The only thing I could claim I knew something about was influencing how consumers make decisions. So I spent almost all my time focused on that opportunity, while everyone else tended to everything else. I was encouraging and supportive, but I really was focused on that issue. And as we got really good at that I could become and I became more educated, I could indulge myself in these other areas a little more. But I think the advice is, be focused on a few things that really matter in your organization, or in your context. Make sure that they're important, and they're impactful, and then do those things at an exceptional level. And don't worry about doing 10 other things at a good level.

Adam: Gary, thank you for all the great advice and thank you for being a part of Thirty Minute Mentors.

Gary: Adam, it's my pleasure. Thanks for having me.


Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

Follow Adam on Instagram and Twitter at @adammendler and listen and subscribe to Thirty Minute Mentors on your favorite podcasting app.