Jim Citrin Leadership by Example

Barry Sternlicht is best known for challenging conventional wisdom by rewriting the rules of the once-staid hotel industry. Through shrewd deal-making, he outmaneuvered industry stalwarts to build the nearly 900-property, 100-plus-country, 145,000-employee, $6 billion (in 2006 revenue) Starwood Hotels & Resorts Worldwide (HOT).

Sternlicht inspires respect and even envy among left-brain businesspeople for his design sensibility, which allowed him to create the Westin "Heavenly Bed" and W Hotels -- widely regarded as the most successful new hotel brand in decades.

A Starwood Star

Sternlicht left Starwood Hotels in May 2005 to return to Starwood Capital Group Global, the private equity firm he founded in 1991 (which has no connection to the hotel company). Industry players are watching his every move, because he's building three luxury hotel brands: a new chain of eco-friendly hotels called 1, and the Crillon and Baccarat, both of which were part of Groupe Taittinger, the venerable French company that Starwood Capital acquired in July 2005 for $3.2 billion.

Today, his firm has $5 billion of equity under management; employs about 150 people directly and 10,000 indirectly with Mammoth Mountain, Societe du Louvre, National Golf, and other assets; and operates in three distinct businesses -- real estate, energy, and hedge fund investing. Sternlicht and his partners have been involved in every asset class in real estate: office, retail, multifamily, land, senior housing, golf courses, nursing facilities, and of course hotels, totaling approximately $30 billion in transactions.

Purpose Beyond Business

Having known Sternlicht for nearly 25 years, I've seen more than the driven entrepreneur and financial and real-estate wizard that's his public persona. One of his deepest and most genuine core values is philanthropy.

Even as a very young man, he was relentlessly focused on helping those less fortunate than himself by giving money, time, and effort. As his business success expanded, so has his commitment to philanthropy, and he's proven that you can be a tough-as-nails executive and sharp dealmaker and a profoundly generous person at the same time. "One of the great benefits of being successful," he told me in a recent interview, "is the opportunity to support important charities and organizations that are doing good."

Sternlicht is devoted to a wide range of different causes, but his No. 1 priority is juvenile diabetes. He pursued the cause when his youngest son contracted the disease at three years old. "I didn't have any idea what diabetes was or how to manage it," he said, "so I took a crash course in the disease. The next question I asked myself was, 'What can I do to help?'" His answer was to become deeply involved in the Juvenile Diabetes Research Foundation (JDRF), raising money and awareness to help the organization fight the disease. Sternlicht chaired 5 major fundraising dinners, completed 10 annual walkathons in New York, and raised more than $10 million.

Cohesion Through Charity

He also brought his company's resources to bear. "At the same time that I was getting involved with JDRF," Sternlicht said, "I needed a theme around which to organize Starwood Hotels," referring to the point about two years after founding the company and acquiring Westin Hotels & Resorts and ITT Sheraton.

"I came into the hotel business believing that each property should be a shining light in the community it served. So I saw charitable work as a way that we could bring the whole company together and give it a 'good soul.'" Sternlicht directed much of the company's philanthropic activity to diabetes, but it was only one of the many charities actively supported by thousands of Starwood employees. "I believe it makes people feel good to do something selfless, something that helps others," he said. "It also makes them proud to be a part of a company that cares, and I was committed to making Starwood a company that cared."

Philanthropy served another business purpose as well. "This was how we turned the corner from being a collection of cultures cobbled together from three different companies toward becoming one cohesive company."

Close to Home

Ever the businessman, Sternlicht sought to enhance the impact of his philanthropy. "As I became more and more knowledgeable about diabetes, I began to direct my time and money more and more specifically. As an example, we're now doing work with the Harvard Stem Cell Institute and funding scholarships for very precise forms of research."

This more focused, hands-on approach is working its way across the nonprofit sector. "With time and effort, you get better at it," Sternlicht says. "You get a little bit smarter and then you're able to decide, in the case of fighting a disease, which of the alternative theories to support that you think has the highest probability of success. You figure out which researcher really wants to find the cure and isn't there to collect a stipend for twenty years. You do all that you can to really support that particular researcher or scientist."

Would he have been as charitable if his son hadn't contracted diabetes? "Absolutely," Sternlicht says emphatically. "We would have been just as charitable, but we wouldn't have been as focused on diabetes as our leading charity." Beyond medical causes, education has been a consistent area of focus. "We've been working with a public high school in the Bronx to help them build a library. I recently took my son down to the school to look at the completed library, and it makes you feel really good about what you're doing.

"I get approached to support so many charities, including some very worthwhile [international] ones," he continues. "But while that cause may be right for others, I think you just need to look at some of the public schools in our urban areas. ... The conditions of the buildings are abysmal. They need books, they need computers, they need paint, they need air conditioning, they need new fences, they need libraries. So that's why urban schools in America have been one of my priorities."

Looking Ahead

Now that Sternlicht is back at Starwood Capital Group, the firm has accelerated its charitable giving. "We've always been philanthropic at Starwood Capital. Of course we don't have an employee base as large as we had at the hotel company, but we're still active. We build homes with Habitat for Humanity and do lots of other things for the same reasons as we've always done. It brings people together around doing something good."

Another current focus for Sternlicht and his firm is being environmentally conscious. "This is obviously an important area for everyone," he said, "and we're starting to take our steps. We've measured our carbon footprint as a firm and have invested in buying carbon offsets. We've changed out all of our paper-ware, we're eliminating our bottled water, we're taking our recycling more seriously, and we're driving hybrids. We're definitely trying to turn the corner. We're not there yet, but at least we're heading in the right direction." It's also smart business: The more Starwood Capital lives green, the more it'll be aligned with its new 1 hotel brand, which in turn will create better engagement with today's authenticity-seeking consumers.

In summing up how he thinks about his business and philanthropic activities, Sternlicht says, "I think we all just hope we can do a little good and make some people's lives better. I like to think that the best for me in this whole area is ahead of me. At the point when I'm doing less, I look forward to spending even more time on finding ways to make a difference."