Danny Meyer’s Entrepreneurial Playbook: Turn Mistakes Into an Advantage

Danny Meyer has built some of the most recognizable names in American hospitality, from Union Square Cafe to Shake Shack. But when he talks about entrepreneurship, he rarely starts with revenue, expansion, or market share.

He starts with a more unusual question:

“What could possibly go right?”

In an interview with Preet Bharara on Stay Tuned, Meyer used stories from decades in the restaurant business to unpack a challenge nearly every entrepreneur eventually faces: how do you grow without losing the thing that made the business special in the first place?

His answer comes down to culture, intentionality, and an uncommon willingness to learn from what goes wrong.

Mistakes can become a competitive advantage

Most founders treat mistakes as something to minimize.

Meyer sees them differently.

“Our intention…was to harness the greatest renewable human resource, which is mistakes,” he told Bharara.

That philosophy came to life in one of the interview’s most memorable stories.

At one of Meyer’s restaurants, a server accidentally spilled olive oil on the back of a guest’s brand-new dress. The woman hadn’t noticed. Meyer could have stayed quiet and hoped she discovered the damage later.

Instead, he told her immediately.

His team then tracked down the exact Calvin Klein dress, found another one in her size, bought it, and delivered it the next day alongside wine, food, a gift card—and, with a little humor, a bottle of olive oil.

The mistake itself was bad.

The response became memorable.

For founders, that distinction matters. Customers do not expect a business staffed by flawless humans. But they remember how a company responds when something breaks.

A mistake handled generously can sometimes create more trust than a perfectly ordinary transaction ever could.

The broader principle Meyer learned from retail legend Stanley Marcus was simple: the road to success can be paved with mistakes well handled.

Culture is not what you say. It is the soil everything grows in.

Meyer uses winemaking as a metaphor for company culture.

A winemaker can obsess over grapes, pruning, harvesting, labels, and technique. But none of those things can fully compensate for unhealthy soil.

In Meyer’s analogy, the people in a company are the grapes.

The culture is the soil.

“Culture doesn’t happen to us,” he explained. “We are responsible for happening to it.”

That becomes especially important as a company scales.

When Meyer had one restaurant, he could personally stand at the front door, taste dishes in the kitchen, and sample wine with his team. He could directly influence hundreds of small decisions.

But founders eventually face a painful reality: personal oversight does not scale.

Your standards have to survive when you are not in the room.

That is why culture cannot simply mean having good people. It requires creating an environment in which those people understand how decisions should be made.

For an early-stage founder, this may be one of the most important reasons to define culture before rapid growth begins. What feels instinctive with five employees can become ambiguous with 50.

Purpose comes before scale

One of the most counterintuitive lessons in Meyer’s career is that several of his biggest successes were not originally designed to become massive businesses.

Shake Shack is the clearest example.

Meyer did not wake up intending to create a global burger chain. The concept emerged from his involvement with Madison Square Park and a desire to give people another reason to use the restored public space.

A temporary hot dog cart became popular. Eventually, it evolved into a permanent kiosk serving burgers, frozen custard, and other foods inspired partly by Meyer’s childhood in St. Louis.

Only years later did Shake Shack expand.

Meyer contrasted that experience with projects he pursued largely because they appeared to be attractive deals.

Those tended to work less well.

The distinction, he told Bharara, is not that entrepreneurs should ignore financial performance. Once a project was underway, Meyer still cared intensely about whether it succeeded.

The bigger question came earlier:

Why choose this road in the first place?

Meyer cited Viktor Frankl’s idea that success, like happiness, often emerges as a consequence of dedication to something larger rather than as something successfully pursued on its own.

For founders, that is a useful filter.

A business opportunity can make sense on a spreadsheet and still be wrong for the company building it.

Listen to customers, not just respected critics

Even experienced entrepreneurs can listen to the wrong feedback.

Meyer learned that lesson through french fries.

Shake Shack originally used frozen crinkle-cut fries. Some restaurant critics disliked them. Coming from the fine-dining world, Meyer had been conditioned to take critics seriously, so Shake Shack switched to fresh-cut fries.

There was one problem.

Customers liked the original fries.

Meyer eventually realized that he had allowed influential outside voices to outweigh the preferences of the people actually buying the product.

Shake Shack switched back.

The episode illustrates a problem every founder faces once their company attracts attention: all feedback does not deserve equal weight.

Investors have opinions. Journalists have opinions. Industry veterans have opinions.

But entrepreneurs still have to determine whose problem they are solving.

You do not need to win on every dimension

Meyer also explained what he calls the “rule of two.”

Businesses often balance three competing variables: quality, speed, and cost. Conventional thinking says you can optimize two, but rarely all three.

Meyer questioned whether founders really need to treat the equation as absolute.

Instead of scoring perfectly on two dimensions and ignoring the third, Shake Shack tried to distribute the compromise.

It would not be as cheap or fast as traditional fast food. But it could offer higher-quality ingredients.

It would not deliver the service experience of a fine-dining restaurant. But employees could still offer genuine hospitality.

That framing contains an important positioning lesson: differentiation does not always require being the absolute best at one thing.

Sometimes the opportunity lies in combining attributes competitors have historically separated.

Fairness becomes a cultural question, too

Meyer’s thinking about culture extends to compensation.

He described the long-standing tension between tipped front-of-house workers and kitchen employees, who can contribute just as heavily to a restaurant’s success while operating under different compensation structures.

His restaurants experimented with eliminating tipping through a model called Hospitality Included. When tipping eventually returned, Meyer said his company retained a revenue-sharing approach for cooks in an effort to reduce the disparity.

During the interview, Meyer also criticized proposals to exempt tips from taxation, arguing that such policies can further widen the divide between tipped and non-tipped workers.

Whatever industry a founder operates in, the larger management question remains relevant: does the compensation system reinforce the culture the company says it wants?

Build the hat that does not exist yet

Near the end of the conversation, Meyer returned to a line from Stephen Sondheim’s Sunday in the Park with George that has stayed with him throughout his career:

“Look, I made a hat where there never was a hat.”

That may be the most concise description of entrepreneurship in the entire interview.

For Meyer, creating a business is not simply about entering a market. It is about making something that becomes meaningful enough to matter in people’s lives.

Union Square Cafe filled a hospitality gap Meyer believed existed in New York.

Shake Shack brought a fine-dining mindset to a burger stand.

And some experiments failed.

That is part of the work.

The entrepreneurial goal is not to eliminate every mistake, predict every outcome, or copy something that already works.

It is to build intentionally, learn quickly, take care of people, and create something worth noticing.

Then, every once in a while, you get to look at what did not exist before and say:

We made the hat.