Barry Sternlicht’s chauffeur-driven black G.M.C. Yukon rolls up to a crumbling brick building on the wrong side of the Stamford, Connecticut, train tracks. It’s a warm fall morning, and a nearby field of dumpsters casts a rank smell over the block. The site was a heavily used auditorium and dental clinic for workers at the Yale & Towne lock factory. When the plant closed in the late 1950s, the building started its inexorable decline: The windows are blacked out or broken; the front-door frame is stripped and exposed; inside, wires hang from where lighting fixtures have been ripped down. But for the next few months, this littered wreck is going to be the unlikeliest launching point for the greatest second act in American real estate.

Sternlicht is the 46-year-old founder, former C.E.O., and ex-chairman of Starwood Hotels. Just two years ago, he was the most influential person in the hotel world, commanding one of the industry’s largest operations: 733 hotels, 231,000 rooms, 120,000 employees and more than $5 billion in revenue. Starting with a small, nearly bankrupt real estate investment trust he bought in the mid-1990s for $120 million, Sternlicht gobbled up name brands like Sheraton and Westin; dreamed up a new chain, the W, that appealed to the young, Kenneth Cole-wearing executive class; and transformed the St. Regis from a stand-alone hotel in New York into a worldwide luxury chain.

He was the thirtysomething fireball of the hotel business, revolutionizing the industry and stealing customers and glory from slow-moving giants like Marriott and Hilton. In the process, he created countless enemies outside the firm by openly mocking his competitors’ conservative ways and, internally, by ignoring veterans’ opinions and relentlessly hounding his senior executives.

“In the hotel industry, he embarrassed a lot of people,” says Ted Darnall, chief operating officer of HEI Hotels & Resorts and former head of Starwood’s North American operations. “He had the vision and strategy that the so-called experts didn’t see or said wouldn’t work. And very little of Barry’s vision was wrong. That’s going to result in a lot of people wanting to see him fail.”

As the operation grew into an empire, Sternlicht became restless, mired in the day-to-day management that took him away from the giant deals he loved to make. He tried to hand off the grinding details of the company to a new C.E.O. and move into an executive-chairman role, only to find himself fighting endlessly and publicly with his successor. In 2005, at Starwood’s annual meeting, he stepped up to the microphone and, with no real explanation, announced, “It is now time for me to follow through with my other commitments to my family and other business.”

In leaving, he joined a long line of founding entrepreneurs who have discovered that their companies no longer need their services. They usually choose one of two paths: move to the sidelines, hoping to rejoin the company later, Steve Jobs-style, as savior in chief; or, like Home Depot’s Bernie Marcus, leave without looking back, to devote themselves to family or philanthropy.

Then there is the Sternlicht way: Walk away from the company with the determination to come back and beat it. Although he had plenty of other opportunities to pursue, Sternlicht couldn’t live with the idea that his departure marked him as a failure. In fact, throughout his entire professional life—even as he achieved success after success—he has always been his own toughest critic, driven by a family history that he revealed only after I’d been following him for nearly a year. “A psychoanalyst would have a lot of fun with me,” he admits.

Stepping from the S.U.V., Sternlicht moves quickly up the Yale & Towne building’s dark central stairway and pushes open an intricately carved, ebony-stained walnut door. Inside lies a 1,000-square-foot one-bedroom suite, a perfect mock-up—down to the black river rocks in the exposed-air shower—of a room for a Wailea, Hawaii, resort that goes under construction this winter.

As soon as Sternlicht enters the prototype, he becomes the center of attention. Tall and bald, his shirt unbuttoned to mid-sternum, as usual, he glides through the rooms—until something stops him cold. “Why is that outlet there?” he demands, pointing halfway down a wall just inside the kitchen. The chatter ends abruptly. “What is the point of that? What could you possibly plug in there?” Suddenly the room fills with activity: Designers who have spent five months putting this together try to distance themselves from what could have only been the work of a lunatic.

Soon Sternlicht is dismantling everything in sight. “Appliances! Where do we plug in our blenders?” he asks, plopping down on a stool (too short and lacking swivel) at an off-white kitchen counter (too narrow). “What is that, a wall-mounted phone? We should put the phone on the island, a handheld cordless. Napkins. Napkins and towel drawers. Where are the dishrags going to go? Where do you put your cooking utensils? People have stuff, and this will look really crappy cluttered up. This is a dumb place to make mistakes.”