Latest / Success Story with Scott Clary / Gary Kusin - Founder of GameStop | When You Lose Everything

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Gary Kusin - Founder of GameStop | When You Lose Everything · Success Story with Scott Clary

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  I know how to make money and I proved that over a long really good career.
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  I really press on hard analysis. Hard analysis doesn't mean you're going to get it right,
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  but it sure beats having a dream. So you need a few things. You need a real product that appeals
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  to an age group that's young enough that it overwhelms them and you need to have scarcity because
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  that's the real way that you build the relationship with your customers having what they want when
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  they wanted it at a price they think is fair. 13 people of our turnaround team went on to
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  become CDOs. That's a world-class team. The self-awareness slash narcissism, that's the other part
• 0:40
  of it because God forbid you become successful. Sometimes look out the window, sometimes you need
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  to look at a mirror. Welcome to Success Story. I'm your host, Scott Clary. The Success Story
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  Gary, thank you for coming on. I appreciate you. Appreciate your time. You have had
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  some incredible success. We're going to talk about Laura Mercy. We're going to talk about GameStop.
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  We're going to talk about kinkos. We're going to talk about when you had portfolio companies,
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  when you move from operator to capital allocator with private equity. We can talk about the book.
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  We can talk about your podcast. We can talk about all of it. But when you look back at everything,
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  you've had lots of successes, tons of failures too. When I say what was your most notable, your most,
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  I guess, jarring failure that you learned from over your career. What's the first thought
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  that comes to mind? There's no question. First, second and third, when I learned while sitting
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  in the Austin airport that when I left GameStop, just after 13 years in, was two years into
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  Laura Mercy, the cosmetics company, and it just left an electronic arts board meeting.
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  I had been using my stock, my stock had some real value when I left GameStop, and I used that
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  so I was, decided to start borrowing on margin scratch surface and would never my, you know, my,
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  where I got in trouble would be at 10% of the lowest stock price it had recorded since we'd gone
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  public. So I never paid attention to it. And I knew it was a great long-term investment. Sit down
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  the Austin airport. There's a Wall Street Journal sitting next to me. I pick it up while I'm
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  waiting for my flight and I look at it and see that GameStop was under a dollar. And I realized,
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  why didn't I get a margin call? Oh my God, I may be broke because I was on that margin up to,
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  I don't know, $8 million dollars. And I was clearly busted to covenant and no one had called,
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  no one had notified me, no one had anything. And I sat there and went, oh, shit, I'm broke.
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  How could that, how could I've gone to where I just was five minutes ago to that, to this moment?
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  I would go, I went the bathroom and threw up. I didn't know what to do. And that was my,
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  that's been the worst moment of my career. And as it ended up, I did the right thing and it managed
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  to rescue me from the whole, from everything. So, but nevertheless, that was a very rough night,
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  you know, kidding. What was the, what was the right thing that got you out of that?
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  The right thing was I called the president of the bank who had my business. And I said,
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  Ron, I need to let you know something because you guys did let me know. I just looked at the stock
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  page Wall Street Journal and looked at, looked at it. And then it was called NeoStar Retail Group,
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  looked at the stock price for the company. And it's way below the threshold where you guys could have
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  conducted a margin call. It's, I'm waiting. No, you didn't. And you should have. And I'm going,
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  I'd like to come in with my hat in my hand and try and figure out some way to get through this.
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  What he said, when I got there for that meeting, he said, yeah, as soon as you get home,
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  you know, you, I need to see you and went up there, big conference room full of people. And he
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  said, tell this group what you told me. And I reiterated the story. And he said, nobody in this room
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  has ever had anyone who had a loan that was secured by anything,
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  and busted a cover of covenant, come in and self disclose. And we have no experience with this.
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  So here's what I'm going to say to you, how long do you think it will take you to get this sorted out?
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  And I said, you know, it could take me a year. And he said, then you got a year. We don't, we,
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  we would have in the normal course of business. Yeah, we'd have sold your stock to cover that.
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  And we missed it. And since you self reported, we're going to give you time. And then I went to my
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  accountant, I had had two appointments. And then I went straight to my tax attorney, tax attorney,
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  who guys don't bid all my taxes forever. He said, you can do three things. You can sell
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  large mercy, a cosmetics, you can sell your house at a big high value house. And you can go get a
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  real job that pays you because I wasn't taking any money out of large mercy at that time. He said,
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  those are your three choices. And you're going to need to do two of the three of them. And I was so
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  pissed off that I put not just me, but my family, my personal finances and this sort of jeopardy.
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  I said, screw it. I'll do all three of them. I sold large mercy. I sold the house and I got
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  myself a big paying job and dug myself out of it. And the job was in Atlanta, Georgia. And I said,
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  that's fine. I'll commute there. Fly there on Sunday night, get back on Thursday night. I
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  I screwed up. I did, you know, I did the crime. I'm going to do the time. And I really punished
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  myself over that for a long time. And you can imagine I have no debt ever yet. You know, I took care of
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  that. I got completely square and sooner than a year, paid them back, paid everyone back on
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  everything and even ended up doing pretty well. We had the situation I was in at that time,
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  way before Kinko's or anything else. So that's the worst. That's not, that's not fun. No, I don't
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  wish that on anybody. I don't think a lot of people would, I don't know how many people would be
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  able to navigate through that. Like in hindsight, it sounds, it sounds like you did it very gracefully.
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  I mean, you sold the company, he sold the house. That's not, that's not the normal playbook.
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  And got a real job. And as it happened, that next real job was incredibly lucrative. And that
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  was before Kinko. So I mean, I got myself, I got myself back in the fairway, but yeah, but
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  every day I looked in the mirror when I woke up, I was pissed at myself. That was just like, I
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  was a knucklehead thing to do. Everything about it. Because the stock price had gone up to,
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  I the last time I looked, it was 30. And look, it's about 50. You know, that's, uh,
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  sickening. You know, like this high risk, this, like obviously you had, you had a, you had a
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  propensity for risk. You didn't mind taking risk. And I think there's a lot of benefits to that.
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  But I mean, sometimes it bites you in the ass too. But do you think that that risk over your career
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  served you more than, than hurt you? Yeah. No, I'm not, I laugh. Because I, two things are true.
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  Sometimes people don't, and also find that this two things thing, a lot of people can't get
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  their head around. Two things to be true. I know how to make money. And I improve that over a
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  long, really good career. I also know how to lose money. And I, and I prove that, and prove that
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  over a long career because I'm an investor, it's start up and, you know, I invest in an array of
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  things that I can have something I've been highly. Feel very strongly about, let's say,
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  an over-invest in it. And every bit of it goes away. So, you know, I've had hundred badgers,
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  and I've had a lot of them that go to zero. And so, yeah, am I high, am I, I, I,
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  wire rack was I when I was younger? Yes. But the big, when I made my big score, we sat down with
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  our financial folks. And we, we agreed how much will you take away for me to ensure that if I
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  get run over by bus tomorrow, my family, you know, my future and all that, it's all taking care of,
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  and I can't touch it. We agreed with that. Then we took what's left and said, got for me,
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  don't knock yourself out. Keep doing what you've been doing, invest in what you like to invest in
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  and, and do that. So, I did, but I've been more judicious, shall we say ever since. And the
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  pattern recognition thing has enabled me to learn enough that I think I'm a better, I'm better at
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  evaluating opportunities now than I was probably earlier in my career. And you mean that across,
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  you know, starting something new, investing in something, taking on a role, like I mean,
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  pattern recognition is, is huge. It just sucks that you had to go through that to get to the
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  point where you reckon that's the pattern. And I would even ask, you know, we're trying to give
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  advice to people at our earlier stage, well, okay, pattern recognition is great after you've gone
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  through that shit. And then you come in on the other side, how do you maybe remove some of those
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  pieces so that, yeah, pattern recognition is important. But somebody who's sold their company
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  exited, how did they out of they navigate that? Because there's no playbook for post exit.
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  Yeah, I, I think the most important thing we did, and I just mentioned it, was with, with a,
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  someone we really trusted, a really important asset manager kind of person, we all agreed on how
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  much I would, and we call it throwing over the fence, you know, make a bunch of money, how much
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  should go there where I can't get to it. I, I literally said, I can't, I can't get to that.
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  That's unavailable to me. This is what I have to invest in being able to take a step back and
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  say, don't you can't put it all at risk. Don't do that. Put away enough on your first big score
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  that'll take care of you till you die. You know, and then you can monkey with the percentages
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  as you get older and you see more opportunities and you feel more strongly about your ability to
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  to realize something might really be good versus maybe not so good. So that's how I do it.
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  And we call it literally throwing it over the fence. Yeah, and not smart. Let's, I want to,
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  we'll talk more about how you invest and how you, you know, how you do your due diligence on
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  startups and some of the, some of the opportunities you put money into. But before we get ahead of
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  ourselves, obviously we have to go back to the beginning. So I didn't realize this because I'm
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  probably too young, but GameStop was not always called GameStop. So to talk to me, how do you
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  pronounce that? I thought first of all is Babbage, Babbage's. Babbage after, named after Charles,
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  Babbage. Yeah, an 18th century mathematician and entrepreneur in Victorian England. He invented
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  stuff like the cow catcher on the front railroad cars. He also invented something that his first
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  big invention was called the difference engine. And his second was called the analytic engine.
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  And they were both the precursors of today's computers. And he essentially figured out he could weave
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  numbers much like a jack hard loom. Weaves fabric. He could do that with numbers. His girlfriend at
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  the time was a woman named Lady Ada Lovelace. She was Lord Byron's daughter. As she helped him by
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  developing the punch cards that he'd built to use his biggest sadness in his life was he died
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  before he could make it work properly. While all of this is important, it's because then this
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  will shock you because of your age. And when we started Babbage's, which became GameStop,
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  no, we couldn't use the word software. Number one, no one knew what software was. It was not
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  in the vernacular. And nine out of 10 people thought it was intimate apparel.
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  Thought it was women's intimate apparel. And if they did know what the word software was,
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  they were incredibly intimidated by it because it was such a big IBM. It was such a big thing
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  that no one wanted any part of it. So what we were trying to do with our first name was find
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  a way to explain what we do in a way that people will come into our store. So we showed never
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  ending loops of gameplay on early video game machines on monitors in front of the store with the
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  big picture in the back of the difference engine and a plaque with Charles Babbage's name. Well,
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  six years later, everyone knew what software was. And that so and no one still knew like you,
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  who Charles Babbage was, but everyone knew you get you. I mean, we were doing we were doing
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  $400 million under the name Babbage. So it's not like people didn't find us. They found it and
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  came to us in droves because we were the first video game store in the world. And so wherever we
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  showed up, lines showed up to get to our product. But we had the opportunity when we bought
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  software, et cetera, stores in Minneapolis. They aren't their only thing was we will not be part
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  of a company that's called Babbage's. And our thing was we will not be part of a company called
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  software, et cetera. But we made it a merger of equals with the agreement being we'll come up
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  at the new night for the combined entity. And we shut them down in Minneapolis, moved them to
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  Texas. And then I left to start Laura Merciate, my partner co-founder became chairman and CEO
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  and their CEO became president of the combined companies. And that was how it got it. That's how
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  the game stopped. I got it. When you think about being a first mover in the video game space,
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  it was a brick and mortar play originally, right? You just you're opening up a brick and mortar.
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  Yeah. So there wasn't digital. There wasn't. Yeah. That's fair. Yeah. I'm just
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  different question. I just do it. So what do you think, you know, prof did you to open up a video
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  and you have a background in it? Did you come from it? Did you enjoy video games? Great question.
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  And the reason I like focusing on this is it informed my strategy and starting cosmetics,
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  and it really informs the way I look at new business plans for startups.
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  Okay. So my co-founder and I were both classmates in business school. He finished top of the class
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  and they were kind of the other book end, but we were best friends. We played poker every Friday night
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  with the group of guys. We were very good friends. So of course, what happens when you're number one
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  in business school, you get to go to Bain or McKinsey or one of those places. And sure enough,
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  he became a senior partner at Bain very quickly when we graduated. I went the retail route.
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  I went to a department store business mainly because the woman I was going to ask to marry me
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  wanted to live in San Francisco. And that was the only job I could find at San Francisco. So
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  I became a department store guy and developed it. So we come together four years later.
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  And I'm talking about why I think department stores are doing because specialty stores
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  are emerging from the limited the gap. The sales joy you name them. Specialty stores became
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  dominant channels and distribution of any product of consumer goods that reached measurable size.
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  And it was of course always the highest margin businesses. And they were taking our lunch from
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  department stores. And I was in a very successful division of Macy's and I was the top merchant
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  in it. And you could kind of see him lumbering towards a swamp. Well, Jim had replanted himself in
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  the Silicon Valley for Boston. And his clients were early video game companies, Activision,
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  Electronic Arts. So he was very excited when we met to tell me about this new way of entertainment.
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  And if you go all the way back to black and white TVs, you go to early high five stereo,
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  you go to beta max, you go to every single category of consumer entertainment goes through a hockey
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  stick. And everything that he pulled together relative to Moore's law, what was happening with
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  semiconductor chip technology and the curve on which delivered higher graphics, better gameplay,
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  more speed. He said there's going to be a battle and there going to be multiple video game hardware
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  units out there, each with their own specialized software. And he said, it's going to be a
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  free for all to see who's going to win this. Well, that was just like when high five when stereo's
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  first came out, they sold in JC pennies and sears and department stores. And then people started
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  saying, well, this is great, but where are the records? Where's, where's software? Where's content?
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  Yeah. And this department stores didn't know how to they would put four records up there. But then
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  record store chains emerged when video, when digital movies came out, a blockbuster emerged. And so
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  I was saying, Jim, everything he was telling me about what would be the penetration video game
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  machines in the home, their main computers and the homes and software for each hardware type.
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  I said, Jim, this is screaming for its own software specialty store. And we need to get a first
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  mover advantage and you need to quit your job at bay. I need to quit my job at May season. Let's
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  let's go make a run at this site. It was an incredibly well informed decision. I mean, we went to
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  the consumer electronics show in January in 1983 when there was kind of nobody there in Las Vegas.
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  And we went to see all the video game. And I got to talk to all of them because I really was kind
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  of the virtue of the between Jim and me. And we both came back very excited. So and I guess I'm
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  explaining it so broadly because we did our homework. We didn't wake up in the morning
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  and say, I have a passion. You know, it's something. I have a passion for women's jewelry or or
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  Jim and I weren't gamers. But we had a passion for what we thought would be a nascent industry that
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  would grow very rapidly. And you know, I think that people are really given a disservice when they're
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  told in college, follow your passion. Well, it's like waste management CEO. That wouldn't,
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  that wouldn't their passion. But you know, I've been pretty darn well with it. And in that. But
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  so one of the things I always look for is was their disciplined analysis upfront. They could talk
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  about size of the sector growth rates in the sector. Why what you your vision is different than
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  anyone else's vision on and on and on. I really press on hard analysis. Hard analysis doesn't mean
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  you're going to get it right. But it should be having a dream. And a lot and a lot you would
• 20:56
  not believe the number of startups that have visionary entrepreneurial founders who talk about their
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  dream vision that they're listening to that and makes. And I'm sure that's good for some people.
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  And a lot of them have made a lot of money doing it. I'm not an investor for that kind of startup.
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  Hey guys, Scott here. I just wanted to take a quick moment to say a heartfelt thanks to every single
• 21:19
  one of you six years of this show. And it's really all because of you. Your listens, your support,
• 21:24
  your shares, it's what keeps this thing going. When I started, I had no idea how big this would get,
• 21:29
  how many lives we touch, the stories we share, the lessons that we learn together. It's truly humbling.
• 21:36
  And I believe that we're building something really special here. A community where no one has to
• 21:40
  reinvent the wheel. We're all in this together learning and growing. And here's my ask. If you love
• 21:46
  this show, it's made a difference for you, please share it with somebody who needs it. Hella friend,
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  host on social, whatever works, it's the best way to keep this thing going strong, bring on even
• 21:56
  better guests and share more life, changing wisdom. And you can find us on all the spots. So you can
• 22:02
  go to successstorypodcast.com. If you like listening to podcasts, if you like video, you can go to
• 22:07
  YouTube. It's youtube.com slash C slash Scott Declary or the newsletter newsletter dot Scott
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  Declary.com just spread the word. I'm eternally grateful for each and every one of you. Let's keep
• 22:20
  learning, let's keep growing and let's keep making this world a little bit better together. All right,
• 22:26
  let's get back to the show. I think that I think that I mean, everybody wants to be an entrepreneur,
• 22:32
  right? And everybody everybody wants to be an entrepreneur, even though they don't understand how
• 22:36
  much work it's going to take them. So you have sort of two sorts of entrepreneurs. You have people
• 22:40
  that try and productize a skill set that they have, which is not a bad thing, but it's not, it's
• 22:46
  not going to be a disruptive blue ocean that they're going to be going into. There's going to be
• 22:50
  a hundred other thousand people. Yeah, it's hard to promote. Yeah. Unless you're so exceptionally
• 22:54
  qualified. But then even then you have to build the brand or yourself. There's going to be, you
• 22:58
  know, 10 to 15 years of building that that proof in the market. The other type of entrepreneur,
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  which I bought you, there's three types. So the incorrect type is the one that, like you said,
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  the visionary, the dreamer that wants to be the Stanford dropout that's going to go build the next
• 23:14
  thing, right? I think the most successful entrepreneur statistically as well, I don't need just me,
• 23:20
  you know, my musings. It's the person who solves a problem in the industry they've worked in since
• 23:25
  they were like 20 years old. And they notice that one thing doesn't work. Now that's hard because
• 23:30
  that means that you need patience to be an entrepreneur. You have to be around long enough to
• 23:34
  know that there's a problem that exists. But you kind of fast track that a little bit. You didn't,
• 23:38
  you didn't live in in video gaming until you were 45 and then try and build a company that's all
• 23:43
  the problem in video games, right? So that's another, what I guess I would ask, what are the main
• 23:49
  signals that you look for from an outsider coming into an industry that indicates a potentially
• 23:56
  emerging market? Because I'm going to go ahead and assume you copied and pasted the strategy
• 24:00
  with Laura Mercy because you did not have this love for cosmetics coming out of GameStop.
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  Well, but I did have all responsibility for all cosmetics at Macy's in for the division of
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  Macy's that I was a senior merchant in for four years. So I knew about cosmetics. So let's just
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  to be clear on that when it wasn't I didn't just kind of fall up in that sense. I had been involved
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  and I was highly curious about the roots of the cosmetics industry. I already understood
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  how cosmetics emerged as a consumer preference from the 1930s when a makeup artist named
• 24:45
  Estee Lauder started putting makeup on movie star spaces and said, wow, I could make a company
• 24:51
  out of this and her husband Joe helped her and that next thing you know, Estee Lauder was well
• 24:56
  and I learned about how the cosmetics industry went from makeup artists to scientific technology
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  to fashion and all of a sudden when I heard makeup artists are coming back and play again,
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  I went, whoa, everything old is new again. If that's true, here will be the next stages of it.
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  And so I was able to come to a plan. Let me find a makeup artist and I found a woman named Laura
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  Mercy. So I mean, it was it was the same. That was how I came up with that. So I'm not I'm not from
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  this industry. So Laura Mercy was and you know, my girlfriend's probably going to kick my ass
• 25:39
  for asking this question. So she was she was a real person. She will I promise you. Yes, she was.
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  She was a real person. She remains until today, a real person. She was doing Madonna's. She was
• 25:49
  Madonna's makeup artist. She was Angelina Jolie's makeup artist. She she's makeup artist to a bunch
• 25:56
  of movie stars and rock stars. And when Bo would run a fashion model on their cover, they would ask
• 26:03
  she's a real. So what we did is we said, Hey, we will put you in the lab. We'll do a license
• 26:09
  agreement with you. We'll pay for all the development. You need your own life under your name.
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  And we'll take care of everything else. And I got myself a co-founder,
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  out of Neiman Marcus who did who was current very current in cosmetics and she and I ran that.
• 26:27
  So this is what every YouTube makeup artist is now trying to do. This is the same playbook.
• 26:33
  Yeah. Yeah. Seeing it done it. Been there. It's been a lot harder than it seems in the graveyard
• 26:42
  school. When you look at the brands you built, so Laura Mercy A from somebody who doesn't know
• 26:48
  makeup knows knows a little bit about Laura Mercy A. So I'm assuming it's a very popular
• 26:52
  say the global it's a it's a very top global high high end fashion brand. And when you look at
• 27:01
  like the evangelism and the loyalty that you've built with the customer base for Laura Mercy A
• 27:05
  and GameStop, what do you think the secret is in building the the fan base of a company so that
• 27:13
  it goes global. It's not just a great product. There has to be something else to it. Again,
• 27:18
  a GameStop I have to put in a class by itself. And the reason why is no one understood what
• 27:27
  happened when that became a meme stock. They didn't understand how can this be happening.
• 27:35
  The relationship with GameStop and its customers it is extraordinary and was extraordinary so that
• 27:45
  in for gamers in their 20s 30s and 40s GameStop was part of the fabric of their lives. They measure
• 27:56
  time by product releases. They measured time by when they showed up at midnight at a GameStop
• 28:03
  to stand in line with free and freezing weather with their mothers having taken them there to
• 28:08
  pick up a game that was going to drop at midnight. No one understood. Everyone talks about fans and
• 28:14
  everyone talks about building a relationship with your customers. There is another level and it is
• 28:22
  it asks Swifties, ask Taylor Swift fans and ask Beyoncé fans. They get it. There are legions of
• 28:30
  people around the world who mark events in their lives by Beyoncé releases new albums and that's
• 28:39
  the relationship and it was unique in all the world that consumer goods in the 90s and 2000s
• 28:47
  between GameStop's customers and GameStop. So when all of a sudden a hedge fund,
• 28:54
  we know one knows how to spell hedge fund but they're all on Reddit together and they're gamers
• 28:58
  and they talk their trash on Reddit. Someone is trying to do what to this company that has been
• 29:06
  part of my life since I was nine years old. Hell no. What do I have to do to stop that
• 29:13
  by the tens of millions of people? That's a relationship that no one could have seen or known.
• 29:20
  Jim and I knew it was we founded it. We'd never seen the way the way customers glammed onto the
• 29:27
  company. We were not surprised to see it but the rest of the world wasn't so was Wall Street.
• 29:35
  Do you think that there's even one tip that you could give for somebody who would want to build?
• 29:42
  It seems like it's an impossible question to answer but I am curious if you have some insight as
• 29:50
  to what makes a company to that degree so intricately tied to a fan. So I think it's a combination
• 30:01
  of a few things. Not the least of which was new product introductions and new game releases and
• 30:10
  while that was important is it did not take long maybe four years. The only company bigger than us
• 30:17
  even as badges was Walmart. Toys are us. We were kind of the same size as Toys are us but Walmart
• 30:24
  was bigger so we could get outsized deliveries of product which is critically important if you're
• 30:34
  dying to have a new game and you know it drops at midnight and you know GameStop will have it.
• 30:40
  You also know that Walmart can't get their act together to be open at midnight much less
• 30:47
  and bought enough stores or distributed it correctly. We had such refined systems that we knew
• 30:54
  how to get the product where the customers work for that product so they had a better
• 31:00
  hip rate than anyone else any other retailer for these game launches and we got that feedback
• 31:07
  from the market and the better we did the better we did because we could make the argument
• 31:12
  to Nintendo that instead of needing 15,000 new hardware pieces of hardware for their new Nintendo
• 31:20
  game system that we could get 24,000 and we would have trucks at the dock when the ships unloaded
• 31:27
  onto our trucks. Our standard was I can't remember what our standard was there was something like
• 31:33
  50% of our stores would have the new title within six hours of it being unloaded off of a ship.
• 31:42
  We rented planes. We rented trucks. We did everything so we could deliver for our customers. Well
• 31:49
  that builds a customer relationship. Pretty unique. I don't think I don't care how good
• 31:56
  our mercy is as an example. I don't think she could bring out a color that people are going to
• 32:01
  line up more and fight over. I don't think bed bath and beyond is going to come up with a thread
• 32:09
  sheet that people are going to be so crazy. So you need a few things. You need a real product that
• 32:15
  appeals to an age group that's young enough that it overwhelms them and you need to have scarcity
• 32:23
  because that's the real way that you build a relationship with your customers having what they
• 32:28
  want when they wanted it at a price that they think is fair. And I think there's a cultural
• 32:35
  component too. I think there's this this like X factor. Oh by the way, our store managers and
• 32:41
  people that worked in our stores. Do you know how easy it was for us to find people? Gamers flocked
• 32:47
  to say, said, I'll work for free. Can you just hire me? Well, we never let people work for free.
• 32:52
  But we didn't have the problem that other places might have and being able to staff their
• 32:57
  stores. People would chill for them. We turned out monthly teaching tools to teach our people how
• 33:04
  to do it. We had a checkout system where people who worked in our stores could check out a new game
• 33:10
  and go home and play it. So when they come so when someone comes in straight, tell me about this
• 33:14
  game. Doon what what's that about her? What's world of warcraft about art? You know, they had
• 33:21
  salespeople who were every bit as enthusiastic as they were. Maybe they had already come up with some
• 33:26
  Easter eggs or some hacks in the game that they could share with the customer. Look when you get
• 33:31
  to this level. Here's what you do. Yeah. That relationship goal and we had competitors
• 33:39
  who could talk about that, but they didn't deliver it. And we did. And that's yet another reason.
• 33:46
  Gamers like hanging out in the store. They like talking with people who work here because
• 33:50
  you know, there's simpatico. You know, it was just it was a very special relationship.
• 33:55
  So difference between what you did at GameStop, which was very blue ocean, very tactical. And when
• 34:01
  you brought that company to market, Laura Mercier, you're very tactical, but cosmetics was not
• 34:08
  blue ocean. Cosmetics is red ocean. Super saturated. What's what's the difference in how you took
• 34:14
  Laura Mercier to market? Was it the was it the original influencer with Laura Mercier or was
• 34:19
  it something else that made it successful? I think it was mostly that and the white
• 34:25
  cosmetics are distributed. You always start at the top, meaning you've got to be able to get
• 34:31
  Henry Bendels or Burgdorf Goodman or Neiman Marcus. There are a lot of people who want to
• 34:38
  carry it, but if they carry it, it dilutes your brand. So it's not enough to know who you have to
• 34:44
  sell it to. They got to buy it. And then they got to present it in a place on the store in
• 34:49
  their on their floor that suggests to the to their customers, whoa, this must really be a hot new
• 34:57
  thing. So lots of that kind of stuff in the cosmetics business. And once you've been in Neiman's and
• 35:03
  once you've been in fact, three years later, you can go to the high end department stores. You can
• 35:09
  start going into other channels, but you get, but the distribution model is pretty set that only
• 35:15
  trick is getting the large retailers to agree to play their role. But for a consumer good, like anyone
• 35:21
  who's listening to this is going to be like, Hey, Gary, it's not that easy to get into Neiman
• 35:24
  Marcus with a new cosmetic product. So what was it? What was the thing that a lot? Was it your
• 35:30
  track record? It was back then. No, we could point to a line called Mac Macy, which was a Canadian
• 35:37
  line called Makeup Artist Cosmetics Macy. So Mac and then Estee Lauder had already bought a
• 35:44
  company called Bobby Brown doing the exact same thing. Bobby Brown's a makeup artist. And then there
• 35:49
  was only one other makeup artist, Trish McAvoy. And that was it. And then Larmercy was the third.
• 35:55
  And today, the reason that it's so hard is, yeah, there are about a thousand makeup artists out
• 36:01
  there now. You have to, I am a big fan of first mover when you see the wind changing in a business
• 36:09
  and that's what was happening when I jumped in with Larmercy. That makes sense. So you wouldn't
• 36:16
  go into them. You wouldn't go into cosmetics and make up today. I can't tell you the number of
• 36:21
  cosmetic companies I've been asked to be on the board. I did go all one because they had a really
• 36:26
  interesting twist and extraordinarily successful. But, but yes. So no, the answer is no.
• 36:35
  Mean cosmetics. Okay. So then, okay. So now you had to sell Larmercy to bring it back to the
• 36:42
  first story you were talking about. So you had to sell Larmercy. That's not a fun. It's not a
• 36:48
  fun thing to go through. So post Larmercy. Holy shit. So just walk me through. You sold Larmercy.
• 36:55
  I sold your house. What was the third thing you had to do? Get a job that paid real. Get a job.
• 37:01
  That wasn't King Coast yet. That was another company. No, that was another company and there's this
• 37:06
  recruiter who wanted me to meet with two junior apparel companies that were public and the deal was,
• 37:16
  I was supposed to pick which one of them I wanted to join the board on. So this is happening in
• 37:20
  parallel with this other stuff. I had been responsible for all junior sportswear in the
• 37:26
  department store business. So I had a big and successful background in cosmetics and junior
• 37:32
  sportswear things like that. I decided I didn't want to join either of boards. I didn't like the
• 37:38
  companies. I didn't like anything about them and didn't feel like that would I would be happy
• 37:42
  there. And he was, of course, pissed off. He said, I promised him you'd pick one. I didn't know
• 37:46
  which one that you're saying you don't want either one of them. That's like being on their
• 37:50
  baby. And at this time, at this point, you have no money either. The technical, nobody,
• 37:54
  no money. So he said, so he called me a week later. He said, you owe me one. He said, there's
• 38:00
  this company called Car America based in Washington, BC. They've been around for over 100 years.
• 38:06
  They are a reek. They own a bunch of, I couldn't spell reek. I mean, that's how that's how bad I
• 38:12
  was. But they said they only serviced out office operation. They bought it. It was, they think we
• 38:20
  were, you know, just cut to what it is. It was like we were. And he said, we want to roll up with,
• 38:25
  there's lots of franchises in Europe. There's lots of this. I want to roll up all this stuff.
• 38:31
  And I met the guy, he and I had gone the same graduate business school and we hit it off
• 38:37
  famously. And I said, look, you know, if you've got some good support staff around here,
• 38:40
  I'm real happy to think about this. And I jumped in and we quickly, we made 46 acquisitions in
• 38:50
  like the first 18 months so that by that point, there were only three big companies left in the
• 38:55
  world, one in Australia, one in the UK and our company. The one, the company that was second
• 39:02
  biggest in the US came to us and said, we would like to buy you all one condition. We need your
• 39:08
  management team to take over the combined company. So Tom Carrick, our America, I mean,
• 39:15
  when we got the numbers, it was like telephone book numbers for me. It was an unbelievable school.
• 39:20
  I just really crazy real estate kind of return. But on the other hand, we had almost, it was
• 39:26
  almost 50 acquisitions. Yeah, we've done a lot to build an organization. And so we sure enough
• 39:32
  merge and we've my team took over. I moved it to Dallas and life was good except the new owner
• 39:39
  that they had bought us this number two. I didn't like their chairman just brought it for an array
• 39:47
  of reasons. And I, but I thought I could sell it again. And he agreed. I said, look, there's
• 39:53
  now there's three of us. I know the owners and the founders of these other two really well,
• 39:57
  why don't you let me take a crack at selling it to one or the other. And we can make a big return
• 40:03
  just because we got a merge company. And he said, great. And so I start working on it. And it was
• 40:09
  harder than I thought because the founder, founder wanted to me to pay the price I needed from him
• 40:15
  or let our people stay, you know, all that kind of stuff that gets caught up in those negotiations.
• 40:20
  So at the same time, I was made aware of the kinkos opening. And I'd had lots of laps around the
• 40:27
  track by this time. And kinkos had one foot in the grave the prior 12 months before I started.
• 40:34
  It had lost 11 million of EBITDA. And the pee for them that owned it said, you know,
• 40:39
  there's something in my contract that if I suggested that we just needed to shut it down
• 40:44
  after nine months, I would be assured I would get a good pay out just because they could cut to the
• 40:50
  chase. But that's my baby. When you asked about my whole career, kinkos was, I just want to take
• 40:57
  a second and think the HubSpot podcast network for supporting success story, the HubSpot podcast
• 41:02
  network has incredible podcasts like the product boss hosted by Jacqueline Snyder and Mina Kuhnlo
• 41:08
  Sithep. If you want to take your physical product sales and strategy to the next level to create
• 41:15
  your dream life, you need to listen to the product boss. They sit down for an hour. They do a
• 41:20
  workshop style podcast. They're going to talk about everything that you need to know to uplevel
• 41:26
  yourself, social media, marketing. If you're a consumer package goods, if you have any sort of
• 41:31
  physical widget, you need to tune into the product boss wherever you get your podcasts.
• 41:37
  It's so funny because it's not even what you were known. So the founder of kinkos, he sold
• 41:42
  his private equity firm and then in traditional private equity firm, that's it. It seems to go
• 41:49
  in the wrong direction after it gets acquired by a private equity firm. But this was for something
• 41:54
  that was notable and they missed. The reason it went into the crapper was because they don't
• 42:04
  do it. Big P firms, especially those that are organized around operations, tend to believe that
• 42:12
  command and control will always win the day. We will figure out what we have to do operationally
• 42:19
  and then we'll force it into the company. There's really only two kinds of operational styles,
• 42:25
  if you will. There is the academy company command and control. By the way, the CEO they brought in
• 42:33
  had been the CEO of Sam's Club. But when I started calling kinkos, the people's Republic of
• 42:42
  Kinkos, the P firms started to get it. I happened to be an entrepreneur. I happened to embrace the
• 42:49
  history of kinkos. I just had to get them to understand that where we were was not a tenable place
• 42:59
  to be. I was able and it's all in there. It's all in the book. I got that minus 11 million EBITDA.
• 43:08
  First 12 months on the job plus 120 million of EBITDA. Year two plus 180 million of EBITDA.
• 43:17
  Year three, two thirds of the way through the year, we're mapping at 240 million of EBITDA. That's
• 43:22
  when Fred Smith walked through my door. We figured it out and it was a great team. It was a team
• 43:29
  effort, but I had enough pattern recognition in my background to understand what I needed to do
• 43:38
  to start the wheels moving for a mega turnaround and it worked. They've been lucky, but it was
• 43:45
  pretty amazing. I don't think business, you know, we're laughing before we started recording,
• 43:51
  because you wrote a book that's more like a business book versus a memoir and we're talking
• 43:58
  about your editor. He's pushing back on the fact that as you're writing your memoir, you say,
• 44:02
  I got lucky. I fell up. I'm listening to you now. When it doesn't sound like anything was that
• 44:09
  lucky, it sounds like you knew what you were doing again and again and again and again. I mean,
• 44:15
  you don't look into, listen, that's correct. But you know what you do. You build a great team.
• 44:22
  When I say great team, this is another one of my proudest moments in business. 13 last count,
• 44:30
  13 people of our turnaround team went on to become CEOs. That's a world class team and how we
• 44:38
  recruited them, got them all bored and all and harness that energy is a book in itself. But the
• 44:44
  real book is, and this is something that I picked up along the way and it was my pattern recognition.
• 44:51
  When all I heard from everyone, when I'd say, what's going on? What's wrong? How this,
• 44:57
  how this gets so bad? Everyone would say it's just, it's a bunch of things. You know,
• 45:03
  everybody was completely demoralized. It's so many things. And Napoleon is sometimes credited
• 45:11
  with setting. If you want to know what's going on at the front lines, go look. I'm a big believer
• 45:17
  in that. I personally walked over 700 malls in America getting bad edges slash GameStop up and
• 45:23
  running in the right locations, not just locations for mall locations inside of them all. That's
• 45:31
  what I did and what I've done and everything I've ever done in my career is it's time I rear into
• 45:37
  an airplane and I get out there meet people. So when, when I started at Kingco's, I told everyone
• 45:43
  at the home offices in Ventura, California, I'm gone for the next six weeks. I'm going into all 42
• 45:50
  regions in America in every market. I'm going to run town halls across all three shifts and I'm
• 45:55
  going to be asking, we had 25,000 employees, I'm going to be asking every employee at Kingco's,
• 46:01
  what and a heck happened around here and what and a heck do we have to do to fix it? And by the time
• 46:08
  I was done, they knew what to do. The store managers, it didn't matter where they're always in
• 46:14
  Seattle or Miami. I heard the same story from everybody. And so I came back with the plan and we
• 46:20
  had put the plan in and the plan worked. And, and, and monumental turnaround and I used the other
• 46:28
  thing which no one believed, I sought out Paul Ornflut because that's kind of how I roll.
• 46:34
  I called them and, of course, he didn't want to talk to me because he hated everybody at CDNR.
• 46:38
  And he assumed I was another city. He didn't know what till I was doing. And I said,
• 46:42
  we didn't dodge me and just meet me for lunch here in Ventura. And he met me for lunch,
• 46:48
  and he came and loaded for beer. He pissed off his face with red.
• 46:53
  Four and a half hours later and into our second bottle of wine, he was just having a ball.
• 46:59
  And I worked, I worked through him also to get to a, and it's all, this all in the book what
• 47:07
  what we did, but he embraced everything that I was trying to do. And he loved the parts of the
• 47:13
  old kinkos which were gold, just gold. I brought them all back or I left them there. I wouldn't
• 47:19
  trade those for the world. And that's how you turn around a company. Everyone bought him because
• 47:26
  the plan was, we're going to do what all the manager said we should have done in the first
• 47:30
  place. That's what we're going to do. And it worked. And they always signed on for it. So it was,
• 47:36
  it was just very cool. Yeah, no, as I was, I was, I was reading this story before we jumped on.
• 47:43
  So Paul, Paul kissed you in front of 3,500 kinkos team, team members were hilarious.
• 47:50
  That's very funny. That was after the turnaround. That was after the turnaround. That was,
• 47:54
  that was going into the turnaround. He had bought into it. I had invited him to meet me after
• 48:00
  Ben Chura. He was banned from the stores. He wasn't allowed in the stores. But I've been,
• 48:05
  I've been invited to the Olympics and saw, like, sitting by Xerox. We were Xerox's biggest
• 48:09
  customer in the world. And I said, Paul, would you meet me and Salt Lake City? I'll take you on
• 48:14
  two of our stores. And he's like, why can't go in stores? They, well, let me, I said, Paul,
• 48:18
  I'm going to let you go in stores. So we went. And by the time we were done there, it was really
• 48:23
  clear. He and I had good chemistry. And I explained to him the whole turnaround plan.
• 48:29
  And he was, and he was saying, yeah, that's right thing to do. Yeah, that's right thing to do. He
• 48:33
  agreed with all of it. I said, what if we plan to surprise in our store managers meeting?
• 48:42
  And no one will know, but you and me, I'll announce you and you come out and talk to
• 48:46
  that. I said, they will go nuts. And he was so excited. He couldn't stand it. And that's when
• 48:53
  we, and everyone had told me, oh, he's so dyslexic. He's so 80 day. This is going to be the world's
• 48:57
  biggest disaster. He's going to go up there and talk for 30 minutes. They gave me 100 reasons,
• 49:03
  not to, to bring him on for this. And I said, guys, I need him. And I talked to Paul,
• 49:09
  or fun. I said, Hey, here's the book on you. You're going to take 30 minutes. You're going to
• 49:14
  promise 10. You're going to take 30. You're going to do this. Gary, I want to talk so badly. I promise
• 49:19
  you you can come out and you give me to hook yourself. But I will stay inside 10 minutes. I will
• 49:24
  say what you need me to say that. And so we were supposed to meet out in the middle in
• 49:29
  shake and this big stage in Las Vegas, 35 out of people. I announced him. And sure, not the
• 49:35
  place goes bonkers. And as we had planned, I walked from the podium to the middle of the stage
• 49:41
  to greet him. I was supposed to shake his hand and then exit the way he came out. And he would go
• 49:47
  to the podium and speak for 10 minutes. He stopped. I have my hand out. He didn't reach his hand
• 49:52
  out. He took my face and kissed me on the lips in the place. Of course, I'm stunned. But in my head,
• 50:00
  like I said, this is done. This went. This is a winner. He is endorsing the turnaround plan
• 50:08
  every single reason not to do this will fall away. When this company sees him,
• 50:14
  kiss me on the lips. I have been anointed by the Godfather. And I mean, I walked off and they
• 50:19
  said, see what happens. And I said, I did see what happened. And it was awesome. He's going to
• 50:24
  speak 30 minutes. I said, yeah, I can speak for an hour. It's this is game over guys. And it was.
• 50:31
  That's amazing. You know, now you now, wait, you have, you've joined private equity firm,
• 50:38
  correct? You after Kinko during it was owned by Clayton Du Boer and Rice. And then I would
• 50:45
  go to TPG after was going to ask because you've seen, you've seen the good and the bad
• 50:52
  when it comes to private equity firms and and founders selling their companies to the right and
• 50:59
  the wrong people. So what are some lessons that you've learned from Kinko's from any of the,
• 51:04
  from any of the transactions you've taken part in that you now I'm assuming with TPG try and do
• 51:09
  things right. So what are those lessons for an entrepreneur founder? So I, I was with TPG for 13
• 51:18
  years. I just, but in 2000, 2019, I started a glide path out and I just left the last TP, the
• 51:30
  board that was of a TPG company a year ago. But so much, this is where the pattern recognition
• 51:39
  really started paying off because I had seen so much. I could tell so, so investment teams from
• 51:47
  PE firms going they meet with company and they tried to decide what is a good company, good fit,
• 51:53
  good reasons to buy them. And I would sit in the same management meetings they were sitting in
• 51:58
  and I would see things completely differently from what they were sitting. And so I guess because
• 52:05
  they weren't experienced enough to know that body language sucked around the management table.
• 52:10
  For instance, I went to one management presentation in Chicago once it had 12 members of the management
• 52:17
  team sitting in the front nine of them had their arms crossed almost the entire meeting rolling their
• 52:22
  eyes looking. I was toxic. And everyone said, this is a great company. We're going to buy it and
• 52:28
  I was like, whoa, whoa, whoa, guys. We need to rethink that. And so,
• 52:36
  compete firms, their P firms are not unlike the management styles. Command they control
• 52:44
  versant material. Essentially, I'd describe an entrepreneurial company as yes for forgiveness,
• 52:49
  not permission. There are PE firms that are very rigid in how they analyze companies and how
• 52:57
  they do their due diligence and they have a playbook. And I think that's a good thing.
• 53:02
  But if they don't execute to the playbook and have things like assess the culture,
• 53:10
  what what is our investment thesis? We've heard their investment thesis is ours aligned with theirs.
• 53:18
  Usually doesn't, by the way, usually with PE firms buy company, they think they miss something,
• 53:22
  either strategic roll up. I mean, they've got usually a different agenda than their target company.
• 53:31
  And I think that you just have to be very careful if you're distributing authority down that low
• 53:39
  that you've got really good people on the front line. And so, they end up doing the first time
• 53:45
  they have a bad transaction. It all starts going right back up to the top. And all of
• 53:49
  the sudden, people who thought they had a throating in one of the silos, technology, consumer,
• 53:54
  healthcare, you know, all of a sudden they get overridden in what's supposed to be the final
• 54:01
  investment review committee review that finally, you know, a founder says,
• 54:06
  I don't like it. We're not going to do it. Yeah. So, I know it was interesting. That was very
• 54:11
  interesting part of my career for sure. Well, I'm also curious on the flip side. So,
• 54:17
  now you have the advice from the perspective of the private equity firm on how to manage a
• 54:23
  relationship with the founder of the entrepreneur. But also, how do you make sure that
• 54:27
  the transaction does go through? It is a success because I have seen, I think I've seen
• 54:35
  outside of maybe companies that, you know, Google and Apple acquired because it's a very specific
• 54:40
  incubation style acquisition that they deploy so that the company doesn't get to basically
• 54:45
  even from the inside out. I think a lot of acquisitions don't go great. You've done a ton of them.
• 54:53
  What makes an acquisition go well versus not go well outside of like they miss something into
• 55:00
  diligence? Because that's an obvious. But say the company is performing well, it's profitable,
• 55:06
  company acquires it, starts to die kind of like what happened with Kinkos. How do you avoid that?
• 55:12
  It's, I'll oversimplify it, but it is truly, you talked to me about the team you assembled
• 55:21
  for this because typically it is very typical for a new owner, a P based owner to put in somebody
• 55:29
  they've hired into the seat yo job. It's as easy as missing at what Clayton DuBler and Rice did with
• 55:35
  the CEO of Samsung. You look at that and go, oh, gold them. They got a season seat yo, yeah,
• 55:42
  but he's a command and control guy. And you can just imagine when he walks into St. Louis and says,
• 55:47
  I'd like all of you to be blue and I noticed it's red, except the founder of St. Louis is now the
• 55:53
  district manager. And as soon as soon as the CEO leaves the market, he tells everyone disregard,
• 55:59
  we're not going to do that. And so if it's, if you get the wrong CEO, they build the wrong team,
• 56:06
  they build the wrong team. Now you've got insurrection and you've got people at the water cooler
• 56:11
  gossiping and you've got, you've got glass door blows up. You know, the team, the team is the
• 56:20
  single first point of the spirit of what can go wrong. But I'll tell you, you said it and you
• 56:29
  are right, more of them go wrong than go right, but I would add to that at the start. It is
• 56:38
  seldom that you see a smooth move from the day the acquisition closes to the day they sell it or
• 56:46
  distribute it or go public or whatever they're going to do. Because invariably they didn't
• 56:51
  miss something or they had to pivot into something or some part of the business would not be able to
• 56:56
  coexist with the new business that they wanted to launch because they thought that was a great
• 57:01
  opportunity in the marketplace. And it can be any number of things, but you can absolutely
• 57:09
  get the ball back in the fairway. If you're honest enough, if you're having lovely performance
• 57:15
  reviews in a company, so you have these monthly operating reviews and you have a template and
• 57:21
  all the members of the senior team, once a month they come together, everybody does go through
• 57:25
  their page. And if you can find things fast enough, you can react to them and impact the future.
• 57:32
  So I wouldn't, I wouldn't why say that, you know, they don't all go bad. They do go bad in the
• 57:41
  early days, more often than be firms ever expected they would. And now you're in a staying power.
• 57:48
  But it's about whether or not you can recover. It's the recovery. Yeah. And that's where you have
• 57:53
  to get real with yourself. You got to get honest. And you know, I have this other saying,
• 57:58
  call them cues into those. Sometimes you look out the window and sometimes you need to look in the
• 58:05
  mirror. And what you tend to find is many top management people in companies tend to look out
• 58:14
  the window when something goes bad. Oh my God, did you see what our competitors did? Oh my God,
• 58:20
  did you see what happened to our cost of goods? What happened? They seldom look in the mirror
• 58:27
  and say, what have I done to contribute to this and what am I going to do to help us get out of this?
• 58:35
  And if you've got a good culture with the senior team, that sort of behavior is reinforced by the
• 58:42
  CEO that, oh, wait, he's not shooting people when they do something wrong. We're all come together,
• 58:48
  we're going to put our heads together. How are we going to get through this? And then bet that kind
• 58:52
  of promotes more honesty and integrity among the senior team and you can get to that right answer.
• 58:58
  I love that. I want to, I want to just touch on a couple. If you have a second to do this,
• 59:03
  a couple like of the soft skills and ideas on personal development that you speak about in the book.
• 59:09
  And what we've gone into today is sort of just like we've done a little bit of memoir,
• 59:14
  a little bit of tactics. Before we sort of, I don't want to say pivot because it's all part of the
• 59:19
  same conversation. But if people actually want to go pick up this book, just give me, you know,
• 59:25
  for the listeners, what are they going to get out of it? Who's it for?
• 59:28
  So the book is really for anyone on their own journey and their career, it gives lots of ways
• 59:34
  to think about your journey and lots of ways to give you permission on your journey to do things
• 59:41
  your way. And I go into pretty great depth about that. But during my stories, I, and the book is
• 59:47
  more collection of stories than it is anything else. But there's stories where I learned something
• 59:52
  important. And the whole book builds to my six leadership principles, which emerged at the back
• 59:59
  end of my career as I thought about every single thing that I had seen good and bad along the way.
• 1:00:05
  What are a set of principles that could could be evergreen in a company? And by the time I left
• 1:00:12
  Kinkos, I had already installed these leadership principles. And I used them in my role at TPG,
• 1:00:20
  when I would be a lead director or a member of the, or I would talk with the CEO, not about
• 1:00:26
  mine as the definitive leadership principles, but you need leadership principles as a north star
• 1:00:32
  in your business. And let's talk about what is important to you. I'll tell you what was
• 1:00:36
  important to me, but that doesn't mean it's going to be right for you. But you get to, but if you can
• 1:00:41
  have open honest conversation about that. And I have to tell you, the one thing I'm sure of the
• 1:00:48
  leadership principles keep you, especially you can never be ready to face all the stuff you
• 1:00:55
  face in business. I spent 25 years as a CEO, first one thing than another. And I continued to see
• 1:01:02
  crap happen at the end of my 25th year that I couldn't believe that I would just say, you have
• 1:01:08
  got to be putting me on. How could this be happening? And so when I don't, I don't think people
• 1:01:14
  should reinvent the wheel. I think that if you understand when things that people would call
• 1:01:21
  soft, that we're going to have honesty and integrity, we're going to have respect for
• 1:01:25
  others. We're going to have open honest communications. That it just those three by themselves
• 1:01:32
  informs someone on what to do. If they just learned something, they wish they hadn't learned. Well,
• 1:01:37
  you know, we're going to have open honest communication. Then that means let's disclose.
• 1:01:41
  And of course, that comes back to my bank thing. I mean, everything will come back to
• 1:01:47
  something. And the book builds up not just to the leadership principles, but also the operational
• 1:01:54
  tactics, which I go into in the chapter before the last chapter. I love it. So the book, just so
• 1:02:02
  everybody knows is called always learning lessons on leveling up from GameStop to Laura Mercier.
• 1:02:06
  So that's going to be available at like literally anywhere you get books. I'm assuming.
• 1:02:12
  And we'll put everything in the show notes as well. You speak about a few different things,
• 1:02:16
  which you know, I've heard. So just to itemize them, you speak about emotional intelligence,
• 1:02:22
  you speak about continuous improvement, you speak about resilience, strategic thinking. These are
• 1:02:29
  all traits that we've heard before. I want your unique take on some of these traits. Some of the,
• 1:02:36
  maybe, maybe your opinions on them as to how they're useful, how they're not. And you
• 1:02:39
  can go one by one or whatever, because everyone's going to know continuous improvement. I don't think
• 1:02:43
  people are going to disagree with that. But why? Why is that so important? How is it? How is that
• 1:02:48
  helped you in your career? Sure. Well, start with continuous improvement. And by the way,
• 1:02:53
  my co founder, uh, Babbage's Slash GameStop, Jim McCurry, and we're talking about this adept,
• 1:02:59
  in that last week. And thank Jim has convinced me that I may need to think rethink continuous
• 1:03:05
  improvement and maybe drop improvement and make a continuous change because the world is changing
• 1:03:14
  wildly and dramatically and with, with a greater speed. The reason I've always said continuous
• 1:03:21
  improvement is you want to constantly be better at everything you're doing because that's a path
• 1:03:28
  to glory. If you think about scale, if you think about just improving year over year performance,
• 1:03:33
  continuous improvement is critical. But as Jim pointed out to me, yeah, it's critical, except
• 1:03:39
  sometimes you're so focused on the operational changes that are the operational improvements that
• 1:03:46
  you'd like to make that you miss major strategic imperatives that are changing right underneath
• 1:03:54
  you. In the case of video games, tell about a huge insight right now everybody thinks that's
• 1:03:58
  really, that's well, of course you do that by used video games and refurbished video game systems.
• 1:04:06
  That's a big idea. That's a very big idea. And it ended up being 500 million dollars of the
• 1:04:12
  profits of GameStop each year was simply their used sales and the refurbished hardware sales.
• 1:04:20
  But that's huge. Well, that's a change. That's not continuous improvement. That's a change.
• 1:04:25
  The migration after us out of the malls because the new leadership and this is not
• 1:04:32
  Gemini, these are the new leaders in the company saw the white power centers were starting to pop
• 1:04:38
  up all over America and it felt like the easiest cheapest high, highest ROI thing you could do to
• 1:04:46
  pivot out of major regional malls and into these power centers. That's a change because that's
• 1:04:51
  continuous change. You wouldn't have thought about that if you were just trying to improve operations.
• 1:04:56
  So those are those kinds of things. I do think the way I like hiring people who are going to report
• 1:05:04
  directly to me. If I, if during the course of an interview, I don't hear something like I want
• 1:05:11
  your job. If I don't hear that, that's a bad thing because I tell them I need someone who wants
• 1:05:21
  my job and then my job is to make them successful. And if they are successful, I'll do whatever I
• 1:05:27
  have to do to ensure they become a CEO. So that's important. But this other thing and then this is
• 1:05:34
  you'll laugh at this maybe, but I don't need someone to say I have a burning desire to win.
• 1:05:42
  If they have that, I think that's great. But I don't look for that. I look for someone who will
• 1:05:48
  refuse to lose. And that is a very different mindset than when at all costs. It refusing to lose
• 1:05:59
  suggests a tenacity, an aggressiveness, and an ego thing that simply no in the face of
• 1:06:08
  insurmountable odds yet keep coming back. That's different than I have to win because those kind of
• 1:06:15
  folks sometimes throw in the towel a little too quickly. So I like hearing either one, but I have to
• 1:06:21
  hear if I don't hear I've got a burning desire to win. I need to hear I refuse to lose somewhere
• 1:06:28
  I like that is critically important. I it's critically important. And then just this
• 1:06:34
  this whole leadership development and I in the reason I did this book and the reason I was doing
• 1:06:39
  this podcast with friend of mine, Jill Lewis is I started mentoring you know about 20 years ago
• 1:06:46
  and it came to me. I did not go to it. I didn't read a thing about mentoring, but people kind of
• 1:06:51
  wanted my opinion about stuff and that started growing to where now it's I've got over a thousand
• 1:06:56
  mentoring sessions. We actually went through my date books from the last 20 plus years.
• 1:07:03
  And so this feels to me like a way that I can mentor more broadly where I don't have to sit down
• 1:07:11
  at a lunch with one person. And that's between this and the podcast. This is stills me up. If I can
• 1:07:21
  if I can hear someone say, wow, good timing. Well, this I was faced with a particular issue and
• 1:07:28
  just reading this. I think I sorted my way through it. Well, that's a win. That's a win to me.
• 1:07:34
  And it's about leverage too, right? Like you're leveraging like audiences,
• 1:07:38
  you're leveraging technology to get the message out because you can hustle your way
• 1:07:43
  to the first milestone. But after that, it has to be leverage. You can't you can't mentor a million
• 1:07:48
  people with that. I mean, that is true. And it's also true. And when you talk about evaluating
• 1:07:55
  companies, you need to understand what scale is and you need to have some idea, does this company
• 1:08:03
  even know how they could leverage their scale? Yeah. And because that's a very important if you're
• 1:08:09
  deciding whether or not to make an investment, that's that's something you want good line of
• 1:08:13
  side on. You mentor a lot. That's actually an interesting point as a mentor. How do you choose
• 1:08:19
  a mentee as a mentee? How do you choose a mentor? Well, I do think that's a great one. And one
• 1:08:24
  that I've been pondering lately, actually. So again, I don't decide who to mentor. I am a very
• 1:08:34
  different. My background is episodic. So it's either someone I know or work for or someone
• 1:08:40
  that someone I know said, why you call Gary? And they essentially come to me and say,
• 1:08:44
  I've got the situation. Maybe you can help me think about it. That's how it comes in. And I might
• 1:08:50
  hear from them again three or four years later. And not before I don't have a regular mentoring
• 1:08:57
  relationship with anybody. And I never have. They do people just kind of come to me. And I like
• 1:09:03
  the episodic. I like to believe that perhaps over a lunch, I could ask enough questions. And I
• 1:09:11
  go into detail in the book about theocratic method of teaching. And I really embrace that. So
• 1:09:17
  and the danger of the word should. I simply ask questions. And if I do my job correctly
• 1:09:24
  with someone who's trying to solve something of importance in their life, they will have an aha
• 1:09:29
  moment when they come to the answer that's right for them. Because there isn't. There's never
• 1:09:36
  just one answer. There are an array of answers. And you just have to pick what's best for you.
• 1:09:43
  Very wise. I love it. And everybody always has the answer inside. They just need somebody to pull
• 1:09:50
  it out of the. We always know what we have to do. And it's not just it's giving them confidence
• 1:09:56
  to listen to themselves and to decide what might be right. I love when people because they
• 1:10:03
  almost it's almost like a like a cartoon. They they they sit up straighter. They're just kind of
• 1:10:10
  bows out their shoulders getting. I know what I'm going to do. And I like I love being in the
• 1:10:15
  situation where I can say, well, what is that? Because we haven't talked it hit them in their
• 1:10:21
  brain. And it resonated in a way that all of a sudden, they felt awesome. For me, that is
• 1:10:26
  success. And that builds me up. And that's what I've done. And that's what I want to keep doing.
• 1:10:31
  I love it. Okay. I have one last one last question to bring it home. You know, you look back over
• 1:10:37
  your entire career. You've had multiple successes. If you were going to tell your 20 year old self
• 1:10:43
  one thing, what would that thing be? It would have probably been the very aware
• 1:10:52
  of the impact of your choices and work on your family and on the growth and development of
• 1:11:00
  your kids and of your community. And I've been married 47 years. So I'm not I didn't I didn't
• 1:11:09
  fail to have a block. It could have been better. I could have been better. And that's that's
• 1:11:16
  probably this work like balance thing that everyone is complaining about. Which I'm seeking.
• 1:11:22
  All right. I'm not complaining so much about that as other people are. I do believe and tell
• 1:11:28
  people where look, if you're going to be in account and guess what March and April, you got to
• 1:11:33
  check out because you're around the clock. Or if you're in a Christmas business, guess what?
• 1:11:37
  Thanks, given the Christmas, you don't get to hang around. But you better find the time when
• 1:11:42
  you know, when you are around and when you and you need to like I always knew, I would be home.
• 1:11:49
  If I was in Dallas, I would be home at 545 at night. So I could have dinner. It's been the
• 1:11:53
  whole evening with the kids with their homework, bad, bad, putting them to bed and all that.
• 1:11:58
  I'd take it out the next morning. I've been known to be at my desk at three in the morning.
• 1:12:03
  But I have to be able to say these will be the blocks of time that I will not violate.
• 1:12:10
  And they are for my other interest. Then if you don't have a family or a small family,
• 1:12:16
  you've got something, whatever it is, whether it's a workout regime, whatever it is,
• 1:12:21
  you have to be able to tell your you've got to be able to compartmentalize your life in a way
• 1:12:27
  that you actually can do it, not go crazy. Yeah, you know, just on that point,
• 1:12:36
  do you think it's because you did it, you maintained a marriage, a family, you said you could have
• 1:12:43
  done parts of it better. Do you think that this is something that entrepreneurs struggle with that
• 1:12:50
  is not discussed or spoken about when they're getting started? This like one of like the sort of
• 1:12:55
  them, I don't know how to put it, like one of the negatives of entrepreneurship that people miss
• 1:13:02
  the mark on the most when they start to build their own thing. They don't understand
• 1:13:07
  like the commitment that it's going to take or do you think there's a version of entrepreneurship
• 1:13:10
  where you can have balance? I think it's all resident in the person. If if you're a person that
• 1:13:17
  is so obsessive about what you're doing, but you're not obsessive about your spouse or your
• 1:13:26
  family or your kid however you want to slice it up, well that that's sending a message that you
• 1:13:33
  need to know that you need to be aware of and you need to understand the implications of that
• 1:13:39
  on whatever those other things are. When I got, I got a call, it's been 15 years, 20 years,
• 1:13:47
  I got a call for American Airlines and they told me I was their number one flyer at the history
• 1:13:52
  of American Airlines and so I was thrilled that I've got a bunch of little planes all over my office
• 1:13:58
  except then when I thought about it, it's like, where am I so proud of that? I'm not, that's,
• 1:14:06
  that is not okay, that speaks to all of you and I had to live with that and I lived with it still.
• 1:14:17
  So I think know what your advice is and I think that work can be advice and building can be
• 1:14:23
  advice and know what your advice is because if you don't have the self-awareness it can destroy you
• 1:14:29
  even if you're building something incredible. Yeah and in the self-awareness slash narcissism
• 1:14:36
  that's the other part of it because God forbid you become successful and all of a sudden you
• 1:14:42
  have more money than you've ever had. You got way more money than you need or can spend and maybe
• 1:14:49
  you start believing your own press clippings and is that a good thing? Yeah, that's and people are
• 1:14:57
  inclined to want to do that because they will probably the most surprised person in room to find
• 1:15:02
  out that that's successful but you need to think about how am I and think about it in a cold
• 1:15:09
  and sober way how will my life change or how should it change or how can I manage how it changes
• 1:15:19
  in a way that still feels good to me feels good to my spouse, to my family, to our lifestyle,
• 1:15:27
  to everything else and you can't not have that conversation. You can have it with yourself
• 1:15:33
  staring in the mirror but you better have.