Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
Gary, I'm very excited for this conversation. We had a fun call last week and I think there's going to be a lot of fun cross pollinating the different audiences, your experience and you know, I actually saw one of your posts today on LinkedIn talking about how you're trying to help people that don't have the access to the experiences that you've had over your lifetime. And you're in a fun chapter, it sounds like, where you spend a lot of time on how to organize the thoughts and the experiences that you've had and distill it down for helpful tidbits. So I'm very, very pumped to have you on the show.
[00:00:45] Speaker B: I am having fun working through different ages and stages for what of my background might be of interest or helpful to them. And so I really start at 8th grade grade when kids kind of start thinking about work and life and stuff like that. And then I moved to older high school kids who were thinking about colleges, universities, where do I go? I can't afford. It's counterintuitive to most kids I find that are in high school that when they say well I don't really have money for college, then you can say, well that means Ivy League because they have all the, if they accept you on a date, they don't look at you on a needs based basis and if they want you and you don't have the ability to pay, they give you a merit scholarship. So you got to think big. And then it's a, that's awesome. And they're going, oh, I never thought of that before. All the way then through college, all the way from early career through C Suites. And I and as I think about the different groups, I think think about where I was in those ages and stages and what kind of lessons they might be looking for. And so I have different kind of talk tracks depending on the group.
[00:02:03] Speaker A: Well, which is really fun because you and I, when we were talking prior, it's like you know, the audience as, as middle market entrepreneurs trying to figure out how to take this something that they created into something else based on different ownership journeys or however they want to scale their company or their role and thinking through the different journeys that you've had. And like, and I know you've got your six leadership principles that I want to dive into that You've distilled, done. You've mentored a lot of people. So you have a lot of stories. And you and I shared a lot of. I resonated with how you. How you like to mentor people and take their baggage.
[00:02:34] Speaker B: But I want to, I want to
[00:02:35] Speaker A: just address like as, like, let's talk
[00:02:38] Speaker B: about a little bit of your background
[00:02:39] Speaker A: because I know the people that might not be familiar with some of the. Some of the things that you've done to give you kind of the scars, I would call it, that are. That are worth listening to.
[00:02:49] Speaker B: Sure. So I was born and raised in East Texas in a town called Texarkana.
Family pretty much middle class. My family owned one of the big furniture stores in town and then later, in addition, a big bowling center in town.
And it was a great small town, a great town to grow up in.
When I got out, when I went to college, I went to the University of Texas in Austin, because from Texarkana, that's like the tip of the top of the mountain.
And had a terrific experience there. But was. And was a government major, frankly, every semester.
[00:03:26] Speaker A: Oh, no way.
[00:03:27] Speaker B: Every semester I'd take all my courses and whatever course I made the best grade and then I switched to that major.
And then of course, I would flunk out of the first. Like, I made an A in biology my first semester in college. So, okay, I'm going to take zoology. I guess I'm going to be a doctor. Had to drop that class within two weeks.
I bounced around and ended up being a government major and frankly, only took one class in the business school. And that was because at my brother's wedding, interestingly enough, everyone, it was in Wichita, Kansas. And everyone was whispering about this guy that was at the wedding. He's the richest man in Wichita, Kansas. And he went to Harvard Business School. So by the end of the weekend, I'm going rich Harvard Business School. I know what I'm going to do after college.
And so then I. I went back to the University of Texas and took a business school course pass fail. It was the only one I needed between me and graduating.
And a teacher failed me in it. And he said, you can't make this stuff up. And I went in and said, no, you don't understand. This is the only course I've got to graduate because I've got to start working. I'm out of money. He said, what are you going to do? And I said, well, I'm a government major, you know, I thought I probably shouldn't say business. He might not Change my grades. I said, I'll probably go into politics or something. I don'.
[00:04:46] Speaker A: Know.
[00:04:46] Speaker B: And he said, if you promise you'll never go into business, I'll change it to a pass. And I said, you got it.
[00:04:55] Speaker A: That's awesome.
[00:04:58] Speaker B: And so from, from there I went to hbs and it was a heck of a, heck of a journey. I had a few zigs and zags between, between that business school professor and, and getting to Harvard Business School. But I went and had a blast. Learned a lot and kind of did the same thing. When I graduated, I had no clue what I wanted to do other than I did not want to, you know, I wanted to experience the world. And I had just started dating a woman and I wanted to marry her. And I asked her if she could live anywhere. She was in law school down in Texas. I said, if you could live anywhere in the US where would you want to live? And she said, oh, man, San Francisco.
So I marched right into the placement office at Harvard Business School and there were a couple of department stores interviewing HBS students for jobs. In their department is Macy's and the other big department store. I said, oh, this is it. If I can land a job in San Francisco, then I can ask her to marry me. And that whole thing worked. I landed a job. When I asked her to marry me, I said, and oh, by the way, I've got a job in San Francisco. You know, I was hedging my bets and I said, and that's how I ended up in department store retailing and through a pretty fortuitous series of events that kind of underscored how I think about life and work. Within three years I was actually a vice president from the training squad to BP senior merchant level and, and started developing an understanding of what was happening to department stores, which was their lunch was being stolen by specialty stores.
And, and I. You could see the handwriting on the wall. Any high margin area in a department store was stolen. In a specialty store like the Gap, the Limited, you just go down the list and make them. They started killing department stores at the exact same time. My study group mate from Harvard Business School who was a consultant at Bain, which is what you do if you're smart, coming out of Harvard Business School, he had gone to manage their west coast office and had a bunch of video game clients and he was coming through Dallas one night and he sat down at our breakfast table and he and I started talking and he started talking about this new thing, video games and computers that could be were going to be small enough to be used in the home and what software was and on and on and on. And I said well wait a second, Jim.
If this really happens, the specialty store channel will become an important, if not dominant channel of distribution for video games. And if everything you're saying is right, you ought to quit your job at Bain and I ought to quit my job in department stores and we ought to start a store that sells nothing but software for video game systems and personal computers that be used in the home.
And he said we didn't learn till much later. We were both the others insurance policy.
If Jim McCurry is going to quit his job as a top bank consultant is willing to do that, start a specialty store, we, we probably ought to walk away from what was going to become a CEO job in the department store world. And I said no kidding. And Jim was the same way. He was telling his friends, that's awesome.
So we ended up starting and our long story behind the name but we called it Babbage's at the start. We later changed it to GameStop.
But sure enough the world rolled out exactly as Jim had shown me in a bunch of slides it would. And we opened the very first software store in the world in June of actually end of May of 1983.
What our first. Most of the software was in baggies. Literally like baggies.
One company who was so excited, they had a whole backstory and they were just starting. They were ready to ship their product on their first day of business. They shipped their first batch of product for us to put in our first store's first day of business. That company's called Electronic Arts.
And we developed a relationship with them that then rolled into Activision. That then rolled in. Wow.
Oh yeah.
[00:09:09] Speaker A: And I mean just at the forefront of it all, which is so crazy. I mean you literally like. Yeah. You had like the surfboard of the tidal wave because distribution. Yeah.
[00:09:17] Speaker B: And. And one day got a call from Bill Gates. He said do you mind if I come down? I do not understand what you guys are doing, but you're selling a lot of flight simulators. I would love to understand.
[00:09:29] Speaker A: That's awesome.
[00:09:30] Speaker B: So that started the video games story. We went public, we bought out our biggest competitor, ready to go to the next level, buying that competitor software, etc. Stores required us to change our name because they weren't going to be bought by us and we weren't going to change. They didn't want to be bought by Babbage and we didn't want to be bought by software. Etc. And the result was we changed the name.
Also the two principles of that store were telling their their big owner was Barnes and Noble. And they said they really, it was obvious they didn't want to lose their jobs. I'd already been doing it 12 years. I had the entrepreneurial urge to go start something else. And so we managed for Jim, my partner, to become CEO. We never used that title and we, we in cutting the deal with them, we said, okay, here's what will. Gary is going to go. He'll go start something else. One of you can become president of this combined company, but Jim needs to be the CEO sitting on top of it, which they agreed with. And next thing you know, we had a deal. And I had been thinking, because I was in charge of cosmetics, when I was in a department store, I learned about a new trend in cosmetics which led to my next startup, which was the company today called Laura Mercier Cosmetics. Won't mean much to you. Going to be hard to find women who wear makeup who don't know it. It is a major global makeup brand. It's called Laura Mercier because there's a makeup artist named Laura Mercier and she developed the line, we licensed it and, and it's now major glow I saw. I sold it to Neiman Marcus and they ended up selling it to, gosh, a couple of companies. It ended up, it ended up being, I think, in the l' Oreal portfolio of companies.
[00:11:23] Speaker A: And Gary, it's so helpful and I want to, because I want to take a pause here because I know that we want to get into then your private equity days. You got this Kinko's story and FedEx story. And so there's all these different chapters of your career that I think are really helpful that we can pull some gold nuggets out of. But what I think is one question that I have kind of about the whole GameStop journey is like this thing that I like after my father and I sold and a lot of the people that listen in or watch our workshops, it's like they build something that's tied to their identity.
They never really understood valuations. They were solving for revenue for their brand, for their customer. And then there's this whole, like, momentum that comes on where they eventually go to private equity or public or something else happens. And you know, there's so many different ways we could skin this cap for the question, but like, like just dealing with that roller coaster and that journey of like. And especially with what happened with Gamestop this last couple years. I mean, I told you we wouldn't go down the whole, like, hey, the dumb money. Like, that's a fantastic, you know, flex. People can go watch it. But, like, you built something that. When I think about the identity that is tied in a lot of entrepreneurs and you, Your brand and your customers still care that much that they, like, literally took on Wall Street. So, like, how did you think about what you had created? And then as the company evolved and other people got their hands into the cookie jar and things changed, how did you deal with that whole journey?
[00:12:49] Speaker B: Well, we were obviously at the outset, very proud. We knew when we started. I mean, you have to be able to look back at that point in time if you use the word software. In 1983, people thought you were talking about women's intimate apparel.
So we literally had to be able to explain to a customer what it was, the way the store was laid out. And we taught all of our people, we said, look, the hardest thing we're gonna do is get people to understand this is safe, this is fun. You will enjoy yourself. And so we put monitors that showed gameplay in front of the stores. We had teachers who would be in the field teaching everybody in the stores about gameplay on various sorts of games.
So one of the outcomes of that was. And it started with parents who were buying games for their kid or their kids and. And went on into the kids was that here was a store that talked their language. They could hold up a video game and tell, look, you got to do this. And when you get from this level to this level. And so people, before it was cool, we had legions of fans who would come in. We knew them all by name. I mean, we remember Jim and I laugh. We remember Big Dave who used to come into town, East Mall out in Garland, Texas, with his coveralls on from his farm. And we knew what he wanted.
And there were all these characters, and they are who lifted us up first. It was the real nerds. As everything goes, it started with just the intense gamers that had no other life. It was like that in the early days. And so we catered to them. And then as the audience grew, we learned how to speak to all different levels. So we.
We were not surprised, frankly, when the main Jim and I began. We both talked on the phone when this started happening, and because our phones started blowing up, I. I know a lot. I can place a handful of languages I can know.
That's French, that's Spanish, that's German, that Japanese, that's Chinese. We were getting, you know, hello, and there'd be somebody in some language we couldn't even decipher trying to talk to us.
And we had both talked and said, we're not getting into this. This is, this is after our time. This is a different age. There are people who can speak to this. But Jim and I knew what the deal was. We would talk about it.
[00:15:23] Speaker A: Your DNA was in those customers.
[00:15:25] Speaker B: I mean, like, yes, yes. And now they were in their 30s and they were in their 40s and the same passion. And all of a sudden they open up the paper and say, whoa, big money thinks they're going to take on GameStop. We'll show them. And they're all on Reddit, that the early gamers were the first Redditors, you know, so they're all still populating Reddit. And so they all knew and they all got together, not a surprise to Jim and me, and said, well, we'll show them. They clearly don't have a clue who they're messing with. And we were just like, wow.
But that's a great example of passionate fans for a brand and what can happen, right?
[00:16:12] Speaker A: And, and Gary, what, Like, so my question for you is, like, there's a lot of people that, so my personal experience and a lot of people listening and when they have, like a lot of times they started their business because they knew the customer. And then what happens is in this kind of. And this will trick into, into some of your other stories too, is that when I've watched people, I mean, out of 400 episodes, I have people that have shown, got on the show. Like, I love what I built because I mean, Chris Carlson literally started. He, he created the, he created the, the shield for the snowmobile light in plastic mold in his oven. And like now Polaris, I mean, like, it's universal. And then he sold the private equity and that gentleman was not very happy about it. And so, and he expressed his opinions on the show. And I say this because what happens, there's this mismatch of like, what the owner and the founder created the DNA of the customers. I mean, like you, like your audience and your customers proved they, they went after Wall street where a lot of times, like there's this mismatch of after the sale, the interest and the motivations of the shareholders change and then they have a disconnect to what originally built the organization. And I think GameStop proved that. So how did you mentally deal with that, like, in between of what was visible?
[00:17:26] Speaker B: Oh, that's a very good question. I suppose. I'm wired A little differently because I understand what you're saying, but I have never been wired to.
This is my baby and I will, and I will protect it at all costs. I have always been wired into customers and into our team members, and I care a lot about them.
But for me, I'm one of those people, like, corporation is not a person.
And I check. Jim and I used to talk about that in our companies, we check our ego at the door. There's nothing that egos can do to make this a better company.
So I think for Jim and me, it was. It was easy to go do something else. And we kept our relationships and frankly, lots of the early team members have. Have made more than a few stops with us because we know them, they know us. And I mean, you know, if you'd like to talk about. My favorite stop in my career was Kinko's.
[00:18:35] Speaker A: Yeah.
Before we. I want to hear that. But I think it's fascinating because, like, as I'm trying to picture your mindset, because Chris Pavely from MapQuest said the same thing. And I think there's a little bit of this instilled a little bit more in, like, the Silicon Valley tech startup space than there are maybe, like, the family businesses that might have, like, you know, a lot of their community. And like, I kind of tried to decipher different roles, but. So if you have this entity, you're not this entity. It doesn't have a personality, but it's the team and the customer. So do you view that as something that can flow between entities and between what they're buying? It's more of like. Because, like, how did you deal with the fact that, like, what if the corporation then treated your customers, that you promised something differently after you sell it?
[00:19:17] Speaker B: Well, I also have a. There is a reality that if you buy my company and you pay me what I decide is a fair price, you got. You paid your nickel and you're going to get your dance. It is your company. It is not. It is not my company. And I went through that with Fred Smith a bunch at FedEx in the later days. I said, look, your company, you bought it. You tell me how you want me to get this thing organized and integrated into FedEx, and I'm gonna do it now, I'm not going to do it without telling you what I think, you know, but I. But I will end every time I tell you what I think with, but you own this company, and if you tell me to take it another direction, I'll take it in another direction because I'm a big believer. And if you own it, you own it. When you sell it, you don't own it anymore.
[00:20:11] Speaker A: So I think that's super, super, super helpful because sometimes people are, they forget that quite a bit. You know, let's go back to your now. So now you said your favorite story is Kinko's. Those are your favorite stop in your career. And why? What's the reasoning behind that comment?
[00:20:26] Speaker B: Oh, it was, it was so perfect for me.
Okay. There are.
I had then been in several startups and I knew in my, my DNA was as an entrepreneur. And I also recognize there are really, there are more than this. But, but, and not to be too overly simplistic, there is a command and control management style for a company and there is an entrepreneurial approach.
And those two are definitely the bookends of the ways you manage companies. And command and control means that the people at the top determine what to do. They install Jack Welch kind of stuff. Jack Welch, it's the army. It's. Okay, here's what, here's what they were told. It runs down the chain of command and people don't question it. It's in a. And great. And I haven't spent two years at FedEx, the ultimate command and control company. If Fred Smith said we're going to veer 4 degrees starboard at 2:05am next Wednesday night, half a million people around the world do exactly that.
[00:21:39] Speaker A: There is another wild.
[00:21:41] Speaker B: There is nothing wrong with that. And it's probably the only way to run a big company. And I had, I actually had quarterly business reviews with Jack Welch for three years. And he understood the difference, but he also recognized that at some level, you've got to start figuring out how to feather in command and control.
I disagree with that. But that was. We, we used to argue about that.
If you look at the DNA of Kinkos, started by a crazy entrepreneurial guy in an entrepreneurial world, I will tell you, Ryan, you always should ask for forgiveness, never permission.
And I mean that. And then I'll follow it though, by saying, hey, you know what?
I don't care when people make mistakes until they make the same mistake twice. After we talked about it, then I start carrying a lot.
[00:22:35] Speaker A: Yeah, yeah.
[00:22:36] Speaker B: But you know what? People make mistakes. And so Paul Orfala, the founder of Kinko, spent 30 years building a company that was kind of based on that. In each part of the country, there were owners, equity owners, and they ran it how they wanted to run it
[00:22:54] Speaker A: and what kind of equity was it? Like a France, like Like a.
[00:22:57] Speaker B: It wasn't. They were literally partners. The way Paul, the Paul start it went all the way to the floor of the stores. A fraction of the action program. So that every single member, every single member of every single team and every single store would get a fraction of the profits of the company above whatever profits they made the prior year. And the newest people got the fewest points. It wasn't by store managers yet.
It was by longevity and being part of the company.
[00:23:28] Speaker A: Cool.
[00:23:29] Speaker B: And it worked.
So here comes a private equity company 35 years later and says whoa. For all the reasons I just said. Can you imagine how strong Kinko's would be if you just put a command and control management structure on top of it. Think how you could leverage your scale. Think how you did it at all. The typical stuff, except they never understood the power of the DNA of Kinkos. So that when. And they brought in a world class CEO. Truly world class. And after Kinko's, he went on and got back to being world class and in other gigs. But Kinko, the he, the. The body rejected the organ. You know, I mean it just because.
[00:24:19] Speaker A: That is beautiful language, Gary. Because like I think what I've heard is like you got command and control and you got the entrepreneurial. There's not necessarily good or evil. There's just different structures because you can't say that FedEx is a non profitable company. Right? But there's just different structures. But if you replace the heart of one to the other, you're going to have a rejection because the DNA of the organism is wildly different on the outside.
[00:24:48] Speaker B: And what I started doing to explain to the PE firm and they hadn't gotten it until I told them. I said, guys, you brought in an incredibly good command and control CEO, but you brought them into the People's Republic of Kinko.
That doesn't work, guys. And guess what? I've started two companies from scratch. And I'm here to tell you that until you start treating the company and the people in it as members of a team, where we can all act together and we can work on things together and ask for forgiveness instead of permission because that's how it always worked, you're not going to get what you need.
That isn't to say that I didn't figure out the things that needed to be done and figured out how to get them done. But you have to know what to keep. For instance, at Kinko's. And I love these stories. That's still. And that's why I love my experience so much. When you go to start a new store, it does not matter if you started as the store manager or the lowest rung on the channel. You clean the bathrooms. We don't outsource bathroom. You clean the bathrooms until there's the next new person.
And that's awesome. If the store doesn't hire a new person for 12 months and the manager happened to be the last one in, they're cleaning the bathrooms every day.
That's how it works. And that's fair.
Everyone in every store had a fraction of the action.
And the thing that was so beautiful. Now, just to fast forward when the sale happened, first of all, Fred X was an entrepreneurial founder. So when I say People's Republic of Kinkos, he almost fell out of his chair laughing because it was a little bit. People's Republic of FedEx. In the early days, he went to Las Vegas and gambled to make enough money to make payroll, his second or third payroll. He was out of money, so he got it.
[00:26:46] Speaker A: Yeah.
[00:26:47] Speaker B: And so when you have someone who gets it, well, that's a lot easier when you start talking about how are we going to integrate this into that? What's going to be important? What are we going to pay for all those things? And by the time the event happened to sell to FedEx, we already had Kinko's speaking differently about the business, but still managing it. But they understood that, guys, we gotta do something or this company doesn't get to stay here. And let's talk about. And then when you can talk about, guys, you know, we have five stores in St. Louis within a one and a half mile stretch of one road. The store managers can go out and wave to each other down there, up and down the street.
Well, you know what? We're getting large corporate business now. And those five stores compete against each other to win that piece of business. Now is that smart? Yes. Someone tell me, is that.
[00:27:40] Speaker A: Yeah.
[00:27:41] Speaker B: The answer, of course, is no. And you can run down. Do all five of them need to be open 24 hours a day, seven days a week? Not really.
You know, do we need two and a half million dollars worth of hardware in each low cut? No, we really don't.
[00:27:55] Speaker A: If my old company was selling you the hardware, you know, the answer is yes.
[00:28:00] Speaker B: But I mean, that's. And so that's one thing. The other thing was when I started at the company, all we knew was we were in the ditch. And you go around and depending on who you asked, you get and said, what's going, what's happened here? What where'd the great company go? We're losing money.
I don't know. Everybody, you know, everybody had a point of view. So I said there because I learned in my career, and it is absolutely true. Like Napoleon said, if you want to know what's going on the front lines, go look.
Well, I want to know what was going on in 1200 Kinkos in 42 regions of the US I told him at the corporate headquarters, see you guys. In two months, I'm going into 42, 42 regions in every district, and in every district, I'm going to run three town halls covering each of the three shifts so every single person can come to the town halls. And my whole thing was listening to her. Guys, here's the fact set.
We lost $11 million last year. Can't do that for too long. And I need to figure out what the hell's going on. And you all need to tell me, and I know you can because you're the ones talking to the customers every day.
[00:29:11] Speaker A: How do you break through that? How do you break through that skepticism? I'm assuming people look at you like, yeah, right, seen this crap before part.
[00:29:18] Speaker B: Well, they start, they ha. On the one hand, they've seen that crap before. On the other hand, they haven't seen someone in their store at two in the morning having a meeting with all, with all the people there and asking them what's wrong? Instead of saying, okay, damn it, we're gonna start doing things.
And I was able to go out and say, we did listen in it. And when we put together a plan and we took it out, people were they trusted. We had already built up enough trust that they could say, I think that's probably not going to work.
And then it's easy when they say that to me, I go, well, I don't want to do something. It's not going to work. Tell me why it's not going to work. And if you engage on a one on one basis kind of works. And when we, when we finally moved around and had our top 150 people at a meeting where we really kind of unveiled the big plan, the only thing that they threw up because we were starting to build trust is, well, Kinko's had this other great thing which plays into what this story. The top 50 stores were called the President's Club.
And those were the class of the company. The store managers got taken on a trip with their significant others to Hawaii or Mexico every year.
And every quarter, the president of the company supposed to have this big call with those 50 managers to get feedback on what the company's supposed to do.
And the question was, well, if we do all these new rules and things, I'm not ready to say it's perfect, but it makes sense.
What would happen if we judged the President's Club stores with this new metrics, dashboards, you know, the things you typically want to put in. And I stood in front of him at this meeting. It was in November, my first year there, and I said, good question. I do not know.
My suspicion is it won't change them from being President's Club, because I think this is a very righteous plan, but I can't promise you. So overnight CFO and our head of strategy and I said, if we have stay up all night, we will stay up all night and we will cast the stores in this new way. We're looking, and let's see who the top 50 out of 50 worked.
And then people start going, wow. But that wasn't enough. And then I said, okay, can we get agreement that this is something we should do? And most heads were going, yeah. But you couldn't believe them because the stories that came up in the past were the prior CEO would come to your town, and Ryan is the district manager, the regional manager. And I might say, we want all of our carpet to be green and we want this type of carpet from this.
And you would say, you know, we tried that 10 years ago. It doesn't work. And the old CEO would have said, well, need you to try it again. I want you to do it my way. And then you'd say, okay, no problem. And as soon as I got my plane and flew away, you look at all, you forget that back to work.
There was all kinds of really bad behaviors with the old CEO.
So what I did, and I knew that and everyone had told me at the store level. So, and this is in my book, this particular chapter, because it was a high beta situation that I. But I had to do it. I had to say it. I. At the end of it, I. I said, okay, we've spent three days. However, the things. Three days.
And everyone's generally in agreement that, gee, this, this might make sense, but I know. And I told him. And I'll never forget my speech. And people who were there mark time by. They were there. I said, look, there are people in this room who think I'm. I'm smoking dough. Let's just all be honest here, okay?
And you know what? They may be right. Time will tell.
But we, I think we've shown you A pretty rational approach, and it's something we have to do. There is no arguing with the hole we're in. There's no arguing with what happens if we don't get out of this hole. So here's what I propose for everyone in this room, everyone in this room in the next 30 days, anyone who is not fully aligned with this plan, give me a buzz. And here's what's going to happen. I am going to be a one man whirling dervish to help you find another job. I will be your best reference. I will find the right firms. I want you to land on your feet.
But you can't stay here.
And for the next 30 days, I will do that with anyone in this room. On the 31st day, I will find you and I will weed you out personally. And those were my words.
And you heard people go, whoa. And then, and then you could drop a pen. It got so quiet.
And then I kicked it to the head of strategy, who till today, says, you son of a bitch, I can't believe you threw me on.
[00:34:30] Speaker A: And
[00:34:33] Speaker B: frankly, a third of them, I had to walk out the door. But the turnaround, what went from -11 million in EBITDA the 12 months before we started to 120 million of EBITDA in year one, which turned to 180 million in year two, which turned. We were, we were marching our way towards 240 million in year three when Fred Smith walked in. And in the rest is history. Paid 10 times 240. And boom, we had a deal. But what was happening if you're paid a fraction of the action in the stores and you hadn't been paid, you hadn't gotten a bonus in the last five years because it had been in a spiral down under the new ownership. And all of a sudden you take a jump from minus 11 to 120. Well, bonuses were being handed out and all the. And, and you start getting real engagement.
Holy moly, look at this.
[00:35:36] Speaker A: Well, you're, it's, it's the, it's the trust, the proof, man. There's so many takeaways in that. And like, what I think is very fascinating, Gary, is I had this, this gentleman, Joel Tramell. Have you, are you familiar with him? He's the Texas CEO. He's got a Texas CEO magazine. So, I mean, he'd be a really
[00:35:52] Speaker B: good contact CEO magazine.
[00:35:55] Speaker A: Yeah, yeah, he owns it. He's been. Yeah, he wrote the CEO Operating System. So a Chief Executive Operating system. And, and one of the, the reason I'm bringing it up and. Or I think it's fascinating. Like, is he has this thing when. Like, when you become the CEO, because a lot of times you get out of the operators and then they're like, you're now this CEO, and it's like, okay, you're doing things through people, and there should be nothing on your task list. And like, you turn that whole ship around through people. And so now you've got these six principles, right? It's like, I mean, because you have to wake up and you're not doing any of the work. You have to get people's bought, you know, bought in through trust.
Actually have the trust, prove it with the numbers. And like, so, like, how do you.
It's just such a monumental task.
[00:36:37] Speaker B: I'll tell you, and then I'll give you the proof. Okay, So I started recruiting a whole new senior team. I literally kept one. There were 15 senior officers. When I got there, we only needed nine. So six went away automatically, and I only kept one of the remaining nine.
[00:36:53] Speaker A: How did you feel before you keep going? I got to ask Gary, like, like, so did you have the. Like, where did you get your confidence that you were making the right decisions when you're just pretty much like, all right, there's 15 people here. I'm the one that's got to be the last man standing.
[00:37:07] Speaker B: Okay, I'll give you a good answer. I was sitting my first meeting with five international country managers. Okay? They all reported to me, five heads of country.
So we're talking, we're chitching. I'm trying to learn, okay, how's business in Japan different from Korea than China, than France? You know, I'm trying to learn the differences.
And so I said, well, tell me. You guys know I'm. Do. I just finished this. Going into 42 districts. If you're, you know, around the clock, hitting town halls, tell me, what's your frequency of going into your countries and. And go and do windshield time with sales teams being in stores on shifts? Not one of the five of them had been in their country in six months.
So now guess what I did. I fired five people simultaneously. And I. And it's very clear, you know, guys, this con, this company's in trouble, and all of you know it. And in spite of that, you're not out trying to help things. You're sitting here belly aching, and guess what?
I don't know how you come back from that. You don't come back from that with me. So we're going to go ahead and we're Going to change our entire.
[00:38:19] Speaker A: That's right.
But.
[00:38:21] Speaker B: But when I recruited. And this one want to get to the punchline, so I started recruiting people, and it's. It's something with me when I'm CEO, is somewhere in my interview with you I need to hear when I say, what's your aspiration? Wait. And if somewhere in there, I don't hear, I want your job, or I have every intention of being a CEO, if I don't hear that, that's the end of the interview. Because then I say, okay, it will be my job to ensure that you become a CEO. If you can accomplish. We got a lot of wood to chop here.
But if we can pull this off, you will get your CEO job. And I'm proud to tell you it's amazing fact. And that's also. I named them in the book. Thirteen of the people on my senior team became CEOs, and they became CEOs because they crushed it.
And these are people who don't just say, yes, sir. This is not command.
[00:39:22] Speaker A: How fun was it working with a team like that, Gary?
[00:39:24] Speaker B: Well, that's what I'm telling you.
And I have so many stories, and we're still all so close.
But the beauty, the most beautiful thing this. The PE firm kind of cleaned out a lot of the top people's equity, but they really never focused on the store managers. All had equity in the company.
And we went from 1200 to 2000 stores in three years. But something like 800 of our store managers were vintage store managers, meaning they had stock.
[00:40:00] Speaker A: Oh, and you took it to 240 at 10 times. And so you helped all those store managers.
[00:40:05] Speaker B: And wait a second. We got paid 2.4 billion, all cash.
And a jag of that rolled all the way down to store managers. So we had hundreds and hundreds of store managers. And that I get. I get a little weepy when I talk about this stuff because it's so beautiful.
Carlene and I were sitting on. My wife and I were sitting on a plane some years later, and we're just sitting there waiting for the plane to load, and. And I just have him look up, and the guy's looking at me, and I'm look. So I started looking at him.
He says, gary. And I said, yeah. And he says, you won't remember me, but I was a manager. This. This. This store. And I have told myself, if I ever saw you again, I would give you a hug.
Can I give you a hug? And I was like, yeah. Why? He said, because the money we made when we sold the FedEx the house, I paid off all my kids going to college and had money for my retirement. And it's because of what we did. And I said, yes, you get the hug. And I sat down. I was crying because that's what happens when the team. This wasn't me.
This wasn't 10 people or 15 people.
This was a company that worked from the first level to 25,000 employees, all buying in to the same vision and doing what they had to do to do it. And it was doing business a lot differently. And they didn't mind that because there was trust and you could have conversations if they had a thought that they thought you didn't think about. They felt it was open, the communications was open and honest enough. They could. I have wide open office. Everyone knows my cell phone number and 25,000 people. They all have my personal email.
And they know if they got. If they've got something on their mind, I'm there.
[00:42:02] Speaker A: How is it that you. Because you said earlier.
[00:42:06] Speaker B: How did you word it?
[00:42:07] Speaker A: Nothing.
An ego cannot do anything to make this better.
And that story proves that. How did you learn that? Especially when you get up into the. A company where, like, you have high leverage as an authority figure overseeing a lot.
How did you learn that and how did you stay true to that amongst all these journeys?
[00:42:33] Speaker B: It's in again, I've had the benefit of a lot of time to think about all this stuff.
It was kind of burned into my DNA as a teenager through the work that I had. And I was the only white guy in a warehouse.
And I realized that I truly had advantages that they truly couldn't have. And it was just because the color of my skin, and it was just because I was a man.
And I figured that out as a teenager before, it was either cool or horrible to have that thought.
It was truth. It was just truth. And so when I watched people from varying backgrounds and all that, all leaning into the same aspiration, well, that's what it. That's what is beautiful about things. It does. It shouldn't matter. Everyone should be able to get where they want to go. And far be it from me to stand in front of a room full of people and say, we're gonna do this. You know, no, I.
And I kept so much of the original stuff in the company. You know, anytime there's a new idea, there's a new idea at Kinko's.
And if you can't, if it's Ryan and you're in the mail room and you developed A new communication plan to streamline communications between stores and corporate offices.
And we implement it. It's called Ryan's Communication Plan. And we got your picture up at the top.
So when we go the company annual meeting and your mailroom guy and you show up, people want to get your autograph. They want to take a photo with you because, oh, my God, that's Ryan, the communications chief. You know, it's like, it's. You treat people with respect, and they give it back, and that's. And so you have.
[00:44:28] Speaker A: How did you learn that, though? Where did that get it? What is the story that. That burned into your DNA, though, that.
[00:44:34] Speaker B: My incredibly positive experience at Babbage's, where it was like, of course, my partner and I. I mean, he's like my brother from a different mother. And we all got along because none of us knew what the hell we were doing for the first five years. We were all so young, and we all kind of grew up together. And I thought all companies were like that. I then went into a couple of companies that were kind of the reverse of that, and I couldn't believe it. And then I fumbled back into another one right before Kinko's. That was back to, oh, it can be done. We weren't a fluke. Babbage's wasn't a fluke. Look at this company, how good it is. So I knew it could happen, and I started making a list of things like honesty and integrity.
One of my principles isn't because I saw honesty and integrity. It was because I didn't. In a couple of companies where I had to say in thinking about the. My boss or my peers or whatever, did they really just say that or do that?
Were they born in a barn? How could they be so. You know, how could they be so mean? I mean, I watched people yell at people in meetings. Well, I learned that that happens. I. A predecessor in a future company after this one threw a phone one day at a wall in front of the whole senior team. Ripped a phone out of the wall and threw it.
How do people do stuff like that? So I set the tone for behavior, rules of the road, like honesty and integrity and open and honest communications and that sort of respect for others, those sort of things that are more in how we're going to work together as opposed to something specific about the business. Because if we can figure that out, everything else comes easier, because now meetings can be healthy meetings, and so you can get more positive things out of them. And then I. And then. So the bad experiences helped me Build up these principles that were. That reinforced. I felt sure. Because I'd been in companies that had respect for others, and now I was in companies that didn't. And I knew, you know what, one of the reasons this company is having issues is it's got a toxic environment because there's no respect for others. And I saw what happened when we had that.
So we've got to have that.
You know, those, those.
[00:47:13] Speaker A: That's. Oh, it's. That is an awesome answer, Gary, because I have had similar experiences over. I mean, coming from the family business and then after 10 years of consulting in and out of companies and working with people, it's like the relativity is necessary to see the truth is, is what I've gathered.
[00:47:32] Speaker B: You got it. You got it. That I couldn't agree more.
And then when I am with that foundation, then I could feather in. For instance, that little story I told you about the meeting, I realized alignment.
You have to have alignment in the company. You have to be able to have someone who can describe a flag on a distant hill and convince everyone in the room that that flag is worth taking.
And it won't be easy, and we might take some casualties along the way, but that is what we have to set about on.
[00:48:08] Speaker A: Not like, is it the right flag? What color is it? Is it upside down or not? What hill?
[00:48:12] Speaker B: Like you.
[00:48:13] Speaker A: Yeah, yeah.
[00:48:14] Speaker B: And then, and then if you can get alignment, then this is the other thing that I see. And it's been in 13 years in private equity, I saw it repeated so many times. The pattern recognition that has come along with the PE work is incredible. But so many times you're given responsibility without authority to do what needs to be done.
So I always make sure that not only are goals spelled out clearly, but then I have a conversation, Ryan, what do you need to do in order to deliver on the accountabilities I would like you to have and you have to come back to me and you have to tell me, you know, I need this hiring and firing authority. I need capex, I need, you know, I need an organization. And I may agree with you, I may not. We get to talk about the company kind of structure, those kind of things. But I will never, in any company I'm involved in, allow accountability without responsibility because that's failure.
[00:49:19] Speaker A: Well, and amen, Gary. But also I think about, like, from my exposure to that, like, if you were to sum up hell on earth for Ryan Dansom, it is that situation. And like and like. And I don't know if it sounds like your background is similar. Like, because I've been in that, I just go, well who the hell would ever want that situation for themselves? So like it's this whole like, well
[00:49:43] Speaker B: like if I hate that, why would they like that?
[00:49:46] Speaker A: And like, like what is more empowering of flourishing the human potential than giving someone the freedom to see their full potential within boundaries? I mean I've got seven year old twins, Gary, and it's like so fundamental. It's like do whatever you want within this container and if you get outside this container, I'm going to whack you back into the middle of it. But like, I'm not going to control what you're doing inside this container.
[00:50:08] Speaker B: Well, I think that this is the way I rationalize it. And I'll call it rationalizing it is my belief that everyone's baggage contains every good and bad thing that's ever happened to them. And from those good and bad things that happen in a person's life, it kind of creates a prism through which they view the world.
So if you were raised, you know, making this stuff, if you were raised in a very bad family, a toxic family environment, and, and you didn't never felt safe, never felt heard, whatever, well, you start protecting yourself. And as you grow older that's makes you perhaps act in different situations differently than someone that grew up in an environment that felt safe, that felt like they could learn. And so there are a lot of people who, who don't feel good unless they're. It's the narcissism thing, you know that if they don't feel like they're the smartest person in the room, then it's a problem. And if anyone wants to challenge them, that's a bigger problem.
And that's, and so many companies have that versus the other end. Like boy, if I want to, if, if I want to work as little as I can, having the best people around me ain't a bad way to do it, right?
[00:51:38] Speaker A: Well, and like, but like, go back to your prism. Like, and this is my like view of it is that narcissistic or egotistical behavior is overcompensating for some insecurity or lack of safety.
Back to your prism experience.
[00:51:57] Speaker B: Yes, it absolutely is. So your job as a leader in a company is to develop a lot of empathy for everyone. And in your walking around and in your conversations with people, see if you can't suss out what the issues are. Now we were able, because we were a large company, multibillion dollar company at Kinko's I immediately installed climate surveys that everyone in each store would take. So we had climate survey results for each functional area corporate plus every single store. And then once I had that for 1200 on its way to 2000 stores, my job, I never went to the best stores. I would wander into the stores with the lowest scores to see what in the world is going on. And that was eye openers. And that's crazy. Yeah. Oh, oh. And I not only I not only saw some of the most toxic workplaces I've ever seen, but then I saw one. I'll never forget Staten Island, New York, where everyone I talked to because I'd come in and they wouldn't really know my face because they don't. They, you know, there's too many stores.
[00:53:04] Speaker A: Yeah.
[00:53:05] Speaker B: And I tell them, they go, where did you hear we had a bad climate? And well, y' all took a climate survey and these. And then you see them all go, oh, that was the last store manager. Oh, our store manager now is the best.
And so finally I'm ready to go meet him. So I meet this young 28 year old kid.
You're surprised he wasn't a basketball player. And I said, can we go outside and talk in this, you know, this kid's eyes are getting kind of big.
And I, and I told him out on, on the sidewalk, I said, look, and I gave him the whole background. I came here to see what was so bad here. And here is the feedback I got. And he started crying and he said, I've worked so hard, I'm trying so hard. It was such a mess. And I think I can make this really great. I said, yes, you can. And I said, here's what we're going to do to help you. We have a high potential cadre of store managers that we spend extra time and attention teaching and coaching. You are going in that group immediately. And it was like, you know, it's like, oh, so cool. But that's what.
Yeah, it's cool. And I was happier than he was because what a situation I had walked into and what an opportunity, not just with what I did with him, but what the store got to see in other stores where when they said, no, the manager's back there, she never comes out of her office, client blinds are always closed. And when she does come out, everybody runs because she's a screamer.
Well, I get to walk in her office and I got to escort her out of the building because I have no, I. How can you have a problem with that?
And, and that's Your job, if you're running a company is, well, there's a, there is the center of a toxic environment right there.
And so it just goes on and on and on. And when people see you're in their corner and I'm not in their corner just because I'm a good guy, the company runs better when we're all in each other's.
[00:55:03] Speaker A: Yes. What along your journey and because you mentored over what a thousand, you've done over a thousand mentoring sessions or a thousand people or whatever, the, whatever set that is, is, who did you use along your journey to like, did you use someone that, that made a big outsized impact along this, along this path?
[00:55:26] Speaker B: I was, I have been very lucky to have several.
And my first mentor was Ross Perot, the founder of Electronic Data Systems. He actually sat next to me at my high school graduation, took a liking to me and invited me to come back with him to Dallas the next day. At that time, he was the richest man in America. And he was taken with me for some other reasons. And he asked my parents if he could take me back to Dallas with him the next day. And I'd never been on an airplane.
So that started a, that started a relationship with him that went on. He was the founding money for GameStop.
And the only, the only reason behind that, the only thing we had to do was to promise him we would never say he was the person that gave the money to start Babbages.
That was his only requirement because he said, if I, if people know that I become the lightning rod for your company and you don't want that, and I don't want that. And he said, I want you guys to rise or fall on your own without me there. So he was always available and he turned us on to several other mentors. And along the way then from, I mean, I learned having breakfast with Bill Gates, I walk away from there and he doesn't even, I feel like I, you know, I, I, I love stuff like that. And for Jack Welch to have quarterly business reviews with me, I thought the first time I had a business review with Jack, I felt a little jaded because I felt like she doing pretty good job. Think I've been around the track a few times, you know, I was going
[00:57:05] Speaker A: to be, what do I need this one? Yeah, yeah, yeah.
[00:57:07] Speaker B: Boy, he blew me away. I couldn't believe his insightfulness on some slides that I showed him until he, he finally starts saying, gary, just shut up for a second.
Well, explain to me. And he went up to the wall because it was up on a big slide.
Is this number right? Yeah. Well, but if it is, then what's your portfolio size? What's your commission structure? What. You know, by the time he's done, he's revamped our geographies, he's revamped the sizes of our companies, what the different commission plans ought to be at each level, given what we're going to have. His portfolio size, I mean, he did that.
[00:57:47] Speaker A: He.
[00:57:48] Speaker B: He picked on one little number and started pulling back.
And before he was done, it was a panorama.
And when he walked and we became really good friends, and I said, man, I said, that was as virtuoso as anything I've ever seen. I need a little more of that. And he said, we'll keep doing this. And he loved the private conversations when it just him and me eating lunch. And I said to him, I fired. I told him all these people I'd fired when I started, and I hired eight new people, and within a year, I had to move on four of them. They. And replace four of the eight.
Should I feel bad about that?
And he said, well, no, you should not feel bad about that, but you shouldn't feel good about it either. That's average. He said, average is if you. In a senior team of a real company, all that, that's if you bet 500 in year one. That ain't bad. It's not good, but it's not bad. And then moved into firing people. And I said, well, you know, how do you fire people? I hear you're just, you know, you just firing people left and right. He said, it's not like that. He said, I.
I have committed to my organization. No one will ever get fired and have it be a surprise.
And I said, well, how do you make sure that happens? And he walked me through what he says, the first.
Ryan, this year you missed your plan.
It happens however it rolls up to me, and I take it to the board and the board approves my budget and you didn't deliver. What can I do? And what can you do to ensure that doesn't happen next year?
And we sit and we talk about it, and I give you everything you need. And if you miss next year, well, that's a problem because it's two years. And he said, he takes people on walks.
And like, he'd say, ryan, I've got to have a very difficult conversation with you. You know, I know your wife, Jane. I know about your two kids. We've played golf a few times, and I really do like you you are super.
You just can't work for me because you've proven you can't deliver numbers that you promised. And after year one, you. I asked what you needed, you told me what you needed. I gave it all to you. And then you missed it your second year. I can't run a company when everybody rolls up to me and I roll it out to a board of directors and they approve it. And then my people, they don't deliver.
And so he said, I have enough issue with people doing it one time. I can't have two. And I'm sorry, and I love you, but you can't be here, which is a very different way than Ryan, the box is on your desk. Security's outside the door. Pack it up, hit the road. Very much more humane.
[01:00:31] Speaker A: What was your third principle or your second is open and honest communication?
[01:00:35] Speaker B: Yeah.
[01:00:36] Speaker A: Yeah.
[01:00:37] Speaker B: And it's so much easier because, you know, you don't have to remember what you told someone if you told them the truth.
[01:00:44] Speaker A: Isn't that the. It's the world that I like. I need to live in, Gary, because otherwise it's too difficult. And when I. When I hear about, like, you know, it's. It's would have been helpful if I was in that situation, knowing what normal is. Like. If you don't know it's normal to hit a 500, then you're wondering, so you're kind of getting this. This path cleared up of what is normal. So, like, what. What. What is your.
What are your thoughts or insights for people that should be looking at mentors and coaches and, like, how to use or how to think about that? Because I think it's something that a lot of people at the highest level need to be thinking about.
[01:01:22] Speaker B: I am a big believer in dashboards and a believer that you can put every metric that is important to your business on one page.
And then for each metric, you can. You can be able to say, this is our target.
This is our goal.
This would be above standard. We ex. This is our expectation. This would be above. This would be above average. This would be incredible.
This would be below average. And this is unacceptable for any metric that is mission critical. And the heavy lifting comes in deciding which are those metrics that really matter. So you don't put metrics on a piece of paper that become pablum that don't have nothing to do with anything. And then once you have that, you manage to your dashboard and you have every single month, you have monthly operating reviews and they run the source document was the dashboard and Maybe you have to change the dashboard after a quarter and everyone realizes we're not going to make that. Well, your job as a leader is first to root cause analysis.
Why haven't we made it? And is there anything we can do to make it?
And then the second thing is figure out what to do, you know, to make it work. And that's your job. And sometimes it's lowering the whatever is something that was a goal. And because now I have time to go to the board, it's not a fun part of my board session, but when I run over the numbers, I say, you know what we're missing here? This was this what I committed to. We got an issue here. This is an opportunity. You know, you go through each one of them, but you say, but this one, you know, we've done some root cause analysis. We figured out what we did, how we forecast wrong in the first place, what we can do. You open, honest communications. The board knows, I know, the people around me know, everybody knows. And you make the course, course corrections that inevitably you have to. You know, all this running a business.
[01:03:26] Speaker A: And how about, how about for someone that is in that top seat working with a mentor, like, what are, what are some thoughts about what to find in a mentor and how. And how that relationship should work?
[01:03:39] Speaker B: So I think I'm a contrarian here. I in, in my mentoring sessions with people in corporate organizations, I don't know the exact percent, but it's more than a fourth. It may not be a half, but it has to. But their issues have to do with toxic workplace issues that are impacting their ability to do work. Maybe they're being hit on by their supervisor. Maybe their boss is having an affair with someone next door to them. Maybe, you know, who knows what they are. But those end up being really important issues for a young person trying to find their way in a corporate organization.
I don't like the conflict that sets up. If you are a senior officer in your company and you have a high potential and she or he is sitting in front of you and tells you something that you know, you are probably duty bound to report to hr. Well, what happened to the confidentiality that they were expecting from you?
[01:04:42] Speaker A: I know.
[01:04:42] Speaker B: And so I, I don't think personal opinion. I don't like the word mentor in a corporate organization, but I love the word coach because coaching is a much more specific word. There's a work team involved, there's a job involved.
I've been through this one before. Here's the best way to get that done. But it's got boundaries when it's just. You're a senior person, you know, I, I think there are way too many tripwires there that create risk for the mentee and the mentor. Because the mentee. What if the mentor has to tell HR it was fraud, it was this, it was that. Who knows what it was. But something had to be reported. Hr and somehow it runs out of control and this. And your mentee gets fired, you know, or gets demoted or gets stuck somewhere else. Well, that was never the goal.
And so I. So I guess for me, I. I was very involved in all the training programs at Kinko's. I had all the time in the world. And we ran classes and I was talking to the classes.
So we didn't have formal mentoring, but we did have formal coaching so that someone who had experience doing whatever this was work team was working on could be a coach to that team so that it didn't run into those issues. So I don't know.
[01:06:09] Speaker A: I love it. So you've got a book coming out.
[01:06:12] Speaker B: Yeah.
[01:06:13] Speaker A: Why don't you tell everybody where they can find you? Find the book. There's a lot of these stories probably packed into it with your principals and what's. What's the best place to find it?
[01:06:20] Speaker B: So sure, it'll be anywhere you buy books from Amazon, Barnes and Noble.
It will be an ebook form, audiobook form, soft cover and hardcover. Be an Amazon. Be in Barnes and Noble being Apple Books street date publishing dates April 30 it. It will be everywhere after that date. And we're pretty excited. It's the. It's. It's called Always Learning. But the tagline is Lessons on leveling up from GameStop to Laura Mercier and Beyond.
And the stories are just as you mentioned, you know, they're my stories that.
That have led me to believe in the leadership principles I have and the steps that I think people go through in their career, how I came about them and what the lessons might be for other people, but being very careful to never say should. And that's another issue. I love it with mentors.
Any. If I ever hear a mentor tells me it's what you should do. First you do this, then it's like, that is. That's so. It's.
[01:07:27] Speaker A: I love it.
[01:07:28] Speaker B: So harmful.
[01:07:29] Speaker A: Yep.
Gary, this has been an absolute pleasure and joy. I am so appreciative of your time.
[01:07:36] Speaker B: Well, I appreciate you setting this up. I love your background. I got excited when we first talked because I know you're something we. We have we kind of walked the same path, and we seem to have the same mindsets about things. So thank you for inviting me and giving me this time.
[01:07:55] Speaker A: Oh, Gary, thank you so much for coming on the show.
[01:07:57] Speaker B: You bet.
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