I keep on trying to describe why you should watch this . . . and each time I realize that I just can’t do this interview justice. But trust me on this interview. It’s good.
The interview is with with Robert Stephens, who took the Geek Squad from a bootstrapped company started in college . . .
. . . to the world’s largest tech-support organization with estimated annual revenues between $1 billion & $1.5 billion (and about 24,000 tech support “agents”).
Clay: Hi, this is Clay, and today’s interview is one of my old-time favorites. It is with Robert Stephens, the founder of the Geek Squad. Robert started the Geek Squad on his bicycle when he was in college making calls to people’s houses to fix their computers and things of that nature. Since then, under Robert’s direction, the Geek Squad has gotten larger and become the world’s biggest technical support organization employing around roughly 24,000 people. Since being acquired by Best Buy, the Geek Squad has become Best Buy’s most valuable property and most valuable component. Anyway, this is an incredible, incredible interview. If you want to see how someone bootstrap the company from, you know, going around on his bike to creating an organization that does over a billion dollars in revenue. You’ll hear that story here. This is amazing, amazing content, and I look forward to sharing with you. On with the interview. Take care.
Hello everyone, my name is Clay Collins, and on the other end, we have Robert Stephens, founder of the Geek Squad, former chief technology officer of Best Buy, and just a brilliant, brilliant person. So Robert, thank you so much for being here with me today.
Robert: Thank you. We’re lucky because the power is out where I’m at and I’m on battery backup so it’s the first time I’ve ever proven that Comcast would actually work if you have battery backup on your cable modem and your wi-fi monitor.
Clay: That’s awesome and that’s good to know. So you know, I’d really like to go back to the Geek Squad. I guess, as you say, you acquired Best Buy, and I love your language there. Was that – Were the details of that transaction disclosed or was that sort of a confidential transaction?
Robert: It was confidential, you know. I mean there were many details of it. You know, most people don’t know there was this spin off of Geek Squad that I retained, the business side of it, and later sold that to another company years later, none under the Geek Squad name. We had to form a new corporation. But I think, you know, 10 years later, what is public is that, you know, it was a good deal for everybody all around, you know. Best Buy, it’s – I mean it was just published a few weeks ago that Geek Squad is the most valuable part of the brand. I always joke with Best Buy buying Geek Squad when they would be larger than them, and at this point, it appears like that actually may come true. And you know, most probably, not only is the business strong, stable, and viable, and will be for, you know, a long, long time, the employees are almost all still there and doing very well.
And you know – I mean I track merges and acquisitions and I don’t really know how people can live with themselves the selling of business knowing that it may not last, you know. I think when somebody buys something, they should expect a good long life out of it. So I’m very proud that 10 years later, it’s better than ever.
Clay: That’s awesome. So were any – Like can you reveal any figures at all around the purchase or how much is the purchase for – I mean I’m sure it was purchased for at least 8 figures. You know, can you confirm or deny any aspect of the purchase price?
Robert: I just don’t talk about that kind of stuff.
Robert: To be honest, any numbers you’d see would only reflect one part of the deal because I also took stock as part of the deal and that stock went up over time. Yeah, that’s my personal business. But you know, what I can tell you is that I could have sold it for even more had I sold it to somebody else, but while I may personally been the more money, the company may not still be here and I may not have lasted as long. The brain might be in a different place. So that’s probably the toughest one, the toughest issues anybody will ever face in business is, you know, stock and pricing the short-term and long-term interest.
Clay: Sure. Hey, is – You’re cutting out here and there. Is there any way, maybe a Dropbox is running on the background or if you have any other browsers open? Is there any way to maybe clean up the connection a little?
Robert: I can try. I don’t know what might be doing it. I shut everything else down. Let me just do the check. I don’t really have anything else running. I just run browsers…
Browsers even, especially Chrome can even…
Robert: Nothing else… Chrome’s got – I shut everything down before our call.
Clay: Okay, okay. Cool. We’ll just roll that. I think the majority of it is coming through. So you said something really interesting there, and you were talking about your business as a product that was acquired by Best Buy, and you were kind of talking about the merits of the deal and how that played out for Best Buy and such. You know, there’s a lot of factors going on here. One was sort of the climate that existed when you started the Geek Squad, and you know, sort of a lot of companies I think nowadays are kind of built to be acquired. They’re not really trying to generate revenue. You know, the exit strategy is ultimately acquisition. It’s not an IPO. Was Geek Squad a business that you developed primarily to be sold, and was the presence of Best Buy locally a factor in that because you’re not in Silicon Valley? What was your intention when you first started?
Robert: Well, first of all, Geek Squad is not a technology company. We’re more of a hospitality business. We’re more like a great small restaurant. We don’t make technology. We don’t sell it. What we really do is act as the glue in between all the other stuff, so in that respect, that is not like a normal dot com or you know, Silicon Valley stuff. But I’ve built it – I built the company to be like the kind of place that brand it I would want to spend the rest of my life at, and you know – I mean I’ll make this prediction, you know, all brands, at some point, will suffer neglect. It’s just, you know – Nobody loves baby like its mother. So sooner or later, it may be abandoned and I’ll always be ready to step in, and you know, take it back into the fold. And in every business I’ve ever start I’ll do the same way. I don’t know how to run a business. I don’t care about that.
Clay: Yeah. That’s amazing. What – So you starting Geek Squad, when you first started that, it wasn’t kind of one of these businesses that was being designed to be acquired by Best Buy, right, like you’re – Is that what you’re saying?
Robert: Yeah, I only went to Best Buy after I had looked at all the other ways. There’s only a few ways that a company grows. I mean you study that. It makes it easier to kind of study the chest board of moves, right?
Robert: I mean I looked at franchising. Franchising is one way to grow. You get a thousand people to give you $10,000 or $100,000 each, but then you really get a thousand owners, and that becomes hard to manage, and the quality is hard to enforce. You can take investors, but at some point, investors will want to sell a piece of you…
Robert: …and you can’t sell pieces of a company, so that creates its own set of problems.
Robert: With Best Buy, they needed the capability, and so in a way, they permanently acquired it. They’re never really going to get rid of it. I mean they might one day, but I doubt it. You know, that’s why we dated for a few years because the dangers if they own it but neglect it, it just languishes there. Kind of like how Google acquires a lot of companies and then they just die in the vine.
Robert: So I hold the acquiring company more responsible. You know, a selling company might have all the best intentions and hopes, and I think it’s perfectly okay to build a company with the intention of selling it as long as you’re honest about it.
Robert: Now there may be strategic reasons to conceal that, you know, but I think that right now, we’re in a very explosive period of capability, and that fad will pass, and the acquiring companies will get smarter and we’ll just be paying this amazing premiums. There’s only one YouTube or Instagram type deal about every 10 years, maybe every 5 years. So you kind of have to ignore those deals because those are just insane. You know, they’re not just about the revenue multiples.
Clay: Sure. So what – Now, you know, you point out that, and I think it’s a really good point that Best Buy is not a tech company, it’s a hospitality company. I’ve heard you talk in the past about sort of the opportunity is really with boring businesses, but I would like to talk about what you think the landscape or kind of the strategic landscape looks like for companies that are outside of Silicon Valley. I know, again, Best Buy was not, but I see you kind of predominantly hanging out in that space right now, and I know that the majority of the people watching this interview right now are not going to be in Silicon Valley and I’d really just love to hear your thoughts on how the game – You know, just talk some of the game in general as it pertains to people outside the valley because it seems like merges and acquisitions seem to happen so much more quickly there when you get investors there. They’re often hooked up with people who can advocate for you in a number of different ways. It seems like the speed is just so much faster there and I would love to just hear your thoughts as someone who lives in Minnesota and is moving it sounds like to the Bay Area. I’d just love to hear your perspective on this.
Robert: Well I’m going out there for a number of reasons. It’s not just technology. Frankly, you know, I cook a lot and I love the food culture there. My honeymoon was in Big Sur. I love the landscape. I’ve lived in the Midwest 43 years and we’re all going to live to be about 90 to 100, so my life is almost like half over essentially, and I lived within 500 miles, and this planet is a big beautiful amazing place so it has more to do with that. And if anything, yeah, it’s one of the worst places to start a company. You know, real estate is expensive in San Francisco. You know, it’s impossible to hire very talented engineers because they all, you know, want huge stock options, but there’s still is a lot of talent there. So actually, I don’t know that much about those reasons. I read about them, but I want to find out for myself.
Robert: I’m a little nervous. Maybe I’m not good enough to compete with all those smart people out there. I don’t know. But you know, you got to try. I feel like if I stay in Minneapolis, I feel like to be honest I’d get too comfortable and complacent. I feel very successful here and that’s why I need to leave because I don’t want to get too comfortable. Call it a mid-life crisis. Call it whatever the hell you want. I guess it was a mid-life crisis when I moved here, you know. I was born here. I was comfortable. Now at school I had a scholarship and everything, but you know, I just – You know, you can’t ever ignore your good instinct. And so, my daughter starts high school this year. That’s another reason. I want her to grow up in a bigger city and have a different viewpoint. But yeah, it doesn’t matter where you are. If I stayed here I’d do the same damn thing, and I’d probably do it very well, but real estate cost would be lower. My profits might be a bit higher. So I don’t know what else to say…
Robert: …except don’t try and make your CDSO compelling because it’s not. It’s better to – Just like a great chef will source their ingredients in season locally and come up with something authentic because then you don’t compete against New York or LA or London. You compete against yourself and that’s what great brands do so that’s really who I’ll be competing out in San Francisco. I won’t be competing in Zuckerberg or Google or Apple. I’ll be competing against my own quirky sense of – You know, I’d be competing against my favorite Wes Anderson movie probably.
Clay: I love that. I think that’s excellent advice. So you know, I think you’re kind of an interesting guy at least to me because I see – I see, you know, just by tweets, and you know, on a plain cast. I see the events you’re attending, and it looks like you’re reading very widely. It looks like you are – like you’re sort of attending a wide array of events, and as far as I can tell and maybe I’m wrong, I’m no expert on you, but it seems like you’ve always done this, yet, you know, in the midst of kind of the strong sense of vision that I believe you have, and you know, being exposed to a number of different ideas, you’ve kind of gone opposite of other people when everyone – You know, when the tech bubble was happening you decided you were going to fix computers. You know, when everyone’s talking about, you know, hyper fast growth and what’s next, you’re talking about going into boring old industries like the banking industry and revitalizing them, and I kind of find that a really interesting paradox that despite the ADD, you’re able to kind of just forge your own path and do what a lot of people might consider boring the length that you were at Best Buy after you acquire them was pretty fantastic, and I’d like to go back to kind of to the start of Geek Squad. When you first started that, did you envision that it would be such a huge brand and that you would eventually be acquired or did you just start off thinking hey, I’m going to fix computers and see what happen. Was that enormous vision that you had for it there kind of from the get-go?
Robert: No. I knew within a few weeks that bam, it was going to be amazing because if you – Everybody knows their gut instinct very well, and if you listen to it it’s incredibly calibrated to success. If you ignore it it’s calibrated to failure, and Geek Squad was build with an ambiguous name to give it room to become what it needed to be, so in the beginning it was a freaking justice league. You know, I ride antique cars and every Geek Squad agent would pick their own odd ball European car, a very specific thing. It’s really reflection personality. Remember, I dropped out of art school 3 years earlier because I didn’t want to compete against other artists. I knew I wasn’t going to be as crazy. I knew I wasn’t going to be as emotionally disturbed. I wasn’t starving from my art, and I happen to be good at business, and I felt guilty about that because I really wanted to be a tortured talented artist.
Robert: So I’ve always been an outsider when I was in high school. I wasn’t unpopular, but I wasn’t totally popular. I was just my own person, and after a while, I realized that was the best way to get girls because, you know, if you compete on muscles, there’s always going to be some guy stronger than you or better looking than you so I had to develop wit. And same thing in art school. I really was intimidated at the Art Institute of Chicago even though I was on a scholarship, you know. Everybody’s interesting, and when everybody’s interesting, it’s really exhausting to keep up with that. And then at some point, it’s like every artist is out for themselves so it’s like, you know, you really are just competing with yourself, which is what I prefer, so I mentioned the quirky because, you know, quirky did the point where most people won’t even get half the stuff that I’m referencing. I mean there’s also inside circular inferences within the Geek Squad brand that most people have no idea about, and I’m perfectly fine with that.
Geek Squad really is a 20-year performance project. It is what it is. What if an artist started the company? The Skyes is a for-profit company that made real profits. What if that artist is disciplined to learn about the software, but then use aesthetics like uniforms and branding, and then it becomes really like a platform for service. I mean Geek Squad doesn’t say tech support. It just says really dedicated obsessive people bonded together in a network type of environment for hire. That can pretty much be anything.
And I think that idea could be applied to plumbing, banking, airline, hotels, but when you hear me talk about, you know, the other industry that’s just me saying I don’t want to compete so if I see everybody going to see Titanic – I didn’t go see Titanic for like 2 years, and it looked good when I saw it, but it’s like, you know, I guess you could say I have a theory that all of human civilization is really powered by spite. I think you’re going to explain most human behavior, the most corporate strategy by spite, you know. If you’re going to be that on something else and…
Price is really the last thing you want to compete on.
Robert: that’s just when you say I’ve given up on all creativity, and you know, I got nothing else.
Robert: So for me, my strategy in San Francisco is 4 themes: service, technology, culture, and brands, and culture and brands are really a product of everything else that you do. So I plan on either adding value to people who are good with all the other stuff, but I sure shit do not plan on being better than some other sequel programmer or some other Java designer, or some UI designer, but I also see a lot of herd mentality in the value and everywhere else…
Robert: …and you show me a herd mentality and I’ll design a better freaking zebra that will stand out, and I’ll get people to pay top dollar for it. And so that’s, you know – But I don’t know what I’m going to do. You know, when you do something like I did for 18 years – Geek Squad just turned 18 years so I’ve just turned 18 years old. Well, it’s like breaking up with a girlfriend after 18 years. The last thing I want to do is start dating somebody else right away. Sometimes you just got to chill and be by yourself for a while and be sad and melancholy and listen to the albums, and then, you know, one day, when you’re walking around and you least expect it, it will hit you, and then, you know, if those great ideas stay with you for more than 3 to 6 months, those are the ones that you want to keep in your sketch book.
Clay: I think that’s incredible advice. So it seems like – You know, since this is the Marketing Show, I would love to talk for a little bit of this about marketing and your approach to that. It seems like marketing just by virtue of how remarkable the Geek Squad was like marketing was almost even built into the DNA of the Geek Squad. You wear different clothes. You drove different cars. I heard you telling stories about how the bottom of the Geek Squad shoes had the logo on it that when people walked around that would be imprinted in this snow. I’ve heard about you doing things kind of like driving your car during various press events so that people would spot it, and you know, I’d love to hear a little bit about some of the more successful experiments that you tried especially early on. You weren’t venture backed, were you, at all? Were you 100%…?
Robert: No, I’m not about a dime. I started with $200. I was on a bike and a cell phone.
Robert: That’s why so many business services suck because you don’t need any money to start.
I don’t need factories or warehouses or anything like that. The best thing ever to happen to me is that I had no money when I started buying a company. The reason everything is marketing is we had no money for marketing. So when you have no money for something everything else you do is marketing and that’s why I tell people that marketing is a taxi paid for being unremarkable. Geek Squad had to stand out because we couldn’t afford to be in the Yellow pages, we couldn’t afford to have billboards, we couldn’t afford to have TV, and that’s not the – People shouldn’t market it.
Robert: You know, the difference in marketing and advertising to me is marketing is getting your name out there, and with the service like mine, you might not need my service today so I need my name out there before you need it. Advertising is getting your offer out there, your message, and so those are two different things. So first thing people have to do is make a name for themselves and build that base. And so, you know, I don’t know when you’re going to be when your computer go down, but I need you to thank me like 911 for fire, paramedic, police, and eventually, you know, I’d like to get my own 3-digit phone number. That’s why I really love business.
In fact, if you’re an artist, if you’re a creative person, I’d say go into business because that’s where you can really make a difference. I love the art world because I don’t feel like it add anything new. Everything has been done.
Robert: And actually, if you are an accountant and you’re not very creative, I say go into the art world. They need more organized people. They need people to balance the books. They need people to do logistics. The party is in the – in the art world. So if you’re a born accountant, join an arts coop, non-profit and help them do their books, but if you are an artist, don’t cop out and stay with the hip people in the freaking warehouse district area of your town. That’s the easy way. That’s actually the cop out. If you really have guts to do it – I did – jump into the belly of the corporate beast and try and work with people, and if you’re so god damn smart then win the arguments. That’s what I did. I went off the web reporting to the CEO with 150,000 employees because I just thought well, if I’m so damn smart I’d be able to win the arguments. You know, I’ve got a good reputation there and I think most people, Best Buy, if you run into them in the street would say they love working with me, and I was easy to get along with, and you know, I’ve tried to nudge and push. I think – I always wish I would have pushed a bit harder, but you got to pick and choose your battles.
So I think marketing for me – Everybody is in the marketing department, and the last thing people heard me say at Best Buy is I’m going to get rid of the marketing department. I want to fire those people. I want to put them in operations. The marketing people in the company are the artists of the company, but operations is marketing now, how you answer the phone. You’re on hold music, you know, training. People do not pay anywhere near enough attention to who they’re hiring and anything that touches the customer, you should own it. Never outsource it.
Clay: Yup. So that’s really interesting. How did you do that at the Geek Squad? Did you bake that in to the training manual, the marketing piece? Did you bake that into the culture like, you know, I think it’s really easy for someone as skilled at business as you to on-the-fly do these kinds of things, but in terms of getting, you know, thousands of people in their day-to-day interactions to do things that are smart, when people ask them a question like, you know, hey, I’m not interested in paying this now, but I’ll eventually want to do it tomorrow, you know, or maybe when I get my paycheck in a few weeks like there’s a right way and a wrong way to respond to a lot of different questions, and I’m wondering how you did that at the Geek Squad.
Robert: Well, you know, there are skills that you can train for and skills you can’t train. So there are skills you got trained for, this old salesman analogy, you know, higher for attitude, train, or skill meaning bedside manner of a doctor, you know, or most service people don’t like to sell because they think it’s beneath them. And there’s a certain truth to that, but selling something to somebody they don’t need that sales, but providing a recommendation in the right moment that’s right for the customer that’s not sales. That’s good service. So first you have to hire people who just like to help people, people who are self-organized. I used to ask people to bring in their Polaroid at their closet and their coffee table in their apartment…
Robert: Because I’m looking for like how, what’s your organizing principle, you know? Like if your closet is a pile of mess of clothes that’s what the customers off the server is going to look like after you leave, right. Are you almost obsessive about keeping things clean especially in places where no one will ever see it? And I can’t train that. You either you got or you don’t.
Robert: But I also want people who just, you know, if you have courtside tickets to the basketball game, you got a hot date, it’s 7 o’clock. The game starts in an hour, and the server is not rebooting. Are you going to stay and make sure it’s done right, and that’s really, really hard to get out in a single interview or several interviews. So we actually stretch out and make the interview process really long and really hard, and really monotonous to weed people out.
We really… I think for 3 skills that – I think there are 3 skills that you can’t train for: curiosity, ethics, and drive. Curiosity really is the most important trait in the 21st century because you can Google anything so curiosity – You know, it’s more important to be a question mark now than an exclamation point, you know. Ethics is important for trust especially with personal data, and lastly, drive is the balancing force. It’s great to be curious and tilt that windmill all day all, but drive is the drive to be persistent, to not give up, and to keep your promises, and so, once I know that that became much easier. Then I’d focus on that and maybe the hiring process much more regular. And then once they came in – So it’s not like I enductonated people to a cult. Everybody has a cult that’s just right for them. The key is to help you to identify and then sweep them out. And then when you give them the uniform, at that point, you’re just putting the cape on and I’m doing it already at superhero.
Clay: That’s awesome. So – You know, so you talked about like you’ve got to hire for the DNA that you can’t train. Would you – You know, obviously, the people at the Geek Squad, you know, had to be technically inclined and inherently curious, but you also talked about the Geek Squad being kind of a large performance art project. Would you rather have someone who maybe is sort of inherently an actor and maybe has charisma and is going to kind of have marketing and ethics, etcetera built into their DNA and train them a little bit more about technology or would you rather go from the technology side and train more for, you know, marketing and the whole performance art piece? What were you more inclined?
Robert: I think I’m going for the technical person and make him more friendly.
Clay: You don’t think you can or you think you can?
Robert: I need somebody who’s friendly, but who has enthusiasm. You cannot take a technical person that’s not inherently just outgoing and make him more outgoing. It can’t be done. You can’t take somebody who’s just is really gung-ho about the brand and really friendly and outgoing, but has no real passion and curiosity with the technology. You can’t do that. You really need both.
Robert: You need somebody who has the inherent bedside manners. Get those with outgoing nature plus the curiosity for technology. They can’t just be a really social person. They have to be spending their spare time checking out technology, playing with apps, buying the new gadgets, you know, wearing the Nike fuel band right now. Why? Because I own the wristband. I own the FitBit. You know, I just live for this stuff because you can’t predict the future unless you live in it.
Robert: So you got to have both, but at the end of the day, you’ve got to have that emotional intelligent psychological makeup that gives you that versatility to be in a situation, drop into a hostile situation and climb your way out of it with finesse.
Clay: Yeah, that’s awesome. That’s really cool. So in terms of future, I know this is an interview question probably you get asked a lot. I’ve heard people say – And I don’t even know like on what grounds they’ve claimed this that you’re absolutely going to become an angel investor or a venture capitalist as opposed to starting a new company. Are the rumors true or do you see yourself starting another company or doing both?
Robert: No way. I would be a horrible investor. You know, the idea of taking my own money and trusting somebody else… or this one? Okay. Yeah, the idea of taking my own money and trusting somebody else – I’m a control freak. I’ve already proven to the world that I can restrain my ego for 10 years. I dare other founders to do that. We give founders too much leeway in this world. All that are Maverick, they broke the rules, they start up with nothing, blah, blah, blah, shit. That’s easy. I don’t know why people are so impressed by that. That’s easy. You want to know what hard is? Hard is selling your company, sticking around, trusting other people not to screw it up and have to persuade you with having the power to order them around. That is freaking hard and I did it for 10 years because you know why I did it? Spite.
To prove that I could, you know. I’m like Rocky with the power of create. I have no illusions. It looks like you’re getting a little performance in there. I had no allusions that I was going to turn Best Buy into Tiffany’s or Apple, but I just wanted to know I could go the distance with them. It was like me versus Apollo create, and I did. I went to full 10 years, far longer than anybody ever thought I would, and now, I’m dangerous because now I know that large companies don’t know what they’re doing. They’re not any smarter than anybody else, and I’d been on the outside, and I’d been on the inside, and now, I’m back outside. And now, I don’t need the things I needed 10 years ago. I have more experience and wisdom. I’ve got a reputation. If I want to raise a billion dollars tomorrow I could. And it’s money because when you take other people’s money then they own you. I’m not going to let anybody own me, and I’m not going to waste my time waiting for other people because if I’ve learned anything is that I have to do things a certain way, and working through other people by investing in them, no freaking way. Nothing.
Clay: I love it. I love it. So your next time is going to be completely bootstrapped by you.
Robert: Yes. If anything, I might allow up to a 40% shareholder, but I want it super majority voting shares. The companies will always be private. I don’t intend to flip companies either. When I build a company, I’m building a 500-year brand or a thousand-year brand that will last forever. I’m going to live off the dividend. If I can’t run a company efficiently enough to pay my employees very well – I plan to give them kick-ass benefits. I’m sick and tired of this bullshit conservative people talking about pitching a lot of taxes. I want to pay higher taxes. I want to make so much money I can afford to pay the government all the taxes they want. In fact, it’s not going to make me work any less hard if the taxes are higher. I want to kick-ass benefits to my employees. They don’t have to worry about it, and I’m going to drive them like a freaking sleigh driver.
Because I’m a capitalist pig, I’m going to have amazing benefits because I don’t want my employees worrying about their kid’s education or their spouses or anything like that or their house payment, you know, but I plan on also being picky as hell who I let inside these glorious companies. And I don’t plan on handing the companies down to my kids. You know, they’re going to make up their own minds what they do with their life, but you know, I’d plan on having a 500-year plan because I’ve been studying Aramist and Luis Vuitton and Rolls Royce, and not just luxury brands, but brands that last a long time.
Clay: Damn. All right, you got me all fired up. This is absolutely amazing. So no investing. No, you know, fighting for venture capital, which it sounds like so many people spend the majority of their time marketing to investors that they forget to market to their own customers in the first place which seems like a huge problem, and your next thing is coming. That’s awesome. Where do you see the future going right now? What’s fascinating you right now?
Robert: Excess capacity marketplaces. That’s the biggest trend in the next 20 years. Ubers, Airbnb, OpenTable, they’re all the same company.
Robert: Their marketplaces for excess capacity. With a sensor and there’s going to be cheap sensors that we put on everything, and that allows us to publish inventory a product and inventory available service. I mean you’re seeing transportation, taxi services. I mean right now, the whole idea that we have to all study and talk with human being to have a taxi come to your home is the stupidest thing I’ve ever seen in my life. Everybody has a smart phone so that means the network knows wherever the taxi is. Probably in every city, more than half the taxis are empty.
Every customer has a cell phone, and with the GPS chip, all you need is a simple down program. Ubers have already done this in a couple of cities, but that’s going to extend itself to gutter cleaning, babysitting, pizza delivery, you name it. You know, OpenTable’s doing it for restaurants. Hair salons. StyleSeat’s doing it for hair salons. Airbnb’s doing it for apartment rooms. HomeMaze is doing it for whole homes. On and on and on. There’s SkillShare that lets teachers sell their lesson plans to other eight-grade Biology teachers.
Robert: So the idea that – And she add something and then sell that product or service out of the real shop, you know, but you got to raise your bar. You’ve got to be a Da Vinci. I believe everybody is a genius at something, not everything. People are going to have to reach inside themselves and find out where they’re going to be great at and what do they want to be great at.
And here’s the hint. It’s what you’d probably do even if you didn’t get paid at it anyway. It’s the thing that gets you out of bed at 2 in the morning and you get that notebook next to your bed, and you wake up and you write ideas, and you’re always thinking about it. That’s probably where you’re meant to be in the world. So that’s a system that publishes excess capacity. Seeing these sensors through networks is what’s going to be the biggest trend. It’s going to have massive disruptions. It’s going to compress wages. It’s going to create massive competition. It’s going to lower prices. That will be good for some, bad for others. I mean you ain’t seen nothing yet.
Clay: Wow. So excess capacity marketplaces, and how do you see that kind of mapping on to your skill set? It seems like, you know, with the Geek Squad and a lot of the service businesses that you’ve talked about, you’ve had control over the way people dress, what they drive, things like that. You’ve had control over how they’re trained in a way that you wouldn’t have control, you know, if you had franchised it. How do you see someone sort of, you know, the marketplace, you know, gaining control and being able to ensure a good experience despite, you know, having a more open platform where anyone can really offer something?
Robert: Well, there’ll be two kinds of marketplaces just like there are today. There’s commodity marketplaces that compete on price. I plan on creating, you know, both. I’m going to create the high end impossible to compete with service that is high end, and – But not just high end in price, but high end in quality for a good value like Geek Squad.
Robert: But I also plan in creating its evil twin, and the evil twin is that perfect other beast of – Every company has a evil twin, and the evil twin is that company that is just as good-looking, but more efficient, more ruthless, a better competitor. We each secretly know our own weaknesses, and you can either wait for another company to come around that’s going to compete against you or you can make that competitor. So each company I create I want to create two versions. One is the higher end, the amazing version. The other one is its evil twin brother, which is out to destroy the first one, and you just have a bigger market share basically, you know. So some people just want to compete on price. I’ll have one that’s ruthless on price and efficiency, and the other one is for higher quality, you know, the better looking brother who makes more money.
Clay: Yeah, that’s really cool. And I guess both would be given permission and lean way to completely try and destroy the other.
Robert: It’s creative tension. That’s – You know, one of the things I’ll probably be doing in the short term while I’m playing around is offering that service to CEOs, to go to them and say I will give me X amount of dollars because what I learned is that a CEO really doesn’t have any control over a company. They can . . . but you know, the organization has like a mind of its own, and one thing I learned about how change manifest itself in such a large company is usually through external threats. This country never would have landed on the moon if it wasn’t for the Soviets. The Soviet Union made us a better country and it was Sputnik that put America on the moon. We never would have spent – You know, I think it’s about $1.3 trillion in today’s dollars that we spent to go to the moon. We didn’t do that unless we were afraid. So a CEO needs an external threat. CEO needs an evil twin to do that and that’s one idea I’m toying around with.
Clay: You know, speaking of evil twins and playing to your strengths and things like that, you know, one thing that’s sort of come out of here is you’re talking about playing through your strengths, not trying to be someone else, being sort of aggressively yourself, and what I’ve personally found when I do that is that I end up leaving a lot of gaping holes in the business. I consider myself a fairly creative person. I have my definite strengths, but I also have definite weaknesses, and those weaknesses would make my company completely vulnerable if I didn’t have an amazing cofounder, and so, you know, I’d love to hear about the role of the cofounder in the projects that you’ve worked on. Have you primarily done them on your own or did you…
Clay: …you know, do you believe – Yes, you have?
Robert: Yeah. No, I’ve never had . . . but I certainly appreciate partnerships. It’s very rare. I mean there’s a reason why I’ve worked with the same editor for 30 years. If you can get somebody complete your sentences that’s gold, and absolutely. I envy people that have partners that could do that because it just – The best part about getting older is if you can gain experience you know how to hire people that can augment your weaknesses without you having to give up that much ownership. The goals preserve control not just for my self enrichment to preserve control so that when decisions need to be made, you can make it quickly, you know. Now that I’m older now in my 40s, I’m probably better equipped to be a partner, but remember, I’ve had a partner and that was Best Buy for 10 years, so I’ve proven that I can be, you know, true and a team player.
Now, I don’t want to be a team player. I need to go back to another mode so all I’m doing is just switching modes again. I’ll probably return to that. You know, as you get older you do get more patient and more – you have a longer view, but right now, I want to be tyrannical and that’s why I would be a horrible investor. You know, I have made a few small investments, but I don’t know enough about investing, and frankly, it just seems like a shitty ratio. I’m not kind of for it. There’s too many things that are going on right now. I’m a hands-on person. I’m not field things, you know.
Clay: That’s amazing. I feel bad actually because I interjected this question. It sort of stopped the flow about the future, which is actually, I think, one of your, you know, where you’re really strong, so excess capacity marketplaces, buildings, sort of the high-end version, the lone version, having them sort of compete with each other and then probably share what they’ve learned in swapping that intellectual property and maybe, you know, the knowledge there, and you mentioned kind of like a lending behavior that happens in Silicone Valley and I feel like I see this too like even with the language, everyone, you know, no one ever was talking about pivots, you know, like 5 years ago, and then this language came through, and people almost seem to repeat each other. People are going crazy about mobile. Are there any trends right now where you see everyone going in one direction where you think there’s a huge opportunity, maybe zagging where everyone’s zigging?
Robert: Well first of all, I just think that that’s relatively small group of people are talking about pivots, but I think it’s very relevant. I mean Eric Reese is – You know, lean stuck up method is really a favorite of Toyota. It does lean manufacturing, and that’s because there’s so much new capability out right now; Amazon web services and, you know, Sequel and all these development tools get hub.
Clay: Google Apps, Tension, yeah.
Robert: So many new tools that are still only available to a small few people who are paying attention. So that part is still actually somewhat of a bubble. Most of the world doesn’t know that. There’s not enough of a runway over the next 10 years just for those things to play out. So that is much more of a trend than a fad I would say.
Robert: You know, I think, you know, Instagram type photo apps, now that’s a fad, you know. I mean I think sharing images is actually very profound human activity that won’t go away anytime soon, but you know, if you chase the things that have already happened there’s just no way to pick it, you know. You’ll go crazy staying up at night looking, you know, some people, wondering how the hell did they do it. You know, Jack Dorsey is Jack Dorsey, and he is who he is because they’re just chasing something that they care about. I mean, you know – Well, it should be long to talk about too much about how Jack was kicked out of Twitter, how that felt, how long those rockets failed, you know, lost. That’s why they’re who they are because they didn’t give up, but that’s why it’s important to pick what you love because you probably will fail. The question is who do you want to fail with? You know, what ideas do you want to fail with, you know, like I love my wife because she’s the person I want to be with through like the worse times, you know, like – So you just got to pick the stuff you love because you’ll probably have shitty days. So the question is how much we enjoy even though shitty days because it’s at least in the area that you’re passionate about.
Clay: Yeah. Good. That’s profound shit. Wow, this has been a truly amazing interview, and I am – I’m kind of – I’m just really grateful that you’ve done this. Are there any questions that you think I should have asked that I haven’t?
Robert: No. But you’re welcome to ask me again, you know, after I live in San Francisco for a few months. I’ll give my report then although I think you should just do a whole other thing on just how you did this today, your microphone. What screen casting software are you using?
Clay: I’m not using screen casting stuff right now. It’s called Call Recorder, and it’s just a Mac app that integrates really well with Skype and records both sides of the conversation. I’m using a – Just you know for everyone listening too – I’m using a really nice kind of soft box for my light that is like $50 on Amazon, and there’s a webcam. It’s actually a webcam that mounts on a tripod called the – It’s the Logitech 920c and it captures video in H.264 and it’s better than my $2500 Canon 7D, so everything is being recorded on the fly. There’s almost no post production and it’s worked out really well for me.
Robert: Cool. Will you send me a link to those things too?
Clay: Absolutely, absolutely.
Robert: The night box – I mean, you know, that’s like the big thing I just tweeted last night. I will just you by your Skype background. Mine is plain, and of course, the power went out and stuff like that, but like your lighting like you have the best lighting anybody in Skype I’ve ever seen so that’s something – You know, with also the face time now in Skype and Google Hangouts. I think the bar’s going to begin to be raised not only on the frontal lighting, but also like on the background so…
Clay: Cool. Thanks so much. Hey, I really appreciate it. I really appreciate you. Thanks for – You know, thanks for being so generous. You don’t have to be there. You absolutely . . . it seems like you’re not in the business of promoting your personal brand, so I realize this completely comes from a benevolent place, but I’m grateful and my audience is gonna be grateful, and I’ll make sure this gets in the hands of a lot of people. So thank you so much.
Robert: Okay, take care.
Clay: Take care. Bye.