1 00:00:17,640 --> 00:00:18,999 Speaker 1: Pushkin. Too quick? 2 00:00:19,280 --> 00:00:20,090 Speaker 2: No, it was perfect. 3 00:00:20,369 --> 00:00:20,709 Speaker 1: Pushkin. 4 00:00:20,730 --> 00:00:36,290 Speaker 2: Stop. You got it. Robert Smith. 5 00:00:36,390 --> 00:00:37,309 Speaker 1: Yes, sir. 6 00:00:37,330 --> 00:00:40,710 Speaker 2: Today's show is about Wayne Huizenga, a man who got 7 00:00:40,730 --> 00:00:42,999 Speaker 2: into the garbage business in the 60s when it was 8 00:00:43,110 --> 00:00:46,500 Speaker 2: rough and tumble, mom and pop shops with a couple 9 00:00:46,540 --> 00:00:49,780 Speaker 2: of trucks. And he went on to create the biggest 10 00:00:49,880 --> 00:00:54,740 Speaker 2: garbage company in the world, Waste Management Inc., by executing 11 00:00:54,760 --> 00:00:59,020 Speaker 2: a historic roll-up, one of the all-time great roll-ups, buying 12 00:00:59,040 --> 00:01:01,790 Speaker 2: a bunch of little companies. And then, in the 1980s, 13 00:01:01,780 --> 00:01:03,950 Speaker 2: he got out of the garbage business and I made 14 00:01:03,970 --> 00:01:07,950 Speaker 2: the same move again, and he built Blockbuster Video. Blockbuster 15 00:01:07,990 --> 00:01:10,670 Speaker 2: Video and a garbage magnet? Into the blue and yellow 16 00:01:10,770 --> 00:01:13,650 Speaker 2: pillar of our high school weekends. I'm Jacob Goldstein. 17 00:01:13,830 --> 00:01:15,850 Speaker 1: I'm Robert Smith, and this is Business History. 18 00:01:15,870 --> 00:01:18,090 Speaker 2: What would you say it is? What is it about? 19 00:01:18,330 --> 00:01:20,130 Speaker 1: It's hard to tell, but I think it is a 20 00:01:20,190 --> 00:01:21,650 Speaker 1: show about the history of business. 21 00:01:21,810 --> 00:01:25,130 Speaker 2: Wayne Huizenga was a man who loved a roll-up. The 22 00:01:25,150 --> 00:01:28,610 Speaker 2: roll-up is a standard business move. You've got a fragmented industry. 23 00:01:28,650 --> 00:01:30,290 Speaker 2: You buy a bunch of little companies to make a 24 00:01:30,330 --> 00:01:33,520 Speaker 2: great big company. Billy Durant did it to build GM. 25 00:01:33,540 --> 00:01:36,860 Speaker 2: We talked about that. Private equity today loves this move. 26 00:01:36,910 --> 00:01:38,910 Speaker 2: You know, they roll up car washes. 27 00:01:39,050 --> 00:01:40,170 Speaker 1: Plumbers. Plumbers. 28 00:01:40,290 --> 00:01:45,710 Speaker 2: Dentists. Doctors' offices. Doctors' offices. Veterinary clinics. So today on 29 00:01:45,730 --> 00:01:48,309 Speaker 2: the show, we are going to talk about Wayne Huizenga, 30 00:01:48,810 --> 00:01:52,450 Speaker 2: the garbage business, the video industry, and the art of 31 00:01:52,670 --> 00:01:57,440 Speaker 2: the roll-up. Wayne Huizenga got into the garbage business in 32 00:01:57,520 --> 00:02:02,940 Speaker 2: part because it ran in his family. His grandfather... Harm Huizinga. 33 00:02:03,900 --> 00:02:07,000 Speaker 2: What is Harm short for? Harmonious. Harmonious. Or maybe he 34 00:02:07,040 --> 00:02:10,060 Speaker 2: was just a bad man. I don't know. Harm Huizinga 35 00:02:10,120 --> 00:02:14,580 Speaker 2: worked in Chicago in the 1890s as a blacksmith and wheelwright. 36 00:02:14,800 --> 00:02:18,220 Speaker 2: Two jobs you don't hear a lot anymore. And he 37 00:02:18,240 --> 00:02:22,120 Speaker 2: would drive into Chicago every day in a horse and buggy. 38 00:02:22,240 --> 00:02:25,260 Speaker 2: And on his way home, people would ask Harm Huizinga 39 00:02:25,320 --> 00:02:27,500 Speaker 2: if he could just take some trash out to the 40 00:02:27,660 --> 00:02:31,310 Speaker 2: edge of town for him and throw it on the ground, basically. Oh, 41 00:02:31,350 --> 00:02:33,670 Speaker 2: you live out in the country? I have something for you, 42 00:02:33,730 --> 00:02:37,390 Speaker 2: a big bag of trash. And Izinga thought, wait a minute, 43 00:02:37,510 --> 00:02:41,109 Speaker 2: here is a demand. Here is something people want. So 44 00:02:41,150 --> 00:02:44,290 Speaker 2: he bought another wagon and turned it into a garbage 45 00:02:44,340 --> 00:02:48,639 Speaker 2: buggy and I believe created the first trash business in Chicago. 46 00:02:49,500 --> 00:02:52,540 Speaker 2: Wayne's father, that was his grandfather, Wayne's father moved the 47 00:02:52,580 --> 00:02:56,780 Speaker 2: family to South Florida, where Wayne grew up. And during 48 00:02:56,940 --> 00:03:00,470 Speaker 2: summer breaks, he'd go back to Chicago, drive a dump truck, 49 00:03:00,490 --> 00:03:04,250 Speaker 2: I guess when he was in high school. And in 1959, 50 00:03:04,250 --> 00:03:08,309 Speaker 2: he lands back home in Florida. He's 22 years old, 51 00:03:08,970 --> 00:03:12,910 Speaker 2: and he's managing a family friend's three-truck garbage firm, a 52 00:03:13,130 --> 00:03:15,340 Speaker 2: company called Pompano Carting Company. 53 00:03:15,660 --> 00:03:16,399 Speaker 1: Oh, sounds great. 54 00:03:16,660 --> 00:03:20,540 Speaker 2: Sounds amazing. And there's this thing that happens at this 55 00:03:20,700 --> 00:03:24,760 Speaker 2: point in Wayne Izinga's life, early career, that shows you 56 00:03:24,800 --> 00:03:27,500 Speaker 2: what kind of a guy he is. And it's a 57 00:03:27,520 --> 00:03:31,940 Speaker 2: little bit Rashomani because there's two different versions of the story. 58 00:03:32,280 --> 00:03:35,340 Speaker 2: And they're different in important ways. So the first one 59 00:03:35,690 --> 00:03:40,430 Speaker 2: is Huizenga, the tough but sympathetic businessman out there in a, 60 00:03:40,510 --> 00:03:43,810 Speaker 2: you know, rough and tumble world. That version goes like this. 61 00:03:44,390 --> 00:03:48,130 Speaker 2: A customer named Thomas Millwood complains that his trash hasn't 62 00:03:48,170 --> 00:03:51,490 Speaker 2: been getting picked up. And Huizenga says the bill hasn't 63 00:03:51,530 --> 00:03:53,650 Speaker 2: been paid and that's why. And the customer's like, yes, 64 00:03:53,690 --> 00:03:58,510 Speaker 2: it has. And things escalate. And at some point, Huizenga 65 00:03:58,710 --> 00:04:03,230 Speaker 2: grabs the customer's balls and twists. And then the customer 66 00:04:03,290 --> 00:04:06,770 Speaker 2: pins Huizenga down until the sheriff comes. And Huizenga gets 67 00:04:06,850 --> 00:04:08,090 Speaker 2: charged with assault and battery. 68 00:04:08,290 --> 00:04:08,790 Speaker 1: Version one. 69 00:04:09,030 --> 00:04:13,660 Speaker 2: Version one. Version two comes from the Miami New Times 70 00:04:13,680 --> 00:04:17,160 Speaker 2: Alt Weekly. Not so sympathetic to Huizenga. This version is 71 00:04:17,580 --> 00:04:21,179 Speaker 2: essentially Huizenga the bully. In this version, Huizenga is going 72 00:04:21,240 --> 00:04:25,239 Speaker 2: door to door, selling garbage collection services on behalf of 73 00:04:25,380 --> 00:04:28,710 Speaker 2: Pompano Carting. And he knocks on the door of this customer, 74 00:04:28,770 --> 00:04:32,599 Speaker 2: Thomas Millwood, same guy. But Millwood doesn't go for the pitch, says, no, thanks. 75 00:04:32,650 --> 00:04:36,779 Speaker 2: I'm not interested. But Huizinga refuses to leave and starts 76 00:04:36,900 --> 00:04:40,720 Speaker 2: using abusive and profane language to Millwood and his wife. 77 00:04:41,320 --> 00:04:44,279 Speaker 2: And then in a fit of rage, he attacks Millwood, 78 00:04:44,700 --> 00:04:48,200 Speaker 2: hits him, breaks his sunglasses and grabs his balls and twists. 79 00:04:48,420 --> 00:04:51,089 Speaker 2: One detail that is the same in those stories. And 80 00:04:51,110 --> 00:04:53,250 Speaker 2: then gets charged with assault and battery. Also the same. 81 00:04:54,140 --> 00:04:57,540 Speaker 2: So he is definitely tough and aggressive, and he is 82 00:04:57,600 --> 00:04:59,940 Speaker 2: in the right business in the right place at the 83 00:04:59,990 --> 00:05:03,330 Speaker 2: right time. Perhaps the most important ingredient to success in 84 00:05:03,350 --> 00:05:07,730 Speaker 2: business is right place, right time. Florida in 1960 is 85 00:05:07,750 --> 00:05:10,110 Speaker 2: a good time to be in the garbage business for 86 00:05:10,130 --> 00:05:14,089 Speaker 2: a few reasons. Air conditioning is spreading. People are moving 87 00:05:14,130 --> 00:05:15,930 Speaker 2: to Florida because now you can live there in the 88 00:05:15,970 --> 00:05:17,170 Speaker 2: summer without it being awful. 89 00:05:17,430 --> 00:05:19,770 Speaker 1: There's so many flip-flops and pop-tops to throw away. 90 00:05:19,790 --> 00:05:26,210 Speaker 2: Flip-flops, pop-tops, rag-mops, lollipops. Consumption in the U.S. is booming, right? 91 00:05:26,230 --> 00:05:30,659 Speaker 2: This is the post-war boom, better living through chemistry, plastics. 92 00:05:31,600 --> 00:05:35,020 Speaker 2: And Americans are creating more and more garbage. The rate 93 00:05:35,080 --> 00:05:39,120 Speaker 2: of garbage produced by Americans is growing faster than the population, 94 00:05:39,660 --> 00:05:42,140 Speaker 2: which is good if you're in the garbage business. And 95 00:05:42,339 --> 00:05:47,650 Speaker 2: Huizenga is definitely a hustler. And he borrows $ 5, 000 from 96 00:05:47,690 --> 00:05:51,530 Speaker 2: his father-in-law and buys a beat-up garbage truck and a 97 00:05:51,570 --> 00:05:55,799 Speaker 2: handful of customer accounts. And in February of 1962, he 98 00:05:55,860 --> 00:05:57,890 Speaker 2: starts Southern Sanitation Service. 99 00:05:58,270 --> 00:05:59,279 Speaker 1: Ooh, it sounds fancy. 100 00:05:59,360 --> 00:06:02,400 Speaker 2: Robert, give us Wayne Huizenga on his early years as 101 00:06:02,540 --> 00:06:03,160 Speaker 2: a businessman. 102 00:06:03,440 --> 00:06:06,620 Speaker 1: I worked 20 hours a day, bar none, all the time. 103 00:06:06,760 --> 00:06:09,000 Speaker 1: And I never drove main streets. I always drove the 104 00:06:09,200 --> 00:06:11,900 Speaker 1: alleys and the side streets, trying to find out what 105 00:06:11,920 --> 00:06:12,440 Speaker 1: was happening. 106 00:06:12,580 --> 00:06:13,740 Speaker 2: One more quote from another interview. 107 00:06:14,240 --> 00:06:16,920 Speaker 1: I picked up garbage from 2 a.m. until noon. Then 108 00:06:16,940 --> 00:06:19,099 Speaker 1: I changed my clothes and went door to door selling 109 00:06:19,120 --> 00:06:21,800 Speaker 1: my services. I didn't know anything about the business. I 110 00:06:21,839 --> 00:06:24,080 Speaker 1: just worked hard. and gave good service. 111 00:06:24,380 --> 00:06:26,980 Speaker 2: This part seems true. Huizenga tried very hard to keep 112 00:06:27,020 --> 00:06:31,170 Speaker 2: his customers happy, except the balls guy, but maybe he 113 00:06:31,210 --> 00:06:34,730 Speaker 2: wasn't a customer. Service is his edge on a certain level. 114 00:06:34,750 --> 00:06:36,770 Speaker 2: He's just a guy with a garbage truck, like lots 115 00:06:36,810 --> 00:06:41,110 Speaker 2: of other guys with garbage trucks. By 1968, he has 116 00:06:41,110 --> 00:06:45,770 Speaker 2: 40 trucks covering routes from Key West to Tampa. And 117 00:06:45,790 --> 00:06:48,670 Speaker 2: this was common at this time. It's the 1960s. There 118 00:06:48,690 --> 00:06:53,210 Speaker 2: were something like 12,000 garbage businesses operating in America. Over 119 00:06:53,270 --> 00:06:55,839 Speaker 2: half of them were just a guy with a few trucks. 120 00:06:56,680 --> 00:07:00,400 Speaker 2: There was no big national player. And so there is 121 00:07:00,520 --> 00:07:05,140 Speaker 2: this kind of big business history, business question here, which is, 122 00:07:05,700 --> 00:07:08,460 Speaker 2: why do we find that some industries are highly fragmented 123 00:07:08,500 --> 00:07:10,860 Speaker 2: like this? Tons of little players, no big dominant firm, 124 00:07:11,180 --> 00:07:15,970 Speaker 2: while others are concentrated? And for the answer, I want 125 00:07:16,010 --> 00:07:17,630 Speaker 2: to go to Michael Porter. 126 00:07:18,230 --> 00:07:18,970 Speaker 1: Ooh, legend. 127 00:07:19,150 --> 00:07:22,390 Speaker 2: Harvard Business School professor. He was a famous business writer 128 00:07:22,450 --> 00:07:24,680 Speaker 2: in the 20th century. Maybe the most. Maybe the most 129 00:07:24,740 --> 00:07:26,640 Speaker 2: famous business writer. The most cited one at business school. 130 00:07:26,720 --> 00:07:29,780 Speaker 1: Absolutely. He had something called Porter's Five Forces. Don't ask 131 00:07:29,820 --> 00:07:31,260 Speaker 1: me to list them off. 132 00:07:31,280 --> 00:07:33,920 Speaker 2: List them! Oh, no. 133 00:07:34,040 --> 00:07:36,160 Speaker 1: They're going to take away my MBA. His five forces 134 00:07:36,200 --> 00:07:41,750 Speaker 1: were competitive rivalry, threat of new entrants, bargaining power of suppliers, 135 00:07:42,020 --> 00:07:45,850 Speaker 1: bargaining power of buyers, and the threat of substitute products. 136 00:07:47,170 --> 00:07:51,080 Speaker 2: So in one of his books, Competitive Strategy, Techniques for 137 00:07:51,220 --> 00:07:55,980 Speaker 2: Analyzing Industries and Competitors, he actually lists, that may or 138 00:07:56,000 --> 00:07:58,380 Speaker 2: may not be true for the record, he actually lists 139 00:07:58,540 --> 00:08:01,980 Speaker 2: a bunch of reasons why an industry can be fragmented. 140 00:08:02,840 --> 00:08:06,550 Speaker 2: And if we apply his framework, as I'm sure he 141 00:08:06,570 --> 00:08:09,290 Speaker 2: would call it, to the garbage industry of the 1960s, 142 00:08:09,310 --> 00:08:11,910 Speaker 2: we can see three reasons why it's fragmented. 143 00:08:11,950 --> 00:08:12,730 Speaker 1: Should I get a whiteboard? 144 00:08:13,210 --> 00:08:17,750 Speaker 2: One, low barrier to entry. Anybody can get into the business, 145 00:08:18,310 --> 00:08:20,940 Speaker 2: just like Huizenga. Borrowed a few thousand dollars from his family, 146 00:08:21,020 --> 00:08:25,440 Speaker 2: bought a truck. He's in the business. Two, personal service 147 00:08:25,680 --> 00:08:28,580 Speaker 2: is key, which we talked about this as well. Huizenga 148 00:08:28,600 --> 00:08:31,059 Speaker 2: has been able to grow his business because he's making 149 00:08:31,440 --> 00:08:33,969 Speaker 2: sure that everybody gets well taken care of. But this 150 00:08:34,030 --> 00:08:37,130 Speaker 2: is hard to scale. There's only one Huizenga. He can't 151 00:08:37,210 --> 00:08:40,490 Speaker 2: make digital copies of himself to knock on doors. 152 00:08:40,690 --> 00:08:45,470 Speaker 1: And we see this in all sorts of businesses, plumbers, roofers, painters, locksmiths. 153 00:08:45,790 --> 00:08:48,750 Speaker 1: Any person who's putting a flyer under your door on 154 00:08:48,830 --> 00:08:52,189 Speaker 1: a daily basis, those are people who are using personal 155 00:08:52,250 --> 00:08:53,839 Speaker 1: service and low barrier to entry. 156 00:08:54,080 --> 00:08:55,500 Speaker 2: Although I do have to say, I feel like the 157 00:08:55,580 --> 00:08:59,340 Speaker 2: flyer is a negative signal to me. I want to hire... 158 00:08:59,740 --> 00:09:01,980 Speaker 2: The plumber or the roofer who doesn't need to be 159 00:09:02,040 --> 00:09:05,140 Speaker 2: putting flyers on people's doors. I want the guy who, like, 160 00:09:05,300 --> 00:09:07,160 Speaker 2: won't take my call. That's why it's very hard for 161 00:09:07,179 --> 00:09:10,390 Speaker 2: me to fix my house. We got one more. Three. 162 00:09:11,170 --> 00:09:15,209 Speaker 2: And maybe most important for Porter's list of why an 163 00:09:15,270 --> 00:09:18,810 Speaker 2: industry might be fragmented is there's not that much of 164 00:09:18,850 --> 00:09:22,300 Speaker 2: an economy of scale. So if you grow a garbage business, 165 00:09:22,700 --> 00:09:26,500 Speaker 2: you got to buy more trucks and hire more drivers. So, yes, 166 00:09:26,540 --> 00:09:29,630 Speaker 2: your revenues are growing exponentially. But your costs are also growing. 167 00:09:29,790 --> 00:09:32,650 Speaker 2: And this means there's not a huge incentive to get big. 168 00:09:33,120 --> 00:09:36,120 Speaker 1: And we see this also everywhere in barbers, right? Every 169 00:09:36,179 --> 00:09:37,839 Speaker 1: new person who comes in, you're going to need another 170 00:09:38,040 --> 00:09:39,280 Speaker 1: chair or another barber. 171 00:09:39,480 --> 00:09:42,420 Speaker 2: And this is definitely true of the garbage business in 172 00:09:42,440 --> 00:09:47,440 Speaker 2: the 1960s. And yet we know Huizinga is going to 173 00:09:47,500 --> 00:09:51,829 Speaker 2: build a giant garbage business. The industry is going to 174 00:09:51,850 --> 00:09:56,010 Speaker 2: become consolidated. And so there is this great question. What changed? 175 00:09:56,270 --> 00:09:57,570 Speaker 2: Why did the industry flip? 176 00:09:57,940 --> 00:09:59,820 Speaker 1: And you know the answer to this. Hippies. 177 00:10:00,760 --> 00:10:06,179 Speaker 2: Environmentalism. Regulation. Regulation is going to change the equilibrium. If 178 00:10:06,210 --> 00:10:09,420 Speaker 2: you think about the garbage business when Huizinga gets into it, 179 00:10:09,610 --> 00:10:14,300 Speaker 2: it is not that different from Harm Huizinga's garbage buggy 180 00:10:14,360 --> 00:10:17,239 Speaker 2: of the 1890s. Tossing it out the carriage on the 181 00:10:17,280 --> 00:10:19,220 Speaker 2: way out of town. It's close to that. People pick 182 00:10:19,300 --> 00:10:21,760 Speaker 2: up garbage in the city. They drive out of the 183 00:10:21,800 --> 00:10:25,370 Speaker 2: city and they do kind of whatever they want with it. 184 00:10:25,400 --> 00:10:28,120 Speaker 2: Not quite, but you might dump it in a quarry 185 00:10:28,320 --> 00:10:31,320 Speaker 2: or an empty ravine or burn it in an incinerator. 186 00:10:31,800 --> 00:10:36,040 Speaker 2: But of course, the incinerators put dirty garbage smoke into 187 00:10:36,059 --> 00:10:39,040 Speaker 2: the air and the landfills is garbage just sitting there. 188 00:10:39,080 --> 00:10:42,120 Speaker 2: And then it rains on it. The rain goes down 189 00:10:42,200 --> 00:10:45,290 Speaker 2: through the landfill into the water table. So it's poisoning 190 00:10:45,309 --> 00:10:48,410 Speaker 2: the water potentially. And so as the environmental movement gets 191 00:10:48,450 --> 00:10:51,010 Speaker 2: going in the 60s, people are like, we don't want 192 00:10:51,030 --> 00:10:54,229 Speaker 2: to breathe garbage smoke. We don't want to drink garbage water. 193 00:10:55,230 --> 00:11:00,199 Speaker 2: In 1965, President Lyndon Johnson signs the U.S. Solid Waste 194 00:11:00,250 --> 00:11:05,360 Speaker 2: Disposal Act. And thousands of dumps and incinerators get shut down. 195 00:11:05,820 --> 00:11:07,580 Speaker 2: Robert Smith, I got good news for you. We're going 196 00:11:07,600 --> 00:11:08,580 Speaker 2: back to Michael Porter. 197 00:11:08,780 --> 00:11:13,240 Speaker 1: Government or regulatory changes can force consolidation by raising standards 198 00:11:13,280 --> 00:11:16,339 Speaker 1: in the product or manufacturing process beyond the reach of 199 00:11:16,420 --> 00:11:20,420 Speaker 1: small firms. Recognizing the ultimate effect of such trends and 200 00:11:20,470 --> 00:11:23,350 Speaker 1: positioning the company to take advantage of them can be 201 00:11:23,370 --> 00:11:26,370 Speaker 1: an important way of overcoming fragmentation. 202 00:11:26,890 --> 00:11:29,970 Speaker 2: There's actually two beats in that paragraph. Beat number one 203 00:11:30,050 --> 00:11:33,160 Speaker 2: is the government can come in raise standards and make 204 00:11:33,200 --> 00:11:36,870 Speaker 2: it too expensive for a guy with a truck and 205 00:11:36,950 --> 00:11:39,829 Speaker 2: a quarry on the outside of town to run his landfill. 206 00:11:39,910 --> 00:11:43,570 Speaker 1: If you had to line your pit with a certain plastic, 207 00:11:43,890 --> 00:11:45,750 Speaker 1: you'd be like, I just want to dig a hole 208 00:11:45,790 --> 00:11:47,329 Speaker 1: and throw the garbage in. I'm out of the business. 209 00:11:47,690 --> 00:11:51,150 Speaker 2: And companies that see this happening and can afford to 210 00:11:51,210 --> 00:11:55,430 Speaker 2: follow the rules can win, can roll up the industry. 211 00:11:56,090 --> 00:12:02,780 Speaker 2: So in 1968... Wayne Huizenga merges his garbage company with 212 00:12:02,990 --> 00:12:07,390 Speaker 2: another guy's garbage company. The other guy is actually Huizenga's 213 00:12:07,630 --> 00:12:12,380 Speaker 2: cousin's husband. Which is funny that your cousin's husband isn't 214 00:12:12,410 --> 00:12:15,380 Speaker 2: just your cousin, but your aunt's husband is your uncle. 215 00:12:15,520 --> 00:12:16,240 Speaker 1: Cousin-in-law? 216 00:12:16,460 --> 00:12:21,540 Speaker 2: They put their companies together. The cousin's brother is Dean Buntrock. 217 00:12:22,160 --> 00:12:25,590 Speaker 2: proprietor of Ace Scavenger Services of Chicago. 218 00:12:25,610 --> 00:12:27,570 Speaker 1: Oh, the names just keep getting better and better. 219 00:12:27,710 --> 00:12:30,870 Speaker 2: Dean had been convicted at one point of conspiracy to 220 00:12:31,130 --> 00:12:35,570 Speaker 2: restrain trade, to willingly injure the business of others, to 221 00:12:35,670 --> 00:12:40,000 Speaker 2: hinder others from performing lawful acts, and an attempt to 222 00:12:40,080 --> 00:12:45,160 Speaker 2: monopolize the rubbish collection business. But apparently got something of 223 00:12:45,220 --> 00:12:48,000 Speaker 2: a slap on the wrist. In any case, in 1968, 224 00:12:48,000 --> 00:12:52,620 Speaker 2: Huizenga and Buntrock merge. And they call their new company 225 00:12:53,200 --> 00:12:58,939 Speaker 2: Waste Management Inc. It's actually Dean, the cousin's husband, who 226 00:12:59,040 --> 00:13:04,200 Speaker 2: has this insight about the new regulations. Landfills that comply 227 00:13:04,260 --> 00:13:08,450 Speaker 2: with the new regulations are now scarce. And so if 228 00:13:08,500 --> 00:13:12,830 Speaker 2: somebody could buy up those compliant landfills, you could have 229 00:13:12,870 --> 00:13:14,670 Speaker 2: a local monopoly, essentially. 230 00:13:15,030 --> 00:13:16,470 Speaker 1: Always buy the scarce resource. 231 00:13:16,530 --> 00:13:18,489 Speaker 2: Always buy the scarce resource if you can afford it. 232 00:13:19,130 --> 00:13:21,250 Speaker 2: Because then you can charge a lot for people to 233 00:13:21,330 --> 00:13:25,370 Speaker 2: dump their garbage there. To do that, they need capital. 234 00:13:25,790 --> 00:13:27,460 Speaker 2: But capital is actually hard to come by in the 235 00:13:27,500 --> 00:13:30,660 Speaker 2: garbage business in the 60s. Banks are wary of the industry, 236 00:13:30,740 --> 00:13:35,700 Speaker 2: see it as seedy, crimey. And they're not entirely wrong. 237 00:13:35,880 --> 00:13:39,480 Speaker 1: Hey, in the waste management business, everybody immediately assumes you're 238 00:13:39,520 --> 00:13:43,240 Speaker 1: mobbed up. It's a stereotype and it's offensive. It's my 239 00:13:43,270 --> 00:13:43,840 Speaker 1: Tony Soprano. 240 00:13:43,860 --> 00:13:47,820 Speaker 2: It's pretty good. You inhabited it. Anyways, you made it yours. Anyway, 241 00:13:48,140 --> 00:13:53,010 Speaker 2: WMI can't get bank financing. And so they decide they're 242 00:13:53,030 --> 00:13:57,750 Speaker 2: going to go public. Ambition. And they net from their IPO... 243 00:13:57,370 --> 00:14:03,170 Speaker 2: $ 4 million. $ 4 million. It's like Dr. Evil going public. 244 00:14:03,190 --> 00:14:06,770 Speaker 1: I feel like that's the catering fee by an investment 245 00:14:06,820 --> 00:14:08,740 Speaker 1: bank for a modern IPO. 246 00:14:09,420 --> 00:14:11,640 Speaker 2: Yes, if you're lucky, that's the catering fee. If they 247 00:14:11,660 --> 00:14:15,579 Speaker 2: do the cut rate, no salmon. So $ 4 million could 248 00:14:15,860 --> 00:14:20,770 Speaker 2: buy you some amount of landfills in 1971. And so 249 00:14:20,790 --> 00:14:25,210 Speaker 2: Huizenga decides to focus on the suburbs. It's the early 70s. 250 00:14:25,330 --> 00:14:30,520 Speaker 2: Suburbs are still growing. And in 1972, Huizinga really starts 251 00:14:30,700 --> 00:14:34,760 Speaker 2: executing on this strategy, and he goes very, very hard. 252 00:14:35,840 --> 00:14:39,660 Speaker 2: The company has this little propeller plane, and he's flying 253 00:14:40,120 --> 00:14:43,310 Speaker 2: all the time. He'll wake up before dawn, fly off 254 00:14:43,350 --> 00:14:46,010 Speaker 2: for a breakfast meeting in one city, get on the plane, 255 00:14:46,070 --> 00:14:48,229 Speaker 2: fly to another city for lunch, get on the plane 256 00:14:48,270 --> 00:14:50,670 Speaker 2: again for a meeting in a third city, sleeping on 257 00:14:50,710 --> 00:14:57,430 Speaker 2: the plane. And between March and December of 1972... WMI 258 00:14:57,530 --> 00:15:04,440 Speaker 2: buys 133 businesses, which is many per week. Many per week. 259 00:15:04,520 --> 00:15:06,200 Speaker 2: It's just deal, deal, deal. 260 00:15:06,540 --> 00:15:07,740 Speaker 1: And these are mostly dumps. 261 00:15:08,160 --> 00:15:12,300 Speaker 2: Largely dumps. Some little garbage companies. Often they're combined. And 262 00:15:12,560 --> 00:15:16,160 Speaker 2: one thing that Huizenga manages to do is, in fact, 263 00:15:16,320 --> 00:15:21,720 Speaker 2: to get a monopoly on private landfills in certain cities, 264 00:15:21,800 --> 00:15:26,960 Speaker 2: in certain areas. And once they do that, unsurprisingly, They 265 00:15:27,020 --> 00:15:29,600 Speaker 2: can jack up the fees for dumping in those landfills 266 00:15:29,620 --> 00:15:33,160 Speaker 2: because you don't have a choice. That's why monopolies are bad, frankly. 267 00:15:33,880 --> 00:15:35,540 Speaker 2: But it's good if you're the one with the monopoly. 268 00:15:35,980 --> 00:15:39,970 Speaker 2: They're growing at like 35 percent a year. And at 269 00:15:40,090 --> 00:15:46,290 Speaker 2: one point, Bunt Rock, the partner, the cousin's husband, tells Huizenga, look, 270 00:15:46,310 --> 00:15:50,630 Speaker 2: we're growing. There's this huge market we're not in, New York, 271 00:15:50,770 --> 00:15:54,740 Speaker 2: New Jersey. We've got to go look at it. So 272 00:15:54,780 --> 00:15:57,920 Speaker 2: Huizenga went up to take a look. Robert, read us 273 00:15:57,940 --> 00:15:58,340 Speaker 2: what he said. 274 00:15:58,720 --> 00:16:01,440 Speaker 1: I spent two days with these guys driving around, listening 275 00:16:01,480 --> 00:16:04,990 Speaker 1: to them talk and came back and said, no, we 276 00:16:05,050 --> 00:16:06,850 Speaker 1: are not going to New York and New Jersey. 277 00:16:07,090 --> 00:16:10,070 Speaker 2: What was the Tony Soprano line? It is a stereotype 278 00:16:10,130 --> 00:16:14,210 Speaker 2: and it's offensive. Those things may be true, but in fact, 279 00:16:14,870 --> 00:16:17,030 Speaker 2: the business was mobbed up there. Give me another line. 280 00:16:17,530 --> 00:16:19,590 Speaker 1: We didn't do business there because of that. We didn't 281 00:16:19,650 --> 00:16:20,970 Speaker 1: want to be tainted with that. 282 00:16:21,520 --> 00:16:25,760 Speaker 2: And this is the real mafia. This is Godfather type stuff. 283 00:16:25,800 --> 00:16:29,460 Speaker 2: You know, Genovese, Gambino, Lucchese, Colombo, Bonanno. 284 00:16:29,600 --> 00:16:32,360 Speaker 1: The real Michael Porter's five forces of New York. 285 00:16:32,480 --> 00:16:36,910 Speaker 2: In 1970, yes. And there is a reason that this 286 00:16:37,030 --> 00:16:42,360 Speaker 2: particular business was so crimey. And that is garbage is 287 00:16:42,400 --> 00:16:45,420 Speaker 2: a commodity business. You can try and get better service 288 00:16:45,480 --> 00:16:48,200 Speaker 2: or whatever, but essentially people just want their trash picked 289 00:16:48,300 --> 00:16:51,300 Speaker 2: up at the lowest price. And maybe the central theme 290 00:16:51,360 --> 00:16:53,280 Speaker 2: of business history that we have talked about so far 291 00:16:53,400 --> 00:16:56,690 Speaker 2: is commodity businesses are terrible to be in because everybody 292 00:16:56,730 --> 00:16:59,970 Speaker 2: competes each other down to the lowest price and you 293 00:16:59,990 --> 00:17:02,580 Speaker 2: don't make any profit that way. So what do you do? 294 00:17:02,900 --> 00:17:03,960 Speaker 2: You fix prices. 295 00:17:04,220 --> 00:17:04,940 Speaker 1: If you're the mob. 296 00:17:04,960 --> 00:17:07,120 Speaker 2: Even if you're not the mob, if you're just four 297 00:17:07,179 --> 00:17:10,990 Speaker 2: guys with garbage businesses competing against each other, you get 298 00:17:11,030 --> 00:17:13,570 Speaker 2: together and you have a few beers and you say, look, 299 00:17:13,590 --> 00:17:16,970 Speaker 2: you take that neighborhood and I'll take this neighborhood and 300 00:17:16,990 --> 00:17:18,449 Speaker 2: we'll just leave each other alone and we'll have our 301 00:17:18,490 --> 00:17:22,530 Speaker 2: nice little businesses. And that is essentially a cartel. But 302 00:17:22,570 --> 00:17:25,490 Speaker 2: there is a problem with cartels that is also interesting. 303 00:17:25,550 --> 00:17:28,389 Speaker 2: And that is there's an incentive for everybody to cheat 304 00:17:28,540 --> 00:17:29,040 Speaker 2: a little bit. 305 00:17:29,660 --> 00:17:32,230 Speaker 1: Because they got in the cartel because they're greedy. They're, 306 00:17:32,390 --> 00:17:35,270 Speaker 1: by definition, greedy people. And what do greedy people do? 307 00:17:35,630 --> 00:17:38,590 Speaker 1: They try to take a little bit more from their competitors. 308 00:17:38,690 --> 00:17:39,560 Speaker 1: And now they're competing again. Yes. 309 00:17:39,630 --> 00:17:42,379 Speaker 2: I mean, in a way, the optimal position for anyone 310 00:17:42,400 --> 00:17:44,379 Speaker 2: to be in is to be in a cartel but 311 00:17:44,440 --> 00:17:47,420 Speaker 2: cheating a little bit on the side, lowering your prices 312 00:17:47,460 --> 00:17:48,790 Speaker 2: a little bit so you can get a little more 313 00:17:48,810 --> 00:17:51,620 Speaker 2: business or something like that. Now, what do you do 314 00:17:51,680 --> 00:17:53,560 Speaker 2: if you have formed a cartel and someone cheats? 315 00:17:53,800 --> 00:17:54,760 Speaker 1: You can't call the police. 316 00:17:54,780 --> 00:17:55,960 Speaker 2: You can't call the police. 317 00:17:56,070 --> 00:17:56,770 Speaker 1: You are criminal. 318 00:17:56,810 --> 00:17:58,550 Speaker 2: You have broken the law to create the cartel. You 319 00:17:58,590 --> 00:18:01,930 Speaker 2: can't be like, well, this guy is cheating in our cartel. 320 00:18:01,970 --> 00:18:04,729 Speaker 2: Come enforce it. This is where the crime comes in. 321 00:18:05,650 --> 00:18:09,130 Speaker 2: This is where the threat of violence and in some 322 00:18:09,170 --> 00:18:13,199 Speaker 2: cases actual violence is used to enforce the cartel. And 323 00:18:13,280 --> 00:18:16,330 Speaker 2: this was the trash business in New York and New 324 00:18:16,369 --> 00:18:18,609 Speaker 2: Jersey for a long time. And to be clear, if 325 00:18:18,630 --> 00:18:20,210 Speaker 2: you live here, you're like, doesn't the city pick up 326 00:18:20,250 --> 00:18:23,460 Speaker 2: my trash? Yes, it's the trash business for institutions, for businesses, 327 00:18:23,500 --> 00:18:24,000 Speaker 2: that sort of thing. 328 00:18:24,100 --> 00:18:26,840 Speaker 1: Still, if we were crime business history, we would hammer 329 00:18:26,920 --> 00:18:27,820 Speaker 1: this lesson home. 330 00:18:28,490 --> 00:18:29,030 Speaker 2: All the time. 331 00:18:29,210 --> 00:18:33,230 Speaker 1: Divide up the business and then use threats and violence 332 00:18:33,890 --> 00:18:35,310 Speaker 1: to make sure you can keep prices high. 333 00:18:35,550 --> 00:18:38,530 Speaker 2: It is extraordinary how high they kept prices, in part 334 00:18:38,570 --> 00:18:40,949 Speaker 2: by killing people. Like, to be absolutely clear, people got 335 00:18:41,010 --> 00:18:43,909 Speaker 2: killed in the garbage business. There was this moment in 336 00:18:43,970 --> 00:18:46,570 Speaker 2: New York when there was a crackdown, not until the 90s, 337 00:18:46,680 --> 00:18:49,380 Speaker 2: kind of amazingly. There was a crackdown on organized crime 338 00:18:49,400 --> 00:18:51,210 Speaker 2: in the garbage business in New York in the 90s. 339 00:18:51,800 --> 00:18:57,530 Speaker 2: And when that happened, prices fell by like 50%. They 340 00:18:57,570 --> 00:19:01,170 Speaker 2: were not inflating prices by 15%. I guess you don't 341 00:19:01,250 --> 00:19:04,050 Speaker 2: kill people for the extra 15. You're going to kill people. 342 00:19:04,070 --> 00:19:06,889 Speaker 2: You might as well double the price. So it worked. 343 00:19:08,070 --> 00:19:11,510 Speaker 2: And Huizenga and WMI stayed out of New York and 344 00:19:11,550 --> 00:19:14,850 Speaker 2: New Jersey for a long time. Although this is a 345 00:19:14,890 --> 00:19:23,369 Speaker 2: point to mention that at some point, WMI paid $ 19. 5 346 00:19:19,810 --> 00:19:24,959 Speaker 2: million to settle a price-fixing suit in Philadelphia. Also got 347 00:19:25,000 --> 00:19:28,760 Speaker 2: fined in other places for harassing competitors and intimidating customers. 348 00:19:28,820 --> 00:19:29,740 Speaker 1: That's the ball twisting? 349 00:19:30,180 --> 00:19:35,090 Speaker 2: No. Huizinga was not personally attached to any of these 350 00:19:35,369 --> 00:19:38,410 Speaker 2: WMI ones, I should say. But there was an instance 351 00:19:38,950 --> 00:19:42,410 Speaker 2: in New Orleans when city officials said that people from 352 00:19:42,670 --> 00:19:46,600 Speaker 2: WMI told them that they would wear cement boots and 353 00:19:46,859 --> 00:19:50,580 Speaker 2: meet their maker if they kept investigating the company. Wow. 354 00:19:50,820 --> 00:20:12,990 Speaker 2: We'll be back in a minute. Thank you. The ad 355 00:20:13,010 --> 00:20:17,510 Speaker 2: break is over. It's the mid-70s. WMI has done its 356 00:20:17,590 --> 00:20:22,169 Speaker 2: big roll-up. But the nature of Wayne Huizenga is to 357 00:20:22,210 --> 00:20:26,200 Speaker 2: want more. Often the case with the people we talk 358 00:20:26,220 --> 00:20:28,440 Speaker 2: about on this show, clearly true of Wayne Izinga. 359 00:20:28,740 --> 00:20:30,240 Speaker 1: When are we going to do our lazy person show? 360 00:20:30,500 --> 00:20:32,820 Speaker 2: Like the person who just did the thing and got out, 361 00:20:32,960 --> 00:20:35,100 Speaker 2: or did the thing, like the Ferdinand the Bull of 362 00:20:35,180 --> 00:20:38,040 Speaker 2: business history. Who is the Ferdinand the Bull of business history? 363 00:20:38,200 --> 00:20:44,320 Speaker 2: Email us at businesshistoryatpushkin.fm. It's the mid-1970s. You're a big 364 00:20:44,540 --> 00:20:47,930 Speaker 2: garbage company with lots of money. You have found a 365 00:20:47,970 --> 00:20:53,750 Speaker 2: competitive advantage in government regulation. You have realized that government regulation... 366 00:20:54,150 --> 00:20:57,050 Speaker 2: gives you an advantage by being big and having access 367 00:20:57,090 --> 00:21:00,380 Speaker 2: to capital because the complex rules are hard for smaller 368 00:21:00,420 --> 00:21:02,760 Speaker 2: companies to deal with. How do you grow? What's your move? 369 00:21:03,200 --> 00:21:06,419 Speaker 2: You look for something even more complex and highly regulated 370 00:21:07,560 --> 00:21:11,320 Speaker 2: with more expensive rules, which is why in the mid-70s, 371 00:21:11,800 --> 00:21:14,770 Speaker 2: WMI gets into the chemical waste management business. 372 00:21:14,810 --> 00:21:15,629 Speaker 1: Ooh, hazardous. 373 00:21:16,130 --> 00:21:20,570 Speaker 2: They buy their first major site in 1977. That's in Alabama. 374 00:21:20,630 --> 00:21:24,070 Speaker 2: They buy a bunch of other chemical disposal sites. They're also... 375 00:21:24,440 --> 00:21:30,550 Speaker 2: expanding internationally. Saudi Arabia, Venezuela, Argentina become the biggest garbage 376 00:21:30,590 --> 00:21:34,930 Speaker 2: company in the world. And then in the 80s, they 377 00:21:35,030 --> 00:21:40,520 Speaker 2: get into trouble because of that chemical waste business. In particular, 378 00:21:40,560 --> 00:21:43,280 Speaker 2: that site in Alabama that they had bought. There's an 379 00:21:43,340 --> 00:21:45,660 Speaker 2: expose on the front page of the New York Times, 380 00:21:45,840 --> 00:21:49,820 Speaker 2: followed by charges from the EPA that the company improperly 381 00:21:49,880 --> 00:21:53,990 Speaker 2: disposed of PCBs, remember PCBs, chemicals, That went into the 382 00:21:54,050 --> 00:21:56,590 Speaker 2: local water supply. At one point, there was a fire 383 00:21:57,130 --> 00:21:59,909 Speaker 2: at the site. A pipe failed. A quarter million gallons 384 00:21:59,970 --> 00:22:04,310 Speaker 2: of liquid waste flowed onto adjacent properties. Bad, you know, 385 00:22:04,390 --> 00:22:08,910 Speaker 2: nasty stuff. But the company weathered it. Their stock fell, 386 00:22:08,950 --> 00:22:11,490 Speaker 2: but it bounced back. They hired a bunch of former regulators. 387 00:22:11,970 --> 00:22:16,160 Speaker 2: Classic move in that setting. They got through it. But Huizenga, 388 00:22:17,060 --> 00:22:21,500 Speaker 2: by the 80s, actually had had enough. When he talks 389 00:22:21,560 --> 00:22:24,260 Speaker 2: about it, He doesn't talk about the toxic waste. He 390 00:22:24,300 --> 00:22:26,980 Speaker 2: talks about what executives always talk about when they leave 391 00:22:27,040 --> 00:22:29,760 Speaker 2: a job. But I have to say, he says it 392 00:22:29,800 --> 00:22:32,479 Speaker 2: in a kind of compelling way. Robert Smith, do you 393 00:22:32,520 --> 00:22:35,480 Speaker 2: remember the song, The Cat's in the Cradle? You're going 394 00:22:35,500 --> 00:22:37,590 Speaker 2: to make me cry here on the podcast. Of course. 395 00:22:37,650 --> 00:22:37,910 Speaker 2: Of course. 396 00:22:38,210 --> 00:22:39,950 Speaker 1: 1970s Harry Chapin, right? 397 00:22:40,010 --> 00:22:41,970 Speaker 2: When you coming home, Dad? I don't know when. 398 00:22:42,270 --> 00:22:43,810 Speaker 1: But we'll get together then. 399 00:22:44,630 --> 00:22:44,990 Speaker 2: Son. 400 00:22:45,730 --> 00:22:47,689 Speaker 1: You know we'll have a good time then. 401 00:22:48,090 --> 00:22:50,410 Speaker 2: Here's what Huizenga said about that song. 402 00:22:50,700 --> 00:22:52,679 Speaker 1: It really does. It makes me a little emotional as 403 00:22:52,720 --> 00:22:55,180 Speaker 1: a father, yes. And as a son. That hits me 404 00:22:55,460 --> 00:22:57,920 Speaker 1: every time I hear that song because that's me right 405 00:22:57,960 --> 00:23:00,580 Speaker 1: to the T. That comes back and hits you real hard. 406 00:23:00,640 --> 00:23:02,860 Speaker 1: And I wish I'd have spent more time with them. 407 00:23:03,160 --> 00:23:05,570 Speaker 1: I never saw my kids play Little League Ball. I 408 00:23:05,609 --> 00:23:06,950 Speaker 1: never went to a PTA meeting. 409 00:23:07,609 --> 00:23:08,290 Speaker 2: Sorry, laugh. 410 00:23:08,790 --> 00:23:11,050 Speaker 1: You're not missing anything at the PTA meeting. But yes, 411 00:23:11,109 --> 00:23:12,310 Speaker 1: Little League Ball is amazing. 412 00:23:12,330 --> 00:23:18,990 Speaker 2: So in 1984, Huizinga left WMI and he started spending 413 00:23:19,010 --> 00:23:23,409 Speaker 2: more time with his family. Just kidding. He buys a 414 00:23:23,450 --> 00:23:26,890 Speaker 2: portable toilet company called Portalette. Let's roll it up. It 415 00:23:26,930 --> 00:23:29,510 Speaker 2: does rentals in 25 states. And he buys all new 416 00:23:29,570 --> 00:23:32,689 Speaker 2: trucks and new toilets for Portalette. He grows the business 417 00:23:32,710 --> 00:23:35,669 Speaker 2: and then sells it to WMI. Can roll the toilets 418 00:23:35,710 --> 00:23:38,540 Speaker 2: off the same truck that drops off the dumpsters for 419 00:23:38,660 --> 00:23:41,119 Speaker 2: construction sites. I'm going to do an aside about the 420 00:23:41,160 --> 00:23:45,480 Speaker 2: word dumpster. Dumpster used to be a registered trademark. In fact, 421 00:23:45,520 --> 00:23:47,440 Speaker 2: I thought it was a registered trademark. Really? And so 422 00:23:47,460 --> 00:23:48,000 Speaker 2: I looked it up. 423 00:23:48,060 --> 00:23:48,240 Speaker 1: No. 424 00:23:48,700 --> 00:23:52,149 Speaker 2: And it was a victim of what is called... Genericide. 425 00:23:52,450 --> 00:23:53,360 Speaker 1: Yes. A.K.A. 426 00:23:53,440 --> 00:23:57,199 Speaker 2: Trademark erosion. Yes. Which is if everybody starts using your 427 00:23:57,220 --> 00:23:59,800 Speaker 2: word as a word and you don't fight it, you 428 00:23:59,840 --> 00:24:01,720 Speaker 2: can lose the right to the trademark. I'm going to 429 00:24:01,740 --> 00:24:05,670 Speaker 2: give you a few others. Escalator. The Otis Elevator Company 430 00:24:05,750 --> 00:24:09,210 Speaker 2: bought escalator as a trademark. It was a moving stairway, 431 00:24:10,210 --> 00:24:13,170 Speaker 2: but they failed to enforce it. Thermos in the U.S., 432 00:24:13,350 --> 00:24:14,690 Speaker 2: dry ice, trampoline. 433 00:24:15,130 --> 00:24:15,760 Speaker 1: Trampoline. 434 00:24:15,780 --> 00:24:19,699 Speaker 2: Also victims of genericide. Genericide is a sad word, but 435 00:24:19,720 --> 00:24:21,060 Speaker 2: I think it's great when we all get to use 436 00:24:21,080 --> 00:24:25,140 Speaker 2: a word whenever we want to. Trampoline, trampoline, trampoline. Back 437 00:24:25,160 --> 00:24:31,750 Speaker 2: to Huizinga. Besides the portalette business, he also gets into 438 00:24:32,170 --> 00:24:34,530 Speaker 2: the sports business, which is what he becomes best known 439 00:24:34,570 --> 00:24:38,190 Speaker 2: for in South Florida because he owns the Miami Dolphins, 440 00:24:38,710 --> 00:24:42,720 Speaker 2: the Marlins, the Panthers, a hockey team. But his big 441 00:24:42,940 --> 00:24:48,850 Speaker 2: post-garbage play comes in 1986. The video rental business. Somebody 442 00:24:48,869 --> 00:24:52,230 Speaker 2: he knew from WMI pitches him on this video rental 443 00:24:52,250 --> 00:24:56,990 Speaker 2: chain in Dallas. It's got 19 stores. It's called Blockbuster Video. 444 00:24:57,810 --> 00:24:59,669 Speaker 2: Guy's like, it's taken off. It's a great time to 445 00:24:59,710 --> 00:25:03,290 Speaker 2: get in. And Huizinga, who made his fortune in the 446 00:25:03,350 --> 00:25:10,090 Speaker 2: rough and tumble garbage business, says, video rentals? Pass. Too sleazy. 447 00:25:12,310 --> 00:25:15,540 Speaker 2: We forget this now. We forget this now. But at 448 00:25:15,580 --> 00:25:20,359 Speaker 2: the beginning... As with many technologies, a key driver of 449 00:25:20,390 --> 00:25:23,120 Speaker 2: the video rental business was pornography. 450 00:25:23,340 --> 00:25:26,119 Speaker 1: Yes. And if you went to a small video store 451 00:25:26,380 --> 00:25:29,960 Speaker 1: back in the day, there was often a curtain in 452 00:25:29,980 --> 00:25:32,179 Speaker 1: the back of the store that said adults only. And 453 00:25:32,240 --> 00:25:37,439 Speaker 1: behind that curtain, or so I've heard, was porno videotapes. 454 00:25:37,600 --> 00:25:39,460 Speaker 2: Porno was what they used to be called. That's an 455 00:25:39,540 --> 00:25:42,200 Speaker 2: old man word. I actually, I remember the curtains. I 456 00:25:42,240 --> 00:25:45,440 Speaker 2: was a young child. I never went behind the curtain, 457 00:25:45,460 --> 00:25:48,150 Speaker 2: but I remember trying to like See if I could 458 00:25:48,250 --> 00:25:50,070 Speaker 2: see through if there was like a little gap in 459 00:25:50,090 --> 00:25:53,050 Speaker 2: the curtains. That's what it was like back then. And 460 00:25:53,190 --> 00:25:55,490 Speaker 2: in fact, I found this story from the New York 461 00:25:55,530 --> 00:25:58,420 Speaker 2: Times from the early 80s, and it said porn was 462 00:25:58,540 --> 00:26:02,580 Speaker 2: somewhere between 20 and 50 percent of the video business 463 00:26:02,720 --> 00:26:05,840 Speaker 2: in the early 80s, down from 70 percent in the 464 00:26:05,880 --> 00:26:07,379 Speaker 2: late 70s. So this is real. 465 00:26:07,680 --> 00:26:10,540 Speaker 1: Always an innovator, porn. Let's talk about these video stores 466 00:26:10,560 --> 00:26:13,939 Speaker 1: for a moment, because it's easy to forget that at 467 00:26:13,960 --> 00:26:17,070 Speaker 1: the time, just about every neighborhood had a It was 468 00:26:17,109 --> 00:26:20,510 Speaker 1: usually a very tiny video store, and you walk in, 469 00:26:20,730 --> 00:26:22,340 Speaker 1: and there's shelves, and all the videos are there. 470 00:26:22,359 --> 00:26:26,000 Speaker 2: Yeah, they were like, if you think of a dry cleaner, 471 00:26:26,800 --> 00:26:29,320 Speaker 2: or in Southern California where I grew up, taco shops. Like, 472 00:26:29,540 --> 00:26:33,550 Speaker 2: every strip mall, there'd be a little shop, a guy, 473 00:26:33,570 --> 00:26:36,810 Speaker 2: a family running a shop. That is what video stores were. 474 00:26:37,090 --> 00:26:41,470 Speaker 1: Classic fragmented situation, because, you know, if you buy some videotapes, 475 00:26:41,550 --> 00:26:44,800 Speaker 1: anyone could start a video rental store, and... It was 476 00:26:44,900 --> 00:26:47,160 Speaker 1: usually personalized to the neighborhood and people would write their 477 00:26:47,200 --> 00:26:48,199 Speaker 1: recommendations on it. 478 00:26:48,260 --> 00:26:52,139 Speaker 2: Like log jamming was a staff pick? Yes. Yes. 479 00:26:53,180 --> 00:26:57,960 Speaker 1: And the third of Porter's reasons for fragmentation is that 480 00:26:58,119 --> 00:27:01,240 Speaker 1: to expand the stores would just require a lot more 481 00:27:01,300 --> 00:27:04,179 Speaker 1: money to have a bigger store to get 10 copies 482 00:27:04,220 --> 00:27:07,300 Speaker 1: of Star Wars rather than the two they had. Frustrating. 483 00:27:07,840 --> 00:27:10,899 Speaker 2: But that's the way video stores operated. That is likely 484 00:27:10,940 --> 00:27:13,820 Speaker 2: what Huizenga had in his mind when his former colleague 485 00:27:13,840 --> 00:27:19,290 Speaker 2: pitched him on investing in a video store. But eventually, 486 00:27:19,330 --> 00:27:21,740 Speaker 2: after several pitches, he was persuaded to just go out 487 00:27:21,780 --> 00:27:24,300 Speaker 2: and take a look at these video stores in Dallas. 488 00:27:25,220 --> 00:27:28,120 Speaker 2: And what he found was actually quite different than the 489 00:27:28,240 --> 00:27:32,010 Speaker 2: classic mom-and-pop video store. We'll be back in just a minute. 490 00:27:52,940 --> 00:27:57,800 Speaker 2: Break is over. It's 1986. After being pitched and pitched 491 00:27:57,900 --> 00:28:00,960 Speaker 2: on this idea, Huizenga agrees to go out to Dallas 492 00:28:01,119 --> 00:28:05,850 Speaker 2: and take a look at this new little company, Blockbuster Video. 493 00:28:06,390 --> 00:28:09,250 Speaker 2: And here is what he finds. Blockbuster Video had been 494 00:28:09,350 --> 00:28:13,800 Speaker 2: founded the year before, in 1985. by a husband and 495 00:28:13,820 --> 00:28:18,880 Speaker 2: wife team with a third investor. And the wife, Sandy Cook, 496 00:28:19,040 --> 00:28:21,859 Speaker 2: was a cinephile. She loved movies. The husband was a 497 00:28:21,880 --> 00:28:24,020 Speaker 2: computer programmer. And this turned out to be the perfect 498 00:28:24,080 --> 00:28:27,939 Speaker 2: pairing to start a video store. Sandy, the cinephile, wanted 499 00:28:27,960 --> 00:28:31,960 Speaker 2: a good selection of movies. You know, movies for grownups. 500 00:28:32,000 --> 00:28:34,980 Speaker 2: And by grownups, she did not mean adult films. No porn. 501 00:28:35,119 --> 00:28:36,909 Speaker 2: They weren't going to do porn. But there was a 502 00:28:36,950 --> 00:28:39,370 Speaker 2: bigger selection. The stores were bigger. They were clean. They 503 00:28:39,390 --> 00:28:41,960 Speaker 2: were brightly lit. She'd already come up with the blue 504 00:28:42,010 --> 00:28:44,970 Speaker 2: and yellow color scheme. So the basic model of the 505 00:28:45,010 --> 00:28:47,550 Speaker 2: store was there. And then the husband, the computer programmer, 506 00:28:47,930 --> 00:28:52,370 Speaker 2: had built this way to attract inventory using computers, which 507 00:28:52,410 --> 00:28:56,170 Speaker 2: sounds boring and routine today, but in the mid-' 80s was like, 508 00:28:56,210 --> 00:28:58,350 Speaker 2: you know, running your business with an AI agent today 509 00:28:58,390 --> 00:28:59,310 Speaker 2: or something. It was the frontier. 510 00:28:59,550 --> 00:29:03,370 Speaker 1: Because video stores at the time relied on a very 511 00:29:03,610 --> 00:29:08,170 Speaker 1: smart film nut, a teenager often, working behind the counter. 512 00:29:08,190 --> 00:29:09,610 Speaker 1: So you'd come in and say, do you have this? 513 00:29:10,010 --> 00:29:11,850 Speaker 1: He'd be like, oh, yeah, yeah, we have this and 514 00:29:11,870 --> 00:29:12,950 Speaker 1: would know exactly where it was. 515 00:29:12,910 --> 00:29:14,330 Speaker 2: In the store. Maybe he would write it down in 516 00:29:14,350 --> 00:29:16,250 Speaker 2: a book when he checked it out. So this is 517 00:29:16,290 --> 00:29:19,490 Speaker 2: what they have. They've also invested in this distribution center 518 00:29:19,550 --> 00:29:22,700 Speaker 2: so that they can roll out the inventory for three 519 00:29:22,760 --> 00:29:26,840 Speaker 2: new stores in 24 hours. They're poised to grow. They 520 00:29:26,880 --> 00:29:30,180 Speaker 2: have a big idea, but they need capital. They are 521 00:29:30,220 --> 00:29:34,590 Speaker 2: constrained by capital. And as Huizenga is in Dallas looking around, 522 00:29:35,070 --> 00:29:39,840 Speaker 2: he gets it. He thinks this is not porn. This 523 00:29:39,910 --> 00:29:44,260 Speaker 2: is the garbage business circa 1968. It is a fragmented 524 00:29:44,300 --> 00:29:48,410 Speaker 2: industry ripe for a roll-up. Robert Smith, take me back 525 00:29:48,450 --> 00:29:49,110 Speaker 2: to Michael Porter. 526 00:29:49,370 --> 00:29:52,590 Speaker 1: An industry can be fragmented because it is new. and 527 00:29:52,690 --> 00:29:55,110 Speaker 1: no firms or firms have yet developed the skills and 528 00:29:55,150 --> 00:29:59,360 Speaker 1: resources to command a significant market share. And it was new. 529 00:29:59,400 --> 00:30:00,100 Speaker 1: The technology was. 530 00:30:00,200 --> 00:30:03,020 Speaker 2: It was new. There was no inherent regulatory change. It 531 00:30:03,060 --> 00:30:05,640 Speaker 2: was just that renting videos was a new thing because 532 00:30:05,700 --> 00:30:08,460 Speaker 2: VCRs were new and nobody had come in and said, 533 00:30:09,310 --> 00:30:11,600 Speaker 2: Let's roll it up. And that is what Huizenga is 534 00:30:11,650 --> 00:30:16,760 Speaker 2: doing right now. He buys 60% of the company. For 535 00:30:16,760 --> 00:30:22,500 Speaker 2: $ 18. 5 million, he becomes chairman and CEO. And we'll be 536 00:30:22,540 --> 00:30:29,910 Speaker 2: together then, son. Blockbuster at this moment is this little 537 00:30:30,130 --> 00:30:34,150 Speaker 2: regional video store chain. And there are other little regional 538 00:30:34,270 --> 00:30:37,410 Speaker 2: video store chains. He is not the only one with 539 00:30:37,470 --> 00:30:42,060 Speaker 2: this idea. So now... The race is on. Who can 540 00:30:42,120 --> 00:30:46,160 Speaker 2: get big fast? And Huizinga is saying this explicitly. Here 541 00:30:46,440 --> 00:30:49,140 Speaker 2: is him, Huizinga, at a company meeting early on. 542 00:30:49,620 --> 00:30:52,350 Speaker 1: We have to move fast because we have nothing exclusive. 543 00:30:52,550 --> 00:30:55,530 Speaker 1: Anyone can duplicate this. So we've got to be out there. 544 00:30:55,730 --> 00:30:58,450 Speaker 1: We've got to be out there first with the superstore. 545 00:30:58,850 --> 00:31:01,450 Speaker 1: Because if somebody comes in across from us, it's going 546 00:31:01,470 --> 00:31:04,790 Speaker 1: to be harder. We've got to establish this thing called blockbuster. 547 00:31:05,170 --> 00:31:07,050 Speaker 1: And it's got to mean videos. 548 00:31:07,550 --> 00:31:11,310 Speaker 2: Huizenga does have the advantage of being Wayne Huizenga at 549 00:31:11,330 --> 00:31:14,340 Speaker 2: this point. He's well-known on Wall Street. He knows the 550 00:31:14,380 --> 00:31:16,959 Speaker 2: playbook for a roll-up. He did it in trash. And 551 00:31:17,080 --> 00:31:21,720 Speaker 2: so he starts buying little regional video chains around the country. 552 00:31:22,280 --> 00:31:23,920 Speaker 2: By the end of 1987, there are 133 Blockbuster stores. 553 00:31:23,940 --> 00:31:25,160 Speaker 2: End of 88, there are 415. End of 89, there 554 00:31:25,220 --> 00:31:27,580 Speaker 2: are 1,089 Blockbuster video stores. At one point, there's a 555 00:31:27,580 --> 00:31:39,150 Speaker 2: new Blockbuster store. popping up every 17 hours. 556 00:31:39,290 --> 00:31:42,100 Speaker 1: Yeah, it became a metaphor for a business growing quickly 557 00:31:42,190 --> 00:31:42,590 Speaker 1: back in the 80s. 558 00:31:42,600 --> 00:31:44,580 Speaker 2: It's like a sped up video of like the building 559 00:31:44,620 --> 00:31:47,240 Speaker 2: going up and the blockbuster sign going on it. These 560 00:31:47,720 --> 00:31:53,240 Speaker 2: are big stores with lots of videos, lots of selection. 561 00:31:53,280 --> 00:31:55,840 Speaker 2: I remember like the new movie that everybody would want 562 00:31:56,000 --> 00:31:58,760 Speaker 2: would come out and they wouldn't have four copies. They'd 563 00:31:58,780 --> 00:32:04,200 Speaker 2: have 40 copies. And What this means is the barrier 564 00:32:04,260 --> 00:32:07,400 Speaker 2: to opening a video store has now gotten higher. If 565 00:32:07,440 --> 00:32:12,030 Speaker 2: you're just somebody without much money and you are entrepreneurial 566 00:32:12,050 --> 00:32:13,970 Speaker 2: and you want to start a little video store in 567 00:32:13,990 --> 00:32:18,630 Speaker 2: the strip mall, you can't compete with Blockbuster. And Huizinga 568 00:32:18,690 --> 00:32:23,030 Speaker 2: is very aggressive. So not only is he opening big stores, 569 00:32:23,430 --> 00:32:26,510 Speaker 2: putting mom and pops out of business, essentially, he is 570 00:32:26,610 --> 00:32:30,190 Speaker 2: going after the kind of medium-sized regional chains that had 571 00:32:30,230 --> 00:32:33,590 Speaker 2: been growing and There was this East Coast chain called Errol's, 572 00:32:34,190 --> 00:32:37,050 Speaker 2: a big player. Here's what Errol said about Blockbuster. 573 00:32:37,430 --> 00:32:41,130 Speaker 1: They grew and beat me up. Blockbuster's locations were always 574 00:32:41,190 --> 00:32:43,410 Speaker 1: better than mine and twice as big as mine. 575 00:32:43,530 --> 00:32:47,260 Speaker 2: They've got Errol surrounded. They're opening stores all around him. 576 00:32:47,320 --> 00:32:51,700 Speaker 2: They hire away Errol's top marketing guy. And eventually, reluctantly, 577 00:32:52,200 --> 00:32:56,860 Speaker 2: Errol sells to Huizenga to Blockbuster. Of course, once Huizenga 578 00:32:56,900 --> 00:32:59,080 Speaker 2: has a lock on the video business, he did what 579 00:32:59,100 --> 00:33:02,050 Speaker 2: he did when he had a lock on landfills. Jacks 580 00:33:02,110 --> 00:33:06,170 Speaker 2: up the fees. There was a time when Blockbuster charged 581 00:33:06,170 --> 00:33:12,470 Speaker 2: $ 3 for a three-night movie rental. By 1994, it's $ 3 582 00:33:11,950 --> 00:33:14,450 Speaker 2: for one night. Plus late fees. 583 00:33:14,860 --> 00:33:16,760 Speaker 1: Oh, the late fees just killed me. 584 00:33:16,960 --> 00:33:17,720 Speaker 2: They killed me. 585 00:33:18,200 --> 00:33:21,100 Speaker 1: How many times was I driving back to the video 586 00:33:21,140 --> 00:33:25,560 Speaker 1: store at, you know, 9.58, screaming into the parking lot, 587 00:33:25,620 --> 00:33:28,530 Speaker 1: trying to get back to the future or something, into 588 00:33:28,550 --> 00:33:29,350 Speaker 1: the store in time? 589 00:33:29,690 --> 00:33:33,860 Speaker 2: You needed a DeLorean. You put it in the slot, right? 590 00:33:33,900 --> 00:33:35,530 Speaker 2: What you don't do in that setting is be like, well, 591 00:33:35,570 --> 00:33:36,870 Speaker 2: I got the late fee. I'll take it home and 592 00:33:36,910 --> 00:33:38,310 Speaker 2: watch it and bring it back. Put it in the 593 00:33:38,350 --> 00:33:39,910 Speaker 2: slot when you get there at 10.01. 594 00:33:39,910 --> 00:33:43,130 Speaker 1: If I remember correctly, they didn't charge you if you 595 00:33:43,150 --> 00:33:46,850 Speaker 1: didn't rewind it. They said, be kind, please rewind. 596 00:33:46,870 --> 00:33:49,660 Speaker 2: That was a movie called Be Kind, Please Rewind, I think. 597 00:33:50,180 --> 00:33:51,280 Speaker 1: But I don't think they charged you. 598 00:33:51,340 --> 00:33:52,740 Speaker 2: Was there the time when you were like, I don't 599 00:33:52,760 --> 00:33:53,880 Speaker 2: have time to rewind it? 600 00:33:54,480 --> 00:33:57,960 Speaker 1: Oh, 100%. My VCR screaming, like, we need. 601 00:33:57,800 --> 00:34:03,880 Speaker 2: To return it. Rewinding. Nobody rewinds anything anymore. Back to Blockbuster. 602 00:34:06,480 --> 00:34:10,720 Speaker 2: Something is coming for Blockbuster, and we know it. The internet. 603 00:34:11,480 --> 00:34:12,460 Speaker 2: The internet is coming. 604 00:34:12,720 --> 00:34:13,540 Speaker 1: The ultimate roll-up. 605 00:34:14,100 --> 00:34:17,729 Speaker 2: The ultimate roll-up. What was shocking to me in putting 606 00:34:17,770 --> 00:34:21,669 Speaker 2: together this story was how early people started talking about 607 00:34:21,710 --> 00:34:31,779 Speaker 2: the internet coming for Blockbuster. A USA Today column from 1991. 1991. 608 00:34:31,780 --> 00:34:36,140 Speaker 2: four years before the web, basically, quotes a money manager 609 00:34:36,239 --> 00:34:38,009 Speaker 2: named Pam Wengarten. 610 00:34:38,370 --> 00:34:40,670 Speaker 1: The video store is going the way of the dinosaur. 611 00:34:40,830 --> 00:34:43,890 Speaker 1: In three years, it won't be around. People will just 612 00:34:44,030 --> 00:34:45,930 Speaker 1: dial up movies with their phones. 613 00:34:46,030 --> 00:34:48,610 Speaker 2: And to be clear, she means you pick up your landline, 614 00:34:48,930 --> 00:34:52,200 Speaker 2: call something. For our younger listeners, she doesn't mean you'll 615 00:34:52,219 --> 00:34:54,000 Speaker 2: watch it on a phone because that was not a thing. Okay, 616 00:34:54,040 --> 00:34:55,740 Speaker 2: go on. Say what she says about Huizenga. 617 00:34:56,460 --> 00:34:58,640 Speaker 1: The guy ought to rent a film from Blockbuster. It's 618 00:34:58,680 --> 00:34:59,880 Speaker 1: called Death of a Salesman. 619 00:35:00,520 --> 00:35:06,930 Speaker 2: Womp, womp, womp. Blockbuster's stock fell 6% in 1991. Market 620 00:35:06,950 --> 00:35:09,160 Speaker 2: was way up that year, so it was really all 621 00:35:09,200 --> 00:35:15,160 Speaker 2: about Blockbuster. And Huizinga and his team are aware of this. 622 00:35:15,260 --> 00:35:20,600 Speaker 2: They look into cable, the internet, but it is not 623 00:35:20,640 --> 00:35:23,780 Speaker 2: Huizinga's world. He is a man of the physical world. 624 00:35:23,940 --> 00:35:26,299 Speaker 2: He drives the back alleys. He knocks on doors. He 625 00:35:26,340 --> 00:35:30,120 Speaker 2: knocks on doors. He gets into the port-a-potty business. Even videotapes. 626 00:35:30,219 --> 00:35:32,970 Speaker 2: This is a physical business. You're building stores. You have 627 00:35:33,090 --> 00:35:37,090 Speaker 2: physical tapes. He is not the guy for this new world. 628 00:35:37,650 --> 00:35:39,190 Speaker 2: And one thing to his credit is he seems to 629 00:35:39,270 --> 00:35:41,930 Speaker 2: know it. He seems to know that the world is changing. 630 00:35:42,750 --> 00:35:48,919 Speaker 2: And he gets out. He gets out. In January of 1994, 631 00:35:48,920 --> 00:35:54,430 Speaker 2: he agrees to sell Blockbuster to Viacom. For $ 8. 4 billion. 632 00:35:54,969 --> 00:35:58,430 Speaker 2: Viacom owned MTV, among other things, at the time. So 633 00:35:58,450 --> 00:36:00,930 Speaker 2: this is an extremely 80s transaction. 634 00:36:01,260 --> 00:36:01,700 Speaker 1: Showtime. 635 00:36:02,020 --> 00:36:07,700 Speaker 2: Showtime. Viacom was run by Sumner Redstone, famous many things guy, businessman. 636 00:36:08,380 --> 00:36:11,680 Speaker 2: And Sumner Redstone was on this acquisition binge at the time. 637 00:36:12,160 --> 00:36:14,520 Speaker 2: He was buying Paramount. He was going to buy CBS. 638 00:36:15,380 --> 00:36:20,359 Speaker 2: And he buys Blockbuster. So in this way, Huizinga, king 639 00:36:20,380 --> 00:36:23,739 Speaker 2: of the roll-up, has been rolled up. You could spend 640 00:36:23,760 --> 00:36:25,819 Speaker 2: some time with the family after this. He got into 641 00:36:25,840 --> 00:36:26,760 Speaker 2: the car business. 642 00:36:27,000 --> 00:36:27,340 Speaker 1: No. 643 00:36:27,480 --> 00:36:30,500 Speaker 2: Rolled up car dealerships around the country into AutoNation, a 644 00:36:30,560 --> 00:36:34,300 Speaker 2: national chain of used car superstores. The man had a 645 00:36:34,340 --> 00:36:37,750 Speaker 2: playbook and he knew how to run it. Wayne Huizenga 646 00:36:37,870 --> 00:36:41,049 Speaker 2: died in 2018. And I just want to close with 647 00:36:41,110 --> 00:36:45,650 Speaker 2: a quote from Huizenga's New York Times obituary. It's actually 648 00:36:45,690 --> 00:36:48,129 Speaker 2: a quote from his son, Wayne Jr., who talked about 649 00:36:48,730 --> 00:36:51,350 Speaker 2: working in a landfill for his dad as a kid. 650 00:36:51,370 --> 00:36:54,410 Speaker 2: He talked about the smell. He said, it was a 651 00:36:54,510 --> 00:36:57,469 Speaker 2: smell I grew to love. My dad would say, it 652 00:36:58,160 --> 00:36:58,840 Speaker 2: smells like. 653 00:36:58,840 --> 00:37:01,580 Speaker 1: Money to me, son. My boy was just like me. 654 00:37:01,980 --> 00:37:04,020 Speaker 2: The Wayne Huizenga story is over, but I do feel 655 00:37:04,040 --> 00:37:06,380 Speaker 2: like we should do a little moment on the end 656 00:37:06,400 --> 00:37:10,089 Speaker 2: of Blockbuster, an obituary. Years after Huizenga had left Blockbuster, 657 00:37:10,489 --> 00:37:13,210 Speaker 2: there was a moment when a little company called Netflix 658 00:37:13,510 --> 00:37:18,020 Speaker 2: offered to sell itself to Blockbuster for $ 50 million in Pass. 659 00:37:18,480 --> 00:37:20,779 Speaker 1: Yeah. Who would want to use the internet to get 660 00:37:20,820 --> 00:37:22,800 Speaker 1: movies when you can come to our big, beautiful store? 661 00:37:23,680 --> 00:37:30,270 Speaker 2: Blockbuster filed for bankruptcy in 2010. Waste Management Inc., still 662 00:37:30,290 --> 00:37:37,129 Speaker 2: going strong, worth more than $ 80 billion. Because people still 663 00:37:37,150 --> 00:37:41,609 Speaker 2: throwing away trash will always throw away trash. Today's show 664 00:37:41,739 --> 00:37:46,880 Speaker 2: was produced by Gabriel Hunter Chang, was engineered by Sarah Bruguier. 665 00:37:48,020 --> 00:37:51,319 Speaker 2: Our showrunner and editor is Ryan Dilley. This is the 666 00:37:51,360 --> 00:37:54,640 Speaker 2: last episode that Dilley will be working on with us. 667 00:37:54,719 --> 00:37:57,740 Speaker 2: So let me say thank you, Dilley. You have helped 668 00:37:57,800 --> 00:38:00,279 Speaker 2: us make this show much better than it otherwise would 669 00:38:00,320 --> 00:38:00,620 Speaker 2: have been. 670 00:38:00,890 --> 00:38:03,690 Speaker 1: A lot of the exciting moments came directly from London. 671 00:38:04,330 --> 00:38:06,830 Speaker 2: Just a quick note that we will be off for 672 00:38:06,870 --> 00:38:09,130 Speaker 2: the next few weeks, but we will be back soon 673 00:38:09,230 --> 00:38:12,650 Speaker 2: with another episode of Business History. I'm Jacob Goldstein. 674 00:38:12,930 --> 00:38:14,510 Speaker 1: I'm Robert Smith. Thanks for listening.