1 00:00:04,160 --> 00:00:07,160 Speaker 1: Get in tech with technology with tech Stuff from how 2 00:00:07,240 --> 00:00:14,160 Speaker 1: stuff works dot com. Hey there, and welcome to tech Stuff. 3 00:00:14,200 --> 00:00:16,920 Speaker 1: I'm your host, Jonathan Strickland, and today we're going to 4 00:00:17,040 --> 00:00:20,040 Speaker 1: begin to talk about a company that played a part 5 00:00:20,120 --> 00:00:25,119 Speaker 1: in getting consumer technology to the consumer, Circuit City. So 6 00:00:25,239 --> 00:00:27,560 Speaker 1: Circuit City is best known for being a big box 7 00:00:27,560 --> 00:00:31,080 Speaker 1: electronics retail store that had some pretty dramatic ups and downs. 8 00:00:31,400 --> 00:00:33,600 Speaker 1: And there's a lot to this story. So this is 9 00:00:33,600 --> 00:00:36,600 Speaker 1: gonna be a two parter. But before I get into 10 00:00:36,640 --> 00:00:39,600 Speaker 1: the details, let's talk about why I'm covering this story 11 00:00:39,640 --> 00:00:45,239 Speaker 1: at all. It's because of a little listener mail. This 12 00:00:45,320 --> 00:00:48,320 Speaker 1: listener mail comes from Kevin, who says, I really enjoy 13 00:00:48,360 --> 00:00:50,720 Speaker 1: your shows that trace the history of tech companies. I 14 00:00:50,880 --> 00:00:53,800 Speaker 1: just finished catching up on the Sony episodes. Actually I 15 00:00:53,840 --> 00:00:56,560 Speaker 1: was hoping you'd consider doing a similar treatment of Circuit 16 00:00:56,600 --> 00:00:59,080 Speaker 1: City sometime. I feel like that was a big part 17 00:00:59,080 --> 00:01:01,200 Speaker 1: of tech in the eighties in nineties, and it's where 18 00:01:01,200 --> 00:01:04,120 Speaker 1: I got my first computer and my first stereo. I 19 00:01:04,200 --> 00:01:06,240 Speaker 1: always thought the store was really cool as a kid, 20 00:01:06,520 --> 00:01:09,760 Speaker 1: darkly lit, red dion, those glass rooms for checking out 21 00:01:09,800 --> 00:01:12,880 Speaker 1: sound systems. Anyway, thanks for listening and keep up the 22 00:01:12,959 --> 00:01:16,240 Speaker 1: great work. With the podcast. Well, thanks for those kind words, Kevin. 23 00:01:16,319 --> 00:01:20,600 Speaker 1: The Circuit City story is interesting because the chain originated 24 00:01:20,959 --> 00:01:24,760 Speaker 1: the concept of the electronics box store. And I don't 25 00:01:24,760 --> 00:01:28,120 Speaker 1: mean it was a store that sold electronic boxes, although 26 00:01:28,160 --> 00:01:31,240 Speaker 1: I guess technically it did, but that's not what I mean. 27 00:01:31,440 --> 00:01:34,880 Speaker 1: I mean it was a box store like Best Buy 28 00:01:34,920 --> 00:01:39,600 Speaker 1: is today. In fact, best buying Circuit City heaven interesting 29 00:01:40,800 --> 00:01:44,759 Speaker 1: relationship or did at any rate. Circuit City was kind 30 00:01:44,760 --> 00:01:47,640 Speaker 1: of best Buy before there was a Best Buy now. 31 00:01:47,640 --> 00:01:50,960 Speaker 1: The company was incredibly successful for many years. In fact, 32 00:01:51,320 --> 00:01:53,480 Speaker 1: it was one of only a dozen or so companies 33 00:01:53,520 --> 00:01:56,360 Speaker 1: to outperform the Fortune five hundred by at least three 34 00:01:56,400 --> 00:02:00,440 Speaker 1: times for fifteen years. I mean by a factor of right, 35 00:02:00,480 --> 00:02:05,680 Speaker 1: by multiplying by three for fifteen years. But eventually those 36 00:02:05,680 --> 00:02:08,239 Speaker 1: good times ended and the company kind of imploded and 37 00:02:08,280 --> 00:02:11,200 Speaker 1: went bankrupt in two thousand nine. And today it's a 38 00:02:11,280 --> 00:02:14,639 Speaker 1: very different story from its heyday. Before I get into 39 00:02:14,720 --> 00:02:17,360 Speaker 1: the story at all, I want to recommend a book 40 00:02:17,440 --> 00:02:20,840 Speaker 1: to anyone who wants to learn more about this company 41 00:02:20,880 --> 00:02:23,520 Speaker 1: and what happened to it and the management practices that 42 00:02:23,560 --> 00:02:27,720 Speaker 1: were involved at all stages. It was written by Alan Wurtzel. 43 00:02:28,440 --> 00:02:30,959 Speaker 1: It's actually the son of one of the co founders 44 00:02:30,960 --> 00:02:34,160 Speaker 1: of Circuit City. He wrote a book titled Good Too 45 00:02:34,280 --> 00:02:37,640 Speaker 1: Great To Gone, The sixty year Rise and Fall of 46 00:02:37,680 --> 00:02:40,400 Speaker 1: Circuit City, and you can read a lot more about 47 00:02:40,440 --> 00:02:42,800 Speaker 1: the company in that book. If this podcast wets your 48 00:02:42,800 --> 00:02:45,400 Speaker 1: whistle at Wortzel, by the way, admits that he's not 49 00:02:45,480 --> 00:02:49,520 Speaker 1: exactly an unbiased reporter, but also he holds himself accountable 50 00:02:49,600 --> 00:02:52,760 Speaker 1: to examine the mistakes that he he credits to himself, 51 00:02:53,360 --> 00:02:56,360 Speaker 1: also to his father and others in the company, and 52 00:02:56,440 --> 00:02:58,560 Speaker 1: the book is an easy and interesting read on the 53 00:02:58,600 --> 00:03:01,560 Speaker 1: subject of business practice is So, we're gonna talk a 54 00:03:01,560 --> 00:03:06,799 Speaker 1: lot about business practices and how it relates to the 55 00:03:06,840 --> 00:03:09,960 Speaker 1: operation of an electronics store, and not so much about 56 00:03:10,000 --> 00:03:12,600 Speaker 1: the tech side of things, because Circuit City was a 57 00:03:12,680 --> 00:03:18,160 Speaker 1: retail establishment. They didn't create electronics, they sold them, but 58 00:03:18,200 --> 00:03:20,240 Speaker 1: they did play a very big role in the tech 59 00:03:20,320 --> 00:03:23,400 Speaker 1: world for many years. So now on with the show, 60 00:03:23,880 --> 00:03:27,760 Speaker 1: and our story begins in Sea Bright, New Jersey, on 61 00:03:27,840 --> 00:03:32,799 Speaker 1: March second, nineteen o seven. That's when Samuel S. Wertzel 62 00:03:32,960 --> 00:03:36,720 Speaker 1: was born. His mother, Flora, was originally from Russia. She 63 00:03:36,840 --> 00:03:39,480 Speaker 1: moved to the United States in her early twenties and 64 00:03:39,560 --> 00:03:42,560 Speaker 1: she ended up opening up a grocery store. Um. She 65 00:03:42,600 --> 00:03:46,280 Speaker 1: actually did that after she divorced Samuel's father. It was 66 00:03:46,360 --> 00:03:49,880 Speaker 1: an arranged marriage and it did not work out, which 67 00:03:49,880 --> 00:03:53,640 Speaker 1: meant that Flora ended up raising Samuel and his siblings 68 00:03:53,680 --> 00:03:57,200 Speaker 1: by herself. That was four kids in total. Samuel had 69 00:03:57,240 --> 00:04:01,080 Speaker 1: two sisters and a brother. So she had very high 70 00:04:01,120 --> 00:04:03,920 Speaker 1: hopes for her children and demanded that they study hard 71 00:04:03,960 --> 00:04:06,640 Speaker 1: in school. And she managed to get some help from 72 00:04:06,640 --> 00:04:08,680 Speaker 1: her parents to open up the grocery store and was 73 00:04:08,720 --> 00:04:12,240 Speaker 1: able to eke out a living that way. Now, Samuel 74 00:04:12,640 --> 00:04:15,960 Speaker 1: went to night school to study accounting after a fairly 75 00:04:16,000 --> 00:04:19,039 Speaker 1: tumultuous high school phase in which he was, according to 76 00:04:19,080 --> 00:04:24,640 Speaker 1: his son quote often a discipline problem end quote. Now 77 00:04:24,960 --> 00:04:28,680 Speaker 1: Alan attributes this primarily to the fact that Samuel didn't 78 00:04:28,680 --> 00:04:32,080 Speaker 1: have a father figure for his childhood. Uh and so 79 00:04:32,200 --> 00:04:35,919 Speaker 1: he ended up acting out quite a bit, and once 80 00:04:35,960 --> 00:04:38,960 Speaker 1: he started to mature, he began to really apply himself. 81 00:04:39,040 --> 00:04:42,080 Speaker 1: He was charismatic and he turned out to have an 82 00:04:42,120 --> 00:04:45,680 Speaker 1: aptitude for business. He and his older brother first opened 83 00:04:45,760 --> 00:04:49,480 Speaker 1: up a wholesale butter and egg business, you know the 84 00:04:49,560 --> 00:04:53,760 Speaker 1: way every tech retail esta establishment gets its start by 85 00:04:53,760 --> 00:04:58,840 Speaker 1: selling butter and eggs um. His estranged father actually worked 86 00:04:58,839 --> 00:05:01,680 Speaker 1: in that business too, and they ended up having a 87 00:05:01,720 --> 00:05:06,279 Speaker 1: working relationship, although not a familial one, and that ended 88 00:05:06,360 --> 00:05:09,240 Speaker 1: up not working out either. He then went on to 89 00:05:09,320 --> 00:05:13,080 Speaker 1: work for a company called June Dairy, but this was 90 00:05:13,120 --> 00:05:17,080 Speaker 1: also during the time of the Great Depression UH, and 91 00:05:17,320 --> 00:05:19,360 Speaker 1: he was not able to hold onto that job for long. 92 00:05:19,440 --> 00:05:22,320 Speaker 1: He was actually laid off, so he then moved on 93 00:05:22,520 --> 00:05:25,440 Speaker 1: and from nineteen thirty eight through nineteen forty seven he 94 00:05:25,520 --> 00:05:28,800 Speaker 1: worked for a company called Packing Products UH. And that 95 00:05:28,920 --> 00:05:31,000 Speaker 1: was a company that was actually created by his father 96 00:05:31,040 --> 00:05:34,880 Speaker 1: in law. And a family vacation in nineteen forty nine 97 00:05:35,080 --> 00:05:39,360 Speaker 1: would change his destiny, and that is the beginning of 98 00:05:39,520 --> 00:05:41,960 Speaker 1: Circuit City. Now I'm going to jump into that in 99 00:05:42,000 --> 00:05:43,360 Speaker 1: a second, but first I want to give you a 100 00:05:43,400 --> 00:05:46,080 Speaker 1: little more information about his family because they played a 101 00:05:46,160 --> 00:05:51,280 Speaker 1: very important role in the evolution of Circuit City. First 102 00:05:51,279 --> 00:05:54,560 Speaker 1: of all, Samuel married a woman named Ruth Mann in 103 00:05:54,720 --> 00:05:57,800 Speaker 1: nineteen thirty two. He had met her in nineteen thirty 104 00:05:57,800 --> 00:06:00,520 Speaker 1: one and a year later they got married. Now, Ruth 105 00:06:01,000 --> 00:06:04,799 Speaker 1: came from an upper class background, very different from Samuel. 106 00:06:05,320 --> 00:06:09,200 Speaker 1: She was also a college educated woman, which was not 107 00:06:09,320 --> 00:06:13,640 Speaker 1: necessarily common at that time in the United States. Her father, 108 00:06:13,880 --> 00:06:17,680 Speaker 1: Leon was in the clothing manufacturing business and was really successful, 109 00:06:18,040 --> 00:06:21,240 Speaker 1: and later he became an entrepreneur who funded the efforts 110 00:06:21,240 --> 00:06:24,800 Speaker 1: of various inventors and engineers. One of those inventors had 111 00:06:24,800 --> 00:06:29,920 Speaker 1: created a packaging material for eggs so that they could 112 00:06:29,960 --> 00:06:32,600 Speaker 1: be shipped without the risk of breakage, or at least 113 00:06:32,600 --> 00:06:37,080 Speaker 1: reducing that risk. There was actually a different invention that 114 00:06:37,160 --> 00:06:39,680 Speaker 1: was already patented in the United States, or that one 115 00:06:39,800 --> 00:06:42,600 Speaker 1: a patent in the United States, and so Leon ended 116 00:06:42,680 --> 00:06:45,279 Speaker 1: up convincing the inventor to give up the patent rights 117 00:06:45,279 --> 00:06:49,440 Speaker 1: in the US and concentrate on a market in Europe. 118 00:06:49,880 --> 00:06:54,599 Speaker 1: And so that's when he created this company packing Products. Uh. 119 00:06:54,680 --> 00:06:58,839 Speaker 1: Leon and Samuel got along great. Leon instilled in Samuel 120 00:06:58,880 --> 00:07:01,880 Speaker 1: two qualities he thought were important in business and beyond, 121 00:07:01,960 --> 00:07:08,520 Speaker 1: which were humor and humility. From Alan's perspective, reflecting back 122 00:07:08,560 --> 00:07:11,680 Speaker 1: on the stories of his father and his grandfather, it 123 00:07:11,840 --> 00:07:15,160 Speaker 1: sounds as though Samuel saw in Leon a father figure 124 00:07:15,200 --> 00:07:18,000 Speaker 1: he had lacked in childhood, and Leon in turn treated 125 00:07:18,040 --> 00:07:22,120 Speaker 1: Samuel as his own son. Because Leon didn't have any sons, 126 00:07:22,160 --> 00:07:25,760 Speaker 1: He had a daughter named Ruth. Samuel and Ruth however, 127 00:07:26,280 --> 00:07:29,560 Speaker 1: did have sons, two of them, Alan and David. Alan 128 00:07:29,600 --> 00:07:32,440 Speaker 1: Wurzel would go on with Samuel to create the Circuit 129 00:07:32,520 --> 00:07:36,280 Speaker 1: City Empire. But even empires have humble beginnings, which brings 130 00:07:36,360 --> 00:07:40,600 Speaker 1: us back to that family vacation I mentioned. So Samuel 131 00:07:40,640 --> 00:07:43,520 Speaker 1: and Ruth were going on a golfing vacation with their 132 00:07:43,560 --> 00:07:46,080 Speaker 1: family in order to clear their heads and plan for 133 00:07:46,120 --> 00:07:50,080 Speaker 1: the future. This was a and things had suddenly kind 134 00:07:50,080 --> 00:07:54,720 Speaker 1: of turned south for the couple financially. The Packing Products 135 00:07:54,760 --> 00:07:58,679 Speaker 1: company had transitioned into a broker company. Now, a broker 136 00:07:58,680 --> 00:08:02,760 Speaker 1: company doesn't hold its own inventory. Typically, what a broker 137 00:08:02,800 --> 00:08:06,600 Speaker 1: company does is they get in the business of matching 138 00:08:06,640 --> 00:08:10,360 Speaker 1: buyers with sellers. The idea was that the company would 139 00:08:10,400 --> 00:08:14,520 Speaker 1: find someone wanting to purchase a particular commodity, then they 140 00:08:14,520 --> 00:08:18,200 Speaker 1: would find a seller who was going to sell that commodity, 141 00:08:18,480 --> 00:08:21,080 Speaker 1: and they would match the two together, making some money 142 00:08:21,160 --> 00:08:23,320 Speaker 1: in the middle of this. And it may even be 143 00:08:23,400 --> 00:08:27,480 Speaker 1: that the company buys the commodity from one entity, sells 144 00:08:27,520 --> 00:08:29,640 Speaker 1: it at a mark up to another entity, and that's 145 00:08:29,640 --> 00:08:33,480 Speaker 1: how you make your profit. But someone at the Packing 146 00:08:33,520 --> 00:08:36,720 Speaker 1: Products Company made a really bad decision. They ended up 147 00:08:36,760 --> 00:08:41,120 Speaker 1: buying a large amount of steel without first securing a customer. So, 148 00:08:41,120 --> 00:08:42,880 Speaker 1: in other words, no one had said that they wanted 149 00:08:42,880 --> 00:08:46,720 Speaker 1: to buy steal. But apparently this person at Parker Products 150 00:08:46,720 --> 00:08:49,319 Speaker 1: felt that the steel being sold was at a price 151 00:08:49,400 --> 00:08:51,920 Speaker 1: that was too good to give up, so they went 152 00:08:51,960 --> 00:08:55,480 Speaker 1: in and purchased this large amount. But then the steel 153 00:08:55,520 --> 00:08:59,000 Speaker 1: market collapsed in the United States and as a result, 154 00:08:59,280 --> 00:09:02,520 Speaker 1: the company was and shambles. Leon by that point had 155 00:09:02,559 --> 00:09:05,320 Speaker 1: retired and he wasn't really in a financial position to 156 00:09:05,400 --> 00:09:08,200 Speaker 1: help bail out the business or to start a new one. 157 00:09:08,280 --> 00:09:10,839 Speaker 1: So Samuel, Ruth and their kids went on this trip 158 00:09:10,920 --> 00:09:13,560 Speaker 1: in nine or to get a new perspective and figure out, well, 159 00:09:13,600 --> 00:09:16,760 Speaker 1: what are we gonna do now? They weren't destitute or 160 00:09:16,760 --> 00:09:19,440 Speaker 1: anything like that, but they didn't They couldn't go any 161 00:09:19,480 --> 00:09:21,440 Speaker 1: further with the company that had been working for They 162 00:09:21,440 --> 00:09:23,800 Speaker 1: had to start over. At this point, Samuel's forty two 163 00:09:23,880 --> 00:09:27,640 Speaker 1: years old, So they were in Richmond, Virginia in nineteen 164 00:09:27,720 --> 00:09:30,280 Speaker 1: forty nine when Samuel got into a conversation with a 165 00:09:30,280 --> 00:09:34,160 Speaker 1: local barber. The cutter of hairs told Sammy that the 166 00:09:34,320 --> 00:09:38,000 Speaker 1: very first Southern television station had just started broadcasting the 167 00:09:38,040 --> 00:09:41,199 Speaker 1: previous year in April, not quite a full year before 168 00:09:41,760 --> 00:09:45,439 Speaker 1: this actual encounter happened, and already the number of television 169 00:09:45,480 --> 00:09:49,000 Speaker 1: stations was on the rise, as as were the number 170 00:09:49,040 --> 00:09:52,800 Speaker 1: of homes that were getting TV sets, but they hadn't 171 00:09:52,840 --> 00:09:54,720 Speaker 1: quite reached the tipping point. It was still one of 172 00:09:54,720 --> 00:09:59,360 Speaker 1: those things that was obviously on the upswing, but wasn't 173 00:09:59,400 --> 00:10:02,800 Speaker 1: anywhere those to the to the peak. So Wortzel saw 174 00:10:02,840 --> 00:10:06,040 Speaker 1: this as an opportunity to create a new market, and 175 00:10:06,320 --> 00:10:09,000 Speaker 1: he uh said, well, you know, if you've got a 176 00:10:09,000 --> 00:10:11,520 Speaker 1: television broadcast station down here, then clearly you've got to 177 00:10:11,559 --> 00:10:16,000 Speaker 1: have televisions to broadcast two. So later in nineteen forty nine, 178 00:10:16,000 --> 00:10:21,160 Speaker 1: Samuel Wurtzel relocated his family to Richmond, Virginia and opened 179 00:10:21,240 --> 00:10:24,920 Speaker 1: up a store called the Wards Company on West Broad Street. 180 00:10:25,559 --> 00:10:28,520 Speaker 1: He took the thirteen thousand dollars he made from the 181 00:10:28,559 --> 00:10:31,360 Speaker 1: sale of his home, which was the equivalent of more 182 00:10:31,400 --> 00:10:34,840 Speaker 1: than a hundred and twenty thousand dollars today, and rented 183 00:10:34,880 --> 00:10:37,760 Speaker 1: a storefront in Richmond that was several blocks from the 184 00:10:37,800 --> 00:10:40,280 Speaker 1: big department stores, so he wasn't right next to the 185 00:10:40,280 --> 00:10:45,280 Speaker 1: places that were already selling televisions under various brands. Now, 186 00:10:45,320 --> 00:10:48,679 Speaker 1: the Wards store only sold television's at that time, they 187 00:10:48,679 --> 00:10:51,120 Speaker 1: didn't sell anything else. That was all he did was 188 00:10:51,120 --> 00:10:54,400 Speaker 1: sell TVs. And you might wonder, well, why did they 189 00:10:54,480 --> 00:10:59,480 Speaker 1: he call it Wards? Well, first of all, it's W, A, R, D, S, 190 00:11:00,040 --> 00:11:03,080 Speaker 1: no apostrophe. The reason for that is Wards is actually 191 00:11:03,080 --> 00:11:07,600 Speaker 1: an acronym. It stands for the initials of Samuel's family. 192 00:11:07,679 --> 00:11:12,040 Speaker 1: The W stands for Wertzel, the last name. A stands 193 00:11:12,080 --> 00:11:15,560 Speaker 1: for Alan, our stands for Ruth, D stands for David, 194 00:11:15,640 --> 00:11:19,800 Speaker 1: which was Samuel's other son, and S stands for Samuel. 195 00:11:19,840 --> 00:11:22,040 Speaker 1: And he said, I don't want an apostrophe in there 196 00:11:22,040 --> 00:11:23,679 Speaker 1: because I don't want it to come between me and 197 00:11:23,720 --> 00:11:27,640 Speaker 1: my family, which I think is cute. Wertzel didn't go 198 00:11:27,920 --> 00:11:30,160 Speaker 1: in on this venture on his own for very long. 199 00:11:30,559 --> 00:11:33,320 Speaker 1: Shortly after he established this place, he took on a 200 00:11:33,360 --> 00:11:36,600 Speaker 1: business partner who became the co founder of the Wards Company, 201 00:11:36,600 --> 00:11:40,280 Speaker 1: and that partner's name was Abraham Haste who invested thirteen 202 00:11:40,320 --> 00:11:44,680 Speaker 1: thousand dollars of his own money into the new company. Now, 203 00:11:44,679 --> 00:11:49,600 Speaker 1: Haiti's chief responsibility was to manage buying and vendor relations, 204 00:11:49,880 --> 00:11:53,040 Speaker 1: so he was looking at the supply side. Sam was 205 00:11:53,120 --> 00:11:56,559 Speaker 1: concentrating on the sales side, so he was looking towards 206 00:11:56,600 --> 00:12:00,280 Speaker 1: the customer, whereas Haste is looking towards the supplier, and 207 00:12:00,360 --> 00:12:02,800 Speaker 1: both men shared a common set of values. Although they 208 00:12:02,800 --> 00:12:06,880 Speaker 1: were very different people, they both felt very strongly about 209 00:12:06,920 --> 00:12:09,520 Speaker 1: certain principles when it came to working with other people, 210 00:12:09,840 --> 00:12:13,720 Speaker 1: whether they are vendors or employees or customers. They believe 211 00:12:13,760 --> 00:12:17,920 Speaker 1: that what goes around comes around, and that keeping interactions 212 00:12:18,000 --> 00:12:21,200 Speaker 1: friendly and helpful gets better results than a more you know, 213 00:12:21,600 --> 00:12:26,360 Speaker 1: uh negative or pressure approach. Samuel and Abraham created the 214 00:12:26,360 --> 00:12:30,280 Speaker 1: company at pretty much the perfect time. So at this 215 00:12:30,400 --> 00:12:34,240 Speaker 1: time it was post World War two UH, and America 216 00:12:34,360 --> 00:12:36,960 Speaker 1: was very different from the America that was that was 217 00:12:37,000 --> 00:12:41,240 Speaker 1: around during the depression years. During the war, American industry 218 00:12:41,320 --> 00:12:45,800 Speaker 1: was almost entirely devoted to military support efforts, either directly 219 00:12:46,040 --> 00:12:49,960 Speaker 1: or indirectly, and business was booming in more ways than one. 220 00:12:50,440 --> 00:12:53,480 Speaker 1: But the important fact for this story is that after 221 00:12:53,520 --> 00:12:57,240 Speaker 1: the war was over, those military production efforts were able 222 00:12:57,280 --> 00:13:02,000 Speaker 1: to shift into a civilian role, so things that had 223 00:13:02,040 --> 00:13:06,320 Speaker 1: been dedicated to producing tanks could end up being used 224 00:13:06,360 --> 00:13:09,800 Speaker 1: to produce other stuff. And also at the same time, 225 00:13:09,800 --> 00:13:13,360 Speaker 1: you had soldiers returning home after serving overseas and then 226 00:13:13,360 --> 00:13:16,720 Speaker 1: they started families. The United States had a baby boom 227 00:13:16,760 --> 00:13:20,080 Speaker 1: going on. US population would increase by more than thirty 228 00:13:20,120 --> 00:13:24,480 Speaker 1: percent over the next couple of decades. So consider all 229 00:13:24,480 --> 00:13:27,679 Speaker 1: the conditions that are present. You had a lot of 230 00:13:27,840 --> 00:13:31,679 Speaker 1: young families, you had a booming commercial sector, you had 231 00:13:31,720 --> 00:13:34,800 Speaker 1: a lot of people with disposable income, and over on 232 00:13:34,840 --> 00:13:38,559 Speaker 1: the technology side, you had the development of reliable televisions. 233 00:13:38,600 --> 00:13:42,520 Speaker 1: They had gone through the first few iterations, and these 234 00:13:42,559 --> 00:13:46,240 Speaker 1: were sets that were expensive, but with the right plan, 235 00:13:46,480 --> 00:13:49,160 Speaker 1: were within the reach of the middle class. Just a 236 00:13:49,160 --> 00:13:53,640 Speaker 1: few years earlier, they were almost exclusively owned by wealthy people. 237 00:13:53,880 --> 00:13:56,080 Speaker 1: They were the only ones who could afford it. But 238 00:13:56,760 --> 00:14:02,480 Speaker 1: using uh in intelligence sales techniques, salespeople could make a 239 00:14:02,520 --> 00:14:06,360 Speaker 1: television more affordable to a much broader variety of people. 240 00:14:07,240 --> 00:14:09,360 Speaker 1: You also had a growth in the number of television 241 00:14:09,400 --> 00:14:11,880 Speaker 1: stations around the country, which meant you had a lot 242 00:14:11,920 --> 00:14:14,520 Speaker 1: more programming for folks, which created a more more of 243 00:14:14,520 --> 00:14:17,480 Speaker 1: a demand for TVs. And it was an absolute perfect 244 00:14:17,480 --> 00:14:20,840 Speaker 1: storm for a company getting into the television retail business. 245 00:14:21,480 --> 00:14:25,840 Speaker 1: Along with appliances like a washer, a dryer, and a refrigerator, 246 00:14:26,040 --> 00:14:29,640 Speaker 1: the television became part of the standard model American home. 247 00:14:30,280 --> 00:14:33,080 Speaker 1: Now in nineteen fifty less than ten percent of homes 248 00:14:33,080 --> 00:14:35,880 Speaker 1: in the United States had a television set, but just 249 00:14:36,040 --> 00:14:40,280 Speaker 1: ten years later that number was eighty five. That's an 250 00:14:40,480 --> 00:14:44,640 Speaker 1: enormous amount of growth. So it ended up being a 251 00:14:44,760 --> 00:14:49,120 Speaker 1: great business to get into if you could be competitive. Now, 252 00:14:49,440 --> 00:14:51,560 Speaker 1: that kind of sets me up for my next section. 253 00:14:51,640 --> 00:14:54,960 Speaker 1: But before I get into that, let's take a quick 254 00:14:55,000 --> 00:15:07,120 Speaker 1: break to thank our sponsor. All right, we're back, and 255 00:15:07,200 --> 00:15:11,440 Speaker 1: now I want to talk about the actual business decisions 256 00:15:11,480 --> 00:15:14,040 Speaker 1: that Samuel and Abraham had. Now, first of all, they 257 00:15:14,040 --> 00:15:17,200 Speaker 1: had no idea how to make television's. That wasn't their 258 00:15:17,240 --> 00:15:21,320 Speaker 1: business model. They would buy televisions from a manufacturer. In fact, 259 00:15:21,360 --> 00:15:24,440 Speaker 1: they had one specific one in those early days. They 260 00:15:24,520 --> 00:15:28,360 Speaker 1: knew a manufacturer in Long Island, New York called Olympic TVs. 261 00:15:28,880 --> 00:15:31,400 Speaker 1: So they would buy their televisions from Olympic TVs and 262 00:15:31,440 --> 00:15:34,680 Speaker 1: then sell them in their store in Richmond. Their first 263 00:15:35,160 --> 00:15:39,920 Speaker 1: inventory was just twelve TV sets in the entire store. 264 00:15:40,160 --> 00:15:42,760 Speaker 1: That's it. At this time in US history, there were 265 00:15:42,760 --> 00:15:44,720 Speaker 1: only a few types of stores that you could find. 266 00:15:44,760 --> 00:15:48,800 Speaker 1: In general, there were big department stores like Sears, Roebuck, 267 00:15:48,880 --> 00:15:53,280 Speaker 1: and Montgomery Ward. Now those mainly carried store brand items, 268 00:15:53,840 --> 00:15:57,920 Speaker 1: and maybe some major brands as well, but those were 269 00:15:57,920 --> 00:16:00,600 Speaker 1: the only ones that they would carry. Right, anything that 270 00:16:00,800 --> 00:16:04,120 Speaker 1: was not a major brand or a store brand you 271 00:16:04,240 --> 00:16:07,240 Speaker 1: really couldn't find in those department stores. Then you had 272 00:16:07,240 --> 00:16:10,400 Speaker 1: some variety store chains, kind of like Woolworth's was still 273 00:16:10,440 --> 00:16:12,920 Speaker 1: big at that time, but they were on the decline. 274 00:16:12,920 --> 00:16:16,280 Speaker 1: It was clear that Woolworths was not long for this 275 00:16:16,360 --> 00:16:20,040 Speaker 1: world in that particular incarnation. Then you had the small 276 00:16:20,080 --> 00:16:23,040 Speaker 1: business owners, the independent owners, the mom and pop stores, 277 00:16:23,360 --> 00:16:26,240 Speaker 1: and they might have one or two shops at most, 278 00:16:26,760 --> 00:16:31,280 Speaker 1: and they would cater to customers in the cities and towns. Now, 279 00:16:31,320 --> 00:16:35,360 Speaker 1: the Wards Company was one of those, really, and they 280 00:16:35,400 --> 00:16:38,360 Speaker 1: faced a lot of competition even in Richmond, both from 281 00:16:38,400 --> 00:16:41,680 Speaker 1: department stores that sold larger brand name sets and other 282 00:16:41,760 --> 00:16:46,640 Speaker 1: independent shops. So to set Wards apart from these other places, 283 00:16:46,680 --> 00:16:50,960 Speaker 1: Samuel began to offer home demonstrations of televisions. And here's 284 00:16:50,960 --> 00:16:53,640 Speaker 1: how it worked. It was pretty smart. Customers could arrange 285 00:16:53,680 --> 00:16:55,920 Speaker 1: to have a TV set delivered and set up in 286 00:16:55,960 --> 00:17:00,720 Speaker 1: their homes. So Samuel hired a driver who could also 287 00:17:00,840 --> 00:17:05,320 Speaker 1: carry heavy things, because back in those days TVs were hefty. 288 00:17:05,440 --> 00:17:07,840 Speaker 1: The screens were small, but the cabinets were enormous. This 289 00:17:07,920 --> 00:17:12,119 Speaker 1: was vacuum tube technology, so vacuum tubes take up a 290 00:17:12,200 --> 00:17:16,520 Speaker 1: lot of space and these were big, bulky, heavy sets. 291 00:17:16,960 --> 00:17:20,720 Speaker 1: So he hired a strapping guy who picked up the 292 00:17:20,840 --> 00:17:23,359 Speaker 1: television set, put it in a truck, and would drive 293 00:17:23,359 --> 00:17:27,320 Speaker 1: it out to a potential customers home, deliver it, set 294 00:17:27,320 --> 00:17:30,359 Speaker 1: it up, and the family would get to test the 295 00:17:30,440 --> 00:17:33,720 Speaker 1: set out for a full day, and the following day summer, 296 00:17:34,000 --> 00:17:37,480 Speaker 1: someone from the company from wards would come by either 297 00:17:37,960 --> 00:17:40,320 Speaker 1: to claim the television, pack it back up, take it 298 00:17:40,320 --> 00:17:44,600 Speaker 1: back to the store, or start a sale, and usually 299 00:17:44,600 --> 00:17:47,440 Speaker 1: this would involve a cash installment, and then they would 300 00:17:47,480 --> 00:17:51,080 Speaker 1: have an installment plan that would last between eighteen and 301 00:17:51,119 --> 00:17:55,359 Speaker 1: twenty four months to space out payments for the television set, 302 00:17:56,320 --> 00:17:58,280 Speaker 1: which is not a bad idea for a world that 303 00:17:58,359 --> 00:18:02,679 Speaker 1: had not yet invented edit cards. This gave customers the 304 00:18:02,760 --> 00:18:05,920 Speaker 1: opportunity to purchase a television set even if they thought 305 00:18:05,960 --> 00:18:09,040 Speaker 1: that it was outside of their budget, because they could 306 00:18:09,040 --> 00:18:12,280 Speaker 1: break up that expense over several months instead of having 307 00:18:12,359 --> 00:18:16,320 Speaker 1: to do a big upfront purchase. Samuel also became an 308 00:18:16,400 --> 00:18:19,600 Speaker 1: expert at sales strategies, many of which involved a good 309 00:18:19,640 --> 00:18:23,159 Speaker 1: deal of social manipulation. That's a nice way of putting it. 310 00:18:23,480 --> 00:18:25,480 Speaker 1: In fact, if you read up on the strategies, you 311 00:18:25,560 --> 00:18:29,520 Speaker 1: might feel a bit uncomfortable as a consumer. But these 312 00:18:29,520 --> 00:18:33,280 Speaker 1: were ideas that worked in sales. So here's an example. 313 00:18:33,440 --> 00:18:35,719 Speaker 1: You could teach sales people to act as though a 314 00:18:35,720 --> 00:18:39,480 Speaker 1: potential customer had already made a decision to buy a 315 00:18:39,560 --> 00:18:43,880 Speaker 1: product without actually having done that. So someone comes into 316 00:18:43,880 --> 00:18:47,520 Speaker 1: your store. There you're showing them, say, a new television set, 317 00:18:48,080 --> 00:18:51,520 Speaker 1: and you pretend like the customer has already decided they 318 00:18:51,520 --> 00:18:55,000 Speaker 1: are absolutely going to buy the television set, and you 319 00:18:55,080 --> 00:18:58,320 Speaker 1: just start asking questions that kind of hint at that 320 00:18:58,440 --> 00:19:01,720 Speaker 1: this actually adds extra pressure on the consumer to walk 321 00:19:01,720 --> 00:19:05,040 Speaker 1: away buying a television set. So you wouldn't say something 322 00:19:05,160 --> 00:19:08,399 Speaker 1: like would you like to purchase this, because that's giving 323 00:19:08,400 --> 00:19:11,239 Speaker 1: the consumer and out. Instead, you might say, do you 324 00:19:11,640 --> 00:19:15,159 Speaker 1: like this one better? In the dark wood cabinet or 325 00:19:15,200 --> 00:19:19,680 Speaker 1: the lightwood cabinet. See, you've already made the assumption that 326 00:19:19,720 --> 00:19:22,560 Speaker 1: they're going to buy one or the other. You take 327 00:19:22,600 --> 00:19:25,080 Speaker 1: away the option of saying, oh, I'm not I'm not 328 00:19:25,160 --> 00:19:28,439 Speaker 1: buying anything. It adds that extra level of pressure. Or 329 00:19:28,480 --> 00:19:31,200 Speaker 1: you might begin by showing a customer a base model 330 00:19:31,440 --> 00:19:34,879 Speaker 1: that has very few features, and honestly, you don't really 331 00:19:34,880 --> 00:19:37,399 Speaker 1: want to sell the base model because you're selling it 332 00:19:37,440 --> 00:19:40,440 Speaker 1: at a very low price and the margin is very low. 333 00:19:40,480 --> 00:19:43,200 Speaker 1: In other words, the profit you make from the sale 334 00:19:43,480 --> 00:19:48,960 Speaker 1: is negligible, and really you could not sustain a business 335 00:19:49,080 --> 00:19:52,919 Speaker 1: selling those style television sets. The purpose of showing the 336 00:19:52,960 --> 00:19:56,200 Speaker 1: basic model is to then move the customer over to 337 00:19:56,359 --> 00:19:59,960 Speaker 1: higher end models that have more features and us cause 338 00:20:00,040 --> 00:20:02,720 Speaker 1: ust more and have a better sales margin, so you 339 00:20:02,760 --> 00:20:06,680 Speaker 1: make a bigger profit from the sale. Uh. Some people 340 00:20:06,720 --> 00:20:10,520 Speaker 1: call this the bait and switch. Samuel preferred to think 341 00:20:10,560 --> 00:20:13,520 Speaker 1: of it as a step up approach. He felt that 342 00:20:13,560 --> 00:20:16,320 Speaker 1: customer service was really important, so it wasn't like it 343 00:20:16,400 --> 00:20:19,720 Speaker 1: was an outright attempt to be a snake oil salesman. 344 00:20:20,000 --> 00:20:23,159 Speaker 1: He was interested in employing the most effective techniques to 345 00:20:23,240 --> 00:20:26,359 Speaker 1: move products. But he also felt that honesty was important 346 00:20:26,680 --> 00:20:28,680 Speaker 1: and that the message he and his employees gave to 347 00:20:28,840 --> 00:20:32,280 Speaker 1: vendors and customers and others should always be the truth, 348 00:20:33,200 --> 00:20:36,560 Speaker 1: because keeping track of lies is a hassle. If you 349 00:20:36,560 --> 00:20:39,400 Speaker 1: tell different lies to different people, maintaining all of that 350 00:20:39,800 --> 00:20:42,120 Speaker 1: is a huge headache. So just be truthful up front 351 00:20:42,200 --> 00:20:46,680 Speaker 1: was his policy. Reconciling the sales approach with the company's 352 00:20:46,760 --> 00:20:50,200 Speaker 1: values requires a little bit of mental gymnastics and perhaps 353 00:20:50,400 --> 00:20:56,399 Speaker 1: some generous allowances, I'll say, but one of those sales 354 00:20:56,400 --> 00:21:00,320 Speaker 1: practices was that the price tag of the televisions in 355 00:21:00,400 --> 00:21:04,680 Speaker 1: the Wards Company store and later other appliances that they 356 00:21:04,760 --> 00:21:08,800 Speaker 1: started to sell after a couple more years, wasn't actually 357 00:21:08,840 --> 00:21:13,280 Speaker 1: a fixed price. Every product had a listed price that 358 00:21:13,400 --> 00:21:16,439 Speaker 1: was the starting point, and then every product had a 359 00:21:16,520 --> 00:21:21,560 Speaker 1: bottom line lowest acceptable price a salesperson would be allowed 360 00:21:21,600 --> 00:21:25,159 Speaker 1: to sell that item for. So your goal as a 361 00:21:25,160 --> 00:21:28,960 Speaker 1: salesperson is to sell it as close to that ticket 362 00:21:29,040 --> 00:21:32,639 Speaker 1: price as you possibly could. But customers can haggle, they 363 00:21:32,640 --> 00:21:36,760 Speaker 1: can bargain, and the salesperson would get a commission based 364 00:21:36,840 --> 00:21:41,080 Speaker 1: upon how high above that lowest acceptable price they were 365 00:21:41,119 --> 00:21:44,399 Speaker 1: able to make a sale. So it was better to 366 00:21:44,440 --> 00:21:46,600 Speaker 1: make a sale than not make a sale. If you 367 00:21:46,720 --> 00:21:49,280 Speaker 1: absolutely had to go to the lowest price in order 368 00:21:49,320 --> 00:21:51,679 Speaker 1: to move a product, then it was better to do 369 00:21:51,720 --> 00:21:54,400 Speaker 1: that than not. But you would get a bigger reward 370 00:21:54,640 --> 00:21:58,639 Speaker 1: if you could sell the product at the higher price, 371 00:21:58,800 --> 00:22:01,720 Speaker 1: the closer to the list price as opposed to the 372 00:22:01,800 --> 00:22:06,640 Speaker 1: secret lowest acceptable price. So if you happen to nab 373 00:22:06,680 --> 00:22:09,119 Speaker 1: a customer that's not terribly aggressive, you can make a 374 00:22:09,160 --> 00:22:14,600 Speaker 1: big commission off a hefty sale. It's another UH idea 375 00:22:14,680 --> 00:22:18,240 Speaker 1: that a lot of modern shoppers find particularly shady. It 376 00:22:18,400 --> 00:22:21,240 Speaker 1: also falls into the category that a lot of people 377 00:22:22,080 --> 00:22:25,280 Speaker 1: will associate with buying a car, and in fact, Circuit 378 00:22:25,320 --> 00:22:28,680 Speaker 1: City has a connection to car sales as well. I'll 379 00:22:28,680 --> 00:22:31,440 Speaker 1: get into that probably in Part two, not so much 380 00:22:31,440 --> 00:22:35,200 Speaker 1: in Part one. Now paired with this was a customer 381 00:22:35,280 --> 00:22:38,359 Speaker 1: service policy that went above and beyond the pale. So 382 00:22:38,520 --> 00:22:41,640 Speaker 1: every salesperson was expected to follow up with a customer 383 00:22:41,640 --> 00:22:45,000 Speaker 1: to make certain that the delivery, installation, and operation of 384 00:22:45,040 --> 00:22:48,680 Speaker 1: their brand new television's met expectations, and if they didn't, 385 00:22:48,720 --> 00:22:51,120 Speaker 1: the company would work to make things right and even 386 00:22:51,160 --> 00:22:55,040 Speaker 1: send along a conciliatory present or two to smooth things over. 387 00:22:55,560 --> 00:22:58,400 Speaker 1: So Samuel felt that great customer service would help word 388 00:22:58,440 --> 00:23:01,680 Speaker 1: of mouth, but perhaps are importantly, it would help the 389 00:23:01,720 --> 00:23:06,080 Speaker 1: company avoid bad word of mouth, which tends to travel 390 00:23:06,160 --> 00:23:09,639 Speaker 1: faster and farther than good word of mouth. People love 391 00:23:09,880 --> 00:23:13,520 Speaker 1: to complain, and that's something that's still true today. If 392 00:23:13,560 --> 00:23:16,880 Speaker 1: you read over the comments or reviews on things online, 393 00:23:16,920 --> 00:23:22,000 Speaker 1: you'll see that people who are dissatisfied uh often will 394 00:23:22,040 --> 00:23:25,640 Speaker 1: go to much greater lengths to express that dissatisfaction than 395 00:23:25,720 --> 00:23:29,200 Speaker 1: folks who are happy, and may even seem that uh 396 00:23:29,240 --> 00:23:31,760 Speaker 1: that the happy folks are are far outnumbered by the 397 00:23:31,840 --> 00:23:34,600 Speaker 1: dissatisfied folks, even if the overall rating is high. It's 398 00:23:34,680 --> 00:23:38,200 Speaker 1: because people who are happy might be willing to give 399 00:23:38,240 --> 00:23:42,159 Speaker 1: like a five star review on something, but not actually 400 00:23:42,160 --> 00:23:45,080 Speaker 1: write anything, just say of five stars, whereas people who 401 00:23:45,119 --> 00:23:48,399 Speaker 1: are unhappy want to tell you about it. Anyone who's 402 00:23:48,400 --> 00:23:50,639 Speaker 1: got a podcast out there knows what I'm talking about, 403 00:23:51,400 --> 00:23:55,119 Speaker 1: and it can be really demoralizing. But Samuel's point was 404 00:23:55,160 --> 00:23:58,960 Speaker 1: that he didn't want bad word of mouth spreading. His 405 00:23:59,160 --> 00:24:03,119 Speaker 1: business was all one in a tight community, so he 406 00:24:03,119 --> 00:24:05,679 Speaker 1: wanted to make sure he maintained a good relationship with 407 00:24:05,720 --> 00:24:08,639 Speaker 1: his customers. He also saw the value in hiring and 408 00:24:08,640 --> 00:24:13,200 Speaker 1: developing good employees. He relied heavily on using personality tests 409 00:24:13,280 --> 00:24:17,720 Speaker 1: when evaluating candidates, particularly for sales or management positions. He 410 00:24:17,760 --> 00:24:20,600 Speaker 1: also considered the potential impact any higher would have on 411 00:24:20,720 --> 00:24:24,560 Speaker 1: other employees. He didn't wanted demoralize anyone by hiring someone 412 00:24:24,600 --> 00:24:27,879 Speaker 1: from outside the company to lord over other people, and 413 00:24:27,920 --> 00:24:30,760 Speaker 1: he wasn't in a rush to fill empty positions just 414 00:24:30,920 --> 00:24:32,520 Speaker 1: to have them filled. He wanted to make sure he 415 00:24:32,600 --> 00:24:35,280 Speaker 1: got the right people for the right job. He also 416 00:24:35,320 --> 00:24:37,720 Speaker 1: believed in promoting from within the company, which helped to 417 00:24:37,840 --> 00:24:41,680 Speaker 1: build employee loyal team. He was also known for being 418 00:24:41,840 --> 00:24:45,800 Speaker 1: pretty lenient with folks who weren't living up to what 419 00:24:45,920 --> 00:24:50,119 Speaker 1: they're they were accountable for. So let's say a manager, Uh, 420 00:24:50,200 --> 00:24:52,760 Speaker 1: it turns out the manager who has been promoted above 421 00:24:53,240 --> 00:24:56,640 Speaker 1: their ability to perform. One of the things that Samuel 422 00:24:56,680 --> 00:25:00,280 Speaker 1: would do is instead of firing someone out right eight, 423 00:25:00,960 --> 00:25:03,679 Speaker 1: he would say, listen, it was a mistake, obviously to 424 00:25:03,720 --> 00:25:06,720 Speaker 1: promote you to this position. You were not ready for it. 425 00:25:07,040 --> 00:25:09,600 Speaker 1: That's no fault of yours. It is a fault of 426 00:25:09,640 --> 00:25:12,840 Speaker 1: ours for making that decision prematurely. How about we move 427 00:25:12,880 --> 00:25:16,160 Speaker 1: you down to an assistant manager position that you can 428 00:25:16,200 --> 00:25:18,840 Speaker 1: then work at and gain more experience, and then later 429 00:25:18,880 --> 00:25:21,360 Speaker 1: on maybe revisit this idea of you being a manager, 430 00:25:21,720 --> 00:25:24,000 Speaker 1: which allowed people to hold onto their jobs and to 431 00:25:24,200 --> 00:25:27,399 Speaker 1: get into a position they were more comfortable with and 432 00:25:27,440 --> 00:25:30,879 Speaker 1: more suited for, as opposed to just saying Nope, you 433 00:25:30,880 --> 00:25:34,240 Speaker 1: couldn't cut it. You're out. He also instituted a policy 434 00:25:34,280 --> 00:25:36,920 Speaker 1: in which the vice president of Personnel was to sit 435 00:25:36,960 --> 00:25:39,360 Speaker 1: down regularly with employees a couple of times a year 436 00:25:39,359 --> 00:25:42,240 Speaker 1: to talk about how the company could improve existing jobs, 437 00:25:42,600 --> 00:25:45,640 Speaker 1: especially the low level employees, like the entry level positions, 438 00:25:46,000 --> 00:25:49,480 Speaker 1: and then he would work to actually implement those suggested changes, 439 00:25:49,600 --> 00:25:52,960 Speaker 1: at least when the changes made sense. And he also 440 00:25:53,080 --> 00:25:55,919 Speaker 1: was a big believer in providing training opportunities for people 441 00:25:56,000 --> 00:25:59,560 Speaker 1: and began to hold annual store manager meetings in exotic places. 442 00:26:00,040 --> 00:26:03,399 Speaker 1: Those meetings would have like a really concentrated period of 443 00:26:03,440 --> 00:26:08,000 Speaker 1: training and and and deep discussions, and then the following 444 00:26:08,040 --> 00:26:11,919 Speaker 1: weekend everyone would just stay at whatever exotic locale the 445 00:26:11,960 --> 00:26:14,960 Speaker 1: meeting was taking place at, and their families would join them, 446 00:26:15,000 --> 00:26:16,280 Speaker 1: and then they would just kind of have a little 447 00:26:16,480 --> 00:26:19,879 Speaker 1: weekend vacation and say Hawaii or Puerto Rico or something, 448 00:26:20,240 --> 00:26:22,879 Speaker 1: which is kind of cool. The company also had no 449 00:26:23,000 --> 00:26:26,800 Speaker 1: vacation policy for management positions, meaning they didn't have a 450 00:26:26,880 --> 00:26:30,360 Speaker 1: policy in place, not that managers couldn't take vacation, in fact, 451 00:26:30,440 --> 00:26:32,560 Speaker 1: they were encouraged to do it. In fact, sometimes they 452 00:26:32,560 --> 00:26:36,119 Speaker 1: were told very sternly, hey, you got you need to 453 00:26:36,200 --> 00:26:39,159 Speaker 1: take some time off. Managers were expected to get the 454 00:26:39,240 --> 00:26:43,000 Speaker 1: job done, period. That's it. As long as that happened. 455 00:26:43,040 --> 00:26:45,520 Speaker 1: They could take as much or as little vacation as 456 00:26:45,560 --> 00:26:47,600 Speaker 1: they liked, but they had to get the job done. 457 00:26:47,800 --> 00:26:51,040 Speaker 1: They also didn't have regularly set hours, but Samuel discovered 458 00:26:51,240 --> 00:26:53,680 Speaker 1: that this approach actually seemed to encourage managers to work 459 00:26:53,840 --> 00:26:56,760 Speaker 1: longer hours than they otherwise might have done on a 460 00:26:56,880 --> 00:26:59,280 Speaker 1: set schedule, on like a nine to five each week. 461 00:26:59,800 --> 00:27:04,119 Speaker 1: So it was a strategy that I've seen used in 462 00:27:04,160 --> 00:27:06,040 Speaker 1: the tech industry quite a few times. A lot of 463 00:27:06,080 --> 00:27:09,199 Speaker 1: companies would have these sort of open hour rules, and 464 00:27:09,240 --> 00:27:12,920 Speaker 1: people would end up spending more hours at their job 465 00:27:12,960 --> 00:27:15,000 Speaker 1: than they would if they were required to show up 466 00:27:15,040 --> 00:27:17,359 Speaker 1: at say, nine am and clock out at five pm. 467 00:27:17,400 --> 00:27:19,399 Speaker 1: And I don't know what that's like, Dylan, Do you 468 00:27:19,440 --> 00:27:22,560 Speaker 1: know what that's like? Dylan is shaking his head, but 469 00:27:22,640 --> 00:27:27,520 Speaker 1: also snort laughing. So take that as you will. As 470 00:27:27,520 --> 00:27:30,600 Speaker 1: the company began to find financial success, Samuel and Abraham 471 00:27:30,640 --> 00:27:33,679 Speaker 1: began to stock it with other TV brands, not just 472 00:27:33,720 --> 00:27:38,000 Speaker 1: those Olympic TVs. They also categorized the various television vision 473 00:27:38,000 --> 00:27:41,120 Speaker 1: sets in steps, like I was saying earlier, with each 474 00:27:41,320 --> 00:27:45,840 Speaker 1: step representing a price range and a set of features. 475 00:27:45,880 --> 00:27:48,240 Speaker 1: So the goal was always to get customers to land 476 00:27:48,240 --> 00:27:51,560 Speaker 1: on the highest step they would want to go, and 477 00:27:51,640 --> 00:27:54,440 Speaker 1: that would represent the models that pose the best profit 478 00:27:54,480 --> 00:27:57,480 Speaker 1: margins for the company. So if you could sell them 479 00:27:57,480 --> 00:28:01,040 Speaker 1: on the most luxurious TV set to make the most profit, 480 00:28:01,440 --> 00:28:05,199 Speaker 1: but each step had to have features that justified that 481 00:28:05,200 --> 00:28:09,600 Speaker 1: that increase in step. You couldn't just have a model 482 00:28:09,640 --> 00:28:12,560 Speaker 1: that had a certain brand name to it and it's 483 00:28:12,560 --> 00:28:15,359 Speaker 1: automatically a step up over other models. It had to 484 00:28:15,400 --> 00:28:20,480 Speaker 1: have demonstrable features that showed that value. In other words, 485 00:28:20,600 --> 00:28:23,439 Speaker 1: the customer had to actually get something for that higher 486 00:28:23,520 --> 00:28:27,320 Speaker 1: price point. So this goes back to that customer satisfaction 487 00:28:28,080 --> 00:28:32,399 Speaker 1: uh concept. It's not just that the company wants to 488 00:28:32,440 --> 00:28:34,440 Speaker 1: make money, they want to do so in a way 489 00:28:34,480 --> 00:28:39,560 Speaker 1: that is at least remotely ethical especial certainly ethical by 490 00:28:39,640 --> 00:28:43,760 Speaker 1: nineteen fifties standards. So by the mid nineteen fifties, Wards 491 00:28:43,840 --> 00:28:46,600 Speaker 1: had opened three more stores and enrichments. They had four 492 00:28:47,040 --> 00:28:50,240 Speaker 1: store fronts at that point. The company also began to 493 00:28:50,280 --> 00:28:54,440 Speaker 1: carry more items than just television's, like refrigerators and other appliances, 494 00:28:54,480 --> 00:28:56,600 Speaker 1: and the appliance boom in the nineteen fifties was kind 495 00:28:56,600 --> 00:28:58,840 Speaker 1: of similar to the TV boom. These were all products 496 00:28:58,840 --> 00:29:04,320 Speaker 1: that promised to increase convenience and save time for households. 497 00:29:04,440 --> 00:29:09,240 Speaker 1: They were also selling this concept of comfort and prosperity, 498 00:29:09,360 --> 00:29:12,120 Speaker 1: so it's it's not just selling products but an idea, 499 00:29:12,600 --> 00:29:16,560 Speaker 1: like a representation of a goal that every American was 500 00:29:16,760 --> 00:29:19,760 Speaker 1: envisioning as this is where I want to be. And 501 00:29:19,800 --> 00:29:22,720 Speaker 1: as the company saw more success, the owners branched out 502 00:29:22,760 --> 00:29:26,280 Speaker 1: further and attempted to open stores in other places. They 503 00:29:26,280 --> 00:29:30,040 Speaker 1: opened one in Roanoke, Virginia, and one in Greensboro, North 504 00:29:30,160 --> 00:29:33,760 Speaker 1: North Carolina, but they didn't Those stores didn't work out. 505 00:29:33,880 --> 00:29:37,200 Speaker 1: Those efforts probably were a little too ambitious, a little 506 00:29:37,240 --> 00:29:40,280 Speaker 1: too early, and both of those stores closed within twelve 507 00:29:40,280 --> 00:29:44,040 Speaker 1: months of having opened. The big problem here was that 508 00:29:44,080 --> 00:29:48,400 Speaker 1: Samuel and Abraham found they couldn't manage those remote locations 509 00:29:48,440 --> 00:29:51,880 Speaker 1: personally the way they could the Richmond offices. Like they 510 00:29:51,880 --> 00:29:54,520 Speaker 1: could put managers in charge of those stores, but they 511 00:29:54,560 --> 00:29:57,080 Speaker 1: couldn't oversee the day to day operations, and if there 512 00:29:57,080 --> 00:30:00,640 Speaker 1: were problems, they couldn't respond to them in a timely 513 00:30:00,720 --> 00:30:03,400 Speaker 1: enough fashion for the store to remain profitable. So it 514 00:30:03,440 --> 00:30:05,960 Speaker 1: was an expensive lesson. But Samuel learned that he needed 515 00:30:05,960 --> 00:30:09,320 Speaker 1: to develop someone to oversee each remote store at a 516 00:30:09,360 --> 00:30:12,840 Speaker 1: managerial level and find a way for managers to send 517 00:30:12,920 --> 00:30:15,560 Speaker 1: meaningful data back for him in order for him to 518 00:30:15,600 --> 00:30:19,840 Speaker 1: make some high level decisions. A few years after opening 519 00:30:19,840 --> 00:30:23,080 Speaker 1: the company, Samuel and Abraham brought a third person onto 520 00:30:23,120 --> 00:30:26,520 Speaker 1: the team, the management level team like this sort of 521 00:30:26,560 --> 00:30:31,200 Speaker 1: senior management. Uh. This guy was named Martin Rosenswig, and 522 00:30:31,320 --> 00:30:34,680 Speaker 1: Rosenswig had an accounting background in New York. Samuel and 523 00:30:34,720 --> 00:30:38,200 Speaker 1: Abraham actually gave him a stake in the business even 524 00:30:38,240 --> 00:30:41,600 Speaker 1: though he had not posted an investment into it. So, 525 00:30:41,640 --> 00:30:45,760 Speaker 1: in other words, Ross as they called him, got a 526 00:30:46,440 --> 00:30:50,120 Speaker 1: percentage of ownership of this company, although he was not 527 00:30:50,200 --> 00:30:52,600 Speaker 1: one of the investors into in the company, and the 528 00:30:52,680 --> 00:30:56,000 Speaker 1: three of them ran the Awards Company until the mid 529 00:30:56,120 --> 00:31:00,160 Speaker 1: nineties sixties. Now I got some more to talk about 530 00:31:00,000 --> 00:31:03,040 Speaker 1: out some of the advances that Samuel instituted in the 531 00:31:03,080 --> 00:31:05,920 Speaker 1: Wards Company that that set it apart from other stores 532 00:31:05,960 --> 00:31:08,360 Speaker 1: at that time. But before I get into that, let's 533 00:31:08,400 --> 00:31:21,000 Speaker 1: take another quick break to thank our sponsor and we're back. So, 534 00:31:21,080 --> 00:31:24,320 Speaker 1: in an effort to keep track of inventory, which all 535 00:31:24,400 --> 00:31:26,520 Speaker 1: had to be done by hand back in those days, 536 00:31:26,520 --> 00:31:30,400 Speaker 1: there were no automated systems. Samuel actually purchased an IBM 537 00:31:30,520 --> 00:31:35,560 Speaker 1: punch card equipment system. He saw the value in this 538 00:31:35,720 --> 00:31:40,760 Speaker 1: burgeoning technological field for using it in order to do 539 00:31:40,960 --> 00:31:46,480 Speaker 1: supply chain management, inventory management, keep track of sales, profit margins, 540 00:31:47,200 --> 00:31:50,640 Speaker 1: and to to have a really good look at how 541 00:31:50,840 --> 00:31:53,720 Speaker 1: each store was doing so that if there were any 542 00:31:54,240 --> 00:31:58,440 Speaker 1: early warning signs, they could sweep in and fix things 543 00:31:58,560 --> 00:32:02,800 Speaker 1: before they became too problematic. By nineteen sixty six he 544 00:32:02,840 --> 00:32:05,680 Speaker 1: had a data processing department to keep track of all 545 00:32:05,760 --> 00:32:09,400 Speaker 1: of this. He also adopted the IBM three sixty computer 546 00:32:09,480 --> 00:32:12,440 Speaker 1: system in the mid sixties to help manage the growing 547 00:32:12,520 --> 00:32:15,520 Speaker 1: chain of stores. UH Samuel used the data to see 548 00:32:15,520 --> 00:32:18,400 Speaker 1: which stores were doing well, which ones weren't, and, like 549 00:32:18,440 --> 00:32:21,720 Speaker 1: I said, jump in if things aren't going well. As 550 00:32:21,760 --> 00:32:25,080 Speaker 1: for Alan Wurtzel, Samuel's son, he would play an important 551 00:32:25,200 --> 00:32:28,840 Speaker 1: role in the rise of Circuit City. First, he went 552 00:32:28,840 --> 00:32:32,479 Speaker 1: on to study economics at Oberlin College and later at 553 00:32:32,480 --> 00:32:36,600 Speaker 1: the London School of Economics and then Yale University. He 554 00:32:36,640 --> 00:32:39,440 Speaker 1: passed the Connecticut Bar in nineteen fifty nine and became 555 00:32:39,440 --> 00:32:41,840 Speaker 1: a law clerk of the U. S. Court of Appeals 556 00:32:41,840 --> 00:32:46,360 Speaker 1: in Washington, d C. In nineteen sixty, so he was 557 00:32:46,400 --> 00:32:50,320 Speaker 1: studying at that point, not yet part of the company. Meanwhile, 558 00:32:50,560 --> 00:32:53,000 Speaker 1: business was going really well for the Wards Company, so 559 00:32:53,040 --> 00:32:55,640 Speaker 1: well that Samuel took the company public, as in it 560 00:32:55,720 --> 00:33:00,000 Speaker 1: became a publicly traded stock in nineteen sixty one. Now, 561 00:33:00,000 --> 00:33:03,440 Speaker 1: out in actuality, that was a move of necessity. There 562 00:33:03,480 --> 00:33:07,800 Speaker 1: was a lot of opportunity for expansion, but that costs money, 563 00:33:07,840 --> 00:33:11,040 Speaker 1: and the company lacked the capital to do that expansion 564 00:33:11,080 --> 00:33:14,240 Speaker 1: on its own. But by going public, Samuel could raise 565 00:33:14,360 --> 00:33:18,440 Speaker 1: capital needed to expand further and make bigger profits. So 566 00:33:18,520 --> 00:33:23,680 Speaker 1: to that end, the Wards Company got into the discount industry. Now, 567 00:33:23,760 --> 00:33:26,640 Speaker 1: this was a time where we started seeing big stores 568 00:33:26,800 --> 00:33:30,400 Speaker 1: show up that were either open membership or closed membership 569 00:33:30,520 --> 00:33:34,680 Speaker 1: discount stores uh such as g e M International or 570 00:33:34,800 --> 00:33:37,320 Speaker 1: Gym International if you prefer. It's sort of like what 571 00:33:37,520 --> 00:33:41,360 Speaker 1: Sam's Club is today. Wards was dipping their toe in 572 00:33:41,400 --> 00:33:45,240 Speaker 1: this pool by opening up departments in already existing stores, 573 00:33:45,360 --> 00:33:48,440 Speaker 1: So they weren't opening up their own discount store with 574 00:33:48,680 --> 00:33:52,640 Speaker 1: open or closed membership. Instead, they would partner with an 575 00:33:52,640 --> 00:33:57,120 Speaker 1: existing store and they would manage a specific department within 576 00:33:57,200 --> 00:33:59,480 Speaker 1: that store. It was almost like a precursor to the 577 00:33:59,480 --> 00:34:04,800 Speaker 1: shopping all, except instead of a store space within the mall, 578 00:34:04,880 --> 00:34:07,680 Speaker 1: it was a department space within a larger, almost like 579 00:34:07,720 --> 00:34:11,000 Speaker 1: warehouse style building. So imagine walking into one of those 580 00:34:11,040 --> 00:34:14,799 Speaker 1: big warehouse stores like Sam's Club and one whole department 581 00:34:15,239 --> 00:34:18,799 Speaker 1: is managed by an entirely separate company like Wards. That's 582 00:34:18,880 --> 00:34:23,160 Speaker 1: essentially what was going on. So Wards would lease space 583 00:34:23,239 --> 00:34:25,840 Speaker 1: from a bigger store and get access to that stores 584 00:34:25,920 --> 00:34:30,840 Speaker 1: customer base in return. The company sold one ten thousand 585 00:34:30,880 --> 00:34:35,160 Speaker 1: shares in December of that year, and that amounted to 586 00:34:35,239 --> 00:34:39,839 Speaker 1: about forty point four percent ownership of the company, and 587 00:34:39,920 --> 00:34:43,920 Speaker 1: collectively those shares represented about five dred thirty six thousand, 588 00:34:43,960 --> 00:34:47,520 Speaker 1: two hundred fifty dollars, which meant the overall companies valuation 589 00:34:47,640 --> 00:34:51,960 Speaker 1: was at one point eight million dollars. Uh small for 590 00:34:52,040 --> 00:34:55,239 Speaker 1: tech companies these days, for for any company considered a 591 00:34:55,239 --> 00:34:58,520 Speaker 1: major company these days, but but big, big news to Samuel. 592 00:34:58,520 --> 00:35:01,120 Speaker 1: I mean, this was like he was on dream Street. 593 00:35:01,160 --> 00:35:03,800 Speaker 1: At this point, about fifty percent of the company's ownership 594 00:35:03,960 --> 00:35:07,720 Speaker 1: still belonged to the Hastis and the Wurtzels. They owned 595 00:35:08,239 --> 00:35:12,640 Speaker 1: about half the company together. The other ten percent ownership 596 00:35:12,920 --> 00:35:16,800 Speaker 1: was all slightly less than ten percent because the stocks 597 00:35:16,920 --> 00:35:21,440 Speaker 1: represented forty point four those belonged to other early investors. 598 00:35:22,200 --> 00:35:27,000 Speaker 1: So five years later, nineteen sixty six, Alan Wurtzel ends 599 00:35:27,200 --> 00:35:31,000 Speaker 1: his private law practice and goes to join the family business. 600 00:35:31,080 --> 00:35:33,840 Speaker 1: His initial role over at Wards Company was to be 601 00:35:33,880 --> 00:35:37,359 Speaker 1: the official legal counsel for Wards. Now. At that time, 602 00:35:37,400 --> 00:35:40,640 Speaker 1: the company consisted of four stores in Richmond and twenty 603 00:35:40,760 --> 00:35:43,680 Speaker 1: seven licensed departments and other parts of the country. In 604 00:35:43,760 --> 00:35:47,040 Speaker 1: those big discount stores I was talking about, sales were 605 00:35:47,120 --> 00:35:50,080 Speaker 1: about twenty two point eight million, with earnings of around 606 00:35:50,120 --> 00:35:54,080 Speaker 1: six hundred sixteen thousand dollars. And father and son began 607 00:35:54,120 --> 00:35:57,040 Speaker 1: to expand the company by buying up smaller companies that 608 00:35:57,120 --> 00:36:00,680 Speaker 1: sold appliances. That not only expanded the company these regional 609 00:36:00,719 --> 00:36:03,120 Speaker 1: reach by getting into areas that they didn't have an 610 00:36:03,120 --> 00:36:06,320 Speaker 1: existing store. That also boosted the variety of products the 611 00:36:06,360 --> 00:36:10,160 Speaker 1: company began to offer to customers, so again more than 612 00:36:10,239 --> 00:36:14,160 Speaker 1: just TVs at this point. In ninety eight, the Wards 613 00:36:14,200 --> 00:36:18,719 Speaker 1: Company joined the American Stock Exchange. The following year, Wards 614 00:36:18,880 --> 00:36:21,759 Speaker 1: makes a concentrated effort to buy up local chains and 615 00:36:21,880 --> 00:36:26,160 Speaker 1: discount stores, converting them over to Wards stores or launching 616 00:36:26,200 --> 00:36:28,960 Speaker 1: them under a new name. So one of those chains 617 00:36:29,040 --> 00:36:32,120 Speaker 1: was a chain called Custom Hi Fi, and that gave 618 00:36:32,200 --> 00:36:35,799 Speaker 1: Wards a foothold in the hi fi audio business. Those 619 00:36:35,800 --> 00:36:38,480 Speaker 1: stores were mainly in the Washington, d c. Area, but 620 00:36:38,520 --> 00:36:40,720 Speaker 1: they represented one of the ways the company was beginning 621 00:36:40,760 --> 00:36:44,720 Speaker 1: to diversify, and they chose to keep the brands separate 622 00:36:44,760 --> 00:36:47,320 Speaker 1: from the overall a Wards Company. They named the stores 623 00:36:47,560 --> 00:36:50,680 Speaker 1: Dixie Hi Fi, So if you ever heard that name, 624 00:36:50,840 --> 00:36:52,800 Speaker 1: that's where it comes from. It. It was originally Custom 625 00:36:52,880 --> 00:36:56,400 Speaker 1: High Fi and then acquired by Wards Company. And in 626 00:36:56,480 --> 00:37:01,160 Speaker 1: nineteen seventy Samuel Wurtzel transitioned into the position of chairman 627 00:37:01,520 --> 00:37:05,560 Speaker 1: and named his son Alan as the president of the company. 628 00:37:05,640 --> 00:37:09,240 Speaker 1: Abraham Haste at that time retired and in nineteen seventy 629 00:37:09,280 --> 00:37:14,080 Speaker 1: three Allen Wertzel took over as CEO of the Wards Company. Now, 630 00:37:14,520 --> 00:37:17,200 Speaker 1: that was a rough time for Awards Company, not because 631 00:37:17,239 --> 00:37:20,880 Speaker 1: of Allen's leadership, but rather because of just economic conditions 632 00:37:20,880 --> 00:37:24,000 Speaker 1: in general. Around that time, the company was on shaky ground. 633 00:37:24,080 --> 00:37:27,600 Speaker 1: Sales were at around sixty million dollars. That's definitely a 634 00:37:27,640 --> 00:37:30,200 Speaker 1: lot of money. But the company had also expanded pretty 635 00:37:30,280 --> 00:37:33,600 Speaker 1: quickly in a short time. So there was this this 636 00:37:33,840 --> 00:37:36,680 Speaker 1: fact of you know, what, how does sales match up 637 00:37:36,719 --> 00:37:40,640 Speaker 1: against the expansion. Also, there was an economic recession in 638 00:37:40,680 --> 00:37:43,520 Speaker 1: the United States, which was making an enormous impact on 639 00:37:43,560 --> 00:37:47,560 Speaker 1: the company's revenues. Uh several stores had turned unprofitable, and 640 00:37:47,600 --> 00:37:51,560 Speaker 1: Allen Wortzel really had his work cut out for him. 641 00:37:51,600 --> 00:37:54,200 Speaker 1: So in nineteen seventy four he decided to make the 642 00:37:54,560 --> 00:37:57,040 Speaker 1: take a pretty big risk. The company tried something new. 643 00:37:57,080 --> 00:38:01,840 Speaker 1: They opened up a forty thousand square foot retail showroom. 644 00:38:02,040 --> 00:38:05,200 Speaker 1: They called it the Wards Loading Dock, so this was 645 00:38:05,280 --> 00:38:09,680 Speaker 1: an enormous showroom dedicated to audio and visual equipment. Now. 646 00:38:09,680 --> 00:38:11,799 Speaker 1: The size meant that the company could sell a much 647 00:38:11,880 --> 00:38:15,200 Speaker 1: larger volume of products, which meant that they could buy 648 00:38:15,239 --> 00:38:17,640 Speaker 1: them at a lower cost and sell them for a 649 00:38:17,680 --> 00:38:20,520 Speaker 1: lower price than a lot of their competitors could. The 650 00:38:20,560 --> 00:38:23,400 Speaker 1: Loading Dock also had a much wider variety of products 651 00:38:23,400 --> 00:38:27,239 Speaker 1: from various brands than most other stores, so that was 652 00:38:27,680 --> 00:38:30,560 Speaker 1: a customer value and they were able to branch far 653 00:38:30,640 --> 00:38:33,239 Speaker 1: beyond the basic TV and appliance business that had to 654 00:38:33,280 --> 00:38:36,440 Speaker 1: find the company in years past. The store also offered 655 00:38:36,480 --> 00:38:39,160 Speaker 1: services that you would have found in the old Wards 656 00:38:39,200 --> 00:38:43,000 Speaker 1: Company store back in nineteen forty nine, like home delivery 657 00:38:43,040 --> 00:38:47,359 Speaker 1: and installation. They also had an in store repairs department there. 658 00:38:47,680 --> 00:38:51,279 Speaker 1: This would become the model for their superstore, but at 659 00:38:51,320 --> 00:38:54,719 Speaker 1: the time it was a pure experiment. That same year, 660 00:38:54,760 --> 00:38:57,400 Speaker 1: in nineteen seventy four, the company began to close down 661 00:38:57,440 --> 00:39:00,799 Speaker 1: those licensed shops and discount stores an the country. Most 662 00:39:00,840 --> 00:39:04,200 Speaker 1: of them had long since stopped being profitable, and this 663 00:39:04,280 --> 00:39:06,960 Speaker 1: marked a switch in strategy in which the Ward's company 664 00:39:07,120 --> 00:39:11,280 Speaker 1: would no longer rent space, but have their own space 665 00:39:11,360 --> 00:39:15,320 Speaker 1: their own stores and expand that way instead of renting 666 00:39:15,320 --> 00:39:18,399 Speaker 1: out a place in someone else's store, and that would 667 00:39:18,480 --> 00:39:20,920 Speaker 1: lead the towards the company's future in retail. It was 668 00:39:21,000 --> 00:39:26,960 Speaker 1: the birth of the superstore. So by nine the company 669 00:39:27,040 --> 00:39:29,719 Speaker 1: was beginning to open new concept stores that they were 670 00:39:29,719 --> 00:39:35,520 Speaker 1: calling Circuit City showrooms in the DC area. These were 671 00:39:35,719 --> 00:39:39,040 Speaker 1: smaller than the loading Dock showroom, but about twice the 672 00:39:39,080 --> 00:39:41,600 Speaker 1: size of the old Rewards stores, and they were pure 673 00:39:41,640 --> 00:39:45,840 Speaker 1: electronics stores. Uh They included not just a showroom, but 674 00:39:45,920 --> 00:39:49,279 Speaker 1: also service departments similar to what the loading dock had, 675 00:39:49,320 --> 00:39:51,960 Speaker 1: but on a smaller scale, and they made sure to 676 00:39:52,000 --> 00:39:54,759 Speaker 1: staff them with knowledgeable employees who could answer lots of 677 00:39:54,840 --> 00:39:58,200 Speaker 1: questions about the products that were on sale. The experience 678 00:39:58,200 --> 00:40:00,839 Speaker 1: for the customer is one that I think a lot 679 00:40:00,880 --> 00:40:03,440 Speaker 1: of you are familiar with, at least on some level. 680 00:40:04,280 --> 00:40:07,080 Speaker 1: You'd walk into a showroom, the show is filled with 681 00:40:07,120 --> 00:40:10,600 Speaker 1: lots of shiny products from different manufacturers. You can see 682 00:40:10,640 --> 00:40:13,200 Speaker 1: him side by side and take a look and even 683 00:40:13,280 --> 00:40:15,799 Speaker 1: test out certain features, depending upon what it is you're 684 00:40:15,840 --> 00:40:18,279 Speaker 1: looking at. So, for example, televisions, you can see the 685 00:40:18,320 --> 00:40:22,240 Speaker 1: different picture quality and you might point at a single product. 686 00:40:22,280 --> 00:40:26,719 Speaker 1: Let's say it's an enormous twenty four inch television and 687 00:40:26,760 --> 00:40:29,680 Speaker 1: you say, I want that, So then you buy it, 688 00:40:30,280 --> 00:40:32,919 Speaker 1: and you're not buying the one that you're looking at. 689 00:40:33,160 --> 00:40:36,200 Speaker 1: That's a display model. Instead, the salesperson calls for a 690 00:40:36,320 --> 00:40:40,120 Speaker 1: boxed version of the same product to come from the 691 00:40:40,160 --> 00:40:43,160 Speaker 1: back room storage space, and an employee brings the box 692 00:40:43,200 --> 00:40:45,279 Speaker 1: out and maybe even carries it out to your car 693 00:40:45,280 --> 00:40:47,960 Speaker 1: and loads it up for you. That was a brand 694 00:40:47,960 --> 00:40:50,480 Speaker 1: new sales model in the late seventies. It's not like 695 00:40:50,520 --> 00:40:53,120 Speaker 1: that was around. Circuit City was one of the pioneers 696 00:40:53,160 --> 00:40:55,799 Speaker 1: of doing it in this way, and it worked. By 697 00:40:55,840 --> 00:41:00,200 Speaker 1: nine sales were at a hundred and twenty million, wise 698 00:41:00,280 --> 00:41:04,280 Speaker 1: as much as just a few years earlier. By wards, 699 00:41:04,320 --> 00:41:08,840 Speaker 1: company had thirty six Circuit City style stores and boys. 700 00:41:08,960 --> 00:41:12,719 Speaker 1: That hard to say in the Southeast, man. I'm glad 701 00:41:12,719 --> 00:41:15,320 Speaker 1: I didn't say in the Southeast. Right after all those others. 702 00:41:16,600 --> 00:41:19,640 Speaker 1: At this time, the shopping mall phenomenon was just getting started, 703 00:41:19,680 --> 00:41:22,560 Speaker 1: so Wards Company began to jump in on that as well. 704 00:41:22,600 --> 00:41:26,040 Speaker 1: It's actually not that different from the discount store approach. 705 00:41:26,239 --> 00:41:30,520 Speaker 1: They started to end up getting storefronts and malls. Some 706 00:41:30,560 --> 00:41:33,839 Speaker 1: of those storefronts they called Circuit City. The company also 707 00:41:33,880 --> 00:41:38,440 Speaker 1: acquired a New York retailer called Lafayette Radio Electronics Corporation, 708 00:41:38,480 --> 00:41:41,480 Speaker 1: which had eight electronics stores in the New York City 709 00:41:41,520 --> 00:41:45,760 Speaker 1: metro area. The ticket price to purchase that bankrupt company 710 00:41:45,880 --> 00:41:48,920 Speaker 1: was six point six million dollars, which sounds like a lot, 711 00:41:49,000 --> 00:41:52,440 Speaker 1: but it was actually a shrewd deal because Wards earned 712 00:41:52,520 --> 00:41:56,440 Speaker 1: a thirty six point five million dollars in tax credits. 713 00:41:57,120 --> 00:41:59,960 Speaker 1: So it all worked out for Rewards with that particular 714 00:42:00,000 --> 00:42:02,560 Speaker 1: acquisition and gave them access to a New York market, 715 00:42:02,680 --> 00:42:05,880 Speaker 1: something that they had not had at that point. Now, 716 00:42:05,920 --> 00:42:09,720 Speaker 1: at this stage, Wards Company was operating four different store 717 00:42:09,840 --> 00:42:14,479 Speaker 1: chains simultaneously. There were the Circuit City stores, which were 718 00:42:14,560 --> 00:42:19,120 Speaker 1: the relatively smaller retail electronics outlets. Think of something like 719 00:42:19,400 --> 00:42:21,680 Speaker 1: a radio shack in the mall. Then there were the 720 00:42:21,719 --> 00:42:25,480 Speaker 1: Circuit City superstores which were modeled after the loading dock, 721 00:42:25,560 --> 00:42:28,799 Speaker 1: and we're really the big box style store. Then you 722 00:42:28,880 --> 00:42:32,360 Speaker 1: had the Lafayette stores in New York, and they also 723 00:42:32,400 --> 00:42:36,040 Speaker 1: had a discount discount store brand out in California called Zodi. 724 00:42:36,760 --> 00:42:39,359 Speaker 1: The company made the vast majority of its revenue from 725 00:42:39,840 --> 00:42:44,600 Speaker 1: electronics sales, not necessarily appliances, but electronics consumer electronics. This 726 00:42:44,680 --> 00:42:48,600 Speaker 1: was a new era where beyond televisions and radios, you 727 00:42:48,600 --> 00:42:52,400 Speaker 1: started seeing other types of electronics uh emerge. And some 728 00:42:52,480 --> 00:42:55,080 Speaker 1: of that was even coming off a particular product I 729 00:42:55,120 --> 00:42:58,000 Speaker 1: talked about not too long ago, Sony's Beta Max video 730 00:42:58,000 --> 00:43:01,359 Speaker 1: cassette recorders. They were also earning big sales with other 731 00:43:01,400 --> 00:43:04,440 Speaker 1: big brand names. Pioneer Audio Systems is a great example. 732 00:43:04,480 --> 00:43:07,399 Speaker 1: That was another one of their brands that they would 733 00:43:07,480 --> 00:43:11,800 Speaker 1: offer in these stores. In the company hired a computer 734 00:43:12,000 --> 00:43:15,440 Speaker 1: hardware and software business owner by the name of Richard Sharp. 735 00:43:16,239 --> 00:43:19,360 Speaker 1: He was brought on as an executive vice president, which 736 00:43:19,880 --> 00:43:21,839 Speaker 1: might seem like a pretty big leap from the whole 737 00:43:21,880 --> 00:43:25,399 Speaker 1: promote from within strategy. He came in at an executive level, 738 00:43:25,800 --> 00:43:30,080 Speaker 1: but Sharp's leadership was a very important role part of 739 00:43:30,160 --> 00:43:34,440 Speaker 1: circuit cities fate. It's actually a little controversial. Some people 740 00:43:34,480 --> 00:43:38,200 Speaker 1: point him as saying that he's the reason Circuit City 741 00:43:38,320 --> 00:43:42,440 Speaker 1: flourished in the eighties and nineties and and just exploded 742 00:43:42,680 --> 00:43:46,440 Speaker 1: in profitability. But others say that he actually laid the 743 00:43:46,480 --> 00:43:49,719 Speaker 1: groundwork for the company's eventual eventual collapse. And we'll talk 744 00:43:49,800 --> 00:43:53,480 Speaker 1: more about him and his decisions in the next episode. 745 00:43:54,440 --> 00:43:59,239 Speaker 1: In sales hit two hundred forty six million dollars, so 746 00:43:59,280 --> 00:44:02,160 Speaker 1: the company had read bounded big time from that shaky 747 00:44:02,160 --> 00:44:05,680 Speaker 1: ground it was on in the early seventies. Now, before 748 00:44:05,719 --> 00:44:08,080 Speaker 1: I sign off for today, I have to finally get 749 00:44:08,280 --> 00:44:13,239 Speaker 1: to nineteen eighty four, not the George Orwell book. This 750 00:44:13,320 --> 00:44:17,520 Speaker 1: is the year that the Wards Company finally transformed officially 751 00:44:18,080 --> 00:44:21,120 Speaker 1: into Circuit City. They changed the name of the company 752 00:44:21,160 --> 00:44:26,800 Speaker 1: from Wards Company to Circuit City. In the company joined 753 00:44:26,840 --> 00:44:29,760 Speaker 1: the New York Stock Exchange and listed under the code 754 00:44:29,840 --> 00:44:35,320 Speaker 1: c C okay, So that's the birth of Circuit City. 755 00:44:35,400 --> 00:44:37,480 Speaker 1: In the next installment, i'll talk about how the company 756 00:44:37,520 --> 00:44:41,040 Speaker 1: shot up the stock exchange, outperforming most other companies, and 757 00:44:41,040 --> 00:44:43,760 Speaker 1: then we'll look at how and why the company faltered 758 00:44:43,800 --> 00:44:47,000 Speaker 1: and eventually collapsed. As well as get a glimpse into 759 00:44:47,040 --> 00:44:50,520 Speaker 1: what's going on with the name Circuit City today. If 760 00:44:50,520 --> 00:44:54,080 Speaker 1: you guys have any questions, suggestions for episode topics, or 761 00:44:54,160 --> 00:44:57,640 Speaker 1: requests for guest hosts or interview subjects in the world 762 00:44:57,640 --> 00:45:00,920 Speaker 1: of tech, drop me a line. My bel address is 763 00:45:01,000 --> 00:45:04,920 Speaker 1: tech stuff at how stuff works dot com, or you 764 00:45:04,960 --> 00:45:08,719 Speaker 1: can contact me on Facebook or Twitter. The handle you 765 00:45:08,760 --> 00:45:11,399 Speaker 1: will need to use in order to do that, I mean, 766 00:45:11,560 --> 00:45:15,120 Speaker 1: like to go to don't use this handle, it's mine anyway, 767 00:45:15,120 --> 00:45:18,279 Speaker 1: It's tech Stuff hs W and I'll talk to you 768 00:45:18,320 --> 00:45:26,600 Speaker 1: again really soon for more on this and thousands of 769 00:45:26,600 --> 00:45:38,640 Speaker 1: other topics. Is it how stuff works dot com.