1 00:00:04,440 --> 00:00:12,280 Speaker 1: Welcome to tech Stuff, a production from iHeartRadio. Hey there, 2 00:00:12,320 --> 00:00:15,960 Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland. 3 00:00:16,040 --> 00:00:19,840 Speaker 1: I'm an executive producer with iHeartRadio and how the tech 4 00:00:20,120 --> 00:00:23,640 Speaker 1: are you? It is time for a tech Stuff classic episode, 5 00:00:23,680 --> 00:00:27,160 Speaker 1: and we're bringing you another two parters. So this week 6 00:00:27,440 --> 00:00:30,960 Speaker 1: we have the first part of the Circuit City story. 7 00:00:31,640 --> 00:00:33,280 Speaker 1: For those of you in the United States, you may 8 00:00:33,320 --> 00:00:37,960 Speaker 1: have fond memories, or at least memories of Circuit City 9 00:00:38,040 --> 00:00:40,519 Speaker 1: if you are of a certain age, and if not, 10 00:00:40,960 --> 00:00:46,720 Speaker 1: you're about to dive into a now obsolete world about 11 00:00:46,880 --> 00:00:50,879 Speaker 1: a retail establishment that existed once upon a time. This 12 00:00:50,920 --> 00:00:58,360 Speaker 1: episode originally published February first, twenty seventeen. Hope you enjoy 13 00:00:58,440 --> 00:01:01,360 Speaker 1: this Listener mail comes from Kevin, who says, I really 14 00:01:01,440 --> 00:01:03,920 Speaker 1: enjoy your shows that trace the history of tech companies. 15 00:01:04,000 --> 00:01:06,800 Speaker 1: I just finished catching up on the Sony episodes. Actually, 16 00:01:07,040 --> 00:01:09,480 Speaker 1: I was hoping you'd consider doing a similar treatment of 17 00:01:09,560 --> 00:01:12,199 Speaker 1: Circuit City sometime. I feel like that was a big 18 00:01:12,240 --> 00:01:14,319 Speaker 1: part of tech in the eighties and nineties, and it's 19 00:01:14,319 --> 00:01:17,039 Speaker 1: where I got my first computer and my first stereo. 20 00:01:17,440 --> 00:01:19,679 Speaker 1: I always thought the store was really cool as a kid. 21 00:01:19,880 --> 00:01:24,560 Speaker 1: Darkly lit red neon those glassrooms for checking out sound systems. Anyway, 22 00:01:24,720 --> 00:01:26,959 Speaker 1: thanks for listening, and keep up the great work with 23 00:01:27,040 --> 00:01:29,760 Speaker 1: the podcast. Well thanks for those kind words, Kevin. The 24 00:01:29,840 --> 00:01:34,839 Speaker 1: Circuit City story is interesting because the chain originated the 25 00:01:34,920 --> 00:01:38,280 Speaker 1: concept of the electronics box store. And I don't mean 26 00:01:38,319 --> 00:01:41,560 Speaker 1: it was a store that sold electronic boxes, although I 27 00:01:41,560 --> 00:01:44,640 Speaker 1: guess technically it did, but that's not what I mean. 28 00:01:44,800 --> 00:01:48,000 Speaker 1: I mean it was a box store like Best Buy 29 00:01:48,280 --> 00:01:51,360 Speaker 1: is today. In fact, best Buy in Circuit City have 30 00:01:51,560 --> 00:01:57,800 Speaker 1: an interesting relationship, or did at any rate. Circuit City 31 00:01:57,880 --> 00:01:59,720 Speaker 1: was kind of best Buy before there was a best 32 00:01:59,760 --> 00:02:03,880 Speaker 1: Buy now. The company was incredibly successful for many years. 33 00:02:03,920 --> 00:02:06,200 Speaker 1: In fact, it was one of only a dozen or 34 00:02:06,200 --> 00:02:08,880 Speaker 1: so companies to outperform the Fortune five hundred by at 35 00:02:08,960 --> 00:02:12,680 Speaker 1: least three times for fifteen years. I mean by a 36 00:02:12,720 --> 00:02:16,760 Speaker 1: factor of three, right, by multiplying by three for fifteen years. 37 00:02:17,080 --> 00:02:20,680 Speaker 1: But eventually those good times ended and the company kind 38 00:02:20,680 --> 00:02:23,720 Speaker 1: of imploded. It went bankrupt in two thousand and nine, 39 00:02:23,800 --> 00:02:26,400 Speaker 1: and today it's a very different story from its heyday. 40 00:02:27,000 --> 00:02:29,600 Speaker 1: Before I get into the story at all, I want 41 00:02:29,639 --> 00:02:32,200 Speaker 1: to recommend a book to anyone who wants to learn 42 00:02:32,200 --> 00:02:35,400 Speaker 1: more about this company and what happened to it and 43 00:02:35,440 --> 00:02:39,520 Speaker 1: the management practices that were involved at all stages. It 44 00:02:39,560 --> 00:02:43,079 Speaker 1: was written by Alan Wurtzel. It's actually the son of 45 00:02:43,160 --> 00:02:45,760 Speaker 1: one of the co founders of Circuit City. He wrote 46 00:02:45,800 --> 00:02:49,600 Speaker 1: a book titled Good to Great to Gone, The sixty 47 00:02:49,720 --> 00:02:52,840 Speaker 1: Year Rise and Fall of Circuit City, and you can 48 00:02:52,880 --> 00:02:54,720 Speaker 1: read a lot more about the company in that book. 49 00:02:54,800 --> 00:02:57,880 Speaker 1: If this podcast wets your whistle at Wurtzel, by the way, 50 00:02:57,960 --> 00:03:01,400 Speaker 1: admits that he's not exactly an UnBias reporter, but also 51 00:03:01,520 --> 00:03:04,560 Speaker 1: he holds himself accountable to examine the mistakes that he 52 00:03:04,919 --> 00:03:08,520 Speaker 1: credits to himself, also to his father and others in 53 00:03:08,560 --> 00:03:11,480 Speaker 1: the company, and the book is an easy and interesting 54 00:03:11,520 --> 00:03:14,520 Speaker 1: read on the subject of business practices. So we're going 55 00:03:14,560 --> 00:03:18,080 Speaker 1: to talk a lot about business practices and how it 56 00:03:18,160 --> 00:03:22,520 Speaker 1: relates to the operation of an electronics store, and not 57 00:03:22,639 --> 00:03:25,360 Speaker 1: so much about the tech side of things, because Circuit 58 00:03:25,400 --> 00:03:30,079 Speaker 1: City was a retail establishment. They didn't create electronics, they 59 00:03:30,200 --> 00:03:33,040 Speaker 1: sold them, but they did play a very big role 60 00:03:33,120 --> 00:03:35,880 Speaker 1: in the tech world for many years. So now on 61 00:03:36,080 --> 00:03:40,720 Speaker 1: with the show, and our story begins in Seabright, New Jersey, 62 00:03:41,000 --> 00:03:45,640 Speaker 1: on March second, nineteen oh seven. That's when Samuel S 63 00:03:45,680 --> 00:03:49,880 Speaker 1: Wertzel was born. His mother, Flora, was originally from Russia. 64 00:03:50,000 --> 00:03:52,520 Speaker 1: She moved to the United States in her early twenties 65 00:03:52,600 --> 00:03:55,920 Speaker 1: and she ended up opening up a grocery store. She 66 00:03:55,960 --> 00:03:59,600 Speaker 1: actually did that after she divorced Samuel's father. It was 67 00:03:59,640 --> 00:04:03,240 Speaker 1: a changed marriage and it did not work out, which 68 00:04:03,280 --> 00:04:07,000 Speaker 1: meant that Flora ended up raising Samuel and his siblings 69 00:04:07,040 --> 00:04:10,560 Speaker 1: by herself. That was four kids in total. Samuel had 70 00:04:10,560 --> 00:04:14,320 Speaker 1: two sisters and a brother. So she had very high 71 00:04:14,480 --> 00:04:17,279 Speaker 1: hopes for her children and demanded that they study hard 72 00:04:17,320 --> 00:04:19,920 Speaker 1: in school, and she managed to get some help from 73 00:04:20,000 --> 00:04:22,039 Speaker 1: her parents to open up the grocery store and was 74 00:04:22,080 --> 00:04:25,599 Speaker 1: able to eke out a living that way. Now Samuel 75 00:04:26,000 --> 00:04:29,320 Speaker 1: went to night school to study accounting after a fairly 76 00:04:29,360 --> 00:04:32,320 Speaker 1: tumultuous high school phase in which he was, according to 77 00:04:32,400 --> 00:04:38,000 Speaker 1: his son quote often a discipline problem. In quote now 78 00:04:38,360 --> 00:04:42,000 Speaker 1: Alan attributes this primarily to the fact that Samuel didn't 79 00:04:42,040 --> 00:04:45,640 Speaker 1: have a father figure for his childhood, and so he 80 00:04:45,760 --> 00:04:49,359 Speaker 1: ended up acting out quite a bit, and once he 81 00:04:49,440 --> 00:04:52,479 Speaker 1: started to mature, he began to really apply himself. He 82 00:04:52,640 --> 00:04:56,000 Speaker 1: was charismatic and he turned out to have an aptitude 83 00:04:56,000 --> 00:04:59,240 Speaker 1: for business. He and his older brother first opened up 84 00:04:59,279 --> 00:05:03,160 Speaker 1: a wholesale butter and egg business, you know, the way 85 00:05:03,279 --> 00:05:07,480 Speaker 1: every tech retail est establishment gets its start by selling 86 00:05:07,520 --> 00:05:12,400 Speaker 1: butter and eggs. His estranged father actually worked in that 87 00:05:12,480 --> 00:05:16,440 Speaker 1: business too, and they ended up having a working relationship, 88 00:05:16,480 --> 00:05:20,000 Speaker 1: although not a familial one, and that ended up not 89 00:05:20,120 --> 00:05:23,000 Speaker 1: working out either. He then went on to work for 90 00:05:23,040 --> 00:05:27,119 Speaker 1: a company called June Dairy, but this was also during 91 00:05:27,279 --> 00:05:31,080 Speaker 1: the time of the Great Depression and he was not 92 00:05:31,160 --> 00:05:33,000 Speaker 1: able to hold onto that job for long. He was 93 00:05:33,040 --> 00:05:36,200 Speaker 1: actually laid off, so he then moved on and from 94 00:05:36,279 --> 00:05:39,200 Speaker 1: nineteen thirty eight through nineteen forty seven he worked for 95 00:05:39,200 --> 00:05:42,800 Speaker 1: a company called Packing Products, and that was a company 96 00:05:42,800 --> 00:05:45,760 Speaker 1: that was actually created by his father in law, and 97 00:05:45,839 --> 00:05:49,920 Speaker 1: a family vacation in nineteen forty nine would change his destiny, 98 00:05:50,160 --> 00:05:54,400 Speaker 1: and that is the beginning of Circuit City. Now I'm 99 00:05:54,440 --> 00:05:56,080 Speaker 1: going to jump into that in a second, but first 100 00:05:56,120 --> 00:05:58,000 Speaker 1: I want to give you a little more information about 101 00:05:58,000 --> 00:06:01,360 Speaker 1: his family because they played a very important role in 102 00:06:01,440 --> 00:06:05,680 Speaker 1: the evolution of Circuit City. First of all, Samuel married 103 00:06:05,760 --> 00:06:09,599 Speaker 1: a woman named Ruth Mann in nineteen thirty two. He 104 00:06:09,680 --> 00:06:12,000 Speaker 1: had met her in nineteen thirty one and a year 105 00:06:12,080 --> 00:06:15,320 Speaker 1: later they got married. Now, Ruth came from an upper 106 00:06:15,360 --> 00:06:19,920 Speaker 1: class background, very different from Samuel. She was also a 107 00:06:19,960 --> 00:06:24,479 Speaker 1: college educated woman, which was not necessarily common at that 108 00:06:24,640 --> 00:06:28,120 Speaker 1: time in the United States. Her father, Leon was in 109 00:06:28,160 --> 00:06:31,840 Speaker 1: the clothing manufacturing business and was really successful, and later 110 00:06:31,880 --> 00:06:35,159 Speaker 1: he became an entrepreneur who funded the efforts of various 111 00:06:35,160 --> 00:06:39,040 Speaker 1: inventors and engineers. One of those inventors had created a 112 00:06:39,200 --> 00:06:43,760 Speaker 1: packaging material for eggs so that they could be shipped 113 00:06:43,800 --> 00:06:46,880 Speaker 1: without the risk of breakage, or at least reducing that risk. 114 00:06:47,320 --> 00:06:51,520 Speaker 1: There was actually a different invention that was already patented 115 00:06:51,560 --> 00:06:53,760 Speaker 1: in the United States, or that won a patent in 116 00:06:53,800 --> 00:06:57,000 Speaker 1: the United States, and so Leon ended up convincing the 117 00:06:57,000 --> 00:06:59,360 Speaker 1: inventor to give up the patent rights in the US 118 00:06:59,600 --> 00:07:03,800 Speaker 1: and andrate on a market in Europe. And so that's 119 00:07:03,880 --> 00:07:09,000 Speaker 1: when he created this company packing Products. Leon and Samuel 120 00:07:09,040 --> 00:07:13,040 Speaker 1: got along great. Leon instilled in Samuel two qualities he 121 00:07:13,040 --> 00:07:16,240 Speaker 1: thought were important in business and beyond, which were humor 122 00:07:16,480 --> 00:07:22,680 Speaker 1: and humility. From Alan's perspective, reflecting back on the stories 123 00:07:22,720 --> 00:07:25,840 Speaker 1: of his father and his grandfather, it sounds as though 124 00:07:25,880 --> 00:07:29,119 Speaker 1: Samuel saw in Leon a father figure he had lacked 125 00:07:29,120 --> 00:07:32,440 Speaker 1: in childhood, and Leon in turn treated Samuel as his 126 00:07:32,640 --> 00:07:35,840 Speaker 1: own son, because Leon didn't have any sons, he had 127 00:07:35,840 --> 00:07:40,440 Speaker 1: a daughter named Ruth. Samuel and Ruth, however, did have sons, 128 00:07:40,480 --> 00:07:43,800 Speaker 1: two of them, Alan and David. Alan Wurtzel would go 129 00:07:43,880 --> 00:07:47,080 Speaker 1: on with Samuel to create the Circuit City Empire. But 130 00:07:47,440 --> 00:07:50,440 Speaker 1: even empires have humble beginnings, which brings us back to 131 00:07:50,520 --> 00:07:54,880 Speaker 1: that family vacation I mentioned. So, Samuel and Ruth were 132 00:07:54,920 --> 00:07:57,640 Speaker 1: going on a golfing vacation with their family in order 133 00:07:57,640 --> 00:08:00,840 Speaker 1: to clear their heads and plan for the future. This 134 00:08:00,880 --> 00:08:03,440 Speaker 1: was in nineteen forty nine and things had suddenly kind 135 00:08:03,440 --> 00:08:08,120 Speaker 1: of turned south for the couple financially. The packing products 136 00:08:08,120 --> 00:08:12,000 Speaker 1: company had transitioned into a broker company. Now, a broker 137 00:08:12,040 --> 00:08:16,080 Speaker 1: company doesn't hold its own inventory. Typically, what a broker 138 00:08:16,160 --> 00:08:19,920 Speaker 1: company does is they get in the business of matching 139 00:08:20,000 --> 00:08:23,720 Speaker 1: buyers with sellers. The idea was that the company would 140 00:08:23,720 --> 00:08:27,880 Speaker 1: find someone wanting to purchase a particular commodity, then they 141 00:08:27,880 --> 00:08:31,560 Speaker 1: would find a seller who was going to sell that commodity, 142 00:08:31,800 --> 00:08:34,480 Speaker 1: and they would match the two together, making some money 143 00:08:34,520 --> 00:08:36,640 Speaker 1: in the middle of this. And it may even be 144 00:08:36,760 --> 00:08:40,840 Speaker 1: that the company buys the commodity from one entity, sells 145 00:08:40,880 --> 00:08:43,120 Speaker 1: it at a markup to another entity, and that's how 146 00:08:43,160 --> 00:08:47,240 Speaker 1: you make your profit. But someone at the packing products 147 00:08:47,320 --> 00:08:50,480 Speaker 1: company made a really bad decision. They ended up buying 148 00:08:50,520 --> 00:08:54,480 Speaker 1: a large amount of steel without first securing a customer. So, 149 00:08:54,480 --> 00:08:56,240 Speaker 1: in other words, no one had said that they wanted 150 00:08:56,240 --> 00:09:00,000 Speaker 1: to buy steel, but apparently this person at Parker Products 151 00:09:00,080 --> 00:09:02,679 Speaker 1: felt that the steel being sold was at a price 152 00:09:02,720 --> 00:09:05,280 Speaker 1: that was too good to give up, so they went 153 00:09:05,320 --> 00:09:08,880 Speaker 1: in and purchased this large amount. But then the steel 154 00:09:08,920 --> 00:09:12,320 Speaker 1: market collapsed in the United States and as a result, 155 00:09:12,640 --> 00:09:15,880 Speaker 1: the company was in shambles. Leon by that point had 156 00:09:15,920 --> 00:09:18,720 Speaker 1: retired and he wasn't really in a financial position to 157 00:09:18,760 --> 00:09:21,560 Speaker 1: help bail out the business or to start a new one. 158 00:09:21,640 --> 00:09:24,240 Speaker 1: So Samuel, Ruth and their kids went on this trip 159 00:09:24,280 --> 00:09:26,320 Speaker 1: in nineteen forty nine or to get a new perspective 160 00:09:26,320 --> 00:09:27,960 Speaker 1: and figure out, well, what are we going to do now. 161 00:09:28,640 --> 00:09:31,720 Speaker 1: They weren't destitute or anything like that, but they didn't 162 00:09:31,920 --> 00:09:34,040 Speaker 1: They couldn't go any further with the company that had 163 00:09:34,080 --> 00:09:36,160 Speaker 1: been working for They had to start over. At this point, 164 00:09:36,200 --> 00:09:39,760 Speaker 1: Samuel's forty two years old. So they were in Richmond, 165 00:09:39,880 --> 00:09:42,599 Speaker 1: Virginia in nineteen forty nine when Samuel got into a 166 00:09:42,640 --> 00:09:46,720 Speaker 1: conversation with a local barber. The cutter of Hares told 167 00:09:46,760 --> 00:09:50,200 Speaker 1: Sammy that the very first Southern television station had just 168 00:09:50,240 --> 00:09:53,520 Speaker 1: started broadcasting the previous year in April, not quite a 169 00:09:53,520 --> 00:09:57,839 Speaker 1: full year before this actual encounter happened, and already the 170 00:09:57,920 --> 00:10:01,760 Speaker 1: number of television stations was on the ride, as as 171 00:10:01,800 --> 00:10:04,760 Speaker 1: were the number of homes that were getting TV sets, 172 00:10:05,200 --> 00:10:07,640 Speaker 1: but they hadn't quite reached the tipping point. It was 173 00:10:07,640 --> 00:10:11,400 Speaker 1: still one of those things that was obviously on the upswing, 174 00:10:12,320 --> 00:10:16,160 Speaker 1: but wasn't anywhere close to the peak. So Wurtzel saw 175 00:10:16,160 --> 00:10:19,320 Speaker 1: this as an opportunity to create a new market, and 176 00:10:19,679 --> 00:10:22,840 Speaker 1: he said, well, you know, if you've got a television 177 00:10:22,840 --> 00:10:25,000 Speaker 1: broadcast station down here, then clearly you got to have 178 00:10:25,080 --> 00:10:29,320 Speaker 1: televisions to broadcast too. So later in nineteen forty nine, 179 00:10:29,360 --> 00:10:34,520 Speaker 1: Samuel Wurtzel relocated his family to Richmond, Virginia, and opened 180 00:10:34,559 --> 00:10:38,240 Speaker 1: up a store called the Wards Company on West Broad Street. 181 00:10:38,920 --> 00:10:41,880 Speaker 1: He took the thirteen thousand dollars he made from the 182 00:10:41,920 --> 00:10:44,760 Speaker 1: sale of his home, which was the equivalent of more 183 00:10:44,760 --> 00:10:48,160 Speaker 1: than one hundred and twenty thousand dollars today, and rented 184 00:10:48,240 --> 00:10:51,120 Speaker 1: a storefront in Richmond that was several blocks from the 185 00:10:51,120 --> 00:10:53,640 Speaker 1: big department stores. So he wasn't right next to the 186 00:10:53,640 --> 00:10:58,640 Speaker 1: places that were already selling televisions under various brands. Now, 187 00:10:58,640 --> 00:11:02,040 Speaker 1: the Ward Store only sold televisions at that time. They 188 00:11:02,040 --> 00:11:04,480 Speaker 1: didn't sell anything else. That was all he did was 189 00:11:04,520 --> 00:11:07,719 Speaker 1: sell TVs. And you might wonder, well, why did they 190 00:11:07,840 --> 00:11:12,600 Speaker 1: he call it Wards? Well, first of all, it's Waards, 191 00:11:13,360 --> 00:11:16,400 Speaker 1: no apostrophe. The reason for that is Wards is actually 192 00:11:16,440 --> 00:11:20,960 Speaker 1: an acronym. It stands for the initials of Samuel's family. 193 00:11:21,040 --> 00:11:25,400 Speaker 1: The W stands for Wurtzel, the last name A stands 194 00:11:25,440 --> 00:11:28,920 Speaker 1: for Allen, R stands for Ruth, D stands for David, 195 00:11:29,000 --> 00:11:33,160 Speaker 1: which was Samuel's other son, and S stands for Samuel. 196 00:11:33,160 --> 00:11:35,400 Speaker 1: And he said, I don't want an apostrophe in there 197 00:11:35,400 --> 00:11:37,040 Speaker 1: because I don't want it to come between me and 198 00:11:37,080 --> 00:11:41,040 Speaker 1: my family, which I think is cute. Wurtzell didn't go 199 00:11:41,280 --> 00:11:43,520 Speaker 1: in on this venture on his own for very long. 200 00:11:43,920 --> 00:11:46,680 Speaker 1: Shortly after he established this place, he took on a 201 00:11:46,720 --> 00:11:49,920 Speaker 1: business partner who became the co founder of the Wards Company, 202 00:11:49,920 --> 00:11:53,600 Speaker 1: And that partner's name was Abraham Haste, who invested thirteen 203 00:11:53,640 --> 00:11:58,000 Speaker 1: thousand dollars of his own money into the new company. Now, 204 00:11:58,040 --> 00:12:03,000 Speaker 1: Haste's chief responsibility was to manage buying and vendor relations, 205 00:12:03,240 --> 00:12:06,440 Speaker 1: so he was looking at the supply side. Sam was 206 00:12:06,480 --> 00:12:09,920 Speaker 1: concentrating on the sales side, so he was looking toward 207 00:12:09,960 --> 00:12:13,600 Speaker 1: the customer, whereas Haste is looking toward the supplier. And 208 00:12:13,679 --> 00:12:16,160 Speaker 1: both men shared a common set of values. Although they 209 00:12:16,160 --> 00:12:20,160 Speaker 1: were very different people, they both felt very strongly about 210 00:12:20,280 --> 00:12:22,880 Speaker 1: certain principles when it came to working with other people, 211 00:12:23,200 --> 00:12:27,079 Speaker 1: whether they are vendors or employees or customers. They believe 212 00:12:27,120 --> 00:12:31,280 Speaker 1: that what goes around comes around, and that keeping interactions 213 00:12:31,320 --> 00:12:35,960 Speaker 1: friendly and helpful gets better results than a more negative 214 00:12:36,200 --> 00:12:40,520 Speaker 1: or pressure approach. Samuel and Abraham created the company at 215 00:12:40,559 --> 00:12:44,600 Speaker 1: pretty much the perfect time. So at this time it 216 00:12:44,720 --> 00:12:48,600 Speaker 1: was post World War two and America was very different 217 00:12:48,679 --> 00:12:51,960 Speaker 1: from the America that was around during the depression years. 218 00:12:52,440 --> 00:12:56,440 Speaker 1: During the war, American industry was almost entirely devoted to 219 00:12:56,559 --> 00:13:01,360 Speaker 1: military support efforts, either directly or indirectly, and business was 220 00:13:01,480 --> 00:13:04,800 Speaker 1: booming in more ways than one. But the important fact 221 00:13:04,960 --> 00:13:08,000 Speaker 1: for this story is that after the war was over, 222 00:13:08,520 --> 00:13:11,880 Speaker 1: those military production efforts were able to shift into a 223 00:13:11,960 --> 00:13:17,160 Speaker 1: civilian role, so things that had been dedicated to producing 224 00:13:17,320 --> 00:13:20,920 Speaker 1: tanks could end up being used to produce other stuff. 225 00:13:21,400 --> 00:13:24,400 Speaker 1: And also at the same time you had soldiers returning 226 00:13:24,400 --> 00:13:28,480 Speaker 1: home after serving overseas, and then they started families. The 227 00:13:28,640 --> 00:13:31,560 Speaker 1: United States had a baby boom going on. US population 228 00:13:31,600 --> 00:13:34,480 Speaker 1: would increase by more than thirty percent over the next 229 00:13:34,559 --> 00:13:39,520 Speaker 1: couple of decades. So consider all the conditions that are present. 230 00:13:39,880 --> 00:13:42,720 Speaker 1: You had a lot of young families, you had a 231 00:13:42,760 --> 00:13:45,960 Speaker 1: booming commercial sector, you had a lot of people with 232 00:13:46,080 --> 00:13:49,719 Speaker 1: disposable income, and over on the technology side, you had 233 00:13:49,720 --> 00:13:53,080 Speaker 1: the development of reliable televisions. They had gone through the 234 00:13:53,120 --> 00:13:57,840 Speaker 1: first few iterations and these were sets that were expensive, 235 00:13:58,160 --> 00:14:01,080 Speaker 1: but with the right plan, were within the reach of 236 00:14:01,120 --> 00:14:04,000 Speaker 1: the middle class. Just a few years earlier, they were 237 00:14:04,040 --> 00:14:07,800 Speaker 1: almost exclusively owned by wealthy people. They were the only 238 00:14:07,800 --> 00:14:14,280 Speaker 1: ones who could afford it. But using intelligent sales techniques, 239 00:14:14,760 --> 00:14:18,240 Speaker 1: salespeople could make a television more affordable to a much 240 00:14:18,360 --> 00:14:21,680 Speaker 1: broader variety of people. You also had a growth in 241 00:14:21,720 --> 00:14:24,680 Speaker 1: the number of television stations around the country, which meant 242 00:14:24,720 --> 00:14:27,160 Speaker 1: you had a lot more programming for folks, which created 243 00:14:27,160 --> 00:14:29,720 Speaker 1: a more of a demand for TVs. And it was 244 00:14:29,760 --> 00:14:32,440 Speaker 1: an absolute perfect storm for a company getting into the 245 00:14:32,480 --> 00:14:37,840 Speaker 1: television retail business. Along with appliances like a washer, a dryer, 246 00:14:38,040 --> 00:14:41,560 Speaker 1: and a refrigerator, the television became part of the standard 247 00:14:41,600 --> 00:14:45,600 Speaker 1: model American home. Now, in nineteen fifty, less than ten 248 00:14:45,640 --> 00:14:48,600 Speaker 1: percent of homes in the United States had a television set, 249 00:14:48,640 --> 00:14:52,600 Speaker 1: but just ten years later that number was eighty five percent. 250 00:14:53,280 --> 00:14:56,880 Speaker 1: That's an enormous amount of growth. So it ended up 251 00:14:56,920 --> 00:15:00,400 Speaker 1: being a great business to get into if you could 252 00:15:00,400 --> 00:15:03,840 Speaker 1: be competitive. Now, that kind of sets me up for 253 00:15:03,960 --> 00:15:07,640 Speaker 1: my next section. But before I get into that, let's 254 00:15:07,680 --> 00:15:20,800 Speaker 1: take a quick break to thank our sponsor. All right, 255 00:15:20,840 --> 00:15:23,920 Speaker 1: we're back, and now I want to talk about the 256 00:15:24,000 --> 00:15:27,680 Speaker 1: actual business decisions that Samuel and Abraham had. Now, first 257 00:15:27,680 --> 00:15:30,840 Speaker 1: of all, they had no idea how to make televisions. 258 00:15:31,080 --> 00:15:34,560 Speaker 1: That wasn't their business model. They would buy televisions from 259 00:15:34,600 --> 00:15:37,640 Speaker 1: a manufacturer. In fact, they had one specific one in 260 00:15:37,680 --> 00:15:40,680 Speaker 1: those early days. They knew a manufacturer in Long Island, 261 00:15:40,680 --> 00:15:44,080 Speaker 1: New York called Olympic TVs. So they would buy their 262 00:15:44,080 --> 00:15:47,000 Speaker 1: televisions from Olympic TVs and then sell them in their 263 00:15:47,040 --> 00:15:51,960 Speaker 1: store in Richmond. Their first inventory was just twelve TV 264 00:15:52,120 --> 00:15:56,120 Speaker 1: sets in the entire store. That's it. At this time 265 00:15:56,120 --> 00:15:58,120 Speaker 1: in US history, there were only a few types of 266 00:15:58,120 --> 00:16:00,800 Speaker 1: stores that you could find. In general, there were big 267 00:16:00,840 --> 00:16:05,560 Speaker 1: department stores like Sears, Roebuck and Montgomery Ward. Now those 268 00:16:05,600 --> 00:16:09,840 Speaker 1: mainly carried store brand items and maybe some major brands 269 00:16:09,880 --> 00:16:13,080 Speaker 1: as well, but those were the only ones that they 270 00:16:13,080 --> 00:16:16,880 Speaker 1: would carry. Right, anything that was not a major brand 271 00:16:17,040 --> 00:16:19,880 Speaker 1: or a store brand you really couldn't find in those 272 00:16:20,040 --> 00:16:23,160 Speaker 1: department stores. Then you had some variety store chains, kind 273 00:16:23,200 --> 00:16:25,800 Speaker 1: of like Woolworth's was still big at that time, but 274 00:16:25,840 --> 00:16:28,600 Speaker 1: they were on the decline. It was clear that Woolworth's 275 00:16:28,720 --> 00:16:33,000 Speaker 1: was not long for this world in that particular incarnation. 276 00:16:33,440 --> 00:16:36,280 Speaker 1: Then you had the small business owners, the independent owners, 277 00:16:36,280 --> 00:16:38,880 Speaker 1: the mom and pop stores, and they might have one 278 00:16:39,000 --> 00:16:42,160 Speaker 1: or two shops at most, and they would cater to 279 00:16:42,280 --> 00:16:46,560 Speaker 1: customers in the cities and towns. Now the Wards Company 280 00:16:47,440 --> 00:16:50,520 Speaker 1: was one of those, really, and they faced a lot 281 00:16:50,560 --> 00:16:53,760 Speaker 1: of competition even in Richmond, both from department stores that 282 00:16:53,800 --> 00:16:57,680 Speaker 1: sold larger brand name sets and other independent shops. So 283 00:16:57,800 --> 00:17:01,880 Speaker 1: to set Wards apart from these other places, Samuel began 284 00:17:02,000 --> 00:17:05,960 Speaker 1: to offer home demonstrations of televisions. And here's how it worked. 285 00:17:05,960 --> 00:17:08,399 Speaker 1: It was pretty smart. Customers could arrange to have a 286 00:17:08,440 --> 00:17:12,240 Speaker 1: TV set delivered and set up in their homes. So 287 00:17:12,600 --> 00:17:16,440 Speaker 1: Samuel hired a driver who could also carry heavy things. 288 00:17:16,800 --> 00:17:20,360 Speaker 1: Because back in those days, TVs were hefty. The screens 289 00:17:20,400 --> 00:17:22,960 Speaker 1: were small, but the cabinets were enormous. This was vacuum 290 00:17:23,000 --> 00:17:26,960 Speaker 1: tube technology, so vacuum tubes take up a lot of 291 00:17:27,080 --> 00:17:31,840 Speaker 1: space and these were big, bulky, heavy sets. So he 292 00:17:31,920 --> 00:17:36,040 Speaker 1: hired a strapping guy who picked up the television set, 293 00:17:36,080 --> 00:17:38,040 Speaker 1: put it in a truck, and would drive it out 294 00:17:38,080 --> 00:17:42,040 Speaker 1: to a potential customer's home, deliver it, set it up, 295 00:17:42,560 --> 00:17:45,360 Speaker 1: and the family would get to test the set out 296 00:17:45,480 --> 00:17:48,880 Speaker 1: for a full day, and the following day someone from 297 00:17:48,880 --> 00:17:53,040 Speaker 1: the company from wards would come by either to claim 298 00:17:53,080 --> 00:17:54,960 Speaker 1: the television, pack it back up, take it back to 299 00:17:55,000 --> 00:17:59,320 Speaker 1: the store, or start a sale, and usually this would 300 00:17:59,359 --> 00:18:02,040 Speaker 1: involve a cat installment, and then they would have an 301 00:18:02,080 --> 00:18:06,160 Speaker 1: installment plan that would last between eighteen and twenty four 302 00:18:06,240 --> 00:18:11,000 Speaker 1: months to space out payments for the television set, which 303 00:18:11,040 --> 00:18:12,960 Speaker 1: is not a bad idea for a world that had 304 00:18:13,000 --> 00:18:17,920 Speaker 1: not yet invented credit cards. This gave customers the opportunity 305 00:18:18,000 --> 00:18:20,439 Speaker 1: to purchase a television set even if they thought that 306 00:18:20,480 --> 00:18:23,680 Speaker 1: it was outside of their budget, because they could break 307 00:18:23,760 --> 00:18:26,840 Speaker 1: up that expense over several months instead of having to 308 00:18:26,880 --> 00:18:31,200 Speaker 1: do a big upfront purchase. Samuel also became an expert 309 00:18:31,280 --> 00:18:34,320 Speaker 1: at sales strategies, many of which involved a good deal 310 00:18:34,440 --> 00:18:37,560 Speaker 1: of social manipulation. That's a nice way of putting it. 311 00:18:37,920 --> 00:18:39,879 Speaker 1: In fact, if you read up on the strategies, you 312 00:18:39,960 --> 00:18:43,920 Speaker 1: might feel a bit uncomfortable as a consumer, But these 313 00:18:43,920 --> 00:18:47,680 Speaker 1: were ideas that worked in sales. So here's an example. 314 00:18:47,880 --> 00:18:50,560 Speaker 1: You could teach salespeople to act as though a potential 315 00:18:50,640 --> 00:18:54,480 Speaker 1: customer had already made a decision to buy a product 316 00:18:55,160 --> 00:18:59,440 Speaker 1: without actually having done that. So someone comes into your store, 317 00:18:59,480 --> 00:19:02,840 Speaker 1: your show them, say a new television set, and you 318 00:19:02,960 --> 00:19:07,000 Speaker 1: pretend like the customer has already decided they are absolutely 319 00:19:07,040 --> 00:19:09,880 Speaker 1: going to buy the television set, and you just start 320 00:19:09,920 --> 00:19:13,280 Speaker 1: asking questions that kind of hint at that this actually 321 00:19:13,320 --> 00:19:16,760 Speaker 1: adds extra pressure on the consumer to walk away buying 322 00:19:16,800 --> 00:19:20,160 Speaker 1: a television set. So you wouldn't say something like would 323 00:19:20,160 --> 00:19:23,480 Speaker 1: you like to purchase this, because that's giving the consumer 324 00:19:23,520 --> 00:19:26,520 Speaker 1: an out. Instead, you might say, do you like this 325 00:19:26,560 --> 00:19:32,240 Speaker 1: one better? In the dark wood cabinet or the lightwood cabinet. See, 326 00:19:32,280 --> 00:19:34,920 Speaker 1: you've already made the assumption that they're going to buy 327 00:19:34,960 --> 00:19:38,679 Speaker 1: one or the other. You take away the option of saying, oh, 328 00:19:38,720 --> 00:19:41,680 Speaker 1: I'm I'm not buying anything. It adds that extra level 329 00:19:41,720 --> 00:19:44,680 Speaker 1: of pressure. Or you might begin by showing a customer 330 00:19:44,720 --> 00:19:48,560 Speaker 1: a base model that has very few features, and honestly, 331 00:19:48,600 --> 00:19:51,240 Speaker 1: you don't really want to sell the base model because 332 00:19:51,280 --> 00:19:53,639 Speaker 1: you're selling it at a very low price and the 333 00:19:53,720 --> 00:19:56,480 Speaker 1: margin is very low. In other words, the profit you 334 00:19:56,560 --> 00:20:01,760 Speaker 1: make from the sale is negligible, and really you could 335 00:20:01,760 --> 00:20:06,280 Speaker 1: not sustain a business selling those style television sets. The 336 00:20:06,359 --> 00:20:09,359 Speaker 1: purpose of showing the basic model is to then move 337 00:20:09,480 --> 00:20:12,520 Speaker 1: the customer over to higher end models that have more 338 00:20:12,600 --> 00:20:16,800 Speaker 1: features and thus cost more and have a better sales margin, 339 00:20:16,880 --> 00:20:20,760 Speaker 1: so you make a bigger profit from the sale. Some 340 00:20:20,800 --> 00:20:24,760 Speaker 1: people call this the bait and switch. Samuel preferred to 341 00:20:24,760 --> 00:20:27,840 Speaker 1: think of it as a step up approach. He felt 342 00:20:27,880 --> 00:20:30,560 Speaker 1: that customer service was really important, so it wasn't like 343 00:20:30,600 --> 00:20:34,160 Speaker 1: it was an outright attempt to be a snake oil salesman. 344 00:20:34,440 --> 00:20:37,600 Speaker 1: He was interested in employing the most effective techniques to 345 00:20:37,640 --> 00:20:40,760 Speaker 1: move products, but he also felt that honesty was important 346 00:20:41,080 --> 00:20:43,119 Speaker 1: and that the message he and his employees gave to 347 00:20:43,240 --> 00:20:46,720 Speaker 1: vendors and customers and others should always be the truth, 348 00:20:47,600 --> 00:20:50,960 Speaker 1: because keeping track of lies is a hassle if you 349 00:20:51,000 --> 00:20:53,719 Speaker 1: tell different lies to different people. Maintaining all of that 350 00:20:54,200 --> 00:20:56,720 Speaker 1: is a huge headache, So just be truthful upfront was 351 00:20:56,760 --> 00:21:01,560 Speaker 1: his policy. Reconciling the sale approach with the company's values 352 00:21:01,600 --> 00:21:04,879 Speaker 1: requires a little bit of mental gymnastics and perhaps some 353 00:21:06,080 --> 00:21:11,359 Speaker 1: generous allowances, I'll say, but one of those sales practices 354 00:21:11,560 --> 00:21:14,959 Speaker 1: was that the price tag of the televisions in the 355 00:21:15,000 --> 00:21:19,600 Speaker 1: Wards Company store and later other appliances that they started 356 00:21:19,600 --> 00:21:23,399 Speaker 1: to sell after a couple more years, wasn't actually a 357 00:21:23,440 --> 00:21:27,879 Speaker 1: fixed price. Every product had a listed price that was 358 00:21:27,920 --> 00:21:31,360 Speaker 1: the starting point, and then every product had a bottom 359 00:21:31,560 --> 00:21:36,119 Speaker 1: line lowest acceptable price a salesperson would be allowed to 360 00:21:36,240 --> 00:21:40,280 Speaker 1: sell that item for. So your goal as a salesperson 361 00:21:40,720 --> 00:21:43,840 Speaker 1: is to sell it as close to that ticket price 362 00:21:44,040 --> 00:21:47,680 Speaker 1: as you possibly could. But customers could haggle, they can bargain, 363 00:21:48,400 --> 00:21:52,200 Speaker 1: and the salesperson would get a commission based upon how 364 00:21:52,400 --> 00:21:55,919 Speaker 1: high above that lowest acceptable price they were able to 365 00:21:55,960 --> 00:21:59,080 Speaker 1: make a sale. So it was better to make a 366 00:21:59,119 --> 00:22:01,960 Speaker 1: sale than not make it sale. If you absolutely had 367 00:22:02,000 --> 00:22:04,160 Speaker 1: to go to the lowest price in order to move 368 00:22:04,240 --> 00:22:06,639 Speaker 1: a product, then it was better to do that than not. 369 00:22:07,240 --> 00:22:09,639 Speaker 1: But you would get a bigger reward if you could 370 00:22:09,720 --> 00:22:14,119 Speaker 1: sell the product at the higher price, the closer to 371 00:22:14,200 --> 00:22:18,080 Speaker 1: the list price, as opposed to the secret lowest acceptable price. 372 00:22:19,320 --> 00:22:21,879 Speaker 1: So if you happen to nab a customer that's not 373 00:22:22,000 --> 00:22:24,439 Speaker 1: terribly aggressive, you can make a big commission off a 374 00:22:24,440 --> 00:22:30,280 Speaker 1: hefty sale. It's another idea that a lot of modern 375 00:22:30,320 --> 00:22:34,800 Speaker 1: shoppers find particularly shady. It also falls into the category 376 00:22:34,880 --> 00:22:38,200 Speaker 1: that a lot of people will associate with buying a car, 377 00:22:38,680 --> 00:22:41,920 Speaker 1: and in fact, Circuit City has a connection to car 378 00:22:42,000 --> 00:22:44,920 Speaker 1: sales as well. I'll get into that probably in Part two, 379 00:22:45,320 --> 00:22:48,760 Speaker 1: not so much in Part one. Now, paired with this 380 00:22:49,000 --> 00:22:52,160 Speaker 1: was a customer service policy that went above and beyond 381 00:22:52,240 --> 00:22:55,240 Speaker 1: the pale. So every salesperson was expected to follow up 382 00:22:55,320 --> 00:22:58,480 Speaker 1: with a customer to make certain that the delivery, installation, 383 00:22:58,640 --> 00:23:01,960 Speaker 1: and operation of their brand new television's met expectations, and 384 00:23:02,040 --> 00:23:04,720 Speaker 1: if they didn't, the company would work to make things 385 00:23:04,800 --> 00:23:08,239 Speaker 1: right and even send along a conciliatory present or two 386 00:23:08,359 --> 00:23:11,680 Speaker 1: to smooth things over. So Samuel felt that great customer 387 00:23:11,720 --> 00:23:15,080 Speaker 1: service would help word of mouth, but perhaps more importantly, 388 00:23:15,440 --> 00:23:18,639 Speaker 1: it would help the company avoid bad word of mouth, 389 00:23:19,480 --> 00:23:22,720 Speaker 1: which tends to travel faster and farther than good word 390 00:23:22,720 --> 00:23:25,960 Speaker 1: of mouth. People love to complain, and that's something that's 391 00:23:25,960 --> 00:23:29,600 Speaker 1: still true today. If you read over the comments or 392 00:23:29,640 --> 00:23:33,120 Speaker 1: reviews on things online. You'll see that people who are 393 00:23:33,119 --> 00:23:38,720 Speaker 1: dissatisfied often will go to much greater lengths to express 394 00:23:38,800 --> 00:23:42,200 Speaker 1: that dissatisfaction than folks who are happy, and may even 395 00:23:42,240 --> 00:23:46,199 Speaker 1: seem that the happy folks are far outnumbered by the 396 00:23:46,240 --> 00:23:49,439 Speaker 1: dissatisfied folks, even if the overall rating is heights, because 397 00:23:49,840 --> 00:23:52,760 Speaker 1: people who are happy might be willing to give like 398 00:23:52,840 --> 00:23:57,240 Speaker 1: a five star review on something, but not actually write anything, 399 00:23:57,359 --> 00:23:59,960 Speaker 1: just say of five stars, whereas people who are unhappy. 400 00:24:00,000 --> 00:24:02,960 Speaker 1: He want to tell you about it. Anyone who's got 401 00:24:02,960 --> 00:24:05,879 Speaker 1: a podcast out there knows what I'm talking about, and 402 00:24:05,920 --> 00:24:09,760 Speaker 1: it could be really demoralizing. But Samuel's point was that 403 00:24:10,080 --> 00:24:14,040 Speaker 1: he didn't want bad word of mouth spreading. His business 404 00:24:14,080 --> 00:24:17,520 Speaker 1: was a small one in a tight community, so he 405 00:24:17,560 --> 00:24:20,080 Speaker 1: wanted to make sure he maintained a good relationship with 406 00:24:20,119 --> 00:24:23,040 Speaker 1: his customers. He also saw the value in hiring and 407 00:24:23,080 --> 00:24:27,679 Speaker 1: developing good employees. He relied heavily on using personality tests 408 00:24:27,680 --> 00:24:32,119 Speaker 1: when evaluating candidates, particularly for sales or management positions. He 409 00:24:32,160 --> 00:24:35,000 Speaker 1: also considered the potential impact any hire would have on 410 00:24:35,119 --> 00:24:38,600 Speaker 1: other employees. He didn't want to demoralize anyone by hiring 411 00:24:38,680 --> 00:24:41,800 Speaker 1: someone from outside the company to lord over other people, 412 00:24:42,160 --> 00:24:44,960 Speaker 1: and he wasn't in a rush to fill empty positions 413 00:24:45,160 --> 00:24:46,880 Speaker 1: just to have them filled. He wanted to make sure 414 00:24:46,880 --> 00:24:49,439 Speaker 1: he got the right people for the right job. He 415 00:24:49,480 --> 00:24:51,960 Speaker 1: also believed in promoting from within the company, which helped 416 00:24:52,080 --> 00:24:56,680 Speaker 1: to build employee loyalty. Who's also known for being pretty 417 00:24:56,800 --> 00:25:01,119 Speaker 1: lenient with folks who weren't living up to what they 418 00:25:01,200 --> 00:25:05,000 Speaker 1: were accountable for. So let's say a manager. It turns 419 00:25:05,040 --> 00:25:08,400 Speaker 1: out the manager who has been promoted above their ability 420 00:25:08,400 --> 00:25:11,479 Speaker 1: to perform. One of the things that Samuel would do 421 00:25:11,720 --> 00:25:16,560 Speaker 1: is instead of firing someone out right, he would say, listen, 422 00:25:16,640 --> 00:25:19,400 Speaker 1: it was a mistake, obviously to promote you to this position. 423 00:25:19,560 --> 00:25:22,720 Speaker 1: You were not ready for it. That's no fault of yours. 424 00:25:23,080 --> 00:25:26,240 Speaker 1: It is a fault of ours for making that decision prematurely. 425 00:25:26,480 --> 00:25:28,880 Speaker 1: How about we move you down to an assistant manager 426 00:25:28,920 --> 00:25:32,560 Speaker 1: position that you can then work at and gain more experience, 427 00:25:32,640 --> 00:25:35,000 Speaker 1: and then later on maybe revisit this idea of you 428 00:25:35,040 --> 00:25:37,320 Speaker 1: being a manager, which allowed people to hold on to 429 00:25:37,359 --> 00:25:40,160 Speaker 1: their jobs and to get into a position they were 430 00:25:40,200 --> 00:25:43,879 Speaker 1: more comfortable with and more suited for, as opposed to 431 00:25:43,920 --> 00:25:47,240 Speaker 1: just saying nope, you couldn't cut it. You're out. He 432 00:25:47,320 --> 00:25:49,879 Speaker 1: also instituted a policy in which the vice president of 433 00:25:49,920 --> 00:25:53,160 Speaker 1: Personnel was to sit down regularly with employees a couple 434 00:25:53,160 --> 00:25:54,919 Speaker 1: of times a year to talk about how the company 435 00:25:54,960 --> 00:25:58,800 Speaker 1: could improve existing jobs, especially the low level employees, like 436 00:25:58,800 --> 00:26:01,720 Speaker 1: the entry level position, and then he would work to 437 00:26:01,800 --> 00:26:05,080 Speaker 1: actually implement those suggested changes, at least when the changes 438 00:26:05,280 --> 00:26:08,320 Speaker 1: made sense. And he also was a big believer in 439 00:26:08,359 --> 00:26:11,680 Speaker 1: providing training opportunities for people and began to hold annual 440 00:26:11,720 --> 00:26:15,440 Speaker 1: store manager meetings in exotic places. Those meetings would have 441 00:26:15,560 --> 00:26:20,680 Speaker 1: like a really concentrated period of training and deep discussions, 442 00:26:21,160 --> 00:26:24,320 Speaker 1: and then the following weekend everyone would just stay at 443 00:26:24,359 --> 00:26:27,760 Speaker 1: whatever exotic locale the meeting was taking place at, and 444 00:26:27,800 --> 00:26:29,920 Speaker 1: their families would join them, and then they would just 445 00:26:30,000 --> 00:26:32,920 Speaker 1: kind of have a little weekend vacation and say Hawaii 446 00:26:33,040 --> 00:26:35,520 Speaker 1: or Puerto Rico or something, which is kind of cool. 447 00:26:36,200 --> 00:26:39,520 Speaker 1: The company also had no vacation policy for management positions, 448 00:26:39,520 --> 00:26:43,000 Speaker 1: meaning they didn't have a policy in place, not that 449 00:26:43,040 --> 00:26:45,840 Speaker 1: managers couldn't take vacation, in fact, they were encouraged to 450 00:26:45,840 --> 00:26:49,560 Speaker 1: do it. In fact, sometimes they were told very sternly, hey, 451 00:26:50,040 --> 00:26:53,040 Speaker 1: you need to take some time off. Managers were expected 452 00:26:53,080 --> 00:26:56,720 Speaker 1: to get the job done, period. That's it. As long 453 00:26:56,760 --> 00:26:58,720 Speaker 1: as that happened, they could take as much or as 454 00:26:58,800 --> 00:27:01,320 Speaker 1: little vacation as they liked, but they had to get 455 00:27:01,320 --> 00:27:04,280 Speaker 1: the job done. They also didn't have regularly set hours, 456 00:27:04,320 --> 00:27:07,359 Speaker 1: but Samuel discovered that this approach actually seemed to encourage 457 00:27:07,359 --> 00:27:10,480 Speaker 1: managers to work longer hours than they otherwise might have 458 00:27:10,600 --> 00:27:12,919 Speaker 1: done on a set schedule, on like a nine to 459 00:27:12,960 --> 00:27:17,920 Speaker 1: five each week. So it was a strategy that I've 460 00:27:17,960 --> 00:27:20,120 Speaker 1: seen used in the tech industry quite a few times. 461 00:27:20,119 --> 00:27:22,399 Speaker 1: A lot of companies would have these sort of open 462 00:27:22,480 --> 00:27:26,280 Speaker 1: hour rules, and people would end up spending more hours 463 00:27:26,680 --> 00:27:28,920 Speaker 1: at their job than they would if they were required 464 00:27:28,920 --> 00:27:30,960 Speaker 1: to show up at say, nine am and clock out 465 00:27:30,960 --> 00:27:33,520 Speaker 1: at five pm. And I don't know what that's like, Dylan, 466 00:27:33,600 --> 00:27:36,880 Speaker 1: Do you know what that's like? Dylan is shaking his head, 467 00:27:36,880 --> 00:27:40,960 Speaker 1: but also snort laughing. So take that as you will. 468 00:27:41,760 --> 00:27:44,520 Speaker 1: As the company began to find financial success, Samuel and 469 00:27:44,560 --> 00:27:47,959 Speaker 1: Abraham began to stock it with other TV brands, not 470 00:27:48,040 --> 00:27:51,800 Speaker 1: just those Olympic TVs. They also categorized the various television 471 00:27:52,080 --> 00:27:55,159 Speaker 1: vision sets in steps, like I was saying earlier, with 472 00:27:55,280 --> 00:27:59,920 Speaker 1: each step representing a price range and a set of features. 473 00:28:00,320 --> 00:28:02,640 Speaker 1: So the goal was always to get customers to land 474 00:28:02,640 --> 00:28:05,920 Speaker 1: on the highest step they would want to go, and 475 00:28:06,040 --> 00:28:08,840 Speaker 1: that would represent the models that pose the best profit 476 00:28:08,920 --> 00:28:11,880 Speaker 1: margins for the company. So if you could sell them 477 00:28:11,920 --> 00:28:15,399 Speaker 1: on the most luxurious TV set, you'd make the most profit. 478 00:28:15,880 --> 00:28:19,280 Speaker 1: But each step had to have features that justified that 479 00:28:19,920 --> 00:28:24,159 Speaker 1: increase in step. You couldn't just have a model that 480 00:28:24,320 --> 00:28:27,480 Speaker 1: had a certain brand name to it and it's automatically 481 00:28:27,520 --> 00:28:29,919 Speaker 1: a step up over other models. It had to have 482 00:28:30,040 --> 00:28:35,080 Speaker 1: demonstrable features that showed that value. In other words, the 483 00:28:35,119 --> 00:28:38,520 Speaker 1: customer had to actually get something for that higher price point. 484 00:28:39,440 --> 00:28:43,840 Speaker 1: So this goes back to that customer satisfaction concept. It's 485 00:28:43,880 --> 00:28:47,480 Speaker 1: not just that the company wants to make money, they 486 00:28:47,480 --> 00:28:49,880 Speaker 1: want to do so in a way that is at 487 00:28:49,960 --> 00:28:56,320 Speaker 1: least remotely ethical, certainly ethical by nineteen fifty standards. So 488 00:28:56,360 --> 00:28:59,760 Speaker 1: by the mid nineteen fifties, Wards had opened three more stores, 489 00:28:59,760 --> 00:29:03,959 Speaker 1: and they had four storefronts at that point. The company 490 00:29:04,000 --> 00:29:06,720 Speaker 1: also began to carry more items than just televisions, like 491 00:29:06,800 --> 00:29:09,920 Speaker 1: refrigerators and other appliances, and the appliance boom in the 492 00:29:09,960 --> 00:29:12,280 Speaker 1: nineteen fifties was kind of similar to the TV boom. 493 00:29:12,320 --> 00:29:15,760 Speaker 1: These were all products that promised to increase convenience and 494 00:29:16,040 --> 00:29:20,959 Speaker 1: save time for households. They were also selling this concept 495 00:29:21,080 --> 00:29:25,680 Speaker 1: of comfort and prosperity, so it's not just selling products 496 00:29:25,760 --> 00:29:29,320 Speaker 1: but an idea, like a representation of a goal that 497 00:29:29,440 --> 00:29:33,200 Speaker 1: every American was envisioning as this is where I want 498 00:29:33,240 --> 00:29:36,200 Speaker 1: to be. And as the company saw more success, the 499 00:29:36,240 --> 00:29:39,600 Speaker 1: owners branched out further and attempted to open stores in 500 00:29:39,720 --> 00:29:43,320 Speaker 1: other places. They opened one in Roanoke, Virginia, and one 501 00:29:43,360 --> 00:29:47,560 Speaker 1: in Greensboro, North North Carolina, but they didn't Those stores 502 00:29:47,560 --> 00:29:51,160 Speaker 1: didn't work out. Those efforts probably were a little too ambitious, 503 00:29:51,240 --> 00:29:54,080 Speaker 1: a little too early, and both of those stores closed 504 00:29:54,080 --> 00:29:58,240 Speaker 1: within twelve months of having opened. The big problem here 505 00:29:58,280 --> 00:30:01,080 Speaker 1: was that Samuel and Abraham found they couldn't manage those 506 00:30:01,320 --> 00:30:05,760 Speaker 1: remote locations personally the way they could the Richmond offices. 507 00:30:06,120 --> 00:30:08,760 Speaker 1: Like they could put managers in charge of those stores, 508 00:30:08,760 --> 00:30:11,200 Speaker 1: but they couldn't oversee the day to day operations, and 509 00:30:11,240 --> 00:30:14,560 Speaker 1: if there were problems, they couldn't respond to them in 510 00:30:14,600 --> 00:30:17,360 Speaker 1: a timely enough fashion for the store to remain profitable. 511 00:30:17,600 --> 00:30:19,960 Speaker 1: So it was an expensive lesson, But Samuel learned that 512 00:30:20,000 --> 00:30:23,160 Speaker 1: he needed to develop someone to oversee each remote store 513 00:30:23,520 --> 00:30:26,800 Speaker 1: at a managerial level and find a way for managers 514 00:30:26,840 --> 00:30:29,680 Speaker 1: to send meaningful data back for him in order for 515 00:30:29,720 --> 00:30:33,560 Speaker 1: him to make some high level decisions. A few years 516 00:30:33,600 --> 00:30:36,720 Speaker 1: after opening the company, Samuel and Abraham brought a third 517 00:30:36,760 --> 00:30:40,440 Speaker 1: person onto the team, the management level team like this 518 00:30:40,600 --> 00:30:44,920 Speaker 1: sort of senior management. And this guy was named Martin Rosenswig, 519 00:30:45,440 --> 00:30:48,920 Speaker 1: and Rosenswig had an accounting background in New York. Samuel 520 00:30:49,000 --> 00:30:52,320 Speaker 1: and Abraham actually gave him a stake in the business 521 00:30:52,400 --> 00:30:56,000 Speaker 1: even though he had not posted an investment into it. So, 522 00:30:56,040 --> 00:31:00,719 Speaker 1: in other words, Ross as they called him, got a 523 00:31:00,840 --> 00:31:04,520 Speaker 1: percentage of ownership of this company, although he was not 524 00:31:04,600 --> 00:31:07,040 Speaker 1: one of the investors into in the company, and the 525 00:31:07,040 --> 00:31:10,440 Speaker 1: three of them ran the Wards Company until the mid 526 00:31:10,520 --> 00:31:14,520 Speaker 1: nineteen sixties. Now I got some more to talk about 527 00:31:14,560 --> 00:31:17,840 Speaker 1: some of the advances that Samuel instituted in the Wards 528 00:31:17,840 --> 00:31:20,960 Speaker 1: Company that set it apart from other stores at that time. 529 00:31:21,280 --> 00:31:23,920 Speaker 1: But before I get into that, let's take another quick 530 00:31:23,960 --> 00:31:36,320 Speaker 1: break to thank our sponsor and we're back. So, in 531 00:31:36,360 --> 00:31:39,720 Speaker 1: an effort to keep track of inventory, which all had 532 00:31:39,720 --> 00:31:41,760 Speaker 1: to be done by hand back in those days there 533 00:31:41,760 --> 00:31:45,920 Speaker 1: were no automated systems, Samuel actually purchased an IBM punch 534 00:31:46,000 --> 00:31:51,440 Speaker 1: card equipment system. He saw the value in this burgeoning 535 00:31:51,720 --> 00:31:56,480 Speaker 1: technological field for using it in order to do supply 536 00:31:56,640 --> 00:32:01,600 Speaker 1: chain management, inventory management, keep track of sales, profit margins, 537 00:32:02,520 --> 00:32:06,200 Speaker 1: and to have a really good look at how each 538 00:32:06,280 --> 00:32:09,720 Speaker 1: store was doing so that if there were any early 539 00:32:09,800 --> 00:32:14,120 Speaker 1: warning signs, they could sweep in and fix things before 540 00:32:14,400 --> 00:32:18,080 Speaker 1: they became too problematic. By nineteen sixty six, he had 541 00:32:18,080 --> 00:32:21,160 Speaker 1: a data processing department to keep track of all of this. 542 00:32:21,600 --> 00:32:25,120 Speaker 1: He also adopted the IBM three sixty computer system in 543 00:32:25,160 --> 00:32:28,440 Speaker 1: the mid sixties to help manage the growing chain of stores. 544 00:32:29,080 --> 00:32:31,600 Speaker 1: Samuel used the data to see which stores were doing well, 545 00:32:31,600 --> 00:32:34,720 Speaker 1: which ones weren't, and, like I said, jump in if 546 00:32:34,840 --> 00:32:39,120 Speaker 1: things aren't going well. As for Alan Wurtzel, Samuel's son, 547 00:32:39,160 --> 00:32:41,760 Speaker 1: he would play an important role in the rise of 548 00:32:41,840 --> 00:32:46,080 Speaker 1: Circuit City. First, he went on to study economics at 549 00:32:46,080 --> 00:32:49,360 Speaker 1: Oberlin College and later at the London School of Economics 550 00:32:49,400 --> 00:32:53,160 Speaker 1: and then Yale University. He passed the Connecticut Bar in 551 00:32:53,240 --> 00:32:55,680 Speaker 1: nineteen fifty nine and became a law clerk of the 552 00:32:55,800 --> 00:32:58,720 Speaker 1: US Court of Appeals in Washington, d c. In nineteen 553 00:32:58,840 --> 00:33:03,400 Speaker 1: sixty So he was studying at that point, not yet 554 00:33:03,480 --> 00:33:07,000 Speaker 1: part of the company Meanwhile, business was going really well 555 00:33:07,040 --> 00:33:09,480 Speaker 1: for the Wards Company, so well that Samuel took the 556 00:33:09,520 --> 00:33:12,760 Speaker 1: company public, as in it became a publicly traded stock 557 00:33:12,960 --> 00:33:16,719 Speaker 1: in nineteen sixty one. Now, in actuality, that was a 558 00:33:16,840 --> 00:33:20,520 Speaker 1: move of necessity. There was a lot of opportunity for expansion, 559 00:33:21,080 --> 00:33:24,560 Speaker 1: but that costs money, and the company lacked the capital 560 00:33:24,680 --> 00:33:27,840 Speaker 1: to do that expansion on its own. But by going public, 561 00:33:28,320 --> 00:33:31,880 Speaker 1: Samuel could raise capital needed to expand further and make 562 00:33:32,080 --> 00:33:35,560 Speaker 1: bigger profits. So to that end, the Wards Company got 563 00:33:35,600 --> 00:33:40,120 Speaker 1: into the discount industry. Now, this was a time where 564 00:33:40,120 --> 00:33:43,400 Speaker 1: we started seeing big stores show up that were either 565 00:33:43,560 --> 00:33:49,040 Speaker 1: open membership or closed membership discount stores such as GEM 566 00:33:49,040 --> 00:33:51,920 Speaker 1: International or Gym International if you prefer. It's sort of 567 00:33:52,000 --> 00:33:56,200 Speaker 1: like what Sam's Club is today. Wards was dipping their 568 00:33:56,240 --> 00:33:59,160 Speaker 1: toe in this pool by opening up departments in already 569 00:33:59,320 --> 00:34:02,720 Speaker 1: existing star So they weren't opening up their own discount 570 00:34:02,760 --> 00:34:07,440 Speaker 1: store with open or closed membership. Instead, they would partner 571 00:34:07,480 --> 00:34:11,360 Speaker 1: with an existing store and they would manage a specific 572 00:34:11,400 --> 00:34:14,400 Speaker 1: department within that store. It was almost like a precursor 573 00:34:14,440 --> 00:34:19,160 Speaker 1: to the shopping mall, except instead of a store space 574 00:34:19,200 --> 00:34:22,080 Speaker 1: within a mall, it was a department space within a larger, 575 00:34:22,360 --> 00:34:25,840 Speaker 1: almost like warehouse style building. So imagine walking into one 576 00:34:25,880 --> 00:34:28,680 Speaker 1: of those big warehouse stores like Sam's Club, and one 577 00:34:28,920 --> 00:34:33,680 Speaker 1: whole department is managed by an entirely separate company like Wards. 578 00:34:33,719 --> 00:34:37,720 Speaker 1: That's essentially what was going on. So Wards would lease 579 00:34:37,880 --> 00:34:40,560 Speaker 1: space from a bigger store and get access to that 580 00:34:40,640 --> 00:34:44,960 Speaker 1: store's customer base in return. The company sold one hundred 581 00:34:45,160 --> 00:34:49,680 Speaker 1: ten thousand shares in December of that year, and that 582 00:34:49,760 --> 00:34:54,080 Speaker 1: amounted to about forty point four percent ownership of the company, 583 00:34:54,840 --> 00:34:58,520 Speaker 1: and collectively those shares represented about five hundred and thirty 584 00:34:58,560 --> 00:35:01,000 Speaker 1: six thousand, two hundred and fifty dollars, which meant the 585 00:35:01,080 --> 00:35:06,000 Speaker 1: overall company's valuation was at one point eight million dollars. 586 00:35:06,320 --> 00:35:10,240 Speaker 1: Small for tech companies these days, for any company considered 587 00:35:10,280 --> 00:35:13,640 Speaker 1: a major company these days, but big big news to Samuel. 588 00:35:13,680 --> 00:35:16,240 Speaker 1: I mean, this was like he was on dream Street. 589 00:35:16,280 --> 00:35:19,000 Speaker 1: At this point, about fifty percent of the company's ownership 590 00:35:19,120 --> 00:35:22,840 Speaker 1: still belonged to the Hasts and the Wurtzels. They owned 591 00:35:23,400 --> 00:35:27,799 Speaker 1: about half the company together. The other ten percent ownership 592 00:35:28,080 --> 00:35:31,960 Speaker 1: was well slightly less than ten percent because the stocks 593 00:35:32,080 --> 00:35:36,560 Speaker 1: represented forty point four those belonged to other early investors. 594 00:35:37,320 --> 00:35:42,120 Speaker 1: So five years later, nineteen sixty six, Alan Wurtzel ends 595 00:35:42,320 --> 00:35:45,920 Speaker 1: his private law practice and goes to join the family business. 596 00:35:46,200 --> 00:35:48,960 Speaker 1: His initial role over at Wards Company was to be 597 00:35:49,040 --> 00:35:52,480 Speaker 1: the official legal council for Wards. Now. At that time, 598 00:35:52,520 --> 00:35:55,760 Speaker 1: the company consisted of four stores in Richmond and twenty 599 00:35:55,920 --> 00:35:58,840 Speaker 1: seven licensed departments in other parts of the country. In 600 00:35:58,880 --> 00:36:02,279 Speaker 1: those big discounts I was talking about, sales were at 601 00:36:02,280 --> 00:36:05,200 Speaker 1: about twenty two point eight million, with earnings of around 602 00:36:05,239 --> 00:36:08,879 Speaker 1: six hundred and sixteen thousand dollars, and father and son 603 00:36:08,920 --> 00:36:12,080 Speaker 1: began to expand the company by buying up smaller companies 604 00:36:12,080 --> 00:36:15,800 Speaker 1: that sold appliances. That not only expanded the company's regional 605 00:36:15,840 --> 00:36:19,080 Speaker 1: reach by getting into areas they didn't have an existing store, 606 00:36:19,480 --> 00:36:22,200 Speaker 1: but also boosted the variety of products the company began 607 00:36:22,280 --> 00:36:26,000 Speaker 1: to offer to customers, so again more than just TVs 608 00:36:26,040 --> 00:36:29,680 Speaker 1: at this point. In nineteen sixty eight, the Wards Company 609 00:36:29,760 --> 00:36:34,320 Speaker 1: joined the American Stock Exchange. The following year, Wards makes 610 00:36:34,360 --> 00:36:37,840 Speaker 1: a concentrated effort to buy up local chains and discount stores, 611 00:36:37,880 --> 00:36:41,880 Speaker 1: converting them over to Wards stores or launching them under 612 00:36:41,960 --> 00:36:44,560 Speaker 1: a new name. So one of those chains was a 613 00:36:44,640 --> 00:36:47,799 Speaker 1: chain called Custom High Fi, and that gave Wards a 614 00:36:47,840 --> 00:36:51,399 Speaker 1: foothold in the Hi Fi audio business. Those stores were 615 00:36:51,400 --> 00:36:54,520 Speaker 1: mainly in the Washington, DC area, but they represented one 616 00:36:54,520 --> 00:36:57,560 Speaker 1: of the ways the company was beginning to diversify, and 617 00:36:57,680 --> 00:37:00,560 Speaker 1: they chose to keep the brand separate from the overall 618 00:37:00,600 --> 00:37:04,640 Speaker 1: Wards Company. They named the stores Dixie Hi Fi, so 619 00:37:04,680 --> 00:37:06,799 Speaker 1: if you ever heard that name, that's where it comes from. 620 00:37:06,840 --> 00:37:09,759 Speaker 1: It was originally Custom High Fi and then acquired by 621 00:37:09,800 --> 00:37:15,040 Speaker 1: Wards Company. And in nineteen seventy Samuel Wurtzel transitioned into 622 00:37:15,080 --> 00:37:18,560 Speaker 1: the position of chairman and named his son Alan as 623 00:37:19,120 --> 00:37:22,279 Speaker 1: the president of the company. Abraham Haste at that time 624 00:37:22,360 --> 00:37:25,839 Speaker 1: retired and in nineteen seventy three Alan Wurtzel took over 625 00:37:25,880 --> 00:37:30,000 Speaker 1: as CEO of the Wards Company. Now, that was a 626 00:37:30,080 --> 00:37:33,600 Speaker 1: rough time for Wards Company, not because of Allen's leadership, 627 00:37:33,640 --> 00:37:37,000 Speaker 1: but rather because of just economic conditions in general. Around 628 00:37:37,080 --> 00:37:39,799 Speaker 1: that time, the company was on shaky ground. Sales were 629 00:37:39,880 --> 00:37:43,320 Speaker 1: at around sixty million dollars. That's definitely a lot of money. 630 00:37:43,360 --> 00:37:45,960 Speaker 1: But the company had also expanded pretty quickly in a 631 00:37:46,000 --> 00:37:50,680 Speaker 1: short time, so there was this fact of you, how 632 00:37:50,719 --> 00:37:54,319 Speaker 1: does sales match up against the expansion. Also, there was 633 00:37:54,320 --> 00:37:57,200 Speaker 1: an economic recession in the United States, which was making 634 00:37:57,280 --> 00:38:01,359 Speaker 1: an enormous impact on the company's revenues. Several stores had 635 00:38:01,360 --> 00:38:05,120 Speaker 1: turned unprofitable, and Alan Wurtzel really had his work cut 636 00:38:05,160 --> 00:38:08,560 Speaker 1: out for him, so in nineteen seventy four he decided 637 00:38:08,600 --> 00:38:11,320 Speaker 1: to make the take a pretty big risk. The company 638 00:38:11,440 --> 00:38:15,400 Speaker 1: tried something new. They opened up a forty thousand square 639 00:38:15,440 --> 00:38:19,319 Speaker 1: foot retail showroom. They called it the Wards Loading Dock, 640 00:38:19,880 --> 00:38:23,080 Speaker 1: So this was an enormous showroom dedicated to audio and 641 00:38:23,200 --> 00:38:26,359 Speaker 1: visual equipment. Now. The size meant that the company could 642 00:38:26,360 --> 00:38:29,279 Speaker 1: sell a much larger volume of products, which meant that 643 00:38:29,360 --> 00:38:32,320 Speaker 1: they could buy them at a lower cost and sell 644 00:38:32,360 --> 00:38:34,200 Speaker 1: them for a lower price than a lot of their 645 00:38:34,239 --> 00:38:37,360 Speaker 1: competitors could. The Loading Dock also had a much wider 646 00:38:37,440 --> 00:38:41,520 Speaker 1: variety of products from various brands than most other stores, 647 00:38:41,840 --> 00:38:45,000 Speaker 1: so that was a customer value, and they were able 648 00:38:45,040 --> 00:38:47,920 Speaker 1: to branch far beyond the basic TV and appliance business 649 00:38:47,920 --> 00:38:50,800 Speaker 1: that had defined the company in years past. The store 650 00:38:50,880 --> 00:38:53,400 Speaker 1: also offered services that you would have found in the 651 00:38:53,520 --> 00:38:56,880 Speaker 1: old Wards Company store back in nineteen forty nine, like 652 00:38:57,160 --> 00:39:02,560 Speaker 1: home delivery and installation, had an in store repairs department there. 653 00:39:02,800 --> 00:39:06,440 Speaker 1: This would become the model for their superstore, but at 654 00:39:06,440 --> 00:39:09,879 Speaker 1: the time it was a pure experiment. That same year, 655 00:39:09,880 --> 00:39:12,520 Speaker 1: in nineteen seventy four, the company began to close down 656 00:39:12,560 --> 00:39:15,919 Speaker 1: those licensed shops and discount stores around the country. Most 657 00:39:15,960 --> 00:39:19,319 Speaker 1: of them had long since stopped being profitable, and this 658 00:39:19,400 --> 00:39:21,880 Speaker 1: marked a switch and strategy in which the Wards company 659 00:39:22,239 --> 00:39:26,400 Speaker 1: would no longer rent space, but have their own space 660 00:39:26,480 --> 00:39:30,440 Speaker 1: their own stores and expand that way instead of renting 661 00:39:30,440 --> 00:39:33,520 Speaker 1: out a place in someone else's store, and that would 662 00:39:33,600 --> 00:39:36,040 Speaker 1: lead them toward the company's future in retail. It was 663 00:39:36,120 --> 00:39:41,480 Speaker 1: the birth of the superstore. So by nineteen seventy seven, 664 00:39:41,640 --> 00:39:44,480 Speaker 1: the company was beginning to open new concept stores that 665 00:39:44,520 --> 00:39:49,520 Speaker 1: they were calling Circuit City showrooms in the DC area. 666 00:39:49,920 --> 00:39:53,640 Speaker 1: These were smaller than the Loading Doc showroom, but about 667 00:39:53,680 --> 00:39:56,279 Speaker 1: twice the size of the older Wards stores, and they 668 00:39:56,320 --> 00:40:00,880 Speaker 1: were pure electronics stores. They included not just a showroom, 669 00:40:00,920 --> 00:40:04,439 Speaker 1: but also service departments similar to what the loading dock had, 670 00:40:04,480 --> 00:40:07,080 Speaker 1: but on a smaller scale, and they made sure to 671 00:40:07,120 --> 00:40:09,880 Speaker 1: staff them with knowledgeable employees who could answer lots of 672 00:40:09,960 --> 00:40:13,320 Speaker 1: questions about the products that were on sale. The experience 673 00:40:13,320 --> 00:40:16,000 Speaker 1: for the customer is one that I think a lot 674 00:40:16,000 --> 00:40:18,560 Speaker 1: of you are familiar with, at least on some level. 675 00:40:19,400 --> 00:40:22,479 Speaker 1: You'd walk into a showroom, the show's filled with lots 676 00:40:22,480 --> 00:40:25,880 Speaker 1: of shiny products from different manufacturers. You can see them 677 00:40:25,920 --> 00:40:28,680 Speaker 1: side by side and take a look and even test 678 00:40:28,680 --> 00:40:31,520 Speaker 1: out certain features, depending upon what it is you're looking at. So, 679 00:40:31,680 --> 00:40:34,840 Speaker 1: for example, televisions, you can see the different picture quality, 680 00:40:35,080 --> 00:40:37,839 Speaker 1: and you might point at a single product. Let's say 681 00:40:38,120 --> 00:40:42,279 Speaker 1: it's an enormous twenty four inch television, and you say, 682 00:40:42,280 --> 00:40:46,520 Speaker 1: I want that, So then you buy it, and you're 683 00:40:46,520 --> 00:40:48,600 Speaker 1: not buying the one that you're looking at. That's a 684 00:40:48,640 --> 00:40:52,400 Speaker 1: display model. Instead, a salesperson calls for a boxed version 685 00:40:52,480 --> 00:40:56,680 Speaker 1: of the same product to come from the backroom storage space, 686 00:40:56,760 --> 00:40:59,359 Speaker 1: and an employee brings the box out and maybe even 687 00:40:59,360 --> 00:41:01,439 Speaker 1: carries it out your car and loads it up for you. 688 00:41:02,320 --> 00:41:05,040 Speaker 1: That was a brand new sales model in the late seventies. 689 00:41:05,080 --> 00:41:07,319 Speaker 1: It's not like that was around. Circuit City was one 690 00:41:07,320 --> 00:41:09,759 Speaker 1: of the pioneers of doing it in this way, and 691 00:41:09,840 --> 00:41:12,759 Speaker 1: it worked. By nineteen seventy nine, sales were at one 692 00:41:12,840 --> 00:41:16,160 Speaker 1: hundred and twenty million, twice as much as just a 693 00:41:16,200 --> 00:41:20,440 Speaker 1: few years earlier. By nineteen eighty, Wards company had thirty 694 00:41:20,520 --> 00:41:24,600 Speaker 1: six Circuit City style stores and boys that hard to 695 00:41:24,640 --> 00:41:28,479 Speaker 1: say in the Southeast, Man, I'm glad I didn't say 696 00:41:28,480 --> 00:41:31,759 Speaker 1: in the Southeast right after all those other essays, and 697 00:41:31,880 --> 00:41:34,760 Speaker 1: this time the shopping mall phenomenon was just getting started, 698 00:41:34,800 --> 00:41:37,680 Speaker 1: so Wards Company began to jump in on that as well. 699 00:41:37,719 --> 00:41:41,160 Speaker 1: It's actually not that different from the discount store approach. 700 00:41:41,400 --> 00:41:45,640 Speaker 1: They started to end up getting storefronts in malls. Some 701 00:41:45,680 --> 00:41:49,000 Speaker 1: of those storefronts they called Circuit City. The company also 702 00:41:49,000 --> 00:41:53,520 Speaker 1: acquired a New York retailer called Lafayette Radio Electronics Corporation, 703 00:41:53,600 --> 00:41:56,640 Speaker 1: which had eight electronics stores in the New York City 704 00:41:56,680 --> 00:42:00,920 Speaker 1: metro area. The ticket price to purchase that bankrupt company 705 00:42:01,040 --> 00:42:04,000 Speaker 1: was six point six million dollars, which sounds like a lot, 706 00:42:04,120 --> 00:42:07,600 Speaker 1: but it was actually a shrewd deal because Wards earned 707 00:42:07,640 --> 00:42:11,560 Speaker 1: a thirty six point five million dollars in tax credits. 708 00:42:12,239 --> 00:42:15,080 Speaker 1: So it all worked out for Wards with that particular 709 00:42:15,120 --> 00:42:17,720 Speaker 1: acquisition and gave them access to a New York market, 710 00:42:17,800 --> 00:42:21,000 Speaker 1: something that they had not had at that point. Now, 711 00:42:21,040 --> 00:42:24,880 Speaker 1: at this stage, Wards Company was operating four different store 712 00:42:25,000 --> 00:42:29,560 Speaker 1: chains simultaneously. There were the Circuit City stores, which were 713 00:42:29,680 --> 00:42:34,239 Speaker 1: the relatively smaller retail electronics outlets, think of something like 714 00:42:34,520 --> 00:42:36,799 Speaker 1: a radio shack in them all. Then there were the 715 00:42:36,880 --> 00:42:40,600 Speaker 1: Circuit City superstores, which were modeled after the loading dock 716 00:42:40,680 --> 00:42:43,920 Speaker 1: and were really the big box style store. Then you 717 00:42:44,000 --> 00:42:47,480 Speaker 1: had the Lafayette stores in New York, and they also 718 00:42:47,560 --> 00:42:51,560 Speaker 1: had a discount store brand out in California called Zodi. 719 00:42:51,880 --> 00:42:54,719 Speaker 1: The company made the vast majority of its revenue from 720 00:42:55,000 --> 00:42:59,719 Speaker 1: electronics sales, not necessarily appliances, but electronics consumer electronics. This 721 00:42:59,760 --> 00:43:04,000 Speaker 1: was an era where beyond televisions and radios, you started 722 00:43:04,000 --> 00:43:07,839 Speaker 1: seeing other types of electronics emerge. And some of that 723 00:43:07,920 --> 00:43:10,720 Speaker 1: was even coming off a particular product I talked about 724 00:43:10,719 --> 00:43:14,000 Speaker 1: not too long ago, Sony's Beta Max video cassette recorders. 725 00:43:14,840 --> 00:43:17,360 Speaker 1: They were also earning big sales with other big brand names. 726 00:43:17,480 --> 00:43:20,120 Speaker 1: Pioneer Audio Systems is a great example. That was another 727 00:43:20,160 --> 00:43:23,840 Speaker 1: one of their brands that they would offer in these stores. 728 00:43:24,600 --> 00:43:27,600 Speaker 1: In nineteen eighty two, the company hired a computer hardware 729 00:43:27,640 --> 00:43:30,600 Speaker 1: and software business owner by the name of Richard Sharp. 730 00:43:31,360 --> 00:43:34,440 Speaker 1: He was brought on as an executive vice president, which 731 00:43:35,000 --> 00:43:36,959 Speaker 1: might seem like a pretty big leap from the whole 732 00:43:37,000 --> 00:43:40,560 Speaker 1: promote from within strategy. He came in at an executive level, 733 00:43:40,920 --> 00:43:45,640 Speaker 1: but Sharp's leadership was a very important part of Circuit 734 00:43:45,719 --> 00:43:49,839 Speaker 1: City's fate. It's actually a little controversial. Some people point 735 00:43:49,920 --> 00:43:53,960 Speaker 1: him as saying that he's the reason Circuit City flourished 736 00:43:53,960 --> 00:43:59,879 Speaker 1: in the eighties and nineties and just exploded in profitability. 737 00:44:00,080 --> 00:44:02,360 Speaker 1: Others say that he actually laid the groundwork for the 738 00:44:02,360 --> 00:44:06,239 Speaker 1: company's eventual collapse, and we'll talk more about him and 739 00:44:06,280 --> 00:44:10,560 Speaker 1: his decisions in the next episode. In nineteen eighty three, 740 00:44:11,440 --> 00:44:14,400 Speaker 1: sales hit two hundred and forty six million dollars, so 741 00:44:14,440 --> 00:44:17,600 Speaker 1: the company had rebounded big time from that shaky ground 742 00:44:17,640 --> 00:44:20,960 Speaker 1: it was on in the early seventies. Now, before I 743 00:44:21,000 --> 00:44:23,560 Speaker 1: sign off for today, I have to finally get to 744 00:44:23,760 --> 00:44:28,520 Speaker 1: nineteen eighty four. Not the George Orwell book. This is 745 00:44:28,560 --> 00:44:33,560 Speaker 1: the year that the Wards Company finally transformed officially into 746 00:44:33,640 --> 00:44:36,440 Speaker 1: Circuit City. They changed the name of the company from 747 00:44:36,480 --> 00:44:40,319 Speaker 1: Wards Company to Circuit City. In nineteen eighty four, the 748 00:44:40,360 --> 00:44:44,279 Speaker 1: company joined the New York Stock Exchange and listed under 749 00:44:44,320 --> 00:44:50,360 Speaker 1: the code cc okay, so that's the birth of Circuit City. 750 00:44:50,520 --> 00:44:52,600 Speaker 1: In the next installment, i'll talk about how the company 751 00:44:52,680 --> 00:44:56,160 Speaker 1: shot up the Stock Exchange, outperforming most other companies, and 752 00:44:56,200 --> 00:44:58,880 Speaker 1: then we'll look at how and why the company faltered 753 00:44:58,920 --> 00:45:02,120 Speaker 1: and eventually collapsed, as well as get a glimpse into 754 00:45:02,160 --> 00:45:06,000 Speaker 1: what's going on with the name Circuit City today. That 755 00:45:06,719 --> 00:45:11,000 Speaker 1: was the Circuit City story Heart one. Obviously, next Friday 756 00:45:11,480 --> 00:45:16,080 Speaker 1: we will run part two of that story. Circuit City 757 00:45:16,160 --> 00:45:18,120 Speaker 1: was one of those places that I did visit a 758 00:45:18,120 --> 00:45:21,400 Speaker 1: few times when I was younger. I would have to 759 00:45:21,400 --> 00:45:23,480 Speaker 1: do it when I was younger because it doesn't exist anymore, 760 00:45:23,480 --> 00:45:26,719 Speaker 1: so I certainly can't do it when I'm older. It 761 00:45:26,760 --> 00:45:30,279 Speaker 1: was a no It was an interesting place. It had 762 00:45:30,320 --> 00:45:33,120 Speaker 1: its own vibe, and it was a vibe that set 763 00:45:33,120 --> 00:45:36,960 Speaker 1: it apart from other, you know, retail box stores like 764 00:45:37,040 --> 00:45:41,960 Speaker 1: Best Buy. But yeah, we'll rejoin the Circuit City story 765 00:45:42,000 --> 00:45:45,160 Speaker 1: next week. In the meantime, I hope you are all 766 00:45:45,239 --> 00:45:54,680 Speaker 1: well and I'll talk to you again really soon. Tech 767 00:45:54,719 --> 00:45:59,120 Speaker 1: Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, 768 00:45:59,440 --> 00:46:02,839 Speaker 1: visit the eye Heeartradio app, Apple Podcasts, or wherever you 769 00:46:02,880 --> 00:46:04,280 Speaker 1: listen to your favorite shows.