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 --> 00:00:15,760
Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland.

3
00:00:16,000 --> 00:00:18,400
Speaker 1: I'm an executive producer with iHeartRadio.

4
00:00:18,760 --> 00:00:22,279
Speaker 2: And how the tech are you? So? Last week, this is.

5
00:00:22,280 --> 00:00:24,599
Speaker 1: A Friday, so we're doing a tech Stuff classic episode first,

6
00:00:24,600 --> 00:00:26,720
Speaker 1: get that all the way. But last week we started

7
00:00:27,120 --> 00:00:31,840
Speaker 1: the Circuit City story with Part one. This week we

8
00:00:31,880 --> 00:00:36,559
Speaker 1: shall conclude the Circuit City story with Part two. This

9
00:00:36,680 --> 00:00:42,560
Speaker 1: episode originally published way back on February eighth, twenty seventeen.

10
00:00:43,159 --> 00:00:43,519
Speaker 2: Enjoy.

11
00:00:44,960 --> 00:00:48,839
Speaker 1: So in nineteen eighty four, Alan Wurtzel really concentrated on

12
00:00:48,920 --> 00:00:52,479
Speaker 1: implementing a new plan based off the success of the

13
00:00:52,520 --> 00:00:56,360
Speaker 1: Circuit City superstore concept that originally was just called the

14
00:00:56,400 --> 00:00:59,959
Speaker 1: Wards Loading doc. Now, that plan involved creating an all

15
00:01:00,120 --> 00:01:03,720
Speaker 1: most cookie cutter approach to store space, and if you've

16
00:01:03,760 --> 00:01:06,959
Speaker 1: ever been to more than one Circuit City during its heyday,

17
00:01:07,080 --> 00:01:12,960
Speaker 1: you probably noticed the layout was remarkably similar, probably almost identical,

18
00:01:12,959 --> 00:01:13,920
Speaker 1: and that was by design.

19
00:01:14,920 --> 00:01:15,400
Speaker 2: Wurtzel.

20
00:01:15,959 --> 00:01:19,119
Speaker 1: My experiment would changes at one location just to see

21
00:01:19,160 --> 00:01:22,480
Speaker 1: how they would do, and then perhaps implement some changes

22
00:01:22,520 --> 00:01:27,400
Speaker 1: across the board, but by and large they remained almost identical. Now,

23
00:01:27,440 --> 00:01:31,160
Speaker 1: the store layout embodied some of the same sales philosophies

24
00:01:31,200 --> 00:01:34,880
Speaker 1: that Samuel had established back when he had first started

25
00:01:34,880 --> 00:01:38,040
Speaker 1: the Wards Company. You might remember in that last episode

26
00:01:38,080 --> 00:01:42,080
Speaker 1: I talked about how he used various manipulation techniques to

27
00:01:42,160 --> 00:01:46,160
Speaker 1: increase sales, not in a way to be dishonest or

28
00:01:46,280 --> 00:01:50,960
Speaker 1: to you know, otherwise trick a customer into buying something,

29
00:01:51,000 --> 00:01:55,000
Speaker 1: but rather to entice a customer into spending as much

30
00:01:55,040 --> 00:01:59,840
Speaker 1: money as possible. There's a fine line there between and

31
00:02:00,160 --> 00:02:04,440
Speaker 1: admirable work ethic and kind of creepy manipulation. And he

32
00:02:04,480 --> 00:02:08,320
Speaker 1: walked it carefully, or at least appeared to well. Alan

33
00:02:08,360 --> 00:02:11,120
Speaker 1: wanted to do the same thing, and he incorporated that

34
00:02:11,200 --> 00:02:14,000
Speaker 1: into the store design itself. This is going to sound

35
00:02:14,040 --> 00:02:15,040
Speaker 1: really familiar to.

36
00:02:14,960 --> 00:02:16,000
Speaker 2: Anyone who's been to.

37
00:02:16,000 --> 00:02:20,080
Speaker 1: A big box store, because now it is standard practice.

38
00:02:20,760 --> 00:02:22,520
Speaker 1: What they would do is they would put all the

39
00:02:22,520 --> 00:02:25,600
Speaker 1: popular brands, all the big ticket items that people were

40
00:02:25,639 --> 00:02:28,920
Speaker 1: really interested in in the back of the store. That

41
00:02:28,960 --> 00:02:31,200
Speaker 1: meant that customers would have to walk through the rest

42
00:02:31,240 --> 00:02:33,400
Speaker 1: of the store in order to get there, and they

43
00:02:33,400 --> 00:02:36,400
Speaker 1: would see lots of other stuff on the way. So

44
00:02:36,600 --> 00:02:39,440
Speaker 1: this was an effort to try and boost sales of

45
00:02:39,480 --> 00:02:44,560
Speaker 1: slightly less popular items by having people walk through you

46
00:02:44,600 --> 00:02:48,600
Speaker 1: see the same thing today, Like most electronics departments in

47
00:02:48,680 --> 00:02:52,160
Speaker 1: a lot of stores are toward the back or somewhere

48
00:02:52,320 --> 00:02:54,760
Speaker 1: deep in the middle of the store, and it means

49
00:02:54,760 --> 00:02:56,600
Speaker 1: you have to walk through other departments to get there.

50
00:02:57,320 --> 00:02:59,480
Speaker 1: And as you're doing that, you're thinking, oh, right, I

51
00:03:00,120 --> 00:03:02,040
Speaker 1: do need to buy a new two piece bathing suit

52
00:03:03,000 --> 00:03:06,720
Speaker 1: or something similar. I mean, I think that way too

53
00:03:06,760 --> 00:03:11,360
Speaker 1: frequently anyway. The late seventies and early eighties marked a

54
00:03:11,440 --> 00:03:15,880
Speaker 1: new age in consumer electronics, and Circuit City was benefiting

55
00:03:15,919 --> 00:03:18,800
Speaker 1: from that. When it started off as just a television

56
00:03:18,840 --> 00:03:23,560
Speaker 1: appliance and radio business, Suddenly those store shelves got way

57
00:03:23,560 --> 00:03:27,320
Speaker 1: more crowded with other stuff. New gadgets were joining them.

58
00:03:27,360 --> 00:03:31,680
Speaker 1: You had VCRs and both the vhs and the Betamax formats.

59
00:03:32,200 --> 00:03:36,800
Speaker 1: You had laser disc players, you had cassette players, record players.

60
00:03:36,880 --> 00:03:40,160
Speaker 1: Later on you would have CD players. You had cordless phones,

61
00:03:40,240 --> 00:03:44,640
Speaker 1: microwave ovens. Much much later, like in the late nineties,

62
00:03:44,720 --> 00:03:50,560
Speaker 1: DVD players would join that. So this succession of new

63
00:03:50,600 --> 00:03:56,440
Speaker 1: products ended up giving Circuit City the base to succeed,

64
00:03:57,120 --> 00:03:59,800
Speaker 1: and because the superstores were so large, they could carry

65
00:03:59,800 --> 00:04:03,480
Speaker 1: all wide variety of products all in one location, and

66
00:04:03,520 --> 00:04:05,920
Speaker 1: the storage space, the warehouse space in the back of

67
00:04:05,960 --> 00:04:07,920
Speaker 1: the store was big enough to allow the stores to

68
00:04:07,960 --> 00:04:11,720
Speaker 1: purchase items from vendors in large amounts in bulk essentially,

69
00:04:12,080 --> 00:04:15,240
Speaker 1: and that lowered the cost of purchase. And then that

70
00:04:15,280 --> 00:04:18,760
Speaker 1: meant they could maximize their profit margins when they sold

71
00:04:18,800 --> 00:04:21,600
Speaker 1: it at a higher price to the customer when they

72
00:04:21,680 --> 00:04:28,200
Speaker 1: made that sale. Now, Wurtzel led the company into an

73
00:04:28,200 --> 00:04:32,360
Speaker 1: intense phase of expansion. Circuit City began to move into

74
00:04:32,360 --> 00:04:36,200
Speaker 1: new markets like Atlanta and Florida. The company would open

75
00:04:36,320 --> 00:04:40,479
Speaker 1: numerous stores in a relatively small region, so they'd open

76
00:04:40,560 --> 00:04:44,719
Speaker 1: maybe five or six stores in a metropolitan area. This

77
00:04:44,800 --> 00:04:47,640
Speaker 1: accomplished a few goals, all of which were benefiting the

78
00:04:47,680 --> 00:04:51,000
Speaker 1: company and a few were benefiting the consumer. For one,

79
00:04:51,080 --> 00:04:54,039
Speaker 1: adding lots of stores in the city meant customers wouldn't

80
00:04:54,040 --> 00:04:56,520
Speaker 1: necessarily have to travel so far to get to a

81
00:04:56,560 --> 00:04:59,680
Speaker 1: specific store. You know, if there's just one location in

82
00:04:59,720 --> 00:05:02,320
Speaker 1: the city, may you have to travel to that location,

83
00:05:02,480 --> 00:05:03,680
Speaker 1: no matter where you may be.

84
00:05:04,240 --> 00:05:04,680
Speaker 2: If there are.

85
00:05:04,680 --> 00:05:08,240
Speaker 1: Multiple locations, you have some choices. That being said, Circuit

86
00:05:08,279 --> 00:05:11,719
Speaker 1: City had made it a practice to purchase cheap land,

87
00:05:12,040 --> 00:05:15,680
Speaker 1: so they were mainly looking at places that weren't necessarily

88
00:05:16,080 --> 00:05:19,839
Speaker 1: in the most populated or convenient spots. That was another

89
00:05:19,880 --> 00:05:24,840
Speaker 1: reason to open several stores. It helped balance that because

90
00:05:25,240 --> 00:05:27,920
Speaker 1: customers would still have to travel a bit, the stores

91
00:05:27,960 --> 00:05:32,600
Speaker 1: didn't tend to be in areas that were convenient to residential.

92
00:05:32,000 --> 00:05:33,200
Speaker 2: Areas for example.

93
00:05:34,360 --> 00:05:37,040
Speaker 1: Now it also meant that they didn't have to spend

94
00:05:37,080 --> 00:05:41,080
Speaker 1: as much money promoting and advertising any individual store, because

95
00:05:41,120 --> 00:05:45,400
Speaker 1: they could group stores together in a single advertising campaign

96
00:05:45,480 --> 00:05:48,720
Speaker 1: for whatever city it might be, and all the stores

97
00:05:48,760 --> 00:05:52,880
Speaker 1: would benefit from this, and that ended up being a

98
00:05:53,240 --> 00:05:56,360
Speaker 1: kind of a money saving effort for the company and

99
00:05:56,760 --> 00:06:00,800
Speaker 1: cutting costs. And this was all new back then. It's

100
00:06:00,800 --> 00:06:03,080
Speaker 1: something that we see a lot of today, or at

101
00:06:03,120 --> 00:06:06,119
Speaker 1: least we have seen a lot of today. You might argue,

102
00:06:06,120 --> 00:06:08,600
Speaker 1: we don't see it as much, mainly because of the

103
00:06:08,640 --> 00:06:12,160
Speaker 1: move to online marketplaces. We'll talk more about that a

104
00:06:12,200 --> 00:06:13,840
Speaker 1: little bit later in this episode.

105
00:06:14,760 --> 00:06:17,680
Speaker 2: So they were keeping the company's.

106
00:06:17,200 --> 00:06:22,880
Speaker 1: Bottom line healthy by managing these costs, by consolidating costs,

107
00:06:23,000 --> 00:06:27,080
Speaker 1: and by maximizing the amount of exposure they were getting

108
00:06:27,120 --> 00:06:30,800
Speaker 1: to customers. But some sad stuff was happening too around

109
00:06:30,800 --> 00:06:33,800
Speaker 1: this time. In nineteen eighty five, the co founders of

110
00:06:33,839 --> 00:06:37,640
Speaker 1: the Wards Company, the company that became Circuit City, Samuel

111
00:06:37,680 --> 00:06:41,440
Speaker 1: Wurtzel and Abraham Haste. Both of them passed away that year.

112
00:06:42,440 --> 00:06:45,479
Speaker 1: They lived long enough to see this little humble TV

113
00:06:45,680 --> 00:06:48,320
Speaker 1: retail shop they had opened way back in nineteen forty

114
00:06:48,400 --> 00:06:52,760
Speaker 1: nine grow into a substantial chain of electronics superstores that

115
00:06:52,800 --> 00:06:57,000
Speaker 1: were in multiple states across the US, But then they

116
00:06:57,040 --> 00:07:00,960
Speaker 1: both passed away in nineteen eighty five. In nineteen eighty six,

117
00:07:01,000 --> 00:07:05,480
Speaker 1: Alan Wurtzel retired as CEO of Circuit City. Now he

118
00:07:05,520 --> 00:07:08,520
Speaker 1: would remain on the board of directors until two thousand

119
00:07:08,520 --> 00:07:11,120
Speaker 1: and one, so he was still active with the company.

120
00:07:11,280 --> 00:07:15,040
Speaker 1: He just wasn't acting as CEO anymore. At the time

121
00:07:15,080 --> 00:07:19,080
Speaker 1: of his retirement, the chain included ninety stores, and sales

122
00:07:19,120 --> 00:07:21,920
Speaker 1: were hovering around the one billion dollar mark.

123
00:07:22,800 --> 00:07:24,520
Speaker 2: In fact, from.

124
00:07:24,720 --> 00:07:28,360
Speaker 1: Nineteen eighty three to nineteen eighty seven, Circuit City had

125
00:07:28,360 --> 00:07:32,560
Speaker 1: the best return on investments on the New York Stock Exchange,

126
00:07:32,560 --> 00:07:35,960
Speaker 1: meaning if you invested money in Circuit City in nineteen

127
00:07:36,000 --> 00:07:39,920
Speaker 1: eighty three, your return was better than any other investment

128
00:07:39,960 --> 00:07:41,960
Speaker 1: you could have made that year, and it remained so

129
00:07:42,040 --> 00:07:45,760
Speaker 1: for the next four years, and even since nineteen sixty

130
00:07:45,760 --> 00:07:48,400
Speaker 1: five it had been listed on the Fortune five hundred

131
00:07:48,440 --> 00:07:52,920
Speaker 1: list of companies nineteen sixty five on it consistently made

132
00:07:52,920 --> 00:07:56,200
Speaker 1: that list and would continue to do so up until

133
00:07:56,320 --> 00:08:00,400
Speaker 1: nineteen ninety five. But that gets a little bit ahead

134
00:08:00,440 --> 00:08:02,320
Speaker 1: of where we want to be right now. I'll get

135
00:08:02,400 --> 00:08:04,720
Speaker 1: into more of the troubles that led to the fall

136
00:08:04,760 --> 00:08:09,960
Speaker 1: from Grace in a bit now. Alan Wurtzel's successor was

137
00:08:10,000 --> 00:08:12,760
Speaker 1: a man named Richard Sharp, and in the last episode

138
00:08:12,760 --> 00:08:15,280
Speaker 1: I mentioned that Sharp had been hired on at an

139
00:08:15,320 --> 00:08:20,480
Speaker 1: executive vice president level outside the company, so that was

140
00:08:20,680 --> 00:08:23,360
Speaker 1: kind of counter to some of the company's core values,

141
00:08:23,400 --> 00:08:27,040
Speaker 1: which included promoting from within. Instead of promoting from within,

142
00:08:27,200 --> 00:08:32,520
Speaker 1: they found this very intelligent, capable hardware and software guy

143
00:08:32,880 --> 00:08:36,360
Speaker 1: and brought him on. His performance was impressive. He had

144
00:08:36,360 --> 00:08:39,320
Speaker 1: designed a computer system for Circuit City that made operations

145
00:08:39,400 --> 00:08:42,040
Speaker 1: much more efficient and effective, and when he stepped in

146
00:08:42,080 --> 00:08:45,040
Speaker 1: as president and CEO of Circuit City, the company was

147
00:08:45,120 --> 00:08:48,040
Speaker 1: on the rise. He would end up pushing it farther,

148
00:08:48,200 --> 00:08:51,880
Speaker 1: going into the stratosphere, though a lot of people have

149
00:08:52,080 --> 00:08:55,120
Speaker 1: argued later on that it might have been his leadership

150
00:08:55,160 --> 00:08:58,439
Speaker 1: that ultimately set the company on the path to self destruction.

151
00:08:59,440 --> 00:09:01,679
Speaker 1: I'll let you go, guys, kind of decide what you

152
00:09:01,720 --> 00:09:03,720
Speaker 1: think once we get to the end of this episode.

153
00:09:03,920 --> 00:09:07,880
Speaker 1: I'm not entirely sold on the idea that Sharp was

154
00:09:08,240 --> 00:09:10,840
Speaker 1: the beginning of the end. I think he made some

155
00:09:11,000 --> 00:09:14,960
Speaker 1: decisions that were ultimately poor ones, but I don't know

156
00:09:14,960 --> 00:09:18,520
Speaker 1: that they were ones that Circuit City couldn't have rebounded from.

157
00:09:18,679 --> 00:09:21,960
Speaker 1: And so we'll get into that a little bit. Let's

158
00:09:21,960 --> 00:09:26,120
Speaker 1: talk about who he was first. So Richard Rick Sharp

159
00:09:26,600 --> 00:09:29,800
Speaker 1: was born on April twelfth, nineteen forty seven, just two

160
00:09:29,920 --> 00:09:33,520
Speaker 1: years before Samuel Wurtzel founded the company that would become

161
00:09:33,600 --> 00:09:37,360
Speaker 1: Circuit City. He grew up in the Washington, DC area

162
00:09:37,480 --> 00:09:41,960
Speaker 1: and attended George Washington High School in Alexandria, Virginia. He

163
00:09:42,040 --> 00:09:44,600
Speaker 1: first went to college to study electrical engineering at the

164
00:09:44,679 --> 00:09:47,800
Speaker 1: University of Virginia, but discovered that that really wasn't his

165
00:09:47,880 --> 00:09:50,400
Speaker 1: cup of tea. He wasn't so much interested in electrical

166
00:09:50,400 --> 00:09:53,440
Speaker 1: engineering as he was in computer science, so he dropped

167
00:09:53,440 --> 00:09:56,559
Speaker 1: out of college and for a short while he pursued

168
00:09:56,600 --> 00:10:02,200
Speaker 1: some slightly less academic interests, like playing poker and shooting pool.

169
00:10:03,320 --> 00:10:07,280
Speaker 1: I usually do the opposite. Shooting poker, however terrible. I

170
00:10:07,320 --> 00:10:10,320
Speaker 1: don't recommend it. He wasn't idol for long, and soon

171
00:10:10,559 --> 00:10:13,400
Speaker 1: he was attending the College of William and Mary studying

172
00:10:13,400 --> 00:10:16,000
Speaker 1: computer science and then went on to attend the Harvard

173
00:10:16,040 --> 00:10:17,920
Speaker 1: Business School's management program.

174
00:10:18,360 --> 00:10:19,240
Speaker 2: When he was twenty.

175
00:10:19,080 --> 00:10:21,840
Speaker 1: Seven years old, he founded a hardware and software business

176
00:10:21,880 --> 00:10:24,559
Speaker 1: development company, and he was really good at what he did.

177
00:10:24,679 --> 00:10:26,920
Speaker 1: He impressed the folks at Circuit City, which is why

178
00:10:26,960 --> 00:10:29,559
Speaker 1: they hired him on at that executive vice president level.

179
00:10:30,320 --> 00:10:33,920
Speaker 1: He joined in nineteen eighty two, and just four years

180
00:10:34,000 --> 00:10:37,520
Speaker 1: later he became the leader of the company. By nineteen

181
00:10:37,559 --> 00:10:40,840
Speaker 1: ninety four he became the chairman of the board. Now,

182
00:10:40,840 --> 00:10:45,199
Speaker 1: while the company was opening new locations in Georgia and Florida,

183
00:10:45,240 --> 00:10:49,920
Speaker 1: it also was working toward eliminating unnecessary drains on profits. Now,

184
00:10:49,960 --> 00:10:53,040
Speaker 1: among those drains were those Lafayette stores I mentioned in

185
00:10:53,080 --> 00:10:56,400
Speaker 1: the previous podcast. These were the stores located in the

186
00:10:56,440 --> 00:10:59,960
Speaker 1: New York area and originally they had sold stereo equipment.

187
00:11:00,600 --> 00:11:05,000
Speaker 1: When Circuit City, back then the Wards Company, purchased those stores,

188
00:11:05,320 --> 00:11:08,240
Speaker 1: there were only eight. By nineteen eighty six they had fifteen,

189
00:11:08,320 --> 00:11:10,760
Speaker 1: but they weren't performing well. They were unprofitable, so the

190
00:11:10,800 --> 00:11:13,920
Speaker 1: company shut down the stores and it would continue having

191
00:11:14,000 --> 00:11:17,520
Speaker 1: trouble penetrating the New York market because the New York

192
00:11:17,559 --> 00:11:20,080
Speaker 1: market was already saturated with lots of stores that would

193
00:11:20,120 --> 00:11:23,160
Speaker 1: engage in price slashing. That was not really a model

194
00:11:23,200 --> 00:11:26,080
Speaker 1: that Circuit City was suited for. Circuit City was still

195
00:11:26,160 --> 00:11:30,760
Speaker 1: using commissioned sales, and the commission sales depended upon salespeople

196
00:11:30,800 --> 00:11:35,000
Speaker 1: trying to sell products at the highest price they could.

197
00:11:35,360 --> 00:11:37,040
Speaker 1: Doesn't really work for price slashing.

198
00:11:37,559 --> 00:11:40,559
Speaker 2: So the Circuit City experience was supposed.

199
00:11:40,120 --> 00:11:46,000
Speaker 1: To be haggle free, but you could often argue down

200
00:11:46,080 --> 00:11:48,400
Speaker 1: a salesperson from the price that was on the ticket,

201
00:11:48,440 --> 00:11:51,680
Speaker 1: at least in the old Wards Company days, and Circuit

202
00:11:51,679 --> 00:11:53,800
Speaker 1: City just couldn't survive in a market where other business

203
00:11:53,840 --> 00:11:57,480
Speaker 1: owners were regularly cutting prices in order to compete for customers.

204
00:11:58,480 --> 00:12:00,000
Speaker 2: Also, in nineteen eighty six.

205
00:12:00,080 --> 00:12:04,160
Speaker 1: Circuit City shut down one other relationship it had earlier established,

206
00:12:04,200 --> 00:12:07,000
Speaker 1: that would be the discount store in California called Zodi's.

207
00:12:07,040 --> 00:12:10,960
Speaker 1: I mentioned them in the last episode two. They At

208
00:12:10,960 --> 00:12:14,440
Speaker 1: that point, Circuit City had been operating four different lines

209
00:12:14,480 --> 00:12:17,480
Speaker 1: of stores. You had the superstores, you had the smaller

210
00:12:17,559 --> 00:12:19,920
Speaker 1: Circuit City stores, you had Zodi's, and you had the

211
00:12:20,000 --> 00:12:23,240
Speaker 1: Lafayette stores. By getting rid of the Lafayette and Zodi's,

212
00:12:23,840 --> 00:12:27,680
Speaker 1: they were able to consolidate Circuit Citi's strategy and simplify

213
00:12:27,760 --> 00:12:31,120
Speaker 1: matters From a managerial standpoint. The money the company reclaimed

214
00:12:31,120 --> 00:12:35,160
Speaker 1: from operating those businesses could be reinvested by opening more

215
00:12:35,280 --> 00:12:40,280
Speaker 1: superstores in California and the southeastern United States in nineteen

216
00:12:40,320 --> 00:12:43,439
Speaker 1: eighty seven and eighty eight. The company prospered and grew,

217
00:12:43,520 --> 00:12:46,840
Speaker 1: and it was fueled by this demand for consumer electronics

218
00:12:46,880 --> 00:12:49,600
Speaker 1: like the VCR, which by that time was viewed as

219
00:12:49,640 --> 00:12:53,240
Speaker 1: a standard component in your typical home theater system.

220
00:12:53,840 --> 00:12:55,040
Speaker 2: Sales grew over.

221
00:12:54,960 --> 00:12:58,440
Speaker 1: One billion dollars a year and the number of stores

222
00:12:58,480 --> 00:13:00,400
Speaker 1: increased to one hundred fifty.

223
00:13:01,480 --> 00:13:02,760
Speaker 2: Circuit City had already.

224
00:13:02,559 --> 00:13:05,400
Speaker 1: Experimented with mall store fronts in the past, and decided

225
00:13:05,440 --> 00:13:07,880
Speaker 1: to try and give it another shot with a new

226
00:13:07,960 --> 00:13:09,160
Speaker 1: idea new brand.

227
00:13:09,600 --> 00:13:09,920
Speaker 2: This time.

228
00:13:10,000 --> 00:13:12,840
Speaker 1: The company planned to open twenty stores, and they branded

229
00:13:12,840 --> 00:13:15,920
Speaker 1: them Impulse And I think that's a pretty clever name

230
00:13:15,920 --> 00:13:19,359
Speaker 1: for a store that specialized in selling small electronic devices,

231
00:13:19,400 --> 00:13:22,080
Speaker 1: particularly the kind you might purchase as a gift or

232
00:13:22,120 --> 00:13:27,839
Speaker 1: a stocking stuffer. It's the very definition of an impulse buy. Now,

233
00:13:27,880 --> 00:13:31,000
Speaker 1: whether the executives at Circuit City intended that meaning to

234
00:13:31,040 --> 00:13:33,400
Speaker 1: be part of the name or not, it definitely was

235
00:13:33,440 --> 00:13:37,080
Speaker 1: the foundation for their sales strategy and it worked and

236
00:13:37,120 --> 00:13:39,360
Speaker 1: a few years later the company made plans to open

237
00:13:39,440 --> 00:13:43,480
Speaker 1: dozens of other stores in malls within their territory. That's

238
00:13:43,480 --> 00:13:45,920
Speaker 1: good to mention that more than a billion dollars in

239
00:13:46,000 --> 00:13:49,160
Speaker 1: sales is not the same thing as a billion dollars

240
00:13:49,280 --> 00:13:52,760
Speaker 1: in profits. Profits are what you get when you deduct

241
00:13:52,760 --> 00:13:56,800
Speaker 1: your costs from your revenue. Now, Circuit City's profits by

242
00:13:56,880 --> 00:14:00,400
Speaker 1: nineteen eighty nine were just under seventy million dollars. Not

243
00:14:00,520 --> 00:14:03,040
Speaker 1: still a heck of a lot of money, but it

244
00:14:03,080 --> 00:14:05,360
Speaker 1: shows how much work the company had to do in

245
00:14:05,480 --> 00:14:08,959
Speaker 1: order to make that kind of profit. A billion dollars

246
00:14:08,960 --> 00:14:13,400
Speaker 1: in sales for seventy million dollars in profit. Also, the

247
00:14:13,400 --> 00:14:16,000
Speaker 1: company managed to do this while there was another economic

248
00:14:16,040 --> 00:14:17,079
Speaker 1: recession in effect.

249
00:14:17,640 --> 00:14:19,960
Speaker 2: So how did it do that? Well?

250
00:14:20,000 --> 00:14:25,240
Speaker 1: Mainly their success hinged on new consumer electronic products coming out. So,

251
00:14:25,360 --> 00:14:27,520
Speaker 1: as you guys are probably aware, I've been going to

252
00:14:27,640 --> 00:14:32,040
Speaker 1: CES also formerly known as the Consumer Electronics Show, every

253
00:14:32,080 --> 00:14:34,400
Speaker 1: year in Las Vegas, Nevada since two thousand and eight.

254
00:14:34,760 --> 00:14:36,080
Speaker 2: Circuit City would be.

255
00:14:36,120 --> 00:14:39,080
Speaker 1: A company that would pay very close attention to trade shows.

256
00:14:39,160 --> 00:14:40,560
Speaker 2: Like cees, the.

257
00:14:40,520 --> 00:14:44,440
Speaker 1: Company depended upon new compelling products to come out so

258
00:14:44,480 --> 00:14:47,840
Speaker 1: that they could offer them in their retail stores. In fact,

259
00:14:48,080 --> 00:14:52,280
Speaker 1: stores like Circuit City are why those trade shows exist. Now,

260
00:14:52,320 --> 00:14:55,560
Speaker 1: sometimes we in the tech media I include myself here,

261
00:14:55,640 --> 00:14:59,000
Speaker 1: we forget this as we walk around waiting to be

262
00:14:59,080 --> 00:15:03,360
Speaker 1: blown away by a groundbreaking product or a new category

263
00:15:03,520 --> 00:15:05,040
Speaker 1: defining technology.

264
00:15:05,560 --> 00:15:06,720
Speaker 2: But the real reason.

265
00:15:06,440 --> 00:15:09,600
Speaker 1: Those trade shows exist is to let retailers get a

266
00:15:09,600 --> 00:15:11,640
Speaker 1: look at the products that will soon be available for

267
00:15:11,720 --> 00:15:14,760
Speaker 1: customers so that they can create a sales strategy for

268
00:15:14,800 --> 00:15:17,120
Speaker 1: the near future and figure out which products they want

269
00:15:17,120 --> 00:15:18,600
Speaker 1: to carry in their stores.

270
00:15:18,600 --> 00:15:21,320
Speaker 2: That's the real reason for those trade shows.

271
00:15:21,760 --> 00:15:25,400
Speaker 1: The press's presence is really just icing on the cake.

272
00:15:25,520 --> 00:15:27,720
Speaker 1: Who has the stuff we report on ends up being

273
00:15:27,960 --> 00:15:32,440
Speaker 1: advertising for both the companies making the cool products and

274
00:15:32,480 --> 00:15:35,000
Speaker 1: the ones that are going to end up selling them.

275
00:15:35,400 --> 00:15:38,040
Speaker 1: Back in the eighties and nineties, those retail establishments were

276
00:15:38,080 --> 00:15:42,560
Speaker 1: primarily superstores like Circuit City, So in many ways, Circuit

277
00:15:42,600 --> 00:15:47,720
Speaker 1: cities booming years can be attributed to advances in consumer electronics,

278
00:15:47,760 --> 00:15:51,280
Speaker 1: from the migration of cassette players to CD players to

279
00:15:51,480 --> 00:15:54,720
Speaker 1: the similar trend of VCRs to DVD players. Much later,

280
00:15:55,120 --> 00:15:58,680
Speaker 1: Circuit City also got into the personal computer retail business,

281
00:15:58,840 --> 00:16:02,800
Speaker 1: beginning in nineteen eighty nine. Now by nineteen ninety, the

282
00:16:02,840 --> 00:16:07,240
Speaker 1: company's sales had hit two billion dollars. Circuit City began

283
00:16:07,320 --> 00:16:10,640
Speaker 1: opening smaller stores and markets that seemed to be too

284
00:16:10,680 --> 00:16:14,280
Speaker 1: small to support a full superstore, and a few years

285
00:16:14,320 --> 00:16:17,880
Speaker 1: later the company introduced a new department in superstores that

286
00:16:17,960 --> 00:16:22,760
Speaker 1: sold music like actual albums as opposed to just the

287
00:16:23,200 --> 00:16:26,240
Speaker 1: equipment that plays music. This was a move that put

288
00:16:26,280 --> 00:16:29,520
Speaker 1: a ton of pressure on smaller independent music stores and

289
00:16:29,640 --> 00:16:32,880
Speaker 1: music chains. I remember a lot of those, both the

290
00:16:33,200 --> 00:16:36,400
Speaker 1: chains and the independent businesses that used to specialize in

291
00:16:36,440 --> 00:16:38,960
Speaker 1: selling music. In my neck of the woods, we had

292
00:16:38,960 --> 00:16:43,040
Speaker 1: a regional chain called Turtles Records and Tapes. I remember

293
00:16:43,160 --> 00:16:45,680
Speaker 1: fondly going into Turtles because that was where not only

294
00:16:45,720 --> 00:16:49,000
Speaker 1: would you buy albums, you could purchase tickets to concerts there.

295
00:16:50,040 --> 00:16:53,240
Speaker 1: And then there were the truly independent mom and pop shops.

296
00:16:53,320 --> 00:16:55,280
Speaker 1: Turtles was still a chain, but there were lots of

297
00:16:55,280 --> 00:16:58,360
Speaker 1: independence stores too, and all of these were pressured by

298
00:16:58,400 --> 00:17:02,000
Speaker 1: the superstore movement into their tis territory. Now that we've

299
00:17:02,000 --> 00:17:05,400
Speaker 1: crept up into the early nineties, it's a good time

300
00:17:05,440 --> 00:17:08,080
Speaker 1: to talk about some of the competitors that rose up

301
00:17:08,119 --> 00:17:11,520
Speaker 1: to face Circuit City. But first, let's take a quick

302
00:17:11,560 --> 00:17:23,040
Speaker 1: break to thank our sponsor. Okay, you can't really talk

303
00:17:23,080 --> 00:17:27,480
Speaker 1: about Circuit City without mentioning their chief competitor, which I

304
00:17:27,520 --> 00:17:30,000
Speaker 1: would argue was Best Buy. I could do a full

305
00:17:30,080 --> 00:17:32,960
Speaker 1: episode on the best Buy story, but let me give

306
00:17:33,000 --> 00:17:36,280
Speaker 1: you the cliffs Notes version. Do they even still have

307
00:17:36,320 --> 00:17:39,840
Speaker 1: cliffs Notes? Do you guys get that reference? Well, anyway,

308
00:17:39,840 --> 00:17:43,399
Speaker 1: here's a summary to tide us over. Best Buy began

309
00:17:43,640 --> 00:17:47,479
Speaker 1: as a chain of music stores in Minnesota in nineteen

310
00:17:47,600 --> 00:17:51,080
Speaker 1: sixty six. It was founded by a man named Richard Shulz,

311
00:17:51,520 --> 00:17:52,920
Speaker 1: and originally.

312
00:17:52,720 --> 00:17:55,320
Speaker 2: The store was called Sound of Music.

313
00:17:55,960 --> 00:17:58,440
Speaker 1: I don't know if the hills are alive in Minnesota,

314
00:17:58,520 --> 00:18:01,399
Speaker 1: but they did have the Sound of Music stores. In

315
00:18:01,480 --> 00:18:04,399
Speaker 1: nineteen eighty two, one of those stores was damaged in

316
00:18:04,480 --> 00:18:08,600
Speaker 1: a tornado. The store held a special tornado sale and

317
00:18:08,640 --> 00:18:12,000
Speaker 1: they called it a Best Buy sale. The event was

318
00:18:12,040 --> 00:18:14,520
Speaker 1: so successful the company decided to hold one every year.

319
00:18:15,880 --> 00:18:18,760
Speaker 1: That being a special sale, not holding a tornado. The

320
00:18:18,800 --> 00:18:22,399
Speaker 1: company didn't schedule tornadoes. I don't think you would want to.

321
00:18:22,480 --> 00:18:23,040
Speaker 2: Those things are.

322
00:18:23,119 --> 00:18:27,840
Speaker 1: Terrible, but the sales went over like Gangbusters. Eventually, the

323
00:18:27,880 --> 00:18:30,920
Speaker 1: company changed its name to best Buy, the same name

324
00:18:30,960 --> 00:18:33,640
Speaker 1: as those sales that made it famous, and that made

325
00:18:33,720 --> 00:18:36,000
Speaker 1: more sense than Sound of Music anyway, because by that

326
00:18:36,080 --> 00:18:38,280
Speaker 1: time the stores were also beginning to carry lots of

327
00:18:38,400 --> 00:18:42,320
Speaker 1: unrelated stuff, things that had nothing to do with audio

328
00:18:42,480 --> 00:18:46,719
Speaker 1: or music. Throughout the eighties, best Buy began to grow,

329
00:18:46,880 --> 00:18:49,639
Speaker 1: and by the early nineties it had expanded into a

330
00:18:49,720 --> 00:18:53,879
Speaker 1: national chain. Circuit City still dominated the market at that time,

331
00:18:54,080 --> 00:18:57,320
Speaker 1: and it seemed like no one at the company really

332
00:18:57,440 --> 00:19:01,439
Speaker 1: took best Buy seriously. In fact, Alan Wurtzel said that

333
00:19:01,680 --> 00:19:04,600
Speaker 1: at that time, no one at Circuit City really considered

334
00:19:04,760 --> 00:19:07,959
Speaker 1: any competition as being anything more than just an annoyance.

335
00:19:08,560 --> 00:19:11,280
Speaker 1: Now you could call that hubris or arrogance, but at

336
00:19:11,320 --> 00:19:14,120
Speaker 1: the time it seemed like Circuit City was firmly on

337
00:19:14,160 --> 00:19:20,280
Speaker 1: the prosperity highway and hindsight is twenty twenty. Best Buy, meanwhile,

338
00:19:20,359 --> 00:19:25,160
Speaker 1: benefited from Circuit City success because Best Buy executives were

339
00:19:25,200 --> 00:19:28,680
Speaker 1: able to learn from the path that was forged by

340
00:19:28,680 --> 00:19:32,600
Speaker 1: Circuit City. They could employ the most successful strategies and

341
00:19:32,680 --> 00:19:36,200
Speaker 1: avoid the pitfalls that Circuit City had identified during its

342
00:19:36,240 --> 00:19:38,680
Speaker 1: growth phase. Because Circuit City was sort of the pioneer.

343
00:19:39,160 --> 00:19:41,800
Speaker 1: Best Buy, following behind, could say, oh, well, we want

344
00:19:41,800 --> 00:19:43,560
Speaker 1: to go this way, but we won't make the same

345
00:19:43,600 --> 00:19:46,399
Speaker 1: mistake that they did. We can avoid that, save money,

346
00:19:46,560 --> 00:19:49,160
Speaker 1: and expand faster. So it gave Best Buy a chance

347
00:19:49,200 --> 00:19:53,080
Speaker 1: to catch up quickly to Circuit City. With companies like

348
00:19:53,119 --> 00:19:56,399
Speaker 1: best Buy biting at Circuit City's heels, the company became

349
00:19:56,440 --> 00:19:59,720
Speaker 1: motivated to get into the price slashing business.

350
00:20:00,080 --> 00:20:02,040
Speaker 2: This stay competitive. Now.

351
00:20:02,080 --> 00:20:05,280
Speaker 1: At this point, Circuit City was still in the lead,

352
00:20:05,560 --> 00:20:08,840
Speaker 1: and Richard Sharp had decided that the company should diversify

353
00:20:08,920 --> 00:20:14,160
Speaker 1: what it offered. What if the company could sell used cars? Well,

354
00:20:14,160 --> 00:20:17,679
Speaker 1: that's a step too far for just a Circuit City brand,

355
00:20:17,680 --> 00:20:21,000
Speaker 1: but it provided the inspiration for Sharp to guide Circuit

356
00:20:21,000 --> 00:20:25,000
Speaker 1: City into launching a new company that was a subsidiary,

357
00:20:25,359 --> 00:20:28,160
Speaker 1: and it specialized in selling used cars. And I bet

358
00:20:28,160 --> 00:20:31,280
Speaker 1: you've heard of it, because in September nineteen ninety three,

359
00:20:31,600 --> 00:20:35,880
Speaker 1: the first CarMax location opened in Richmond, Virginia. And yes,

360
00:20:36,119 --> 00:20:41,399
Speaker 1: CarMax originated as a Circuit City company. And while Circuit

361
00:20:41,400 --> 00:20:44,720
Speaker 1: City would eventually die in two thousand and nine, spoiler alert,

362
00:20:45,240 --> 00:20:48,640
Speaker 1: CarMax is still around. But in those early years Carmacks

363
00:20:48,640 --> 00:20:50,879
Speaker 1: had a rough start, and since Circuit City had a

364
00:20:50,920 --> 00:20:56,520
Speaker 1: stake in the company, it also hit Circuit City pretty hard. Also,

365
00:20:56,640 --> 00:21:00,640
Speaker 1: launching Carmacks wasn't going to stave off those competitors best Buy.

366
00:21:00,720 --> 00:21:03,359
Speaker 1: To do that, Circuit City stores began to engage in

367
00:21:03,400 --> 00:21:06,080
Speaker 1: that price slashing, at least in the markets where Best

368
00:21:06,080 --> 00:21:09,680
Speaker 1: Buy stores were trying to get a foothold. So if

369
00:21:09,720 --> 00:21:12,520
Speaker 1: you happened to live in a city that had both

370
00:21:12,600 --> 00:21:16,360
Speaker 1: Best Buy stores and Circuit City stores, you benefited from

371
00:21:16,400 --> 00:21:19,040
Speaker 1: this because you could get a better bargain for your product.

372
00:21:18,720 --> 00:21:20,000
Speaker 2: If you shopped at Circuit City.

373
00:21:20,560 --> 00:21:22,959
Speaker 1: But if you lived in a place where only Circuit

374
00:21:22,960 --> 00:21:26,200
Speaker 1: City existed, you didn't see that benefit because there was

375
00:21:26,240 --> 00:21:29,480
Speaker 1: no need for them to slash prices. Best Buy wasn't

376
00:21:29,520 --> 00:21:33,560
Speaker 1: there to siphon off any of the business. The two

377
00:21:33,560 --> 00:21:38,400
Speaker 1: companies had very different sales strategies. At Best Buy, employees

378
00:21:38,400 --> 00:21:41,400
Speaker 1: were trained to be able to answer basic customer questions

379
00:21:41,400 --> 00:21:45,040
Speaker 1: and assist when necessary, but largely customers had kind of

380
00:21:45,080 --> 00:21:48,160
Speaker 1: a help yourself approach, like walk into a store, see

381
00:21:48,200 --> 00:21:50,120
Speaker 1: the thing they wanted to buy, put it in a cart,

382
00:21:50,160 --> 00:21:51,160
Speaker 1: and go to checkout.

383
00:21:51,320 --> 00:21:53,640
Speaker 2: That's how it would work. At best Buy, you.

384
00:21:53,640 --> 00:21:55,680
Speaker 1: Might get asked by an employee if there's anything he

385
00:21:55,800 --> 00:21:58,119
Speaker 1: or she could do to help you find, but that

386
00:21:58,160 --> 00:22:00,720
Speaker 1: would be about it until you made your purchase. But

387
00:22:00,840 --> 00:22:04,600
Speaker 1: over at Circuit City, salespeople were still working on commission,

388
00:22:04,840 --> 00:22:07,080
Speaker 1: so the experience was very different. You walk into a

389
00:22:07,080 --> 00:22:11,520
Speaker 1: circuit City, you would see demonstration models of various products,

390
00:22:11,920 --> 00:22:14,920
Speaker 1: but for the most part, you couldn't pick anything up.

391
00:22:15,160 --> 00:22:17,760
Speaker 1: Everything was in boxes in the warehouse and you would

392
00:22:17,760 --> 00:22:21,320
Speaker 1: talk to a salesperson who would make a sale, establish

393
00:22:21,400 --> 00:22:24,080
Speaker 1: whatever the price was that you're paying. Then they would

394
00:22:24,119 --> 00:22:26,439
Speaker 1: go into the back and get the thing that you

395
00:22:26,520 --> 00:22:28,760
Speaker 1: were interested in buying, bring it out to you, and

396
00:22:28,840 --> 00:22:29,520
Speaker 1: then you would go.

397
00:22:29,480 --> 00:22:30,159
Speaker 2: And purchase it.

398
00:22:30,720 --> 00:22:35,240
Speaker 1: So very different models, and it meant that over at

399
00:22:35,240 --> 00:22:38,080
Speaker 1: Circuit City, a salesperson made more money if they made

400
00:22:38,280 --> 00:22:42,000
Speaker 1: more sales, they had an incentive to sell more to

401
00:22:42,160 --> 00:22:43,040
Speaker 1: more customers.

402
00:22:43,480 --> 00:22:45,040
Speaker 2: At best Buy that wasn't the case.

403
00:22:45,040 --> 00:22:48,399
Speaker 1: People were on an hourly wage, no commissions, so the

404
00:22:48,440 --> 00:22:51,840
Speaker 1: customer experience at Circuit City was very different from Best Buy.

405
00:22:51,960 --> 00:22:55,480
Speaker 1: If you walk into a circuit City and you encountered

406
00:22:55,480 --> 00:22:58,480
Speaker 1: a salesperson who didn't have a particularly subtle approach, you

407
00:22:58,560 --> 00:23:02,200
Speaker 1: might feel pressured when shopping for electronics, which a lot

408
00:23:02,240 --> 00:23:06,760
Speaker 1: of folks react negatively toward. Circuit City executives felt that

409
00:23:06,800 --> 00:23:08,679
Speaker 1: their approach was actually the best one, which is why

410
00:23:08,720 --> 00:23:11,440
Speaker 1: they stuck with it for so long. It motivated their

411
00:23:11,480 --> 00:23:16,320
Speaker 1: sales force and it drove revenue because salespeople were selling

412
00:23:16,359 --> 00:23:20,040
Speaker 1: those higher margin products, the things that cost more money

413
00:23:20,040 --> 00:23:22,919
Speaker 1: and you would make more profit from because the cost

414
00:23:23,320 --> 00:23:25,800
Speaker 1: to the consumer was much higher than what it cost

415
00:23:25,920 --> 00:23:27,520
Speaker 1: Circuit City to purchase.

416
00:23:27,119 --> 00:23:27,760
Speaker 2: From a vendor.

417
00:23:28,680 --> 00:23:30,960
Speaker 1: The company at that point was valued at more than

418
00:23:31,000 --> 00:23:35,119
Speaker 1: a billion dollars, and they continued to grow and open

419
00:23:35,200 --> 00:23:39,639
Speaker 1: up new superstores in various markets. Meanwhile, Best Buy was

420
00:23:39,680 --> 00:23:42,919
Speaker 1: starting to gain ground, and by nineteen ninety five, it

421
00:23:42,960 --> 00:23:46,000
Speaker 1: was competing with Circuit City in about half of the

422
00:23:46,119 --> 00:23:49,879
Speaker 1: larger company's markets. So half the stores that Circuit City

423
00:23:49,920 --> 00:23:52,960
Speaker 1: owned were competing with Best Buy. The other half were

424
00:23:53,000 --> 00:23:55,400
Speaker 1: in markets the Best Buy had not quite penetrated yet.

425
00:23:55,840 --> 00:23:58,840
Speaker 1: Best Buy was also taking a different strategy when choosing

426
00:23:58,920 --> 00:24:03,119
Speaker 1: store locations. Remember I mentioned that those Circuit City superstores

427
00:24:03,119 --> 00:24:06,399
Speaker 1: were located on cheap land, which wasn't always convenient to

428
00:24:06,560 --> 00:24:09,080
Speaker 1: local populations. It could be really out of the way.

429
00:24:09,640 --> 00:24:12,399
Speaker 1: Best Buy tried to avoid that same problem and find

430
00:24:12,480 --> 00:24:17,320
Speaker 1: areas close to population centers and pay that higher upfront

431
00:24:17,359 --> 00:24:23,000
Speaker 1: cost because it was access to more customers, and they

432
00:24:23,240 --> 00:24:25,080
Speaker 1: figured that people would be more willing to go to

433
00:24:25,119 --> 00:24:28,040
Speaker 1: a store that's closer to their home rather than travel

434
00:24:28,040 --> 00:24:32,639
Speaker 1: across town to go to a competitors superstore. Other stores

435
00:24:32,640 --> 00:24:35,320
Speaker 1: besides Best Buy were also pushing up against the giant,

436
00:24:35,560 --> 00:24:39,760
Speaker 1: which created a much more competitive environment for Circuit City. Still,

437
00:24:39,920 --> 00:24:42,040
Speaker 1: at that point, the company was really doing great. It

438
00:24:42,119 --> 00:24:45,640
Speaker 1: hit seven billion dollars in sales in nineteen ninety five,

439
00:24:45,720 --> 00:24:48,080
Speaker 1: with earnings at a twenty percent growth rate.

440
00:24:48,760 --> 00:24:51,480
Speaker 2: It seemed like the company was unstoppable. It was too

441
00:24:51,560 --> 00:24:52,280
Speaker 2: big to fail.

442
00:24:52,600 --> 00:24:58,480
Speaker 1: Accept it totally wasn't bump bump bomb. Nineteen ninety five

443
00:24:58,520 --> 00:25:01,080
Speaker 1: really is the turning point year. That's the year where

444
00:25:01,080 --> 00:25:04,560
Speaker 1: we see Circuit City doing incredibly well, and afterward we

445
00:25:04,680 --> 00:25:07,560
Speaker 1: start to see it falter. In nineteen ninety six, Best

446
00:25:07,560 --> 00:25:12,600
Speaker 1: Buy sales officially outperformed Circuit City sales. Now Circuit City

447
00:25:12,640 --> 00:25:14,840
Speaker 1: was still doing well, just not as well as the

448
00:25:14,880 --> 00:25:18,120
Speaker 1: company had been doing in previous years. This would become

449
00:25:18,119 --> 00:25:20,639
Speaker 1: a familiar story over the next few years. The company

450
00:25:20,680 --> 00:25:24,280
Speaker 1: continue to see earnings grow, but they were growing by

451
00:25:24,320 --> 00:25:27,480
Speaker 1: smaller amounts with occasional rallies over the next few years.

452
00:25:27,480 --> 00:25:30,119
Speaker 1: So you might say, in one year they'd see twenty

453
00:25:30,160 --> 00:25:34,520
Speaker 1: percent growth, the next year they might see fifteen percent growth,

454
00:25:34,800 --> 00:25:37,679
Speaker 1: the next year might be seven percent growth. And like

455
00:25:37,680 --> 00:25:40,280
Speaker 1: I said, there were a couple of rallies. But seeing

456
00:25:40,440 --> 00:25:44,440
Speaker 1: the growth slow like that is terrifying to companies, particularly

457
00:25:44,520 --> 00:25:50,320
Speaker 1: publicly traded companies, because shareholders expect a return on their investment. Now,

458
00:25:50,640 --> 00:25:53,040
Speaker 1: that continued to go until about two thousand and two,

459
00:25:53,200 --> 00:25:55,719
Speaker 1: when the company had what folks in the industry referred

460
00:25:55,720 --> 00:26:00,520
Speaker 1: to as negative growth, which means the company last money.

461
00:26:00,800 --> 00:26:03,160
Speaker 1: It didn't grow at all. It actually shrank a bit.

462
00:26:03,280 --> 00:26:05,639
Speaker 1: It was only a tiny amount. It was zero point

463
00:26:05,920 --> 00:26:08,960
Speaker 1: seven percent negative growth, but that is a terrible sign.

464
00:26:09,560 --> 00:26:13,840
Speaker 1: Best Buy, meanwhile, had experienced a pretty wild growth rate

465
00:26:14,000 --> 00:26:17,359
Speaker 1: over that seeing period of time, but it was always

466
00:26:17,400 --> 00:26:20,320
Speaker 1: in the positive space. So some years it was growing

467
00:26:20,640 --> 00:26:23,679
Speaker 1: a lot, some years it wasn't growing as much, but

468
00:26:24,040 --> 00:26:25,120
Speaker 1: it was always positive.

469
00:26:25,840 --> 00:26:27,320
Speaker 2: And part of the reason that it's kind of.

470
00:26:27,320 --> 00:26:30,800
Speaker 1: A zigzag wild ride for best Buy was that the

471
00:26:30,880 --> 00:26:33,920
Speaker 1: company was ramping up the number of stores it opened,

472
00:26:34,119 --> 00:26:38,680
Speaker 1: where as Circuit City was already pretty well entrenched. Meanwhile,

473
00:26:38,760 --> 00:26:42,280
Speaker 1: another store was starting to pinch at Circuit City's performance,

474
00:26:42,320 --> 00:26:45,440
Speaker 1: and this time it was Walmart. In the mid two thousands,

475
00:26:45,520 --> 00:26:49,360
Speaker 1: Walmart redesigned its stores and product lines to include more electronics,

476
00:26:49,359 --> 00:26:53,600
Speaker 1: including high end brands like Sony. Now that put Walmart

477
00:26:53,600 --> 00:26:55,080
Speaker 1: in competition with Circuit City.

478
00:26:56,200 --> 00:26:57,200
Speaker 2: Walmart was able.

479
00:26:57,040 --> 00:26:59,800
Speaker 1: To do some serious damage by offering something that I

480
00:27:00,000 --> 00:27:03,080
Speaker 1: I think we all have had experience in. It is

481
00:27:03,119 --> 00:27:05,320
Speaker 1: the bane of my existence when I go into a

482
00:27:05,320 --> 00:27:08,000
Speaker 1: brick and mortar store, and that is the upsell with

483
00:27:08,160 --> 00:27:14,080
Speaker 1: extended warranties. Extended warranties are profit machines. It is a

484
00:27:14,080 --> 00:27:17,000
Speaker 1: way for a company to make crazy amounts of money

485
00:27:18,040 --> 00:27:23,080
Speaker 1: for relatively little investment. And Walmart was really putting the

486
00:27:23,200 --> 00:27:26,840
Speaker 1: hurt on Circuit City and Best Buy by offering these

487
00:27:26,880 --> 00:27:29,440
Speaker 1: extended warranties at a much lower cost than you would

488
00:27:29,440 --> 00:27:30,720
Speaker 1: find at the other stores.

489
00:27:31,400 --> 00:27:34,080
Speaker 2: And like I said, there were almost pure profit for stores.

490
00:27:34,119 --> 00:27:40,280
Speaker 1: In fact, extended warranties accounted for all of the operating

491
00:27:40,359 --> 00:27:42,879
Speaker 1: profit for Circuit City in two thousand and five, and

492
00:27:42,920 --> 00:27:46,000
Speaker 1: a third of the profit for Best Buy that same year.

493
00:27:46,400 --> 00:27:49,439
Speaker 1: So Walmart's move to undercut warranty prices was a shot

494
00:27:49,520 --> 00:27:53,199
Speaker 1: right across the bow at the electronics superstores, and it

495
00:27:53,240 --> 00:27:56,480
Speaker 1: was an effective one. According to a retailing analyst named

496
00:27:56,520 --> 00:28:01,399
Speaker 1: Todd Kurt, a tiny drop in warranty revenue would result

497
00:28:01,480 --> 00:28:05,040
Speaker 1: in a massive drop in operating profit for Circuit City.

498
00:28:05,280 --> 00:28:07,199
Speaker 1: And when I say massive, I'm talking about if you

499
00:28:07,320 --> 00:28:13,159
Speaker 1: drop one percentage point decrease in extended warranty revenue, it

500
00:28:13,160 --> 00:28:16,480
Speaker 1: would end up having a twenty nine percent decrease in

501
00:28:16,640 --> 00:28:21,720
Speaker 1: operating profit. And Circuit City saw a five percent decrease

502
00:28:22,680 --> 00:28:24,359
Speaker 1: in warranty revenue that year.

503
00:28:25,000 --> 00:28:26,160
Speaker 2: Huge impact.

504
00:28:27,040 --> 00:28:29,880
Speaker 1: And when you see that your business is so heavily

505
00:28:29,960 --> 00:28:33,600
Speaker 1: dependent upon a single point like that, you start getting

506
00:28:33,640 --> 00:28:37,480
Speaker 1: awfully nervous. So Richard Sharp started looking into ways that

507
00:28:37,520 --> 00:28:39,840
Speaker 1: he could possibly turn this around, and he thought that

508
00:28:40,000 --> 00:28:44,200
Speaker 1: maybe diversifying Circuit City's products was a potential answer, and

509
00:28:44,240 --> 00:28:46,120
Speaker 1: he did this in a couple of different ways. He

510
00:28:46,200 --> 00:28:48,760
Speaker 1: did some home security stuff that didn't work out. But

511
00:28:48,880 --> 00:28:51,880
Speaker 1: the real big one that people like to point to

512
00:28:51,960 --> 00:28:55,120
Speaker 1: as being a huge misfire happened in nineteen ninety eight.

513
00:28:56,040 --> 00:28:59,040
Speaker 1: That's when the company would end up carrying a new

514
00:28:59,120 --> 00:29:04,080
Speaker 1: product called Divics DIVX, which is a type of digital

515
00:29:04,160 --> 00:29:07,680
Speaker 1: movie disc, and it was sort of like a disposable DVD,

516
00:29:08,080 --> 00:29:11,960
Speaker 1: although those were two different standards at that time. The

517
00:29:12,160 --> 00:29:14,840
Speaker 1: disc could store encoded digital video, but you had to

518
00:29:14,920 --> 00:29:18,280
Speaker 1: watch the disc within forty eight hours of purchase or

519
00:29:18,320 --> 00:29:21,360
Speaker 1: you lost your chance. So this was kind of a

520
00:29:21,400 --> 00:29:23,760
Speaker 1: move to get into the video rental business.

521
00:29:24,160 --> 00:29:24,520
Speaker 2: Circuit.

522
00:29:24,560 --> 00:29:27,920
Speaker 1: City's kind of moving into blockbuster territory with this, But

523
00:29:28,200 --> 00:29:30,120
Speaker 1: there was no risk of someone running off with a

524
00:29:30,120 --> 00:29:33,120
Speaker 1: copy of a film. You would just produce the Divics disc,

525
00:29:33,680 --> 00:29:34,320
Speaker 1: sell it to a.

526
00:29:34,280 --> 00:29:37,160
Speaker 2: Consumer, and then they would have two days to watch it.

527
00:29:37,760 --> 00:29:41,160
Speaker 1: Divic's players had a phone connection that had to be

528
00:29:41,280 --> 00:29:43,880
Speaker 1: active for the video to play. So anyone who's used

529
00:29:43,880 --> 00:29:48,280
Speaker 1: to computer games that have an online component requirement, even

530
00:29:48,280 --> 00:29:50,600
Speaker 1: if it's just a single player game, you know what

531
00:29:50,600 --> 00:29:53,840
Speaker 1: I'm talking about. This is digital rights management, right. It's

532
00:29:53,880 --> 00:29:57,240
Speaker 1: the attempt to make sure that the use of the

533
00:29:57,680 --> 00:30:01,720
Speaker 1: product falls within certain parameters. In this case, you have

534
00:30:01,800 --> 00:30:05,040
Speaker 1: forty eight hours to watch your movie. A central computer

535
00:30:05,080 --> 00:30:10,479
Speaker 1: system kept track of everything, even unplayed movies, which drives

536
00:30:10,520 --> 00:30:14,040
Speaker 1: me crazy. Is amazing that this ever was considered a

537
00:30:14,080 --> 00:30:17,680
Speaker 1: good idea. Let's say that you wanted to rent a movie.

538
00:30:17,680 --> 00:30:20,959
Speaker 1: So you hit your local circuit city and buy a

539
00:30:21,120 --> 00:30:24,280
Speaker 1: Divic's disc and bye bye. I mean, you're really just

540
00:30:24,400 --> 00:30:27,040
Speaker 1: renting the chance to watch a movie for forty eight hours.

541
00:30:27,080 --> 00:30:29,960
Speaker 1: So let's pick a specific film. I'm gonna pick your

542
00:30:30,080 --> 00:30:33,000
Speaker 1: favorite film, which we all know is Big Trouble in

543
00:30:33,040 --> 00:30:36,680
Speaker 1: Little China, classic movie starring Kurt Russell, directed by John Carpenter.

544
00:30:37,200 --> 00:30:39,880
Speaker 1: You have great taste, fantastic favorite film.

545
00:30:39,920 --> 00:30:40,760
Speaker 2: Good on you.

546
00:30:40,760 --> 00:30:43,000
Speaker 1: You pay a few bucks, maybe four or five dollars,

547
00:30:43,440 --> 00:30:45,960
Speaker 1: and because this is a rental, you don't have to

548
00:30:46,000 --> 00:30:46,680
Speaker 1: pay more than that.

549
00:30:46,840 --> 00:30:49,600
Speaker 2: You know you're not buying the movie. You take the

550
00:30:49,600 --> 00:30:54,280
Speaker 2: disc home, but you're a busy person. It turns out you.

551
00:30:54,200 --> 00:30:57,520
Speaker 1: Don't have time to enjoy that film within those first

552
00:30:57,560 --> 00:31:01,160
Speaker 1: forty eight hours. Well, that's central computing system knows this.

553
00:31:01,400 --> 00:31:06,160
Speaker 1: It's tracking it because your Divic's system hasn't called in

554
00:31:06,240 --> 00:31:09,680
Speaker 1: to say, hey, this guy's watching Big Trouble and Little China,

555
00:31:09,840 --> 00:31:13,000
Speaker 1: or this lady is watching Big Trouble and Little China,

556
00:31:13,320 --> 00:31:16,040
Speaker 1: or this family isn't watching Big Trouble and Little China.

557
00:31:16,040 --> 00:31:19,120
Speaker 1: And forty eight hours have passed, and since you didn't

558
00:31:19,120 --> 00:31:21,440
Speaker 1: have the decency to watch it when you were supposed

559
00:31:21,480 --> 00:31:22,520
Speaker 1: to your.

560
00:31:22,360 --> 00:31:26,360
Speaker 2: Build another three dollars. Isn't that crazy?

561
00:31:26,440 --> 00:31:30,960
Speaker 1: You were charged for not watching the movie you rented.

562
00:31:31,960 --> 00:31:35,080
Speaker 2: You go, you rent a movie, you're not supposed to

563
00:31:35,080 --> 00:31:37,640
Speaker 2: return the disc. You throw it away after you.

564
00:31:37,640 --> 00:31:41,240
Speaker 1: Use it forty eight hours passes, you get dinged for

565
00:31:41,440 --> 00:31:43,880
Speaker 1: not watching the movie. It's like a late fee for

566
00:31:43,920 --> 00:31:48,320
Speaker 1: a movie you don't have to return. Yeah, can't imagine

567
00:31:48,360 --> 00:31:52,680
Speaker 1: why that standard lost out to DVD, So I'm sure

568
00:31:52,720 --> 00:31:55,640
Speaker 1: you're familiar with the DVD format. I'll probably do a

569
00:31:55,800 --> 00:31:59,560
Speaker 1: full episode more about DVDs and encoding and also if

570
00:31:59,560 --> 00:32:01,840
Speaker 1: you say the where DVD fast enough? You sound like

571
00:32:01,840 --> 00:32:05,600
Speaker 1: you're Twiggy from Buck Rogers. But it was early days

572
00:32:06,080 --> 00:32:08,720
Speaker 1: for both of those standards back in nineteen ninety eight,

573
00:32:08,840 --> 00:32:12,400
Speaker 1: and Circuit City had gone all in on the devics bet,

574
00:32:12,760 --> 00:32:16,680
Speaker 1: but other retailers weren't so excited about that technology, which

575
00:32:16,720 --> 00:32:20,040
Speaker 1: meant that Circuit City had to work extra hard to

576
00:32:20,480 --> 00:32:24,280
Speaker 1: educate customers and convince them that the Divic's format was

577
00:32:24,320 --> 00:32:26,200
Speaker 1: the way to go, and that was a tough job.

578
00:32:26,760 --> 00:32:27,920
Speaker 2: They tried to convince.

579
00:32:27,640 --> 00:32:31,360
Speaker 1: Studios to create exclusives, stuff that would only come out

580
00:32:31,400 --> 00:32:35,560
Speaker 1: on Divics and not on DVD, but with very little success,

581
00:32:36,240 --> 00:32:40,440
Speaker 1: and in nineteen ninety nine Sharp knew that this was

582
00:32:40,480 --> 00:32:42,520
Speaker 1: a bad idea and he pulled the plug on the

583
00:32:42,560 --> 00:32:46,000
Speaker 1: whole project. Now, the price tag for that mistake was

584
00:32:46,080 --> 00:32:49,800
Speaker 1: about two hundred and thirty three million dollars for the

585
00:32:49,840 --> 00:32:52,760
Speaker 1: development and promotion of Divics.

586
00:32:53,800 --> 00:32:55,400
Speaker 2: Not good news.

587
00:32:56,320 --> 00:33:01,360
Speaker 1: In two thousand, Sharp transitioned from president and CEO to chairman. Now,

588
00:33:01,400 --> 00:33:04,280
Speaker 1: like I said earlier, Sharp's tenure included high highs and

589
00:33:04,400 --> 00:33:07,760
Speaker 1: low lows for Circuit City, and some things like the

590
00:33:07,840 --> 00:33:10,440
Speaker 1: Rabbit expansion in the late eighties and early nineties had

591
00:33:10,520 --> 00:33:14,080
Speaker 1: really paid off, but others like the Divik's debacle and

592
00:33:14,160 --> 00:33:18,360
Speaker 1: a similar misstep with the home security sales and installation

593
00:33:18,560 --> 00:33:23,160
Speaker 1: were big misses. At that point, Alan McCullough, who had

594
00:33:23,200 --> 00:33:26,520
Speaker 1: previously been the president and COO of Circuit City, became

595
00:33:26,560 --> 00:33:30,520
Speaker 1: the new president and CEO. Two years later, McCulla would

596
00:33:30,520 --> 00:33:33,840
Speaker 1: take over the title of chairman from Sharp, and from

597
00:33:33,880 --> 00:33:35,560
Speaker 1: two thousand and two to two thousand and five he

598
00:33:35,600 --> 00:33:38,000
Speaker 1: would be the head guy in charge. I got a

599
00:33:38,000 --> 00:33:40,480
Speaker 1: lot more to say about that, but let's take another

600
00:33:40,560 --> 00:33:51,240
Speaker 1: quick break to thank our sponsor. All Right, we're heading

601
00:33:51,280 --> 00:33:54,560
Speaker 1: forward the slide into bankruptcy here. But first let's talk

602
00:33:54,560 --> 00:33:57,320
Speaker 1: a bit about McCullough. He had worked with Circuit City

603
00:33:57,440 --> 00:34:00,600
Speaker 1: since nineteen eighty seven, so he had been there for

604
00:34:00,680 --> 00:34:04,360
Speaker 1: a while. He was invested in the company, at least

605
00:34:04,800 --> 00:34:09,160
Speaker 1: professionally invested, if not financially invested, and his tenure began

606
00:34:09,840 --> 00:34:13,360
Speaker 1: with a big change in Circuit City strategy. His tenure

607
00:34:13,440 --> 00:34:18,600
Speaker 1: as the president, that is, president CEO, the company said

608
00:34:18,640 --> 00:34:22,480
Speaker 1: it would no longer sell appliances. It would focus only

609
00:34:22,520 --> 00:34:25,399
Speaker 1: on consumer electronics and get out of the appliance game.

610
00:34:26,239 --> 00:34:29,200
Speaker 1: The appliance market, like consumer electronics, had become much more

611
00:34:29,280 --> 00:34:32,680
Speaker 1: competitive over the past few years. It was largely due

612
00:34:32,760 --> 00:34:37,320
Speaker 1: to big stores like Home Depot and Lows offering major appliances.

613
00:34:38,280 --> 00:34:40,400
Speaker 1: Getting out of the business was thought of as a

614
00:34:40,400 --> 00:34:44,000
Speaker 1: way to cut costs and to focus on consumer electronics

615
00:34:44,000 --> 00:34:48,080
Speaker 1: more exclusively so that it could be more effective. Appliances

616
00:34:48,120 --> 00:34:50,160
Speaker 1: also take up a lot of space when you're trying

617
00:34:50,160 --> 00:34:52,800
Speaker 1: to sell them, so by getting out of that business,

618
00:34:52,840 --> 00:34:55,920
Speaker 1: the company wouldn't need to maintain as much warehouse space,

619
00:34:56,040 --> 00:34:58,640
Speaker 1: and it would also cut down on delivery costs.

620
00:34:59,120 --> 00:35:00,520
Speaker 2: So the whole idea was.

621
00:35:00,680 --> 00:35:02,840
Speaker 1: We can save a lot of money this way, but

622
00:35:02,920 --> 00:35:06,120
Speaker 1: getting out of the appliance game also meant that suddenly

623
00:35:06,160 --> 00:35:09,120
Speaker 1: some jobs weren't needed, like a whole lot of them,

624
00:35:09,160 --> 00:35:13,880
Speaker 1: like a thousand jobs. Circuit City closed six distribution centers

625
00:35:13,920 --> 00:35:16,759
Speaker 1: as well, and the decision was made so quickly that

626
00:35:16,800 --> 00:35:20,600
Speaker 1: it ended up causing huge problems for Circuit City because

627
00:35:21,360 --> 00:35:24,600
Speaker 1: the vendors that Circuit City worked with, the companies that

628
00:35:24,760 --> 00:35:27,800
Speaker 1: made the products that Circuit City sold in their stores,

629
00:35:28,360 --> 00:35:32,000
Speaker 1: weren't informed of the decision in advance, so it damaged

630
00:35:32,040 --> 00:35:35,160
Speaker 1: a lot of business relationships. And it also meant that

631
00:35:35,200 --> 00:35:37,880
Speaker 1: anyone in the market for appliances wasn't going to go

632
00:35:37,920 --> 00:35:41,040
Speaker 1: to Circuit City, so that resulted in less customer traffic

633
00:35:41,239 --> 00:35:44,480
Speaker 1: in stores and that ended up hurting. And while the

634
00:35:45,440 --> 00:35:49,440
Speaker 1: business was operating at a loss for the appliance's section,

635
00:35:50,400 --> 00:35:53,880
Speaker 1: the sales still went to help cover fixed costs, and

636
00:35:53,920 --> 00:35:56,359
Speaker 1: now you didn't have those anymore, so that money had

637
00:35:56,400 --> 00:35:59,680
Speaker 1: to be taken from other places. McCullough would also officially

638
00:35:59,680 --> 00:36:04,200
Speaker 1: spin off Carmacs into its own company. Carmacks at that

639
00:36:04,239 --> 00:36:07,000
Speaker 1: point was facing competition in the used car market space,

640
00:36:07,440 --> 00:36:10,280
Speaker 1: and it had been a drain on Circuit City's financials.

641
00:36:10,280 --> 00:36:13,880
Speaker 1: It had a rough several rough early times for carmas

642
00:36:15,160 --> 00:36:18,239
Speaker 1: Circuit City tried to remodel stores in an effort to

643
00:36:18,280 --> 00:36:21,520
Speaker 1: make the more attractive to customers. The company had long

644
00:36:21,600 --> 00:36:24,560
Speaker 1: been focused on the practice of scooping up that cheap

645
00:36:24,560 --> 00:36:29,680
Speaker 1: property for its superstores, but again it meant that most

646
00:36:29,719 --> 00:36:32,839
Speaker 1: of those stores weren't convenient to customers, and Best Buy,

647
00:36:33,080 --> 00:36:34,960
Speaker 1: like I had mentioned, had gone a totally different way,

648
00:36:35,040 --> 00:36:38,120
Speaker 1: spending that upfront cost to get those premium locations. Now,

649
00:36:38,320 --> 00:36:42,840
Speaker 1: Circuit City couldn't just relocate stores, so their next choice

650
00:36:42,920 --> 00:36:47,320
Speaker 1: was to remodel and redesign store spaces to entice customers inside.

651
00:36:48,000 --> 00:36:50,319
Speaker 1: So the idea would be that now customers could come

652
00:36:50,360 --> 00:36:52,919
Speaker 1: in and purchase a lot of the products just by

653
00:36:53,000 --> 00:36:54,920
Speaker 1: picking up a box and taking it to check out.

654
00:36:54,960 --> 00:36:58,520
Speaker 1: They wouldn't have to talk to a salesperson. But they

655
00:36:58,520 --> 00:37:01,840
Speaker 1: were still running the sales on commission at this point,

656
00:37:01,880 --> 00:37:04,240
Speaker 1: so a lot of products didn't fall into that category.

657
00:37:04,239 --> 00:37:06,000
Speaker 1: If you wanted one, you still had to talk to

658
00:37:06,040 --> 00:37:08,400
Speaker 1: a salesperson. They still had to send someone to the

659
00:37:08,440 --> 00:37:10,120
Speaker 1: back to get the product to come out to you.

660
00:37:10,480 --> 00:37:12,759
Speaker 1: Only a few of the products were kind of a

661
00:37:12,800 --> 00:37:16,360
Speaker 1: help yourself approach. So it was sort of a half measure,

662
00:37:17,760 --> 00:37:20,000
Speaker 1: and you might imagine that it wasn't terribly.

663
00:37:19,680 --> 00:37:22,600
Speaker 2: Effective, and you'd be right. Now.

664
00:37:22,680 --> 00:37:27,200
Speaker 1: The remodeling strategy was scaled back from their original plans

665
00:37:27,360 --> 00:37:29,879
Speaker 1: almost from the beginning. In two thousand and one. They

666
00:37:30,080 --> 00:37:34,280
Speaker 1: initially said we're going to remodel one hundred and forty stores,

667
00:37:34,800 --> 00:37:38,840
Speaker 1: but they only really remodeled about twenty or so, and

668
00:37:38,880 --> 00:37:41,040
Speaker 1: the reason for that was to save money on the

669
00:37:41,080 --> 00:37:44,440
Speaker 1: costs that remodeling would incur. It was about a million

670
00:37:44,560 --> 00:37:47,000
Speaker 1: dollars per store to remodel them.

671
00:37:47,440 --> 00:37:49,680
Speaker 2: So they thought, well, well, we'll spread.

672
00:37:49,320 --> 00:37:53,239
Speaker 1: Out the costs of remodeling by doing blocks of stores

673
00:37:53,719 --> 00:37:57,080
Speaker 1: each year. But the problem was doing this meant that

674
00:37:57,160 --> 00:38:00,480
Speaker 1: the stores were falling further behind their competitive it was

675
00:38:00,480 --> 00:38:03,800
Speaker 1: putting them in a more dangerous position. In two thousand

676
00:38:03,800 --> 00:38:07,200
Speaker 1: and three, responding to changes in the market that had

677
00:38:07,200 --> 00:38:13,800
Speaker 1: happened years earlier, Circuit City finally ended its commissioned sales program. Instead,

678
00:38:13,840 --> 00:38:16,799
Speaker 1: all employees would get a fixed hourly pay rate based

679
00:38:16,840 --> 00:38:19,480
Speaker 1: upon their pay grade. It also meant cutting nearly four

680
00:38:19,600 --> 00:38:25,160
Speaker 1: thousand jobs all in sales. Four thousand people having their

681
00:38:25,239 --> 00:38:30,879
Speaker 1: jobs cut because this decision no longer did Circuit City

682
00:38:30,960 --> 00:38:34,200
Speaker 1: need salespeople who specialized in convincing customers to buy the

683
00:38:34,280 --> 00:38:37,360
Speaker 1: highest step up on a product they could manage. Instead,

684
00:38:37,840 --> 00:38:41,560
Speaker 1: hourly wage employees would provide general assistance, similar to the

685
00:38:41,600 --> 00:38:43,839
Speaker 1: way business was done in shops like Best Buy.

686
00:38:44,680 --> 00:38:44,919
Speaker 2: Now.

687
00:38:45,040 --> 00:38:47,759
Speaker 1: If Circuit City had made this change back in the nineties,

688
00:38:47,800 --> 00:38:50,360
Speaker 1: it might have worked, though it still would have obviously

689
00:38:50,440 --> 00:38:53,560
Speaker 1: been painful for the people who were in sales, But

690
00:38:53,600 --> 00:38:56,920
Speaker 1: by this point, when the company was already in dire straits,

691
00:38:56,920 --> 00:38:59,719
Speaker 1: when it was struggling, it meant seeing a decrease in

692
00:38:59,760 --> 00:39:03,560
Speaker 1: those higher margin sales and further negative impact on revenue,

693
00:39:04,200 --> 00:39:06,480
Speaker 1: which wasn't something they could easily bounce back from at

694
00:39:06,480 --> 00:39:09,400
Speaker 1: this point. In June two thousand and three, the Circuit

695
00:39:09,440 --> 00:39:11,640
Speaker 1: City Board of directors had a big decision to make.

696
00:39:11,880 --> 00:39:14,240
Speaker 1: Another company was coming to the table with an offer,

697
00:39:14,280 --> 00:39:17,960
Speaker 1: and that other company was comp Usa Incorporated. The offer

698
00:39:18,040 --> 00:39:21,719
Speaker 1: was a one point five billion dollar acquisition deal, but

699
00:39:21,840 --> 00:39:24,480
Speaker 1: the board of directors decided not to pursue the offer

700
00:39:24,520 --> 00:39:27,680
Speaker 1: and rejected it. By two thousand and four, things were

701
00:39:27,719 --> 00:39:32,080
Speaker 1: looking pretty grim. In a single day, Circuit City announced

702
00:39:32,120 --> 00:39:35,800
Speaker 1: three thousand, four hundred job cuts and not just any jobs.

703
00:39:36,120 --> 00:39:40,920
Speaker 1: They cut sales associates, people who had the most knowledge

704
00:39:40,920 --> 00:39:43,680
Speaker 1: and experience and tenure with the company. They were also,

705
00:39:44,440 --> 00:39:49,160
Speaker 1: no coincidence, the highest compensated in that department in.

706
00:39:49,080 --> 00:39:50,520
Speaker 2: These sales associate roles.

707
00:39:51,320 --> 00:39:56,120
Speaker 1: Now their replacements lacked that knowledge and experience that they

708
00:39:56,160 --> 00:39:57,360
Speaker 1: needed in order.

709
00:39:57,280 --> 00:39:59,240
Speaker 2: To succeed in their new roles.

710
00:39:59,640 --> 00:40:03,640
Speaker 1: The Urtzels would have found this entire move unacceptable. You

711
00:40:03,719 --> 00:40:05,920
Speaker 1: might remember in my last episode I talked about how

712
00:40:06,000 --> 00:40:10,600
Speaker 1: Samuel Wurtzel had always stressed the importance of training and

713
00:40:10,640 --> 00:40:15,160
Speaker 1: setting employees up for success. Now this move put unqualified

714
00:40:15,160 --> 00:40:19,359
Speaker 1: people into positions without proper preparation, through no fault of

715
00:40:19,440 --> 00:40:22,319
Speaker 1: their own, and it was a huge mistake. At the

716
00:40:22,320 --> 00:40:26,920
Speaker 1: same time, Circuit City executives were awarding themselves big retention

717
00:40:27,120 --> 00:40:31,080
Speaker 1: bonuses in order to keep various executives from jumping ship.

718
00:40:31,400 --> 00:40:34,919
Speaker 1: So this had a devastating effect on employee morale. You've

719
00:40:34,960 --> 00:40:40,160
Speaker 1: got the most knowledgeable employees booted, you've got people unqualified

720
00:40:40,200 --> 00:40:42,920
Speaker 1: put into new positions, and you've got the executives at

721
00:40:42,960 --> 00:40:48,560
Speaker 1: the top rewarding themselves seemingly in spite of all the employees.

722
00:40:49,600 --> 00:40:54,440
Speaker 1: So this was sending a really bad message not just

723
00:40:54,560 --> 00:40:58,600
Speaker 1: to employees, but also to vendors and also customers, and

724
00:40:58,640 --> 00:41:01,560
Speaker 1: losing those experienced employees and demoralizing the rest of the

725
00:41:01,560 --> 00:41:05,680
Speaker 1: workforce trickled down into that customer experience. It became increasingly

726
00:41:05,880 --> 00:41:10,280
Speaker 1: unpleasant to shop at Circuit City. Stores were poorly organized

727
00:41:10,320 --> 00:41:15,440
Speaker 1: in staff, and customer dissatisfaction was through the roof. Now,

728
00:41:15,480 --> 00:41:18,120
Speaker 1: in two thousand and five, a man named Philip J.

729
00:41:18,560 --> 00:41:22,279
Speaker 1: Schoonover became the president of the company. He would then

730
00:41:22,360 --> 00:41:25,399
Speaker 1: later become the chairman and CEO in two thousand and six,

731
00:41:25,440 --> 00:41:28,120
Speaker 1: and he would stay in that role until forced to

732
00:41:28,560 --> 00:41:32,239
Speaker 1: leave in two thousand and eight. That probably tells you

733
00:41:32,320 --> 00:41:33,040
Speaker 1: that things.

734
00:41:32,800 --> 00:41:35,040
Speaker 2: Did not go well.

735
00:41:35,239 --> 00:41:38,560
Speaker 1: Now, if Sharp had made decisions that put the company

736
00:41:38,600 --> 00:41:42,080
Speaker 1: in danger and McCullough had exacerbated matters, you could say

737
00:41:42,080 --> 00:41:45,799
Speaker 1: Schoonover is the person everyone associates with the death of

738
00:41:45,960 --> 00:41:50,239
Speaker 1: Circuit City. It may not entirely be Schoonover's fault. He

739
00:41:50,320 --> 00:41:53,440
Speaker 1: was in a terribly difficult position when he came on board.

740
00:41:54,200 --> 00:41:59,480
Speaker 1: But Alan Wurtzel said Schoonover completely ignored company values, the

741
00:41:59,480 --> 00:42:03,520
Speaker 1: ones that Samuel Wurtzel, Allen's father had instilled in the company.

742
00:42:04,160 --> 00:42:05,640
Speaker 2: Namely, he said.

743
00:42:05,520 --> 00:42:10,480
Speaker 1: That schoonover stopped caring about fair deals and honesty when

744
00:42:10,520 --> 00:42:13,920
Speaker 1: dealing with employees and vendors alike, which is pretty brutal.

745
00:42:14,760 --> 00:42:15,440
Speaker 2: In two thousand and.

746
00:42:15,480 --> 00:42:19,040
Speaker 1: Six, Circuit City decided to copy Best Buy, which is

747
00:42:19,120 --> 00:42:22,120
Speaker 1: kind of interesting considering how many times Best Buy was

748
00:42:22,239 --> 00:42:26,399
Speaker 1: essentially copying Circuit City but doing it better. Best Buy

749
00:42:26,560 --> 00:42:30,520
Speaker 1: had launched an electronics service called geek Squad back in

750
00:42:30,560 --> 00:42:34,600
Speaker 1: two thousand and two. Now, geek Squad provides specialized customer

751
00:42:34,680 --> 00:42:38,680
Speaker 1: service for things like equipment installation, adjustment repairs, that kind

752
00:42:38,719 --> 00:42:41,879
Speaker 1: of thing for a fee, and those fees add up

753
00:42:42,000 --> 00:42:44,840
Speaker 1: kind of like those extended warranties had been a huge

754
00:42:44,880 --> 00:42:48,839
Speaker 1: source of revenue for Best Buy and Circuit City alike. Well,

755
00:42:48,880 --> 00:42:51,719
Speaker 1: this was four years later, but Circuit City says, all right,

756
00:42:51,920 --> 00:42:54,200
Speaker 1: two thousand and six, we're going to launch our own service,

757
00:42:54,760 --> 00:42:57,840
Speaker 1: which is going to be a specialized electronics service, and

758
00:42:57,880 --> 00:42:59,600
Speaker 1: we're calling it fire Dog.

759
00:43:00,880 --> 00:43:03,440
Speaker 2: Fire Doog, however, required a big investment.

760
00:43:03,480 --> 00:43:06,680
Speaker 1: The company spent millions of dollars in the hiring, training,

761
00:43:06,719 --> 00:43:10,520
Speaker 1: and resource allocation for fire Doog teams, and it wasn't

762
00:43:10,520 --> 00:43:14,040
Speaker 1: a very well coordinated effort. Some stores were lagging way

763
00:43:14,080 --> 00:43:16,680
Speaker 1: behind other stores, and there was a lot of confusion

764
00:43:16,760 --> 00:43:20,400
Speaker 1: and not clear messaging, and that ended up adding to

765
00:43:20,440 --> 00:43:23,839
Speaker 1: the expense. Customers were confused by the service, which wasn't

766
00:43:23,880 --> 00:43:27,360
Speaker 1: promoted very well, and many rejected it. So while geek

767
00:43:27,440 --> 00:43:31,480
Speaker 1: Squad succeeded over at Best Buy, fire Doog floundered at

768
00:43:31,520 --> 00:43:35,000
Speaker 1: Circuit City. Also in two thousand and six, the company

769
00:43:35,040 --> 00:43:37,759
Speaker 1: made a real bold move on Black Friday, the day

770
00:43:37,800 --> 00:43:41,600
Speaker 1: after Thanksgiving here in the United States, Circuit City offered

771
00:43:41,680 --> 00:43:45,480
Speaker 1: an amazing deal at the time. It offered a forty

772
00:43:45,560 --> 00:43:50,000
Speaker 1: two inch panasonic plasma television for less than one thousand dollars,

773
00:43:50,040 --> 00:43:52,960
Speaker 1: which was way below the normal price you would find

774
00:43:53,000 --> 00:43:56,280
Speaker 1: at most places at that time, but it actually created

775
00:43:56,320 --> 00:43:59,400
Speaker 1: a domino effect that caused damage. Circuit City began to

776
00:43:59,480 --> 00:44:03,280
Speaker 1: slash to such levels that the profit margins were almost

777
00:44:03,280 --> 00:44:07,800
Speaker 1: completely eliminated, meaning the company was selling products very close

778
00:44:07,840 --> 00:44:10,000
Speaker 1: to what it cost the company to get them in

779
00:44:10,000 --> 00:44:13,280
Speaker 1: the first place, all in an effort to regain customers.

780
00:44:13,600 --> 00:44:15,799
Speaker 1: And it's a game you cannot play forever because those

781
00:44:15,840 --> 00:44:19,040
Speaker 1: profits are never going to be enough, especially for a

782
00:44:19,040 --> 00:44:22,960
Speaker 1: publicly traded company. Two thousand and eight would see the

783
00:44:23,239 --> 00:44:26,280
Speaker 1: end of Schoonover's tenure. Like I said, he was forced

784
00:44:26,320 --> 00:44:29,080
Speaker 1: out of his role and an investor named Mark Waddles

785
00:44:29,120 --> 00:44:32,400
Speaker 1: took over the job, which by then was not great.

786
00:44:33,000 --> 00:44:35,799
Speaker 1: Sales for Circuit City were down by eleven percent and

787
00:44:35,840 --> 00:44:38,000
Speaker 1: the company had suffered more than one hundred and fifty

788
00:44:38,080 --> 00:44:42,359
Speaker 1: million dollars in losses. Things were ugly. In April two

789
00:44:42,400 --> 00:44:45,920
Speaker 1: thousand and eight, another suitor came calling Circuit City, and

790
00:44:45,960 --> 00:44:49,240
Speaker 1: this time it was Blockbuster, which is yet another company

791
00:44:49,280 --> 00:44:51,600
Speaker 1: I could do an episode on and talk about how

792
00:44:52,120 --> 00:44:54,880
Speaker 1: it failed to be nimble, sort of like Circuit City

793
00:44:55,080 --> 00:44:59,560
Speaker 1: and ultimately a doomed Blockbuster. But this is Circuit City story.

794
00:45:00,040 --> 00:45:02,640
Speaker 1: So Blockbuster comes up to Circuit City and says, hey,

795
00:45:03,360 --> 00:45:04,760
Speaker 1: buy it for a billion dollars.

796
00:45:05,120 --> 00:45:08,280
Speaker 2: So this is half a billion dollars less than.

797
00:45:08,200 --> 00:45:10,919
Speaker 1: The previous offer had been just a few years ago

798
00:45:11,239 --> 00:45:16,399
Speaker 1: from CompUSA. But by July one, two thousand and eight,

799
00:45:17,000 --> 00:45:20,640
Speaker 1: Blockbuster had second thoughts. They had actually looked into the

800
00:45:20,640 --> 00:45:24,200
Speaker 1: potential deal further and concluded that acquiring Circuit City would

801
00:45:24,239 --> 00:45:25,960
Speaker 1: be a bad business decision.

802
00:45:26,320 --> 00:45:26,720
Speaker 2: Yikes.

803
00:45:27,760 --> 00:45:31,200
Speaker 1: So Circuit City stocks plummeted as a result. If someone

804
00:45:31,239 --> 00:45:32,880
Speaker 1: comes up and says, hey, do you want to go

805
00:45:32,920 --> 00:45:34,680
Speaker 1: to the problem the you know what, never mind, I

806
00:45:34,719 --> 00:45:36,799
Speaker 1: can do better. It's probably not going to help your

807
00:45:36,800 --> 00:45:40,840
Speaker 1: self esteem. The same is true with investor confidence in

808
00:45:40,880 --> 00:45:44,920
Speaker 1: Circuit City after this event. And yeah, that story comes

809
00:45:44,960 --> 00:45:48,480
Speaker 1: from Jonathan's past, I'll thank you not to pursue it further.

810
00:45:49,080 --> 00:45:50,000
Speaker 2: By November two.

811
00:45:49,840 --> 00:45:53,279
Speaker 1: Thousand and eight, the company was baling waters. Circuit City

812
00:45:53,320 --> 00:45:56,480
Speaker 1: announced it would close one hundred and fifty five stores

813
00:45:56,520 --> 00:46:00,000
Speaker 1: and layoff more than fifteen percent of its workforce by

814
00:46:00,160 --> 00:46:02,480
Speaker 1: end of the year, and just a little bit later,

815
00:46:02,560 --> 00:46:05,840
Speaker 1: seven hundred corporate employees, the people who worked at Circuit

816
00:46:05,880 --> 00:46:08,200
Speaker 1: City's corporate headquarters were let go.

817
00:46:09,400 --> 00:46:10,120
Speaker 2: All the other.

818
00:46:09,960 --> 00:46:12,840
Speaker 1: Corporate employees were moved into the same building to cut

819
00:46:12,880 --> 00:46:15,280
Speaker 1: costs so they didn't have to have as much office space,

820
00:46:15,920 --> 00:46:19,759
Speaker 1: and on November tenth, the company filed for bankruptcy for

821
00:46:19,880 --> 00:46:23,000
Speaker 1: Chapter eleven and started searching for a White Night to

822
00:46:23,040 --> 00:46:25,719
Speaker 1: rescue them. The whole idea was that, you know, by

823
00:46:25,840 --> 00:46:28,600
Speaker 1: filing for bankruptcy, you get a little breathing room. The

824
00:46:29,040 --> 00:46:32,319
Speaker 1: goal is to try and get out of bankruptcy and

825
00:46:32,360 --> 00:46:35,120
Speaker 1: go back to business. But at this point it was

826
00:46:35,120 --> 00:46:37,560
Speaker 1: too late. No one was willing to jump forward and

827
00:46:37,600 --> 00:46:40,080
Speaker 1: try to write a sinking ship, not for a company

828
00:46:40,080 --> 00:46:43,319
Speaker 1: that lost five billion dollars in stock market value in

829
00:46:43,400 --> 00:46:46,000
Speaker 1: just twenty four months. There were still hopes that a

830
00:46:46,040 --> 00:46:48,680
Speaker 1: company could re emerge from this bankruptcy.

831
00:46:48,760 --> 00:46:49,719
Speaker 2: It just wasn't meant to be.

832
00:46:49,840 --> 00:46:52,640
Speaker 1: There was a brief moment of hope when it appeared

833
00:46:52,640 --> 00:46:55,640
Speaker 1: that a retail businessman from Mexico might swoop in at

834
00:46:55,640 --> 00:46:59,319
Speaker 1: the last second, but after purchasing a little less than

835
00:46:59,360 --> 00:47:02,600
Speaker 1: thirty percent of the company, that just stopped. A lot

836
00:47:02,600 --> 00:47:04,840
Speaker 1: of questions were raised about why someone would come in

837
00:47:04,880 --> 00:47:07,040
Speaker 1: and buy up a third of a company that was

838
00:47:07,120 --> 00:47:11,520
Speaker 1: doomed to failure and not try to do more. So

839
00:47:11,719 --> 00:47:14,080
Speaker 1: the company at this time was still trying to do

840
00:47:14,160 --> 00:47:17,680
Speaker 1: business like. Stores were still open and still trying to

841
00:47:17,719 --> 00:47:21,799
Speaker 1: sell merchandise, but those bankruptcy proceedings had really hurt them

842
00:47:21,840 --> 00:47:26,120
Speaker 1: beyond just that backstage stuff. I mean, customer confidence had

843
00:47:26,160 --> 00:47:29,120
Speaker 1: withered away, and the company lacked the resources to try

844
00:47:29,120 --> 00:47:32,480
Speaker 1: anything new to bring customers back in. So in January

845
00:47:32,520 --> 00:47:35,239
Speaker 1: two thousand and nine, they couldn't keep things going any

846
00:47:35,280 --> 00:47:39,280
Speaker 1: longer and the company was forced to liquidate all its assets,

847
00:47:39,320 --> 00:47:42,320
Speaker 1: and over the next few months, the company would close stores,

848
00:47:42,440 --> 00:47:46,440
Speaker 1: layoff workers, liquidate things until the final store closed on

849
00:47:46,560 --> 00:47:50,600
Speaker 1: March eighth, two thousand and nine. But that's not quite

850
00:47:50,600 --> 00:47:54,160
Speaker 1: the end of the story. On April sixteenth, two thousand

851
00:47:54,160 --> 00:47:57,600
Speaker 1: and nine, a company called system As Incorporated, purchased the

852
00:47:57,680 --> 00:48:02,200
Speaker 1: intellectual property of Circuit City, which include the company's name

853
00:48:02,320 --> 00:48:06,680
Speaker 1: and their customer database. So for several years, Circuit City

854
00:48:06,760 --> 00:48:10,560
Speaker 1: existed but essentially existed in name only, and system Acts

855
00:48:10,680 --> 00:48:13,960
Speaker 1: used it here and there until twenty twelve, when they

856
00:48:13,960 --> 00:48:16,759
Speaker 1: figured this name doesn't really have any value anymore and

857
00:48:16,840 --> 00:48:20,520
Speaker 1: they just stopped using it. But you might think this

858
00:48:20,640 --> 00:48:23,919
Speaker 1: is when the company died off, and you'd still be wrong,

859
00:48:23,960 --> 00:48:29,120
Speaker 1: because it's zombie time. It's like closing time, only with

860
00:48:29,200 --> 00:48:35,120
Speaker 1: more brain devouring now. One thing Circuit City had continued

861
00:48:35,320 --> 00:48:38,279
Speaker 1: to do in this time, despite no longer being a

862
00:48:38,360 --> 00:48:43,040
Speaker 1: viable entity, was make charitable donations, which is weird, right,

863
00:48:43,080 --> 00:48:46,080
Speaker 1: You might wonder, how can a company that doesn't exist

864
00:48:46,280 --> 00:48:49,799
Speaker 1: fund charities? Well, it's because the company had established a

865
00:48:49,920 --> 00:48:54,160
Speaker 1: fund and deposited money into the fund specifically for the

866
00:48:54,160 --> 00:48:58,360
Speaker 1: purpose of making regular charitable donations, and there's still money

867
00:48:58,400 --> 00:49:02,680
Speaker 1: in it, so the fund still pays out year over year.

868
00:49:03,440 --> 00:49:05,120
Speaker 1: Last time I checked there's a little bit more than

869
00:49:05,120 --> 00:49:07,960
Speaker 1: a million dollars in that fund, so it won't go forever.

870
00:49:08,080 --> 00:49:12,200
Speaker 1: It will eventually drain, but for the time being there's

871
00:49:12,200 --> 00:49:17,560
Speaker 1: still money from Circuit City funding charities. And now there

872
00:49:17,600 --> 00:49:21,560
Speaker 1: are new owners of the Circuit City intellectual property. So

873
00:49:21,600 --> 00:49:25,600
Speaker 1: from twenty twelve to twenty sixteen, that name remained unused,

874
00:49:25,960 --> 00:49:28,040
Speaker 1: but then a new group came in and purchased the

875
00:49:28,080 --> 00:49:31,600
Speaker 1: IP from Systemax. The new CEO is a guy named

876
00:49:31,719 --> 00:49:35,000
Speaker 1: Ronnie schmol who said that plans are in place to

877
00:49:35,080 --> 00:49:39,000
Speaker 1: open kiosks and stores. Originally they had aimed at kind

878
00:49:39,040 --> 00:49:42,040
Speaker 1: of the summer of twenty sixteen, but that didn't actually happen,

879
00:49:42,480 --> 00:49:44,600
Speaker 1: and according to the new owners, the reason for that

880
00:49:44,800 --> 00:49:46,920
Speaker 1: is they want to make sure that they do it correctly.

881
00:49:47,800 --> 00:49:49,759
Speaker 1: So we're still waiting as of the recording of this

882
00:49:49,840 --> 00:49:53,920
Speaker 1: podcast to see that happen. But if the owners are successful,

883
00:49:53,960 --> 00:49:57,200
Speaker 1: we may see a return of the Circuit City brand

884
00:49:57,520 --> 00:49:58,759
Speaker 1: under new ownership.

885
00:49:59,080 --> 00:49:59,880
Speaker 2: It'll be a new.

886
00:50:01,280 --> 00:50:05,200
Speaker 1: Kind of not that different from the way Atari came back.

887
00:50:06,280 --> 00:50:09,080
Speaker 1: But we have a very different marketplace today than we

888
00:50:09,120 --> 00:50:12,080
Speaker 1: did even back in two thousand and nine. Online purchases

889
00:50:12,120 --> 00:50:14,440
Speaker 1: are on the rise. Brick and mortar stores are having

890
00:50:14,480 --> 00:50:18,759
Speaker 1: trouble getting consumers to actually visit physical stores, so it

891
00:50:18,800 --> 00:50:21,680
Speaker 1: may end up that Circuit City will become an online

892
00:50:21,719 --> 00:50:25,960
Speaker 1: only enterprise, although that's not necessarily the plan if it

893
00:50:26,000 --> 00:50:28,880
Speaker 1: works at all, But like I said, the plan is

894
00:50:28,920 --> 00:50:32,240
Speaker 1: to open real, actual stores. So perhaps in the future

895
00:50:32,320 --> 00:50:34,960
Speaker 1: I'll need to record a part three to this story.

896
00:50:36,080 --> 00:50:40,640
Speaker 1: And that concludes our two part series about Circuit City,

897
00:50:40,960 --> 00:50:44,879
Speaker 1: a store that you know, was kind of a trailblazer

898
00:50:45,040 --> 00:50:48,920
Speaker 1: in some ways and then blazed right out and in

899
00:50:48,960 --> 00:50:51,680
Speaker 1: pretty much every way that counts. I hope you all

900
00:50:51,800 --> 00:50:57,960
Speaker 1: enjoyed this two part retrospective look at Circuit City, and yeah,

901
00:50:58,040 --> 00:51:00,400
Speaker 1: I look forward to doing a lot more episodes about

902
00:51:00,440 --> 00:51:03,520
Speaker 1: stores like this. I really need to do a deep

903
00:51:03,560 --> 00:51:06,960
Speaker 1: dive on radio Shack, because I think I actually did

904
00:51:06,960 --> 00:51:09,120
Speaker 1: do episodes about radio Shack once upon a time. But

905
00:51:09,160 --> 00:51:12,120
Speaker 1: I really need to do another one because that story

906
00:51:12,440 --> 00:51:16,640
Speaker 1: gets bonkers. But we'll have to leave that for another time.

907
00:51:17,120 --> 00:51:19,759
Speaker 1: In the meantime, I hope you're all well, and I'll

908
00:51:19,760 --> 00:51:28,680
Speaker 1: talk to you again really soon. Tech Stuff is an

909
00:51:28,760 --> 00:51:33,920
Speaker 1: iHeartRadio production. For more podcasts from iHeartRadio, visit the iHeartRadio

910
00:51:34,000 --> 00:51:41,040
Speaker 1: app Apple podcasts, or wherever you listen to your favorite shows.