Best Buy’s Founder: Serve Others, Put Yourself Last, And You’re More Likely To Win!

And we continue here with Our American Stories, and with an entrepreneur whose business you most definitely know, but whose story you probably don’t. Our own Alex Cortez brings us this great American Voice.

Basically, for me, life kind of took on a level of independence at age eleven, and that’s when I got my paper route for the first time. And so now I was responsible for delivering one hundred and twelve newspapers morning, evening, and Sunday for four and a half years.

We’re listening to Dick Schultz, native son of Saint Paul, Minnesota.

Obviously, I learned or began to learn the importance of financial independence. Now, my father told me that you need to put twenty percent of what you earn into the family, because the family is providing you a place to live, food to eat. So my father was German, very task-oriented, very disciplined. I’m sure that was in part and parcel how he was raised by his very dramatic father. And so, you know, the good part of that was at age eleven, here’s responsibility. You’re up at five thirty in the morning, you have papers on your shoulder. At six, you’re done. At seven fifteen, you have breakfast, you’re out the door to school at eight.

And I did that for almost five years.

You begin to think in terms of, gee, I can be in control because I’m responsible, I’m doing what I signed up to do, I’m benefiting financially from it, I’m dependable, and at the end of the day, it began to plant the seeds for me that I can actually control my own destiny if I apply myself diligently and work effectively and efficiently. And obviously, one of the things that came out of that was I was a sophomore and I wanted to take my date to the prom. So I asked my father if I could use the car, you know, to take my girlfriend to the prom, and he said, ‘Well, no,’ he said, ‘We only have one car in the family, and I can’t take a chance that you might get into an accident.’

‘So, I’ll take you.’

And of course I said, ‘Dad, you know, you don’t understand. I’m taking my girlfriend to the prom, and I don’t want my father driving me.’ ‘Well, that’s the only way you can use the car.’ ‘Fine.’ So I decided to take this into my own hands. And so, the Christmas before the prom, which is the following March, I decided that if I put the newspaper in the door of every customer from Thanksgiving to Christmas, and as opposed to flipping it up on the porch, which was a normal routine, that I would be inclined to get some tips that would be beyond

what is normal.

That’s exactly what happened from Thanksgiving to Christmas. I’m schlepping one hundred and twelve newspapers up and down the street, up and down the sidewalks, into the doors, and I put the newspaper in every day morning, evening, and on Sunday. Then I collect for the paper after Christmas, and lo and behold, you know, I get a little over three hundred dollars in tips in addition to the somewhat over one hundred dollars that I get from the sale of

the newspapers every month.

So now I had real cash in my pocket. So the second of January is my birthday. I’m fifteen years old, and I go to Aero Pontiac. I meet the general manager, Phil Hesley, a long time ago, and I make the mistake of saying, ‘I’ve got three hundred dollars to spend.’ I learned from them, but he matched me up with a nineteen fifty Pontiac, which had just been traded in. So it was five years old and was driven by a school teacher, had twenty-nine thousand miles on it, and it was an inline six-cylinder, standard transmission, which I had never driven. So I hadn’t driven anything. I buy the car. My father drives it home. Obviously, I had to get my license, so that took place in January. You know, I took my girlfriend to the prom, and we had a great time preceding that, which is kind of interesting how these memories become re-apparent.

So, I’m a sophomore. I drive my car to school.

Normally it’s like a four-and-a-half or five-mile walk, which I did every day. Saint Paul Central. So I’d hitchhike or I’d jump on the bus, depending on the time it was. But, you know, I was hiking to school four and a half miles every day. And now, of course, I’ve got my own car. I’m the only sophomore with a car, so I parked in the parking lot. I’m at school, go through school. Bell rings at three o’clock; I’m out of school. I got papers to deliver. I get to the car, and there are three girls around my car. I walk up to my car, and one girl says, ‘Is this your car?’ And I said, ‘Well, yeah, that’s my car.’ ‘Gee, it’s really nice! Can we have a ride?’

‘Well?’

‘Yeah.’ They get in the car, and I drive them home, and then I go get my papers and I do my work. Next day, I’m at school. Bell rings at three o’clock. I’m out, and there are five girls around the car. So the story gets interesting. So there were no seat belts in those days. I got three girls in the back. I got two girls in the front because it’s a bench seat, so there are no buckets.

And I drive them home. But it’s taken

longer because these girls live in different places. So the third day there are seven girls there, and I said, ‘Look, I can’t be doing this.’ I said, ‘You know, I’m getting late for my route.’ So it ended, you know, after Day Three, when I wasn’t driving seven girls around.

But it was cool for me because, A, I’m

the only sophomore with his own car. B, you know, the girls are warming up to the guy that owns his own car, so you’ll learn a little bit about, you know, what’s important in life. And so I had a lot of

fun with it.

And the end of the story is my daughter Nancy and her husband John found a replica of my car in Scranton, Pennsylvania, and bought it. They shipped it to Florida, painted at my colors, and delivered it to me on Father’s Day. It blew me away because I pretty much had put that chapter in my life away. But then, of course, not only did the car resemble my own first car, at least in color, it had all the original equipment. So I had to go through the car and completely resurrect brand new interiors and motors and driveshafts and drivetrains and brakes and electrical systems and air conditioning on the whole thing, which is nice.

And now I drive the car. In fact, I had it yesterday.

I drove it here yesterday. So, you know, it’s interesting how these memories take hold. Then I went from the paper route to Red Owl. It’s a grocery store in Highland Park, and I started as a carry-out boy and then was asked to participate in stocking shelves.

And I had a really good

friend who worked there, and he met his future wife there. She was a cashier. So he and I have been close friends since third grade. So I’m working there, he’s working there, and, of course, now his wife-to-be is working there, and I’m in the stocking role, putting stuff away. It comes in off the truck, and you put it off of pallet jacks, and you put it onto carts, and you take it out in the store, and you’re putting stuff. You know, where it belongs, except that the way it was handled was, the stuff that was on the cart was everywhere in the store. So you literally had to take the cart from aisle to aisle, and/or leave the cart in an aisle, and take something that belongs in another aisle. And so the stocking process itself, like, took forever, and it was horribly inefficient.

So I said to the assistant manager, David Cole — I’m guessing he’s probably not with us any longer — but I said, ‘You know, can we sort everything off the truck in the back room and put things on the cart aisle by aisle so I can take things out and put it into— everything that’s on the cart is in the same aisle— so I can get it done more efficiently and more effectively?’ I didn’t use ‘effective’; I used ‘efficient.’ And he said, ‘Well, no,’ he said, ‘We’ve been doing it this way, you know, forever. This is what the company wants, and and so we’re not changing. We’ll find.’ So this inefficiency, you know, goes on, and weeks go by, and finally I said, ‘Oh, my good, Mr. Cole, let me at least try to see if we can’t be more efficient with the way we distribute all the groceries when they come in.’

And he was. He said, ‘Mr. Schultz, we’ve spoken about this.

‘You should just know we’re perfectly fine the way we are, and I’m not changing any method of distribution in the hopes that it might be more efficient.’ And I said, ‘Oh, okay, thank you.’ I took off my apron, handed it to him, and said, ‘I’m out of here.’ And I quit my job and walked out of the store.

‘You just got here!’ I said, ‘I just quit.’ He said, ‘What do you mean, you just quit? This is your job!’ I said, ‘It was my job.’

I said, ‘You know, if somebody is not going to at least try to become a little more efficient in what we do, I guess I don’t want to. I don’t want to be a part of it.’

And you’re listening to Dick Schultz, and this seventeen-year-old kid would go on to found a little company called Best Buy and promised to always listen to every team member for new ideas, and especially front-line workers like he was. We’re right in the middle of the action. More of this unique American Voice, this unique American Story. Here on Our American Stories, and we continue with Our American Stories and with the story of Dick Schultz and the company he founded, Best Buy. When we left off, Dick was a seventeen-year-old grocery stocker whose boss didn’t even want to hear his ideas, good or bad, and from that moment on, Dick was determined to do the exact opposite for the rest of his life. Let’s return to Dick on leading Best Buy.

I’m a big believer in managing from the bottom up. So I don’t manage at the top; that’s what people are paid to do. I manage to see what’s really happening, and that’s at the bottom. So, servant leadership to me is a big thing, and engaging where the actual work gets done is vital to know whether what you’re doing and how you’re training and what you’re providing matters or not.

People up on the fifth floor

essentially, are so far — usually so far away from it — that they’re conceptualizing, you know, too far from the actual touchpoints. I’m a touchpoint person. I learned that in Best Buy when I did my cashier and customer-service meetings. We had stores at Best Buy where we had underperformance. Any company has underperformance in some place, and in areas where you have that underperformance, you can go to the district manager or you can go to the store manager, and you can talk about, ‘So, why do you suppose, you know, we’re not getting the numbers here, where our margins are down here, you know?’ And you get all kinds of excuses, you get all kinds of alibis, you get all kinds of stories. And I couldn’t believe that it was only happening in this one store and the other five, as an example, that were all put in the same place or different places, at

the same time, were all doing just fine.

So the only way I could get at it was to say, ‘I needed to have a breakfast meeting with the cashiers and customer-service people, and would you make a reservation for me at the Perkins down the street?’ [Manager’s voice implied]: ‘Fine, I’ll take care of that. I’ll look forward to seeing you there.’ And I said, ‘No, I don’t need you there. I just need the cashiers and the customer-service people.’ I said, ‘I just want a chance to chat with them about what they see and what’s going on in the store.’ And, of course, they were perplexed at that when they were cut out of that meeting. So, of course, it took the better part of a half an hour to get these people comfortable with me. But I have the ability to warm them up at some point in time and get some laughs and acknowledge and compliment what’s going on, and talk a little bit about how we’re thinking about the future. And so then, pretty soon, I touch on what’s going on in the store. And that’s when it starts. And once they had the assurance their names weren’t going to be used, and they were free to talk about the actual experience, I couldn’t write fast enough. I couldn’t write fast enough. So future meetings like that, I would take my administrative assistant with me, Donna Mankowski, and Donna would sit next to me at Perkins, and she’d be writing like crazy with the stuff that was coming out. And sure enough, you know, the managers were absent, you know, without leave. They were everywhere; customers were complaining.

And what drove me to it was, I rationalized: The very last touchpoint a customer will have with respect to the experience they had in the store would be with the cashier, and if there is an issue, that’s when it’ll get dumped. And so the cashier knows everything that’s going on in the store because the customers essentially, you know, have to tell somebody how miserable it was. [Customer complaints implied]: ‘I couldn’t get somebody to wait on me. You know, I didn’t know what the price was. Nobody would tell me what the service was or what the warranty was. I couldn’t even tell if it was in stock. I couldn’t find anybody that would tell me they would check to see if it was in stock,’ and the stories went on and on and on.

So, instead of dealing with the district manager, I went to the regional manager, and I said, ‘Well, here’s what you need to know about that store,’ and so he went in and talked to the district manager, and they understood basically. Then what happened: We cleaned out the management team, fired all of them, and within thirty days we had a whole new management team in the store, and, lo and behold, the numbers came right back on up to where the other five stores that were being measured at the same time.

So that’s just

who I am, and that’s how I manage. And I have to really understand what the experience is for the person that we’re serving. And the only way you really get that, you know, is to get to the person that’s doing the serving. So that’s my world when I get there; that’s what I do. And probably the greatest satisfaction I’ve had at Best Buy is seeing graduates who get out of school and don’t have a clue where they’re going to start working or what they’re going to be doing. [Graduate implied]: ‘I’ve been in school for four years; I’ve got my degree. Now I’ve got to find a job, you know, that I enjoy and that I can make some money.’ And oftentimes, you don’t get started right away.

You know, you work your way around, and there are so many cases of young people that worked part-time at Best Buy where they’re going to school fifteen hours or twenty hours a week, whatever it happened to be, and they sold electronics, or they sold computers, or they sold whatever it was, or on the floor. ‘I need the money, you know. I’m eighteen years old, and I’m working twenty hours a week, and I’m making twelve bucks an hour.’

I need the money.

Then they get out of school, and now they’re looking for a job. The store manager knows they’re good at what they do, they’re reliable, on-time, and excellent at what they’ve done, offers them a full-time position. [Young person implied]: ‘Well, I guess maybe I can take it while I’m looking.’ [Speaker implied]: ‘So, fine.’ So they start as a full-time employee. Then they moved into supervision, then they moved to an assistant management position, and then ultimately, within five years, sometimes less, they’re a general manager of a forty-five-million-dollar store with one-hundred-and-twenty employees and one-hundred-and-fifty grand a year.

Totally unexpected, totally unplanned. But the company was growing. We were moving into new stores in new cities. We were taking people that grew from the bottom up. So they understood the process, understood the procedure, understood the steps, and they made the best managers. I can’t tell you how many millionaires we made. We were growing like a weed. We had stock-option programs for our management throughout, and so these young kids, at twenty-seven to twenty-eight, twenty-nine, thirty years old, had stock options that they had gotten in management, and these stock options were paying dividends, especially when we were opening multiple numbers of stores. There was a five-year period where we opened fifty stores a year for five straight years. And they don’t think about any of that. But it happens at this company because we know if you bring people from the bottom up through the organization, you train them effectively, they see the outcome from the work they do. It becomes acknowledged and then rewarded. They’re not going anywhere. People don’t leave Best Buy. They don’t. They love the company, and as long as we can continue to show them ways to learn and grow and become successful, why would they go anyplace?

And with common sense becoming increasingly uncommon, common sense ideas like serving others are usually going to stand out and get rewarded.

You know, it became apparent to me that whatever it took to serve customers in an order that they preferred was what we had to do…