Jim Keyes: The 7 Eleven and BlockBuster CEO Who Grew Up Without Running Water

00:00:10
Speaker 1: This is Lee Habib, and this is Our American Stories. And we tell all kinds of stories here on this show. And one of our favorites is what we like to call our American Dreamers Series. And always that series is brought to us by the great folks at Job Creators Network, advocating for small businesses and working hard to help them turn their small businesses into bigger ones. Today’s story is about Jim Keyes, the former CEO of 7-Eleven and Blockbuster. Here’s Jim with his story.

00:00:42
Speaker 2: So, wow, it’s an interesting, I think, an interesting American tale in many ways. I guess you could say I am the classic definition of the American dream because I grew up in a challenging environment. Too many children, not enough money. Three-room house, six children, two parents, all squeezed into this one building, literally with no running water and no modern conveniences like a thermostat. We had a wood-burning stove that would stop burning in the middle of the night if someone didn’t get up to replenish the wood, and it would get so cold in the house that literally the galvanized buckets that we used for water—we had an outdoor pump—would freeze over and we’d have to break the ice to get to the water in the morning if it wasn’t cold enough to freeze the whole bucket during the night. Cleanest, freshest water in the world. Literally, that was the environment that I grew up in, which, interestingly, never occurred to me was a situation of poverty until one day, I believe, the church came with a basket of food, and I remember asking my mother at the time, “Why are they giving against this food?” She said, “Well, we need it. We’re, you know, we’re kind of poor.” And I still remember trying to understand why they would think we were poor, because I didn’t feel like we were poor, never did. But that situation is tough on any family, in any situation. So my mother, at the time I was about five years old, was probably pretty tired of that situation—no running water, no indoor plumbing—and found a relationship with another person, and my dad found out about it and created quite a scene, and she ended up leaving. And so she left home when I was only about five years old. Interestingly, they gave me the choice, “Would you like to live with mom or dad?” And apparently I don’t remember this part, but apparently I went in and put all of the things I owned into a little vapor sack and came out and said, “I’m not going to stay with either of you. You figure out what you want to do.” And I went to live with my older sister, who had just become just gotten married. My mom had moved away to a trailer park, and my dad was still living in this house without running water. So I decided to go back in and stay with my dad until one day, literally walking home from school, I read a sign on the house, and the red sign said, “CONDEMNED.” And I didn’t know what that word was and went to my grandmother and said, “Well, what is condemned mean?” I think I was probably ten years old or eleven years old at the time. “What is condemned mean?” And she tried to explain it to me, and it just didn’t register. “Why would they condemn our house?” And it turned out that the visiting nurses who would come and take care of my dad from the town went back and reported on the conditions, basically being no running water and no heat, and it certainly wasn’t an adequate environment for someone dying of cancer. And I didn’t realize he was that bad off at the time, but they ended up putting him in a VA Hospital for the rest of his—for the remaining year or two of his life, and I got shuffled off to one of my brothers. I ended up with with my eldest brother living with him for a while until my father finally passed when I was twelve, and I had an opportunity to go in and live with my mom at that point. So my mom, she knew that the trailer park wasn’t a good environment, so she moved in with someone, you know, who could better, you know, provide for us with a home and that sort of thing. And that environment was not a very healthy environment. So the gentleman was a bit volatile, you know, and as I became a little bit older, we would have a natural teenager conflict that you have over music or, you know, the length of your hair or whatever it is. But his volatility got to the point that caused him to take some extreme actions. And then, in one circumstance, I was in a situation where he and my mom had gotten into a fight, and we wondered what he was going to do. Went to the garage. We thought he was only leave the house, heard the car start in the garage, and I went down outside. This, in the middle of winter in Massachusetts, went out to the outside of the garage and found that it was locked, and the car was running inside. I had to kick open a panel of the garage and got the door unlocked. Finally, by the time I was able to kick through a panel and unlock the door, and by the time I got the door open, I literally had to pull him from the car in the garage full of smoke, and he was passed out, and I had to lay him down in the snow, and thankfully he was able to come back out of it. We moved shortly after that. That was about enough that triggered my mom to then find another place on her own, and she got me out of that environment. But, you know, you think at the time, “Why am I going through this?” I’m fourteen years old. “Why should I have to deal with, you know, this sort of situation?” But again, you do. You deal with it. You, you get through it. You get to the other side. It’s not fun, but you learn from that adversity that everyone has issues, and, you know, you say a little prayer of gratitude that you’re not, you know, as validle as that, and it makes you go forward and be thankful for what you do have rather than sad about what you don’t. In many ways, you know, you look at it and you say, “Wow, those were tough times.” But that adversity that I dealt with made me the person I am today. Gave me the confidence, gave me the strength, forced me to be self-sufficient, forced me to realize at a very early age that I was going to survive, I had to do it on my own. And I wouldn’t trade that for anything today. Looking back, I was very fortunate to have had that adversity and to come out favorably from it, which some people don’t. But I think there’s a huge lesson there that I that I love to share with young people today. That adversity gave me strength that others don’t have the opportunity to get.

00:07:05
Speaker 1: And you’ve been listening to Jim Keyes tell the story of his youth, and not an easy story, but as he put it, it shaped him. As he put it, “That adversity made me the person I am today.” When we come back, more with Jim Keyes’s story, our American Dreamers Series. Here on Our American Stories, folks, if you love the great American stories we tell and love America like we do, we’re asking you to become a part of the Our American Stories family. If you agree that America is a good and great country, please make a donation. A monthly gift of seventeen dollars and seventy-six cents is fast becoming a favorite option for supporters. Go to OurAmericanStories.com now and go to the donate button and help us keep the great American stories coming. That’s OurAmericanStories.com. And we’re back with Our American Stories and with Jim Keyes’s story. Jim, as you just heard, grew up in poverty, divorced parents who died at a young age. But Jim would end up becoming the CEO of 7-Eleven and Blockbuster. Let’s get back to Jim with the rest of his story.

00:08:25
Speaker 2: My first job, I think I made one dollar, seventy-five cents an hour or something. It was McDonald’s. McDonald’s had just come to town. They were relatively new. They built one store on Grafton Street in Worcester, and it was a fabulous experience in so many ways. I can’t say enough about it, because, one, it was money; I needed money for school. Two, I learned very, very quickly that I was a worker. I learned self-sufficiency at an early age that if I was going to get by, whether it was schoolwork or a job, I had to work twice as hard as anybody else. So I put my head down and said, “I’m going to be the best burger flipper that’s ever been in this place,” and literally practiced flipping burgers so that I’d be faster than anybody else. Anyone that’s ever worked at McDonald’s knows that that’s a cherished skill. And even something as mundane as cleaning the parking lot, I would run because I knew that if I did it better than somebody else, even though it was the lowliest of tasks—or cleaning the bathrooms—if I cleaned them better than anybody else, I would get the attention of the manager, who would perhaps give me a raise or give me more hours because hours were precious. He wanted to work as many hours as you could. And so I did get their attention, and literally they rewarded me with the worst job in the store, which was a shift manager, the guy that had to stay and work late into the evening. But I was barely sixteen years old, and I was able to be a shift manager, which means they trusted me basically to manage the small late-night staff and to cash out the drawers at night, counting the drawers and filling out the bank statement and the daily financial statement at night. There was a huge breakthrough in confidence because hard work is rewarded, trust is important, and there is virtually unlimited opportunity here because then, shortly after, they literally came and tried to talk me out of going to college and going instead of Hamburger University and becoming a store manager. Hamburger University is McDonald’s’ internal training program they send their store managers through. It’s quite an advanced program. It’s both academic and practical application of managerial skills and store operator skills. Basically, they trained store operators and future franchisees in the system. You know, I don’t know, maybe I could have been CEO and McDonald’s through that, through that path, but I’m glad I took the path I did. One other story about McDonald’s that was so important is that I got exposure to others in a different environment. My environment was one that you see so much in schools, particularly in rural areas, almost discouraging me from trying to pursue a career or a college education. “We don’t do that here. We go to work for the factory like our parents did, and there’s nothing wrong with that.” But at McDonald’s, I had the opportunity work with a couple of college students, and they told me how easy it was to, you know, to get into college. “Look, you can do this, we’re doing it.” That really gave me the confidence that college is an option for me. I would never have even considered it because my, literally, my guidance counselors in school said, “You can’t afford college. Why would you even think about it? Don’t disappoint yourself.” Well, meanwhile, I probably had I applied to Harvard, I probably could have gotten a full vote scholarship given my grades and my activities, et cetera, et cetera. But I didn’t have that confidence. I just didn’t have that exposure to how it works, how the system works. I had no choice but to pay for my own education, so I worked not only at McDonald’s, I would also part-time driving a truck. And so I worked two jobs at McDonald’s at and then I’d be up at four a.m. I’d literally work till the midnight shift and then close out and then four a.m. be there loading my truck for the next day. But the good thing about those two jobs is I was able to save enough—at least the first year of college. I decided to apply early admission to Holy Cross because my mother had now been diagnosed with cancer. So she was ill, and I didn’t know what I was going to do in terms of being able to try to help take care of her, so I decided to go local. Throughout my career, I’ve run into these periods of crisis or conflict or issues that occur. My very first job, Gulf Oil. I thought I had made it big, one of the Seven Sisters, the big oil companies. I had a fabulous job working for the Chief Financial Officer doing merger and acquisition work, and really thought that I was on my way. This was a great career move. Coming out of graduate school, I had the opportunity to do this. And four years into this, we made an acquisition attempt that failed, and it weakened the company, even one of the largest oil companies in the world. All of a sudden, it was crippled. It found itself in trouble because they tried to make an acquisition of Cities Service and it failed. The stock was pummeled, and we had to figure out what to do next. And right about that time, T. Boone Pickens ironically made a run on Gulf Oil. I still remember the day he came to our shareholder meeting and stood up and gave the Gordon Gecko greet his good speech in front of the staid old Mellon family in Pittsburgh, Pennsylvania, at a shareholder meeting. I was a kid at the time, just wide-eyed, thinking, “You know, he’s right. This place is fat.” “I walk around these halls and people have fallen asleep every day after their three-martini lunches and hiding buying the Wall Street Journal. They could make a lot more money,” which is exactly what Boone was saying. Well, it turns out Boone’s pressure on the company caused them to merge with Chevron. So, all of a sudden, here I had this great career, and now I was out, and I found myself in San Francisco with Chevron, part of the merger team, and the guys, as Chevron was saying, “Jim, we don’t know how you got here or why to this position,” because I was in a relatively senior role on the merger team even, and I was very young at the time, and they said, “You’re gonna have to pay your dues here at Chevron,” and that was my opportunity to go to 7-Eleven. One of the gentlemen that I was working for at the time, during part of my short career at Gulf, took over as CEO of Citgo, which was ironically part of Cities Service. It was the downstream end of Cities Service. I had spent a lot of my time working on Cities Service on the analysis for the acquisition, potential acquisition of the company. So when he took over as CEO of this entity that was just acquired by the South In Corporation, the parent company for 7-Eleven, he reached out to me and said, “Could you come and join?” So I left Gulf and I went to the South In Corporation/7-Eleven, and crisis occurs again. At 7-Eleven, they took on—they did an LBO, a leverage buyout of the company. It took on four and a half billion dollars a debt at seventeen percent interest rates. Hard to imagine at the time anyone would do this. This is during the days of leverage buyout frenzy that occurred in the nineteen eighty-seven timeframe. Well, by nineteen ninety-one, 7-Eleven, the South In Corporation, was filing for Chapter 11 protection, and I thought, “I’m out of a job. Now what am I going to do?” It turned out that that was the best thing that could have happened in my career. The way that people approach adversity, they either put their head down and take on the role of the victim, “Woe is me,” or they put their head up and say, “I’m going to figure this out in chaos’s opportunity.” I kept my head up. I looked at the opportunity. I worked harder than I worked prior to the filing of Chapter 11, and when we came out of it, I had the opportunity to be the Head of Strategic Planning for 7-Eleven because of the division that I ran during that LBO period. In the bankruptcy period, it ended up outperforming much of the rest of the company, and so I came out of it with an opportunity to lead, to develop a new plan for the new entity emerging from bankruptcy that then led to an opportunity to be Chief Financial Officer. That role of Chief Financial Officer gave me an opportunity then to be Chief Operating Officer. So it was a wonderful sequence of events where I was able to work really hard and prove that at least one division of the company could excel. I was then able to develop a plan for the new entity going forward. I was able to take on the role of Chief Financial Officer to finance that plan, and then I was ultimately able to be the Chief Operating Officer to execute the plan and Chief Executive Officer to then sell it to the investment community. That led to an amazing period of time. In a ten-year period, we increased same-store sales every quarter for nearly ten years and had a tenfold increase in the equity value of the company from the time I was named CEO in 2000 until we sold the company in 2005. And so it ended up being just a wonderful experience born of adversity, born of problems and crisis and challenge, and that adversity that we faced, the chaos that we faced, turned into opportunity for me, both personally and professionally.