Here at Our American Stories, we love sharing tales of the American Dream, and today we bring you another inspiring business journey from Jim Keyes. You might already know Jim as the determined leader who successfully brought 7-Eleven out of bankruptcy, a testament to his grit and smarts that also earned him the Horatio Alger Award. But Jim’s remarkable talent for turning companies around was needed once more, this time by a household name that many held dear: Blockbuster. He didn’t just see a video rental store; he saw a powerful opportunity to offer convenient media access for all.
Stepping in as Blockbuster CEO, Jim Keyes embarked on a bold mission to redefine its future. His strategy involved revitalizing stores, stabilizing finances, and building a strong digital future that offered everything from streaming to mail delivery. This was a story of big plans and bold action, but then the 2008 financial crisis hit, shifting the focus from transformation to sheer survival. Jim’s time at Blockbuster offers a powerful look at leadership, showing how even against immense odds, American grit and a never-give-up spirit can inspire us to innovate and keep striving for what’s next.
📖 Read the Episode Transcript
And we’re back with Our American Stories. And as you know, some of our favorite stories to tell are business stories, American Dreams stories. And today we bring you another business story from Jim Keyes. We’ve already told two stories with Jim about his childhood and the story of becoming the CEO of 7-Eleven. Today, Jim tells us the story of becoming the CEO of another company we all know and love. Joey Cortez brings us today’s story.
Speaker 2 (00:39):
In 2005, Jim Keyes received the Horatio Alger Award, joining the ranks of Rich DeVos, Buzz Aldrin, Hank Aaron, and many more Americans who exemplified great virtue and perseverance. The award was well-deserved. As you might have heard in our previous stories with Jim, he came from nothing, worked at McDonald’s and would become the CEO of 7-Eleven and successfully brought them out of bankruptcy. Turns out Jim had a real talent for turning companies around, a talent needed by another company in peril, a company that holds a special place in all of our hearts.
Speaker 3 (01:19):
I started looking for similar opportunities. I saw in Blockbuster a very similar environment. Hard to see that on the surface, but they had small box stores, yes, but really what they were in the business of is convenience.
Speaker 4 (01:32):
So, people were…
Speaker 3 (01:32):
Saying, “Well, the Blockbuster store is going to go away.” I never saw them as being a video rental store. I saw them as being a convenient access to media entertainment store.
Speaker 5 (01:43):
So it’s, in fact, just another form of convenience.
Speaker 3 (01:47):
I also saw the technology that was coming wasn’t quite here yet for the ability to stream movies, to have…
Speaker 4 (01:54):
the access via the internet.
Speaker 3 (01:56):
Now, the capability wasn’t there; the infrastructure wasn’t there, but the potential was. So, my objective in taking on Blockbuster was to first make the stores better. This created a false perception that all I cared about was the store. That is not true because the first thing we had to do was right the cash flow of the company, and the cash flow of the company was suffering.
Speaker 4 (02:16):
Stock was suffering.
Speaker 3 (02:18):
The week I got there, they violated a bank covenant, so they were not satisfying their financial obligations. So, job one: right the ship, get the stores to be more productive, and then step two: build that digital future for the company. So that was my objective, and all was going actually quite well the first year I joined the company in mid-2007. By the third quarter of 2008, I had one full year under my belt. We had significant increase in same-store sales. We bought a streaming video company called Movielink, and we…
Speaker 4 (02:55):
were very well positioned.
Speaker 3 (02:56):
We had already a by-mail business and an offering total access, so that customers could get our movies anyway.
Speaker 4 (03:03):
they want: by mail, via…
Speaker 3 (03:04):
a kiosk in the stores, or via streaming. So it was a very good offering. Unfortunately, again, back to the adversity thing. Sometimes I think that black cloud maybe just follows me around that I have to keep reminding myself this is, potentially, there’s going to be a silver lining on the other side of this. But at Blockbuster in 2008, everyone forgets that Lehman Brothers collapsed. We were in the midst of a worldwide financial crisis. The banks were virtually shut down, and Blockbuster had a billion dollars of debt, of which a third was due to be refinanced in…
Speaker 5 (03:41):
2009.
Speaker 4 (03:44):
So, I had little choice in…
Speaker 3 (03:49):
shifting from transformation mode to survival mode for Blockbuster. So, we had to pull back, retrench, try to finance the debt and make it through this financial crisis, and ultimately…
Speaker 4 (04:05):
we started looking…
Speaker 3 (04:06):
for partners—distribution partners. Google was a very high potential partner. We were very close to a deal with Google that would have put us side by side with YouTube. So, imagine: everything paid-for TV or movie would be Blockbuster, and everything free would be YouTube under the Google banner. That would have been a huge differentiator. We had an opportunity at one point to lock up the content that Netflix started streaming.
Speaker 4 (04:35):
We could have gotten it exclusively for $100 million a year.
Speaker 3 (04:39):
Of course, a company only eight one hundred and eighty at the time in EBITDA, so it would have consumed a lot of our cash flow.
Speaker 4 (04:45):
It was a very high-risk proposition.
Speaker 3 (04:48):
We didn’t take that exclusive deal at the time, thinking that we could do it later, and we missed a window of opportunity there. So, there are a couple of decisions I would like to have back if we could. But with the information we had at the time, with what we knew at the time, we did the best that we could.
Speaker 4 (05:07):
We like to believe we would have…
Speaker 3 (05:08):
been far better off for the consumer—a far better alternative for the consumer than Netflix—because you think about the difference that Blockbuster was.
Speaker 4 (05:17):
Netflix from the…
Speaker 3 (05:18):
beginning was a purveyor of older movies, older content. That’s really how they made their money. When they started streaming, they had no new…
Speaker 4 (05:26):
releases at all. Blockbuster stores had new movies, old movies, TV shows.
Speaker 3 (05:31):
We were the aggregator of anything anybody wanted to see, rather than offer a small sliver of all-you-can-eat entertainment. And so, we like to believe that we would be what doesn’t exist today, which is the one-stop shop. You want to see a movie? Doesn’t matter what movie it is. We want to see Top Gun or Paul Blart: Mall Cop. You know, go to the Blockbuster icon, and you’d be able to find it. That was what we were building with the acquisition of Movielink. It gave us all of the new releases with the acquisition of the long-tail content that we also could have acquired when we bought Movielink.
Speaker 4 (06:09):
That would have given us both new releases, old movies,
Speaker 5 (06:11):
and TV shows.
Speaker 3 (06:12):
The only thing we didn’t do at the time—and no one was doing it—was creating new content, which we could have evolved into. But, you know, again, it’s one of those “would have, could have” opportunities. A story I like to share: I ran into Warren Buffett at Bill Gates’s house, of all things. I was invited to a Microsoft CEO Summit, and so I was a bit starstruck.
Speaker 5 (06:35):
I’m walking, I’m looking around.
Speaker 3 (06:36):
There’s Bezos, Gates, there’s, you know, all these people. Warren Buffett’s there at the buffet, getting shrimp. I thought, “Okay.” So I introduced myself, said, “Hi, Warren! Jim Keyes, nice to meet you.” And he said, “I know, I know. I remember you from 7-Eleven.” And he sent me a nice note when I was inducted into Horatio Alger. In fact, “See that plaque over there, Calvin Coolidge?”
Speaker 4 (06:57):
See, “Press on.”
Speaker 5 (07:00):
That plaque. That very plaque came from my McDonald’s. They let me take it home. I took it to high school shop…
Speaker 3 (07:09):
class or art class, and did a decoupage on that little plaque that you see, and it’s been on my desk ever since. It’s Calvin Coolidge’s quote, Calvin Coolidge’s quote, about persistence. The plaque says, “Press on.” Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb.
Speaker 4 (07:33):
Education alone will not. The world is full of educated derelicts.
Speaker 3 (07:38):
Persistence and determination alone are omnipotent.
Speaker 5 (07:45):
Now, that was a quote by Calvin Coolidge, the same…
Speaker 3 (07:49):
quote when I first was inducted into Horatio Alger. Warren Buffett sent me his biography. Very nice, and a nice vote from Warren in it. He’s also a Horatio Alger member. And I’m flipping through the book, and an entire chapter of the book was one page. It was not only that quote, it was the same script. I don’t know if he also worked at McDonald’s and it off the wall from the poster or what, but it was exactly the same script in the book that he sent me. So, I’ve always been a Warren Buffett fan, and I was able to share with him that we shared in common Columbia University and a belief in this Calvin Coolidge quote: that persistence and determination are omnipotent. So, back to my story. So, I run into Warren Buffett. He remembered me from Horatio Alger and from 7-Eleven. He said, “So, what are you doing now?” And I told him that I had made the move to Blockbuster.
Speaker 5 (08:53):
He’s, “Oh, yeah, yeah, yeah, I think I remember that.”
Speaker 3 (08:55):
And this is right around 2008, when the financial markets were collapsing. We were just getting crushed by the press and by, you know, the perception that Blockbuster was going to have to file. And I said, “You know, Warren, I may have made a big mistake. This was, you know, I had such a good run at 7-Eleven, and I took this on. So frustrating, and I don’t know if I should stay or go, and, you know, I’m not sure what to do.” And he—he looked at me. He said, “Jimmy, you’re kidding!” He said, “You’re in the game!” He said, “Would you rather be on the—on the bench watching somebody else doing this, or would you rather be at bat?” He said, “Yeah. See, you got knocked down. Get up, dust yourself off, get back in there!” He said, “It’s far better to be in the game. Take another swing.”
Speaker 4 (09:43):
“What do you get to lose?” And I literally took that advice.
Speaker 3 (09:47):
I walked away from there feeling so much better, a little embarrassed that I was playing the victim myself—so my own advice about adversity and dealing with challenges—and I decided to stay. The easy answer would have been, “I didn’t create this problem. I’m out of here, right?” I stayed, saw the company through a successful restructuring. We got the company sold a Dish. I was able to keep the stores open, save 19,000 jobs, and felt so much better that I wasn’t a quitter, that I didn’t bail.
Speaker 5 (10:16):
Now, could it have better… a better outcome?
Speaker 3 (10:17):
Could we have sold to Google instead of Dish, restructured around a digital network?
Speaker 4 (10:22):
Yes, I wish.
Speaker 3 (10:23):
But still, I feel good about the outcome because ultimately I know I did the right thing. And I credit some of that to Warren Buffett running into him in a fortuitous way that one day.
Speaker 1 (10:39):
Jim Keyes’s story here on Our American Stories.
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