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Shop top brands like Kohler or find your local showroom at fergusonhome.com. And we're back with our American stories. And as you know, some of our favorite stories to tell are business stories, American dream stories. Today we bring you another business story from Jim Keated. 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. Jory Cortez brings us. Today's story. 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. I started looking for similar opportunities. I saw In Blockbuster, a very similar environment.
It's 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.
So people were 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.
So it's in effect just another form of convenience. I also saw the technology that was coming. It wasn't quite here yet. For the ability to stream movies, to have access via the internet.
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 false perception that all I cared about was the store is not true. Because first thing we had to do was write the cash flow of the company. Cash flow of the company was suffering.
stock was suffering. Uh the week I got there they violated a bank covenant so they were not satisfying their financial obligations. Job one, write 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 in uh 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 MoviLink.
and we were very well positioned. We had already a buy-mail business and an offering called Total Access so that customers could get our movies any way they want. mail via a kiosk. Um in the stores or Uh 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, but. 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 2009.
So Um I had little choice in in Ah. 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, We started looking 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 T V 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.
uh the content that Netflix started streaming, we could have gotten it exclusively. for $100 million a year. Of course, the company only made $180 at the time. in EBITDA, so it would have consumed a lot of our cash flow. It was a very high risk proposition.
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. We like to believe we would have 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.
Netflix from the 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 releases at all. Blockbuster Store had new movies, old movies, TV shows.
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, it doesn't matter what movie it is, you want to see Top Gun or Paul Blight 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 Movie Link, 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 Movie Link. That would have given us both new releases, old movies, and TV shows. 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. And but you know, again, it's one of those woulda-coulda opportunities.
I, I, uh, a story I like to share, I ran into to Warren Buffett. At Bill Gates' house, of all things, I was invited to a Microsoft CEO summit. And so I was a bit starstruck. I'm looking around, there's Bezos, there's Gates, there's all these people, Warren Buffett's there at the buffet. Getting shrimp.
I thought, okay.
So I introduced myself, said, Hi, Warren, Jim Keys, nice to meet you. And he said, I know, I know you. I remember you from 7-Eleven. He sent me a nice note when I was inducted into ratio alga. In fact, see that plaque over there?
Calvin Coolidge. See? Press on. That plaque, that very plaque, came from my McDonald's. They let me take it home.
I took it to high school shop 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's Coolidge 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. Education alone will not. the world is full of educated derelicts.
Persistence and determination alone are omnipotent.
Now, that was a quote by Calvin Coolidge. The same quote. I I When I f first was inducted into ratio alga. Warren Buffett sent me his biography. Very nice.
A nice note from Warren in it. He's also a Horatio Alga 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. I've got it. off the wall from the poster or what but it was exactly the same script in the book that he sent me.
So 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 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 Algernon from 7-Eleven. He said, So, what are you doing now? And I told him that I had made the move to blockbuster. He's oh yeah yeah yeah.
I remember that. And I was... This is right around 2008 when the financial markets were collapsing and We were just getting crushed. by the press and by, you know. perception that Blockbuster was gonna have to file and I said, you know Warren, I I may have made a big mistake.
This was, you know, I had such a good run at 7-Eleven. I took this on.
So frustrating and I don't know if I should stay or go, and you know, not sure what to do. And he looked at me and he said, Jimmy, are you kidding? He said, You're in the game. Said, uh would you rather be on the face? on the bench watching somebody else doing this, or would you rather be at bat?
So yeah, so you got knocked down. Get up, dust yourself off, get back in there. said it's far better to be in the game. Take another swing. What have you got to lose?
And I literally took that advice. 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 the 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.
Now, could it have been a better outcome? Could we have sold to Google instead of Dish? Restructured around a digital network? Yes, I wish. 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. Jim Keys' story here. on our American stories. Let's be real.
Life happens. Kids spill, pets shed, and accidents are inevitable. Find a sofa that can keep up at washable sofas.com. Starting at just $699, our sofas are fully machine washable inside and out. you can say goodbye to stains and hello to worry-free living.
Made with liquid and stain-resistant fabrics. They're kid-proof, pet-friendly, and built for everyday life. Plus, changeable fabric covers let you refresh your sofa whenever you want. neat flexibility, our modular design lets you rearrange your sofa anytime to fit your space, whether it's a growing family room or a cozy apartment. Plus, they're earth-friendly and trusted by over 200,000 happy customers.
It's time to upgrade to a stress-free, mess-proof sofa. Visit washable sofas.com today and save. That's washable sofas.com. Offers are subject to change and certain restrictions may apply. Stop settling for weak sound.
It's time to level up your game and bring the boom. Hit the town with the ultra-durable LG X-Boom portable speaker and enjoy vibrant sound wherever you go. Elevate your listening experience to new heights because let's be real, your music deserves it. The future of sound is now with LG X Boom. And for a limited time, save 25% at lg.com with code FALL25.
Bring a bowl. X-Boom. Over 300 channels, zero bills. That's TiBo Plus. Live news, reality, movies, and more.
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Learn more at Tibo.com. Chances are, you've been to the doctor recently, and you probably handed over your insurance, your ID, and even your social security number. Your doctor is just one of many places that has your personal info. And if any of them accidentally expose your details, you could be at risk for identity theft. LifeLock monitors millions of data points a second.
If you become a victim, they'll fix it, guaranteed, or your money back. Save up to 40% your first year. Call 1-800-LifeLock and use promo code iHeart or go to lifelock.com/slash iHeart for 40% off. Terms apply. We finally switched to T-Mobile because with them we can be connected here and there.
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