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

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Our own Alex Cortes brings us this great American voice. Basically for me, life kind of took on a level of independence at age 11. And that's when I got my paper route for the first time. And so now I was responsible for delivering 112 newspapers morning, evening, and Sunday for four and a half years.

We're listening to Dick Schulz, native son of St. Paul, Minnesota. Obviously, I learned or began to learn the importance of financial independence. Now, my father told me that you need to put 20 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 Germanic father. And so, you know, the good part of that was at age 11, here's responsibility. You're up at 5.30 in the morning. You have papers on your shoulder at 6. You're done at 7.15.

You have breakfast. You're out the door to school at quarter to 8. 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, 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 was normal. That's exactly what happened. From Thanksgiving to Christmas, I'm schlepping 112 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 Sunday. Then I collect for the paper after Christmas, and lo and behold, you know, I get a little over $300 in tips, in addition to the somewhat over $100 that I get from the sale of the newspapers every month. So now I had real cash in my pocket. So the 2nd of January is my birthday, I'm 15 years old, and I go to Aeroponniac, I meet the general manager, Phil Hesley, a long time ago, and I make the mistake of saying I've got $300 to spend.

I learned from them. But he matched me up with a 1950 Pontiac, which had just been traded in, so it was 5 years old. It was driven by a schoolteacher, had 29,000 miles on it, and it was an inline 6-cylinder standard transmission, which I had never driven. So I hadn't driven anything. I buy the car, my father drives it home, obviously 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 reapparent. So I'm a sophomore, I drive my car to school. Normally, it's like a 4.5 or 5-mile walk, which I did every day, St. Paul Central. So I'd hitchhike, or I'd jump on the bus, depending on the time it was, but I was hiking to school 4.5 miles every day. And now, of course, I've got my own car, I'm the only sophomore with a car. So I'm parked in the parking lot, I'm at school, go through school, bell rings, 3 o'clock, I'm out of school, I got papers to deliver. I get to the car, and there's 3 girls around my car. I walk up to my car, and the 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, 3 o'clock, I'm out, and there's 5 girls around the car.

So the story gets interesting. So there's no seat belts in those days. I got 3 girls in the back, I got 2 girls in the front, because it's a bench seat, so there's no buckets. And I drive them home, but it's taken longer, because these girls live in different places. So the third day, there's 7 girls there, and I said, look, I can't be doing this.

I said, I'm getting late for my route. So it ended after day 3, when I wasn't driving 7 girls around. But it was cool for me, because A, I'm the only sophomore with his own car. B, the girls are warming up to the guy that owns his own car.

So you learn a little bit about 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 it my colors, and delivered it to me on Father's Day.

It blew me away, because I pretty much had put that chapter of my life away. And 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 drive shafts and trains and brakes and electrical systems and air conditioning and the whole thing, which is nice. So 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 carryout 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. 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 roll putting stuff away. It comes in off the truck, and you put it on 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, 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, who I would have guessed 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 carts 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 so we're not changing. Well, fine. So this inefficiency, you know, goes on. And weeks go by, and finally I say to him again, 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 said, Master Schultz, we spoke 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, okay, thank you. Took off my apron, handed it to him, and said, I'm out of here. And I quit my job and walked out the store. And of course, my buddy is up in the front, you know, carry out. He's taking groceries out to people's car. He says, where are you going?

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 said, I guess I don't want to be a part of it.

And you're listening to Dick Schultz and this 17-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 frontline workers like he was who were right in the middle of the action. More of this unique American voice, this unique American story here on Our American Stories. For each person living with myasthenia gravis, or MG, their journey with this rare neuromuscular condition is unique. That's why Untold Stories Life with myasthenia gravis, a new podcast from iHeartRadio in partnership with Argenics, is exploring the extraordinary challenges and personal triumphs of underserved communities living with MG. Host Martine Hackett will share powerful perspectives from people living with the debilitating muscle weakness and fatigue caused by this rare disorder. Each episode will uncover the reality of life with myasthenia gravis. From early signs and symptoms to obtaining an accurate diagnosis and finding care, every person with MG has a story to tell. And by featuring these real-life experiences, this podcast hopes to inspire the MG community, educate others about this rare condition, and let those living with it know that they are not alone.

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Learn more at keysoulcare.com. 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 17 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. Because 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 touch points. I'm a touch point person. I learned that in Best Buy when I did my cashier and customer service meetings. We have stores at Best Buy where we had underperformance. I mean, any company has underperformance someplace. 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, 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.

We're all doing just fine. So the only way I could get at it was to say I needed to have a breakfast meeting with cashiers and customer service people. And would you make a reservation for me at Perkins down the street? Fine, I'll take care of that. I'll look forward to seeing you there.

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, and 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.

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 name wasn'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 touch point a customer will have with respect to the experience they got in the store will 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. 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 were 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 then he went in and talked to the district manager and they understood basically then what happened, cleaned out the management team, fired all of them. And within 30 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. 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's so many cases of young people that work part time at Best Buy while they're going to school. 15 hours or 20 hours a week, whatever it happened to be.

And they sold electronics or they sold computers or they sold whatever it was around the floor. I need the money. You know, I'm 18 years old and I'm working 20 hours a week and I'm making 12 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. Well, I guess maybe I can take it while I'm looking.

So fine. So they start as a full time employee. Then they move to a supervision. Then they move to an assistant management position. And then ultimately within five years, sometimes less, they're a general manager of a 45 million dollar store with 120 employees and they're making 150 grand a year.

Totally unexpected, totally unplanned. But the company was growing. We were moving into new stores, into 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 27, 28, 29, 30 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 50 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 just 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? So that's what we do. And that's what we've always done. I've always been a big believer in it.

We all sing the same song. We all buy the same benefit that we believe comes from hard work and focus on the benefit of the customer. And it's not rocket science.

It's not rocket science. It's common sense. 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. Immaterial and regardless as to whether it was profitable. And if it was successful and the customer bought a lot of it, it was incumbent on us to figure out how to make profit. Best Buy is about almost $50 billion in revenue now. 127,000 employees.

I mean, we're all over the place. And you're listening to Dick Schulz tell the story about how service and servant leadership works and how it transforms companies and cultures inside companies. And this idea of getting close to the people on the ground and promoting them from the ground up. No one knows the business better than the person who started in the stockroom, the person who runs the cashier.

Of course, it's so true. The cashier gets all of life dumped on them. The entire bad customer experience is, well, it's dispatched to the cashier. And what a brilliant thing to do to cut out that local manager and go to the go above his head and find out what's really going on by talking to the people on the front lines. It is common sense, and it is so true that any big organization can start to forget about the front line workers, the bureaucracies in government and outside government.

Any organization, any bureaucratic structure can forget the customers and the people on the front line. When we come back, more of Dick Schulz's remarkable story, Best Buy's remarkable story, a great servant leadership story, here on Our American Story. For each person living with myasthenia gravis, or MG, their journey with this rare neuromuscular condition is unique. That's why Untold Stories Life with myasthenia gravis, a new podcast from iHeartRadio in partnership with Argenix, is exploring the extraordinary challenges and personal triumphs of underserved communities living with MG. Host Martine Hackett will share powerful perspectives from people living with the debilitating muscle weakness and fatigue caused by this rare disorder. Each episode will uncover the reality of life with myasthenia gravis. From early signs and symptoms to obtaining an accurate diagnosis and finding care, every person with MG has a story to tell. And by featuring these real life experiences, this podcast hopes to inspire the MG community, educate others about this rare condition, and let those living with it know that they are not alone.

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That's Goldco.com slash iHeart. And we continue with our American stories and with Best Buy founder, Dick Schultz. I would honestly say that one of the biggest failings in corporate America today is the prioritization of the constituents that they serve. I would have to say that most companies today, certainly those we've competed with, have in most cases a priority to place the customer first. And that's totally accurate, totally correct, and totally right. But then most of them place the shareholder second.

So it's a public shareholder, or if it's a private business, it's the self-interest and financial net worth of the owner. Then comes the employee, and after the employee comes a community if there's anything left over. So that's pretty much the priority.

I inverse that. I start with the customer wholly, completely, fully, first and foremost, under any and all circumstances, the best decision you make is one that serves the interest and benefit of the customer. Then I believe in the customer experience, the second. And the customer experience is provided by the people who take care of them. So whether you're a technician or whether you're a pallet fork driver, whether you're a truck driver, whether you're a service technician, whether you're a blue shirt on the floor, whether you're somebody talking to the customer online, whether you're pricing something somewhere to be competitive for a customer when they come in, it's the employee that holistically makes the experience for the customer special. And that's what they leave with. So yeah, I bought this and I got a good price.

But let me tell you, I'll never go anyplace else because here's what happened when I was in the store. So A, I'm greeted. B, I'm introduced to products that I knew and products I didn't know. I'm told about technologies and how these technologies engage and why this is important. I'm asked what I'm going to do with it, who's going to be using it. So I can selectively make a good buying decision. The people I'm talking with are not on commission.

They're not vested in selling me this over that, you know, which is how this whole industry began. And so it was a great experience. In fact, just this week, just this week, Sunday, we're with a couple of friends of ours and we're having a vegan dinner. I'm not vegan, but they are. So this is fine. We don't say no, they're great people.

We're having dinner. And they say to me, I got to tell you, I know based on our relationship how vested you are in customer experience. But I got to tell you what just happened to me at Best Buy. And of course, I figure, well, I'm going to get something that's probably not the best. He says to me, I've never had a bad experience at your store, but what happened to me on Sunday, so over the top special, I've got to share it with you.

So I said, well, what was that? He said, well, we needed CO2 cartridge for a soda drink machine where we, I guess it purifies the water, carbonates the water, whatever. I don't use it, but I knew CO2 cartridges were there for some application. So we went to Staples to buy one because we needed a new cartridge and Staples didn't have any. Well, Staples is two doors from Best Buy here in town. So he said, well, I can't imagine Best Buy sells CO2 cartridges, but we're two days away.

Let's go check. So they walk in, they're met by somebody at the door who asked us what it was we were looking for. We tell them we want a CO2 cartridge for this water system. And he said, well, I know we sell the water system.

I'm not sure if we have the cartridges, but let me check. So he goes over to the display area and he doesn't see any cartridges on the shelf. So he comes back to the customer and says, gee, I'm sorry, but it doesn't appear like we have any. But, you know, let me check and see if there's any in the back room. He gets on the phone. He's got, they're all connected up, you know, telephonically. Gets on the phone, asks the warehouse people in the back of the store, do we have any CO2 cartridges?

And the immediate answer is no, no, we don't have any. So they apologize. He apologizes to the couple and says, I'm really sorry.

I know that we carry the brand and it looks like we do carry the cartridges if we just don't have any. So my friends, they thank them. Didn't expect to get it anyway. Leave the store, get in the car, and they're driving away from the store up to the stop sign that gets them out on the main road. And here behind them, huffing and puffing, is a blue shirt employee racing, waving at him, waving at him, you know, to stop. He's almost out of breath.

He's like he's running a block. And, of course, my friends stop in the car and he gets to the car and he asks them to roll the one down there, roll the one down. I said, you know what, thanks for stopping. He said, I want you to know we found the CO2 cartridges for you. The guy in the back didn't know where to look, so just said we didn't have any, but we do have some and I've got them for you. So come on back around.

I pulled them out and they're for you. And, of course, you know, this couple is blown away. Like, when does this ever happen? Turns out it's our general manager, our general manager, the guy that's in charge of 150 employees at one of our biggest stores in the chain, David Salazar, neat, neat, neat guy, young man. But he goes the extra mile because he knows he's demonstrating leadership for customer service and everybody in the store knows what just happened.

So my couple turns around, comes back, he goes in the store, they write up the transaction, he walks out with the two cartridges, 30 bucks for two cartridges. And so he relates this message to me. And I'm on the phone with Salazar this week on another issue and I said, David, I got to tell you a story. And I just told him that story. And I said, you just have to know how special that is and how blown away my friends were that you chased them down to get these two cartridges into their hands once you found them. So it's a classic example of what you do for customers.

That's the experience piece. Do you think those friends of ours would ever not share that story with anybody they come across? They'll share it with everybody they come across.

So I'm a big believer, big believer, big believer, lessons learned in my life. You could do something really, really right for customers on a normal, ordinary course of business and it will influence their feelings about the experience. But they're not inclined to say too much about that to anybody unless they're asked. Do one thing wrong to a customer.

They tell five people. At the end of the day, you can only lose if you don't treat the customer with the kind of experience that they're entitled to when they come to visit the store. That's been my experience because I started in this business on the floor. And then at the end of the day, I know what it's like to do something well, right and better versus, you know, just blow it off or brush it off.

And in this case, Salazar just went beyond with two CO2 cartridges. So I say customers first, employees second. Then I say partnerships, which nobody thinks too much of are third.

You really need to partner with people that can help you do things better in serving number one. And so partnerships have to have a win-win outcome by design. Win-lose is not sustainable. Win-win is sustainable.

And so you have to rely on people that are really good at doing what you're not very good at and or what you really need to do what you need to do to serve number one. Then comes community because the people that you're selling to and making profit from clearly live in the community. So there needs to be some giving to the community and then the shareholder. Number five.

That's my rotation. And if every company in this country operated that way, we would have a much more robust economy than we have. We'd have better paid people as a result of the influence they have. And if you get one, two, three and four right, five wins, they just do. I'm the number one shareholder at Best Buy to this day, 54 years later, and I've never been wealthier by virtue of this company continuing to do the right things in that order. And I make it a point with every CEO transition we've had to have this discussion every single time because I know it influenced the decisions you make at the highest level. And if you're constantly focused on one, two, three, four and then five, net at the end of the day, five will win big.

They will. And so both the last two CEOs and I sat down head to heart to heart, head to head. This is what we have to do. Here's why we have to do it. And if we lose track of this, I guarantee you we'll get off the tracks. And once you're off the tracks, finding your way back is expensive.

So that's a key lesson for me. And I wish more CEOs in this country would rethink the prioritization because just far too many of them are more wired to return an investment for the shareholder. And shareholder becomes number two.

And then they show back what follows. And my goodness, a real special thanks to Dick Schultz for sharing some of his insights, his personal stories, a few that were just so good. And my goodness, the one about David Salazar. I mean, the guy is the general manager.

He's running out to a stop sign, running across the parking lot out to the road for two 15 dollar cartridges. And he's right. The customer will never forget that experience. The Dick Schultz story, Best Buy story. A terrific servant leadership story here on Our American Stories.

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