Pulling Off The $100M GameStop Bet w/ Co-Founder Gary Kusin

Welcome to another episode of the Main Street Business podcast. I am excited today to welcome Gary Kusin, a serial entrepreneur, investor, author, mentor and co founder of GameStop. Gary was also the co founder of Laurie Mercier Cosmetics and served for 13 years as the CEO of the private equity firm TPG and in a transformative stint as the CEO of Kinko's now FedEx. Today he continues to advise companies large and small and leave his indelible mark on the business world through his vision leadership. We are so lucky to have him as a guest here on the Main Street Business podcast. Well, Gary, what an honor to have you here with us. This is truly an honor because sometimes I feel like I'm that Main street small business owner and we look up to the serial entrepreneur like you who's done it all. Gone from small to big and everywhere in between. And so that's very, very interesting to a Main street small business owner. And it's an honor to have you here with us. Thank you so much for coming.

Well, thank you for having me.

Okay, well, I, you know, on that note, I've been dying to ask this question. I want to know when you knew it in your bones that you were an entrepreneur, like, what was that small business experience? Was it the lemonade stand? I don't know. What, what was it that was that seminal moment?

That's an interesting question because my partner and I came at GameStop completely differently than entrepreneurs tend to come at things. We came to it as a result of very deep analysis. My partner co founder was a partner at Bain. He had replanted himself in the sil Silicon Valley and had some video game publishers at the dawn of the video game era, helping them figure out how to grow their business. At the same time, I was pursuing a career in department store retailing and had come to the point of view that specialty stores were taking the lunch of department stores. And I did some very detailed analysis and presenting it to the parent company and saying we. And with some answers I thought we might want to follow. So Jim came to town, came into Dallas. He was on his way to do something else. He said, you're just not going to believe what I'm doing. And he came over for dinner and he started showing me the charts and the graphs that showed what would be the likely penetration of video game hardware, what would be the likely penetration of computers used in homes? What would happen to the available content providers, which are software, video games? Looking back at the history from black and white TV to color tv, high fives, the record Industry didn't exist until Sears and J.C. penney's put millions of hi fi record players on the street. And then there was demand for content. So with him coming with content and me coming with specialty stores are going to end up dominating if it, if this industry evolves, this next wave of technology driven consumer entertainment evolves the way you suggest. And he finished top of the class at our business school, so I had no reason to doubt him. And I was kind of at the other end. And I had a real strong visceral feeling that specialty stores in any category of consumer goods that reaches measurable size becomes a dominant, if not main, channel of distribution. So by the time he finished showing me his charts and graphs, I told him my point of view, that if my point of view was correct, a software channel would emerge that would become a dominant channel of distribution. I said, you need to quit Bain and I need to quit this department store thing and we need to take this and run with it. Not because I had entrepreneurial DNA coursing through my veins, but because we had come at it from two very different point of views, but both pretty deeply analytical. And so now to your answer, your question. Thirteen years later, when, when I'm trying to get our biggest competitor to agree to be acquired by us, I knew the answer was the two principals in our target company were going to lose their jobs. And I started thinking about what should I do next? And since I do now have entrepreneurial chops, I took the same sort of analytical approach to the cosmetics company, but with the feeling in my bones that, you know, I've done this before, I can probably do it again. So my first, I'm going to say my first inkling of that, gee, I might have some entrepreneurial DNA coursing through my veins was actually on my second startup. And then I confirmed it when I took over as CEO of Kinko's because I related so closely to the entrepreneurial founder in how he approached growing his business and what I thought was a solution to the plethora of issues that facing the company when I stepped into the leadership role. So it evolved. I think my entrepreneurial instincts evolved more than poof.

No, I hear you. And it was funny. I felt there was like a something subtle there that you said GameStop was strategic, you knew what you wanted, you had a plan. And then with Laura Mercier, you were like, it sounds like you were like, this is fun. Like it was a different motivation. Maybe. I don't know.

Yeah, I didn't have the uncertainty about like one of our first mentors, Ross Perot always used to say, you can be the best farmer in the world and if it doesn't rain, you won't bring in a crop. Which was the way he tipped his hat to the perils of entrepreneurmanship. Well, so we worried about that in the early days of Babbages and we spent a lot of time saying what could kill us. And the only thing we could figure out was if computers cause cancer because you couldn't kill it any other way. At Laura Mercier I was because I didn't have top of the class MBA as my is my insurance policy and I had to fall back on my experience. I spent a lot more time and then did did pucker up a little bit before I made the leap on that one.

Well, I just think that that entrepreneurship when you is it brings out a passion of fun like entrepreneurs that really like taking something from nothing and building and it's a spirit and you can't.

It's hard to define that is. That is correct and that I had. So we always. I was kind of the back of the house operations guy. My co founder was kind of the Wall street investment banker kind of guy. So my, my office opened into the warehouse and I won't and I'll never forget walking in the warehouse one week at Christmas when we had 24 DOC doors. They were all working. We were shoving out close to 700,000 DOL video games a day. Had hundreds of people. And I stood back there looking and I started crying because I remembered before our first store was open and I was in the warehouse by myself with the pile of software that was just piled on the floor trying to figure out how to sort it out. What am I going to do with all this? That was one time. And the other time which was kind of equally telling. We put our, we put everything we had into developing a culture of customer first and for all of our people in the stores to be gamers to understand everything there was to know about video games. And I liked when I was traveling out in the field, I liked not telling anybody where I was going to pop up because next thing you know you got a district manager with you. The stores never look better. That's not my style. And I walked into Bellevue Mall in Seattle, Washington and I rounded a corner and there was our store and there were at least eight or nine sets of customers in there. And our staff was completely engaged with all of them. And I just stood there looking and it was the vision we had when we started. I started Crying again there. And I'm not a crier, but those things, those things went to my core and just pride, it was, it was pure pride that this. Actually, I was looking at what was a dream being a reality. I'd seen it in the warehouse, I saw it in the stores, and it was just. It was. It was so important to me.

Well, you know, I bought a few video games in the past. GameStop for sure. I've got kids. I got Christmases to fill, you know, stockings. And to me, I always felt like GameStop wasn't a big box store, it was a Main street store. I always had that feeling like it was just kids in there talking video games, having fun. And it didn't hit me as Wall Street. And I don't know if you tried to create that vibe, but I'm a huge fan of Main street, of course, as you know.

Sure.

How did that happen, that culture?

Well, it started. I mean, when you go back to the earliest days, our big concern, our first store was the first video game store in the world. If you use the word software, 90, 99 out of 100 people believed it was some sort of woman's intimate apparel. Okay. Software was not a word. That's right. So we believed Moore's Law was absolutely right. We believed semiconductor chip technology was going to drive speed, drive graphics capabilities and was going to create waves of games that would be better even than upright arcade machines. But we were going against this fear of the unknown from customers. So we thought the only way to mitigate against that was to have people in the stores who were gamers, who tend to be teenagers into early 20s, who could show excitement and enthusiasm while pointing to a cartridge or a floppy disk or whatever it happened to be and explain it in a way that the customer. Oh, that's all it is. Oh, cool. While they had their youngsters in tow who were saying, I'll do anything if you just get me Pac Man 2. You know, it's like. And so we, we did. Everything in our company was built around the transaction in the store and more about informing people than selling people. So we had a whole checkout system. If you worked in a Babbage's, then GameStop store, you could check out any title, take it home and play to your heart's content and bring it back the next day and check it out again the next day if you wanted to. So we did everything we could do so our salespeople, our customers felt like our salespeople were accessible. Our salespeople came from a point of view because if they hadn't played a game, they just yell out in the store, hey, anybody played this or that? Oh my gosh, somebody would have. And so we created. I never called it Main street, but clearly the meme thing underscored that it was a Main street thing. What was happening. And believe it or not, it took from the 80s and 90s is Babbage's became GameStop and Groove. It took all of that, generations of gamers for whom not GameStop was a cool store, but GameStop was the fabric of their lives and they marked time by release dates of video games. And that is a relationship that I have not seen matched until this past summer. Taylor Swift is the first business, if you will, whose customers are so far beyond fans. They live, eat, drink, laugh, cry. They are immersed in that business the way our gamers were immersed in our business. So now think about 30 and 40 year olds for whom they still not only mark time, they still got game systems in their basements and they still love gaming and they're on Reddit and now on Reddit they all start talking about this hedge fund is going to try and short that. Nobody knew what hedge fund meant, nobody knew what short and stock meant. But somebody was messing with their life because they measured their life by GameStop games. By how many times did you get your parents to take you at midnight in the middle of the winter for an early game release where you had been on the wait list for a month? You know, they can tell you with such precision. And when word got out that someone was trying to kill gamestop they all said look, what don't understand any of that stuff. What can we do? And they were saying buy one share, buy 10 shares, buy what you can afford. And because there were such legions of them, legions, they were able to do what they did. And everyone kept walking around. Jim and I, my co founder and I were talking daily and we agreed we would not talk to anyone about anything about the meme thing to see if anyone figured out we knew what it was immediately. We still hear from, we hear from gamers who were our great customers in the 90s and in the aughts they still send us stuff. I mean it's really. To have had a ride on that kind of rocket ship is pretty cool. It was so high octane that it inspired it, it inspired so many people in so many different ways to pursue careers that were a little bit entrepreneurial because they were chasing, they were chasing, trying to replicate what they had growing

up well and I and I know.

Of course.

I've been following you. Now with your increased content you're producing and your passion for the entrepreneur, that's just one of the payoffs of entrepreneurism. It's not. It's not even at the end of the day, it's not the money. It's that I created a tribe, I created a culture, I created followers, that I changed their lives. And all of a sudden you're like, boom. You know, it's crazy.

Yeah. And so that.

Yeah.

And so that fills us up still, until today, and we're not involved anymore. But I got a. I got a letter. I mean, this is just a great example. I got a letter last summer from some kid who. It was. It was a beautiful letter. He was dying to get game, and they were always sold out of it. And I don't know if you have any. If you can possibly help, but this is a game I want and I'll pay anything for it, so. And it just warmed my heart to get this because that's kind of letters we used to always get.

Yeah.

So I called. So again, you know, GameStop, still based here in Dallas. I called over there, and next thing you know, I'm in CEO's office talking to his admin. And they said, well, he'll maybe call you, maybe not. And he never called. And that's. It's not. Not me. And an ego thing that he had no clue about the customer relationship. And how do you keep the glue in a customer relationship that transcends decades and generations of people? And that's when, back in the day, my partner or I, we'd have moved heaven and earth if I had to fly. If it. If it was a game that was made by a publisher in France. If I had to fly to France to walk in the door. I need one of these for a customer who's in the early teens in a small town in Pennsylvania, living in an apartment. I googled the. Mapped his address just to see, and it was a. That's who we lived for. And I couldn't get anyone to call me back from the company. So it's like, okay, that's where they are. You know, I mean, so did you

find it on ebay and send it to them anyway?

No, I didn't. In fact, I called what I did, and shame on. I did not follow up. There was still a person there, a senior officer of the company who I'd hired, and I sent it to him, and I'd be surprised if the person wasn't taken care of, oh, that's good.

Well, this brings us to this next venture of yours, which I'm really excited about. That just came out a few weeks ago. I haven't had a chance to read it yet. But always learning. What was your inspiration behind this new book? And you've learned so much, but now you're like, no, I'm always learning. What's the premise there?

Sure. So the fact is, I have been. I took a really interesting facilitated session my wife and I did after we sold Kinko's to FedEx and trying to decide what in the world we do now with our lives, and went through an exercise that, in fact, is the introduction to the book, and it's called seven Months, seven Weeks, seven Days, seven Words. And it's a process we went through in a facilitated exercise to get to our core, because the whole notion was, what is your core? What is your passion? How do you want to spend the rest of your time? And it did an incredibly effective job. As you'll read, I didn't invent what they did to us, but it was pretty. Pretty great. And when you. As it happens, when you boil me down, I'm about learning and teaching only two things, and in that order, learning and teaching. And that was something that I've never hidden from. I was aware of that. So what I started thinking about is it also I talk about in the book. I've had over a thousand mentoring sessions over the last 20 years, and I. And I never went looking for them. And that is literally culling through my calendar for 20 years to figure out how. How did I do that? And what would happen is people would come. I'm not a normal. I'm not a normal mentor in that sense. I was episodic. So somebody who I might have worked with or was a friend would call me and say, I've got this really sticky problem. I'm not sure how to think about it. Do you have a minute for a cup of coffee? I'd really appreciate it. By the way, if I've ever. If you've ever been on a team and I've been on the same team, I drop what I'm doing till today to be helpful. Because we all work together, we took a hill, we had success, and I'm forever connected to them. So I start. So I started doing that, and next thing I knew, I was hearing from other older team members and others, and then people who weren't team members but were told by team members. And every one of them had an issue. They just wanted Input. So fast forward, and I can talk about my mentoring style, which is 180 degrees off anybody else's. But what's ended up happening, I started noodling around on how can I mentor more broadly. I hate to just one person.

You want to impact a big group? Yeah.

And what happens is I learned very early on that I have this very closely held belief kind of has two things, two parts to it. One is everyone in the world carries around their own baggage with them, and inside that baggage is every good and bad thing that's ever happened to them in their life, and it informs their worldview so that everyone views the world through a prism of their own making, literally colored by their experiences. So if I believe that, and I believe and I believe that those prisms are unique as fingerprints are, where would I get off as a mentor? Telling someone, this is what you should do. I hate the word should. It's a word that makes my skin crawl in the mentoring business. And so what I did is I started telling stories at business school. I learned everything in the Socratic method of teaching. You have case studies. I loved that. And what I really loved was the Socratic method of teaching that the professors used. And I started using that when someone would sit with me and talk to me about an issue, I would just start asking questions. And I could see that my questions. If I ask questions kind of correctly and sequentially based on what I was hearing, I could get moved to, what do you think are your alternatives? Let's kind of go through, tell me what you think your choices are. And next thing you know, you watch their face, and they're having a little mini aha moment. But what. But what I was able to do that really triggered a little faster was because I have been involved in so many different businesses, I do have a world of stories. And so I was able to start talk. When I was talking with people in a mentoring situation, I would invariably get to a point and I'd go, look, I think I experienced something not off, too far off of what you're talking about. Let me just tell you what I was faced with. Let me tell you how I thought about. It may or may not be of value to you, but maybe it is. And then I would tell a story, and I ended up. And over the years, I've converted kind of everything I've ever done into a whole series of stories. And it occurred to me, especially in the last 10 years, where when I talk with my buddies and I tell them things, I. I played all my cards Very close to my vest during my whole career. And I started talking about these stories and people would say, you need to write a book. That's incredible. And so now I'm thinking, okay, my stories help with mentoring. I want to figure out how to mentor more broadly. Maybe I ought to write a book of my stories with my learnings at the end of each part so that people who are earlier on in their own journeys can get to read kind of a lot of really funny fun. Some of them are very sobering. But a lot of stories that all I picked, I only picked the ones that had really interesting kind of punchlines to them. And I thought this might be a way to help people. And early returns say I might be on to something with that because it's. They are stories and they range from, you know, in which you'll get to. If you read the book.

Oh yeah.

For instance, on 9 11, if you. If anyone wondered how the United States had photos of every terrorist going through the airports on 9 11, they had it. By 912 they had it because of Kinkos. We had the information. And how we came up to discover that we had the information is a story that is kind of beyond belief. And how I went from within 10 minutes of the plane hitting the Pentagon. I was talking with Secretary of Defense Rumsfeld on the phone. And I mean, I'm CEO of a coffee shop. And the whole story, how all that rolled out is just. When people hear it, it's like, you are Kidd.

Well, don't say anything more because now everybody's gonna die to buy the book. This is good.

No, and there are a bunch of other stories that are. But they all really do kind of have lessons. And I broke the book into seven different parts. And at the end of each part are a couple of pages of what I think were my lessons learned. And it really culminates in the book. I developed a set of leadership principles which I use for the last 20 years that have really become my North Star in business based on things that have happened to me, the baggage I'm carrying around with me. And I talk about them, how I came to them, and why they're so important to me that they rise to the level of six leadership principles. So the book has a. It's got a reason for being there. But. But my. What I'm hearing early on are these stories are friggin nuts.

How could.

And they're people who know me and they go, how can I not know that story? It's because I didn't tell you yet.

Oh, my gosh, I love it. I'm so excited. Well, all my listeners, please. Down in the description will be a link to the book. I'm excited. I've already ordered my copy. I haven't got it yet. And I'm going to dive into that one for sure. Well, something else I've been dying to ask you about is your new podcast, relatively new. And I wanted to hear about you and your co host and what the vision is for that. And again, it's just so entrepreneurial driven. I'm just really fascinated with that. What's the plan there?

I'll tell you what the plan is. First, my co host is a woman named Jill Lewis. She was the attorney who helped me launch Laura Mercier Cosmetics. And over the last too many years, I've pulled her out of her law firm multiple times to be general counsel for companies I've been involved in. And we just, our paths have been very close together for both of our careers. And she has a passion for mentoring also, but she does it as an attorney. I do it as the way I do it. So we decided, because she mentors, I mentor that we hadn't really seen a podcast that allows the listener to eavesdrop, literally eavesdrop on a real mentoring session. And that was our vision. We've just released our eighth episode and we found all these terrific early stage companies that, I mean, you got to sort through to find the ones that have really articulate founders who can describe their vision, the issues they're facing, and all those kinds of things. But we do it in a way that the listener can eavesdrop on someone else's company and the issues they're facing. And we always wrap our show by asking the entrepreneur or the founder what were the, if any, takeaways from our time we've spent today. And then Jill discusses what she thinks are the important takeaways for entrepreneurs who are listening. And then I wrap with what I think are the lessons, the key lessons that any founder, co founder, entrepreneur who is listening to the podcast might think about taking away. And we're having a lot of fun with that.

Well, and I saw the podcast page. In this robust application, you're like calling all entrepreneurs, if you want to be mentored and you're facing a challenge, call us. And I was like, is he wanting to interview him or what? And so I wanted to ask that format that's really, I like that eavesdrop concept. That's pretty cool.

That's. I wanted to use that in, I Wanted to use that in the name of the podcast, but Jill talked me out of it. For some reason, I can't remember why. But when Jill talks, I listen. And she's. Again, we are so different. So she comes at things where, like, we had one, one entrepreneur, and he asked her. He. He. And I forgot the exact question. He said, well, what do you think about that? She said, gosh, well, other than it's illegal and you could go to jail, because I think it's frigging awesome. You know, it's always like, what, she's an attorney and she knew that what he was talking about doing, he couldn't do the way he was talking, doing it. So she isn't bashful about. Other than it's illegal. I think it's a great idea. You know, she. So that's her approach and mine is. Mine is different. And so that between the two of us, we have a really good time. And again, because we've been such dear friends for so long, it's so easy for us to do these together.

Exciting. Well, one of my last questions is I. I just want to talk about that Main street and entrepreneurship passion that you've shown in your career. What's your feelings about the entrepreneur on Main street and what they're facing today and any advice or some vision for them? It's tough out there in a lot of ways.

Very good question. Yes. I think one of the things that I talk about a lot is I think that entrepreneurs are done a disservice by people telling them to find their passion and pursue their passion. And I will always default to the. Of Waste Management and say, do you think the founder of Waste Management woke up one day? I've got real passion for waste. And yet it's a multinational, enormous company doing so much good. But that's not a company people would have had passion about. The people who started US Steel, the commodity businesses, they didn't have passion. They found an issue. They found an opportunity that they thought could be an opportunity for someone to step in and be better, smarter, faster, or whatever else, and they did something about it. And I guess so. I urge entrepreneurs to not have blinders on where you're only willing to say, I only will do something that fits my idea of a great aspiration. I think you leave a lot out versus opening the aperture fully to view the world around you.

You know, it's funny, I had a. I was doing a little class workshop and I was talking about. This was kind of a reality check for me. What you're talking about? About 10 years ago, I was doing this class, and I was like, hey, what are you passionate about? What's your hobby? Let's make money at it. And one guy, and I'll never forget, I say this quote often. He's like, why do I want to ruin my hobby? Trying to make money at it.

That's a smart person. Now I'd invest behind someone like that. He thought about it, and he was unfettered by conventional wisdom. I loved that.

Yeah, it was so refreshing. And I like the way you summarize it up. Find a problem you want to solve that you can solve and make money at and make it a mission, a purpose. That's cool. But your passion, let's save that for after hours. Let's make. So that's where you go, rejuvenate and recharge. And you're doing this so you can have that passion over here. Maybe. I don't know. I like what you said. Let's find a problem, solve it. Let's make some money. Sometimes your passion is a different story. Well, Gary, you're just so enjoyable to talk with. So pleasant. And I am so excited about this. These are a lot of new chapters in your life. A new book, a new podcast. And you're, like, sharing all these great stories and your wisdom and your mentoring. So refreshing. And it's wonderful for us small business owners to see someone like you that has done so much and share these stories with us. Thank you so much.

You bet. And I appreciate it very much. And I appreciate you doing this. This is great.

Well, we'll send some entrepreneurs your way and we'll get them interviewed. And thanks again, Gary. We'll see you around.