Geek Squad's second act
Geek Squad took its tech support national when it sold to Best Buy - but founder Robert Stephens says it's barely started living up to its promise.
(FORTUNE Small Business) -- FSB first covered Geek Squad in March 2001, when the tech company employed 50 workers and was preparing to expand - for the first time - into markets beyond the Twin Cities. In October 2002, Minneapolis-based Best Buy (BBY, Fortune 500) bought the startup; today, Geek Squad's agents are stationed in each of the chain's 1,150 stores, from the U.S. to London to Shanghai.
Last year, Geek Squad serviced more than four million customers and accounts, accounting for about 4% of Best Buy's revenues. From the Minneapolis office where he still oversees the iconic brand he founded, Geek Squad CEO Robert Stephens reflects on becoming part of corporate America. For more, see our video of how Stephens got started.
FSB: Why Best Buy?
RS: I was thinking about Best Buy as early as 1995 because I knew it was going to be number one at what it does. I spent the 1990s building my model. I looked at ways to grow the business and realized it would be best to combine forces- kind of like peanut butter and chocolate. Most of my Geek employees had previously worked at Best Buy, so I knew the chain store employed good people.
FSB: How did your relationship with Best Buy begin?
RS: [Best Buy and Geek Squad] were dating for a couple years before we got married.
It started in 2000 with us providing on-site service in one of their stores. The first thing we realized: Best Buy didn't have a service department - just a shipping department. If a customer came in on Saturday and dropped off his laptop, they'd ship it to the manufacturer. And if Best Buy didn't have enough boxes, the computer sat there for three or four days. Next thing you know, it's three weeks later and they were relying on the manufacturer to get the part.
We said, "Duh! Most of the problems with a laptop revolve around its hard drive, a product you carry on your shelves. Why not just fix it in the store?"
We had a two-year contract to provide service at that one store. I spent those two years trying to talk myself out of selling out. When I ran out of reasons why I shouldn't do it, that's when I decided to sell to Best Buy. And now we have 17,000 children!
FSB: What was it like going from being a small business to becoming part of a major corporation virtually overnight?
RS: When I came to Best Buy, it felt like that first day of high school where you don't know your locker combination. I came in here with a sense of humility.
I decided that I wasn't going to be the cocky founder who thinks he knows everything. I had read a lot of articles about founders who sold their companies and invariably, within a couple of years, they had quit or got kicked out. I thought, "I'm going to stay here out of spite, despite the statistics. I'm going to be the founder who stays." The real trick is, can you influence without having authority?
FSB: How has your entrepreneurial experience helped you within the confines of a big company?
RS: When I started Geek Squad, I couldn't afford to hire a marketing company, so I used my car for advertising. Our uniform - black pants, white shirt - wasn't a gimmick. It's all we could afford. The Geek Squad grew up learning to live without the luxuries of resources. Now that we have resources, we try to use them more wisely.
Big companies can't think small; it's hard for them to stay lean and mean. Innovation is about trying lots of things. Rather than spending $100,000 on one idea, we could put $1,000 toward 100 ideas ... Many billion-dollar businesses don't start out as a billion-dollar idea, they start out as a $500 idea.
FSB: Geek Squad has faced a few PR issues since becoming part of Best Buy ...
RS: Now that we're big, we are a target. Customers record calls for quality purposes, they have YouTube capability, they blog, etc.
I try and ward some of that off by scanning blogs every day and subscribing to a service that allows me to scan podcasts. It's about detecting a disturbance in the Force. We can't wait for a customer to write us a letter - for every letter, there's a hundred that haven't been sent. All it takes is one failure to get blogged to take the hit.
Being great at service takes years. That's why why most people stink at it - they lose their stamina. I'm 38 years old. I'm a two-time college dropout. I'm not employable for anything else. I love this business. I love helping people, and I love technology. I won't give up - so I think that all of the problems Geek Squad is facing today can be solved.
FSB: If you could go back to before becoming part of Best Buy and give yourself one piece of advice, what would it be?
RS: Compromise less. Speak up louder. Put my foot down more. Best Buy rolled out Geek Squad really rapidly, probably a bit too fast. Initially it sacrificed a bit of quality, but lately we've improved.
I forgave myself for when I let Best Buy skin our knees a bit - I don't think that I could have persuaded them without letting them take us out for a test drive and scraping us up a bit. At least now we're getting better at avoiding the scrapes.
FSB: What's next for your brand?
RS: What we're capable of doing in the average home is far more than the customer is ready to embrace. Soon you will have some kind of hard drive where you'll download music, movies, and photos - and I don't think you'll be able to use the cable guy to make all that stuff to talk to each other.
I don't think people want to set up relationships with four or five different techs. They want one person, one company - Geek Squad. But until that convergence happens, I'll be spending my time getting ready for it. Geek Squad hasn't even started to become relevant yet.