The $20K Mistake 99% of Retailers Make (Adapt or Die) | James Keyes DSH #1033

Summary

Digital Social Hour Podcast: A Deep Dive into Retail Success with James Keys

Episode: The $20K Mistake 99% of Retailers Make (Adapt or Die) | James Keyes DSH #1033
Host: Sean Kelly
Guest: James Keys
Release Date: December 30, 2024

---

Introduction to James Keys

In this compelling episode of the Digital Social Hour, host Sean Kelly welcomes James Keys, a renowned business legend with a storied career in some of the world's largest corporations. James brings a wealth of experience and unique insights into the challenges and strategies that drive success in the ever-evolving retail landscape.

---

James Keys' Unconventional Path to Entrepreneurship

James Keys began his journey far from the traditional business pathways. Growing up in Grafton, Massachusetts, a small town in Central Massachusetts, James had little exposure to the business world. As he recounts, “I did not take the normal path. I was one of these kids, literally. I didn't know what business meant.” (02:18).

Initially aspiring to become a lawyer, James found himself gravitating towards business almost by accident. He humorously acknowledges, “I would have made a terrible lawyer.” This unexpected pivot laid the foundation for his entrepreneurial spirit within corporate environments.

---

Embracing an Entrepreneurial Mindset Within Corporations

James emphasizes the rarity and importance of entrepreneurial thinking within corporate structures. He states, “The reason I was successful in business is I'm an entrepreneur.” (03:28).

He highlights the inherent tension between corporate conformity and the risk-taking nature of entrepreneurs. “Corporations will beat the entrepreneur out of most people. It encourages conformity and discourages stepping out and taking risks that entrepreneurs do.” (03:39). However, James believes that corporations need entrepreneurs, and his willingness to innovate within these structures propelled his career forward.

---

Change Equals Opportunity: The Core Philosophy

A recurring theme in James' discussion is his mantra, “Change equals opportunity.” (04:17). This philosophy underscores his approach to business and leadership. He elaborates on how every bit of commerce begins and ends with change, and those who can adapt are the ones who capitalize on new opportunities.

Using the example of Sears and Amazon, James illustrates how failure to innovate can lead to downfall. “Sears, had they stayed the course, could have been Amazon today.” (07:00). This comparison underscores the critical need for businesses to continuously evolve to stay relevant.

---

Debunking Myths: The Blockbuster and Netflix Saga

One of the most insightful segments involves James clarifying the often-misunderstood history between Blockbuster and Netflix. Contrary to popular belief, James reveals, “In the year 2000, Netflix stock was trading for $0.79. If you think that was a dumb move to turn them down for 50 million, why didn't you buy the stock at 79 cents a share?” (08:51).

He emphasizes that Blockbuster was not merely negligent but was actively pursuing similar initiatives to Netflix, including their own DVD-by-mail service. However, unforeseen challenges like the 2008 financial crisis and substantial debt hindered their ability to capitalize on these opportunities, ultimately leading to their sale to Dish Networks.

---

The Transition from Physical Stores to Streaming

James details Blockbuster's strategic moves towards embracing digital streaming. Despite acquiring a streaming company and launching their own service, external economic factors derailed their progress. “We ultimately did restructure the company and sold the company to Dish Networks.” (10:04).

He points out the technological limitations of the early streaming era, such as poor buffering and limited bandwidth, which further complicated Blockbuster's transition. Only with advancements like the iPad in 2009 did streaming become a viable option for mainstream consumers.

---

Redbox vs. 7-Eleven: Strategic Approaches to Retail

James contrasts Redbox's business model with that of 7-Eleven, where he holds significant leadership experience. While Redbox struggles due to lack of studio support and distribution challenges, 7-Eleven thrives by leveraging technological innovations to optimize inventory and store operations.

He shares, “At 7-Eleven, we were one of the first to adopt technology to manage inventory, ensuring we never run out of bestselling products while continuously optimizing slow-moving items.” (16:01). This strategic use of technology allowed 7-Eleven to maintain relevance and efficiency in a competitive market.

---

Prioritizing Product Quality and Customer Loyalty

James underscores the importance of product quality in fostering customer loyalty. Using Starbucks' entry into 7-Eleven as an example, he notes, “The quality of their product and the experience was so good that price didn't matter to that customer.” (14:28).

He further highlights 7-Eleven's success in international markets by maintaining high-quality offerings, such as restaurant-quality sushi in 7-Eleven stores across Japan, Taiwan, Thailand, and Korea. This commitment to quality ensures repeat business and strengthens the brand's reputation globally.

---

The Slurpee Day Phenomenon: Turning a Mishap into a Marketing Triumph

One of the most entertaining anecdotes James shares is the origin of Slurpee Day. Initially launched as a free giveaway during the company's 75th anniversary celebration, the event spiraled out of control when David Letterman humorously criticized 7-Eleven on his show for the unexpected influx of customers asking for free Slurpees (19:22).

James explains, “What started as a joke ended up being a great marketing strategy. We put small cups in place, and Slurpee Day became a staple for the company’s promotions.” (21:36). This story exemplifies 7-Eleven's ability to adapt and turn challenges into opportunities.

---

Navigating Retail Challenges: Theft and Store Environment

Discussing broader retail challenges, James addresses the issue of theft, especially during economic downturns like the pandemic. He shares strategies that 7-Eleven employed to mitigate these issues by fostering strong community relationships and maintaining well-managed stores. “If you keep that store well, you hire great staff, the neighbors know them, the store is clean. That store becomes almost a sacred treasure of the neighborhood.” (24:57).

This approach not only reduces theft but also builds a loyal customer base that feels a personal connection to the store.

---

The Future of Retail: Integrating AI Without Losing the Human Touch

When discussing technological advancements, James is optimistic about the role of Artificial Intelligence (AI) in retail. However, he cautions against adopting technology for technology’s sake. “AI will supplement jobs and help people do a better job, but it will never replace the person who knows their community best.” (25:48).

He envisions a future where AI assists store operators in managing inventory and understanding sales trends, while the human element remains crucial for adapting to real-time community changes and maintaining customer relationships.

---

Evolving Leadership: Adaptability Over Fixed Styles

James shares his evolving perspective on leadership, emphasizing adaptability in the face of constant change. “Leadership is all about change and learning to adapt.” (27:55). He criticizes the prevalent fear-based management styles, advocating instead for a leadership approach grounded in knowledge and relentless positivity.

He draws inspiration from Norman Vincent Peale, highlighting the balance between confidence and humility. “True humility is when you're smart enough to know that you don't know everything and that every other human being walking on this planet has something that you can learn.” (33:28). This mindset fosters continuous learning and prevents arrogance, enabling leaders to stay open to new ideas and perspectives.

---

Balancing Confidence with Humility

James reflects on personal challenges with ego, acknowledging that confidence can sometimes be misconstrued as arrogance. He reiterates the importance of humility, echoing the teachings of Norman Vincent Peale. “Every other human being has something that you can learn. If you just always try to learn from them, then you're going to stay this side of that line of arrogance.” (35:04).

This philosophy not only enhances personal growth but also strengthens professional relationships by valuing diverse viewpoints and experiences.

---

Closing Remarks: Sharing Knowledge and Continual Learning

In his closing statements, James encourages listeners to seek knowledge and embrace a positive mindset. He promotes his book and online presence, emphasizing the importance of education and personal development in achieving success. “Use that portal to unlimited learning and find truth... with the personal discipline to seek the truth, then we can replace our own anger and aggression with relentless positivity.” (32:01).

James leaves listeners with a powerful message: adaptability, continuous learning, and maintaining human connections are paramount for thriving in today's dynamic business environment.

---

Key Takeaways

• Adaptability is Crucial: Embracing change as an opportunity can determine the success or failure of a business.
• Quality over Price: High-quality products and customer experiences foster loyalty beyond mere pricing strategies.
• Human Connection Matters: While technology like AI can enhance retail operations, the human element remains essential for understanding and responding to community needs.
• Balanced Leadership: Effective leadership balances confidence with humility, fostering a culture of continuous learning and adaptability.
• Turning Challenges into Opportunities: Innovative thinking can transform setbacks into marketing triumphs, as demonstrated by the Slurpee Day story.

---

Notable Quotes

• James Keys: “I did not take the normal path. I was one of these kids, literally. I didn't know what business meant.” (02:18)
• James Keys: “Change equals opportunity.” (04:17)
• James Keys: “If you keep that store well, you hire great staff, the neighbors know them, the store is clean. That store becomes almost a sacred treasure of the neighborhood.” (24:57)
• James Keys: “AI will supplement jobs and help people do a better job, but it will never replace the person who knows their community best.” (25:48)
• James Keys: “True humility is when you're smart enough to know that you don't know everything and that every other human being walking on this planet has something that you can learn.” (35:04)

---

Connect with James Keys

For those inspired by James Keys' insights and entrepreneurial journey, you can find more about his work and access his latest publications at JamesKeys.com. Follow him on social media under the handle @JKeysAuthor on platforms like TikTok and Instagram to stay updated on his latest thoughts and initiatives.

---

This detailed summary encapsulates the key discussions, insights, and strategies shared by James Keys on the Digital Social Hour podcast, providing valuable lessons for entrepreneurs and professionals navigating the complexities of the modern retail landscape.

Transcript

[Indeed Advertiser]

We're driven by the search for better. But when it comes to hiring, the best way to search for a candidate isn't to search at all. Don't search. Match with Indeed. Indeed is your matching and hiring platform with over 350 million global monthly visitors, according to Indeed Data, and a matching engine that helps you find quality candidates fast. Ditch the busy work. Use Indeed for scheduling, screening and messaging so you can connect with candidates faster, leveraging over 140 million qualifications and preferences every day. Indeed's matching engine is constantly learning from your preferences, so the more you use Indeed, the better it gets. Join more than 3.5 million businesses worldwide that use Indeed to hire great talent fast. And listeners of this show will get a $75 sponsored job credit. To get your jobs more visibility at indeed.com bluewire just go to indeed.com bluewire right now and support our show by saying that you heard about Indeed on this podcast. That's indeed.com bluewire. Terms and conditions apply. Need to hire you need Indeed.

[Jim Keys]

This episode is brought to you by Dutch Bros. Big smiles, rocking tunes, and epic drinks. Dutch Bros. Is all about you. Choose from a variety of customizable handcrafted beverages like our Rebel energy drinks, coffees, teas, and more. Download the Dutch Bros. App for a free medium drink. Plus find your nearest shop, order ahead and start earning rewards offer valid for new app users only. Free medium drink Reward upon registration. 14 day expiration terms apply. See Dutch Bros.com Think about what Amazon is. It's a catalog company. I mean, it goes full circle all the way back to where Sears was.

[Sean]

Wow.

[Jim Keys]

They just found a better way to do it.

[Sean]

And then eventually there'll be a company that can make it even better, Right?

[Jim Keys]

Exactly. Change equals opportunity. Sears, had they stayed the course, could have been Amazon today.

[Sean]

All right, guys, Jim Keys here today, Business legend.

[Jim Keys]

Thanks for coming on, Sean, it's great to be here.

[Sean]

Yeah. You've been part of some of the biggest companies in the world.

[Jim Keys]

Yeah, I've had a few adventures over the years.

[Sean]

Yeah. Incredible, man. How'd that all get started?

[Jim Keys]

I did not take the normal path. I was one of these kids, literally. I didn't know what business meant. I thought business. When I was in high school, I literally thought business was like typing class, you know, and literally we had no frame of reference in the small town. I grew up in factories. Grafton, Massachusetts.

[Sean]

Never heard of it.

[Jim Keys]

So.

[Sean]

Yeah.

[Jim Keys]

Yeah, sounds like a small town.

[Sean]

Yeah.

[Jim Keys]

Central Mass. And you get. You get west of Boston about 30, 40 miles. It gets really rural, really fast. And so, yeah, I just had no frame of reference. And, and so, like so many kids, I had no idea what I wanted to be when I grew up. Right. I thought, I don't know, maybe if I work really hard, maybe I'd be a, A doctor or a lawyer. I didn't know and ended up almost by mistake in business because I was planning to try to get to law school somehow, some way. I thought, yeah, that's a career, man. They make a lot of money and they wear suits and it looks sharp. I would have made a terrible lawyer. Terrible lawyer. But, yeah, I found in, I found the business path. And here's the irony. You're an entrepreneur.

[Sean]

Yeah.

[Jim Keys]

The reason I was successful in business is I'm an entrepreneur. You don't think of that, you think of corporate entrepreneur as almost an oxymoron.

[Sean]

Right, right.

[Jim Keys]

I mean, there are very few people that see themselves as entrepreneurs in a corporate environment because a corporation will beat the entrepreneur out of most people.

[Sean]

Right.

[Jim Keys]

It encourages conformity. Right. And, and it discourages stepping out and taking risk that entrepreneurs do. The irony is all corporations need entrepreneurs. And so my career really was propelled by my willingness to step out and take those risks and, and be an entrepreneur within a corporate environment. And it paid off. It does work.

[Sean]

I love that. Yeah. Well, they call them entrepreneurs now, right?

[Jim Keys]

Yeah, that's a fancy name for em. Yeah, yeah, yeah.

[Sean]

It's definitely an interesting dynamic because as companies grow, they kind of lose that entrepreneurial flair that started the company.

[Jim Keys]

They do. And here's the irony. I talk a lot about change and I see change as opportunity. I've kind of coined the expression change equals opportunity, ironically, the acronym CEO. Right. Think about that. It is so powerful that every bit of commerce begins and ends with something changes. Someone responds to that change and they get compensated for it. Right, Right. So what happens then? They get big and they get afraid to keep changing and someone else says, well, I can do it better. And they stimulate another change and then they get compensated for it. And sometimes that company that started with the response then goes away.

[Sean]

Right.

[Jim Keys]

And that's unnecessary if you can manage that response to change, proactive, confident response to change in a way that makes you virtually an entrepreneur.

[Sean]

Right. And these days you got to change quicker than ever. Right. Because of technology and all these advancements. If you're not embracing AI now, you're kind of falling behind.

[Jim Keys]

Exactly. You want to. You know, I've got a great example I haven't really used. I didn't put it in the book, but Think about when I grew up. We had something called a Sears catalog. You're too young to remember Sears.

[Sean]

I heard of Sears.

[Jim Keys]

Yeah, well, they. Sears started as a catalog, okay? Right. So when I was a kid, they didn't have Sears stores all over the place. In fact, in my little rural area, we had a catalog. So I'd flip through and look at. They had these, like, Halloween costumes, and I wanted to be a marine, you know, marine costume and in there. And you'd look at all these cool things in the catalog, and you'd buy something, it would show up at your.

[Sean]

Door, you would call them and buy it.

[Jim Keys]

Yeah, it was like an 800 number that you'd call.

[Sean]

Yeah.

[Jim Keys]

And you'd order something, and then they would deliver it in a. In. In a week or something like that. Well, then Sears decided as they got bigger, we need stores to satisfy that demand. And then along comes Walmart and changes everything. Right. They started doing more aggressive pricing and bigger and bigger stores. And pretty soon Sears went by the wayside and, well, they're still around, barely. But then what happened? Amazon comes in and says, well, we can do it better. We can go online. But think about what Amazon is. It's a catalog company. I mean, it goes full circle all the way back to where Sears was.

[Sean]

Wow.

[Jim Keys]

They just found a better way to do it.

[Sean]

They just made it better.

[Jim Keys]

They just made it better. Yeah.

[Sean]

And then eventually there'll be a company that can make it even better.

[Jim Keys]

Right, Exactly. And that's what change is all about. Change equals opportunity. Sears, had they stayed the course, could have been Amazon today. But when you get big, that inertia sets in. Resistance to change creeps into every organization. And instead of being the Amazon of today, which is ironically where they started, they've pretty much gone away.

[Sean]

Yeah, there's been a few big companies that's happened to. Right. Radio Shack.

[Jim Keys]

Yeah.

[Sean]

I think Red Lobster is bankrupt right now.

[Jim Keys]

Yeah, there's.

[Sean]

There's been quite a few recently.

[Jim Keys]

Blockbuster.

[Sean]

Blockbuster. I wasn't going to bring it up until you did.

[Jim Keys]

No, I mean, I had to. I mean, here's the irony. I'm out there talking about change, and I get, you know, of course you'll post one of these and somebody will be out there going, oh, yeah, this is. This is the guy that turned on Netflix for $50 million. And what they don't think through is the real story because there's so much more to learn in the Blockbuster story about change.

[Sean]

Yeah, I want to hear your side of that. So you got presented that deal to buy Netflix. What's going on in your head?

[Jim Keys]

No, I, I didn't. Ironically, here's, here's where people get their information. We're, we're living in a world of perceptions. I'm going to talk more about perception in a while, but. But we're living in a world of perceptions where you flip on the Internet and you, and you, you're scrolling through things and you see something and you just react to it and then you take it as fact. So on the Internet, there is this perception that the CEO of, of Blockbuster, turned down Netflix, offered to sell for $50 million. Here's the reality that happened in the year 2000. In the year 2000, Netflix stock was trading for $0.79. So what I like to tell people is if you think that was a dumb move to turn them down for 50 million, why didn't you buy the stock at 79 cents a share?

[Sean]

Right. So it was already public at the time.

[Jim Keys]

It was public.

[Sean]

Oh, I didn't know that.

[Jim Keys]

Yeah, but they were doing DVDs by mail and struggling. And so Blockbuster looked at that deal. This is seven years before I got to the company. This is the year 2000. And they said, we can do the same thing ourselves. And they did. So they had built a DVD by mail business just as Netflix did. And Blockbuster's plan was to stream. It's just that in 2007, people forget that streaming was a very, very ineffective vehicle at the time because of buffering, the lack of WI fi, the lack of bandwidth. That created not a great user experience at the time.

[Sean]

Right. So the quality wasn't there.

[Jim Keys]

Quality wasn't there. Now, we did buy a streaming company. We bought a company called Blockbuster called Movie Link that we renamed Blockbuster On Demand. So again, people don't know the story, but Blockbuster was very well prepared for streaming in 2007 when I arrived with the acquisition of this company that was really built by the studios to prevent the fragmentation that's occurred as a result today.

[Sean]

Interesting. So you were prepared for the streaming era. So then what exactly happened?

[Jim Keys]

Absolutely. Well, again, change happened. So here we were, we were, we had significantly increased earnings for the company, made some improvement in store operations, bought a streaming video company. We had something called Total access. You get DVDs by mail, online, in stores, kiosks, even to compete with Redbox. And then all of a sudden, in 2008, Lehman Brothers collapsed. The financial markets completely shut down. The banking system was basically in disarray worldwide. This wasn't just the United States. So worldwide Financial crisis and Blockbuster had a billion dollars of debt that had to be refinanced in 2009. That's the real story of Blockbuster. It was very difficult to get that debt refinanced. We ultimately did restructured the company and sold the company to Dish Networks.

[Sean]

Oh, got it.

[Jim Keys]

Yeah.

[Sean]

Okay. So you never hear that part of the story.

[Jim Keys]

Yeah, I know. No, people just take again, perception. I just take, I'll take the, I'll take the nickel version of the story and then I'll accept it. Real.

[Sean]

Yeah.

[Jim Keys]

But there's so much more to learn, right. If, if someone digs in and gets the truth.

[Sean]

That's interesting because you hear that with Google and Yahoo too. You're like, oh, they could have bought Yahoo, could have bought Google or something.

[Jim Keys]

Right, exactly, exactly.

[Sean]

But they don't know. No one's ever heard Yahoo side of it.

[Jim Keys]

Right, Exactly.

[Sean]

Yeah. That's interesting.

[Jim Keys]

So many stories.

[Sean]

When was that shift from physical stores to streaming? Was it a specific year you remember?

[Jim Keys]

It didn't really. It wasn't really viable. It began in the year 2008. 2009. We had ROK, came out with a device. But TVs weren't smart, there weren't apps. And to sort of timestamp this, the iPad, which is now the first time we had a device that was viable to watch movies on. That was launched in 09. So by 2010, 2011, we were just then beginning to see viable streaming capability. Prior to that, there was a little streaming going on in 07, 08, but it was primarily kids on an Xbox.

[Sean]

Got it. That makes sense.

[Jim Keys]

Yeah.

[Sean]

So Redbox must be struggling now, right?

[Jim Keys]

Yeah, Redbox is struggling. But Redbox, it was an interesting business model. They had a very low cost device. They created these little, little kiosks for probably 10,000 each and put them in front of Walmart stores and 7, 11 stores.

[Sean]

Wegmans too.

[Jim Keys]

Yeah, yeah. And ironically the studios did not support that model. So the studios wouldn't sell them DVDs. You know how they got their inventory? They would literally go to Walmart.

[Sean]

No.

[Jim Keys]

Yeah. And buy. They had a whole army of young people. Basically they'd send in a Walmart and buy five copies of a movie.

[Sean]

They're paying full retail price. Yeah.

[Jim Keys]

Well, but here's the deal. Walmart was using DVDs as a loss leader.

[Sean]

Oh.

[Jim Keys]

So to attract customers.

[Sean]

Interesting.

[Jim Keys]

And they didn't realize that Redbox had made a whole, built a whole distribution model around going into Walmart stores, buying them their cost of goods. Believe it or not was lower than mine at Blockbuster.

[Sean]

Whoa.

[Jim Keys]

Yeah. Yeah. Because they were buying the, the discounted DVDs at Walmart.

[Sean]

That's crazy.

[Jim Keys]

I know, I know.

[Sean]

What a strategy.

[Jim Keys]

I know.

[Sean]

Does a loss leading strategy still work you think these days?

[Jim Keys]

Yeah. I am not a big fan of loss leaders at retail. I know a lot of retailers use them, but I think it always comes down. You know, prior to blockbuster, I was CEO of 711 and I'm just a big believer it's all about the product. You are what you sell.

[Sean]

I agree. Because I feel like customer loyalty is not as strong as it used to be because people are now just shopping prices.

[Jim Keys]

If we're being honest, they're shopping price. Price will always be a factor. Price has been a factor since retail was invented. But ultimately it comes down to the product you're going to buy. I mean, look at, look at Starbucks. I remember when Starbucks came in 7 11. At the time we were the biggest retailer of coffee in the world. And Starbucks came in and you know, I'm guilty. I looked at them and said, who's going to spend four bucks for a cup of coffee? Right. But the quality of their product and the experience was so good that price didn't matter to that customer. They were willing to pay for the quality of the experience and the quality of the product. It's a great lesson in that.

[Sean]

Interesting. Yeah, you're right. That's a great example actually. Yeah. Because some people do have that loyalty if they like the experience and the overall it's not just the price. Right?

[Jim Keys]

Exactly. If you go to 711 in Japan, they are selling restaurant quality sushi and people will use 711 in Japan. Not just Japan, but Taiwan, Thailand, Korea, they'll use 711 three meals a day.

[Sean]

Whoa.

[Jim Keys]

Because the quality of the food is so good that it keeps them coming back. 7:11 in Asia doesn't have to discount. They don't play that game. They don't have to play that game. It's a good value, but it's really about the quality of the product.

[Sean]

Yeah. I used to go to 711 all the time probably when you were CEO actually, because I went when I was a kid.

[Jim Keys]

Yeah.

[Sean]

Boston cream donut.

[Jim Keys]

Awesome.

[Sean]

Oh man. Good.

[Jim Keys]

Yeah. That was an innovation. Believe it or not. Putting those donuts in the store was a big deal. We had to build a whole nationwide infrastructure with bakeries that were in every market partnering with bakers and the ability to distribute that product at least once a day. Because you can't have a donut sit on the shelf for 48 hours. And it, it's just not good anymore. So we had built, basically had the advantage of being able to replicate the thing that made 711 in Japan and in Asia so successful, which is daily delivery of fresh products.

[Sean]

Yeah. Because the stores are small. So how do you decide what gets in, what gets out?

[Jim Keys]

This is the, the secret sauce for 7 11. They were able to harness technology in a way that let them change the product assortment literally by store. By figuring out, because convenience is literally neighborhood by neighborhood, sometimes a store on one side of the street has different needs, different customer needs than a store on the other side. You might have one on the drive side that people are stopping for coffee on the way in and then on the way home, maybe they don't drink as much coffee and the coffee sales would be lower. So the idea is to use technology to know every item in the store, every sku, which is the stock keeping unit, and be able to manage that inventory appropriately so you never ever out of stock on the bestselling products and on the slow moving items. Since the store is so small, the, the, the challenge is to eliminate those items and replace them constantly with things that have a better chance of success.

[Sean]

Wow. So you were using that tech in the early 2000s?

[Jim Keys]

Yeah, yeah. We were one of the first to adopt it.

[Sean]

Whoa.

[Jim Keys]

It was fabulous. And it, it really, it made the difference. 7:11 in Japan first launched this tech and they, it totally transformed their business.

[Sean]

I bet, because before it was manually so you could guess what would sell.

[Jim Keys]

Exactly. And 711 in the United States. When I first got there, we had a, a history of negative. Same store sales really declining every year because we were building a lot of stores and perhaps cannibalizing some stores. But the real problem wasn't the number of stores. The real problem at the time was we really didn't know what sold. More importantly, what didn't sell in every store.

[Sean]

Yeah, they're everywhere. Seven elevens.

[Jim Keys]

Oh yeah. Almost 80,000 stores now.

[Sean]

Holy crap.

[Jim Keys]

Worldwide. Yeah.

[Sean]

And the ones at gas stations, I assume, do the best.

[Jim Keys]

In a window of time. Yes. Think of gasoline as another convenience item. And the nice thing about 711 is it will continue to morph and sell those things that you need conveniently. So literally, the company started selling ice for people's icebox.

[Sean]

Oh, wow.

[Jim Keys]

Yeah. And they, and they transformed over time by keeping up with change.

[Sean]

Right.

[Jim Keys]

Every time something changes. I mean, take ATMs we had during my tenure there. ATMs used to be only at banks. And then they started putting Them randomly at a few locations. Well, we decided it's a convenience item for people to get access to their cash. So we put, we made the hard call, put them in every seven eleven store.

[Sean]

And that was probably expensive at the time.

[Jim Keys]

It was very expensive because some stores didn't generate enough revenue to be able to make the ATM the cost of the machine work. But by making that decision then people began to realize, any 711 I know I can get cash. And then it became a huge revenue generator for the company.

[Sean]

Smart. Wow. Yeah. And vapes became big. And I'm sure they started selling vaporizers and caught that trend.

[Jim Keys]

Yeah, exactly. Vapes. Tobacco was declining, but then as tobacco declined, vaping started to grow.

[Sean]

Yeah.

[Jim Keys]

Again, came in, provided the convenience and that, that one thing that is consistent. The need for convenience will never go away. Absolutely right. When did keep up with change. You're going to win.

[Sean]

Absolutely. When did Slurpee day launch? Because that's one of the most viral marketing campaigns of all time.

[Jim Keys]

I know you'll love this. So here's how the Slurpee day started. We played with the idea. Let's, let's, let's give a free Slurpee on 711 day. In fact, I think the first time we did it may have been in 2002, which was the company's 75th anniversary at a big splashy thing at New York City. We rang the bell on Wall street and had a big event at Radio City Music hall and Ellis Island. All this to celebrate the company's birthday. And we provided free Slurpees. Well, we hadn't really thought it through. Franchisees were a little upset because it was so popular that people came in and we didn't provide a little cup. It was just take a Slurpee. And people were loading up these 16 ounce slurpees and walking out. And so we stopped doing it for a couple of years. And then around 2005 is right around the time we sold the company. We ended up selling 711 to the Japanese licensee. David Letterman had a little red ass.

[Sean]

Oh, yeah.

[Jim Keys]

Well, here's what happened. Our race team was Michael Andretti and the Andretti racing team. And we had a car at Indy. The Andretti team then hired Danica Patrick.

[Sean]

Oh, nice.

[Jim Keys]

Away from Rahal Letterman racing. Oh, right. And that happens all the time. I mean, drivers get hired back and forth. It's like football players changing teams. Well, unfortunately, when a guy's named David Letterman and he's got a show the next week, he puts an actor on Stage I'm at home watching tv, and this guy comes out and is Jim Keys, CEO, seven Eleven. I'm going, what's up with that? And the guy comes on stage and says, dave, congratulations. Thanks for helping us feature Seven Eleven's free Slurpees. Anybody that goes into a Seven Eleven gets a free Slurpee.

[Sean]

Whoa.

[Jim Keys]

Well, of course, this caused chaos. We weren't. The company wasn't prepared for it. People all came into the store, and literally that triggered the realization that this is so popular. Why don't we just do this?

[Sean]

So.

[Jim Keys]

So what started as a joke on 711 day with David Letterman being upset at us for stealing his race car driver. Ended up being a good thing. And we put they end. The company ended up putting the small cups in.

[Sean]

Smart. Yeah. Wow. So you turned a negative into a pos. Positive.

[Jim Keys]

Turned a negative into a positive.

[Sean]

What'd he say afterwards?

[Jim Keys]

Well, it was funny because he. He. Then he did this twice with 7:11. First he did it with free Slurpees. A few weeks later, he came back with free hot dogs. Well, now the lawyers, of course.

[Sean]

Yeah, they stepped in there. Yeah.

[Jim Keys]

Maybe it's not a good idea.

[Sean]

Those are a little more expensive than Slurpees.

[Jim Keys]

Exactly. But ironically, I had already left the company by now.

[Sean]

Oh, okay.

[Jim Keys]

And. But he still used this guy. Jim Keys, CEO, and every time a company Carnival Cruise Lines toilets were overflowing, it's. Jim Keys, CEO of Carvel Cruise became a bit. Oh, yeah, he had it going for like 10 years. Yeah. It was his story.

[Sean]

He was petty with you.

[Jim Keys]

He was petty.

[Sean]

He was really mad. You took Danica. Shout out to Danica. She's been on the show.

[Jim Keys]

Yeah, yeah, yeah. She's great.

[Sean]

Yeah, she's great. Yeah. Hot dogs shout out to Costco because they kept the same price for 22 years.

[Jim Keys]

Pretty amazing.

[Sean]

$50. They're obviously losing money on that at this point.

[Jim Keys]

That's a classic class leader. But it's. It's a Costco looks at as a service because people love the hot dogs and they love to come in and.

[Sean]

Yeah.

[Jim Keys]

And let's face it, they're going to buy a lot while they're there.

[Sean]

Oh, yeah. Well, just their food court in general. All the prices are super reasonable. You're not spending that much, and it's pretty good meal.

[Jim Keys]

Yeah, I'm a big Costco customer.

[Sean]

I love Costco.

[Jim Keys]

I. I get teased because I, you know, half my wardrobe comes from. They have. They have great value.

[Sean]

They got good clothes.

[Jim Keys]

I buy my Levis there I buy.

[Sean]

My socks, my underwear, sometimes some, yeah. Apparel and interesting business model.

[Jim Keys]

Too much information. You just told the whole world that you buy your underwear at Costco. It's not going to be good for.

[Sean]

Yeah, yeah, nah, but interesting model because they don't make high margins.

[Jim Keys]

No, I know, I know. Membership model, they, that membership model works and Costco did a really, really good job. I mean, think about competing with Sam's and Walmart. They've done quite well.

[Sean]

Yeah. I wonder how Walmart's doing these days.

[Jim Keys]

Walmart I think is doing well. I, I've done a lot of business with Walmart over the years. A huge respect for Sam Walton when he came in, what he started, the culture he built. And they have a fabulous corporate culture there, but they, they suffer from being big when, when you're as big as Walmart, you have a giant Target on your back and it's, and it's tough because people are going to, to challenge virtually everything you do.

[Sean]

Oh, yeah, yeah. I know. The theft was a big deal, right, with Walmart and Target.

[Jim Keys]

Yeah, a little bit of a challenge. But you know, John, a lot of that stuff, Retailers, I've been through these cycles throughout my career and cycles come and go and we went through a really tough time during the pandemic and crime went through the roof and retailers suffer the, the, the brunt of that challenge because people are desperate in a way.

[Sean]

Yeah.

[Jim Keys]

And they will do some pretty stupid things. But you know, at the end of the day these things will pass and a good retailer will find you don't have to lock up the whole store. You build trust with your customers. And ironically, I used to have some stores in the toughest parts of town with the lowest amount of shrink.

[Sean]

Really?

[Jim Keys]

Yeah. Because what the trick was, if you keep that store well, you hire great staff, the neighbors know them, the store is clean. That store becomes almost a sacred treasure of the neighborhood. They don't want to mess it up.

[Sean]

Right.

[Jim Keys]

So they'll defend their own store and protect their own store from others who might come in and want to, want to do damage.

[Sean]

100%. Yeah. I'm big on energy and big on environment.

[Jim Keys]

Yeah. It really does work. And again, when you're a big company, sometimes you don't see that you lose that, that people touch and the importance. But I don't care how tough the neighborhood is, you can make it work with the right people and the right products in the right store environment.

[Sean]

Yeah. So obviously self checkout was pretty revolutionary. Do you see AI being part of retail moving Forward.

[Jim Keys]

Yeah, I, I think is going to do a lot for retail. I think there's some vulnerability though. A lot of people when new tech comes, they want so badly to embrace it that they'll try things that I call tech for the sake of tech.

[Sean]

Yeah. Too fast.

[Jim Keys]

Exactly. Well, or they, or it's gee whiz, stuff that maybe looks good but doesn't really move the needle on the business. I do think tech will help us significantly and being able to manage inventories. We were at 7:11 very early in the idea of using technology to empower the store manager, store operator to make much better decisions about things like product inventories and, and in stock capability. AI will be able to do a lot of that thinking for them, but never replace the person. Here's the difference. The computer, the AI that's the best systems in the world will know what's selling and what's not selling. But that store operator who's there talking to the customers, they're the only ones that really know, you know what, there's construction that's going to start in two weeks on this street. It'll really be hard. By the time AI realizes that construction has happened and is having an impact on the sales, by then it's too late. The operator with the eyes and ears and the pulse on the community empowered with AI can do a far better job than just the computer alone.

[Sean]

Yeah.

[Jim Keys]

So I don't really worry about the future of AI taking away all these jobs. I think AI is going to supplement jobs and really help people do a better job. But it's hard for us to eliminate the importance of that person. And you know, it's the story I said a minute ago.

[Sean]

Yeah.

[Jim Keys]

The neighborhood, that store is part of the neighborhood and that person in there has a relationship with those customers. It's a very, very valuable element of retailing that's easy to overlook.

[Sean]

Yeah. So you still value that human connection.

[Jim Keys]

Exactly.

[Sean]

Your businesses.

[Jim Keys]

Exactly.

[Sean]

How has your leadership style changed over the years?

[Jim Keys]

I've got a different point of view on leadership. I don't think there is one leadership style. There's a lot of people that teach servant leadership. This kind or XYZ leadership. I, I believe leadership is all about change and all about learning to adapt. Because the reality is, as I said, change equals opportunity. Things are going to change, people are going to change, systems are going to change, customers are going to change. The leader must be able to adapt to those changes in order to effectively lead. Unfortunately, too many leaders get stuck in a model that may have worked In a robust economy and all of a sudden the markets collapse. They have to pivot.

[Sean]

Right.

[Jim Keys]

And they're, they're just unable to do it because they're used to one leadership style, one management style.

[Sean]

Yeah. Because a typical one I see in big companies is like a fear based style. Right?

[Jim Keys]

Yeah.

[Sean]

Like the employees fear the boss or whatever.

[Jim Keys]

Yeah, yeah. That's just not just in companies, by the way, that, that's pervasive in society today. If you think about it, that's everywhere.

[Sean]

But that's not an optimal working environment, in my opinion. Right.

[Jim Keys]

It's not an optimal working environment. It's not an optimal societal environment. Right. And unfortunately, the, the change in availability of technology with the Internet and social media, et cetera, et cetera, has I think, accelerated this propensity of fear. I mean, think about it. You turn on any news channel or just flip through social media.

[Sean]

Yeah.

[Jim Keys]

It's a fire hose of they're coming to get you. Look what they're going to do to you. They can do this, they can do that. And you know, the irony is fear is our worst, our worst enemy as individuals and as a society. What are we afraid of?

[Sean]

Right.

[Jim Keys]

With knowledge, we can accomplish anything. In fact, I quoted Yoda in the book.

[Sean]

I love it.

[Jim Keys]

Yeah, well, it's better to quote Yoda than to quote ancient philosophers because people don't care what ancient philosophers say. They care what Yoda says. But he was talking to Luke about the importance of. Well, about the force and about fear leading to the dark side. Said fear leads to the dark side because ignorance leads to fear and fear leads to anger, and anger leads to violence. And that negative cycle. We're there in so many parts of society, so many parts of the world in this cycle of fear and anger that is fixable. His advice to Luke was use the Force, which to me is kind of a metaphor for faith. I don't care which faith, but a faith in something, a belief in the universe or in God. He encouraged Luke to use the Force and knowledge. And those two things were the antidote to that negative cycle because he could turn understanding and knowledge into hope and into peace.

[Sean]

I love that.

[Jim Keys]

Yeah. Isn't that cool?

[Sean]

That's so cool.

[Jim Keys]

I mean, I was in Star Wars. It was, it was right there. If you, if you think about the messaging behind that, that we're in control of our own destiny and if we have a belief in ourselves and we learn how to learn, we can overcome virtually anything and we have nothing to fear.

[Sean]

Yep. That's such great advice. Because knowledge is pretty accessible these days. You could go to your local library, you could go to YouTube, and you could use that to escape your negative environment.

[Jim Keys]

That's exactly right. That's, that's really the message that I've been out talking about that, that today, technology, the advantage of technology is, you know, I have right here in my pocket a portal to unlimited learning.

[Sean]

Right.

[Jim Keys]

So if I choose to be led around by a bunch of percept, I'm vulnerable to that. And it may make me angry, it may make me want to fight. Alternatively, I can use that portal to unlimited learning and I can find truth, maybe hard, sometimes may have to really work at it, but the truth is there. And if we have the personal discipline to seek the truth, then we can replace our own anger and our own propensity for, you know, aggression or reaction. We can change that with what I like to call relentless positivity.

[Sean]

Right.

[Jim Keys]

I'm a, I'm a, I'm a positive guy. Why? Because I don't have any fear and I know that I can learn anything to overcome any challenge that somebody might throw at me.

[Sean]

Love it. Yeah. That's a great mindset to have. Because a lot of people do deal with anger, but you could channel that in the right way.

[Jim Keys]

You can channel it the right way. Yeah. And, and think about as an entrepreneur, it can kill your career as an entrepreneur. You can't allow that fear to creep in. You can't allow that anger to creep in. It's that relentless positivity that will make you successful as an entrepreneur and, you know, outside of the business world. Yeah, it's just a good, good way to live.

[Sean]

Absolutely. Did you ever have any struggles with ego because you had all this success?

[Jim Keys]

I, you know, I, I, I like to think that I know where I came from. So for me, everything was upside. And I know I could go back if I had to. So I, I think that helps keep me humble. But, but I have struggled. I've had people say, hey dude, you think you know everything. You're so arrogant. Right. I mean, because confidence can be perceived as arrogance.

[Sean]

Yeah. There's a fine line. Right.

[Jim Keys]

Really fine line. But, but here's what I learned in, in researching for the book, I, I found Norman Vincent Peale. Right. He was a old time preacher, wrote the Power of Positive Thinking. He was a big influencer of the day. Right. And he was big on confidence. But he preached in equal amounts the importance of humility. Because confidence and humility have to go hand in hand to avoid arrogance. But his Definition of humility was really interesting because it wasn't. It wasn't humility in the sense that, oh, gee, I'm not so smart, you know, blah, blah, blah, not self effacing. Which is fine to be self effacing, but he said true humility is when you're smart enough to know that you don't know everything and that every other human being walking on this planet has something that you can learn. And if you just always try to learn from them, then you're going to stay this side of that line of arrogance because they'll know that you don't know everything.

[Sean]

Wow.

[Jim Keys]

Isn't that cool?

[Sean]

It's very cool, yes. You got to get different perspectives. Right.

[Jim Keys]

You got to get different perspectives and you may not agree, you don't have to agree, but to be able to entertain another thought.

[Sean]

Right.

[Jim Keys]

Really important.

[Sean]

And what comes to mind when you're talking about this is politicians, Right. Sometimes they lose touch with reality because they're so in their bubble they're not getting different perspectives.

[Jim Keys]

Exactly. And, and we're caught up in a. In a time when there is a perceived strength around sticking to your position, even if it's wrong. I call it in the book, I called it militant ignorance. Right. Where somebody knows something's wrong. But. Well, that was my position. I don't want to be thought of.

[Sean]

As a. I suppose that it was a terrible habit.

[Jim Keys]

Yeah, no, everybody does it. We're all.

[Indeed Advertiser]

We're all.

[Jim Keys]

But. But that's where. That's where confidence comes in. If you have the strength of conviction yourself as a politician or as a business person or just a guy on the street.

[Sean]

Absolutely.

[Jim Keys]

If you have that strength of conviction, then it's okay to be able to say, you know what? I said XYZ yesterday, today I have more information and now I'm going to say something different. But that's because I'm armed with knowledge, more information.

[Sean]

Yeah. I love when people open up like that too. It's a good sign. For me, it is in business and friendship.

[Jim Keys]

Exactly. Good way to pick your friends.

[Sean]

Yeah. Where can people find the book and keep up with you, man?

[Jim Keys]

I'm out there. Jameswkes.com I've got a website. They can order it. It's available on Amazon, Barnes and Noble, all the online sites. And I've got J Keys, author, is my social media handle on TikTok and Instagram and others. And yeah, I hope people will help me spread the word because I think there's a. I think there's a message here. That can help all of us, whether you're in school and, you know, you want to do a better job academically, whether you're an entrepreneur, you want to use learning to succeed and build confidence. I think there's a good message here.

[Sean]

Absolutely.

[Jim Keys]

Share it.

[Sean]

Yeah. We'll link everything below. Thanks for coming on today.

[Jim Keys]

Thank you, Sean.

[Sean]

Yeah.

[Jim Keys]

Appreciate the opportunity.

[Sean]

For sure. Thanks for watching, guys. Check out the book. Check out a site. See you guys next time.