Video games, eccentric personalities and past presidential candidates have all made their way through Gary Kusin's career.
The entrepreneur and business mentor is the former CEO of FedEx Office and co-founded the company now known as GameStop. Kusin shares how he started the first large-scale video game retailer, why GameStop surged in the financial market during the meme stock craze of 2021, and how a summer internship at an insurance company changed his outlook on leadership and life. We spoke with Kusin ahead of the April 30 publication of his new book, Always Learning.
Read the Transcript
Gary Kusin
I said, you need to quit your job. And I’ll walk away from my job. I was 28 years old and a senior merchant. And we decided we’d walk away from what we’re doing, not because we’re gamers, but because we identified a market niche that was going to explode. There’d be twelve year old kids dragging their mother into the store and go through the store and said: “My birthday’s next week !I want this, this !!”. And we realized what we had thought would happen was happening. A new generation of users were starting to grow up. If everyone just bought a few shares, you could create a short squeeze. No one knew what that meant, but they said, we’re in. And Wall Street didn’t know what to do with a retail movement that crushed them. And the only way that works is an enormous, an army of emotionally connected customers.
Zach
Welcome to the Leader’s Edge podcast. I’m Zach Ewell, content producer, here at Leader’s Edge. In this episode, we meet entrepreneur and business mentor, Gary Kusin. Video games, eccentric personalities, and past presidential candidates have all made their way through Gary’s career. In fact, for those listening now, there’s a very good chance one of Gary’s businesses has impacted you. Founder of the company, now known as GameStop, and former CEO of FedEx office. The business leader shares how he started the first large scale video game retailer, why the company saw a resurgence in the financial market during the meme stop craze of 2021, and how a summer interning at an insurance company changed his outlook on leadership and life. My conversation with Gary came as he was just about to publish his new book, always learning an entrepreneurial memoir.
Gary, I like you to read one of your favorite passages from your book and explain to me why it’s one of your favorites.
Gary Kusin
I do have a passage that I like a lot or a little bit of the story that I like a lot. Between my first and second years at Harvard Business School, I was really trying to make as much money as I could. So I went to the placement office and trying to see who was paying the most. It ended up it was a large insurance company, but based in the bayous of Louisiana, selling a type of insurance that’s only legal at the time in 16 states. That summer, I met and became close to my first real business mentor. E.J. Ouro is the man I worked for that summer. One of the most wild personality in a real Cajun. And I wrote a chapter on EJ. And I’m happy to. Happy to read it:
EJ was so colorful. He was maybe 5ft, ten inches tall, easily weighed 300 pounds, likely much more. And he was absolutely beloved by his employees. He would always wear a seersucker suit and a straw fedora. And he could, as he would often say, dance a jig at a funeral. How he loved his Harvard MBAs, each summer. His pronunciation of MBA was “Imma bia eh”. No matter what we had done during each week, every Friday morning, he’d make the three of us sit in a row with our hand pulled adding machines and compute his personal net worth. And every Friday would put his very big hands around my very scrawny neck while I was computing and bellow. “What have you done so far this week to make me more money?” I thought he was one of the funniest characters I had ever met. And I teased him right back, which sometimes caused others to gasp or cringe and look away. He was clearly playful, but others always deferred to him because of his wealth. I guess he was just so much fun to work for. And because he liked my teasing, he quickly made me his designated driver. As his driver for that summer, I would take him everywhere, our Chevrolet tilting in his direction every time he got in the car. In the process, I met people like the Louisiana governor Edwin Edwards and senators Russell Long and J. Bennett Johnston in private rooms in New Orleans restaurants like Antoine’s Galatois. I would wait outside the door of the private dining room until the meal was finished. I never knew what went on behind the closed doors and wished I did, but figured it was best that I didn’t.
EJ, with his signature lavish graciousness, allowed us to host the current year MBAs. Got to hire the next year MBAs for a dinner in the nicest, most expensive restaurant in Boston. We had a great evening. And about a week later, I got a call from EJ saying, “Gary, I gave you an unlimited budget for your dinner with the new recruits. And for the first time since I started doing this, you went over my budget”. I was silent for a minute. Then I started belly laugh. He started belly laughing in his inimitable way and just said, just teasing. I’m really going to miss you. He was so special. He was beloved by everyone in the company. They were completely vertically integrated, from insurance to cemeteries, to funeral homes, to florists. He had the whole gamut covered through the entire south.
And the insurance he sold, which, again, was not legal in other states, is called industrial insurance, and it means burial insurance. So I go to you, and I would say, I will sell you a $200 funeral for ten cents a week. And if you died after one week and paid $0.10, you would get a $200 funeral. And he made a big deal. They would love to find someone over 100 years old and sell them a policy because they just used their advertiser. They just put it in and say, billy Joe Washington, be 105. He bought his burial insurance at 104, you know, and we gave him a $200 funeral. So, you know, it’s that kind of business. But how he managed people, the culture he built there, were so informative for me. When I was really very early in my career
Zach
I was actually going to ask you about that passage. It’s really funny that you chose that, because I thought that chapter in your book was so rich with detail. And EJ Ourso seemed like such a just fun character. Something that, you know, that somebody that sounds like a cartoon, but turns out they’re, you know, they’re. They’re real life. In that chapter, specifically, you describe EJ as the, quote, “my first example of a role model for a superb CEO.” Could you dig into that a little deeper for me? What attributes and characteristics did he hold that had such an impact on you?
Gary Kusin
So by the end of my book, I lay out my six leadership principles that I learned along the way over my career. And I honed as many of them from bad, toxic environments as I did from environments that worked well. What he was able to. What he did that is so hard for leaders to do, is he could paint an aspirational picture of a flag on a distant hill, and he could rally all of his team members. He said, that’s what we’re aiming for, and here’s why we’re aiming for it. And explain in great detail why that hill is worth taking. And then he says, we may lose some people along the way. This is not going to be an easy battle. And he talks in those kinds of terms that builds. He becomes very aspirational in his description of a future.
And people buy into that, or they don’t. And if they don’t, they leave. But if they buy into it, they feel like they’re doing good work for being part of a group on that kind of mission. And that’s probably. That’s probably the thing I saw as strongly in his company as I ever found anywhere else in all of my travels and business.
Zach
It sounds like a fantastic summer.
Switching gears now, a little bit like many people my age, I have very vivid memories. Visiting GameStop stores. I believe the first game I bought was used copy cartridge of Pokemon yellow for my game Boy. Throughout the years, my brother and I would frequent GameStop a lot, spend, saved up, pooled money from mowing people’s lawns in our neighborhood. We bought cartridges, game consoles and other appliances. What has your relationship been like with video games? Do you have any favorites? Do your kids? Grandkids?
Gary Kusin
Kids and grandkids. Oh my goodness. You just can’t believe the array of games that they’re playing that still have titles that I remember, you know, big Dune comes out. Is that dune two or is that Dune three? Because were around for the first 15 years of the industry, my biggest experience was with what became the greatest games of the video game hardware eras, before you started going and having online games. So I particularly liked Pitfall Activision title that it takes a ton of work to figure it out well enough. I was a Tetris nut. I can’t believe the 13 year old kid just beat it. I was sure if it was going to beat, it would be me. But for me, the most interesting story is that my partner and I didn’t, we didn’t found Babbages that became GameStop because we’re gamers. We kind of did it the old fashioned way. Jim, my partner, was a partner at Bain, and he had replanted himself in the Silicon Valley. At the dawn of the Silicon Valley, he started having a lot of video game publishers, particularly Activision and Electronic Arts and other game other publishers like those that he began working for. And he developed a hypothesis that he could take back to the very first black and white TVs, penetration curves that looked like hockey sticks. And he found that in every era of a consumer good, an entertainment consumer good in particular, but also apparel and everything else, when revenues reached a certain size, the specialty store channel became an important, if not dominant, channel in distribution. Specifically, look at records. Records didn’t become a specialty store item.
Enough record players sold in Sears, JC Penney’s, all the big department stores, to have an installed base of record players. They also sold records, but they only sold 2345 records. And as the recording industry grew and rock and roll exploded and country western and seoul and all those sorts of things, record chains emerged, like sound warehouse. You can go peaches, you can go through. And every record chain that there was grew up in the late fifties and early sixties. Then you go to color TVs, the penetration color TVs, then you go to Betamax, you go to movies that you could rent, and all of a sudden, blockbuster emerged. And so Jim’s hypothesis was this video game thing is real.
And because, and went through all the microchip technology, and with Moore’s Law, using Moore’s Law, we figured out that the size of the chips were going to grow logarithmically so that the gameplay available on video game systems would explode. So there would be generations of video game hardware. And as were talking about that, I was in a department store, and I was talking about, we’re getting killed by all these specialty stores. And that’s where I developed this hypothesis. So as Jim was telling me that video game hardware would explode and that video games would explode, I said, jim, we’ve seen this movie before. There will be a channel that will grow and emerge that only sells video games for video game systems used in the home. And I said, you need to quit your job at Bain and I’ll walk away from my job.
I was 28 years old and a senior merchant in a big division of what’s today Macy’s. And, and he was in the hottest consulting company in the world as a senior partner. And we decided we’d walk away from what were doing, not because were gamers, but because we identified a market niche that was going to explode.
Zach
Company that you co-founded, Babbage’s, in 1983, would then go on to become GameStop. At the time, you said Babbage’s was the world’s first video game retailer. In hindsight, this decision to open a video game and software retailer at the beginning of a blossoming video game industry was a great move, as the video game industry today is projected to be worth over $282 billion. And the company, GameStop, is still to this day recognized as a household name going back to the early eighties. Now, you already discussed essentially the market indicators you looked at with your partner, but once you got started, once you started opening stores, what was that aha. Moment that you had that essentially gave you confidence to what you were doing? That aha moment of what I’m doing right now is going to be a success.
Gary Kusin
The passion that our customers had for what were doing. There would be twelve year old kids dragging their mother into the store and go through the store and said, my birthday’s next week. This, they would have all these conversations and we realized what we had thought would happen was happening. A new generation of users were starting to grow up and knew what video games were. They were smart about what were the hot games. They knew what they wanted and they convinced their parents to pay pretty big price to buy game for a teenager. So we, in our numbers, kept getting bigger and bigger and bigger.
Zach
So we do several political podcasts here at Leader’s Edge. Don’t worry, I’m not going to ask you any political questions, but we have a series called View from the Hill, politics and risk. And I’d be remiss if I did not bring this up. But after reading a specific passage from your book, I found it fascinating that you had not one but two past presidential candidates who invested in babbages. One was Ross Perot, third party candidate from the 1990s elections and businessman. And the other was Mitt Romney, 2012 republican presidential nominee. How did this come to be?
Gary Kusin
Well, in the case of Mitt was a senior partner at Bain and was best man at my co founders wedding. I mean, they were thick as thieves. And he was starting their first PE fund and was in touch with Jim. And so our first, our original backer was Ross Perot, and he backed us because he met me, as you probably read early in the book, at my high school graduation. And we stayed in touch. He really was pushing me to start my own business. And when Jim and I went to see him to see about him investing, he said, I’ve been waiting for you to come. And so he was our first investor. He didn’t understand retailing. And he ultimately, by the end of the second year, was very nervous because were extraordinarily seasonal and remain so till today.
I mean, Christmas is 100% of the profit of a year in the video game business, and the fourth quarter is probably 50% of a year’s revenues. He couldn’t take that seasonality. And I suggested to him that if we could find someone to take him out, would he be okay with that? He said yes. So we found two investors, Warburg Pincus in New York and Bain Capital, and those two bought him out, and they both became owner. Jim owned a third of the company, and the investors did. So they bought out Ross’s third, and then they split his third between themselves.
Zach
Okay, fascinating. Just the, it’s crazy how large the world is, but at the same time how small it is and where people essentially will go on to do. After you moved on from GameStop, the business would grow to become the largest video game retailer in the world. And like I said, it still is today. Additionally, many others would learn of GameStop in 2021 when it became front and center of the investment community as a, quote, meme stock, propelled by online Internet forums such as Wall Street bets on Reddit. What has it been like watching from afar, a business that you co-founded, develop and change over the years?
Gary Kusin
Well, we knew it was going to change because we had seen the movie before with Blockbuster. Blockbuster was a perfect analogy for GameStop. There were. Blockbuster was the hottest retail concept out there for a couple of decades. If you wanted to rent a movie and everybody wanted to rent movies, you’d go to Blockbuster and you’d rent movies. That’s how it would work. Well, with the onslaught of the Internet, digital content and everything else, there became an easier, faster, cheaper way for people to do their renting. And they did it. They downloaded off the Internet. So we watched Blockbuster go away.
We knew with the advent of downloadable games, when the Internet got fast enough and the chips that drive the processors and video game systems got fast enough, that people were going to be able to download a massive multiplayer online game with the environment, they were going to be able to download that. And so it was just a matter of time. So we had seen the movie before and that did not make us feel bad at all. But when I find it hugely instructive, Wall Street figured that out. They figured out that sooner or later, you never know what the timing is, but sooner or later, technology will have to overtake GameStop and people just won’t use it the way they did in the past.
What they didn’t count on is the incredible, unprecedented customer loyalty of teenagers who are now maybe in their thirties and forties, and they can’t talk about the fabric of their lives from when they were kids until now without talking about the role GameStop played in their growth and development. It was emotional for tens of millions of gamers, from their teen years now into their thirties and forties. And when all of a sudden they read that a hedge fund is trying to put their GameStop out of business, and all you had to do was if everyone just bought a few shares, you could create a short squeeze. No one knew what that meant, but they said, we’re in. And Wall Street didn’t know what to do with a retail movement that crushed them, that they didn’t know how to react.
And the only way that works is an army of emotionally connected customers. And I don’t know how you can get more connected than being the fabric of teenage gamers lives.
Zach
You definitely hit the nail on the head. I mean, you know, I started this interview with me just talking about my experience in GameStop, and definitely you can’t talk about video games in America without, you know, bringing up an experience, whether good or bad or funny or, you know, wacky, but yeah. And just like, you know how the pandemic, everybody got a lesson. A crash course in know health and how in tech, like, how to do zoom and everything like that in meetings. I think they also got a mini lesson on, like, finance, short squeeze. What does that mean? Robin Hood? What is that? You know? So everybody kind of became literate by way of just the news and all of these subjects. So. Very fascinating. So you decided to go back to business school.
After undergrad, you received a Master’s of Business Administration from Harvard Business School, as you previously mentioned. So I’m currently in the process of finishing my MBA as we speak at Smith School of Business, University of Maryland. This is a personal question of mine, but I’d really like to know why you decided to go back to school and pursue a MBA.
Gary Kusin
I had a different major every semester in college. Till my junior year. I would just pick whichever course I made the best grade in and say, okay, I’m meant to be. I had no clue. I knew I didn’t want to go back to my hometown, and so I was thinking about it a lot. So I went to my brother’s wedding. It was at the end of my junior year, and he got married in Wichita, Kansas. And he. All I remember, I don’t remember much from the wedding, but what I do remember was everyone was whispering about this guy. They said, he is the richest man in Wichita, Kansas, and he went to Harvard Business School. And you hear that around the clock for three days. And I was going, okay, rich, Harvard Business school rich. I know what I’ll do.
I’ll go to Harvard business school, and then I’ll become rich. That sounds like a good plan. And that’s how I was a government major. I was literally thinking about collective good theory or as a history minor. I was thinking about us history. From the civil war to the press. I couldn’t spell business. I took one class at the end of my. At the end of my fall semester at the University of Texas, because I was graduating early, because I could start working one class in the business school, and I took it. Pass fail. It was a coding class on how do you code punch cards. I failed it, and I went to the professor and I said, you can’t do this. I have to graduate. I need a job. I’m out of money. Can’t you give me a pass?
The whole reason I took a course here at the business school was I could take it. Pass fail. He said, well, what’s your major? I told him. And then he said, I’ll tell you what. What are you going to do when you graduate? And I said, I don’t know. Probably going to politics. I have no clue. He said, well, if you will promise me that you’ll never go into business, I’ll change your fail to a pass. I said, you got it, man. Public service, here I come. He said, okay. Changed it to a pass, and I graduated, and it was going to my brother’s wedding that tipped me off to Harvard business school. Really? I’d only had one class in business, but I had worked in furniture stores. I had worked in Austin at a furniture store. I’ve done enough stuff that it made an interesting application, so off I went.
Zach
So it sounds like you were using some business negotiation intellect for your past fail.
Gary Kusin
So, yeah, I’ve got a history of doing that.
Zach
That’s funny. As I understand it, a large part of your career has been around mentoring individuals. Specifically, you say, over 500 people, which is a lot.
Gary Kusin
Ends up, it’s over a thousand. We went back and did the work.
Zach
Thousand. Wow. How did you get into that space? Did people begin to come to you looking for advice, or is it a space that you actively pursued to break into?
Gary Kusin
That’s an interesting question, and there’s two sides to it. I recognized very early on in my life that I had advantages that other people didn’t have. And I go through a couple of settings in my book about when I worked in a furniture retail furniture store warehouse as a teenager, being the only white guy in the warehouse and I delivered furniture, I always had a black partner. And the way they were treated in some homes that went into was shocking. And I started realizing that, you know what? That doesn’t happen to me. And there are some advantages that I have that other people don’t have. And that struck me as incredibly unfair. So from a very early age, I had a sense of fair play, and I kind of developed over time a real desire to want.
If there was anything I could do to help level playing fields for people who might not have my advantages, I wanted to do it. So as my career kept progressing and I was very busy, I tell a lot of stories, as you can probably tell, and that’s kind of how I manage. And so from a very early age, people would say, can I come talk to you about something? I’d just be interested in getting your take on it. And we would have a conversation. We’d go eat lunch. And that’s when all my mentoring started as over lunches. And I would talk with them and I would always try to have them come up with their own answer. I am not in the book. I go into detail why I don’t like the word should.
I don’t believe anybody should tell anyone else what to do about their lives. So what happened was enough people started walking away from the lunches saying, wow, I have a different perspective than I had before the lunch. And they started talking with people about it and more people came to me and then they started being outside the company. And over the years it started, it blossomed from there. I went back to Texarkana, my hometown, and put together a program at my high school where they picked the highest potential 9th and 10th graders and would introduce me to the top ten highest potential 9th and 10th graders. And I would spend time getting to know them and developing mentoring relationships with them each year.
And as I’ve gotten older and more stops in my career and in my own journey, I have developed a really strong pattern recognition so that I can, because I’ve taken so many lapse around so many different tracks and so many different companies, I’ve seen a lot. So it’s easy for me to, when speaking to someone who wants some mentoring advice, I just ask questions and say, how did you come up with that? Why do you think that’s important? In a very socratic way, like I was taught at Harvard Business School, in a socratic way. And it seems to take a life of its own. I do not do regular mentoring. I am episodic. So if you and I have a mentoring session, that’s great.
Three years from now, you may be in a different situation, in a completely different part of your journey, but you find yourself at some kind of crossroads and you say, I wonder if Gary’s got any point of view where he can help me talk and you can recontact me. So I, I have been mentoring some of the people I’ve been mentoring. I’ve been mentoring for over 20 years, and again, not on a quarterly basis, not annual basis, on an as need basis. And it fills me up to be able to think that I can help people in underserved communities in ways that maybe they couldn’t have on their own to attract mentors. I realized probably ten to 15 years ago that it fills me up. And frankly, that’s one of the reasons I wrote the book.
And that’s one of the reasons that I started a podcast with an attorney who I’ve been friends with and worked with for over 25 years. It is to level the playing field in a larger way.
Zach
That was my conversation with Gary Kusin, entrepreneur and business mentor. You can find his new book, “Always Learning”, on paperback, ebook and audio ar Amazon.com.
And to listen to more podcasts, head to leadersedge.com or find our episodes on Soundcloud, Spotify and Apple Podcasts.
