Okay, I want you to close your eyes for a second.
We're going back to a Saturday afternoon. Let's
say it's, I don't know, 1998, maybe 1999. You've
just parked your car in a massive sprawling asphalt
lot in some suburb, maybe outside Dallas or Atlanta
or Chicago. You walk through a set of sliding
glass doors and you are hit with this. this very
specific wall of air. Oh, I know that air perfectly.
It's conditioned to be freezing cold, regardless
of the weather outside. It's almost a statement.
It's freezing, yes. And it has a smell. Can you
smell it? It's like ozone, static. Ozone, static
electricity, and fresh shrink wrap. It's the
smell of new plastic off -gassing from thousands
of products at once. Yes, that shrink wrap smell.
That's it, exactly. So you look to your left,
and there is a pallet. I mean, a literal wooden
shipping pallet stacked six feet high with boxes
of copy paper. Always the paper. And to your
right, there's a wall of beige towers, computer
towers, and monitors that weigh, I don't know,
50 pounds each. And the sound, it's this low
-frequency hum of 100 cooling fans all spinning
at once. You are painting a very, very vivid
picture of a very specific era in American retail.
This is the absolute peak of the category killer
era. The big box store. And for a certain generation
of nerds and geeks and, you know, early adopters,
this wasn't just a store. It was, look, I don't
want to overstate it, but it was almost a pilgrimage
site. I don't think you are overstating it. You
didn't just go there to buy a cable. You went
there to see what the future looked like. It
was a cathedral of commerce for the burgeoning
digital age. And the temple you were describing
is almost certainly. CompUSA. The king. The absolute
heavyweight champion of the world. But here's
the thing that triggered this whole deep dive
for me. I was feeling nostalgic the other day.
And I typed CompUSA .com into my browser just
to see what was there. Okay. I expected maybe
a redirect to a holding company or an investment
firm or maybe a fan run memorial page. Something.
What did you find? Nothing. A 404 error. Page
not found. A digital ghost town. Didn't even
redirect me to a history of page. It just didn't
exist anymore. It's gone. Wow. That is such a
stark contrast to where they were. At their peak,
we are talking about a genuine empire, over 229
locations, billions with a B in revenue. They
were the gateway to the Internet for millions
of Americans. So that's the mystery we're trying
to solve today. How do you go from being the
absolute center of the tech universe, the place
where America literally learned how to use a
computer, to an error message? Well, it's a classic
corporate tragedy. I mean, it has everything.
Hubris, some really questionable management,
the Internet revolution, and some truly, truly
bizarre business pivots. It sounds like it's
a story about what happens when a company forgets
what it is. That's a perfect way to put it. And
we have a massive stack of sources today. We're
looking at corporate timelines, financial reports
from the 90s, liquidation documents, and even
some old marketing archives we dug up. So what
are the main threads we need to pull on? I think
there are three. First, the whole category killer
concept itself, what it was, why it worked so
well, and then why it just stopped working. Second,
the danger of what I'd call stagnant corporate
oversight. Specifically, what happens when the
people running the ships stop looking at the
horizon and just look at the spreadsheets? And
the third? The third is what I call zombie retail.
It's the messy, complex afterlife of a corporate
brand. Just because a company dies doesn't mean
it stays dead. Not really. Zombie retail. I love
that. Okay. But before we get to the zombies,
we have to start with the birth of the beast.
We have to go back to 1984. 1984, the year the
Macintosh launched. Yes. The year of the famous
Super Bowl ad. Exactly. The PC revolution is
just kicking into gear. And in Addison, Texas,
which is a suburb of Dallas, two guys named Errol
Jacobson and Mike Henichovich decide to open
a store. Now, they didn't call it CompUSA initially.
No. They give it a name that I think just perfectly
encapsulates the era. It's so blunt. They called
it Soft Warehouse. Soft Warehouse. It doesn't
exactly roll off the tongue, does it? It sounds
like a place where you'd buy pillows or, I don't
know, mattresses. Right. It does sound a bit
plush. But you have to understand the psychology
of the computer market in 1984. There's a reason
they chose that specific name. I'm assuming warehouse
just implies cheap, right? Precisely. Computers
in the early 80s were terrifyingly expensive.
I mean, truly. If you went to a boot computer
dealer, like a Computerland or something, you
were paying thousands and thousands of dollars.
And you felt like you were paying for the experience.
The carpet, the salesman's fancy suit, all the
overhead. It was an intimidating, high -friction
purchase. Totally. So by calling it a warehouse,
they were sending a signal, a very clear one.
They were saying, no frills here, rock -bottom
prices. We stack them deep and sell them cheap.
It was a complete rejection of that IBM man in
the Chris Blee suit. This was for the people,
for the hobbyists. Exactly. And the soft part.
Short for software, which is a really crucial
distinction. Right. Because in 1984, hardware
was the main event. But Jacobson and Hanachovitch,
they realized that once you bought the box, you
needed the programs to run on it. And software
had incredibly high margins. They focused on
volume. So it's a very industrial, very utilitarian
vibe from the get -go. And that vibe just seemed
to work. In 1986, just two years later, they
opened their first superstore on Marsh Lane and
Beltline Road in Addison. And when we say superstore
in 1986, what are we really talking about? What's
the scale? We're talking about a massive footprint.
Most computer stores at the time were these tiny
little storefronts in strip malls. You know,
maybe a thousand square feet. This was different.
They were taking the model of a grocery store
or a big lumber yard. And applying it to floppy
disks and dot matrix printers. And it caught
on in a big way. By 1988, they're going national.
They open a mega store in Atlanta, Georgia. The
expansion is, it's aggressive. It is the beginning
of the explosion. But the real shift, the moment
they decided to stop being a local warehouse
and start being a national brand, that happens
in 1991. That's the rebrand. They finally drop
soft warehouse. Probably a wise move in the long
run. And they become CompUSA. And at the same
time. They go public on the New York Stock Exchange.
This is a massive pivot. The name change alone
is so significant, isn't it? CompUSA sounds definitive.
It sounds patriotic almost. It does. It signals
that they want to be the American computer retailer.
It's ambitious. They're consciously shedding
that local industrial skin and putting on a proper
corporate suit. And the man wearing that suit,
metaphorically speaking, was the CEO at the time,
Nathan P. Morton. Right. The Morton era is really
considered the golden age by almost any metric.
Under his leadership, revenues just skyrocketed.
They hit over $2 billion. That's billion with
a B. For the early 90s. in this very specialized
retail sector, that is just astronomical growth.
It's hard to overstate how dominant they were
becoming. It wasn't just about the money, though.
It was about how they talked to people. I was
looking through the notes on their marketing
from this era, and do you remember the character
PC Modem? Oh, absolutely. The radio campaigns,
yes. 1990, they hire actor Jack Riley to play
this character, PC Modem, and it ran for years.
Why do that? Why use a character? Well, it's
a classic marketing strategy for what you'd call
a high anxiety product. You have these complex,
intimidating machines, personal computers. People
are genuinely scared they're going to break them
or they don't understand the jargon. You know,
what is a bit? What is a byte? What's RAM? So
what do you do? You humanize it. You create a
character to make the technology feel... Approachable,
maybe even a little funny. It lowers the barrier
to entry. It's kind of like the Mac versus PC
ads that came much, much later. But for the retail
experience itself, it's saying it's OK if you
don't know what you're doing. We're here to help
you. Exactly. And it worked. They were democratizing
the technology, making it feel like it was for
everyone, not just for engineers. So Morton resigns
in 1993, but the train is already moving at an
incredible speed. We get to the mid -90s. The
Internet is starting to bubble up into the mainstream
consciousness. And this brings us to a really
interesting contradiction in the source material
about their online presence. Ah, yes. This is
a classic, classic example of the innovator's
dilemma. OK, let's unpack that, because when
I look at the timeline, it says CompUSA launched
retail sales on CompUSA .com way back in 1996.
1996? I mean, that is incredibly early. Amazon
was barely selling books at that point. Most
major retailers didn't even have a static web
page, let alone a fully functional e -commerce
site where you could put in a credit card number.
So on paper, they were pioneers. They were ahead
of the curve. Technically, yes, they were present.
But here's the key. Being present and being effective
are two very, very different things. And the
sources later cite a failure to transition to
online sales as one of the primary reasons for
their collapse. Okay, so how is that possible
if they were there in 96? If they were one of
the first, shouldn't they have won that race?
Not necessarily. You have to think about their
core business model. They had these massive,
expensive physical stores, those 229 locations
we mentioned. They were paying enormous amounts
in rent, electricity, and salaries for thousands
and thousands of employees. So if you're the
CEO and you push too hard online, If you make
your website too good and too cheap, you cannibalize
your own stores. You undercut your own store
managers, who are probably a powerful force within
the company. Exactly. Every single dollar spent
on the website was a dollar not spent in the
physical store. And the store managers, the regional
managers, they would have absolutely viewed the
website as a direct competitor. So they put up
a website, but they didn't really want it to
succeed too much. I think that's right. While
they had the website, the corporate focus, the
bonuses, the entire culture was likely still
90 % focused on getting bodies into the physical
big box. They treated the web as a side project,
curiosity, rather than the future of their entire
industry. They saw it as a supplement, not a
replacement. Like, hey, check the prices here,
then come on in and buy it from us. Right. Whereas
a company like Amazon... They didn't have any
stores to protect. They could burn the boats.
CompUSA was desperately trying to protect the
castle from the very revolution they were helping
to arm. So while they were sort of struggling
to figure out the web, they were making some
massive moves in the physical world. I want to
fast forward to 1997 because looking at the timeline,
this feels like a moment where CompUSA actually
made a truly brilliant move, even if it didn't
save them in the end. You're talking about the
Apple deal. The Apple deal. But we need to set
the stage. The Apple of 1997 is not the Apple
of 2024. Oh, goodness, no. Not even close. 1997,
Apple was on death's door. Their stock was in
the toilet. They were losing money hand over
fist. Michael Dell had famously said that if
he were running Apple, he'd shut it down and
give the money back to the shareholders. So if
you're a retailer at that time, stocking Macintoshes
is a huge risk. They weren't selling. They were
just collecting dust on the shelves. And most
retailers were kicking them out. Circuit City,
Best Buy. They were shrinking their Apple sections
down to nothing or hiding them in a back corner.
They wanted that precious shelf space for the
Windows 95 machines, which were absolutely flying
out the door. So into this chaos enters CompUSA.
Well, Steve Jobs had just come back to Apple.
He's trying to save the company. And he realizes
he has a fundamental problem. He could build
the greatest computer in the world. And the iMac
was just around the corner. But if the 19 -year
-old kid at the electronics store doesn't know
how to sell it, or worse, is actively incentivized
to push a Compaq or a Gateway instead, Apple
was dead. So he needed a sanctuary for his products.
He needed a controlled environment. And he went
to CompUSA and he proposed this radical idea,
the store within a store. What did that actually
look like on the ground? It was amazing for the
time. In the middle of this chaotic, noisy, beige
warehouse we described earlier, they literally
carved out a dedicated zone for Apple. It had
different flooring, usually black carpet. It
had different, more focused lighting. It was
cleaner. It was quieter. It was like walking
from one country into another right there in
the middle of the store. And this is the crucial
part. CompUSA let Apple train the staff in that
section. This was the absolute precursor to the
Genius Bar. You had a CompUSA employee wearing
a CompUSA shirt, but they had been to what they
called Apple Camp. They knew the product inside
and out. They could actually explain why a Mac
was better for graphic design or video editing.
That seems incredibly forward thinking for a
store that was basically built on the Stack 'em
High warehouse model. By January 1998, they had
built 57 of these things. If you were a Mac user
in the late 90s, CompUSA wasn't just a store.
It was the only place you could reliably go to
see and touch the new hardware. It was a critical
lifeline for Apple during its darkest days. OK,
so this is the part I don't get. If they were
bedfellows with the company that would become
the most valuable company on Earth, how did they
lose? How did that not save them? Well. You know,
being the landlord to a genius doesn't make you
a genius yourself. It just means you collect
the rent for a while. Yeah. Eventually, Apple
realized, hey, this dedicated retail concept
works so well. Why don't we just build our own
stores and keep all the profit? So CompUSA was
basically the training wheels for the Apple store.
That's the perfect analogy. And once Apple learned
how to ride the bike, they didn't need the warehouse
anymore. But at the time, it really showed that
CompUSA was willing to experiment and try new
things. And speaking of trying things, they didn't
just partner with Apple. They started buying
up their competitors. In 1998, they acquired
Tandy's Computer City. Which is a pretty interesting
detail because Nathan Morton, the former CompUSA
CEO, actually helped facilitate that deal from
the other side. It was a consolidation move.
The market was getting crowded. You had Best
Buy, Circuit City, Fry's Electronics, Micro Center.
Right. CompUSA's strategy was pretty simple.
Just eat the smaller fish, get bigger. They also
tried to diversify into services. They started
CompUSA Call Center Services in 1998. Right.
The idea was to provide help desks and technical
support for other companies like cellular providers
or OEMs. It was a really smart idea on paper.
You've got all this technical expertise in -house.
Why not sell it as a B2B service? Exactly. And
that division actually did okay. It was eventually
spun off as a separate company called the Telvista
Company in 2001. But it shows they were thinking
at least a little bit about being more than just
a box mover. So we're at the end of the 90s.
CompUSA is the undisputed king. They've eaten
Computer City. They're hosting Apple's comeback.
They have a growing call center business. Life
looks pretty good. But then the year 2000 hits
and the entire structure of the company changes
fundamentally. This is a really pivotal moment
in the story. The company goes private. They
get thawed out. They get bought out by Grupo
Sanborns, which is a massive Mexican retail company.
They purchased 85 % of CompUSA. Now, for those
who don't follow international finance, Grupo
Sanborns is associated with an even bigger entity,
Grupo Carso, which is controlled by Carlos Slim.
One of the wealthiest men in the world. Correct.
So in one move, CompUSA goes from being a public
U .S. company, answerable to shareholders on
Wall Street, to being a subsidiary of a massive
international conglomerate. How does that kind
of change affect a company's day to day? Does
it make them safer because they have deeper pockets
backing them? You might think so. And in some
ways it does. But it can really change the agility
of a company. When you're a small division within
a foreign conglomerate, the chain of command
gets a lot longer. Decisions that used to be
made in Dallas might now have to go through Mexico
City. And those decisions might be made by people
who aren't walking the floors of a store in Ohio
or California. It can lead to a real disconnect
between the ownership and the reality on the
ground. And we start to see some of that potential
disconnect with the next big acquisition. Let's
move into what I'd call the era of the identity
crisis. We're in 2003. CompUSA buys a company
called Good Guys. This is a classic textbook
case study in strategic adjacency gone horribly,
horribly wrong. Strategic adjacency. That sounds
like MBA speak for we thought these two things
went together, but they really didn't. Laughs.
That's pretty much exactly what it is. Good Guys
was a high end consumer electronics retailer.
Mostly. west coast based you're talking about
you know five thousand dollar speakers mahogany
finish amplifiers home theater setups that cost
as much as a new car Okay. And CompUSA, at its
core, sells hard drives, printer ink, and discount
laptops stacked on pallets. Exactly. So the theory,
the strategy was, hey, Best Buy is doing this
with their Magnolia brand. They're putting these
fancy home theater sections in their stores.
We need to do that, too, to compete. It's a me
-too strategy. They're copying their competitor.
Yes. But just think about the culture clash for
a second. Who is the typical CompUSA shopper
in 2003? It's a guy looking for a new graphics
card. He wants specs. He wants to know the clock
speed, the amount of VRAM. He's reading the back
of the box. He's probably wearing a T -shirt
with some kind of nerdy reference on it. Correct.
He's a utilitarian buyer. He's on a mission.
Now, who is the good guy shopper? That's someone
who wants to sit in a plush leather chair in
a soundproofed room, close their eyes, and listen
to a jazz record on a high fidelity system. They
want an experience. It's a luxury purchase. Exactly.
It is an emotional sale versus a technical specs
-based sale. The two mindsets could not be more
different. And CompUSA tried to jam these two
worlds together. Oh, it was worse than that.
They closed all 46 of the standalone Good Guys
locations, destroying that brand's entire identity
and moved all that high -end inventory inside
the CompUSA warehouses. They even rebranded the
stores CompUSA with Good Guys inside. That is
a mouthful of a name. It doesn't exactly flow.
It's just clunky branding. But physically, it
was a disaster. Imagine you have these $10 ,000
speakers sitting right next to a literal pallet
of discount DVDs in a bargain bin, and you have
the staff who are trained to explain the difference
between DDR2 and DDR3 RAM suddenly being asked
to sell the concepts of audio warmth and soundstage.
So the customers didn't cross -pollinate, I'm
guessing? Not at all. The computer guys didn't
care about the expensive speakers, and the audiophiles
certainly did not want to buy their luxury audio
gear in a place that smelled like shrink wrap
and ozone. It just diluted the CompUSA brand
and alienated the old Good Guys customers. It
confused everyone. So the cracks are really starting
to show. The Good Guys integration is rocky at
best. And then we get to 2005 and 2006, and we
start to see signs of real internal distress.
Let's talk about the loyalty program. Ah, yes,
the CompUSA network. Launched in 2005, the deal
was 13 points for every dollar spent. That sounds
pretty generous, actually. That is a very, very
aggressive reward rate. Yeah. It suggests they
were pretty desperate to get people to sign up
and swipe their cards. But then in 2006, just
a year later, they completely suspend sales of
the membership cards. The official reason from
the source material says they needed to investigate
program awareness among low visit customers and
the effect on retention. Which is just the most
beautiful piece of corporate speak for. We are
losing a ton of money on this and we have no
idea if it's actually working. And then they
just they ended it. They killed the whole program.
Tated completely. Yeah. Customers got some coupons
or refunds for their membership fee. But think
about what that signals to the market to your
customers. A loyalty program is supposed to be
the anchor of your retail strategy. It's the
thing that keeps people coming back. Right. If
you launch a big flashy loyalty program and then
you abruptly cancel it a year later. It suggests
total internal chaos. It suggests you don't have
a long -term plan. You are just throwing spaghetti
at the wall and seeing what sticks. And while
this loyalty program is collapsing, the leadership
at the top is just churning. This is a critical
detail. In 2006, the CEO, a guy named Tony Weiss,
leaves after only four months on the job. Four
months. That's barely enough time to find the
bathroom, let alone formulate and execute a corporate
strategy. Exactly. And who do they bring in to
replace him? A man named Roman Ross. OK. And
here is where the story gets really, really interesting.
Roman Ross was a former executive at Philip Morris.
The tobacco company. The tobacco company. Yeah.
Now, look, I want to be fair. Management skills
can be transferable. If you can run a global
supply chain for cigarettes, you understand logistics.
But there is a very valid critique to be made
here about. Corporate oversight being completely
out of touch with the market realities. You're
bringing in a tobacco executive to run a computer
hardware retailer in the middle of the most disruptive
digital revolution in human history. It really
highlights the commoditization mindset of the
ownership. If you sell cigarettes, the product
is the product. It doesn't change much year to
year. It's about marketing and distribution.
But technology changes every six months. You
need to understand the community. You need to
understand why someone is passionate about buying
a specific GPU. And under Ross, in November 2006,
what's the big strategic push? They push this
big home entertainment rollout. They put HDTVs
and home theater equipment in 40 stores. Again,
just look at the timing. November 2006, the iPod
is completely dominant. The iPhone is just a
few months away from being announced. It launched
in early 2007. The entire world is moving toward
mobile computing, toward digital services, toward
lightweight laptops. And CompUSA's big pivot
is to... Big, heavy televisions. Which is exactly
what Best Buy and Walmart and Costco and their
other big rival, Circuit City, were already doing.
Exactly. They were late to enter an already saturated
market where they had absolutely no competitive
advantage. They were fighting a war on a front
where they were already outnumbered and outgunned.
And meanwhile, their core identity computers
and components was rapidly shifting online to
places like Newegg and Amazon. It was a pivot
to the past, not a pivot to the future. It really
was. And the market responded, or rather, it
just stopped responding. And we finally reached
2007 and the dam just breaks. The collapse. The
soft warehouse finally runs out of runway. It
starts in February 2007. The company announces
they're closing 126 stores. That was more than
half of their remaining locations at the time.
A brutal cut. And look at who they hired to help
them do this. They didn't hire a growth consultant.
They didn't hire a famous turnaround specialist.
They retained Gordon Brothers. Who are Gordon
Brothers? They are asset recovery specialists.
Liquidators. When you call Gordon Brothers, you
are not trying to save the business. You are
trying to sell the furniture, the fixtures, the
inventory, everything for pennies on the dollar.
They are the vultures you call when the animal
is already down on the side of the road. That
is such a grim realization for the thousands
of employees. The moment that name gets mentioned,
you know it's over. The criteria for closing
the stores were just... brutal and clinical.
Performance, profitability, and most importantly,
proximity to competitors. They specifically listed
Best Buy, Fry's, Micro Center, and Circuit City.
Basically, if a CompuSA was near a competitor
that was doing it better, they shut it down.
And the sales, I remember these vividly, the
giant yellow and red going out of business signs.
People would just flock to the stores thinking
they were getting the deal of a lifetime. But
were they really? I have a suspicion you're going
to tell me, no, not really. Well, the source
material notes that the initial discounts were
somewhere in the range of 5 % to 30 % off. But
here's the trick that liquidators often use.
The first thing they do is go through the store.
and remove all the existing sale tax. They reset
everything to the full MSRP, the manufacturer's
suggested retail price. Which, in the real world
of electronics retail, nobody ever actually pays.
Right. So they jack the price up to the absolute
maximum theoretical price, and then they take
10 % or 20 % off. For the first few weeks of
a liquidation sale, you are often paying more
than you would have paid on a normal Tuesday
a month earlier. That is just devious. It's capitalizing
on the panic. that everything must go. Signage,
it triggers a scarcity instinct in people. You
saw people buying obviously broken open box cables
and outdated software just because of that big
yellow banner out front. And by the very end?
By May of 2007, it was 90, 95 % off. By then,
you were literally buying the shelving units.
You're buying the employee lockers from the break
room. It's just the carcass of the business being
picked clean. So by May 2007, that first big
wave of closures is done. But the corporate body
is still twitching a little bit. In December
of 2007, the company itself is sold. It's sold
to a company called Specialty Equity, which is
an affiliate of Gordon Brothers. Wait, hold on.
So the liquidators bought the company they were
hired to liquidate? Essentially, yes. The company
was bought by the very people who were hired
to take it apart. It's the final, final stage
of corporate hospice. They kept about 103 stores
open for a little while longer, mostly to sell
through the remaining inventory. But the writing
was on the wall in giant... Flaming letters.
So that's it. That's the death of the original
CompUSA. The soft warehouse that was founded
back in 1984 is officially gone. But the name,
the brand itself, that didn't die. And this is
where we enter the zombie phase. Because brands
have value, even damaged ones. People recognize
the name CompUSA. So in January 2008, another
company, Systemax, steps in. Systemax. They were
the parent company of Tiger Direct, right? Correct.
And Tiger Direct was a huge catalog and online
retailer for computer parts and electronics.
They were very aggressive, very nerd -centric.
They bought the CompUSA brand, the trademarks,
and 16 of the remaining retail locations, mostly
in Florida, Texas, and Puerto Rico. So the strategy
was to use the CompUSA skin to fuel Tiger Direct's
move into a physical retail presence. Exactly.
It's cheaper than building a brand from scratch.
They slapped the CompUSA name on their existing
Tiger Direct stores. They tried to wear the skin
of the fallen giant to give themselves instant
recognition. And to their credit, they tried
to innovate, too. In October 2008, they launched
something they called Retail 2 .0. Oh, the irony
of this is just painful. Retail 2 .0 was a strategy
to deeply integrate Internet shopping into the
physical stores. You could walk in, use these
computer terminals to see the full online inventory.
You could scan a product on the shelf and see
online reviews right there. That sounds exactly
like what CompUSA should have done in 1999 or
2000. It was the perfect idea, executed nearly
a decade too late. If the original CompUSA had
done this when they were the undisputed market
leader, they might have become Amazon before
Amazon did. But doing it in 2008. under a zombie
brand in the middle of a global financial crisis,
it was completely doomed from the start. And
the zombie eventually ran out of steam, too.
In November 2012, System X announced they were
dropping the names. They dropped both Compiose
and Circuit City because, yeah, they had bought
the Circuit City brand, too. They were like a
collector of fallen retail giants. They decided
to consolidate everything under their core brand,
Tiger Direct. Customers got an email on November
7, 2012, and just like that, the CompUSA name
was stripped from the last few storefronts. But
even that wasn't the final, final end. No, because
intellectual property is like a hot potato. It
just keeps getting passed around from one holding
company to another. In December 2013, the IP
was sold to a realty group, of all things, called
Jassily 645 Realty. Then, in 2018, it was leased
to a company called Deal Central. And I remember
this vaguely. There's a press release and some
minor news stories in 2018 about a grand relaunch
of CompUSA .com. There was. A splash page went
up. There was a press release full of buzzwords,
a promise that the king would return to reclaim
his throne. And what is the reality today as
we're talking? The reality is an error page.
As of right now, the domain redirects to absolutely
nothing. It is the digital equivalent of an empty,
weed -choked lot where a grand castle used to
stand. The soft warehouse is finally, definitively,
and completely closed for business. What a wild
ride. From a single warehouse in Addison, Texas,
to a multi -billion dollar empire, to a zombie
brand, to a 404 error. It really is an incredible
story. So let's try to wrap this up. What are
the big takeaways here? If you're looking at
this as a business case study, what did we learn
from the fall of CompUSA? I think the first and
most important lesson is about the life cycle
of the category killer. That model building a
massive store with absolutely everything in it.
It worked beautifully in the 80s and 90s for
one simple reason. Information was scarce. What
do you mean by information being scarce? I mean
that in 1992, if you wanted to know which printer
was the best one to buy, you had to go to the
store and ask the guy in the red shirt. Or...
Maybe if you were dedicated, you'd read a print
magazine. But for the most part, the retailer
held all the knowledge. Right. They were the
gatekeepers of the information. But the internet
completely destroyed that monopoly on information.
Suddenly, I could go online and read a hundred
reviews on CNET. I could go to a forum and ask
other users. I didn't need the guy in the red
shirt to explain the specs to me anymore. In
fact, pretty soon, I often knew more than he
did. The value add, their main reason for existing,
it just... Evaporated. It evaporated almost overnight.
And the second big takeaway is about adaptability.
CompUSA was crushed by competitors like Best
Buy, who adapted faster to the home entertainment
trend, and obviously by the very technology they
sold the Internet. But I don't think its failure
was inevitable. You don't think so? A lot of
people say that big brick -and -mortar computer
stores were just doomed no matter what they did.
No, I don't think so. And the proof is Micro
Center? Oh, that's a fantastic point. Micro Center's
still around. I was just in one last week. Micro
Center is not just around. In many ways, it's
thriving. And why? Because they are arguably
more nerdy than Concur USA ever was, even in
its heyday. They leaned into the hobbyist market,
the PC builder market. They have that massive
build -your -own -PC section in the back of the
store. They have 3D printers and Raspberry Pi
kits. Correct. They didn't try to become a TV
store or an appliance store. They doubled down
on their core niche. Comp USA, with the good
guys acquisition and the home entertainment push,
they try to be everything to everyone. And in
doing so, they lost their core identity. Micro
Center kept theirs, and that's why they survived.
And we can't forget the leadership aspect in
all this. The tobacco executive factor. It really
highlights the critical importance of having
leadership that understands and is passionate
about the product, not just the spreadsheet.
When you start treating computers like they're
cigarettes or bars of soap, you miss all the
nuances of the community. Tech consumers are
smart. They know when they're being pandered
to. The good guys pivot and that abrupt cancellation
of the loyalty program. It just showed a management
team that was completely flailing and out of
touch. It's a difference between a founder led
vision and a conglomerate managed portfolio asset.
It's a different mindset. So here's the provocative
thought I want to leave everyone with today.
We look back at CompUSA with this mixture of
nostalgia and maybe a little bit of pity. But
we are living in a time right now where retail
is shifting again just as dramatically as it
did in the late 90s. Absolutely. We are seeing
the exact same patterns play out. We see other
big retail giants struggling. We see the rise
of AI and shopping and... instant delivery services.
So looking at the current landscape, the Best
Buys, the Game Stops, even the Tarnets of the
world, who is the next CompUSA? That is the multi
-billion dollar question, isn't it? Who right
now is pivoting to home entertainment when they
should be looking at whatever Retail 3 .0 is
going to be? Who is about to cancel their loyalty
program because they don't really know if it's
working? It's a very scary question if you're
a shareholder in one of those companies. History
doesn't repeat itself, but it certainly rhymes.
And somewhere... Right now, there is a new software
house starting up. Maybe it's a website. Maybe
it's an app. Maybe it's just a guy in a garage
selling specialized AI servers. And they are
going to eat everyone's lunch in the next 10
years. And we will be here to do a deep dive
on them when they do. Absolutely. Thank you for
listening to this deep dive into the rise, fall,
and strange afterlife of CompUSA. If you have
any fond memories of buying a 50 -pound CRT monitor,
or if you still have your old CompUSA rewards
card in a junk drawer somewhere, take a moment
to appreciate just how fast the world moves.
And remember, adaptability is survival. We'll
see you on the next dive.