WEBVTT 00:00:00.000 --> 00:00:01.439 Okay, let's unpack this. I want to start with 00:00:01.439 --> 00:00:05.280 a sensory memory. If I say the name RadioShock, 00:00:05.280 --> 00:00:08.240 what is the immediate visceral thing that hits 00:00:08.240 --> 00:00:11.099 your brain? For me, it's a very specific smell. 00:00:11.220 --> 00:00:14.099 It's that mix of stale carpet, ozone, plastic 00:00:14.099 --> 00:00:17.940 packaging, and maybe, just maybe... A hint of 00:00:17.940 --> 00:00:20.320 burnt solder. It's the smell of potential, or 00:00:20.320 --> 00:00:22.620 at least it used to be. For a certain generation, 00:00:22.839 --> 00:00:25.199 that smell meant you were about to build something. 00:00:25.359 --> 00:00:27.320 Right. For another generation, it meant you were 00:00:27.320 --> 00:00:31.120 about to overpay for a remote control car battery 00:00:31.120 --> 00:00:33.140 on a Saturday morning because you didn't have 00:00:33.140 --> 00:00:35.840 any other choice. And for anyone following business 00:00:35.840 --> 00:00:39.060 news in the last, say, 10 years, that name just 00:00:39.060 --> 00:00:42.070 smells like... Well, a dumpster fire. A tragedy, 00:00:42.109 --> 00:00:44.170 really. I mean, it's a slow motion car crash 00:00:44.170 --> 00:00:46.530 that somehow turned into a zombie movie. Exactly. 00:00:46.929 --> 00:00:49.469 We're talking about Radio Shack today. And I 00:00:49.469 --> 00:00:51.530 have to say, I dove into the stack of research 00:00:51.530 --> 00:00:54.549 we have. The corporate histories, the SEC filings, 00:00:54.549 --> 00:00:56.729 the endless Reddit threads from former employees. 00:00:56.869 --> 00:00:59.929 And this story is so much wilder than just Amazon 00:00:59.929 --> 00:01:02.590 killed the video store. Way wilder. We're talking 00:01:02.590 --> 00:01:05.069 about a company that was once a cultural touchstone. 00:01:05.590 --> 00:01:07.569 I mean, this was the place where the personal 00:01:07.569 --> 00:01:09.530 computer revolution basically got its walking 00:01:09.530 --> 00:01:12.129 leg. Absolutely. It was a sanctuary for nerds 00:01:12.129 --> 00:01:14.090 before nerd was a badge of honor. You have to 00:01:14.090 --> 00:01:16.510 understand the scale here. Yeah. At its peak, 00:01:16.670 --> 00:01:20.090 Radiarshack operated over 8 ,000 stores in the 00:01:20.090 --> 00:01:23.150 U .S., Mexico, and Canada. They were within five 00:01:23.150 --> 00:01:26.489 miles of 95 % of the American population. Think 00:01:26.489 --> 00:01:29.530 about that density. That is Starbucks levels 00:01:29.530 --> 00:01:33.189 of saturation for capacitors and fuses. Exactly. 00:01:33.189 --> 00:01:37.019 And now. It's a ghost. But it's not just a ghost. 00:01:37.120 --> 00:01:39.939 It's a poltergeist. We have a story here that 00:01:39.939 --> 00:01:42.739 involves a pivot to cryptocurrency, rogue social 00:01:42.739 --> 00:01:46.680 media accounts, posting NSFW content, a CEO who 00:01:46.680 --> 00:01:48.819 lied about a theology degree. Oh, don't forget 00:01:48.819 --> 00:01:50.640 the bankruptcy proceeding that tried to sell 00:01:50.640 --> 00:01:53.540 customer data against the will of 38 state attorneys 00:01:53.540 --> 00:01:56.519 general. It's the ultimate case study in identity 00:01:56.519 --> 00:01:58.799 crisis. It really is. So the mission for this 00:01:58.799 --> 00:02:01.180 deep dive is pretty specific. We want to understand 00:02:01.180 --> 00:02:03.319 how a company that once sold more mobile phones 00:02:03.319 --> 00:02:06.000 than Walmart. Circuit City and Best Buy combined. 00:02:06.379 --> 00:02:09.639 Which is a crazy statistic. And was, at one point, 00:02:09.719 --> 00:02:11.780 the world's biggest manufacturer of personal 00:02:11.780 --> 00:02:15.599 computers. How did that company collapse into 00:02:15.599 --> 00:02:18.139 this cautionary tale? We need to figure out how 00:02:18.139 --> 00:02:20.240 you go from being America's technology store 00:02:20.240 --> 00:02:23.639 to being a punchline. And crucially, we need 00:02:23.639 --> 00:02:26.060 to look at the financials, the why behind the 00:02:26.060 --> 00:02:28.460 bad decisions. Because it wasn't just bad luck. 00:02:28.680 --> 00:02:32.680 It was structural. So let's rewind way, way back, 00:02:32.780 --> 00:02:34.840 because I think most people assume Radio Shack 00:02:34.840 --> 00:02:37.199 started in the 70s or 80s, but the roots go much, 00:02:37.240 --> 00:02:40.000 much deeper. We're going back to 1921, Boston, 00:02:40.139 --> 00:02:42.340 Massachusetts. The Roaring Twenties. And we have 00:02:42.340 --> 00:02:45.139 two brothers, Theodore and Milton Deutschman. 00:02:45.219 --> 00:02:47.180 Now, in 1921, they aren't selling cell phones, 00:02:47.280 --> 00:02:49.960 obviously. They are selling equipment for a brand 00:02:49.960 --> 00:02:53.860 new, almost mystical field, amateur radio. Ham 00:02:53.860 --> 00:02:55.919 radio. And we need to pause here to explain what 00:02:55.919 --> 00:02:58.919 ham radio actually meant in 1921. Right. Today, 00:02:59.020 --> 00:03:00.780 we think of it as maybe something your eccentric 00:03:00.780 --> 00:03:04.400 uncle does in the basement. But in 1921, ham 00:03:04.400 --> 00:03:06.969 radio was the Internet. It was the only way a 00:03:06.969 --> 00:03:08.969 regular person could communicate instantly with 00:03:08.969 --> 00:03:10.969 someone in another country without going through 00:03:10.969 --> 00:03:13.169 a government or a massive telegraph corporation. 00:03:13.550 --> 00:03:15.789 It was the frontier. Totally. It was the original 00:03:15.789 --> 00:03:18.189 maker community. You weren't just buying a radio. 00:03:18.289 --> 00:03:20.990 You were building a transmitter to talk to a 00:03:20.990 --> 00:03:23.610 guy in Australia. Right. And the Deutschman brothers 00:03:23.610 --> 00:03:27.129 saw this. They opened a one store retail and 00:03:27.129 --> 00:03:30.009 mail order operation. And the name they chose. 00:03:30.980 --> 00:03:33.919 Radio Shack. It wasn't just a random rustic vibe. 00:03:34.080 --> 00:03:36.860 It was specific jargon. Right. I looked this 00:03:36.860 --> 00:03:39.729 up. It's a nautical term. It is. On a ship, the 00:03:39.729 --> 00:03:42.729 radio shack was the small wooden structure on 00:03:42.729 --> 00:03:45.009 the upper deck that housed the wireless equipment. 00:03:45.349 --> 00:03:48.210 It had to be up high for the antenna. It was 00:03:48.210 --> 00:03:50.110 the nerve center of the ship's communication. 00:03:50.629 --> 00:03:53.330 So by calling the store Radio Shack, they were 00:03:53.330 --> 00:03:56.069 signaling to radio officers and hardcore hobbyists, 00:03:56.169 --> 00:03:58.229 this is where your gear is, this is your command 00:03:58.229 --> 00:04:00.629 center. That is fascinating. So it wasn't just 00:04:00.629 --> 00:04:02.909 a shack in the sense of a rundown hut. It was 00:04:02.909 --> 00:04:05.469 a technical term. But looking at the early history, 00:04:05.650 --> 00:04:08.530 it wasn't all smooth sailing. In those Boston 00:04:08.530 --> 00:04:11.669 days, the store had a bit of a, let's call it 00:04:11.669 --> 00:04:15.110 a reputation. It did, and not necessarily a glowing 00:04:15.110 --> 00:04:18.250 one. Among the locals and some of the more snobbish 00:04:18.250 --> 00:04:22.269 audiophiles, it was disparagingly nicknamed Nagasaki 00:04:22.269 --> 00:04:26.009 Hardware. Nagasaki hardware. That sounds loaded, 00:04:26.269 --> 00:04:28.410 especially given the time period. It was very 00:04:28.410 --> 00:04:30.810 loaded. You have to remember the era. Post -World 00:04:30.810 --> 00:04:33.910 War II, Japanese manufacturing was perceived 00:04:33.910 --> 00:04:36.230 very differently than it is today. Right. It 00:04:36.230 --> 00:04:38.029 wasn't Sony. No, it wasn't the high -quality 00:04:38.029 --> 00:04:41.089 Sony or Nintendo or Toyota standard we know now. 00:04:41.250 --> 00:04:45.029 It was seen as cheap, low -quality, mass -produced 00:04:45.029 --> 00:04:47.990 junk. And Radio Shack sourced a lot of their 00:04:47.990 --> 00:04:50.310 parts from Japan to keep costs down. So they 00:04:50.310 --> 00:04:52.209 were the budget option, the place you went for 00:04:52.209 --> 00:04:53.550 the cheap stuff when you couldn't afford the 00:04:53.550 --> 00:04:56.209 American or German parts. Exactly. But they were 00:04:56.209 --> 00:04:59.379 innovating, too. In 1954, they started their 00:04:59.379 --> 00:05:02.600 own private label called Realist to sell high 00:05:02.600 --> 00:05:04.839 -fidelity music equipment. Realist. They later 00:05:04.839 --> 00:05:07.259 changed it to Realistic after a lawsuit, but 00:05:07.259 --> 00:05:09.600 that brand Realistic would become Legendary. 00:05:09.740 --> 00:05:11.699 Oh yeah, I definitely had a Realistic cassette 00:05:11.699 --> 00:05:14.060 player growing up. It was a generic brand that 00:05:14.060 --> 00:05:16.519 everyone had. But despite the mail order success 00:05:16.519 --> 00:05:20.680 and expanding to nine stores, by the early 1960s, 00:05:20.680 --> 00:05:23.819 the Deutschmans were in trouble. They had overextended. 00:05:23.920 --> 00:05:26.180 They had ambitious plans, a fancy headquarters 00:05:26.180 --> 00:05:29.139 near Boston University. But the financials just 00:05:29.139 --> 00:05:30.680 weren't adding up. They were running out of money. 00:05:30.800 --> 00:05:33.220 They were basically bankrupt. They had about 00:05:33.220 --> 00:05:36.920 $14 million in today's money worth of debt. And 00:05:36.920 --> 00:05:39.459 that is where the story truly begins. That is 00:05:39.459 --> 00:05:41.620 where we meet the man who would turn this Nagasaki 00:05:41.620 --> 00:05:46.000 hardware into a retail empire. Enter Charles 00:05:46.000 --> 00:05:48.759 D. Tandy. Now, looking at his background, this 00:05:48.759 --> 00:05:51.259 doesn't make sense on paper. He wasn't an engineer. 00:05:51.439 --> 00:05:53.519 He wasn't a radio guy. He was a leather guy. 00:05:53.639 --> 00:05:55.920 Charles Tandy. He was a genius, frankly. He ran 00:05:55.920 --> 00:05:57.879 Tandy Leather. They sold leather craft kits, 00:05:58.019 --> 00:06:00.300 moccasins, belts, wallets that you would stitch 00:06:00.300 --> 00:06:02.279 together yourself. So he was in the hobby business. 00:06:02.810 --> 00:06:05.509 Precisely. And that is the key connection. He 00:06:05.509 --> 00:06:09.050 understood the psychology of the hobbyist. He 00:06:09.050 --> 00:06:11.449 knew that people like to build things with their 00:06:11.449 --> 00:06:14.370 hands. He was looking for other hobbyist businesses 00:06:14.370 --> 00:06:18.730 to expand into. He saw Radio Shack, saw the potential 00:06:18.730 --> 00:06:21.529 in consumer electronics, and bought the failing 00:06:21.529 --> 00:06:27.470 company in 1962 for $300 ,000. $300 ,000. That 00:06:27.470 --> 00:06:29.930 is pennies. It's the price of a small house today. 00:06:30.110 --> 00:06:34.290 It's an absolute steal. So... A leather guy buys 00:06:34.290 --> 00:06:36.949 a radio store. Did he try to sell leather cases 00:06:36.949 --> 00:06:39.569 for the radios? He did, actually. But the real 00:06:39.569 --> 00:06:42.149 revolution was his business strategy. He looked 00:06:42.149 --> 00:06:44.029 at the books and realized the mail order business 00:06:44.029 --> 00:06:46.389 was losing money due to the costs of credit. 00:06:46.490 --> 00:06:48.329 You know, people not paying their bills and shipping. 00:06:48.449 --> 00:06:51.170 Right. So he pivoted. He closed the mail order 00:06:51.170 --> 00:06:53.709 side and went all in on physical retail, but 00:06:53.709 --> 00:06:55.709 not just any retail. This is the famous holes 00:06:55.709 --> 00:06:58.439 in the wall strategy. Holes in the wall. The 00:06:58.439 --> 00:07:00.220 conventional wisdom at the time for electronics 00:07:00.220 --> 00:07:02.740 was to build big, impressive showrooms where 00:07:02.740 --> 00:07:05.579 you could display the giant console TVs and hi 00:07:05.579 --> 00:07:08.579 -fi systems. Tandy went the opposite direction. 00:07:08.740 --> 00:07:11.459 Going small. He wanted many, many small locations, 00:07:11.800 --> 00:07:14.300 rented storefronts and strip malls, old buildings, 00:07:14.500 --> 00:07:17.259 anywhere with foot traffic. So why go small? 00:07:17.339 --> 00:07:20.100 What was the advantage? Two reasons. Density 00:07:20.100 --> 00:07:23.040 and flexibility. By keeping the store small and 00:07:23.040 --> 00:07:25.579 the rent low, he could afford to saturate a neighborhood. 00:07:26.120 --> 00:07:28.519 If you have a store every three miles, you become 00:07:28.519 --> 00:07:31.949 the default option. And because they were rented 00:07:31.949 --> 00:07:34.350 shells with minimal build out, if a location 00:07:34.350 --> 00:07:36.329 didn't work, he could close it and move it down 00:07:36.329 --> 00:07:38.509 the street with almost no loss. It's the fail 00:07:38.509 --> 00:07:41.290 fast methodology before Silicon Valley invented 00:07:41.290 --> 00:07:45.029 the term. Exactly. But the real genius, and this 00:07:45.029 --> 00:07:47.910 is the business school case study part, was the 00:07:47.910 --> 00:07:50.670 inventory management and the vertical integration. 00:07:51.189 --> 00:07:53.509 Right. Vertical integration. This is a term we 00:07:53.509 --> 00:07:55.670 hear a lot, usually regarding companies like 00:07:55.670 --> 00:07:58.470 Apple or Tesla today. But Radio Shack was doing 00:07:58.470 --> 00:08:00.550 this in the 60s. Yeah. Yeah, way ahead of the 00:08:00.550 --> 00:08:03.550 curve. Tandy cut the inventory from 40 ,000 items 00:08:03.550 --> 00:08:07.269 down to 2 ,500. Wow. He applied the 80 -20 rule 00:08:07.269 --> 00:08:10.250 before it was trendy. He identified the 20 % 00:08:10.250 --> 00:08:13.209 of items that represented 80 % of the sales batteries, 00:08:13.389 --> 00:08:16.449 wires, tubes, simple radios, and got rid of the 00:08:16.449 --> 00:08:19.629 esoteric stuff. He focused on the hits. And crucially, 00:08:19.769 --> 00:08:23.009 he replaced name brand products with private 00:08:23.009 --> 00:08:25.850 label items. So instead of selling RCA cables, 00:08:26.089 --> 00:08:29.250 they sold... RadioShack cables. Even better, 00:08:29.389 --> 00:08:32.330 they sold realistic cables or Archer antennas 00:08:32.330 --> 00:08:35.169 or Mycona test equipment. These were all RadioShack 00:08:35.169 --> 00:08:38.590 brands. And here's the kicker. RadioShack didn't 00:08:38.590 --> 00:08:41.490 just brand them, they manufactured them. They 00:08:41.490 --> 00:08:43.850 owned the factories. Okay, let's break down the 00:08:43.850 --> 00:08:46.289 economics of that. Why does owning the factory 00:08:46.289 --> 00:08:48.649 matter so much for a store like this? It's all 00:08:48.649 --> 00:08:50.570 about the margin. I mean, all of it. Let's say 00:08:50.570 --> 00:08:53.049 you sell a Sony radio. Sony makes the radio, 00:08:53.169 --> 00:08:54.929 they take a profit. The distributor ships it, 00:08:54.970 --> 00:08:57.539 they take a profit. You sell it. You get a small 00:08:57.539 --> 00:09:00.759 slice at the end, maybe 15 or 20 percent. Right. 00:09:00.860 --> 00:09:03.179 But if you make the wire in your own factory 00:09:03.179 --> 00:09:05.679 for 10 cents and you sell it in your store for 00:09:05.679 --> 00:09:07.779 five dollars. You keep the whole four dollars 00:09:07.779 --> 00:09:10.620 and 90 cents. Exactly. The margins on those small 00:09:10.620 --> 00:09:13.320 parts, the cables, the connectors, the fuses 00:09:13.320 --> 00:09:16.600 were astronomical. A thousand percent markup 00:09:16.600 --> 00:09:18.799 sometimes. A thousand percent. That is why they 00:09:18.799 --> 00:09:21.600 could afford to have 8 ,000 stores. They weren't 00:09:21.600 --> 00:09:23.580 making money on the big ticket items. They were 00:09:23.580 --> 00:09:25.320 making money on the bits and pieces that you 00:09:25.320 --> 00:09:27.080 couldn't find anywhere else. So they're making 00:09:27.080 --> 00:09:29.000 their own stuff, selling it in their own tiny 00:09:29.000 --> 00:09:32.200 stores, and they're everywhere. But you still 00:09:32.200 --> 00:09:34.100 need to get people into the store. Of course. 00:09:34.200 --> 00:09:36.419 You can have the best margins in the world, but 00:09:36.419 --> 00:09:40.259 if nobody walks in, you die. And this brings 00:09:40.259 --> 00:09:43.639 us to one of the most brilliant... and frankly, 00:09:43.679 --> 00:09:46.659 nostalgic marketing schemes of the 20th century. 00:09:46.840 --> 00:09:49.820 The Battery of the Month Club. Yes. I remember 00:09:49.820 --> 00:09:52.000 this. My dad had this card in his wallet for 00:09:52.000 --> 00:09:54.799 years. It was like a sacred object. It ran from 00:09:54.799 --> 00:09:57.399 the 60s all the way to the 90s. It was the ultimate 00:09:57.399 --> 00:09:59.659 loss leader program. You got a wallet -sized 00:09:59.659 --> 00:10:02.200 card, which, by the way, doubled as a business 00:10:02.200 --> 00:10:04.320 card for the store with the address and phone 00:10:04.320 --> 00:10:08.679 number. And it entitled you to one free inter 00:10:08.679 --> 00:10:11.460 -cell battery every single month. Just one free 00:10:11.460 --> 00:10:14.480 battery. Not a pack. Just one. Just one. A 9 00:10:14.480 --> 00:10:17.779 -volt, an AA, a C -cell. But think about the 00:10:17.779 --> 00:10:20.019 psychology. First, you have this card in your 00:10:20.019 --> 00:10:22.139 wallet. It's a prominent billboard in your pocket. 00:10:22.460 --> 00:10:25.000 Second, nobody goes to the store just to get 00:10:25.000 --> 00:10:28.179 one AA battery and leaves. You go in, you grab 00:10:28.179 --> 00:10:29.620 your free battery, and then you look around. 00:10:29.720 --> 00:10:32.039 Oh, I need a cable for the TV, or I need a new 00:10:32.039 --> 00:10:34.679 fuse, or hey, look at that remote control car. 00:10:35.000 --> 00:10:37.679 It turned the store into a habit. A monthly ritual. 00:10:37.940 --> 00:10:40.700 It drove consistent foot traffic for decades. 00:10:41.039 --> 00:10:42.879 And because they made the batteries themselves, 00:10:43.259 --> 00:10:45.759 again, vertical integration, the cost of that 00:10:45.759 --> 00:10:48.220 free battery to them was pennies. So it was basically 00:10:48.220 --> 00:10:50.259 free marketing. It was the cheapest customer 00:10:50.259 --> 00:10:53.139 acquisition cost in history. Just brilliant. 00:10:53.500 --> 00:10:55.559 It's genius. And speaking of genius products, 00:10:55.659 --> 00:10:58.139 we have to talk about the flavor radio. This 00:10:58.139 --> 00:11:00.139 was in the notes, and I just love the whimsy 00:11:00.139 --> 00:11:02.860 of it. The realistic flavor radio. It had the 00:11:02.860 --> 00:11:05.960 longest production run in radio history. From 00:11:05.960 --> 00:11:10.440 1972 to 2000. Oh, wow. These were simple AM -only 00:11:10.440 --> 00:11:13.259 portable radios, but the hook was the colors. 00:11:13.320 --> 00:11:16.100 They came in flavors. Strawberry, avocado, plum, 00:11:16.299 --> 00:11:18.679 vanilla, chocolate. An avocado radio. That is 00:11:18.679 --> 00:11:21.059 the most 1970s sentence I have ever heard. It 00:11:21.059 --> 00:11:23.820 is perfectly 70s, but it shows that Tandy understood 00:11:23.820 --> 00:11:26.179 that electronics could be fun, personal, and 00:11:26.179 --> 00:11:28.480 cheap enough to be an impulse buy. It wasn't 00:11:28.480 --> 00:11:31.120 just serious gear for ham radio operators anymore. 00:11:31.200 --> 00:11:33.700 It was pop culture. But the real game changer 00:11:33.700 --> 00:11:36.279 wasn't avocado radios. We have to talk about 00:11:36.279 --> 00:11:40.220 1977, the personal computer revolution. This 00:11:40.220 --> 00:11:42.179 is where Radio Shack goes from hardware store 00:11:42.179 --> 00:11:46.320 to tech giant. The TRS -80. This is a monumental 00:11:46.320 --> 00:11:49.519 moment. 1977 is often called the 1977 trinity 00:11:49.519 --> 00:11:53.000 in computing history. You had the Apple II, the 00:11:53.000 --> 00:11:56.600 Commodore PT, and the TRS -80. And the TRS -80 00:11:56.600 --> 00:11:59.679 was the Radio Shack offering. Now, for our younger 00:11:59.679 --> 00:12:01.480 listeners or those who didn't live through this, 00:12:01.580 --> 00:12:04.000 describe this machine. What are we looking at? 00:12:04.120 --> 00:12:06.679 It was a gray, chunky keyboard that contained 00:12:06.679 --> 00:12:08.639 the computer itself, hooked up to a standard 00:12:08.639 --> 00:12:11.220 black and white TV monitor and a cassette tape 00:12:11.220 --> 00:12:13.960 recorder for storage. A cassette tape? A cassette 00:12:13.960 --> 00:12:16.759 tape. And it had four kilobytes of RAM. Four 00:12:16.759 --> 00:12:18.740 kilobytes. My email signature is bigger than 00:12:18.740 --> 00:12:21.100 four kilobytes. It is. But at the time, this 00:12:21.100 --> 00:12:23.379 was magic. And unlike the Altair, which was a 00:12:23.379 --> 00:12:25.080 kit you had to solder together yourself and hope 00:12:25.080 --> 00:12:27.779 it worked. Rod box of parts. The TRS -80 came 00:12:27.779 --> 00:12:29.940 fully assembled. You plugged it in, you typed 00:12:29.940 --> 00:12:33.279 a command, and it worked. It cost $600. Which 00:12:33.279 --> 00:12:35.580 was a lot of money then. About $3 ,000 today. 00:12:35.899 --> 00:12:38.200 But compared to a mainframe or a business computer. 00:12:38.519 --> 00:12:41.259 It was accessible. And RadioShack had a massive 00:12:41.259 --> 00:12:44.059 advantage over Apple and Commodore. They had 00:12:44.059 --> 00:12:47.899 3 ,000 stores ready to sell it on day one. Apple 00:12:47.899 --> 00:12:52.000 had... A garage and a few local dealers. So they 00:12:52.000 --> 00:12:54.870 dominated the market. They did. For a few years, 00:12:54.990 --> 00:12:57.470 the TRS -80 was the best -selling computer in 00:12:57.470 --> 00:13:00.549 the world. They created a whole ecosystem. They 00:13:00.549 --> 00:13:03.789 had comic books. No way. Tandy Computer Whiz 00:13:03.789 --> 00:13:06.009 Kids, where the Whiz Kids would team up with 00:13:06.009 --> 00:13:08.649 Superman or Archie to solve crimes using their 00:13:08.649 --> 00:13:11.889 TRS -80s. Superman and the Tandy Whiz Kids. That 00:13:11.889 --> 00:13:14.470 is amazing. Quick, Superman, I need to load this 00:13:14.470 --> 00:13:16.429 cassette tape to calculate the villain's trajectory. 00:13:16.669 --> 00:13:19.529 It will only take 45 minutes. It sounds funny 00:13:19.529 --> 00:13:21.649 now, but it normalized computers for a generation 00:13:21.649 --> 00:13:24.139 of kids. And we have to mention the Forrest Mims 00:13:24.139 --> 00:13:26.740 notebooks here, too. Oh, right. The engineers' 00:13:26.940 --> 00:13:29.100 mini notebooks. These were little books sold 00:13:29.100 --> 00:13:31.639 at Radio Shack, written by Forrest Mims. They 00:13:31.639 --> 00:13:33.759 were hand -drawn. The semantics looked like they 00:13:33.759 --> 00:13:35.840 were sketched on graph paper. I remember those. 00:13:36.039 --> 00:13:38.000 They taught you how to build circuits, how to 00:13:38.000 --> 00:13:40.419 use a 555 timer, how to build a light sensor. 00:13:40.740 --> 00:13:42.820 They were approachable. They didn't feel like 00:13:42.820 --> 00:13:44.940 textbooks. They felt like field guides. Yeah. 00:13:45.100 --> 00:13:48.860 This cemented Radio Shack as the school for the 00:13:48.860 --> 00:13:51.200 maker generation. But even with all that success, 00:13:51.399 --> 00:13:53.139 the craft— Facts were starting to show. I recall 00:13:53.139 --> 00:13:56.539 the nickname, the Trash 80. Yes, the Trash 80. 00:13:56.620 --> 00:13:58.759 It was affectionate for some, derogatory for 00:13:58.759 --> 00:14:02.230 others. The build quality was... OK. But the 00:14:02.230 --> 00:14:05.490 real problem was the proprietary nature. As the 00:14:05.490 --> 00:14:08.190 80s went on, the world moved toward the IBM PC 00:14:08.190 --> 00:14:11.169 standard. RadioShack eventually pivoted to making 00:14:11.169 --> 00:14:14.529 IBM clones, but the margins were shrinking. Competitors 00:14:14.529 --> 00:14:16.509 like Dell and Gateway were coming up, selling 00:14:16.509 --> 00:14:19.149 direct to consumers. This leads us into the 90s. 00:14:19.149 --> 00:14:21.370 The Golden Age is ending. The Tandy era is winding 00:14:21.370 --> 00:14:25.389 down. And RadioShack starts to undergo this. 00:14:25.959 --> 00:14:27.860 identity crisis. This is the pivotal moment. 00:14:28.019 --> 00:14:30.179 In the early 90s, they made a strategic decision 00:14:30.179 --> 00:14:32.220 that in hindsight was the beginning of the end. 00:14:32.279 --> 00:14:34.519 What was it? They decided to get out of the making 00:14:34.519 --> 00:14:37.179 business. They sold off their manufacturing divisions. 00:14:37.399 --> 00:14:39.440 They stopped making their own computers. They 00:14:39.440 --> 00:14:42.600 sold Memorex. They decided to stop being a vertically 00:14:42.600 --> 00:14:45.759 integrated manufacturer and focus solely on being 00:14:45.759 --> 00:14:48.419 a retailer. They gave up their superpower, the 00:14:48.419 --> 00:14:50.210 thing that gave them those. Thousand percent 00:14:50.210 --> 00:14:53.570 margins. Exactly. They voluntarily gave up their 00:14:53.570 --> 00:14:56.350 moat and they shifted their focus from hobbyist 00:14:56.350 --> 00:14:59.549 components, the weird wires and fuses you couldn't 00:14:59.549 --> 00:15:03.450 get anywhere else, to the new hotness. Wireless 00:15:03.450 --> 00:15:07.250 phones. Mobile phones. The boom of the late 90s 00:15:07.250 --> 00:15:09.909 and early 2000s. I mean, on paper, that sounds 00:15:09.909 --> 00:15:11.990 smart. Everyone is buying cell phones. Why not 00:15:11.990 --> 00:15:14.309 sell them? It seemed smart at the time. It made 00:15:14.309 --> 00:15:16.350 the stock price go up in the short term. But 00:15:16.350 --> 00:15:19.240 here is the danger. They went from selling exclusive 00:15:19.240 --> 00:15:22.120 private label goods to selling third -party plans, 00:15:22.500 --> 00:15:25.580 Verizon, Sprint, AT &T. Which you could buy anywhere. 00:15:25.799 --> 00:15:27.559 You could buy them at Best Buy, at a carrier 00:15:27.559 --> 00:15:30.659 store, eventually at Walmart, at Costco. RadioShack 00:15:30.659 --> 00:15:33.120 became a middleman. And when you are a middleman 00:15:33.120 --> 00:15:35.080 selling a commodity product, you have no pricing 00:15:35.080 --> 00:15:37.139 power. You are just competing on who has the 00:15:37.139 --> 00:15:40.320 better strip mall location. And they tried to 00:15:40.320 --> 00:15:44.039 fix this middleman problem with some really interesting 00:15:44.039 --> 00:15:46.559 experiments. We have to talk about Incredible 00:15:46.559 --> 00:15:50.259 Universe. Oh, Incredible Universe. 1992. This 00:15:50.259 --> 00:15:53.100 was Tandy's attempt to out -best buy Best Buy. 00:15:53.220 --> 00:15:56.820 They launched big box electronic stores. And 00:15:56.820 --> 00:15:59.740 when I say big, I mean gigantic. These were 160 00:15:59.740 --> 00:16:03.820 ,000 square foot warehouses. For context, a typical 00:16:03.820 --> 00:16:06.539 radio shack was like 2 ,500 square feet. Right. 00:16:06.960 --> 00:16:09.460 These places were massive. They had DJs, karaoke 00:16:09.460 --> 00:16:11.879 stages, restaurants inside the store. It was 00:16:11.879 --> 00:16:13.960 like a theme park for electronics. Come for the 00:16:13.960 --> 00:16:16.279 TV, stay for the laser show. Essentially. But 00:16:16.279 --> 00:16:19.080 the economics were a disaster. It was too big, 00:16:19.220 --> 00:16:21.460 too expensive to run, and the inventory costs 00:16:21.460 --> 00:16:23.960 were crushing. Most of the stores never turned 00:16:23.960 --> 00:16:26.139 a profit. They eventually sold the profitable 00:16:26.139 --> 00:16:28.919 ones to Fry's Electronics, another fallen giant, 00:16:29.139 --> 00:16:31.200 and closed the rest. Billion dollar mistake. 00:16:31.639 --> 00:16:34.120 So the big box idea failed. Then they had the 00:16:34.120 --> 00:16:36.899 Repair Shop Initiative in 1994, trying to repair 00:16:36.899 --> 00:16:39.039 out -of -warranty electronics. Which theoretically 00:16:39.039 --> 00:16:41.179 makes sense for RadioShack, right? We fix things. 00:16:41.879 --> 00:16:43.759 Executives thought it would generate $500 million 00:16:43.759 --> 00:16:46.860 a year. But think about the logistics. You are 00:16:46.860 --> 00:16:50.700 promising to fix any electronic device. A Sony 00:16:50.700 --> 00:16:54.460 Walkman, a Panasonic VCR, a Toshiba TV. Right. 00:16:54.559 --> 00:16:57.259 You need parts for thousands of different models. 00:16:57.480 --> 00:16:59.440 You need technicians who know how to fix everything. 00:16:59.620 --> 00:17:02.100 It just didn't scale. It was a logistical nightmare. 00:17:02.419 --> 00:17:05.930 And then... There is the cat. Yeah. We cannot 00:17:05.930 --> 00:17:07.890 do this deep dive without talking about the Q 00:17:07.890 --> 00:17:11.250 -Cat. The Q -Cat. The year 2000. This is peak 00:17:11.250 --> 00:17:15.690 .com bubble insanity. RadioShack invested $35 00:17:15.690 --> 00:17:18.549 million in this. It was a barcode reader shaped 00:17:18.549 --> 00:17:21.329 like a cat. A literal plastic cat. A plastic 00:17:21.329 --> 00:17:23.450 cat with a red LED nose. That was the scanner. 00:17:23.609 --> 00:17:25.630 The idea was you would be reading a magazine. 00:17:25.690 --> 00:17:28.289 You'd see an ad for, say, a Ford truck. You would 00:17:28.289 --> 00:17:30.089 take your plastic cat, which was wired to your 00:17:30.089 --> 00:17:32.710 computer, and scan a barcode on the ad. And then 00:17:32.710 --> 00:17:35.170 dashmagic .yourwebbrowser would open the Ford 00:17:35.170 --> 00:17:37.670 website. Instead of just typing in Ford .com. 00:17:38.379 --> 00:17:40.980 Exactly. It was a solution looking for a problem. 00:17:41.599 --> 00:17:43.740 But think about the user experience friction 00:17:43.740 --> 00:17:46.559 here. You are reading a magazine on your couch. 00:17:46.859 --> 00:17:49.420 Your computer is on a desk in the other room. 00:17:49.619 --> 00:17:51.619 You have to bring a magazine to the desk, wake 00:17:51.619 --> 00:17:54.619 up the computer, find the cat, scan the code. 00:17:54.779 --> 00:17:57.240 And the cat had a cord. It wasn't wireless. It 00:17:57.240 --> 00:17:59.500 wasn't wireless. It plugged into the PS2 keyboard 00:17:59.500 --> 00:18:01.920 port. It was clunky. It was creepy. And it was 00:18:01.920 --> 00:18:04.740 a massive privacy nightmare because it tracked 00:18:04.740 --> 00:18:06.740 what you were scanning. It became a punchline 00:18:06.740 --> 00:18:09.519 in the tech world. It showed a company that was 00:18:09.519 --> 00:18:13.240 desperate to be on the cutting edge but had completely 00:18:13.240 --> 00:18:16.220 lost touch with how humans actually use technology. 00:18:16.400 --> 00:18:19.539 And amidst all this... the branding started to 00:18:19.539 --> 00:18:21.880 get shaky they went from america's technology 00:18:21.880 --> 00:18:24.619 store to you've got questions we've got answers 00:18:24.619 --> 00:18:27.220 which is a good slogan actually you've got questions 00:18:27.220 --> 00:18:30.019 we've got answers it emphasized their knowledgeable 00:18:30.019 --> 00:18:33.099 staff but was it true well there's a disconnect 00:18:33.640 --> 00:18:36.180 As they cut training budgets to save money, and 00:18:36.180 --> 00:18:38.440 as they focused entirely on selling cell phone 00:18:38.440 --> 00:18:41.140 contracts, the staff became less knowledgeable 00:18:41.140 --> 00:18:43.579 about electronics and more aggressive about sales. 00:18:43.880 --> 00:18:46.039 So you had questions about a capacitor, but they 00:18:46.039 --> 00:18:47.440 didn't have answers. They had a question for 00:18:47.440 --> 00:18:50.160 you. What carrier are you with? And then the 00:18:50.160 --> 00:18:53.680 ultimate cringe moment, the 2009 rebrand. Yeah. 00:18:54.240 --> 00:18:57.519 The Shack. The Shack. Oh, man. They tried to 00:18:57.519 --> 00:18:59.880 rebrand as just The Shack. It was a desperate 00:18:59.880 --> 00:19:03.740 attempt to appear cool and youthful, but it alienated 00:19:03.740 --> 00:19:06.380 their core demographic, the tinkerers, the older 00:19:06.380 --> 00:19:09.019 hobbyists, without actually attracting the cool 00:19:09.019 --> 00:19:11.059 kids. Right. It's like your dad putting on a 00:19:11.059 --> 00:19:13.400 backwards baseball cap, sitting on a chair backwards 00:19:13.400 --> 00:19:15.640 and saying, let's rap about connectivity. It 00:19:15.640 --> 00:19:18.740 reeks of insecurity. So we have failed experiments, 00:19:19.019 --> 00:19:21.920 a confusing brand identity, and a shift to low 00:19:21.920 --> 00:19:24.740 margin cell phones. But underneath the surface, 00:19:24.960 --> 00:19:27.299 there was something even more toxic brewing. 00:19:27.599 --> 00:19:30.420 The corporate culture was rotting. This brings 00:19:30.420 --> 00:19:33.500 us to the mid -2000s. The management malpractice 00:19:33.500 --> 00:19:36.240 here is stunning. First, you have the resume 00:19:36.240 --> 00:19:38.680 scandal with CEO David Edmondson. Well, right. 00:19:38.970 --> 00:19:41.309 The guy who invented his own degree. In 2006, 00:19:41.529 --> 00:19:43.630 the Fort Worth Star -Telegram did some digging. 00:19:43.710 --> 00:19:45.609 They revealed that Edmondson lied about having 00:19:45.609 --> 00:19:47.869 degrees in theology and psychology. He didn't 00:19:47.869 --> 00:19:49.910 have them. It's never a good look when your CEO 00:19:49.910 --> 00:19:52.210 is lying about his credentials. Yeah. It suggests 00:19:52.210 --> 00:19:54.710 a certain looseness with the truth at the top. 00:19:54.769 --> 00:19:56.509 It does. He resigned. And then they brought in 00:19:56.509 --> 00:20:00.089 Julian C. Day as CEO. Now, Julian Day was a financial 00:20:00.089 --> 00:20:02.509 engineer. He had no frontline retail experience. 00:20:02.670 --> 00:20:06.430 He was a cost cutter. The consumerist later named 00:20:06.430 --> 00:20:09.750 him one of the 10 crappiest CEOs. That is a title 00:20:09.750 --> 00:20:12.630 you do not want on your tombstone. What did he 00:20:12.630 --> 00:20:15.549 do that was so bad? He treated employees like 00:20:15.549 --> 00:20:18.670 line items on a spreadsheet to be deleted. There 00:20:18.670 --> 00:20:22.730 was a program called Fix 1500. Fix 1500. It sounds 00:20:22.730 --> 00:20:25.269 like a repair program for radios. It was a purge. 00:20:25.680 --> 00:20:28.420 In 2004, setting the stage for this culture, 00:20:28.660 --> 00:20:31.819 they identified the bottom 1 ,500 store managers. 00:20:32.200 --> 00:20:34.500 But they didn't just grade them on sales data. 00:20:34.680 --> 00:20:37.019 They graded them on subjective interviews with 00:20:37.019 --> 00:20:40.240 district management. It created a survivor -style 00:20:40.240 --> 00:20:42.420 culture. If your boss didn't like you, you were 00:20:42.420 --> 00:20:45.680 out. 1 ,734 managers were reassigned or fired 00:20:45.680 --> 00:20:47.799 in six months. It created a culture of fear. 00:20:48.079 --> 00:20:50.460 I can imagine. But the low point, the absolute 00:20:50.460 --> 00:20:53.200 nadir of employee relations, happened in August 00:20:53.200 --> 00:20:57.160 2006. The email layoff. I remember reading about 00:20:57.160 --> 00:20:59.259 this. It sounds dystopian. Walk us through that 00:20:59.259 --> 00:21:01.940 morning. Imagine it's a Tuesday morning. You 00:21:01.940 --> 00:21:04.519 work at the headquarters in Fort Worth. You get 00:21:04.519 --> 00:21:07.460 an email notification. Subject line, workforce 00:21:07.460 --> 00:21:10.740 reduction notification. You open it. It basically 00:21:10.740 --> 00:21:13.720 says your position has been eliminated. You have 00:21:13.720 --> 00:21:15.839 30 minutes to pack your personal effects and 00:21:15.839 --> 00:21:18.619 leave the building. 30 minutes. That's an eviction, 00:21:18.619 --> 00:21:22.000 not a layoff. minutes. And get this, the company 00:21:22.000 --> 00:21:24.220 withheld their severance packages immediately 00:21:24.220 --> 00:21:26.480 to ensure they returned their company issued 00:21:26.480 --> 00:21:28.500 blackberries before they walked out the door. 00:21:28.660 --> 00:21:31.319 What? Give us the phone or you don't get paid. 00:21:31.519 --> 00:21:34.180 That is incredibly cruel. It's dehumanizing. 00:21:34.259 --> 00:21:37.099 It was. And the public backlash was immediate. 00:21:37.440 --> 00:21:40.079 It showed a company that viewed its people as 00:21:40.079 --> 00:21:44.180 liabilities, not assets. If you treat your HQ 00:21:44.180 --> 00:21:47.099 staff like that, imagine how the store employees 00:21:47.099 --> 00:21:50.009 felt. And while they were firing people by email 00:21:50.009 --> 00:21:52.750 to save pennies, what were they doing with their 00:21:52.750 --> 00:21:55.349 capital? Because companies usually fire people 00:21:55.349 --> 00:21:57.910 to save money to invest in something else. They 00:21:57.910 --> 00:21:59.990 weren't investing in anything productive. Were 00:21:59.990 --> 00:22:02.529 they investing in e -commerce? Were they building 00:22:02.529 --> 00:22:05.109 the next Arduino? No. They were doing financial 00:22:05.109 --> 00:22:08.009 engineering, specifically stock buybacks. Between 00:22:08.009 --> 00:22:12.009 2000 and 2011, RadioShack spent $2 .6 billion 00:22:12.009 --> 00:22:15.769 buying back its own stock. $2 .6 billion. Okay, 00:22:15.769 --> 00:22:17.569 explain this for the non -finance listeners. 00:22:17.980 --> 00:22:21.240 Why do companies buy their own stock? Theoretically, 00:22:21.279 --> 00:22:23.940 it's to return value to shareholders. If you 00:22:23.940 --> 00:22:26.400 reduce the number of shares available, the earnings 00:22:26.400 --> 00:22:28.599 per share goes up and the stock price usually 00:22:28.599 --> 00:22:31.460 rises. Okay. It makes the executives who are 00:22:31.460 --> 00:22:34.279 paid in stock options very rich in the short 00:22:34.279 --> 00:22:36.730 term. It doesn't actually make the company better. 00:22:36.809 --> 00:22:38.950 It doesn't build a new factory or design a new 00:22:38.950 --> 00:22:41.049 product. Correct. It's artificial inflation. 00:22:41.309 --> 00:22:44.930 That $2 .6 billion could have been used to pivot 00:22:44.930 --> 00:22:47.930 to online retail. They could have bought MakerBot. 00:22:48.109 --> 00:22:50.230 They could have built a competitor to Amazon 00:22:50.230 --> 00:22:52.630 for electronics components. They could have reinvented 00:22:52.630 --> 00:22:54.890 the maker movement. Instead, they lit that money 00:22:54.890 --> 00:22:57.430 on fire to prop up the stock price. And it worked 00:22:57.430 --> 00:23:00.529 for a while. The stock was over $20. But eventually, 00:23:00.750 --> 00:23:03.859 reality catches up. The stock fell to under $1. 00:23:04.140 --> 00:23:07.519 That capital just evaporated. That is infuriating. 00:23:07.700 --> 00:23:10.779 So they have no money, bad morale, and customers 00:23:10.779 --> 00:23:13.460 hate them. I saw the Temkin Group ratings regarding 00:23:13.460 --> 00:23:16.579 customer service. Yes. For six consecutive years, 00:23:16.859 --> 00:23:19.039 Radio Shack was ranked as the retailer with the 00:23:19.039 --> 00:23:22.140 worst overall customer experience. Six years 00:23:22.140 --> 00:23:24.799 in a row. Think about that. Worse than the DMV. 00:23:24.839 --> 00:23:27.079 Worse than cable companies. Why? What was so 00:23:27.079 --> 00:23:29.309 bad? Because of the pressure. Employees were 00:23:29.309 --> 00:23:31.589 under immense pressure to sell mobile contracts. 00:23:31.849 --> 00:23:34.690 If you walked in looking for a fuse or a capacitor, 00:23:34.890 --> 00:23:37.670 the core RadioShack customer, you were ignored 00:23:37.670 --> 00:23:39.730 because there was no commission on a 50 -cent 00:23:39.730 --> 00:23:42.089 fuse. But if you looked like you might buy a 00:23:42.089 --> 00:23:44.190 Sprint plan, they swarmed you like sharks. It 00:23:44.190 --> 00:23:46.609 became an unpleasant place to be. Which brings 00:23:46.609 --> 00:23:50.250 us to the slow -motion collapse, 2012 to 2015. 00:23:50.730 --> 00:23:53.630 This is the death spiral. By 2011, smartphones 00:23:53.630 --> 00:23:56.309 accounted for half of their revenue. But the 00:23:56.309 --> 00:23:59.420 margins were razor thin. They were losing money 00:23:59.420 --> 00:24:01.900 on every transaction once you factored in overhead. 00:24:02.339 --> 00:24:04.380 They needed to shrink. They had too many holes 00:24:04.380 --> 00:24:06.680 in the wall. They needed to close about 1 ,100 00:24:06.680 --> 00:24:09.039 stores to survive. So close them. That was the 00:24:09.039 --> 00:24:11.240 original strategy, right? Flexibility. But they 00:24:11.240 --> 00:24:13.599 couldn't. And this is a fascinating piece of 00:24:13.599 --> 00:24:16.900 financial tragedy. In 2013, they ran out of cash. 00:24:17.400 --> 00:24:21.759 They got a $250 million loan from a group called 00:24:21.759 --> 00:24:25.220 Salus Capital. But lenders aren't charities. 00:24:25.359 --> 00:24:28.339 This was a distressed loan. It came with onerous 00:24:28.339 --> 00:24:30.660 conditions. What kind of conditions? The loan 00:24:30.660 --> 00:24:33.960 was an asset -based loan. The collateral for 00:24:33.960 --> 00:24:36.880 the loan was the inventory in the stores. If 00:24:36.880 --> 00:24:39.619 RadioShack closed a store and liquidated the 00:24:39.619 --> 00:24:42.059 inventory, the value of the collateral would 00:24:42.059 --> 00:24:44.539 drop. Ah, I see where this is going. If the collateral 00:24:44.539 --> 00:24:48.059 drops, the bank calls the loan. So the bank specifically 00:24:48.059 --> 00:24:51.220 blocked them from closing stores? Yes. The contract 00:24:51.220 --> 00:24:53.079 said they couldn't close more than 200 stores 00:24:53.079 --> 00:24:55.720 a year, but they needed to close 1 ,100, so they 00:24:55.720 --> 00:24:57.640 were trapped. That's a death trap. They were 00:24:57.640 --> 00:25:00.119 forced to keep unprofitable stores open, paying 00:25:00.119 --> 00:25:02.599 rent and salaries, just to keep the inventory 00:25:02.599 --> 00:25:05.859 on the shelves to satisfy the bank. By late 2014, 00:25:06.200 --> 00:25:10.099 they were losing $1 .1 million per day. A million 00:25:10.099 --> 00:25:14.660 dollars a day. Just bleeding out. It was unsustainable. 00:25:14.680 --> 00:25:17.190 They tried everything. Thanksgiving 2014, they 00:25:17.190 --> 00:25:18.990 tried to stay open from 8 a .m. to midnight. 00:25:19.190 --> 00:25:21.509 On Thanksgiving? That's desperate. It caused 00:25:21.509 --> 00:25:24.410 a revolt. Employees quit. Customers were angry 00:25:24.410 --> 00:25:26.630 about the commercialization of the holiday. And 00:25:26.630 --> 00:25:28.470 the sales were actually lower than the previous 00:25:28.470 --> 00:25:31.430 year. It was the final gasp. And so in 2015, 00:25:31.789 --> 00:25:35.049 bankruptcy number one happens. They filed Chapter 00:25:35.049 --> 00:25:38.809 11, delisted from the NYSE. And this is an important 00:25:38.809 --> 00:25:41.509 distinction for our listeners. The Radio Shack 00:25:41.509 --> 00:25:43.589 that emerged from this bankruptcy was not the 00:25:43.589 --> 00:25:45.630 same company. Right. It was bought by a hedge 00:25:45.630 --> 00:25:48.170 fund called Standard General operating as General 00:25:48.170 --> 00:25:50.869 Wireless. The chief marketing officer at the 00:25:50.869 --> 00:25:53.269 time explicitly stated that the old Radio Shack 00:25:53.269 --> 00:25:55.670 was defunct. It was a zombie. A zombie wearing 00:25:55.670 --> 00:25:58.359 the skin of Radio Shack. They made a deal with 00:25:58.359 --> 00:26:01.000 Sprint to turn the stores into co -branded locations. 00:26:01.519 --> 00:26:03.920 The mock -ups showed Sprint branding dominating 00:26:03.920 --> 00:26:06.359 everything. It wasn't Radio Shack anymore. It 00:26:06.359 --> 00:26:08.019 was a Sprint store with a few batteries in the 00:26:08.019 --> 00:26:10.220 back corner. And even in bankruptcy, they managed 00:26:10.220 --> 00:26:12.720 to court controversy. The customer data sale. 00:26:13.039 --> 00:26:15.779 This one really riled people up. Right. When 00:26:15.779 --> 00:26:17.880 a company goes bankrupt, they sell their assets. 00:26:18.619 --> 00:26:23.039 Desks, chairs, inventory. But RadioShack tried 00:26:23.039 --> 00:26:25.859 to sell its customer list. The personal data 00:26:25.859 --> 00:26:30.259 of 67 million customers. Names, addresses, purchase 00:26:30.259 --> 00:26:32.759 history. After promising for years on little 00:26:32.759 --> 00:26:35.240 signs in the store, we will never sell your data. 00:26:35.380 --> 00:26:38.829 Exactly. It was a final betrayal of trust. 38 00:26:38.829 --> 00:26:40.950 state attorneys general had to step in and fight 00:26:40.950 --> 00:26:43.069 it in court. They eventually reached a settlement 00:26:43.069 --> 00:26:45.009 where most of the data was destroyed, but the 00:26:45.009 --> 00:26:47.250 attempt showed just how far they had fallen. 00:26:47.390 --> 00:26:50.529 So 2015 happens. They are technically still alive 00:26:50.529 --> 00:26:53.160 as general wireless. But the suffering wasn't 00:26:53.160 --> 00:26:55.839 over. No, not even close. The Sprint partnership 00:26:55.839 --> 00:26:58.700 was a disaster. Bankruptcy number two came just 00:26:58.700 --> 00:27:02.059 two years later in 2017. General Wireless filed 00:27:02.059 --> 00:27:05.480 for Chapter 11. They started closing stores aggressively 00:27:05.480 --> 00:27:08.720 this time. And this is where we get the rogue 00:27:08.720 --> 00:27:11.240 Facebook post. Oh, I saw this in the research. 00:27:11.440 --> 00:27:13.339 This was from a store in Reynoldsburg, Ohio. 00:27:13.720 --> 00:27:16.519 Yes. Imagine you are following your local radio 00:27:16.519 --> 00:27:19.640 shack on Facebook. One day, a post pops up. We 00:27:19.640 --> 00:27:24.119 closed. F you all. Wow. No asterisks. No asterisks. 00:27:24.119 --> 00:27:26.480 It went viral instantly. Corporate had to deny 00:27:26.480 --> 00:27:29.119 involvement, obviously. But it captured the mood 00:27:29.119 --> 00:27:31.279 of the employees perfectly. They felt abandoned. 00:27:31.480 --> 00:27:33.980 They felt used. And there was a lawsuit against 00:27:33.980 --> 00:27:36.460 Sprint, too, right? Yeah. It wasn't just incompetence. 00:27:36.480 --> 00:27:38.980 There was an accusation of sabotage. Yes. The 00:27:38.980 --> 00:27:41.880 creditors sued Sprint. They claimed that Sprint 00:27:41.880 --> 00:27:44.799 used the RadioShack co -branded stores as a Trojan 00:27:44.799 --> 00:27:47.759 horse. How so? They alleged that Sprint used 00:27:47.759 --> 00:27:50.200 the RadioShack sales data to figure out... exactly 00:27:50.200 --> 00:27:52.619 where the best customers lived, and then built 00:27:52.619 --> 00:27:55.400 new standalone Sprint stores right next door 00:27:55.400 --> 00:27:57.960 to the best performing Radio Shacks. Cannibalizing 00:27:57.960 --> 00:28:00.579 them. Destroying them. They claim this tactic 00:28:00.579 --> 00:28:04.259 killed 6 ,000 Radio Shack jobs. It was a messy, 00:28:04.380 --> 00:28:07.559 ugly end to the retail giant. So the carcass 00:28:07.559 --> 00:28:09.680 of Radio Shack is picked clean. The stores are 00:28:09.680 --> 00:28:13.200 empty. The sign is taken down. And then 2020 00:28:13.200 --> 00:28:17.940 happens. And things get weird. The RV era. Retail 00:28:17.940 --> 00:28:20.740 e -commerce ventures. These are investors who 00:28:20.740 --> 00:28:23.539 buy dead brands like Pier 1, Models, Linens, 00:28:23.539 --> 00:28:26.220 and things, and try to run them as online -only 00:28:26.220 --> 00:28:29.059 zombie brands. Right. They bought the RadioShack 00:28:29.059 --> 00:28:31.819 IP. And they decided the future of RadioShack, 00:28:31.839 --> 00:28:33.920 a company known for soldering irons and batteries, 00:28:34.180 --> 00:28:38.099 was? Aptocurrency? RadioShack Defy. In December 00:28:38.099 --> 00:28:41.079 2021, the website suddenly changed. It was no 00:28:41.079 --> 00:28:43.539 longer selling parts. It was announcing a cryptocurrency 00:28:43.539 --> 00:28:46.579 platform to swap tokens. They launched a token 00:28:46.579 --> 00:28:49.160 called Radio. I just, I can't connect with that. 00:28:49.259 --> 00:28:51.900 How do you go from the TRS -80 to a liquidity 00:28:51.900 --> 00:28:54.480 pool? You don't. That's the point. It was pure 00:28:54.480 --> 00:28:56.420 arbitrage. They were using a trusted, nostalgic 00:28:56.420 --> 00:28:59.180 brand name to give legitimacy to a crypto project. 00:28:59.420 --> 00:29:01.180 The theory was that because RadioShack was an 00:29:01.180 --> 00:29:03.460 old brand, it would make crypto feel safe for 00:29:03.460 --> 00:29:06.480 older generations. Wow. Oh, Grandma Knows RadioShack. 00:29:06.509 --> 00:29:08.630 Maybe she will buy this token. That is incredibly 00:29:08.630 --> 00:29:12.109 cynical. It is. And to generate hype, they adopted 00:29:12.109 --> 00:29:15.710 a very strange Twitter strategy. In June 2022, 00:29:16.230 --> 00:29:19.109 the brand's verified Twitter account began posting 00:29:19.109 --> 00:29:22.970 NSFW content. Not safe for work. Edgy, vulgar 00:29:22.970 --> 00:29:27.140 jokes. Drugs, sex, insults. To attract. Who? 00:29:27.460 --> 00:29:30.920 Crypto bros. Presumably. The edgelord marketing 00:29:30.920 --> 00:29:34.140 strategy. Yeah. But it backfired spectacularly 00:29:34.140 --> 00:29:36.160 with their few remaining real world partners. 00:29:36.519 --> 00:29:39.339 Hobby Town USA, a chain of hobby stores that 00:29:39.339 --> 00:29:41.619 had a partnership to sell Radio Shack parts in 00:29:41.619 --> 00:29:44.519 their aisles, terminated the relationship immediately. 00:29:45.019 --> 00:29:46.779 Yeah, I can see why. They were like, we are a 00:29:46.779 --> 00:29:49.680 family hobby store. We sell model trains. We 00:29:49.680 --> 00:29:52.000 can't be associated with a Twitter account posting 00:29:52.000 --> 00:29:55.140 about. bodily fluid. So they alienated the last 00:29:55.140 --> 00:29:57.099 remaining connection to their hobbyist roots 00:29:57.099 --> 00:29:59.599 to chase a crypto trend that was already crashing. 00:29:59.799 --> 00:30:02.460 It was the final identity crisis. A 100 -year 00:30:02.460 --> 00:30:05.180 -old brand reduced to a shill for a digital token. 00:30:05.400 --> 00:30:07.759 And here's the twist. The story doesn't end in 00:30:07.759 --> 00:30:09.740 the crypto gutter. Right. Because while the U 00:30:09.740 --> 00:30:11.720 .S. version was setting itself on fire on Twitter, 00:30:11.900 --> 00:30:13.200 something else was happening internationally. 00:30:13.779 --> 00:30:15.779 We have to remember that RadioShack was a global 00:30:15.779 --> 00:30:19.079 brand. Yes. And in Latin America, it never died. 00:30:19.319 --> 00:30:21.480 In fact, it never even really struggled. Wait, 00:30:21.519 --> 00:30:23.700 really? While the U .S. stores were closing, 00:30:23.880 --> 00:30:26.339 the ones in Mexico were fine. Perfectly fine. 00:30:26.720 --> 00:30:29.539 A group called Unicomer, based in El Salvador, 00:30:29.859 --> 00:30:31.920 had bought the rights for Latin America and the 00:30:31.920 --> 00:30:34.440 Caribbean years ago. And another group, Grupo 00:30:34.440 --> 00:30:37.660 Gigante, owned the business in Mexico. They operated 00:30:37.660 --> 00:30:40.480 independently. And were they pivoting to crypto 00:30:40.480 --> 00:30:43.039 and firing people via email? No, they were just 00:30:43.039 --> 00:30:45.259 running electronic stores. They sold phones, 00:30:45.420 --> 00:30:48.539 yes, but they also sold TVs, stereos, parts. 00:30:48.740 --> 00:30:50.839 They were profitable. They were opening new stores. 00:30:51.000 --> 00:30:53.980 While the U .S. chain was imploding, RadioShack 00:30:53.980 --> 00:30:56.880 in El Salvador was a premier retailer. That is 00:30:56.880 --> 00:30:58.819 incredible. So the DNA of the company survived 00:30:58.819 --> 00:31:01.720 by leaving the country. And in May 2023, the 00:31:01.720 --> 00:31:04.559 ultimate irony occurred. Unicommer Group, the 00:31:04.559 --> 00:31:06.599 franchise, acquired control of the worldwide 00:31:06.599 --> 00:31:09.759 RadioShack business, including the U .S. intellectual 00:31:09.759 --> 00:31:12.359 property. So the franchise bought the franchisor. 00:31:12.359 --> 00:31:15.000 The child saved the parent. Essentially, Unicommer 00:31:15.000 --> 00:31:17.079 now owns the brand. They stripped away the crypto 00:31:17.079 --> 00:31:19.359 nonsense immediately, and they have signaled 00:31:19.359 --> 00:31:21.880 a potential return to traditional retail roots. 00:31:22.119 --> 00:31:24.940 That is a glimmer of hope. So let's bring this 00:31:24.940 --> 00:31:27.500 all together. We've gone from ham radio to the 00:31:27.500 --> 00:31:30.680 golden age of the TRS -80 to the cell phone kiosk 00:31:30.680 --> 00:31:33.299 era to the bankrupt size zombie years and now 00:31:33.299 --> 00:31:36.259 back to international ownership. When you look 00:31:36.259 --> 00:31:39.039 at this entire arc, what is the big business 00:31:39.039 --> 00:31:42.339 lesson? If we look at the big picture, the fatal 00:31:42.339 --> 00:31:45.700 flaw was abandoning the maker community. RadioShack 00:31:45.700 --> 00:31:47.640 was built on the backs of people who wanted to 00:31:47.640 --> 00:31:50.599 build, fix, and understand technology. The people 00:31:50.599 --> 00:31:53.339 who knew what a capacitor was. The people who 00:31:53.339 --> 00:31:56.460 bought the Forrest Mims notebooks. Exactly. When 00:31:56.460 --> 00:31:59.240 RadioShack chased the generic mobile phone market, 00:31:59.420 --> 00:32:02.259 they became just another middleman. They stopped 00:32:02.259 --> 00:32:04.480 offering value. They stopped being a destination. 00:32:04.920 --> 00:32:07.500 In a world of Amazon, you can't survive by selling 00:32:07.500 --> 00:32:09.519 the same thing as everyone else at a higher price. 00:32:09.700 --> 00:32:11.119 You have to offer something else. You have to 00:32:11.119 --> 00:32:14.000 offer expertise and exclusivity. It's tragic 00:32:14.000 --> 00:32:16.000 because if you look at the last 10 years, the 00:32:16.000 --> 00:32:19.079 maker movement has been huge. 3D printing, Arduino, 00:32:19.519 --> 00:32:22.180 Raspberry Pi, drone building. That is the great 00:32:22.180 --> 00:32:25.019 what if. Imagine if Radio Shack hadn't spent 00:32:25.019 --> 00:32:28.700 20 years trying to be a Verizon kiosk. Imagine 00:32:28.700 --> 00:32:31.019 if they had become the hub for the maker movement, 00:32:31.299 --> 00:32:33.880 a place where you could go to learn 3D printing, 00:32:34.079 --> 00:32:36.960 buy Arduino kits, get your broken iPhone screen 00:32:36.960 --> 00:32:39.519 fixed by an expert who actually teaches you how 00:32:39.519 --> 00:32:42.460 to do it. The right to repair movement is massive 00:32:42.460 --> 00:32:45.039 right now. People are tired of disposable tech. 00:32:45.579 --> 00:32:47.200 RadioShack could have been the headquarters for 00:32:47.200 --> 00:32:49.880 that revolution. They had the real estate. They 00:32:49.880 --> 00:32:52.039 had the brand heritage. They just didn't have 00:32:52.039 --> 00:32:54.500 the vision. They chased the quick buck of the 00:32:54.500 --> 00:32:56.920 cell phone contract, the financial engineering. 00:32:57.259 --> 00:33:00.160 play and lost their soul in the process. It really 00:33:00.160 --> 00:33:01.859 makes you think about the importance of knowing 00:33:01.859 --> 00:33:04.160 who your customer actually is. And respecting 00:33:04.160 --> 00:33:07.519 them. You can't hate your customer or your employees 00:33:07.519 --> 00:33:10.859 and expect to survive for 100 years. So next 00:33:10.859 --> 00:33:12.480 time I need a battery, I'm going to think about 00:33:12.480 --> 00:33:15.519 that wallet size card, the smell of ozone, and 00:33:15.519 --> 00:33:17.660 what could have been. And maybe, just maybe, 00:33:17.779 --> 00:33:19.839 with the new ownership, we might see a soldering 00:33:19.839 --> 00:33:22.420 iron on the shelf again one day. We can dream. 00:33:23.899 --> 00:33:25.960 That's it for this deep dive into the rise and 00:33:25.960 --> 00:33:28.339 fall of RadioShack. Thanks for listening and 00:33:28.339 --> 00:33:29.579 stay curious. Goodbye.