History is rife with examples of failure to evolve, leading to irrelevance or, worse, extinction. Two notable ones that come to mind, thanks to two very interesting films I’ve seen recently, are Blockbuster and BlackBerry.
The Last Blockbuster is a quirky and nostalgia-laden documentary about how the video chain once ruled the rental market nationwide, only to dwindle to a single holdout, in Bend, OR, over the span of a decade. It’s an epic rewind, for sure. Meanwhile, BlackBerry uses the “based on a true story” format and is filmed much like a documentary. It tells the now familiar story of a tech unicorn’s fall from grace, complete with visionary nerds, greedy Gordan Gekko types, and off-the-hook blunders. Though the movie makes it seem like BlackBerry originated this now well-worn Silicon Valley storyline, the company was actually a Canadian startup. While Blockbuster and BlackBerry were quite different, their reasons for failure were strikingly similar.
At Blockbuster’s peak during the ’90s, the chain operated more than 9,000 locations, employed over 84,000 people, and boasted annual sales a tick under $6 billion. It was a home entertainment institution that saw millions of Americans make weekly pilgrimages to their local outlet to rent (and return) movies and video games, as well as purchase overpriced snacks. The stores served as de facto community centers that attracted all ilk. They were also first jobs for countless future doctors, lawyers, directors, and such. Above all, Blockbuster stores were a happy place offering a sea of entertainment options amid inviting bright blue/yellow decor and an intoxicating popcorn aroma. What could go wrong?
Enter Netflix in 2000. The by-mail rental company with a no-late-fees hook was getting off the ground. When the dot-com bubble burst, Netflix was in desperate need of a cash infusion. The company pitched Blockbuster on a sale that would allow it to handle the online business while Blockbuster managed the brick-and-mortar stores. The price tag: $50 million. Blockbuster’s board poo-pooed the pitch. In its now historic arrogance and misjudgment, the chain failed to see the market evolution (streaming) on the immediate horizon. Currently, Netflix has a market cap of around $240 billion and is the world’s 42nd most valuable company. Blockbuster filed for bankruptcy in 2010.
Meanwhile, BlackBerry, which debuted in 1999, invented the smartphone market. At its peak, it had 50 percent of the U.S. market share and 20 percent of the global market share. Its customer base, like Blockbuster’s, spanned all ages and demographics. It was a status symbol like a Rolex watch, not to mention an addictive device. Hence, its nickname: “CrackBerry.” In 2008, its value peaked at about $85 billion. Again, what could go wrong?
As the film entertainingly portrays, BlackBerry’s demise stemmed from its failure to evolve. In 2007, Apple delivered its first iPhone, a revolutionary touch screen alternative and all-in-one device (phone, camera, iPod, etc.) packaged in a sleek modern design. It has since become the ultimate accessory with releases of its latest versions on the level of Beatlemania. Apple’s current valuation: $3 trillion, ranking it as the world’s most valued company. BlackBerry is worth $1.7 billion. Like Blockbuster, BlackBerry’s board failed to take Apple’s innovation seriously. Its fall from grace has become a classic case study in corporate mismanagement.
These two movies really stuck with me. (For the record, I watch a lot of movies.) Starting any business is tough. I admire anyone with the dreams (some say delusions), skills, passion, and sheer determination to try to make it a reality. Without entrepreneurs, we are nowhere as a society. Even more, I admire those who continually find ways to adapt and evolve to keep their dreams-turned-startups relevant decades later. Staying in business, as many executives have told me over the years, is really hard. You can’t stand pat. You need eyes in the back of your head while always scanning the horizon. You must be wary of complacency, which can spread like cancer. And arrogance is like a fast-moving virus. It can be lethal. You must stay humble and open to new ideas. Blockbuster and BlackBerry’s boards did neither, and it proved to be their Achilles’ heel.
Having had a front row seat to this industry for decades, I’ve reported on a Blockbuster-store-like catalog of script-worthy tales. They are filled with stars, bit players, and some real characters. They are rich in drama, intrigue, inspiration, humor, innovation…all the ingredients you need for a great story. The two latest entries are this issue’s Q&A with Clarks Americas President Gary Champion (p. 12) and our retail profile of Garrett Breton, owner of Comfort One Shoes (p. 36). Both are exemplars of refusal to rest on their laurels. They are movers, shakers, and survivors. Both stories are replete with adversity and determination to overcome whatever obstacles arise to ensure that their companies succeed. They never stand still. Both are also genuine good guys who believe they would be nothing without the support of their prized teams. They are not arrogant.
It’s little wonder that Champion and Breton’s story arcs span decades and have many great scenes still to come. They are like feel-good movies. I hope you enjoy them, and all the others in this issue, as much as I did telling them.
