MINNEAPOLIS – Robert Stephens recalls with precision the night he signed the deal that would put his sassy startup, Geek Squad, under the massive corporate umbrella of Best Buy.
Parked in an alley outside the lawyers’ office in downtown Minneapolis, Stephens and his mentor, Platinum Group founder Dean Bachelor, toasted the future with a $400 bottle of champagne. It was October 2002, and Stephens, then 33, was plotting the new heights to which he could take Geek Squad, the computer repair company he had started in college.
“I felt like a fighter pilot stuck in a crop duster,” Stephens said. “I couldn’t wait to get to Best Buy and learn how to take off in a Boeing 777.”
Since then, Geek Squad has grown from 60 employees and nearly $3 million in sales to the world’s largest tech-support operation with annual revenue of $1 billion to $1.5 billion, analysts say.
About 24,000 “agents” worldwide come to work each day dressed in white button-down shirts, black pants and clip-on ties. They still make house calls in iconic black-and-white “Geekmobiles,” and are set up in all of Best Buy’s 1,143 U.S. stores.
Geek Squad remains Best Buy Co. Inc.’s killer app – something that sets it apart from other national chains, even more so with the demise of Circuit City. And the Geeks might be more important than ever to the company’s future.
As Wal-Mart, Sam’s Club, Target and Costco sell more computers and flat-screen televisions, they too are getting into the customer service game. None uses staff to troubleshoot and do installations, however.
“Geek Squad’s going to become a bigger and bigger component of their core strategy,” said Mitch Kaiser, an analyst with Piper Jaffray in Minneapolis. “Beyond driving sales, it increases customer satisfaction. Best Buy becomes the trusted adviser and the IT staff for the individual.”
Crucial to the success of the quirky Geek Squad brand has been the remarkable harmony between Stephens, its free-wheeling creator, and the multibillion-dollar Fortune 500 company that brought him in.
Corporate America is littered with chronicles of successful entrepreneurs who leave their posts within a year to 18 months of getting acquired. Some don’t mesh with the culture or can’t stomach changes the parent company wants to make. Others get sidelined in budget meetings when they’d rather be inventing something.
Stephens, who launched Geek Squad with $200 and a bicycle, studied the failed transitions and vowed not to become another one of them.
“I was no longer the owner, and that was quite humbling,” he said. “I decided I wouldn’t be this know-it-all founder who is a tyrant of the brand. My goal was to influence without authority. Learn and study. I’m just going to sit in the cockpit for a while.”
Stephens’ lime-green office on the eighth floor of corporate headquarters in Richfield, Minn., screams intellect and creativity. He dropped out of art school and a computer science program before starting Geek Squad, and both sides of his brain seem perpetually engaged.
He mentions Albert Einstein and Andy Warhol in stream-of- consciousness predictions of a future where people wear computers like contact lenses and technology will make “humans pickier than ever before.”
On shelves are magazine covers from Newsweek and Rolling Stone, which gave some ink to the fledging company. Books on technology and philosophy sit near photos of his children.
Stephens, who starts his day at 5 a.m. and wraps up around 9 p.m., knows he intimidates some at Best Buy. In meetings he tries to temper his rapid-fire offerings of ideas and solutions. His ability to understand technology – especially how it relates to people and to business – has made him something of an oracle. But he’s determined to foster an environment in Best Buy where good ideas can bubble up.
‘The visionary guy’
Case in point: the day Rich Kurhajetz handed him an Android mobile phone. Kurhajetz works in the Best Buy Mobile division. He’s jazzed about Android handsets, which use Google’s license-free operating system and can be offered by multiple cell phone companies, unlike the iPhone. He’d never met Stephens but wanted to get his take.
“In the organization, he’s seen as the visionary guy. Larger than life,” said Kurhajetz. “On the other hand, it was easier than I thought to get in to see him.”
As Stephens glided his index finger across the face of the phone, his face showed a mix of delight and wonder. Stephens drives a splashy sports car and is one of Best Buy’s best-dressed execs. But show him some new technology and the inner geek surfaces.
“This is Best Buy at the forefront,” he says to Kurhajetz, who came to Stephens’ office with a hidden agenda as well: Friends of his have developed a Web platform used by sports teams and others that lets fans who aren’t there get up-to-the-minute scores, photos and even video on their laptops – and soon, their phones.
Kurhajetz sees an opportunity for Geek Squad to expand the application to high schools – perhaps by helping them get laptops, video cameras and tech support so busy parents and fans don’t ever have to miss out.
Stephens loved the mobile app idea and set up a second meeting to talk in more detail.
“My job is to find pirates within the organization, like Rich, and see if I can give them room to set sail,” Stephens said.
Squad ‘in its infancy’
Stephens once described Geek Squad as “a living comic book,” inspired by “Star Wars,” Atari video games and cop shows such as “Adam 12” and “Dragnet.” He put Geek Squad agents in that same light, as if to say: “Step away from the computer, ma’am. Geek Squad is here to help.”
Stephens stole the idea of wearing uniforms and using vehicles as marketing from UPS. The flat-rate pricing for Geek Squad services he lifted from Rapid Oil Change.
Soon Geek Squad was fixing computers for 3M, General Mills, Hollywood producers and rock stars. Since its nationwide expansion in 2004, Geek Squad has contributed an ever-larger share of Best Buy’s sales. Best Buy doesn’t break out individual results. But services and warranties, of which Geek Squad contributes about half, Kaiser estimates, hovered around 5 percent of total revenue between 2006 and 2008. It increased to 7 percent in the most recent fiscal year. That’s a bit more than appliances. By comparison, about 70 percent of sales come from consumer electronics, computers and home theater.
What’s not measured is how many people buy their increasingly complicated electronics at Best Buy because Geek Squad is there when needed.
That’s how it went for John Weil and his wife, Kim Troedsson. They recently bought a laptop, desktop computer and printer at Best Buy and hired the Geek Squad to set up the wireless network so all the components could talk to each other.
“We couldn’t do this ourselves. Are you kidding?” Troedsson said recently as agent Dustin Williams clicked through the setup process in their Minneapolis home, talking the couple through every step.
Stephens believes 2010 kicks off a new era where boundaries in technology will continue to come down.
“You’re going to have a high-speed, color, megapixel, GPS, geolocated, real-time, social search engine in your pocket that talks. And then it’s going to predict what you want. Then it’s going to say, ‘What are you going to do with all of this power?’ ”
That, he said, is where the Geek Squad comes in. “Our work’s not complete yet. With mobile phones alone, and TVs becoming like computers, Geek Squad is in its infancy.”