[NOTE: This is the second of three blog posts. To view the webinar interview of March 2, 2022, upon which this series of blog posts is based, please CLICK HERE.]

Scott Beck sensed an opportunity to help churches utilize big data to be more effective. This required a clear strategy and the determination to hunker down for the long haul. An idea will soon die without the ability to execute. Scott had spent a business lifetime learning how to take ideas to scale. Where did it start?

In August 1985 Scott walked into the first Blockbuster Video store, which was in Dallas, TX. It was week one, day 4. He became Member #91. Blockbuster immediately grabbed his attention. He thought, “it looks like McDonalds and IBM got together to build a video store.” It “solved a lot of problems” for consumers and was extremely well-organized and well-run.

As it turns out, there were already 13,000 video stores throughout the US—but they were largely small mom and pop operations. There was something different about Blockbuster, however. David Cook, the founder, built Blockbuster around a system. Even when there was only one store, Cook had a full distribution centre ready – the whole store was put together in the centre (carpet, shelves, desks, etc.).

Scott highlighted that Blockbuster had differentiated itself in the industry with good execution. First, they put videos inside boxes so that even after the movie was rented there was not an empty spot on the shelf. Second, they used bar codes on the videos, which speeded up the service. Third, they had very large and well-lit stores with a good selection. Lastly, they had a three-day rental policy – it gave people the ability to rent more movies.

Scott and his dad bought 10% of Blockbuster. Scott became the first franchisee in 1985 and started opening more locations. By the time Blockbuster was sold to Viacom in 1994, it was at 7,000 stores. Amazingly, they were opening a store every 16 hours for many years.

But not every good idea can scale well and quickly. Why did Blockbuster? Scott explained that besides a good core idea, you need to attract good people—which it did. They knew they wanted to franchise from the outset and planned accordingly. You also need to be able to attract capital – it was a public company (Cook Data Services) right from the outset.

After rapid growth since 1985, David Cook wanted to get out. Wayne Huizinga, who had succeeded in rapidly growing a waste management business, bought out Cooke in 1987. Huizinga grew Blockbuster even more. Eventually, Wayne wanted to exit. Scott likewise wanted to transition into other businesses opportunities. Viacom, under the leadership of Sumner Redstone, purchased Blockbuster in 1994.

Scott highlighted a key point that would impact the future of Blockbuster and its eventual demise: “When Blockbuster got sold to Viacom it ceased to have its own strategy. It became a tactic in Viacom’s strategy. Viacom’s strategy was to aggregate content. So, they used Blockbuster’s cash flow to buy Paramount and then ultimately CBS.”

Blockbuster is most recently kept in the public mind as having missed the opportunity to buy Netflix in its formative years. As Scott explains, “That’s not a fun story [the negative aspect of missing an opportunity]. Instead, the fun story is that Blockbuster could have purchased Netflix for $50 million in 2002. If Blockbuster would have just followed the strategy that we laid out in 1993 there wouldn’t have been a Netflix.”

Another one of Scott’s entrepreneurial ventures was “Boston Chicken” which was later renamed “Boston Market.” It was a pioneer in the “home meal replacement” sector. The concept was created by two fellows in Newton, MA. The opportunity then came to one of Scott’s partners, and the two of them, along with a franchise expert, bought a controlling interest when it had 12 stores. They grew it to 1,600 stores in early 1990s and went public in 1994.

Scott admits that “we did some strategic things that were wrong.” In particular, “we grew too fast for our capital structure and leveraged our balance sheet too much.” Ultimately the business was sold to McDonalds; 60% of the locations were turned into McDonalds. It was a case where the McDonalds’ strategy became the Boston Market strategy—similar to what happened when Blockbuster was purchased by Viacom.

One other venture was “Einstein Bros Bagels,” founded in 1995, which came out of the expertise and experience of Scott and his partners in the food business. Bagels were just starting as a national trend in the US. Scott and his partners bought five bagel companies, which were each chains of 5-8 stores. They pulled them together. “One big debate at the outset: do we want steamed or boiled bagels? We picked steamed, since it was easier to execute and better for making sandwiches.” They opened about 600 stores in 3 years.

A consistent theme in Scott’s entrepreneurial journey is about getting businesses to scale. When businesses can grow rapidly, they benefit from efficiencies with respect to branding, training, and customer research and marketing, to name a few. With the context of this marketplace experience and track record of success, Scott wondered whether those skills could be directed towards tapping into big data and tech for the benefit of the church community. That led to Gloo, as described in the next blog post.