Dave Lukas Chats with Alan Payne
252: Built to Fail, The Rise and Fall of Blockbuster and How Alan Payne Outlasted It All
This week’s Misfit Entrepreneur Alan Payne. When I say Blockbuster Video, what comes to mind? If you are younger, you may be saying “What’s Blockbuster video?” If you were around through the spectacular rise and fall of Blockbuster, you are probably thinking something along the lines of colossal failure. At one point, Blockbuster was the pinnacle of entertainment where everyone went on a weekend evening to rent a movie.
And most think that the downfall happened because of Netflix and streaming and the company not adapting to the new world of content. While those things had an impact, the real reasons started much earlier and Alan Payne was there. In fact, Alan was one of the most successful franchisees and his stores outlasted Blockbuster’s bankruptcy by over a decade. They did so, because Alan realized the company was Built to Fail and decided to run things differently drawing on his storied history of success in business. In fact, his book is called Built to Fail, which tells the story and lessons learned from the failure of Blockbuster as well as what Alan has learned on how to succeed in business over his 30+ year career.
I’ve asked him to come on the show and share his story, his experience, and wisdom and how you can use it succeed where others have failed.
Built To Fail by Alan Payne
Alan didn’t come to own a business in the traditional way. He was working for a grocery company called HEB in Texas in the 80’s. HEB is regarded as one of the best and most well-run companies in the nation. At the time, they were looking to add video rental into their stores as it was becoming almost an expectation of customers. But HEB had decided to take things further. Blockbuster was just starting out in the mid 80’s and because HEB owned so much real estate, Blockbuster wanted to lease space from them. HEB decided to do it themselves and have their own brand called Video Central. They tapped Alan to lead it.
They opened the first Video Central store right across the street from a Blockbuster. It was the first video store run by a mature, capitalized company with a massive track record of success. Video Central was very success against Blockbuster doing 3x the sales of an average Blockbuster. Alan grew the business to 35 stores and then HEB decided to sell it to focus on the grocery business. Alan left with the stores and joined a Blockbuster franchise group with stores from Alaska to Texas.
Within a few years, in 2000, he got the opportunity to buy the stores and did so running them for another 18 years outlasting Blockbuster by almost a decade.
All of this was due to using a business model that he developed at HEB.
The reason he wrote the book was that what he saw from 1993 to ultimate demise of Blockbuster was frustrating as it could have been avoided.
What really killed Blockbuster? Why was it built to fail?
What did you do differently that allowed you to outlast and survive and thrive where Blockbuster didn’t?
At the 16 min mark, Alan talks about how Netflix and Redbox came to be and how Blockbuster missed out because of complacency when it was right there for the taking for them.
What were lessons learned from HEB on how to run a great business?
You covered several important lessons in Built to Fail, share those with us…
These lessons/principles are what Alan applied to his business to make it so successful.
Talk about when you finally had to close your stores and any lessons learned…
Any other advice?
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