Ron Johnson: Creator of the Apple Store: How Human Connection Drives Retail in the AI Age

0:00Steve always believed that if he thought hard enough about anything, you'd come to the inevitable answer and there was only one right answer. The first Apple store, right? Like, why did it work? Like, a lot of people said it was going to fail. Like, conventional wisdom said, computer stores were a terrible idea. You and Steve saw something different. Like, what was it about the human behavior that the industry missed that were where you guys said? Welcome to the Pawscast where we introduce you to incredible humans who share their journeys with the mission to inspire you to harness your own inner tenacity to drive your life and career forward. And now your host, Adam Posner. Hey, everybody. Welcome back to the Pawscast. You ever walked into an Apple store? You've experienced today's guest work firsthand. Ron Johnson didn't just build a retail chain. He reinvented how the world experiences technology as a creator of the Apple store. Mine behind the Genius bar. I want to Steve Jobs closest collaborators. Ron helped turn Apple into the most admired retail brand on the planet and his new book shop different shares the untold lessons behind that journey from leadership and innovation to creating cultures rooted in purpose, kindness and unforgettable customer experiences.

1:16Ron Johnson, welcome to the Pawscast. We're ready to be here. Thank you for including me. Well, greetings over on the West Coast. The left coast runs calling us from Menlo Park, home of Apple and so many other tech companies in this fine world that we live in. But I want to get into it, Ron, and you have an incredible story. But my guest, my audience, they really love to hear an origin story. And I want to know where this mindset came from, where this design, you know, where this all came from in your head. And I'm asking, may I ask what your parents did for a living? Yeah, my mom was a stay at home. I'm not choosing a nurse before. And my dad grew up in Minneapolis. He went to the Army like a lot of people did back in World War II. He came out. He loved politics. He was a legislature in the state house at age 25. The first year it could be. And did not for profit stuff for about 10 years. And then a little company called General Mills, which makes cereals and all that media was hired him to be a, the head of strategic planning. They liked how he thought about things.

2:27So he spent about 15 years leading General Mills in that avenue. And then he retired. So he was kind of, you know, and I grew up in a suburban household or house was 1500 square feet went to public schools. But I had very comfortable loving, loving. I love that. Do you remember like one of those first lessons when you were a kid that you took away from your parents that you look back now, but glad I had that foundation. No, I was super lucky. My first memory as a child. My first memory. I was four years old. I was in the principal's office at school. Uh-oh. Elementary school, but I was there because they were interviewing to see if I could start school year early. And I was with my mom. And I remember the principal asked to me, Ron, what color was George Washington's white horse? And I said black.

3:29And I walked out. But I was still never forget my mom. Once we get out the door, she reached down for her handsome and shoulder and said, Ronnie, no matter what happens, you'll always be loved. Yeah. And that was an amazing first memory. This idea that no matter what happens, you always be loved. And that's what I had in my childhood. I was the one who loved each of my siblings dearly and did everything for us. I was very blessed. That is super lucky. So moving forward with this, this educational path, you are in the Harvard MBA, Goldman Sachs, it you walked away for a career in retail. Looking back, like what, what did you see that everyone else missed? Like what was like, I mean, a career Goldman. I mean, that's a, a lifelong, you know, right your own check kind of kind of job. And you tell it caught your attention. Well, a few things. One is I love the end stars. Yeah. And after my first year at Harvard Business School, I took out all of our cases. We had 400 that first year.

4:35That made a pile. Which ones did I enjoy? Which ones did I didn't? There are 20 I loved and they were all retail or like consumer marketing. And I thought the people that I admired were passionate about their work. You know, the most successful you'd see were artists and musicians and athletes. We just love what they do. And I said, well, I can't you love your work. And I looked at retail and I said, this is a young person's business. I was a big director at the time. People know I'm famously from the gap and Jay crew. Mickey was 31 leading the gap. And I was 24 at the time or 25. And I said, well, if I put my head down, I'm in a good. I could have a big responsibility on age. And so why not do something I could do for a lifetime versus go to Goldman and make a lot of money. And you know, I just didn't have that much compassion for dance. I'm just something I could love. I talk about this a lot. How critical it is, especially at an early stage of your career to learn more so what you don't like than what you actually like.

5:40Right. Like understanding those pieces of it, you know, with their specific elements about finance that you didn't like, did you, was it the corporate structure, words of the actual discipline of finance. He was just too easy. I honestly was like a problem that had a specific answer. You know, when you're looking at finance, you run the numbers, it comes to an outcome. You make some assumptions. But I felt like what I did a lot of people could do. You know, most of my class and business are business they want to go there. They were super smart. They were really to work around the clock. That's what it took more effort than it took. Intelligence to me to do the work. I didn't think it was pretty challenging. Interesting. The rewarding economically it wouldn't be rewarding emotionally or intellectually for me. To have that foresight and insight at that point of your age and your career to follow that passion and listen, in today's day and age, it's tough. Not everybody can follow their passion. They hear from all the gurus out there follow your passion.

6:42Listen, at the end of the day, you got to put food on the table. You need to have a paycheck. So the ability to do that at a young age and set your course into what you love to do is certainly admirable. So I want to talk about. Let me just agree for a second. Please. It's hard to know your passion, but you do know what you love. True. You know what industry you love. Anyone is in their 20s. I love music. I love athletics. I love travel. Whatever you love, right? Well, if you love music, why not look to get a job in the music industry. Yeah, every day you wake up, you're doing something you care deeply about. And then if you're going to go to music, just figure out, okay, what jobs in the music industry have no limits to their awkward mobility. What are the critical skills I need to have to really have a career in the music industry? You don't want to go to a company and go into some job that's just not important. So I can I love retail.

7:43I knew I'd either have to go be a store leader, because store leaders ended up running retailers. I have to be watching them later because they have to have running returns. I wouldn't go into finance because finance people just did finance at retailers. They were never the CEOs. And it wasn't that I needed to be a CEO, but I didn't want to have a limit to my career. Right? But if you love sports, there are leagues, there are teams. There's all sorts of ways to get involved with sports. You know, so I really think finding industry to get love. That's number one. And then within that, what was your passion? How could you uniquely make a contribution? So I don't know if you know your passion, but I think you know your loves. Yeah, I mean, I think that the listen, that that's very idealistic, right? I think you can do that. I think a lot of people should do that. But that's not always a case too. And I also come from a school of thought where like listen, even it's like just say music is your passion, but that's not your. You're training and you're upbringing. If you could have a job that could pay your bills where you could still have a passion for music outside of work.

8:47And still do that. I think that's admirable as well too, because not everybody's going to be able to have a limited amount of jobs in music or sports. I mean, I'll be able to, you know, put the put the right financial put them in the right financial place. So it's it's a balance, but in best case scenario like yourself, you followed something that you were passionate about and you went down that you went down that course. So Ron, you're at target, right? You're you're now a target. And what was that moment that you got this call from from Steve Jobs and from Apple? I was I was flourishing in target target was doing great. The stock had gone up 12 times in the decade of the 90s. I was one of the merchandising leaders who and I brought design to target and I just launched a partnership with Michael Grady. It was an architect. It was the first kind of retail designer collaboration that kind of place today. Everybody. That was the first of its kind. And it it works really well. And that led Steve who had just returned to Apple as CEO in 97.

9:51We launched Michael Grady's in 98. He launched the iMac in 98. The iMac was a cult hit, but it didn't change the business. It appealed to the Mac faithful. It didn't make any runs into the PC and so Steve concluded if he was going to win, he had to control the customer's where. So he opened his own course. And so he talked to a headman and said, you know, find out who's done all that stuff at target. It turns out it was me. Who's that guy doing that? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? Who's that guy? And I told him that he really stayed cool. I told him that we were wide. It was a man who made me realize that he was saying something. No, it wasn't. So, I just didn't agree to what kind of a good guy was doing with... So, I also told him he really works. Which exactly really... And he didn't meet the guy. So, I always confession with my best friend. And tell the right thing to my friend who came through going through advertisements that he wasn't giving me. I interference with the connection. And I have my會. And I was really happy in three of my launches.

10:51And I heard about the home workplace. And I had it in my office, and I had an experiment with it. I had that 10 week talk to Steve and they did it with senior clients, and he was explaining this on them. What was out first time meeting him like? It was incredible. I showed up for 5 o'clock on Monday. Weated outside his office. I remember sitting there. I didn't know a lot about Steve or App there. But there are three magazine covers in front of me. One forks and one time, one business week or whatever. We'll sneak on the cover. And I was starting to read those and I was like, once I was pretty successful. Yeah, I'm going to meet this guy with the magazine sitting in front of me. Is this plan? I also really looked at my life when I saw this torn as the sitting in a chair, you know, pair of Levi's jeans that were ripped. You know, in a target, you know, people kind of dressed up week casual days. But you were, you know, pants that didn't have a belt. You didn't have ripped jeans at target, right? But anyway, I met Steve. He introduced himself and went to a conference room.

11:52He immediately put his feet up on the table, stared at me. Remember notice even one eyebrow that's higher than the next kind of uncomfortable silence. And he said, thank you for coming. And it led to a three hour conversation that she's didn't have. And then I had to jump on a plane. And as I left, he said, well, when can you come back? And I said, well, I could probably come back in two weeks. And he said, right. He said, if you don't mind, because we talk about retail, he said, can you send me an email? And what you do if I leave you the job? Oh, I said, well, I would, but I don't have a computer. I don't have an email. Because this was 2000. This was 2000, you know, target didn't use email work. You weren't there yet. World, the world changes. And so Steve said, that's okay. I'll send you a computer. That's a nice touch. And I was able to send my first email to Steve.

12:53How cool is that that Steve Jobs gave you your first computer? That's a cool story. That's a cool story to it. But I want like, do you remember that conversation? I remember what it's level of like a level of inclusivity, the his line of questioning. He was just probing you. He just wanted to learn. He wasn't interviewing. He was just talking about the value of the conversation. He said, you've done some really cool stuff at Target. Tell me about it. And we talked about it. And then he asked follow up questions blah, blah, blah. He loved just learning about what I did. And then he told me about Apple and I had asked him questions. And then he said, I'm thinking about opening stores. And I remember I said, well, who's like, who's the customer? And he said, well, right now we do really well as professionals who are creatives. And he said, I've got this idea to create these consumer applications like Pro and Apps for photos and movies and music.

13:59And I think we are on source. We can double our market share. And that's that sounds reasonable. I said, but if you do that, I don't know you need stores. I mean, to get 5% market share, Dell's doing it all online. Now, I think he should think bigger. And he said, what do you mean? I said, well, as you learn, or you will want to learn, I don't have a computer yet. I look at the app list. It's an analog world. Very few people I know have computers. I said, 50% of Americans own a computer. Why aren't you going after the 50% of them yet? You have to get a map. Don't worry about losing the Microsoft. Go after the other 50%. Now, if you want to do that, just like I brought design to the airport of America, what? That might be interesting. He said, well, she think we can do that. I said, why not? And then he said, so where do we put the stores?

14:59I said, you put them where people shop. And what's that? It's a mall. I hate malls. I don't know if you're going to get a mall. You're going to get a mall. You're going to get a mall. You're going to get a mall. You're going to get a mall. You're going to get a mall. You're going to get a mall. You're going to get a mall. But that's where they are. They're crowded. They're filled with cranny stores. I said, but in most communities, that's where people are. And so we, it was all, we went on for hours ago. What would retail look like? How do you think about the store? How do you think about service models? And he just wanted that. He wasn't interviewing me. He wanted the design stores together. He was already sold on you. He went to brought you in. I wouldn't mind. I'm not going to let anybody know that I can come in. I think I don't want to get in. I have a, you know, a big town. That what you've accomplished. You had the receipts. You already had the receipts. Yeah, but he. He was in a bit. The time he had four or five candidates that he was maybe. Here. But I learned later. He liked me from the get go. You know, I think it was the design. Accompanation of the design work. Because he loved design. Who? Yeah.

16:00I want to, I want to, I want to double down on the design piece. the products there. When you worked with the architect at Target, what did you learn? What were some of those strategies around understanding how to apply design into a consumer experience from a experiential point of view, from the flow of the store, aesthetics, merchandising point of sale? What were some of those pieces you learned from that experience at Target that you parlayed into designing that first Apple store, some of those key learnings? Everything. Seriously, you know, so up until we did design at Target, most products we bought in the Hardline's area were bought for a function. You know, the coffee maker, Helmi Cups, how expensive, how quickly does it heat up, whatever it would be, you know. When you design, you're trying to balance form and function, but there's more of an emphasis on form, because that's why you want a design object. It's something to look at. It's something that's

17:01going to lift your spirits. It's got a little different purpose in the world. It's got to be functional, but the form was what to rise it. And, you know, that was a hard thing to get Target to want to do because no one really thought their customer would appreciate the design. So in order to do that, I believe two things. We had to go big and we had to be pure. Every object had to be exactly what Michael Craves wanted to produce. We couldn't compromise. We just said if you got rotary sources, right. When we presented it, we had to have packaging that was well designed. You know, so we did these beautiful boxes with expensive Target, where the matte finishes the photography. It was just the picture with the ITC out. No callouts, no function, no even Helmi Cups it made. Just the product, just the product. And then we treated our gondolas, you know, those long fixtures you see in the grocery store at Target. And I said, this is like your podcast. This is a canvas. And we're going to create art on this

18:06canvas by how we put together the presentations. So we had all the boxes lined up in a way. We created displays. We had headers with striped, who was Michael Craves and why was he an authority for designing these products. And we would really be. And then we went and when we launched it, Target wasn't in New York at the time. We didn't have stores on these coasts. Oh, no. Not in New York. We went to the Whitney Museum and took over the whole first floor of the Whitney Museum, our massive time, 77th or 8th, our camera, exactly. And we did this display that was unbelievable. We had teak at all our clocks. Michael Graves clocks the former Target bullseye. And we had chandeliers made of kitchen tools and design. Here's design. And you know, people thought there's no way. Tarts did a succeed in this. And all the press came and they stayed there for hours. And they knew they were in a moment. Somehow it just magically came together.

19:10So the lesson was when you do something, you've got to be pure. To break through the clutter, you can't compromise. You got to get the big picture right, but it's all about the details. And that's where I learned to target. Well, it turned out that's exactly what Steve at all is believed with every bone in his body. And I think that's what designers do. You know, good architect, they want that building to be pure. You know, they have sesame cells. You know, it takes very little time to create the sketch of what you want to do. You imagine then the devil's in the details. And that's true with design as well. I love that perspective so much. And one last question about Steve Jobs, what's that? What's that one lesson that still influences how you make decisions today that you learn from him from working side by side with him? That's what's the one lesson that that Steve always believed that if he's thought hard enough about anything,

20:14you'd come to the inevitable answer and there was only one right answer. You know, most people believe, yeah, any business problem. But as I'm heard, you know, 80 kids in the class, 90 kids, there were 90 different things. And a lot of businesses, let's just go that direction. Let's see how it works. And we'll go to the next version. Steve believed if you thought hard enough about it, you'd get to the right answer. And you should wait until you have that before you do something. You know, so think of the iPhone. You know, Steve's dream was let's reinvent the phone. We took a lot of years, explored a lot of different ways to do an iPhone. And eventually came down to an all glass touch screen. You know, no buttons. Yeah. No keyboards. Sorry, no keyboard. Right. Yeah. All keyboard, which was at the time, blackboard is the name of the keyboards. Blackboard is crushing it. Great product, by the way, at the time. Yeah. It was a great product. It did something. I love my blackberry. I remember it. I still have it

21:15in a box somewhere next to my Motorola StarTech. Yeah. But Steve believed that because we thought it's over with the team that this was the inevitable right answer. And look at that 20 years later, the iPhone is still the market share leader. And it doesn't. It just minor changes there. So let's talk about the first, the first Apple store, right? Like, why did it work? Like a lot to people said it was going to fail. Like conventional wisdom said computer stores were a terrible idea. Everyone, you know, I'll solve it. You and Steve saw something different. Like, what was it about the human behavior that the industry missed that where you guys said, we're going to design a store that's a attraction that's a people going to want to come here. People met people. What people missed is the the consumer me at the time when the Apple stores opened was they fear technology. Right. And we created a store which overcame fear. You know, they are beautiful spaces located

22:19where they were. Yeah. Right where they shopped. They're in a really good place to shop. And while they walk in, they're friendly people. They're products that you know, you had your hands on. But the back of the store was filled with support genius bars, theaters, training tables. And so people that were scared of technology can walk in on the phone. I could do this, you know, and so we overcame fear. But Ron, wasn't the other piece and kind of double back to what we said earlier. And I remember because I grew up in the ad agency world that it was a divide. Apple and Mac were for designers and creatives and PCs were for business and everyone else. How did that? I mean, I truly feel like the Apple store helped Bridgett app to make Apple more accessible to everybody and say, no, you don't. It could do everything on here. Come try it. Here it is. It's sitting at a table. Come try this iPod iPod iPods were there and and other accessories and immediate, immediate accessible. Was that part of the game plan from a business perspective? We definitely wanted to get like Steve's

23:22mantra when we finally announced the store. So it took a man in the Wall Street Journal in New York Times who said, five down, 95 together. We have five percent market share. That's the same as BMW and the automobile industry and people love BMWs. And he said, but we want more. And so we're open and start. So everyone can understand the benefit of Mac. The easy one to convert was someone who never bought a computer. They didn't know the difference. They did know the difference. They had nothing to give up. If you own the PC at that time, you had a lot of software. You know, software wasn't something you downloaded from the internet. You know, it's a disk. You used to get a box with disks and end or a CD later on it. You had to actually install it yourself. Yeah, so you had gone through all this effort to learn how to use that PC. The ads are if you had a PC at home, if you're on that work purchase one, you had that

24:23because you can connect to your office PC. You don't share the data through the power you get it back. Not your Wi-Fi through cables. There's a lot to give up by the way. So we knew to switch someone to a Mac would be hard. But we felt that getting the new buyer would be easier. Right? To get the Mac person's upgrade more frequently would be easier. Right? So we don't have to get the PC guy and girl, but we can get the map that the un-initiated easier. The new user. So that's what they missed. You know, the other one after the world that had never we went after the techno lights, the people who didn't love technology. You know, you think, but here's another one I think about it. I think, yeah, how old were you in 2000? How old was I in 2000? That was 26 years ago. I was 20. Yeah, 21. Okay, so what technology

25:24you owned? I was in I was senior at college and I had a desktop PC. What else did you have? I had a CD. I had a cell phone. I had a cell phone. I had a CD. I had a CD Ramdra. I was driving back and forth from New York to Buffalo. I had a cell phone. I had a CD burner. I had a CD burner. I had a DVD player. I had a lot of stuff. I spent a lot of my money on tech. What I had when I joined Apple, I had an HP 12C calculator. I actually had somehow a digital scale, a scale you step on and showed you your numbers. I had a digital alarm clock. And I think we might have had a DVD player which was pretty new for watching movies. We go to a lot of sites. People didn't have a lot of digital devices back then.

26:25It was a novelty. I didn't have a cell phone. I didn't have a computer. I didn't happen to have a handheld device. Yeah. Well, it's interesting because I went to University of Buffalo. It was a very tech-forward school that had a very big internet department. I remember my first email address and how we had to access it and friends at other schools did not have any email addresses. Back then, it was a new thing. I mean, I didn't want to tell you what you need to do. You need to do the technical. That was the beginning of the digital revolution. When technology just began in the first, even the computer. This was pre-ipod. We're clearly pre-smart phone. Maybe not pre-cell phone, but cell phones had pretty low limited use. Right. They were bulky. They were large. We need to get back to that. We need to get back to it. It's so interesting too because I've been seeing studies too that a lot of the younger generations are actually buying non-smart phones. They're just buying phones that actually

27:27act as phones. I don't need all the bells and whistles. I want to talk a little bit about the Genius Bar. Because the Genius Bar, like, keep me straight here. It wasn't just about fixing the computers. It was about building that consumer trust. Was that the real motivation behind it? To deepen that relationship with the customer? Initially, we needed a place to repair products when they brought them. You needed a service department. We also needed a place where people could just get help. I got a question about anything related to the map. If I bought a map, I just don't know how to do this. How do I do this? Well, we thought, you know, in a hotel, I just like bartenders. Bar tenders were these incredibly friendly, interested people. They were connected. They knew answers. It was comfortable to sit at the bar. You weren't side by side. You're ready for a show. You had a story to come and go. But they dispensed any cocktail you could imagine. Imagine someone

28:35dispensed advice. They were the smartest Apple people in your community. These are really smart people. But they were friendly. What if to give that aspiration, if we call them Geniuses? Because Apple had this thing different campaign where we celebrated Geniuses. Well, now it's called Geniuses. It's a bit audacious to call that. It was a bold move. The whole goal was to get in the first event. We should call it the Geek Bar because he didn't think we'd ever be able to find Geniuses. Best by end that I'm taking Geek Squad. They ended up taking that one from you. They had that before. That started 96. But they had that name. But we call it Genius Bar. It connected with people. You never know what's going to work when you do things. But that probably is the most identifiable feature of the story that distinguishes the story. There's a lot of things that just fit the evidence to have the cube. The cube's pretty important.

29:38I remember that being built. But what's common to be every Applester was that Genius Bar. And we couldn't build a bit enough. I remember the last one before I went to chase the panel. We built it. IFC Mall in Hong Kong. It was an entire floor. It was a 500 foot long Genius Bar. It was something like 96 stools. Geez. It was packed all the time. Who's ready for a cold hard fact? Indeed's pricing model and all programmatic job advertising is based on driving volume, not outcomes. Jobboards get paid on clicks and applies not hires. Their incentive is to send you more volume. That's what happens with volume-based pricing models. And all that volume creates exactly what you'd expect. Nass inefficiency, mountains of unqualified applications and wasted spend. Meanwhile, TATEMS know their career site is already their best source of quality applicants who get hired. TATEMS invest in their career sites and employer brand. But the outdated technology makes it too hard for people to connect

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31:41Yeah, wait, that was neck that was literally like I could put my hand on the Apple store. So we have a very close connection to it. So we were on top of the Chinese restaurant. We're in the apartment building. I was crossing the movie theater. That was that was 1991 Broadway. That was our four-store man. It was boy, I loved to guess that you're 2000. 10ish. Eight. Two that it was so we got married 2010. That was 2008. Yeah, there's eight or 10. And it had two floors, the lower level of beautiful spiral staircase down the middle. Yeah, it was on the lower down the left to the lock the sound because the street in the store was not as it is slant Broadway slant up the street. And but it had an all glass roof. And beautiful stone walls. I love that story. It was it was nice. I've pictures of my phone from the opening of it. It's one of the earliest photos of my iPhone. So let's pivot. I want to talk

32:45about it. You came up and say hello. You should have known about it. Ah, it was a different I was I was still 2010. I was still working at Sirius XM at the time. Yeah, it was a radio guy. I was a who wouldn't know that a radio guy working at Sirius XM would end up with a podcast, you know, 15 years later. It's pretty pretty wild where where life takes you. So I want to I want to talk about the book. Ron shop different retail revealed and your book argues that physical stores matter more now than ever in this AI driven world. I completely agree with you. But that's almost the opposite of what a lot of people believe. Why does tech actually increase the value of human connection instead of replacing it? I love to hear your POV on this. Yeah, now the reality is, you know, the one of the biggest ones, misconceptions in America is that stores are dying. If you ask most people are stores growing or going to the internet, they say, well, stores are dying. It's serious. Look at that. It's, but it's just not true. There's always tired models, tired stores that go away. They're

33:48just old. They're not relevant, right? They're just not relevant. They're not speaking to the consumer. They're not meeting their needs. Exactly. But if you look at how we shop, 70% of people buy their things in store, every app purchases, 70% are in store, 30% are online. But of that online portion, half are the digital arms of physical stores. Right? So today we shop on the channel. Sometimes we go to the stores, then we go online, we do a lot of research. It's the way it works. But our shopping happens are really well in print. Right? We've been shopping, making a choice between online and physical for now over 30 years. And we make shopping decisions every week and everyone's got their payment. You know, so when this new technology hits like AI is coming big fast to retail, it's going to improve online shopping. That's going to improve physical shopping. But I don't think it changes where we shop. Right? Because technology is part of the shopping experience. It's not the core of

34:49the shopping experience. Right? So it's going to have an impact. It's going to improve things, but I don't think it'll change things. Just like online retail didn't kill stores. Yeah. You don't think Amazon killed a large percent of mom and pop and other type of businesses? It killed some small town stores that were not very productive anyway. But if you know the argument I always get if you were to pick what retail, physical retail is known for having big stores like Amazon as a big store. I can buy everything I need from groceries to household, the little clothing. They've got really everyday low prices like Amazon, they're convenient. Who would you say that is? It's target of Walmart. Yeah. Yes, Walmart and Target. So Walmart in 2000 when Amazon opened had a market cap of $130 billion. It was the most

35:50one of the most high-value companies in the world at the time. So Amazon is flourished right from a revenue perspective. They do a half of online shopping just about. They're really big. A lot of people shop there every day. Well, what's Walmart's market cap today? They get a trillion dollars last quarter. Second biggest online retailer. But they're eight times the market cap they were back in 2000. Because of the physical location that people still like going to a store in 2002. People buy in physical. So people like to touch rights. People still like to touch tangible items. They like convenience. They can be. What is the root word of convenience? Vignance. Convene. Convene. Bring people together. Yes. You're together. That's the root of

36:52can be terrible joke there. Sorry. No, no, it's okay. But my modeling point is it's very clear that tired retail's never worked. The US was massively overstored in 2005. Overmold, overmold, right? The only way to grow was to add stores because there wasn't an online alternative. And catalogs weren't that productive. So you just built more stores and it was easy to get cheap and people had overstored. And so now we reduce the store footprint a little bit. The US, the tired people have gone away like Sears and Kmart and whatever. Because Walmart beat them. Part of Walmart's growth is taking out Kmart Sears. You know, but Amazon didn't hurt them. They hurt other people. And they built their own massive online presence. Walmart.com is a beast. It's a beast. And now it's a marketplace. You know, originally up until about five years ago, Walmart.com sold what Walmart sold its stores. It was just Walmart, not like Amazon. It's a marketplace just like Amazon.

37:56You can't forget to shop there. But Walmart has a lot of physical advantages. They advantageous that can allow them to be Amazoned online. They've got scale. They've got sourcing. They've got sales. They've got stores that can ship from seven miles versus 50 miles. That's a pretty big advantage. They're distribution centers. Well, their customer can order online and pick up a store if they want it today. Yeah, Amazon's going to spend a lot of money if you get you there the same day. So the bottom line stores have advantages when you put them together with digital. So that's why on each channel one. So let's talk about the other side of the coin. Let's look about failure for me. I want to talk a little bit about the JC Penny chapter and you experienced one of the toughest public setbacks for anyone who has not picked up the book yet. In lightness, what would happen over at JC Penny? What was that? I went from the H50 Agassir. I'm going to leave Apple. It's a hobby. Companies doing great. You know, but Steve's going to

38:57see what's going to pass away when you do that. And I just want to do one more thing. And I enjoy the hard things that I did in my career. I enjoy trying to figure out the house. All right. I enjoy challenge of target trying to be Walmart. I enjoy it. And I said, I want to do something really hard. And a couple of New Yorkers, Bill Akman and Steve Rah had taken a position in JC Penny and they called me to join the board. And I said, I can do that. You know, I knew Penny's forever. You know, I grew up near Penny's by South Hill Mall and he got him in a soda. I would literally go to the, when I go visit Apple's Thursday park in the Penny's lot because I remember where my car was. You know, it's easy to find your car. It was easy to park my car, but for God, I remember one time I did forget it, but I just left it there and went to the airport and left my rental car with them while I told them it's in the wall. But I made the decision to go to Penny's. And at the time I was quite, I think, situation here. You know, I'd been very successful at Apple,

40:03the target. And I knew with everybody about what it would take to make Penny's relive again. And I got there and instead of taking the time to bring the team along, you know, with the boards, strong support, they said, let's just go. Let's go change everything. And so three months after I got there, we began a huge transformation that performed a little worse than we anticipated. We thought it would cause sales to drop the first year, 15%. They dropped 20. But, but it became this public failure where no one understood what I was trying to do. The investors didn't understand, employees didn't understand. Even the board didn't really understand. And so it was in any in the middle of a firestone, the stock's going down, Wall Street, shutting the stock for all kinds of reasons. The press was all over it. I couldn't be able to quiet story, you know. But it was a

41:09pretty big story at the time. So what was that thesis that you thought was going to transform that failed and why? Well, it was really, you know, I, I, I, I, not worried about the vision. The thesis was Penny's had a reasonably strong balance sheet, reasonably strong balance sheet. It had nearly a thousand stores, but the customer was in their 60s. How do you take that real estate and transform it to appeal to a younger customer? How do you get a young family? Penny's is a hundred year old brand. How do you get a young customer, a young family to be interested in JC Pen? So we created a store for them. Okay, we're going to get rid of the idea of a department store. We're going to break the store into 100 unique, specially stores. You know, smaller stores get rid of the vans. We're going to combine the existing pennies brands with stores that include blown up versions

42:10of what's in the store like a van store, J.C.P. Levi's store, J.C. Pen is like, right? Brand activations within the retail footprint. We're going to bring in the DTC brands because this was 2012 and you know, worry parker starting maybe physical footprints and you can find these because they have to go market. So really created places like that. But the Lich Pen was to do this. We've got price goods. Have young people shop. We're going to have everyday low prices. Now no one went to Zara or whatever and got to sell. They've just price products where they're going. Well, Penny's had this old model where everything was the price on the ticket was made up even though you never sold it. Less than 1% of the items were bought at full price. The average item was bought at 60% off. But that's how they created value. So instead of having 40 element polls, I dropped the price to $10 because our average retail is $9.93 or something. So it was $10 every day. And I just tried to

43:12say every day is a good day to shop. And by having everyday pricing, the better brands would come with pennies because they're not going to be devalued. Being next to these 60% off sales was a flick on the roof. But what we did is it really disappointed the long-term customer. That customer who knew how to shop pennies with their coupons. What I missed was they felt the value they brought to their family was in saving money from the regular price. Right. The discount. Here, I got to come home everyday and I just saved $100. Even though we gave them the same prices, they lost the psychological benefit that they had. All interesting. Yeah. And the people that were better at managing it got a little lower prices than the people who didn't. Because they knew how to take advantage of all the coupons and sales. They had a PhD in pennies pricing, I guess. Double down discounts. Yeah. But ultimately, I had that vision that we should

44:15just go do it. And if we had taken our time and tested the pricing in a few markets, found a way to continue the loyalty program for the long-term shopper, we could have navigated it a lot better. So I just think I went way too fast. And that was arrogance. I believe that like everything I'd done before, that people would figure it out because it was a better way to shop. But we looked today. You know, I mean pennies then when I left, they went back and go model, sales dropped again, stock went down 50%. They brought in this year's stock went down 50%. It finally got bought by Simon and somebody to keep the stores open because otherwise all the retailers and the malls of the pennies closed, they could all walk away. You need to have those anchor stores. We need the anchor store the chance can be. So you know, the model was tiring. It's a shame today. They're doing a little better right now. You know, the reality is the department stores continue to suffer. Macy's

45:17having a good run now. They're kind of getting back. But they've reduced their footprint from probably a thousand stores. I think they're going to have with 400. You know, so the reality is the department store was struggling. I accelerated pennies demise because we didn't carry through them. The you can't hurt again. But it was a very tough period for me personally. How did you handle that? You know, you've been around the block to see your first rodeo. How did you handle professional failure? I handled it pretty poorly. I just took it on myself. I didn't talk to people. I was kind of embarrassed. I was my kids and family were in California. I was convening Texas every week. I'd sit in my hotel room at night and just go, what the heck should I do? What's going on? And I should have engaged more people, gotten more advice. But I had not failed for 25 plus years. Sure, an issue has failed. But overall, we knew they were going the right direction.

46:23This was a mass. I never go to work out every morning and I'd be in the hotel room gym. And there by face would be on the thing, Ron Johnson with arrows going down. No, it was not stop. I couldn't get a wait one. How did you bounce back from that? Let's come back, Ron. I'm quite resilient. I took the year or two and just processed it. Yeah. But I didn't jump back quickly. And there's a lot of other people who contribute to it. But that's their start. I'm very comfortable to talk about the things that I could have done differently. The lessons are what I know and that what others could have done. So I am in 100 percent.

47:27That's that's the way to do it. All right. Let's switch gears here a little bit. Okay. If Steve Jobs was building Apple today, let's imagine Steve Jobs launched his Apple in 2026 with AI, spatial computing and it's entirely different retail landscape. What would he build differently? And what would he refuse to change? Absolutely refuse to change. What would he do differently now? I thought about that a lot. I don't think he would change a thing in the store. I think the stores, I'm in the stores quite a bit. They're still packed. They're filled with people engaging. And when you look at what's going on now with AI coming in Siri, if you can't have to learn how to use that on my Apple devices, with prices going up and the memory shortage, he wants people to come in and have his team be able to talk to them. They've got a new upgrade program coming out where you basically, instead of buying a phone or

48:30an Apple hardware piece, you can basically rent to own or it's like hardware. It's like a least. Second least, but it's like really, just like we have a lot of subscriptions. It's like a hardware subscription. And then after two years, they go upgrade my phone. Well, you have to explain to people how that works and what you do. And so I think he would want the stores to be filled with great people where I could try and have conversations and get help. And so I think those fundamentals wouldn't be that big for them. And it's interesting. The Apple stores don't look tired. Now you walk by them. They still feel young. It's a clean design. There's not much to get tired from. It's simple. Keep it simple and clean and aesthetically pleasing. Yeah. And then what happens is the people are the energy. So I don't think they'd be, I'm not trying to be negative. There's nothing in retail that I see that I feel boy, the Apple store should come in. Yeah. It's really interesting.

49:34One of the things that I absolutely love in the cannabis industry, so many of the stores are emulating the design of the Apple store, the setup of it too, to make it a higher scale. With like the geniuses, they call them like the bud tenders, right? They're consultants along the place, but the way that it's designed and set up, they're taking a lot of cues from this masterclass in retail. It's how do you engage? How do you create? Like a masterclass. It's not like a new model. No, that's what's interesting. But that's where good design is timeless. So you go back to your meeting conversation. You asked me about design, what Steve likes. Now that stores timelts. It's a beautiful space, high quality materials. There's nothing to get in the way of the primary objective, getting your hands on a product for car from employee. Now there's no trickiness to it. They're very straightforward, beautiful places. You know, and set's timelts, like a beautiful teakettle or a beautiful building or a beautiful building. Keep it simple and timeless. So there was a line from the book that stuck with me,

50:37quote, the most important person is the one in front of you. I really, I really, I really truly believe that as well. So in this world obsessed with scale and automation and efficiency, how do leaders today actually live that philosophy? Right? Like how do you, how do you, how do you live it? Yeah, I think it's just being present. It's recognizing that you can only do one thing at a time. Right? And you've got to invest the time on what you're doing exactly right now. Now we did yesterday. I already do tomorrow. What are you doing now? Steve Modellat. I mean, Steve was the most present person I ever worked with. You know, you're being the Steve. He would be so intensely focused on what we were talking about. You didn't walk around with a cell phone. You didn't want to. He wasn't on his iPhone. He was going to, if the mean right over, he was going to solve that problem. Then he got to the next one. And Steve had a pretty productive life. But he was always present. And you know, obviously, I believe that in the customer

51:38service business, you know, when people walk in the apples, right? I told him, employees, you know, give them a warm welcome spend as much time as they need. And acknowledge someone else, you know, be with you when I'm done. But don't worry. Ruthlessly eliminate worry from the experience. You're running place all the time. Just take care of one customer. We did a few second matter. And I think people valued the fact that when they got to the apples during the event and employee, they really care deeply about them and they weren't distracted. That's a great lesson there. So my lesson is you did like you and I are chatting now. I'm not thinking right at the end of the year. You know, you're the most important person in my lifetime. Oh, I appreciate that. I appreciate that. And presence is, I, I mean, everyone listens to the show knows my story last couple of years. I went to my whole, my whole health journey. And my biggest takeaway was presence, presence with my family, making that time count. You can't make that time back up. And the same thing applies to business and retail, like the customer, the

52:41who deserves your attention right now, give it to them. And like you don't put an ROI in person relationships, right? So what's the most important conversation you ever did with yourself? Yeah, exactly. And so people don't realize that there's a conversational nature to grow, right? Everything we do, everything we do and grow is in a conversation and the first conversation with ourselves. That's about being present with yourself. And people that are multitasking all the time, they don't have time to think deeply to build their inner voice. But that's all we bring in the world today because with AI, general knowledge is a query away. If you want to know something, just query it one of your AI agents. Just push a button and talk at it into the ether. It's going to come back to you. Hey Siri, hey, Alexa, it's going to come right back to you. Correct. So then what do you bring to the world to your work to a conversation? It's what you

53:41uniquely think. And that's your personal geography and how you process it. And so we need to find more time to be much more introspective. Absolutely. That's my voice. So let's bring it, let's bring it home here, Ron. You've spent your career helping people think differently about business, retail, leadership and purpose. So 20 years from now, when people talk about Ron Johnson, they're not going to be talking about Jay-Z Penny. What do you hope they say that you helped change? He helped people understand the value of human connection of personal relationships, of choosing kindness at all times. Because there's a sense that in business, you got to be strong and tough and demanding and whole people accountable. You really have to make people flourish. And that's how you win.

54:45And that takes kindness. And that takes love. You know, as we talk about in the book. So I hope I'm just seen as someone, maybe I'm the epitaph on my tombstone, say, choose kindness. I love it. That's always lead with empathy, lead from the heart. We have one run at this life. Do the way you do everything is the way you do anything. Just lead, lead with love. So, Ron, let last but not least, you look back on your career and then in your life and you've had these moments of great success. I mean, you were at the pinnacle of your industry. And now you look back with gratitude and appreciation for this life you built this family. Ron Johnson, how do you define success? It's having the ability to spend as many days you can with the people you love in places you love doing things you love. Right. And when you do things you love, that

55:48identity has an other component. You're doing it for other people. But I really think too many people spend their life, I don't know, living someone else's life. You want to be in a life where you're with the people you love in a place you love doing something. What? Simple as that. Not always easy to execute, but if you make that your focus and your present and you make the time and create the life for those people. Ron, I want to thank you so much for joining me in your time today. I want everyone to pre-order his new book, Shop Different, How Retail Revealed Apples Genius. Out September 22nd, we're going to link it up in the show. Now as you can find it on Amazon, you can find it where all books are sold. Ron, thank you so much. Where else could folks connect with you? Where could they learn more? We're going to link that up as well. Hang with me for one moment here. There's been a fantastic conversation. I deeply appreciate you and your time. Everyone out there listening, if this show meant something to you, even a review rating, it goes a long way, sharing means caring. Remember,

56:52be good to yourself. Be better to others and catch us next week for another great episode of The Pawscast. Take everybody.