As the term ‘geek' has evolved, so has its business application. Katy McCarthy, CEO of ThinkGeek, the leading eCommerce brand for the geek in all of us, shares her insight on balancing growth with authenticity and the impact of ThinkGeek's acquisition by GameStop. If you like our podcast, please subscribe and leave us a rating!Podcast: DownloadSubscribe: iTunes | RSS
Katy McCarthy: My challenge and our challenge was to ensure that while being authentic and remaining very true to the core, we were also being very inclusive.
Bill Gullan: Greetings one and all, this is Real-World Branding. I'm Bill Gullan, President of Finch Brands, a premier boutique branding agency. Super excited about today's interview with Katy McCarthy. Katy is the CEO of ThinkGeek. I think the title at this point is CEO ThinkGeek at GameStop. ThinkGeek was acquired in late July by GameStop and Katy's going to tell you over the next couple of minutes some of the things that have changed and some of the things that remain the same post acquisition. Very grateful for her time particularly given the time of year there, in prime selling season with Black Friday and Cyber Monday and everything else that they need to get done in holiday and so stealing twenty to twenty five minutes of Katy's time is a blessing and an honor. Really interesting path that Katy took to this position, she's a finance and ops person by trade, spent a ton of time, as she will tell you, across GE in different divisions, in different locations, in different roles Many of the roles tended obviously to have a finance and an operations and an audit focus. Katy arrived into the CFO chair at ThinkGeek, which was then GeekNet – the parent company of ThinkGeek. She arrived in 2011 and moved into the CEO chair in March of 2013.
As with many companies that reach a certain level due to sort of passion and vision, Katy was brought in to provide the infrastructure that enables a company that has that passion and vision to become mature and to grow based on that platform and on that foundation. So she's going to take us through some of the really interesting things, not only in her career, but also about how ThinkGeek has helped her in terms of being different from what she's experienced in some of the ingredients that make that brand authentic and successful. We've talked about it in small ways along the way on this podcast, different lessons from being close in as they redefine their brand and sort of re-launch. We are very proud to have played a small role openly in their ability to grow shareholder value and then ultimately be acquired by GameStop in July. So without further ado Katy McCarthy.
Bill: Here we are with Katy McCarthy the CEO of GeekNet, the parent company of ThinkGeek, and I know that they're still sort of working this out after the acquisition but ThinkGeek at GameStop has a nice ring to me, how does that sounds Katy?
Katy: It sounds great Bill, thank you.
Bill: Great and thanks for joining us especially given Black Friday, Cyber Monday and all these other important things around holiday. We're grateful for your time and it's just a pleasure to speak.
Katy: Happy to do it.
Bill: So what a ride for you just not only over obviously the totality of your career but particularly recently given the acquisition of ThinkGeek and GeekNet by GameStop. Congratulations by the way! How has it been? I'm sure you haven't had a moment to sit and think about it but what's been going on?
Katy: Well it's certainly been very busy. As you mentioned, we're always busy this time of year as a company that is a place where people love to come to shop for gifts. So we’re entering the busiest time of the year, but it's been an exciting year. Our partnership with GameStop, we believe, will enable us to increase brand awareness, which I know is something we've talked about in the past as the big prize for the company. We're now able to reach beyond our current customer base to a broader group of people who are passionate about video games, who are passionate about certain fandoms and that lines up right with ThinkGeek’s vision – which is we like to get people energized and passionate and geeking out about our products.
Bill: In addition to the normal chaos of the holidays, you add Star Wars right now on top of that. I can't imagine what the excitement level is over there.
Katy: Well it's really high energy. We've been looking forward to this for quite some time. Our GeekLabs team has developed some innovative and exclusive products related to Star Wars – both the older movies that some of us remember growing up, as well as The Force Awakens.
Bill: Sure, well exciting times. Speaking of exciting times, and going back a ways, would you mind taking us through some of the twists and turns in your career that have led up to this point? I think our listeners, given where you are, may find this journey a bit surprising. What could you tell us about your growth as businessperson?
Katy: Sure, well you know I started with GE, a large multinational company, straight out of school in a financial management training program and moved around to different rotational assignments. After that I joined GE's core product staff, where I traveled throughout the world doing financials but also business process improvement reviews. After I finished that, after five years of being on the road, I moved to Europe and took an assignment at the time at GE plastics business in the Netherlands and spent about two years there. Then I moved back to their headquarters in a financial planning analysis role. A few years later, I had my first chief financial officer job in their transportation business and went back to Connecticut to run the audit staff that I was once a part of for a few years and then moved to London, so another international assignment as their chief financial officer of health care business.
So how did I get here from GE, which is very different company? It was due to one of our board members, who was on the board here at GeekNet. He sat on the GE board and needed somebody to come and basically take a business that had been very entrepreneurial and ensure that, because it was a public company, we had the proficiencies, the disciplines, and the metrics to grow and grow profitably. So I loved the idea of coming to more of a startup environment, a smaller company where I could get my hands on so many different things on a day-to-day basis. And I always love a challenge and certainly this has been one. I've been here now five years, first as CFO and then on to CEO.
Bill: What a journey I mean when you have a finance and operations background at a larger company environment, and obviously the GE culture and the Think Geek culture may have slight differences. How, beyond what you said Katy, is the need to bring some of the infrastructure into an environment that is so high energy in and highly creative? How has it felt? What's the move been like to you? How have you handled a lot of different things? We know from being down there with you and your colleagues, how much passion there is, and energy, but no you’re a few years into this, how does it feel?
Katy: Well I think it feels great. I think we're at a great place. We've had our challenges. It's never easy to be a smaller e-commerce company and being a standalone public company. So we certainly had our challenges, but what we did is really take a step back and think about what's most important, which is the customer. The fact that we have such an engaged passionate group of people that love ThinkGeek, who we are, that's what motivates us every day and we did a lot of work around our brand and our exclusive products. We knew that launching more of our own exclusive products was the key to our success in a very competitive retail environment. So it's different, I mean I can equate it to when I first came here and I had the opportunity throughout my career to work in different environments. So for example working in overseas assignments, traveling throughout the world, and being in different places, working in new acquisitions and I think when I first came here, just like those experiences, I had a lot to learn. I had a tremendous amount to learn about retail, about e-commerce, about the technology that powers it, but I leveraged the fact that I had moved industries and locations so many times and learned from the best, learned from the people who work here, who knew it better than I did.
Bill: Well I think one of the things that we found right away is, and it isn't surprising given as you say the depth the passion of the ThinkGeek Universe and all of its fandoms that comprise it, these folks smell a fraud a mile away and the company is unmistakably and importantly of, by, and for the geek universe. Even while bringing these infrastructural elements and business processes, we know how hard you in the team have worked to make sure that the company remains really authentic. Could you speak about entering a culture where the team around you is so motivated and so a part of all of the things that core customer values?
Katy: Certainly. So it is a strength that we have our employees who are fans of the company, who are customers of the company, and I think it's one of the things that makes ThinkGeek special. My challenge and our challenge was to ensure that while being authentic and remaining very true to the core, we were also being very inclusive. So I saw an opportunity, even if I just think about myself, I'm a mom over forty, buys a lot of gifts for the family. So I might not look like the core geek, but in fact I have the passion to want to find amazing gifts for people in my family or in my life and oh by the way if I can pick something up for myself, terrific. So I think that as a team we've come together to ensure we're remaining authentic and should have a core while being inclusive and expanding the customer base.
Bill: You're not Cos-playing every day Katy, when you go in?
Katy: I don't have time. I mean the great thing about ThinkGeek is we have so many different fandom there's always something for anyone who works here, any of our customers to be excited and passionate about. So I feel like there's something fun for everyone on our site and in our stores that we sell to. So I think that is something that motivates our employees every day.
Bill: Sure and one of the things that I know that the company has elevated, and you referenced it, is this belief that all shapes and sizes, wherever we come from, whatever we're into, there's a little bit of geek inside of every one of us in terms of the activation of that passion and support of the things that we all love as individuals. Whether it's classic fandoms that are obviously associated with geekdom and have been for a long time, but new things gadgets, different gifts. Could you speak to this sort of finding or the process of finding the geek inside of all of us?
Katy: Sure, well I mean I think first we start with our customers and we listen to our customers. We have a very engaged social media community and they have terrific suggestions for us, like what products they'd like to see and if they exist today they give us tremendous input on them or maybe on those that don't yet exist. We also look at our team of people who have many diverse sets of passions. So for example few years ago we didn't have much in terms of cooking related products, now R2-D2 measuring cups has been very successful for us, as well as previously the Star Trek Enterprise pizza cutter. So cooking is something that many people get passionate about and we've celebrated that with the some of our products.
Bill: Well this evolution of the brand and of the company that you're talking about managing seems to track really closely with the way the concept of how geeks and geekdom has evolved. I mean it used to be that it was a pejorative term that was about the taxonomy of high school social groups and it was the kids that were in the basement and they were really smart, they were really into technology and they were kind of socially awkward, but over time the definition of a geek has expanded in such an inclusive way and it really is about sharing in a community it seems. Could you speak about how the sort of branding of the company has evolved in concert with perhaps the societal perception of what geeks are and who geeks are?
Katy: Sure, I mean clearly as technology has become a bigger part of everybody's life, and geek has definitely become something that is more mainstream, it's much more cool to be a geek than when I was in high school, let me say that. I think in terms of our brand, we always want to, as you said, we want to be authentic. The company started more as probably stuff, a lot of cool stuff that geeks would like. [Now] I think it's more to more of a lifestyle brand and more overall experience and a place where people can celebrate their inner geek and connect with one another. So I think that's been that evolution and has allowed us to be known by a broader group of people.
Bill: You mentioned the importance of GeekLabs and sort of home grown product concepts, when you think about the ThinkGeek brand and the fact that the business on the site has always featured mega licenses – Star Wars, Star Trek, Dr. Who, and Mine Craft and on and on – how have you or how do you think about nurturing the ThinkGeek brand alongside these other critically important and also super well-known or well-regarded brands that are part of the product assortment? Is there any sort of juggling that has to go on there?
Katy: Well I think that the most important thing with our licensed product is to find that product that will generate conversation, that is unique, that is as timely. As Ty Liotta, who runs GeekLabs would say, it's that part of the movie, if it's a movie like Star Wars, that people who are really passionate fans remember and that they want to have a conversation about. So that's where I think we get our authenticity within the licensed product. In GeekLabs however at least half of our products are non-licensed, so ThinkGeek branded items that our team comes up with the idea, generates, and has manufactured for a customer.
Bill: And to your point I mean it seems your R2-D2 measuring cups are perfect example. It is probably very easy if one simply wants a T. shirt, or plush, or whatever it is that reflects that character that they like, that entertainment property that they like, it's probably easy to get that, but it probably isn't easy to get the really sort of creative and unique and shareable applications of these licenses that the team conceptualizes at ThinkGeek.
Katy: Yes we want to create the product that people are themselves posting on social media and saying look what I got at ThingGeek, and that really creates a smile on everybody's face because it's such a fun product that in some cases will also be that joke that is the inside joke that people who are passionate fans understand.
Bill: Right and some of the other ways that the e-commerce site and all the other brand touchpoints bring the spirit to life, I mean through the blog, through the product videos that are hilarious. ThinkGeek has over a million likes on Facebook and similarly large communities across different social categories, the company obviously has a tremendous presence at Comic-Con and in different places where you would expect it to be a leader. How does, and we know we're discussing it from a variety perspective, but the voice of the brand, the content, that drives such a strong community affiliation, how does that work alongside some of these incredible product ideas and applications?
Katy: Well I think it's very important. We want not only the products to be fantastic but we want people to enjoy the experience. So when they read the copy, it may be sharing the inside joke or celebrating, it is definitely a voice that is unique and the balancing act there is always to be able to give that to the customer, but also make sure we're providing the important information they need to decide whether or not they want to buy the product. So you want the voice to be there but you also have to keep in mind that you have a broad group of consumers who are coming, in particular around the holidays right now. Some may get the joke better than others and we just want to make sure we're inclusive.
Bill: Speaking of inclusion, the stereotypical geek association, which is very outdated of course, but was a young male whether teens or early twenty's, typically not with the family, you mention being a mom and there are obviously wide applications for the products in terms of gifts and self-use across the lifestyle. When you think about inclusion, how important is the demography, and attitudes, and behaviors of this broader marketplace as the company looks to expand its base?
Katy: Oh I believe it's very important. I mean one example would be when I first arrived we sold primarily black T. shirts and many were very popular and some still are. However we knew if we wanted to reach more women, we might need a few other colors. We've added geeky scarfs with the pi and infinity symbol on them, some yoga pants, so in with that came of course more sales. So I do think it's important to keep in mind who's coming to the site. As we think about videogames for example we already had some videogame licenses. We're now working with GameStop. A tremendous amount of, if you look at the data, women are playing videogames more than ever. So we needed to make sure that product assortment is broad enough to include everybody who wants to shop on our site.
Bill: Speaking of GameStop are you going back and forth to, they're right around Dallas, right? You back and forth there all the time?
Katy: Well of course there was a lot of discussion in the beginning, but we're very focused on this holiday, being our first holiday together, so the goal has been first things first let's have a successful 2015 holiday season and there are bigger broader things that we can do as we get into 2016. We are very excited that we have our first retail stores, one opened in Orlando with our ThinkGeek brand on it in November, we have another store that opened in Nyack, New York last week, and another one coming in Dallas, so that's very exciting for us.
Bill: Terrific, absolutely and I know that back before the acquisition, the company had been doing some things in the wholesale business and had been looking at and considering ways to bring this creativity, and the amazing products that the company makes, into different channels and reach the consumer in different ways. Obviously the retail expertise that GameStop brings, in addition to the possible enlargement of the consumer base, seemingly those are pretty important superpowers to talk about growth.
Katy: Very important I mean we've been a successful e-commerce company but we also saw some success in selling our products into big-box retailers and specialty retailers. So it's perfect and I can tell you, our customers were incredibly excited about the retail location. We had people in Florida who drove several hours to be there for opening and that really is terrific for us, we want to see that grow and expand.
Bill: Yeah it's great. So obviously retail is a huge innovation and a step forward for the brand, I know you're very focused on making this a great holiday season. Any other things that you can talk about that we can expect from ThinkGeek in the next little while or as you look down the road or would you rather we wait and see?
Katy: Well I think what you can expect is that we continue to increase the number and the revenue from exclusive GeekLabs products. Now we have a bit more scale, so we have the opportunity to produce more and get that product distributed, as you said earlier through multiple channels, so we have a nice multichannel business. Hopefully this also will give us the opportunity to reach the significant customer base that GameStop has while continuing to delight and entertain our current customers and hopefully at some point we can do more outside the United States. There is still a tremendous amount of opportunity in the U.S. but this gives us a platform to look at international expansion at some point.
Bill: Definitely and having gotten to know Ty and team a little bit I mean the GeekLabs team and work process is really just an explosive idea factory of incredibly creative things that make you smile, make you laugh, and some ultimately turn out maybe to be impractical but the overall net effect of that is an assortment that is not something that you can even come close to finding anywhere else. And to be able to provide greater sort of oxygen and visibility to that incredible capability, I just can't wait to see what happens when more and more people have access to these types of ideas.
Katy: Yes, well thank you. We are incredibly proud of the work that they've done, the team deserves all the credit and now they have an opportunity to create more unique products that will hopefully put a smile on the face of our current and future customers.
Bill: Sure, no doubt they will and as we close in Katy, thank you so much for this time and insight. It has been such a pleasure Finch playing an infinitesimal role and getting to know you and the team and to be able to see a bit of this close up has been a real joy for us. As people look at your own career path and the things you've learned along the way, and I'm sure all of our listeners or many of our listeners are finding inspiration in this sort of journey that you've taken, are there any words of wisdom that you can share with folks who find your career path or at least elements of the things that they might want to emulate in their own lives?
Katy: Sure. Well first I want to say thank you for this opportunity and thank you for the work that you and your team did. It was instrumental in us telling the story of our company to our investors and eventually to GameStop. To answer your question I have a couple of things that I reflect on. I think one is, when you're presented with an opportunity, step up and take it, even if you feel like it might seem like a daunting job or something you're not quite sure you're ready for, push yourself and surround yourself with the right people and a good things will happen. And I think the second thing that I would say that I learned is it's really important to learn from your setbacks and mistakes and to be resilient and move forward from those. Those are be the things that I try to keep in mind and share with my team because there will be things that won't go well and the most important thing is that you learn from them and move on.
Bill: Yeah absolutely and to that end one final question, I lied I guess. Could you speak for a minute about sort of the mentorship and management side of things? And here's a bit of context for why I think this would be interesting, when we got to know members of the team, and it's a very self-contained really sort of passionate group of folks, many of whom may have come at their professional growth an opportunity out of a sort of a passion for the product and the fandoms. They may not have, many of them or all of them haven’t had sort of a linear classical business education across functions. They may have risen to where they are through passion, and as you think about expanding capability and capacity of the team, as you think through mentoring and managing folks whose journeys may have had more of left and right turns, what have you found within the culture and how would you describe the internal side of this as you nurture and grow the team?
Katy: Well I think it's something that is a balance every day that we have to strike, which is the creativity and entrepreneurial spirit of the company. It's essential, it is a culture, its who we are but as we've grown and been asked to do more, we’ve been thrilled to have the opportunity to add some more business disciplines that needed to be sharpened. So for example project management, we've added some people who at GeekLabs aren't necessarily the creative product development people but they're very good at project management. Some more skills around technology as we expanded our presence in mobile. This year we just launched an app, we implemented in new RP system, so that required us to add certain skill sets within information technology engineering that we may not have had but blended in nicely with the people who'd been coding the website for quite some time. So I think it's how do you balance what is so good about the core with some of the business process disciplines that are essential as a company grows to a certain level and wants to increase profitability.
Bill: Do you have to get it yet to be effective there? I mean regardless of what your professional pedigree might be, it would seem like whether one is a classically motivated geek and loves some of these fandoms in their own personal lives, at the very least you have to kind of respect that, right?
Katy: Yes absolutely, I mean you have to respect it. If you come in and you think immediately I'm going to take a cookie cutter approach that I use somewhere else and just plop it down here and it's going to work correctly that would be naive. They definitely need to understand, to be empathetic to the culture and embrace it, but at the same time make sure that the goals and objectives that you set for yourself and your team are being achieved.
Bill: Sure, well that's a great place to leave it. We've kept you longer than we promised but we're so grateful for your insight. We wish you and the team all the best certainly for the holidays and can't wait to see how this story unfolds over time. What a great opportunity, a great brand, a great group of people and Katy McCarthy of ThinkGeek honored that you spent some time with us this morning.
Katy: Thank you very much Bill and happy holidays.
Bill: Many thanks to Katy for her time and her insight. It has been such a pleasure for us to be part of the story of ThinkGeek and to get to know Katy and members of her team along the way. Three ways as always to help us here at real world branding, the first is to subscribe if you like what we're doing, we do an interview with a business or brand builder basically every other week, although that schedule may be modified slightly over the holidays here. And then in off weeks we will do what we call One Big Idea, which is a focused kind of meditation for ten or so minutes on one important topic that we're running into, either that came up through one of our interviews or through our work with clients as we build our own brand here at Finch Brands. So subscribing to us by clicking that button in the App Store of your choice will make sure that you do not miss a one. We think it or at least we hear that it also helps us with making sure that we are found in search results for others who might find value in the type of content that we put out there at Real-World Branding. Second way is to rate us and we'd love to hear it. We appreciate feedback and ideas for how to make this ever better and ever more valuable, but rating us if we've deserved four stars, five stars would be something that we would certainly love to see. We think that also helps us with search results. And then lastly, let's keep this dialogue going. Twitter's probably the best way @billgullan or @finchbrands, finch like the bird. Ideas for future guests, questions for future guests, topics that you'd like to hear us address, as well as just feedback on what we're doing well and what we're what we're not doing so well. We'd love to hear it to make sure this is time well spent for you our dear listeners. So on that note a wonderful Thanksgiving and holiday season to all of you and will sign off from the cradle of liberty.