Ron Johnson: Business Lessons From Apple’s Success and JCPenney’s Nearly $1B Failure | Entrepreneurship | E417

Ron Johnson built one of the most successful businesses in retail history, the Apple Store, at a time when many believed the internet would make brick-and-mortar obsolete. Alongside Steve Jobs, he pioneered a customer-centric retail experience built on service, trust, and bold ideas. However, after decades of groundbreaking success at Target and Apple, Ron's attempt to transform JCPenney ended in failure, forcing him to rethink how innovation must be paced and executed. In this episode, Ron shares how entrepreneurs can innovate, earn customer trust, and know when to change course. In this episode, Hala and Ron will discuss: (00:00) Introduction (00:00) The Bold Bet Behind Apple Stores (06:12) The Principles Behind Apple Store Design (15:31) How the Genius Bar Was Born (21:10) True Innovation vs. Simple Improvement (22:52) How Target Used Design to Win (39:11) Why Ron Took on JCPenney (52:34) Lessons From Ron’s Biggest Failure (55:35) Leadership Lessons From Ron’s Favorite Quotes (1:03:28) How AI Will Transform Retail Ron Johnson is a seasoned retail executive, entrepreneur, and former CEO of JCPenney, best known for transforming the global retail landscape. As Apple’s former Senior Vice President of Retail Operations, he led the creation and rollout of the iconic Apple Store and Genius Bar concepts alongside Steve Jobs. Prior to Apple, Johnson served as Vice President of Merchandising at Target. He is also the author of Shop Different, which captures his decades of experience in retail innovation and executive leadership. Sponsored By: Indeed - Get a $75 sponsored job credit to boost your job's visibility at Indeed.com/profiting Shopify - Start your $1/month trial at Shopify.com/profiting. Northwest Registered Agent - Get a complete business identity with Northwest. Visit northwestregisteredagent.com/YAPFree and start using free resources to build something amazing. Mindstone - Master practical AI skills without the complexity with Mindstone’s AI Competency Programme. Head to experience.mindstone.com/yap and get 10% off. AT&T Business - Stay connected with reliable, secure internet built for entrepreneurs. Switch to AT&T Business at business.att.com. HoneyLove - Treat yourself to the most advanced bras and shapewear on the market. Save 20% off Honeylove by going to honeylove.com/PROFITING! #honeylovepod Freshbooks - Manage all your business finances in one place. Right now, my listeners can get FreshBooks for less than $3 a month for your first four months — that's 90% off. Head to FreshBooks.com/podcast to get started. Walmart Marketplace - Reach millions of active online shoppers and get ready for holiday demand. Apply to sell today at marketplace.walmart.com/yap. AG1 - Get a daily health drink that helps maintain energy, support gut health, and support immune health, all in one simple scoop. And for a limited time, save 20% on your first subscription order of AG1 Next Gen or AG1 Pro at DRINKAG1.com/PROFITING. Resources Mentioned: Ron’s Book, Shop Different: bit.ly/-ShopDifferent Ron’s LinkedIn: linkedin.com/in/shopdifferent Active Deals - youngandprofiting.com/deals Key YAP Links Reviews - ratethispodcast.com/yap YouTube - youtube.com/c/YoungandProfiting Newsletter - youngandprofiting.co/newsletter LinkedIn - linkedin.com/in/htaha Instagram - instagram.com/yapwithhala Social + Podcast Services: yapmedia.com Transcripts - youngandprofiting.com/episodes-new Entrepreneurship, Entrepreneurship Podcast, Business, Business Podcast, Self Improvement, Self-Improvement, Personal Development, Starting a Business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Technology, Marketing, Negotiation, Money, Finance, Side Hustle, Startup, Mental Health, Career, Leadership, Mindset, Health, Growth Mindset, Passive Income, Online Business, Solopreneur, Networking

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Hala Taha?

  Today's episode is sponsored in part by HeyGen, Shopify, Life at the Speed of Play, and Indeed. HeyGen helps you create AI avatar videos without constantly being behind the camera. Get your first three videos free at heygen.com/profitting. Shopify is the global commerce platform that helps you grow your business. Start your $1 per month trial at Shopify.com/profitting. Life at the Speed of Play by Mark Pincus helps entrepreneurs quickly test ideas and find the ones worth pursuing. Get two books for the price of one at GetMark'sBook.com/Yap. Indeed helps you attract, interview, and hire all in one place. Get a $75 sponsored job credit to boost your job's visibility at Indeed.com/podcast.

• 0:45Hala Taha?

  As always, you can find all of our incredible deals in the show notes or at YoungandProfiting.com/deals.

• 0:52Speaker 01

  Most people thought it was insane that Apple was going to open stores, including a couple of the board members. Steve said to me, he goes, Ron, we have $4 billion in the bank. If I could write a check for a billion dollars today and have 100 stores, I'd be happy.

• 1:05Hala Taha?

  When Ron Johnson joined Apple in 2000, the company had a tiny share of the computer market. Ron helped create and launch the Apple Store and Genius Bar. Ron takes us behind the scenes of his work at Target, Apple, and JCPenney, while sharing what he learned about innovation, leadership, and decision-making through both his greatest successes and biggest failures.

• 1:25Speaker 01

  Steve believed, after that experience, that if Apple is going to win, it had to control the customer experience. Because the reality, Dell's done pretty well selling computers over the internet. And Gateway, selling PCs, is closing its stores.

• 1:38Hala Taha?

  You came up with the concept of Genius Bar, correct?

• 1:41Speaker 01

  I called Steve and I said, Steve, I got the name. I'm going to call it the Genius Bar. And he said, you can't do that because anybody you find who can talk about technology is a geek. So if you want to call it the Geek Bar, maybe that would work. I said, the main reason I want that name is-

• 1:56Hala Taha?

  How did that impact your ego? Like, did you feel down or like that you were a failure because you had failed?

• 2:02Speaker 01

  I was a failure. Make no mistake about it. When you're the CEO of a company and you do something, fails in everyone's mind, and you walk away from it, you failed. I think even today, there'll be times I wake up and my stomach churns about-

• 2:18Hala Taha?

  Ron, welcome to Young and Profiting Podcast.

• 2:20Speaker 01

  I am so excited to be here. Nice to meet you, Al.

• 2:22Hala Taha?

  Nice to meet you as well. Thank you for flying out, being here in person. You've got such incredible experience. You've been with Apple, Target, JCPenney, in the C-suite, and you've done such an incredible job transforming these stores, especially Apple and Target. So I want to start with Apple.

• 2:43Speaker 01

  Sure.

• 2:43Hala Taha?

  I learned that you convinced Steve Jobs to put in Apple stores, before they were even a thing, in really expensive malls when Apple only had 5% of the PC market share and four products.

• 2:57Speaker 01

  Right.

• 2:57Hala Taha?

  How was that not a completely insane idea at the time?

• 3:00Speaker 01

  Well, most people thought it was insane that Apple was going to open stores, including a couple of the board members. But I didn't convince Steve. Steve wanted to open stores.

• 3:09Hala Taha?

  Okay.

• 3:10Speaker 01

  Steve had come back to Apple in 1997, launched that cult hit, the iMac, which had rave reviews, even made the cover of Time Magazine.

• 3:20Hala Taha?

  Wow.

• 3:20Speaker 01

  But it didn't change the game for Apple. It sold to the Mac faithful. And Steve believed, after that experience, that if Apple is going to win, it had to control the customer experience. So it wanted to open stores. So he called me to come out and talk to him about stores.

• 3:37Hala Taha?

  So he poached you from Target.

• 3:38Speaker 01

  He recruited me from Target. But during that first conversation, interestingly, I said, so who's the customer? How big can this be? And he said, Ron, we've got 5% market share. Which it turns out, it was two or three, but he said five. And he said, if we go after the creative consumer, now, Apple does a great job with creative apps for pros. We have high market share in the marketing departments, the creative departments, but not as much in the business side. I think we can double our market share and get to 10%. And later he told me the board wasn't supportive. And I said, well, you know, the board might be right. If all you want to do is double your market share, because the reality, Dell's done pretty well selling computers over the internet.

• 4:23Hala Taha?

  Yeah.

• 4:23Speaker 01

  And Gateway, selling PCs, is closing its stores. So maybe the board is right. And I said, but I don't know why you want to sell to the creative pro only. And I had come from Minneapolis, so I was living and working at Target. And in Minneapolis, very few people had computers. And it turns out, only 50% of American households had a computer.

• 4:45Hala Taha?

  Yeah.

• 4:46Speaker 01

  And I said, you think you've lost the PC war to Microsoft? There's half the market to go.

• 4:51Hala Taha?

  Yeah.

• 4:52Speaker 01

  And I said, now, if you want to go after everybody, that'd be interesting. And I had that idea because I just brought design to Target, which became Design for All, and people loved it. And once I told Steve that, he got real excited. And he said, no, I could do that, but where would you put stores? And I said, well, we'd go where they shop, where people shop. That's the mall.

• 5:15Hala Taha?

  And he hated the mall, right?

• 5:16Speaker 01

  He goes, I hate malls.

• 5:18Hala Taha?

  Why did he hate them?

• 5:19Speaker 01

  He hated. He said, they're filled with crappy stores, and they're crowded. And I think for him, it was a little bit back to Steve had become a celebrity at age 24 when he launched the personal computer.

• 5:32Hala Taha?

  Yeah.

• 5:33Speaker 01

  And founded Apple and Pixar. And it was hard for him to be in a public space.

• 5:38Hala Taha?

  Yeah, so he didn't-

• 5:39Speaker 01

  And, but it was pretty clear. I said, look, Steve, if you want to find your customer, you got to be more convenient than a remote parking lot where all the computer stores have been located. Because they're bought every four or five years. So why would you pay for expensive mall traffic? It was common wisdom.

• 5:56Hala Taha?

  Yeah.

• 5:56Speaker 01

  And the next time I met Steve, a couple of weeks later, the first thing he said to me is, Ron, I'm going to offer you the job. I thought, wow, that's pretty good. You know, one discussion. But I said, he said, but you're right about malls. We should put stores in malls. So I didn't really have to convince him.

• 6:13Hala Taha?

  Yeah.

• 6:13Speaker 01

  It was pretty obvious, once we decided we were going after everybody, that the only way to do that would be in a mall. But Steve said to me, he goes, I realized I might not be able to get someone to get in their car and drive 10 miles to check out a Mac. But I could get him to get, what, 10 feet out of their way.

• 6:31Hala Taha?

  Yeah.

• 6:31Speaker 01

  And that's all we have to do in a mall. And he was right.

• 6:34Hala Taha?

  Yeah, it's so interesting that there was some initial pushback, but he, he said that he was going to give you a billion dollars, basically, to build these stores. Is that right?

• 6:44Speaker 01

  Yeah, so Steve offered me the job. I came out two weeks later with my wife Karen to kind of just talk to him one more time. He took me to a Macworld. Super exciting. You see just how interesting Apple is as a company, how strong Steve is as a leader.

• 7:03Speaker 01

  And we went and toured Stanford Shopping Center. And at the end, he said, so any other objections? I said, Steve, you said the board has approved a test, that we should open four stores and see how it goes. I said, unfortunately, I won't come for a test.

• 7:20Hala Taha?

  Not going to change your whole life, just-

• 7:22Speaker 01

  Well, I said, I'm not going to give up the career. I have a target for a test. But more importantly, I won't be able to recruit any A players to come for a test. If you believe in something, you need to be all in. Well, that's Steve's nature. He's always been all in. Everything he's done, he's been all in. And he quickly just looked at me and he said, Ron, we have $4 billion in the bank. If I could write a check for a billion dollars today and have 100 stores, I'd be happy. Well, I knew it wouldn't cost $100 million to build out 100 stores. And then I said, okay, let's go do this.

• 7:58Hala Taha?

  Yeah, very cool. So let's talk about some of the principles that you used when designing these stores. You really wanted the store to be a place of belonging. You really wanted to be, to be more about relationships than transactions. Talk to us about what your philosophy was.

• 8:16Speaker 01

  Yeah, it was, well, it was pretty obvious. This is 2000. When we're talking about the stores, we're at the height of the dot com bubble. It burst like four months later, we're in the middle of designing stores. But people, there were literally smart people who thought stores were going to go away. People, some people still believe that today.

• 8:36Hala Taha?

  Yeah.

• 8:36Speaker 01

  Even though it couldn't be further from the truth. But when you're designing a store in the midst of the internet, which is taking off, you have to think through, what could I do that the internet could never do? And that's essentially create a place to belong, to deliver an experience. So we had to design a store that had so many advantages to shopping online that everyone would prefer to come to a store. And the beauty is, because Apple had such a small product lineup, four total products.

• 9:09Hala Taha?

  Yeah.

• 9:09Speaker 01

  Computers only, two portables, two desktops, that's it. We could present the entire product line in 30 square feet. But we built stores that were 6,000 square feet big.

• 9:23Hala Taha?

  Wow.

• 9:24Speaker 01

  And we did that because that was the size, basically, of a great space in the mall. That's what the Gap had. And they were like the leading specialty store. And Steve agreed that how you present yourself has a big impact on how people perceive you.

• 9:38Hala Taha?

  It was like the dominance of the mall, basically.

• 9:40Speaker 01

  And we wanted to be a brand that was like a Gap, you know, because he said, we're much bigger than the Gap. And that enabled us to have the space to create experiences.

• 9:48Hala Taha?

  Yeah.

• 9:48Speaker 01

  So we devoted, very simply, first rule, half goes to new customers, the ones we're trying to attract. That'd be the front of the store. And everyone could try every product. Up until then, you couldn't try products in a physical store.

• 10:02Hala Taha?

  Yeah.

• 10:03Speaker 01

  They were just things on display. But we had to connect them to the internet, figure out how to keep them current with software, you know, et cetera, et cetera. But the half went to the products, and the other half went to owners, assuming people buy. How do we help them get over, overcome their fear of technology?

• 10:20Hala Taha?

  Yeah.

• 10:20Speaker 01

  Because that was the enemy. The reason people didn't have computers, they were too complicated. They were scared. They'd buy this and never use it. So we put in theaters, where you could take classes, and tables, where you could get training, one-to-one eventually. And a Genius Bar, where you could get face-to-face help. So we put in all of these services, along with the thing. And the stores became immediately one of the most popular stores in the mall.

• 10:47Hala Taha?

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• 12:54Hala Taha?

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• 14:10Speaker 01

  Well, that was the instinct I had, yeah.

• 14:12Hala Taha?

  Yeah.

• 14:12Speaker 01

  You know, Steve and I had spent a long time designing. And Steve has spent a lot of time. You know, Steve's obviously a really busy person. He's running two companies at the time.

• 14:21Hala Taha?

  Yeah.

• 14:21Speaker 01

  CEO of Pixar and Apple. You know, leading Apple. And we got this new initiative called Retail. And he had come over every Tuesday for four hours in a warehouse to help design the store with me and the team. Put a lot of energy into it. Steve called me every night the first year at 8 o'clock for me to get to know him so he could delegate and trust. He put a lot of energy into it.

• 14:47Hala Taha?

  Yeah.

• 14:48Speaker 01

  And then one day, I was flying back. I was commuting from Minneapolis. And my wife had just completed another beautiful scrapbook of my two-year-old son and four-year-old daughter. And it hit me that I live in an analog world on the weekends when I'm with my family in Minnesota. But in Cupertino, I'm in a digital world where we're inventing all these apps to like get rid of the scrapbook. And I talked to Steve one night on a Thursday. I said, Steve, have you ever thought about this? You know, the Mac, if we succeed, it'll be the center of someone's digital life. Yeah, where I am, my wife makes, takes pictures. We go to the grocery store, get the film developed. She cuts them up, puts them in a scrapbook. It's wonderful.

• 15:33Speaker 01

  And I come to Cupertino, we're making digital scrapbooks. And that's true of movies, that's true of music. And I said, the Mac's kind of the center of your digital life. And Steve said, can you write me an email on that? And I said, sure. And I wrote him a little note the next day. And then Monday, he bounces into ET. And I think my conversation is probably crystallizing thoughts he had from many other conversations. So I'm not taking credit for this. But he walks in, he doesn't sit down like he always does, hardly says good morning. And he goes up to the whiteboard and he goes, I've got the future of the Mac. He said, we're going to call it the digital hub.

• 16:08Hala Taha?

  I love that.

• 16:09Speaker 01

  The hub. And he said, the Mac will be in the center. You'll have your devices, like your Canon camera or your Sony camcorder. And we'll create a layer of software in the middle. And we'll be able to take your data, your content from your camera, you know, into the Mac. And through our applications like iPhoto, iMovie, iTunes, we will do things you couldn't do before. And that's how we'll position the Mac. And so we talked about that at ET. And then that night, I woke up about 2:00 in the morning. I couldn't sleep. I said, well, if Steve really believes in the digital hub, we designed our store around products. They should be designed about, around the digital hub, about what people can do.

• 16:51Hala Taha?

  Yeah.

• 16:52Speaker 01

  So the next morning, it was Tuesday, which is when we have our retail meeting. And Steve used to like me to go to the main building, Infinite Loop in Cupertino and ride with him to the store, just so we could catch up and chat about what we're going to do that day. And I got there and he said, you look, he goes, you look tired. I said, well, I was up. And I said, you know, I've been thinking about the store. And if you love the digital hub, you know, I think the store is wrong. And he looked at me, said, tell me more. And I told him what I just told you. And he said, God, dude, you know, you might be right. But do you know how much work I put into the store? Let's go, I don't want you to talk about this today. Let's work on what we're going to work on.

• 17:36Speaker 01

  Cause you might be right, but I don't know if I have the energy to design an entirely new store. I said, okay. And we got in the car and quiet. You know, usually we chatted the whole way there. It was, you know, eight to 10 minutes depending on traffic lights. And we got there and we walk in. He hasn't said a word yet since I talked to him. We meet, there's a group of 15 people there waiting. And Steve's coming. Who's going to get to go first? There's all that pressure of now Steve's in the room. And Steve looks at everyone, he goes, well, Ron just told me that our store is all wrong. And he's right. And so we're going to start over. But I'm going to leave now and leave it up to you guys to figure it out.

• 18:19Hala Taha?

  You guys figure it out.

• 18:21Speaker 01

  But he told the story then, really affectionate to the group, that every great thing he'd done, there became a moment in the project when you did have the courage to do a U-turn.

• 18:33Hala Taha?

  Yeah.

• 18:34Speaker 01

  Or to start over. And he told a story about Toy Story. You know, one of the great movies, first great movie with Pixar. And he said, you know, we got to have the courage to do it right. And that delayed the first store about six months. But it allows to create a place that really became the Apple Store we still see today.

• 18:53Hala Taha?

  Yeah, what a cool story. I love that story. What did that teach you about decision-making and being flexible enough to, to change direction while also being like firm in your original decisions? Like, what did that teach you about decision-making?

• 19:10Speaker 01

  Well, it became a lesson that I really learned from Steve. Steve used to say, if you think through any problem hard enough, you'll come to the inevitable only answer. And everyone will agree with you. Super counterintuitive to what companies like Facebook do today, where let's just get stuff out there and test it and the customer will, that will evolve.

• 19:32Hala Taha?

  Yeah.

• 19:33Speaker 01

  Steve believed in thinking things through with a small group of people and putting your best, best foot forward. That's how he designed products. That's how he created movies. That's how we created this store. And Steve was never in a hurry. Now, he wasn't driven by product timelines. You know, there were a lot of products we thought, is it ever going to come out?

• 19:56Hala Taha?

  Yeah.

• 19:57Speaker 01

  The phone was actually quite a bit beyond when we initially thought we could bring out a phone at Apple, right? So the lesson I learned from that was you get one chance to launch a store, you get one chance to launch a product. Do it great. If you have a better idea, have the courage to make a change.

• 20:15Hala Taha?

  So you came up with the concept of Genius Bar, correct?

• 20:20Speaker 01

  Yeah.

• 20:20Hala Taha?

  What was your initial reason for it? I know.

• 20:23Speaker 01

  Sure.

• 20:23Hala Taha?

  I know that people were not familiar with computers. So obviously to educate, but what else beyond that?

• 20:29Speaker 01

  Yeah. Well, first, you know, I get credit for the Genius Bar.

• 20:34Speaker 01

  But I wouldn't take ownership. Everything is done by groups of people.

• 20:39Hala Taha?

  Yeah.

• 20:40Speaker 01

  And so I had been in a meeting at Offsite, which was really fun with 18 people talking about, how do we build the store? What's the service philosophy? And in that conversation, it became very clear that people felt like they get sold to at stores, but great services in hotels, especially five-star hotels. So we asked the question. I said, right away, okay, let's just spend two days designing the Apple Store service as if we were a five-star hotel. What we do?

• 21:10Hala Taha?

  What a great activity.

• 21:11Speaker 01

  It was really fun.

• 21:12Hala Taha?

  Yeah.

• 21:12Speaker 01

  And it led to, and the reason we decided, you know, stores, once you leave, we don't know you're coming back. So stores tend to try to close these commissions and things to get someone to buy today. Hotels, you've already booked the hotel. You're not leaving.

• 21:29Hala Taha?

  Yeah.

• 21:29Speaker 01

  You know? They depend on you coming back same time next year or telling it front. So they're truly in the service business. And I knew at the time that people would take four or five visits to buy a Mac. So in many ways, we were going to be like a hotel. You're not going to sell anybody on the first visit. So why would not do that? And as we looked at the hotel, we ended the first day, had a great day. And I said, tomorrow, we're going to talk about customer service. You know? It's something that most people hide in a technology store because you don't want the customer to fear. They're already scared of technology. You don't want to say, well, this thing's not going to work. Look at that big service counter you have, right?

• 22:09Hala Taha?

  Yeah.

• 22:10Speaker 01

  And that night I was sitting there thinking about it. I said, so what is there in a hotel that could be a metaphor for service? And I said, every hotel is a great bar. And you think about bartenders, they're really friendly. And if I want to learn about what I can do for dinner, bartenders tend to know because they talk to people all the time. And, you know, they dispense alcohol. What if we dispensed advice? And I said, came in the next day, I said, what if we build a bar for service? And let's make it the most important part of the store. Let's stick it out, you know? And, you know, people kind of reacted pretty well to the idea. And I called Steve and told him about it. He said, that sounds like a great idea.

• 22:54Speaker 01

  What are you going to call it? I said, I don't know. He goes, well, tell me then you have a name. I said, okay. And a few days later, I was kind of watching like I love to do. For some reason, I turned on the old Apple Great Think Different ad, which we all know.

• 23:12Hala Taha?

  Yeah.

• 23:13Speaker 01

  That Steve used when he came back to Apple to motivate the teams. And the last line said, well, some people, we see genius. And I said, genius bar. It just seemed to make sense. And so I called Steve and I said, Steve, I got the name. I'm going to call it the Genius Bar. And I explained why. And he said, you can't do that. And I assumed it was because, you know, you didn't want to leverage the genius branding. He said, no, because anybody you find who can talk about technology is a geek. So if you want to call it the Geek Bar, maybe that would work, but you should think about another name. And this was during the day sometime. And Steve, as I said, would call every night at eight o'clock.

• 23:56Speaker 01

  We had an agreement to do that for a year. And he called that night and I was prepared. And I said, Steve, I want to talk to you about the name again. And I said, the main reason I want that name is I want to be in a position where we have everyone in every city we put a store fighting to be one of the geniuses. Because who wouldn't want to be the smartest Apple person in Minneapolis? The smartest Apple person in New York City? Because that's what the genius is. And I said, then we won't have any trouble getting people who can serve and help with technology. Steve said, interesting. And the next morning, I went into work and I was going up to my office

• 24:39Speaker 01

  and I walked by our general counsel, Nancy Heinon. And Nancy said, Ron, what's a genius bar? Steve asked me to trademark that name, you know? So Steve, you know, quickly, as always, yeah, if you had a good idea, he was the first to get behind it.

• 24:55Hala Taha?

  It's really cool that he was able to kind of change his mind and that you guys actually had a relationship where you could challenge him and then end up getting your way.

• 25:04Speaker 01

  But everyone did on the ET.

• 25:07Hala Taha?

  What's ET?

• 25:07Speaker 01

  Executive team at Apple. You know, this is unique to me. If you were talking to Johnny Ive or Phil Schiller or Tim Cook, they'd all say the same thing. Steve wanted the best ideas to win. And he loved having a vigorous debate, a conversation with people that were really smart and passionate like him to get to the right answer. Nothing, you know, I think, one of you's turned him on, but got him excited. You know, then a good debate.

• 25:40Hala Taha?

  Yeah.

• 25:40Speaker 01

  About something that hadn't been done before.

• 25:46Hala Taha?

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• 26:30Hala Taha?

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• 26:45Hala Taha?

  What's up, Yap fam? You guys know we love reading on this show. So I'm always excited when I find a book I genuinely think is worth sharing. Life at the Speed of Play: Launch Products People Love by Mark Pincus is one of those books. Mark is a legendary Silicon Valley entrepreneur and investor. And this fast-paced 170-page book is his playbook for testing ideas quickly, navigating uncertainty, and figuring out what's actually worth pursuing. One of my favorite concepts is what he calls the abyss. Those moments when you feel stuck or unsure of what's next. Instead of fearing uncertainty, he shows you how to use it as a tool for discovery. Right now, Mark is doing a buy-one-get-one offer for Yap listeners.

• 27:29Hala Taha?

  Go to GetMark'sBook.com/Yap, buy one copy for $32 and get a second copy free. So you can keep one for yourself and give the second to a friend, future co-founder, or someone who needs a little push.

• 27:45Hala Taha?

  What's up, Yap gang? I recently had Gary Vee on the podcast and he told me something that really stuck with me. If you've got sales DNA, you've got to be paying attention to live selling because it's one of the biggest opportunities right now online. And that really got me curious. So I checked out an app that he told me about called Whatnot. I jumped into a live show and I instantly got it. The seller was showing products in real time, answering questions in the chat, and building a real relationship with the buyers. It didn't feel like boring shopping. It felt like a community. Whatnot is the largest live shopping marketplace in the country. And for entrepreneurs, the results are really hard to ignore. Sellers on Whatnot can sell up to 10 times more than traditional marketplaces. And the number of sellers making over $1 million a year on the platform has doubled.

• 28:29Hala Taha?

  So if you've got products to sell and you're looking for a new way to reach customers, search Whatnot, W-H-A-T-N-O-T in the App Store. Download it and you can start selling right away. That's Whatnot in the App Store. So Genius Bar was really innovative. The way that you guys laid out the Apple stores were really innovative. And you talk a lot about like, what does it truly mean to be innovative? Help us understand your opinion on that.

• 28:55Speaker 01

  Yeah, to me, this is the big mistake people make is they don't understand the difference between improvement and innovation. In my mind, innovation always is doing something that has never been done before. Right? And things that have never been done come out of someone's imagination. And that's what makes them disruptive. Most people, you know, are comfortable. They pay attention to what's going on in the world, especially at their competitors. And they take an idea competitors done and it's new to their company, but it's mere improvement.

• 29:30Hala Taha?

  Yeah.

• 29:31Speaker 01

  Right? And there's nothing wrong with that. We should be doing that all the time. Paying attention to what our competitors are doing, shamelessly taking their best ideas and using them. Apple's done that many times. Facebook does that all the time, right? There's nothing wrong with that. That's competition, but it's not improvement.

• 29:48Hala Taha?

  Yeah.

• 29:49Speaker 01

  It's not innovation because everyone's doing that. So the real question when you're trying to improve is, can I improve faster than somebody else? Right? Innovation starts in the imagination. And it takes a whole different level of courage and a whole different level of skills to pull it off. And some companies are great. And some art, as I learned when I went to JCPenney.

• 30:11Hala Taha?

  Yeah, and I definitely want to talk to you about how to test innovative ideas and what the right approach is. But first, let's talk about your time at Target. So you worked at Target before Apple. And you were really responsible for like the whole like Tarjay movement, right? Where Target became sort of like the fancier Walmart, the more like design forward version of Walmart. And I remember growing up, we used to call it Tarjay and like it was like a nicer store. So when you first started at Target, like what was your initiative? Like what were you charged to do?

• 30:48Speaker 01

  Again, let me not just be humble, let me be really honest. I didn't come with up with Tarjay. You know, I think if you read the Target history, someone in Duluth or Minnesota in the third store called it Tarjay. You know, it's just kind of the French pronunciation of that word. And it kind of stuck below the surface. In the 90s, when Target really took off as a company, I was there from 90 to 2000. The stock went up 12 times because Target really got its footing and emerged. Filled that gap between what people thought they could find at a discount store. And what they're finding at the specialty stores in the mall or department stores.

• 31:32Speaker 01

  Which were really the leaders and where you go to find new ideas. And Target took that over. When I got there, you know, the CEO, Bob Ulrich, a great CEO, said, let's differentiate from Walmart. Because Walmart now was making this move from rural America. Target and Walmart started the same year in 1961.

• 31:52Hala Taha?

  Oh, wow. I thought Target started later.

• 31:54Speaker 01

  No, 1961, 20 years later. You know, they were the two leading discount stores. There were still 10. You know, Kmart and Venture and Hills and every region of the discounter. Because the only way to grow, there wasn't an internet, you had to open stores. And it was good to put your stores in one area so your marketing got, you know, leveraged. But Target owned suburbs, Walmart owned rural. Well, Walmart was coming in the suburbs because they had pretty much done all the rural stores they thought they could. But Walmart had a lot lower cost structure. Part, they designed, you know, less expensive stores. But they were also better at systems and different things. So they were a big competitor. So the only way Target could win was by being different than Walmart.

• 32:40Speaker 01

  And different probably had a little higher price point. But a lot of times different wasn't better, it was just different. So the buyers at Target would take something like a high volume toothpaste by Crest. And Walmart was so low on price, they'd get some other ounces and assume the customer couldn't calculate and just charge a different price.

• 33:00Hala Taha?

  It'd be like a smaller toothpaste, basically?

• 33:03Speaker 01

  Smaller or bigger, but it was more pronounced. But they got away with it because there wasn't a direct competitive SKU or stock keeping unit, right? So I came up with the idea that what if we could be different and better? And I called it preferred. You know, something's preferred, you'd probably say it's different and it means more to me.

• 33:25Hala Taha?

  Yeah.

• 33:25Speaker 01

  And for the home area that I had at the time, I started in toys, then I had all the kids, and then I went into home. The home was emerging in the late 90s as the category. People were buying homes and moving even more aggressively to the suburbs. But the retailers that had not dominated the 80s, like The Gap and The Limited. Were now being dominated by people like Crate and Barrel and Pottery Barn and, you know, Williams Sonoma and Restoration Hardware. And so the home era was becoming a hot area. And at the same time, design was becoming a thing in the world. Tom Peters called it the decade of design. Volkswagen did their Beetle.

• 34:11Speaker 01

  Steve and John, you were working on the new iMac, you know, just on and on.

• 34:15Hala Taha?

  Yeah.

• 34:15Speaker 01

  And I said, what if Target won on design? Instead of carrying a tea kettle at $9.99, what if we had a tea kettle that was special? That didn't just, you know, boil water, it lifted your spirits every time you looked at it. And so I had this idea to, you know, do design. And I thought home was the perfect place to do it. And coincidentally, met a guy named Michael Graves, who had been a great architect in the 80s. And had done home products for companies like Alessi, Italian made leader in design. And I was introduced to Michael and I quickly became friends and I said, how would you like to design for Target? You design, we build. We'll go make them because we've got great sourcing.

• 35:00Speaker 01

  And he said, Ron, I'm the head of the architecture practice at Princeton. And not a single one of my students can afford one of my products. I would love to do that.

• 35:11Hala Taha?

  Oh, I would have expected him to be like, I don't want to water down my brand or something.

• 35:14Speaker 01

  That's what his team said. His team didn't want him to do it. But Michael, I don't know, he was, we just got along great. He had no objection. And I remember the first time we toured a Target store together. I came with a packet of yellow pad, yellow stickies, you know, from 3M in Minnesota nearby. I said, just put one of these on any product you think you could do better. He said, Ron, you didn't bring enough stickies. And so he went through and, you know, just.

• 35:46Speaker 01

  And then we launched with 140 items. It was probably, doing design at Target was as much fun as creating the Apple store.

• 35:55Hala Taha?

  Really?

• 35:55Speaker 01

  It really was. It was hard. No one thought it would work. And Michael used to say, you get 10 great days in your life. You know, and he told me about several of them. And I think the day we launched Michael Graves was one of my great days. We were in New York, Target didn't have stores in the Northeast yet. We had taken over the Whitney, we had the courage to take over the Whitney Museum, the first floor. For like a week, but for the night of the launch, we invited all the press and influencers from New York. And the press people said, nobody's going to come. And if you're going to say any remarks, do them in the first 15 minutes because they'll stop by and leave.

• 36:36Speaker 01

  And we took over the floor, we took all the items, some of the items that were coming in, like the tea kettle and the clock. And we treated them like museum pieces. We had like 50 clocks that made the Target bullseye at the entrance. We had chandeliers with stainless steel kitchen tools, did all these beautiful things.

• 36:55Hala Taha?

  That's really cool.

• 36:55Speaker 01

  And, you know, people came in and you could just feel the energy. It was packed. We didn't talk for an hour and a half because people were too busy wandering around. And there was alcohol, which made you help too. But, you know, the thing started about seven. When Michael got up, he was really funny. And he said a few things, and when he was done, we had given everyone a whistle. I don't know, because the whistle's on the tea kettle, you know? And all of a sudden, everyone starts blowing whistles. It was this moment where you knew, you knew it was going to work.

• 37:30Hala Taha?

  Yeah, you knew it was going to be a success.

• 37:32Speaker 01

  Everyone was shocked. People, we finally kicked people out, turned the lights on about 10 o'clock. Just like an event, it was a moment. And it's kind of like the first Apple store we opened, you kind of had a sense it was going to work. And I've been lucky to be a part of some great moments in my career.

• 37:51Hala Taha?

  Yeah.

• 37:51Speaker 01

  And that was one of them.

• 37:52Hala Taha?

  Really cool. So you decided you were going to do home goods. Fashion, from what I read in your book, like it, like the trends changed too quickly, but you did innovate.

• 38:03Speaker 01

  Well, now here's what I've tried to, in the book, the point I was trying to make in the book.

• 38:06Hala Taha?

  Yeah.

• 38:06Speaker 01

  And this was the business case for design. Because when you do something innovative, you're in the business to make money. You've got to think, why does this make sense? So Target had, in their business model, two categories of merchandise. We'd say we had basics. In basics, you had to price with the market, whatever Walmart charged, we charge.

• 38:26Hala Taha?

  Okay.

• 38:27Speaker 01

  And therefore the prices, the margin tends to be low, but they drive a lot of volume. Then you have fashion and we had, you know, 30% of the store in things like apparel for kids and family and men's and women. That you can take a high markup. But you got to mark it down every season. You know, unfortunately, summer goes away.

• 38:47Hala Taha?

  Yeah.

• 38:47Speaker 01

  You know, then we have fall and then we have holiday. So fashion for a store like Target, you know, it's not a luxury brand that gets 80 point markups.

• 38:56Hala Taha?

  Yeah.

• 38:57Speaker 01

  Would, you know, make a little higher margin than basics, but not a lot. I viewed design, you could get the markup of fashion. Because it's got that same appeal. But a great item would be in assortment 10 years from now. You'd never have to mark it down.

• 39:14Speaker 01

  Right? So whereas we were making, if you fuzz your eyes, 30 points on basics.

• 39:18Hala Taha?

  Yep.

• 39:19Speaker 01

  40 points on fashion. We can make 50 points on design. So if design became 10% of our volume, that would add one and a half points of margin to Target's bottom line. We could fit that in.

• 39:31Hala Taha?

  Yeah.

• 39:32Speaker 01

  And grab a new customer. So it was a good business case. But convincing people at Target to do that was hard because they saw our big competitor being.

• 39:43Hala Taha?

  Cheaper, yeah.

• 39:43Speaker 01

  Cheaper at Walmart. And now we're going up further?

• 39:48Speaker 01

  This is going to change the image of Target if you're successful to where no one from Walmart's coming.

• 39:52Hala Taha?

  Yeah.

• 39:53Speaker 01

  But we did it and Target, what it really did is it reinforced the idea of Target.

• 39:57Hala Taha?

  Yeah.

• 39:58Speaker 01

  You know, and then people were all.

• 39:59Hala Taha?

  Premium, all that, yeah.

• 40:00Speaker 01

  You know, we got the customer who was shopping at the mall to come to Target and buy home and more apparel and more discretionary purchases.

• 40:10Hala Taha?

  Yeah. You did something pretty innovative with children's fashion, too.

• 40:15Speaker 01

  I did.

• 40:16Hala Taha?

  The story goes, from what I understand, is that the sizes were really off and people were having trouble finding the right size of clothes for their kids.

• 40:25Speaker 01

  Yeah, yeah. I guess let me try to, if I could. And this goes back to, because this is an example where I'd say we improved Target's kids department. But it's a radical change.

• 40:38Hala Taha?

  Okay.

• 40:39Speaker 01

  So I had admired the Gap from the 80s. I mean, Mickey Drexler was, you know, if you're a young retailer, he was it. I remember one time I was in Hong Kong at the Regent Hotel and he walked through the lobby. And it's kind of like I later would see Steve walking into Macworld. You know, Mickey was pretty, the guy.

• 40:59Hala Taha?

  Yeah.

• 40:59Speaker 01

  And they had launched Gap Kids. Most beautiful kids store you'll ever see. But what they did is they made every product from size two, a toddler size two, to size 20, which is big for a boy or girl, end of the range. Every product's available in every size. Well, that let them have clean presentation. They didn't have to break the Gap Kids store into little toddler area, a little kid's area, a big kid's area. And that's how every department store and discount store was merchandised. So when I took over kids, we had a toddler section. We had boys, we had girls, we actually had little boys and big boys.

• 41:39Speaker 01

  And little boy got character t-shirts and big boys got things that were closer to like juniors. But kids weren't naturally that. There's big kids and they didn't want to have characters on, they're a little kid. It was just a mess.

• 41:54Hala Taha?

  Yeah.

• 41:54Speaker 01

  And so I figured Target had a pretty small children's floor. And I said, if we had the courage that the Gap did, we could double our assortment. Instead of offering all these things for little kids and big kids, let's have one kids and let's have the courage to take our sizes and collapse them. So instead of a four and a five, we had a four or five. Instead of a six, seven, seven, eight, we had a six, seven, eight. They're a little big, but kids could grow into them. But doing that let us double our assortment. But to do this, I got a lot of pushback at Target.

• 42:32Hala Taha?

  Yeah.

• 42:33Speaker 01

  Because we would have to redo every pattern, everything we're doing. You know, to create that consistency. So it was a shockingly hard amount of work to do that, but it worked. And Target's kids area ran well ahead of the other apparel areas. After the first six months or so of stuff, for the next probably decade. You know, because we fundamentally changed, gave Target a benefit that nobody else had. And no one else really did it because they didn't understand it.

• 43:05Hala Taha?

  Yeah.

• 43:06Speaker 01

  You know, and that's what I call, you know, that was improvement. I found the idea at the Gap. It was pretty innovative for discount stores and department stores to do that.

• 43:17Hala Taha?

  How did you get your, your ideas? Like all these different ideas that you had for the stores that you worked for, the brands that you worked for? How did you generate your ideas? What was your process?

• 43:27Speaker 01

  Well, I don't, there isn't really a process. You just, you love what you do. You know, if you love what you do, you're immersed in it. You know, I probably have visited as many stores in my lifetime as anybody my age.

• 43:38Hala Taha?

  Yeah.

• 43:39Speaker 01

  You know, I still do that. When I came to see you, I had a chance to walk through the stores in front of us. And so when you're in stores a lot, you learn to become a student of stores. And if you have a mind that's always looking for what's next, but wanting to do it now, you pick up on newness.

• 44:00Hala Taha?

  Yeah.

• 44:00Speaker 01

  You know, and you get an eye for it. And then when I used to take over areas, I used to ask myself, how can I do something in the time I'm going to be here, like in toys? What can I do in my maybe two years I'll be in toys that will permanently improve Target's position in toys? So that forced me to think not about, you know, what should I carry in aisle three? What can I do at a higher level that will endure? That's what sizing was. It wasn't about, you know, getting great colors and basic t-shirts and getting a great fashion statement and getting that new dress. Start at the higher level. What if we sized our merchandise different? That was design and home.

• 44:44Speaker 01

  It wasn't about, okay, let's make sure we're picking the right things from the vendors and fighting for allocation, which are all good things to do.

• 44:51Hala Taha?

  Yeah.

• 44:52Speaker 01

  But the next person who takes over will try to do the same thing. They might not be as good at it as whoever had it before. Design was a permanent change in how Target competed that no one else was doing.

• 45:05Hala Taha?

  Yeah.

• 45:05Speaker 01

  Right? So I think it's more how you frame the problem that leads to the, the innovation. Okay? So being, loving what I did, being in stores, combined with how I frame the problem, plus courage. You know, I just always have had courage.

• 45:27Hala Taha?

  Yeah.

• 45:27Speaker 01

  You know, to do things.

• 45:29Hala Taha?

  And I think it's, you've been in retail for a really long time. So it's, it's the expertise in retail. So I'm an expert in podcasting and similarly, I can like easily spot the trends.

• 45:39Speaker 01

  Well, that's why you have a network.

• 45:40Hala Taha?

  You know, so to easily be able to like spot the trends because I'm always reading about it. I'm always curious about how to grow, how to do this, how to do that. And like we'll find things that like people wouldn't notice. But it's probably very similar where you're just such an expert in retail that you walk a new store and you're like, oh, that's interesting.

• 45:56Speaker 01

  Well, that's what, you know, you probably get asked all the time by friends, can you talk to my daughter or son who are thinking about a career? And my advice to people all the time is, you know, when you're thinking about what to do, pick an industry you can love for a lifetime and become an expert.

• 46:11Hala Taha?

  That's great advice.

• 46:12Speaker 01

  You'll never get bored.

• 46:14Hala Taha?

  You, you were at Target, we talked about your experience at Apple. And after Apple, you got an offer to be the CEO of JCPenney. And when you first initially got that offer, how did you feel about it?

• 46:29Speaker 01

  Well, I wasn't, I was open for a change.

• 46:32Hala Taha?

  Okay.

• 46:32Speaker 01

  Because I was turning 50. I'd been at Apple for 12 years, 11 years when I started to think about it. And I kind of was thinking, you know, most things I've done have been in 10-year cycles. And if I'm going to do something other than stay at Apple, now would be a time to think about it. And a couple of guys from New York, a guy named Bill Ackman, who's a well-known investor.

• 46:55Hala Taha?

  I think I interviewed him.

• 46:57Speaker 01

  You probably have. Bill's a very smart guy, risk taker. And a guy named Steve Roth, who was CEO of Vornado, one of the big real estate firms. They had taken a, an activist position in JCPenney. And as part of their investment, Penny said they could join the board and add one more board member. So I got a call out of the blue, would you like to talk to Steve and Bill about joining the Penny's board? And so on one of my trips to New York to visit a new Apple store, we were opening a store on the Upper West Side. I stopped over, spent time at Steve, with Steve and Bill at their apartment. At Steve's apartment, they didn't want to gather.

• 47:39Speaker 01

  And Bill walked me home and he was excited to have me join the board. And I thought, you know, why not? I've known Penny's forever. I used to work at Mervyn's and Target and Kids. I know the company, how it competes, I've watched it. And I went out and met all the board members and they were ready to bring me out as a board member. But then the CEO, who'd been there six, seven years, was probably 66 at the time.

• 48:09Speaker 01

  Unfortunately, he had a car accident.

• 48:10Hala Taha?

  Hmm.

• 48:11Speaker 01

  And it was pretty bad. And he survived it, which was great. But it made the board think about succession planning. And I don't know where it came from, but I get a call, well, Ron, how would you think of, how would you like to think about becoming CEO instead of a board member? And I just thought about it. I said, well, that'd be interesting. I want to do something really hard. And I loved the department store because I grew up, they were the king.

• 48:36Hala Taha?

  Yeah.

• 48:37Speaker 01

  You know, in the sixties, when I grew up, they were the king. And I always thought they had, you know, inadvertently lost their way because they hadn't competed well enough.

• 48:46Hala Taha?

  Mm hmm.

• 48:47Speaker 01

  And traveling around the world, as I did with Apple stores, there were great department stores. Harrods and Selfridges in London, Prontom, Galleries Lafayette in Paris, Hong Kong. You know, the department store isn't dead. It was kind of dying in the United States. I thought that'd be a big challenge. So I decided, oh, why not? So I did.

• 49:09Hala Taha?

  I think your dad talked to you about that and basically was like, how, how much success do you need?

• 49:14Speaker 01

  That's good. You've read the book. I'm impressed. No, my dad's attitude was, why are you doing this, Ron? You've got a young family and my kids were in, uh, I think they were

• 49:26Speaker 01

  12 and 14, 13 and 15, going into their most important years of their young life for the years that Karen and I would, they'd be living with us. And, you know, Apple's doing great. Uh, it was kind of a hobby for me because the store, everything we opened worked and we had to build a great team. And the team was doing the work. I was kind of leading and having fun designing new stores and stuff. But I wanted to take on a challenge. And my dad thought it was more pride than purpose.

• 49:56Hala Taha?

  Yeah, like the, the prize of being CEO.

• 49:58Speaker 01

  Power of what you can do, not even being CEO, just proving you can turn around the department store. You know, you helped make Target, Target, you created the Apple store, no one thought it would work. Here's another one.

• 50:11Hala Taha?

  Yeah, another challenge.

• 50:12Speaker 01

  And, you know, looking back, there was some truth to that, even though I didn't want to face that there always is. And you can create in your own head, you know, I know I'm doing this because, you know, I'd like to take a new challenge. I'd like to help all those employees in Texas compete for another century, you know? Um, you can always talk yourself into it, but you gotta be really thoughtful. It's really motivating you.

• 50:37Hala Taha?

  So you went to JCPenney and you wanted to help turn around the stores. Cause like you're saying, department stores still are kind of a dying breed in the U.S. What were some of the things that you wanted to change about JCPenney?

• 50:51Speaker 01

  Yeah. Well, it's interesting. The department store is actually having a good little period right now.

• 50:55Hala Taha?

  They are?

• 50:55Speaker 01

  Yeah. Macy's is, you know, they got a new team in place and they've got their bold new chapter. And their stock's up maybe double from the floor.

• 51:03Hala Taha?

  Oh, okay.

• 51:04Speaker 01

  Couple of years ago, they're competing better. It doesn't mean they're winning.

• 51:08Hala Taha?

  Yeah.

• 51:09Speaker 01

  But they're starting to make more money. And even Kohl's has gone up a little bit of late. Um, Nordstrom is taking the company private. They're doing a little better, you know? So they're coming back, but they're a lot smaller than they were when I joined JCPenney years ago. They're about half the number of stores in that group.

• 51:25Hala Taha?

  Yeah.

• 51:26Speaker 01

  But, you know, I just felt that if we had the courage to reimagine the store, to get at what we needed, a younger family customer, we could have another day. You know, because the reality is like Penny's had 600 great stores. They were pretty productive. They just had an aged customer, you know, the customer was 55 to 65 years old.

• 51:51Hala Taha?

  Yeah.

• 51:52Speaker 01

  When I was at Target, they were 25 to 35. And you get a young customer, they're going to have families and they're going to live with you for the next few decades. Where the Penny's customer is going away and that's why market share was going down. You know, so how do you get a younger customer? Well, we had basically free stores because we're an anchor in the mall. Right? And they're 30 year leases. So all we have to do is redo everything about the store, but we could create something quite compelling. So number one, okay, pricing, everything we sold was 60% off. We ran 13 ads a week.

• 52:31Hala Taha?

  So many coupons, so many discounts and coupons at JCPenney.

• 52:34Speaker 01

  And coupons and nobody else was shopping that way. If you walk through the specialty stores, it was all full price and you have clearance when it didn't sell. You know, Starbucks, everything you do, but the department store had this reliance on coupons. Well, imagine instead of telling someone it's worth $40 and selling it for 10, just make it $10 every day. Make every day a great day to shop. Now I've restored my brand credibility on pricing. That would allow me to attract all these people to Penny's, new brands from all around the world. But most importantly, direct to consumer. Now, back in 2011, that's when people like Warby Parker

• 53:19Speaker 01

  went online with glasses. That's when, you know, mattresses. And everyone was creating these, all these things. Well, they need a place to put stores and we're in the mall. But we could offer a thousand square feet to each of them at much better prices because we pay, we're free. The mall being a hundred feet down the road is going to be $60 a square foot. You know, so we could reimagine the interior of the store. Instead of having, you know, 60,000 square feet of racks, a hundred unique specialty stores, the best of the Penny's brands, plus others and reinvent how you shop. So now you got great pricing every day. We got a whole new environment inside.

• 54:03Speaker 01

  We've got new merchandise that you can't find somewhere else. And suddenly shopping at Penny's is like an adventure. You know, it's like the Apple store. It's a place to belong. And in the center, and that we're not putting a genius bar, we'll put a town square. A place where we're on fashion shows and do things for kids and families and, you know, we can make this an experience. And so I wanted to do that.

• 54:27Hala Taha?

  It sounded like a great idea.

• 54:29Speaker 01

  Well, I think most people thought it was a good idea. However, I learned a lot of lessons, right? So I went to Penny's and I basically asked them to implement my idea of America's favorite store. It wasn't their idea. And if you're going to make a change, you gotta get people to buy in. It starts with trusting you as a leader. They didn't know me. They saw me as the Apple guy. Even though I'd spent more time in apparel than technology, they never knew about my working before Apple.

• 55:01Hala Taha?

  Yeah.

• 55:02Speaker 01

  You know, and I'm a new guy and I'm well to do and know it all and, and, and they just didn't buy into it. And I didn't have the courage to let people go. I don't like firing people.

• 55:15Hala Taha?

  Yeah.

• 55:16Speaker 01

  And I said, I'll convince them, you know? The big mistake happened. My first month on the job, I was at a board meeting. And I asked the board a really important question, one little question. If you're going to make a major change to a retail strategy, the time to do it is February, March. Because you've gone through Christmas, you have your most clearance, you have time to get people ready for the next year. If we're going to do it, we have to do it this February. Or we wait a year and do it a year from now.

• 55:50Speaker 01

  If we wait a year, we can focus on our teams, getting the inventory right, making sure everyone understands it, da, da, da, da.

• 55:58Hala Taha?

  Yeah.

• 55:58Speaker 01

  Yeah. But if we went now, we're not going to go through another year of, you know, kind of tough business.

• 56:04Hala Taha?

  Yeah.

• 56:05Speaker 01

  And the CEO, Mike Olman, who I replaced, just said, Ron, from my perspective, what do we have to lose? It sounds great. And the board all kind of nodded. And I made the decision, I made the decision, let's go.

• 56:18Hala Taha?

  Yeah.

• 56:19Speaker 01

  I told the team, we're going to go in six weeks for changing everything.

• 56:22Hala Taha?

  Oh my gosh, it's not a lot of time.

• 56:24Speaker 01

  But the team did a phenomenal job. I mean, they, we had to go through and figure out prices on thousands and thousands of items. And change price tags and figure out signing and how to communicate this and create advertisements. But the reality, we went way too fast.

• 56:39Hala Taha?

  Yeah.

• 56:40Speaker 01

  And so the team didn't understand it. The board didn't truly understand what we were doing. Investors didn't understand it. And most importantly, customers didn't understand it. And so we alienated that coupon customer. And, you know, in many ways, we fired our customer.

• 56:56Hala Taha?

  Your most loyal customer.

• 56:57Speaker 01

  Our most loyal customer. Now, the one that's not going to carry us to the future, but we had thought sales would be down 15%. They were down 20% right away. You know, but outside investors didn't know what the plan was. Cause we didn't really communicate as well as we could.

• 57:14Hala Taha?

  Yeah.

• 57:14Speaker 01

  And they thought, who's this idiot running JCPenney? How are you as a board letting him do this? And all the board members get called by their friends, what are you doing? And it was a really tough year. Now, the NPS was through the roof.

• 57:30Speaker 01

  So sales are down 20%. That means 80% of the people are buying or new customers are coming.

• 57:37Hala Taha?

  Okay.

• 57:37Speaker 01

  And they were loving it. Cause they found all these beautiful new shops. We had put in maybe 20 shops as we went through the year. There's a Levi's shop. It's the best place to buy Levi's in the country by far. And sales in Levi's were 40% year over year, you know? But it was early, but the overall picture was things were going down. And I had real personal trouble with it. Cause I did 25 years of success.

• 58:04Hala Taha?

  Yeah, you just had one success up the other.

• 58:07Speaker 01

  What I went through that year. And eventually a year later, I said to the board, look, I'm not having fun. If you're not having fun, you think we're doing the wrong thing here. The sooner you make a change and go back, the better. You know, because every month that goes by with this strategy would be harder to go back to your old strategy. Cause that's what some of the team wanted to do.

• 58:28Hala Taha?

  Yeah.

• 58:28Speaker 01

  And after three months, they said, Ron, we're going to go back. And they actually brought back Mike Olman to do it. And they tried to do a U-turn. Unfortunately, that didn't work either. You know, when Mike left, two years later, the stock was down another 50%. And then they brought in Marvin and after he left two years later to go lows, stock was down another 50%. You know, so Penny's was having trouble. When I came in, the failed transformation took it down. The U-turn took it down. So we really missed an opportunity, I think, to save JCPenney.

• 59:03Hala Taha?

  Yeah.

• 59:03Speaker 01

  Uh, and I think the lesson is, you know, if you're going to make a change. You gotta, you gotta stick it out.

• 59:11Hala Taha?

  You gotta stick it out?

• 59:12Speaker 01

  Yeah.

• 59:13Hala Taha?

  Was there any sort of like testing you wish you did or talking more to the customer?

• 59:20Speaker 01

  Yeah, you know, I do. I, you know, it's funny, at the time, I told people I don't believe in tests. Cause by and large, I, I don't. We didn't test sizing a target, we did it.

• 59:32Hala Taha?

  Sometimes the customer doesn't even know what they want.

• 59:34Speaker 01

  They don't. That was Steve's approach, right?

• 59:36Hala Taha?

  Yeah.

• 59:37Speaker 01

  But I look back, Steve changed his mind a few times. You know, like the iPod, he said, I'm not gonna bring that to Windows. Hell will freeze over before I make a Windows iPod. And three years later, he did, and that's what made the iPod, that's what really made Apple. That catapulted our ability to get Windows customers. So Steve changed his mind.

• 59:57Hala Taha?

  Yeah.

• 59:58Speaker 01

  You know what I mean? And so I was pretty darn stubborn on the pricing in particular. That was the real difficult part.

• 1:00:05Hala Taha?

  The no discounts.

• 1:00:06Speaker 01

  Yeah. And if I'd done it over, and we had a year, I would have at least tested the marketing messages. You know, you can do that without testing with the customer, that would have been helpful.

• 1:00:16Hala Taha?

  Yeah.

• 1:00:16Speaker 01

  Yeah. There are a lot of ways we could have rolled out. I was worried about the cost of having two teams, one doing the new pennies, one managing the old. I thought it'd be too much work for the buyers to do both. So I thought of it as an either or. But the big thing, you know, quite honestly, I was arrogant. I was situationally arrogant. Everything I had done for 25 years had worked.

• 1:00:42Hala Taha?

  Yep.

• 1:00:42Speaker 01

  You know, and because I had the courage to make change. And so when the board said go, I said, let's go. You know, and on hindsight, we should have tested a lot of things.

• 1:00:52Hala Taha?

  How did that impact your ego? Like, did you feel down or like that you were a failure because you had failed this transformation with Tracy Penny?

• 1:01:01Speaker 01

  I was a failure. Make no mistake about it. When you're the CEO of a company and you do something, you know, that fails in everyone's mind and you walk away from it. You failed. Yeah. We fail every day. But when you come back to work, you know, you have, you fail, have not a great podcast, you come back, you do another podcast.

• 1:01:24Hala Taha?

  Yeah.

• 1:01:25Speaker 01

  When you lose the chance to keep going, and when it's over, that's when you fail. Right?

• 1:01:31Hala Taha?

  Yeah.

• 1:01:31Speaker 01

  And so I did. I failed. And it was hard. Um, I think even today, there'll be times I wake up and my stomach churns about what could I have done different and why did I go there? Why did I listen to people? Why did I go so fast?

• 1:01:48Hala Taha?

  Why didn't you fire who you wanted to fire?

• 1:01:50Speaker 01

  Different, you know?

• 1:01:52Hala Taha?

  Yeah.

• 1:01:52Speaker 01

  You agonize over those things. They never leave you.

• 1:01:56Hala Taha?

  Yeah.

• 1:01:56Speaker 01

  That's part of life. Now, I've been lucky. I, I got lucky too. You know, the Apple stores worked, you know, and Target did pretty well.

• 1:02:03Hala Taha?

  Yeah. You've got a great, you've got a great legacy.

• 1:02:06Speaker 01

  Well, I've had, no, I've had, I guess if anything, I've, I've tried.

• 1:02:10Hala Taha?

  Yeah.

• 1:02:10Speaker 01

  I've tried.

• 1:02:11Hala Taha?

  Okay, let's play a game. So I was, when I was reading your stuff, I thought that you had a lot of quotes. Now, not every quote comes from you, but I thought we could play a game called Quote Goat. Do you know what goat means? Greatest of all time?

• 1:02:24Speaker 01

  Okay.

• 1:02:24Hala Taha?

  Okay? So I'm gonna say a quote, you tell us what this quote.

• 1:02:29Speaker 01

  These are my quotes?

• 1:02:29Hala Taha?

  Some of them are your quotes, some of them are quotes that you say.

• 1:02:32Speaker 01

  Yep.

• 1:02:33Hala Taha?

  It's all quotes that you're familiar with.

• 1:02:34Speaker 01

  Sure.

• 1:02:34Hala Taha?

  Um, if there's a story about the quote, tell us that.

• 1:02:38Speaker 01

  Sure.

• 1:02:38Hala Taha?

  Or tell us the meaning behind it, whatever comes to your mind, okay?

• 1:02:41Speaker 01

  Yeah.

• 1:02:41Hala Taha?

  Good things happen when people come to the store.

• 1:02:44Speaker 01

  That's absolutely true. That's absolutely true. And that's the Apple Store.

• 1:02:49Hala Taha?

  Yeah.

• 1:02:49Speaker 01

  You know, I mean, I just believed in traffic, right? That's why you build stores, to get customers to come in. And no matter what they're coming for, you know, we ran summer camps for kids. And kids would come in five days a week in the morning. Almost every employee was dedicated to camp. And customers couldn't buy because the kids were over all the computers. But I knew good things would happen from that. So good things do happen when you come to the store.

• 1:03:17Hala Taha?

  Every hour has its leader, every leader has their time.

• 1:03:21Speaker 01

  Yeah, that's absolutely true. That's from the Talmud. I don't know if you know that.

• 1:03:26Hala Taha?

  I didn't know that.

• 1:03:27Speaker 01

  That's from the Talmud. I read that in a book by Marianne Williamson, A Return to Love. But the idea behind that is really simple, that leadership is something you've got to give away. And whoever's, like in this podcast, right now, you're leading. You've got this thing about the goat, right?

• 1:03:47Hala Taha?

  Yeah.

• 1:03:48Speaker 01

  You're leading, I'm following, right? When I'm speaking to you and answering a question, I'm leading. That's true in a store. When one of our employees or the customer, they're the most important person in the store. It's not the manager, right? They're leading that conversation. And so I think we have to all recognize that we are leaders and we're followers all day long, right? And you gotta be willing to give away leadership. You know, that's a really good life lesson.

• 1:04:17Hala Taha?

  Yeah. Make love visual.

• 1:04:20Speaker 01

  I really think when you see two people smiling, when you see brain cells multiplying, like you do in an Apple Store, that's an act of love. Because together, you're improving each other's lives. And when you see that in a store, you're making love visual. So I used to tell my friends, the thing I love about the Apple Store, you see love everywhere.

• 1:04:46Hala Taha?

  Like people helping each other.

• 1:04:47Speaker 01

  Helping each other. And it's, and it's a beautiful thing. Like when I go to the grocery store, and I do this too, but you see a customer getting out of their car and taking shopping carts that were left in the parking lot. And you're walking into the store, just return them and put them where they belong. When I see that, that's an act of love.

• 1:05:06Hala Taha?

  Yeah.

• 1:05:06Speaker 01

  And it's visual. That person didn't have to do it. He's securing the good for the store. But it's just the right thing to do.

• 1:05:14Hala Taha?

  Yeah.

• 1:05:14Speaker 01

  When someone stops down to pick up a piece of paper that's on the floor and put it in a trash can, that's making love visual. Right? When you walk an old lady across the street, that's making love visual. And great stores do that.

• 1:05:28Hala Taha?

  I really like this one. The conversational nature of reality.

• 1:05:33Speaker 01

  Yeah. No, that's not mine. That's from David White. David White's a poet.

• 1:05:39Speaker 01

  But he had this philosophy that everything in life comes from a conversation. And the most important conversation is the one you have with yourself. So think about that.

• 1:05:51Hala Taha?

  Yeah.

• 1:05:51Speaker 01

  You know, every day you're thinking.

• 1:05:52Hala Taha?

  Yeah.

• 1:05:53Speaker 01

  Well, what are you thinking? You're going, okay, like, I've gotta go to the airport later today. I'm going, well, if I leave at what time? I look at Uber. If I leave at this time, I'll probably be on time. I'd have a conversation with myself and making a decision, I'll leave at this time. When I thought about the Genius Bar before talking to Steve on the phone. I had a conversation with myself, which led to a conversation with Steve, which then led to a decision. So the reality is the world's about a conversation. Now, the best conversations are the ones that have no end in mind. The conversation will reveal knowledge that you didn't come into the conversation with, you know?

• 1:06:36Hala Taha?

  Yeah.

• 1:06:36Speaker 01

  Too often, unfortunately, we go into a conversation, okay, I wanna convince my spouse, I wanna convince my kids that this is the way to do it. So I don't go in and seek to understand, and then maybe be understood, as Stephen Covey would say. Yeah, that's another great quote.

• 1:06:52Hala Taha?

  Yeah.

• 1:06:52Speaker 01

  You know, but the idea, I think life is a conversation. And we've got to become better conversationalists. And unfortunately, with all this screen time and social media, we're spending less time connecting. And we need to spend more time convening. And convening is really, you know, it's interesting, the word convene. The root word is of, is, it's the root of the word convenience. And that's the opposite of what we do when things are convenient. We tend to not convene. Now, we gotta go back to convening more, having conversations, and being aware of how that reveals knowledge.

• 1:07:30Speaker 01

  Chat GPT can't reveal knowledge, right? It can reveal what the world knows. But it doesn't reveal new knowledge. That's gonna come through conversation.

• 1:07:43Hala Taha?

  Okay, last one. People want to do significant things.

• 1:07:48Speaker 01

  Yeah, we all do. We're born to have meaning, have impact. You know, there's a great little story in the book, and I forget the name of the guy. But years ago, someone ran an experiment and they, in a infant, you know, uh, uh, I should know this, I'm a new grandparent, but in the, the baby's crib.

• 1:08:08Hala Taha?

  Okay.

• 1:08:09Speaker 01

  They put one of those mobiles.

• 1:08:10Hala Taha?

  Okay.

• 1:08:11Speaker 01

  And then once I was up there, a little kid would touch it, and they couldn't stop touching it. Cause they loved to, if I touch this, the thing moves, right? By definition, we enjoy having impact. We like to influence things, right? The bigger the influence we have, the more excited we get, right? And I think everyone wants to do significant things.

• 1:08:33Hala Taha?

  Yeah.

• 1:08:34Speaker 01

  And that takes encouragement, that takes kindness, that takes a vision. So I've always practiced with my teams, you know, you gotta set a North Star. And the higher that star, the bigger the vision, the easier it is to accomplish it. If you have something relatively small, it's just another thing on the to-do list. The thing about a North Star is they're up, which is the direction of values. But it's also so far out, we're never gonna get there. And that means you have a strategy that will never end. The Apple Store kept innovating, even to this day. 25 years later, the Apple Store feels new and vibrant. It's got a heartbeat. If you walk in the store, you feel

• 1:09:17Hala Taha?

  Yeah.

• 1:09:17Speaker 01

  the soul of the store, right? That's because we had a great North Star.

• 1:09:21Hala Taha?

  What was the North Star?

• 1:09:23Speaker 01

  It was to enrich lives. Very simple. Enrich the lives of the employees and the customers. And everything was designed around that objective in mind.

• 1:09:33Hala Taha?

  So I want to switch gears a bit. I want to talk about AI. So when you started the Apple Store, people thought stores were going to go extinct because of the internet. Now, a lot of people think AI is going to be impacting work in general, perhaps retail. How do you think AI is going to impact retail?

• 1:09:52Speaker 01

  It's going to have a huge impact. It's going to impact the in-store experience and it's going to impact the online experience. However, it's not going to change where we shop. I don't think it'll change at all how often we go to stores. It's just going to let both be better, you know? The biggest change you'll see will be in online shopping, in my opinion. You know, I think the idea of having a website with all of these little tiles. You have to navigate, you know, through men's, ladies, you know, what's new, what's on sale? It'd be a lot easier to have an agent just say, hey, I'm looking for something new and exciting. I'm a guy, I am willing to take fashion risk and it comes back with, here are the items we have. You know, that's going to happen.

• 1:10:35Speaker 01

  A genetic commerce will be a really big deal and that's going to help online. And it'll be a little bit more like when you walk in a store. Cause in a store, you can talk to an employee and say, you know, what do you think? What are the hot items? You know, I've got a party tonight, what should I wear? You know, so I think the online will compete in that way. But most of what the stores do will be things you can't see as a customer, but that'll make it a lot better.

• 1:10:58Hala Taha?

  Like what?

• 1:10:59Speaker 01

  Inventory management. You know, recommendations to the employees, you know? You know, employees will see, you know, what are the best selling items in the store? And they'll come back with that. And it'll be also, because a lot of customers walk in the store, you know, they're there. You know, like at the Apple Store, you know, pretty well, you can flash your thing. You know, your QR code with the employee and they know everything you own. And it can recommend, oh, you know, you, I see a lot of photos. You know, we got this new camera, it says a great camera. You know, you're going to have improvement everywhere in retail, you know, from AI. I'm a real tech optimist and I'm a believer in AI. There's downsides, but every new technology we've launched, we've said there are downsides.

• 1:11:44Speaker 01

  But they've always been for good.

• 1:11:46Hala Taha?

  Well, this has been such an incredible interview. I end my show with two questions I ask all of my guests. The first one is, what is one actionable thing our young improfitters can do today to become more profitable tomorrow?

• 1:11:58Speaker 01

  Ruthlessly illuminate hurry from your day. You know, so often we're just go, go, go, go, too much on the plate. We're running behind, we're feeling anxious, we gotta slow down. You know, Steve Jobs did one thing at a time. You know, he would only let Pixar make one movie a year. Cause he said, you know, we can only do one great movie a year and we want to do great movies. You know, we had the Mac, we had the iPod. Three years later, we did a phone. Three years later, we did an iPad. It wasn't like Sony that had so many products in its portfolio or Samsung. We did a few things. Steve was never in a hurry. He didn't even carry his cellphone until the iPhone came out.

• 1:12:43Speaker 01

  He didn't want to be bothered, you know? Slow down.

• 1:12:47Hala Taha?

  It's crazy to hear that because you think of Steve Jobs as being so innovative and you would assume that he's just like all about like deadlines and targets and next thing, a new thing. And it's really interesting to hear that he was not into the

• 1:13:00Speaker 01

  He was all about quality.

• 1:13:01Hala Taha?

  And what would you say your secret to profiting in life is? And this can go beyond business and finance, however you want to take it.

• 1:13:08Speaker 01

  When I came out of Harvard Business School, I was going to, pretty close to accepting a job with Goldman Sachs, I mean, a part department. That was one of the, the yet jobs, you know? You get the status of working on Wall Street and mergers and acquisition. It'd be like now, you know, right now, that segment of the business is really hot. And it was back in 84.

• 1:13:28Hala Taha?

  Yeah.

• 1:13:28Speaker 01

  A guy who was a CFO at Dayton Hudson said to me, Ron, the net present value of a life has nothing to do with how much money you have. He said, you gotta pick the net present value of your life, not your career. And that was interesting to me. And that led me to figure out, I'm going to pick an industry I can love for a lifetime. I'll start at the bottom. I unloaded trucks at a Mervin store and I got started.

• 1:13:56Hala Taha?

  And that's a retail store?

• 1:13:57Speaker 01

  Retail store and at the time was very popular. And, yeah, but even, you know, I told Steve, you know, I'll take the job, but you know, I'm a parent. I'm going to coach all my kids' sports teams. And he said, I don't care, just get your job done. But I would leave Apple at four o'clock every day in the spring to go coach my son's little league baseball team as an example. But the net present value of a life is your whole life. It's your work, it's your family, it's your friends, it's the hobbies you love. You know, it could be your faith, I think that's an important thing for most people. No matter what faith it is.

• 1:14:39Speaker 01

  Now you gotta find a way to be fulfilled in all of those things. Right? And that's what I think is the most important thing.

• 1:14:46Hala Taha?

  That's so beautiful. Another quote from the, from the quote goat. Well, Ron, where can everybody learn more about you and everything that you do?

• 1:14:54Speaker 01

  Well, I actually have a little website called Ron Johnson Shops Different. It's, the name of the book is Shop Different, uh, coming out September 22nd. It's really about the Apple Store, but it goes back into some of the things we talked about, like my time at Target, my time at Penny's and more. But if you go to ronjohnsonshopsdifferent.com, you can have access to all the little interviews I do, podcasts I do like this one. Uh, and that'd be where I go.

• 1:15:22Hala Taha?

  Awesome. Well, thank you so much.

• 1:15:24Speaker 01

  Pleasure of mine.

• 1:15:25Hala Taha?

  It was so great to speak with Ron Johnson today and learn more about what it really takes to build a customer experience that people truly love. Here are some of my favorite lessons that he shared. First, the best customer experiences are about belonging, not transactions. When Ron and Steve created the Apple Store, they asked a simple but brilliant question. What can a store do that the internet never could? That's why the Apple Store was not just built to sell computers. It had classes, training, face-to-face support and the genius part. Like he mentioned, the products only took up a small portion of the store, but they had huge stores for a reason. It gave people a place to learn, connect and feel taken care of. Next, real innovation takes imagination and courage.

• 1:16:07Hala Taha?

  Ron made such a clear distinction between improvement and innovation. Improvement is taking what already exists and making it better. Innovation is imagining something that has never been done before. And that's what happened when the Apple Store team realized that the store should not just be organized around products, but around the digital life that people were starting to live. And I just loved the lesson Ron learned from Steve Jobs. If you realize there's a better way, you need to have the courage to make a U-turn. Finally, bold leadership only works when people understand and believe the vision. Ron was very honest about JCPenney and how moving too fast without enough trust, buy-in and communication created one of the hardest lessons of his career. That part of the conversation was so important because past success can make any of us think we already know the answer.

• 1:16:52Hala Taha?

  But great leaders stay humble enough to bring people with them. For entrepreneurs, this episode is such a great lesson in how to think bigger about your customer, your team and your own decision-making. Innovation is not just about having a bold idea. It's about creating something people truly need, communicating the vision clearly and having the humility to keep learning along the way. If you listened, learned and profited from this episode of Young and Profiting, share it with somebody who's building a business, leading a team, or trying to create a better experience for their customers. You can also check out Ron's new book, Shop Different, for more of his lessons on Apple specifically. And if you enjoyed this show, please drop us a five-star review on Apple, Spotify or Castbox, wherever you listen to the show. Nothing helps us reach more people than a good review from you.

• 1:17:34Hala Taha?

  You can also find me on Instagram at YapWithHala, our Instagram is on fire right now. You can also find me on LinkedIn, just search for Hala Taha. This is your host, Hala Taha, AKA The Podcast Princess, signing off.