Brian Dunn: The rise and fall of a salesman

His leap from salesman to CEO matched Best Buy's success, but Brian Dunn's reputation crashed with the fortunes of his employer.

hide

Brian Dunn, former president and chief executive officer of Best Buy Co. Inc.

Photo: Ronda Churchill, Bloomberg

CameraStar Tribune photo galleries

Cameraview larger

Long before Brian Dunn resigned as Best Buy Co.'s chief executive amid accusations of misconduct, he described his feelings about the company in starkly personal terms.

"I don't want this to sound cornball," Dunn said in a 2008 company video, "but it really matters to me that this is a place where somebody can walk in and build an extraordinary path for himself."

Dunn began carving out such a path in 1985. He was 25 years old, with no college education, when his mother helped him get a job selling VCRs and CD players at Best Buy's Minnetonka store. At the time, the Internet was a decade from becoming mainstream. Best Buy wasn't even selling computers.

By 2009, Dunn had been named CEO of what had become the nation's largest consumer electronics retailer.

Such an unlikely ascension came to a crashing end April 10, when Best Buy disclosed that Dunn had stepped down after being told that the board of directors was investigating whether he used company resources to pursue an inappropriate relationship with a female employee.

The turmoil surrounding Dunn's departure comes at a tumultuous time for one of Minnesota's biggest and best-known employers. Sales are falling at many of Best Buy's 1,100 mammoth stores, while the company's stock lost half its value over the past two years.

"Best Buy is distracted," said Carol Spieckerman, president of newmarketbuilders, a retail consulting firm.

Dunn's fall highlights more than one man's alleged shortcomings. It has put Best Buy's board of directors under scrutiny for selecting him, and for not moving faster to replace him.

Some board members raised that prospect as early as last summer, when it was increasingly clear that Best Buy's business was deteriorating, sources told the Star Tribune. But the board didn't press its case because Dunn retained the support of Richard Schulze, Best Buy's founder and largest shareholder.

"The board wasn't prepared to pull the trigger," said one person with direct knowledge of the discussions.

Best Buy officials declined to comment for this story. Dunn also declined interview requests.

When Dunn joined Best Buy, the company operated only nine stores. In many respects, the fledgling chain's journey -- from a single storefront at St. Clair and Hamline avenues in St. Paul to a mega-retailer producing $45 billion in sales -- was every bit as improbable as Dunn's ascent to the corner office.

Best Buy was the first electronics retailer to stop paying commissions to its salespeople and the first to adopt a big-box format. When rivals copied his strategies, Schulze raised the stakes. He doubled Best Buy's store size to 50,000 square feet and opened more stores across the country.

Embracing an "us vs. the world" outlook, Schulze was determined to drown competitors like Radio Shack, CompUSA and Circuit City in a sea of blue and yellow, Best Buy's signature colors. Loyalty, hard work and a zeal for selling counted more than academic or corporate pedigrees.

Best Buy's foot soldiers were the "blue shirts," employees who prowled the sales floor in royal blue, short-sleeve shirts, helping customers navigate the dizzying array of choices.

And Dunn was one of the best.

Matt Henderson, who worked at the Minnetonka store alongside Dunn, said his former colleague was part of a top-performing group that included Brad Anderson, who would serve as Best Buy's CEO from 2002 through 2009, and Tim Sheehan, currently the company's chief administrative officer.

"Brad would say, 'We need to sell X number of extended warranties,' and Brian would beat the hell out of the sales team until he got them," Henderson recalled.

In a 2008 interview, Dunn confessed that he never intended to stay at Best Buy past his first holiday season in 1985. His goal was to earn enough money for Christmas, and then find a real job.

"There were a lot of people like that at Best Buy in those days," he said. "We were a little bit of a misfit island. People weren't looking for Best Buy -- Best Buy sort of found their way to them."

Salesman rises to field marshal

Misfit or not, Dunn's drive got noticed. After five years, he was managing Best Buy's Edina store. A year later, he was a district manager overseeing several Minnesota stores. Eventually, Dunn would serve as field marshal as Best Buy rolled out stores in new markets, including Ohio, Indianapolis, Philadelphia and the northeastern United States.

"Brian was terrific," said Michael Keskey, a retired Best Buy executive who oversaw the company's U.S. store operations. "He was my right-hand man for 10 years."

When Anderson succeeded Schulze as CEO in 2002, he brought Dunn into the executive offices, naming him head of U.S. stores. Dunn was promoted to the No. 2 post at the company in 2006, then succeeded his long-time friend as CEO three years later.

Dunn had come a long way from the days of hustling extended warranties. He and his wife, Sue, and three sons live in a sprawling, two-story brick home that they bought in 2001 for $2 million. It sits atop an expansive hill in west Edina.

Dunn was comfortable rubbing elbows with the sports and entertainment celebrities who orbited Best Buy's marketing world. His Facebook page includes photos of actor Kiefer Sutherland with his arm around Dunn's mother; a personal congratulations from Dunn to NASCAR driver Matt Kenseth; and a picture of Dunn with Slash, the former lead guitarist of Guns N' Roses.

Dunn told a New York Times interviewer that he didn't let the attention go to his head.

"Be careful about what you believe about yourself," Dunn said. "You're never as good as they say or as bad as they say."

Dunn is a self-described basketball freak, and as such, Best Buy has become a major sponsor of youth basketball tournaments affiliated with Dana and David Pump, sports consultants from the Los Angeles area who help develop blue-chip basketball players around the country. Best Buy is the marquee sponsor of the national Double Pump Basketball Challenge Series. Dunn's middle son, Will, a standout at Benilde-St. Margaret's School where he is a senior, played on the Pump n Run Minnesota squad.

At last year's star-studded Harold Pump Foundation Celebrity Dinner, a cancer fundraiser organized by the brothers in memory of their father, Dunn clowned with former heavyweight boxing champion Mike Tyson. He also shared the red carpet as a Pump Foundation "honoree" with pro basketball legend Jerry West and boxing champion Oscar De La Hoya.

Neither David nor Dana Pump returned calls from the Star Tribune about their friendship with Dunn. But when news of his resignation broke, Hall of Fame basketball player Magic Johnson took to Twitter to wish Dunn the best.

"To my friend, Brian Dunn: a heartfelt thank you. You have always given back to the community & God has another important job for you."

Dunn tweeted a reply: "Thank you Earvin. I appreciate your support and friendship."

Despite his growing success, Dunn never seemed to forget his blue-shirt beginnings and blue-collar roots. Though a gold bracelet dangled from his right wrist, he rarely wore a tie, even when speaking at gatherings outside Best Buy's offices.

In a 2009 interview, shortly after he was named CEO, Dunn spoke eloquently about how his wife's battle with breast cancer seven years earlier had changed his priorities and made him a better leader.

Still, after his first year on the job, Dunn joked in a company interview that he was sometimes known as "the house of Yes," though he acknowledged that he was "learning to rein that in." There were moments when Dunn seemed as surprised as anyone that he ended up leading Best Buy.

At a breakfast meeting of Twin Cities business executives last month, Dunn described how he was pacing the grounds of Best Buy's sprawling headquarters complex in Richfield the night before he was named CEO.

"It was a surreal moment," Dunn confided to a room full of executives. "I remembered thinking, 'I hope I wake up way smarter.' "

A comfortable choice as CEO

At the time, the selection of Dunn as CEO appeared to be popular among most employees. Even Wall Street seemed comfortable with the choice. "I'm expecting a smooth transition," said an investment analyst at the time. "Operationally, which is Dunn's background, the business is as strong as it's ever been."

But the retail world already was changing, and Best Buy was about to pay the price.

Best Buy's sales had tripled during the housing boom as the company added stores at a breakneck pace -- more than 700 before the decade was out, almost half of which opened after housing prices had begun to fall and consumers began to curtail their spending.

Even a sharp drop in television sales in 2007 wasn't seen as a warning sign.

Some insiders attribute that to the fact that Best Buy's executive suite had been seeded with so many "sales heroes," who tended to favor one growth strategy above all others: Opening more stores. One former executive said it almost got to the point where not coming up the ranks as a blue shirt became a strike against you.

The 2009 collapse of Best Buy's last remaining big-box competitor, Circuit City, initially blunted the impact of broader consumer trends. Indeed, Best Buy's stock gained more than 50 percent during Dunn's first 10 months on the job.

But when sales began falling, Best Buy and Dunn often appeared unprepared. He sent mixed signals about the company's plans to expand in China and other foreign markets, and reversed course on holiday discounting. After announcing plans to dramatically expand product offerings on its website, Best Buy struggled to fill holiday orders.

"People's expectations have changed," said Love Goel, who heads a Twin Cities-based firm that invests in digital retail companies. "And right now Best Buy is not meeting them, either in the store or online."

A wrenching holiday season

The last holiday shopping season proved disastrous for Best Buy, and prompted CNBC commentator Herb Greenberg to name Dunn one of the five worst CEOs of 2011.

"Hard to put an up-from-the-ranks 'blue shirt' on the list," Greenberg wrote. But Best Buy, he said, "has neither articulated nor executed on a strategy that appears to be working."

Among investors, Dunn had defenders who said he deserved more time.

"We believe Brian Dunn never got a fair chance," said David Strasser, an analyst with Janney Capital Markets. "He came into the company [as CEO] at a tough economic time and dramatically changing environment. He got blamed for a lot of problems that were out of his control."

But even Best Buy's directors were growing impatient, concluding that the company needed to move faster to cut costs and restore the confidence of investors. At a tense board meeting in January, Schulze and other directors pushed Dunn to accelerate a planned restructuring.

In late March, Best Buy announced that it would close 50 big-box stores and cut 400 corporate positions to save $800 million over three years. It would also expand in China, roll out smaller Best Buy Mobile stores at a faster pace, and test its experimental "Connected Store" format.

Dunn led the charge as the company attempted to persuade skeptical investors. He spoke about how he was deeply committed to overseeing this transition. He dismissed calls for his resignation.

"We have a long [history] of transforming ourselves to be where the customers need to be," he said.

Investors remained skeptical, but seemed to accept the fact that Dunn wasn't going anywhere.

Less than two weeks later, Best Buy announced that Dunn had resigned.

Eric Wieffering • 612-673-1736, eric.wieffering@startribune.com Tony Kennedy • 612-673-4213, tony.kennedy@startribune.com Thomas Lee • 612-673-4113, thomas.lee@startribune.com Paul McEnroe • 612-673-1745, paul.mcenroe@startribune.com

  • $32.97

    Best Buy's closing stock price on June 24, 2009, when Brian Dunn took over as CEO

    $21.47

    Best Buy's closing stock price Friday

    50

    Best Buy store closings announced March 29 in the wake of weak holiday sales

    in 2009 ... in 2012 ... as a company leader ...

    OPINIONS OF BEST BUY

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close