Michael Streit's Profile
Hey Aaron – thanks for the comment and for corroborating my claims about customers driving out of their way!
I have similar curiosity about why they’re not expanding faster and agree with you regarding the brand equity spillover. My sense is that they are extremely deliberate and conservative because they can’t afford to have any stores deliver anything less than a top notch experience. Maybe they think they’d lose control if they moved loo fast.
Thanks for the comment !
Hey Roxy – thanks for the great comment.
I wish I knew a bit more about exactly how they pick their locations because I agree that it’s a really interesting / important question. Based on what they’ve done, it seems like they’re slowly expanding along major highways coming out of Houston. But I’m not sure what they think the right space between two stores is.
Their roadside marketing (billboards) are huge in terms of getting people to “hold it” – sometimes even explicitly saying “x miles to Buc-ee’s” – worth a google for some funny ones.
Hey Jeremy, great post and awesome product! I’m not quite to AFOL status but played with them a lot as a kid.
One of the things I thought was interesting about your post was your point about finding the core passionate consumer and figuring out what resonates with them. It reminded me of our Design Thinking practice of working with the extreme users of a product to figure out what they liked, presuming that their extremism would reveal things that might be more latent in a regular customer. I also would imagine that those few uber-fans drive a good bulk of their revenue.
How much of Lego’s business is traditional Lego blocks versus other Lego “branded” products? Do you think Lego faces a threat from other children’s entertainment options on-screen with prevalence of apps, ipads, etc.? Or have those threats been around all along, in the form of video game, etc.?
Hey Jeremy – thanks for the comment and really well-stated point.
Regarding competition and threads, I think the biggest risk would be if Buc-ee’s lost control of the customer experience and eroded their brand in the process. This is the reason they don’t franchise, as I mentioned in a comment above. I think a small gas station would struggle to afford the cost of keeping a store spic-n-span without the extra revenue from merchandise and “inside sales”. I think a supermarket like Walmart could compete, but lacks the feverish brand loyalty. So I think the biggest external threat would be something like the roadside stops mentioned in this article: http://www.wsj.com/articles/SB10000872396390444914904577623862863808508 – all of which have very similar models to Buc-ee’s.
In regards to innovation, I personally don’t think the business has aspirations to expand its business model. I would look more to see them stick to their bread and butter, but expand geographically throughout the southwest.
Thanks for the comment!
Hey Obi, thanks for your comments. I had the same major takeaway regarding empathy.
Regarding defensibility of bathrooms, I would say two things. One, I think the entire brand is the real differentiator at this point – beyond just the bathrooms. Remember that people are driving miles out of their way to go here – the bathrooms are only valuable insomuch as they draw customers. Two, I think keeping a store like this clean is more expensive than most gas stations can afford. Buc-ee’s can afford to staff their stores because they sell so much merchandise in addition to gas, which they can only do because of their brand equity.
Regarding financing new stores, I’m speculating somewhat, because the company is private, but I think part of their conservatism has to do with controlling the store experience. They refuse to franchise, for instance, because they want to control the customer experience, upon which the whole business rests.
Thanks for the comment!
Thanks Steph! Those are really interesting questions to consider because they challenge the ‘border’ of what Buc-ee’s is. I would imagine they’ll never stop selling gas, just because their customer is a road-tripper, not someone strolling through a city. The urban question is interesting too – the biggest challenge, in my opinion, would be finding cities where land is available.
Thanks for the comment!
Thanks Bryan! Glad you found the business interesting.
Great questions – I’d say that Buc-ee’s “cult” status probably resulted from its effective branding (cute logo, funny slogans…) along with a little luck. The fact that your buddy is wearing a gas station t-shirt around speaks to that, as you allude.
I think the business is scalable, but I do wonder if it’s somewhat regionally constrained. They’re also not willing to franchise which makes expansion somewhat more challenging.
Thanks for commenting!
Hi Obi, KIPP is a really interesting story and Exhibit 1, in particular, speaks to how successful this model has been. I’m curious about the economics of a KIPP school. Is most funding received through the government? How active is KIPP in lobbying on behalf of charter schools? It seems like the ability of the principals to manage the budget in a decentralized basis would help manage a school’s costs in a more targeted way, but are they also able to impact the revenue that a given school receives?
Andrea – this is a really intriguing mission and business model. What role does collecting donations play for Vision Spring? At first blush it seems counter to their business model, for the reasons you mention. I’m also curious about whether entrepreneurs feel competitive pressure from organizations that do give glasses away, and whether you think those models hurt the economy by undercutting these entrepreneurs.
CP – great post and very interesting company. What controls, if any, does Planet Labs place on its real-time data for paying customers? Is there a concern that this data could be used for nefarious purposes? Or are companies/countries already able to monitor the globe, with or without Planet Labs?