Billionaire Richard Schulze focuses on giving away the fortune he spent a career building
MacMillan. Carlson. Hubbard. These names that dependably show up on the list of richest Minnesotans belong to second- and third-generation family members who have inherited their massive wealth.
Richard Schulze, founder and chairman emeritus of Best Buy, is a self-made success. On the Forbes Real Time listing of the world’s billionaires, Schulze was ranked 603rd, with a net worth of $3.2 billion.
Although the 76-year-old retail entrepreneur makes his permanent home in Florida, he remains deeply connected to his home state, where much of his philanthropy is focused. The Richard M. Schulze Family Foundation funds medical research, human services and education; it’s given $50 million to the Mayo Clinic, $40 million to the University of Minnesota for diabetes research and its $50 million donation to the University of St Thomas in 2000 endowed the Schulze School of Entrepreneurship on UST’s Minneapolis campus.
Schulze talked to Minnesota Business writer Kevyn Burger about his efforts to build better entrepreneurs, his plan to give away his money and his humble origins in St. Paul.
MNBIZ: Today, Best Buy employs 125,000 through its online platform and stores. Forbes credits you with being one of the country’s top ten job creators. How did you do it?
Schulze: So much growth in the economy emanates from new companies that break into the marketplace and add value, innovation, new services and product offerings, and that creates jobs. Candidly, a job creator is someone who sees an opportunity in a market and adds value for customers who are underserved. You spot that snippet of service that’s important to a customer but isn’t being offered or isn’t offered with quality. Then you dedicate to doing a better job at providing it. When we started in 1966, we saw the vast market of customers not getting the selection and value on electronics and entertainment products. That was the original niche, serving a customer base of 18 to 25 year olds. Then we expanded our base, built on it, refined it, as the customers’ needs evolved.
MNBIZ: You opened your first Sound of Music store in St. Paul in 1966 when you were 26. The chain grew and morphed into Best Buy in 1983. How has your sector changed since you began?
Schulze: The market is now populated by larger companies with deep pockets. They are financially strong, national platforms with smart management. When we grew the company, the base of retail was mom and pop. It was more regional, less sophisticated. These companies were not able or willing to change to keep pace with customer needs. We work hard on offering the right product assortment, brand names, competitive pricing, technical service. But our secret is staying keyed-in on the customer. We’re driven to get the customer what they need, quickly and efficiently.
MNBIZ: Could you replicate your success today?
Schulze: I do. Now we are fortunate to be in the world of new technology. Tech is the root cause of why our company is successful; it’s what we sell and it’s what we use to make the customer experience more satisfying.
MNBIZ: What enabled Best Buy to became the world’s largest consumer electronics retailer?
Schulze: I believe success can be attributed to our penchant and passion for being connected to the customer. I want the customer to think of us first. I wanted Best Buy to be that name associated with a good experience so they would come back. Repeat customers are a hallmark of any successful business.
MNBIZ: Are you still connected to Best Buy?
Schulze: I’m the biggest shareholder. My involvement is less but I will never say that I’m retired. I do some work with the senior management team; I’m on the phone almost every month. They call me with questions about direction, opportunity or application. I still attend national sales meetings and the holiday prep sessions.
MNBIZ: You’re also very focused on the work at the Schulze School of Entrepreneurship at the University of St. Thomas.
Schulze: I value entrepreneurship, being an entrepreneur myself and now in my 50th year in business. Entrepreneurs strengthen the economy, but we need to find a way to get more startups up and operating. Right now only one in 23 of these businesses succeed; that’s a pretty ugly performance, but it can be changed. What is missing with the 22 that don’t make it? We want to carefully think about ways that people with chutzpah, passion and verve can be nurtured as they start a business.
MNBIZ: How does the program do that?
Schulze: We teach the students that they control their own destiny. We can help them build financial relationships with banks and angel funding, establish a credit line, get operating capital. Then we add mentors to give them new ways to think about opportunities and link them to accelerators that help startups and connect them with peers.
MNBIZ: Do you go beyond entrepreneurs?
Schulze: We also promote Intraprenuership. We take students who want to work in an existing company. They add value with fresh ideas and ways to challenge the status quo. The economy needs them, too.
MNBIZ: Your foundation supports higher education even though you never went to college.
Schulze: I intended to go to St. Thomas, but when I graduated 1958, I went into the service to avoid the draft. I picked the Air Force and the Air National Guard. I had a weekend commitment and took a full-time job as a manufacturer’s rep and got acquainted with the electronics industry. My career took off and I never got back to it.
MNBIZ: Do you feel you missed something?
Schulze: My world was practical application. Had I been able to get my college education, I would have learned more about analytical thinking. I could have found better ways to do things than through trial and error. But I learned from my mistakes. \
MNBIZ: You are on pace to give away $1 billion. What drives that level of philanthropy?
Schulze: I’m a Christian and I believe in helping others by giving of my time and resources. I’m connected though my Catholic faith with strengthening Catholic schools. Families sacrifice to send their children to get this education and we’ve taken on the responsibility of supporting them.
MNBIZ: What are your other priorities?
Schulze: We’ve put a lot of money into medical research. We want to help to advance treatment or even find a cure for diabetes. We support breakthroughs in other health conditions through regenerative medicine, stem cell research. And of course cancer research. My late wife Sandy died of mesothelioma. My current wife Maureen’s husband died of the same cancer six weeks before Sandy died. So we know that when you’re stuck with a cancer diagnosis, you need support and not just from the clinic treating the patient. We’ve built Hope Lodges for families to stay in free-of-charge when they have to travel to hospitals for their cancer treatments; it follows the Ronald McDonald House model but for adults. There are two in Minnesota (at the U of M and the Mayo Clinic), two in Florida and we’re working on Houston and Ann Arbor. The name of the game is to destress the environment for families.
MNBIZ: In 2016, you made a capital investment in Meristem, a family wealth management firm headquartered in Minneapolis. What was appealing about Meristem?
Schulze: It was an opportunity to get a piece of a high-quality, high-performance company that gives exceptional service.
MNBIZ: What jobs did you have as a youth?
Schulze: I was always hard-working. I started delivering the St Paul paper when I was 11—morning, afternoons and Sundays, so before and after school. Later I was a carryout boy at Red Owl and a package sorter at Montgomery Ward. I was the only sophomore at Central High School to buy their own car — I paid $300 for a green two-toned 1950 Pontiac. I was pretty proud of that.
MNBIZ: What do you do for fun these days?
Schulze: Golf, play a little bocce ball, socialize with friends. We live in Bonita Springs, a great community near Naples, Fla., and we enjoy the beach. I like to travel with my wife. Last year we took a three-week cruise with friends that went from Sydney, Australia, to Hong Kong with stops in New Zealand, Vietnam and Hawaii. We are fortunate to have an airplane that takes us wherever we want to go. I want to continue to experience new and different things and learn and grow. I want to stay intellectually engaged, physically active and spiritually grounded.