Over the course of my museum career, I've often encountered the notion that "museums should be run like businesses." I thought it would be interesting to hear from someone outside the museum world about just that subject. By a happy coincidence, I recently was introduced to Gary Hoover, an entrepreneur with an interest in museums, who was kind enough to be interviewed and to share his insights with ExhibiTricks readers.
Gary Hoover is an American businessperson who founded Bookstop, an American bookstore chain. He has been named an entrepreneur-in-residence at the University of Texas at Austin School of Information. Gary has also experimented in the tablet game app business and the for-profit “experiential” museum industry.
All these adventures have given Gary a wealth of experience that he now uses to help others, whether they lead large companies, startups, or non-profit organizations.
Gary's interview begins below.
What’s your educational background?
I view education broadly. Most of my education has come from the people I have worked for and with, my working experience, and my 57,000+ book and magazine collection. Most of my values came from my parents, the church I grew up in, and my K-12 school teachers.
Along the way, I earned a BA in Economics from the University of Chicago, an institution I love and have supported in every way possible. I was fortunate to study under four future Nobel Prize winners. However, my course structure was really a liberal arts program, with as much hard science, humanities, and other social sciences as economics. I also made many great, lifelong friends.
My experiences working for three big companies, two of them department stores, were invaluable to my future adventures.
What got you interested in Museums?
How can you not be interested in museums? I think every American has experienced them, usually early in life. By the time I was ten, I had fallen in love with the Museum of Science and Industry in Chicago, and of course, it was also near my college campus. I think I have visited at least 400 museums on every continent but Antarctica, ranging from the biggest and most prestigious to the smallest niche museums.
My first love was retailing, and I have spent most of my working life in that industry. I still love it and study it daily. As a bricks-and-mortar, direct-to-the-public business, museums are a natural extension of that interest.
When, after co-founding two successful businesses (and one failed one), I looked around for where the next big opportunity was: museums (broadly defined) seemed like a natural. As the world becomes more affluent and as we evolve from a product economy to a service economy, more consumer spending will go to experiences rather than just more “stuff.” The future is very bright for the big service industries: finance, healthcare, travel, and education.
In addition, every business I started was fundamentally about education. Bookstop brought more books from more publishers and authors, more affordably, to millions of people, and Hoover’s did the same with business information. My big failure, TravelFest, was also based around education, with the second-best travel book selection in America and drawing over 10,000 people per year to its learning center events. It failed when the airlines decided travel agents were no longer needed.
The experience economy is a real thing, that will only grow – and grow dramatically – in the coming decades. What share museums and related organizations get is up to them. The customers are ready.
I met with museum executives and attended industry conferences. I read everything I could get my hands on. But my museum visits were the most important way to learn. I liked some of what I saw but was unimpressed with a lot, too.
I also studied the economics of the industry closely, always with my retail knowledge as a backdrop. Overall, museums operate short hours, and have an exceedingly high gross margin, attributes that any retailer would be jealous of. But from a retailer’s perspective, their allocation of funds between operations and capital investment are out of balance, they are not efficient users of space, and, most importantly, are often not customer-centric.
What do you think when people say, “Museums should be run more like businesses”?
Museums are businesses in my mind, just like hospitals and universities are businesses. Whether they are for-profit or non-profit just determines whether they contribute to the tax base, their governance structures, and their systems of financing. None of these corporations will survive longer-term if they do not contribute something of value to society or if they fail to serve their customers. I have written about that here: https://hooversworld.com/boom-in-non-profit-entrepreneurship/.
What are your pet peeves about museums?
I love museums and have told retailers how much they could learn from the best ones. So my main concern is that they are falling short of their potential, not growing the business up to its potential. The customers are there if people want to offer them quality experiences. Many more people could be served and more jobs created if museums lived up to this potential.
I believe the biggest failure is not being customer-oriented. I paid $60 for the big ticket at a major city science center, and just as I was rushing to consume the best exhibits before closing, I was told that the museum was closing early for a private party. In a major historical site, none of the men’s rooms had toilet paper, something that would get you fired at Walmart. At many museums, customer/human contact is nil, and the only people you meet are surly or at least unfriendly guards.
I got an insider’s tour of a great art museum for a bunch of us “VIPs.” We met some of the artists and received deep storytelling about the major works. But everywhere we went, “the hoi polloi,” the paying customers, stood in the background, fascinated as they eavesdropped. But they were shown no courtesy, not made to feel welcome like us “people who matter.”
Most museums are closed evenings, when most people seek experiences. In most museums, the staff has weekends off, the most important time of the week. Only twice in my hundreds of museum visits did I see the director on the floor.
All of these things would be intolerable even at a Goodwill store or a Dollar General, let alone at Nordstrom’s or Neiman-Marcus. Or at a Best Western or Motel Six, if it has good management.
What are your thoughts on for-profit museums?
Deciding whether to make a museum a for-profit or non-profit is a complex decision. There are pros and cons to both.
I raised seven million dollars to start a for-profit museum-like experience but had to abort the project when the Great Recession of 2008 made further fundraising impossible. For that project, I selected the for-profit model.
If done at high quality, for-profit corporations can be more sustainable, and I always wanted my ideas to have long lives. John Deere and Procter & Gamble, two of my favorite organizations, were both founded in 1837. Their futures (and jobs) are secure as long as they serve customers. Donors can be more fickle and sometimes less logical than the public. As a retailer, I trust the public to make the right decisions and to respond to the best quality operations. The customers will always be there. The organization’s fate is completely in the hands of leadership.
Making your organization totally dependent on customers ensures that you will always be customer-first.
I have served on several non-profit boards, where the conversations are often irrelevant to the customer experience. I have been a board member of several for-profits, including my own companies and Whole Foods Market. Those conversations are overwhelmingly about customers and what their experiences are like. Every smart businessperson knows that the profits will flow if you serve people well, if you give the public value for their money.
Remember that all these organizations, of both types, must make a profit in order to be of value to society. Non-profits just use different terms like “reserves” and “surplus” for profits. But any organization that spends more money than it takes in, year after year, is not long for this world.
Profits, the excess of income over expenditures, serve several critical roles. They are the only insurance against “rainy days” like closing because of a virus, and thus the best income insurance for employees.
Profits are the source of all experimentation and innovation: new, risky ideas can only be tried with these “excess funds.” We would never have heard of an iPhone if the iPod had lost money. The big success of the first commercially successful detergent, Tide, in the 1940s enabled Procter & Gamble to invest in the technology to put fluoride in toothpaste in the 1950s, eliminating a lot of cavities.
Profits are the only way organizations can expand, create more jobs (and more interesting jobs), and serve more people, if what they are doing is worth doing.
These principles are just as applicable to non-profits as they are to for-profits.
As long as I am talking about profits, overall the profit system puts great pressure to become more efficient and lower prices. As many businesspeople know, the best way to increase profits is to lower prices.
Henry Ford lowered the cost of a car dramatically and Samuel Insull did the same with electricity. Companies like Microsoft and Dell achieved success by making software and hardware far more affordable (and accessible) than in the old mainframe computer days. Companies including Southwest Airlines, Costco, and UPS rose to power by lowering prices, paying higher wages than their peers, and in each case being very profitable compared to their competitors. When business is “done right,” everybody wins.
I also think that the funding mechanism for non-profits is probably less efficient than that of for-profits. I once attended the annual banquet of all the non-profits in my city and looked around to see hundreds of fund-raisers and grant-writers. All together, they raised far less money than the relative handful of people who raised the money for all the startups in town. I saw that as a potential waste of human energy and talent.
I have concerns about the tax base in America. Whether you think taxes are too high or too low, funding key government operations is critical. We have an aging population with fewer of working age. We have a large number of people who do not contribute to taxes (58% of federal income taxes are paid by the top 6% of income-earners, who also pay the highest tax rates). I think it is likely that the non-profit sector is growing faster than the for-profit part of our economy. Tax-exempt state and local governments are also growing. So we are becoming increasingly desperate for taxpayers. By creating a for-profit company that pays taxes, I can better help alleviate this major problem.
None of these thoughts should imply that I am opposed to non-profits. I gave my college far more money than I kept for myself. They got over two million dollars and today I live on social security, after risking all my own money on my last, failed idea.
There is nothing better than a great non-profit corporation or a great for-profit corporation, an organization that knows its purpose and serves people well.
What advice would you have for museum professionals who want to learn from Business History?
What do you think is the “next frontier” for museums?
Storytelling, engaging human interest in the human stories behind the art and innovations, putting the customer first, and the points I have already mentioned. People love the stories of people. Most art museums only tell you the name of the picture, who painted it, and who donated it, with dates. What were these people like? Why did they do what they did? What can we learn from them? The same goes for scientists and innovators in science museums. Tell us the human stories!
Engage people! I see so many “interactive’ exhibits that are expensive, custom-built, but not much fun. In a museum in England many years ago, one room was just pens and blank post-it notes soliciting comments from visitors on the subject at hand. The walls were covered with thoughts, and everyone stopped to read them. That was true interactivity.
Museums focus too much on fancy buildings and expensive exhibits instead of on what matters – the customer experience. Exhibits are static. Every retailer knows that you have to continually rework your “exhibits” in order to keep customers coming back. A trip to a Target store is more fun than a museum visit for many people. (Look at how many museums open strong but then attendance declines, except for blockbuster exhibits.)
What are some of your favorite museums or exhibitions?
If money were no object, what would your “dream” museum project be?
Money should never be the object. An entrepreneur should be able to create twice as good and high quality an experience for half the money. My latest unrealized dream can be studied at https://thesparkaustin.com/.
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Paul Orselli writes the posts on ExhibiTricks. Paul likes to combine interesting people, ideas, and materials to make exhibits (and entire museums!) with his company
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