LOUISVILLE, Ky. — Just outside this city, known for the Kentucky Derby and the Louisville Slugger, is another metropolis better known for its brain power and a curious form of local pride.
It's called Geek Squad City: a 240,000-square-foot warehouse that’s home to 1,200 of retail giant Best Buy’s best and brightest. Every day up to 4,000 broken laptops, smart phones and tablets arrive here, almost a million a year, where they’re unloaded, then sorted by brand for repair.
Geek Squad City is not just a repair facility. It’s ground zero in the big box chain’s fight to whip rivals like Amazon.com and Walmart through expertise, service and end-to-end customer care. Since they think of this place as a city, the geek-in-charge is known as Mayor Wes Snyder.
“Until we built this place, the largest grouping of agents was 20 in our corporate office,” he said. “When we originally opened, we were going to have a couple hundred. And it just felt like it was big enough to be a city.”
Mayor Snyder oversees the entire pocket-protector workforce, including nearly 600 Geek Squad agents, many of whom are trained on the job. You can’t miss them: right down to their shiny shoes.
If you look closely, you may even spot a "double agent" or two – like Geek twins Daniel and Nick Morris. Before joining the squad, they’d never repaired a computer. In their former lives, they flipped burgers. They get all kinds of repair jobs here, from worn-out power supplies to fried disk drives; the most common problem they see here are busted motherboards.
Four years ago, agent Katie Moran was a Best Buy cashier. Today she specializes in fixing Sonys and Toshibas. She can fix pretty much anything in about 15 or 20 minutes - as long as she can get the parts. But she’s taken on some real tough cases. “I had one that looked like it had been shot,” she said.
Snyder said they’ve seen computers that have been “run over with cars, thrown out of nine-story buildings, left on radiators to burn up.”
Agents repair up to 10 products a day at an average cost of $200 each, unless they’re under warranty. The success rate is about 95 percent The place buzzes with geekish intensity as the squad tackles a seemingly endless, incoming supply of battered and broken devices too troubled to be fixed in the 1,100 Best Buy stores around the country. They fix any computer, any make, and brand – whether you bought it there or not.
There may be eight million stories in Geek Squad City, but when they're found on customers' hard drives, they remain top secret. Recording devices, including cell phones, are checked at the door. Hard drives are kept under lock and key, and when a drive can't be fixed, it’s flattened.
Ever had a precious document or photo vanish? That's when the data recovery supersleuths step in. It doesn’t matter if the drive was set on fire, plunged into boiling water — or you simply hit the delete key when you didn't mean to. If the data is there, they’ll find it, says Brian Williams, a 12-year squad veteran.
“You kind of think of all the data as a giant puzzle,” he said. “Some puzzles are very easy to put back together. Some puzzles may be a million different pieces. We can do it, it just may take a little bit longer.”
The job of fitting together the pieces of this business began in 1994, when Robert Stephens, a Minneapolis college kid, founded a computer repair company. He named it Geek Squad, came up with the retro uniforms – black slacks, white short-sleeve shirt, black necktie, white socks and black lace-up shoes - and put his agents in Volkswagen Beetles. Today he's Best Buy's chief technology officer.
“I never thought I'd get into the computer repair business,” he said. “That's like the plumbing of the IT industry. But if you operate a service business with good systems, and you think of the hiring and the branding and little details like the uniforms, you can take any boring business and make a name for yourself.”
His small business had grown to 60 geeks and $3 million in annual revenue when it caught Best Buy's attention in the late 1990s. Best Buy bought the company in 2002, and today, the Geek Squad is 20,000-strong, worldwide.
Stephens says his computer repair business has now become Best Buy's entire service ecosystem - across the globe. They’re available on phone and online, 24 hours a day, seven days a week. Need a geek to hang a flat screen or fix a fridge? A typical home visit costs about $150. A laptop repair might run as little as $50, or it could be covered under an annual service plans that start at $100.
Best Buy’s blue-shirts on store sales floors are schooled to push the plans. No wonder: Geek Squad services business accounts for roughly 6 percent of Best Buy’s $50 billion in annual sales -- more than $3 billion worth of high-margin revenue.
Those store-bought warranties can be controversial: Not everyone thinks it’s worth paying $250, for example, to insure a $2,000 flat screen. Most consumer advocates say the plans are usually not a good deal. George Sherman, who oversees Best Buy’s service division, said those critics overlook the convenience of the company’s in-store repair shops.
“In many cases, when you buy a warranty, you're being handed off to a third party, and you're picking up a phone and calling a phone number, and it's not the retailer where you bought it,” he said. “You can walk into a Best Buy store where you bought the product in the first place, and that's where you initiate the repair process.”
Good deal or not, the service contracts – even the geeks – are all vital, Best Buy says, to its effort to offer what Amazon and Walmart cannot.
“We think (service) is the absolutely critical factor,” said Sherman. “There are many places to buy consumer electronics. We think service and services makes the difference. You just don't hang up a shingle and say we're in the service business. And that's why we have such a powerful differentiator with the Geek Squad because we've built it, we've fine-tuned it, we’ve iterated it and we've gotten better and better.”
© 2012 CNBC, Inc. All Rights Reserved