The Exchanges

Q On that opening day in 1979, you had, you'd raise the money to open two shops, you're in Atlanta, you open the doors to Home Depot, and is there just a mad rush of people to come in?

A Uh, not as expected. Um, That'd be, that'd be a mild statement. So we, ah, we agreed. Bernie and I went to one store, and our partner, Pat, and other associates obviously went to the other store, and we agreed. We weren't going to talk to each other in the morning. And, ah, my three older children, ah, they were each given 500 dollars, one, in one dollar bills, and I told them, I said, look, you know, I told the mother, I told them, I said, they'll be back in school by 11, 12 at the very latest. So at six o'clock at night, they were standing in front of the store still handing out one dollar bills. So we had, we had this grand opening, and nobody came.

AI assessment note: “we had this grand opening, and nobody came.”

Q So I guess it was in your mid twenties or late twenties, you went and worked for a company called Daylen. What was, what was Daylen?

A Uh, Dalen was a conglomerate when that word was, uh, really fancy and drew high P ratios. Uh, the great majority of the company ended up being in bankruptcy. Uh, I was running a chain of drugstores. I originally started out as a CFO there. We were the only part of the company that was making any money, and they had a small home improvement center company in California called Handy Dan Home Improvement Centers. They were also making a little bit of money, but the rest of the company's all losing money. So, I had an option to stay there and continue just to run the business as it was, or potentially go to California. Uh, I had met my partner at HD, Bernie Marcus, uh, through, through Dalen. Bernie was running the discount store division for them. Uh, that wasn't doing well, and so that time I was 24 or five years old. Um, I mean, I was a young man.

AI assessment note: “Dalen was a conglomerate when that word was, uh, really fancy”

Q What did your, what did your dad do?

A My dad, uh, was a pharmacist. Um, he passed away when, uh, he was 44. I was 15 at the time. Several years before that, he had left, uh, he was working for his, his brother in a retail drug store. And, uh, he started his own pharmaceutical distribution company, uh, to hospitals and nursing homes and doctors across the country. Uh, when he passed away, my mother was only 37 at the time, and without any business background, um, she went in and started to run the business. Uh, my mother was one of these people which, you know, failure was not part of her vocabulary, and she Was gonna succeed, and she was gonna do whatever it took to be successful in the business, and I would go to school, and, and I was playing football then, and do my football practice, come home, I'd start dinner. Um, I did the family laundry, and just did a variety of things to support the house as best I could, and, and, uh, try to be as good a friend to my mother as I could be. I remember periodically I would, I would take her and go bowling, and I remember one time, you know, She was very young looking. Somebody would ask me, well, is that your girlfriend? I said, no, that's my mother, actually. It's not, not my, actually, my girlfriend. But, ah, she was always very young at heart, very young in spirit. She loved to dance. Very much of a caring person.

AI assessment note: “My dad, uh, was a pharmacist.”

Q How did you, how, when, when Bernie came to you and said, hey, here's the business plan, you were in, you were in right away, you, you, you said, let's do this thing?

A Well, we did the business plan together, and I, and Bernie and I, but Bernie lived in the San Fernando Valley, for those of you that know LA, it's from a three hour to a three day drive to get, to get from, you know, Orange County to San Fernando Valley, and so we would talk a lot by phone, and I would develop really all the business plans, and work on the models, and Things of that nature. I would send them to him. He would look at them. Oh, we'd meet at a coffee shop that was somewhere in the middle, which we met at, I don't know how many times, but they had a table there that was kind of named after us, and we kept, you know, developing this model and developing it, and finally, I remember one night I had, you know, all these papers spread out on our dining room table, and I, You know, I called Bernie, and I said, you know, listen, partner, um, I mean, I've applied, you know, five years of, of experience in large public accounting firm, my own business experience, my experience running a chain of drug stores, and these numbers don't add up.

AI assessment note: “Well, we did the business plan together”

Q Did you, did you have, I, I'm just curious, I mean, you know, you've got this job, you moved to California, it's very successful, you've got this career ahead of you. I don't know, were you, were you worried? Did you feel like the rug was pulled from out, out from under you?

A Well, I, I, you know, I, you know, I was shocked, and, ah, but, you know, I mean, given the financial background that I had, we had saved up some money, I wasn't, you know, I wanted to take my time, as did Bernie, and, ah, think through the options that we had. You know, he was still a fairly young man at that point as well, and, ah, didn't want to rush into anything, so I took basically the better part of the year off. I did a lot of running, ran my first marathon that year, spent a lot of time with my kids. I mean, I did a lot of things that I wanted to do. Um, was looking at a lot of different alternatives. We wanted to think about outside the box, and Uh, and Bernie had said, well, you know, if we were ever to leapfrog our own business, Handy Dan Home Improvement Centers, what kind of home improvement center store could we not compete against? And so we said we could never compete against the big warehouse, no frills, down market, low prices, great service, great services. So instead of kind of taking that Handy Dan model of the fours, four million dollars, 40% margin, 40 staff people, et cetera, We said let's try to leapfrog the industry, you know, dramatically.

AI assessment note: “I was shocked, and, ah, but, you know, I mean, given the financial background”

Q What about your personal life? I mean, did it take a toll on the time you were able to spend with your kids, your family? All the time.

A I thought you weren't gonna ask me about my personal life. No, you can ask me whatever you want. I told guys, anything you want to talk about is fine. Um, I think it's one of the things I'm most proud of. My oldest daughter, who, she was running a non-profit for, um, For young women in San Francisco, and when they did a retirement dinner for me in 2001, she couldn't be there. She couldn't get away, and she did a video piece, and she sent it, and I still remember, you know, what she said there, and she says, Dad, you know, I never realized when I was growing up, you know, the size of the Home Depot, and the success of it, because you're always there for me. You're always at events that were important to me. You're always there when I was doing dance recitals. You're always there, you know, important School programs, whatever it may be, and, and I worked around the kids schedule, and I would work early in the morning, I'd work late at night, I'd put them to bed, and work after that, and so I, I always made sure there was balance in my life, and I think, you know, I'm often asked by young folks, uh, most people are younger than me, so it's easy for me to find people that want that advice today, but I always tell them, you know, make sure you have balance in your life, and, and because, Too many young executives, men or, or women, they, their attitude is that we gotta work now, wor…

AI assessment note: “I worked around the kids schedule... I always made sure there was balance”

Q Right? I mean, that, that was, can you, can you explain what, what was the, I mean, did you have this burning passion to own the Falcons? Was it, was it sort of a chance to run a business again? What was the thinking behind, behind doing that?

A Well, I was a season ticket holder, you know, since I had moved to Atlanta, and, um, I didn't realize this, but the commissioner before, uh, Commissioner Goodell, uh, Commissioner Tagliabue, at the closing when I bought the team, he said, you realize the team you just bought has never had back-to-back winning seasons, and I said, Paul, you know, Paul's the smartest guy in the room, not because he told you, it's because he really was the smartest guy in the room. I said, that can't be correct, so I went back, and I checked, and it turned out that was correct. So I realized all those years that I was a season ticket holder, and I would have such angst over the Falcons, I understood why, because it was, you know, constantly, you know, like this. So, I said to myself, I can either sit and complain about it for the next, you know, 40 years of my life, or just try to buy it to even fix it. So, um, So I felt, you know, buying a team and fishing seemed like more fun than, ah, sitting there and just watching them play and losing games and what have you. So that was in 2000 and one, um, and I'm just finishing up our 17th year as, um, as owners. Now, we've had, we've had, you know, we've had multiple back-to-back winning seasons, multiple championships, uh, played well last year in the Super Bowl, we just, we forgot there was a fourth quarter in the game, but played really well for three …

AI assessment note: “I can either sit and complain about it... or just try to buy it”

Q You went, Home Depot went from zero revenue in 1979 to seven hundred million in 1985, the fastest company in U.S. history to hit 40 Billion dollars in revenue. How did you manage that growth? Was that overwhelming?

A I'll tell you a story. Sam Walton, um, Sam Walton was the founder of Walmart. Um, Sam was speaking at a retail conference I went to, and somebody asked him, and the company had gone from, I don't know, ten billion to twenty billion or something. Today, I don't know what, they own half the world. But, but they, ah, I mean, whatever, you know, between the name and Amazon, but, but we said, well, how did you get from 10 to twenty billion dollars? And Sam said, we opened up one store at a time, and that's all we did. And so, really, at HD, we had a five year plan, we had a one year budget, we had all of that, but we focused on every single store, and our, our, um, plan was that each store had to be better than the last store we opened up. So we didn't have any plantograms. We didn't have any, you have to do it this way. We didn't let the model get frozen. We didn't let it, we made the folks running the store think about, this is the last store. How do I make this store better? How do I own it? How do I feel accountable for it? How do I inject my ideas into it, and how do I make it better? So every store got better.

AI assessment note: “we focused on every single store, and our, our, um, plan was that each store had to be better”

Q You stepped down, stepped away from the company, left the company at a pretty young age. You were 58. This is 2001. Um, why did you leave? Were you just kind of, your time there was done?

A Well, I told the board at that time, I mean, I'd done, I mean, the earlier days in the company, the first, I don't know how many years, but that was a 23 year period of time that it was, it was great fun, it was all these adventures, starting a new business, you know, going half broke, figuring out how to work Through that, you know, responding to customers, and as time went on, I spent, found myself spending more time in meetings, more time doing things that I had to do that were part of the job, and I didn't dislike doing them, but they weren't as much fun for me anymore. So, and I really felt that 23 years was a long time for, ah, somebody in my position, first as president, later as CEO, and chairman, and what have you, and And, and Bernie and I had always, you know, operated as a very close partnership. I mean, it was really more like two brothers working together, two partners working together than anything else.

AI assessment note: “they weren't as much fun for me anymore. So, and I really felt”

Q You went off to college, ah, at Babson College. It was a, a small, a business college in Massachusetts. Um, was that, was that your intention to get into business? Out of school?

A Well, I think really what happened after my dad died, uh, we would talk about what's going to happen to the family business. Um, we had hoped, uh, you know, my mother would, you know, get remarried. She did, uh, she exceeded our wishes. She did several times over. Um, so she would, she would laugh at that too. She wouldn't, she wouldn't think my, my mother would think that would be very funny. So, uh, But in any event, um, so my brother was gonna take over the, uh, pharmaceutical end of the business, and I would take over the business end of the business, so that, that was really the plan. He went to pharmacy school, I went to business school, and, uh, was able to develop some skills in terms of, uh, how to work with others, and be inclusive, and, uh, and, and be a good leader, so that, that was very important for me in college.

AI assessment note: “I would take over the business end of the business, so that, that was really the plan.”

Q Arthur, I want to ask you about how you and Bernie thought of the company, and you have to, of course, agree on what it's going to be, what the values of the company are. So what, what were the core values of Home Depot?

A Well, I think that, you know, we never really wrote them down. Uh, I remember I went to, um, lunch at Bernie, and I said, you know, we're living these values, which by far, in a way, is the most, most important thing that we can do, but they're not written down. And I'm going to give you some shocking news today that I've kind of figured out and, and know to be true, and that is that you and I are going to approve a lot of stores in the future that we will actually never see. We'll never be in them. We'll never get a chance to go visit them. I remember we stopped eating lunch, put down that fork, and we said, you're nuts. He said, that's crazy. How can we approve stores and never go visit them? I said, Bernie, because we, we, we spent about half our time in our stores, and I said, if you do the math of it, we visit certain numbers of our existing stores every year, and, ah, we just realized that there were too many new stores, and that, so I said, we need to document, we need to write down, and, you know, I, I think the beauty of our core values But you're really focused on our associates, and people, and relationships, and community, and giving back, and the people who are serving drive everything that we're doing. Those are the ones that we listen to, those are the ones we respond to, those are the ones we care for, those are the ones we nurture, and that's the mentality of t…

AI assessment note: “focused on our associates, and people, and relationships, and community, and giving back”