In a very personal book, Ken Langone, financier, investor, philanthropist, and co-founder of the Home Depot, describes his life. We read about his taking Ross Perot’s Electronic Data Systems public as well as how he founded Invemed Associates. Those accomplishments, impressive as they may be, all pale in comparison to his move to join Bernie Marcus and Arthur Blank in cofounding The Home Depot. It is all in the recently published, ‘I love Capitalism’ (Portfolio/Penguin, 278pp), which celebrates Ken’s 80 active years.
I remember many of the details of Home Depot’s first stores, but Ken brings them alive with his salty perception. It was his persuasive personality, backed by single-minded determination and sheer willpower, that convinced Bernie Marcus and Arthur Blank to create the store, hire Pat Farrah and develop a concept that today has no rival, albeit strong competition. It all came together in Atlanta in 1979, when the first two of the original four stores were opened. The high-ceilinged warehouses were 55.000 to 75,000 square feet in size, far larger than any home improvement center had ever been.
Bernie Marcus took me through one of the first stores, telling me that he wanted it to be messy to give customers the feeling of merchandise excitement. The overwhelming size of the store and its broad assortment of brands was excitement enough for me to be convinced of their viability and Home Depot’s growth potential. Since that time, the notion of a messy store has given way to orderly, neat stores – all overwhelmingly filled with home improvement merchandise.
The book traces the growth of the Home Depot from its inception under Bernie Marcus to more challenging times under the fractured leadership of Bob Nardelli to the gains achieved under the inspired direction of Frank Blake. Since 2015, the company’s chairman and CEO has been Craig Menear. Ken Langone was always the one working powerfully behind the scenes; wielding his influence to force change when it was needed but also to recognize achievements and celebrate accomplishments.
Home Depot had a somewhat unusual start. It all stemmed from an abrasive relationship the founders had with Sandy Sigoloff, CEO of Daylin. At the time, Bernie Marcus was working for Sigoloff as CEO of Handy Dan, a home improvement company. Daylin owned 81% of the stock while Ken Langone owned 16% of the 19% public stock, but corporate infighting created such a stressful situation that Langone forced the sale of his Handy Dan stock. Eventually that move enabled Bernie Marcus, along with fellow Handy Dan colleague Arthur Blank, as well as another industry pro – Pat Farrah, to be free to create the concept that blossomed in Atlanta into the mega-success we now know as Home Depot.
Today, Home Depot is one of the most admired and respected companies in the U.S. In fiscal 2017, the Home Depot achieved sales of $100.9 Billion. At the end of the fiscal year there were 1950 warehouses in the United States, 182 warehouses In Canada and 122 warehouses in Mexico. Net earnings were $8.6 Billion. Currently Home Depot has a P/E ratio of 25.19. While the company still sells home improvement products, it has expanded its scope to serve not only the do-it-yourself customer, but also professional customers such as builders, renovators, general contractors and repairmen. It also serves small business owners and tradesmen. Kan Langone’s keen business sense and financial prowess certainly has paid off.
