Gopher-preneur book of the month, April '05, Built from Scratch : How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion
Home Depot was started by Bernie Marcus and Arthur Blank. They had both recently been been fired from another home improvement chain when a friend, Ken Langone, told them this was their chance to make the company they always dreamed about. Neither of them had much in the way of savings and because they were older, they felt their job prospects weren't too good. They were also pretty scared of losing everything they owned if they didn't start making money soon. Ken told them again, now was their golden opportunity to start The Home Depot. Ken believed in Bernie and Arthur's management abilities so much, he was able to raise about two million dollars from investors to start the company.
In 1977 the average markup on products in home improvement stores was 45%. The selection at most stores was limited. The world was waiting for someone to step up to the plate and make things better. The first store opened in Atlanta, Georgia in June of 1979. The store offered a selection people just couldn't believe, a vast warehouse of home improvement products all under one roof. What a great idea! In the beginning, The Home Depot would advertise sales in newspapers that offered a few products steeply discounted to attract customers to their stores. The sale products would quickly sell out and the stores would empty of customers until the next big sale came along. Trying to find a way to break this cycle Bernie and Arthur met with Sam Walton, founder of Walmart. Sam told them he had been down their road in the past. Sam said instead of only getting customers in their stores for the sales, why not drop their prices and lower their markup to offer customers low prices all the time. This would help Home Depot sell more and sell more often. And you know what? Sam was right. The Home Depot adopted this strategy and put many other home improvement retail chains out of business. Stores like Somerville Lumber, Grossman's, HomeQuarters, Channel and Rickel's just couldn't compete. As time went on, The Home Depot expanded it's product line to over 40,000 items and has improved it's ability to reach out to a diverse customer group by offering in store how-to training.
The Home Depot now has over 320,000 employees working at 1,800 stores, with a new store opening every 48 hours on average. This company is a great monument to capitalism at work. Thank you Bernie, Arthur and Ken for helping us improve our homes and our lives.
If you are interested in learning more about Home Depot please read this book "Built from Scratch : How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion" by Bernie Marcus, Arthur Blank, Bob Andelman, we did!