The Home Depot, Inc.
In a classic all–American rags–to–riches story, billionaire Bernard Marcus ascended from a childhood in the tenements of Newark to the co–founding of the world's largest home improvement retailer, The Home Depot, Inc., making him one of the richest men in America. Equally impressive is the fact that success has not changed the friendly, sincere, and popular "Bernie," who still gives hugs to his achieving employees, and donates the bulk of his money to charity.
Marcus was born in 1929 in Newark, New Jersey, to Russian immigrant parents. After receiving a degree in pharmacy from Rutgers University in 1954, Marcus instead chose a career in the retail field. After being summarily fired, along with another key executive, from Handy Dan Home Improvement Centers for experimenting with wholesale do–it–yourself merchandise, the two men formed The Home Depot. The easy–going Marcus is married with three children. He enjoys golf, swimming, and the Atlanta Hawks professional basketball team. As far as do–it–yourself projects around the house go, Marcus told Nation's Business interviewers that he wouldn't do plumbing repairs even if he had the time. He is co–author of the book Built from Scratch, which is about founding The Home Depot.
Marcus is the chairman of the Center for Disease Control Foundation and is on the board of directors of many organizations, including the New York Stock Exchange. He is active in several community organizations, including the Shepherd Spinal Center and the City of Hope cancer research center. Marcus, with his wife, Billi, is the founder of the Marcus Foundation. The Foundation contributes to Jewish causes, medical and health care issues, free enterprise systems, and children's issues. In 2001, the Foundation announced a $4.5-million contribution to establish the Marcus Chair in Vascular Medicine and the Marcus Vascular Research Fund for Emory University's School of Medicine. Marcus also created the Marcus Developmental Resource Center, a support services resource for children with mental impairments; Marcus made a $45-million donation to the Center in 1998. In November 2001, he gave $200 million to build one of the world's largest aquariums in Atlanta, Georgia.
Marcus was named Most Respected CEO in 1990 by Georgia Trend magazine. He also has been honored with induction into the Horatio Alger Association of Distinguished Americans, and in 2000, was inducted into the Rutgers University Hall of Distinguished Alumni.
Following graduation from college, Marcus began working at Vornado, a drugstore and cosmetics company. The retail experience appealed to him more than the pharmaceutical aspect of his job, and he instead chose to continue his career in retail. Moving up through the ranks at Vornado, Marcus was vice president when he left the company in 1968. He moved because he was offered the job of president of Odell, Inc., which he accepted. In 1970, Marcus again moved to a position as vice president of a much larger company, Daylin, Inc. Daylin owned a chain of local home improvement stores known as Handy Dan Home Improvement Centers, Inc.. Marcus found his mark.
By 1972, Marcus had moved through the ranks of retailer Handy Dan and struck up camaraderie with the vice president of finance, Arthur Blank. The pair began experimenting in discounted merchandise within the Handy Dan chain. When Marcus moved up to chairman of the company, he and Blank developed a plan to sell discounted goods in a "do–it–yourself" retail store. They began experimenting with the idea, with local success.
Meanwhile, venture capitalist Kenneth Langone had heard from a friend that Marcus found success with his new marketing strategy at Handy Dan. Langone arranged to meet Marcus. He saw a man with an insatiable drive to make things better, even when things were good. As he told Forbes magazine interviewers, "He [Marcus] was—and still is—a warrior."
Langone began buying Handy Dan stock and visiting some of the 60 area stores. He noticed that all the employees knew Marcus as "Bernie." Said Langone in the same interview, "When he put his arm around a clerk and said, 'How's your baby?' he really wanted to know how the baby was." So impressed was Langone that he and a group of Invemed clients bought up about 14 percent of Handy Dan shares. Then Langone began to put pressure on Sanford Sigoloff, head of Handy Dan's parent company, Daylin, Inc. At the time, Daylin controlled approximately 84 percent of Handy Dan stock. Notwithstanding, Langone felt that Sigoloff was not giving Marcus the support he needed. So Langone "put Sigoloff on notice that I was going to hold him accountable, as majority stockholder, for my interest." Sigoloff offered to buy Langone's interest out. Langone held out, then sold.
In 1978, with Langone off his back, Sigoloff fired Marcus and Blank. It was the best thing that ever happened to either of them. As Marcus related in Forbes, "I remember calling him [Blank] on a Friday night. He said, 'You've just been hit in the [rear end] with a golden horseshoe. Let's go into business for ourselves.'" That is exactly what they did.
Marcus and Blank joined with a third fired executive, Pat Farah, and developed their vision for The Home Depot. Langone provided an initial investment of $100,000 working capital for them. Unable to finance construction of a prototype store, the men bought two defunct Treasure Island Discount stores in Atlanta and set up shop as The Home Depot. They stocked the shelves with 18,000 different items, priced them low, and hired knowledgeable staff.
On the day of their grand opening, June 22, 1979, Marcus and Blank came up with the idea to have their children hand out $1 bills at the store entrance as a thank you gift to shoppers. By evening, the kids were out in the parking lot, trying to find people and offer them $1 to come into the store. The second day was like the first. Marcus, Blank, and Farah met for lunch. As Marcus later recalled in an interview with Nation's Business, "We just sat there in stunned silence. We didn't even eat. It looked like curtains for us." Marcus continued, "My wife wouldn't let me shave for days. She didn't want me to have a razor in my hands."
However, a couple days later, according to Nation's Business, Marcus became hopeful when a satisfied customer returned with a bag of home–grown okra as her way of saying thank you for the good shopping experience she had at The Home Depot. New Yorker Marcus didn't know what to make of the okra, but the gesture made him believe he was on the right track. Soon, word spread and the customers poured in—so much so that within twelve months, two more stores had opened. The year after that, 1981, The Home Depot went public and issued its first stock.
Chronology: Bernard Marcus
1929: Born in New Jersey.
1954: Graduated from Rutgers University with a pharmacy major.
1954: Worked for Vornado, a drugstore and cosmetics company, after graduation from college.
1968: Left Vornado for presidency at Odell, Inc.
1970: Joined Daylin, parent company of Handy Dan.
1978: Fired, along with Arthur Blank, from Handy Dan.
1978: Partnered with Blank and Pat Farah to form The Home Depot.
1979: The first The Home Depot store opened in Atlanta.
1981: The Home Depot went public.
1999: Home Depot earned a place on the Dow Jones Industrial Average.
2001: Marcus pledged $200 million to build one of the world's largest aquariums in Atlanta, GA.
During the following 10 years, the company exploded with growth, and it had toppled the nation's leading home improvement chain, Lowes, as the country's biggest warehouse home center retailer. Marcus' and Blank's stock was then worth $780 million. By 1987, The Home Depot had 75 stores and had earned $54 million on sales of $1.5 billion. By 1991, the company had 158 stores in 14 states, and more than 30,000 happy stock–holding employees. Eight years later, in 1999, The Home Depot was added to the selective Dow Jones Industrial Average, when such respected firms as Sears, Chevron, and Goodyear were removed.
But co–founders Marcus and Blank never forgot the day they were terminated from Handy Dan. They had been running the most profitable home center store in the country at the time. But then, unexpectedly, one day, they were fired without reason. As Marcus recalled in Nation's Business, "what we learned is this: You never turn your back. You always question success. And that experience gave us one of the things that is critical to running the company today: humility."
That humility translated into customer service for the new The Home Depot chain. Marcus and Blank often made time in their busy schedule to wear an orange apron and walk the floor in one of their stores, helping customers just like any other employee. Further, they always were open for suggestions, whether from customers or employees. These early practices have stayed with the company since the beginning. But, as a result of listening to customers, their stores have not remained the same. The stores have nearly doubled in size and carry twice as many items as those first envisioned.
From the beginning, Marcus served as The Home Depot's chief executive officer (CEO), and Blank was its president (the third partner, Farah, has since retired). But they have always treated the company as though it was a large entrepreneurial interest involving all their employees. In 1992, when interviewed by Nation's Business, Marcus stated, "Among our 30,000 employees, we probably have 10,000 people who are entrepreneurs. And we have an environment that allows the entrepreneur to function. That is very rare for a company our size." He cited an example of an employee who took it upon himself to learn sign language to better assist hearing–impaired or deaf customers. As a result, the number of deaf customers turned into a steady stream, and the employee began teaching sign language to other sales clerks. All employees of the company are graduates of employee training at The Home Depot University.
Since going public, The Home Depot suffered the exposure that often attracts competitor copycats. But Marcus and Blank believed that their successful recipe involved "chemistry," particularly between customers and employees. And there was chemistry between Marcus and Blank as well. Blank is the more detailed and organized of the two; Marcus is the more gregarious, casual one. His formula for success, as he told Forbes interviewers, is that "Every customer has to be treated like your mother, your father, your sister or your brother."
Social and Economic Impact
The Home Depot Inc. reported fiscal 2001 revenues of $45.7 billion, with a one–year's sales growth of 19 percent. That year, they employed 227,000. The chain had grown to 1,100 stores in 48 states and Canada, Puerto Rico, Argentina, and Chile. In 2000, the company acquired plumbing distributor Apex Supply, which had operated 21 facilities in South Carolina, Georgia, and Tennessee. The company planned to open 600 stores by early 2002. For six consecutive years, The Home Depot was ranked by Fortune magazine as America's Most Admired Specialty Retailer.
Marcus has been praised in many magazines for his social responsibility, citing him as one of the most generous philanthropists in the world. The Home Depot co–founder Arthur Blank spoke of his relationship with Marcus on the occasion of the Rutgers University Distinguished Alumni award in 2000. Said Blank, "For more than 20 years, we have shared a labor of love at The Home Depot, and my admiration for Bernie has grown through the seasons. Bernie carries within him a sincere respect for people of all origins and situations, and his passion for life and compassion for others has inspired thousands, including me. I am proud to call him my partner, my friend, my mentor, my brother."
Sources of Information
Contact at: The Home Depot, Inc.
2455 Paces Ferry Rd.
Atlanta, GA 30339–4024
Business Phone: (770) 433–8211
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"Hall of Distinguished Alumni–2000." February 2000. Available at http://info.rutgers.edu/University/alumni/HDA2/2000/marcus.html.
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"Marcus Foundation Gives $4.5 Million for Vascular Research." Available at http://www.emory.edu/EMORY_REPORT.
Thompson, R. "There's No Place Like Home Depot." Nation's Business, February 1992.