- In 1978, Arthur Blank and his cofounders launched what would become the world’s largest home improvement retailer: Home Depot.
- In his recent book “Good Company,” Blank outlines his approach and strategies for running Home Depot, the Atlanta Falcons, and his other current business ventures.
- Blank spoke to Business Insider about the coronavirus pandemic and the importance of values in business.
- Visit Business Insider’s homepage for more stories.
Forty-two years after he set off to found a bigger and better hardware store with Bernie Marcus, Arthur Blank still thinks of the world’s largest home improvement retailer, Home Depot, as his “baby.”
Blank recently spoke with Business Insider about his new book “Good Company,” in which he strives to make the case for values-driven capitalism. Today, the Home Depot cofounder is best known for owning the National Football League’s Atlanta Falcons. He also owns Major League Soccer’s Atlanta United, a number of PGA TOUR Superstores, and two guest ranches in Montana.
Fresh off being fired from the retailer Handy Dan, Blank and Marcus teamed up with investor Ken Langone and merchandiser Pat Farrah to found Home Depot in 1978. Blank succeeded Marcus as CEO, only to be forced out of the company by his successor Bob Nardelli in 2001.
Blank recently shared fun anecdotes and thoughts about tackling early Home Depot customer service calls, working for values-driven companies, and how businesses can survive the current coronavirus crisis.
Editor’s note: The following interview has been edited for length and clarity.
‘I just went by myself and put on an apron’
Business Insider: You and your cofounder Bernie Marcus were known to don orange aprons and pitch in at stores. How did you balance that with avoiding micromanaging?
Arthur Blank: For me and for Bernie as well — he’d probably give the same answer — putting on an apron and being in the store, it really did a couple of things.
I had the opportunity to talk to customers directly about whatever they were looking for, whatever they liked or didn’t like. I would stop customers — so would Bernie — if they left the store without anything.
You could ask them what were you looking for and why didn’t you find it? Whether it was an assortment issue, a price issue, an out-of-stock issue or whatever it may be. We got a lot of truths about our business by talking directly to the customers and directly to frontline associates – the people on the sales floor who were taking care of the customers.
We really got a very strong understanding of not what was in a report that was filtered 12 times over before it got to my desk, but just reality. What was working and what wasn’t.
I didn’t have an entourage traveling with me when I went to stores. I just went by myself and put on an apron. That also reinforced the message that the customer is number one. And the bureaucracy is number two.
‘Our job is to make every single customer happy’
BI: In “Good Company,” you write about answering “Ben Hill calls” [customer service complaints, named after a poster plastered throughout early Home Depots that read “Are you satisfied? If not, call “Ben Hill”]. What sort of lessons did you take from those early calls?
Blank: Unfortunately sometimes you can’t get an issue resolved in the store, so you want to call somebody. We established Ben Hill because, at the end of the day, we wanted to make sure that the store manager really thought of the store as their store.
So for the first number of years, myself, or Bernie, or, Pat Farrah would end up taking all of those calls. You’d tell the customer, “This is Arthur Blank, I cofounded the company. Can I help you?”
And they would tell us whatever the issue was. It didn’t make a difference. We never viewed ourselves as a judge trying to decide which side of the scale is right or wrong. The customer’s always going to be right.
We’d call the store and say, “Áine Cain was just in the store and she was unhappy about our tile work, et cetera. She says the tile came in the wrong color and she didn’t realize it until after they installed it. We have to replace the tile.”
Usually those conversations between ourselves and a store manager were not the most pleasant in the world.
The next day, the store manager would gather all the associates and say, “Listen, I got a call from Arthur. We didn’t take care of this customer that was in the store. We made them make a phone call to somebody they don’t know. Instead of making a friend in the store, we made them actually resort to a process that is not very personal.”
Our store managers, after a while, would track any Ben Hill calls they got. They’d tell the store associates that they didn’t want any Ben Hill calls. Which meant that the store manager owned the store, and owned every customer in the store. Our job is to make every single customer happy. And that means if they’re not happy after step one, you go to step two and you make them happy.
‘It’s been a year we all want to forget’
BI: Zooming out a bit, how can retailers adopt the values-first mentality that you outline in your book? Especially right now, during a global pandemic that’s taken a toll on many parts of the retail industry?
Blank: What I tell myself — and all of our businesses — is that this is a period of time where we have to survive. We’ve got to take care of the customers as best we can, or our fans or our guests, whatever it may be. And take care of our associates because they’re the biggest asset we have. They’re the ones who take care of our fans, guests, and customers. That means supporting them during a difficult period of time financially and every way that we can. Be sensitive to their family situations, some have people at home who are aged, sick, or children they can’t get childcare for. And then look to 2021.
On the other hand, 2020 can also be the year where a retailer — or any kind of company — can be smart and sharpen or fine tune some skills like the Zoom stuff, that everybody’s learned to do well.
That has a place in terms of the future of our country and the future of our economy — people being able to work effectively through challenges.
We’re seeing it in terms of Home Depot, with people wanting to improve their homes now. I’ve seen that in our golf business. Our comp sales from e-commerce are probably up 150%.
I was just in New York yesterday helping my middle son Josh move in. We had dinner out, and I saw all these restaurants throughout Manhattan that had opened up on the sidewalks. It feels more like a European city. People are out on the streets enjoying some fresh air at a restaurant. They’re people-watching. There’s more connection that way. That would be a nice thing in the future, for these same shop and same restaurant owners to do three quarters of the year in Manhattan when the weather’s nice. That’s a way they can expand their business.
On balance, it’s been a year we all want to forget, but there are a lot of things that are happening during 2020, some learnings that are worth applying in the future.
‘Home Depot is my seventh child’
BI: How do you think Home Depot is doing now under CEO Craig Menear?
Blank: The company is so much more advanced in terms of distribution and logistics support than when we were running it. The most important thing though is if you go to a shareholders meeting at Home Depot — and I still go every year — is that they start out every shareholders meeting over 40 years later with the circle of values and an inverted triangle with customers on the top and Craig Menear on the very bottom.
Well over half the officers, including Craig Menear, were people that we hired from the stores or from the frontlines of merchandising. They understand the company, they understand their culture, and they understand how to take care of the customers and take care of the associates. They do just a beautiful job.
I love the business. I have six children. Home Depot is my seventh child. I still think of it that way.
BI: You wrote in “Good Company” about the issue of retailers forcing out experienced full-time store employees in favor of untrained or under-trained part-time workers. How does that practice play out for retailers and customers?
Blank: At Home Depot, we never separated the level of training that a part-time person got from a full-time person. Customers don’t walk up to an associate and ask, “Are you full or part time?” If they have on an orange apron, they are expected to answer questions, be knowledgeable, and help with whatever problem you’re trying to get resolved.
In the case of Bob Nardelli [former Home Depot CEO who succeeded Blank], sadly, they let go of a tremendous number of full time people that were experienced to try to save some money.
That’s a downward spiral. It reduced sales, so they reduced labor some more, then it reduced sales some more. Before you know it, you’re doing a fraction of the business you were doing before.