Bernie Marcus didn't know it at the time, but getting fired as CEO of the Handy Dan home improvement chain in 1978 was the best thing that ever happened to him.
"I thought this was hands-down the lowest point of my life, since I had never been fired before and felt like a failure," Marcus, 93, told Investor's Business Daily. "I thought about suing until I met with Sol Price, who owned Price Club, which was eventually merged with Costco, who shared his own experience in being consumed by litigation. He said, 'You and Arthur (Blank, the CFO who was also fired) are great retailers, so be smart and walk away.'"
The firing pushed Marcus to realize the dream he had been secretly working on for years: Create a warehouse-size store for do-it-yourselfers that had great customer service. He, Blank, and Ron Brill, another fired executive, opened the first two Home Depot stores in 1979, with investor Ken Langone as co-founder.
The result is a legendary success story.
Think Big Like Bernie Marcus
Home Depot turned out to be one of the greatest new company launches in history.
The company went public in 1981 at what is now a split-adjusted 24 cents per share. The IPO raised cash needed after the fourth store opened. Marcus stepped down as CEO in 1997 but remained chairman until 2002, when the price had risen to 46 a share.
Now? Home Depot shares trade for more than 320 a share. The company is a member of the Dow Jones Industrial Average with a market value of more than $330 billion. And the company runs more than 2,300 locations with nearly half a million employees.
Marcus: Work Hard At Early Jobs To Discover Your Passions
Marcus' father was a cabinet maker in Newark, N.J. Debilitating rheumatoid arthritis tormented Marcus' mother. A doctor told her having another child was the only way the ease the condition. He gave her hormone shots. As a result, Bernie was born in 1929, the youngest of four.
Growing up Jewish, Marcus faced antisemitism. And bullies beat him up. He fought back, though. By age 10, he earned the respect of a gang and was invited to join. Finally, he found physical protection. And then, starting at age 11, he worked multiple jobs as his family was so poor. Marcus worked as a waiter in the Catskills. He put in 17 hours a day, seven days a week.
Marcus' dreamed of being a doctor. And after two years of pre-med courses, he applied to Harvard Medical School. He was accepted, he says, contingent on paying a $10,000 fee because he was Jewish.
"I refused and owe Harvard a big thank you for denying me entry because it changed the trajectory of my life," Marcus wrote in the recently published "Kick Up Some Dust: Lessons on Thinking Big, Giving Back, and Doing It Yourself," co-authored with Catherine Lewis.
Work Through Setbacks Like Marcus
Marcus went to the Rutgers College of Pharmacy. But he often missed classes because he was working as a partner in a startup selling meat freezers and serving in the National Guard. After graduating, he became a partner at a drugstore, but that job didn't work out. He discovered he loved retailing, though. He joined a series of stores where he learned to develop concession areas for brands.
"No business school curriculum could have matched my working time talking with customers and buyers, training new employees, and trying new ways to sell more merchandise," he wrote.
Find Partners With Different Strengths
In 1969, Marcus became executive vice president of merchandising at Daylin, a retailing conglomerate. He quickly made enemies when he questioned the sales projections of fellow executives. In 1972, he was moved from running a $6 billion business to heading the six stores of the recently acquired Handy Dan chain in Los Angeles.
"It was a demotion and they hoped I would just leave, but I had a family and so took the job on the condition that I could hire my own team and an independent board," he said. "They agreed because they wanted some stability and maybe even a profit out of these stores."
Two years later, Blank became his CFO and they hit it off, growing the chain to 80 locations.
"I hated balance sheets, budgets and projections and our personalities could not have been more different, the ultimate odd couple, but we complemented each other," Marcus said.
Find Opportunity In Challenge
But by 1975, Daylin was going down the tubes, filed for Chapter 11 reorganization, and hired restructuring guru Sandy Sigoloff to turn it around. Sigoloff was notorious for his "slash and burn management style that made creditors happy and nobody else," Marcus said. "He taught me more about leadership than anybody in my career because he showed me what not to do."
The most important thing he learned was to create a place where employees were empowered to make the right decisions for customers. He and Blank told what they call their "Cinderella story" in 1999's "Built from Scratch."
"At Home Depot, you don't get a job, you get a career," Marcus noted. "You will see badges that state that associates have been with us for 15 and 25 years because we treat them well and make their work exciting."
Apply Your Business Skills To Change The World
After retiring, Marcus formed the Marcus Foundation to apply his business skills to support charities in a handful of areas. His first focus is free enterprise. "The American dream is alive, if you have ambition and aren't afraid to fail," he said.
But he also sounds a warning: "We wouldn't be able to build Home Depot today because there is so much more regulation and too many lawyers representing hedge funds, so I would definitely recommend staying private."
Another area of focus for giving are veterans and the community. Some of the research Marcus sponsored is already paying off. "We have focused on developing treatments for post-traumatic stress disorder (PTSD) and traumatic brain injury (TBI) and have created the only effective brain trauma centers around the country."
Home Depot today employs 35,000 associates who are veterans, reservists or spouses, he added. The Foundation helps fund the Avalon Network to help build support for veterans in every state.
Jewish causes are another area of focus. Marcus supports a range of organizations, like RootOne, which arranges teen trips to Israel, and "the Israel Democracy Institute, a nonpartisan think tank that supports research on laws and programs that will help democracy thrive in Israel. "
And he's plowing money into medical philanthropy. Starting in 2002, in the wake of the 9/11 terrorist attack, the Foundation and its partners provided money, equipment and training to prepare the Centers for Disease Control for future emergencies.
Without this, the CDC would not have been prepared for the Covid-19 pandemic, he said. "We have also helped the City of Hope to develop blood tests to detect cancer in the early stages, our Autism Center is the most prominent one in the world, and we are pioneering clinical trials on macular degenerations and stem cells," he said.
Donate Your Time And Money
One of Marcus' favorite projects is the Georgia Aquarium in Atlanta, the city where Home Depot is headquartered. The aquarium needed to bring in 100,000 animals from all over the world. Opened in 2005, it attracts millions of visitors each year, "creating jobs and making the city and state a favorite for business conventions," Marcus said.
But Marcus' approach to giving isn't just writing a check.
"You have to get involved and use your business sense, not just donate money," Marcus said. "Do it yourself and don't quit being useful when you retire. Too many people when they approach 60 just check out. At 93, I'm working even harder for philanthropy than I did for Home Depot and my brain is always working."
Bernie Marcus' Keys
- Former CEO and co-founder of Home Depot.
- Overcame: Enormous challenges of attracting customers to a new retail concept.
- Lesson: "Our positive attitude was probably the key to our success. We just were not going to take no for an answer. If one idea didn't work, we'd try another."
