[00:03:09] Trey Lockerbie: So I wanted to kind of touch base on the current valuation of what you’re seeing with Home Depot.

[00:03:14] Clay Finck: As I was researching Dollar General, I actually came across Home Depot as well, you know, both in the retail business. When I was digging into Home Depot’s numbers, I’m like, Man, they’re, a lot of their numbers are even better than Dollar General, but I’ve already put all this work in.

[00:03:26] Clay Finck: But in the end, I think they’re both, Fantastic companies trading at what’s likely a fair price. Just hitting on Home Depot specifically. I see fantastic numbers and I see, you know, what looks like very much a Buffet like pick in terms of the numbers, the consistency of the earnings and the revenues.

[00:03:44] Clay Finck: Digging into that just a little bit here, you know, I see strong and consistent top line revenue growth over the past decade, especially over the past couple of years that really accelerated. I think with Covid hitting interest rates, going to, you know, people could refinance their mortgages at less than 3%.

[00:04:02] Clay Finck: Put on a new deck, go and build a new swimming pool in the backyard, or remodel the kitchen. So that’s just like great news for Home Depot’s business. Obviously looking at their return on invested capital, something that Buffet, you know, he wants to see high returns on capital 10 plus percent. Well, Home Depot’s return on invested capital is 25 to 30% consistently over the past decade, which is not something you see very often.

[00:04:27] Clay Finck: One concern with Home Depot is if we see a pullback in the housing market, you’re gonna see less people tap into that home equity. I mean, already with rates. Call it 7% interest. People are gonna be refinancing a lot less, so they’re gonna have to come up, you know, with their own savings to remodel that kitchen.

[00:04:47] Clay Finck: That’s one reason you could see slowing growth in the near term, at least, is just based on whatever housing does. Well over 50% of their online orders are actually still picked up in their stores. So I think they definitely have a strong moat. You know, Lowe’s is probably their biggest competitor, but I don’t think Amazon is really much of a competitor in this space.

[00:05:06] Clay Finck: I think they’ve really built their moat, dived into their niche really well. Establish their position. They have, I believe half their customers are just do it yourself type, home improvement type people, and then half their customers are businesses ordering from Home Depot. I looked at my R T IP finance tool as well and saw that Tom Gainer has a 3.6% position, which is also a really good sign that it’s probably a pretty high quality company.

[00:05:32] Trey Lockerbie: Yeah, it’s often viewed as almost like a proxy for the housing market, and I feel like there’s this disconnect brewing with Home Depot and the economy as a whole, especially the real estate market. So, for example, the current quarter’s earnings results are due out November 16th. analysts are expecting the company to earn $3 and 35 cents a share on sales of 34.4 billion.

[00:05:55] Trey Lockerbie: And in the latest quarterly report, the CEO Ted Decker, said that the company’s latest quarterly earnings were the highest in history. Meanwhile, you’re seeing things like buyer traffic dropping off a cliff for real estate. You’re seeing mortgage rates, you’re seeing the fastest mortgage rate increase in history.

[00:06:12] Trey Lockerbie: I’m just kind of really gonna watch this November 16th earning report because how can you go from the best quarterly earnings in history and have a real estate market shaking out like that? And I’m kind of curious if the disconnect is coming from what I think you highlighted there, which is people may not be interested in new homes or selling their home, but they might be interested in renovating their home.

[00:06:32] Trey Lockerbie: So in a way, maybe some of those metrics are actually what is causing Home Depot to be a great stock pick.

[00:06:38] Clay Finck: I saw a chart of their store counts around 2007, 2008. Their store counts hit just above 2200, and then it just flatlined from there, which is quite surprising when the 2010s were a decade of low interest rates.

[00:06:53] Clay Finck: Plenty of opportunity to reinvest back in the company and fuel that growth, but I think this is a sign that manage. You know, really has shareholders’ best interests in mind. They know how much they can get from each new store built, and they’re just weighing the opportunity costs. They’re buying back shares a little bit.

[00:07:12] Clay Finck: They’re expanding into the e-commerce space. I think they’re just being very mindful of only investing when they’re able to get a higher rate of return above their cost of capital. So I think seeing that store count, you know, essentially flatlined since 2008, but also seeing the stock do extraordinarily well since then, I think.

[00:07:31] Clay Finck: Just a really good sign for shareholders in terms of how the management is allocating capital.

[00:07:37] Trey Lockerbie: Home Depot to me, is probably a pretty safe bet for a very stable growth. It’s probably not gonna be your 10 bag or whatever, but it’s gonna grow probably in that 5% or kind of at the market rate is my expectation for this stock moving forward.

[00:07:50] Trey Lockerbie: But I think the downside, depending on what the housing market does in the near term, could be a pretty stable bet. It’s also worth noting that they’ve got really strong financials, a little bit of debt, but it’s highly manageable by what they’ve got, so they, it’s got great management. We’re gonna talk a lot more about that in that interview right now with Bernie Marcus.

[00:08:06] Trey Lockerbie: So I hope you enjoy. You guys have written an amazing book together, and I received it this week, basically the day it came out, and I absolutely devoured it. It was such an easy read because it’s just story after. Amazing story after Amazing story. Bernie, you’ve lived an incredible life and had a, an incredible career.

[00:08:23] Trey Lockerbie: Founded Home Depot in 1979. And I was curious because that was around the time there was high interest rates and some similarities to today is almost similar environment. So I was curious, having lived and operated in a high interest rate environment like that, how would you advise business leaders running companies today, especially publicly traded ones?

[00:08:44] Bernie Marcus: Look, it’s 79 and today are two different times. Number one, we don’t have the regulations that we had now then, so we were free. The government let us operate, and by that I mean we’re able to do things that we wouldn’t, we weren’t confined to. Today you have the scc, the fac, the ftc, the sd, you know, all the alphabets getting involved in your business.

[00:09:12] Bernie Marcus: It’s not that easy, but the times were the same. Interest rates were very high. People, manufacturers especially couldn’t produce product. They didn’t have the money. So, you know, normally we have terms like 60 days before we pay for bills. We made a policy of paying people COD, deliver the product to us.

[00:09:35] Bernie Marcus: We will pay you the day you bring you to the loading dock. That way we kept so many manufacturers and visited us and some of these manufacturers today. Some of the biggest in the country, they’ve grown from that, but they would’ve gone out of business. And today’s environment is the same way. Listen, I don’t know how these people survive with the number one high interest rates, the cost of inflation, of the fact that you have to keep raising prices to customers.

[00:10:04] Bernie Marcus: The fact that you can’t find people at work because they’re being more, not to work than work. It’s a bad environment. But, you know, entrepreneurs have a way, entrepreneurs figure out a way to get through and to make it happen. And there will be plenty of people who survive and those who survive will be victors.

[00:10:25] Bernie Marcus: They’ll come out ahead and they’ll be better in the future. Providing there is a future out here if these don’t get worse in the handbag, which, you know, is happening every day here today.

[00:10:36] Trey Lockerbie: That COD policy that I’m sure established a lot of goodwill with your vendors, did that become sort of a competitive advantage for you guys early on?

[00:10:45] Trey Lockerbie: Did you see that kind of karma if you will come back to you in other ways?

[00:10:49] Bernie Marcus: Oh sure. Oh sure. We had money because we had gone public and we raised money to open new stores and we were just very careful. Look, if you don’t have product in the stores, you don’t have anything to sell. You have nothing to sell.

[00:11:05] Bernie Marcus: You’re a dead duck. So we had to figure out a way to do it. That was the only way to do it. And this is a typical entrepreneurial thing that happened to. Over 30 years, you know, you always had these things happen and you have to respond to it in a way that’s economically feasible and makes sense and keeps your business going.

[00:11:30] Trey Lockerbie: You were 49 years old when you founded Home Depot, so you had actually already had a successful career in other ways and you’d seen a few different market cycles already. How does today’s market environment compare to other recessionary times you’ve witnessed in the past?

[00:11:44] Bernie Marcus: Well, I think much worse. I think much worse.

[00:11:48] Bernie Marcus: This energy issue is a major issue. Everything runs on energy. We have a president who is, wants to change the world. You know, in 10 days that should take, you know, thousands of days. And he’s pushing it and I’m afraid it’s gonna have and it already has. Inflation is just rampant. People don’t have money to pay for food.

[00:12:11] Bernie Marcus: Filling up a gas tank. And I’m thinking about our customers, especially the contractors. These will fuel, they fake and fill up their trucks. It’s over $150. And they’re getting killed. They can’t pass it on the consumer. They pass it on The consumer doesn’t wanna pay it. They lose a job. So it’s not good for anybody.

[00:12:33] Bernie Marcus: And unless there’s something happen in November, I don’t think good things are gonna come out. Coming out of this. I think it’s gonna be long time, and it’s gonna be, and we will have a recession. I just believe it. I don’t see how we could possibly avoid it. And I hate to be an naysayer cause I’m normally a very up person.

[00:12:52] Bernie Marcus: And, but in this case you have a president who’s driving you there. I mean, that’s his goal. He’s behind that wheel. He’s got his foot on a gas and he’s going there and it seems to be known as unstopppable.

[00:13:05] Trey Lockerbie: You know the book repeatedly promotes capitalism and free enterprise. I was just speaking with economist Richard Duncan, who claims that we are no longer really in capitalism.

[00:13:14] Trey Lockerbie: We are in what he calls Creditism, and that’s mainly because our credit growth as a company seems to be the major contribution to asset prices increasing in GDP growth. What, if anything, is different about capitalism today versus when you were starting out?.

[00:13:31] Bernie Marcus: Well, in those days, it was a very simple matter. We borrowed money, we opened stores, we hired people, we bought product, we sold product, we made money.

[00:13:43] Bernie Marcus: We opened more stores. When we found more stores to open than we could handle, we went public again, and we went public. Basically to open stores. So today I think we have some like 2,700 stores. We have 500,000 associates. This all came about through capitalism, not socialism. The government did anything for us.

[00:14:06] Bernie Marcus: What they did was stay out of our way, but they’re not staying out of their way today.

[00:14:11] Trey Lockerbie: Catherine, I’m curious to pull you in here because there’s a lot about Bernie’s youth in the book, and it seems to be littered with these scenes out of West Side Story. It would see a lot of rough and tumble encounters joining a gang.

[00:14:24] Trey Lockerbie: Bernie, what kept you on the straight and narrow and Catherine, how fun was it to dig into some of these stories?

[00:14:29] Bernie Marcus: Well, first of all, I grew up in Newark jersey. Not a nice town. It was a tough town. We grew up in a very bad neighborhood. We were very, very poor and you either fought or you survived.

[00:14:43] Bernie Marcus: If you didn’t fight, you didn’t survive. And so I was a fighter and I got into these altercations, and believe me, my life was on line many times. And I decided to join a gang in order to survive for a short period of time. The gang became my family, and I learned a lot by that on how to work with people that were disparate, not my myself.

[00:15:08] Bernie Marcus: These guys worked, They didn’t carry guns, they didn’t carry knives, but they were bad guys. And I learned a lot of lessons in life and how to handle life because of that. And, you know, as you all trade, as you go through life, all of these experieces. Become part of who you are, so that I’ve always been a fighter and I don’t back down, but I try to think.

[00:15:32] Bernie Marcus: Things carefully. I don’t hit people anymore, although I like to, I think seriously about it today. But you try to work it out. You try to figure it out. You use your common sense, but it was an experience that made up part of my life, certainly my early life.

[00:15:49] Catherine Lewis: Trey, writing about this. Was, there’s no other way to describe it, Bernie.

[00:15:53] Catherine Lewis: It was just a ball of fun. We had all these great interviews and conversations about what it was like to grow up as the fourth child, sort of making a way out of no way living in a tenament. But it, what’s really amazing about Bernie’s early life, and I think this really shaped the framework of the book, is that he realized that the, at the very youngest age, that if he was gonna be successful in anything, he was gonna have to do it.

[00:16:20] Catherine Lewis: Right? That he had to figure it out on his own. And so everything from all kinds of amazing jobs, working at the Catskill as a waiter and then becoming a comedian and then a hypnotist. It was like West Side Story and the marvelous Mrs. Mazel all wrapped up together.

[00:16:37] Bernie Marcus: But I can’t sing.

[00:16:39] Catherine Lewis: You can bet. That’s true.

[00:16:41] Trey Lockerbie: The gang thing and some of the other stories really stood out because it showed very clearly that you had this skill or this innate skill even to ingratiate yourself even to people like a big Jim who’s featured in the book, who might appear to be enemies at first and later become friends. It would seem so was this a natural skill that you were born with or did you pick it up from someone else?

[00:17:01] Trey Lockerbie: Was it out of survival? How were you able to climb the ranks in so many different areas of your life?

[00:17:07] Bernie Marcus: Well, in our early age I was really left alone. I was born. My story is that I was never really meant to be here. My mother had me because she was crippled and couldn’t walk. She had me for a medical purpose, and I was born with brothers and sisters way older than myself.

[00:17:30] Bernie Marcus: And I was like a way they didn’t know that. What is this? What is this kid doing here? What is he hanging around for? And I live my life. Nobody knew where I was. I went where I wanted to go. I did what I wanted to do and I did things nobody else did. I would go to Giant Stadium Evers Field, Yankee Stadium.

[00:17:50] Bernie Marcus: I. To put up circus tense by myself. My mother never knew where I was. Nobody knew where I was, and all of these experiences became experiences of my life. They formed who I am, and they taught me, number one, that you have to be able to communicate with people that wherever you go, no matter what you do, if you can’t communicate.

[00:18:14] Bernie Marcus: You’re a dead duck, and I carried that through my entire life. Being able to like to sit with somebody and have a conversation and learn what they knew, and try to incorporate it into your own life. Became very important to me. So that was all part of my upbringing and it brought me to, you know, the ability to run a company.

[00:18:38] Bernie Marcus: Later on when I ran Handy, Dan and other companies, you have to have that skill today. I’m not sure that Harvard Business School teaches that. I don’t know how they could teach it because they’re busy talking. And writing papers and they don’t. Just the heart of listing and the heart of being able to incorporate what the thoughts are and come out with your own ideas, that’s what communication really is, and that’s what a great entrepreneur is able to do.

[00:19:08] Bernie Marcus: I found that same thing with Sam Wall. I founded with all the great entrepreneurs that I worked with. They all had that ability. You could sit and talk for hours and you. Got into each other, you understood each other and you learned something. Every time you had that sit down, you walked away and said, Wow, that was a great experience.

[00:19:30] Bernie Marcus: I’m gonna incorporate something. And that became part and parcel, and it started when I was a young kid.

[00:19:37] Trey Lockerbie: It reminds me of you know how Buffet doesn’t have his college degree framed on as well, but he does have a Dale Carnegie certificate hanging on his phone. So Catherine, you mentioned Bernie becoming a hypnotist there, there’s so many wild stories in this book, but becoming a hypnotist may be the top.

[00:19:52] Trey Lockerbie: And Bernie, I’m kind of curious, I mean, This skill of becoming a hypnotist, which you apparently became quite good at or maybe too good at in some cases. Did that help in business later in life as far as commanding a room, negotiating a deal? , were you using any magic tricks along the way?

[00:20:09] Bernie Marcus: No I think it taught me how to concentrate on somebody, how to look at them and understand them.

[00:20:15] Bernie Marcus: Look ’em in the eyes. And understand them. But it also taught me, you know, it’s what I learned through hypnotism. Remember I learned hypnotism because I wanted to be a doctor. I wanted to be a psychiatrist. Actually, I could have been somebody, I really could have been somebody . So that was all part and parcel, and I never did nasty things.

[00:20:35] Bernie Marcus: I never made fun of people when I put people up on the stage. I never abused them. I did really interesting things. I stopped ’em from smoking, you know, bad habits that they had. And all of those things were part and parcel of skills that I developed myself. And as I said, if I had been a psychiatrist, I could have been very successful, I think, because I would’ve incorporated all of those things into my practice.

[00:21:04] Bernie Marcus: But lo and behold, that never could happen.

[00:21:08] Trey Lockerbie: I found it interesting that your mother went from working in a sweat shop more or less early on to ultimately teaching business. Was she an influence for you and helped develop your business acumen?

[00:21:19] Bernie Marcus: No. She was in, we, she played the role was giving me the confidence of looking at the bright side of everything.

[00:21:28] Bernie Marcus: The glasses half empty, but the glasses half full. My mother’s philosophy was the glasses half full. And she was a very positive, and no matter what happened, she could find goodness If somebody died, it was like painful. You know, an uncle or somebody died. My mother would find a good reason for it. She’d say he’s now happy.

[00:21:50] Bernie Marcus: He’s not suffering anymore. In other words, it was a reason he died. It was good, and she taught me. Don’t look back. One of the things you taught me was don’t look back when you do something, you did it. Move on. And I carried that all of my life until I wrote this book with Catherine. Well, Catherine will tell you that some of the stories that I resurrected, I mean, I was astounded at myself at some of the things that happened to me.

[00:22:19] Bernie Marcus: Because I never thought about it. I never went back and looked at these things. And a lot of what I found out, number one, that was kind of depressing to me. But I grew up in the fifties. Having been born in 1929, I never realized how antisemitism was in the United States. It was brutal. You couldn’t get a job at a corporation.

[00:22:41] Bernie Marcus: You couldn’t get a job in a law firm. You couldn’t get a job in a manufacturing company if you were Jewish. It wasn’t until a Jewish state Israel was formed that these things turned around. But Travis nhard say. I see the world turning around the other way. Now it’s gone back to where it was, and part of my philanthropy today is fighting that and making sure it doesn’t happen.

[00:23:06] Bernie Marcus: We fought 2000 years suffering antisemitism. I don’t wanna see it go on any longer. And I don’t want to add to rears and it is on a campuses, It’s horrible. I couldn’t get into Harvard as a Jewish kid. I don’t think you can get into Harvard as a Jewish kid today unless you have a lot of money.

[00:23:26] Trey Lockerbie: Yeah, there’s an interesting part in the book there about you had to turn down a bribe, so to speak, to get into Harvard because they were basically enforcing a $10,000 entry fee, Right.

[00:23:35] Trey Lockerbie: For people, you know, beyond their allotment, I guess, for Jewish kids, which is quite concerning. I mean, just, yeah, the things you went through are quite incredible. Your father was a carpenter, and a lot of folks will likely immediately think, Oh, what was the case? That’s why you started Home Depot or even got in a Handy Dan, what might surprise our audience about you and your handy work abilities?

[00:23:59] Bernie Marcus: My lack of, No. My father wouldn’t let me go near a job. He was a very intense guy. He built butcher blocks, you know where they hung. And every once in a while when he ran late, he would a ask my brothers and myself to come down and to knock nails in the oak and try to get his job done, and then he would stay there all night, pulling every nail that we did out because it wasn’t done well.

[00:24:26] Bernie Marcus: So he didn’t give me any confidence in home improvement. I would tell you, , I took nothing from. As that, just a hard working guy who really broke his back to feed his family. That’s what I got out of him.

[00:24:41] Catherine Lewis: But Bernie, that was also intentional on your part, you tell a story about why you didn’t wanna learn those?

[00:24:47] Bernie Marcus: No, I spent all my time in the stores tray and I would walk a store. And pick up a tool and say, What is this? Tell me how you use it. And I did it out of ignorance, total ignorance. And then they would have to explain to me how they used the tool. And if I understood their explanation, I knew they were well trained.

[00:25:09] Bernie Marcus: If they said, Well, follow the directions on a box that was not gonna. That’s not a Home Depot associate. We wanted our people to know more than that and help the customer like myself do things that they never could have done before, which is what built the Home Depot to do yourself business.

[00:25:29] Trey Lockerbie: Yeah. There’s these nice tidbits in the book about how these associates would often even direct you elsewhere. There was maybe a tool, or, I mean at one point Nails, right? , where Oh yeah, they would wanna direct you somewhere else. I mean, that was the integrity. See from these associates, they wanted to do right by the customer, even if it wasn’t at Home Depot.

[00:25:45] Trey Lockerbie: So while you might not have been good at building cabinetry, you were certainly great at building culture, and that’s very clear. You wrote in the book also that success is rarely as interesting as the struggle. So I’d like to focus on a few of Home Depots struggles, one of which was buying Beau Home Centers. What were the lessons derived from this venture that went sideways?

[00:26:10] Bernie Marcus: Arrogance. We looked at these stores. They had great locations in Dallas and Houston and they fit really well with us and we did a cursory on how they ran the business and we thought that we were smart enough that we could take all of these people and turn them into Home Depot Associates over.

[00:26:30] Bernie Marcus: And we had great confidence and no, we haven’t, didn’t even think twice about it. And then we opened the business and it turned out to be a freaking disaster, almost. Took us down, came close to closing our stores because we had to throw people in from our stores into their stores, and they we virtually ended up with nobody working there that worked there before, or the entire management had to be moved out.

[00:26:56] Bernie Marcus: Almost every employee. Was moved out. We learned arrogance and we learned that the number two things, arrogance is one, and number one is due diligence. That you have to be smart and you have to do the right kind of due diligence. And if you get both right, you’ll be okay. And I’m happy to say that thereafter we didn’t have a calamity that hit us in the years to come.

[00:27:21] Bernie Marcus: I will say that, you know when they say Bernie Marcus did this, and Bernie Marcus did this. Bernie Marcus didn’t do this. I had great people around me, Arthur Blank, Ron Brill, Pat Farrah. They were, I had great people that loved to work at Home Depot, understood the culture, had it in their guts. The key was to have it in their guts that we believed in taking care of the customer and taking care of our associate.

[00:27:46] Bernie Marcus: And if we took care of the both, everything would work out for the best. And we live by that, and we even live by that. Today it is prevalent in all of our stores the same way.

[00:27:58] Trey Lockerbie: Catherine, maybe on this point you could share a quick story about a forklift and how that might have changed uh, some culture behavior in the Beau water stores.

[00:28:08] Catherine Lewis: Home Depot when this was the culture of Arthur and Kenny and Bernie, right? That you walked the stores, you knew what was going on And this manager never was in the store and you know, was sitting in his office. And so they got a forklift and essentially flattened his office to show the importance of this culture.

[00:28:26] Catherine Lewis: You know, and Bernie and Arthur are very different, very complimentary. You know, Arthur was your numbers. Bernie was on the floor. There was no, you know, dust on Bernie. He walked those stores. He knew those associates. He talked to customers. The nail story that you alluded to earlier. Bernie- remember you’re in the parking lot and you see the guy. And you start helping him load the lumber. And what did you ask him?

[00:28:52] Bernie Marcus: Where do you buy your nails? He didn’t buy ’em from us and he said, Your nails a lousy, They bent, they break. And I didn’t believe it. I went back in the store, got a board, got some nails, started banging them in, and they broke and they bent and I couldn’t believe it.

[00:29:08] Bernie Marcus: And so somebody wasn’t listening. One of our merchants was not listening. He evidently was in love with this vendor, but I could tell you that day, all those nails were out of the stores. We ran a business for about two weeks where we didn’t have a nail on the store until we found a new vendor that we trusted.

[00:29:28] Bernie Marcus: But. You know, the thing with the with the office, that’s very typical. We wanted our people to be on a floor of the store and if they weren’t on the floor of the store, what are you there for? There was another time, I don’t know if I had it in the book, Catherine, I don’t remember, but I came in the store on a Monday.

[00:29:46] Bernie Marcus: And I toured some stores before I gave a class and Monday no manager who was on the floor of the store. And I came back, we had the meeting and I said, I went through five stores and no managers was on the floor cause somebody explained to me, I gave all immunity by the way their bosses weren’t there and I, everybody Was okay to say whatever you wanted to.

[00:30:10] Bernie Marcus: No one ever got fired for complaining or telling us the truth. And they said, We have so much paperwork that we have to stay in there Monday all day doing paperwork. So I said, Do you think it’s important? And they said no. So I went back home, I got to stamp and I said, From here on in to stamp everything that’s Bo, and we’ll go back to the merchant.

[00:30:33] Bernie Marcus: And we’ll find out whoever put that piece out, that they don’t realize the burden they’re putting on you. And after a while we just cut that out. They suddenly got it. They suddenly realized they didn’t wanna put the pressure on the people in the stores. That’s this listening. It’s just listening to people.

[00:30:51] Bernie Marcus: People are pretty smart. I found out, you know, smart things from people who you wouldn’t expect it from. There was a part-time. That told me, I asked him why he had didn’t have an merchandise on the floor, and he said, There’s no room on the shelf. And I said, What do you mean there’s no room on a shelf? He said, Well, we bringing a case in at 24 and we sell it the first day and then we have to wait for the rest to come in.

[00:31:16] Bernie Marcus: So I said, Why don’t you order more? And they said, Well, we have no place to put it. So I said, Why don’t you just stack it on a floor? And so that, that’s how we stacked merchandise on the floor where we knew we needed the volume. On the floor. It’s all from listening to somebody. You know, You’re not the smartest guy in the world.

[00:31:35] Bernie Marcus: You don’t know everything in the world, and you learn from people.

[00:31:39] Catherine Lewis: And Bernie, I think that employee had been with you for 90 days. And was like a teenager.

[00:31:44] Bernie Marcus: He saved us millions of dollars. Millions of dollars.

[00:31:49] Trey Lockerbie: And a lot of your employees and associates made millions of dollars just through their careers at Home Depot, which is also very admirable.

[00:31:55] Trey Lockerbie: And another thing I found very admirable is that you and your fellow executives capped your salaries at $2 million. This is unheard of now, and I’m sure it was even unheard of back then. How was this decision made and what impact did this have on the company?

[00:32:10] Bernie Marcus: Well, it was Arthur and I decided to do that.

[00:32:14] Bernie Marcus: We knew that if we could get our associates to believe that this is their business, that they would work harder, they would work smarter, they would be more dependable. And the only way we thought we could do that was to not take options, but to give it out to everybody else. And so author and I, we went to the board.

[00:32:37] Bernie Marcus: We said to the board, There will never be an option for author or myself, just the two of us. Never be an option. And we are gonna give the options out to people in the stores. And we did so that everybody owned a piece of the rock. Everybody had a piece, it was their business. And you know, they wouldn’t lose a customer for any reason whatsoever because they knew it was their money and it was their part plus the fact they appreciated the.

[00:33:06] Bernie Marcus: That we weren’t getting rich on them, That if the company was successful, we would be successful. And so would they.

[00:33:15] Trey Lockerbie: That’s an amazing social and even governance policy. And you know, in 2001, the year you retired, Home Depot won the award for most socially responsible company, which I’m sure felt really good.

[00:33:26] Trey Lockerbie: And today, the lack of this level of leadership has resulted in a lot of regulation and ESG policies. And ESG seems aligned with your philosophies in a way, but I know you, you hate bureaucracy and your friend Sam Walton had a quote in the book about how bureaucracy was like cockroaches, you only see it when you turn on the light.

[00:33:44] Trey Lockerbie: So what are your thoughts on esg? Do you have ideas on better ways to approach this kinda equity?

[00:33:52] Bernie Marcus: I don’t think a fat cat in Wall Street has the ability, the sense or the understanding. Of setting a policy for anybody who makes him so smart, why is he setting a policy? I know one thing. A company is set up to sell a product, to make a profit, to hire people, to make their lives better, to sell to customers and increase the wealth.

[00:34:17] Bernie Marcus: That’s the way you increase wealth, not the way these people do it. I mean, these guys at BlackRock, it’s such a cro. It’s unbelievable. I’m so happy to see that states are kicking back now. They control the voting, and you go into a boardroom today and you vote on something. And you’re not voting. They are.

[00:34:36] Bernie Marcus: This one guy in Wall Street is voting your share. On something he believes that you may not believe. And I think it’s undemocratic, frankly, really undemocratic. And I’m happy to see the states, the fighting back.

[00:34:50] Catherine Lewis: Well, and Trey, can I add something? We had, Bernie, you and I had this conversation yesterday, right, about this about ESG and sort of all of the policies that have now become sort of common in regulations.

[00:35:00] Catherine Lewis: What’s interesting about Home Depot is that they were doing all of this early on. Home Depot was high. If you were willing to work, Home Depot would hire you. A lot of people without a high school education, a lot great sort of rags to richest stories. A lot of women in leadership Right. And we tell a great story about Ann Marie who now, you know, who was a Jamaican immigrant and also sort of really focused on social sort of issues like veterans.

[00:35:26] Catherine Lewis: For example, making sure that veterans you know, were treated fairly and cared for and hired both, you know, in the stores, but also supporting veterans causes, but also the philanthropy of the company in natural disasters. So if you look at this environmental, social, and governance, Home Depot was doing all of that really early, and if other business leaders were like Arthur and Bernie, We wouldn’t need all of this right? They just naturally did it because they did the right thing, They created the right culture.

[00:35:57] Bernie Marcus: We didn’t need them. We were way ahead of them. Way ahead of them.

[00:36:02] Trey Lockerbie: Well, I mentioned your friend, Sam Walton, one of my favorite parts of the book was reading about your travels with Sam, especially visiting each other’s stores.

[00:36:10] Trey Lockerbie: What impact did Sam have on you and your business?

[00:36:14] Bernie Marcus: Oh, enormous impact. Policies. We went everyday low prices because of Sam Walton. One day he sat me down with David Les, his president. We had lunch and he said, This is the last meeting we were gonna have. If you keep running sales the way you do and don’t sell everyday low prices, I don’t want to have anything to do with you anymore.

[00:36:37] Bernie Marcus: I said, Sam, that’s pretty powerful stuff. And I went back and I thought about it and I said, Geez, he is a hundred percent right. And I changed the company. I went back, I sat with author, I said, We’re changing the philosophy. We had to move out. Some merchants couldn’t deal with it cause they believed in sales.

[00:36:57] Bernie Marcus: So that you kept product off the shelf until it went on sale. Why not sell it every day at a sale price? And so that’s where every day sales came from. And I had an impact on him the same way. There were a lot of things I gave him on efficiency, on a, on how to be efficient in the stores that he listens to very carefully.

[00:37:17] Bernie Marcus: He was a great guy and smart as hell. As I said, I think he’s one of the great retailers of all time.

[00:37:24] Trey Lockerbie: He was also very frugal. There’s a lot of stories of you riding around in his truck with a broken air conditioner. Well,

[00:37:28] Bernie Marcus: He was, It was a nut case.

[00:37:30] Trey Lockerbie: Did , I was gonna say, did that wear off on you? Did he pick up any of that frugality from him?

[00:37:35] Bernie Marcus: Oh, hell no. Hell no. You kidding? Driving around that stupid little truck in, In 95, a 98 degrees. Temperature with humidity. My underwear was soaking wet. My socks were. And I said, Why the hell did you put an air conditioner in? Ah, it’s an old car. It doesn’t need an air conditioning. And this is what he drove.

[00:37:56] Bernie Marcus: I mean, he was a strange guy. Very strange. He did everything for the business, nothing for himself, but he was a genius in retailing.

[00:38:05] Trey Lockerbie: Someone like you who has met some of the most impressive people in the world, like Sam and other politicians and presidents. I mean all kinds of people you’ve come across.

[00:38:13] Trey Lockerbie: I always pay attention to the folks that you say stood out most to you. And in the book you highlight George Schultz. So how exactly did George influence you?

[00:38:24] Bernie Marcus: I got involved with George. George was very much involved with the state of Israel when he left secretaries of state, he had this interest in a student that worked for him.

[00:38:35] Bernie Marcus: And I’ll tell you the story this student worked for him in Israeli and it was before the 48 war or one of those wars, the seven day or whatever it was. And he was the most brilliant student he ever had, and he had him over his. Many times to have dinner with his wife. And one day this he knocked on his door and he said, I wanna say goodbye.

[00:38:58] Bernie Marcus: I’m going home to fight for my country. And George said, You should stay here, get your education, you’ll be able to help Israel in a different way. And he said, No, I’m going back to fight for my country. And he went back and unfortunately he was killed. And George never forgot that guy. And many years ago, many.

[00:39:19] Bernie Marcus: Pass by. I was with George when George met the mother of this young man and they embrace, like they were the oldest friends in the world. George was a very emotional. About that. And he said, people that would give up their lives for their country or people that I admire. And this young man was one and he got involved with me, with Israel Democracy Institute, became a major part of it, became a chairman, a co-chair with me.

[00:39:48] Bernie Marcus: And for years we operated together upwards until the time he was about 98 years old. And by last meeting with. He was about 99 years old. We were looking forward to his hundredth birthday, which was just around the corner. And he was as sharp and as bright as the day I met him. He remembered every conversation we ever had.

[00:40:11] Bernie Marcus: He would quote me on conversations, I mean, just that I had 10 years before he would quote me on what I had said. He was just brilliant. He gave me a viewpoint. Of the world. How else could a guy from Newark, a kid from Newark, grow a tenement, be around somebody like a George Schulz. It’s, it just happened to be one of the great, what should I call it?

[00:40:35] Bernie Marcus: Something that comes to you, that collateral. It’s a collateral benefit that I got meeting prime ministers and presidents and senators and all of those people by the position of being with Home Depot. The success of Home Depot allowed me to knock on a lot of doors and be allowed in.

[00:40:56] Trey Lockerbie: Well, you’ve contributed a lot to Israel through your philanthropy.

[00:40:59] Trey Lockerbie: You’ve actually donated over $2 billion now to various charitable organizations of veterans cancer research. The Marcus Foundation is involved in a number of initiatives, especially in medicine as well. So I’m curious, what are some of the initiatives that you’re most proud of or just most passionate about today?

[00:41:18] Bernie Marcus: Well, I’m still passionate about autism, which we started 40 some odd years ago when nobody knew what autism was. And we have continued with it. As I say in the book, don’t just write a check, stay involved, and we helped the thing grow. It’s now probably one of the best. And the strongest autism treatment centers in the world.

[00:41:41] Bernie Marcus: That’s number one. Number two is our Avalon action. That, or, you know, did you watch the football game with tour?

[00:41:48] Trey Lockerbie: Oh yeah. Well, he got very injured. Yeah,

[00:41:51] Bernie Marcus: He had traumatic brain injury. Do you know there’s no treatment for it.

[00:41:54] Trey Lockerbie: I believe it.

[00:41:55] Bernie Marcus: There is no treatment for it. And we have veterans that came back from the war who’ve been struggling, who can’t function.

[00:42:02] Bernie Marcus: They’re dizzy, they can’t sleep at night, they’re in pain. They can’t focus and there’s no treatment for ’em. So like Mike Milken, Mike Milken, setting out. To do something about prostate cancer. We decided to take this on and we took it on. We found the right people. We opened up an institute in Denver, and we came up with a protocol that actually works on concussions and traumatic brain injury.

[00:42:33] Bernie Marcus: Today is the only one that we’re. And we are growing this now, and this is our future thing. We’re gonna, we are gonna make this one of the biggest things in the United States, so it eventually becomes protocol for everybody. But we also have a treatment for post traumatic stress called Boulder Crest.

[00:42:53] Bernie Marcus: Which is an eight day treatment for people that don’t have traumatic brain injury, but have all these problems. That’s firemen, policemen, that’s military, that’s nurses, that’s doctors, that’s people who go through trauma every day, see something. And this is a big deal, and it’s something that we’re putting our life in line on today, and we’re spending a lot of energy and time, and we have the protocol that works the key.

[00:43:21] Bernie Marcus: We have the facts and the facts show works, and as we spread out, more and more places will take it on. And eventually we hope that every hospital in the United States takes this on. This is a big deal. This is like changing the way medicine is practiced with traumatic brain injury.

[00:43:40] Trey Lockerbie: Speaking about the change of medicine, I share passion with you for integrative medicine, and there’s a part in the book talking about your experience with Dr. George Zabrecky and the field of integrated medicine. I’m curious how that area of medicine has impacted your life as well.

[00:43:56] Bernie Marcus: Well, he saved my life. Literally twice where nobody else could. He did, and he did it with integrated medicine once he did it with a root of a tree from the Amazon where I was on a verge of dying because I had an infection in my system.

[00:44:13] Bernie Marcus: And George shopped in and saved my life. And where we’re trying to show that integrated medicine along with normal, with regular medicine. Cannot operate. There are people that are gonna be, that can be helped by acupuncture, massage, nutrition, big deal. Nobody spends time on nutrition. Most doctors don’t spend any time on it.

[00:44:36] Bernie Marcus: And yet nutrition develops, can develop all kinds of problems if you don’t have the right, right kind of nutrition for people. So that’s integrated medicine and we’re happy that we’re able to open the school at Jefferson where all of the interns are taught integrated medicine, the only one in the United States that were-.

[00:44:58] Trey Lockerbie: Your long time partnership with City of Hope and being on the board for so long, what hope have you seen come out of your time and contributions from city of hope.

[00:45:09] Bernie Marcus: Oh my god. Bone marrow transport. I was there the day they voted it. It was a day they a doctor had approached them for funding for bone marrow transports.

[00:45:21] Bernie Marcus: They didn’t have the money for it, but he was so emphatic about speaking to the board. And I happened to be on a board my first day and he spoke to the board and he talked about bone marrow transplant and how this could change the. Of thousands and thousands of people all over the world, and the board bought it and the board voted that day and contributed money.

[00:45:46] Bernie Marcus: And I remember I gave $5,000. That was the most I could give, but other board members gave a lot of money and that became a major part of City of Hope. As you know, since you’re involved with City of Hope, how many thousands and thousands of people. And how many thousands of people in other hospital now do bone marrow transplant and how many lives it saved?

[00:46:08] Bernie Marcus: It all started that day at the City of Hope.

[00:46:11] Trey Lockerbie: Even though you couldn’t afford Harvard Medical School. It’s ironic that maybe you’ve vontributed more to the field of medicine through these philanthropic endeavors. It’s really quite. Incredible actually. And one other fun, I would say a philanthropic endeavor is the Georgia Aquarium.

[00:46:29] Trey Lockerbie: That was also fascinating because it felt a little bit like an entrepreneurial endeavor for you as well. You guys, it seemed you guys got that spirit again getting really enthusiastic about the ideas that went into it. So it required 250 million from you in an investment or donation, if you will.

[00:46:44] Trey Lockerbie: What was the impetus ultimately for you, and I mean, this is not the Bernie Marcus Aquarium you named it the Georgia Aquarium, and I also found that quite admirable aswell.

[00:46:53] Trey Lockerbie: Well, you

[00:46:54] Bernie Marcus: know, at one point my wife and I sat together and when we came to Atlanta, we didn’t have much money. And all the money we made was made in Georgia through the Home Depot.

[00:47:07] Bernie Marcus: And we wanted to do something really spectacular. People were trying to get us to open a symphony hall, other people an a hospital, a children’s hospital, things like that. And I said, Why don’t we do something that’s fun? Why don’t we do something that everybody would enjoy and I was in Israel.

[00:47:26] Bernie Marcus: And I happened to be with Roy Barnes. I wasn’t with him. I met him there and I gave him a ride back on a plane and for 12 hours we talked about what we could do in the state of Georgia to make it different. And somehow the aquarium came up. I love aquariums, I love big fish. And he said to me, Roy, if you like big fish, why don’t you just open the aquarium?

[00:47:49] Bernie Marcus: I said, Well, I don’t think there’s ever been an aquarium that is done the ocean. Or a lake or a river, and it’s not Atlanta. And he said, Why don’t you? Why don’t you do it? Well, I came back, got off the plane and said, Came back to my wife Billy, and I said, We’re gonna open an aquarium. And it wasn’t putting up the money.

[00:48:09] Bernie Marcus: We actually involved in every facet. Of that. Billy and I traveled around the country. We looked at aquariums all over the world. We picked the animals. We want belugas, we want whale sharks, we want this, we want that. And then we built the aquarium to accommodate all of fish and that and mammals that we wanted.

[00:48:29] Bernie Marcus: And so it was a labor of love. And when I went to. The State House, they made the announcement. I said, This is gonna change Georgia. We are gonna make Georgia a place where people will come here to visit. Not just because convention center or business, but because there’s some great attraction. And although we have, you know, the, the Braves, we had the Falcons, we got the Augs, It’s not the same.

[00:48:56] Bernie Marcus: And I said, This is gonna have an. An economic impact on Atlanta. We got the land, fortunately through Coca-Cola. They donated the land, and I could tell you that billions of dollars was spent in the area. If you looked at that area before and after, you would see. How much economic benefit it did for the state of Georgia.

[00:49:19] Bernie Marcus: Created jobs, restaurant, hotels, everything. But it’s still a labor of love. It’s a place I love to go. I still love fish, big fish. Sure.

[00:49:29] Trey Lockerbie: You’re 93, and by any metric you’ve lived now along in successful life, you’ve lived the American dream. What have you determined to be the secret to both health and to happiness?

[00:49:42] Bernie Marcus: Looking forward, not looking back. People say to me, Have you ever, have you made mistakes in your life? And I say, Are you kidding? Look where I am. How bad could there have been? What mistake could I have made that would’ve affected me? I mean, I’m at this position in my life today. I have everything I want, my family’s taken care of.

[00:50:04] Bernie Marcus: I’ve done the things I want to do. I met people, other people I’ve never met. I said, Why would I look? Catherine is the one that got me to look back. She’s the only one that drew me back and forced me to look at what happened in the past. It was a kind of regurgitation myself, but half of these things you read in a book I never thought about.

[00:50:29] Bernie Marcus: Never thought about it ever, but they did happen. But they were great experiences and I think that life has been great for me and I’m. God has blessed me with a good light and a good family, and a good wife and good friends. And of course, I can’t forget my associates, Arthur, Ken Lango Ron Brill, all the people around me who help make me who I am.

[00:50:54] Bernie Marcus: I’m a product of all of them. Believe me, I’m not a one man show. I never was a one man show. It was a group effort, but a group that knew how to work. I really wrote it for two reasons, number one, for my grandchildren. But the second reason I wrote it was to try to convince people out there who I know, who are great people in the community.

[00:51:18] Bernie Marcus: I live here in Boca Raton. There are great entrepreneurs who are very effective, ran great businesses. And they retired. And then we retired. They just throw in, they threw in their shoes, They quit. They quit life, and they play golf. They go shopping at Home Depot and Costco, and that’s their life. I mean, and I say, Watch you do that.

[00:51:43] Bernie Marcus: A good friend of mine, Howard Halpern told me yesterday he was here yesterday, that he’s also one of these entrepreneurs, great entrepreneurs, just raised an awful lot of money for something called dark. He hadn’t done that before. He’s become a great fundraiser and he’s going to build a great institution.

[00:52:01] Bernie Marcus: He’s taking it on. He’s doing exactly what I did, relatively speaking, and so there are people out there I’m trying to incentivize, don’t give up. I’ve met multi billionaires who come to me and say they’re sitting on a ton of money and they don’t know what to do with it. They’d like to give it away. They don’t know how to do it.

[00:52:22] Bernie Marcus: They don’t know where to do it. They don’t know if they should do it and kick up some dust. Is a way of trying to stimulate to them to do it, to go into something, put their brains into it, be like, I’m Mike Milken for crying out loud. But you don’t have to do Mike Milken if you do what my friend Howard Halpern did with the Jar and it’s, it could be smaller communities, but you can make an.

[00:52:49] Bernie Marcus: And the impact that you make will change your life. People will appreciate you to extent that you will not understand. When you save a life and you look that person in the face, the amount of emotion that’ll go through you will amaze you and it’ll give you more incentive to continue on. And do better things. That’s the reason for the book.

[00:53:13] Trey Lockerbie: You touch on Destiny a couple of times in the book. How much do you attribute luck or destiny to the success that you’ve had?

[00:53:21] Bernie Marcus: A lot of things. A lot of things happen to me because I say it’s bizzare. I met somebody, boom, and something happened really great. I think that’s Destiny.

[00:53:31] Bernie Marcus: The first job I had with two guys and running across Herbie Humpfred, who’s my first mentor. That was pure luck running into him into a store at the one time, on the one day that he happened to be in the store on that one month. He’d not been in that store in a month, and I happened to grab him on that.

[00:53:52] Bernie Marcus: Well, what do you call that? I call it love. So there are a lot of people and it happens over and over again in my life.

[00:54:01] Trey Lockerbie: Well, Bernie, you’ve had an incredible life, an incredible career when you wrote this book. I’m not sure how much you are aware, how much of an influence is gonna have on a lot of people.

[00:54:09] Trey Lockerbie: And I believe it’s gonna have a tremendous impact for many people and they’re gonna be inspired to give as much as you’ve given. And again, I’m just incredibly honored to have you on the show. And I really appreciate the book and for your time today. Thank you very much.

[00:54:23] Bernie Marcus: Thank you. Thank you,

[00:54:25] Trey Lockerbie: And thank you to you as well, Catherine.

[00:54:27] Catherine Lewis: Oh, of course, my pleasure.

[00:54:29] Trey Lockerbie: All right, everybody, That’s all we had for you this week. If you’re loving the show, don’t forget to follow us on your favorite podcast app, and if you’d be so kind, please leave us a review. It really helps the show. If you wanna reach out directly, you can find me on Twitter at @treylockerbie.

[00:54:40] Trey Lockerbie: And don’t forget to check out all of the amazing resources we’ve built for you at theinvestorspodcast.com. You can also simply Google TIP finance and it should pop right up. And with that, we’ll see you again next time.

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