Invest Like the Best with Patrick O'Shaughnessy
· Ken Langone, Patrick O'Shaughnessy
You can see where I started and the city where I am right this minute. And it's okay to bargain hard. But when you're done, you're done. And he was shocked. I'm assuming you got your deal, you got exactly what you wanted. Now you got it. Frankly, I said, I thought you had a great deal last night. But obviously, you thought there might be more on the table. So I won't disappoint you. By the way, that company turned out to be a home run. We did okay. So that's the philosophy in life. I pride myself on that. I think there's nothing more precious in my life, other than my family, than my word. [00:00:00] S0: Was there early formative experience, like a specific experience that most taught you that lesson? How did you come to that conclusion, it sounds like, at a really young age? [00:00:00] S1: My mother and father. They were humble, uneducated but incredibly honorable people. But just how they lived their lives, that was really where it was chiseled home to me. You know, keep your word, work as hard as you can and give it all you got. And live by the golden rule. One of the things that I feel strongly about is I'm very forthright about my childhood because that's where it all started. That I had a good fortune meeting this lovely lady. She was 16 and I was 18. We got married when she was 18 and I was 20, and almost 68 years later, we're still hanging around with each other. That's pretty good. [00:00:00] S0: What's the key to doing that well?
· Patrick O'Shaughnessy, Ken Langone
[00:00:00] S0: What's the key to doing that well? [00:00:00] S1: Have your fights but never carry a grudge. Don't go to bed pissed off. We have 2 kids that truly love each other, and with triumph and success I wouldn't change this, and I hope it hasn't. I urge my kids to be genuine, to be authentic. That to me is very important, being authentic. [00:00:00] S0: Life and business is a repeat game. The story you just told about not doing the second deal with that guy, even just the way you've created successful financial outcomes seems to have been by holding longer than anybody else.
· Ken Langone
[00:00:00] S1: Well, I love loyalty. if I would like to be remembered for one thing, only one thing. I'd like to be remembered that I was a loyal friend, a loyal husband, a loyal father. Whatever you want. Loyalty is in short supply, and I miss it. The world has become very transactional. My epic battle with Eliot Spitzer, which I whooped his ass, I can tell you right now. He isn't coming back for more, I can tell you right now. He isn't coming back for more. I got his ass whooped. And that was a fight that I loved every single second of. But there, people were saying to me that I showed my loyalty to Dick Grasso. I said, no. In that case, by the way, it wasn't just loyalty. It was the facts. The facts were that the whole committee, all 9 of us, always voted unanimously to give them these pay packages. Which, by the way, will magnify it because every previous Chairman of the Stock Exchange never had a tenure short of longer than 10 years. So I know when you got these deals right here 5 years, 6 years, 7 years span. Dick Grasso started at the Exchange as an $82.50 a week, union clerk. Went from that, all the way to the Chair. Guess what, he had 37 years of service. So when you put the yardstick to that, well, that's what you wanted. He created it that way to get people to stay, and look what he did. When he took over, they had 1,200 listings. When he got the bullet in his head, they said he had 2,800 listings. He made all of this. I bought seats for $72,000 a piece. I got $8 million for each one of them. I mean how bad a deal was that? We had guys on the floor of the exchange every hour, the whole key of the exchange was listings. But people said, well, that was loyalty. Yeah, it was loyalty, but more importantly, it was being loyal to the truth. I knew the truth. The truth was every single member of that committee knew exactly, and that was the sad thing to me, the number of high-powered guys that withered under this guy's tenure. Bring them on, baby. I'll show you how it works, okay? Bring them on. He did and he got it.
· Patrick O'Shaughnessy, Ken Langone
[00:00:00] S0: What was that? [00:00:00] S1: I didn't want that. When Cuomo replaced him as AG, and when the Court of Appeals found in our favor 7-0, Cuomo called me up, and it was a Wednesday. It's when their decisions came out. He said to me, he said, "I don't know, give me some advice." He said, "I'm thinking of appealing it." I might -- he's lost, and I know he's playing with my head. He says, "I'm thinking of appealing it. What do you think?" I said, well, there's 2 things I think. Number one, the most joyous thing I could hear is the fact that you're gonna appeal it, that the game goes on. Because I'm having a hell of a time with my life. And number two, you haven't got the balls to appeal it. He and I became good friends, by the way. So loyalty is in short supply in the world. [00:00:00] S0: The idea about loyalty rings through The Home Depot story in such an incredible way, like so many stories of people, kind of like Grasso, starting as a cashier and becoming a senior executive. I would just love to hear the beauty of the long term at Home Depot as you've experienced it as a co-founder and now an incredibly long-term holder of that business.
· Ken Langone
[00:00:00] S1: The most precious thing that Home Depot has are the kids on the floor, where the orange aprons are. We had what we call the -- most corporations have a triangle that's the base and the point at the top, and the point at the top is where the CEO is, and the base is where the newly hired employee is. We turned it upside down. We say the most important person to the company is the person that comes in touch with the customer. If that customer gets what he wants at a fair price and feels that he got great service, he's never going any place else again. The most precious part of that equation there -- I call him a kid -- anybody under 88's a kid, because I'm 88 years old. You're under 88, you're a kid. They don't get pissed off. Those kids, really challenging jobs. They need to learn what they're selling. They don't have the luxury of not being able to handle a difficult customer. They have crazy hours and most of them are still right at the bottom without a college education. And those kids made this company. If there's one thing that Home Depot is known for, it's our service. They think -- we give you great prices, no question about that. We're always in stock, no question about that. We have every imaginable item you could want in any a given category, so you've got assortment. But the thing that holds it all together, is the kid that's dealing with you. I'll give you a for instance. This is a good friend of mine, customer. His faucet was dripping. When he turned it off, it was still dripping, meaning that the washer had failed, so water got through where the valve is, end of the nozzle to the faucet and drip, drip, drip. It's 3:00 in the morning and your wife kicks you and says, "Go fix the stupid faucet. I can't sleep. The drip is keeping me awake." Guy gets up in the morning, he goes to The Home Depot store, out in Long Island near me. He says to the kid, "I need a new one of these." But the kid says to him, "A new one of what?" He said, "I need a whole new stem, it's leaking." "You need a washer. Follow me." We have little glassine bags of the shorter size washers. Kid take 25 seconds, takes it off the pane, opens it up, it's the right size washer, has a screwdriver in his apron, takes it off, unscrews the screw, takes the bad washer out, takes the good shop washer, puts it in, puts the screw back in.
· Ken Langone, Patrick O'Shaughnessy
And he says to the guy here, go home to your wife. Guy says, "What do I owe you?" He says, "Nothing." So he said, "Happy he came to Home Depot." Three months later, the wife wants a new kitchen. She says, I want to go to one of these foo-foo joints, Kitchen and Bath Guys. They go back. They found the kid. Kid brought them over to the kitchen designer where we sell kitchens. We've got the $100,000 kitchen order. That's the value. So we make an effort to train the kids, we make an effort to treat them fairly. Last year, unilaterally, we raised wages $1 billion across the company. Why? Because we really feel for our kids. They own stock. Like I say, it's them that makes the money. [00:00:00] S0: Just a bit. [00:00:00] S1: I sure did. I'll tell you this. The greatest number of the world to me is not my net worth. We have 3,000 kids that are still working for the company today. 3,000 of them. They started out pushing carts from the lot. They're multimillionaires, and they're still working for the company. You want to talk about culture carries, trust me. That's the value of treating your people right, they're taken care of. We do everything that we can for them, and they know it. [00:00:00] S0: What in the history of Home Depot went the most wrong? And how did you fix it?