We Study Billionaires - The Investor’s Podcast Network - TIP490: Lessons from Home Depot, Sam Walton and giving away $2 Billion w/ Billionaire Bernie Marcus

Starting point is 00:00:00 You're listening to TIP. Hey guys, I'm really excited to share an upcoming event hosted by the Investors Podcast Network. Beginning on Monday, October 17th, we are launching a stock pitch competition for all of you to compete in. And the first place winner will receive $1,000 plus a year-long subscription to our TIP finance tool and more. So don't miss your chance to win $1,000. If you're interested, please visit the investorspodcast.com slash stock-dash competition for more information. The last day to submit your stock analysis will be Sunday, November 27th. And to compete, please make sure you're signed up for our daily newsletter.

Starting point is 00:00:37 We study markets, where we'll announce the winners. All entries can be submitted to the email newsletters at the investorspodcast.com. Good luck. Today's episode is a special one because my guest is billionaire Bernie Marcus. Bernie is most known as the co-founder of Home Depot, which he founded at age 49. He's also known for co-founding the Israel Democracy Institute as well as the Georgia Aquarium. And at a young 93 years of age today, he's as sharp and funny as ever. Bernie comes from the school of Hard Knocks and his rough and tumble upbringing shaped him

Starting point is 00:01:12 into the no-b-s, hardworking success he is today. As a signer of the Giving Pledge, he plans to donate most of his wealth to charity and has already given away over $2 billion. Bernie has a new book hoping to inspire more people to give back titled, kick up some dust, which also reflects on his life and career. It's a fantastic read full of hilarious stories. Co-author Dr. Catherine Lewis also joined us to share her experience with the book. Catherine is the director of the Museum of History and a professor at Kennesaw State University. In this episode, we discuss how today's economy compared to the early 80s when Bernie was

Starting point is 00:01:48 co-founding Home Depot? Bernie's early jobs as a waiter, comedian, and yes, even a hypnotist? Bernie's take on ESG, given that Home Depot won the most socially responsible company award the year he retired. What it was like to travel around and share business tips with Sam Walton, lessons from philanthropic efforts in integrative medicine and the Georgia Aquarium, and much, much more. Bernie is a blast. His optimistic personality is contagious, and I feel incredibly honored to have had this discussion. So without further ado, please enjoy my conversation with Bernie Marcus. to The Investors Podcast, where we study the financial markets and read the books that influence

Starting point is 00:02:33 self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to the Investors Podcast. I'm your host, Trey Lockerbie, and today I've got with me our co-host, Clay Fink, on the show for the first part of this episode before we jump into an interview with co-founder of Home Depot, Mr. Bernie Marcus. So, Clay, I wanted to connect with you because You just did this amazing assessment on Dollar General and Apple that came out. And I know you were considering Home Depot when you were getting into all that. So I wanted to kind of touch base on the current valuation of what you're seeing with Home Depot. As I was researching Dollar General, I actually came across Home Depot as well, you know, both in the retail business.

Starting point is 00:03:19 When I was digging into Home Depot's numbers, I'm like, man, a lot of their numbers are even better than Dollar General, but I've already put all this work in. 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 Buffett-like pick in terms of the numbers, the consistency of the earnings and the revenues. 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-heading, interest rates going to, you know, people could refinance their mortgages at less than 3% put on a new deck, go and build a new swimming pool in the backyard,

Starting point is 00:04:06 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 Buffett, 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 percent consistently over the past decade, which is not something you see very often. One concern with Home Depot is if we see a pullback in the housing market, you're going to see less people tap into that home equity. I mean, already with rates at call it 7% interest, people are going to be refinancing a lot less. So they're going to have to come up with their own savings to remodel that kitchen. That's one reason you could see slowing growth in the near term at least is just based on whatever housing does.

Starting point is 00:04:53 well over 50% of their online orders are actually still picked up in their stores. So I think they definitely have a strong moat. Lowe's is probably their biggest competitor. But I don't think Amazon is really much of a competitor in this space. I think they've really built their moat, dived into their niche really well, established their position. They have, I believe half their customers are just do it yourself type, home improvement type people.

Starting point is 00:05:19 And then half their customers are businesses ordering from Home Depot. So I looked at my RTIP 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. 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 in November 16th. analysts are expecting the company to earn $3.35 a share on sales of $34.4 billion. And in the latest quarterly

Starting point is 00:05:58 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. I'm just kind of really going to watch this November 16th earning report because how can you go from the best quarterly earnings and 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. So in a way, maybe some of those metrics are actually what is causing Home Depot to be

Starting point is 00:06:39 a great stock pick. I saw a chart of their store counts. Around 2007, 2008, their store counts hit just above $2,200. And then it just flatly. line from there, which is quite surprising when the 2010s were a decade of low interest rates, plenty of opportunity to reinvest back in the company and fuel that growth. But I think this is a sign that management 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. 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.

Starting point is 00:07:24 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 is just a really good sign for shareholders in terms of how the management is allocating capital. Home Depot to me is probably a pretty safe bet for a very stable growth. It's probably not going to be your 10 bag or whatever, but it's going to grow probably in that five or, percent or kind of at the market rate is my expectation for the stock moving forward. But I think the downside, depending on what the housing market does and 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

Starting point is 00:08:01 highly manageable by what they've got. So it's got great management. We're going to talk a lot more about that in that interview right now with Bernie Marcus. 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 an incredible career. You 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 a similar environment. So I was curious, having lived and operated in a high interest rate environment like that,

Starting point is 00:08:40 how would you advise business leaders running companies today, especially publicly traded ones? Oh, 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 SEC, the FAC, the FTC, the SD, you know, all the all the alphabets, getting involved in your business, it's not that easy.

Starting point is 00:09:17 But the times were the same. Interest rates were very, very high. People, manufacturers especially, couldn't produce product. They didn't have the money. So 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. We will pay you the day you bring you to the loading dock. That way we kept so many manufacturers in business.

Starting point is 00:09:47 And some of these manufacturers today are some of the biggest in the country. They've grown from that, but they would have 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, the fact that you have to keep raising prices to customers, the fact that you can't find people at work because they're paying more not to work than work. It's a bad environment. But, you know, entrepreneurs have a way.

Starting point is 00:10:18 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 the victors. They'll come out ahead and they'll be better in the future, providing there is a future out here if things don't get worse than the handbag, which, you know, is happening every day here today. That COD policy, I'm sure, established a lot of goodwill with your vendors. Did that become sort of a competitive advantage for you guys earlier?

Starting point is 00:10:50 Did you see that kind of karma, if you will, come back to you in other ways? 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? 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

Starting point is 00:11:17 entrepreneurial thing that happened to us 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. 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? Well, I think much worse. I think much worse.

Starting point is 00:11:53 This energy issue is a major issue. Everything runs on energy. We have a president who wants to change the world in 10 days that should take, you know, thousands of days, and he's pushing it, and I'm afraid it's going to have, and Anandori has. Inflation is just rampant. People don't have money to pay for food, filling up a gas tank. And I'm thinking about our customers, especially the contractors. Diesel fuel, they can 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. the consumer doesn't want to pay it, they lose a job.

Starting point is 00:12:37 So it's not good for anybody. And unless there's something happened in November, I don't think good things are going to come out coming out of this. I think it's going to be a long time, and it's going to be, and we will have a reception. I just believe it. I don't see how we could possibly avoid it. And I hate to be an A-saber because I'm normally a very up person.

Starting point is 00:12:59 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 nowhere to stop him. 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.

Starting point is 00:13:22 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? Well, in those days, it was a very simple matter. We borrowed money. We opened stores. We hired people.

Starting point is 00:13:47 We bought product. We sold Trotter. We made money. 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 27,700 stores. We have 500,000 associates.

Starting point is 00:14:08 This all came about through capitalism, not socialism. The government did anything for us. What they did was stay out of our way, but they're not staying out of the way today. 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 Westside story. It would see a lot of rough and tumble encounters, joining a gang. Bernie, what kept you on the straight and narrow?

Starting point is 00:14:34 And Catherine, how fun was it to dig into some of these stories? Well, first of all, I grew up in Newark, New York, 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 survive. If you didn't fight, you didn't survive.

Starting point is 00:14:54 And so I was a fighter. And I got into these altercations. And believe me, my life was online 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 leg, myself. These guys weren't, they didn't carry guns.

Starting point is 00:15:20 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, as you go through life, all of these experiences 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 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. Trey, writing about this was, there's no other way to describe it. Bernie, 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

Starting point is 00:16:11 fourth child, sort of making a way out of no way, living in a tenement. But what's really amazing about Bernie's early life, and I think this really shaped the framework of the book, is that he realized at the very youngest age, that if he was going to be successful in anything. He was going to have to do it yourself, right? That he had to figure it out on his own. And so everything from all kinds of amazing jobs, working at the cat skills as a waiter and then becoming a comedian and then a hypnotist. It was like Westside story and the marvelous Mrs. Maisel all wrapped up together. But I can't say that's true. The gang thing and some of the other stories really stood out because it showed very clearly that you had this skill or this

Starting point is 00:16:59 innate skill even to ingratiate yourself, even to people like a big gym 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? Was it out of survival? How are you able to climb the ranks in so many different areas of your life? 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. And I was like a way late. They didn't know. Like, what is this? What is this? this kid doing here? What does he hanging around for? And I live my life. Nobody

Starting point is 00:17:54 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, Evans Field, Yankee Stadium. I went to put up circus tents by myself.

Starting point is 00:18:10 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, you're a dead duck. And I carried that through my entire life.

Starting point is 00:18:34 Being able to sit with somebody and have a conversation and learn what they knew and try to incorporate 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 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 listening and the art of being able to incorporate

Starting point is 00:19:16 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. I found that same thing with Sam Walden. I found it with all the great entrepreneurs that I worked with. They all had that ability. You could sit and talk for hours and you kind of got into each other. You understood each other. And you learned something.

Starting point is 00:19:42 Every time you had that sit down, you walked away and said, wow. That was a great experience. I'm going to incorporate something. And that became part and parcel. It started when I was a young kid. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer.

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Starting point is 00:24:03 All right. Back to the show. It reminds me of how Buffett doesn't have its college. degree framed on his wall, but he does have a Dale Carnegie certificate on his wall. So, Catherine, you mentioned Bernie becoming a hypnotist. There's so many wild stories in this book, but becoming a hypnotist may be the top. 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,

Starting point is 00:24:33 negotiating a deal for you using any magic tricks along the way? No, I think it taught me how to concentrate on somebody, how to look at them and understand them, look them in the eyes, and understand them. But it also taught me, you know, it's what I learned through hematism. Remember, I learned hematism 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. 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 them 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 have incorporated all of those things into my practice.

Starting point is 00:25:35 But lo and behold, that never could happen. I found it interesting that your mother went from working in a sweatshop, more or less early on, to ultimately teaching business. Was she an influence for you and helped develop your business acumen? No, she was injured. She played the role was giving me the confidence of looking at the bright side of everything. The glass is half empty, but the glasses half full. My mother's philosophy was the glasses half full. And she was a very positive.

Starting point is 00:26:09 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. He's not suffering anymore. In other words, it was a reason he died. It was good. And she taught me that don't look back.

Starting point is 00:26:30 One of the things she 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 me 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 me, but I grew up in the 50s, having been born in 1929, I never realized how anti-Semitism was in the United States. It was brutal. You couldn't get a job at the corporation. You couldn't get a job in a law firm.

Starting point is 00:27:15 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 Tramstari said, I see the world turning around the other way now. It's going back to where it was. And part of my philanthropy today is fighting that and making sure it doesn't happen. We fought 2,000 years suffering anti-Semitism. I don't want to see it go on any longer. And I don't want to have their ears. And it is on the 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. Yeah, there's an interesting. 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? For people 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

Starting point is 00:28:29 handiwork abilities. My lack of. No, my father wouldn't let me go near a job. He was a very, very intense guy. He built butcher blops, you know, where they hung meat. And every once in a while, when he ran late, he would ask my brothers and myself to come down and to knock nails in the oak and try to get this job done. And then he would stay there all night pulling every nail that we did out because

Starting point is 00:28:59 wasn't done well. So he didn't give me any confidence in home improvement. I would tell you, I took nothing from him as just a hardworking guy who really broke his back to feed his family. That's what I got out of him. But Bernie, that was also intentional on your part. You tell a story about why you didn't want to learn those. No, I spent all my time in the stores trade 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. If they said, well, follow the directions on a box. That was not going to work. That's not a Home Depot associate. We wanted our people to know

Starting point is 00:29:54 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. Yeah, there's these nice tidbits in the book about how these associates would often even direct you elsewhere if there was maybe a tool or, I mean, at one point nails, right? Where they wouldn't want to direct you somewhere else. I mean, that was the integrity that you would see from these associates. They wanted to do right by the customer even if it wasn't at Home Depot. So while you might not have been good at building cabinetry, you were certainly great at building

Starting point is 00:30:26 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 Depot's struggles, one of which was buying Bowwater home centers. What were the lessons derived from this venture that went sideways? Arrogance. We looked at these stores.

Starting point is 00:30:49 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 overnight. And we had great competence. And no, we didn't even think twice about it.

Starting point is 00:31:11 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 we virtually ended up with nobody working there that worked there before. Or the entire management had to be moved out. Almost every employee was moved out. We learned arrogance and we learned that the number two things,

Starting point is 00:31:40 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. I will say that, you know, when they say Bernie Marcus did this, and Bernie Marcus did this, Bernie Marcus didn't do this.

Starting point is 00:32:04 I had great people around me. Arthur Blank, Ron Brill, Pat Farrah. 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 believe in taking care of the customer and take care of our associate. And if we took care of the both, everything would work out for the best. And we live by that.

Starting point is 00:32:29 And we even live by that today. Today it's prevalent in all of our stores the same way. Catherine, maybe on this point you could share a quick story about a forklift and how that might have changed some culture behavior in the Bowwater stores. Home Depot, and 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 was sitting in his office. And so they got a forklift and essentially flattened his office to show the importance of this culture. You know, and Bernie and Arthur are very different, very complimentary. You know, Arthur was your numbers guy. 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.

Starting point is 00:33:25 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? Where do you buy your nails? He didn't buy it from us. And he said, your nails are lousy. They pen, they break. And I didn't believe it. I went back in the store.

Starting point is 00:33:40 Got a board, got some nails, started banging him in. And they broke and they bent. And I couldn't believe it. 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.

Starting point is 00:34:08 But, you know, the thing 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 in 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 and I toured some stores before I gave a class. And Monday, no manager 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 manager was on the floor.

Starting point is 00:34:40 because somebody explained to me, I gave all immunity, by the way, their bosses weren't there. And everybody was okay to say whatever you wanted to say. 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 a stamp.

Starting point is 00:35:07 And I said from here on in, to stamp everything. And we'll go back to the merchants 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 want to put the pressure on the people in the stores. That's this listening. It's just listening to people. People are pretty smart.

Starting point is 00:35:33 I found out, you know, smart things from people who you wouldn't expect it from. There was a part-time employee. that told me, I asked him why he didn't have a 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 bring a case in at 24 and we sell it the first day. And then we have to wait for the rest to come in. So I said, why don't you order more? And they said, well, we have no place to put in. So I said, why don't you just stack it on the floor? And so that's how we stacked merchandise on the floor, where we knew we needed the volume on the floor.

Starting point is 00:36:11 It's all from listening to somebody. You know, you're not the smartest guy in the world. You don't know everything in the world. And you learn from people. And Bernie, I think that employee had been with you for 90 days. It was like a teenager. He saved us millions of dollars, millions of dollars. And a lot of your employees and associates made millions of dollars just through their careers at Home Depot,

Starting point is 00:36:34 which is also very admirable. 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? Well, it was author and I decided to do that. 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.

Starting point is 00:37:05 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 Arthur and I, we went to the board and we said to the board, there will never be an option for Arthur or myself, just the two of us, never be an option. And we're going to 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 fact that we weren't getting rich on them, that if the company was successful, we would be successful. And so would they.

Starting point is 00:37:55 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. 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 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.

Starting point is 00:38:26 So what are your thoughts on ESG? And do you have ideas on better ways to approach this kind of equity? 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. That's the way you increase wealth, not the way these people do it.

Starting point is 00:39:02 I mean, these guys at Black Rock, it's such a crock. It's unbelievable. I'm so happy to see that states are kicking back now. They control the voting. You go into a boardroom today and you vote on something and you're not voting. They are. This one guy in Wall Street is voting your chair 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 are fighting back. 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. 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 of great, great sort of rags to riches stories, a lot of women in leadership, right? And we tell a great story about Anne Marie. who now, you know, who was a Jamaican immigrant, and also sort of really focused on social sort of issues like veterans, for example, making sure that veterans, you know, were treated

Starting point is 00:40:14 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, Homekeeper 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. We didn't need them. We were way ahead of them, way ahead of them.

Starting point is 00:40:47 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. What impact did Sam have on you and your business? Oh, enormous. back, policies. We went to everyday low prices because of Sam Walton. One day, he sat me down with David Glass, his president, who had lunch, and he said, it's the last meeting we're going to have. If you keep running sales the way you do and don't sell everyday low prices, I don't want to

Starting point is 00:41:21 have anything to do with you anymore. I said, Sam, that's pretty powerful stuff. And I went back and I thought about it. And I said, geez, he is 100% right. And I changed the company. I went back. I sat with the author. I said, we're changing the philosophy. We had to move out some merchants. Some merchants couldn't deal with it because they believed in sales so that you kept

Starting point is 00:41:45 a product off the shelf until it went on sale. Why not sell every day at a sale price? And so that's where everyday 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 how. to be efficient in the stores that he listens to very carefully. He was a great guy and smart as hell. As I said, I think he's one of the great retailers of all time.

Starting point is 00:42:12 He was also very frugal. There's a lot of stories of you writing around in this truck with a broken air conditioning. It was a nutcase. I was going to say, did that wear off on you? Did you pick up any of that frugality from him? Hell no. Hell no. You kidding, driving around that stupid little truck in 95 or 95.

Starting point is 00:42:31 I have a 98 degrees temperature with humidity. My underwear was soaking wet. My socks were wet. And I said, why don't you put an air conditioner in? It's an old car. It doesn't need the air conditioning. And this is what he drove. I mean, he was a strange guy, very strange.

Starting point is 00:42:48 He did everything for the business, nothing for himself. But he was a genius in retailing. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform.

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Starting point is 00:46:31 So how exactly did George influence you? Well, I got involved with George. George was very much involved with the state of Israel. When he left Secretary of State, he had this interest in a student that worked for him. him. And I'll tell you the story. This student worked for him in Israeli. And it was before the 48 war, 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 house many times to have dinner with his wife. And one day, he knocked on his door and he said, I want to say goodbye. I'm going home to fight for

Starting point is 00:47:13 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 years passed by, I was with George when George met the mother of this young man.

Starting point is 00:47:38 And they embraced like they were the oldest friends in the world. George was 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. And for years, we operated together up until the time he was about 98 years old. And my last meeting with him was he was about 99 years old.

Starting point is 00:48:13 We were looking forward to his 100th 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. 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, grown at Tenement,

Starting point is 00:48:43 be around somebody like a George Schultz. It's, it just happened to be one of the great, what should I call it, 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. You've contributed a lot to Israel through your philanthropy. 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?

Starting point is 00:49:34 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 help the thing grow. It's now probably one of the best and the strongest autism treatment centers in the world. That's number one. Number two is our Avalon action that, you know, did you watch the football game with Tua? Oh, yeah. He got very injured. He had traumatic brain injury. Do you know? know there's no treatment for it. I believe it. There is no treatment for it. And we have veterans that came back from the war who've been struggling, who can't function. They're dizzy. They can't sleep

Starting point is 00:50:22 at night. They're in pain. They're, they can't focus. And there's no treatment for him. 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, that actually works on concussions and traumatic brain injury. Today, it's the only one that we're aware of. And we're growing this now. And this is our future thing. We're going to make this one of the biggest things in the United States so that eventually becomes protocol for everybody. But we also have a treatment for post-limatic stress called Boulder Crest, which is an eight-day treatment for people that don't have traumatic brain injury,

Starting point is 00:51:18 but have all these problems. That's firemen, policemen, that's military, that's nurses, there'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 on energy and time. And we have the protocol that works. The key is we have the facts and the fact show it 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. Speaking about the change of medicine, I share passion with you for integrative medicine.

Starting point is 00:52:06 And there's a part in the book talking about your experience with Dr. George Zabrecki and the field of integrated medicine. I'm curious how that area of medicine has impacted your life as well. Well, he saved my life twice, 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. George hopped in and saved my life. And we're trying to show that integrated medicine, along with normal, with regular medicine,

Starting point is 00:52:47 can operate. There are people that can be helped by acupuncture, massage, nutrition, big deal. Nobody spends time on nutrition. Most doctors don't spend any time on it. And yet nutrition can develop all kinds of problems if you don't have the right kind 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 are aware of wherever. Your longtime partnership with City of Hope and being on the

Starting point is 00:53:25 board for so long, what hope have you seen come out of your time and contributions from City of Hope? Oh my God. Bowmerer Transfer. I was there at the day. The day. The day. I was there. The day they voted it. It was a day they, a doctor had approached them for funding for Beaumara transplants. 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 life of thousands and thousands of people all over the world. And the board bought it. And the board bought it. And the board. voted that day and contributed money. And I remember I gave $5,000. That was the most I could give,

Starting point is 00:54:14 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 evolved with City of Hope, how many thousands and thousands of people and how many thousands of people in other hospitals now do bone marrow transplant and how many lives is saved? It all started that day at the City of Hope. Even though you couldn't afford Harvard medical school, it's ironic that maybe you've contributed 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. 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 really required $250 million from you in an investment or donation, if you will. What was the impetus ultimately for you? And I mean, this is not the Bernie Marcus aquarium.

Starting point is 00:55:14 You named it the Georgia aquarium. And I also found that quite admirable as well. Well, you 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 people. and we wanted to do something, something really spectacular. People were trying to get us to open a symphony hall, other people, a hospital, a children's hospital, things like that. And I said, why don't we do something that's fun?

Starting point is 00:55:48 Why don't we do something that everybody would enjoy? And I was in Israel, 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.

Starting point is 00:56:11 I love big fish. And he said to me, Roy, if you like big fish, why don't you just open the aquarium? I said, well, I don't think there's ever been an aquarium that it's 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 going to open an aquarium. And it wasn't putting up the money.

Starting point is 00:56:37 We actually involved in every facet of that. Billy and I traveled around the country. We looked at the aquariums all over the world. We picked the animals. We want pelugas. We want whale sharks. We want this. We want that.

Starting point is 00:56:51 And then we built the aquarium to accommodate all of fish and mammals that we wanted. And so it was a labor of love. And when I went to the State House and made the announcement, I said, this is going to change Georgia. We are going to 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 Braves, we have the Falcons, we have the Hawks, it's not the same. And I said, this is going to have an impact, an economic impact on Atlanta. We got the land, fortunately through Coca-Cola. They donated the land.

Starting point is 00:57:35 And I could tell you that billions of dollars were 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, created jobs, restaurants, hotels, everything. But it's still a labor of love. It's a place I love to go. I still love fish, big fish. You're 93, and by any metric, you've lived now a long and successful life. You've lived the American dream.

Starting point is 00:58:04 What have you determined to be the secret to both health and to happiness? Looking forward, not looking back. People say to me, have you made mistakes in your life? And I say, are you kidding? Look where I am. How bad could there have been? And what mistake could I have made that would have affected me? I mean, I'm at this position in my life today.

Starting point is 00:58:28 I have everything I want. My family is taken care. I've done the things I want to do. I met people. Other people I've never met. I said, why would I look back? 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.

Starting point is 00:58:49 It was a kind of regurgitation myself, but half of these things you read in a book, I never thought about, never thought about ever. But they did happen, but there were great experiences. And I think their life has been great for me. And I'm blessed. 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, author, Ken Lango, Ron Brill, all the people around me who help make me who I am.

Starting point is 00:59:24 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, a group effort, but a group that knew how to work together. I really wrote it for two reasons, number one from 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 I live here in Boca Raton,

Starting point is 00:59:51 there are great entrepreneurs who are very, very effective, ran great businesses, and they retired. And then we retired, they just threw in their shoes. They quit. They quit life.

Starting point is 01:00:06 And they play golf. They go shopping at Home Depot and Costco. And that's their life. I mean, and I say, why'd you do that? A good friend of mine, Howard Halper, 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 JARC. He hadn't done that before. He's become a great fundraiser, and he's going to build a great institution.

Starting point is 01:00:33 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. They don't know where to do it.

Starting point is 01:00:56 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 a Mike Milken for crying out loud. But you don't have to do Mike Milken. what you do what my friend Howard Halpern did with the Jark. And it could be smaller communities,

Starting point is 01:01:19 but you can make an impact. 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

Starting point is 01:01:34 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. 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?

Starting point is 01:01:52 A lot of things. A lot of things happen to me because I say it's Berscher. I met somebody, boom, and something happened really great. I think that's destiny. The first job I had with two guys of Harrison running across Herbie Hufferin, 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 a store on that one month. He'd not been in that store in a month. And I happen to grab him on that day. Well, what do you call that? I call out luck. So there are a lot of people.

Starting point is 01:02:29 And it happens over and over again in my life. Well, Bernie, you've had an incredible life, a credible career. When you wrote this book, I'm not sure how much you are aware how much an influence is going to have on a lot of people. And I believe it's going to have a tremendous impact for many people. And they're going to 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. Well, thank you. And thank you to you as well, Catherine. Oh, of course. My pleasure. 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.

Starting point is 01:03:06 And if you'd be so kind, please leave us a review. It really helps the show. If you want to reach out directly, you can find me on Twitter at Trey Lockerby. And don't forget to check out all of the amazing resources we've built for you at the investors podcast.com. You can also simply Google TIP finance and it should pop right up. And with that, we'll see you again next time. Thank you for listening to TIP.

Starting point is 01:03:27 Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP490: Lessons from Home Depot, Sam Walton and giving away $2 Billion w/ Billionaire Bernie Marcus

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