The best operators have a relentless focus on leverage, finding ways to multiply their impact rather than just working harder.
But here's what I see happening in finance teams everywhere.
Brilliant people getting buried in expense management busywork.
If you think about it, you become a finance leader because you love strategic work, modeling scenarios, optimizing capital allocation, finding the insights that actually move the business forward.
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It's the opposite of leverage.
This is exactly why I'm so bullish on what the team at Ramp has built.
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So they automated all of it.
Automatic categorization, receipt matching, spending controls that actually work.
I love the network effect that this creates.
When finance teams at companies like Shopify and Stripe automate the mundane stuff, they free up cycles to think bigger, to ask bigger questions, spot patterns others miss and make the kind of strategic bets that separate great companies from good ones.
The math is simple.
Get your time back.
Focus on what matters.
Check out ramp.com slash invest and see what happens when you eliminate the busy work.
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In asset management, growth often depends on customization.
It's the nature of the beast in our industry and I know, having experienced the problem firsthand as an active manager.
It's a competitive differentiator to tailor products and services to clients' preferences.
Those of us growing our businesses always wanna say yes to customers.
It means delivering a tailored portfolio, a tailored report, or a tailored expectation for service.
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The more you grow, the more complexity you absorb.
The more you say yes, the harder it is to scale efficiently and consistently.
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Having been an early design partner myself, I saw firsthand the power of taking an entirely clean sheet of paper to building the system.
We've all been waiting for a front-to-back platform that combines all of a firm's core functions on a single dataset.
It's how leading firms stop choosing between growth and efficiency and start saying yes to both.
I believe the best firms will be built on Ridgeline as their operating system.
I also believe there'll be a leading case study in combining the power of systems of record and AI.
If you haven't spent time with them yet, I urge you to see what Ridgeline might unlock for your business.
As an investor, gaining an edge means having the right tools, and one platform leading the way is AlphaSense.
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Hello and welcome everyone.
I'm Patrick O'Shaughnessy and this is Invest Like the Best.
This show is an open-ended exploration of markets ideas, stories and strategies that will help you better invest both your time and your money.
If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in-depth profiles of the people shaping business and investing.
You can find Colossus Review along with all of our podcasts at joincolossus.com.
Patrick O'Shaughnessy is the CEO of Positive Sum.
All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum.
To learn more, visit psum.vc.
My guest today is Ken Langone.
Ken is a legendary American businessman best known for his co-founding of Home Depot.
He is also a former director of the New York Stock Exchange and a passionate philanthropist.
He shares with us a lifetime worth of wisdom, building Home Depot into a powerhouse and prioritizing his employees above all else.
He says he still bleeds orange to this day.
You'll hear as he recounts his business endeavors, his strict belief in keeping your word and his true pride in his country, what he knows to be the land of opportunity.
We discuss his work with Ross Perot, the idea of an upside-down hierarchy, and the power of loyalty.
For anyone who may find it easier to follow along, we have a transcript of the episode on joincolossuscom.
Please enjoy this conversation with Ken Langone.
So Ken, it's hard to know where to begin a conversation with you, given the number of interesting things that you've done across your life, your career.
I saw, when researching your history, so many interesting early anecdotes with you establishing yourself, especially in your work with Ross Perot.
And I always found Ross to be such an interesting character in business history.
I'd love to hear the story of you taking his business public and what that represented to you at an early stage of your career and what it was like to work with him.
I happened to be at a Mardi Gras ball in Washington and at the party I met a fellow there by the name of Jack Hite, and he and I hit it off.
He was telling me that he was partners in a company that was getting ready to go public and they had a hell of a record.
And I said to him, is there any chance I can get a chance to pitch my firm to be the auto writer?
He said, I want to see what I can do.
We had a good time that night.
Drank a little bit, raised a little hell.
Monday, he called me up and he said, you got an appointment in Dallas at 1130 on Wednesday.
Two things I want to tell you.
Don't be late.
You got 30 minutes.
When the 30 minutes are up, leave.
And don't swear.
Because I've been swearing like a sauce sailor at this party.
So I took two kids with me out of a club.
I say, kids, I was only 33 myself there.
And we went down to Dallas.
The scariest thing was exactly at 11.30, I got into his office.
And there he was sitting behind a big desk.
He's diminutive.
And he could... Hi, fellas.
Come on over here, sit over here, have a little chat.
I hold on.
I said, we're doing fine, Mr. Perot.
I said, this is Roger Green.
This is Duke Glenn.
So we sit down.
He lists the farms that he met with Goldman Sachs, Merrill Lynch, White Well.
Kidder Peabody, every one of the top runs of Wall Street was there to see him.
He talks nonstop for 29 minutes.
Goldman says this, Merrill says that, Kidder says that, Whitewell says that.
And he says, what do you think of that?
I'm looking, I got 30 seconds left.
I told Mr Perot.
I think I'll just take advantage of the time I've got left to say goodbye and I hope you'll see me again sometime.
What do you mean?
I told Jack, I told him I had 30 minutes, and by my calculations, 30 minutes.
Forget that.
Tell me what you think.
And I thought to myself, well, I'm going to blow the 30-minute rule.
I might have to go all the way.
I said, Mr. Perot, that's the biggest pile of horse shit I've ever heard in my life.
And he backs me.
What do you mean?
I said, Mr. Perot, this whole process is fairly simple.
You're going to pick somebody who's going to tell you what he thinks you can sell your stock for.
And your bet is, can they deliver on that number?
I said, it's that simple.
That's all the talk they have about working the market, knowing the market, doing this, all those things.
He said, well, that's interesting.
He said, let's talk a little bit more.
We talked Until one o'clock in the morning.
Wow.
Driving me and two guys.
I was in the front seat.
He had a big maroon Lincoln.
And he was driving us all over Dallas.
We were going to go back on at 3.30, play in the afternoon.
Now, I figured, oh, I'm not going to throw this comedian in.
We were looking for a drugstore.
We could buy shaving gear and toothbrush and stuff like maybe even a T-shirt, because we brought nothing to Alice.
We finally found a place.
We stayed at a hotel.
He was going to make a decision by the following Friday.
And he called up.
He said, I'd like to get to know you a little bit better.
He said, come on back down.
So I went back down.
And we talked and we talked and we talked.
I had not seen one number on how much his sales were, what his earnings were, nothing.
So he invited me back down.
You got a chance?
Come on back down.
I talked to you.
I said, sure.
So the third time I went down, I went down alone.
He picked me up at the airport.
We're driving back to his office.
Ken, have you given that a thought to what you think we're worth?
Mr. Perot, I said, first of all, I said, I haven't had the benefit of your numbers.
Let's assume the numbers are great.
I said, can I get some kind of relevance?
He got into his office and he had a closet.
And on the inside of the closet door, he had a graph, a chart.
I didn't know what the numbers were.
All it was was a chart of the percentage growth of the earnings and of the sales.
And it was doubling every year.
And I said to him, I knew what the business was.
By now, I got a good understanding.
I said, based on those numbers and if I could be made comfortable that they can continue that way for a while.
I would argue your company's worth 100 times earnings.
What?
They said, yeah, about 100 times earnings.
Are you sure?
I said, well, boss, I'm not sure of anything.
I'm sure of this.
Those numbers are what you say.
I had no idea whether it was 5 million or 9 million.
Well, it turns out it was 7 million of revenues. and $3 million of pre-tax profit.
It was a staggering launch and the clear prospects that it continued its ascent.
So he thought, I want to think about it.
I left about two weeks later.
What he had done was he was calling all the other firms up and said okay, What do you think I'm worth?
They settled in around 30 times.
Now when did May call me up and he said to me, are you comfortable with what you said?
I said, Ross, I'll say it again.
You can continue this progression.
You just do simple math.
You got to cut the multiple every year.
It's not going to take long to get this thing down to 25 times earnings.
But I said, I won't be able to tell you that until I can get a better fix on the business.
So he said, well, come on now, bring some guys down.
Let's get to know each other better and talk about how we do things.
He brought in a bunch of guys, one after the other.
I swear to God, he had some kind of machine that created these guys.
It was unbelievable.
One more talented than the other.
Common sense, plain spoken, gentleman.
Don't forget he had a dress code white shirt, no tassel loafers.
Wingtip shoes, highly shined, no facial hair.
Military style haircuts.
And the more I got exposed, the more excited I got.
So he saw, okay, well, let me think about it.
This comes into June.
Two weeks later, he called me up.
Ken, Mitch Hahn and I have been talking.
One of the things we expect of people, you know, we're optimistic people.
And very frankly, he said, Mitch and I are a little worried that you don't show much enthusiasm.
I'm going, what the hell?
I said, Ross, I'll be on the next plane down.
What are you talking about?
I said, I've never seen that in real life.
He said, I've told you that.
Well, I know I don't, Ross.
I'm coming down.
No, no, don't come down.
He said, you know, we Texans have a good rule here.
If you've got a good sense of humor, you're a good Texan.
I said, well, God damn it.
You guys are a pain in the ass, too, okay?
So anyway, he gives me the deal.
The rest of Wall Street is stunned.
Here's this little pissy railroad find house getting the most short after piece of business, probably in the last five or ten years.
And we go through the whole process.
He wants an hour guard.
I go, Rush, I'm going to make you one promise I didn't tell you before.
I'm personally going to be on every meeting with every investor.
That's what I intend to do.
Are you sure?
Oh, I know.
He calls me up at the very end and decided he's going to give me the business.
One of the friends that wanted it was G.H.
Walker.
There was a guy there by the name of Jerry Lodge who he knew and who he liked.
When Lodge heard that we were going to do the deal at Heart of Time Journeys, he said Ross, we'll go to Heart of Time Journeys and we'll be co-managing.
So Ross called me up and said that he'd gotten this call and how did I feel about having a partner?
I said, Ross, let me ask you a question.
I said, you and I are in Ohio.
I got the steering wheel and you got the brakes.
We're sitting next to each other.
How long before we're gonna hit the wall?
Because we're gonna hit the wall.
I said Ross, if I'm going to go 200 miles an hour, I got control in the clutch, steering wheel, shift everything.
All right, get in that car.
I understand.
I said, Ross, you want to give them the deal.
If you're more comfortable with them, you go to them.
I'm going to be around.
I'm sure we'll figure a way out for you and me.
He said, you were the one who made him go from 70 to 100.
You're my man.
Let's go.
We spent a whole summer getting the perspectives together.
And the more I learned about it, the more excited I got.
I had a whole month here.
Now, back then, New York State had a stock transfer tax.
When you sold stock, it was the tax.
And the way you get around it.
With an underwriting.
You go through the tunnel after midnight on the day of the deal, sign all the papers in Jersey and drive back in.
So the deal was done in Jersey.
It was legal.
The night before the end already, Elaine and I and Margo and Ross had dinner at 21.
We got to know each other that summer.
We really didn't go up personally well.
By the way, I'll tell you, one of the great joys of my life was his friendship.
And this is an aside.
One of the great honors of my life was when I got the call from the family, Ross Jr.
They'd like me to deliver a eulogy at his funeral.
Wow.
Me.
So anyway, we're driving through the tunnel.
Elaine went home because our kids had to go to school the next day.
We had three kids.
So we're in a limousine.
By the way, the limousine driver was always a witness signing the paper.
So this was all legal stuff.
I love it.
So we're driving through the tunnel.
It was a back seat where you had two seats looking at each other.
Lager and Ross are looking ahead.
I'm sitting with my back to the front looking at them.
Well, he said Byron, all the other guys on Wall Street told me now he's going to back away from what he said he's going to do.
What are you talking about, Russ?
Well, I'm told, Ken, this is when you guys say, sorry, Russ, I miscalculated.
I can't do it at the 100 times earnings.
I got to do it at a lower number.
What are you talking about?
Well, I suppose this is when you're going to tell me I'm not getting the 100 times earnings.
I said, how'd you know that?
See what I know?
See what I know?
I said, how'd you know that?
What do you mean?
I said, I'm not going to do it.
I'm sorry.
See, there you are.
They're all I like up here.
They get us country boys up here.
They pick us clean.
I said, wait a minute.
Wait a minute.
Does A Heart of Time Journeys mean that much to you?
Damn right, he says, Texas, put your hand on your words you bought.
It means a lot to me, not just the number, but the fact you kept your word.
I said, Russ, look, the last thing I want is an unhappy client.
We'll do it at a hundred-time journey.
Damn right you will.
I said, okay.
So Margo, I winked at Margo while he was in a little bit of a tizzy.
She says to me, God bless Margo, she's sharp.
She goes, Ken, what were you going to do with that?
I thought I was going to do it a 115-time journey, but it's the only one that's a 100-time journey.
It's okay with me.
We did it at 115 time journeys.
And by the way, it went from 16 to 24 the first day.
So it was a very successful deal.
And that deal, for lack of a better way to describe it, pulled me on a map.
The most important thing of all was he was a man who, when you delivered it to him and you kept your word, He never forgot it.
So he became perhaps my store just that.
I was a young kid, 33.
I never got an underwrite.
That friendship has lasted.
All through his life and now with his family as well.
What about his style do you feel is most lacking in the world of leadership today, if anything?
Integrity.
That's it.
Man, the man was maniacal. about keeping his word.
And the second thing would be loyalty.
If you promise to and deliver it for it, You never forget.
And this will be it.
One of my favorite ideas of yours is this notion of leaving more on the table for the other guy than you think the other guy thinks he deserves.
Did that come from Ross?
No.
Let me tell you where that came from.
That came from my experiences as a poor kid, when I realized if somebody expected this of me, I gave them that plus something.
And to me, the art of negotiating is not see who bets who.
The art of negotiating, to me, is to get a deal for yourself, to make sure the guy you're dealing with feels he got more than he thought he was gonna get or he shouldn't get.
100 times earnings to 115 times earnings.
I can't think of a deal I've done where I couldn't have gotten more than I got.
That's okay because the element of trust is the most precious thing in living.
If I trust my doctor that he's going to do the right thing for me, there's a better chance he's going to be more candid with me and more willing to try and help me, whatever my condition is or a friendship or a marriage.
I don't care what it is.
I'll give you a for instance.
I did a deal with a guy.
I bought a company.
He was a tough negotiator.
He negotiated back and forth.
And I virtually gave in at every point.
We got done around 9.30 at night, my office.
I said, now you say, oh, I'm happy.
It couldn't be happier.
Okay.
I said well, I'll tell you what.
Let's go back and I'll drop you off at the hotel and I'll pick you up in the morning.
We'll have breakfast.
We'll talk school.
I said, okay.
So the next morning, I pick him up.
We're driving to my office.
He said, Ken, can I be honest with you?
I said, please don't.
He said, I'm sorry.
As I reflect on this, I don't think.
This is good enough for me as I'm entitled.
I said, well, let's go upstairs.
They said, okay, where do you think this thing is deficient for you?
And he tells me, it's okay, you got it.
What do you mean?
Tell me what you want, you got it.
I've got to tell you something else.
I will never do business with you again.
You bargained hard all day yesterday.
You assured me at the end of the day it was exactly what you wanted.
You were fairly treated.
I said, I can't think of one point I didn't concede to you.
I said, I'm sorry.
You got what you want on this deal, but I never wanted the business we can look at.
And I feel strongly about that.
And the best testimony is I never had a fear of client or a potential partner in a deal saying something bad about me because I did okay.
I would always hope that I do okay.
You see where I started, the city where I am right this minute, and it's okay to bargain for it, but when you're done, you're done.
And He was shocked.
I told him, you got your deal.
You got exactly what you want.
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 of life.
I pride myself on that.
I think there's nothing more precious in my life other than my family, than my word.
Was there an 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.
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 hold to me.
You know, keep your word, work as hard as you can and give it all you got.
And by the golden rule.
One of the things that I feel strongly about is I'm very forthright about my job, because that's where it all started.
Then 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.
Almost 68 years later, we're still hanging around with each other.
We got pretty good.
What's the key to doing that well?
Have your fights, but never carry a grudge.
Don't go to bed pissed off.
We were two kids that truly loved each other.
The term success wouldn't change us.
I hope it hasn't.
I urge my kids to be genuine, to be authentic.
That has to be very important, being authentic. 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.
My 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 isn't short supply.
It is loyalty.
The world has become very transactional.
My epic battle with Eliot Spitzer, which I whooped his ass, I can tell you right now.
He ain't coming back for more, I can tell you right now.
He ain't coming back for more.
I got his ass good.
And it was a fight that I loved every single second of it.
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 nine of us always voted to get out of this, so we could give them these pay packages which, by the way, were magnified because every previous chairman of the stock exchange never had a 10-year chart of longer than 10 years.
So I know when you got these deals ready here, five years, six years, seven years.
Dick Grasso started the exchange at $82.50 a week.
Union cart, union cart.
Went from that all the way to, guess what, he had 37 years of service.
The way you put the yardstick to that, whoo, hell, 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 bulleted, he said he had 2,800 listings.
He made all of us, I bought seats for $72,000 a piece.
I got $8 million for each one of them.
I mean, how bad a deal is that?
We had guys on the floor of the exchange going around with it.
The whole key to the exchange was listings.
But people say, 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.
That was a sad thing to me, that I'm one of the high-powered guys.
That withered under the skies.
Oh, he is such a... Bring him on, baby.
I'll show you how to wither.
Okay?
Bring him on.
He did.
He got it.
What was that for?
I didn't want it that.
When Cuomo replaced him as A.G., And when the Court of Appeals found in our favor 7-0.
Cuomo called me up, and it was a Wednesday.
That's when the decisions came out.
He said to me, you know, he said, I don't know, give me some advice.
He said, I'm thinking of appealing it.
He's lost.
I know.
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 two things I think.
Number one the most joyous thing I could hear is the fact you're going to repeal it if the game goes on, because I'm having a hell of a time in my life.
And number two, you haven't got the balls to repeal it.
He and I became good friends, by the way.
So loyalty is in short supply in the world.
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, you know, a senior executive.
Yeah.
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 incredibly long-term holder of that business.
The most precious thing Home Depot has are the kids on the floor with the orange aprons on.
We had what we call the most corporations have a triangle that the base and the point at the top, and the point at the top is where the CEO is.
And the base is literally how I deploy years.
We turned it upside down.
We say the most important person in 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 he got great service, he's never going anyplace else again.
The most precious part of that equation there.
I call my kid anybody under 88.
I'm 88 years old, you're under 88, you're a kid.
So I'll get pissed off.
Those kids really challenging jobs.
They need to learn with their seller.
They don't have the luxury of not being able to handle the difficult customer.
They have crazy hours, and most of them are stored right at the bottom without a college education.
And those kids made this come.
If there's one thing Home Depot is known for, it's our service.
Big thing.
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 to give in category, but you got to sort of it.
But the thing that holds it all together is a 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 was.
Put it in the nozzle of the faucet and drip, drip, drip, drip.
It's 3 o'clock in the morning, and your wife kicks you and says, I can't sleep.
The trip is keeping me awake.
Guy gets up in the morning.
He goes to the Home Depot store, says to the kid, I need a new one of these.
The kid says to him, a new one of what?
He said, I need a whole new stamp.
They tell you, I'm sorry, sir, you need a wash.
Follow me.
We have little glassy bags of assorted size washers.
Can't tell you, 25, 30, I don't know if that's cheaper.
Takes it off the peg, opens it up, gets the right size washer has a screwdriver in his apron takes it off, unscrews the screw, takes the band washer out, takes the good drop washer, puts it in, puts the screw back in and he says to the guy here go home, where it won't drip anymore.
Guys, what do I owe you?
He said, nothing, sir.
He said, happy you came to Home Depot.
Three months later, the wife wants a new kitchen.
She's going to go to one of these foo-foo joints, kitchen and bath guys.
The owner will go to my friend.
They went back.
They found the kid.
Kid brought him over to the kitchen designer.
When we sell kitchens, we've got $100,000 kitchen order.
That's the value.
We make an effort to train the kids.
We make an effort to treat them fairly.
Last year, we did a lottery.
We raised wages $1 billion.
Of course, the Trump, why?
Because we really feel for our kids.
They own stock.
I guess I could say I made some money.
Just a bit.
I'll tell you this.
The greatest number of the world to me is not my network.
We have 3,000 kids that are still working for the company today.
3,000 of them.
They started out pushing carts in from a lot.
They're multi-millionaires.
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 and taking care of them.
We do everything we can for them.
And they know it.
What in the history of Home Depot went the most wrong and how did you fix it?
Well, the thing that went most wrong was a mindset that cost was more important than culture.
How did we fix it?
We changed leadership.
That's simple.
Frank came to the company, I'm going to guess, around 2003, 2004.
At that point, we were 23, 24 years old.
But I would call Frank Blake the founder of the company.
Why?
Frank restored the culture.
He led by example, no doubt about it.
His selection as CEO was, I think, the smartest decision, and I take great pride in that personally, because when we were confident, we decided that we had to go different ways with Bob.
By the way, give Bob credit.
The first 40 years, Bob was with Cummings.
Everything he touched, he made better.
However, once we got past that four years, he started to now get a little too aggressive.
And I think he got away with the culture.
Fright was not a popular choice. is a natural.
And the reason Frank is a natural is he embraces the farthest of values the human being could have.
One year, Frank didn't even want to take a bonus.
No, we're just getting this thing going right.
I don't need a bonus this year.
Frank is selfless, Frank.
First of all, he's a sportist.
Three-fold hours.
He graduated from Harvard.
Columbia Law School graduate.
Clerk to Justice Stevens of the Supreme Court.
Throwing on it in the year.
Number two or three guy, and I think formative energy.
Comes to people to work on strategy.
A nerdy kind of guy, you meet him.
You'll never get a prize for being a picture of Sartorial Splendid, okay?
And I say that because I tell them, I mean, that's Frank's charm.
What you see is what you get.
And I talk about being authentic.
He is the best example of authenticity I could imagine.
So culture is there.
Interesting aside, when I was at the NYU Medical Center, places that are shambles.
Baroque morale was terrible.
They just merged their hospital with Mount Sinai.
Ironically, it is an example of bad faith.
Each side, but it was true on the other side.
They were getting rid of the bad hospital.
We took two bad hospitals and made it one huge bad hospital.
The element of distrust was palpable.
So when I took the job, I went and I said to the body look, if you want me to do this, you have to sign the oath.
The body was chairman.
We did it.
And I think we at Home Depot, Bernie and myself and Pat, we put this culture in place.
They won.
We lived it.
We lived it.
I tell people here I had highly educated, double degree, triple degree doctors.
And the same thing I did with this 18-year-old kid that barely got out of high school with this professional, highly accomplished, fabulous doctor.
Treated him the same way and it worked.
Just guess what?
They even beat him at the end of the day.
Got to celebrate our people on the floor.
They are the key.
This is the magic sauce.
This is a secret sauce.
Not so much a secret, but it takes effort.
It takes time.
And you try to do everything you can to let these kids know that they really matter.
They can make a difference.
That they're opinion.
Share with us your ideas.
Share with us.
You'd be amazed at the number of great ideas we had.
We implemented it in the stores.
It came out of the mind of a kid that barely got out of high school.
We encouraged them to be open, to come express themselves.
Sell us.
I'll give you, for instance, we're opening a store in Elmont.
So the Wednesday before the store's going to open, I'm in there and the kid in the plumbing department comes up to me.
He said, are you somebody in this company?
Yeah.
Come on, I'll show you something.
He said, I'm curious, were you guys born stupid or did you become stupid?
Okay, I said, maybe it's a combination of both.
You don't want these kids to feel intimidated or threatened.
You want to get it out of their head.
I says, okay.
So he takes me over and he shows me a big cardboard box that's on the floor at the bottom of the rack.
And in the box are a bunch of plungers.
We got stopped up to it.
He said, you put your hand in that box, you think you were in a coal mine.
You come out black.
I said, what?
He said, nobody sees the plungers.
Now, think of this.
You don't wake up on a Saturday morning and say, let's go to Old Depot and buy a plunger.
It's three o'clock in the morning.
The toilet stopped up and you haven't got a plunger.
You get your ass to the Home Depot store as soon as it opens, you get the plunger.
So, back to the kid, I said, okay, what would you do?
He said, I'd get pipe hooks.
Like in a gun store, how they show guns on a wall.
And I put the plungers at the end of the thing on a rack.
Why don't you do it?
He said, can I?
I said, why can't you?
I think it's such a good idea.
Why don't you do it?
Okay.
Saturday morning at 11 o'clock, the store is now open.
People are clapping.
And I said, come on, come here, come here, come here.
It's like water.
There's no plungers in there.
Pipe cooks.
Oh, you put them back in the box?
No, they're cold.
Hey, honey, three of us.
Plunger you can buy for $3, $3.54.
Hey, honey, we need a plunger.
I don't have a plunger.
You made it an impulse item.
That was out of the mind of a kid that barely got out of high school.
You don't know where you're going to find a gem.
But you're never going to find them if you don't look for them.
What do you think was the reason you've been able to hold on to these investments, these positions, for so much longer than everybody else?
I saw the average length of your investments is 35 years or something crazy like that.
Stop at 42 years.
42 years.
Sorry.
I don't want to take that.
Absolutely.
Because I'm stupid.
I'm loyal.
I'm even loyal to my investment positions.
What am I going to tell you?
You know, you're loyal, you're loyal.
Look, I got my Lilly stock two years before Home Depot was founded.
I got to know the management people.
I liked them.
You know, they were solid Midwestern people.
The guy that I negotiated the deal with was a tough son of a bitch by the name of Gene Step, but I had such aberration and respect for Gene I had no doubt that Lilly would turn out to be a great company.
Now, it didn't hurt that if I'd sold the stock I'd have had a hell of a tax, because my cost basis The little device company I took over at a proxy fight had a market cap of a million and a half dollars.
Okay?
Had a market cap, a million and a half dollars.
Literally gave us $50 million.
That was a proxy fight.
It was May of 72.
Lilly gave us a million and a half shares of Lilly stock worth 3750 a share of our stock per share roughly that.
And Lilly paid a dividend.
So the dividend was a nice thing, the little bit of income.
Lilly stock has split over all those years from 77 to now, 16 to 1.
So the three and a half shares, six, nine, is 24 million shares.
Okay.
You ready now?
$18,360,000,000.
Now, catch this.
Lilly's stock from 77 to 02 went from 37.
It was always $100,000.
From 02 to 18, the stock did nothing.
It was a 109 in 02 and it was 109 in 18.
However, going back to 77 November 30, 77 Until last August, counting the dividend including the 16 years or nothing, it compounded at 15 a year.
You're a home run.
Every stock I own compounded at 15%.
I spent a lot of time with companies.
I get to know the managements.
My first and my major and my principal concern is people.
I bet on people.
I've got a Home Depot position now.
I got literally 47 years.
Depot, I got 46 years.
JP Morgan, I bought the warrants, but I bought them way back.
I got my JP Morgan stock today, 16 years.
I got my Parker Haddop 16 years.
They're puppies.
They're still babies.
I've got a new position called option shareholdings.
I bought it six years ago, and I'll be there with them.
As long as the management stays quality people, as long as the prospects of the business are bright, It's like my wife.
These guys, you get married three and four times.
How do they remember what to call them?
What name to use?
I mean, can you imagine?
Jane, Mary, my bad, Pat.
Life is simple.
And holding on to these situations.
Well, the food I ate as a kid is still my favorite food.
Peasant food.
What's your death row meal?
Pasta fagioli.
What's your last pasta fagioli?
It's got all of me and beans, plant parmesan.
Fried peppers and potatoes.
Oh, God, they cook fried peppers and potatoes.
And I got my mother.
God, she was so cook.
But those are my favorite foods.
I got a little dive in Port Washington.
I told him.
DiMaggio's, great pizza, bowl of pasta fagioli or a bowl of scatola and beans.
Man, it's like dining in heaven.
What do you love most about capitalism?
I love that title of your book.
If you had to sum it up, what do you love most?
The good it does for mankind.
The good it does for them.
Look at our society.
Look at every other country that moved towards socialism.
Look at what's happened.
Venezuela, Cuba, Argentina.
Look at them.
Brazil.
Look at New York.
Look at New York.
Hey, look.
A poor kid working his ass off with a shot at the grass ring?
He may never get it, but he's going to do a lot of good along the way, even if he didn't get it.
Well, I'll give you a for instance.
You got a call one day, Jim.
We opened up first time in Long Island in the late 80s.
I walked the store.
He was working at one of our first stores on the island.
Bam, Jim, and it says to him, I said, I've got to come see you today.
Okay.
And I have a rule.
Home Depot employees come first.
Bernie called me.
And it was another call from a kid.
I said, fellas, I'll call you back.
I got to talk to this kid.
So the kid comes in at the same day.
Hi, Mark, what's up?
He's far away.
He goes, you know, I thought you should know.
He said this morning I got a call from my Merrill Lynch broker that my Home Depot stock is now worth a million dollars.
I'm a millionaire.
That's silence.
He told me to think of something else.
He said, I paid my parents' mortgage off before.
I paid my mortgage off.
My two kids are in college.
And I'm a millionaire.
Do you know the impact that had on that kid and all those people in the store?
He did it.
I can do it.
They got to work hard.
You're going to have deals that don't always work.
She got six months to tell you all my bad deals.
Everything is in a home run.
Oh, I'd be happy if they were breaking it, but you're going to get off the plate and take a sway.
You ain't going to hit the ball every time.
You're going to have a few strikeouts.
That's Dwight.
But what does capitalism do?
I think it all was promised.
Me, me, a plumber's son, a cafeteria working son, not a very good student.
I thought it was a bad student.
Look at what capitalism allowed me to do.
You can't take that lightly.
That's heavy duty stuff.
What did you see most commonly in the opportunity around Home Depot or other stuff that you got involved with early on, beyond the people?
I know you were optimizing for amazing people.
Was it just that?
That's 95%.
You weren't doing store fragmentation calculation for... Right, right.
You get into a bad idea with a great guy, the great guy's going to tell you it's a bad idea and we made a mistake.
Game over.
I haven't got a crystal ball, but that's the key.
Jesse Haddock was a golf coach at Wake Forest.
One time I asked Jesse, what do you look for in a high school kid?
He goes, the one thing I never do is I don't mess with their swing.
If what they're doing and the results of their play gives them my attention, I get my attention because they got a great record.
I leave them alone.
I go, what are you looking for, Jesse?
He said, I look for the kid that gets a line on a par three.
And the next one goes back and birdies.
He said, I look for resilience.
And that's about it.
I look for a management guy Bernie Marcus, fired at 49 years old, no money, a mortgage, no health insurance.
All right, let's go.
Let's do it.
Let's start it.
But same thing.
By far, same thing.
He just took bankruptcy.
You want people who can bounce.
You want people who can come back.
They got to fight.
They got to, hey, okay, that didn't work, but I'm going to give it a shot again.
Home Depot, look at it.
You realize Home Depot today has a market cap of approximately $400 billion.
$400 billion.
Shit, that's a lot of money.
Not bad.
What bad deal most stands out in your memory?
We don't have six months sadly, but we've got a few minutes.
What bad deal is most memorable?
I did a deal So I got by virtue of.
There was an article in Fortune magazine after the Perot deal titled the article The Fastest Richest Texan Ever by Perot.
And in that article, he was incredibly generous in describing me.
The guy called me up. from Avon, New York, outside of Rochester.
They were building modular homes in a factory.
I went up to see it.
It blew my mind.
I got so caught up in the moment. what they were doing.
I failed myself to take a step back and talk about the people, but I did.
And because I had a hard hand, there was nothing I could do that people weren't going to jump on.
Those guys had to go to jail.
Fortunately, I didn't know anything about it.
They left me.
We looked for a deal for them.
1970 was a bad year.
They left me and they went to Merrill Lynch.
It's all about reputations.
Always is and always will be.
Nothing matters to me more than I was a member to keep my word.
Curious how the hospital thing resolved.
It was a mess when you showed up and you oversaw it for a long time and it's one of the best ever.
We're number one in America.
We got a culture that won't stop.
We're heading on all cylinders.
We got three and a half billion dollars cash in the bank.
The brand is thing of all.
We took over a rundown, broken down hospital in Brooklyn called Lutheran Hospital.
The zip code has the highest percentage of welfare patients in the United States.
It's the poorest zip code in the country.
We don't make a nickel on that hospital, but that hospital on its own was now ranked number one.
We have three hospitals, Long Island, Brooklyn, and Manhattan.
We put all those three in separately.
All three of them separately got A. Number one, how good are we doing?
We're kicking ass and taking names like you can't believe.
Is it all culture?
100%.
Oh, wait a minute.
Whoa, whoa, whoa, whoa, whoa, whoa.
Culture? and making sure you bring the very best with you as you embrace that culture.
We're number one in brain surgery.
We're number one in neurology.
In the top 10 in virtually every specialty you can name urology dermatology, you name it, we're there.
How do we do it?
We celebrate these people.
We pay them well.
Okay, we pay them well.
But we're delivering a product second to none.
A guy shot me the other day in a restaurant.
I own a peaceful restaurant down in Bogart called Gallagher's.
It's unbelievable.
There's a good example.
The kid that runs Gallagher's, he's 67, I call him a kid.
He bought that restaurant and was doing $6 million a year in 2012.
Last year, he did $30 million in business.
One restaurant, home run.
This year, he's going to do $33, $34 million in business.
It's all about the people.
Now, all I can say to you is, I say all the time, under promise and over deliver.
But it's always about the people.
And if you get those people to know, you're going to take good care.
You've got to be fair with them.
It's critical.
This guy at a restaurant the other night comes to me.
He says, Mr. Langone.
You're Mr. Langone.
I said, yes, I am.
Your hospital saved my wife's life.
That's a pretty strong statement.
He said, no, no, no, I'm telling you.
You just got tears coming down.
I said, you know what you think?
You just made my day.
You made me feel like I'm somebody.
How do we do it?
Go down, go to NYU and grab a guard.
They think I'm a white job.
I walk in and I say, I said to the security guy, the big security guy, you happy?
Yeah, I'm happy.
You like it?
I love it here.
Well, if you ever got a problem, I hope you know who I am.
Call me up.
And I prefer they call me Ken, by the way.
Mystery is a barrier that blocks you from authenticity with each other.
Call me whatever you want.
Just don't call me late for an order, okay?
I mean, that would piss me off.
The last question I ask everybody is what is the kindest thing that anyone's ever done for you?
Oh, God.
I've got so many kind things done for me.
I can't count them.
I'll give you a for instance.
Here's one thing.
I worked in a butcher shop as a kid among my many jobs.
I had two or three jobs at one time.
In fact I worked in a butcher shop and the guy that ran the butcher shop didn't know I worked for the supermarket down the street, down parking.
Actually, the shelves up in the store closed nine o'clock at night.
You'd find if you'd known there was this competitor.
Anyway, next to the butcher shop was a liquor store.
And the Orman family were in.
Maybe we had five Jewish families in town.
We're awesome.
Lenny Long, good man, came to me, said to me, hey, kid, you want a couple of bucks?
I said, yeah, sure.
A couple of bucks, I'd kill you for a couple of dollars.
What do you want me to do?
He said, I want you to use this.
I got cardboard boxes that come in.
I put them up.
He had a little porch back of a store.
He says, this is a garbage company.
We'll come and take them.
You got to take them down 150 yards where there's a spot where they pick them up.
Take the boxes.
I'll give you a dollar a week.
Two nights a week, 50 cents.
You got it, man.
About three weeks after I'm doing it, one day I'm carrying the boxes.
The guy on the garbage truck is there putting the boxes, breaking the boxes up.
What are you doing with the boxes?
Oh, he says, it was a lot of money.
What are you talking about?
Yeah, he says, I break them up and I tie them up or I take them to the junkyard.
And they buy scrap paper.
Who is she again?
She'll probably get three bucks a day.
You can, yeah.
So I go back to Lenny.
I said, Lenny, we got a deal.
I said, if you let me break the boxes up, stack them in a pile on acres over where the boxes broke, you got a lot of space.
I'm going to tie them up with twine, and you haven't got to pay me anything.
Why not?
I said, because I'll be able to sell it.
Okay.
Two to four, make it three, four, five dollars a week.
Show them the boxes.
How do you answer that?
I'm more prepared to look at a store.
He said, hey, come here.
He said, are you going to college?
I said, yeah.
Come on in.
Takes me in.
He had a counter.
And he had a little opening to the back.
In the back, the shelf in the back of the counter.
Here's a counter.
Here's a shelf.
In the back of that shop, he had a little desk where he did his bookkeeping.
Takes out a dollar a week.
He says, I hear you're going to a trial.
He said, who might need this?
He put a dollar a week. in the envelope.
For all those weeks, I was selling my stuff.
You talk about kindness?
Thank God.
There have been so many people who have been so kind to me, I can't count them.
People are good.
Talk about kindness.
If you gave me a month, I couldn't have enough time to list all the people that have been good to me and kind to me.
That's one of the reasons I believe in God.
I really do.
That's me.
Your story, your book, all your ideas, they're wonderful.
Remember this?
Most important thing in that book covered. an American story.
It only happened in America.
This is the genius of America, that a poor kid rough around the edges like me, could do okay.
That whole promise not to the matter, born that with a silver spoon in my mouth.
Just the chance to live in this great country was all I needed.
I've so enjoyed our time together.
Thanks for doing this with me.
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