It was 1978, and Arthur Blank had just received some bad news. He picked up the phone to call his wife Diana to tell her that he and his mentor and friend, Bernie Marcus, had just been fired. Blank, 35, had been vice president of finance, and Marcus was president, of Handy Dan Home Improvement Centers, which at the time was the largest and most successful chain of home improvement stores in the country.
"She started laughing, thinking I was joking with her," Blank recalled. "Eventually, after she started getting phone calls at the house from business media reporters, she realized it was true."
And that is the beginning of one of the most remarkable stories in the annals of American business. Blank and Marcus rebounded from their Handy Dan firings to found The Home Depot Inc., the world's largest home improvement retailer, the sixth largest retailer in the U.S., and the eighth largest retailer in the world. As I write this, the company is valued at more than $89 billion.
The challenges were many for Blank and Marcus in the early, entrepreneurial days of Home Depot. For one, most of the inventory in the first store was fake.
"We didn't have enough capital to fully stock the stores—to create the wow factor we needed—so we borrowed empty boxes from one of our vendors to put on the top racks, and we stacked empty paint cans ten feet high."
Believe it or not, Home Depot's founders had a hard time in those early days getting customers to come into their stores.
"On the day we opened our first two stores in Atlanta, we kept our kids out of school and put them in the parking lot of our stores handing out 700 one-dollar bills to entice customers in. I remember thinking we'd be able to get the kids back to school by lunch time, but by the end of the day they were still in the parking lot — with money. Bernie, Pat Farrah (a co-founder and our senior merchant) and I met for lunch that day and just looked at each other. Our big day had not gone as we had planned."
The company's first two stores opened much more slowly than they anticipated, and the company went through half of its seed money in the first nine months of operation, Blank said.
Home Depot's advertising also wasn't paying off—customers just weren't showing up. Then, one of their ideas clicked.
Read more about Arthur Blank's story in Clark Howard's Living Large for the Long Haul.