Home Depot: Sigoloff's unsung legacyFebruary 25, 2011: 2:23 PM ET
by Patricia Sellers
If you're old enough to remember the investor Sandy Sigoloff, you were probably surprised to read that he died at 80. 80! Time has flown since the slick, black-maned Ming the Merciless, as he called himself, was storming into down-and-out retailers, slashing operations, and saving some (like Wickes) while flubbing others (like Bonwit Teller and B. Altman).
While Sigoloff's obits attached those retail names to his legacy, it is little known that without him, we might never have seen the creation of Home Depot (HD). In 1995, Home Depot's founders, Bernie Marcus and Arthur Blank, told me about their fateful run-in with Sigoloff, their onetime boss. I wrote about this in a Fortune cover story, "So you fail. Now bounce back!" about how superstar business-people recover from failure.
You can't always control your environment. Such is the business philosophy of Bernie Marcus and his business partner, Arthur Blank...
It was an April Friday in 1978 at Handy Dan's Los Angeles headquarters when Blank and Marcus got canned by Sanford Sigoloff, the retailer's new owner. The official reason was "unauthorized and unacceptable business practices," which related to employment of non-union workers. But personality clashes with Sigoloff were the real reason. The next day Ken Langone, an investor friend, told Marcus and Blank, "You've just been hit in the ass by a golden horseshoe. Let's go into business." Says Marcus: "Once I stopped stewing in my misery, I saw that Kenny wasn't crazy."
With $2 million in capital, Marcus and Blank began opening the kinds of stores they had dreaded competing against: hangar-size, no-frills outlets with high-grade service and a huge selection of products. Today, Home Depot (1994 revenues: $12.4 billion) tops the fast-growing home-improvement industry and hammers rivals on innovation. Says Marcus: "We're always looking for someone to crawl over our backs, to destroy us."
While Marcus and Blank have moved on from retailing (focusing on philanthropy and in Blank's case, owning the Atlanta Falcons), Home Depot has grown quite nicely. This week Home Depot reported 2010 net income of $3.3 billion on revenue of $68 billion.