This article was written by Phineas Upham
Four friends got an idea in 1978 to launch a home improvement superstore, a kind of one stop shop for all things construction. Bernard Marcus, Arthur Blank, Ron Brill, and Pat Farrah managed to secure funds from an investment banker to launch the company. The first two locations were built in 1979, on land leased from J.C. Penney.
It became a destination for contractors until the 1990s, when it started to see fiercer competition in the space from companies like Lowes.
In the early 2000s, after Bernard Marcus and Arthur Blank had stepped down for retirement, the company appointed Robert Nardelli as its CEO. Nardelli, who had previously served as the chairman and CEO of Chrysler, began a path toward extreme efficiency.
Nardelli began his time with the company by setting metrics he considered to be important and gutting the work force. This saved the company costs in the short term, but stores felt the pressure in the long term. Managers became alienated and unable to hit sales goals. In response, Home Depot started a new arm of its business called HD Supply, which was later sold for $8.5 billion in 2007.
Today, Home Depot has shifted most of its efforts into servicing customers in person and online. It has extensive tutorials teaching customers how to retile floors or perform basic maintenance. It also began testing fuel centers at some of its stores, but has not fully rolled this feature out to every store in the United States.
About the Author: Phineas Upham is an investor at a family office/hedgefund, where he focuses on special situation illiquid investing. Before this position, Phineas Upham was working at Morgan Stanley in the Media & Technology group. You may contact Phineas on his LinedIn page.