Home Depot: Fake it till you make it

I can tell you I have had some failures in my life where I just thought this is it. I'm done for!! Well I recently stumbled across a story that struck a cord with me. In this week's edition of The TradeOff I am going to share the interesting story of Home Depot. How their failures led them to start the business and how they faked it until they made it.

Building Up From Rubble

In 1978, Bernie Marcus and Arthur Blank, both recently fired from a regional home improvement company. They had dedicated years and decades of their lives to building up the company for their employers and both were given their walking papers. I have been fired in my past and I have to say it is one of those utterly terrible moments in life. I was not a good employee and did deserve to be fired but it also still hurt. It felt like the end of the world. I didn't know what to do.

Well Bernie and Arthur did what most entrepreneurs do they conceived an idea for a new kind of home improvement retailer. Their big bold vision was to go against the grain. They wanted to start the concept of a large big box super store, with a no-frills store, vast inventory and low prices, which was a significant shift from the smaller, more service-oriented stores of that time.

Financial Challenges

Ah, the trials of a new start up. Picture this: two ambitious entrepreneurs, dreams larger than their pockets, opening the doors to their groundbreaking concept in bustling Atlanta. But there's a catch, there is always a catch. The idea was big and bold but they are two recently fired employees. So the funds are pretty meager. I remember a time in my own life where I struggled with finances, feeling that crushing weight of expectation and reality colliding. Just like many of us, Bernie and Arthur too faced the all-too-familiar issue that start ups face. NO cash. Picture two of their debut big box retailer with vast amount of shelves. But all the shelves were empty. Think about that today if you walked into a new retail store how much trust you would have if all the shelves were empty. Let's be honest first impressions often times are everything.

Creative Solution:

Isn't it true that sometimes, constraints ignite the most brilliant flames of creativity? Here were these two fired-up visionaries, looking at cavernous spaces echoing with the potential of what could be. But instead of hanging their heads in dismay or hastily shutting their doors, they rolled up their sleeves. I've always believed that when the going gets tough, the tough get crafty. And that's precisely what Bernie and Arthur did. In an age where Instagram filters hadn't been birthed yet, they applied the oldest trick in the entrepreneur's book – creating an illusion. They started to fake it until they made it from sheer necessity and ambition.

They couldn't afford to fill their shelves with product because their vendors would not extend two recently fired former employees lines of credit. So they asked the vendors for empty boxes of their product. So they could fill the shelves with something.

Little did the customers know that all the stocked shelves were filled with nothing but empty boxes. But the perception was that the stores were fully stocked and gave them the illusion of success.

Vendor Relationships

It's worth noting that only one of Home Depot's vendors provided them with a credit line at the start. This trust was invaluable. The empty box idea also involved approaching other vendors for empty boxes to place on the shelves. The fact that vendors collaborated in this unique approach highlighted the strength and trustworthiness of the budding business relationship.

Focus on Customer Service

While they were getting started and even after, Marcus and Blank emphasized impeccable customer service. They hired knowledgeable staff and provided training to ensure that customers could get expert advice on their projects. This customer-centric approach played a huge role in building the store's initial customer base and loyalty.

Growth and Expansion

The scrappy beginnings paid off. With the initial perception of the stores being stocked and a strong focus on customer service, Home Depot gradually started gaining traction. The company soon opened more stores and expanded its reach. Today, Home Depot is the largest home improvement retailer in the U.S., boasting hundreds of stores across the country and significant international presence.

In Conclusion

The story of Home Depot is an excellent example of how resourcefulness and resilience can help overcome early challenges. Their ability to think outside the box (quite literally, in this case) and their unwavering focus on customers laid the foundation for what would become a home improvement empire. It serves as an inspiration for entrepreneurs everywhere, reminding them that beginnings might be tough, but with creativity and determination, success is achievable.

Until next week

Jake