Ken Langone - The American Dream - [Invest Like the Best, EP.368]

Patrick O'Shaughnessy

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Patrick O'Shaughnessy

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 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 joincolossus.com dot. 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 Hyte, and he and I hit it off, and he was telling me that he was partners in a company that was getting ready to go public, and they had Alibaba record. And I said to him, is there any chance I can get a chance to pitch my firm to be the underwriter? He said, let me see what I can do.

Ken Langone

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 nice one. I say kids.

I was only 33 myself, and we went down to Dallas. The scariest thing was exactly at 1130. I got into his office. There he was, sitting behind a big desk. He's diminutive, and he could, hi, fellas.

Ross Perot

Come on over here. Sit over here. Have a little chat. How you all doing? I said, we're doing fine, Mister Perot.

Ken Langone

I said, this is Roger Green. This is Duke Glenn. So we sit down. He lists the firms that he met with Goldman Sachs, Merrill lynch, white, weld, kidder, Peabody. Every one of the top firms in Wall street was there to see him.

He talks nonstop for 29. 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 just want Mister proof. 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 high, told me I had 30 minutes, and by my calculations, 30 minutes, forget that.

Ross Perot

Tell me what you think. And I thought to myself, well, I'm gonna blow the 30 minutes rule. I might have to go all the way. I missed a bro. That's the biggest problem bullshit I've ever heard in my life.

Ken Langone

Any backstory? What do you mean? I said, mister 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. I said, 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 01:00.

Wow. Drive. Me and two guys. I was in a front seat. He had a big maroon Lincoln and he was driving us all over Dallas.

We were going to go back on 330 plan in the afternoon. Now I figured, I'm not going to throw this meeting 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 down. 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. Like to get Billy a little bit better. He says, 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, enough. So he invited me back down. You get a chance, come on back down like dog. 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, Mister Perot? I said, first of all, I said, I haven't had the benefit of your numbers.

Ross Perot

Let's assume the numbers are great. I said, can I get some kind of relevance? We 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 a chart of the percentage growth of the earnings and of the sales, and it was doubling every year.

Ken Langone

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 is worth 100 times earnings. What? I said, yeah, about 100 times earnings.

Are you sure? I said, well, ross, 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 margin and the clear prospects that it continued with the set. 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, that 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 time 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 down.

Ross Perot

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 has some kind of a machine that created these guys. It was unbelievable.

Ken Langone

One more talented than the other one, common sense, plain spoken gentleman. Don't forget, he had a dress code. White suit, white shirts, no tassel loafers, wingtip shoes, highly shined, low facial hair, military style haircuts. And the more I got exposed, the more excited I got it. So he saw, okay, well, let me think about it.

This comes into June. 2 weeks later, he called me up. Ken, Mitch Harden 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.

Ross Perot

I'm going, what the. I said, ross, I'll be on the next plane down. What are you talking about? I said, I've never seen that in life. He said, I've told you that.

Well, I know. I don't rush, I'm coming down. No, no, don't come down. He's. You know, we're Texans, have a good rule here.

We think if you got a good sense of humor, you're a good texan. I will. God damn it. You guys were pain in the ass, too. Okay.

Ken Langone

So anyway, he gives me the deal. The rest of Wall street is stunned. Here's this little piss at railroad findouts, getting the most sought after piece of business probably in the last five or ten years. And we go through the whole process. He wants to how guy do it.

I go rush, I'm going to make one promise I didn't take before. I'm personally going to be on every meeting with every investor. That said, I intend to build a short. Oh, I know. He called me up at the very end when I decided he's going to give me the business.

None of the firms that wanted was Gh Walker. There was a guy there, by the way, Jerry Lodge, who he knew and we liked. When lodge heard that we were going to do the deal at a harder time journey, she said, ross, we'll go to a harder time journey and we'll be co matching. So Ross called me up and said that he'd gotten this call and how do I feel about having a partner? I said, ross, let me ask questions.

The uni are in a high racing speed car going 200 miles an hour. School. I got the steering wheel and you got the brakes. We're sitting next to each other. How long before we're going to hit the wall?

Because we're going to 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? Getting in that car, I understand. I said, ross, you want to give them the deal?

If you're more comfortable with them, you give it to them. I'm going to be around. I'm sure we'll figure a way out for you and me to. Oh, sir. He said, you would have wanted me to go from 70 to 100.

Ross Perot

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 home monkey.

Ken Langone

Now, back then, New York state had a stock transfer tax. When you sold stock, there was a 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 Jerry with legal.

The night before the underwriting, Elaine and I and Margo and Ross had dinner at 21. We got to know each other that summer. We really hit it off personally. Well, by the way, I tell you, one of the great joys of my life was his friendship. And this was an aside.

One of the great honors of my life. When I got the call from the family, Ross Junior. They'd like me to deliver 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 the witness signing the paper. So this was all legal stuff.

Patrick O'Shaughnessy

I love it. So we're driving through the tunnel. It was a back seat where you had two seats looking at each other. Margo and Ross are looking ahead. I'm sitting with my back to the front looking at them.

Ross Perot

Well, he said, borrow all the other guys on Wall street. Totally. Now the ones 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 isn't. When you guys say, sorry, Ross, I miscalculated. I can't do it at the hundred times earnings. I got to do it at a lower number. What are you talking about?

Is what. I suppose this is what you're going to tell me. I'm not getting 100 times earnings. I said, how'd you know that? Same arm out.

Same arm out. I said, how'd you know that? What do you mean? I said, I'm not going to do it. There are times, Ernest, I'm sorry.

See, Marco, there you are. They're all alike. Up here, they get us country boys. Up here, they pick us clean. I said, wait a minute.

Ken Langone

Wait a minute. Does 100 times journeys mean that much to you? Damn right. He says, Texas. You put your hand out of your words.

Ross Perot

You bought 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 100 time journey. And well, you will.

Ken Langone

I said, okay. So Margo. I winked at Margo while he was a little bit of a tizzy. She says to me, God bless Margot. She's short.

She will. Ken, what were you going to do? It at. I was going to do it at 115 time journey. That's the only 100 times 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 put me on a map.

The most important thing of all was he was a man. When you delivered to him and you kept your word he never forgot it. So he became perhaps my staunchest that I was a young kid, 33. I never got an underwriting. That friendship has lasted all through his life and now with his family as well.

Patrick O'Shaughnessy

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 promised to and delivered for it.

Ken Langone

He 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 him that plus something. And to me the art of negotiating is not see who best 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 going to get or he should 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, for instance, I did a deal with a guy. I bought a company. He was a tough negotiator. He negotiated back and I've heard she gave in on every point I got done around 930 at night. My office.

I said, now you say, oh, I'm happy. I couldn't be happy. I said, well, I'll tell you what. Let's go back and I'll drop you up hotel and I'll pick up in the morning. We'll have breakfast.

We'll talk to you. It's 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 do. He said, I'm sorry. He said, as I reflect on this, I don't think this is a good enough video for me, as I'm entitled. I said, well, let's go upstairs. And I 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 don't want to tell you something else.

I will never be 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 cant think.

At one point, I didnt concede to you. I said, im sorry you got what you want on this deal, but I never wanted the business with you again. 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.

You can see where I started, sitting where I am right this minute. And it's okay to bargain all it, but when you're done, you're done. And you were shot. I told you, 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 comedy 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 there was chisel home to it, chisel home to me. You know, keep your word, work as hard as you can and give it all you got, and live by the golden rule. One of the things that I feel strongly about is I'm very forthright about my childhood, because that's where it all started, that I had a good fortune. Mean, this lovely lady, she was 16 and I was 18.

We got married. She was 18, and I was 20. Almost 68 years later, we're still hanging around with each other. That's pretty good. What's the key to doing that?

Well, happy fights, but that's a carrier crush. No, go to bed. So we were two kids that truly loved each other and determined success wouldn't change us. But I hope it hasn't. I urge my kids to be genuine, to be authentic.

But that's, to me, 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. Look, 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 is in short supply. And loser. The world has become very transactional. My epic battle with Elliot Spencer. Wish I whipped his ass.

I can tell you right, 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 Grasshopper.

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 unanimously to give them these pay packages. Which, by the way, were magnified because every previous chairman of the stock exchange never had a ten year chart of longer than ten years. So I know when you got these fields here, five years, six years, seven years.

Dick grassroots started at the exchange at $82.50 a week. Union clerk. Union clerk went from that all the way. How, I guess, what he had 37 years of service. When you put the art, stick to.

Ross Perot

That, 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 1200 listings. When he got the bulletin is that he had 2800 listings.

He made all of this. I bought seats for $72,000 apiece. I got $8 million for each one of them. I mean, how bad a deal is that? We had guys that employ the exchange going out with it.

The whole key to the exchange was listed. 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 high powered guys that with. It under disguise, he, bring him on, baby. I'll show you with it. Okay, bring them on.

Ken Langone

He did. He got it. What was that? I didn't want it to happen. When Cuomo replaced him as aggressive and when the court of appeals found in.

Ross Perot

Our favor, 70 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'm, I don't know, give me some advice. He said, I'm thinking of appealing it.

Ken Langone

I might. 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? As well as two things. I think, number one, the most joyous thing I could hear is the fact you got to repeal it, that 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 reveal it. He and I became good friends, by the way.

So loyalty's in short supply of 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 a senior executive. 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 where the newly hired employees, 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 a kid.

Anybody under 88, and I'm 88 years old. You're under 88, you're a kid. They don't get pissed off. Those kids really challenge jobs. They need to learn what they're selling.

They don't have the luxury of not being able to handle the difficult customer. They have crazy hours and most of them are still right at the bar without a college education. And those kids made this company. 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 want in a given category. So you got assortment.

But the thing that holds all together is a kid that's dealing with you. I'll give you, 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 with the valve, was printed a nozzle of the faucet and dripped, drip, drip, drip.

03:00 in the morning and your wife kicks you and says, go get the faucet. I can't sleep, the trip is keeping me awake. Guy gets up in the morning, he goes to the home people store. How long they make, says to the kid, I need a new one of these. The kids says to him, a new one to what?

He said, I need a whole new stent leakage. Tell you I'm sorry. So you need a wash, marble made. We have little glassine bags of assorted size washers. Can't tell you.

Twenty five cents, thirty. Takes it off, 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 trop washer, puts it in, puts a screw back in and he says to the guy, here, go home where we'll drift guys with Ioe. He said nothing, seriously. Happy, he came to own depot. Three months later, the wife walked into the kitchen.

He's going to go to one of these foo foo joints. Kitchen and bath guys don't over to my friend, they went back, they found the kid, kid brought him over to the kitchen designer where we sell kitchens. We got $100,000 kitchen order. That's the value. We make an effort to train the kids, make an effort to treat them fairly.

Last year, unilaterally, we raised wages, $1 billion. Because the company, why doesn't we really feel for our case? They own stock. I guess I could say I made some money just a bit. I should.

I'll tell you this, the greatest number of award to me is not my network. We have 3000 kids that are still working for the company today, 3000. They started out pushing carts in from a lot. They're multimillionaires 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 do we fix it?

We changed leadership. That's simple. Frank came to the company on what, I 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 constantly deciding that, we had to go to different ways.

Bob, by the way, give Bob credit. The first 40 years, fathers were coming. Everything he touched, he made better. Everything. However, once we got past that four years, he started to now get a little too aggressive and I think got away from the culture.

Frank was not a popular choice. It's a natural. And the reason Frank is a natural is he embraces the foreignest of values 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. Frank is selfless. Fritz, at least squad is it? Free fall of owls.

He graduated from Harvard Columbia Law School graduate court to Justice Stevens of the Supreme Court, throwing on it in the year number two or three guy, and I think Paul and Abedigy comes, people to work on strategy and nerdy kind of guy. Let me get a prize for me, a picture of sartorial splendor. Okay? And I say that because they tell them, I mean, that's Frank Shore. What you see is what you get.

And I talk about being authentic. Here's the best example of authenticity I could imagine. So culture is there, is it. The interesting aside, when I was at Jordan NYU Medical center, places that are shamous, broken morale was terrible. They just merged their hospital with Mount Sinai.

And ironically, here's an example of bad faith. Each side looking through. On the other side, they were getting rid of a bad hospital. We were two bad hospitals and made it one to one huge bad hospital. The element of distrust was palpable.

So when I took the job, I went and I said, the boy, look, you want me to do this really bad side of the alpha waters? Really bad. I believe he said, okay, Morgan, then I want the hospital back. I want this thing to emerge. I thought it would be easy legally and technically.

It was a difficult thing. We did it. And I think we at home depot, Bernie and myself and Pat, we put this culture in place day one. We lived it. We lived.

I tell people here I had highly educated, double degree, triple degree doctors and the same thing I did with a 618 year old kid that Bailey got out of high school with. This professional, highly accomplished, fabulous doctor, treated them the same way. And it worked. This. Guess what?

The human beings at the end of the day, gotta celebrate hourly. People on the floor, they are the key to this is the magic sauce. Okay? This is a secret sauce. Not so much of 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 are intending to share with us. You rise here, share with us, you be amazed the number of great ideas we had that we implemented in the stores that came out of the marine of a kid that barely got out of high school. We encourage them to be open, to come express themselves. So I give you, for instance, we roll in store on Elmline.

So the Wednesday before the stores got old, when I'm in there and the kid in the plumbing department comes out to me, he said that. Are you somebody in this company? Yeah. Come on, let's show you something. He's.

Ross Perot

I'm curious. Were you guys born stupid or. Okay. I said, maybe it's a combination of both. You don't want these kids to feel intimidated or threatened.

Ken Langone

You want to get it out of their head. I said, okay. So he takes me over and he shows me a big cardboard box that's on the floor at the bottom of the racket. And in the box are a bunch of plunges we got stopped up to out. You see, you put your hand in that box, you think you were in a coal mine.

Ross Perot

You come out black. So what? Nobody sees the plunges. Now think of this. You don't wake up on a Saturday morning, say, I mean, let's go to Home Depot and buy a plunger.

Ken Langone

It's 03:00 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 the kid, I said, okay, what would you do?

He thought I'd get pipe hooks like in a gun store. You know how they show guns on a wall? And I put the plunges at the end of the thing on Iraq. Why don't you do it? He said, can I?

Ross Perot

I said, why can't you think it's. Such a good idea? Why don't you do it? Okay, Saturday morning at 11:00 the store is now open. People clap and I see.

Come on, come here, come here, come here. Like, well, there's no plunges in the pipe cooks. I said, oh, you put them back in the box. No, they're cold. Hey, honey, $3 plunger.

Ken Langone

You could buy 3354. Hey, honey, we need a plunger. I don't have a plunger. You made it. An impulse, I know.

Ross Perot

That was out of the mind. 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 it. Preston, 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 saw? The average length of your investments is 35 years or something crazy like that.

Stop it. 42 years. 42 years. Sorry, I don't want to take that because I'm stupid. I'm loyal.

I'm even loyal to my investment positions. What am I going to tell you? You're loyal. You're loyal. Look, I got my Lily stock two years before Home Depot was founded at a little medical device truck at April.

Ken Langone

I got to know the magical people. I liked them. 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 admiration 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 all of the tax because my cost basis, the little device company I took over at a proxy fight ready, had a market cap of a million and a half dollars. Okay, had a market, got a million and a half dollars. Lilly gave us $50 million.

That was approxified. It was may of 72. Lilly gave us a million and a half shares of Lilly stock, worth 37.50 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 those all those years, from 77 to now, 16 to one. So the three and a half shares, 69 is 24 million shares. You ready now? $18,360,000,000. Now catch this.

Lilly stock from 77 to zero two, went from 37, got to was highs, 109. From zero two to 18, the stock did nothing. It was a 109 and until. And it was 109 and 18. However, going back to 77, November 3077 until last August, counting the dividend, including.

Ross Perot

16 years or nothing. It compounded at 15% a year. You're a home run very. Stock I own compounded at 15%. I spent a lot of time with companies.

Ken Langone

I get to know the managements. My first in my major, and my principally concern is people. I bet on people. I've got a Home Depot position now. I got literally 47 years, people.

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 pocket out of it.

16 years. They're puppies. They're still babies. I've got a new position called option shareholders. I bought it six years ago, and I'll be there with them as long.

Ross Perot

As the management states 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 do you. Jane Merrick.

About that. Life is simple and holding onto these situations. The food I ate as a kid is still my favorite food. Peasant food. What's your death row meal?

Ken Langone

Pasta, fried joke. What's your last pasta? Fish oil. It's got oil, meat and beans, plant. Parmesan, fried peppers and potatoes.

All kind of fried peppers and potatoes. And I got my mother. God, she was so cooked. But those are my favorite foods. I got a little dive in Port Washington.

I cottle dimaggios, great pizza. Bowl of pasta fagioli, or a bowl of chicarola and beans. Man, it's like dying to go into heaven. What do you love most about capitalism? I love that title of your book.

Patrick O'Shaughnessy

If you had to sum it up, what do you love most? The good it does for mankind. Good it does for. Look at our society. Look at every other country that moves towards socialism.

Ken Langone

Look at what's happened. Venezuela, Cuba, Argentina. Look at them. Brazil. Look at them.

Ross Perot

Look at you. Look at you. How do you look? A poor kid working his ass off with a shot at the brass 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.

Ken Langone

Well, I'll give you, for instance, you got a call one day. We opened the first chamber island in the late eighties. I walked the store. He was working at one of our first stores on the island. Pam came in and says to the Morrison, you got to come see you today.

Ross Perot

Okay? And I have a rule. Home Depot employees first. Bernie called me, and it was another call from the kid. I said, fathers, I'll call you back.

Ken Langone

I got to talk to this kid. The kid comes in that same day. Hi, Mark. What's up? He smiled.

I thought you should know. He said, spoony, I got a call from my Merrill lynch broker that my Home Depot stock is now worth a million dollars. I'm a millionaire. I said, it's valid. He said, let me tell you 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 gotta have deals that don't always work. Anybody that, if you got six months, tell you all my bad deals, everything isn't home run. Oh, I'd be happy if they were break even. But you gotta get off the plate and take a swipe.

You ain't gonna hit the ball every time. You gonna have a few strikeouts. That's Dwight. But what does capitalism do? I think it all was promised me.

Ross Perot

Be a plumber son, a cafeteria working son. Not a very good student like I was a bad student. Look at what capitalism allowed people to do. You can't take out widely. That's heavy duty stuff.

Patrick O'Shaughnessy

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? Like, I know you were optimizing for amazing people. Was it just that that's 95%. You weren't doing store fragmentation calculation for. But you get into a bad idea with a great guy, the great guy's got to tell you, it's a bad idea.

Ken Langone

We made a mistake. They move on. Not everybody is going hard. 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 on a high school kid? He goes, the one thing I never do is I don't mess with their sweat. If what they had going and their results of their play gives them my attention, I get my attention because they got a very bracket. I leave them alone. I want to look for Jesse.

He said, I look for the kid that gets a line on a plot three, and the next one goes back and buries. You know, 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 off. Same thing by far. Safe. They just took bankruptcy. You want people can bounce.

You want people to come back? They got fighting. They got a 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, it's got a market cap. 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 got a few minutes. What bad deal is most memorable?

I did a deal that I got by virtue of. There was an article in Fortune magazine after parole deal. The title of the article, the fastest, richest texan ever, Bob 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, and 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 hot hand, there was nothing I could do that people weren't going to jump on.

Those guys ended up all going to jail. Fortunately, I didn't know anything about it. They left me. We looked at the deal for them. 1970 was a bad year.

They left me, and they went to Merrill lynch. It's all about reputation. Always isn't always. Nothing matters to me more that I was a member to keep my word. Curious how the hospital thing resolved.

Patrick O'Shaughnessy

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 hitting on all cylinders. We got three and a half billion dollars cash in the bank.

Ross Perot

The greatest thing of all, we took over a rundown, broken down hospital in Brooklyn called Luther 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 right.

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.

Ken Langone

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 ten, and virtually every special 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 piece of a restaurant down here in Boca called Gallagher's. It's unbelievable. There's a good example. The kid that runs Gallagher's in, he's 67. I call him a kid.

He bought that restaurant. I was doing 6 million a year, 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 people. Now, all I can say to you is, I'd 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 got to be fair with them.

It's critical. This guy in a restaurant the other night comes to me and go, you miss Lang on that? 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, it's got tears coming down and said. I said, yeah, you just pay like that and maybe she always comes somebody, how do we do it? Go down. Go down while you and grab a guard.

Ross Perot

They think I'm a white job. I walk in and I say, I security. As a big security guy, you happy? Yeah, I'm happy. You like it?

I love it. Well, if you ever got a problem, I hope you know I am, pull me up. And I prefer they call me Ken. Mister 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?

Ken Langone

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. I'll give you, for instance, 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 at the butcher shop didn't know I worked for the supermarket down the street. A damn packing next to the shelves up in the store. Closed 09:00 at night.

He'd flag me if he'd known that there was this competitor. Anyway, next to the butcher shop was a liquor store, and the Orland family ran. Maybe we had five jewish families in town. Ross, Lenny Orman, good man, came to me, said to me, hey, kiddies, do 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. I got cardboard boxes that the liquor comes in. I put them up.

He had a little porch back of a store. He says, it's a garbage company. We'll come and take them. You got to take them down 150 yards where there's a spot where they picked them up. Well, you got to take the boxes.

I'll give you a dollar a week. Do it two nights a week, $0.50. You got it. Money. 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 by notice. He's breaking the boxes up. What are you doing with the boxes? Oh, he says, they're worth a lot of money. What are you talking about?

Yeah. He says, I break them up and I tie them up and I take them to the junkyard and they buy the scrap paper. Probably get $3 a day. Who 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 me, because the boxes broke, you got a lot of space. I'm going to tie them up with twine, and we haven't got to pay me anything. Why not?

I said, because I'd be able to sell it. Okay, two to four. Make it three. Four. $5 a week, showing the boxes.

About a year after that, I'm more prepared for the liquor store. He said, hey, mayor, so 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 Shelton back of the county. Here's the counter, here's a shelter. The back of that shelf, he had a little desk where he did his bookkeeping. Takes out a golbo, he says, here you go. Who might need this.

He put a dollar a week in. The envelope for all those weeks I. Was selling myself on this stuff. You talk about kindness. There have been so many people who have been so kind to me, I can't count.

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, kind of. This is 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 and not to the matter born not 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.

Patrick O'Shaughnessy

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Ken Langone - The American Dream - [Invest Like the Best, EP.368]

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1. Introduction to Ken Langone

2. Early Career and Ross Perot

3. Building and Sustaining Home Depot

4. Views on Capitalism

5. Philosophies on Life and Business

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