Supported by Greenhaven Road Capital, finding value off the beaten path.
Carl Turner Jr., former CEO of Dollar General joined Barry Ritholtz for a conversation about family, business, and faith. What I liked most was the old-fashionedness of Turner and his company – and that old-fashionedness still works. Flashy is fun to write about and we do plenty of that here with theSkimm, Rent the Runway, and Airbnb and Uber. But, young companies make it and old companies survive doing similar things. What works works.
The right four chords are hits in any decade. In that spirit, let’s say the four business chords are customers, humility, luck, and independence.
Carl Turner Sr. came home from a sales visit and announced that the wholesale business wasn’t working anymore. “We need to go into retailing. We need to be directly in touch with our customers.” Being in touch with your customer, said Turner Jr., “is a good principle in retailing.”
Why? “Problem solving genius exists where the problem does.”
Yvon Chouinard put it this way: “We knew what we wanted. I heard someone say that if you wait for the customer to tell you what to do you’re too late. We were our own customer. I think that was the secret to coming out with products.”
Turner is like-mined. “My idea was to recruit great associates from the customer base and they could help us build the company because we would build with associates who could understand the customer because they were the customer.”
Dollar General’s focus on customers extended to their expansion strategy. “We wanted to open the stores where we understood the customers.” That was in Kentucky and Tennessee.
Ali Hamed thinks tech has a disconnect:
“I think the tech world has this problem where we go out and say ‘We think we’re really smart and the rest of the world is really dumb, and so why don’t we build apps to make their lives more like ours.’ What you end up doing is building products with judgement at their core. But when you find founders that are building products for themselves and their friends you find products with empathy at their core. That empathy translates to features and functions that understand the seemly non-pragmatic nuances of a given industry.”
“Luther Turner, my papa, was wonderful. He only had a third grade education. He was the head of the family after his father was killed and he had to make it all work at age eleven. What Luther had going for him, was that he assumed that everybody he met was smarter and that he should learn something from everybody he met.”
The best performers balance ego and humility. Sam Hinkie told Patrick O’Shaughnessy, “it’s not clear I’m right about anything I’ve said today.” Guy Spier said he could just be the luck investor who flipped heads many times in a row.
The humility/ego balance takes form as small bets. That’s what Turner’s father did.
“Carl Sr. was a country boy who observed what the city boys did in retail. He noticed that the Louisville and Nashville department stores would run big, full-color ads once a month; ‘Dollar Days Sales – everything priced on the even dollar.’ He knew those city boys were making money with those sales or they wouldn’t spend that much money on the ad.”
Turner Sr. got an idea.
“He said to them (his staff), ‘We’re going to take a store where we failed operating the Junior Department Store, in Springfield Kentucky, and we are going to open a dollar store. If that store succeeds where we previously failed that’s a pretty good test.”
Leadership should encourage ideas from all over the company and have the humility to try things. Gregg Popovich explains it this way, “I don’t care where an idea comes from. You have to be comfortable enough in your own skin to realize that an idea can come from anywhere.”
For Dollar General, “The timing happened to be right, because it was right after the second world war, and it worked.” Much like Harry Snyder‘s In-N-Out (also after World War 2) or Milton Hershey‘s chocolates (after the Civil War), timing matters.
Instagram and Kayak both had founders that saw the smartphone and thought this is kinda interesting but none of the founders realized how big their idea actually was. Success arrives holding the hand of serendipity.
Investors note that you can’t be the market and beat the market. It’s true too for businesses. Ritholtz asked Turner Jr. about competition and he said, “We always considered our competition to be everybody else in retailing. The landscape of retailing provided all kinds of competition.” But he was never concerned about what other people were doing.
“A good retailer leader observes the competition but doesn’t copy them.” If the Turners tried to imitate Sam Walton as he created Wal-Mart, Sam Walton would have crushed them. They had to be different. Turner said, “What you need to learn is apply in your company what that competition seems to do well in their company.” See: The Dollar Days sales.
Rory Sutherland put it this way. “One of the reasons stupid, or pig-headed people do well, and when they do well they do really well, is because they are ignoring all the category norms everybody else thinks are important and they’re emphasizing something completely different.”
Thanks for reading.