Home Depot is the best total-returning stock in the American public market since the day it listed in 1981, ahead of Apple, Microsoft and Nvidia, and Ben Gilbert and David Rosenthal say a $1,000 investment at the IPO is $34 million now.
The company most investors would call a boring specialty retailer is worth between $300 billion and $350 billion, holds about half of its category, and got there by hiring plumbers instead of shop assistants.
"You would not make as much money as you would have if you had bought Home Depot on the day of its IPO."
Gilbert and Rosenthal make Acquired, the company-history podcast, and had just published a Home Depot episode built on primary documents including the Moody's manuals the company's own banker used in 1977.
The full interview is covered here so you can skip it. 32 minutes of audio, 14 minutes of reading.
Here are the 11 moments that matter.
👤 Guests: Ben Gilbert and David Rosenthal, co-hosts of Acquired, which had just published its Home Depot episode
🎙️ Hosts: John Coogan and Jordi Hays, who run TBPN's daily live tech show
👥 Also on: Nico Wittenborn of Adjacent, Scott Keogh of Scout Motors, Mitchell Green of Lead Edge Capital, and Faraj Aalaei of Cognichip, in separate segments of the same episode
📰 Published: 14 September 2026 on YouTube (TBPN)
🔴 YouTube | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 32 min | ✅ Time saved: 18 min
Key Takeaways
No American stock has returned more than Home Depot since 1981, including the chip companies
A $1,000 investment at the IPO is $34 million, with dividends reinvested
The founders hired tradespeople rather than retail staff, and paid shop-floor workers in stock from 1980
The bet was converting a customer who came in for a washer into one spending $100,000
Ross Perot nearly owned 70% of Home Depot and the deal collapsed over what car the founders drove
The company stopped opening stores in 2007 and did not open another for about fifteen years
It spent the period building fulfillment centers instead, and has only just started building again
An enormous share of its e-commerce is collected in store, because the job cannot wait for delivery
The aging American housing stock is the tailwind, not new construction
The median home is fifteen to twenty years older than when the company was founded
1. Why They Picked Home Depot
The hosts opened on why a company-history show chose a hardware retailer in the middle of an argument about AI.
It was one of the most requested episodes they have had. Gilbert put it in the top five listener requests, with emails arriving every week for the last two or three years
The timing turned out to suit the audience. A comment on the new episode thanked them for taking the listener's mind off the weekend's AI argument, which the show's hosts said was the point
What drew them in was the size of it. Every other giant retailer is a general retailer — Walmart, Costco, Amazon — and Home Depot is a specialty retailer worth between $300 billion and $350 billion
The category is what makes that possible. Home improvement is an enormous market and, depending how you frame it, Gilbert said the company owns about 50% of it
The mechanism is ordinary and hard to copy. They picked the most interesting category, then built scale economies that let them negotiate the best prices and do the most volume
2. The Best Stock Since 1981
The research turned up a claim the pair had not expected, and it is the reason the episode exists in the form it does.
Nothing in the American market has beaten it since it listed. Rosenthal said Home Depot is the greatest total-returning public stock in the United States since the day it went public in 1981
That includes the obvious counter-examples. "You would not make as much money as you would have if you had bought Home Depot on the day of its IPO." Buying Apple, Nvidia or Microsoft on any other day does not get you there
Even the best chip trade does not close the gap. Rosenthal said buying Nvidia on its IPO day in 1998 does not exceed the total return, with dividends reinvested, of Home Depot bought at its 1981 IPO
The hosts pushed back with the usual candidates. Domino's came up, and Gilbert placed Monster second
The number that makes it concrete is the one they gave for early holders. "So there are people that put in a thousand dollars and what do they have now? $34,000,000 for a thousand dollar investment."
3. Plumbers On The Floor
Asked whether scale was the whole story, both said the staffing model was the differentiator, and it explains the shareholder base too.
They recruited from the trades, not from retail. Instead of hiring the way another retailer would, Home Depot recruited former tradespeople — plumbers and electricians who could actually help with a project
The point was to level the customer up. If you install a toilet successfully you are likely to try a bathroom, then a shed, then an accessory dwelling unit. Gilbert said the company could take someone who came in for a ten-cent washer and eventually turn them into a $100,000 customer
He argued that conversion does not exist elsewhere in retail, which is why the company bet itself on it
The strategy needed speed, so they paid people in equity. Even in 1980 the company was giving shop-floor retail employees compensation in the form of stock
The result is a shareholder base of former staff. Rosenthal's line was that those people became multimillionaires
4. The Founders And Ross Perot
The founding team had four distinct jobs in it, and the financing nearly went a very different way.
Bernie Marcus was chief executive and the primary figure, with Arthur Blank, who owns the Atlanta Falcons today, and Pat Farrah as merchandiser
The fourth was the banker, and that was deliberate. Ken Langone was an investment banker and a co-founder, and he took the company public when it was one or two years old at a $32 million market capitalization
Before that, the plan was to sell most of it to one man. Langone had made his name taking Ross Perot's company public, so he took the founders to Perot. "Ross Perot is gonna own 70% of Home Depot and bankroll the whole thing."
The deal died over a car. Perot objected to the founders driving Cadillacs. "my guys don't drive Cadillacs, they drive Chevrolets", and the Home Depot side walked away
The hosts put a number on what that refusal was worth. 70% of the company today would be around $230 billion
The hosts also defended the founders' taste. At the time a Cadillac read the way a Mercedes G-Wagon does now, and a Chevrolet like a Ford Taurus
None of the founders came out of home improvement. Gilbert said they were retail people who saw the opportunity in the category, having been in it at an earlier company
5. Costco And Walmart Copied
The format was borrowed from two other retailers, and the pair were precise about which parts came from where.
The warehouse itself is the Costco idea. "Home Depot was basically their prior company mashed up with Costco." The founders knew Saul Price, saw what he was doing in San Diego, and concluded the same thing would work in home improvement
The store mechanics followed. A giant warehouse, labels not faced out, product taken off the pallet the way it arrived
The employee compensation came from Walmart, which surprised Rosenthal in the research
So did the pricing stance. Gilbert credited Walmart with inventing everyday low prices — things do not go on sale — and said that was Home Depot's ethos for a long time as well
6. The 2006 Near-Death
The one period the company nearly lost itself was not caused by the housing market, which is the answer most investors would give.
The timing looks like the housing crisis and is not. Rosenthal said the company almost completely died in 2006 and 2007 going into the crisis, but not for the reason you would think
The cause was a chief executive hired in 2000 whose first few years were good and who was, in Rosenthal's words, absolutely the wrong person for the job
The strategy was efficiency at the cost of the proposition. A General Electric executive who focused on six sigma, as few employees on the floor as possible, and general retail staff instead of expensive specialists
What broke was the reason to shop there. The value proposition to customers became less and less clear as the specialist staffing was watered down
The recovery is credited to one person. Frank Blake became chief executive in January 2007. "If you ask Ken Langone, he said Frank absolutely saved the company."
7. An Aging Housing Stock
The hosts asked how a home-improvement boom coexists with a country that says it cannot build, and got two answers.
The first is that do-it-yourself work routes around the permitting system. "You don't need permits when you're just doing this yourself. You don't need permission." Rosenthal said that was the whole ethos of the company, and that even now the business is mostly residential and skirts the bureaucracy
The second is that the demand does not come from new houses at all. "Home Depot is experiencing like the most ridiculously awesome secular tailwind from that ever because America has a giant housing base that gets older every year."
Gilbert put a number on the aging. "So the median age of a home is up like fifteen to twenty years" against when the company was founded, and an old house is close to an annuity for the retailer. A new home does not need as many trips
COVID was the accelerant, and they had prepared for it by accident. Gilbert said the company had built an astonishing amount of supply chain and e-commerce capacity in the three or four years before, and then everyone was trapped at home wanting to improve it without going to a store
The repeat-visit dynamic is built into the product. Gilbert said he is back seven times for a single shopping trip, because you need a different nail or a different screw
Rosenthal's version of the same point is that the work cannot stop. If you are doing something on a weekend, or you are a professional on the clock and you run out of nails, you go to the store
8. 2,300 Stores, Then A Stop
The store footprint has two phases and nothing in between, which is unusual for a retailer of this size.
The expansion was relentless for nearly thirty years. "Home Depot grew stores like crazy." Gilbert called it the original blitzscaling company, from 1979 until 2006
The count at the top was specific. "Twenty three hundred stores."
Then it stopped completely. "Dead stop in 2007 and they essentially didn't build another store until two years ago."
The capital went into logistics instead. Rosenthal said the company focused on e-commerce, on building fulfillment centers and specialized fulfillment centers, on the theory that it already had most of the good real estate
Building has now restarted, which Rosenthal framed as the company deciding it had taken a decade and a half off
On whether the real estate is the hidden asset, Rosenthal said no. You cannot look at the property portfolio and call it half the market capitalization. What ownership buys is durability — other retail gets built around a Home Depot, and the company does not have to renegotiate a lease in ten years or lose the site to a competitor
The stores anchor other people's shopping centers. A Best Buy across the street, a Target, food and beverage. But inside, Gilbert said, the strategy is that you should not have to go anywhere else for your project
9. Pros Are Half The Business
Where management is putting its effort now is contractors, and the hosts' questions about drones and delivery got a flat answer.
The mix has shifted. "Contractors and pros now are half the business."
The growth plan is to go up the size curve. Rosenthal said most growth for the past decade, COVID excluded, has come from professionals, and the company is pushing deeper into bigger builders — multifamily, commercial, the work that involves cranes — where it historically had little penetration
That requires a different kind of selling. Corporate relationships and enterprise systems, rather than orders arriving at a store
E-commerce at this company does not mean delivery. "Most retailers, ecommerce equals delivery." "And that is not true at Home Depot. An enormous amount of their ecommerce is in store pickup." Gilbert's reasoning: you are mid-project with the wrong size nails and four hours to finish, so you drive over — you just want it waiting for you. He put the pickup share at around half and flagged that he did not remember the exact figure
Rosenthal was clear about what the company is not excited by. Not drones, and only a little AI — the annual report talks about using it to help people find products and to build internal systems. "But they sell big heavy stuff."
The logistics are the moat in the pair's telling. "Like, you can get 3,000 pounds of lumber in two hours at your house." A host's framing was that you cannot put 3,000 pounds of lumber through a parcel network
Rentals are a real part of the business — a concrete mixer, a specialized tool, a backhoe
One host argued humanoid robots would be the next tailwind, on the view that a homeowner would order a fence built the way people now order software written, and that the latent labor capacity in a household gets unlocked when there is no other person's fee to negotiate
10. HD Supply, China, Lowe's
The three things that did not work, and the competitor that copied its way back into the market.
The distribution acquisition was the big misadventure. In the early 2000s the company bought a set of businesses and pushed them together into HD Supply, a way to reach professional contractors outside the store footprint. It became a distraction and was spun off
The ending is the part Gilbert enjoyed. A decade later the company bought the most valuable part of it back, and it is now part of how the professional expansion is being run
China did not work, and the reason was cultural rather than commercial. "Interestingly, in China, it's not cool to be working on your house on your own, like why can't you hire someone to do that for you?" Wealthy buyers live in cities that do not need much do-it-yourself work. The company opened a dozen or more stores and was basically unsuccessful
Lowe's is the older company and lost the market anyway. It is over a century old and it was Lowe's market for a long time before Home Depot arrived
The format decided it. A warehouse five times the square footage of the incumbent's stores produced a better return on investment than a lot of small stores with a limited range
The response is why the two look alike now. "Lowe's to their credit, when Home Depot passed them in 1989, Lowe's really woke up to this", shut the old concepts, built clones and then developed their own version
11. The Sawdust On The Floor
The last stretch was about the texture of the company, and about what the pair dig up when they research one.
The founders staged the mess on purpose. Before one of the first two store openings, managers hired a crew to polish the floors overnight. The founders arrived at four in the morning and were furious: "These need to be action places. We can't have polished floors." They drove forklifts around to scuff the floor and threw sawdust over it
A viewer asked whether the store smell is engineered. Neither could say for today; Rosenthal assumes it is at least intentional
The research now has a public shelf. The show launched an artifacts page with a designer this year, and for this episode it holds the Moody's manuals from 1977 and 1978 that Ken Langone used to look up the share price of Handy Dan, the company where the founders worked before Home Depot
Gilbert's favorite find was the first annual report, which he said is carried by its imagery in a way that would be criticized today as too many pictures and not enough facts
Asked which back catalogue episode explains a moment of industry infighting, they named two. Gilbert offered Standard Oil, with the caveat that it was recorded before he thinks the show got good; Rosenthal offered Lockheed
The Lockheed answer came with the Last Supper. The defense secretary gathered the prime contractors at the end of the Cold War, told them procurement was shrinking every year for a decade, said he had no say over antitrust and was not advising anything anti-competitive, and that there would have to be fewer of them
The finding that surprised them in that episode is a founding story for the industry. "Lockheed and the military industrial complex created Silicon Valley." "Lockheed created the town of Sunnyvale." Rosenthal said the secret Lockheed missiles-and-space operation employed something like ten times the rest of the technology industry combined at the time, and that the early chip startups were selling to Lockheed and the military
Gilbert and Rosenthal's bottom line is that the best-performing American stock of the last forty-five years was built on a staffing decision and a repeat-purchase habit, not on a technology, and that its current growth depends on contractors and an aging housing stock rather than on anything being built new.
Bonus Insights
The hosts wondered aloud why no subscale company has attempted an IPO in this market. Gilbert's answer was incentives: bankers could price a small listing low and let it trade up, but venture investors have every reason to offer $500 million and some secondary instead
Rosenthal's hypothetical was three reasonably smart AI researchers taken public in a shell, and the hosts' objection was that it would list at $10 billion and leave no upside
The Home Depot conspiracy bit ran through the segment. The hosts joked that the company is secretly behind the housing shortage and that its store-building pause was its own version of pacing the frontier; Rosenthal played along, calling it the most powerful company in the world
One host had learned the rental business the hard way, having had a load of dirt delivered for his son's electric dirt bike and spent four hours moving it with a shovel, not knowing he could have rented the equipment
A delivery experiment came up as a hint of where retail logistics goes. A host had a Best Buy order delivered by a local courier faster than he could have driven there himself
Products, Companies & Tools Mentioned
Home Depot (The subject: about half of home improvement, $300–350 billion of market value, and the best US total return since 1981)
Acquired (Gilbert and Rosenthal's show; its artifacts page now publishes the primary documents behind each episode)
Lowe's (The century-old incumbent that was passed in 1989 and rebuilt itself as a clone)
Costco and Walmart (The two templates: the warehouse format from one, stock compensation and everyday low prices from the other)
HD Supply (The distribution business that became a distraction, was spun off, and was partly bought back)
Nvidia (The comparison that loses: its 1998 IPO still does not beat Home Depot's 1981 one)
Best Buy and Target (The kind of retail that gets built around a Home Depot site)
Lockheed Martin (The subject of the episode they recommend for industry consolidation, and in their telling the origin of Silicon Valley)
Books & Resources Mentioned
Acquired's Home Depot episode (The episode this conversation is about)
Acquired's artifacts page (Where the primary documents live, including the 1977 and 1978 Moody's manuals used on Handy Dan)
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