The Container Store: Kip and Sharon Tindell

Transcript from https://podmenti.com/t/92265974c5c55ff2


July first, nineteen seventy eight.
The first
Container store I guess is opened.
Do you remember people walking into the store in those early days saying
You're charging for empty boxes?
Yeah.
A lot of people said that. Uh I I my my my father had a birthday party and I was the bartender and you know
They're like, Son, you're gonna open stores selling empty boxes? You know, that that's gonna be really hard, uh you know, and it was uh
Humiliating and
Boy, trying to explain it before we actually put the products on the shelves and open the store was
Embarrassing.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

I'm Guy Roz, and on the show today, how Kip and Sharon Tyndall turned empty boxes into a full-on business with the container store.
A chain that helped people put their stuff.

Back behind most grocery stores, you will find loading docks, giant dumpsters, pallets of stuff, and well.
Of course rats.
And before, say, the year nineteen eighty
If you wanted to pack up your house and move.
You would most likely go to this very location behind the supermarket and grab as many cardboard boxes as you could get.
And
Why would you do that?
Because surprisingly, it wasn't that easy for ordinary consumers to just buy flat cardboard boxes.
And say you wanted to arrange your spices in an organized way, well
There were practically no off the shelf solutions.
In fact.
If you wanted to organize almost anything in your house,
You'd have to make the compartments and the shelves and the containers yourself, which seems weird, right? Like why wouldn't there be a solution for that?
Well
This is what a guy named Kip Tyndall also wondered.
Kip and his friend Garrett Boone were met with a lot of skepticism when they told people that
They thought there was an opportunity here.
A store even.
A shop that sells cardboard boxes?
Who's gonna pay money for that?
Seems like a pretty reasonable question to ask in 1978.
That was the year Kip and Garrett opened up their shop in Dallas.
They called it
The container store and
Basically, they sold things that weren't available to regular people.
Things like milk bottle crates, wire drawers, plastic burger baskets, and of course.
Flat cardboard boxes.
And
I don't think anyone listening will be surprised to hear that the idea was a hit.
The citizens of Dallas flocked to the store.
And the container store began a slow and methodical march across America.
Over the next 30 years. Now, the story we are about to tell is amazing and super inspiring, but
We are telling it at a slightly awkward time. So let me address the elephant here, if you are not aware.
The container store is at least for the time being
on a path to bankruptcy, something that was reported after we did this interview.
And there are many reasons why, and we'll address some of them.
It's important to note that Kip Tyndall and his wife Sharon, who is also a co-founder and who you will also hear in today's story,
are no longer involved with the company.
In fact
They've been out of the picture for several years.
But what they tapped into and what they built
had a pretty significant impact on a whole new multi billion dollar category, loosely called
home organization.
Kip and Sharon met in their early 20s. Kip grew up in Texas and Sharon in Louisiana.
And for college, Sharon ended up at Louisiana State University in Baton Rouge.
I am
Kind of aspired to be an art student.
Although my father
He wanted me to become either a teacher or a nurse, something practical.
So I went to L S U and I majored in landscape architecture.
Mm-hmm.
And while I was in
LSU I took a lot of design courses.
Another thing that really influenced me
was that people are the product of their environment.
That really resonated with me later on.
How did you and Kip meet? Obviously you're married today. How how did that happen?

So
I uh had a summer internship in Austin, Texas.

And it was at the parks and recreation department.
Actually Kip can tell this story better than I can because I'm a little bit hoarse.
Yeah.
I lived in this wonderful house, uh, just off campus, uh duplex with some friends and
Uh my wonderful backyard.
I think my landlord finally got tired of all the property tax he was paying on the
Oh the big backyards. So he built a fourplex apartment complex back there.
And he announced that I would be the uh apartment manager. I would help him lease it and take care of it and
All of that. He was gonna give me five dollars a month off my rent.
I thought well that's that's ridiculous. Five dollars to to
But anyway, my first tenant was Sharon Tyndall.
You know this landscape architecture, um
student from LSU, I you know, my whole family's from New Orleans. That was interesting to me.
It was fascinating. I had my future wife living in my back yard.
Wasn't really love at first sight.
We just got to know each other over the summer.
And by the time it was time for her to go back to LSU
Uh we started
Going out on dates? Wow.
Um
Uh so all right.
So
From what I
From what I understand.
You were a
A long term student.
You were searching and but probably
uh there was a reason why it it took so long for you to
partially get through school.
Well, I mean
You know, who wants to leave Austin? Uh yeah. Austin was
Uh I love that um
So I majored in English and uh
You know, I was cramming a four year program into
You know, seven years basically. Cramming four years into seven.
I I
Never actually graduated, never actually got my undergraduate degree. I think I'm lacking
Six hours in mass science. And and one of my college roommates, the
My wacky friend John Mackie, the founder of uh Whole Food Foods. Oh yeah. Yeah, we house mate, we shared that house and he was I just thought he was the most interesting kid in Austin and he still is. We we lived there for forever together. He never graduated either.
And we admired that. We we were almost kinda proud of it. We took the courses we wanted to take.
And um it didn't particularly bother us that we didn't
Uh get that degree.
Right.
But uh
Okay.
Th there's a little bit of a backstory, which is it it's sort of we we we'll go back, but also forward, which is you had a high school friend.
Name Garrett.
Right. Garrett Boone. And you and Garrett work together at Montgomery Ward in the
paint department. This is important because you would eventually start a business together. Cause the c did that happen in already in high school?
Yeah, um, you know, Garrett and I both worked retail all over our lives. I started actually at a Sherwin Williams paint store at fifteen.
Yeah.
Carrot Boone.
had a master's degree in history from rice
And he didn't want to teach.
And so what do you do with a masters in history from Rice, if you know Well, yeah he's the paint department manager at Montgomery Wards. And I was a high school kid working part time at Mgomery Wards, and he's ten years older than me and
Learned a lot from him and
We really
But we
We made that paint department at Montgomery Wards the best department in the whole store. We won all the awards.
We would hit the sales numbers, we would get the display.
Uh numbers. We just
You know, we loved it and we
We started even then talking about uh
uh doing our own opening our own retail store someday.
Okay, so Garrett, so you meet Garrett and when you're working at Montgomery Ward in high school, he's already out of college in the paint department. And you stay in touch and continue to talk about maybe
Starting a store together, tell me about
The conversations you were having.
Well
You know, Garrett and I were very good friends, and uh Sharon was this
This girl that was designing how she they designed a park for the city of Austin. I thought that was pretty awesome. And so I was just um
Not working very hard in school.
And storehouse we should mention, I don't I I don't think it exists anymore. Maybe there's a brand of it that exists, but it basically was a furniture store that sold these sort of block furniture. Contemporary furniture.
Very innovative uh thing and
They paid me.
I don't know.
four or five hundred dollars a month, which was
You know, for a student in those I I felt like a millionaire. You know, I mean I I had four hundred dollars a month to to to live on.
And and so Garrett had been working for Storehouse. I'm looking I'm looking it up now and I see the storehouse went out of business in two thousand six.
And he was sort of
opening stores and he tapped you to help him open a store in Austin.
Yeah.
You know, that was more fun than running the paint department, right?
And so what that led to, guy, was uh at first
We were thinking that maybe we were gonna open a really
Cool.
uh handmade furniture store
Yeah. And we we pursue that for a while. But the problem with furniture stores is that they're boring. There's no traffic and you can hear the drone of the air conditioner.
uh you know there's no people
There's no air of excitement. So that that steered us away from furniture and the housewares.
And tell me how that idea kind of started to evolve. How did how did you come I mean, this is the late seventies. It's a weird idea back then.
Very weird idea. I mean, you know, we had we had my father's friends are like, you guys are gonna open a store that sells what? Empty boxes? And and you know, but uh
These were functional, clean, simple.
Designs
that did something for you. They they saved you space.
They organized you, they saved you space, but ultimately they saved you time.
You know, you have no choice but to reason be reasonably well organized in today's
uh world.
And that was
kind of a tailwind that we had.
Uh can you imagine how great a pantry looks when everything in the pantry is
Clear rather than opaque.
And you can see the almonds in that jar, and you can see
Yeah.
study for an exam until I had the
The apartment completely
clean and organized and
kind of a Zen, you know, uh then I could sit down
Uh and study.
When everything is in its place.
Uh I think your mind works better. I think I think I think life's a lot better with a little bit of organization.
says everything in its right place. Of course it's quoting Radiohead, but I agree. I hear you.
If you're trying to get two or three kids for ready for school in the morning and you're disorganized and they're dis disorganized, it's a disaster. People are late, people are crying, but if you're organized, everything is going beautifully. There's a love note from mom and the lunchbox and the little girl's uniform is pressed perfectly. I mean there's a there's a zen.
Quality of life to
being well organized. It's not saving lives.
Lots of businesses are doing things a lot more noble than that.
But I think that that people are calmer, happier.
when they experience the joy of being reasonably well organized. And so you guys are talking about to this this idea, which I think is a great idea, comes to c you and Garrett start to talk about it.
But
Now you've got to figure out.
There's a lot of things you need to solve when you're gonna start a business, right? First of all, you need the capital to
Open a shop and to get a lease. Second, you need the capital to bring an inventory. And then you need the inventory. Let's just talk about.
This is the late seventies.
I'm thinking
There aren't there's an a whole industry of companies that are making storage containers. Like maybe I don't know, maybe there's Tupperware. There is Tupperware, I'm y maybe there's like
Plastic
But I
No.
What what what existed in the late seventies for storage? I would like to just first of all mention in the beginning when they were s researching products, there were no plastic storage boxes as we know them today. There were no corrugated boxes for sale as we know them for today. No corrugated boxes for sale?
No you couldn't just buy a box if you were a regular civilian human.
No.
Wow.
That's un American.
If you wanted to store something in your attic.
You would probably have to go behind a store.
To find an old used shipping box to put your things in. That had dead lettuce in it.
Right.
That's wild. And also
Um
The idea of
Plastic.
In an unbreakable form.
had really not been embedded yet. So most
Plastic boxes were very, very small, like Tapware.
But
in terms of a large plastic box that was unbreakable.
That
Uh resin had not really been developed yet.
Right.
Exactly. Shatter upon impact. Wow. Okay. So then a lot of people stored things in trunks.
Oh like big.
Those big trunks that you've got. Steamer trunks. Yeah. Right, exactly.
That my kids bring to camp every summer, yep. Exactly. Yep.
And then also think about the age uh
There this is not the digital age. So we had lots of
Videos and L Ps and cassette tapes and photos. I'm embarrassed to say I still pay a bunch of money every month for the storage of them.
So you're
So the so
First of all.
Let's talk about
How you would
solve this problem. Like if nobody was making this stuff, what were you
going to sell in your store.
Commercial products, industrial products.
Uh we became distributors for so many of the things we wound up selling in the initial store because
Nobody had ever retail them before.
Kip, you should talk about the Thomas Register. Well the products drove the concept. We wrote to
Hundreds of thousands of different manufacturers from uh set of books.
called Thomas Registry and it's a list of every manufacturer.
And these what kind of products were these? These were furniture products.
Furniture and housewares, um.
Where it evolved was what in businesses can
considered material parts and handling.
interested in saving time and space. But nobody had ever
thought about saving time and space for consumers.
You know, to organize your kitchen, to organize your closet. Uh there were no products to do that. So the products that we
started with were all commercial and industrial in nature.
And I would say.
Ninety percent of'em had never been retailed before.
And we were thrilled by that. It was a completely original idea.
But when you contacted these companies that made things for
Uh you know.
manufacturers and wholesalers and you said, Hey, we want to sell this to consumers
'Cause I'm assuming that, you know, we're talking about what, cardboard boxes. We're talking about
Plastic.
Tubs.
Did any of them.
I'm
I'm imagining some of them were like Consumers, why would consumers want this?
Yeah, they they they all were like that. And I'd say about half of them
Really?
Wanted their products to be sold.
on the retail level to consumers because they love their products and they nobody had any earthly idea what they did when they went to work every day and this would give exposure to their beloved products. The other half of them were very worried
about litigation and and consumers hurting themselves on it. So
uh it was it was difficult to convince them to sell to us because
Um you know, it just never been done before. So it was a matter of comforting I mean, you know, we'd contact him a half dozen times before we'd finally
uh get them to agree to sell to us. We're trying to we're trying to buy from them. Uh but then
You know, their experimentation was rewarded because we in most cases wound up being one of their biggest customers. Yeah, I mean it'd be it almost I mean today of course it's different because consumers can get anything they want, but it's almost as as if like I would go to a a plastics company and I would just say, Hey, listen, we want
to buy, you know, five hundred gallon bags of plastic pellets to sell in our store. And they would say, well we don't do that. We sell plastic pellets to plastic manufacturers. And I would say, well, but I consumers won't want to buy this. They want to make their own It just it was that probably that weird. What
Uh, Kip, do you remember I mean Kip we mentioned cardboard boxes. Do you remember what other products you were trying to
To to maybe see if you could sell, like if you could if you could put it in the shelves at that time.
Sure, you know I mean wire baskets that were used in the uh
poultry business for egg collections and and or gardening glass jars and bottles that were used for manufacturers to put their salsa uh in. And and we also had to teach these manufacturers how to sell to a retailer. It's like
No, we're not gonna just buy one time from you. We're gonna be buying every month or six weeks from you, so you need to give us
This price.
Not the one time price. It was it was leading leading'em by the hand and they were scared. And so it was really relationship building. Which was very instructive later on in life when we were competing against the mass merchants, you know, trying to trying to have relationships with manufacturers.
A lot of those items that we had to buy the bases and the tops
Separately. So we had to create our own manufacturing off site to create the products. For instance, we would have to buy
A jar and a lid.
In separate quantities, and we have to put them together to create a product.
But we didn't
We didn't have any money, uh it was a very small
Capitalized company, thirty five thousand dollars was all we had to start with. So we would order a dozen.
From somebody that was used to selling thousands to a big manufacturing uh thing.
But
That again's where the relationship with the manufacturers took over.
Believe in us.
Try to help us succeed.
And they were proud.
Of seeing their products in a retail store. Right. Oh, that would come later after you open the store, but you're still trying to source the st the stuff for the store. Okay. Now
You had to find a location and and I would think that your first star would have been in Austin because
Um you say you loved it there and then you went to school there and you met Sharon there, and but but I guess by by this time the two of you had moved to Dallas and then you you wound up opening your first store there. I'm curious about
You went to school in Austin and you knew Austin well. John Mackie was your
House made at one point started Whole Foods in Austin. Did you ever think about opening up initially in Austin?
No.
We open.
Right here in Dallas where we lived, right actually in the neighborhood.
That we lived.
And
We weren't actually sure we ever wanted a second location.
So the first couple of locations or so were in Dallas.
And then the first um out of town location was Austin.
How did you have still need capital to do this, you c couldn't do with no money down. How did you raise the capital
Two
Lease a store and bring in the inventory.
Well, we started with thirty five thousand dollars.
Which in what which in nineteen seventy eight is
Not a small amount of cash.
Yeah, well that's certainly not a very very big amount of care. Uh I I
You know, put in five thousand dollars, uh
Garrett put in ten thousand dollars, his parents put in ten thousand dollars.
And then Garrett's friend John Mullen
An architect in Dallas put in
ten thousand dollars. So we had thirty five thousand dollars
Which was really undercapitalized, but
Uh there was no
Borrowing
You had to make it. If it wasn't gonna work.
It was the thirty five grand had work. We we guarded that thirty five thousand dollars like you wouldn't believe. Yeah.
All right, so you you guys raise you you raise this small amount of cash and you
identify a location, I think it's in North Dallas, and
B before you open the store you had to come up with a name.
Right.
Great name, simple name, very clear. Was it as simple as I just described? Like you guys were like containers, container store.
Um
We had hundreds of names written down. Boone's Box Company. Garrett liked that. Boone's box company, you know. Garr Boone, yeah. Yeah, and um all kind hundreds of names.
One of those names was the container store, and as we finalize the product mix.
The container store.
Made the most sense, there was some pushback on it because.
Some people were saying, Well that sounds a little arrogant, the container store and I was like, No, it's perfect because
I mean
There's no other container stores. We are the container store. There's no arrogance in that. You know, we're the only ones, so we're the container store and that's what fit the product mix.
And it and it was open ended.
Right. So
I I heard uh maybe this is apocryphal. I heard the story
that the name was suggested
By a guy named Bob Wilson.
Is that
Is it true?
Yes.
Um
He suggested probably
fifty or seventy five names, this was one of those.
Uh he was a good friend of John Mull's
The father of his famous sons, uh Owen and uh Luke Wilson. Right. That's right. This is like a forest gump
episode of how I built this. Everyone's making a cameo appearance. Well I tell you we had so much friends and family support at the beginning. We had no money, we had no experience. You had an English major
a history major, a landscape architect and an architect in John Mellon.
you know, trying to create this thing and we needed every bit of help and advice we could get from friends and family.
Uh we we didn't really
Get the the store.
Um
ready to open until about thirty minutes the morning we opened it.
We had thirty or forty family members in there working all night to to to to get everything set up. So
Yeah, thank goodness for that name. I think it turned out to be a great name.
And I think naming a business is a
an amazing experience.
Yeah.
All right. So
July first, nineteen seventy eight.
The first container store I guess is opened, and
And were were there any was it did do you remember people walking into the into the store in those early days saying
You're charging for empty boxes?
Yeah. A lot of people said that. Uh I uh my my my father had a birthday party and I was the bartender and you know
All these
Texas oilmen who were very distinctly not our target customer. These guys were the opposite of our target customer.
Boy trying to explain it before we actually
Put the products on the shelves and open the store was
Embarrassing.
Come back in just a moment. How Kip and Sharon recover from that embarrassment, why they eventually decide to take the container store public, and why they wind up
Regretting it.
Stay with us.
I'm Guy Raz and you're listening to How I Built This.
Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1978, and Sharon and Kip have just opened the first container store in North Dallas. And just like they said earlier, it has all the things you wouldn't find in a typical retail store.
Popcorn tins, milk crates, wire baskets.
All of it repurposed.
For storage.
The store was fulceptual, you know, Garrett sourced the shelving which was actually the fixtures that all the products were sitting on. So and the shopping baskets were also for sale. Oh. So you we could literally sell the entire store all the way down to the fixtures if we wanted to.
That's
Genius. Like an it's like the ice cream cone, because you're selling the vehicle uh the the container
So I I'm looking at a picture right now.
It's a picture of of

Uh in that original
container store and it it looks
not slapped together, but it looks very bare, right? Which is what it should have been.
Did it d uh take off right away? Were people I mean, was it did you
Were you making sales right away or was it slow going? What do you remember about
About the summer of nineteen seventy eight.
Well the first day was comprised mostly of um
Friends and family buying stuff out of
Heartfelt generosity.
Yeah. Garrett's sister bought
Like a
I think a five hundred dollar item a big
Trunk of some kind or something.
It's a good sale.
We weren't very busy.
But
Sometime during the first week.
We had a crude little
direct mail mailer go out to
Parents of the Haday School, which is a private school right down the street from where we open, and the Dallas Five Hundred Club, which five hundred
leading contributors to the arts. You know, couple of very good mailing lists.
And
They laughed amazed and chuckling and
Happy and
They bought all kinds of things and the the word of mouth took over
And I would say
By the second week or something.
It was almost scary how
Crowded our sixteen hundred square foot store is we miss the
Entrepreneurial terror.
Well we we worried a lot the first two, three, four days, but by the second week we were thinking about giving numbers to let people in the door because the war
Uh you know, word of mouth is it. That's that's what
That's what human beings do. So I wanna I wanna I wanna
stay in nineteen seventy eight, seventy nine time frame because I know that you got married in nineteen seventy nine. You became husband and wife, and Sharon, you had a career
You were trained as an architect, you had a landscape architect, and you had a a a
budding career. But I guess
You started to do some
kind of informal consulting for
the container store very early on and the within the first several months, which would eventually lead to you be becoming an executive there. But but how did that how how did you go from doing some consulting work to just saying, you know what, I I'm
I I'm gonna work I'm gonna be part of this full time.
Well I'm not sure I would call that consulting, but You were just pitching in. I'm using I'm using a fancy term like oh at a consulting contract. You were literally the w nights and weekends, you were like, Yeah, sure I'll make a sign. Right. I made signs, I uh helped count the money, I worked behind the registers.
Gosh, the store was just all consuming for Kip.
Day and night. And
I felt that the more time I spent with him working at the store, the more time we had for each other. And probably the less time we had to talk about business, which was great, then we had more free time to enjoy each other. So part of it was just enjoying each other. Yeah. Yeah. But but
Uh Sharon was working uh as a landscape architect and really the the business became so overwhelming. Uh we really needed somebody else whose heart and mind was in the right place. Garrett and I probably thought we were
about as good a merchants as as there was anywhere, but um we've quickly discovered that
Sharon could run.
circles around us, uh in when it came to that.
W Sharon, you, if I'm not mistaken, you were really interested in product, in in identifying and sourcing interesting products to stock the shelves.
Absolutely. The products
To begin with, were very, very innovative, but they weren't as relatable as I thought that maybe they could have been. There were some really out there products. And I think that's really what created the buzz and energy in the store itself. You know, the customers were
were interested, but they were a little bit confused. Um you know, like we're trying to sell
Uh mailboxes for bread boxes. They were trying to sell towel bars for tie racks. A wire leaf a wire leaf barrel that was made to burn leaves in.
Uh, we were selling that for toy storage around the
Keep the soccer balls and basketballs or pool supplies in. You know, everything's not going to be a little bit more. But you know, I I think
At the end of the day, there needed to be a little bit more focus and strategy to
pull everything together.
And to uh
Make sure the customers really understand that we were selling solutions, not items, you know, it's just uh
That's where I came in.
Hm.
And I guess because of the interest in the store, it was unusual.
you had to expand'cause sixteen hundred square feet is small, especially given that you were selling storage supplies.
Um how are you financing
the growth of the store because within a year or two
You would have another store in Dallas and then you
You know, growing
store by store, was it all just cash flow from the business was financing the next
Location.
Yeah, um you know, it's alien concept, I guess, to the way businesses are developed today, but there's a there's a patience involved.
To where that's all the money you have.
Uh we we didn't really want to borrow money uh even from the bank.
Uh we certainly didn't want to, you know
raise capital and add new uh investors. And we didn't do that for many decades. Uh we generated a lot of
earnings and then we put that money back in the business.
We just incrementally grew.
Totally financed by
The earnings of the business.
We were much more interested in growing the business than we were taking money out and
buying a new car for ourselves or something and
We paid each other we paid each other seven hundred dollars a month for a long, long time.
And then we went to a thousand dollars a month. We didn't spend money on anything except
Growing the business.
And so that that went on for
Many, many years like that.
Uh we
It never even occurred to us to raise capital by having other equity owners come in.
And we were afraid to borrow money from the bank.
Why were you afraid to borrow money from the bank?
Uh
We didn't want the bankers involved with the business. It seemed like a a lack of control over what we were doing.
We figured out that we could grow about twenty percent per year safely and securely without the RPM needle getting into the red.
Without screwing everything up. Wow. Faster than that was a little a little frightening.
And there was enough money for us to grow at twenty percent a year. Twenty percent a year sounds pretty slow now. In those days it was really considered fast, you know, particularly for retail.
uh free cash flow enough to expand your business uh as rapidly as we
Wanted to, almost.
So the store the stores are expanding.
Initially in Texas.
Um, let's talk a little bit about
the two of you and how you
sort of work together. What were your
I I know that Kip uh uh you would eventually become CEO, but initially your you were C O O and
From your perspective, I mean, you know, a lot of people um I've interviewed uh have said I'll never work with my partner or my spouse, never. Just would never work with total opposites. Obviously we've had married couples on the show, I shouldn't say obviously, we've had lots.
But but there are plenty of people who've said no no
There's just no way we could work together. So I I don't think there's a
You know hard and fast rule about this, but why do you think
You guys were able to make this work.
Sharon was uh
She's
In my opinion, she's the the greatest person I've ever known. Thus sh I think I think she's smarter than I am. I just felt privileged
to be able to partner with her
I think a lot of it has to do with having that kind of respect for one another. We're well aware of
What the other does better than the other, and Sharon clearly could do the
Product selection, product creation, merchandising
At a level that
Even our mentors like
Stanley Marcus admired and loved, so I wouldn't dare try to tell her.

Didn't feel like her boss. In fact I
I joke to friends.
that uh when Sharon and I disagree, which is
Not that often, but when we do I I usually
Find out two years later that
She was right.
Well, it certainly wasn't lost on me that our products weren't gonna sell themselves, so we were highly, highly dependent.
on the training of our salespeople and also just the inspiration that they got from Kip and Garrett.
inspiring the salespeople that being a salesperson was really a noble
Profession.
And uh they really, really empowered our salespeople to feel good about training and and f and selling the product. Um
We extended this to working with friends, hiring friends. We didn't have an HR department. We asked our employees to bring us their best
cousins and best friends that y you know who your good cousins are and who your bad cousins are and who you want to work with and so
Work with the people you love.
You you mentioned briefly one of your mentors, Stanley Marcus, and he, of course, people may n may or may not know him. He was the guy who kinda turned Neiman Marcus into what it was, um, wrote a bunch of books on retail
How did he become a mentor to you?
Well, you know, we grew up in Dallas. Uh
I think we had met him once or twice.
But we didn't know him. Uh he walked into the store the first week or two we were open.
And um
He walked in and he said.
You know, this is the greatest retail store I've ever been in. Wow. And I was like from that guy who's a legend. What? You know, the mighty Stanley Marcus thinks that what we're doing is worthwhile.
What are you talking about? You said no, I I've never seen a uh a retail store that and I said, Well, you know, I mean gosh, what about your retail you know, he
He loved it, and he was so generous with his time and praise.
And we were so early on.

And and then he
He wanted to be involved with it. He wanted to mentor us.
Did he want anything in return, like to invest or anything like that?
No?
No?
Uh, he offered to be on the board many years later, but he he might as well have been a board member all along because he was so
Helpful. But you know Stanley Marcus lived until his mid nineties. So we we had him as a friend and a mentor for for a long, long, long time. I know every time I talk to people in in retail in Dallas, uh his name always comes up because Neiman Marcus
was him. And you know, it's interesting because the nineteen eighties is really the beginning of the storage boom and it it it continues to to this day, right, with the with
storage facilities. We did a whole episode on pods.
Yeah, that company that
that basically stores your stuff uh a few years ago. Fascinating story, Pete Warhurst.
Um and so storage has, you know, over time has become a big business. People just accumulate more stuff. They don't want to get rid of it and they want to store it.
And I wonder whether and you know, who knows, I it might just be psychobabble or something that I'm about to ask, but
I feel like in a sense what what the store was, it wasn't about
Just selling people storage stuff, it was also about giving people a sense of control.
A sense of like I can
Take control over the messiness in my life.
Absolutely.
It's really more of a matter of being able to find and locate the things that are meaningful for for you.
You don't have to have your spices organized alphabetically.
To be organized.
You just have to be able to find what you're looking for.
You don't have to necessarily
Throw your clothes away if you haven't worn them in three years. If you have something sentimental, you wanna hold on to it, you can look at it thirty years from now and still love it.
And so it's not really a matter of selling items to
Make people
Organized, quote unquote. It's really to
be therapist in a way. And uh once people figured out what we were about
We became more of a problem solution store.
Until Maria Condo came around and did it for everybody. Stop storing stuff. Throw it away. Yes, but she came around. You know what? Yeah. She really did. She did, yeah. She just now she stores stuff. Um so all right, let's go back to the the late eighties,'cause I think
A big turning point was when you opened your store in Houston.
Doesn't seem like a big deal. Okay, you're in Dallas, now you're in Houston. But I guess that store
would would kind of catalyze
A whole series like
Of of
principles w which would essentially really create the culture that you want to
that that you eventually would build.
for the company as it was growing.
What was going on with the Houston store? Why did you
feel like you had to come up with
A series of principles.
For that particular location.
Well it was a it was an extraordinary location. It's probably the best.
Retail
Corner.
In the south.
And that store became so b it did three or four times.
the volume that we expected that store to do.
And so it was
Yeah.
Talk about
Organized and
in control and a sense of order. There was none of that. It was mayhem.
Because it was so successful it was actually
Overrun with customers and
so quickly, uh uh we we couldn't hire enough people fast enough. We couldn't get the products down
We were flying products down on
on South West Airlines, you know, uh it was pretty much mayhem.
And so in that turmoil
We began to hire people.
But we're just hiring just about anybody that that came in the door to try to keep up with the overwhelming business.
But we still have to agree on a certain set of foundation principles. And so
I reached into my old
uh file I called it my philosophy epistle file. And these were very almost corny.
Doing to other type uh what tell me what these principles were.
Um
Communication is leadership. That's one of our foundation principles. So we communicated everything to our employees. I think last two short
Two
Deal with opaque people. Well what would you tell them? Would you would you tell your employees about like what was discussed at board meetings?
Oh yeah.
Uh we we would bring them into the solution of every every problem.
We would share
All sales numbers, all
Everything on the P L.
Uh
One another foundation principle is intuition does not come
to an unprepared mind you need to train before it happens. You're not really
Genius.
Unless you're
Not just using logic at work, you're using intuition at work. We want you to use your intuition. We authorize you to be brave enough to you you'll make more mistakes, but you'll also be much more genius by by using your intuition. So seven such principles as this
And uh
That started with the Houston store and this foundation principles thing. Uh it was the only way we knew how to deal with the mayhem that we were experiencing every day in that store. I'm I'm curious about I mean, obviously it was uh became a a really important part of the culture there, but were there was there any eye rolling or like what is this hokey stuff or this corny
These corny aphorisms, what are they about? Was there any of that?
I was I was scared to death to present this to these
employees, most of whom I barely knew.
I was afraid of being
Laughed at or
Eggs thrown at me or rotten tomatoes or something. And uh
They didn't make fun of me as I feared.
They live.
You know, later on.
Fortune magazines running around saying we're the best company to work for in America, but the way we measured that b was by having
single digit less than ten percent employee turnover in an industry that had triple digit turnover uh people joined the business and they never left
I want to go back to
Just the expansion of the store because it was
Slow, but
But as you say, done very
Methodically. It was did you have enough money in the bank?
Yes, we can build another store. Um and then I think in in the late nineties you made a a pretty significant acquisition, and I I I know this'cause I had one, an Elpha, a company called Elpha that makes closets, designs, you know, these like build your own closets. I built one in like two thousand two. I remember going to the container store,
getting all the stuff and putting it together and falling off my stepladder building it, but I built it.
Um
And that acquisition of Alpha
was really a game changer, right? Because i i it it it all of a sudden you get into the business of not only are you selling the storage products
But you're also
building or people are building closets and so
W I mean how did how are you guys able to acquire that without outside investment?
Well, we didn't have much money, uh we didn't have any experience in acquisitions. It was a David and Goliath struggle. I remember we were like sweating blood trying to to win the acquisition because other
better finance people were
Competing with us.
But the employees, the people of Elpha
Uh love the container store. They
They were really in favor of it being us.
And um
It was the greatest product we've ever been associated with. It was
The ultimate
And
Uh it was about twenty five percent of our sales.
We were the
Importer, distributor, marketing agent, and retailer. There were no middlemen. Uh it was our our highest volume.
And our highest margin product.
And that is really
a key to business success. If if your best selling product's also your highest gross margin product.
You're going to do well.
Um
I guess by I mean you're growing, the container store's growing in in into the two thousands.
And
Two thousand seven.
for a variety of reasons you decided that you were looking for somebody to put some money into the business. I guess your co founder, Garrett, was looking to
You know, to liquidate some of his holdings. He'd been
to you know, it's I I'm sure your wealth, his wealth have been tied up in the business for so f so long.
And and
Apparently he was looking to maybe um take some money off the table. Is that why you guys brought in an outside
Private equity firm.
Yeah, uh uh you know, Garrett was ten years older than
The me and uh
John Mullen.
Well, it's a year or two older than uh
Garrett and they were looking to
Sell some of their stock.
We were
A little Spartan about how we didn't take any money uh we didn't pay ourselves uh very much at all, and we didn't
Take any money out of the business.
And so at some point
You have to figure out.
What to do about that.
Uh so
We interviewed over a hundred private equity firms.
When we
chose the our private equity partners, I'm told nobody's ever interviewed half that many.
But it was the most important decision we've ever made.
And then ultimately even went the in into the public uh market.
Each of those things, each of those steps
Dramatically changes the business.
As you begin to worry about things like
Equity and
Partnership.
You know
Until then you're able to focus on employees
Product.
And customers.
And Wall Street.
Banks and
equity owners are not a distraction. You know, they're not taking up
The key people's time.
After the the

majority acquisition.
by the private equity firm, I believe they're called uh Leonard Green.
You stayed on.
And and you you both of you stayed on and continued.
um building the company um
And by twenty thirteen, I believe, you decide to go public, um the company decides to go public. I mean, was it the I mean I'm imagining the private equity investors had an interest in taking it public, they made a significant investment, they wanted to see a return on that.
Um that's a that's a tricky decision, right?
Well, uh you know, the the private equity guys were shocked uh that we wanted to do that. That was our it was our our unilateral decision. They they never thought that we would ever agree to that thing. Uh you know, I I had been exploring that for ten years because uh it's very interesting that
even if you have the best partners around, we have wonderful partners, they were really good people.
But it's very hard.
If you're closely held.
To get your partners to agree to dilute themselves
So that you can get stock in the hands of employees.
And Sharon and I were really big advocates of getting
More stock in the hands of employees.
She becomes even better.
If she's got a piece of the action. If she oh if you can look her in the eyes and call her partner, that helps. It's very difficult to do, though, because
Even a partner
The
Claims they want to do that.
They always have an accountant or a lawyer or a spouse
The
won't let them dilute themselves. And I'm like, that's the only way you can do it. You got to dilute yourself if you want employees to have more ownership. If your public
It's standard operating procedure. There's stock options. Everybody
You know, you're you're dealing with a more sophisticated level.
uh shareholder, ostensibly. And and they certainly understand the concept of getting stock in the hands of employees. That's the major reason we did it. Yeah.
No, I mean it makes sense. I mean i it's it's interesting because uh at the time you went public you had about uh you know r roughly seventy locations, six thousand employees, uh a hope
to expand to about three hundred locations.
couple of years ago they wrote that the container store
Was the best
Retailer.
That should never have gone public.
Do you think that's a fair assessment or do you think that's unfair?
I think it's fair.
Because we were very long term oriented.
And
I love the idea of getting stock in the hands of our employees.
And that was the only way to do it by going to the And
It's the only way to do it.
Sadly.
And you know and I I take responsibility for that. Like I said, the our private equity partners were deliriously happy with that decision, but it it wasn't them forcing it upon us.
And it fit us like a
Poor fitting suit. There wasn't anything about it that really
Worked well for us.
I I don't think that our company
It was difficult for our culture.
Uh to be a publicly traded company. It did.
Take uh
A lot of key people's time away.
Uh once you're public, there's not as much focus going into the employee and the vendor and the community. It's it's it's primarily focusing on the
Equity markets. So uh I think it's a fair statement. You know, I think there's a reason that there's half as many publicly traded companies as there were
You know, thirty or forty years ago.
It alters your business too.
To go public.

and we come back in just a moment.
how the container store deals with yet another challenge.
Competition.
Stay with us, I'm Guy Roz, and you're listening.
How I built this.
Hey, welcome back to How I Built This. I'm Guy Raz.
So it's twenty fifteen, nearly two years after its IPO.
And the container store?
is struggling.
Income has dropped by nearly seventy percent.
I mean this was uh this post recession, obviously there's a lot of um direct to consumer internet businesses that are starting up.
um uh competitors like IKE are getting into the storage business at this point.
Wha what was going on? What what do you remember about that time and and why
Growth started not growth, but but
even net sales, uh net income started to to decline.
Well, you know, you had uh kind of a change in retail begin.
About that time, most people would say Amazon.
Uh a Amazon had a lot to do with it.
Our average customer
Drove twenty one minutes to get to our store.
Twenty one minute drive time on average. So
We began to lose
are under twenty five dollar sales.
Because
If you gotta buy three sweater boxes
Uh you might as well just buy it online from Amazon, you know, sweater box is sweater box.
Now if you're gonna redo your pantry
You know, well then you drive the you want to come to us.
And so everything was more global, competition was more fierce.
And
Amazon type sales.
We came
Of course, bigger and bigger, bigger. So we would hire great people.
Train'em.

And then hope that they would interact for an hour.
with our customers to
Reorganize their linen closet.
Uh Amazon
There's no human contact. Everything's transactional. It's quick, easy.
Д'сно Грей Леч. Існе форм retail.
The American public was inner was uh surveyed at that time about who provides the greatest service in retail. I expected Stan Marcus or the container store or Creighton Barrel, one of those kind of companies to win.
It was Amazon. I'm like they don't provide any service at all. But what they do is they're
They make the transactions so easy and so consumer focused. In a way, they're more consumer focused than anybody.
So people were saying well maybe
Maybe you're out of step.
Because
Retail began to change.
You had to adapt to it and and it led us to focus more on the high dollar sale and less on the low dollar sale because
People still

solving a problem, but if they're just picking up three or four items, they would just take the easiest path.
But I wonder whether
Was there a world where there could have been a pivot?
That would have
Stabilize a container store's finances.
Better? I don't know. I mean
Maybe the answer's no. I don't I don't know,'cause obviously you're probably traded company.
The stock prices by twenty sixteen is down, you know, a over eighty percent from its its high. Um
And that's a lot of pressure on the business.
Well, I wanna reiterate that you know, we had uh
We had forty years of being the most successful business around it was it was it was giddy. It was crazy, you know? And then this hit us kind of like a tidal wave of this change change in retail and and now
I think that the
employee orientation and the
Foundation principles and the
Selling solutions rather than items.
uh still apply
But it's hard to
Weather that kinda storm.
frankly, when you're a a public company, you know, Wall Street isn't very patient. They're they're interested in this quarter's earnings and this year's our earnings. And we were trying to be stewards
If you and I had a farm.
And we only worried about the productivity of that farm this month, this quarter.
It may not be a very good form in five years, so we
We were accustomed to being private and patient and long term oriented.
And uh
Perhaps we didn't react quickly enough to those changes. It's you know, I'm not sure. I j it's so interesting because somet I mean things change. Industries change, right? And so
I m whether it's apparel or big department stores or
even big stores like REI I mean
The whole model has changed, you know, as as you say Stanley Marcus focused on
customer service on on selection.
Uh it's very and I I'm just gonna say it straight up.
It's when I go into a big retailer today.
and I get great customer service, I'm blown away.
'Cause it it's very rare.
It's very unusual to get customer service. It was then, it's particularly now. Jim Sinagle the the the Costco guy and I had a running debate for years.
Uh
We had ten thousand products. He said you should have fifteen hundred products of different pro you know, you you
So most retailers that carry Advil have fifteen or seventeen
Painkill. Types. Types. Well, they they have fifteen different Advils. They have different sizes, different strengths. He he has he has one. He only carries one. There's a certain beauty and simplicity to that, but
Uh uh Gordon Siegel and Sharon Tyndall and Stanley Marcus and I wanted selection. You know, we we wanted to have the world's greatest collection of coat hangers.
Uh i if if you needed a trash can, we had the world's greatest collection of trash cans. You know, yeah. And the world kinda went to
No, no, no. We're we're gonna just only have we're gonna have a big one and a small one. That's it. Just two SKUs and every consultant in the world.
went around to all the retailers in the world and optimized their
Their their SKU count, their stock keeping unit count, uh which really meant just destroying their
You know, there's selection. Yeah. Yeah.
Well it's I think about like for example you mentioned trash cans, you know, and Simple Human, a brand that easily
was scaled because of a store like container store, right? Like the container store probably made that brand, but then they could sell at Amazon, they could sell Walmart.com, they could sell at Target.com, and so
If if you discover that brand a container store
You could also just eventually, years later, just
Have it delivered to your house.
Well it's interesting. I I spent a long time on the whole foods board
And both the container store and whole foods and
Craden Barrel and companies like that. We would be the first significant customer to
So many vendors.
Yeah. And we would help that
Little bitty company.

And then unless our relationship was overwhelming strong
we would kinda get cut out of the deal as they began to sell, you know, the mass merchants and whatnot, uh, which you can't really blame them for so
Uh you almost need to buy equity in these little vendors because as we make them rich and famous, uh we get squeezed out in favor of the of the mass merchants. Yeah. And so you either build a beautiful relationship with those people, or in the case of Alpha, we actually bought the company
Or you
phase them out as they become
Sold at Costco'cause you can't compete with Costco once that happens. Or or in the case of Whole Foods, you just you know, if you can't beat'em you join'em and then you become an Amazon company.
Yeah. Which which has the scale to, you know, gro grow that business.
Um but I wanna stay on this thing for a moment about customer service because
You guys spent I read something like you would offer
more than two hundred hours of customer service training to your employees and
And I guess the industry standard was like ten hours.
And again, it's it's just
A lot of big retailers, it's just you know, it's teenagers working there and they're just you know
They they don't really care.
Uh it's not their fault. You know, I'll walk into stores and I'll think
This store is badly managed.
Because
It's just the people seem miserable.
Is there
A world where where
This
W with a emphasis and focus on customers.
comes back'cause I feel like
Even ten, certainly twenty years ago.
Customer service felt really important. It it just felt different than it feels now.
Well for us we hired employees that were actually customers.
And I think that's a big difference. A lot of the best employees that we had actually experienced the products that we sold.
And
that is way different than just hiring somebody off the street.
The most fanatical customer is gonna make your best employee. We're really focused on that.
It's a lost art. Uh there's very little of it.
Oh, you have to compensate people well, you have to train'em well.
They have to care as much about the business as you do. And that's uh
I hope it's not a bygone era, and as it you know, pendulums
Happen in the world.
As it goes away farther and farther I think maybe there'll be more
It'll make more sense for it to come back because people will will long for it again.
Um
I I I I gather that it it made sense for you, you felt like it made sense to step down in twenty sixteen and to to retire.
I I think um Cher uh both of you did didn't officially retire until twenty nineteen, but Kip, you stepped down as CEO.
in twenty sixteen. Um
Let's talk a little bit about sort of the container store
Post Sharon Kip.
Um
The store, it's no secret, has been struggling. I mean it it and and that in large part just'cause the retail environment has shifted.
Um
There's one here in not too far from where I live in Marin County that I go to now and again and
To be honest, it's almost always empty.
When I go in.
And so I wonder whether w when you when you think about the stores today, and I know you're
Divest it and you're out out of that world. But um
I don't know, do you think that
There's a future to
to what the container store is now or or do you think it has to
radically transform and become something else.
Frankly
Not everybody's interested in what the old founders have to say about how something should be run today.
But you're you're still it's still your kid.
You know?
goes through a time where it's not doing well, that's that's painful.
And if
They're not particularly anxious for you to step in and say
Here's how you should correct that. They're not particularly anxious for us to do any of that, and we're not particularly anxious to do it. You know, I think that's a good thing.
We did this for forty
two forty three years.
You know, bring out the violin, but I'm not really bragging, but I mean we loved it. I we we worked
You know, fourteen, fifteen hours a day, six or seven days a week for forty three years. Nobody loved their work more than Sharon and me, but also nobody
has enjoyed retirement more than me, the freedom, the lack of stress. And so we're
We're loving.
Life.
Uh
Frankly, more than ever.
Uh and they're into new people, new era.
And it's uh
Very interesting to to watch and half the time we don't even know what's going on with it.
Um
When you think about the journey you you guys have taken, you know, from
opening this first store in North Dallas in seventy eight to, you know, when when you left and obviously
the retail environment had changed, but both of you did very well. You did extremely well. You built a really big brand and
uh and a big business. How much do you think it had to do with with the work you put in the in the elbow grease, and how much do you think had to do with
Luck, the luck of finding the right people, the luck of people buying you know, liking the idea, et cetera.
Well, I think there's always a little bit of luck, but I think that staying focused and
discipline to the concept was really, really critical.
To our success, we really didn't divert from the idea.
Mm-hmm.
Um
We love to
We found something to do that we were good at.
Uh we found other people who we loved who loved us who were also good at it.
And we worked.
Night and day, you know, to make it you know, to make it happen.
Uh but uh we certainly have plenty of good luck.
In spite of all that along the way. I think I think it takes it all in order to
Build something of that magnitude, it it takes
All of the above.
That's Kip and Sharon Tyndall, co-founders of the container store.
By the way, Sharon wasn't kidding earlier when she said that Marie Kondo had reversed herself on the value of storage. In fact, a few years back,
Marie collaborated with the container store to release a whole line of minimalist hangers and baskets and drawer organizers.
All designed, of course.
To spark joy.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And please sign up for our newsletter at gyros.com. This episode was produced by JC Howard with music composed by Ramteen Erablui.
It was edited by Neva Grant with research help from Sam Paulson. Our audio engineers were Quasey Lee and James Willits.
Our production staff also includes Alex Chung, Carla Esteves, Katherine Cypher, Devin Schwartz, Chris Massini, Carrie Thompson, John Isabella, and Elaine Coates.
I'm Guy Raz and you've been listening to how I built this.