|KENNETH G. LANGONE|
Kenneth Langone's biggest claim to fame is his involvement in the immensely successful Home Depot, which he co-founded in 1978. Via his small investment bank, Invemed Associates, Mr. Langone raised a mere $2,000,000 to launch the do-it-yourself home improvement retailer which today is worth over $76 billion in terms of market capitalization (as of November 27, 1998). Mr. Langone currently owns close to 1% of the outstanding stock of Home Depot, Inc and is a member of its Board of Directors.
This is a far stretch from his modest upbringings. Mr. Langone, son to a plumber and a cafeteria worker, was raised in a close-knit Italian family in Roslyn Heights, NY approximately 20 miles east of Manhattan. As successful as Mr. Langone is, he has never lost touch with his past. He is a very unpretentious man: "I'm a peddler" he has stated. In fact, he would attribute his determination to succeed partly to his modest upbringing and the tough times he has experienced.
Although Mr. Langone's high school principal told Mr. Langone's parents that their son was not college material, and that they would be 'wasting their money' sending him to college, they thought otherwise. His parents mortgaged their house to send young Mr. Langone to Bucknell University where he majored in economics and political science, and finished in 3½ years. To get through college, he worked in a variety of jobs, including a butcher's helper, caddy and ditch-digger.
Shortly after graduation from Bucknell in 1957, with help from his father-in-law, Mr. Langone received a job in the investment department of the Equitable Life Assurance Company. As Equitable required an MBA, Mr. Langone agreed that while working full-time at Equitable, he would get his MBA at night. As such, he attended NYU's Graduate School of Business (now the Stern School of Business), attending classes four nights per week. Later, he was to teach Finance at NYU.
After graduation and a two-year stint in the Army, in 1961, Mr. Langone decided to pursue a career on the 'sell' side of Wall Street. At this time, Wall Street was on the cusp of a new era, one which favored brains and selling ability rather than family or academic credentials. This transformation favored Mr. Langone who eventually joined the Wall Street firm R.W. Pressprich & Co., an old-time bond house. Eventually, Mr. Langone became an Executive Vice President at Pressprich whose duties included corporate finance work. In his capacity as an EVP, Mr. Langone landed the most sought out IPO deal at the time, that of Ross Perot's Electronic Data Systems (EDS) which took public in 1968 and later advised Perot on the sales of EDS to General Motors. Not only did this lead to the presidency of Pressprich, but also to a life long friend in Ross Perot.
Mr. Langone admits that the road to success was bumpy. In 1969, shortly after his success with the EDS IPO, Mr. Langone had a bad experience with Stirling Homex Corp. and specifically with the Stirling brothers who weren't being straight with him. As a result of this experience, Mr. Langone learned how important the people factor was in investment banking and that the character of the principals should be put ahead of the concept and the numbers in assessing a deal. This philosophy has been evident in deals that Mr. Langone was involved in after this point.
Mr. Langone also has a very hands-on approach to management and more specifically to his choice in pursuing investments. He feels that you should stick to the fundamentals and get into the nuts and bolts of the business before making any decisions, he says, "...when I buy a stock, I want to know everything about that company. I don't want any distractions." This was clear when he visited every Handy Dan store before he committed himself and his investors to a 14% stake in the company. This "Sam Walton" approach, coupled with the fact that he sees his investments as long term commitments rather than just making a quick buck has been a very successful formula for Mr. Langone. Getting so close to Handy Dan gave Mr. Langone the perspective of the home improvement business necessary to realize its potential. After Handy Dan bought out Mr. Langone and his investors and also fired their top guy, Langone decided to go into business for himself and founded the Home Depot along with Bernard Marcus, former CEO of Handy Dan.
Mr. Langone has been involved in a series of other successful investments,
some of which involved his Park Avenue brokerage and investment banking firm,
Invemed Associates which was established in 1974. to finance start-ups in the
medical field but which eventually evolved into other domains. Other
notable investments of Mr. Langone (to name a few) include the following:
|•||he raised $5 million for Ivac, a medical equipment concern, which was sold to Eli Lily & Co. in 1977 and which sprang Lily's medical instruments division, a multi-billion dollar division.|
|•||through a series of mergers and divestitures, Unifi, Inc. was created from Mr. Langone's doing. Unifi is on of the most profitable US textile firms.|
|•||Langone was the mastermind behind Patlex Corp., the public company who financed Gordon Gould's fight for his patent rights for inventing the laser. Patlex holds the royalty rights to the original laser patents which will have generated over $190 million in royalties by 2007.|
Mr. Langone has also been involved in some visible political issues as a contributor and as an advisor. He was part of Mayor Rudolph Giuliani's transformation team in 1993 and Senator Bob Dole's finance chairman for New York State in the 1996 presidential elections. He was also an outspoken supporter of the balance budget amendment and held discussions in front of members of congress regarding the debt limit and what Wall Street's reaction would be if the debt limit was not raised and the government defaulted on its debt. As one would also expect, he was a supporter of long time friend Ross Perot's 1992 run for the presidency.
Mr. Lanonge's success and leadership skills have obviously not vone unrecogniszed. In fact, he has served (andin some cases still does) as a Director and/or Board Member for several organizations, including some which he has invested. Included among these are the following: Home Depot, Inc.(Director); AutoFinance, Inc. (Director); New York Stock Exchange (Board Member); Tricon Global Restaurants, Inc. (Board Member); InterWorld Corp. (Board Member); DBT Online, Inc. (Board Member); Unifi Inc. (Director); US Satellite Broadcasting of Minnesota (Director); and NYU's Board of Trustees.
Mr. Langone is also a devout Catholic and works hard for his favorite charities. He recently gave more that 8% of his stake in Home Depot to charity, totaling over $30 million at the time. He is married with three grown children. In his spare time, he enjoys a good book and playing golf with his wife, who he admits is better than he.
Mr. Langone admits that he got the fundamentals for what he does from NYU and believes strongly in the value of getting an MBA at night. In early 1998, Mr. Langone donated $6.5 million to NYU's Stern School to endow the Kenneth G. Langone Part-time Evening MBA program. The money will be used to endow a professorship, finance a new curriculum development fund, and establish special services for the Stern's night students.