Oct 25, 2012

A Candid Interview with David Green Founder and CEO of Hobby Lobby

David Green and the Beginning of Hobby Lobby

David Green is the Founder and CEO of Hobby Lobby, a multibillion dollar company with over 500 stores. In this section, David discusses where he is in life and what it took for him to get there.

Where you are in life—exact role?

CEO of Hobby Lobby. I’m responsible at that level. I’m 71 years old. I don’t plan on going anywhere for the next 10-15 years. That’s my responsibility as CEO of Hobby Lobby.

How did you get your start?

I got out of high school, and I wasn’t much of a student. I got started in the retail business at a local five and dime store. Then became assistant manager of the store. Then became manager of a TG&Y store that’s no longer around. 

Everyone dreams of having their own business. I decided to make miniature frames in my garage. In 1970, we borrowed $600 to start Hobby Lobby, making frames in our garage.

My real love is retail. We opened our first store in 1972; it was 600 square feet. We made frames in the back 300. And as we sold the frames and made a profit, I put the money into the front 300 square feet. Three hundred square feet is about the size of an average living room. That was our first store.  I had a partner who ran the store. My wife would ship the frames, and my boys would glue the frames. My wife worked the first five years for no pay.

Your wife worked 5 years without getting paid?

She didn’t get paid for 5 years. We just tried to put everything back in business.

With $600, you don’t have any money to pay anyone. The boys were paid $0.07 a frame. We needed her to help out because we needed to put everything back into the company. We needed everything in order to avoid sinking the ship. We were very conservative in terms of our own lifestyle to build this company.

How many stores do you have now?

We have 500 stores now.  We’re in 41 states. We’re opening 30-35 stores a year. We have one warehouse in Oklahoma City with more than 5 million square feet of warehouse to serve our stores.

Which states aren’t you in?

West of the Mississippi, we’re not in Oregon. We’re looking there, though. East of the Mississippi, we’re not in New England states. We’re looking there, too.  Not looking at Hawaii or Alaska.

What attracted you to this industry?

When I was running the TG&Y, they gave managers a lot of latitude. We had 13 people in the pet department. I had a young man that ran it for me.  They had so many things to do.  I thought I could do the same thing in crafts that I had done in the pet department. I didn’t have the money to open a store. I decided to make the frames in the garage as a start.  We have over 600 people in manufacturing today. We make our own candles and fixtures. I knew I didn’t want to be in manufacturing. I ultimately wanted our business to be retail. I saw the mass merchandisers couldn’t do it. All that was out there were a lot of Ma and Pa stores (there weren’t any Michael’s or JoAnn stores).

You knew you didn’t want to be in manufacturing, and you wanted to be in retail because you saw the opportunity?

I loved retail. When I got out of high school, I realized that this is where God has gifted me and this is where I need to be. Exactly where God wants me to be. I’m gifted for it.  I am anointed to do what I do.

Any leadership lessons that you’ve learned?

The Bible has given us a lot of instruction on how to lead our family and others. We definitely need to run our business on biblical principles. I have Psalms 3:5-6 on my desk.

We find ourselves relying on the Lord everyday in our prayer life. He knows the future.  We try to allow God to lead us, knowing He knows the future and He’s the only one who knows the future.

We find ourselves with problems and God is always there to help us when we lean on Him. We always come back to knowing He’s there and He’s wanting to help us.

Did you ever go to college?

No.

Any mistakes that you guys made that were learning opportunities for you?

Thousands of little ones.  In the early '80s, we positioned ourselves in a way that assumed that the market was going to continue to grow, and we extended ourselves too far.  One thing we learned was to get out of debt. We have zero long-term debt. Everything’s paid for.  You don’t know what will happen tomorrow.

What was your process for getting out of long-term debt?

We tried to do three things with cash: pay tithes, grow, and pay debt. We needed to balance these three things. 

Every year we tried to have less debt. Now that we don’t have debt, it allows us to give more.  We give half of our earnings to ministries. We’re not a 501 C3, so the government allows us to give up to 50% and be tax deductible.

David Green and the Complexities of Managing Hobby Lobby, a Large Family-Run and Faith-Friendly Business

In this section, David discusses what Hobby Lobby looks for in people who work for them, what success is, and how to manage the multiple stakeholders of a large and profitable company.

What do you look for in the people?

We look for integrity.  I don’t care how much you know.  I take people from manufacturing and bring them into the office. You could be the smartest person in the world, but if you don’t have integrity, you won’t be here. Our corporate officers are people I can depend on. They are truthful, and their families are important to them.

You always viewed the company as multiple store company; how have you gone about setting goals for work and life?

It’s ok to set goals as long as they are submitted goals.  "God, if you want something different, then you’re welcome to interrupt us." We will do $3 billion in sales this year.  In six years, we’ll do $5 billion.  You have to have some numbers out there where you think you’re going so you have the infrastructure to support it. 

How do you define success in business? 

Success is to be very profitable and take care of your people. Our minimum wage is $13 an hour. We’ve gone up $1 a year. Success isn’t just making a profit. It’s what you do with the money.  If you’re not doing something that’s going to matter 500 years from now, then you’re not doing something great. Our first obligation is to take care of the people who got us here.  They fight for us because we fight for them.  If we’re successful and take care of our people, have no debt and continue to grow, then I don’t know what else you would need to do to be successful.

You give away half of the net profits?

Half of the profits, not the sales. We give to various ministries.

You have 3 kids, 10 grandkids, and 3 great grandkids. How have you been able to manage a busy schedule and family?

My wife ran the business before I quit my job at TG&Y.  I can count on two hands how many times I have worked past 5:30. Before I got married, I said my life’s goals are to have a strong marriage, be successful at what I did, and for my children to serve God.

Marriage is like your work. You have to work at it if you want a successful marriage.

Years later, I added that I wanted my grandkids to serve God, and to tell as many people as I could about Christ. So I started out with 3 goals at first, and I’ve had to add other goals. 

When I get with my managers, I tell them that their families are more important than this business.  Serving God is the most important thing, then family, and then this business. I don’t want them working a bunch of hours. I want them to run a great store, but I want them to spend time with their families. If they’re working too many hours, then they’re not delegating enough.

So if you’re done by 5:30, what is your average workweek is—how many hours?

When kids were at home, it was probably 48. I was home on Saturdays. Now I work a two-thirds day on Saturday.  I tell my wife that anytime she’s lonely and she feels like a widow at home, she can call me. There’s nothing here that’s so important that I can’t come home. I worked less when the kids were home. 

We’re closed on Sundays so that the employees can go to church. Only two large companies are closed on Sundays. We feel like it’s important for the family.  

Your employees have different religious beliefs and backgrounds. Do you have a strategy for expressing your Christian faith?

Our strategy is to be very bold. We tell people about the Good News of Jesus. We have five chaplains. We are very, very bold. We don’t ask people about their belief system. We hire them on what they can contribute to the business. I can’t help but tell people of the greatest story ever told—God’s love and our eternal life. We do that with our five chaplains. We’re very busy telling people about Christ.

Do you ever have employees who are disgruntled with that approach?

We’ve had a couple situations in which people have resigned. At this point no one has given us any legal issues. We would fight it.

We have more rights than most people think we have.  We have a legal right to speak about what God has done for us.

We’ve never had any lawsuits. It wouldn’t stop us, though.  At Easter and Christmas, we put out full page ads on the death of Christ and the resurrection, and on the birth of Jesus.

Our signs say that we’re closed on Sunday so our employees can worship and be with their families. We have a tremendous amount of product that’s inspirational. And we have the Hobby Lobby Statement of Purpose.

David Green and the Dark Times at Hobby Lobby and Where it Led Him

In this section, David discusses the toughest times they faced at Hobby Lobby and how it led him to humility and dependence on God.

Ever thought of taking the company public?

Zero reasons to do that. We don’t need anybody’s money. If we had their money, we couldn’t give any money away. When we first got started 30 years ago, there may have been a reason. But if we had, we wouldn’t have been able to use the business the way God wanted us to use it.

Have you had any personal failures or dark moments that helped you to grow?

We had hard times in 1985, and I know it was about my personal pride. We had been booming, and up until the bust, I was very prideful. God used that time to say, “You think you’re so good; I’ll let you have it by yourself.”  I talk about it in my book More Than a Hobby.  

At that time, I learned more than I ever learned in my life. I’m a preacher’s son, so I should’ve known that, but I had to learn myself. I can’t do anything without God, and I try to give him the glory. I was only partially successful, and I was prideful. I know I couldn’t handle all of the success today, if I hadn’t gone through that.

How bad was it in 1985? Was the company in jeopardy?

The bank threatened to liquidate us. Power companies would come in and turn our lights off. We would pay them out of the registers. Every phone call we got was about a past due invoice. No one would ship to us because we were past due from the previous month.

It was a miracle that we got through it. I would pray every day under my desk.  I asked for forgiveness for my pride. Really, it was the worst time of my life as well as the best. It taught me I can’t do anything without Him.

How many stores in 1985?

We had 11 stores. We started coming out of it in a year. That year seemed like 20 years.

It’s amazing how God has blessed us beyond our comprehension. We see ourselves as stewards not owners. 

The company is set up so that no one can profit from the sale of the company. All anyone can ever get is their salary. They can have the fruits that they earn. They can’t get the tree. Money has a better chance of hurting your character than helping it.

Is the company is family-owned?

It’s in my name and my three kid’s names. Then it passes to their kids.  Legally, we’ve agreed it is not ours. We’ve all signed the fact that we have no rights to any money from the stock. 

This isn’t ours; it belongs to God. We always said that.The kids are fine with it. 

We get a salary, what we’ve earned. 

The Lord told you to do it this way?

Christian professionals came in to help me, and they were advising me the same way a secular person would. I went through unsettling times with my spirit. I was in my backyard praying, and God told me clearly that this company belonged to Him.

I wrote on our board:

“Hobby Lobby belongs to me.” — God

God owns everything. It meant we had nothing to give our grandkids. It has to be in our name, but we only receive the fruits we’ve earned.

All images used with permission of Hobby Lobby.

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