Ed Stack: Lessons from Dick’s Sporting Goods [Outliers]

Ed Stack built Dick’s Sporting Goods from a struggling family store into an empire of more than 800 stores and billions in sales. Along the way he nearly lost everything. Multiple times. This episode is the story of what he did, how he did it, and the lessons you can learn. ----- Some of the things you'll learn in this episode: Never rely on the kindness of strangers. Your name is your biggest asset. The person who talks the least is usually the decision maker. Sometimes the most profitable decision on a spreadsheet is the worst decision for a business. Good businesses don’t need debt and bad ones can’t handle it. When the data and the anecdotes differ, you’re measuring the wrong thing. Trust isn’t earned in the easy times; it’s earned in the fire. People are rarely buying just your product. Give the underdog a chance. They want it more. Not knowing what you’re doing can be an asset. All money comes with strings. Your competition always has something to teach you. Always bet on yourself. Learn from mistakes, but don’t over-learn them. “The moment a business stops evolving, the moment its leaders sit back and think, ‘Everything’s good,’ that’s when it starts to fail.” Problems are opportunities to add value. Play the game to win. Become someone people want to help. Investment bankers are not your friends. Manically focus on the numbers. The recipe is boldness mixed with caution. What you get out of anything is directly proportional to what you put in. The spreadsheet is not the customer. Arguing teaches you how to think. If you go into a deal with a win-win mindset, it almost always works out. Clever excuses don’t make anything better. Every business is someone’s irrational dedication. The most important element of success is perseverance. Always let people keep their dignity. The cost of making others happy is losing yourself. Do right for the company. Do right for society. You can’t prosper unless the community around you prospers. Believing in someone before they believe in themselves changes everything. Learn more at: https://fs.blog/knowledge-project-podcast/outliers-ed-stack/ ----- Upgrade: Get a hand edited transcripts and ad free experiences along with my thoughts and reflections at the end of every conversation. Learn more @ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ----- Newsletter: The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ----- Follow Shane Parrish X @ShaneAParrish Insta ⁠@farnamstreet⁠ LinkedIn ⁠Shane Parrish ----- This episode is for informational purposes only. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Shane Parrish?

  We're going to be out of money next month. Ed Stack stared at the CFO who just uttered those words. It was 1996 and they were $13 million in debt. Forty stores bleeding cash. The banks wouldn't restructure unless the venture capitalists put in more money. The VCs wouldn't invest unless the banks restructured. Someone suggested bankruptcy. Ed felt physically ill. His father had lost everything when the second store failed, but he'd sold his house, his car, everything he owned to pay back his creditors. He refused bankruptcy on sheer determination and principle. Now Dick's had gotten over its skis again. This time they had over 40 stores. They were in markets they didn't understand.

• 0:44Shane Parrish?

  They had outdated inventory systems. He had made every mistake his father warned him about. That night, lying awake, Ed Stack faced the truth. He was about to lose the company his father started with $300 from a grandmother's cookie jar. He had one last meeting, one shot. What happened in that room would determine whether Dick's Sporting Goods died in 1996 or became an 800-store empire that would one day have to choose between keeping every customer happy and doing what the Stack family believed was right. This is the story of two generations who learned that in business, like in sports, how you play the game matters more than the final score.

• 1:26Shane Parrish?

  Welcome to The Knowledge Project. I'm your host, Shane Parrish. In a world where knowledge is power, this show is your toolkit for mastering the best what other people have already figured out.

• 1:39Shane Parrish?

  Today, we're going to talk about the incredible story behind Dick's Sporting Goods. In 1948, an 18-year-old named Dick Stack took $300 from his grandmother's cookie jar and opened a bait shop so small that it was addressed as 453 and 1/2 Court Street. His son Ed would later build it into an over 800-store empire worth over $16 billion. Along the way, they'd avoid bankruptcy twice, discover night before anyone else, fight off hostile takeovers, and make every mistake in the Book and learn from them every time. And they ultimately made decisions that would cost them hundreds of millions. But to find who they were as people. This is the story of a father and son who couldn't stand each other, but built something extraordinary together.

• 2:23Shane Parrish?

  It's also a story about how sometimes the most successful businesses aren't built on strategy, but on who you are when everything falls apart. This is the story of Ed Stack and Dick's Sporting Goods. It's time to listen and learn.

• 2:48Shane Parrish?

  In July, 1948, Dick Stack stayed up all night working on a list. His boss at the army store wanted to expand into sporting goods. And since Dick was known around Binghamton as the best fisherman in town, the boss asked him to figure out what inventory they'd need. Well, Dick was only 18, but he knew fishing gear inside and out. So he carefully wrote down on two pages, equipment and every item that you would need. The next morning, he brought the list to his boss, eager to impress. His boss looked it over, pulled out a pen and started crossing things out while muttering dumb kid, you don't know what you're talking about. Dick snatched the papers from his boss and walked out of the store, never to return. It's not like Dick had a backup plan. He'd barely graduated high school six months earlier

• 3:33Shane Parrish?

  and only made it because an English teacher gave him a gift grade and told him, I don't know what will become of you, Dick, but somehow I know you'll be a success. Walking home with these torn papers, Dick stopped at his grandparents' house. He told his grandmother what happened. She listened quietly, carefully, then asked him a simple question. How much would it cost you to do this yourself? Dick thought for a moment, $300. His grandmother slowly got up, walked across the kitchen to a corner cupboard, reached for an old cookie jar and pulled out $300. Years of her savings. She put the money in Dick's hands and said, go start this business yourself. Most businesses start with bank loans or investors.

• 4:16Shane Parrish?

  Dick's Sporting Goods started because a grandmother believed in her grandson. That cookie jar becomes so important to the Stack family that today, when employees hit 25 years with the company, they receive a replica with $300 tucked inside. It's powerful to believe in yourself even when there's no evidence, but it's even more powerful when someone gives you the gift of believing in you. To understand what drives Dick Stack, you need to know what shaped him. When Dick was seven years old, his father was killed in the car accident. Ed Stack Sr. had been a bootlegger during prohibition, and when that car crashed at a high speed, there was a woman in the passenger seat who wasn't Dick's mother. She survived. The family's beer distribution business disappeared shortly after.

• 5:01Shane Parrish?

  It probably sold off to pay gambling debts. After that, Dick's mother had to take in boarders just to keep the house. His grandparents basically raised him, and his grandfather became his lifeline. Every weekend, they'd go fishing. Those quiet hours on the water were the only time that Dick felt any peace. School was absolute torture for him. He probably had dyslexia, although nobody called it that at the time. Words swam on the page. He graduated from high school, as he'd say for the rest of his life, by the skin of his teeth. So when Dick opened his store at 453 and a half Court Street, and yes, the address was so small, they actually gave it a half number, he had exactly one thing going for him. He knew fishing better than anyone else in town.

• 5:46Shane Parrish?

  Those early days would have broken most people. Dick would open at nine, close at nine, and Sundays take in only $5, maybe seven on a good day. His margins were nonexistent. He couldn't afford wholesale prices. So here's what he did do. Close the shop, drive 60 miles to Scranton, buy inventory at retail from a drugstore, then drive all the way back and sell it at barely enough markup to cover the gas. But Dick had a chip on his shoulder and something to prove. To that boss who scratched up his list, to the kids from high school who went to college, to the ghost of his bootlegger father. They were all whispering in his ear that he'd amount to nothing. So he kept going. And slowly, the fishing crowd started to notice.

• 6:31Shane Parrish?

  The skinny kid behind the counter knew every lure, every technique, every secret spot on every river for 50 miles. When you asked Dick Stack about fishing, you weren't getting a sales pitch. You were getting years of wisdom earned in predawn hours on cold water. By 1952, he'd renamed the place Dick's Army, Navy and Sporting Goods and finally started buying wholesale. He began sponsoring fishing contests and even wrote his own ads, including one hilarious one that was disguised as a medical warning. It was called Fishing Pox, very contagious to adult males. Symptoms include continual complaint as to the need for fresh air. Patient has blank expression, sometimes deaf to wife and kids.

• 7:15Shane Parrish?

  Treatment, go fishing as often as possible with tackle from Dick's. The store was working. So Dick did what every entrepreneur does when things finally click. He expanded a bit too fast. In 1954, Dick opened a second location at the new Hillcrash Shopping Center north of town. Everything about it was wrong. The developer had no experience. The location had no traffic. It was in the wrong part of town and the perfect example of if you build it, they don't always come. But Dick didn't know what he didn't know. Well, he understood fishing like nobody else. Real estate and traffic patterns were different water entirely. Soon, he found himself with two stores, his original profitable store on Court Street

• 7:59Shane Parrish?

  and his new larger location that was hemorrhaging money. Now, the smart move would have been to close the failing store and retreat to what worked. But Dick had signed a lease he couldn't break. So he made a decision that would haunt him for the rest of his life. He closed the profitable Court Street location, gambling that customers would follow him to the out of the way shopping center. They didn't. Within months, he was advertising massive stock reductions. Three weeks before Christmas in 1955, which is prime retail season, he was practically giving merchandise away. The desperation leaked through every ad. On June 6, 1956, Dick Stack took out an ad with the heading that said everything. We quit.

• 8:44Shane Parrish?

  He was 27 years old, married with a one-year-old son named Ed. His wife was pregnant with their second child, and he just lost everything. But here's what matters about Dick Stack. For all the things he wasn't educated, sophisticated, or patient, he was a man who kept his word. He could have declared bankruptcy. Most would have. Nobody would have blamed him. Instead, he sold everything he owned. The house, the car, anything worth a dollar, and he paid back every creditor in full. His wife, Mary Ann, took their son Ed and moved in with her parents. Dick moved in with his mother four houses away. He found a job at Montgomery Ward downtown selling sporting goods for someone else.

• 9:28Shane Parrish?

  Now, this story could have ended here, but you wouldn't be listening to this podcast. Dick would just be another casualty of American retail ambition. That's what everybody expected. What he didn't know then was the reputation he earned in that moment of failure by paying back every supplier when he didn't have to would become the foundation of everything that followed. People say it takes years to build trust and seconds to destroy it. But what they don't tell you is that it's even harder to build trust in the ashes of failure. Six weeks later, when he walked back into those same suppliers' offices asking for another chance, they remembered. This was a man who protected their interests even when his own world was collapsing.

• 10:14Shane Parrish?

  But first, before he did that, a stranger had to appear. Dick was working the Montgomery Ward sales floor when a stranger walked up. He'd never seen him before and would never see him again. The man walked up to him and just said, "I knew your father." Then he looked Dick straight in the eye. "If you had half the guts your father had, you'd be doing this for yourself." And then he walked away. Two days later, Dick quit Montgomery Ward. Within six weeks, he'd convinced a bank to back him. His suppliers, the same ones he'd paid back every penny, agreed to trust him again. He reopened at 389 Court Street with an ad featuring his picture under the heading, "Dick is back." But this time was different.

• 10:54Shane Parrish?

  He bought the lot next door, built an Acme supermarket and used the rent to cover his mortgage. If the sporting goods store struggled, he'd have income. He expanded slowly this time, 5,000 square feet, then 10,000, then 13,500. Never again would he bet everything on one roll. In fact, as we'll see, this is a lesson he over learns. But that's getting ahead of ourselves. The deeper lesson at this point isn't about business strategy, but character. It's about what you protect when everything's falling apart. Dick could have saved himself through bankruptcy and destroyed his reputation. Instead, he protected his name and earned something money can't buy. The trust of people who'd seen him at his worst.

• 11:36Shane Parrish?

  In 1965, Dick divorced his wife and married his bookkeeper Donna. She was 21, 15 years younger. She'd calm his volcanic temper, help him think clearly, and more importantly, she'd help him see that his oldest son, Ed, might be the key to everything. Not that Ed wanted anything to do with the store. In fact, Ed Stack would spend the next decades trying to escape the very business that had consumed his father's life. That battle between father and son, between past and future, between playing it safe and risking everything, would determine whether Dick's sporting goods remained a two-store operation or became something neither of them could imagine. A $16 billion empire built on three things.

• 12:20Shane Parrish?

  A grandmother's belief in her grandson, a father and son who argued relentlessly, and the kind of chutzpah that only comes from not knowing what you're in for. Ed Stack hated everything about the store. From age 13 onward, Ed spent every summer and weekend in the warehouse, unloading trucks and suffocating heat while his friends played baseball at the park. His father would test him constantly. They'd play catch in the yard, but don't get the wrong idea. This wasn't some Norman Rockwell moment here. Dick would fire fastballs at his son harder and harder and then start throwing them in the dirt. If Ed missed one and had to chase it in the bushes, he'd turn his back to find his father gone.

• 13:04Shane Parrish?

  The message was clear. If you can't catch, we're done here. At dinner, Dick would quiz him. You're playing second base, two oats, man on third, ground ball hit to you. What do you do? Ed was expected to answer instantly. No thinking allowed. One wrong answer and Dick would explode. Ed dreamed of playing for the Yankees, then the Giants. He was good enough to start a quarterback for his high school team, good enough to catch for the varsity baseball team, but not good enough for the pros. At 5'10", 160 pounds, he was too small for football. And in baseball, he could field, but he couldn't hit very well. So when high school ended, Ed wanted college for one reason: escape. He'd had the family business shoved down his throat for years.

• 13:46Shane Parrish?

  He'd sacrificed his summers and weekends to that store. But Dick wasn't so eager to let him go. In his mind, Ed didn't need college. He could stay and learn the business from Dick. They fought about it for months. Finally, Donna, Dick's young wife, pulled her husband aside and said, "If you don't let him go, you're gonna lose him forever." She was probably right. "Fine," Dick said at dinner one night. "You can go to college, but I'm not paying for all of it." They struck a deal. Ed would continue working, holidays and summers, saving $1,000 per year towards expenses, and Dick would cover the rest. It wasn't generosity, it was a leash. Ed chose St. John Fisher College outside of Rochester. Not Notre Dame or Syracuse. His SAT scores weren't that good.

• 14:31Shane Parrish?

  Years later, when his daughters asked him whether he scored higher in math or verbal, he'd tell them the truth. "Sports, honey." Fisher was a small Catholic school with tree-shaded dorms and brown brick buildings. Ed fell in love with the place immediately. He made friends with Mark Munch and Bill Columbo, who'd both become crucial to Dick's sporting goods later. But that first day, watching his dad's car drive away after dropping him off, Ed felt something he'd never felt before. He felt free.

• 15:03Speaker 01

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• 15:31Speaker 02

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• 15:45Speaker 02

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• 16:01Shane Parrish?

  He was finally away from the store. Halfway through freshman year, Ed had his whole future mapped out. Major in accounting, learn to manage the company's books, then go to law school. The combination of business and legal knowledge would land him a corporate job someday. He'd finished his first year excited about the path ahead. He even wrote to a local law firm asking for a summer job. They said yes. Ed recounts his father's reaction to the news this way. You're not going to work there? Sure, I am. I got the job. No, this business has put food on the table since you were a kid. It's what's helping pay for college? You're going to get your ass down to the store, and that's all there is to it. Ed did what he was told. He swallowed his anger and went back to the warehouse.

• 16:46Shane Parrish?

  But now his hatred for the store went deeper than before. This wasn't just giving up summer for baseball anymore. This was his father crushing his dream. The one bright spot that summer was golf. His grandfather had been pushing him to try it for years, and Ed finally gave in. They played every Monday. Gramp was something else. Starting at age 71, he shot his age for 19 years straight. When Ed complained his shots were going left, Gramp kept it simple. Well, Eddie, aim a little more to the right. That summer and the ones that followed, those Monday golf games rescued Ed from purgatory. Well, at least dude about his stolen future, dreaming of law school and escape, at least he had Mondays with Gramp. Meanwhile, the economy was falling apart.

• 17:31Shane Parrish?

  The college years coincided with brutal interest rates going up to 12% in 1974. Consumer spending tanked. Some mornings Dick Stack would lie in bed, too depressed to get up, convinced his business was about to fail for the second time. Working at the store those summers, Ed started to see the real problem. It wasn't interest rates, it was his father. Dick had no buying strategy, just hunches. Ed remembered the garage at home was always stuffed with overstocked merchandise. Dick would bet big on some product, it wouldn't sell, and they'd have boxes of it for years. Eventually, they'd dump it at a loss just to clear the space. The store had no financial discipline either.

• 18:12Shane Parrish?

  Once a year, every July, they'd do inventory, count everything in the store, add it all up. And that's when Dick would finally learn that he'd made money that year or not. He had no idea up until that moment. He'd use a line of credit to buy merchandise and pay salaries, flying blind for about 12 months. His hunches had worked out more often than not, but Ed wondered how long that luck would last. During the school year, Ed worked part-time at Xerox, at Wegmans Grocery, at Oak Hill Country Club. Even as the lowest employee at these places, he could see the difference. These businesses knew if they were making money every single day. They had systems, they had data. They didn't run on gut feelings and prayer.

• 18:54Shane Parrish?

  Seeing his dad's weaknesses only strengthened Ed's resolve. He wanted no part of the family business. Soon as he graduated, he'd be gone. Then Dick's doctor spotted him dragging his leg up the stairs. Get to the hospital, now. Dick Stack was only 47, but he'd smoked three packs a day since his teens. If you suggested he'd cut back, he'd say, anybody can quit smoking, it takes a real man to die of lung cancer. That was the kind of guy Dick Stack was. He didn't exercise, he drank Manhattan's Lake Water, his breakfast was toast, coffee, and cigarettes. Nothing for lunch and dinner late at night, and then a big bowl of ice cream in bed.

• 19:35Shane Parrish?

  The double bypass was scheduled at Mass General in Boston in 1976. That was pretty major surgery. Plenty of people died on the table. Ed came home for winter break with the operation looming. When he asked for Saturday off to see his girlfriend back in Rochester, his father exploded from his bed. You're not taking Saturday off, we're open, you're staying here. For maybe the first time in his life, Ed stood his ground. Yeah, I am. A week later, leaving for the spring semester, Ed paused at his father's bedroom door. He knew he might never see him again. Dad, good luck with your operation, and I just want you to know that I love you. Now, that was radical talk in the Stack household. Dick had never once told Ed that he loved him, not once.

• 20:20Shane Parrish?

  Ed half expected he might say it now, with death knocking at his door. Instead, Dick grumbled, if you loved me, you wouldn't have taken last Saturday off. During surgery, Dick's heart stopped. They brought him back, but he never really came all the way back, not emotionally and not physically. Seventeen months later, Ed was three weeks from graduation. He'd lined up interviews with accounting firms in Rochester. Everything he'd worked for was within reach. And then Donna called. Your father can't do it anymore. The business is dying. Ed could have let it fail. Nobody would blame him. He was 22, he'd never wanted this store, and he owed his father nothing. But he thought about Bob Aitken, who worked there for 20 years.

• 21:03Shane Parrish?

  The other employees with mortgages, the vendors who trusted his father, his family. What would it do to Dick to watch his life's work die? At nine o'clock on Tuesday morning after graduation, Ed Stack opened the store. The same lights he turned on as a 13-year-old forced to work on weekends. The same cash register he'd stood behind instead of playing baseball. But something was different this time. The employees looked at him for direction. Vendors called about orders. The bank wanted to know about payments. For the first time, Ed wasn't just working at the store. He was responsible for it. Sometimes the thing that you're running from becomes the thing you have to run. Ed Stack wanted to be anywhere but behind that counter.

• 21:47Shane Parrish?

  But duty doesn't care what you want. It doesn't care what you feel. His father couldn't run the store anymore, and so somebody had to. That somebody was Ed. The next chapter of Dick's Sporting Goods was about to begin, not because Ed Stack chose it, but because life chose it for him.

• 22:06Shane Parrish?

  Something shifted in 22-year-old Ed's back when he stood behind the counter in 1977 after taking over. The store that he hated his whole life now suddenly became interesting. Maybe it was because he'd spent years watching from the outside and maybe it was because he'd worked at Xerox and Wegmans and now he saw how real businesses operated. But standing there, running the store for the first time, Ed saw opportunities everywhere. Sales that year hit just over 2 million, but profits were razor-thin at 100,000. The store needed better record-keeping, smarter merchandising, different advertising. When Ed pointed this out to Bob Aiken, his father's longtime lieutenant, another man,

• 22:50Shane Parrish?

  might have bristled at the boss's kid making all these suggestions. Instead, Bob said, "Young blood, let's do it." The word "let's" changed everything. For the first time, Ed wasn't just following orders, he was making decisions. And the store he despised became a puzzle he couldn't wait to solve. He started thinking about it in his sleep and in the shower, he was obsessing over it. Take the ammunition wars. Every year before hunting season, their competitors would drop prices on ammo. Dix would match them, starting a price war. One day, a guy from Kmart walked in, dressed like a New York lawyer in a suit and tie. Ed was behind the counter, 23, but baby-faced enough to pass for a teenager. The Kmart guy figured he could intimidate this kid.

• 23:33Shane Parrish?

  He said, "You people need to stop this price war or we'll put you out of business." Ed played dumb, "What do you mean? You have to tell the boss to stop this price war." "Okay," said Ed, "I'll make sure he knows." The guy walked out, probably feeling good about himself. In the next weekly ad, Dix dropped the price another 10 cents. When Kmart matched them, Ed sent his brother Marty over with cash from the register. Marty filled an entire shopping cart with shotgun slugs, case after case, buying Kmart's entire inventory at their loss leader price. Cheaper than Dix could buy them from Remington or Winchester. They held those slugs until hunting season started. Then when hunters couldn't find ammo at Kmart, guess where they came?

• 24:15Shane Parrish?

  Dick's had plenty and they drove massive traffic to the store. This is how Ed thought about competition, not as something to avoid, but as something to exploit, something to have fun with, a game, a puzzle. He'd been reading business books, especially about Sam Walton, the guy who owned one five and dime store in rural Arkansas. And he built Walmart by growing quietly in concentric circles, staying under the radar, expanding outward from Bentonville without attracting attention from bigger competitors. Ed started to dream and he would adopt the same strategy. From Binghamton, they'd expand in small steps, Syracuse, Rochester, then Buffalo. Always cold weather markets, always hunting country. Places where Dick's understood the customers because they were customers.

• 25:00Shane Parrish?

  One truck could service multiple stores on principal highways. No need to attract attention from big chains. For now, this worked, but Ed knew something his father refused to see. Retail never stands still. The moment you think you've figured it out, that's when someone figures out how to destroy you. Dick spent more than half the year in Florida recovering from his surgery, but he still reminded everyone who was boss. When 16-year-old Jay Miniger applied for a job, Ed took him under his wing. Together, they studied the market and decided Dick should enter the cross-country ski business. Snow covered Binghamton for months. The sport was exploding, the timing was perfect. They built this beautiful display stretching 30 feet all across the back wall.

• 25:43Shane Parrish?

  Skis, boots, poles, everything a customer would need. They stood back admiring their work when Dick Stack walked in. He was leaving for Florida the next morning for his six-month winter stay. Dick stared at the display for a moment and then he walked to one end and shoved the first set of skis. The entire display crashed down like dominos. "Get these the hell out of here," he said and walked out. Jay went pale. Oh my God. What are we going to do? Let's pick up the skis and put them back, Ed said. He's leaving tomorrow and we'll sell them all before he gets home. Which is exactly what happened. They sold every piece of ski equipment, plus all the coats, hats and gloves to go with them.

• 26:25Shane Parrish?

  From then on, Ed's strategy was simple. Wait until his father left town to make changes. Well, it might not have been so easy to see in the moment. Looking back later in life, Ed says his father's resistance actually helped him because it forced him to think through every proposal, every action, analyze every angle and make his ideas bulletproof. If he wanted Dick's support, he'd have to prove beyond a shadow of a doubt that an idea would work. This taught Ed a fundamental truth about retail his father couldn't see. The moment you think you've got it figured out, that's the moment you start to die. In retail, there's no standing still. You're either getting better or you're getting worse. Herman's World of Sporting Goods was expanding from New Jersey. Modell's was growing.

• 27:09Shane Parrish?

  New chains were forming that Ed hadn't even heard of yet. The comfortable little sporting goods store in Binghamton Dick built, that model was already extinct. It just wasn't obvious yet. Dick couldn't see it. Hillcrest had broken something inside him. That second store failure in 1956 had taught him the wrong lesson. Instead of learning how to expand smartly, he learned not to expand at all. Instead of learning how to adapt to customers, he learned not to change anything. He'd gone from reckless to paralyzed. And in retail, paralysis is just death in slow motion. There were limits to what Ed could tolerate.

• 27:50Shane Parrish?

  In the summer of 1978, his best friend, Mark Munshi, was getting married in Rochester. Ed was in the wedding party. A week before, he told Bob Aiken he'd need to leave Friday at noon for the rehearsal dinner. Sure, no problem, Bob said. But Dick Stack heard about it and found Ed in the store. And here is how Ed remembers this conversation. You're not going to that wedding. The store is open, so you're working. It's Munshi's wedding. He's my best friend. I'm in the wedding. I don't give a shit. You're working. End of conversation. I'm going. If you go, don't come back on Tuesday. Ed caves. He called Moonchi to say that he couldn't make it. At 23 years old, standing in the store instead of at his best friend's wedding, Ed realized he couldn't work for

• 28:32Shane Parrish?

  his father indefinitely. They were heading for a reckoning. Sometimes the cost of keeping peace is losing yourself. Ed kept the job but lost something bigger. That moment crystallized everything wrong with how Dick ran the business. Meanwhile, Ed was discovering something about himself that would matter more than any business strategy. His father had made him work the store since he was 13, but never taught him the actual business. Dick kept all the real knowledge, the buying, the vendor relationships, the planning locked in his own head. So when Ed walked into the Holiday Inn to meet salesman Paul Grossman, he didn't know the first thing about placing an order. Paul had all these jackets laid out on the beds and racks, and

• 29:15Shane Parrish?

  Ed started pointing at everything he liked, ordering the same quantities in every color, every style. He was like a kid who'd never been to a candy store and suddenly got the keys. Paul watched this for a while and then looked over his glasses. "Son, you don't have enough money to buy all the stuff you're trying to buy. Let me help you." Most 23-year-olds would have faked it, but Ed didn't. His inexperience was so transparent that Paul couldn't help but teach him. They spent hours going through the basics: how to read a market, how to plan inventory, how to balance desire with reality. The same thing kept happening. Mike Rich from Woolridge would quote $40 for closeouts, and Ed would counter with 15. And Mike would usually say yes, not because he had to, but because he

• 29:57Shane Parrish?

  wanted to help this kid succeed. Why? Because Ed Stack didn't pretend to know everything. He didn't throw his weight around as the boss's son. He treated vendors with respect, remembered their names, asked about their families. When he didn't know something, he just admitted it and said so. When someone helped him, he remembered and thanked them. Dick Stack had built trust with vendors over a decade, but Ed built something different. He built a faction. People didn't just trust Dick's sporting goods. They wanted it to win. For three years, Ed had been calling Puma and Adidas, begging them to let Dick's carry their shoes. These were the brands that every kid wanted. Hell, Ed had one of them when he was a kid, but his father wouldn't stock them. Now that Ed could make decisions,

• 30:41Shane Parrish?

  he was desperate to get them. The answer, though, was always no. In their eyes, Dick's was some outdoor store, hunting and fishing, not a place for cool sneakers or cool kids. Ed would call between trade shows and leave messages. And when they did call back, which was rare, the answer never changed. It was always no. So Ed did what Dick's had always done. He gave an unknown guy a chance. Nike was a nobody in 1978. Bob Akin had bought some basketball shoes from them while Ed was in college, but that was about it. And now Ed added running shoes. They flew off the shelves. By 1980, Nike had captured half the US athletic footwear market, and Dick's rode the wave with them. And that's when Puma finally called back and said,

• 31:26Shane Parrish?

  yes, we'll sell to you. Ed immediately called Adidas. Just wanted you to know, Puma's gonna sell to us. Really? Yeah. Ed had Puma's business card ready to prove it. There was a pause. Well, if they sell to you, we'll sell to you. Finally, three years of rejection, and now both brands wanted in. But when the Adidas rep came to take their first order, he had conditions. What do you want for Adidas apparel? He asked. Ah, we're not really interested in apparel, Ed said, just the shoes. The rep started packing up his samples. If you're not buying apparel, we're not giving you shoes. Ed was furious. Three years of begging, and now this guy was making demands? But he had no choice. Okay, we'll buy some apparel. After the rep left, Ed turned to Jay.

• 32:09Shane Parrish?

  Someday, those guys are gonna be begging to us to buy from them. But here's where the story gets really interesting. The Adidas apparel that Ed didn't want, it exploded out of the store. Running was becoming a national obsession in the late 70s. And runners didn't just need shoes. They needed shoes and shorts and skirts and socks and everything. And the margins on sportswear were incredible. Dick's made more profit on running a fit than on an expensive hunting gear or jacket. That arrogant Adidas rep had accidentally shown Ed the future of Dick's sporting goods. Sometimes the best thing that can happen is not getting what you want.

• 32:48Shane Parrish?

  Dick succeeded and rode a 40-year wave with Nike because Puma and Adidas wouldn't give them a chance. They discovered apparel because Adidas forced it on them. The rejections and the demands that felt like insults at the time were actually gifts. Years later, Adidas would indeed come begging, but by then, Dick's was huge. Dick Stack spent most of the year in Florida recovering, but he still managed to lose his mind over the phone about every change Ed made. First, it was the apparel. What the hell is clothing doing in my store? Ed let the numbers do the talking. The apparel Dick didn't want was generating the profits he did want. Dick grumbled but couldn't argue with math. Then Ed revolutionized their advertising.

• 33:33Shane Parrish?

  For decades, Dick had run black and white ads in the sports section. Same spot, same format since the 1950s. Ed noticed other retailers using tabloid inserts, eight to 12 pages, full color, impossible to miss. So Ed built one of these inserts. He drew stick figures wearing clothes, primitive sketches of products, handed these scrolls to the newspaper, and they turned them into a professional eight-page color insert. Business exploded, but so did costs. Annual advertising jumped from $40,000 to $100,000. His father got on the phone. "What the hell are you doing?" Dick screamed from Florida when he saw the expenses. Bill Humsman, the accountant, stepped in. "Dick, look at the sales."

• 34:16Shane Parrish?

  Sales jumped from 2.7 million to 3.1 million. Profits had doubled. "They spent a lot of money," the accountant said, "but they made a lot more. The kid is on to something." The proof came from their competitors. Jerry Harper, their Nike rep, walked into Dick's biggest rival and asked how back to school was going. "It'd be a lot better," the kid said, "if we weren't getting Dick to death." At 26, Ed was running the business, but Dick still owned it. And he still called from Florida to complain about nearly everything. Nothing Ed did was ever right. Even though Dick couldn't argue with the results, he was content with two stores. "Where else but America?" he loved saying. "Can a dumb kid who got out of high school by the skin of his teeth make it like this?"

• 34:59Shane Parrish?

  In his mind, he'd made it, and he wasn't wrong. He'd lost everything at Hillcrest in the 50s and rebuilt from nothing, creating a profitable business, so why risk it all again? But Ed saw Herman's expanding from New Jersey and Modell's growing and new chains forming. The comfortable two-store operation was already dead. It just didn't know it yet. The lesson here is about different definitions of success. Dick Stack thought success meant not failing again, and Ed thought success meant growing before someone else grew past you. One was playing not to lose, the other was playing to win. And in retail, playing not to lose is just losing slowly. Ed wasn't satisfied with the two stores.

• 35:42Shane Parrish?

  He was paranoid, and his paranoia was justified. He'd watched Walmart destroy local department stores. Home Depot was steamrolling hardware stores. Sporting Goods would be next. Ed wanted to expand to Cortland, 40 miles up Interstate 81. It was the perfect size, perfect location, perfect market. For months, he had argued with his father about it, but Dick wouldn't budge. Hillcrest still haunted him. Finally, Dick exploded mid-argument. "If you think you're such a goddamn smart son of a bitch, go down to the bank and get your own line of credit and buy me out." So Ed did exactly that. He went to First City National Bank in Binghamton, showed them the numbers and walked out with a verbal commitment for a credit line. The bank was ready to back him.

• 36:25Shane Parrish?

  "We're good to go," Ed told his father a few days later. "What do you mean, we're ready to go?" When Ed explained what he'd done, Dick turned indignant. "This is my business, and it's going to stay my business." Dick hadn't expected his bluff to be called. He wasn't ready to let go. So Ed was still trapped, loving the business he once hated but unable to grow it, watching the retail landscape change while forced to stand still. The stalemate might have continued forever, but Ed had an unexpected ally, Uncle Joe. Dick's brother and accountant started whispering in his ear about succession planning. Dick was 55, had been running the business for 36 years, and his health wasn't improving. Maybe it was time. The negotiations were classic Dick Stack.

• 37:08Shane Parrish?

  He'd sell the business to his five kids for 1.25 million, but on his terms. They'd pay him over 20 years at 12% interest and couldn't pay it off early, even if they wanted to. He'd keep the buildings and lease them back at above-market rates for 25 years. The kids couldn't break those leases without his permission. Dick would have income for life and stay connected with the business from Florida. But Uncle Joe insisted on one crucial detail. Someone had to be in charge. Very short, the young lawyer structuring the deal suggested a two-class stock arrangement. Ed would get 51% of the voting shares. Ed would have control.

• 37:48Shane Parrish?

  His siblings would get equal equity stakes, but not have control over operations. In the summer of 1984, the same summer that Ed would go on to marry the love of his life, Denise, he took control of Dick's Sporting Goods. He was 29 years old. Dick finally stepped back and Ed could finally move forward. The first thing Ed did was move operations out of the cramped quarters behind Court Street. They rented a distribution center 10 minutes away. It was 20,000 square feet of warehouse and offices. Dick Stack saw this from the sidelines and lost his mind. A retailer should be in the store. Everything happens in the store. How the hell can you know what's going on sitting on your ass at a desk?

• 38:33Shane Parrish?

  But Ed knew the chains were coming. Herman's, Modell's, Sports Authority, they weren't being run by guys standing behind cash registers. They had systems, they had infrastructure, they had strategic planning. Dick's needed the same to survive. Still, his father had a point. You couldn't really run retail remotely. So Ed spent time at Court Street regularly, walking the floor, talking to customers. The difference was that Ed saw both needs. His father thought you had to choose. Ed knew you needed both, time in the store to stay connected and time away to plan the future. One was tactics, the other was strategy. Without both, Dick's would die. Ed did something else really smart. He assembled a board of advisors. They met quarterly and saved Ed from himself often.

• 39:18Shane Parrish?

  They were generous with their time, but brutal with their opinions. And of course, Ed always knew that his father's advice would be, don't do it. In 1986, Tim Myers and Ed drove to Syracuse on a Sunday scouting locations for their first store outside Binghamton. Syracuse was three times the size with a major university, plenty of hunters and fishermen. It was perfect Dick's territory. They met Mary Claire Cott, a real estate broker who showed them property near a shopping town mall. They looked at it like the location and before they really thought it through, they signed the papers. Driving home, Tim looked over at Ed. Did we just buy a piece of land? I think we did. What are we gonna do with it? I don't really know.

• 40:02Shane Parrish?

  By the time they got home, they were in full panic. They'd just committed to buying land with no plan, no budget, no idea if they should buy or lease. They called the real estate agent that night and backed out. She was very generous. She said, no problem, I understand. Weeks later, they were back properly prepared this time, or at least so they thought. This time, they leased space in a strip center. They spent months creating detailed plans, departments like boutiques, displays that would stop shoppers in their track, a layout that would pull people through every section. They handed the plans to the developer and waited. Then came the education. The contractor called them over to show them the progress. So Ed and Tim walked into four walls and a roof. Well, when do you start the interior?

• 40:47Shane Parrish?

  Ed asked. What interior? We're building you a vanilla box. You're supposed to build us a store. They hadn't ordered fixtures. There's no shelving, there was no lights, there was nothing. They were supposed to open in six weeks. The contractor luckily saved them. He agreed to do the interior work for extra money and definitely gouged them a bit, but he finished on time. And the store was beautiful. The Syracuse opening was a revelation. They moved Binghamton people up to run it, including Ed's sister Nancy. Hundreds lined up for jobs. Their advertising started weeks early with just a teaser. The biggest sporting event in Syracuse starts on August 3rd. Opening day, the crowds overwhelmed them.

• 41:30Shane Parrish?

  Nike reps who'd seen everything were shocked. Nancy had to take bags of cash to her apartment because the registers couldn't hold it all. The store did $8.3 million in its first year. With one opening, they doubled the size of the company. A year later, Gary Stefano from Nike toured the store with Dick. Dick, you must be so proud of these kids. They've done such a great job. Now, before I tell you what Dick would say, can you guess? Dick nodded, of course. The store looks great. They're doing a great job, but these kids did 25% more business than they thought they would. So you know what? They're not really quite as smart as they think they are. Think about that for a second.

• 42:13Shane Parrish?

  His son just doubled the size of the family business with one store. Proved all Dick's fears wrong, and the best he can manage was pointing out that they underestimated their success. But here's what Dick didn't understand. Not being as smart as you think you are is how you learn. Ed and Tim made every mistake possible in Syracuse. They bought land they didn't need. They didn't know what a vanilla box was. Nearly opened with empty walls. And because of all those mistakes, they learned more about opening stores than any NBA program could teach them. The real lesson from Syracuse isn't about real estate or construction contracts. It's that sometimes your ignorance is a great asset. If Ed had known everything that could go wrong, he might never have tried to expand.

• 42:57Shane Parrish?

  Next, they opened a second store in Syracuse, 12 miles north. Ed expected to match the first year's sales. It should be about 8.3 million. But the new store only did 7 million, and the first store's sales dropped to 8 million. Combined, they've grown a lot, but it's not what they projected. Ed learned an expensive word: cannibalization. When you have one store in a city, customers drive from everywhere to reach it. But when you add a second store, you split that customer base. One plus one doesn't equal two. In this case, it equals about 1.75. Still, both stores were wildly profitable, so they pushed forward. Rochester next, then Buffalo. Each store bigger than the last, each one a revelation to customers who'd never seen

• 43:41Shane Parrish?

  anything like Dick's Sporting Goods. In Buffalo, Ed overheard a kid, who was maybe nine years old at the time, standing wide-eyed before a wall displaying 30 feet of baseball gloves. "Mom," he gasped, "I've waited for a store like this my whole life." He wasn't the only one. The Buffalo store did $12 million in its first year. But growth brought new problems. Bigger stores meant more employees, which meant higher turnover. And thieves got creative. They weren't just stealing clothes anymore. They'd bring razors, cut the heads off graphite golf clubs, pocket them, get them reshaffed at elsewhere, and sell them on the black market. Ed called his best friend from college, Bill Colombo, who was then on the fast track at JCPenney.

• 44:26Shane Parrish?

  He convinced him to leave to join Dick's. In 18 months, Bill cut theft in half. By 1990, Dick's had seven stores when Herman's World of Sporting Goods finally arrived in Binghamton. Herman's was the apex predator of East Coast sporting goods. They'd been in the business since 1916. They had way more stores, and they were crazy aggressive in expanding from their New Jersey base. Ed was smart. He studied their patterns and discovered they had a weakness. They ran predictable sales inserts every Sunday. So Dick's ran their inserts on Wednesdays, which gave them 24 hours to read Herman's Sunday ads for the following week and adjust their prices to beat them.

• 45:07Shane Parrish?

  Week after week, Dick's undercut Herman's prices before Herman's even knew they were in a fight. After Thanksgiving one night, with a bit too much to drink, Tim Myers called the Herman's store, pretending to be Bob Corliss, Herman's CEO, asking how the holiday business had been. The manager, thinking he was talking to the CEO of his company, was pretty candid about what was working and what wasn't. Then Tim got a little carried away. Said, "Your store's a mess. I'll be there tomorrow morning at 9:30. It better look different." That night, Ed drove past Herman's. Every light was on. The parking lot was full. Employees working through the night to fix problems that didn't exist. Ed felt terrible about it after. It was underhanded and unnecessary and not the way he wanted to do business.

• 45:53Shane Parrish?

  They were young and stupid, letting competition turn into something ugly. But it also showed another side, which was how seriously they took the threat. Herman's wasn't just competition, they were an existential danger. This chain could crush Dick's without thinking twice. Ed knew they had to fight with everything they had. Though he'd learned that night, there were lines he shouldn't cross. The real lesson here isn't about competitive tactics, it's about fear and survival. When your seven stores facing a hundred store chain, you feel like David loading a slingshot. Sometimes that fear makes you fight smart, like using Wednesday ads to beat Sunday prices. And sometimes it makes you do things you'll regret, like the prank phone call.

• 46:35Shane Parrish?

  Ed never pulled this stunt like that again, but he never stopped taking competition seriously either. Because in retail, the day you stop fearing your competition is the day competition stops fearing you. By 1991, Ed had built Dick's to 12 stores using Sam Walton's playbook. Grow quietly in concentric circles. Stay under the radar, stick to cold weather hunting markets, always on major highways. Places that are big enough to support a store and too small to attract the bigger chains. The strategy was working, every store was profitable. They understood their customers because they were their customers. But Ed's siblings wanted out. They saw friends cashing out for millions and saw Herman's with hundreds of stores and Sports Authority expanding everywhere.

• 47:20Shane Parrish?

  So when the phone rang, Michael Barrick from Bessemer Ventures Partners was on the other end of the line. We can help you become a national player, we've done this before. Ed thought about his father, content with two stores, his siblings wanted their payday. "Let's talk," Ed said.

• 47:38Shane Parrish?

  Six million dollars hit Dick's bank account in 1991. It came from venture capitalists who'd built Office Depot and Petsmart, who'd funded Staples, who knew how to turn small regional players into national powerhouses. Ed Stack had spent months negotiating with Michael Barak from Vestmar Partners, Jerry Gallinger from Oak Investment Partners, and Dennis DeFory, the French genius who'd founded Carrefour. These weren't just investors, they were kingmakers. Had kept control of the board with five seats to their two, but six million dollars doesn't come free. It comes with high expectations.

• 48:15Speaker 01

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• 48:44Speaker 02

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• 49:14Shane Parrish?

  You need to establish beachheads, they told him. Get into markets before your competitors do. Figure out the details later. Dick Stack would have hated this. He'd lost his second store in 1956 by expanding too fast and spent 40 years terrified of growth. But sometimes you have to take risks to build something great. The money transformed Dick's overnight. They went from opening three stores a year to opening 20. But too much growth too quickly creates a lot of problems. In 1994, they tried hiring a top-tier CFO. The candidate loved Dick's and they loved him. They brought him and his wife and his daughter to Binghamton for dinner. Everything seemed perfect, but then their family went shopping for a house. That afternoon, the candidate called Ed.

• 49:58Shane Parrish?

  "My wife said if I wanted the job, I can move here, but she and my daughter won't be coming." Dick's had to leave in order to attract top talent. They looked at Boston, but the real estate prices were astronomical. Hartford had perfect housing, but no affordable office space. Philadelphia was briefly considered until the evening news declared it the murder capital of America. Pittsburgh, on the other hand, had everything they needed. Central location, great airport, and reasonable costs. The day they left Binghamton, Ed's six-year-old son, Brian, sat in the back of the minivan. "I just want to look at our house for as long as I can as we drive away." Ed almost turned around, but they went. Before the move, Jerry Gallinger came to see their new prototype store.

• 50:43Shane Parrish?

  The sign blazed 10 feet tall, "Dick's Sporting Goods." Did you ever think about changing the name? Ed knew what he meant, but he wanted him to spell it out. "My assistant asked me about it, my wife too. I don't understand, we're a sporting goods retailer." Jerry squirmed, looking increasingly uncomfortable. "Maybe Dick's just isn't the best name, you know, like Guy's Anatomy?" Ed turned indignant. "That's what my grandmother named my father. The name stays." The subject never came up again, but it showed that the new investors were more hands-on than you'd expected. In Pittsburgh, they'd opened three stores simultaneously, each one 50,000 square feet. The city went wild for them.

• 51:26Shane Parrish?

  And success has a way of making bold people boulders, so they kept pushing harder. By 1995, they had 22 stores, and then 40. They were opening stores at breakneck speed, convinced they had the Midas touch. You know what happens when you convince yourself you have the Midas touch? The new stores were enormous, 60,000 square feet, but more than that, they were full of fancy floors that nobody noticed, and expensive fixtures that didn't drive sales. They opened in markets that they didn't understand, like Cincinnati, Baltimore, Philadelphia. Three stores per city all at once that had worked. Pittsburgh. They didn't know local fishing seasons or hunting culture or what people actually wanted.

• 52:08Shane Parrish?

  And their inventory system, which had been built for two stores, was cracking under forty. Pallets stacked on pallets in the warehouse. Stores had too much of what wouldn't sell and not enough of what would sell. They had to mark everything down. Margins crashed. In nineteen ninety six, Mike Hines told Ed they'd be out of money next month. They owed thirteen million dollars they didn't have. The banks wouldn't restructure the debt and the venture capitalists wouldn't put in more money until the banks restructured. It was a classic catch twenty-two. We should file chapter eleven, someone suggested at a meeting. Ed felt physically ill. His father had refused bankruptcy when their second store failed, selling everything he owned to pay his creditors.

• 52:54Shane Parrish?

  Ed wouldn't use bankruptcy to escape debts he'd created. That's not an option, he'd said. Someone mentioned GE Capital, and at the time they had a reputation for brutal terms and restrictive covenants, basically one step above Tony Soprano. But they would do something that banks wouldn't do. They would take risks the banks wouldn't touch. The night before the meeting, Ed stood at his hotel mirror, giving himself a little bit of a pep talk. Get your shit together, Stack. Walk in there and talk like you don't care whether they give you the loan or not. The conference room he walked into wasn't exactly what you'd expect. There were suits firing questions like prosecutors. How can you run a business without a computerized replenishment system? Why did you increase the store size to sixty thousand square feet?

• 53:40Shane Parrish?

  After a while, Ed took a different tactic. He interrupted them and said, guys, let me tell you something. We made a series of mistakes. And these are the mistakes we made. He told them what happened, then moved on to why it happened. That he thought establishing beach hedge in new markets was important, but they'd moved into too many too quickly. And this is what we're going to do so that it never happens again, Ed said. Our venture group will put in additional equity into the business. We'll be disciplined on expenses and growth. We won't allow our growth rate to outstrip our capital. All told, the interrogation, the meeting lasted for about ninety minutes. And in the back of this room sat a man who hadn't spoken once. He had a dark suit. He was about forty, watching everything like a hawk.

• 54:25Shane Parrish?

  The meeting ended with no promises made, but as he was gathering up his papers, the quiet observer went over, sat down and said, "Tell me the three things I need to do so that we can agent this loan." There were only two. Ed told him how much money they needed and when they needed it by. The man quietly studied Ed for 10 seconds, his head cocked to the side, saying nothing. His eyes weren't adversarial, he seemed to be seeking understanding, not delivering a challenge. This was a gut instinct call and this silent appraisal was his due diligence. Finally, he smiled. "We can do that." He shook Ed's hand and left. To this day, Ed doesn't know who he was. Walking out, Mike asked, "What just happened?" "I think we just saved the company.

• 55:10Shane Parrish?

  There's a lesson here. If you're in a big meeting and there's a person sitting off in a corner not saying anything, that's probably the person you have to convince. They're the decision maker." GE Capital gave them $140 million, but it came with a really short leash. They couldn't buy inventory without permission or open stores without approval. Every penny was tracked, every metric monitored. Ed would say later,

• 55:33Speaker 03

  "We'd peered into the halls of hell and we were never going back. Funny thing, GE Capital turned out to be a wonderful partner. If we had an issue or wanted to do something different, they wanted to know about it and to understand our thinking. But I don't recall a single instance when we were mulling some important action and they said no. Their covenants proved far less onerous than they'd seem. In fact, they were easy to hit. They put those in place to keep us from getting ourselves into trouble. And once our new systems were installed and we were back on solid footing with our inventory under control and our margin rates back to normal, the covenants were performance bars that we cleared easily. All told, fixing all that was broken took a little more than a year.

• 56:14Speaker 03

  By early 1997, we were a far healthier company than we'd been before the scare. Hitting the pause button in our growth enabled us to take a more thoughtful approach to further expansion. And with our new systems, we had an almost microscopic view of Dick's operation and a far better sense of what we were doing and why."

• 56:32Shane Parrish?

  But this near-death experience taught Ed an important lesson about debt. Listen to his words here because they contain a profound amount of wisdom.

• 56:43Speaker 03

  You never get over a close call like the one we experienced in the mid 1990s. I will never again be comfortable relying on someone else's capital. I will always be a little paranoid and insist that we finance all we do from our own earnings. It seems to me that's the only way to control your own destiny. The banks can't take away your business if you don't owe them any money. So we carry no long-term debt. Self-reliance requires discipline, but we've managed it. I think that's one reason we've survived when so many other retailers have run into trouble, especially our direct competitors in sporting goods. Many have carried a heavy debt load, pushed on them by their private equity owners, firms that use these stores and that debt to pay themselves. When you're leveraged up like that

• 57:27Speaker 03

  and have significant interest payments to make, you're not as nimble when things get turbulent. Wall Street gets on my back sometimes, saying, "We don't have an optimal balance sheet," which is its way of saying we have too much cash and don't have what the street considers the proper amount of debt. Let them say what they will. Our balance sheet is optimal for us.

• 57:48Shane Parrish?

  Wow, there's so much wisdom in that. Warren Buffett later encapsulates the exact same idea by saying, "We never want to count on the kindness of strangers in order to meet tomorrow's obligations. When forced to choose, I will not trade even a night's sleep for the chance of extra profits." I think that's a profound lesson. But the near-death experience changed the dynamic with the venture capital partners, too. The VCs had invested for quick growth, not to watch Ed slowly rebuild. Jerry Gallagher and Mike Barak started pushing for changes. Focus on footwear, go all-in on e-commerce, stop opening stores, and become an internet company. Michael, Ed told him repeatedly, "We're not going to do that." The VCs pulled out their spreadsheets.

• 58:33Shane Parrish?

  They wanted Ed to focus on the fast sellers, but Ed knew that that would destroy Dick's. They needed all categories for credibility and authenticity with the actual customers. That kid in Buffalo who said he waited his whole life for a store with 30 feet of baseball gloves. He was one customer among tens of thousands, each seeking something specific. To win, Dick's had to be good at every sport. And Ed was eventually proven right. Within years, the specialty stores, the VCs cited as the future, had all cratered. The lesson here cuts deep. Sometimes the most profitable decision on a spreadsheet is the worst decision for a business. Jeff Bezos has this quote that I think about often.

• 59:17Shane Parrish?

  When the data and the anecdote differ, the anecdote is often right. You're measuring the wrong thing. It's not that the data is wrong. The VCs saw the numbers. Ed saw the customers. In retail, customers always win. The venture capitalists, though, they were drunk on this internet fever. Remember what the late 90s were like? It was 1999 and Etoys.com had just gone public at $20 a share. By day's end, it was trading at 67. The company had never made a profit, but it was suddenly worth more than Toys R Us. Michael Barrick and Steve LeBeau caught the fever hard. They wanted Dick's to stop opening stores, pivot entirely to the web. Ed thought they were insane. Home computers were still slow and clunky.

• 1:00:01Shane Parrish?

  Most households weren't even connected to the internet at the time. But the VCs wouldn't listen. They forced Dick's to create DSports.com and poured $20 million into it. The name itself was a problem. Dick's.com was obviously taken by a gay pornography site. Ed tried buying it repeatedly without success. Dsports.com launched on Super Bowl Sunday 1999 with 34,000 items for sale. They advertised on ESPN and Fox Sports, burning through cash. Ed's goal wasn't to make money, it was to limit how much they lost. During one meeting, Henry Nacella, the former Staples president, helping run their internet venture,

• 1:00:42Shane Parrish?

  told Ed, "You clearly don't want to win in this business because you're not willing to lose more money." And Ed thought, "You're right, exactly." EToys had already collapsed from $68 to 0.09. Dozens of dot coms were crashing. Why should Dicks join them? The tension exploded when Ed took his first vacation in years to Cabo. His assistant called, "There might be a coup underway." So Ed flew back immediately. "You shouldn't be the CEO," Barrett told him when they met. Barrett compared their disagreement to Truman firing MacArthur and tried to rally the board to remove Ed, but the other directors wouldn't go along. The VCs wanted out. They'd been trying to cash out for years.

• 1:01:24Shane Parrish?

  At a board meeting, Gallagher sneered across the table, "I think you're not going public because you don't want to go public." Then Gallagher played dirty. He invoked a mandatory redemption provision, demanding Dicks buy back his shares immediately. He knew they didn't have the money, so he offered a deal. "Extend the deadline by two years, but give the VCs a bigger piece of the company." Ed looked across the table and thought, "It's time for you to go." The solution was audacious. Ed went back to GE Capital and borrowed 60 million to buy out 60% of the venture capital stakes. The VCs were so desperate for their money, they agreed immediately. But then disaster nearly struck. A fax arrived from Leonard Green and Partners, offering to buy all the VC shares at a higher price.

• 1:02:08Shane Parrish?

  Someone had clearly leaked the deals. Dicks was in play now for a hostile takeover. Ed had one hope, Dennis Deforey, who'd invested years earlier. Dennis called from Paris with a simple question. "Ed, do you want to sell your company?" "I don't want to sell it for this price. I don't want to sell it for twice this price." Neither do I. The takeover was blocked. Ed had control again. While Ed was fighting for control, a former Maryland football player named Kevin Plank was building something revolutionary in his grandmother's basement. A moisture-wicking shirt that kept athletes dry. He called his company Under Armour. Ed first saw Under Armour at a trade show. They had a tiny booth in a company no one had ever heard of. But Ed saw what others missed.

• 1:02:52Shane Parrish?

  This wasn't just another shirt. It was a completely new category. This wasn't the first time he'd bet on an unknown company. Remember Nike? Dick's became one of Under Armour's first major retail partners. When other stores wouldn't give the unknown brand any shelf space, Ed gave them prominent placement. The partnership exploded. Under Armour grew from nothing to a multi-billion dollar company, and Dick's rode the wave with them the whole time. By 2002, though, the world had changed. September 11th had shocked the economy. Ed employed thousands of people. And if another crisis hit while Dick's was private, those families would suffer. They scheduled the IPO filing for July 17, 2002, Dick Stack's birthday.

• 1:03:34Shane Parrish?

  "Call me superstitious," Ed said, "but I thought he might be able to help." The roadshow was brutal. Three weeks of dawn to midnight meetings. Their investment banker had promised $18 to $20 per share, but as they toured, the price kept dropping. Then Ed did something unheard of. Instead of cashing out like most executives, Ed bought in. He purchased 80,000 additional shares in the IPO with his own money. The night before going public, the bankers pushed to lower the price even more to $12, saying that there was no demand. But then something odd happened. Ed's phone rang. A woman from Merrill Lynch, not knowing she was talking to the Dick CEO, told him that his order for his shares had been cut

• 1:04:17Shane Parrish?

  because the IPO was so oversubscribed. Ed turned to the Merrill Lynch banker beside him. "You said we couldn't do a deal at 13, and now you're cutting me back because it's oversubscribed?" On October 15, 2002, Ed Stack rang the opening bell at the New York Stock Exchange. The company his father started with $300 from a cookie jar was now public. The stock opened at $12.25 a share and closed the day at $13.15. Within a month, it was trading above 20. Without getting into the banking aspect of this or how they tried to take advantage of him or the VC's behavior, the lesson here is about believing your own story when nobody else does. The bankers didn't believe. The market didn't believe.

• 1:05:02Shane Parrish?

  But Ed believed enough to buy his own stock because he knew what Dick's could become and what it was worth. Sometimes the best investment you can make is betting on yourself when everyone else is betting against you. The other lesson is you have to be really selective and careful about who you let on your board and who you bring in as your partners. While everybody looks good on day one, it doesn't always look good a few years later.

• 1:05:27Shane Parrish?

  There's a moment that captures everything Dick's Sporting Goods was meant to be. Ed Stack was working the sales floor when it happened. A kid, maybe nine, tried to steal a baseball glove. An employee caught him in the parking lot and dragged him back inside, yelling at the thief. Dick Stack walked over and looked at the boy's worn clothes. Why'd you steal the glove? The kid looked up, tears streaming down his eyes. I just want to play baseball. You can't steal, Dick said, no matter how bad you want something. Promise me you won't do this again. Yes, sir. But then Dick walked the boy back to the baseball section and had him pick out a ball and a bat to go with the glove. You go play baseball. Stay out of trouble. Ed never forgot that moment. His father understood something fundamental. When parents buy their kids a baseball glove, they're not buying equipment, they're buying

• 1:06:12Shane Parrish?

  a dream. Dick Stack died in March of 1998, dementia having stolen almost everything from him. The funeral procession made a slow loop past the store at 345 Court Street. At his death, Dick's had 51 stores in six states. What happened next would have been unimaginable to the man who started with $300 from a cookie jar. By 2012, Dick's had 518 stores approaching $6 billion in sales. It has taken 53 years to reach their first billion. They hit $2 billion just three years later. And today, they have over 850 stores and over $16 billion in sales. But the transformation wasn't just about size. When Ed learned that one in five American high schools were no longer offered sports

• 1:06:56Shane Parrish?

  due to budget cuts, Dick's launched the Sports Matter Initiative, committing over $100 million to save youth sports programs. Then came the guns. After Sandy Hook in 2012, Dick's pulled assault-style rifles. After Parkland in 2018, where the shooter had bought a shotgun at Dick's, Ed made a decision that would cost at least $250 million annually. No more assault rifles, no firearms to anyone under 21. They destroyed $5 million in existing inventory rather than return it. The backlash was vicious. Death threats. 65 employees quit immediately, but Walmart followed suit, and so did Kroger. When asked if Dick's would ever reverse the decision, Ed's answer was one word: never.

• 1:07:41Shane Parrish?

  Today, Dick's operates more than 800 stores and employs 55,000 people. At headquarters, the original cookie jar sits in a place of honor. Every employee reaches 25 years receives one just like it with $300 tucked inside. The real legacy isn't the stores or the money. It's the millions of kids who got their chance to play. You go play baseball and stay out of trouble. Eight words that built an empire, not because they were a business strategy, but because they were human. Okay, let's get into some of the reflections from this episode. This whole freaking story is insane. From that list that Dick Stack gives the guy, his boss who wants to go into fishing, asks him to do it, and then he tears up the list.

• 1:08:24Shane Parrish?

  He starts crossing things out and then Dick grabs it and then goes to his grandmother and his grandmother gives him $300, which is her life savings on her unproven grandson. And then the father-son dynamic between Ed and Dick and the tension and the stress and to VCs and to all the lessons that they learned and how important it is to have the right partners and never ever be dependent on the kindness of strangers to finding his confidence to ban guns in a sporting goods store. This is such an insane story. And one of the things that came to mind when I was reading this cookie jar part of the story is that, oh, people say, no, nobody starts a business like that today. That doesn't happen.

• 1:09:09Shane Parrish?

  Well, least you think that that doesn't happen. I point you to Shopify, which Toby Luque's father-in-law mortgaged his house so that Shopify in the early days could make payroll. Every business that you see that exists is somebody's irrational dedication and it's also somebody else believed in them at a moment when nobody was believing in them. One thing that was interesting about Dick was when he expanded to two stores and then he had to pull back, you know, a move that scarred him for life. He never declared bankruptcy and paid off all his creditors. That was the exact same thing that Jimmy Patterson's father had happened to him too. It took him a lot longer to pay off all of his creditors.

• 1:09:51Shane Parrish?

  But he made a point of doing it. And in both cases, that reputation for what you do in this time of fire and how you treat people and paying back the people that you owe money to ended up benefiting them later in life. Not only did it benefit Jimmy, you know, the son and Ed, who was the son, but it benefited the company. I mean, the only reason that Dick was able to start again was because he had paid back those people. The problem there is that he overlearned this expansion lesson. He should have taken away the mistakes that he made and not made them. He picked a development in the wrong location with an inexperienced developer with bad tenants in the building. He was north of the city, if I remember correctly, instead of east or west,

• 1:10:31Shane Parrish?

  where the traffic patterns were moving as people exploded into the suburbs. Another thing that I found really fascinating was Ed's work ethic is intense. It often involves long hours, a lack of work-life balance, and a preference for being deeply involved in all aspects of his company. He's not running his company out of a spreadsheet. He's running it from the territory. A lot of people think that you can run things from the 30,000-foot level, and I don't think that's true. When we study outliers, they know all the details. Sure, they might operate at the 30,000-foot level often, but they can go down to the 1-centimeter level. And that's one of the things that differentiates them. But to do that, you have to be obsessive about

• 1:11:12Shane Parrish?

  details. You have to be in the weeds. You have to know the business cold. You can't just get the gist of things. You have to play with the data. You have to be in the mess. You have to talk to the customers. Everybody wants to skip that part today. There's a part in the book that never made the podcast episode where Ed talks about what he learned playing sports, and I want to read it to you. "What I learned on the field is part of a team transcended athletics. How to work hard, for starters. You have to commit to practice, to improving, to making an effort. There were always people on our teams who were dodgers, who didn't go all out in practice and didn't give all they had in games. As an adult, I've come to see that there are people like that

• 1:11:55Shane Parrish?

  in any organization. At the same time, you learn that a team is only as strong as its component parts. And if one of those parts fails, the whole team has a problem. If your left tackle lines up offside and gets called for it, on the next play, the whole team lines up five yards back." Successful plays work the same way. They inspire the whole team to reach further. I've seen that many times at Dicks. You learn that the team is more important than you are, that you're part of a greater good. That can be humbling. It can mean taking a demotion or an unwanted reassignment for the good of the group. That willingness to sacrifice is the key to teamwork and to success in any collective effort. You learn how to win and you learn how to lose

• 1:12:39Shane Parrish?

  and how to be a good sport. When you win, you don't rub your opponent's nose in it. Likewise, you don't resent it when he beats you. You take the lesson into whatever you do for the rest of your life. I've certainly applied that in my career. We've had our share of losses along with wins. Individual sports are a little different. Everything hangs on how you did and only you answer the call. In golf, wrestling, skiing and singles tennis, you're on an island. I think that it takes a lot of guts to play those solo sports, but they share one important lesson with team sports, which is that what you get out of any endeavor is directly proportional to the effort you put into it. I love that last line. Whatever you get out of any effort is directly proportional to the effort you put into it.

• 1:13:24Shane Parrish?

  There's another really subtle thing that happens that I think a lot of people don't pick up on and I wish more people would pay attention to. So the first time Ed goes to buy something for the store of the winter coats, he goes into this hotel room at the Holiday Inn and he has no idea what he's doing. And I think this is a key moment. It has nothing to do with strategy. It's something harder to teach. How do you become someone worth helping? Somebody that other people want to help? Somebody that other people want to root for? So Ed, in this moment, could have let his ego destroy him. He could have faked competence and made these catastrophic mistakes. Instead, his vulnerability becomes his greatest asset. If you go into a deal, looking at it as a partnership, Ed would say later, it almost always works out.

• 1:14:08Shane Parrish?

  But to me, that's kind of missing something because partnerships work when you're the kind of person other people's want to partner with. When vendors, for instance, who could crush you, choose to lift you instead. When competitors respect you even while trying to beat you. When employees stay loyal through the hard times because they believe in who you are, not just what you pay. There's a world of difference between people helping you and wanting you to win. Okay, I want to get into some of the lessons I took away from this incredible story of Dick's Sporting Goods. So the first is the gift of belief. Dick Stack's grandmother pulled $300 from her cookie jar after his boss crossed out his carefully crafted list. She didn't give him business or advice or connections. She gave him belief.

• 1:14:53Shane Parrish?

  Dick's Sporting Goods exists because someone believed in an 18-year-old kid who barely graduated high school. Believing in someone before they believe in themselves can change everything. Two, your name is your biggest asset. When Dick's second store failed in 1956, he could have declared bankruptcy like everyone expected. Instead, he sold his house, his car, everything he owned to pay back his creditors in full. Six weeks later, when he asked the same suppliers again for another chance, they remembered. Trust isn't built in the good times, it's built in the hard times. Three, a taste for salt water. Ed despised working at his father's store every summer and weekend from age 13 to he was done college. While his friends played baseball, he unloaded trucks in suffocating heat.

• 1:15:37Shane Parrish?

  However miserable those years were, he learned, sometimes your worst experiences are your best education. Four, ignorance is a superpower. Ed and Tim signed papers to buy land in Syracuse with no plan, no budget, and no idea what a vanilla box was. They nearly opened a store with empty walls. They made every possible mistake. But here's the thing, if they'd known everything that could go wrong, they might never have left Binghamton. That's what kept his father there. Those mistakes taught him more about expansion than any course could. Sometimes knowing too much can kill action. Five, the quiet one decides. At the make or break GE Capital meeting, Suits grilled Ed for 90 minutes. But in the backseat, a man who never spoke just watched.

• 1:16:22Shane Parrish?

  After everyone left, he approached Ed. Tell me what you need. That was the decision maker. Every important meeting works this way. The loud ones interrogate, the quiet ones decide. Find the person saying nothing. That's who you need to convince. Everything else is just noise. Six, and this is one of my favorite ones. When GE Capital asked about Dick's near bankruptcy, Ed didn't deflect or minimize. He simply laid it all out. We made a series of mistakes. Here's what they were. Here's why we made them. Here's exactly how we'll ensure they never happen again. That brutal honesty saved the company. Most people explain away failure. The best dissect it like surgeons. The precision of your diagnosis proves the depth of your understanding.

• 1:17:06Shane Parrish?

  Seven, the kindness of strangers. After nearly losing everything in 1996, Ed learned what Buffett already knew. Never count on the kindness of strangers to meet tomorrow's obligations. Dick's has very little debt despite Wall Street calling their balance sheet suboptimal. But Ed doesn't care. The banks can't take away your business if you don't owe them money. Never put yourself in a position to need the kindness of strangers. Eight, bet on hunger. When Puma and Adidas wouldn't return Ed's calls, he gave shelf space to a nobody called Nike. When established brands ignored them, he backed a football player making shirts in his grandmother's basement called Under Armour.

• 1:17:48Shane Parrish?

  The rejection by established players forced Dick's to bet on hungry unknowns. Those partnerships made billions. Sometimes the best deals come from those desperate to prove themselves, not those who've already made it. Number nine, follow the territory, not the map. The VCs pulled out spreadsheets showing Ed what works on paper, but Ed remembered that kid in Buffalo who gasped at 30 feet of baseball gloves. Sure, that wall didn't turn inventory fast, but it got people in the store. The VCs were measuring the wrong thing. When spreadsheets and stories disagree, the stories are often right. The data isn't wrong. You're just measuring the wrong thing. Those specialty retailers run by spreadsheets. They're all dead. Dick survived because Ed understood something fundamental.

• 1:18:33Shane Parrish?

  The map is not the territory. The spreadsheet is not the store. Number 10, high agency means no excuses. When Ed CFO said they'd be bankrupt next month, someone suggested Chapter 11 and Ed felt physically sick. His father had sold out everything to avoid bankruptcy in 1956. "That's not an option," he said. "So he found another way, even if it meant dealing with GE Capital's what he thought were brutal terms at the time." High agency people don't accept the obvious solution. They find the option that shouldn't exist. While others explain why something can't be done, they're already trying to do it. Number 11, the real transaction. Dick's Sporting Goods became an empire because Dick and Ed Stack knew

• 1:19:18Shane Parrish?

  they weren't just selling equipment, they were selling possibility. When you understand what people really buy, you understand everything. Thank you for taking the time to listen and learn with us today. I hope you loved this episode and learned as much from this story as I did. I'll see you next time. Thanks for listening and learning with us. Be sure to sign up for my free weekly newsletter at fs.blog/newsletter. The Farnham Street website is also where you can get more info on our membership program, which includes access to episode transcripts, my repository, ad-free episodes, and more. Follow myself and Farnham Street on X, Instagram, and LinkedIn to stay in the loop. We're doing here, leaving a rating and review would mean the world.

• 1:20:01Shane Parrish?

  And if you really like us, sharing with a friend is the best way to grow this community. Until next time.