Pod Insights How I Built This with Guy Raz Men's Wearhouse: George Zimmer (2019) About this episode In 1970, George Zimmer was a college graduate with no real job prospects and little direction. That's when his father, an executive at a boy's clothing company, asked him to go on an important business trip to Asia. It was that trip that propelled him into the world of men's apparel. In 1973, the first Men's Wearhouse opened in Houston with little fanfare, but by the mid-80s, George Zimmer managed to carve out a distinct niche in the market—a place where men could buy a good quality suit, at "everyday low prices," along with all the shirts, ties, socks, and shoes they need.
With George as the face of the brand, Men's Wearhouse became a multi-billion dollar empire with hundreds of stores across the U. S. But then, in 2013, a bitter battle forced him to give it all up.
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5:07 Guy Raz? Visit mobili fuels.com for details. Hey, it's Guy here. And just a couple of things before we get to the show today. First, I've got something very cool to share with you all. After months of hard work and even some electronic sweat and tears, I can finally say the How I Built This shop is now open. Check out this curated collection of products for every idealist and innovator out there. In fact, I'm holding my How I Built This travel mug as we speak. You can get your own at wonderyshop.com, where you'll also find t-shirts and hats and notebooks and a bunch of cool How I Built This stuff. So if you are a supporter of the show, if you love the show or you know somebody who does,
5:49 Guy Raz? check it out, wonderyshop.com, to find all of your How I Built This gear. And later this week, on How I Built This Lab, we'll be talking to the founders of Board Ape Yacht Club. You might know them from their collection of NFTs worth millions of dollars. The company that they built to make those NFTs, Yugo Labs, is now valued at over $4 billion. You'll hear the founders talk about how they built that company, the art, the allure, and the culture of NFTs, which people spent more than $22 billion on in the last year alone. So look for that later this week. And for today's show, we're sharing an episode from April of 2019
6:30 Guy Raz? with a guest who has an amazing story and a truly amazing voice. Enjoy.
6:40 Speaker 01 I knew that something wasn't right. And the next day, they said that by unanimous consent, they decided to replace me. And George, we've put your furniture in storage. And I remember thinking, my furniture and my knickknacks, 40 years of stuff that I had accumulated in 50 cartons were put in storage. And in the moment, it felt like, well, damn, if all these people who are my friends don't want me as their leader anymore, then why do I want to be their leader?
7:24 Guy Raz? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
7:36 Guy Raz? I'm Guy Raz, and on today's show, how George Zimmer turned discount suits into a multi-billion dollar empire called Men's Warehouse, and the bitter battle that forced him to give it up.
7:54 Guy Raz? So in retail fashion, there are three main categories of customers. And obviously, this is a slight oversimplification, but it goes a little like this. There are products for the top end of the market, so think like a Birkin bag by Hermes. It costs around $20,000, and Hermes knows it's only going to sell a small number of them a year. You sell 500 Birkin bags a year, that's $10 million in revenue. And then there's the lower end, so Old Navy, for example. A huge number of consumers can afford to buy their clothes, and so they sell a lot of stuff: t-shirts, jeans, button downs for like 20 or 30 bucks apiece. And there is a clear strategy with each approach.
8:38 Guy Raz? But where fashion brands can really hit the big time is in the middle range. So imagine a Venn diagram of a person who might pop into J. Crew or Madewell now and again, but also pick a few things up at Target. That is the customer most fashion brands are hoping to attract: the value shopper who's also discerning. And while this all might sound intuitive and obvious, that wasn't always the case. If you wanted a suit, for example, in the 1960s or '70s, you had to shell out a lot of cash or settle for something that looked and felt, well, cheap. And this was the insight George Zimmer had back in the early '70s, when he was a young suit salesman.
9:21 Guy Raz? A good suit was out of range for a lot of men. And by the way, George also thought, with some justification, that men generally hated shopping for clothes. And when they did, they wanted to do it once, maybe twice in a year. So what if there were a place that solved this problem? A place where you could get a pretty solid suit at a good price, but also a place that made it super easy to get in and out fast? A place where, while you were trying on your suit, the salesperson would come back to the dressing room with a stack of handpicked button downs, ties, socks, and shoes to go with that suit? And a place that would do all the alterations on site?
10:05 Guy Raz? This was the idea behind Men's Warehouse, and what started out as a single shop in Houston would eventually turn into a multi-billion dollar clothing empire with hundreds of stores across the US. George became the face of that empire. You probably remember those commercials of him back in the day. George would look at the camera and say, "You like the way you look, I guarantee it." But over time, his personality, his charisma, his vision, it created tension with the management and with the board. And as you will hear, they threw him out. And it was ugly, but we'll get there. George Zimmer grew up in Scarsdale in New York.
10:46 Guy Raz? His dad worked for a discount men's clothing company called Robert Hall, so obviously, that had a huge influence on George. But it was his mom who really played an outsized role in his early life.
10:59 Speaker 01 My mother was a truly remarkable woman. And she had both amazing strengths and qualities that made us all proud. And then she had her own demons, many of them connected to having been an orphan, which does carry its own baggage. But what she did for me, which is something that I didn't appreciate when she was alive, but what she instilled in me was this notion that I was a special boy and I would be able to do anything I chose to do in life.
11:44 Speaker 01 And I must say, I've been a legend in my own mind for decades. And as I think we all know now, confidence is a positive quality.
11:56 Guy Raz? And, I mean, you say your mom instilled this idea in you that you were special. Did you feel that when you were a kid? Was it something that because she said it, you started to believe that?
12:07 Speaker 01 The truth is that I did not. But I think that because of her consistency and the way she handled this issue, that it did enter my subconscious. And by the time I got to college, and certainly after college, I felt very confident about almost anything I tried.
12:30 Guy Raz? So you, in 1966, you go off to college to Washington University in St. Louis. What do you remember about Washington University at the time? I mean, this is like the height of the free speech movement at Berkeley and student activism and the anti-war movement. And what was it like at Wash U?
12:52 Speaker 01 Well, it was fantastic. I've often felt that the time that you spend in college, if you're fortunate enough, can be the most positive years of your life. For me, I went to college as a sheltered young Jewish boy from New York. And because of what was going on in the streets, I became much more politically aware and sophisticated.
13:26 Guy Raz? So, okay, so you're at Wash U studying economics, I think, right?
13:30 Speaker 01 Right.
13:30 Guy Raz? And meantime, back in Scarsdale, your dad's business making clothing, how was it doing?
13:39 Speaker 01 Well, when I went to college, his business was in its ascendancy. But he never really mastered the art of making a profit in business. Although he did make small profits, he never really, in my opinion, took advantage of what he might have been able to achieve.
14:02 Guy Raz? What was, what was your dad making? What kind of clothes was he making?
14:06 Speaker 01 Inexpensive boys' outerwear, like what we called snorkel jackets. Out here, they would be called ski jackets, nylon shells.
14:18 Guy Raz? Yeah.
14:18 Speaker 01 He also made more of an upscale boys' raincoat. And when John John Kennedy was standing at his father's funeral in that famous photo where he salutes, he's wearing my father's raincoat.
14:35 Guy Raz? Wow. Amazing. I mean, anyone listening can picture that image.
14:39 Speaker 01 That's right.
14:40 Guy Raz? Um, presumably, he was manufacturing all this in and around Scarsdale. This is like the pre-make-your-stuff-in-China era.
14:48 Speaker 01 Right. Well, he ended up asking me in late 71, since I had not gotten a job of any note, I was substitute teaching.
15:01 Speaker 01 And my father, I think recognizing his son was in danger of drifting away to become a permanent hippie, said to me, why don't the two of us go to Asia? Because he wanted to look into manufacturing there instead of the greater New York area. And when I came back to New York to make that trip, he informed me that something had come up and he couldn't do it, but he wanted me to go in his stead, which I did. And really, that's the beginning of my business experience.
15:42 Guy Raz? So 1971, he says, hey, I want to think about making my stuff in Asia. Can you go there? Where did you fly to?
15:51 Speaker 01 Well, I flew to Osaka was my first stop. And we get to what was known as Idiwild Airport back then.
16:00 Guy Raz? Right, JFK.
16:00 Speaker 01 Right. It was called Idiwild then. And it was Pan Am One, flying from New York through Fairbanks, Alaska to Tokyo.
16:13 Guy Raz? Wow.
16:13 Speaker 01 And then I was switching and flying down to Osaka.
16:17 Guy Raz? All right. So you fly, you get to Osaka. By the way, what are you, I mean, are you, you're 23 years old?
16:24 Speaker 01 Twenty-three.
16:25 Guy Raz? And, and were you like, presentable? Were you, you know?
16:29 Speaker 01 I was presentable. I told my father, when he told me he wasn't making the trip, that I didn't really understand his business well enough to do this on my own, at which he said, George, they're going to love you in Asia because you're my eldest child, your number one son. And they're going to love the fact that you're doing this because I can't. So I would get up every morning at about five o'clock in the morning. And start studying because I literally didn't know much about the manufacturing
17:09 Speaker 01 of clothing and I would study from usually five to eight, including going to the breakfast restaurant in the hotels, which were quite glamorous. And he was right, a lot of people were very excited to talk to the number one son who had made such a long trip because his father couldn't make it.
17:36 Guy Raz? And you were there on a fact finding mission, right? You were looking for potential factories to work with.
17:41 Speaker 01 Yeah. My job was to find factories, give them samples to make.
17:49 Guy Raz? Right.
17:50 Speaker 01 And then send them back to New York and be sort of the middle man.
17:54 Guy Raz? Got it.
17:55 Speaker 01 And he was making the decisions. Of course, it was always about negotiating a price, the exact fabric. And I lived there for about six months.
18:05 Guy Raz? Oh, wow.
18:06 Speaker 01 I ended up settling in Hong Kong.
18:10 Guy Raz? So, did you find a factory that you decided this is the one that's gonna work?
18:15 Speaker 01 No, I did not. I found many factories that made samples, which I dutifully sent back to New York. But we didn't find any factory that we could make a deal with. And so after about six months, I came home and when I got back to New York, it was the seventy-two presidential election. And I actually got a job in the McGovern campaign, working in Chicago in the summer of seventy-two, in charge of what was called grassroots fundraising. And I remember I moved to Texas on Election Day nineteen seventy-two.
19:00 Guy Raz? Why?
19:01 Speaker 01 My father offered me a job in Dallas, repping his line in Texas, Oklahoma, Louisiana.
19:11 Guy Raz? So you get back to the US, you work on the McGovern campaign for a brief stint.
19:17 Speaker 01 Yeah.
19:18 Guy Raz? And then your dad sends you to Dallas to represent him and his clothing company.
19:24 Speaker 01 Right.
19:24 Guy Raz? But why Dallas? What, I mean-
19:25 Speaker 01 Because the, uh, the rep he had there had quit.
19:29 Guy Raz? So he had reps all over the country?
19:31 Speaker 01 He did.
19:31 Guy Raz? And they were, what, they would, what would they do? Go to department stores or small shops?
19:35 Speaker 01 Go to department stores, specialty stores. By this time, he had a thriving business and, uh, he was doing well. And I thought it was an opportunity to continue my apparel career. And I liked living in Dallas. It was, uh, it was fun.
19:55 Guy Raz? So you moved to Dallas in 72 and what? You start going, uh, making appointments and trying to, to say, hey, you know, this is the, we're making these raincoats and these jackets and, uh, you know?
20:06 Speaker 01 For six months.
20:08 Guy Raz? Okay.
20:08 Speaker 01 I traveled the, uh, territory, Texas, Oklahoma, Louisiana. And the largest account in my territory was in Houston, which is where I ultimately started Men's Warehouse.
20:21 Guy Raz? What was the account?
20:22 Speaker 01 Called Foley's. It was a, uh, federated department store. And I went in and sold the boy's buyer some sport coats that were not, in my opinion, the correct sport coats he should have bought. But I was too new in the job to, uh, speak up and let him make the order because it was an order.
20:47 Guy Raz? Sure.
20:47 Speaker 01 And then when they didn't sell, he told me that he knew my father was the owner and he'd like to return the coats. And I said, well, we don't take anything back. And he reminded me that I could pick up the phone and call my father and get it done, which I did. And we took back about 400 sport coats. And he'd promised that he would give me a large order going forward. And when I came in to get that order a few months later, he informed me that they were dropping me.
21:27 Speaker 01 So I had about a five hour drive from Houston back to Dallas. And I decided that they didn't really understand how to retail apparel, not only in Foley's, but throughout my territory. I didn't think that they understood the idea of discounting, which was really more in the Northeast and to some degree in Chicago, but had not gotten into the South.
21:56 Guy Raz? Hmm.
21:57 Speaker 01 And so I decided to relocate from Dallas to Houston and open the first men's warehouse.
22:05 Guy Raz? All right. Wait, well, let me, let me wind this back a little bit.
22:07 Speaker 01 Yeah, sure.
22:08 Guy Raz? Because it can't have been that quick. Or maybe it was. I, I, I'm trying to, I mean, you are your dad's rep in Dallas.
22:16 Speaker 01 For six months.
22:17 Guy Raz? For six months. And you lose an account. And at some point you say, you know what? I want to open up my own place. How, how did that happen? How did that idea even come to you?
22:30 Speaker 01 I'll tell you the, having been a student activist in college and having been somebody that did not believe that capitalism was the end all be all to what we needed. I did not like the idea of having to execute, not just my father, but the sales manager's vision. And so the reason I, the primary reason I opened Men's Warehouse was that, that it was a way for me to become my own boss and create my own destiny, follow my dreams.
23:21 Guy Raz? Okay, so you are roughly 25.
23:24 Speaker 01 Younger.
23:25 Guy Raz? Younger, okay. And before you even opened up Men's Warehouse, what was your idea? Why did you think that suits was the right thing to get into?
23:33 Speaker 01 Well, suits was what I knew.
23:35 Guy Raz? But how was it that you knew suits? I mean, was, because I, my understanding is that your dad's primary business was making clothing for boys.
23:43 Speaker 01 He had expanded so that his product assortments were outerwear like snorkel jackets, these raincoats that had zip-out linings that were fairly upscale. And then he started a line of inexpensive suits and sport coats.
24:05 Guy Raz? Right. And did you wear suits yourself?
24:08 Speaker 01 I almost never wore a suit until I went to Hong Kong.
24:12 Guy Raz? And why did you think that Houston was the place to go?
24:16 Speaker 01 Yeah. Well, I was living in Dallas and going to Houston every month. And the way I explain this is that Dallas was old money, Houston was new money. So that for a young upstart like myself, trying to create a business, the chances were much greater in Houston. And in fact, since I didn't really know anything about the retail business when I opened Men's Warehouse, the only reason that I was able to make it was because the city's growth was so extraordinary that it covered up for what I didn't understand.
24:59 Guy Raz? Okay. So you decide you are going to open up a store that sells discount suits in Houston in 1973. Did you start the company by yourself or did you do it with somebody else?
25:14 Speaker 01 Well, no, I, the way I started it was Harry Levy had been my fraternity brother.
25:22 Speaker 01 And was from Dallas. And I had called him up and said, would you like to move to Houston and do this with me? And he said, well, what's in it for me? And I said, well, I'll give you a third of the company for three grand.
25:38 Guy Raz? Nice. And how did you guys get the money to to open that first store?
25:41 Speaker 01 Uh, so I got my inventory from my father. He became my financial partner.
25:48 Guy Raz? And the inventory wasn't suits. It was just slacks and shirts.
25:52 Speaker 01 That's right.
25:52 Guy Raz? And jackets.
25:53 Speaker 01 That's right. And the way that worked was that I had only $7,000 when this all began. And that basically went to first and last month's rent. So there was really no money as the company got ready to open. My father sent us several thousand suits and sport coats and slacks, as well as 80 raw steel rolling racks, which is what we used for store fixtures in the first store.
26:32 Guy Raz? How big was that place?
26:33 Speaker 01 It was 6,000 feet.
26:35 Guy Raz? So, big place.
26:36 Speaker 01 Yes.
26:37 Guy Raz? Rent in Houston, was it cheap?
26:38 Speaker 01 Well, it was 3,500 a month.
26:41 Guy Raz? Got it. All right. So 1973, you and Harry opened the store, Men's Warehouse. How'd it go?
26:47 Speaker 01 Well, I remember the first Saturday we were open for business. We ran an ad in the Houston Chronicle and in the Houston Post. We were selling sport coats for $25, slacks for $10, and did not carry suits or shirts or ties or have tailoring. In fact, our first cash register was a mechanical, old-style NCR that you would push the buttons and it would come up in the window.
27:24 Guy Raz? Yeah.
27:25 Speaker 01 No sale. I mean, that was how we started.
27:28 Guy Raz? And was it a hit right away?
27:31 Speaker 01 Well, we did 3,000 the first Saturday and then Monday we did $60. And so I would not say it was a success right away.
27:43 Guy Raz? Wow, were you guys freaking out about that Monday?
27:45 Speaker 01 No, because my mother had always promised me that these things would work.
27:53 Guy Raz? So you, you guys are running this place and it doesn't sound like it was, I mean, aside from that first day, it doesn't sound like you guys were really breaking the bank, you know, doing, you know, just crushing it in those first two years.
28:08 Speaker 01 We weren't. We lost money in each of the first two years and then we opened a second and a third store in Houston.
28:17 Guy Raz? But how, what, explain this to me. You're losing money on the first store, but you go and you decide to open a second and a third store, thinking that those will help you make more money?
28:30 Speaker 01 The marketing expenses in a major urban area are so high, you can't really run a single location. You need multiple locations.
28:41 Guy Raz? When did you expand into jackets and ties and suits and belts and things like that?
28:48 Speaker 01 We started to get into a broader product assortment in the mid to late 70s. We first went right to suits and we had a salesperson. He was the EVP for Hardshafter and Marks, based in Chicago.
29:07 Guy Raz? That was a what?
29:08 Speaker 01 They were America's largest clothing manufacturer. And he came to see us and I said to him, they had the line Nino Sarudi. And I said, we'd like to buy that line from you. And he said, forget about it. I sell Foley's, I sell. And I said, well, let me tell you the whole story. We want to buy the line without the label. But we want a 20% discount.
29:38 Guy Raz? So it would be a white labeled men's warehouse, Nino Sarudi suit, but you would put your label on it?
29:44 Speaker 01 Correct.
29:45 Guy Raz? And he said?
29:46 Speaker 01 He said, "Why would I do that?" And I said, "You know, Kenny, why don't we play a game of basketball? And if I can beat you, you'll give me that deal. And if you beat me, I won't bother you again." The rest is history.
30:04 Guy Raz? You beat him in the game.
30:05 Speaker 01 I beat him and we got Nino Sarudi suits, white labeled, but at a 20% purchase discount, which enabled us to sell them moderately profitably at $199, when everybody else in America was selling them at $299. That was the essence of the business.
30:30 Guy Raz? So I guess this is a way for Art Chaffner and Marx or any of the clothing manufacturers to sell more of their suits if they white labeled them, even if they were selling to at a lower price?
30:40 Speaker 01 Exactly.
30:42 Guy Raz? When did you first expand outside of Houston?
30:46 Speaker 01 In 1980, I came out to the Bay Area on a vacation. And we were planning on opening up in Dallas as our next market. And I walk into either Rus Atkins or some other Bay Area store.
31:05 Guy Raz? Department store.
31:06 Speaker 01 No, it was a men's.
31:07 Guy Raz? Men's store, okay.
31:08 Speaker 01 Clothing store. And there was not a regular priced 100% wool suit for under $300. And we were selling 100% wool suits for $199.
31:27 Speaker 01 So I went back to Houston and told my team that we could pick up Dallas later. And we were going to go right to the Bay Area before things changed.
31:39 Guy Raz? Where in the Bay Area?
31:41 Speaker 01 So we started in the South Bay. We opened in Mountain View, San Jose, Fremont. And then we had one store up in Concord.
31:53 Guy Raz? So this is in the early eighties. The tech boom is really just beginning. Presumably, your customers were professional men?
32:04 Speaker 01 Yes, mostly professional men.
32:07 Guy Raz? And you opened up there and what happened? Did people flock to it? Or was it kind of, again, you know, mixed results?
32:16 Speaker 01 I would say mixed results. We were not really successful until the mid eighties, in my opinion.
32:25 Guy Raz? What happens in the mid eighties to make Men's Warehouse really successful?
32:32 Speaker 01 Well, we were put under duress. Our bank in Texas called our loan. And so we were put in a difficult position.
32:44 Guy Raz? They called your loan because they were getting worried about you?
32:47 Speaker 01 No, it's a, in the early eighties, there was a general meltdown of all the banks in Texas. And every bank, including our bank, which was the largest bank down there, First City National. All of them were acquired by out of state banks.
33:07 Guy Raz? Right.
33:08 Speaker 01 So we had to rethink our business model. So I looked at our inventory. And by then, it was on computer printouts. And I noticed that on about half of the inventory, there was a significant discrepancy between the ticketed price and the selling price.
33:31 Guy Raz? Meaning, meaning what? It was, the selling price was much lower than what the ticket price was?
33:36 Speaker 01 Yes, because of promotional activities.
33:40 Guy Raz? In other words, you'd have a sale or?
33:42 Speaker 01 Correct.
33:42 Guy Raz? And you had regular sales?
33:44 Speaker 01 We did. So I made the decision.
33:48 Speaker 01 To change the model and eliminate regular sales.
33:53 Guy Raz? You decide we need to stop holding sales,
33:58 Speaker 01 Yeah.
33:59 Guy Raz? lower our everyday prices and basically send out the message that we just, that we offer low everyday prices.
34:07 Speaker 01 Exactly.
34:08 Guy Raz? When you made the decision, did you have a year of slow sales, two years?
34:14 Speaker 01 One year of slow sales.
34:16 Guy Raz? I mean, it sounds like it was, you have a combination of a bank calling and your loan, really low margins. Sounds like this change in strategy was kind of a hail Mary.
34:28 Speaker 01 Well, I think the toughest part of this was trying to persuade people that I knew what I was doing, because they were questioning whether I knew what I was doing.
34:39 Guy Raz? But how did you know that you knew what you were doing?
34:42 Speaker 01 I didn't. So to that degree, you could call it a hail Mary. But I had been in the retail business for a while by then, and I had instincts that this made sense. It made no sense to me, this constant barrage of sales. It was though everybody in retail thought that the American consumer was stupid. And actually, they're not as stupid as those people thought.
35:17 Guy Raz? When we come back in just a moment, how George Zimmer's hail Mary paid off in a big way, and the origins of that iconic slogan.
35:25 Speaker 01 You're going to like the way you look. I guarantee it.
35:29 Guy Raz? Stay with us. I'm Guy Raz, and you're listening to How I Built This.
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37:08 Guy Raz? NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.
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39:19 Guy Raz? Hey, welcome back to How I Built This. So it's 1986 and Men's Warehouse is trying to pull out of an economic slump. George Zimmer has just changed the business model to focus on everyday low prices. And to get the message out, he decides to become the spokesperson. You know the commercials.
39:38 Speaker 01 At the Men's Warehouse, you get all three: service, quality, and a good price.
39:44 Guy Raz? With George standing in front of what looks like a classroom.
39:48 Speaker 01 So what I did, because we had had training classes, which I would give a presentation to, I found I was very comfortable in those environments.
39:58 Guy Raz? Sure.
39:58 Speaker 01 So I said, "Set up a fake training class and bring in three cameras and film me from different angles and we will just bring in random office employees to ask me questions. I will answer them."
40:17 Guy Raz? Saying what?
40:18 Speaker 01 Saying that we've got great suits and sport coats. Here's why. And oh, by the way, they're priced right.
40:26 Guy Raz? Wow. And why did you think that would be compelling? I mean, that sounds like the most boring, dull, commercial ever.
40:33 Speaker 01 I can only come back to my mother's words.
40:37 Guy Raz? Oh, God, sheesh.
40:38 Speaker 01 It never occurred to me, and I could say this about two dozen things in my life, that most people would say, didn't it occur to you that that might not work? And I go, quite frankly, not really.
40:58 Guy Raz? So at what point did you utter the very famous phrase?
41:03 Speaker 01 I think I uttered it in 86.
41:05 Guy Raz? And how did that happen?
41:07 Speaker 01 It happened as an ad lib. And as I was ad-libbing the commercial, I'm having an inner dialogue with myself while I'm speaking.
41:18 Guy Raz? Yeah.
41:18 Speaker 01 I didn't have much time since I was in a live recording. And all I could think of was, I guarantee it. And the beauty of I guarantee it was not so much the words, because the words are as hackneyed as you're going to find.
41:36 Guy Raz? Yeah.
41:36 Speaker 01 But I, when I started walking around in my regular life, people were saying to me, hey, George, I guarantee it. And I knew, A, that that was catching on, but I also have known something else, which is, as long as people are calling me George, I think the companies that I'm involved with will prosper. If they start to call me Mr. Zimmer, I'll be worried.
42:07 Guy Raz? So you essentially, almost overnight, become like the mascot of Men's Warehouse?
42:12 Speaker 01 I did. And it, the benefit is that when you are a spokesperson for your own business, of course, you're doing it to affect the external world. You want more business. But what happens is that, and we were in a retail business with hundreds or thousands of employees, the workforce loves the fact that the boss is on TV.
42:42 Guy Raz? I know him.
42:43 Speaker 01 I know George.
42:43 Guy Raz? I know George, yeah.
42:45 Speaker 01 And it was a great part of the company culture.
42:50 Guy Raz? So by the late 80s, you are still in Houston and the South Bay?
42:54 Speaker 01 No, we're in, we have 15 stores in the Bay Area. We're in Seattle, Portland, Dallas, Sacramento, and Houston.
43:04 Guy Raz? And Houston.
43:05 Speaker 01 Yeah.
43:05 Guy Raz? And what I'm still trying to figure out is, why didn't a bigger company try and undercut you? I mean, clearly, you've got this thing going where you're selling Nino Sarudi suits. It was probably an open secret that you were selling them for $100 less than a branded Nino Sarudi suit.
43:20 Speaker 01 Without the label.
43:21 Guy Raz? Without the label, but if this was an open secret, why wouldn't some other company come in and like Macy's or some big company and try to do the same thing?
43:29 Speaker 01 Well, I think that the answer is that many did. There were people that tried to mimic what we did. But, you know, part of it is, and I'm very proud of this, I did all the training originally at Men's, and I used to say to our employees, "Look, men look at going into a clothing store like going to the dentist's office." So their wife says to them, "I made you a dental appointment," and it's like the worst thing that the man can imagine. So they put off coming in to a clothing store until they can no longer defer it any longer.
44:13 Speaker 01 And from that intuitive understanding, we developed what we called shirt stacking. So that when a man purchased a suit while he was in the dressing room, we would put together shirts, ties, belts, shoes, everything that would make the outfit really jump. Then we would present it to the customer. And we were not, in my mind, pushy, but we were not passive
44:45 Guy Raz? Yeah.
44:45 Speaker 01 ... salespeople either. And the result was that our customers thought we had great service because they perceived this as service, and it drove a lot of revenue.
44:56 Guy Raz? So basically, men, the thinking was, men don't want to spend a whole A whole lot of time shopping. They're generally buying stuff when they have to.
45:03 Speaker 01 Correct.
45:04 Guy Raz? They're gonna go in, they're gonna try on the suit and the pants. But while they're in the dressing room, we're gonna bring them like a pink shirt and a blue shirt and a white shirt. And we're gonna say, hey, these look great with the suit. Here's some great ties. And they would say, thank you for making it easy for me. I'm gonna buy it. I'll take it all. And they'd walk out.
45:19 Speaker 01 Exactly.
45:21 Guy Raz? Wow. So 1992, you guys go public, and I guess the IPO brings in, I read, like 13 million dollars?
45:29 Speaker 01 That's correct.
45:29 Guy Raz? I mean, it doesn't sound like a whole lot for an IPO.
45:34 Speaker 01 Well, I was never trying to amass the greatest fortune that I could. And it turns out to have been, I think, a very good decision because although we had an IPO that only raised 13 million, we then had four or five secondaries. Each secondary was at a higher value.
46:00 Guy Raz? Secondary.
46:01 Speaker 01 Stock offering. They're kinda like IPOs.
46:06 Guy Raz? I think the 1990s really was when you blow up, right?
46:09 Speaker 01 That's right.
46:10 Guy Raz? You're riding a really strong economy. What else is going on? Why? I mean, because you now are going to cities all across the United States, right?
46:19 Speaker 01 Right.
46:20 Guy Raz? So what's going on that allows this expansion? Are consumer habits changing?
46:25 Speaker 01 No, I mean, first of all, with the money that we got from the IPO and secondaries, we started opening 50 stores a year or a store every week. So if you can imagine, each store costs about a million dollars in inventory.
46:45 Guy Raz? Wow. In cities all across the country.
46:48 Speaker 01 Right. All 50 states.
46:50 Guy Raz? You hit, I think, a billion dollars in revenue in 98. And then in the early 2000s, the expansion continues. 1999, you start to rent out tuxedos. How did that happen? And why?
47:04 Speaker 01 So we were at a training class. One of my regional managers had dinner with me and said, you know, George, I went into a few tuxedo stores. He was in Seattle. And he said, you know, this is exactly what we do. Fit people in clothing.
47:22 Guy Raz? Yeah.
47:23 Speaker 01 Why don't we do this?
47:24 Guy Raz? And you said?
47:24 Speaker 01 And I said, let's try. And he had 12 stores up there.
47:30 Speaker 01 And the first year, we did $1 million.
47:33 Guy Raz? Wait, hold on. He opened like a mini tuxedo rental shop within the store?
47:38 Speaker 01 Inside the store.
47:39 Guy Raz? Yeah, inside the store. They're just a cordon office section and it just said, "Tuxedo rentals here."
47:44 Speaker 01 Exactly.
47:44 Guy Raz? Okay.
47:45 Speaker 01 Everybody in my organization hated this idea.
47:48 Guy Raz? Yeah, why are you doing tuxedo rentals? We got suits.
47:50 Speaker 01 Every time you screw up a wedding, you lose a customer. You know, this is not a way to build a clothing business.
47:58 Guy Raz? Yeah.
47:59 Speaker 01 So, we rolled it out into our stores, a third, a third, a third over three years. It took five years before the employees in the company stopped complaining to me about being in this business. And I used to say to everybody, and it was, it got to be redundant, where I would say, "Hey, look, this is going to take a while to develop, but when it does, it's going to be amazing."
48:34 Guy Raz? And I guess there was a point. I read that something like one out of five suits in America was purchased at Men's Warehouse?
48:41 Speaker 01 Correct.
48:42 Guy Raz? That is astounding.
48:43 Speaker 01 Astounding.
48:45 Guy Raz? So, I want to fast forward to one particular chapter, because this is going forward to 2011. You step down as CEO of Men's Warehouse, and Doug Euer becomes the new CEO. And you picked Doug Euer, right?
48:59 Speaker 01 I did. I had been, you know, I didn't want to retire. And Doug had been my COO, and had been doing a great job. So, I said to him, "You know, Doug, our offices were next door." I said, "I'm not retiring. I'm going to come to work every day."
49:17 Guy Raz? Yeah.
49:18 Speaker 01 "But you're running things day to day, and I'd like you to get credit for that."
49:23 Guy Raz? You then become what, chairman of the board?
49:26 Speaker 01 Well, I had been chairman.
49:27 Guy Raz? Right.
49:28 Speaker 01 I became executive chairman to indicate that I was still working.
49:32 Guy Raz? Just a reality check. After you made that decision to step away from being CEO, did you really disengage? I mean, it was your company. You founded it. You started it. Did you really back away?
49:44 Speaker 01 I never told Doug what to do. After he was made CEO,
49:49 Guy Raz? Yeah.
49:50 Speaker 01 I said to him, "Doug, you're the CEO. It's your decision. You make it the way you see it."
49:57 Guy Raz? Okay, now. This is a moment where I guess there begins to be considerable tension between you and the board.
50:04 Speaker 01 Yeah.
50:04 Guy Raz? What started to happen? What kind of sort of differences of opinion did you start to have with board members?
50:10 Speaker 01 I don't really know exactly what happened because as it got closer to my termination, I was cut out of more and more of the discussions that the board was having. But I'll give you a simple example. We owned a division called K and G. And K and G did 400 million. We had 100 stores. And it was a superstore in the sense that it was 25,000 feet and it was men's and women's and the price points were below men's warehouse.
50:50 Speaker 01 And I said to the board, K and G provides a unique opportunity for an offensive and defensive strategy. And they didn't quite understand what that meant. And so what it means is men's warehouse stores were able to raise the gross profit percentage by a full 10%, which is 1,000 basis points over a decade because K and G was protecting our opening price point position.
51:28 Speaker 01 And at the same time, because K and G was a significant national presence, it prevented other stores from realizing that investing in low-priced clothing, the way I had done in '73
51:46 Guy Raz? Yeah.
51:47 Speaker 01 would make sense. So the board and Doug wanted to sell K and G. And I told them that I would support them in selling it, but I didn't agree with it. And so it was that type of decision. And the board represented it in their public relations releases as though I was unwilling to cede authority. And I never understood what they were talking about because I was totally explicit in explaining to Doug that he was the guy.
52:25 Guy Raz? All right, June 19th, 2013.
52:28 Speaker 01 Yes.
52:29 Guy Raz? You're fired from Men's Warehouse as the executive chairman.
52:32 Speaker 01 Yeah.
52:33 Guy Raz? Thrown off the board. This is the company that you founded in Houston in 1973. What do you remember about hearing that news?
52:44 Speaker 01 Well, it wasn't that long ago, so I remember everything. I remember that the lead director, who I had put in the position, six foot seven, stood up, which made him quite intimidating, and said to me, you know, George the board, by unanimous consent, and went on to talk about getting rid of me. But when he said unanimous consent, I'm in a room of friends.
53:13 Guy Raz? People you knew.
53:13 Speaker 01 And I'm going unanimous. I mean, I have Deepak Chopra, as well as people that you don't know. And I can't believe that it is unanimous, because I have done so many favors for all of these people.
53:30 Guy Raz? He says by unanimous consent, we're asking you to step down?
53:34 Speaker 01 Well, at first, they said to me, we'd like you to become chairman emeritus. And I said, what is that? And they explained it, and it was a figurehead position. And I said, when do you need to know? And they said, by 10 o'clock. And the reason why was that we were meeting as a board in advance of an annual shareholder meeting.
53:59 Speaker 01 And so they wanted to get me off the prospectus as chairman of the board. And they said they could do it if I notified them by 10 o'clock that night. So we were in a hotel, so I was just by myself in a hotel.
54:15 Guy Raz? Where?
54:16 Speaker 01 In Fremont.
54:18 Speaker 01 And I remember being in my room and thinking, you know, my lawyer was the company's lawyer. I had very few good friends outside of the business. I had nobody to really talk to.
54:34 Guy Raz? Wow.
54:35 Speaker 01 Deepak came up to my room that night and led me on a guided meditation because he was concerned that I wasn't taking into account my legacy. And he was right. I wasn't valuing my legacy. And what I was valuing was two things. Number one, I said, look, I know I told you that Doug would be a good replacement, but after a couple of years, I was wrong. He's not qualified to run the company. And that wasn't what Deepak wanted to hear. And so the next day,
55:15 Speaker 01 they said that, you know, by unanimous consent, they've decided to replace me. And they said to me, and George, we've put your furniture in storage. And I remember thinking, you've put my furniture in storage. I mean, my furniture and my knickknacks, 40 years of stuff that I had accumulated in 50 cartons were put in storage. And in the moment, it felt like, well, damn, if all these people who are my friends don't want me as their leader anymore, then why do I want to be their leader? Obviously, there's something not right here.
56:03 Guy Raz? When we come back in just a moment, how after leaving Men's Warehouse, George stops and smells the roses in his backyard for a few months, gets really bored, and decides to start another clothing company. Stay with us. I'm Guy Raz, and you're listening to How I Built This.
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56:56 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2013, and every single member of the board at Men's Warehouse has just voted to fire George Zimmer from the company he founded. Were you hurt by the board said to you, by your friends essentially rejecting you? Did you feel personally hurt?
57:20 Speaker 01 Well, and this may not be a satisfactory answer, but it may be more about that as a trained CEO, I don't get hurt the way you mean it.
57:34 Guy Raz? So in no way did it depress you?
57:37 Speaker 01 No, in some way.
57:38 Guy Raz? I mean, you're a human being.
57:39 Speaker 01 But I did not get depressed. I did not go into this, "Poor me, and I'm a victim." The subtitle of my book is How Overcoming Obstacles Became a Habit. I'm completely comfortable in my skin almost all the time. And I feel I have a lot of respect from people I care about. I see what happened at Men's as really an example of capitalism run amok.
58:19 Speaker 01 Not a one.
58:20 Guy Raz? So to say you didn't take it personally is not really true.
58:25 Speaker 01 Oh, well, I feel that I'm a great friend. And so when you hurt me, the only way I have to get even is to withhold my friendship. And say, that's it. We're no longer friends and I no longer want to speak to you.
58:45 Guy Raz? That's a normal human reaction.
58:47 Speaker 01 Yeah. Now, it could be that, you know, under some sort of therapy, it would be discovered that I am really quite hurt, but I don't feel hurt. I, uh, I got divorced after this happened for the second time. I have a great relationship with my children. I'm, uh, you know, watching politics in the evenings, uh, but I, I don't feel, I don't know. I think being hurt is very close to feeling like a victim. And I just reject that.
59:27 Guy Raz? Okay. So after you left, it cleared the way for Men's Warehouse to make a couple of significant decisions, including acquiring Joseph A. Bank for 1.8 billion dollars. Turned out to be a bad decision.
59:41 Speaker 01 Yes. And the reason is because Men's Warehouse thought that the Joe Bank customer and the Men's Warehouse customer were different because of shirt stacking. We were more aggressive in the selling process. When you walk into a Joseph Bank, they leave you alone to browse. And what I found was that you do a lot less business with that strategy than if you have a knowledgeable consultant who is genuinely interested in helping the customer in whatever
1:00:26 Speaker 01 the customer's lifestyle is.
1:00:29 Guy Raz? The company is, how would you describe the company today from the outside?
1:00:33 Speaker 01 Struggling.
1:00:34 Guy Raz? Do you own any shares anymore?
1:00:36 Speaker 01 A few, yeah.
1:00:37 Guy Raz? And do you feel a sense of satisfaction that they are struggling since your departure?
1:00:42 Speaker 01 Yes, and my new business is, although we're very small relative to them, we are competitors.
1:00:50 Guy Raz? So, so I wanted to talk about your new business a sec, but you leave Men's Warehouse. You're rich, you can do whatever you want, you can go to Hawaii, you can hang out with your kids, whatever you want to do.
1:01:03 Speaker 01 Right.
1:01:03 Guy Raz? Did you think about that, doing that for some time?
1:01:05 Speaker 01 I tried for four months. I sat in my backyard in Piedmont, beautiful, flowers. It was the summer and I thought, gee, this is dull and boring. My kids are in school, my wife's got her own life, and I'm sitting in my backyard looking at the flowers. Didn't make sense.
1:01:29 Guy Raz? So I guess, pretty soon after this, you come up with an idea for a new business, which was an online tuxedo rental company called Generation Tux.
1:01:37 Speaker 01 Yes.
1:01:38 Guy Raz? And you launched this in, I think, what, September of 2015?
1:01:42 Speaker 01 Right.
1:01:42 Guy Raz? And when the people from Men's Warehouse found out about it, what did they think?
1:01:48 Speaker 01 Oh, my God.
1:01:49 Guy Raz? Was there like a cease and desist letter? Was there anything like, I guess, I guess you didn't sign anything, because you, right, you didn't.
1:01:54 Speaker 01 Right, they just threw me out.
1:01:56 Guy Raz? You didn't pledge not to.
1:01:57 Speaker 01 If I tell you, you know, what Men's has done, Men's is afraid of me, is what it must be. Because after I was fired, the first thing I tried to do was buy K and G from Men's.
1:02:11 Guy Raz? Which was that retail company that they owned. You tried to buy it from them.
1:02:14 Speaker 01 For $90 million.
1:02:16 Guy Raz? Okay.
1:02:17 Speaker 01 Well, at first, they wouldn't sell it to me at all. Then they said, all right, if you give us a four-year non-solicitation. And I said, what do you mean by that? And they said, you can't hire our employees for four years. And I said, are you kidding? I'll give you two years, but four years is an eternity.
1:02:42 Speaker 01 Deal never happened. To this day, they still can't find anybody that would offer them half of what I was gonna pay them. Then I had a relationship with Macy's and we were gonna provide Macy's with the tailoring for their online business, not their stores, their online business. And as a lark, I asked my local guy if they would have any interest in doing a tuxedo rental thing with us.
1:03:18 Guy Raz? Yeah.
1:03:18 Speaker 01 And within a few months, my team and I were in New York in Terry Lundgren's office, the CEO of Macy's, making a deal to be the
1:03:34 Guy Raz? Tuxedo?
1:03:34 Speaker 01 Tuxedo rental. And we had the deal. It went to legal review. And while it was in legal review, Men's Warehouse stole it. Because I could not get Macy's to agree to a no shop clause.
1:03:51 Guy Raz? Uh huh.
1:03:52 Speaker 01 So they
1:03:53 Guy Raz? They shopped it around.
1:03:54 Speaker 01 I don't know how it happened. But the next thing I know, Terry called me and said, I'm very sorry, George, but we're not doing it.
1:04:02 Guy Raz? Wow.
1:04:02 Speaker 01 And I said, who are you doing it with? And he said, uh, he didn't want to tell me at first. And then he said, Men's Warehouse. And I went, you gotta be kidding me.
1:04:14 Guy Raz? Yeah.
1:04:14 Speaker 01 And it doesn't make me vengeful or revengeful. It, it just makes me more determined to do what I know how to do.
1:04:27 Guy Raz? What is the status of Generation Tux now? I mean, you started in 2015.
1:04:33 Speaker 01 This will be our first year of profitability.
1:04:35 Guy Raz? Okay, so it started, it took a long time for Men's Warehouse to get to, well, to really get to major profitability.
1:04:41 Speaker 01 Oh yeah, this is much better.
1:04:43 Guy Raz? And you go online and you get a tux and you just put your measurements in and it comes to you and then you wear it and you send it back?
1:04:51 Speaker 01 Exactly. And we do things like, if you want a free home try on, we'll do not only one, two free home try ons.
1:05:02 Speaker 01 We do free swatches. You know, we do a lot of things that make our business strong. And it's, right now, it's starting to really fire on all cylinders.
1:05:13 Guy Raz? George, do you feel a sense of, I don't know, vindication that you were right about certain things? Certainly, you were wrong about certain things. Everyone's wrong over the course of their career. But I guess you were right in certain ways. You did not want Men's Warehouse to acquire Joseph A. Bank. You didn't like that model. They did. It hurt them.
1:05:37 Guy Raz? Does being right, is that important to you?
1:05:39 Speaker 01 I think so.
1:05:40 Guy Raz? Why?
1:05:43 Speaker 01 Well, I like to think that I'm right about many things and wrong about a few things. But, yeah, I think that, you know, that there is a real problem in America. I think that capitalism, which clearly won the battle over communism and even socialism, is in need of modification. And I'm a capitalist. What the hell? I've spent my life making money. But there are a few adjustments to capitalism that would make it sustainable, which unfortunately, I don't think it is sustainable.
1:06:23 Guy Raz? Would one of those adjustments be shifting the focus away from shareholders?
1:06:27 Speaker 01 Exactly. That's what it's about.
1:06:30 Guy Raz? Because it's always about short-term profit.
1:06:32 Speaker 01 Yeah.
1:06:34 Guy Raz? George, when you look over the course of your career, the ups and downs, how much of your success do you attribute to your hard work and your intelligence and skill? And how much do you attribute to luck? Just being lucky, riding a lucky wave?
1:06:51 Speaker 01 Well, I think they go hand in hand. In other words, I think you need luck. But you also need the talent and the intelligence to know how to take advantage of luck. I think that what happens in life, unfortunately, is a lot of people have the opportunity to be lucky, but don't know how to take advantage of it.
1:07:20 Guy Raz? And you did.
1:07:21 Speaker 01 And I did.
1:07:24 Guy Raz? That's George Zimmer, founder and former CEO of Men's Warehouse. By the way, the company that now owns Men's Warehouse, Tailored Brands, was hit hard during the pandemic and filed for bankruptcy two years ago. It's closed hundreds of stores, but hopes to reinvent its business model and stay in business. Meanwhile, George is still running the two other companies he founded, Generation Tux and Zee Tailors. At some point, I'm going to make you say it. You know that, right?
1:07:52 Speaker 01 I'll say it right now. You're going to like the way you look. I guarantee it.
1:07:57 Guy Raz? I think I'm going to put that as my phone ringer.
1:08:01 Speaker 01 When I was at Men's Warehouse, I would go to charity auctions and auction off doing that for $3,500.
1:08:14 Guy Raz? Wow.
1:08:15 Speaker 01 I would do it for you for nothing, by the way, so.
1:08:18 Guy Raz? Thank you. Thank you very much. Hey, thanks so much for listening to the show this week. If you want to contact the team, our email address is [email protected] . On Twitter, we're at How I Built This, and I'm at Guy Raz. On Instagram, we're at How I Built This, and I'm at Guy.Raz. This episode was produced by Deba Motasham, with music composed by Ramtin Arablouei. It was edited by Neva Grant, with research help from Candice Lim. Our production staff also includes J.C. Howard, Casey Herman, Liz Metzger, Kerry Thompson, Alex Chung, Josh Lash, Sam Paulson, Catherine Seifer, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez.
1:09:01 Guy Raz? I'm Guy Raz, and you've been listening to How I Built This.
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