Ep. 277 — Jay Steinfeld: The Founder Who Stayed Seven Years After Selling to Home Depot

6 min read

Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS

Episode Summary

Most owners assume the only way to get a big exit number is to sell to a buyer who will grind the place down to spreadsheets in ninety days. Jay Steinfeld is the counter-example. He bootstrapped Blinds.com from $3,000 in 1996 into the world’s number one online blinds retailer, sold to Home Depot in 2014, then stayed seven years running the business inside a 450,000-employee public company. His M&A attorney had never seen that. Neither have I, after hundreds of these interviews. Jay and I got into how you actually pull that off: how to diligence a buyer the way you’d diligence a hire, why a minority recap let him buy out the shareholders who only wanted cash distributions, and why a Pixar-style memo of understanding (titles, comp plan, location, name on the door) protected the secret sauce Home Depot didn’t yet know they were buying. We also got into the four E’s that drive every decision Jay makes (Evolve, Experiment, Express, Enjoy) and the death of his wife in 2002 that forced him to define them in the first place.

Watch on YouTube

## Top 10 Takeaways
  1. You don’t have to sell to the devil to get a big number. Alignment with the buyer is real or it isn’t, before the docs get signed.
  2. Diligence the buyer like you’d diligence a hire. Ask their portfolio companies about the bad quarters, not the highlight reel.
  3. Shareholders who want cash and an owner who wants to reinvest is misalignment that compounds every quarter.
  4. A minority recap can buy out misaligned shareholders without selling the whole company. Most owners don’t know it exists.
  5. Your core values aren’t a wall plaque. They guide your behavior at home, at work, and in the boardroom.
  6. People don’t quit over pay. They quit because they stopped feeling consequential.
  7. Stop asking how little you can pay before people quit. Ask how much more you can give that’s in the long-term interest of the company.
  8. Operational excellence, customer intimacy, and innovation are three different love languages. The buyer’s won’t match yours.
  9. A merger memo (titles, comp, location, name on the door) protects the secret sauce the buyer hasn’t figured out yet.
  10. Death is the ultimate calibrator. Below it is the floor. Everything above it is gravy.

Sound Bites

“You do not need to gut your soul to build a business. You do not need to be harsh. You don’t need to be a jerk. You can be kind. You can bring humanity into business.” (@TBD) — Jay Steinfeld

“We were a tiny drop of magic potion in a giant vat of Home Depot. You could put that little drop in there, and it would barely tint the water. But it was there.” (@TBD) — Jay Steinfeld

“If things are getting in your way, get rid of them. If things aren’t working, stop doing them. If things are working, do more of it. A lot more of it.” (@TBD) — Jay Steinfeld

“Death destroys the man, but the idea of death saves him.” (@TBD) — Jay Steinfeld

“I want entrepreneurs to have as many choices as they possibly can have. And one of the best ways to do that is to have a valuable business that you can get what you want out of.” (@TBD) — Ryan Tansom

About This Episode

Jay Steinfeld is the founder of Blinds.com, which he bootstrapped from $3,000 in 1996 into the world’s largest online blinds retailer before selling to Home Depot in 2014. He stayed on for seven years post-sale running the business inside Home Depot’s 450,000-employee, $130B retail platform, an outcome rare enough his M&A attorney had never seen it before. Jay now teaches at Rice University’s Jones Graduate School of Business, sits on five boards including public-company Masonite, and is the author of Lead from the Core: The 4 Principles for Profit and Prosperity, which lays out the four E’s that guided every decision in building, scaling, and selling the company.

Resources Mentioned

  • Lead from the Core: The 4 Principles for Profit and Prosperity by Jay Steinfeld — Jay’s book on the four E’s, available at Amazon, Barnes and Noble, Books-A-Million.
  • Built to Last by Jim Collins — Referenced as the book that pushed Jay to define his core values after his wife’s death.
  • Creativity, Inc. by Ed Catmull — Pixar’s CEO; source of the Pixar-Disney “memo of understanding” Jay modeled his Home Depot deal terms on.
  • The 5 Love Languages by Gary Chapman — Referenced for the analogy to business “love languages.”
  • The Discipline of Market Leaders by Treacy & Wiersema — Source of the three business orientations: operational excellence, customer intimacy, product innovation.
  • Finish Big by Bo Burlingham — Ryan referenced for the framework on owners aligning their exit with their identity.
  • The Autobiography of Benjamin Franklin — Referenced by Jay for “well done is better than well said.”
  • Conscious Capitalism — The community where Ryan first encountered Jay’s story.

Connections

Phase + Module:

Milestones:

Concepts referenced:

  • Noble Aim — Jay’s purpose: “help people become better than they ever believed possible”
  • The Owner-Operator Trap™ — Broken by hiring domain experts and shifting into the owner seat
  • Capital Allocator — The reinvest-vs-distribute fight with the original shareholders that triggered the recap
  • Independence by Design™ — Jay intentionally designed both the exit and the seven-year post-sale structure

Graph View