Welcome to How Leaders Lead, where every week you get to listen in while I interview some of the very best leaders in the world. I break down the key learnings so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. My guest today is Bill Rhodes, who's been the CEO of AutoZone since 2005. Now, get this, AutoZone is one of the only companies around who has grown both their earnings per share and their revenue every year for the past 20 years. Boy, I got to tell you, that kind of consistency is remarkable. Not just remarkable, it's amazingly remarkable. But there's no way Bill is going to take the credit for it. I don't care how hard you try to get him to do it, it's just not going to happen. For him, it's all about his team and what they can do together. He's got this deep and genuine admiration for his people, who he calls AutoZone ers. That respect drives how he makes decisions, how he implements new ideas, how he finds and trains talent, and a whole lot more. When we truly respect those we lead, we see leadership for the privilege it really is. It's the secret to getting big things done and to getting the kind of growth we all want to have. So hey, let's get right down to it. Here's my conversation with my good friend and soon to be yours, Bill Rhodes. Bill is great to have you on the show. So great to be with you and thank you for the mission of How Leaders Lead. I am a consumer of your program and have enjoyed it thoroughly. It's a great way to go out on a run and think about something other than the pain. That's great. So I have to tell you, listen to your voice here. You're Sam Elliott. You got the mustache. You got the beard. You sound exactly like Sam Elliott. And it's all gray and I guess that's why my voice is so raspy. Too many years, David. Too many years. I really can't wait to get into how you lead and talk about the great job that you've done at the AutoZone. But first, at the time in this recording, it's the new NBA season. It's just beginning and as one of the owners of the Memphis Grizzlies, which I know you are, what's it feel like knowing you get to watch the job, the rent, dunk on all the people for the next several months? That's got to be fun. Yeah, David, I'm a miniscule owner of the Memphis Grizzlies. But myself and several other Memphians, when there was an ownership change a number of years ago, almost a decade ago now, all came together to make sure that we secured the Memphis Grizzlies in our great hometown of Memphis, Tennessee. I've really enjoyed my association with the Grizzlies. John Moran is like none other to watch. But our front office now is really fantastic. He's got a lot of great players around him and there's nothing. There is nothing that brings the citizens of Memphis together like the Memphis Grizzlies. That is great. And you had a great run last year. That team's coming together. So it'll be a lot of fun. You know, what did the Grizzlies taught you or reinforced about leadership? Just watching it all unfolds. We have a couple of leaders of the organization. Jason Wexler is the CEO of the Grizzlies. And Zach Klimann was the youngest GM of the Grizzlies. And these are two non-traditional. These are not long-term basketball guys. But they've come in and they've brought innovation. They've brought data and data analysis. And they've made some really great decisions like picking John Moran number two in the NBA draft coming out of Murray State. I'm looking at you. And you got your red AutoZone shirt on. You got your name badge. I'd say you're true blue, but I think you're actually true red. Yeah, sure. My luck leads AutoZone red. It's Monday. It's Monday at the Store Support Center. Now listen, I didn't say the headquarters. I didn't say the corporate office. It's Monday at the Store Support Center. Everyone here's role is how do we best support our stores? We just finished our four and a half hour executive committee meeting where everyone is dressed just like me and everyone in this building is dressed just like me. On Mondays, we wear our store uniforms in solidarity with the most important people in our company, which are the people in our stores and our distribution centers, who are closer to the customer and taking care of the customer every day. Everybody has recognition pens. As you know, as a leader, a huge part of leading an organization is recognition . And we do it on a regular basis. The one on my right collar is a shrink buster pen. How do we control shrink or loss in the company? Something I earned when I was a divisional vice president back in 2000, I believe it was. The top left on my left hand side is the Lib the Pledge pen. Everybody who goes through their first day of orientation at AutoZone, we call foundations, gets a Lib the Pledge pen. They should put it on their uniform or dress code as we call it every single day and have a recommitment to living the AutoZone pledge. Do you know the AutoZone pledge, David? Well, no, you tell me, but I think I have an idea of what it is. So whenever five or more of us are gathered, including my executive committee meeting at 10 o'clock central today, we begin the meeting by all standing up and clapping and then we spell AutoZone. A-U-T-O-Z-O-N-E. Who's the best AutoZone? Who's number one? The customer. AutoZoneers always put customers first. We know our parts and products. Our stores look great. We got the best merchandise at the right price. So this pen signifies to 112,000 people every morning when they're getting dressed what it means to be an AutoZone. And that's to live that pledge that like everything else at AutoZone always starts with the customer. When I was at Yum, we had a Yum cheer, but you've taken it to a whole different level with that with your pleasure. That's great. And it's a lot of fun to start those meetings with that cheer, isn't it? Oh, it's awesome. You know, it's interesting. It was not created here, our founder was on the board of Walmart, borrowed a best practice from somebody else. We do it as well, if not better than anybody else. But think about being in a meeting setting and how many people come in, some of which are late, many of which are at low energy or they're focused on their phone or something else. And instead, they have to stop everything that they're doing. Stand up, raise the energy level of the entire organization that's in that room . And also, you know what? If you get there after the cheer and pledge, everybody knows you were late. I was going to share one more thing with you. And that's this pin. It's a service pin. Every AutoZone or from their first anniversary on gets recognized for their years of service. And, you know, in today's society, many people say people won't stay with organizations a long time. You'll notice my pin is a 27-year pin and about six weeks I'll be celebrating my 28th anniversary with AutoZone. Here's a crazy statistic. We have our CEO team, which is the vice president of the organization. As of today, I rank 18th out of 63 people in tenure at almost 28 years. I got to ask you, how do you do that? I mean, nobody has that kind of tenure. I think it's the AutoZone culture. First of all, I think we're incredibly selective of people. I have a saying that AutoZone is not right for everybody and everybody is not right for AutoZone. And that's okay. We're pretty unique. How many people feel comfortable doing a cheer and a pledge? How many people feel comfortable wearing the uniform? How many people want to get as passionate as we do about our business? And if they're not that kind of person, if they're not competitive, they don't like to win. They need to go somewhere else because this wouldn't be the place for them. I got to ask you, how did you first get introduced to AutoZone? Great story. So I was a CPA coming out of college, went to grad school at the University of Memphis and got an MBA. And from there, I was recruited to Ernst & Young to be an intern that ended up resulting in a full-time job. But I was with Ernst & Young, Ernst & Wendy Ernst & Young for about six and a half years. The first client that I ever worked on at E&W at the time was Malone and Hyde. And it was the divestiture of Malone and Hyde, which was the parent company of AutoZone. So I worked on that originally, then went away for about a year. And in preparation for AutoZone's initial public offering in 1991, I came on maybe a couple of years before that and worked on the AutoZone account. So I spent five years or so. I would spend three or four months a year at AutoZone. And it's in my hometown of Memphis, Tennessee. And I liked the culture. I loved the competitiveness of the culture. I liked the fact that I didn't have to wear a tie to work every day like I did at E&W. I loved the people. I looked at the business model and saw how successful the business model and how sustainable it was. And so December of 1994, I was asked to come to AutoZone as the manager of inventory accounting. And I had five people on my team and the rest, as they say, is history. Who did you interview with, Bill? I interviewed with three people. I interviewed with the chief financial officer, got him Chuck Bell, who was also an E&W alumni. And I interviewed with the guy that was going to be my new boss, Richard Adams. And then the last interview that I had was with a gentleman by the name of Pitt Hyde. And Pitt Hyde was the founder of AutoZone, who I had never met before until maybe six weeks before this whole interview process. And for the last 28 years, Pitt has been a huge mentor. Pitt and his wife Barbara are mine and my wife's Amy, still an anthropic mentors. And he's a dear friend and certainly a confidant to help me think through some things from time to time. Did Pitt give any coaching when you had that interview with him? He didn't give me coaching. But at the end of the interview, he allowed me to ask him three questions. Or he said, would you have any questions? I said, yes, sir, do you know where my office is going to be? And he said, no, son, you won't have an office, but we really don't know exactly what you're going to do yet. So we don't know where your cubicle will be. He said, well, anything else. I said, yes, sir, do you know what my title will be? And he said, no, we don't know what your title will be. We're still trying to figure it out. We're trying to enhance the finance and accounting staff. We think you'd make a good addition. I said, OK, he said, anything else. I said, yes, sir, how much money am I going to make? And he said, son, you're way too into the details. You need to decide if you want to be an AutoZoneer. And if you do, everything else will take care of itself. And boy, no truer words were ever spoken about. I love it. And then at age 39, you've become the youngest Fortune 500 CEO. Tell us the story of when you got that news. Well, what an interesting time. So back up just a little bit. It was the week after spring break. And I'd been on a skiing trip with my family and had a bad skiing accident on Wednesday. It's been all day Thursday in the hospital. With a severe concussion, we ended up coming home so that I could get some rest. And I started finding out on Friday night-- sorry, Saturday night-- that I may need to come back to Memphis because something was going on, but I didn't know. So I got up Sunday morning and got ready to go do whatever I needed to do. There was some discussion. I might need to go to New York that day, whatever. I got up at about 5 o'clock. I was ready to go to work, do whatever I needed to do. But they kept ticking on. So finally, I said, well, I'm going to go to church. I went to church with my family, had a quick lunch, and came back home and was waiting. At about 4 o'clock that afternoon, our founder called me. Our CEO, the pre-seeded me, had decided to go to Office Depot as the chairman and CEO. And the board had met that weekend, kind of on a surprise thing. And it selected me to be the president and CEO. And our founder, who was the one that called me at 4 o'clock on Sunday afternoon, they decided that he would come back as the chairman of the board on an interim basis. And so it was very fortunate for me that here's this mentor of mine that's going to come back and help me through this massive change. But that's how I found out. Wow, that's a great story. Did you feel any pressure, Bill, being so young? Or were you old enough to even know the difference? As you can see, David and others can't. I always looked so much older than I was, that frankly, in all candor, it was a benefit to me, whether I was at Ernst & Young or at AutoZone. I might have looked 10 or 15 years older than I was. And it was funny, we went to this party of retirement celebration or departure celebration for the previous CEO. I went with Pitt and he looked around, he said, "I'm so tired of people asking me what I'm doing, putting a 39 year old in the road." And he said, "What they don't realize was I became the CEO, Pitt became the CEO of Malone and Hyde, his grandfather's company, a New York Stock Exchange Company at the age of 26. He was the youngest ever CEO of a New York Stock Exchange Company at the time for years. He had confidence in me and that certainly helped. And I would say age never played a part for me, but our business was in tough spot at the time. We announced simultaneously with me becoming the CEO and Pitt coming back that our same store sales were down 7%. You know what that means. - That's not good. - We ended the quarter down 5%, the worst performance in the company's history. So I was scared, but it wasn't because of my age. - You joined the company as a CEO in 2005. Talk about the business that you inherited when you were CEO and what you're leading today. Just give us a little snapshot. - I'd been at the company for 10 years and four months. I've been around the company for 15 and a half years or so. So it was a company that I knew very, very well. But we were going through a tough spot. We'd made some changes. A lot of them worked. Some of them didn't, just like always. But we were in a spot where we were underperforming in a pretty significant way when I became the CEO, which was frankly very fortunate because it allowed this new team, the executive committee at the time to come together and really say, what is working, what's not working, what needs to be tweaked. And within a matter of a couple of months, the new team had come together and put together a new strategy. Now, it could have very easily been marketed as back to the basics. But as you know, if you want to inspire people, you don't talk about going back to anything. So we coined it, Live the Pledge. That pledge I shared with you earlier, this pin was a product of that strategy. And so we came to our big national sales meeting and said, look folks, here are the things we're going to do. And they were very simple basics of this business. But they left the room and left the meeting with a level of confidence, confidence that they could go make it happen. Because as our founders father said, no individual builds a business. The individual builds an organization and the organization builds a business. And we had to motivate and inspire and engage and get people excited about what we could do together. And it certainly wasn't a quick turnaround. We quickly stabilized the sales of the organization. But it was about three more years before we really saw some significant growth. What's the scope of your company today? Today, we will pass 7,000 locations, stores. The majority of them, about 6250 are in the US, a little over 700 in Mexico and 70 in Brazil. We have 112,000 people. We don't call them employees because they're special. We call them auto-zoners. We just finished our fiscal year at the end of August. We did $16.3 billion in sales. We made about $3.2 billion, $3.3 billion in EBIT or operating profit. It's a terrific business model in a great industry with the most fabulous people executing it. And you have a great retail and commercial business. And how do you think about the growth of each business and how have you structured the company to attack both those opportunities? The company started on July 4, 1979. The most American company on the most American day. But we started on as a retailer. So our founder was in the wholesale grocery business. So think of being the supply chain for the independent grocers in the '70s. And Pitt saw that that future probably wasn't very bright. So he diversified the organization. He got into drug distribution, running some grocery stores, got into sporting goods retailing, got into drug store retailing. Several different things, and the last one that they got in was auto parts. But solely as a retailer. Fast forward 17 years to 1996. And they said, look, we're servicing part of the market. And frankly, the smaller part of the market. Why don't we open it up a lot of the same inventory? The same stores can be distribution points for the commercial market. So in 1996, we started the commercial business. I just mentioned that we finished the last fiscal year with $16 billion in sales. The majority of it was in US retail. But about 40% now, $4 billion a year is in our wholesale business. Our US retail business is our most important strategic priority. Our commercial business is our greatest growth opportunity in the mid to long term. And then we have an international strategy today that is about Mexico and now Brazil. You have 112,000 team members, and you say those 112,000 people are not employees. They're auto zoners. You obviously have a lot of pride in that. And one of the things that I noticed about you, Bill, we both were at a golf outing. And there are a lot of very good golfers, fun guys around. But I noticed you spent, I would say almost as much time talking to the staff. I mean, you're really into the front line. I mean, where did that get into your DNA? I say first started with my mom and dad, who I learned all my values from. But my dad was a regional manager for TerminX. He was always a people person. My dad wanted to be a coach. He played sports and high school and college. And he always wanted to be a coach. He ended up being a coach, but doing pest control instead of being on fields. And then I would also say auto zone has taught me that. Auto zone, we can't be successful at auto zone without every single person on our team, every single auto zone are being engaged. And when I think about some of the unspoken values at auto zone, there are two that I think are at the forefront. One is humility. The other one is empathy. But we ask our people to do every single day. You think about most sectors of retail. People are walking in the store because they want to buy some Kentucky fried chicken. Are they want to buy taco? Are they want to go to Best Buy and Buy TV that they've been saving up for? At auto zone, they're walking in the store many times because they got up that morning on their way to work and their car won't start. And they're going to have to spend 100, 150 dollars that they didn't plan on spending. And our auto zoners are at that pain point for the customer. And they're there to solve that problem. And so I've learned forever that if you really want to understand what's missing in a business or what we need to improve, you go straight to the front lines and you deal with the people that are dealing with a customer every day. They know Best. And then I just have tremendous respect for what they do. And frankly, they're just wonderful people. And I love to be around them, whether that's in an auto zone store or at that event you were talking about. We'll be back with the rest of my conversation with Bill Rhodes in just a moment. You know, there are some leaders like Bill who are so good at building teams. When they talk, you can just hear how much they care about the people they lead . That comes through loud and clear in my conversation with John Caliperi, head basketball coach at the University of Kentucky. I'm trying to teach them that you're going to come across fame and fortune. The question is, what are you going to do with it? Do you know how to build joy within you? It's what you do for somebody else. It's not what you're gathering or what you're dragging in. And so part of our pillars of what we want to do in our culture is that it's not about winning basketball games. If we take care of everything else, we'll win our basketball games. Well, the chance if we love on them and they love on each other, well, the chance to win the national title. If you want to elevate your team and help them be at their best, go listen to my conversation with Coach Cal, episode 22 here on How Leaders Lead. You talk about empathy and humility as a couple of your core values for your people. Is that what you describe to be an auto-zoner? What is an auto-zoner versus a typical employee? I think an auto-zoner is a problem solver. If somebody walks into our store, particularly on the retail side, and they say , "My car sounds like my car smells like my car is shaking. I've got whatever the issue is and our people take the time to listen to the customer and understand what exactly is the problem. Then we begin to try to or they begin to try to isolate where the problem is. We take a fixed finder and put it in your OBD2 port and find out that you've got a problem with your downstream O2 sensor. They're problem solvers and I just love it. I also understand that you have a practice at AutoZone called Gotcha. Tell me about it and share a story that brings it to life. Go out to the customer's automobile. That's what it stands for. You can walk into an auto-zone store and you can say, "Hey, my car is doing this." We encourage and incentivize our folks to go out of the store and go to the car . That's where the problem is. You can open the hood and you can look and see, "Oh, my goodness, they think they have a bad battery. They don't have a bad battery. They got corrosion on their terminals." We need to take the terminals off, clean the post, put some felt washers on there, put it back together, and there they go. They may have spent $3 when they thought they were going to spend $150. That's what Gotcha is. Everybody you have coming to CU is not really looking forward to it. That's really a great point. How have you really trained people on that notion? You've talked about a couple of things, but that is a very different orientation than most people would have with their customers. There are certainly people that come into our stores that are excited about accessorizing their store, but that's less than 20% of our business. For 80% of our businesses, either failure, water pump, starter, alternator, battery, my car won't run, or maintenance. We need new windshield wipers, need brake pads or brake rotors, whatever the case may be. A lot of times we're hiring new auto-zoners that don't have automotive knowledge. We spend a ton of time and money creating training modules so that they can get up to speed. But more than anything else on the training front, we train them how to be an auto-zoner. And a big part of that is being a good listener, being empathetic to the customer situation. And by the way, if you don't have the knowledge today to solve that customer's problem, somebody else in the store does, and it is just fine to raise your hand and say, "Hey, David, can you help me with this? I've gotten over my head talking about a smog pump or whatever the case may be ." You know, excellent customer service is in the DNA of every great company. And you obviously have got this fantastic culture that you're so proud of that you used to really drive it. But what's the biggest challenge you face now in keeping that culture alive and keeping that customer service going? Because it's not easy. I mean, you're very upbeat and optimistic and positive, but I hear a lot of people whining about how tough the work environment is these days. It's the toughest labor market in my career. And frankly, it started before the pandemic. If you know, there's been a lot of discussions about hourly wages and gaps and wages between certain parts of society, and they were real. And I began talking about it probably five years ago that the wage market was moving up much quicker than it had in the past. During the pandemic, obviously, there was a tremendous amount of economic stimulus, see that true stimulus or enhanced unemployment or child tax credits, PPP money , a lot of different money that flowed into the economy and has been well documented. There was a significant amount of the population that left the workforce. I think the last time I saw it now, we're about 1% below. I think it was 63% versus 62% in the job penetration in the country. So it's been a very tough time for us to find people, particularly in our stores and in particular in our distribution centers. But what we try to do is leverage our greatest asset. Our greatest asset is our autos owners. And so we have a referral program that pays them significant amounts of money. A lot of people have been doing sign-on bonuses and we've tried those and they might work here or there. I'll tell you what has worked for us. And we've done it a long time and we amped it up during the depths of COVID. And that's a referral bonus. Because first of all, when an autos owner puts their name on somebody else, they're going to put their name on if they believe that they're going to be a good autos owner. And I think that that's really helped us. But we're still challenged with the labor situation and staffing issues in our stores and distribution centers or in the other parts of the organization. But we're in much different place today than we were in site April of this year . Every leader casts a shadow for their organization. And I'm looking at you right now. And as I mentioned earlier, your autos own red and you got your name badge on. And underneath that name badge, it says customer satisfaction, I think. I think that's what I can read right there. How did that come to be? And as a leader, what do you do to really drive home that fact that customer satisfaction is what it's all about? Because you're obviously passionate about it. No question. So yes, it says customer satisfaction. I'll show you a copy of my business card that says Bill Rhodes, chairman, president, chief executive officer, customer satisfaction. Every single autos owner, 112,000 strong today, 12,000 of which are outside of the United States. Every single person has customer satisfaction in their title. I've talked a lot about our culture. As you can tell, I'm incredibly passionate about our culture. I want to be crystal clear. I didn't create this culture. Pitt, Hyde, Peter, Formanac, Linda Ireland, Tom Haneman, those great leaders that came before us today, they created this culture and they've instilled it into us to continue to nurture it and grow it and change it with the times. I tell you, one of the toughest jobs that we as leaders at Autosome today have is as society changes, how do we change our culture to keep up with society while also and more importantly, making sure we have non-negotiables, those things that we will never change, like our dress code, like our uniform, as I call it, like customer satisfaction. I can remember talking to a new executive one time and they said, you know, there's two things that really bother me and they're just hokey. First of all, when we start a meeting, I've got to do a cheer and pledge. And second of all, why do I have customer satisfaction on my business card? That's hokey. I said, it goes back to what I said earlier. For Autosome, it's not right for everybody and everybody's not right for Autos ome and that's okay because if you can't buy into this culture, if you can't be passionate about this culture, you don't need to be here. So you have almost 7,000 stores outside the United States and I know you're killing it in Mexico. What are the plans to grow the business internationally and how do you decide where you're going to go to? Yeah, it's a very difficult decision. You know, it's pretty easy for us and again, I was not part of the decision to go to Mexico, but we had been on the border of Mexico for years, decades, and we saw how well our stores performed on the Mexican border. We also saw that they didn't perform nearly as well in the Canadian border where the climate is different. You know, the people working with their hands is not as normal. And so we decided, let's go to Mexico. We were already having to put most of our products in Spanish language as well as English. So it was a pretty easy decision for us. Wasn't easy in the beginning where a lot of fits and starts and actually five years in, we looked at, should we stay or should we leave? Thank goodness we decided to stay. Thank goodness we continued to trust and support and resource our team down there because they built a really phenomenal business in Mexico. Now, fast forward a few years later, we began to see the success of Mexico. We said, where is next? And I was in a position at that point, Tom, to help be part of the team that looked to where we go next. And we went to China and Taiwan and Canada and Poland and Hungary and Czech Republic and Brazil and all these different places. We ultimately decided on Brazil, it's not for the faint heart. It's a tough place to do business as you well know. But it also has a tremendous population of people. There are also people that are inclined to do things. There's a lot of home improvement activities that happened there. And there were also some competitors down there that we saw that we're doing very, very well. And so about 10 years ago, we made the leap of faith to go begin building out in Brazil. And as you can tell, I think we had 72 stores at our last public reporting. We've taken our time, taken our time because it's been hard. Has not been easy. We had to make sure that first it worked for the customer. We proved that pretty quickly. The harder part was to prove that it worked for us and our shareholders. And it was a good economic venture. We tested it for about nine months before earlier this year. The board made the declaration we were no longer in test mode. And it was now part of our growth strategy. I believe AutoZone is one of the few and maybe the only company that I know of that has had both earnings per share growth and revenue growth for each year, the past 20 years. What do you think builds the key to driving that kind of consistent performance ? What do you do to get that kind of consistency? So first of all, we're a great industry. That's part of the growth story. You got to pick a great industry. Secondly, we've got a phenomenal team. Everybody throughout our organization, I've talked about the tenure of this organization. We've got to have people that are passionate about this business that are looking to grow in an industry. The other thing that I think we do here that some people think is too conservative, but I think for us, it's played out pretty well. You have to grow. And we have organic growth where we can grow our store count two and half, three percent a year and have for a long time and believe we can for quite a bit longer. But you also have to have innovation. And when you say innovation, so many people think about radical innovation. You know, we're going to go create a new retail model or we're going to go radically change what our stores carry or what they look like. We believe that AutoZone in incremental innovation, we call it evolution over revolution. And we say because with revolutionary innovation, the messes are a lot bigger. And if we'll challenge ourselves to get better every day, this whole notion of continuous improvement and the notion that let's go test things, we have 7,000 stores. You got a great idea? Let's go put it in a hundred stores and prove that it's a great idea. We don't have to put it in 7,000 stores. And when we do almost inevitably, we make a mistake and we have to go back and clean it up. And doing my research and you mentioned your dad a little bit earlier, but my understanding is that he used to take you to work with him on Saturday. What were some of the big lessons you learned from just watching your dad in action? Yeah, I didn't go with him every Saturday, but he went almost every Saturday. Therein lies one of the biggest lessons that I learned. Nobody was tapping his shoulder telling him he had to go to work. He went to work every Saturday. What happened as a result thereof? His branch managers were at work every Saturday. And it's a lesson dad taught me years and years ago, I'm sure you know who Kim mons Wilson is, one of the great Memphians who found it holiday in. I never get the quote exactly right, but my dad beat this quote into my head, which was, "If you want to be successful, all you have to do is work half a day, every day. And it doesn't matter which 12 hours it is." You know, today's society, a lot of times we don't want to talk about the value of hard work. We want to talk many times about balance, you know, work-life balance. And we have to make sure that in the work-life balance that we don't forget the work part of it. And I always believe the harder you work, the smarter you get. I think that that was one of the things that my father taught me amongst a ton of others. My dad, as I mentioned earlier, he was a coaches coach. And I could listen in, sit in his office, I'd watch him print off these reports , and I'd watch him circle numbers. And then I see him pick up the telephone and he'd start talking to every one of his branch managers. And he always found something positive to talk to them about. But they all knew at the end of the day there was going to be one of those numbers that he was going to hone in on, say, "Hey, what are we doing on this front? How do we get better here?" And this notion of continuous improvement, evolution over revolution, I think my dad taught me a lot of those lessons. You know, so let's fast forward a little bit. You go to the University of Tennessee, Martin, on a golf scholarship and you get a degree in accounting. Why accounting, Bill? Well, I wanted to be my dad. My dad was my hero. And he was a manager. So I knew I wanted to be in business. And so I got to UT, Martin, and I went to, you know, started doing all the regular classes and I would go to the business people. And I talked to them about the various majors that they had. And at the end of the day, I got talked into an accounting major. And I'll never forget this as long as I live, went downstairs to the phone booth because there were no phones in your room in the dormitory. And I stood in line to call my parents on a landline. And they both got on landlines at home. And we got a conversation about dads that, "Son, have you decided what you're going to major in?" And I said, "Yes, sir, I have." And he said, "Okay, what is it?" And I said, "Accounting." And he said, "Accounting. Why in the world would you want to be an accountant?" They wear like green-arm bands and green ice shades and they sit in the corner by themselves and do numbers all day. That doesn't seem to be you to me. I said, "Well, Dad, here's why I picked it." They told me that it was the most difficult major in the business school at UT Martin. And so I said, "I'll go do it." And he said, "That's good enough for me." That's great. I'll tell you what, if that doesn't tell you something about Bill Rose, I don't think anything will. I mean, you absolutely love a challenge. And you're also an outstanding golfer in college. And as you look back in those college days in golf, what was the big challenge you had to overcome in that just to be able to compete? Yeah, I love my days in college. And I love playing for University of Tennessee at Martin. And my coach Grover Page, who was very requiring, I loved it. I played really well my first couple of years. And then my junior year, I did not play well at all. In fact, my coach, coach Page, talked to me after my junior year and said, "You know, you're not performing well. I'm going to take at least half your scholarship away. Going into your senior year, I've had this conversation with many people. I would assume that you don't want to play next year. And I immediately said, "No, sir, coach. I'll fix it. I'll go to work this summer. I'll work like crazy and I'll be better." And the one thing I ask you is if you watch what I do, because in golf, there's really the bigger part of the season is the summer season. And I said, "I just ask you watch what I do in the major events this summer. And if you happen to have scholarship money, give it back to me." And I'll never forget, I was cleaning out the attic at my parents' house in August in Memphis, Tennessee. You know what that's like. My mother got a phone call and she said, "Coach Page is on the phone." And he came back and he said, "Hey, I do have a little money left. I've seen how you performed and I want to give you your scholarship back." And that's great. I appreciate it. And I'll do all I can to make sure that you don't regret that. Hey, you know, because you're listening to this, I can tell you're the kind of person who wants to learn how to lead well. But there's a lot of companies out there who want to take that desire and charge you $500 or $1,000 or heck, even $20,000 to try and show you how to lead. That's just not right. If you want to be a better leader, I believe you deserve to have access to something that will truly help you and it shouldn't cost a fortune. So I want you to go to howleaderslead.com and start my leadership class. It's really and truly free. And after you take this class, you're going to feel more confident in your role and you'll be on your way to getting big things done with your team. Go check it out at howleaderslead.com. From what I understand, golf is what actually got you in the door at Ernst & Winnie, which is now Ernst & Young. Tell us about that story. It's amazing how twists and turns happen in your life. And this particular one was pretty amazing and it is how my career got started. I was a good student at UT Martin, but I was never an upper echelon top of the top student that any of the back then big eight accounting firms would have recruited. And so I come back to Memphis. I learned and even though I said I wanted the toughest degree at UT Martin, about halfway through my junior year, I learned two things. One, I didn't particularly care for accounting. And more importantly accounting didn't like me. And so I decided I would go straight to the University of Memphis when I graduated and get an MBA and focus on management and then go follow in my dad's footsteps. When I came home, there was a little article in the commercial appeal, our local paper in Memphis, talked about the success I'd had my senior year in college, playing golf, and then mentioned that I was at the University of Memphis pursuing an MBA. And there was a gentleman by the name Mike Hopper who ran the audit practice of the Ernst and Winnie at the time office. And Ernst and Winnie had three groups at the office, three different practices. One was audit, one was consulting, one was tax. And so he called my mother's house and said, "Hey, I'd like for you to have Bill call me." So I come in and back then you wrote on the refrigerator, just to call Mike Ho pper Ernst and Winnie. I called him and said, "Hey, I read about you. I'd like to interview you." When I was a college boy, I put on my best duck head khakis, my penny loafers, well, a navy blazer, I borrowed a tie from my dad who's six-fives. It was way too long, had a full beard. Back then in public accounting, you wore dark suits, white shirts, no facial hair. I went down to see this guy Mike Hopper. He walks me into his corner office overlooking the Mississippi River and he starts interviewing me. And about three minutes in, and he says, "Alright, here, stop. Here's the deal." At Ernst and Winnie, we have three practices, audit, tax, and consulting. Every year we have a golf challenge between the different practices. He says, "Since I've been here, we've finished last in the golf challenge every year. I don't believe not one, we've finished last. So I want to hire you. You can work one hour a week or 60 hours a week. I don't care. This was May of 1988. I was going to graduate from graduate school in December 1988. And he said, "You can work here until the end of your graduate school or until after the golf challenge. Either one works for me, but we won't be looking to hire you full time." So I got this great opportunity to go to Ernst and Winnie and I thought, "How can you not write on your resume that you worked as an intern for Ernst and Winnie?" And it was the beginning of my career. Fortunately for me, by the time December came along, they decided that maybe I could make it there and they brought me on full time. And I stayed there a total of six and a half years. It was the greatest training ground I could have ever had. Did you help them win or not? Yeah, we won. So we won. But much more disappointingly, they never held it again. That was it. Well, now that you're on the team, there was no chance. As a consultant or an auditor, you really get to put your head underneath the tent or raise the hood and really check out companies. And you'd check out, I'm sure, five to ten companies a year. What did you learn from that experience, Bill, as you were moving up the ladder ? I call it sometimes the greatest MBA program. Where else can you be? You're 23 to 26 years old. I guess I was 28 or so when I left. Where can you be where you get an opportunity to see inside of a company? My case back then, probably eight to 12 a year. You get to see which businesses perform well and why, which industries are cycl ical, which ones aren't. More importantly, you get to see which leaders are successful and what are their leadership traits. You see which leaders fail or aren't as successful and what maybe are they missing? In AutoZone's case, it gave me the chance to see inside this culture and I wanted to be a part of this culture. So it was really just maybe the greatest learning experience I've ever had. You joined AutoZone in 1994. You had a lot of different positions. But one of the things that we were talking about this past weekend was that you had what you call sort of a "lucky demotion." Talk to us about that. I came into AutoZone 1994 as the manager of inventory accounting. I did that for about six months and they wanted to start an internal audit department. And so they asked me to do that in addition to what I was doing, but I wanted to call it process improvement because I didn't want to know in the nature at the time of internal audit. Did that for about a year. Then I went to work for our president and kind of a support function. Did that for maybe six months and then we started buying companies and I did a lot of M&A work for about three years in addition to my supporting the store operations. Our CFO at the time was beginning to talk about his timeline and how long before he retired. So I was moved back into the finance organization as a vice president. I was already a vice president but moved back as a vice president. After four months I was promoted to a senior vice president, a finance and the controller of the company and thought, "Man, this is going crazy. I was, I don't know, 34 years old or something shocking to me to be considered for a role like that at that stage in my career." Four months later I get called in the office on a Thursday by one of my mentors , Tim Vargo. He says, "Hey, the board's met all week and we've actually decided you're not going to be the next CFO. In fact, we've hired him. He starts on Monday. He's going to take your job. You're going to be demoted back to a vice president. We don't know what you're going to do, but we like you." I was tracking with it all along until he said, "But we like you." Lo and behold, they called me back in about a week later and said, "Yep, you're going to be the vice president of the Mid-South Division of Stores." So I went from running the accounting organization to working with 525 stores in 11 states and 8,000 people. What a great opportunity that was for me to really learn our business from the ground floor, to get to know our people at a more intimate level, and to help understand what they needed for us to all to be the most successful we can be. And that was really when you demonstrated you're much more than a numbers person that you were a general manager. You could make money and make things happen, right? I don't know about that because we weren't terribly successful. I was in that role because I was only in that role 11 months and then I got re- promoted this time to be senior vice president of our supply chain. So our distribution centers and transportation fleet, I was like, "Thank goodness you all got me out of that role because I don't know if the company could afford it. Those kind of sales much longer." When did the company know? When did you know that you wanted to be more than a finance person? That you wanted to really run the business? I think I knew it when I was in college, when I studied accounting, and I knew that it was a great profession. And I'm a huge proponent of accounting because it is the language of business. But I really wanted to be my dad. And I saw the impact that my dad could have on people by being a people leader. And that's what was inspiring to me. You've been such a successful CEO and you're a leader in the retail industry. I know a few years back, you and other few CEOs, you met with the president to talk about the tariff situations in China. You know, meeting with the president, Bill, that's pretty heady stuff, no matter how successful you are. What did it feel like just to be in the room and be at the White House? It was funny, as we were preparing to go to the White House, I went with the retail industry leaders association. I think there were eight of us that were CEOs of retail companies. We met with President Donald Trump and Gary Cohen and Jared Kushner and Mike Pence and maybe a couple others. It was fascinating. But leading up to that meeting, everybody kept asking, says, "Well, I'm sure you've been in the White House before." And I said, "Of course I have, as a tourist. But to walk into the White House with all these cameras and everybody on you, seven of my peers walk into the Roosevelt Room, tons of media in there. And we were waiting on a president of Trump and his team. And we were in there maybe 30 minutes or so waiting. It was just look around that room and think about who had been in that room and the kinds of decisions that had been there. It was surreal, David. And then President Trump was a little late because he was having to deal with something else and he had a major meeting behind us. So we felt like our time would be compressed and it was not. Being his team were in there with us for an hour. The media was in there for the first three or four minutes and then left. And we had one of the more fascinating conversations that I've ever had. I was particularly impressed that Gary Cohen and his thoughtfulness and where he was going and the fact that President Trump and Pence, all of them were, Vice President Pence, all of them were listening. We had a great discussion at the time there was a movement going on to have a border adjustment tax which ultimately got killed but it came back in the form of tariffs, six, nine months later. But to be at the seat of government and to have the opportunity to represent your industry and to represent in my case, AutoZone and AutoZoneers, it was a tremendous honor. And then we left the Roosevelt Room and went into the Oval Office. I'm sure you've had these experiences in the past that you're going to go see something that you've envisioned your whole life and you get there and you see it. It looks nothing like you thought it would look. I guess maybe I've watched too much TV when you walk into the Oval Office is like, "Yep, there's those brown sofas. There's the window." I mean, it's like you knew exactly where you were. It was really remarkable. You've had so much success, Bill, but all of us have had what we might call our epic fail. When you look back on your career, what would be one failure that you learned the most from? How much time do you have? There's a long list. I know you said one. There's one that really sticks with most of my failures that I've made and I've made a gazillion of them. Most of them have been bad people decisions. And those are the hardest because you're impacting somebody's life and they're in their family's livelihoods. You either promoted them too soon, you promoted them too late, you moved them in and apart of the organization where they couldn't be successful. But I made one critical error in 1996 that I will never forget. I was responsible for labor scheduling. I don't remember how many stores we had in '96, probably 1200. We were trying to figure out ways to be more efficient with our labor. At the time, we had three person minimums in all of our stores and some of them just didn't need three people every hour of every day. And so I sat actually in this office with our founder, it was his office at the time, and I pitched to him that we shouldn't have three person minimums in our stores. And he said, "Okay, I know you've done the work, you've looked at all the data. Okay." Well, I went and pulled the big lever and I took them all down to two person minimums, but our forecasting methodology wasn't appropriate, wasn't good enough to do that. And it took me four weeks before I could reverse that decision. And the amount of pain and frustration I put autosoners through and the amount of dissatisfaction that I put customers through, it was one of those things that have led to this philosophy of evolution over revolution or testing. If I had put it in 100 stores, we would have found out in two weeks that it wasn't the right thing to do. But to me, that's what it's about. They're all going to make mistakes. And think I don't want anybody to ever be afraid of is to make a mistake in a business decision. Just don't keep back in the same one. Go back and learn from those mistakes and figure out how it's going to affect your decision-making. Who else are you going to listen to? How are you going to bring people together to evaluate the decision? Because I was painful and it was 100% on me. Yes, and it turned out to be a huge advantage in the end. And so many times those failures are sort of blessings in disguise. Bill, this has been so much fun and I want to have some more with the lightning round of questions. Are you ready for this? Sure, David. Okay. What are three words others would use to describe you? I would say competitive, detailed, and relentless. If you could be one person for a day beside yourself, who would it be and why? David, I learned this from my mom and dad and this is an unconventional answer if you don't mind. My parents taught me no idols. And they said, you know, like in junior high school, you look around, you've got the great looking kids, you've got the great athletes. My parents said, you can't be that person. I want you to go focus on being the best Bill Rhodes that you can be. You're never going to be the best athlete. You're never going to be the most handsome. But just go be the best you that you can be. And so I spend every day saying, I don't want to be anybody else. God has blessed me so many times over with the skills, capabilities, talents, passions and people that I've been blessed with. And so I don't want to be anybody else. Fair enough. What's your biggest pet peeve? People with a victim mentality. Don't tell me why you can't. Don't tell me why you got this disadvantage. Tell me what talents and capabilities you have as an individual. So let's figure out how best to leverage those and make you be all you can be. What's the last thing you bought at AutoZone for your car? It was a pickup tool. I just bought it in Mexico two weeks ago. If I got in your car and turned on the radio, what would I hear? The message to Christian radio station on SiriusXM. What's your lowest round of golf and wear? 64 Edmund Orgel golf course in Millington, Tennessee. A hundred years ago when I could play the game. What's something about you that few people would know? I think that I have a massive fear of failure. I think that drives me as much as anything. I don't like to lose. And I don't like the embarrassment of failure. And I've had it so many times in my life that I know what it tastes like and I don't like to go there. Yeah, it's interesting that you don't want to have people afraid to make mistakes in your company, yet you have this massive fear of failure. How do you deal with those two things? One of the things that happened to me over the years is I was trained as an accountant, which is a low risk kind of role. And I would say in my first decade, I was a pessimist. And then I moved into these leadership roles and you can't lead people and be a pessimist. And so I've become this ultimate optimist that I can find opportunity in everything that's in front of us. And then the other thing that I would say, one of the traits that I've really picked up on mainly since the pandemic built is this notion of executive courage. The executives that are willing to take 60% of the necessary information and they're willing to make a decision and decide on a path forward. Because if you have 60% of the information, you have your intuition. If you make a decision, I believe 80% of them are going to be right and you're going to do terrific. I believe 15% of them were the wrong decision to make. But because of your commitment and the team's commitment to it, you're going to make it work. And then about 5% of the time you're going to realize, oh, that was a really bad decision. Raise your hands. I say, we can't do that. Let's we got to go back and we own it. Let's clean it up and let's fix it. You know, we've talked about your dad in this conversation and they called him the big man as I understand it. You live large with humility and grace. As you think about your own legacy, what words do you want people to use when they describe how you show up as a leader? My dad was the big man. He's about 280 pounds, 6'5". He lost some weight for at one point in time. My friends started calling him medium man. One of the greatest traits that I would say about my dad and I said it when I was given my part of his funeral. I never met anybody that didn't have an enemy. Never met anybody that everybody loved. And I know that's not the case with me. But that was the most incredible thing about my dad. What I want people to think about me is that I left this wonderful place, the world, better than I found it. I helped AutoZone not why I was here, but I helped be part of a team that set up AutoZone for the next decades of success. I tried to live according to my values every day. I'm a sinner saved by the grace of God. I fall short, but I want everybody to realize I'm doing what I can do. I'm being the best me that I can be. And what's one piece of advice, last question here that you'd give to aspiring leaders? Have courage. Be willing to make decisions. You can get paralyzed by the fact you may not know everything. Use your intuition and then go make it successful. You've got to lead through people. You've got to listen to people. Build a team. Have consensus oriented decision making, but don't be afraid to make a decision . Bill, you are one great guy. Just knowing how hard it is to drive culture, keep it alive. You know, what you're doing in AutoZone is just world class. And you live it every day and you are making a better AutoZone for the future. So congratulations on everything you've done and everything that I know is going to happen because of your leadership and the leadership of your team. Thank you, David. As you know, these kind of jobs, they're team sports. And I get a lot of the credit that I don't deserve. I have the most phenomenal team that I get the honor of working with every single day. And that's the secret of our success. I just love Bill. He's the real deal. He's smart. He's humble. And he's clearly a leader who knows how to take people with him. I mean, when he told that story of his decision to reduce staff and stores and the awful impact it had, boy, you could just hear the sorrow in his voice still after all these years. But you know, what's amazing about that story is it led him to a better strategy. He calls it evolution over revolution and is such a smart way to roll out new ideas. But more than that, Bill's story should remind us that leadership is a privilege and great leadership only happens when you value those you lead. That respect can drive you to make better decisions and to truly learn from the decisions that aren't so great. Now Bill, to his credit, has had a lot more good decisions than bad ones. But the important thing is he learns from both. Now normally at this point, I offer you some coaching for your week. But to be honest with you, I can't just sit here and tell you to value your team. That's got to be a genuine thing that comes from your heart. But I can tell you this, get to know your people, pinpoint their strengths, get interested in what they're interested in. And what makes them tick. When you do, that respect just naturally follows and people will know how much you value them. So ask yourself, what do I need to do this week to deepen the respect for those I lead and to make sure my team knows it. Lean into those questions and I know you're going to engage your team and accomplish big things together. So do you want to know how leaders lead? What we learned today is the great leaders value those they lead. Coming up next week on How leaders lead is Junior Bridgeman, former NBA player and one of the greatest entrepreneurs in the world. It was never about the number of stores. It was never about trying to have a company that was X, Y, and S.I.S. It was always about trying to present more opportunities for people to better their lives. I think it's a Kenyan proverb that if you want to go fast, go by yourself, but if you want to go far, go with other people. And so ours was always about bringing people along to improve their lives so they could make more money so that they could better their lives. Thanks again for tuning in to another episode of How leaders lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be. [BLANK_AUDIO] [BLANK_AUDIO]