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

We're going to be out of money next month. Ed Stack stared at a CFO who just uttered those words. It was 1996, and there were $13 million in debt. 40 stores bleeding cash that banks wouldn't restructure unless the venture capital was put in more money.

The VCs wouldn't invest unless the banks restructured. Someone suggested bankruptcy. Ed felt physically ill. His father had lost everything when the second store failed, but he'd sold his house, his car, everything he owned to pay back his creditors.

He refused bankruptcy on sheer determination and principle. Now Dix had gotten over at skis again. This time they had over 40 stores. They were in markets they didn't understand.

They had outdated inventory systems. He had made every mistake his father warned him about. That night, lying awake, Ed Stack faced the truth. He was about to lose the company.

His father started with $300 from a grandmother's cookie jar. He had one last meeting, one shot. What happened in that room would determine whether Dix's sporting goods died in 1996 or became an 800 store empire that would one day have to choose between keeping every customer happy and doing what the Stack family believed was right. This is the story of two generations who learned that in business, like in sports, how you play the game matters more than the final score.

Welcome to the Knowledge Project. On your host, Shane Purish. In a world where knowledge is power, the show is your toolkit for mastering the best what other people have already figured out. Today we're going to talk about the incredible story behind Dix's sporting goods.

In 1948, an 18 year old named Dix Stack took $300 from his grandmother's cookie jar and opened a bait shop so small that it was addressed as 453.5 Court Street. His son Ed would later build it into an over 800 store empire worth over $16 billion. Along the way, they'd avoid bankruptcy twice, discover a night before anyone else, fight off hostile takeovers and make every mistake in the book and learn from them every time. And they ultimately made decisions that would cost them hundreds of millions, but to find who they were as people.

This is the story of a father and son who couldn't stand each other but build something extraordinary together. It's also a story about how sometimes the most successful businesses aren't built on strategy, but on who you are when everything falls apart. This is the story of Ed Stack and Dix's sporting goods. It's time to listen and learn.

In July 1948, Dix Stack stayed up all night working on a list. His boss at the army store wanted to expand into sporting goods. And since Dix was known around Binghamton as the best fisherman in town, the boss asked him to figure out what inventory they'd mean. Well, Dix was only 18, but he knew fishing gear inside and out.

So he carefully wrote down on two pages, equipment, and every item that he would need. The next morning he brought the list to his boss, eager to impress. His boss looked it over, pulled out a pen, and started crossing things out while muttering dumb kid, you don't know what you're talking about. Dix snatched the papers from his boss and walked out of the store, never to return.

It's not like Dix had a backup plan. He'd barely graduated high school six months earlier and only made it because an English teacher gave him a gift grade and told him, I don't know what will become of you, Dix, but somehow I know you'll be a success. Walking home with these torn papers, Dix stopped at his grandparents' house. He told his grandmother what happened.

She listened quietly, carefully, then asked him a simple question. How much would it cost you to do this yourself? Dix thought for a moment, $300. His grandmother slowly got up, walked across the kitchen to a corner cupboard, reached for an old cookie jar, and pulled out $300 years of her savings.

She put the money in Dix's hands and said, go start this business yourself. Most businesses start with bank loans or investors. Dix's sporting goods started because a grandmother believed in her grandson. That cookie jar becomes so important to the stacked family that today, when employees hit 25 years with the company, they receive a replica with $300 tucked inside.

It's powerful to believe in yourself, even when there's no evidence, but it's even more powerful when someone gives you the gift of believing in you. To understand what drives Dix's back, you need to know what shaped him. When Dix was seven years old, his father was killed in the car accident. Ed's back senior had been a bootlegger during prohibition, and when that car crashed at a high speed, there was a woman in the passenger seat who wasn't Dix's mother.

She survived. The family's beer distribution business disappeared shortly after. They probably sold off to pay gambling debts. After that, Dix's mother had to take in borders just to keep the house.

His grandparents basically raised him, and his grandfather became his lifeline. Every weekend they go fishing. Those quiet hours on the water were the only time that Dix felt any peace. School was absolute torture for him.

He probably had dyslexia, although nobody called it that at the time. Word swam on the page. He graduated from high school as he'd say for the rest of his life by the skin of his teeth. So when Dix opened his door at 453.5 Court Street, and yes, the address was so small they actually gave it a half number, he had exactly one thing going for him.

He knew fishing better than anyone else in town. Those early days would have broken most people. Dix would open at nine, close at nine, and some days take in only $5. Maybe seven on a good day.

His margins were non-existent. He couldn't afford wholesale prices. So here's what he did do. Close the shop, drive 60 miles to Scranton, buy inventory or retail from a drug store, then drive all the way back and sell it at barely enough markup to cover the gas.

But Dix had a chip on his shoulder and something to prove to that boss who scratched up his list, to the kids from high school who went to college, to the ghost of his bootlegger father. They were all whispering in his ear that he'd amount to nothing. So he kept going. And slowly the fishing crowd started to notice the skinny kid behind the counter knew every lure, every technique, every secret spot on every river for 50 miles.

When you asked Dix stack about fishing, you weren't getting a sales pitch, you were getting years of wisdom earned in pre-dawn hours on cold water. By 1952, he'd renamed the place Dix Army, Navy and Sporting Goods, and finally started buying wholesale. He began sponsoring fishing contests and even wrote his own ads, including one hilarious one that was disguised as a medical warning. It was called fishing pox, very contagious to adult males.

Symptoms include continual complaint as to the need for fresh air. Patient has blank expression, sometimes deaf to wife and kids. Treatment, go fishing as often as possible with tackle from Dix. The store was working.

Dix did what every entrepreneur does when things finally clicked. He expanded a bit too fast. In 1954, Dix opened a second location at the new Hillcress Shopping Center north of town. Everything about it was wrong.

The developer had no experience. The location had no traffic. It was in the wrong part of town. And the perfect example of if you build it, they don't always come.

But Dix didn't know what he didn't know. Will he understood fishing like nobody else? Real estate and traffic patterns were different water entirely. Soon he found himself with two stores, his original profitable store on Court Street and his new larger location that was hemorrhaging money.

Now the smart move would have been to close the family store and retreat to what worked. But Dix had signed a lease he couldn't break. So he made a decision that would haunt him for the rest of his life. He closed the profitable Court Street location gambling that customers would follow him to the out of the way shopping center.

They didn't. Within months he was advertising massive stock reductions. Three weeks before Christmas in 1955, which is prime retail season, he was practically giving merchandise away. The desperation leaked through every ad.

On June 6, 1956, Dix docked to get an ad with the heading that said everything. We quit. He was 27 years old, married with a one year old son named Ed. His wife was pregnant with her second child and he just lost everything.

But here's what matters about Dix dack. For all the things he wasn't educated, sophisticated or patient, he was a man who kept his word. He could have declared bankruptcy. Most would have.

Nobody would have blamed him. Instead, he sold everything he owned. The house, the car, anything worth a dollar and he paid back every creditor in full. His wife Mary Ann took their son Ed and moved in with her parents.

Dick moved in with his mother four houses away. He found a job at Montgomery Ward downtown selling sporting goods for someone else. Now this story could have ended here, but you wouldn't be listening to this podcast. Dick would just be another casualty of American retail ambition.

That's what everybody expected. What he didn't know then was the reputation he earned in that moment of failure by paying back every supplier when he didn't have to would become the foundation of everything that followed. People say it takes years to build trust and seconds to destroy it. But what they don't tell you is that it's even harder to build trust in the ashes of failure.

Six weeks later, when you walk back into the same supplier's offices asking for another chance they remembered. This was a man who protected their interest even when his own world was collapsing. But first before he did that, a stranger had to appear. Dick was working the Montgomery Ward sales floor when a stranger walked up.

He'd never seen him before and would never see him again. The man walked up to him and just said, I knew your father, then he looked Dick straight in the eye. Yet half the guts your father had, you'd be doing this for yourself. And then he walked away.

Two days later, Dick quit Montgomery Ward. Within six weeks, he'd convinced a bank to back him. His suppliers, the same ones he'd pay back every penny agreed to trust him again. He reopened at 389 Court Street with an ad featuring his pitcher under the heading Dick is back.

But this time was different. He bought the lot next door, built an Acme supermarket and used the rent to cover his mortgage. If the sporting goods store struggled, he'd have income. He expanded slowly this time, 5,000 square feet, then 10,000, then 13,500.

Never again would he bet everything on one roll. In fact, as we'll see, this is a lesson he over-learns. But that's getting ahead of ourselves. The deeper lesson at this point isn't about business strategy, but character.

It's about what you protect when everything's falling apart. Dick could have saved himself through bankruptcy and destroyed his reputation and said he protected his name and earned something when he can't buy. The trust of people who'd seen him at his worst. In 1965, Dick divorced his wife and married his bookkeeper Donna.

She was 21, 15 years younger. She'd call him his volcanic temper, help him think clearly, and more importantly, she'd help him see that his oldest son, Ed, might be the key to everything. Not that Ed wanted anything to do with the store. In fact, Ed's stack would spend the next decades trying to escape the very business that had consumed his father's life.

That battle between father and son, between past and future, between playing it safe and risking everything, would determine whether Dick's sporting goods remained a two-store operation or became something neither of them could imagine. A $16 billion empire built on three things. The grandmother's belief in her grandson, a father and son who argued relentlessly, and the kind of hutspa that only comes from not knowing what you're in for. Ed's stack hated everything about the store.

From age 13 onward, Ed spent every summer and weekend in the warehouse, unloading trucks and suffocating heat while his friends played baseball at the park. His father would test him constantly. They'd played catch in the yard, but don't get the wrong idea. This wasn't some Norman Rockwell moment here.

Dick would fire fastballs at his son harder and harder, and then start throwing them in the dirt. If Ed missed one and had to chase it in the bushes, he'd turn his back to find his father gone. This was clear, if you can't catch word done here. A dinner-dick-wood-quism, you're playing second base, two oats, man on third, groundball and hit to you.

What do you do? Ed was expected to answer instantly. No thinking allowed. One wrong answer and Dick would explode.

Ed dreamed of playing for the Yankees, then the Giants. He was good enough to start a quarterback for his high school team, good enough to catch for the varsity baseball team, but not good enough for the pros. At 5'10", 160 pounds, he was too small for football, and in baseball he could feel but he couldn't hit very well. So when high school ended, Ed wanted college for one reason, escape.

He'd had the family business shoved down his throat for years. He'd sacrificed his summers and weekends to that store. But Dick wasn't so eager to let him go. In his mind, Ed didn't eat college, he could stay and learn the business from Dick.

They fought about it for months. Finally, Don Ed Dick's young wife pulled her husband aside and said, if you don't let him go, you're going to lose him forever. She was probably right. Fine, Dick said at dinner one night, you can go to college, but I'm not paying for all of it.

They struck a deal. Ed would continue working holidays and summers saving $1,000 per year towards expenses, and Dick would cover the rest. It wasn't generosity, it was a leash. Ed chose St.

John Fisher College outside of Rochester, not Notre Dame or Syracuse. His SAT scores weren't that good. Years later, when his daughters asked him whether he scored higher in math or verbal, he'd tell them the truth. Sports, honey.

Fisher was a small Catholic school with tree shaded dorms and brown brick buildings. Ed fell in love with the place immediately. He made friends with Mark Moonch and Bill Colombo who'd both become crucial to Dick's sporting goods later. But that first day, watching his dad's car drive away after dropping him off, Ed felt something he'd never felt before.

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He was finally away from the store. Halfway through freshman year, Ed had his whole future mapped out. Major in accounting, learned to manage the company's books, then go to law school. The combination of business and legal knowledge would land him a corporate job someday.

He'd finished his first year excited about the path ahead. He even wrote to a local law firm asking for a summer job. They said yes. Ed recounts his father's reaction to the news this way.

You're not going to work there. Sure, I am. I got the job. No, this business has put food on the table since you were a kid.

It's what's helping pay for college. You're going to get your ass down to the store. And that's all there is to it. Ed did what he was told.

He swallowed his anger and went back to the warehouse. But now his hatred for the store went deeper than before. This wasn't just giving up summer for baseball anymore. This was his father crushing his dream.

The one bright spot that summer was golf. His grandfather had been pushing him to try it for years and Ed finally gave in. They'd played every Monday. Gramp was something else.

Starting at age 71, he shot his age for 19 years straight. When Ed complained his shots were going left, Gramp kept it simple. Well, Eddie, aim a little more to the right. That summer and the ones that followed those Monday golf games rescued Ed from purgatory.

Well, he stood about his soul in future dreaming of law school and escape. At least he had Mondays with Gramp. Meanwhile, the economy was falling apart. The college year was coincided with brutal interest rates going up to 12% in 1974.

Consumer spending tanked, some morning's dick stack would lie in bed to press to get up. Commenced his business was about to fail for the second time. Working at the store of those summers, Ed started to see the real problem. It wasn't interest rates.

It was his father. Dick had no buying strategy, just hunches. Ed remembered the garage at home was always stuffed with overstocked merchandise. Dick would bet big on some product.

It wouldn't sell and they'd have boxes of it for years. Eventually they'd dump it at a loss just to clear the space. The store had no financial discipline either. Once a year, every July, they'd do inventory, count everything in the store, add it all up.

And that's when Dick would finally learn that he'd made money that year or not. He had no idea up until that moment. He'd use a line of credit to buy merchandise and hay salaries, flying blind for about 12 months. His hunches had worked out more often than not, but Ed wondered how long that luck would last.

During the school year, Ed worked part-time at Xerox, at Wegman's Grocery, at Oak Hill Country Club. Even as the lowest employee at these places, he could see the difference. These businesses knew if they were making money every single day. They had systems, they had data.

They didn't run on gut feelings and prayer. Seeing his dad's weaknesses only strengthened Ed's resolve. He wanted no part of the family business. Soon as he graduated, he'd be gone.

Then Dick's doctor spotted him dragging his leg up the stairs. Get to the hospital, now. Dick's dad was only 47, but he'd smoked three packs a day since his teens. If you suggested he'd cut back, he'd say anybody can quit smoking, it takes a real man to die of lung cancer.

That was the kind of guy Dick's dad was. He didn't exercise, he drank, man hatens like water, his breakfast was toast, coffee, and cigarettes. Nothing for lunch and dinner late at night and then a big bowl of ice cream in bed. The double bypass was scheduled at Mass General in Boston in 1976.

That was pretty major surgery. Plenty of people died on the table. Ed came home for winter break with the operation looming. When he asked for Saturday off to see his girlfriend back in Rochester, his father exploded from his bed.

You're not taking Saturday off, we're open, you're staying here. For maybe the first time in his life, Ed stood his ground. Yeah, I am. A week later, leaving for the spring semester, Ed paused at his father's bedroom door.

He knew he might never see him again. Dad, good luck with your operation. And I just want you to know that I love you. Now that was radical talk in the Stack House.

Ed had never once told Ed that he loved him, not once. Ed had half expected he might say it now, with death knocking at his door. Instead, Dick grumbled, if you loved me, you wouldn't have taken last Saturday off. Drink surgery, Dick's heart stopped.

They brought him back, but he never really came all the way back, not emotionally and not physically. Seventeen months later, Ed was three weeks from graduation. He'd lined up interviews with accounting firms in Rochester. Everything he'd worked for was within reach.

And then Donna called. Your father can't do it anymore. The business is dying. Ed could have let it fail.

Nobody would blame him. He was 22. He'd never wanted this door, and he owed his father nothing. But he thought about Bob Aiken, who worked there for 20 years.

The other employees with mortgages, the vendors who trusted his father, his family. What would it do to Dick to watch his life's work die at 9 o'clock on Tuesday morning after graduation, Ed Stack opened the door. The same lights he turned on as a 13-year-old forced to work on weekends. The same cash register he'd stood behind instead of playing baseball.

But something was different this time. The employees looked at him for direction. Vendors called about orders. The bank wanted to know about payments.

For the first time, Ed wasn't just working at the store. He was responsible for it. Sometimes the thing that you're running from becomes the thing you have to run. And then the stock wanted to be anywhere but behind that counter.

But duty doesn't care what you want. It doesn't care what you feel. His father couldn't run the store anymore, and so somebody had to. That's somebody was Ed.

The next chapter of Dick's Sporting Goods was about to begin. Not because Ed Stack chose it, but because life chose it for him. Something shifted in 22-year-old Ed Stack when he stood behind the counter in 1977 after taking over. The store that he hated his whole life now suddenly became interesting.

Maybe it was because he'd spent years watching from the outside, and maybe it was because he'd worked at Xerox and Wegmans, and now he saw how real business is operated. But standing there, running the store for the first time, Ed saw opportunities everywhere. Sales that year hit just over 2 million, but profits were razor thin at 100,000. The store needed better record-keeping, smarter merchandising, different advertising.

When Ed pointed this out to Bob, he'd been his father's longtime lieutenant, another man, might have bristled at the boss's kid making all these suggestions. Instead, Bob said, young blood, let's do it. The word let's change everything. For the first time, Ed wasn't just following orders.

He was making decisions, and the store he despised became a puzzle he couldn't wait to solve. He started thinking about it in his sleep, and in his shower he was obsessing over it. He was like the ammunition wars. Every year before hunting season, their competitors would drop prices on ammo.

Dicks would match them, starting a price war. One day a guy from Kmart walked in dressed like a New York lawyer in a suit and tie. Ed was behind the counter, 23 but baby faced enough to pass for a teenager. The Kmart guy figured he could intimidate this kid.

He said, you people need to stop this price war, or we'll put you out of business. Ed played dumb. What do you mean? You have to tell the boss to stop this price war.

Okay, said Ed, I'll make sure he knows. The guy walked out probably feeling good about himself. In the next week we'll add Dicks dropped their price another 10 cents. When Kmart matched them, Ed sent his brother Marty over with cash from the register.

Marty filled an entire shopping cart with shotgun slugs, case after case, buying Kmart's entire inventory at their loss leader price. She birthed and Dicks could buy them from Remington or Winchester. They held those slugs until hunting season started. Then when hunters couldn't find ammo at Kmart, guess where they came.

Dicks had plenty, and they drove massive traffic to the store. This is how Ed thought about competition. Not as something to avoid, but as something to exploit, something to have fun with, a game, a puzzle. He'd been reading business books, especially a bit Sam Walton, the guy who owned one five in dime store in rural Arkansas, and he built Walmart by growing quietly in concentric circles, staying under the radar, expanding outward from Bentonville without attracting attention from bigger competitors.

Ed started to dream, and he would adopt the same strategy. From being Hampton, they'd expand in small steps, Syracuse, Rochester, then Buffalo. Always cold weather markets, always hunting country. Places where Dicks understood the customers because they were customers.

One truck could serve as multiple stores on principal highways. No need to attract attention from big chains. For now, this worked, but Ed knew something his father refused to see. Retail never stands still.

The moment you think you figured it out, that's when someone figures out how to destroy you. Dicks spent more than half the year in Florida recovering from his surgery, but he still reminded everyone who was boss. When 16 year old Jay Minager applied for a job, Ed took him under his wing. Together they studied the market and decided Dicks should enter the cross country ski business.

Snow covered Binghampton for months. The sport was exploding. The timing was perfect. They built this beautiful display, stretching 30 feet all across the back wall, skis, boots, poles, everything a customer would need.

They stood back admiring their work when Dicks sat walked in. He was leaving for Florida the next morning for his six month winter stay. Dicks stared at the display for a moment, and then he walked to one end and shoved the first set of skis. The entire display crashed down like dominoes.

But these the hell out of here he said and walked out. Jay went pale. Oh my God, what are we going to do? Let's pick up the skis and put them back, Ed said.

He's leaving tomorrow and we'll sell them all before he gets home. Which is exactly what happened. They sold every piece of ski equipment plus all the coats, hats and gloves to go with them. From then on, Ed started to do a simple wait until his father left town to make changes.

Well, it might not have been so easy to see in the moment. Looking back later in life, Ed says his father's resistance actually helped him because it forced him to think through every proposal, every action, analyze every angle and make his ideas well-proof. The moment you think you've got it figured out, that's the moment you start to die. In retail, there's no standing still.

You're either getting better or you're getting worse. Herman's world of sporting goods was expanding from New Jersey. Modell's was growing. New chains were forming that Ed hadn't even heard of yet.

The comfortable little sporting goods store in Binghamton, Dick Build, that model was already extinct. It just wasn't obvious yet. Dick couldn't see it. Hillcrest had broken something inside him.

That second store failure in 1956 had taught him the wrong lesson. Instead of learning how to expand smartly, he learned not to expand at all. Instead of learning how to adapt to customers, he learned not to change anything. He'd gone from reckless to paralyzed.

And in retail, paralysis is just death and slow motion. There were limits to what Ed could tolerate. In the summer of 1978, his best friend, Mark Minich, was getting married in Rochester. Ed was in the wedding party.

A week before he told Bobby Ken, he'd need to leave Friday at noon for the rehearsal dinner. Sure, no problem, Bob said. But Dick's dad heard about it and found Ed in the store. And here is how Ed remembers this conversation.

You're not going to that wedding. The store is open, so you're working. It's Munchy's wedding. I'm in the wedding.

I don't give a shit. You're working. End of conversation. I'm going.

If you go, don't come back on Tuesday. Ed caves. He called Munchy to say that he couldn't make it. At 23 years old, standing in the store instead of at his best friend's wedding, Ed realized he couldn't work for his father indefinitely.

They were heading for a reckoning. Sometimes the cost of keeping peace is losing yourself. Ed kept the job but lost something bigger. That moment crystallized everything wrong with how Dick ran the business.

Meanwhile, Ed was discovering something about himself that would matter more than any business strategy. His father had made him work the store since he was 13, but never taught him the actual business. Ed kept all the real knowledge, the buying, the vendor relationships, the planning walked in his own head. When Ed walked in to the holiday inn to meet salesman Paul Grossman, he didn't know the first thing about placing an order.

Paul had all these jackets laid out on the beds and racks and Ed started pointing at everything he liked, ordering the same quantities in every color, every style. He was like a kid who'd never been to a candy store and suddenly got the keys. Paul watched this for a while and looked over his glasses. Son, you don't have enough money to buy all the stuff you're trying to buy.

Let me help you. Most 23 year olds would have faked it, but Ed didn't. His inexperience was so transparent that Paul couldn't help but teach him. They spent hours going through the basics.

How to read a market. The inventory had a balanced desire with reality. The same thing kept happening. Mike Rich from Woolridge would quote $40 for clothes outs and Ed would counter with 15.

Mike would usually say yes, not because he had to, but because he wanted to help this kid succeed. Why? Because Ed Stack didn't pretend to know everything. He didn't throw his weight around as the boss's son.

He treated vendors with respect, remembered their names, asked about their families. When he didn't know something, he just admitted it and said so. When someone helped him, he remembered and thanked them. Dick Stack had built trust with vendors over a decade, but Ed built something different.

He built affection. People didn't just trust Dick's sporting goods. They wanted it to win. For three years, Ed had been calling Puma and Adidas, begging them to let Dick's carry their shoes.

These were the brands that every kid wanted. Hell, Ed had one of them when he was a kid, but his father wouldn't stalk them. Now that Ed could make decisions, he was desperate to get them. The answer though was always no.

In their eyes, Dick's was some outdoor store, hunting and fishing, not a place for cool sneakers or cool kids. Ed would call between trade shows and leave messages. And when they did call back, which was rarely answered, never changed. It was always no.

So Ed did what Dick's had always done. He gave an unknown guy a chance. Mike was a nobody in 1978. Bobby can had bought some basketball shoes from them while Ed was in college.

But that was about it. And now Ed added running shoes. They flew off the shelves by 1980. Nike had captured half the US athletic footwear market and Dick's rode the wave with them.

And that's when Puma finally called back and said, yes, we'll sell to you. Ed immediately called Adidas. Just wanted you to know Puma's going to sell to us. Really?

Yeah. Ed had Puma's business card ready to prove it. There was a pause. Well, if they sell to you, we'll sell to you.

Finally, three years of rejection. And now both brands wanted it. But when the Adidas rep came to take their first order, he had conditions. What do you want for Adidas?

Apparently, we're not really interested in apparel. Ed said just the shoes. The rep started packing up his samples. If you're not buying apparel, we're not giving you shoes.

Ed was furious. Three years of begging. And now this guy was making demands, but he had no choice. Okay.

We'll buy some apparel after the wrap left. Ed turned to Jay. Some day, those guys are going to be begging to us to buy from them. But here's where the story gets really interesting.

The Adidas apparel that Ed didn't want, it exploded out of the store. Running was becoming a national obsession in the late 70s. And runners didn't just need shoes. They needed shoes and shorts and skirts and socks and everything.

And the margins on sportswear were incredible. Dicks made more profit on running of it than on an expensive hunting gear jacket. That arrogant Adidas rep had accidentally shown Ed the future of Dick's sporting goods. Sometimes the best thing that can happen is not getting what you want.

Dick succeeded in a world of 40-year wave with Nike because Puma and Adidas wouldn't give them a chance. They discovered apparel because Adidas forced it on them. The rejections and the demands that bolt like insults at the time were actually gifts. Years later, Adidas would indeed come begging.

But by then, Dick's was huge. Dick's stock spent most of the year in Florida recovering, but he still managed to lose his mind over the phone about every change admitted. First, it was the apparel. What the hell is clothing doing in my store?

Ed let the numbers do the talking. The apparel Dick didn't want was generating the profits he did want. Dick rumbled but couldn't argue with math. Then Ed revolutionized their advertising.

For decades, Dick had run black and white ads in the sports section, same spot, same format since the 1950s. Ed noticed other retailers using tabloid inserts, 8-12 pages, full color, impossible to miss. So Ed built one of these inserts. He drew stick figures wearing clothes, primitive sketches of products, handed these scrolls to the newspaper, and they turned them into a professional eight-page color insert.

Business exploded, but it's so did it costs. People advertising jumped from $40,000 to $100,000. His father got on the phone. What the hell are you doing?

Dick screamed from Florida when he saw the expenses. Bill Humsman, the accountant, stepped in. Dick, look at the sales. Sales jumped from $2.7 million to $3.1 million.

Profits had doubled. They spent a lot of money, the accountant said, but they made a lot more. The kid is on to something. The proof came from their competitors.

Jerry Harper, their nightgrip walked into Dick's biggest rival and asked how back to school was going. It'd be a lot better, the kid said, if we weren't getting Dick to death. At 26, Ed was running the business, but Dick still owned it. He still called from Florida to complain about nearly everything.

Everything Ed did was ever right. Even though Dick couldn't argue with the results, he was content with two stores. Where else but America, he loves saying, can a dumb kid who got out of high school by the skin of his teeth make it like this? In his mind, he made it, and he wasn't wrong.

He'd lost everything at Hillcrest in the 50s and rebuilt from nothing, creating a profitable business. So why risk it all again? But Ed saw Herman expanding from New Jersey and Modell's growing a new chain forming. The comfortable two-store operation was already dead.

It just didn't know it yet. The lesson here is about different definitions of success. Dick's stack thought success meant not failing again, and Ed thought success meant growing before someone else grew past you. One was playing not to lose, the other was playing to win.

And in retail, playing not to lose is just losing slowly. Ed wasn't satisfied with the two stores. He was paranoid, and his paranoia was justified. He'd watch Walmart destroy local department stores.

Home Depot was steamrolling hardware stores. Sporting goods would be next. Ed wanted to expand to Courtland 40 miles up Interstate 81 as a perfect size, perfect location, perfect market. For months, he had argued with his father about it, but Dick wouldn't budge.

Hillcrest still haunted him. Finally, Dick exploded mid-argument. If you think you're such a goddamn smart son of a bitch, go down to the bank and get your own line of credit and buy me out. So Ed did exactly that.

He went to First City National Bank in Binghamton, showed them the numbers, and walked out with a verbal commitment for a credit line. The bank was ready to back him. We're good to go, Ed told his father a few days later. What do you mean we're ready to go?

When Ed explained what he'd done, Dick turned indignant. This is my business, and it's going to stay my business. Dick hadn't expected his bluff to be called. He wasn't ready to let go.

So Ed was still trapped, loving the business he once hated, but unable to grow it, watching the retail landscape change will force to stand still. The stalemate might have continued forever, but Ed had an unexpected ally, Uncle Joe. Dick's brother and accountant started whispering in his ear about succession planning. Dick was 55, had been running the business for 36 years, and his health wasn't improving.

Maybe it was time. The negotiations were classic Dick Stack. He'd sell the business to his five kids for $1.25 million, but on his terms. They'd pay him over 20 years at 12% interest and couldn't pay it off early, even if they wanted to.

He'd keep the buildings and lease them back at above market rates for 25 years. The kids couldn't break those leases without his permission. Dick would have income for life and stay connected with the business from Florida. But Uncle Joe insisted on one crucial detail.

Someone had to be in charge. Very short, the young lawyer structuring the deal suggested a two-class stock arrangement. Ed would get 51% of the voting shares. Ed would have control.

His siblings would get equal equity stakes, but not have control over operations. In the summer of 1984, the same summer that Ed would go on to marry the love of his life Denise, he took control of Dick's sporting goods. He was 29 years old. Dick finally stepped back, and Ed could finally move forward.

The first thing Ed did was move operations out of the cramped quarters behind Court Street. They rented a distribution center 10 minutes away. It was 20,000 square feet of warehouse and offices. The next stock saw this from the sidelines and lost his mind.

A retailer should be in the store. Everything happens in the store. How the hell can you know what's going on sitting on your ass at a desk? But Ed knew the chains were coming.

Herman's, Moudel, sports authority. They weren't being run by guys standing behind cash registers. They had systems that had infrastructure that had strategic planning. Dick's needed the same to survive.

Still his father had a point. You couldn't really run retail remotely. So Ed spent time at Court Street regularly walking the floor talking to customers. The difference was that Ed saw both needs.

His father thought you had to choose. You knew you needed both. Time in the store to stay connected and time away to plan the future. One was tactics.

The other was strategy. Without both, Dick's would die. Ed did something else really smart. He assembled a board of advisors.

They met quarterly and saved Ed from himself often. They were generous with their time, but brutal with their opinions. And of course Ed always knew that his father's advice would be, don't do it. In 1986, Tim Myers and Ed drove to Syracuse on a Sunday, scouting locations for their first store outside Binghamton.

Syracuse was three times the size with a major university, plenty of honors, and fishermen. It was perfect Dick's territory. They met Mary Claire Caw at a real estate broker who showed them property near a shopping tunnel. They looked at it like the location and before they thought it through, they signed the papers.

Driving home, Tim looked over at Ed. Did we just buy a piece of land? I think we did. What are we going to do with it?

I don't really know. By the time they got home, they were in full panic. They just committed to buying land with no plan, no budget, no idea if they should buy or lease. They called the real estate agent that night and backed out.

She was very generous. She said, no problem. I understand. Weeks later, they were back properly prepared this time or at least so they thought this time they leased space in a strip center.

They spent months creating detailed plans. They had departments like Otiques, displays that would stop shoppers in their track, a layout that would pull people through every section. They handed the plans to the developer and waited. Then came the education.

The contractor called them over to show them the progress. So Ed and Tim walked into four walls and a roof. Well, when do you start the interior, Ed asked? What interior?

We're building you a vanilla box. You're supposed to build us a store. They hadn't ordered fixtures. There's no shelving.

There was no lights. There was nothing. They were supposed to open in six weeks. The contractor luckily saved them.

He agreed to do the interior work for extra money and definitely gouged them a bit, but he finished on time. The store was beautiful. The Syracuse opening was a revelation. They moved Binghampton people up to run it, including Ed's sister Nancy.

Hundreds lined up for jobs. Their advertising started weeks early with just a teaser. The biggest sporting event in Syracuse starts on August 3rd. Opening day, the crowds overwhelmed them.

Nightcrabs had seen everything were shocked. Nancy had to take bags of cash to her apartment because the registers couldn't hold it all. The store did $8.3 million in its first year. With one opening, they doubled the size of the company.

A year later, Gary Stefano from Night toured the store with Dick. You must be so proud of these kids. They've done such a great job. Now, before I tell you what Dick would say, can you guess?

Dick nodded. Of course, the store looks great. They're doing a great job, but these kids did 25% more business than they thought they would. So you know what?

They're not really quite as smart as they think they are. Think about that for a second. His son just doubled the size of the family business with one store. Proved all Dick's fears wrong and the best he managed was pointing out that they underestimated their success.

But here's what Dick didn't understand. Not being as smart as you think you are is how you learn. Ed and Tim made every mistake possible in Syracuse. They bought land they didn't need.

They didn't know what a vanilla box was. They opened with empty walls. And because of all those mistakes, they learned more about opening stores than any NBA program could teach them. The real lesson from Syracuse isn't about real estate or construction contracts is that sometimes their ignorance is a great asset.

If Ed had known everything that could go wrong, he might never have tried to expand. Next, they opened a second store in Syracuse, 12 miles north. Ed expected to match the first-year sales. It should be about 8.3 million.

But the new store only did 7 million. And the first-door sales dropped to 8 million. Combined they'd grown a lot, but it's not what they projected. Ed learned an expensive word, cannibalization.

He had one store in the city, customers drive from everywhere to reach it. But when you add a second store, you split that customer base. One plus one doesn't equal two. In this case, it equals about 1.75.

Still, both stores were wildly profitable. So they pushed forward. Rochester Nax and Buffalo. Each store bigger than the last.

Each one a revelation to customers who never seen anything like Dick's Sporting Goods. In Buffalo, Ed overheard a kid who was maybe 9 years old at the time standing wide-eyed before a wall displaying 30 feet of baseball gloves. Mom, he gasped. I've waited for a store like this my whole life.

He wasn't the only one. The Buffalo store did $12 million in its first year. But growth brought new problems. Bigger stores meant more employees, which meant higher turnover.

And thieves got creative. They weren't just stealing clothes anymore. They'd bring razors, cut the heads off graphite golf clubs, pocket them, get them reshafted elsewhere, and sell them on the black market. Ed called his best friend from college, Bill Colombo, who was then on the fast track at JCPenney.

He convinced him to leave to join Dick's. In 18 months, Bill cut theft in half. By 1990, Dick's had seven stores when Herman's world of sporting goods finally arrived in Binghamton. Herman's was the apex predator of East Coast Sporting Goods.

They'd been in the business since 1916. They had way more stores and they were crazy, aggressive, and expanding from their new Jersey base. Ed was smart. He studied their patterns and discovered they had a weakness.

They ran predictable sales inserts every Sunday. So Dick's ran their inserts on Wednesdays, which gave them 24 hours to read Herman's Sunday ads for the following week and adjust their prices to beat them. Week after week, Dick's undercut Herman's prices before Herman's even knew they were in a fight. After Thanksgiving one night with a bitch too much to drink, Tim Myers called to Herman's store pretending to be Bob Corley's, Herman's CEO, asking how the holiday business had been.

The manager thinking he was talking to the CEO of his company was pretty candid about what was working and what wasn't. Then Tim got a little carried away and said, your store's a mess. I'll be there tomorrow morning at 9.30. A better look different.

That night, Ed showed a pass to Herman's. Every light was on. The parking lot was full. Employees working through the night to fix problems that didn't exist.

Ed felt terrible about it after. It was underhanded and unnecessary and not the way he wanted to do business. They were young and stupid, letting competition turn into something ugly. But it also showed another side, which was how seriously they took the threat.

Herman's wasn't just competition. They were an existential danger. This chain could crush dicks without thinking twice. Ed knew they had to fight with everything they had.

Though he'd learned that night, there were lines he shouldn't cross. The real lesson here isn't about competitive tactics. It's about fear and survival. When you're seven stores facing a hundred store chain, you feel like David loading his link shot.

Sometimes that fear makes you fight smart, like using Wednesday ads to beat Sunday prices. And sometimes it makes you do things you'll regret, like the prank phone call. Ed never pulled his phone like that again, but he never stopped taking competition seriously either. Because in retail, the day you stop fearing your competition is the day competition stops fearing you.

The $91 added bill dicks to 12 stores using Sam Walton's playbook, grow quietly in concentric circles, stay under the radar, stick to cold weather, hunting markets, always on major highways, places that are big enough to support a store and too small to attract the bigger chains. The strategy was working. Every store was profitable. They understood their customers because they were their customers.

But Ed's siblings wanted out. They saw friends cashing out for millions and saw hermans with hundreds of stores and sports authority expanding everywhere. So when the phone rang, Michael Barrack from Bessemer Venture Firm Partners was on the other end of the line, we can help you become a national player. We've done this before.

Ed thought about his father content with two stores. And siblings wanted their payday. Let's talk, Ed said. $6 million hit dicks bank account in 1991.

It came from venture capitalists who built office depot in Petzmer who'd funded staples who knew how to turn small regional players into national powerhouses. Ed stack had spent months negotiating with Michael Barrack from Bessemer Partners. Jerry Gallagher from Oak Investment Partners and Dennis Defori, the French genius who'd found a car for these weren't just investors. They were kingmakers and kept control the board with five seats to their two.

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You need to establish beach hedge. They told them, get into markets before your competitors do. Figure out the details later. Dick Sack would have hated this.

He lost his second store in 1956 by expanding $2,000 spent 40 years terrified of growth. But sometimes you have to take risks to build something great. The money transformed Dick's overnight. They went from opening three stores a year to opening 20.

But too much growth too quickly creates a lot of problems. In 1994, they tried hiring a top tier CFO. Their candidate loved Dick's and they loved him. They brought him and his wife and his daughter to Binghamton for dinner.

Everything seemed perfect. But then their family went shopping for a house. That afternoon, the candidate called that. My wife said, I wanted the job.

I can move here. But she and my daughter won't be coming. Dick's had to leave in order to attract top talent. They looked at Boston, but the real estate prices were astronomical.

Herford had perfect housing, but no affordable office space. Philadelphia was briefly considered until the evening news declared at the murder capital of America. Pittsburgh on the other hand had everything they needed. Central location, great airport and reasonable costs.