How Pitt Hyde put AutoZone into overdrive

  @FortuneMagazine July 25, 2013: 7:11 AM ET
HOW12 pitt hyde

Pitt Hyde at an AutoZone in Glenwood Springs, Colo.

(Fortune)

Joseph "Pitt" Hyde III, 70, knew nothing about cars. But after turning his grandfather's company, Malone & Hyde, into the nation's third-largest wholesale food distributor, he figured there was money to be made under the hood. Touting low everyday prices (a strategy he learned from serving on the board of Wal-Mart), he founded AutoZone, which is now the nation's largest retail auto parts chain, exceeding $8.6 billion in sales in 2012. His story:

I was born in Memphis, and grew up here. My grandfather started Malone & Hyde, a wholesale food distributor, in 1907. He ran it, my father ran it, and I ran it. From the time I was 4 or 5, my grandfather would take me to visit the stores, and my father always discussed the big decisions being made with me. I was always told that I had the opportunity to run Malone & Hyde, and the obligation to do it better than my grandfather and father did. I never knew I had a choice.

Fortunately, if I'd been given an option, I'd still have chosen this path. My first job, when I was 14 or 15 years old, was bagging groceries and carrying them out to cars at one of our stores. Back then, we supplied all the products, designed the stores, and subleased to operators of independent grocery stores. We also owned 50 to 100 supermarkets ourselves.

After I graduated from the University of North Carolina with an economics degree, my father grew ill. So in 1968, at 26, I had to take over. It was the ultimate baptism by fire. Most of the people reporting to me were twice my age. That year, we had $240 million in sales. Fortunately, I was able to continue to grow the company.

In the mid-1970s I had concerns about the long-term outlook, and looked for areas to diversify into. We had a successful drug chain [called Super D] and felt comfortable with specialty retailing. So when this small company, Checker Auto Parts in Phoenix, came up for sale, I checked it out. I saw how it was growing with auto parts geared to the do-it-yourself market. We passed, and Lucky Supermarkets bought it. We started looking at chains like Pep Boys (PBY).

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I could see the auto parts business was growing rapidly and wasn't as price-sensitive as food. I didn't see anyone doing a superior job of customer service, and most were not well kept. I thought we could bring a lot to the table. We decided to start a company from scratch.

We opened our first store in Forrest City, Ark., on July 4, 1979, and called it Auto Shack. We changed the name after we were sued by Radio Shack [for trademark infringement]. Auto Shack initially won the lawsuit, but Radio Shack (RSH) successfully appealed. Rather than fight it, we changed the name to AutoZone (AZO, Fortune 500).

In 1988 we sold Malone & Hyde, which by then had $3.3 billion in sales. We had set up AutoZone in its own corporate structure, so when we sold the base business, I kept AutoZone. I'd never been a do-it-yourselfer and didn't know the auto parts business, but I knew there was an opportunity. We worked on small margins and were very tight operators, so that discipline helped us through as we learned the business.

We started with four stores and were the first auto parts store with electronic catalogues, so customers could instantly look up parts and warranty information. Our objective was to build a culture around superior customer service, and to have everyday low prices in good-looking stores.

In 1991 we went public, and the competition saw how well we were doing. They started copying our store layout and pricing. But none of them could copy our culture. Today we have 5,000 stores.

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In 1996, while I was running AutoZone, I found out I had prostate cancer. I was fortunate. I had an operation and recovered. It reminded me that life can be tenuous, so I decided to shift gears. I continue on the board, but retired as chairman and CEO in 1997. I wanted to divide my time between my family, philanthropy, and business.

Back when I was 26, the business consumed every waking moment, and I missed a lot of things with my two older children. After leaving AutoZone, I made it a point to take my younger children to school every morning, and attend their activities. I spend more time now with my wife, Barbara, the older children, and their kids. After my surgery I put up the money for GTx Inc., a biopharmaceutical company, with the hope it would help people with prostate cancer. I actively manage it as chairman. I also have Pittco Holdings, which is a broad investment portfolio of managed funds, real estate, and private equity.

When you're running a big business, you spend 80% of the time addressing small things and 20% on the big things that really make a difference. It took me 35 years to figure out if you spend 80% of the time on the big things, and 20% on the small things, life will be much more meaningful. Money is a small part of the equation for success. Sweat equity is what makes things work.

This story is from the August 12, 2013 issue of Fortune. To top of page



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