WEBVTT 00:00:00.000 --> 00:00:03.899 Happy Valentine's Day. It is February 14th, 2026. 00:00:04.360 --> 00:00:06.240 And I know what you're probably thinking. You're 00:00:06.240 --> 00:00:10.220 thinking about chocolates, roses, maybe a dinner 00:00:10.220 --> 00:00:12.439 reservation you totally forgot to make. We've 00:00:12.439 --> 00:00:14.919 all been there. Right. But while the rest of 00:00:14.919 --> 00:00:16.859 the world is focused on romance and relationships, 00:00:17.179 --> 00:00:21.780 we're here to talk about a breakup. Or, maybe 00:00:21.780 --> 00:00:25.039 more accurately, a departure. A withdrawal from 00:00:25.039 --> 00:00:27.980 public life. It is a bit of a somber Valentine's, 00:00:27.980 --> 00:00:29.539 isn't it? But you're right. We're looking at 00:00:29.539 --> 00:00:32.240 a relationship that has lasted for nearly 40 00:00:32.240 --> 00:00:34.840 years. The one between the American public, the 00:00:34.840 --> 00:00:38.140 stock market and, well, one of the most recognizable 00:00:38.140 --> 00:00:40.880 retail brands in history. And the thing is, as 00:00:40.880 --> 00:00:44.280 of just two months ago, December 2025, that whole 00:00:44.280 --> 00:00:46.359 relationship has fundamentally changed. Completely. 00:00:46.679 --> 00:00:48.520 The ties have been severed. We are talking, of 00:00:48.520 --> 00:00:51.020 course, about the ODP Corporation, better known 00:00:51.020 --> 00:00:53.719 to everyone listening as Office Depot. And before 00:00:53.719 --> 00:00:55.479 you roll your eyes and say, wait, we're doing 00:00:55.479 --> 00:00:57.420 a deep dive on the place I buy printer cartridges, 00:00:57.659 --> 00:00:59.890 stick with us. Please do. Because this isn't 00:00:59.890 --> 00:01:02.149 just a story about paperclips. This is a story 00:01:02.149 --> 00:01:05.090 about the rise of the category killer, the brutal 00:01:05.090 --> 00:01:07.810 decades -long wars with the Federal Trade Commission, 00:01:08.150 --> 00:01:11.269 a desperate search for identity involving Lady 00:01:11.269 --> 00:01:13.890 Gaga and NASCAR drivers. You can't make that 00:01:13.890 --> 00:01:16.109 part up. You really can't. And finally, a billion 00:01:16.109 --> 00:01:18.549 -dollar exit that happened almost, you know, 00:01:18.549 --> 00:01:20.689 in the shadows. It really is the perfect case 00:01:20.689 --> 00:01:22.950 study for the entire life cycle of the big box 00:01:22.950 --> 00:01:25.909 era. You've got the explosive, almost irrational 00:01:25.909 --> 00:01:29.340 growth of the 1980s. Yeah. consolidation battles 00:01:29.340 --> 00:01:32.599 of the 90s, then the identity crisis of the 2000s 00:01:32.599 --> 00:01:34.060 when the internet just broke everything. And 00:01:34.060 --> 00:01:37.099 then the final act. The final act. Yeah. Privatization. 00:01:37.280 --> 00:01:40.680 Yeah. As of December 2025, Office Depot is no 00:01:40.680 --> 00:01:42.700 longer a public company. It was taken private 00:01:42.700 --> 00:01:45.519 by a firm called Atlas Holdings. And that is 00:01:45.519 --> 00:01:48.000 our mission today. We are going to unpack this 00:01:48.000 --> 00:01:51.819 entire 39 -year saga. We've got a stack of sources 00:01:51.819 --> 00:01:55.299 here, everything from their original founding 00:01:55.299 --> 00:01:57.840 documents to court transcripts from their fights 00:01:57.840 --> 00:02:00.480 with the government and the final financial filings 00:02:00.480 --> 00:02:02.480 from late last year. We're going to figure out 00:02:02.480 --> 00:02:04.760 how a company goes from being a Wall Street darling 00:02:04.760 --> 00:02:07.680 to selling itself for what looks like a discount 00:02:07.680 --> 00:02:09.979 price. We're going to try to answer the big question. 00:02:10.180 --> 00:02:13.460 Was this inevitable? Was the office supply super 00:02:13.460 --> 00:02:16.620 storages? doomed the moment high speed Internet 00:02:16.620 --> 00:02:19.599 was invented? Or were there, you know, critical 00:02:19.599 --> 00:02:21.939 mistakes made along the way? I love was it inevitable 00:02:21.939 --> 00:02:24.740 questions. So let's dive in. And to do that, 00:02:24.780 --> 00:02:26.759 we have to rewind the clock. We're going way 00:02:26.759 --> 00:02:30.400 back to 1986. Top Gun is crushing it at the box 00:02:30.400 --> 00:02:32.460 office. The Bengals are telling us to walk like 00:02:32.460 --> 00:02:35.460 Egyptians. And down in Florida, three guys of 00:02:35.460 --> 00:02:38.139 Patrick Schur, Stephen Daugherty and Jack Copkin, 00:02:38.199 --> 00:02:40.629 they have a vision. But before they start selling 00:02:40.629 --> 00:02:42.629 pens, they were involved in something else. And 00:02:42.629 --> 00:02:45.009 this detail, this is my absolute favorite thing 00:02:45.009 --> 00:02:46.930 in the research stack. I have a feeling I know 00:02:46.930 --> 00:02:48.750 exactly where you're going with this. The name 00:02:48.750 --> 00:02:51.110 of their previous company. Please, for the record, 00:02:51.210 --> 00:02:52.870 tell the listener what it was called. It was 00:02:52.870 --> 00:02:56.310 called Mr. Howe Warehouse. Mr. Howe. Yes, usually 00:02:56.310 --> 00:02:59.949 stylized in all capital letters. M -R -H -O -W. 00:03:00.090 --> 00:03:02.669 It just sounds like a frantic question. Mr. Howe 00:03:02.669 --> 00:03:05.810 W. Or maybe a really aggressive superhero who 00:03:05.810 --> 00:03:08.689 fixes your plumbing. Never fear, Mr. Howe is 00:03:08.689 --> 00:03:11.620 here. It certainly has a unique ring to it. But 00:03:11.620 --> 00:03:13.599 while the name is amusing, the business model 00:03:13.599 --> 00:03:17.120 is actually the key to our entire story. Mr. 00:03:17.240 --> 00:03:19.240 Howell was a home improvement membership warehouse. 00:03:19.599 --> 00:03:22.280 So like an early Home Depot or Lowe's. Think 00:03:22.280 --> 00:03:24.500 of it as a precursor to that model. Yeah. Yeah. 00:03:24.740 --> 00:03:27.939 Big industrial concrete floors, high ceilings, 00:03:27.939 --> 00:03:30.560 pallet racking. Schur and his partners sold Mr. 00:03:30.699 --> 00:03:32.659 Howell to a company called Service Merchandise 00:03:32.659 --> 00:03:36.120 in 1983. But clearly that warehouse concept was 00:03:36.120 --> 00:03:38.599 just burned into their brains. Right. So they 00:03:38.599 --> 00:03:40.580 looked at the retail landscape in the mid -80s 00:03:40.580 --> 00:03:43.219 and saw a huge gap. Because back then, if you 00:03:43.219 --> 00:03:45.120 needed office supplies, how did you buy them? 00:03:45.319 --> 00:03:47.280 Well, it was a completely bifurcated market. 00:03:47.500 --> 00:03:51.340 I mean, totally split. If you were a massive 00:03:51.340 --> 00:03:53.240 corporation, let's say you're General Motors 00:03:53.240 --> 00:03:56.509 or IBM, you had a contract. You had a dedicated 00:03:56.509 --> 00:03:59.629 distributor who delivered pallets of paper right 00:03:59.629 --> 00:04:01.949 to your loading dock at a heavily discounted 00:04:01.949 --> 00:04:05.050 rate. Sure. Bulk pricing. Right. But if you were 00:04:05.050 --> 00:04:07.729 a small business, if you were a local accountant 00:04:07.729 --> 00:04:11.250 or a lawyer or just running a flower shop, you 00:04:11.250 --> 00:04:13.169 were kind of out of luck. You went to the local 00:04:13.169 --> 00:04:15.629 stationery store, right? The little shop on Main 00:04:15.629 --> 00:04:19.240 Street. Exactly. The mom and pop stationer. And 00:04:19.240 --> 00:04:21.160 you paid the fullest price for everything. There 00:04:21.160 --> 00:04:23.560 was no middle ground. You were basically paying 00:04:23.560 --> 00:04:26.459 a premium for the absolute basics of doing business. 00:04:26.560 --> 00:04:29.939 It was inefficient. So the aha moment for sure 00:04:29.939 --> 00:04:33.779 in his team was, why don't we do for office supplies 00:04:33.779 --> 00:04:36.540 what we did for hammers and lumber with Mr. H 00:04:36.540 --> 00:04:38.939 .O .W.? Precisely. It's the category killer model 00:04:38.939 --> 00:04:41.600 in its purest form. You take one specific category 00:04:41.600 --> 00:04:44.279 of retail, you build a massive warehouse store, 00:04:44.439 --> 00:04:46.740 you stack the inventory to the ceiling to lower 00:04:46.740 --> 00:04:49.300 your storage costs, you cut the sales staff to 00:04:49.300 --> 00:04:51.680 a bare minimum, and you just slash prices. You 00:04:51.680 --> 00:04:54.220 become the only game in town. You undercut the 00:04:54.220 --> 00:04:56.920 local shops so deeply that they just can't compete. 00:04:57.740 --> 00:05:00.500 It's a brutal but incredibly effective strategy. 00:05:01.000 --> 00:05:04.600 So in October 1986, they launched. The very first 00:05:04.600 --> 00:05:07.360 Office Depot opens its doors. It's in the Lakes 00:05:07.360 --> 00:05:09.660 Mall in Lauderdale Lakes, Florida. And the response 00:05:09.660 --> 00:05:12.819 was just electric. We often forget how revolutionary 00:05:12.819 --> 00:05:15.439 these stores felt when they first appeared. I 00:05:15.439 --> 00:05:17.360 mean, suddenly a small business owner could walk 00:05:17.360 --> 00:05:20.699 in and buy a single box of pens for pretty much 00:05:20.699 --> 00:05:22.860 the same unit price that General Motors was paying. 00:05:22.959 --> 00:05:25.480 As a democratization of the supply closet. That's 00:05:25.480 --> 00:05:27.379 a great way to put it. It leveled the playing 00:05:27.379 --> 00:05:29.120 fields for small businesses in a way that had 00:05:29.120 --> 00:05:31.860 never happened before. And the proof is just 00:05:31.860 --> 00:05:34.480 in the sheer speed of the growth. I was looking 00:05:34.480 --> 00:05:37.319 at the timeline and this blew my mind. They opened 00:05:37.319 --> 00:05:40.560 store number one in October 1986. When did they 00:05:40.560 --> 00:05:43.860 go public? December 1988. Two years. Two years 00:05:43.860 --> 00:05:46.319 and two months. It's insane. It's a rocket ship. 00:05:46.519 --> 00:05:49.560 Usually a company spends years, maybe a decade, 00:05:49.600 --> 00:05:51.899 building up a track record, proving profitability, 00:05:52.319 --> 00:05:54.699 stabilizing the model before they dare to do 00:05:54.699 --> 00:05:57.660 an IPO. But Office Depot went from grand opening 00:05:57.660 --> 00:06:01.079 to ticker symbol in 26 months. It just speaks 00:06:01.079 --> 00:06:04.079 to the absolute hunger in the market for this 00:06:04.079 --> 00:06:07.079 concept. Investors looked at that first store 00:06:07.079 --> 00:06:10.139 and said, this is it. This works. We can put 00:06:10.139 --> 00:06:12.560 one of these in every single strip mall in America. 00:06:13.060 --> 00:06:15.860 It was land grab. Get big fast. That was the 00:06:15.860 --> 00:06:18.939 entire strategy. In the late 80s, if you weren't 00:06:18.939 --> 00:06:22.259 growing at breakneck speed, you were dying. Wall 00:06:22.259 --> 00:06:25.290 Street rewarded growth. above all else, even 00:06:25.290 --> 00:06:27.089 profitability sometimes. And they didn't just 00:06:27.089 --> 00:06:30.149 grow by building new stores. They grew by eating 00:06:30.149 --> 00:06:32.670 other fish. Correct. Which brings us to their 00:06:32.670 --> 00:06:36.410 first really big move. By April 1991, they made 00:06:36.410 --> 00:06:38.870 a massive strategic play. They merged with a 00:06:38.870 --> 00:06:41.230 company called Office Club. Office Club, again 00:06:41.230 --> 00:06:43.730 with these names, sounds very exclusive. Welcome 00:06:43.730 --> 00:06:46.550 to the club. Right, but this was a very, very 00:06:46.550 --> 00:06:49.490 calculated geography play. Office Depot was founded 00:06:49.490 --> 00:06:52.430 in Florida. They had completely dominated the 00:06:52.430 --> 00:06:55.310 East Coast and the South. Office Club was a major 00:06:55.310 --> 00:06:57.350 player on the West Coast. So this was the missing 00:06:57.350 --> 00:07:00.790 piece. It was the missing piece. By merging, 00:07:01.069 --> 00:07:03.870 Office Depot didn't just get bigger. They instantly 00:07:03.870 --> 00:07:06.550 became a truly national chain. They bridged the 00:07:06.550 --> 00:07:08.670 gap between the Atlantic and the Pacific in one 00:07:08.670 --> 00:07:10.769 signature on a piece of paper. So by the early 00:07:10.769 --> 00:07:13.430 90s, they are the kings. They have the category 00:07:13.430 --> 00:07:15.490 killer crown. They're a national powerhouse. 00:07:16.129 --> 00:07:18.709 But as we know, the 90s were a time of globalization. 00:07:19.209 --> 00:07:21.730 If you win America, the next logical step is 00:07:21.730 --> 00:07:24.509 the world. Which brings us to chapter two, global 00:07:24.509 --> 00:07:27.649 ambitions and the, what do you call the Viking 00:07:27.649 --> 00:07:29.810 strategy? Right. They sort of dipped their toe 00:07:29.810 --> 00:07:32.779 in the water in 1995. With Mexico. Yeah, joint 00:07:32.779 --> 00:07:35.439 venture with a local retail giant called Grupo 00:07:35.439 --> 00:07:37.959 Gigante. That was a pretty standard retail move 00:07:37.959 --> 00:07:40.639 at the time. Find a local partner, leverage their 00:07:40.639 --> 00:07:42.759 logistics and their real estate knowledge, open 00:07:42.759 --> 00:07:45.769 stores. Smart. But not revolutionary. But the 00:07:45.769 --> 00:07:48.350 real game changer, and the piece of history I 00:07:48.350 --> 00:07:50.689 think is most overlooked in their story, is the 00:07:50.689 --> 00:07:53.589 1998 acquisition of a company called Viking Direct. 00:07:53.829 --> 00:07:56.189 This is such a critical moment. No, when I hear 00:07:56.189 --> 00:07:58.329 Viking, I think of guys with helmets and axes, 00:07:58.410 --> 00:08:00.870 you know, raiding the coast. But this was a different 00:08:00.870 --> 00:08:03.810 kind of conquest. Very different. Viking Direct 00:08:03.810 --> 00:08:07.129 wasn't a store. It was a catalog business. A 00:08:07.129 --> 00:08:09.990 direct mail company. I remember those catalogs. 00:08:09.990 --> 00:08:12.550 They were thick, heavy, like phone books. You'd 00:08:12.550 --> 00:08:14.670 get them on your desk at work. You'd circle the 00:08:14.670 --> 00:08:16.629 highlighters and the legal pads you wanted and 00:08:16.629 --> 00:08:19.370 what you'd fax the order in. Exactly. You'd fax 00:08:19.370 --> 00:08:21.189 it or call it in. Yeah. But think about what 00:08:21.189 --> 00:08:23.730 a catalog business actually is from an operational 00:08:23.730 --> 00:08:26.449 standpoint. What are its core components? It's 00:08:26.449 --> 00:08:29.600 a list of stuff. A database of customers. It's 00:08:29.600 --> 00:08:31.800 a massive database of customers combined with 00:08:31.800 --> 00:08:35.080 huge centralized warehousing and a logistics 00:08:35.080 --> 00:08:37.799 network designed to pick, pack, and ship individual 00:08:37.799 --> 00:08:40.379 small parcels to millions of different addresses. 00:08:40.639 --> 00:08:42.340 Wait a minute. That sounds exactly like Amazon. 00:08:42.659 --> 00:08:45.600 It is the proto -e -commerce model. Before the 00:08:45.600 --> 00:08:47.799 internet was the internet, catalog companies 00:08:47.799 --> 00:08:51.320 were doing e -commerce without the E. By acquiring 00:08:51.320 --> 00:08:54.519 Viking in 1998, Office Depot wasn't just buying 00:08:54.519 --> 00:08:57.000 a customer list. They were buying the infrastructure 00:08:57.000 --> 00:09:00.240 for the future of retail. That is such a smart 00:09:00.240 --> 00:09:02.100 point, because if you're a brick -and -mortar 00:09:02.100 --> 00:09:05.019 store, your entire logistics chain is built around 00:09:05.019 --> 00:09:08.490 pallets. You know how to receive a truckload 00:09:08.490 --> 00:09:10.470 of printers and put them on a shelf. You have 00:09:10.470 --> 00:09:13.570 no idea how to put one single stapler in a box 00:09:13.570 --> 00:09:16.450 and mail it to a guy in Leeds. You don't have 00:09:16.450 --> 00:09:19.250 a clue. It's a totally different business. Viking 00:09:19.250 --> 00:09:22.059 gave them that capability instantly. It allowed 00:09:22.059 --> 00:09:25.080 them to expand into Europe and Australia without 00:09:25.080 --> 00:09:27.620 having to build hundreds of stores. They could 00:09:27.620 --> 00:09:29.980 just mail the catalogs and later put the catalog 00:09:29.980 --> 00:09:33.039 online and ship everything from a central hub. 00:09:33.200 --> 00:09:35.200 It was a capital light way to conquer the world. 00:09:35.340 --> 00:09:37.929 It was brilliant. And it worked. They expanded 00:09:37.929 --> 00:09:40.610 into Central America in 2001 using that Viking 00:09:40.610 --> 00:09:43.629 brand El Salvador, Guatemala, Costa Rica. And 00:09:43.629 --> 00:09:46.049 for a brief shining moment in the early 2000s, 00:09:46.070 --> 00:09:48.309 Office Depot was actually the second largest 00:09:48.309 --> 00:09:51.409 e -commerce retailer in the world. Get out, really. 00:09:51.570 --> 00:09:54.409 Yes, right behind Amazon. Because they simply 00:09:54.409 --> 00:09:57.250 ported that massive Viking catalog online and 00:09:57.250 --> 00:09:59.230 they already had the warehouses and the pick 00:09:59.230 --> 00:10:01.590 and pack systems to fulfill the orders. That 00:10:01.590 --> 00:10:03.850 is an absolute tragedy in hindsight. They had 00:10:03.850 --> 00:10:06.029 the lead, they had the infrastructure, they had 00:10:06.029 --> 00:10:08.779 everything. They did. But having the infrastructure 00:10:08.779 --> 00:10:11.519 and having the visionary culture to pivot your 00:10:11.519 --> 00:10:14.100 entire company are two very, very different things. 00:10:14.279 --> 00:10:16.220 And while they were expanding globally with Viking, 00:10:16.440 --> 00:10:19.980 they were also getting bogged down in a war at 00:10:19.980 --> 00:10:22.340 home, a war that would define their existence 00:10:22.340 --> 00:10:25.679 for decades. The merger wars. This is chapter 00:10:25.679 --> 00:10:29.039 three. And this feels like a soap opera. or, 00:10:29.039 --> 00:10:31.659 you know, a courtroom drama. It's the story of 00:10:31.659 --> 00:10:34.379 Office Depot and Staples. The will -they -won't 00:10:34.379 --> 00:10:36.679 -they of the corporate world. It's truly incredible. 00:10:36.960 --> 00:10:38.360 It feels like they've been trying to get married 00:10:38.360 --> 00:10:40.820 for 30 years and the government keeps objecting 00:10:40.820 --> 00:10:43.279 at the wedding. That is a very, very accurate 00:10:43.279 --> 00:10:45.480 description. And to understand the privatization 00:10:45.480 --> 00:10:48.679 that just happened in 2025, you absolutely have 00:10:48.679 --> 00:10:51.720 to understand what happened back in 1997. 1997, 00:10:52.159 --> 00:10:54.700 the first attempt. The context here is just crucial. 00:10:54.879 --> 00:10:58.129 In 1997, Office Depot and Staples were... the 00:10:58.129 --> 00:11:00.409 two titans. They were Godzilla and King Kong. 00:11:00.610 --> 00:11:02.370 They were just crushing the small mom and pop 00:11:02.370 --> 00:11:05.330 shops. So they announced a merger. From a business 00:11:05.330 --> 00:11:07.889 perspective, it made total sense. Combine operations, 00:11:08.370 --> 00:11:10.929 close redundant stores, lower costs, increase 00:11:10.929 --> 00:11:13.649 efficiency. But the Federal Trade Commission, 00:11:13.950 --> 00:11:17.289 the FTC, had a slightly different view. They 00:11:17.289 --> 00:11:21.169 did. On July 18, 1997, the FTC got a preliminary 00:11:21.169 --> 00:11:23.690 injunction to stop the merger. Their argument 00:11:23.690 --> 00:11:25.970 was classic antitrust. They said, if you two 00:11:25.970 --> 00:11:28.720 merge, you will be a monopoly. You will control 00:11:28.720 --> 00:11:31.299 the office supply market. You will raise prices 00:11:31.299 --> 00:11:33.440 and the consumer will have nowhere else to go. 00:11:33.580 --> 00:11:36.259 And in 1997, that was probably true, wasn't it? 00:11:36.299 --> 00:11:38.480 I mean, Walmart wasn't huge in office supplies 00:11:38.480 --> 00:11:41.539 yet. Amazon was just selling books out of a garage. 00:11:41.620 --> 00:11:44.379 It was a very fair argument in 1997. The competitive 00:11:44.379 --> 00:11:48.080 landscape was them and. Yeah. That's about it 00:11:48.080 --> 00:11:50.759 in terms of super stores. The court agreed. The 00:11:50.759 --> 00:11:52.600 deal was killed. OK, so they go back to their 00:11:52.600 --> 00:11:54.600 corners. They compete. They fight it out for 00:11:54.600 --> 00:11:57.220 another. what, 18 years? An entire generation. 00:11:57.500 --> 00:12:00.100 But then, fast forward to 2015, the world is 00:12:00.100 --> 00:12:01.799 completely different. We have iPhones. We have 00:12:01.799 --> 00:12:03.940 high -speed internet. Amazon is the everything 00:12:03.940 --> 00:12:06.559 store. You can buy a desk on Wayfair. You can 00:12:06.559 --> 00:12:09.539 buy pallets of paper at Costco. Staples looks 00:12:09.539 --> 00:12:11.320 at Office Depot and says, hey, let's try this 00:12:11.320 --> 00:12:13.500 again. The market has completely changed. We 00:12:13.500 --> 00:12:15.240 aren't the predators anymore. We're the prey. 00:12:15.460 --> 00:12:18.919 It's a desperation move. Staples offers $6 .3 00:12:18.919 --> 00:12:23.360 billion cash in stock. A massive deal. And their 00:12:23.360 --> 00:12:25.679 argument to the FTC this time is totally different. 00:12:25.740 --> 00:12:27.940 It's look around. Look at Amazon. If you don't 00:12:27.940 --> 00:12:30.139 let us merge, Amazon is going to kill us both. 00:12:30.240 --> 00:12:32.519 We need this merger to survive. It seems like 00:12:32.519 --> 00:12:35.740 a slam dunk argument. Any rational person looking 00:12:35.740 --> 00:12:38.500 at the retail landscape in 2015 would say, yeah, 00:12:38.559 --> 00:12:40.159 these guys aren't a monopoly. They're dinosaurs 00:12:40.159 --> 00:12:42.159 trying to bundle up against the coming ice age. 00:12:42.320 --> 00:12:45.110 So what should the FTC do? They blocked it again. 00:12:45.269 --> 00:12:47.590 Unbelievable. Why? I mean, how could they possibly 00:12:47.590 --> 00:12:50.029 argue that Amazon didn't matter? Okay. This is 00:12:50.029 --> 00:12:51.350 where we have to get a little technical, but 00:12:51.350 --> 00:12:54.350 it's absolutely fascinating. Yeah. The FTC used 00:12:54.350 --> 00:12:57.870 a very, very specific and some would say outdated 00:12:57.870 --> 00:13:00.769 definition of the market. They didn't look at 00:13:00.769 --> 00:13:03.409 retail consumers, people like you and me, buying 00:13:03.409 --> 00:13:05.789 a pack of pens. Okay. They looked exclusively 00:13:05.789 --> 00:13:08.870 at B2B contract customers. Explain that distinction. 00:13:09.009 --> 00:13:11.129 What does that mean? Okay. So if you're a Fortune 00:13:11.129 --> 00:13:13.759 500 company. Let's say you're Boeing or Coca 00:13:13.759 --> 00:13:17.139 -Cola. You don't buy your paper from Amazon .com. 00:13:17.320 --> 00:13:20.419 You need a contract. You need a dedicated supplier 00:13:20.419 --> 00:13:23.299 who can deliver to 500 different locations nationwide, 00:13:23.639 --> 00:13:26.539 provide detailed spending reports for your accounting 00:13:26.539 --> 00:13:29.500 department, manage inventory levels, and guarantee 00:13:29.500 --> 00:13:31.940 a fixed price on toner for the next three years. 00:13:32.120 --> 00:13:34.279 Right. It's a much more complex sale. It's a 00:13:34.279 --> 00:13:37.639 massive, complex enterprise relationship. And 00:13:37.639 --> 00:13:40.700 in 2015, the FTC argued that Amazon business 00:13:40.700 --> 00:13:42.879 just wasn't mature enough to handle those kinds 00:13:42.879 --> 00:13:46.320 of massive, complex corporate contracts. They 00:13:46.320 --> 00:13:48.700 argued that only Staples and Office Depot have 00:13:48.700 --> 00:13:51.000 the national logistics and sales infrastructure 00:13:51.000 --> 00:13:54.200 to serve the Fortune 500. So their argument was 00:13:54.200 --> 00:13:56.919 if they merge, Coca -Cola would have no choice 00:13:56.919 --> 00:13:59.519 and would get price gouged. Exactly. The government's 00:13:59.519 --> 00:14:01.980 whole case was about protecting the biggest companies 00:14:01.980 --> 00:14:04.500 in the world. They essentially said. We don't 00:14:04.500 --> 00:14:06.240 care about the small businesses or the regular 00:14:06.240 --> 00:14:08.659 consumers who have infinite choice online. We 00:14:08.659 --> 00:14:10.700 only care about this one tiny slice of the market 00:14:10.700 --> 00:14:12.799 where you two are the only players. A district 00:14:12.799 --> 00:14:15.200 court judge bought that argument. A judge agreed 00:14:15.200 --> 00:14:20.080 in May 2016. The injunction was granted. The 00:14:20.080 --> 00:14:23.669 deal died on the vine for the second time. That 00:14:23.669 --> 00:14:25.490 has to be one of the most frustrating moments 00:14:25.490 --> 00:14:27.850 in modern business history, to be told you're 00:14:27.850 --> 00:14:30.570 a dangerous monopoly while you're literally watching 00:14:30.570 --> 00:14:33.450 your customers walk out the door to a digital 00:14:33.450 --> 00:14:36.190 competitor that the government refuses to acknowledge. 00:14:36.509 --> 00:14:39.669 It was a fatal blow. It was a strategic death 00:14:39.669 --> 00:14:42.289 sentence. It meant they were trapped. They couldn't 00:14:42.289 --> 00:14:44.470 scale up to fight Amazon, but they couldn't grow 00:14:44.470 --> 00:14:46.710 organically because the retail market was shrinking. 00:14:46.870 --> 00:14:49.350 They were stuck in a cage built by the FTC. And 00:14:49.350 --> 00:14:51.960 when you can't marry the one you love, you. You 00:14:51.960 --> 00:14:54.759 settle. That brings us to chapter four, the merger 00:14:54.759 --> 00:14:58.120 that worked, the OfficeMax deal. Right. In 2013, 00:14:58.379 --> 00:15:00.679 so this is just before that second failed Staples 00:15:00.679 --> 00:15:03.080 attempt, Office Depot merged with the number 00:15:03.080 --> 00:15:05.740 three player OfficeMax. This was pitched as the 00:15:05.740 --> 00:15:08.100 merger of equals. But I remember some Wall Street 00:15:08.100 --> 00:15:10.639 analysts at the time called it two drunks trying 00:15:10.639 --> 00:15:13.759 to hold each other up. Ouch. That's brutal. It's 00:15:13.759 --> 00:15:16.559 harsh, but you can see the logic. It was a purely 00:15:16.559 --> 00:15:18.679 defensive move. They completed the deal in November 00:15:18.679 --> 00:15:22.129 2013, but it wasn't a celebration. There were 00:15:22.129 --> 00:15:24.789 no champagne corks popping. It was a triage operation. 00:15:25.350 --> 00:15:27.809 So what happened after the ink dried on that 00:15:27.809 --> 00:15:31.909 deal? Massive, painful closures. By May 2014, 00:15:32.389 --> 00:15:34.289 just six months later, they announced they were 00:15:34.289 --> 00:15:37.850 closing 400 stores. 400 stores, that's a huge 00:15:37.850 --> 00:15:40.409 number. That's a lot of empty real estate and 00:15:40.409 --> 00:15:42.549 a lot of lost jobs. It was absolutely necessary. 00:15:43.240 --> 00:15:45.419 Because of the merger, you had absurd situations 00:15:45.419 --> 00:15:48.340 where an Office Depot and an Office Max were 00:15:48.340 --> 00:15:50.600 literally across the street from each other in 00:15:50.600 --> 00:15:53.039 the same strip mall, fighting for the same diminishing 00:15:53.039 --> 00:15:55.460 pool of customers. They had to cannibalize their 00:15:55.460 --> 00:15:58.039 own footprint just to stop the bleeding. So the 00:15:58.039 --> 00:16:00.399 regulatory environment is hostile. The retail 00:16:00.399 --> 00:16:02.799 footprint is shrinking. And this leads to what 00:16:02.799 --> 00:16:05.779 I call the identity crisis era, the mid -2000s 00:16:05.779 --> 00:16:07.860 and 2010s, where they just seem completely lost. 00:16:08.179 --> 00:16:10.700 This is where the story gets, well, colorful 00:16:10.700 --> 00:16:13.220 is a good word for it. We have to talk about 00:16:13.220 --> 00:16:15.120 the partnerships, because when I look at this 00:16:15.120 --> 00:16:18.259 list, I see a company that is just throwing spaghetti 00:16:18.259 --> 00:16:20.179 at the wall to see what sticks. Let's start with 00:16:20.179 --> 00:16:24.440 NASCAR. Ah, yes. In 2005, Office Depot became 00:16:24.440 --> 00:16:27.059 the official office products partner of NASCAR. 00:16:27.259 --> 00:16:29.860 Which is a mouthful of a title. It really is. 00:16:30.279 --> 00:16:33.559 They sponsored the hashtag 99 Ford Fusion, driven 00:16:33.559 --> 00:16:36.500 by Carl Edwards, the guy who was famous for doing 00:16:36.500 --> 00:16:38.500 backflips off his car when he won. I remember 00:16:38.500 --> 00:16:41.019 him. And then later, starting 2009, they sponsored 00:16:41.019 --> 00:16:44.730 a huge name. Tony Stewart, smoke in the hashtag 00:16:44.730 --> 00:16:48.330 14 Chevy. Now, help me understand the logic here. 00:16:48.389 --> 00:16:51.129 I get that NASCAR has a massive loyal audience. 00:16:51.350 --> 00:16:53.450 But when I think of NASCAR sponsorships, I think 00:16:53.450 --> 00:16:56.710 of, you know, beer, motor oil, maybe power tools. 00:16:56.909 --> 00:16:59.210 I don't immediately think Manila folders. It 00:16:59.210 --> 00:17:00.909 does seem like a weird mismatch on the surface. 00:17:00.990 --> 00:17:02.610 But think about the demographic. Who watches 00:17:02.610 --> 00:17:05.579 NASCAR? A lot of tradespeople, independent contractors, 00:17:05.940 --> 00:17:08.619 plumbers, electricians, mechanics, small business 00:17:08.619 --> 00:17:11.299 owners. The guy who runs a local HVAC repair 00:17:11.299 --> 00:17:13.700 service out of his truck. OK, I see it now. That 00:17:13.700 --> 00:17:15.859 guy needs invoices. He needs printer ink. He 00:17:15.859 --> 00:17:17.619 needs a new chair for his home office where he 00:17:17.619 --> 00:17:19.980 does the books at night. It was a very clever 00:17:19.980 --> 00:17:21.960 play for the blue collar small business owner. 00:17:22.039 --> 00:17:25.619 A market that maybe staples with its more corporate 00:17:25.619 --> 00:17:28.750 feel was ignoring. Exactly. And for a while, 00:17:28.769 --> 00:17:31.230 it seemed to work. It solidified their brand 00:17:31.230 --> 00:17:33.509 as a practical place for the working man's business. 00:17:33.910 --> 00:17:37.750 But then they took a hard left turn. A very, 00:17:37.829 --> 00:17:40.670 very hard left turn. In September 2012, they 00:17:40.670 --> 00:17:42.529 announced they're not renewing with Tony Stewart. 00:17:42.890 --> 00:17:46.369 And then just two months later, they announced 00:17:46.369 --> 00:17:50.410 a new partner. From Tony Stewart to Lady Gaga. 00:17:50.650 --> 00:17:53.569 Yes. In November 2012, they announced a partnership 00:17:53.569 --> 00:17:57.119 with Lady Gaga's Born This Way Foundation. I 00:17:57.119 --> 00:17:59.240 mean, talk about whiplash. You go from the grandstands 00:17:59.240 --> 00:18:01.859 of Daytona to the Little Monsters. It's two completely 00:18:01.859 --> 00:18:04.279 different universes. It is. They started selling 00:18:04.279 --> 00:18:06.619 these limited edition office supplies, you know, 00:18:06.640 --> 00:18:09.539 notebooks, pens, where 25 % of the earnings went 00:18:09.539 --> 00:18:11.400 to the foundation. They had these things that 00:18:11.400 --> 00:18:13.440 they called bravery bracelets. Bravery bracelets 00:18:13.440 --> 00:18:16.140 at Office Depot. It just screams of desperation, 00:18:16.480 --> 00:18:19.339 doesn't it? It signals a boardroom that is absolutely 00:18:19.339 --> 00:18:21.359 terrified that they're becoming irrelevant and 00:18:21.359 --> 00:18:23.930 losing the next generation. They probably looked 00:18:23.930 --> 00:18:26.210 at their demographic data, saw that their average 00:18:26.210 --> 00:18:29.369 customer was like 55 years old, and panicked. 00:18:29.509 --> 00:18:31.849 Total panic. How do we get the millennials in 00:18:31.849 --> 00:18:33.529 the door? I don't know. Lady Gaga is popular 00:18:33.529 --> 00:18:35.890 with the kids. Let's do that. But it feels so 00:18:35.890 --> 00:18:38.210 inauthentic. And customers are smart. They can 00:18:38.210 --> 00:18:41.230 smell inauthenticity a mile away. You can't just 00:18:41.230 --> 00:18:43.750 slap a pop star's name on a highlighter and suddenly 00:18:43.750 --> 00:18:46.710 become cool. It highlights the lack of a core 00:18:46.710 --> 00:18:50.029 identity. Were they the NASCAR store for contractors? 00:18:50.390 --> 00:18:52.930 Were they the social justice store for millennials? 00:18:53.230 --> 00:18:55.950 Were they a B2B logistics company? They were 00:18:55.950 --> 00:18:58.029 trying to be everything to everyone, which usually 00:18:58.029 --> 00:18:59.869 means you end up being nothing to anyone. But 00:18:59.869 --> 00:19:01.650 to give them credit, they did eventually find 00:19:01.650 --> 00:19:03.930 a partnership that made a lot more sense. In 00:19:03.930 --> 00:19:07.170 July 2020, they partnered with Canva. Now that 00:19:07.170 --> 00:19:10.549 is a logical fit. That one makes sense. Canva 00:19:10.549 --> 00:19:13.670 is this huge online design tool for the gig economy, 00:19:13.910 --> 00:19:16.950 for small businesses, for creators. Right. You 00:19:16.950 --> 00:19:19.390 design your flyer or your new business card on 00:19:19.390 --> 00:19:21.569 Canva's website. And then you click a button 00:19:21.569 --> 00:19:24.269 and you send it to be printed at your local office 00:19:24.269 --> 00:19:27.549 depot. That integrates perfectly into the modern 00:19:27.549 --> 00:19:29.990 workflow. It's a smart, seamless connection. 00:19:30.349 --> 00:19:32.730 It acknowledges that people don't just need raw 00:19:32.730 --> 00:19:35.150 materials anymore. They need finished products. 00:19:35.569 --> 00:19:38.069 Which leads us to the next big chapter in their 00:19:38.069 --> 00:19:41.029 story. The pivot that was supposed to save them. 00:19:41.519 --> 00:19:44.579 the pivot to services and technology. This has 00:19:44.579 --> 00:19:46.519 been the drumbeat from their leadership for the 00:19:46.519 --> 00:19:49.599 last 10 years at least. We are not a retailer. 00:19:49.779 --> 00:19:52.579 We are a services provider. It started in a huge 00:19:52.579 --> 00:19:54.799 way in 2017 when they bought a company called 00:19:54.799 --> 00:19:57.980 CompuCom. A billion -dollar acquisition. This 00:19:57.980 --> 00:20:00.569 was a massive bet. And the goal was actually 00:20:00.569 --> 00:20:03.170 fascinating. They wanted to become the IT department 00:20:03.170 --> 00:20:05.890 for small and medium -sized businesses. I like 00:20:05.890 --> 00:20:08.349 that concept. If I run a bakery with three locations, 00:20:08.490 --> 00:20:11.170 I don't have an IT guy on staff. If my point 00:20:11.170 --> 00:20:13.329 -of -sale system crashes during the morning rush, 00:20:13.490 --> 00:20:16.569 I'm in huge trouble. Exactly. Office Depot wanted 00:20:16.569 --> 00:20:18.829 to be the one you called. They would send a technician, 00:20:18.990 --> 00:20:22.210 a geek squad. style person though that's a best 00:20:22.210 --> 00:20:25.250 buy term to fix your network manage your software 00:20:25.250 --> 00:20:28.170 updates handle your cyber security it's a sticky 00:20:28.170 --> 00:20:30.950 relationship buying a pen is a one -time transaction 00:20:30.950 --> 00:20:33.609 fixing my server every month is a long -term 00:20:33.609 --> 00:20:35.670 relationship and relationships have much higher 00:20:35.670 --> 00:20:38.529 margins you make pennies on a pen you can make 00:20:38.529 --> 00:20:41.769 50 margins on i .t services it was a move to 00:20:41.769 --> 00:20:43.890 get away from low margin products and into high 00:20:43.890 --> 00:20:46.049 margin services they also bought a company called 00:20:46.049 --> 00:20:49.430 buyer quest in january 2021 yeah that's another 00:20:49.430 --> 00:20:51.309 piece of puzzle. It's enterprise procurement 00:20:51.309 --> 00:20:54.839 software. Again, trying to embed themselves deeper 00:20:54.839 --> 00:20:56.619 in the workflow of their corporate customers, 00:20:56.819 --> 00:20:58.839 making it harder for those customers to leave. 00:20:59.039 --> 00:21:00.619 And while they were doing all this high -tech 00:21:00.619 --> 00:21:02.279 services stuff, they were also really boosting 00:21:02.279 --> 00:21:05.140 their own products. The private labels. We have 00:21:05.140 --> 00:21:08.799 to mention TUL. PUL. The pens. The legendary 00:21:08.799 --> 00:21:11.819 TUL pens. Listen, people are obsessed with these 00:21:11.819 --> 00:21:14.299 pens. There are online forums dedicated to them. 00:21:14.339 --> 00:21:16.539 I have friends who will not write with anything 00:21:16.539 --> 00:21:19.740 else. It is a massive, massive success story 00:21:19.740 --> 00:21:22.650 for them. It's a cult product. And it's a perfect 00:21:22.650 --> 00:21:24.849 example of why private labels are so important, 00:21:24.990 --> 00:21:27.650 along with their other brands like Ativa and 00:21:27.650 --> 00:21:30.329 Real Space Furniture. Explain the economics of 00:21:30.329 --> 00:21:32.730 that. Why is a private label so much better for 00:21:32.730 --> 00:21:35.230 them? It's simple. If you go into Office Depot 00:21:35.230 --> 00:21:38.329 and buy a box of Bic pens, Office Depot makes 00:21:38.329 --> 00:21:40.869 a small margin, but Bic makes the real profit. 00:21:41.400 --> 00:21:45.000 If you go in and buy a box of TUL pens, Office 00:21:45.000 --> 00:21:47.140 Depot keeps almost all the profit. They control 00:21:47.140 --> 00:21:49.440 the design, the manufacturing cost, everything. 00:21:49.680 --> 00:21:52.960 It's a much more profitable sale. So on paper, 00:21:53.119 --> 00:21:54.779 it seems like they're doing the right things. 00:21:54.859 --> 00:21:56.900 They're pivoting to high margin services. They're 00:21:56.900 --> 00:21:59.339 building successful private label brands. They're 00:21:59.339 --> 00:22:01.599 even getting elite gold certifications for their 00:22:01.599 --> 00:22:03.299 buildings. We saw they built a green store in 00:22:03.299 --> 00:22:06.680 Austin way back in 2008. But there was a very 00:22:06.680 --> 00:22:09.019 dark side to the service pivot. Chapter seven, 00:22:09.140 --> 00:22:11.710 the scandal. The PC health check. This makes 00:22:11.710 --> 00:22:14.230 me angry just reading about it. It should, because 00:22:14.230 --> 00:22:17.130 it was a fundamental breach of trust that undermined 00:22:17.130 --> 00:22:19.529 their entire services strategy. So lay it out 00:22:19.529 --> 00:22:22.390 for us. What exactly happened? In March of 2019, 00:22:22.849 --> 00:22:25.069 Office Depot and a partner company they used 00:22:25.069 --> 00:22:27.990 called Support .com agreed to pay a total of 00:22:27.990 --> 00:22:31.250 $35 million to settle allegations from the Federal 00:22:31.250 --> 00:22:34.170 Trade Commission. The FTC again. They just cannot 00:22:34.170 --> 00:22:37.059 shake these guys. They really can't. The allegation 00:22:37.059 --> 00:22:39.000 was that they were running a scam in their stores. 00:22:39.200 --> 00:22:42.180 They offered a free PC health check. You bring 00:22:42.180 --> 00:22:43.799 in your computer. Maybe it's running a little 00:22:43.799 --> 00:22:46.759 slow. They plug in a piece of software. And the 00:22:46.759 --> 00:22:48.980 FTC alleged that this software was basically 00:22:48.980 --> 00:22:51.599 rigged. It was designed to falsely claim it found 00:22:51.599 --> 00:22:55.319 malware symptoms or infections, even on perfectly 00:22:55.319 --> 00:22:58.380 clean, brand new computers. So it was a lie. 00:22:58.460 --> 00:23:00.680 It was a scare tactic to sell services. That 00:23:00.680 --> 00:23:03.180 was the allegation, yes. The software would pop 00:23:03.180 --> 00:23:05.880 up a scary red box with a warning, and the store 00:23:05.880 --> 00:23:08.180 associate would say, oh no, you have a serious 00:23:08.180 --> 00:23:11.579 virus. But don't worry, for $300, our tech service 00:23:11.579 --> 00:23:14.599 can fix it for you. That is just predatory. And 00:23:14.599 --> 00:23:16.740 think about who brings a computer into a store 00:23:16.740 --> 00:23:19.720 for a checkup. It's not the tech -savvy 20 -year 00:23:19.720 --> 00:23:22.140 -old who built their own PC. It's the grandmother 00:23:22.140 --> 00:23:24.460 who's worried she clicked on a bad link. It's 00:23:24.460 --> 00:23:26.160 the person who doesn't know better and trusts 00:23:26.160 --> 00:23:28.720 the expert in the red shirt. It's exploiting 00:23:28.720 --> 00:23:30.660 the most vulnerable customers. And that's why 00:23:30.660 --> 00:23:32.539 it was so incredibly damaging. Think about it. 00:23:32.599 --> 00:23:34.859 They were spending a billion dollars on CompuCom 00:23:34.859 --> 00:23:37.720 to rebrand themselves as a trusted IT advisor. 00:23:38.240 --> 00:23:41.099 And at the exact same time, their own stores 00:23:41.099 --> 00:23:43.779 were getting busted for scamming customers with... 00:23:43.789 --> 00:23:46.410 fake virus scans. You cannot build a service 00:23:46.410 --> 00:23:48.450 business without trust. It's the only currency 00:23:48.450 --> 00:23:51.730 you have. It poisoned the well. Completely. How 00:23:51.730 --> 00:23:54.190 could any small business owner sign a million 00:23:54.190 --> 00:23:56.750 dollar IT contract with him after reading that 00:23:56.750 --> 00:23:59.849 headline? So trust is eroded. The big mergers 00:23:59.849 --> 00:24:02.730 were blocked. The retail footprint is shrinking. 00:24:02.829 --> 00:24:05.650 And the stock price is just flatlining for years. 00:24:06.329 --> 00:24:09.269 Which brings us to the end. Chapter 8. The final 00:24:09.269 --> 00:24:12.009 chapter of public independence. Let's look at 00:24:12.009 --> 00:24:14.000 the financial autopsy. We have the numbers from 00:24:14.000 --> 00:24:16.480 the 2024 annual report, which was the last one 00:24:16.480 --> 00:24:18.500 they filed as a public company. Okay, shoot me 00:24:18.500 --> 00:24:20.240 with them. What was the top line? Revenue for 00:24:20.240 --> 00:24:24.279 the full year 2024, $6 .99 billion. Okay, so 00:24:24.279 --> 00:24:27.220 nearly $7 billion. That still sounds like a massive 00:24:27.220 --> 00:24:29.339 company. That's not a small business. It is. 00:24:29.359 --> 00:24:31.859 That's a lot of revenue. But as they say, revenue 00:24:31.859 --> 00:24:35.000 is vanity, profit is sanity. So let's look at 00:24:35.000 --> 00:24:37.420 the bottom line. What was the net income? Negative 00:24:37.420 --> 00:24:42.049 $3 million. A loss. They sold $7 billion worth 00:24:42.049 --> 00:24:44.609 of goods and services, paid their employees, 00:24:44.970 --> 00:24:47.970 paid their rent on almost 1 ,000 stores, paid 00:24:47.970 --> 00:24:50.230 their suppliers, and at the end of the year, 00:24:50.269 --> 00:24:52.880 they were $3 million in the hole. That is the 00:24:52.880 --> 00:24:54.980 definition of a treadmill. You are running as 00:24:54.980 --> 00:24:57.539 fast as you can just to stay in the same place, 00:24:57.559 --> 00:24:59.740 or in this case, to slide backward just a little 00:24:59.740 --> 00:25:01.680 bit. It's completely unsustainable. And that 00:25:01.680 --> 00:25:04.279 explains the razor thin, or in this case, negative 00:25:04.279 --> 00:25:07.200 margins, the operating costs of maintaining all 00:25:07.200 --> 00:25:09.920 that retail real estate, the corporate overhead, 00:25:10.140 --> 00:25:12.720 the debt from the acquisitions. It was a business 00:25:12.720 --> 00:25:14.759 model that just wasn't working anymore as a public 00:25:14.759 --> 00:25:17.640 company. Wall Street demands growth. If you aren't 00:25:17.640 --> 00:25:20.019 growing and you aren't profitable, you're dead 00:25:20.019 --> 00:25:22.269 money. So the sharks began to circle. And in 00:25:22.269 --> 00:25:24.230 this case, the shark was a private equity firm 00:25:24.230 --> 00:25:27.789 called Atlas Holdings. Enter the buyout. In September 00:25:27.789 --> 00:25:31.109 2025, the agreement was announced. By December 00:25:31.109 --> 00:25:34.450 2025, just two months ago from when we're recording, 00:25:34.710 --> 00:25:38.250 it was all done. The deal was closed. And the 00:25:38.250 --> 00:25:40.210 final Bryce tag. It was completed at approximately 00:25:40.210 --> 00:25:43.799 $1 billion. I want to pause on that number for 00:25:43.799 --> 00:25:47.059 a second. A company with $7 billion in sales 00:25:47.059 --> 00:25:51.440 sells for $1 billion. That ratio seems incredibly 00:25:51.440 --> 00:25:54.180 low. It's a distress valuation. It's about 0 00:25:54.180 --> 00:25:57.519 .15 times revenue. In the tech world, healthy 00:25:57.519 --> 00:26:00.160 companies sell for 10 or 20 times their revenue. 00:26:00.599 --> 00:26:03.019 Even in traditional retail, you'd expect a better 00:26:03.019 --> 00:26:05.160 multiple than that. This price tells you exactly 00:26:05.160 --> 00:26:06.799 what the market thought of their future. Which 00:26:06.799 --> 00:26:09.680 was not much. That the ODP Corporation had zero 00:26:09.680 --> 00:26:12.170 growth potential. Atlas Holdings didn't buy it 00:26:12.170 --> 00:26:13.970 for the future. They bought it for the existing 00:26:13.970 --> 00:26:15.750 cash flow and the assets they could sell off. 00:26:15.869 --> 00:26:18.690 So as of right now, Valentine's Day 2026, there 00:26:18.690 --> 00:26:21.869 is no more ODP ticker symbol on the Nasdaq. It's 00:26:21.869 --> 00:26:24.190 just gone. It is a private company. They have 00:26:24.190 --> 00:26:27.250 a new CEO named Craig Gunkel, who was appointed 00:26:27.250 --> 00:26:29.470 in December as soon as the deal closed. And what 00:26:29.470 --> 00:26:31.029 do they have left to work with? What's the state 00:26:31.029 --> 00:26:33.549 of the company today? They still have about 19 00:26:33.549 --> 00:26:36.970 ,000 employees and they still have a retail footprint 00:26:36.970 --> 00:26:41.000 of roughly 922 stores. So for the listener wondering, 00:26:41.319 --> 00:26:44.119 is my local office depot going to close down 00:26:44.119 --> 00:26:46.720 now? What's the likely answer? The answer is 00:26:46.720 --> 00:26:51.000 probably some of them will. Yes. Privatization 00:26:51.000 --> 00:26:53.799 is almost always a prelude to a serious deep 00:26:53.799 --> 00:26:56.359 restructuring. Why is that? When you're a public 00:26:56.359 --> 00:26:58.500 company, you're terrified of closing stores because 00:26:58.500 --> 00:27:00.200 it's a negative headline. It looks like you're 00:27:00.200 --> 00:27:02.279 shrinking and Wall Street punishes you for it. 00:27:02.339 --> 00:27:06.059 The stock price drops when you're private. You 00:27:06.059 --> 00:27:07.619 don't care about the stock price. You only care 00:27:07.619 --> 00:27:10.140 about profitability and cash flow. No more quarterly 00:27:10.140 --> 00:27:13.119 earnings calls to apologize for. Exactly. Atlas 00:27:13.119 --> 00:27:15.519 Holdings can now make the hard, painful cuts 00:27:15.519 --> 00:27:18.029 that the public markets wouldn't tolerate. I 00:27:18.029 --> 00:27:20.089 would bet they're looking at those 922 stores 00:27:20.089 --> 00:27:22.789 right now, identifying the 200 or 300 that are 00:27:22.789 --> 00:27:24.369 losing the most money, and they'll shut them 00:27:24.369 --> 00:27:26.630 down immediately to stop the cash bleed. So we 00:27:26.630 --> 00:27:29.250 can expect a smaller retail footprint and probably 00:27:29.250 --> 00:27:32.349 a harder pivot toward that B2B distribution model, 00:27:32.470 --> 00:27:34.430 the CombiCom and BuyerQuest side of the business, 00:27:34.609 --> 00:27:37.329 the boring stuff. The boring but profitable stuff, 00:27:37.509 --> 00:27:40.609 yeah. I think you'll see a slow managed retreat 00:27:40.609 --> 00:27:43.160 from consumer retail. It really feels like the 00:27:43.160 --> 00:27:45.759 end of the Mr. Howe dream, doesn't it? The original 00:27:45.759 --> 00:27:48.240 vision of a giant warehouse where everyone is 00:27:48.240 --> 00:27:51.220 welcome is turning into a focused logistics company 00:27:51.220 --> 00:27:53.400 just for corporate accounts. It's a return to 00:27:53.400 --> 00:27:56.140 the mean. The category killer era was a very 00:27:56.140 --> 00:27:58.900 specific moment in time, fueled by cheap real 00:27:58.900 --> 00:28:01.900 estate, cheap capital, and a complete lack of 00:28:01.900 --> 00:28:05.400 internet competition. That moment is over. Now, 00:28:05.400 --> 00:28:08.319 before we sign off, I have a theory. A deep dive 00:28:08.319 --> 00:28:10.799 conspiracy theory, if you will. Oh, I'm intrigued. 00:28:11.019 --> 00:28:13.380 Go on. OK, so we spent a good chunk of this show 00:28:13.380 --> 00:28:15.599 talking about how the government repeatedly refused 00:28:15.599 --> 00:28:18.539 to let Office Depot and Staples merge because 00:28:18.539 --> 00:28:21.200 they were these two public giants. But look at 00:28:21.200 --> 00:28:23.460 the chessboard now. Staples was taken private 00:28:23.460 --> 00:28:27.019 back in 2017. A firm called Sycamore Partners 00:28:27.019 --> 00:28:30.380 bought them. Right. And now Office Depot is private. 00:28:30.809 --> 00:28:33.170 Atlas Holdings owns them. They are both operating 00:28:33.170 --> 00:28:35.890 in the shadows of private equity. No public reports. 00:28:36.210 --> 00:28:39.549 No SEC filings to scrutinize. No shareholder 00:28:39.549 --> 00:28:41.170 votes. I see exactly where you're going with 00:28:41.170 --> 00:28:43.529 this. Does this finally open the door? Can they 00:28:43.529 --> 00:28:47.509 just merge now? Can the CEOs of Atlas and Sycamore 00:28:47.509 --> 00:28:50.549 have lunch, shake hands in a dark room, and finally 00:28:50.549 --> 00:28:52.710 combine these two companies now that nobody's 00:28:52.710 --> 00:28:54.849 really watching? It is the billion -dollar question, 00:28:55.009 --> 00:28:57.210 isn't it? Technically, being a private company 00:28:57.210 --> 00:29:00.660 doesn't make you immune to antitrust laws. The 00:29:00.660 --> 00:29:03.279 FTC can still investigate and sue private companies. 00:29:03.839 --> 00:29:06.539 However. There's a big however. There's a huge 00:29:06.539 --> 00:29:09.480 however. Yeah. Without the intense public scrutiny, 00:29:09.599 --> 00:29:12.400 without the media circus that surrounds a public 00:29:12.400 --> 00:29:15.039 merger announcement, it is so much easier to 00:29:15.039 --> 00:29:18.019 coordinate. Coordination, not a formal merger. 00:29:18.380 --> 00:29:20.940 Maybe. Maybe they don't formally merge into one 00:29:20.940 --> 00:29:23.740 company called Staples Depot. But maybe they 00:29:23.740 --> 00:29:26.240 just quietly divide the map. You take all the 00:29:26.240 --> 00:29:27.759 corporate contracts west of the Mississippi, 00:29:27.980 --> 00:29:30.839 we'll take the east. Or. We'll share our procurement 00:29:30.839 --> 00:29:33.839 networks to lower costs from suppliers. It allows 00:29:33.839 --> 00:29:36.619 for a level of collusion or cooperation that 00:29:36.619 --> 00:29:38.880 is simply impossible when you're two public companies 00:29:38.880 --> 00:29:41.400 fighting for stock market supremacy. The war 00:29:41.400 --> 00:29:44.480 might finally be over, not because one side won, 00:29:44.640 --> 00:29:46.880 but because they both got bought by new owners 00:29:46.880 --> 00:29:49.559 who decided to stop fighting and just survive 00:29:49.559 --> 00:29:51.779 in the dark. Or perhaps they just realized that 00:29:51.779 --> 00:29:53.579 fighting each other was completely pointless 00:29:53.579 --> 00:29:56.259 when a third party named Amazon had already won 00:29:56.259 --> 00:29:58.700 the war years ago. That is a very sobering thought. 00:29:59.160 --> 00:30:01.460 It is what it is. Well, that brings us to the 00:30:01.460 --> 00:30:03.599 end of our journey. We've gone from the optimistic 00:30:03.599 --> 00:30:08.000 dream of a Mr. Howell warehouse in 1986 to a 00:30:08.000 --> 00:30:10.519 billion -dollar private equity exit in 2025. 00:30:11.140 --> 00:30:14.640 We've seen the rise, the falls, the blocked weddings 00:30:14.640 --> 00:30:17.839 at the altar, the NASCAR cars, the Lady Gaga 00:30:17.839 --> 00:30:20.619 bracelets, and the final withdrawal from public 00:30:20.619 --> 00:30:23.119 view. It really is a monument to the last 40 00:30:23.119 --> 00:30:25.839 years of American retail. A true case study. 00:30:25.920 --> 00:30:28.000 So the next time you drive past an office depot, 00:30:28.059 --> 00:30:30.140 take a look at that red and white sign. It's 00:30:30.140 --> 00:30:32.859 not just a store. It's a survivor. And somewhere, 00:30:33.039 --> 00:30:35.519 Mr. Howe W. is watching and probably scratching 00:30:35.519 --> 00:30:39.420 his head. Long live Mr. Howe W. Thanks for listening 00:30:39.420 --> 00:30:40.859 to The Deep Dive. We'll catch you on the next 00:30:40.859 --> 00:30:41.019 one.