The Container Store’s CEO unpacks his business philosophy

October 19, 2014, 11:00 AM UTC
Inside A Container Store Group Inc. Store Following Co.'s IPO
A pedestrian walks past a Container Store Group Inc. location in New York, U.S., on Monday, Nov. 4, 2013. Container Store Group Inc., a retailer of storage and organization products, surged in its debut after raising $225 million in a U.S. initial public offering by pricing the shares at the top of an increased range. Photographer: Jin Lee/Bloomberg via Getty Images
Photograph by Jin Lee — Bloomberg/Getty Images

When Kip Tindell started The Container Store in 1978, his father asked him how he was going to make a living selling empty boxes. Since then retailer has become a Mecca for the disorganized who dream of order and the compulsively organized who dream of containers. It’s such a big market that The Container Store sold $749 million in merchandise in 2013. But that hasn’t translated well on Wall Street. Since an initial public offering nearly a year ago, the company’s shares (TCS) have lost more than half their value.

The Container Store has made Fortune’s 100 Best Companies to Work For list for fifteen years in a row. (This year it’s no. 28). Tindell is also a firm believer that women make better executives then men.

Earlier this month, Tindell, who is CEO of the company, released his book Uncontainable, which explains his philosophy of conscious capitalism for leading a business. Key points include paying good employees well above the industry average and the importance of using logic and intuition (honed by education or training) for making business decisions.

Tindell discussed his book and business practices with Fortune. An edited transcript is below.

You highlighted that women make better execs then men. Three of your top execs are women. How does the Container store create a nourishing environment for females? What do other companies need to do?

It’s okay to say women make better executives then men. So many people think we’re approaching parity on the issue but 24 of the Fortune 500 CEOs are women. People need to hear this.

The Container Store’s culture is female friendly: that’s conscious capitalism. We look for people who are way up in Maslow’s hierarchy of needs. About 70% of our employee base is female. Women are better team players then men. They are very supportive of everyone getting a promotion even when they don’t get it. Men tend to leave the company if they don’t get a promotion.

It’s okay to look for women when the numbers are what they are. We’ve been purposely trying to find a female leader to add to our board of directors [Editor’s Note: Two of The Container Store’s ten board members are women.]

You discuss the importance of trained intuition for making business decisions in your book. How did that play into your decision to go public?

It was more of a logical decision. I investigated every alternative and concluded this was the best. Bigger companies wanted to buy us, but then you subjugate your brand. Going public let us get more stock in the hands of employees, and most employees work better if they have stock, especially significant stock. Employee morale is the highest it’s ever been. Everyone who has been here over two years has the option to have stock. Being public has been wonderful and terrible, good and bad, very extreme.

How are you dealing with the volatility of your shares?

Earnings were up 38.7%, gross margin was up. Most metrics on the page were ones were ones we were pleased with. Our stores have never done better. The market reacted to this one metric, which is top store sales and that’s Wall Street’s favorite metric. Foot Traffic is down 1.5%, but retailers are seeing a certain sluggishness in consumer behavior. That passes. We’re fanatically looking under every rock to increase traffic and perfect everything we are doing. We’re longer term oriented. What’s the stock price going to be in five years, not next week?

But of course you care and it’s frustrating when you aren’t doing well. We don’t like to see it, but it’s conscious capitalism not quarterly capitalism. We’re not going to do things for a quarter’s results, we’re going to do keep to build something that’s better and better.

The Container Store pays it’s sales reps $50,000, and you’re a big proponent of paying well above the industry average. What are your thoughts on minimum wage?

I just don’t get into that. We believe in the compensation philosophy but that doesn’t necessarily work for every business. It’s not for The Container Store, which conspicuously pays above minimum wage, to say that’s what’s best for other businesses like a mom and pop store or different types of industries. It’s a thorny and complex issue. I’m in support of what various people think is best for their businesses.

How does that play into being the head of the National Retailers Federation, which opposes minimum wage, come 2015?

I support the National Retailers Federation. I love retail. The NRF has a position on minimum wage and, as a leader, I support those positions. It’s complex, you have very different retailers in that organization, so they can’t all be the same. What works for us may not work for them.

What happens when those views conflict with conscious capitalism?

No company is completely pure and holy. We all try to be the best we can.

What could The Container Store be doing better?

We need to get our traffic up. That’s what we’re focusing on primarily. We have these big initiatives that will drive sales rolling out in July. Traffic is an industry-wide issue. We also want to continue focusing on the customer dance so that when the customers go into a closet they get so excited they do a dance because they love it so much. We want a solution where you spend 25 minutes talking with one sales person and walk out with eight items. The brands you love, you have an emotional bond with them.

Much of The Container Store’s success rests on the dynamic between customer and salesperson. How do you see that playing out in a world where Amazon and Google are competing over home delivery?

We are well insulated against Internet giants. Most of our products are proprietary. People can’t find our products anywhere else. The Container store also sells solutions not items. No retailers don’t want to do that because it’s so HR oriented. You have to find great people and then train them. It’s a difficult form of retail. It’s so dependent upon really high levels of customer service. The most beautiful thing about the container store is the interaction between salesperson and customer. We’re trying to get better and better.

What advice would you give to young entrepreneurs?

Wake. [Editor’s note: wake, as in the trail of water left by a boat] Your wake, my wake, everybody’s wake is far faster and more powerful than you think it is. It makes you realize how big and powerful we are, and how much impact we have on the companies around us and the world around us. We’re not just one grain of sand in the beach. In an organization mindful of their wake, good things happen to them, they become an unassailable business.

It’s important for young people to realize this. Everything matters. It’s a good way to wind up being neurotic but everything you do and don’t do matters. People don’t realize it, but it’s true. Nothing just happens.

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