"Some say that by being public, our culture will change for the worse. But this is not going to happen. Instead, we'll continue to grow our yummy culture."
That's what Melissa Reiff, president of The Container Store, told Forbes following her company's successful initial public offering debut on Nov. 1. On that day, shares rose as high as $35, almost twice its $18 IPO price.
The reference to "yummy culture" that defines the retailer's "employee-first mantra" was highlighted in a letter to potential investors from chairman, CEO and co-founder Kip Tindell in its IPO prospectus.
Mr. Tindell also touched on the concept of "the customer dance" that validates the Container Store's customer service efforts, insights into selection and price, and "Conscious Capitalism," or creating businesses that simultaneously creates value for all stakeholders: employees, customers, vendors, communities and shareholders. His college roommate, Whole Foods' John Mackey, is also a Conscious Capitalism proponent.
But Mr. Tindell particularly stressed the benefits of an employee-first focus, which he claims "defies conventional business wisdom." Indeed, the letter got the most attention for taking on the late American economist Milton Friedman and the belief that shareholders' interests should come first.
Wrote Mr. Tindell, "With all due respect to Milton, at The Container Store we have found that if you take better care of the employees than anybody else, they really will take better care of the customers than anybody else."
Mr. Tindell also told CNBC that going public will make it easier for the retailer to reward employees with stock options. Forty percent already own stock, including many part timers. The IPO money largely went to its largest shareholder, Leonard Green & Partners.
Container Store's strong start as a public company was traced to the healthy crop of consumer sector IPOs this year, its streak of 13 consecutive quarters of positive comps, and its unique, customer-first positioning. It operates 62 stores, and sees room to reach 300 in the U.S.
A more bearish view came from stories pointing to a recent slowing rate of sales in the first half of 2013. Questions also linger around the competitive threats to storage/organization categories despite its vaunted staff.
In his letter, Mr. Kindall wrote that he trusted "the most sophisticated investors" would understand that culture will continue to drive the value of The Container Store.
He adds, "When we asked our employees to describe in a word The Container Store's culture, they shared things like love, passion, family, sweet, security, support, mindful, magical and matchless. Love and sweet and mindful — in business? Now that warms my heart and is something we're incredibly proud and passionate about."
- Interview With Container Store President Melissa Reiff - Forbes
- The Container Stores IPO Prospectus - Securities & Exchange Commission
- Container Store CEO on Its ‘Yummy Culture' and ‘The Customer Dance' - The Wall Street Journal (sub. required)
- Container Store CEO disses late economist Milton Friedman - Chicago Tribune (tiered sub.)