Tandy's Money Machine - Irvin Farman

[mjohn707]

In the spirt of value investing, I'm offering a review of a book about Radio Shack (the electronics retail chain currently on its last legs) published more than 20 years ago.  Adding to the glamour, the book currently ranks #227,741 on the amazon best sellers list and is out of print, although used copies can be purchased for .01 cents from amazon.com.  Now that I've got your interest, let me proceed with the review ;) 

 

Farman tells the story of Charles Tandy who transformed his family's failing leather stores into a viable business, and then used the profits to purchase the near bankrupt Radio Shack chain.  Tandy used the same methods he learned while restructuring the leather business to turn Radio Shack around which created a huge success for him by the time of his death in 1978.  Farman explains how Tandy's decisions concerning inventory levels, incentive compensation, cost management, offshore sourcing, the creation of house brands, and the use of television advertising contributed to the chain's growth.

 

The best part of the book is the chapter which is mostly just long quotes from Tandy's rambling and sort of self-congratulatory speech at MIT later in his career.  Tandy disdained prepared remarks but was a very gifted off-the-cuff speaker.  He includes a few zingers and one very interesting anecdote from the early days of Radio Shack.  I'm not going to spoil it for everyone, but Tandy, a Texas Christian University graduate, was able to ask a question that an entire room full of MIT business students and professors was not able to answer correctly.  It is very similar to a question that Charlie Munger put to a room of CIT (or maybe Stanford, I can't remember) students and professors 20 years later with the same results. 

 

The book is uncritical and repetitive in the way that most "official" biographies are, but it has the virtue of accurately describing the factors that contributed to the success of the Tandy Corporation.  I've read a whole bunch of these business history/company founder biographies, and it is not always the case that you understand why a company succeeded or failed after you read them.  Farman also describes Tandy's sad last days and his early death from alcoholism. 

 

I would only recommend this one to people interested in the history of retailing.  It is interesting to see how a business that is widely seen as a failure today was once such a vibrant business.  I also believe that Tandy's ability as a retailer is very underrated today.

[dolce far niente]

Thank you. I just bought one.

[petec]

Thank you. I just bought one.

 

+1

[ni-co]

Thank you. I just bought one.

 

+1, too.

[OracleofCarolina]

I just finished reading the book learned a lot. I suppose Radio Shack is an example of a retail operation that was successfully turned around(at least for a couple of decades). I'll send the book to the 1st person who direct messages me their info.

[mjohn707]

I just finished reading the book learned a lot. I suppose Radio Shack is an example of a retail operation that was successfully turned around(at least for a couple of decades). I'll send the book to the 1st person who direct messages me their info.

 

Glad you liked it.  I thought it was also interesting how poorly tandy did with pier 1 considering how well the company did after he sold out.  Farman seems to imply that he was locked into his management strategy that was so effective with the leather stores and radio shack.  It's just funny to me how his intuition failed him in that one and in that department store he bought at one point.