Tandy's Money Machine: How Charles Tandy Built Radio Shack into the World's Largest Electronics Chain

by Irvin Farman

a business history of Radio Shack and the man who built it

Genres: Business

464 pages, Hardcover

First published August 1, 1993

Reviews

[Erik Surewaard · Rating 4 out of 5]

This book gives a good overview of the person that was a real innovator. This in three major areas: retail, finance and technology.

In retail, he saw the potential of specialty retailing. Whereby until the sixties, the retail landscape was governed by downtown department stores, Tandy made the step to small retail shops in suburban locations or in shopping centers. As such, he was able to roll out a direct retail chain (RadioShack) of over 7,000 shops. He was (one of the) first to create such a large footprint. Opening over 3 shops per day is clearly amazing. He also focussed on creating higher margins through focussing on creating a house brand and having production in Taiwan and Japan.

He was also a financial inmovator. First of all, he gained control of RadioShack through a buy-out of distressed equity. As a profitable company, he further bought back outstanding shares. Often by offering debt (with warrants) in return. As such, he was able to increase the EPS, increase the leverage and increase his own stake in the company. This all took place in the early seventies, way before it became a trend as of the 80’s to leverage up the balance sheet through e.g. LBO’s. He also split up Tandy through an equity earn out. This to create a focussed company only on electronic retailing.

Technically he innovated by introducing one of the first desktop computers. The TRS-80. This for a price half of the competitors. Buying components in silicon valley in the 70’s. Through the massive retail footprint he was able to get a significant role in microcomputers.

Great book to read. It is unfortunate that the story of the Tandy company itself ends with the death of Charles Tandy himself. After his death, a lot still happened with e.g. RadioShack.

I think that this book is an important read for people having an interest in retailing and finance. Since this book is written in the early nineties, it would be great to have another book that continues the story of Tandy.

[mjohn · Rating 3 out of 5]

I would only recommend this one to people interested in business history and retailing. Farman tells the story of the career of Charles Tandy who transformed his family's chain store leather business and then used it to purchase the near bankrupt Radio Shack chain. Tandy applied the same methods he learned in expanding the leather business regarding clever inventory selection, incentive compensation, and cost management to the newly purchased Radio Shack chain. The high growth rate of the electronics industry after the '70s combined with Tandy's early recognition of the effectiveness of the offshore sourcing of product, house brands, and television advertising created a huge success for Tandy by the time of his death in 1978.

Tandy disdained prepared remarks but was a very gifted off-the-cuff speaker, and the best part of the book is the chapter which is mostly just long quotes from his rambling and sort of self-congratulatory speech at MIT. He includes a few zingers and one very interesting anecdote from the early days at Radio Shack. I'm not going to attempt to paraphrase the anecdote because I don't have the book in front of me, but I've heard some variations on the general theme before and its ability to befuddle very intelligent audiences is interesting.

The book itself is uncritical and repetitive in the way that most "official" biographies are, but it has the great 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.