An Auto Parts Company Executive Who’s Unafraid to Get His Hands Dirty.
Joseph Reeves ‘Pitt’ Hyde III: An Auto Parts Company Executive Who’s Unafraid to Get His Hands Dirty
by Blake Fontenay
September 8, 2015
"If Memphis is a town where the good Lord decided to bequeath a guardian angel to us, it’s Pitt Hyde."
Jack Sammons the Chief Administrative Officer for the city of Memphis Tennessee
Joseph Reeves ‘Pitt’ Hyde III: An Auto Parts Company Executive Who’s Unafraid to Get His Hands Dirty
In the spring of 2001, the city of Memphis was buzzing about the prospects of getting its own professional basketball team. A group of local investors wanted to buy an ownership stake in the National Basketball Association’s Vancouver Grizzlies franchise and relocate the team to the Bluff City.
Despite the excitement, there were a lot of unanswered questions: Did the local group have the financial resources to live up to its promises? Would the city and county governments be willing to build a new arena for the Grizzlies if the team was able to move? If so, how would the arena be financed? What commitments were the team owners willing to make in order to ensure that the Grizzlies would stay in Memphis?
Tom Marshall, a local architect who was then a Memphis City Council member, remembers having a lot of concerns about whether an arena construction project would work. During that frenetic time in the city’s history, Marshall recalls one day when the telephone rang at home and his 12-year-old son Austin got into a long and very involved conversation with someone.
The person on the other end of the line was J.R. ‘Pitt’ Hyde III, the founder of the AutoZone chain of auto parts stores and the local leader of the team relocation effort. And the phone call was just one of many Hyde would make in order to increase Marshall’s comfort level with the project. To Hyde, getting to know Marshall’s family was just part of that process.
“He called me no less than 30 times,” Marshall said. “That’s a guy who is dedicated.”
That story is typical of those people tell about Hyde. After transforming a family-run business into one of Tennessee’s Fortune 500 companies, Hyde could easily rest on his laurels or at least delegate tasks he wants done to subordinates.
But as Hyde demonstrated while lobbying for the arena project, that’s just not his style.
“He didn’t outsource it,” said Gayle Rose, a longtime friend who was also involved in the effort to relocate the Grizzlies to Memphis. “When it mattered, he did it.”
Hyde’s interests haven’t been limited to basketball and brake fluid. Over his career, he’s been involved in a variety of initiatives aimed at improving the quality of life in Memphis – including everything from funding new bicycle paths to helping to develop the National Civil Rights Museum.
Jack Sammons, the city’s chief administrative officer, even credits Hyde for helping to persuade him to take his current job.
“Most cities don’t have that kind of philanthropic leadership,” Sammons said. “The guy is really in touch. And he does it all out of love.”
‘An Opportunity and an Obligation’
Growing up, there was little doubt that Hyde would go to work at Malone & Hyde, a food distribution business that his grandfather J.R. Hyde Sr. had founded in 1907.
“I never remember having an option,” Hyde said of his career path. He said he felt both “an opportunity and an obligation” to follow in the entrepreneurial footsteps of his grandfather and father. Even at a young age, Hyde remembers his father talked business around the family dinner table. By the time Hyde was nine or 10 years old, his father was taking him along to business meetings. (He also picked up the nickname ‘Pitt’ from his sister Susan at a young age – and it stuck.)
Hyde began working summer jobs at Malone & Hyde stores during high school. After graduating from the University of North Carolina in 1965 with a degree in economics, he joined the family business full-time.
He became the company’s president at 26 and its chief executive officer at 28 after his father became ill.
“It was a real challenge,” Hyde said. “Nearly all of the people reporting to me were twice my age.”
Fearing that he would be judged harshly if the company faltered, Hyde said he worked “night and day” to make sure earnings projections were met. “It was a real pressure cooker.”
His efforts paid off, however. Malone & Hyde expanded its specialty retailing division under his watch and became the country’s largest wholesale food distributor with annual sales of more than $3 billion. Hyde spent a decade as the youngest chief executive officer among the companies with stock traded on the New York Stock Exchange.
Learning from the Retailing Master
During that time, Hyde frequently crossed paths with Wal-Mart founder Sam Walton, who operated stores in many of the same small towns where Malone & Hyde was doing business. The two men developed a friendship that led to Hyde’s election as one of only two Wal-Mart board members who weren’t part of the Walton family.
Hyde recalls that Walton would personally pick him up at the airport for board meetings in a 10-year-old Buick with an interior covered with dog hair. Walton’s bird hunting dogs rated highly enough with their master that the Buick’s windows were left rolled down so they could jump into the car when it was parked outside of Walton’s home.
Wal-Mart’s board meetings back then were conducted in a makeshift conference room furnished with cafeteria tables and metal folding chairs. The no-frills environment was all part of the “culture of thrift” Walton created for his company, Hyde said.
That culture focused on keeping Wal-Mart’s administrative costs low. And the department store chain used its expanding purchasing power to buy items at lower costs and pass those saving on to customers.
Hyde was also impressed by Walton’s efforts to keep employee morale high through rituals like reciting the company cheer.
“He (Walton) had a real ‘up with people’ culture,” Hyde said.
Hyde was gaining valuable insights about the retailing industry, but he wasn’t convinced the wholesale grocery business held the most promise for long-term success. He began to talk with people who ran other types of retail operations to determine if any of those might be good areas for Malone & Hyde to diversify its business interests.
A conversation with an auto parts retailer from California stuck with him. The retailer told Hyde that customers typically didn’t ask how much a new part cost, only whether it was available. That stood in sharp contrast to the grocery business, where Hyde knew customers could become irate if charged a few cents more for items than the prices found at other stores.
In the grocery business, a profit margin of 1.5 cents on a dollar was considered good. For auto parts retailers, the margin could be 10 cents per dollar.
However, in his examination of other auto parts stores, Hyde found customer service and merchandise presentation to be lacking.
He came up with a concept intended to fix those shortcomings and opened the first Auto Shack store in Forrest City, Arkansas July 4, 1979. Three stores in Memphis, the company’s headquarters, followed soon after.
The concept took off, with new locations being added across the country. Within seven years, Auto Shack was spun off as a separate company, with Hyde as its president and chief executive officer. Malone & Hyde’s grocery operation was sold to Oklahoma City-based Fleming Companies in 1988.
Auto Shack changed its name to AutoZone in 1987 to resolve a lawsuit with the operators of the Radio Shack chain of stores. AutoZone now has more than 5,500 stores in the United States, Mexico and Brazil.
Hyde stepped down as AutoZone’s chairman and chief executive officer in 1997, although he remains on the company’s board of directors.
Culture the Key
Hyde said AutoZone’s basic concept is the same as it has always been: Provide customers with excellent service and low prices in a clean and attractive environment.
Like Walton, Hyde believes corporate culture and strong employee morale are critical to staying ahead of the competition.
Hyde believes competitors – sometimes called “Auto Clones” or “Zone Clones” – have a harder time replicating AutoZone’s culture than anything else.
Doc Crain, manager of the first Auto Shack store, is credited with creating the term “WITTDTJR” (pronounced “wit-i-jer”) as shorthand for “whatever it takes to do the job right.”
AutoZone dubs employees who make special efforts to help customers as “extra milers” who are eligible for awards and financial incentives.
Hyde said it’s not unusual when an AutoZone customer returns a part to discover that the part itself wasn’t defective, but may have been installed improperly or wasn’t the problem in the first place. Yet AutoZone store employees – known as “AutoZoners” – are taught that their focus needs to be on solving problems rather than winning arguments with customers.
“In retail, you’re only as strong as your lowest paid person because they are interacting with customers the most,” Hyde said. “Turn a complaint into a compliment. Make it a challenge to solve the problem. Others can’t replicate the ‘up-with-people’ culture and it remains what differentiates AutoZone today.”
AutoZone executives who visit the company’s stores don AutoZone uniforms and assist customers. That’s intended to serve a twofold purpose: Rank-and-file employees see their bosses doing the same jobs they have to do, which is designed to boost morale. Also, the executives stay in touch with what day-to-day store operations are like.
Whether they take place in a board room or a store, AutoZone business meetings begin with recitation of the company’s cheer and its pledge, followed by a story about an extra miler.
William Rhodes, the company’s current chief executive officer, acknowledges the rituals might strike some employees as outdated or a little hokey, but those are the types of employees who don’t typically last very long.
“If you don’t embrace it, the AutoZone culture won’t embrace you,” Rhodes said. “AutoZone is not for everybody and everybody is not for AutoZone. But we don’t ask anyone to do something we aren’t willing to do ourselves. It’s about leadership by example.”
Rhodes said the company continually makes changes to improve its operations, but without compromising the model Hyde established.
“Our business model is under constant evolution,” Rhodes said. “But it is an evolutionary process, not a revolutionary process.”
Although Hyde is still a major AutoZone stockholder, that’s not the only source of his wealth. He is also owner and president of Pittco Holdings Inc., which has a broad portfolio of investments, and he’s a general partner in Worthington Hyde Properties LP, an Atlanta-based real estate company that specializes in multifamily housing and hotel development.
His net worth has been estimated at more than $1 billion.
‘A Much More Engaged Philanthropy’
Hyde inherited his family’s philanthropic interests as well as its business holdings. Hyde’s grandfather had founded the J.R. Hyde Sr. Family Foundation in 1961 as a way to share some of Malone & Hyde’s prosperity with the rest of the world. The elder Hyde had a strong belief in the credo that “to whom much is given, much is required.” He appointed his children and his grandson, Pitt Hyde, to the foundation’s board of directors.
The family continued to operate the foundation following Hyde Sr.’s death in 1972. The grandson eventually took over the J.R. Hyde Sr. Family Foundation’s leadership, then started a second philanthropic organization, called J.R. Hyde III Foundation, in 1992. Today, both organizations continue to operate under the umbrella of the Hyde Family Foundations.
Tom Jones, principal in Smart City Consulting, a Memphis firm that focuses on public policy reforms, said although the two foundations are aligned, there are some differences between the two foundations.
Early on, the J.R. Hyde Sr. Family Foundation tended to support faith-based causes that may or may not have roots in Memphis. The J.R. Hyde III Foundation is heavily focused on projects that are aimed at improving Memphis - and it provides more active oversight and a greater focus on accountability than its predecessor did.
“It really did change the face of Memphis philanthropy,” Jones said of the newer foundation. “It made it much more entrepreneurial.”
It wasn’t always easy. Gayle Rose, a friend to both Hyde and his wife, Barbara, said the Hydes’ motives were sometimes questioned as they became more active in participating in various community projects.
“In the beginning, they made some moves where they stubbed their toes a little bit,” said Rose, chief executive officer of EVS Corp., a Memphis-based firm that assists companies with data backup and recovery. “I’ve seen them learn from their experience, adjust and keep going. They never retreated.”
Staying the Course in Tough Times
Hyde’s involvement in the construction and management of the National Civil Rights Museum was contentious, at least initially.
Jones, who served on the museum’s board of directors, recalls there were some in the community who questioned Hyde’s motives for being involved as a board member. There was also sharp disagreement about whether the museum should be locally managed, as Hyde advocated, or run by Tennessee state government. Hyde’s viewpoint ultimately prevailed and the museum remains under local control.
“The meetings were often contentious,” Jones said. “Some of the attacks were highly personal. But he (Hyde) stuck with it. He attended every meeting.”
Beverly Robertson remembers interviewing with Hyde when the museum board was seeking its first executive director.
“He made me feel comfortable,” Robertson said. “He didn’t try to intimidate me.”
Nevertheless, Robertson turned down the job the first time it was offered to her. When the job became open seven years later, she still had some misgivings about taking it because her background was in business, not museum management.
She eventually relented and took the job – and Hyde has told her since that he always viewed her background as the kind the museum needed.
“He obviously knew something about me or saw something about me that I didn’t see myself,” said Robertson, who retired from the job in 2014 after 17 years at the museum.
Robertson credits Hyde with creating an endowment for the museum and successfully lobbying for a major expansion not long after she was hired in 1997.
Hyde’s involvement with the renovation project went beyond financial support. Robertson said he was heavily involved in the selection of architects, contractors and designers. He also provided input on the exhibit scripts, some of which were 50 pages long.
“He read everything,” Robertson said.
When needed, Hyde provided a corporate jet to shuttle museum officials back and forth on business trips.
The Hyde Foundation also sponsors the museum’s annual Freedom Award, which has been responsible for bringing national and international human rights advocates such as Nelson Mandela, Mikhail Gorbachev, Colin Powell, Oprah Winfrey, Sidney Portier and Harry Belafonte to the city.
Over the years, Robertson said she heard from some black people who wondered why a white man would be so committed to the museum and its mission. Her response is pragmatic.
“Why look a gift horse in the mouth?” Robertson said. “Why do you care who supports the museum and who gives to it? It’s true that there were skeptics in the beginning, but where are those skeptics now?”
‘If It Were Easy, It Would Have Been Done a Long Time Ago’
The Hyde Foundation’s foray into education reform was also somewhat controversial. The foundation became an early supporter of charter schools and successfully lobbied for state legislation to allow them in Tennessee.
Some critics still view charter schools, which receive government funding but operate with more autonomy than traditional schools, as siphoning resources away from the public education system. However, Hyde’s position is that charter schools are one tool among many that can improve education for students from kindergarten through high school.
Hyde said education reform “takes up more of our time and more of our capital than anything else. We’ve been at it for more than 20 years. One size does not fit all and there has to be flexibility in the work. It’s always a work in progress, and if your focus was to be on city-building, it had to also have a focus on education.”
The foundation continues to support various initiatives aimed at increasing student performance and holding teachers accountable. With education reform, Hyde believes that sustained success over the long term is more important than immediate results.
“Most things that are worth being done and haven’t been done, there’s a reason,” Hyde said. “And the reason is that they’re very difficult.”
The Hyde Foundation has also been heavily involved in the development and implementation of a master plan for Shelby Farms, one of the largest urban parks in America, that some have compared to New York’s Central Park.
Not all of the foundation’s projects are huge. Some are smaller “quality of life” endeavors, like providing funding for bicycle or pedestrian paths.
Sammons, the city’s chief administrative officer, said it’s not unusual for the foundation to loan out its conference rooms for various community meetings, many of which Hyde personally attends.
To bolster the redevelopment of downtown Memphis, Hyde moved both AutoZone’s corporate headquarters and the foundation’s offices from eastern neighborhoods to the city’s urban core.
A Personal Crisis Sparks a New Interest
Hyde’s career as a businessman and philanthropist were going well when he got a major jolt: At age 53, around the same time he was stepping down as president and chief executive officer at AutoZone, he was diagnosed with prostate cancer.
“That was quite a shock to me,” Hyde said. “It’s funny how life takes you down unexpected paths.”
Hyde had surgery that was successful and left him cancer-free. However, the experience inspired him to team up with his doctor, Mitch Steiner, to form GTx Inc., a company dedicated to developing new cancer-fighting drugs.
It was Hyde’s first foray into a business far different from his background in retailing. Developing and testing new drugs requires substantial financial investments and long lead times.
While stock prices have been volatile since the company’s founding in 1997, GTx has entered the trial phase of development of two breast cancer drugs that Hyde believe show great promise.
“We have a robust pipeline (of experimental drugs) and I’m very optimistic,” Hyde said. “But it is a long process.”
After GTx had been operating for a few years, Hyde decided to branch into a different part of the medical industry by founding the Memphis Biotech Foundation, which later became known as the Memphis Bioworks Foundation, a nonprofit group focused on helping entrepreneurs in Memphis..
Hyde said one of the industries that showed great promise for Memphis was manufacturing medical devices, partly because of the medical research taking place in the city’s colleges and health care facilities and partly because the city’s location and access to transportation networks makes shipping relatively easy.
When Baptist Memorial Hospital decided to close its location in the city’s medical center district, the new foundation had an ideal site for a campus for medical-related businesses.
“Our mission was really to help the industry and help the university discoveries from the (lab) bench to the marketplace,” Hyde said.
Steve Bares, executive director of Memphis Bioworks Foundation, said the process of acquiring the property, razing the hospital and building the campus wasn’t a short or inexpensive one. And, like some of Hyde’s other projects, the idea met with some skepticism.
“There were some people who didn’t understand,” Bares said.
Yet since Memphis Biotech was founded in 2001, the campus has grown to include four buildings with about $140 million worth of construction on site. Bares said. There are plans to expand the campus by adding a large ‘anchor tenant’ and providing transitional office space for companies that have graduated beyond the incubator stage.
Bares said it’s been a slow process, but Memphis Bioworks has helped many companies successfully launch their operations.
“One of the hallmarks of entrepreneurs is tenacity,” Bares said. “Nothing is quick. Everything takes time.”
Memphis Bioworks provides developing companies with everything from venture capital to laboratory and device fabrication space to mentoring services and job training programs.
“You can’t go very many places in Memphis without knocking up against one of the companies we’ve been a part of,” Bares said. “You can’t recruit life science companies. You have to grow them. And Pitt sure loves dealing with young entrepreneurs. He loves working with start-up companies. It’s such a big part of his character.”
Bear Hunting in Memphis
While many of Hyde’s pursuits might not have drawn a lot of attention from the general public, his involvement with the group seeking to bring the Grizzlies National Basketball Association franchise to Memphis did. Hyde was one of a group of Memphians who wanted to buy an ownership stake in the team from principal owner Michael Heisley and relocate the team from Vancouver.
Hyde said he became involved more because of the team’s prospective economic development benefits than his own personal love of sports. He had seen numerous surveys that indicated professional sports teams made it easier for cities to attract and retain highly talented professional workers.
In a basketball-crazy city that frequently found itself divided on racial issues, Hyde also saw the potential for the team to serve as a unifying force.
One of the biggest obstacles was the construction of a new arena. Although Memphis had The Pyramid, a large arena used for University of Memphis basketball games and other events, Heisley considered a new arena to be a critical component of any relocation plans.
For Hyde, who had served on the building authority that planned The Pyramid’s construction, it was a bit frustrating since the riverfront arena had been built with the possibility of attracting a National Basketball Association franchise in mind. But by the time the opportunity with the Grizzlies presented itself in 2001, The Pyramid was considered outdated by National Basketball Association standards.
Recruiting the team was controversial in some quarters of the community where people didn’t think it was appropriate to spend public money to build an arena to serve a private business enterprise. Hyde became the local ownership group’s main spokesman, fielding pointed questions from the media and government officials.
Hyde remained unflappable even during meetings that sometimes stretched for hours.
“He doesn’t get too emotional,” said Rose, the EVS Corp. chief executive officer, who was among a group of local citizens who lobbied for the team’s relocation. “He doesn’t get too happy or too upset. He’s really steady.”
The city and county governments did ultimately agree to finance and build the new arena and the Grizzlies relocated to Memphis. From there, the challenge was building a franchise that had been a perennial loser into a success story on and off the court.
Hyde said Heisley was committed to building a winning team, although he wasn’t always interested in the local owners’ thoughts about how best to do that.
“They didn’t listen to a lot of our input,” Hyde said. After more than a decade in Memphis, Heisley sold his interest in the team to a group led by communications technology executive Robert Pera that includes Hyde and other local owners.
Since the transition, Hyde said Pera has sought more local input on issues like sales and marketing. And the team has enjoyed several years of sustained success on the court.
Hyde’s interview with the Tri-Star Chronicles came during the middle of the Grizzlies’ playoff run at the end of the 2014-2015 season. Hyde noted with pride the way the entire community had come together to support the team as it battled before losing to the eventual champion Golden State Warriors.
‘Constructive Impatience’ to Get Things Done
The same year Hyde got involved in the recruitment of the Grizzlies, he provided the funding to launch Memphis Tomorrow, a group of chief executive officers from some of the community’s largest businesses.
Many of Memphis Tomorrow’s members were already part of the local chamber of commerce, which is dedicated to cultivating economic development in the community.
Blair Taylor, Memphis Tomorrow’s president, said her organization’s mission goes beyond protecting jobs and increasing the number of new businesses. Memphis Tomorrow gives the chief executive officers a forum to meet and discuss projects aimed at improving the quality of life in Memphis.
“He (Hyde) believed in the CEO-level engagement, in having them really roll up their sleeves to improve the community,” It’s about how CEOs can be good corporate citizens and really help move Memphis forward.”
Hyde has what Taylor calls “constructive impatience” – that is, the determination to keep pushing forward and expecting results even in solving seemingly intractable problems.
“He’s also very pragmatic,” Taylor said. “It’s a unique combination: He’s a pragmatist, but he also has a lot of vision.”
Taylor said the city’s musical heritage is important to Hyde, which is why he established a small business development center to provide mentoring to musicians and others who work in the music industry.
“He continues to think of music as a treasure to Memphis,” Taylor said.
Through his foundation, Hyde supports numerous other arts-related organizations, including the Memphis Brooks Museum of Art, the Memphis College of Art, ArtSpace and Ballet Memphis.
Hyde also founded Memphis Challenge, a program aimed at boosting academic performance and community leadership for high school students, and championed the Memphis Leadership Academy, a program aimed at helping young professionals to feel connected and involved in the community.
‘The City’s Guardian Angel’
Although Hyde is involved in so many projects, he somehow manages to stay very engaged with them. As an architect, Marshall said he’s probably made at least 20 different presentations to Hyde on different projects over the years.
During those presentations, Marshall said Hyde has been known to ask questions about specific architectural design features that might have been discussed at previous presentations given months or even years before.
“He absorbs information,” Marshall said. “That uncanny recall speaks to his brilliance. You can say it once and he’ll remember it, years down the road. You don’t really realize at the time how closely he’s listening.”
Sammons, the city’s chief administrative officer, said Hyde and his wife Barbara don’t enter into any of their projects with the aim of gaining more attention.
“That’s just not their style,” Sammons said.
Rose said that while the Hydes do attend big social events when they’re invited, that’s not their preference. They would much rather spend their free time hosting small dinner parties with interesting people. Hyde’s interests include art, music, fishing, bicycling, skiing and other outdoor activities.
Robertson, the former executive director of the National Civil Rights Museum, said Hyde is much more approachable than some people might expect. He also has a sense of humor that casual acquaintances might not get a chance to see.
“I think some people find him hard to get to know because they don’t know how to approach him,” Robertson said. “He really likes real people, people who are honest and genuine.”
Robertson said she and Hyde frequently disagree in their political views, but that hasn’t stopped them from talking about politics.
“The discussions were rousing, but they were enlightening, too,” Robertson said.
And while he might have had altruistic motives for bringing the Grizzlies to town, Robertson said that doesn’t make him any less of a fan. During games, Robertson said, it’s not unusual for him to leave his luxury box and join the spectators whooping and hollering at courtside.
Sammons said one of the most remarkable traits of Hyde’s personality is his commitment to improving the community even though there’s nothing really compelling him to do so.
As a community, Sammons said, Memphis faces some deep-seated challenges that date all the way back to the region’s transition from an agrarian to an industrialized economy. No one and nothing is forcing Hyde to spend so much of his time and money tackling those problems.
“He could live anywhere in the world, but in his retirement, he has chosen to take on the toughest tasks in our state’s largest city,” Sammons said. “If Memphis is a town where the good Lord decided to bequeath a guardian angel to us, it’s Pitt Hyde.”