Diane Hendricks: Building a fortune

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1:08It's 2009 in rural Wisconsin. A woman brushes snow off her coat as she enters her quiet, empty home. She flicks on the lights and steps into the home office of her husband and then pauses, reminding herself, he's gone. She walks over to his messy desk. She moves past a statue of Ronald Reagan on horseback, a sculpture of construction workers perched on a beam above New York and stacks of blueprints. She eyes the power of unopened mail and then picks up the top envelope. Inside is a letter addressed to her asking to meet and discuss the possible sale of the business, not their business anymore, her business.

1:44Should she? She gazes at the family photos lining the walls, taking in images of her seven children and 17 grandchildren. children, in that moment, she makes a decision and she's doing it all for them.

2:05Welcome to Good Bad Billionaire, the podcast where we take the world's richest people and find out how they made their money. My name is Zing Sing and I'm a journalist, author and podcaster. And my name is Simon Jack and I'm the BBC's business editor. You've probably never heard of her. But that woman, standing in her late husband's office in rural Wisconsin, would go on to become the richest self-made woman in America. Diane Hendricks has a fortune of$22 billion. Talk about big money. She built her fortune through ABC Supply, the US's largest distributor of roofing supplies, which she co-founded with her husband in 1982.

2:40A teenage mother who left school at 17 and a two-time cancer survivor, she's been called the most successful female entrepreneur in American history by Forbes. At the 2024 Republican National Convention, she stood on stage and said, I'm living proof the American dream is possible with hard work and determination. She's also one of the Republican Party's biggest political donors in 2024. She poured millions into Donald Trump's re-election campaign. But before the headlines, before the billions, before all the roofs, let's rewind to where the dream really began.

3:15So Diane Hendricks was born Diane Marie Smith on the 2nd of March 1947 in Mondovi, Wisconsin. Age nine, she and her family moved to a 200-acre dairy farm in Asayo, Wisconsin, a small rural town. By the 1940s, Wisconsin was known as America's Dairyland. Dairy farming provided families like hers with a steady, modest income. So really American heartlands. Yes, I can picture this in my mind. I've probably got it wrong, but I've got a picture. The grassy fields, the cows. Diane was the fourth of nine daughters. She said she loved her childhood. She was playing with her eight sisters. She was eating homegrown vegetables.

3:52And she said, I wish every child could be as loved as I was. I wish every child would eat homegrown vegetables as well. Yeah, she sounds like she was quite a special child in that regard. Diane loved being outside, but she said her dad didn't believe in girls doing farm work, like milking cows or driving tractors, because he didn't consider it safe. So he told her girls did housework. By 10 years old, Diane had decided that being a farmer's wife or farming was not for her. Instead, she dreamt of becoming a businesswoman who lived in a city, had a car and wore a blue suit. But in 1964, Diane got pregnant at the age of 17 and her high school asked her to leave.

4:28She admits she was only an average student, but she was determined to get her high school diploma. So she studied at home and when the students left for the day, she went back to the school to hand in her work or take tests. and she said it was embarrassing, but it was OK. And a year later, she got that diploma. So a bit of persistence, a bit of grit there. Her parents encouraged her to marry the father of her son. So in 1965, the young couple moved with their baby to Janesville, which was then a booming industrial city in southern Wisconsin. Her husband worked in a Chrysler plant while she worked on the assembly line of a Parker Pen factory.

5:01Remember Parker Pens? But Diane quit after three months and got a job selling new build homes for a local builder. and that was a role that didn't require a licence at that time. And while she was working, she started studying for a real estate licence because she was determined to carve out a future on her own terms. Now, three years later, however, the marriage had fallen apart. She told the New York Times in 2009, I knew I had to find a way to support myself alone. I filed for divorce a week after I was 21. So imagine being a young single mother in the 60s in America. Yeah, and in a pretty conservative kind of background in those rural communities as well.

5:40Can't have been easy at that time. So, yeah, you know, at this point, things are not going great for Diane Hendricks. No, they really weren't. But she was still trying to, you know, get somewhere in real estate, wasn't she? She was trying to make her mark. She still needed to take on other jobs, though. She spent a year working as a Playboy bunny in the Wisconsin branch of the Playboy Club. Diane has no shame about this. She says you've got to do what you've got to do sometimes. times so around this time diane sold two houses to a roofing contractor called ken uh this is quite the meet cute so they talked on the phone he tried to set her up on a blind date with his friend but they got on so well that she decided to go on a date with ken instead and she later told forbes that by the time they met in person she'd fallen for him when ken walked up the steps she smiled and said you'll do that's nice um there is something sweet about this ken was 27 She was 21.

6:31The pair, though, apparently were kindred spirits. He'd aspired to be an architect. But he too left school at age 17 after his ex-wife got pregnant. Ken also took on jobs simultaneously to support his young family. He joined his father in the roofing business. He drove a repair truck for a local energy company. And whilst driving for that energy job, he'd make a note of houses needing roof repairs and then go back after his shift and offer to repair them on the weekends. Ken was always looking for ways to get more work. So, for instance, when hail storms hit towns, roofers usually hiked up their rates, which makes sense, right?

7:05And hail is a massive problem in US farmlands. You go crop and hail damage is like a real hazard to some of the crops and indeed to homes. But Ken decided to take an insurance person out to dinner and offered to keep his normal rates if the insurers offered him the contract for all the damaged houses. So when houses get damaged, they call the insurance company, the insurance company called Ken. He's got the in to do that at pre-agreed rates. So when the next storm hit, Ken would be the first choice. Soon he won contracts to repair roofs at military bases and Kmart, for example, across the country.

7:39And by 1971, he built a business with 500 roofers working for him and had$7 million in annual sales. Pretty good business. That is not bad going. Now, Diane says she and Ken started working together within weeks of that first date. They began by reading up on real estate and then they bought$10 ,000 fixer uppers near Beloit College. And during the harsh midwinters, you know, when there probably wasn't that much construction work going on, they tapped Ken's roofing crew for help. While Diane handled most of the painting and finishing touches herself. In her words, I cleaned a lot of toilets. Over three years, Diane and Ken purchased 100 homes.

8:14She rented them to college students and she reinvested that rental income to finance each new property. So clearly a couple with business on the mind. Yeah, and so buying places, fixing them up, selling them on, using that money to buy more, growing organically like that. So they were snapping up properties in the early 70s. This is right in the middle of a recession, actually, and house buying had slowed during that because loans were hard to get. But renovators like Ken and Diane, they could buy homes cheaply with cash initially. They could fix them up, as I say, and then use that property as collateral to buy more.

8:46With fewer people able to buy, the need for rental homes also went up. So you can't afford to buy, you have to rent. That gives them an income because they've got the rental properties. And rising inflation pushed property values higher over that time, helping their investments grow, even as interest rates were going up quite – this was the 1970s. We had inflation shocks. It was actually a pretty tough time. And it's quite interesting when we look through all of our billionaires, quite a lot of them have thrived and prospered or certainly emerged from recessions when other people have been killed off.

9:20If you can get through a recession, you're in a great position. Right. And it's about holding your nerve as well. Right. It's not just about, you know, being able to buy things. It's about knowing that while everyone else is suffering pain, you're going to grit your teeth and get through. Yeah, exactly. Now, Diane and Ken married in 1975. So, you know, clearly the business and romantic partnership worked out. They were blending not just their work lives, but also their family. So, you know, deep breath, because this is going to be complicated. Ken brought four children from his first marriage.

9:47Diane brought her son from her first marriage. Together, Diane and Ken had two more children, which meant they had a bustling household of seven. Oh, my God, that sounds exhausting. When each child graduated high school, their graduation presents included$100, a bag of nails and a hammer. Really? I'm sure it felt really poignant. This is the path we've chosen for you. Maybe if you grew up in a construction family, you'd think, God, this is being handed the sword in the stone. But, you know, a bag of nails and a hammer, I'd be like, Mum, can I not just get a nice necklace? Yeah, but they were in the family business, right?

10:21Yeah, exactly. So at 1.5 of the seven kids held vice president roles in the family business. Diane has since instilled that intense work ethic into her 17 grandchildren too. She said, they've all worked. My grandchildren know I'm not happy unless they've got a job too. Why don't you just give me some of your$22 billion and why are you making me go and work? There's a saying in Hong Kong where the first generation makes the money, the second generation holds on to the money, the third generation loses it. Yeah. By the late 1970s, Diane was running their house renovation business, managing student rentals, overseeing a store that sold carpets and home appliance to other landlords, all while Ken travelled the country building his roofing business.

10:59So they're a busy couple. But Ken was on constant months-long road trips and they were becoming unsustainable with that very large family. And the sharp rise in mortgage rates in 1979 began to impact their refurbishing business. So Diane and Ken started looking elsewhere. They started exploring new opportunities. Because when Ken had travelled the country for roofing jobs, he'd kept running into the same problem. The roofing supply industry was a mess. Roofers had to juggle multiple suppliers. travel long distances to pick up materials, deal with terrible service. As Ken told the Washington Post, you could spend half your morning waiting for a sales clerk who knew more about lawn furniture than vinyl siding, whatever vinyl siding is.

11:39Diane later said, over time, we realised there needed to be a distribution chain that could offer contractors access to specialised products from manufacturers across the country. Get this stuff organised. Diane and Ken also wanted to raise the professionalism in roofing, which had a bad reputation. So the industry was basically unregulated. So that opened the door to a lot of so-called cowboy contractors who cut corners. And because most homeowners, unfortunately, cannot easily inspect a roof, many people were just unknowingly ripped off. And that in turn dragged down the reputation of even the hardworking, honest contractors, which if you've ever tried to refurb a house anywhere in the world, you know is a problem everywhere.

12:19Roofers also had a lot of downtime. When it rains, you can't work. So as Ken said, some spent a lot of time in the pool hall, but it angered him that roofers like his father and his workers were treated like lowlifes. Diane told CNBC, we felt like roofers weren't being treated with respect. That was part of our goal to build a company would help the guy in the pickup truck and provide service and respect to everyone. So they started a roofing supply wholesaler. it's quite interesting this because putting the workman first, it's a smart move it's basically they're the people who are going to be your customers, they're the people who are going to improve the reputation of the industry so I think that kind of customer focus might have been unusual at that time Yeah, especially I think because a lot of our billionaires don't really cite respect as one of the reasons for motivating them to start a new business, it's quite unusual, it must be born out of both of their backgrounds really from quite humble backgrounds.

13:16But as we will see, it worked a treat. Yeah, that's right. Because by 1982, there was another recession in the United States. It was starting to bite back then. But they were undeterred. They were confident their supplies company would work. And they were so confident that they offered everything they owned as collateral for a massive bank loan of$900 ,000 to buy three struggling building supplies businesses. Their bank in Janesville could not get behind the idea. Diane says that Ken had described himself as an entrepreneur to the bank, but the bank explained to Ken it meant risk taker and they didn't do business with risk takers.

13:50Well, entrepreneur, as we know, famously, Dan Quayle said, the French don't even have a word for entrepreneur. That's very good. But anyway, entrepreneur these days trips off the tongue pretty easily. In fact, if you're not an entrepreneur and you live in Silicon Valley, then what the hell are you? But entrepreneur was probably something that was not welcomed with open arms. So very different time. So anyway, they asked a different bank. They asked their small bank in Beloit, Wisconsin, and this bank agreed to grant the loan. An American builders and contractors supply, better known as ABC Supply, was launched.

14:25At the end of 1982, they had three locations and sales of$4 million a year. They were expanding quickly. They acquired struggling distributors. They opened new branches wherever they saw demand. And within two years only, ABC Supply had 25 locations with sales of$82 million. That is an extraordinary growth from$4 million to$82 in two years. Wow. I mean, it certainly is something. When ABC Supply was founded, Ken Hendricks was CEO and chairman. Diane was executive vice president, also company secretary and on the board. Ken was listed as sole owner, so we don't know exactly how much Diane earned.

15:03But by the mid-1980s, she was almost certainly a millionaire. And later, when she asked if she and Ken ever plan to be billionaires, she answered, no, but we wanted to be millionaires. Yeah, and they are there in the mid-1980s.

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16:31So let us go now from a million to a billion. After this strong start, ABC's growth soared. By 1987, it had 50 locations, 600 employees,$183 million in revenue. It was ranked number one on Inc. magazine's list of fastest growing companies. Ken at this time was the company's public face. Diane was managing the finances and the family. but both were laser focused on maximising the income and profit of the business. Ken concentrated on keeping costs down by negotiating bulk discounts. He used renovated trucks to deliver supplies, recycling pallets, blah, blah, blah. Lots of small marginal improvements, cost-cutting measures to make the business leaner and more profitable.

17:12And America was going through a home building boom at the time, wasn't it? Yeah, it was the early years of the Reagan administration. and there was a newfound confidence in fact in the US. After the decade of the Vietnam War, you'd had the oil shocks, you had the high inflation of the late 70s when basically the US was not a very happy place. The arrival of Reagan seemed to chime with a number of different things in terms of financial deregulation and all that kind of stuff which gave America a more confident posture and that was reflected in things like you need confidence to build a bunch of houses and that's what we were seeing.

17:48Yeah, you need confidence to know that you can build them, it'll get finished and people will buy them. Yeah. So Diane looked at starting new companies that could service those building contractor companies. In 1986, she launched a company called American Patriot Insurance Agency to sell insurance policies to contractors to help them save on workers' compensation costs. By the 90s, they'd also expanded into a trucking business, window manufacturing, a roofing products brand. So really try to do this full 360 deal. They also gave free seminars to customers on how to use new materials. They produced advertising signs for contractors to publicise their own businesses.

18:24So the idea was if all these customers who were buying from ABC were doing well, so would the Hendrix. That's so interesting about things like, you know, seminars on how to use new materials, all that kind of stuff, helping the contractor. That's now common practice, you know, for building supplies, whatever. It was kind of novel at the time that they were saying, here's some new stuff. Here's how to use it. We're not only the place where you buy it, you're the place where you learn new skills. A one-stop shop. And probably now is a good time to try and give an insight into what Diane Hendricks is like, Diane the person.

18:56She named her insurance company American Patriot, and that is telling. She doesn't share much personal detail, but her love for the US is pretty loud and clear. She told Forbes magazine, I love this country. I'm just so blessed to have been born in America. I've never had a door that didn't open for me. and she doesn't reveal much about her pastimes but we know that her and Ken like motorcycling. She likes Harley Davidsons. Who doesn't if you're a motorcyclist? And she still loves the outdoors. Her property is home to three retired Budweiser horses. These are large working horses who used to pull the promotional beer wagons.

19:28We have a similar thing in the UK with these old shire horses. A quiet nod though to her appreciation for American tradition. Now, let's go to 1997. ABC Supply has 160 outlets and a 25 % share of the market. But it was an all plain sailing. So Diane and Ken now needed to refinance the bank loans they'd used to grow ABC Supply. So the company issued a 10-year,$100 million bond at a high 10.6 % interest rate. Now, those interest repayments meant that although ABC Supply sales passed$1 billion in 1998, they actually made a loss of$2.6 million that year. Okay, so basically their financing costs, the interest they're paying is outweighing some of their, the income they're getting, so pushing them to a net loss.

20:12So they needed to return to profitability. So for the first time, they looked outside. They brought in an outsider to help. And that outsider was called David Luck. In 1998, he came in. He was a former chief executive of a national tyre retailer. And he was made president and chief operating officer at ABC. And Luck said he wanted to shift the company's focus away from getting big to becoming the best. And he achieved this by sort of streamlining the infrastructure. He also gave more autonomy to staff, added more employee training programs, which reduced staff turnover. And if you're going to bring in someone, someone whose surname is Luck sounds like a good idea.

20:48Yeah. What's that phrase? Nominative determinism? Nominative determinism. You are what you're called. Yeah. You become what you're named. Yeah. Well, I mean, David Luck luckily worked for them because by 2004, ABC Supply had successfully paid off the bond three years ahead of schedule. and with luck running the day-to-day business at ABC Supply, the Hendrix could focus on their other ventures, of which there were a staggering 30 of them. So under Hendrix Holding, they ran businesses from manufacturing steel and aluminium products to e-waste management and they also refocused on Beloit. Do you remember that struggling city where they bought homes in the 1970s?

21:25That also was home to the bank that gave him that first loan. Yeah, they'd already transformed a semi-abandoned diesel engine plant into ABC's headquarters, but apparently on a whim in 2001 they bought Beloit Corp's million square foot former papermaking foundry for seven million dollars that company had gone bankrupt a few years before costing the city an estimated 3 ,000 jobs from the plant and the supporting businesses in the supply chain they turned the foundry into the ironworks it was called a space that leased offices workshops retail space the local business is kind of a familiar idea now that sort of thing can often invested in these companies himself to persuade them to stay in Beloit, which helped preserve local jobs.

22:06So really, I mean, you know, it reminds me of something like where one family or one business becomes synonymous with the town. In the UK, we have a place called Padstow, where there's a chef, a restaurateur called Rick Stein, who basically, you know, has taken over the town and he employs everyone there and it's called Padstine. And I think it's a similar thing here. Yeah, I mean, the Hendricks were praised for reinvesting in Beloit, but there were also a few dissenting voices. So some business owners took issue with their projects, particularly when they moved the police station, library and other city services from the business district to a then vacant mall that they own on the outskirts of town.

22:47The editor-in-chief of the Beloit Daily News, Bill Barth, said, it's a very small sliver, but you do hear the occasional comment, why don't we just rename it Hendricksville? And yeah, it does seem like, you know, Rick Stein and Padstow aside, in America you can really just remake a town in your own image. Yeah, what about Walmart, Sam Walton on Bentonville? Yeah, yeah. I feel like it must feel very good on the ego to know that you can walk out of your car into a town and think to yourself, I own this town. Yeah, but let's return to the business. In 2007, it was the 25th anniversary of ABC Supply.

23:20Revenues by now,$3 billion. Ken was named Entrepreneur of the Year by Inc. magazine and he appeared on Forbes' billionaire list for the first time with a net worth of three and a half billion. Then on 21st December 2007, Ken came home from a business dinner. He went to check on renovations. Him and Diane were undertaking on their new home. And as he inspected the floor above their new garage, he fell through. And this is really tragic. He died in the hospital that night of a trauma to the head from the force. I mean, Diane deeply missed Ken, didn't she? Yeah, she said, I can count on my hand the number of nights I wasn't with him in those 40 years.