#354 Sam Walton: The Inside Story of America's Richest Man
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And he gives you that superpower to tap into the collective knowledge of history, goes treats on demand. And you can do so easily by going to founders notes dot com, that is founders with A S just like the podcast as founder er's notes duck com. Thank you very much your support, and I hope you enjoy this episode on sam wm, so the book that I wants to talk about today is sam walton, the inside story of america's richest man, and is writing by van's trimble.

This book is way less known. And sams incredible autobiography, fact, this book came out a few years before sams autobiography is published at the end of the book, sam walton is still alive. And what is fascinating is how the book begins.

And he talks about the fact that before they are the eighties, there is no such thing as the forbes four hundred list. And so when the very first forbes four hundred list comes out, sam is on IT. And then within a few years, he obtains the number one spot and just hold year after year after year.

But before that happened, for the first sixty years of sam wong's life, he was not nationally known. He says he was in the shadows. He was off the beat track, just building his incredible business empire.

And so by the time the force four hundred years has come around, sam has already built this six point three billion dollar fortune. And so the book opens with all these reporters in the early nineteen, descending on bent vokins, all to try to figure out who sam multa is and how he accumulated such a massive fortune. And then in their research, they give a great overview of his life.

And so he says he grow up in missouri. In the depression, he worked his way through college, live the clean Christian life, served stateside in world war two, married in oklahoma bankers daughter, open up his first five dime store in backwater north central arkansas, and raised four healthy kids. And then this is my favorite part of the entire section, pretty darned ordinary, but only on the surface.

Sam walton, underneath was no ordinary man. He was a genius in business with an iron mind and unwilling to compromise any of his carefully thought out principles. And one of the most markable things about them is just how simple his idea really was.

And he says, is A A very simple idea. I'm going to buy cheap. I'm gonna sell low. I'm going to do that every day. I'm gna do IT with a smile and focus on service.

And one of the benefits that same, what had early this career was that there is a tendency for people to confuse a simple idea with an ordinary person. And charlie monger, who extensively studied someone, hit upon why. And a simple idea, taken very seriously, is so powerful in business, charlie said.

In business, we often find that the winning system goes almost ridiculous ly far in maximizing and are minimizing one are few variables. And so most of what I want to talk you about today, just how long IT took sam to find his path and how messy IT was at the beginning of, you know, one of the greatest businesses that has ever been created. I I read, uh, a little while ago that if you take his family's network today, so it's almost a quarter of a trillion dollars.

And yet IT took some on twenty years of experimenting inside of retAiling before he the rush is about that. What he uses and finds the idea slowly but surely to trainer finds the idea that turns into warmer. But before I guess, I just, anna point out a few things that happened in his childhood that I think gives you an idea of the kind of person that we're dealing with.

There's a few trades that appear in early life that he never lets go of a sense of duty. He's extremely disciplined, and then he had unbelievable levels of endurance. And so this is a description of sam.

When he was in high school, sam was going off for football and basketball, learning to like tennis, making a and friends, grinding away on merit badgers in hopes of becoming an eagle scout, regularly attending sunday school and working all jobs such as mowing the grass and delivering newspapers. He was following the example of his dad. His dad had a life model that could not be more simple.

IT is only three words, and it's the same world over and over again. Work, work, work. His dad taught his sons that you were supposed to have a fierce work at, that he would not tolerate any.

His sons not being industry, they had to be industrious, they had to be ambitious and they had to be decent people. And so here's a little more about sam, and he's gonna es back to this idea that do not confuse a simple idea with an ordinary person. He was caught back of the undefeated foot.

All team. He letters in basketball was present at the student body. He was awarded the superlative, the most versatile boy he was in every club in organization.

And he was active. The description continues. He was a hard worker.

He was optimistic. He felt that the world was something that he could conquer. He didn't waste time. He was always busy doing something.

And that's something that he's going to continue for his entire career, in fact, that he is always working. He hated wasting time and his intolerant of slowness. And I don't think you going to understand sam wolton until you understand the effect of the great depression had on sand.

He grew up in the great depression. He was born in nineteen eighteen. And so he is old enough to see the effects, the financial effects. And IT actually leads to his parents to boss, which is obviously very rare at that time, that time period.

And he talks a little bit above seeing his father struggled with this time, he says, my father quit the mortgage company and went into business for himself in the real state and insurance industry. Then came the depression. Dada's business went down the drain.

And so then his dad is moving the family around, looking for opportunity. And yet, for the next ten years, this is the prime of his father's life. They make no economic progress.

They are distinctly lower middle class, right, hovering around the poverty line. And so sam and his brother bud get jobs to try to help out the family. And there's a lying.

The book, they think, is very important to understanding the kind of personality that sam had. And he said the depression was a big leveler of people. Sam choose to rise above IT.

He was determined to be a success. And so when I was reading this section, what immediately popped into my mind is what my favorite ideas that comes from program. And he was asking, what is the bitter predictor of company success in business as a determination? As the intelligence and pause answer to this is incredible.

He says. IT turns out IT is much more important to be determined than smart. If you imagine this hypothetic person, that is one hundred out of one hundred for smart and one hundred out of one hundred for determination, and then you start taking away determination.

IT doesn't take very long until you have this special but brilliant person, whether if you take someone who is super determined and you take away smartness, eventually you get to a guy who wins a lot of taxi dans or a trash howling business, but is still rich. IT is important to note that only takes one person on the founding team to be super determined. And the reason I bring them up, and the reason I think, is really important, because this is OK, we see he's got the space work ethic right.

He is determined to success. He is not going to allow his family to hover over the poverty line. Think about how insane if you are mapping out.

I was think about this this morning, if you were mapping out the family tree and the trajectory, the economic trajectory of the wolton family before sam walton comes on the scene, you would see middling success and then oversight. There is one data point. The general tional inflection point were just skyrocket today.

That family, present day a hundred years after sam, what was born, you know, they have quarter of a trillion dollars, two hundred and fifty billion dollars. But a hundred years ago they were struggling. The poverty line.

The difference was one person, the super determined person, made that difference. He changed the trajectory of his entire family for generations. And so IT starts with determination, but in this hypothetical situation, it's not that we have to remove points for intelligence.

IT took same to find where he can be intelligent. What is the feel that he can be the most intellect? If you have a list of the greatest retailers of all time, sam walton has to be at the top of that list.

And the reason I recommend, if you haven't read his autograph, y get IT immediately, get the audio book, get the paper would ever have to do. And then if you ready, read this, because you will see IT took decades of him applying a determination and imaging IT with one hundred and one hundred intelligence in a specific field. And it's important to understand this was not planned out.

Sam had no idea. He had one idea, one idea of what his future career could be when he was a wrong college age is like, maybe should be present in of the united states. That's another, personally, the top, he to said, competitive drive as well.

But he did not have this dream to be a retailer in his boy. He stumbled into IT. And so lets go there right now.

He actually gets a job at J. C. penny. This is an extremely important turning point in life.

You see a lot of the lessons that he's gonna. Arn from J. C. penny. Here lies later on to walmart.

And so let me just say, like, in case you don't know, like this shock me because I knew what J. C. Penny was.

He was a around one as a kid. You of the existing more. But in one thousand forty, right where we are in the story, J.

C. Penny has almost sixteen hundred stores. They're doing three hundred million year in revenue.

And the founder is still actively involved, even though he and sixty, his name is john cash. Penny, sam is actually going to meet john. I get a lesson directly from him.

So sam gets his job. He's being paid eighty five dollars a month. Remember that for this upcoming story about sharing incentives with storm managers will get to second.

But the first idea had the point of you that seems going to use for warmer is the fact that the company strength that J. C. Penny had built, sixteen hundred stores, avoiding big cities as exactly isms gonna for warmer.

And he focused on small towns, your total towns of two thousand people, six thousand people, eight thousand people. That's the first ideas ago. Maybe a lot more business on these small town.

The second idea, john J. C. J. C. Pending, is constantly in the stores. He is traveling around in the stores wanting to know what's going on. Sam does this his entire life.

And IT is one of these store visits to the store that sam is working in sams around twenty two years all of the time that he gets his lesson from this wiser, more successful retail legends. Sixty five says the customer came in and bought something from sam. And while he wrapped IT up for her, J.

C. Penny was observing the transaction closely. I finish rapping and tying the package, and the lady left.

Then mr. Penny came over, boys. He said, I want to show you something. And he took a box about the same size and went around IT with paper and let IT overlap maybe a quarter of inch.

Then he went around IT with trying one time like this and one time like that, any tided. He said, boys, you know, we don't make a dime at the merchants we sell. We only make our profit at the paper and string.

We save this idea of watching your cost twenty for seven of big show, you ruthlessly efficient, is an idea that sam walton holds onto for the rest of his life. There is a lot of things, and sam automotive phy, that I absolutely love that he said, and this is one of my favorite things that he said in the autobiography, think release to the story that we're learning right now. He says you can make a lot of different mistakes and to recover if you run an efficient Operation, or you can be brilliant and still go a business if you're too inefficient.

So that is the second thing he learned from his time here. The third, his direct manager guy, him duncan, he said he was fantastic trainer. He used to invited to his house every sunday to play pingpong ong and to eat and talk.

We talk about business. Of course, you could learn a lot. He was one of the managers who had a twenty five percent bonus contract.

Again, another idea, sam is directly gona steal at the very beginning warmer. He sets up all his managers and his and twenty five percent of the profits of the store. Remember I said that at this time, sam is making eighty five dollars a month.

His manager shows him the twenty five percent bonus. H cc. IT was for sixty five thousand dollars.

This is same response. He wave that around, and that made us run faster and work harder. Sam, waltons, time working.

A, J, C. penny. And applying what he learned there, would eventually put a few billion dollars into his own cash registry.

So I want to get into wear. Sam buys his first store where he gets the money from. He is twenty seven years old.

He marries a woman from oklahoman, iam Helen. They both have this desire or small town people. So they are looking around where they're gone to live and where they're going to live.

They are going to try to buy a ben Franklin store. So they're called ben Franklin five and times the way I would think about this now is like the modern day equivalent would be like the dollar store. The reason they were called by times because most of the things that you buy there are, you know, can get for a nicer time.

And so samon Helen are going around looking for a small town where they can raise their kids. And sam could have his store. This is the very beginning of his retail empire, sam's twenty seven years old.

And so they stumble upon this, a little town and arcs, lt. Court, newport. There is a ben Franklin franchise.

Not keep mind at the very beginning for like twenty years of his life. Same walton is a franchise of a much larger company and with a little bit, but it's crazy. He tried to give the idea for to bend Frank to the big coop oration.

They laugh amount of the room. And so twenty thousand seven year old sam finds the store, the town. There's four thousand people that live in newport. They say tiny, tiny town. The he can buy the bent Franklin franchise is going to cost twenty five thousand dollars.

He does not have twenty five thousand dollars, so his father in law is going to be very important in their lives, which i'll get you later. His fathering is very successful as a lawyer, ranter, banker. And so he loans sam walton in the twenty five thousand dollars needed to buy the ban Franklin franchise.

And at this time, sams plane is very simple, is like what i'm gna take, the obsession with customer satisfaction that J. C. Penny had.

And I just going apply IT to my own little five dime store. And so he's trying to figure out, like drum up business and this is the first sign of something that seems roman. He said, you're very much like A P.

T. barna. He's got the isma of a southern preach. And so his consent with less conventional ways to attract more customers into the store. And you wouldn't believe how some of these likes really simple ideas were so effective.

So bought a money and cream is and he put that out in front of the store and on the weekends, families and all the farmers and other people's real area, they would mob his ice cream, uh, his ice cream machine, and then some of them would come in the store, then turn turn into customers. Then he'd obsess over their customer satisfaction. So then he'd makes sure they return.

And then if they return, they're going to tell the people. And five and half years now, when he loses the store, IT is by far the most successful. I think he's tighter first in all the ben Franklin franchise, if not taken so is like all the ice can work, what else can I do?

Any boys of popcorn shine does the same thing puts out the popcorn. Same exact thing happens like there's different ways to draw attention to the store. Then just by saying, hey, you know fifty percent offered by one get one free.

He's finding another way to attract customers. And even if only converts a small percentage of the people ice cream popcorn, it's still a great return on the investment for buying a poker machine and ice cream machine. And that something that seems going to repeat.

He really felt one of his his best advantages was consistent around the clock customer satisfaction says the most important discovery sam well made a newport, was that there was a charm and satisfaction in retAiling that he had not fully expected. He was crazy about selling and about satisfying customers. So customer s satisfaction, satisfaction ers repeated over over again throughout the book.

The way I would think about this is that seems satisfying customers is jeff BIOS obsessed over customers. It's the same exact idea you and i've talked about this many times of the past. If you read about the earlier as amazon, jeff pas is going around handing out highlighted copies of same autobots phy for the early employees at amazon, a life and career of sam alana, huge influence over how jeffy zo's built amazon in the early days.

And so same wild's bend Frankland store was a smashing success. And then we're going to see something that that happens over whatever. Again, that opportunity is a strange beast.

IT frequently appears after a loss. He's running the thing for five and half years. He gets sales up to two hundred and twenty five thousand a year. No other store newport's performing like this. And that catches the eye of his landlord.

And so this, I consider one of the most important decisions of his entire life, because that thirty two years old, same walton n gonna, lose everything and be forced to start over again. And IT is because of an inexperience kind of rookie mistake. When he bought the store, he didn't read the least close enough, and he did not have the option to renew.

And so sam is meeting with his attorney, and his attorney is telling them what's taking place. It's no good. I hope to god, the next time you take a releasing somebody, you check to make certain IT contains a proper renewal class.

They're not going what you keep, the store, the plane. Truth is, they want to run the bend Franklin in that building. You've showed the whole town what a monem ker can be.

He's atterley watch the color drain out of sams face IT looks like you're finished, the attorney, said the lawyer, this is when my favorite parts of the entire book, the lawyer sauce, sam clenching and unclenching is fist staring at his hands and then he straight right up. No, he said, i'm not whipped. I found new port and I found the store, and I can find another good town and another bend.

Franklin, just wait and see. And so think about that. You're same wilton, your thirty two years old, you have wife, several kids, and you just spent five and a half years building up a store that was a phenomenal success.

And somebody took IT from you, from your own mistake. He wasn't wasn't another blaming other people. And I love this response.

Is I not not feel sorry of this fine. I made a mistake. I won't make that mistake again, which will get two minute, will build up again from scratched.

And so this is when he finds Better var and all because he driving around and looking again, running simply, go going to go to small town when we tried to buy a and Frank and friend choice. When I want to sell, he finds one in Better vel. And he doesn't make the same mistake.

So what he does is like, okay, I will buy this store from you. It's too small, so I also need to get the barber shop next store. Sam insists on buying the building.

And then next stories like all the stores too small, going to making money. I got a knocked down this wall. And so he finds that the burger shopping ing story is actually not for sale, and so is like, I will lease that, but I need a ninety nine year lease.

You won't sell to me, that's fine. Then I need a least that that lives longer than I do. Now at least the barber shop was owned by two windows.

They say, the first time he comes them, they say no. The second time, he says, they say no. The third time, they say no.

The fourteen, they say no. The fifth time, they say no. The six time IT took six trees. And you'll see he does this exact same playbook when his recruiting people, in some cases, he will recruit the same person, and they ll tell no.

For a decade, these guys were lentz, but finally, the sixth time they finally agree to this ages, you know, ninety nine year at least. And at the same time, he suffers a devastating personal tragedy. His mom dies unexpectedly from cancer.

SHE was just fifty two years old. He went in for an Operation to remove some of the cancer. And then a few days after the Operation, SHE passed away.

So think about this. He's thirty years old, right? He used all he's married with with kids like a set early.

He used all of his money setting up the new store in bed though. Okay, he's got no, he's got no money. So he, thirty two, wife, kids, no money.

Your mom, who you adore, dies at fifty two years old. unexpecting. At the same time, he still has to run his new port store till the end of year.

So he is commuting back and force. And even though the stores only two hundred fifty miles apart, it's I can eight to ten our drive because it's through these month. And the reason I bring that all up together, because, you know, no money, your mom is dies, your stretched thin as could be.

And yet is the driving back in fourth that leads one of the most important ideas that he ever finds, because he starts to think, what the heck i'm if I can never, if I can not move ground faster, right? I will always be related. Just having one store already know by now sam won's not the personally type to, i'm just gonna n one store the of my life.

And so IT is during these long drive to the mount, eight hours, ten hours each way, like I gotta gure out a way to cover faster ground. And then he hears the buzz of an airplane overhead. And the author S A great job of describing this.

I want to read this to you. Sometimes hardship can enlighten and inspire. This is the case for same world. And as he put in hours and hours of driving ozark mountain roads in the winter of one thousand fifty, but that same boredom and frustration triggered ideas that eventually brought him billions of dollars.

He was struck with the realization that if he was component enough to Operate separate stores in two toone successfully, one, not three, four, or maybe even a, he could see the possibility of his own chain of five and dime stores. One evening, he heard the drone of a small airplane overhead, and a light flash is brain. So he goes down to local airport.

Ines, like, maybe is the first week, like charter plane and capability, fly me between ben vo and new poor. And that says for a reasonable fee. He charted a pilot to taken to Bette ill.

The eight hour road trip shrink to a ninety minute flight. This gave sam the answer he was looking for. Without this, his warmer phenomenon never would have been able to see the light of day.

And so it's no surprise that the band bill store starts to do really well because sams paying attention every single thing, and he just has this idea. No, I guess I need to back up. He is a constantly until the IPO.

He is constantly under finance and under capitalized. He actually talks about that in the autobots phy. I want to read from the autobots phy again before I pick the story back up. He says many of our the best opportunities were created out of necessity.

The things that we were forced to learn and do because we started out under finance and under capitalize in these remote small communities contributed mightly to the way we've grown as a company. Had we been capitalize, or had we been the offshoot of a large corporation, the way I wanted to be, whatever, from early, we try to give away the idea. Walmart, they said, no, we might never try all these small little towns that we went into a nearly days.

IT turned out the first big lesson we learned was that there was much, much more business out there in small town amErica than anybody, including me, had ever. So his idea, the very beginning, this is a good thing, is like he had to prove the concept over, you know, many, many years. Then once he knew is working, he import, you know, gasoline on this promising Sparks.

But his idea first is like, let's get one store up that was profitable. Let's take the profits, dump that into another store, then get that so proffering and dump in into another store. And so that is why the planes becomes so important.

These are not corporate jets. He's click flying around. There's a bunch of almost like very close calls. You know, sam hotton was a kind of reckless fire, but you know, think, thankful ly, nothing happened in his forty years of flying.

But without these are small sessions planes, they could, he could have never gone and travel to all these stores. Because that leads me to the next single when I talk you about, it's not just that, you know what J. C.

Penny was doing back in the day, going to all of six hundred stores. Same thing sam would do when he has this chain of five times. Same thing.

Same would do when he has a chain of walmart. He did IT for every single one of his competitors. He visited more retail stores in anywhere else in history.

He doesn't actually, he does IT for the stores and in his autobiography that he would also show up but the headquarter, uh, like the the corporate headquarters without an appointment. And he says, if you just show up and you ask more often than not, they would let you win. And then he would ask some questions about pricing, distribution and other things.

Like, I was another former education, and so he is doing this in the nineteen fifties. He's gonna like oklahoman and arsenal and all these country towns. And he says he studied how they did things.

He was ready to pass on any successful little trick they had and would copy IT. And so when I got to the section of the book, two things happen. One, I had like a big moral face, because I just think it's a learn.

I love people. They are truly dedicated to what they are doing. I say one of my fair maximum is actions express priority.

You demonstrate other people what's important to not about what you say, not by what you believe, but what you do. Actions express party if you get same run, not all over the south, visiting every single store. And so that just made me smile and laugh.

And I I love you black up. The second thing that came to mind is because i've become friends with mr. bees. mr. Bees like the biggest creature on the internet, biggest youtube or he's got like a billion followers across all these platforms.

Actually flummery es headquarters spent seven hours him uh his top team, one of my friends is a major investor and uh myspace companies as well. And I heard a story that just screams like, this is something that sam walton would do. And so mister bees comes back from doing, he's like a seventeen hour flight or something like that lands back into united states, needs to do another connecting flight to go back to lead to the remote area where his headquarters says.

And instead of jumping on another flight, he mapped out, there's like a five hundred mile distance between where he's at and where his homeless and mr. Beast chocolate company festivals has a massive deal with warmer. And so he does, instead of flying home, he maps out every single warmer and like a five hundred five radius.

And I take, i'm going to drive, drive. You could take a couple of our flight, or you could do like a fifteen hour driving this over multiple days. And he visited every single walmart in between where he was and where he was going.

And so at every single storm visit, he would find room for provin. And one of the funniest things I heard was when, in some cases, in the front of the store, IT be look like all the festivals were sold out, and then he pull up, like what my system says, that you have eventful. So he would go to the back of the store and he would find the invention in the back, and he literally Carried to the front, so he get more sales.

I think that is, what same multiple do I just love that idea where you you have this this crazy, determined, mad man in the nineteen fifties, driving through all these little towns, inspecting every single retail store that defines going to the headquarters, dropping on the C. E, O at a hotter, and just ridding them with questions and using as a form of education. And then you see, seven years later, at the same kind of determined individual doing something very summer.

I just love that part. So as sam is expanding, he's opening new stores. I already told you her earlier.

He literally lives that idea from J. C. penny. He's like, okay, I can be here. But he knew that you had to have a single, like, single family leadership.

There has been one person that is completely responsible for the performance of storm, and same is not there. So that when he says, i'll give you twenty five percent of all the profits, and then here's a faster story for you do. This is what I love about bag freeze.

We have some of the smartest, reductive people ever live. And the bike fees, their life stories are full of them making mistake after mistake after mistake. And so as he is expanding, he comes across this brand new phenomenon.

At this point in american history, there is no such thing as the shopping center. And so as he's looking for a location to expand, he comes across, I think, is the second shopping center ever built in united states. And he just like, oh my god, this is this concept is genius.

And so he gets distracted. He's already building a is small but very successful variety store five and time chain. And he takes a detour from something is already working, says i'm going to develop shopping centers.

I have a line for this. What he's doing, because I did this, said I was on a phone, my friend jared. And is explaining what this other idea had for another podcast.

And he, like, completely shut IT down. And he used the black jack analogies. I don't split tense. Sam walton, split tens are cut right to the punch line. We lost our money and left town.

Do we have like a one two year detail? He took his eye off the thing that was working. He got distracted.

He gave into distraction and at the opuntia time, and a bunch of his money. So now he is back, fully dedicated, fully focus on expanding his burgeoning retail empire. I love scrappy people.

I love reliably produce for people. I love people who don't take no for an answer. And so sam is always only look up for new, exciting merchandise that he can stock in the stores at this time.

Hua hoops is like this, is this like phenomenon spreading all across the country. The main like manufacturer of poo hoops will not sell the small little merchants because is tiny at this time. And so seems like, okay, cool, uh, you must sell us this time.

We're gna make our own. So he started, realized that what is a hole? It's like this little copy, it's covered plastic pipe with this is a connector the end he like, we just gonna our own.

So after the stores close him and a bunch of the people they get together and they start making several thousand of these a night. So that's the first part of this high agency, relentless resource for ness. This is hilarious.

Remembers sam does not have a lot of money. He's under finance under capitals for a long time, all the way until warmer goes public. And warmer doesn't exist yet.

And so they're making about one central location, but they would distribute them throughout all the stores that they have very sam didn't even have a trucks. Or how you can do this. He is a car, you know, he does.

He sets up a john vote. I like twelfth t little john n boat behind his car, and loads the john n boat with all the whole thousands of who loops that. They spent the nightmares.

And then he drives around his stores and a car in using a john boat as a trailer. In the end result is this line, the hole hooks are so popular that you couldn't keep them in stock. And so there's a combination of two ideas here are they think are very important.

Number one, doing things that others were not doing lead to unexpected. His success in two goes back to that quote that I read from same autobots phy, the fact that many of the best opportunities were created out of necessity, because we were so under finance, we are so under capitalize. We had no idea just how large these businesses can be built in what, you know, these towns, these towns were ignored.

And so they arrived at this very value idea to trainer. They are just testing much of things. And so here's the description of one of things.

They found out that the larger they may restore, the more money they made. The decisions were made for walmart long before formed as a company was developed. Back in the bend Franklin days, we learned so much.

And so they use one example of a store where they make A A A slightly bigger, slightly larger band, Franklin store, and how much sales grew as a result of just having a larger store surprise them. And so this story, the example that are using, was in the sole town called sing robbert. The same Robert showed us how much volume was there.

If we went into much larger units in small communities and push the merchandise. We became the first independent variety chain in the country to try large stores in small towns. We were doing an amazing amount of business and thirteen thousand square foot store, which is told out of character for a town of just two thousand people.

We found that we could do a million dollars in each variety store that was unheard of. And so that is through this constant experimenter, the fact that he is still relentlessly visiting every single retailer everywhere he's at, that he discovers what is going to be his life's work, which is discounting. The concept behind discounting this time is very contusion that you lower the Price, you lower the margin, but you will make more money because you sell more.

And all throughout his automotive phy, all throughout this book, every single view that you will see with sam, even though he didn't do a lot of interviews, he talks about the fact that, you know, I have no shame in the meeting. This, like, if I would, I would searching for good ideas. And if I found a good idea, if I found a competition that had a Better idea than I did, I would just adopt.

He was always, he didn't care the of the origination source of the idea. He just wanted the very best idea. So he is like, he says, if they had something good, we copy IT.

And IT is through this that he says, I was totally fascinated by the idea of discounting. And when he discovers discounting in the eighteen sixties, he is blown away. He winds up studying.

This guy in irin chase, who starts his company, got an and hope they only at six stores, but they're doing two hundred and fifty million dollars year and sales so all through out early one thousand nine hundred and sixty, he says there is no discount store in existence between one thousand hundred and sixty and one thousand two, they did not get a visit from sam walton and IT is through this that he discovers that another person had studied and and hope to and they're studied IT before him. There is a sky and Harry blair cunning him. He is the one that comes up to concept for car and so came up with a dominant player way before warmer.

And so same walden is looking back on this, saying, one about to reach one thousand ninety after already beating came here. He says, i've always had the greatest admiration for her coming him, because when he threw that business down, that thing was ten or twenty years ahead of its time. And he did a Better anybody else.

What I did later was take pieces of IT, meaning take pieces of k mark, and make our walmart as much like IT as we could. The difference what, and this is fast thing that happens over over again, is kr took the discounting idea, and they set up, set up shop in major cities. One more look at that, I know why would we compete head on with somebody, start doing that? We'll take the discount idea and set up in tiny, tiny little towns.

And so back to what sam we saying at the start, we were so amateurs and so so far behind came or just ignore to us, they let us stay out there while we develop and learn our business. If they had jumped on us, I hate to think of that, but we were protected by a small town market. IT would have been unthinkable for them to have tried to put a competing store in a small town.

They gave us a ten year period to grow. And any also brings the fact that they got rich and successful and fat and lazy. They were self satisfied with what they had accomplished.

Sam walton was never, to the day he died was never like that. They were self satisfied with what they accomplish. They thought they could roll over everybody.

And they woke up one day and found out the world had changed. And so now, sam knows, is like I can not stay in the variety of our business. I can not stay in this time and die.

Business discounting is going to roll over everything. Let's get ahead of this. And this is where this is where he goes.

So give me, I guess, to show back up. He's forty three years old when he's make trying to make this transaction. He's got thirteen of these variety stores, right? Has been Franklin franchise are franchisees over the last seven years.

He's built thirteen of these stores. So he goes he's what I mean when he he goes and tries to give away the idea for warmer, he's gonna go to the to the headquarters of ben Franklin in chicago. And he's going to pitch this idea to, and this is the idea that turns out to be warmer.

I'm going to read this whole section to to you because it's so fast to me. His proposal was a dacians, certainly unacceptable. He suggested that the variety store of franchisers leap into the front line of the booming discount business.

I think that kind of store will fit in the role market just as well as major metropolis, mark sam said you should franchise them and I will be your ginny pig. Imagine some walton pitching you an idea that of a brand new business that's growing like a weed that is clearly the new journey like I will be your partner and Operator and you say, no, that's incredible. The band Franklin executives exchange sour looks.

Sam went on, you're gonna have to cut your wholesale Prices instead of making twenty to twenty five percent profit of the merchandise that you sell to your retailers. You're gonna have to be satisfied with about twelve and a half percent, almost half. They blew up.

They blew up at them to the sophisticated and experience businessmen and their tailor suits and custom shoes in chicago, OK IT looked like the tail was trying to wag the dog. What was this arkansas country fellows experience with only a dozen or sel stores compared to their thousand outlets and nearly a century of retAiling? Know how we have to pose here.

Because this is such an important point. You have to think about the incentives of the people that are selling to sam multon is trying to sell them. So the greatest example that got lodged in my brain many years ago, no one is ever eager to fix a cash machine that isn't broken.

And the person that put that idea into my brain, in fact, that you have to think about the intentions of the people they are saying to that no one is ever eager to fix a cash. Aching, broken, is in James diccon autographed. He invented the world's first psycho ic vacation cleaner.

That means his vacuum cleaner doesn't need bags. So before that, if you on a vacation, you're costly having to buy more vacation bags, right? What is James they can do? The first first thing tries to go to sell his invention to is a company that is making five hundred million a year, selling vacuum bags IT.

He's like all they're onna. See how superior a cleaning machine that my vacuum is compared to there is that is irrelevant. You cannot sell a backless vacuum cleaner to people to make five hundred million years selling vacuum bags.

You cannot sell the idea of discounting at a lower margin and saying, hey, sell me your stuff at twelve a half percent in selling instead of selling IT to me at twenty five percent. How do you think they paid for those tailor suits and those custom shoes with that twenty five percent margin? And so they laugh him out of the room.

And then there's a great story that is told in this. Also told in sam multis auto bag phy, the very next day one of the Better Franklin and executives goes in checked es may be, check out new car thing that this crazy and is talking about. And here's description of what happens.

He got a surprise. Sam walton was their head of them here. He was twenty five miles from our office, and he was talking to a clerk.

He was writing in a little nobility. And at one point he got down on his knees to look under the, and I said, mr. Walton, what you're doing and he said it's just part of the education process done.

I'm still learning. And so sam talks about this time. It's not like he thought discounting was the future, right? But he wasn't sure if he could do that.

He was going to succeeded that he knew he could. He was really got the variety story of business, but he decides i'm just an experiment. He he's constant experimenting and he talks about this the way he describes this point of his life.

He has a great term money. He says, I was thrushes around for the right rate ago. IT was uncertain.

But one thing that he knew is that discounting does not work. If you have a high cost structure, discounters must they must have low cost. And there's like this, all these indicators.

That woman might be more successful than their competitors early on is because even after they go public, they have like the lowest costs to sales ratio in the entire industry. And so how dedicated was same to keeping costa? Well, warmer is called that in part because fewer letters means cheaper signs on the outside of a store.

And so same one of his executives have this list of names and are trying to figure out what are we going to call this new concept? You know, I have to go out on my own, the ben Franklin guys, they don't want anything do this or i'm going to do in anyways. Which one of those do you think we should call IT? They studied the list for a few minutes, and all were long names, each made up of three or four words.

And so this executive says, well, sam, you had me buying the letters to go up on our and Frankly, stores, and I know how much they cost and how much they cost to repair and how much to light these letters. It's expensive to put that many words in a name. And the shortest st name on the list was warmer.

And so jeff basis has the saying.

he says, we know from our past experiences that big thing starts small. The biggest oak starts from acorn. If you wanted do anything new, you've got got to be willing to let that acorn grow into a little sapling and then into a small tree.

And then maybe one day it'll be a big business on its own. Listen to the description of very first warm mer, the business that is going to generate for the walton family quarter of a trillion dollars of wealth. The first walmart is in a small town and is only sixteen thousand square feet.

IT is an immediate success from the very fair share. What do they consider a success? Seven hundred thousand dollars in total sales, which may seem like a small number.

But from that day, from day one, the store, that very first walmart store for the next fifteen years has a consistent thirty percent growth in sales. IT made a profit from the very beginning. So then he opens the second one.

He invites a skinning David glass, who is going many years since the future is going to be become the sea of warmer. Sam tried to recruit really early. In fact, he takes my decade to get David glass to say yes.

So he invites David glass out to the second opening of the opening of the second warmer. And this is what David glass said. David glass thought that sam might have lost his marbles with all of the discount store.

Foolish IT would surprise him if this kind of store had any future. IT was the worst retail store I had ever seen. Sam had brought a couple trucks of watermelon ds in and stack them on the sidewalk. He also had a donkey right out the parking light. He was one hundred and fifteen degrees, and the watermelons began to pop. And then the donkey began a poop all over the sidewalk, and the watermelon in the donkey shed ran together all over the parking lot and got inside the store like so many people before him and since David glass was guilty of a snapped judgment on this unorthodox merchandizing name's sam walton in fact is a great description of, you know, sams personality and and part of is like, success. This is like promotion ability.

There is this article one thousand eighty four gaine going to call from and IT said, so how from there from this like cat, this, this exploding watermelon and donkey grab opening, uh, so how from there the same world and get to be america's most admired retailer? He wanted to sheer force of a complex peroni, as the donkey watermelon episode illustrates. He's an old fashion promoter in the P.

T. Barnum style. But he's more than that. He's a little bit Jimmy Stuart.

He's handsome. He's got this all shocks charm. He's also a little bit Billy grand. This is what I meant, Billy gras, famous preter. Sam walton is very much in vanellus.

He's a little bit Billy gram with a chrysa m persuasiveness that heartland folks fine, harder, resist. And he's more than a bit Henry ford, a business genius who sees how all parts of the economic puzzle relate to his business. overall.

Everything is that of an old yard rooster who is tough, loves a good fight and protects his territory. And so the mistake that glass made is the mistake that most people make. They don't understand that small improvements every day over a long period of time.

What that compound in, in general, the thing that I unrested mated about sam is that he has an overwriting, something in him that causes him to improve every day. That's not difficult when you have something as bad as he had back in Harrison. This is the donkey in the watermelon.

But sometimes you achieve success and say, boy, now I got IT like, I want IT I can lay back a little and enjoy IT. Sam never did that. He has never gotten to the point where he is comfortable with who is or how we're doing.

And this is firing my favorite description of sam walton in the book. His tactics prompted people to describe him as a modern day combination of vince la party, who insisted on a solid execution of the basics in general pattern, who said, a good plan, violent, executed now is Better than a perfect plan next week. And so once he realizes walmart is a winning formula, he he search, expand really rapidly.

But what you see is, at the very beginning, he just got to be a simple basic plan, simple basic principles that he executes on. So the first thing is he's obsessed already mention once, just like these principles for amazon that we still don't obsess over customers for warmer IT was just customer satisfaction, he said. The central agreement is a course customer satisfaction dly day past when without sam reminding an employee, remember walmart golden rule number one, the customer is always right.

Number two, if the customer isn't right, prefer to rule number one. And so what he means by customer says fashion is always exceeding the expectations of the customer. So let's say, you buy a pair shoes, they don't fit, you don't like them.

One of the cases you bring them back, sam would tell his stores, not only should you cheerfully replace the shoes, meaning you should be happy, you should smiling, then you should throw in a pair socks and stockings for the hassle. He understood the value of a satisfied customer. I said that customer gonna come back to warmer, not next week, not just next week, not just next month.

Were a bit humans or habitual. They might be shopping there for decade after decade, as long you don't upset them or let them down. And then as far as expansion, you know, this is precombustion, which will get to just the massive, surprising investment that lamer made computers in one thousand and seventies.

But before that is okay, I want to run a bunch he he had like this ideas. Like, I need to make sure that all my stores are so close to the distortion center that my trucks can deliver whatever you're missing that same day. If he said he started with the distribution and their work backwards, I don't want to expand outside of the distribution center.

If IT takes my trucks drivers longer than five or six hours to get anyone store. And so the first handful of walmart were in this three hundred mile radius of betton, the arcadia. And that's really what I was.

His faith in this adherents to this small handful of principles. And he refused to D. V. From his talks about the site. I had no vision of the scope of what I would start, but I always had confidence. As long as we did not work well and we were good to our customers, there would be no limit to us.

And for this fact alone is why reading these by graphs and these early company stories are so important because it's talks about like how there is a lot of rough edges in these walmart stores. The eighth walmart ever they put in this old IT was used to be a coca cola balling plant, and so IT still wasn't all the way converted. And so had, like all these pipe sticking about the floor where there was no air conditioning in the entire buildings.

So what's your solution? okay. We don't have a see we can put in before we open what does get twenty eight window fans and it'll take care the ac problem later.

And there's a line that describes what this was like in the very early days of what's going to become a very valuable company. He says he was still largely a seat of the pants instinct of sam walton. They guided this warmer expansion again at the beginning.

There's going to be a lot of refugees and half working things and not a lot of process. The way I think about the early as a warmer is exact way I think about the early days of disy land with all disney. There's a great line in that book.

I just covered the history of what is me. If you haven't listen to IT up to three forty seven, how well disney built his greatest creation, which he considered his great decoration to be disney and one of the people working with what was describing this time says, you ask the question, what was our process like? I kind of laugh, because process is an organized way of doing things.

I have to remind you, during the world disney period of designing disney, we didn't have processes. We just did the work process came later. All of those things, all of these things have never been done before.

What just gathered up? All these people who never designed a theme Parker or never designed a dizen land. So we're on the same boat at one time.

And we just had to figure out what to do and how to do IT on the fly as we go along and not even discuss plans, timing or anything, we just worked. And what just walked around and made suggestions. Same exact idea is happening in the day is warmer.

And so now sam realizes a walmart is the main thing. This is where my entire focus be beyond. And so this is where really, really was started putting.

He's really think about how long he he did five and hf years of one store storm newport, right, learning, learning slowly proving that he knows what he's doing. Then he gets spend, Frank, another brand, Frankly, store then you know handful. I think in about eleven years he does thirteen more stores.

Watch how he's the wear and try to describe you is like he's simulate impatient and has an abundance of patients, if that makes any sense. So he takes a while to make sure he knows what he's doing is actually going to work. But once he knows is going to work, he puts his foot all the way on the gas paddock.

And so up to this point, he's got one big problem. He is, I was deep in debt. It's like causing a anxiety stress.

He's been borrowing and and financing the expansion of walmart. He he gets loans from banks and loans from insurance companies, and he's dying for a permanent solution. And he only has one idea for a permanent solution.

He's like, we have to ipa, we have, we have to tap the public markets. And so he's gonna ET these local arkansan entrepreneur s they're called Stephen brothers. They're going to team up with another wall street firm that, that is successful and selling the stock.

I mean, to get there in one second because it's kind of nuts how schools lely accurate a bunch of same wallets predictions are. But I just love they give a short background in the book on the seven brothers, who you are very helpful in, in getting this IPO done. I'm escape over that.

I just love the advice because they were like, you know, poor arkansas l boys too, and they went up being they they hit the forms four hundred less two for different reasons. But I love the advice of their dad told them when they were grown up in my raw arko. He says he used to tell sons, don't be ashamed of your poverty and don't be proud of IT just get rid of IT as quickly you can and his sons made good on that advice.

But I want to talk about how nuts IT is. That seems he was just dead on on a lot of a sales co. So he's he's doing this pitch to potential investors and they're like, okay, your sales volume right now around twenty million dollars a year IT seems like, yeah, sir, our businesses really growing this year, we did one million, twenty one point three million.

That's quite a jump because the year before we only did trail point six million. And he says our calculation is that in the next five years are five year projection from now, that in one thousand twenty five our sales will be two hundred and thirty million. And so the other side, the tables like decided, skeptical, like the guise of nuts.

And here's the punch lines. m. Walton, however, was right on target. Total sales for nineteen seventy five came to two hundred and thirty six million.

Lars, so in thousand and sixty nine, when he was done with that, he was at twenty one point three. He is like, we're going to hit two hundred and thirty million five years now and he came in at two thirty six. And then I want to point out a part of same personalities.

This is also something he shares in common, which bases, he is very polite. He has a country charm, but he drives the way. He pushes his topic executives, he pushes them unbelievably hard.

It's really facing the difference, the way he treats his, like front line workers who he spends a lot of time with, pay attention that makes them feel special, make sure they doing their good job. But like he isn't pushed them like he pushes top executive. And so I said sam had seen others resigned or get fired because of the rise of working in a pressure cooker for a boss that some executives called that old slave driver.

That internal new name, there's a line from one of jeff bases by grapes is very similar and says, if you're not good, jeff will chew you up and spit you out, and if you are good, he will jump on your back and ride you into the ground. So they both hold their top executives to an unbelievable rigorous standard of excites the way I think about sams affable country boy personality with what's really inside. When I read a biography on Young bill gates, excEllent book, if you haven't read IT yet, it's called hard drive.

The making of the microsoft empire covers the first thirty five years of buggies life. He realized that a Young bill gates was just gangs kon, and a mr. Rogers costume.

Something similar is going on here with sam says. He also claims that the public conception of sam is a good old country boy wearing a soft valve globe. This is the fact that there's an iron fist within that glove.

The boss himself kindly agrees, I guess I need a little tough if I see things I don't like. Sam stress that he knew his business from top to bottom. I used to do IT all, sweep the floor, keep the books by the merchandise.

One of my assets is my willingness to try something new to change. That is a concept that we Carry out throughout the company. We have a low resistance to change. We call IT our R C factor.

And so as many examples on the book of what I just reference, the fact that as hard as he is on his executives, hard is he seems to be on his executives, he just as support of his front line workers and genuinely cares about them. There's a bunch of examples. Here's one.

He would flag down one of his own eighteen wheelers and climb into the cap to write a hundred miles with the driver to gain first hand experience that might improve transportation. He would get up at two thirty in the morning, buy a box of donuts and take him over to his wares to the warehouses loading dock, where he solicited ideas to up, create their effort. If the docker said they needed two additional shower stores, they immediately got them.

This is all connected to something that same, water and peat. Remember, repetition is resumed. Ive, so he will repeats over over, going to go out this book, but also in internal communications that he believed in management by walking around.

When sam discusses his management style, he is dead serious about identifying IT as M, B, W, A. Management by walking around. There's this company news letter called warmer world that we d go out every month.

And he says, this is hearing this reference, this repetition of the importance of managing by walking around at sit for salmon for everybody in the company is rarely appear in in an issue. Think about how crazy is every month. He's just repeating the same thing, the importance of the same thing over and over and over and over again.

These are all great ideas and smart things. The same. Well, and does. Let's get back to another mistake. He winds up retiring.

He he recruits this guy name, ron mayer, who he thought of like this boy genius. And so I will read you my note, which gives an overview of about to take place here. Stepping aside of the company, spend your whole life building because someone else is in a rush does not seem wise.

And so same is about two and fifty seven, and run mayers putting pressure on him, saying, hey, you know, I don't want to just, I want to run my whole company like I want to be CEO of walmart and know if I can do that here, then i'll have to do IT somewhere else and so he says, as he approaches fit the seventh birthday, same walton was reluctant inly, trying to change his lifestyle completely by surrendering the data day command of his walmart empire. Now sam is going to find this impossible to do, and not describe SHE retired and never retired. So where to send? And so we have conver wife in his top executives, s, he says, i'm gonna SE wrong.

If I don't step, decide and I don't anna lose them is a very talented guy. And so his official, sam had retired. Round was a new chairman and C E, O of walmart.

IT is the most uncharacteristic same wilton kind of thing that same walton never did. So essentially he retires, but he's still working. His role was now supposed be unofficial, but he could not keep his hands off when he saw something, anything he didn't think was right.

He just stepped in incorrectly on the spy. That is the way of always been, I guess I was getting in the way of ron's authority. And the problem is the numbers, the sales and profits.

And rounded mayor is doing a magnificent job, but sam just has to control the company. Bother seems conscious that he persons made a mistake. He discovered that he really wasn't ready to be retired, that he missed his old job, and so he comes as fork in the road.

He said, okay, this office working, you either have to get back into IT, take back your job, or you have to live completely. And so when he tells around, hey, i'm coming back over. I'd love to keep you.

Of course, ron's can do what most people would do is like, you know, I can't accept that i'm not going stand for emotion of believing the company. So sam takes back over control. The company does exactly he goes back doing exactly what he is doing and that say he's always recruiting now he not to lose round mayor.

He lost a bunch of like ron mayors with ten. So he lost you know a big chunk of his executive that he has got to go back and recit and he does what he does over over again. He would pitch the same person over and over, over again, says someone said same.

Walton used up men the way he threw wood into his fireplace, just like the logs they blazed up with a fury, generated powerful and beautifully efficient flames. And after a time die down into cold ashes, IT was necessary from always to be looking for good men and talent to replenish his stock pile. He fell back on old habits and started to recruit again.

Those with scornfully turned him down before one of these people was going to be David glass. The eventually CEO can trail maybe fifteen years into the future where we're in the story, going to become C. E O, and and rather successful C E.

O of warmer. And David didn't go into the job, you know, ignorant blindly, he knew. He says he was under no misconception he could expect to work harder and put in more hours than ever before in his life.

And now we get to one of most mindless things that happens in the book, and he is mind blowing to me. Remember he, he was talking about of the fact that he is not resistant to change. Now, principles is not in debate.

Somebody always wants the best ideas and he repeats over gant. You know, he says, R. C, is that former resistance to chain.

We want to low resistant to change. We're willing to change. It's a trademark of like the walmart culture.

The walmart philosophy everyday is a different situation in the real business, we have to be flexible. These are things that that sam walton would repeat. Now this, this is insane.

What they do here is the size of the investment. So at first, you know this nineteen seventy nine, okay, at first, his team is top executive people who trust like we need computers. We need help the businesses like it's too unwieldly.

We don't. We need x, we need more organized data. We will make Better decisions. And at first, sam thought, computers are just overhead. But then he listened and he learned and he changed his mind.

Ann, more important that and he invested, he put his money, was mouth, was finally his lootenant ts, educated and convinced. Sam and warmer blocked down five hundred million dollars for a modern communications puter system. And when they say computers, this time history, he's a giant IBM main frames.

And so now all the warmer stores, the warehouses and the distribution center able to communicate in real time. By thousand nine hundred and seventy nine, the stores and warehouses could communicate around the clock with headquarters. So keep in mind, inside of every single store, there's at least thirty six departments in each store and they're selling different things.

So this computer system is now telling them daily sales from nearly every store. But every single department inside of every store, they tell what the bank deposit for that day is. They would estimate sales figures.

They would flag reports on my hot selling items that they may need to either or or more, and deliver more to the stores you'd d have up to date warehouse eventful. And this goes on and on and on. So sam is writing the annual port of warmer in thousand nine hundred seventy nine.

He, he summarizes perfectly. He says the financial savings in a number of personal hours saved daily by using the computer center are even by the computer. So it's one thing to say, yeah, we're willing to change.

We want the best ideas. Sam is sixty one years old when he makes a decision, sixty one years old investing five hundred million a half a billion dollars in nineteen and seventy nine dollars. That's one of the most remarkable things in the entire book and this just proves his dedications like I want he talk about investing in technology.

Huge uh, advantage he head over other discounters too but he's put his money in his actions behind this where mouse, he said he was saying with this milk, no, we have a low recess to change. We want the best ideas. And then it's one thing to say that a completely different thing to match up actions in this half a billion or investment with that.

That's not to me, another surprising thing that I don't think I remembered. You know, i've read this book before. I've read some mountains autobots phy choice.

I've reread my highlights and notes from those books anyway, we know dozens of times, and I had forgot. So once he realized, oh, walmart a thing, he he like, man, this things grown too slowly. And it's hilarious because this is what he considered slow growth.

And i'll tell you how he fixes us. So from one thousand hundred and seventy four thousand and one thousand seventy seven, he goes from seventy eight walmart to one hundred and fifty three. So let's call that double.

And he goes some annual sales of one hundred and sixty seven million to four hundred and seventy eight million. And he's like, this is too slow, so he does. Next to something I had forgotten, he actually accelerates store growth by acquiring entire retail chains and then converting them to walmart.

Now that he's a public company now, he's got access for the first time is ever. He's got access now to way more resources. He's not constrained by money anymore.

And so he buys a chain of sixteen uh discount stores conversion into warmer. Then he buys another chain of one hundred and four stores converse in warmer. He is showing they can master both growth internally and by acquisition. So there's just a few more ideas that I want to tell you about two main ones.

But here's another interesting one, that ref effect that sam is constantly collecting information from the front lines hates people sit in the office like you need to get in stores and you need to go all across the country. But but as walmart grows, they have like this entire fleet of planes. And so they they use the planes every single day to be on site where the work is actually happening.

But his friends' daughter has a bad experience at walmart, and he actually calls her dad, who just happens to be with. And at the time I was facing, and so we hearing the story, says my daughter bought a pair shorts of her father in law. They turned out not with the right size.

So he goes back and they didn't have the right size, but the manager is refusing to give the money back. And so SHE calls her dad from the store. Her dad is happy with sam.

Sam gets on the phone and he listens to the customer, and her name is sera bell. And so he listened to sera bell and he goes OK. Let me talk to the manner sam talks to the manager.

Then the manager suddenly gets really, really nice and gives the money back. And so later on, sam friend was apologizing, no, sorry, you know, to disrupt you getting on the my daughter and he was, no, i'm glad that sir called that. Uh, what he learned on a phone call, hubby is is when worth, it's wait in gold.

I told the manager that I wanted to bring that pair shorts to our saturday morning meeting. I made him stand up and hold up the shorts. Then I asked him, what is your model? And he said, satisfaction guaranteed.

You know, every once in a while, you have to refresh their memory, this constant flow of information from the front lines, from the people actually serving the customers, from customers of cells, is something that sam walton definitely believed in. Here's another fascinating idea. This one definitely surprised me.

And I think it's another example of sam copy good ideas. I mentioned earlier that his father played a huge role in his life, you know, having a successful businessman, entrepreneur as as a father's law to give advice to nylander. He loan in the first twenty five thousand for the first store, but he saved them untold among the money in the way that he hadn't set up the state planning.

The four, four hundred lists assume that sam walton owned all that walmart stock, turned out he had given IT away years before he had any value. And he got that idea from his father mall. When and how and why he and how, and share their business resources with their four children is one of the more fascinating, untold walton stories.

The children have each own one fifth of their parents stock and property since nineteen fifty four. Sam and Helen created the trust that set this up when ron was ten and Alice was only five, doing this kind of estate planning. So earning the game was urged on by sam through his father's law, L.

S. Robson, who had earlier done precisely the same thing in giving Helen and her siblings equal shares in the vast ranch that he assembled in okhotsk. mr.

Robson was a banker and a lawyer, and he was pretty smart, sam said. I could see IT was the thing to do. And this all took place four decades ago. And so the sun is talking about this. At that time, all dad and mother had was a variety store too.

Our shares than couldn't been worth more than five thousand dollars each the time the book was is printed, which is in nineteen ninety, each of the kids were worth about two billion dollars because of this. So by turning over ownership of eighty percent of his holding to his children so early on, he avoided any substantive gift or inherent taxes. And so his father in law put the best, the best way to reduce paying a state taxes is to give your assets away before they appreciate, right? So let's talk about speed and soul Price.

This is one of my favorite search entire book, something the same. Walton said over over again that he took more ideas for so Price than any single other person. Thinking about how relentless sky was on studying everything everything is was doing is like, this is the, in fact, that a cool experience.

I read sol Prices autobots phy, it's not autographed. His biography was written after sol Price passed away by his son, rubber Price. That is episode three or four.

In that episode, I talk about how sol Price is the most influences retailer. All time walton learn from him. Jeff bazas, jim cynical, the founder of costco, the founders of home deep, the this goes on and on and on about how influential show Price was.

Anyways, I put that episode out. Rubber t Price. Souls Prices. Sun, the author that book the episode and emailed me, he loved the episode, and he thought he honor his father. His father should be honored.

If you haven't the episode back and rest and try to find a book is incredible soul places and remarkable man. So let's talk about a present speed. Look how fast sam wilton is moving. okay? So he's got this idea more successful.

He's never we just heard heard somebody to say earlier, he doesn't never gets fat and happy with success and never has never happened, didn't happen in the past and didn't happen up till the day he died. So it's always looking for, you know I believe in one more in discounters, but there is always people coming with new ideas. And he realizes that sol Prices is going to invent an entire new category.

And so he says on a january morning in ninety eight, three sam walton flies Sandy ago to investigate a new wrinkle in the a membership wholesome club we think of its costco, and which are obviously turns to same song as well. The idea originated five years earlier by savy californian trees, net sol Price soil Prices, making a standing success by selling merchandise in only a ten percent above manufacturer Prices and getting rich. If so, Price could do that same walton figure t he could do the whole sale.

Club idea was good, extremely good. And so same goes back to the villains, like, okay, we're just going to do the exact same thing, the sole Prices doing our on sand ago, and we're going to do if we're going to call sams club and we're going to start right now. This is insane.

First visit, january nineteen thousand eighty three. Okay, january. He does his first visit.

April the same year, he opens the first sams club in the next eight months before the end of one thousand and eighty three. Okay, so january first, he visits the first one, doesn't have any. By the end of that same calendar year, he's got three.

Then the next twelve months, he opens a more within three years of stepping foot in soil Prices. Price club C. M.

Now has twenty three sams club wholesale stores, and he's doing seven hundred and seventy six million dollars. That's insane from nothing to almost a billion dollars in sales in three years. And in within seven years, he's got one hundred and five of these things and there was five billion a year.

Extreme patients, coupled with extreme and tolerance for slow ess. That is the career of sam walton. He's going to take a sign to make sure this thing works.

And when IT works, he pours gasoline on IT. And so it's an extreme bias for action that runs throughout the entire book, is what jeff also says. Jeff is said to the things that he learned most from samm darom pity applied the early of amazon is through gally in a bias of action.

And I think this extreme bias of action is a great place to close and were close in sams own words. Our method success, as I see IT, is action with a capital a and a lot of hard work mixed. As we've said throughout the years, do IT try and fix IT.

It's not a bad approach in the works. There are a lot of people out there who have some great ideas, but nothing in the world is cheaper than a good idea without any action behind IT. And that is, well, leave IT.

If you have not yet read same wolton autobots phy, I would read same volta's autobots phy first. If you have a top ten list of an entrepreneurial graphs. Aug h.

That that list. So if you haven't read that one yet, I would highly recommend doing that. You can also listen to the epo de I did on the last episode I did on C M.

On debug three, episode thirty four. If you've already listen to the podcast, listen to again and read the book, then I would highly recommend getting this book as well. Same walton is far too important of an entrepreneurs only read one background about.

So if you buy this book using the link that in the showers, public player also find us com, you'll be supporting the at the same time, that is three hundred and fifty four books down one thousand ago. And I talked again soon. okay. So what you about .

to hear is this question knows us a few months ago, actually recorded a few months ago, they asked, how did history s great answers think about hiring at all the answers? People think I have a Better memory than I then actually do. You know, if people say, David, you have a great memory, my wife would laugh at that.

I forget things all the time. It's not to have a good memories. I reread things over and over, over again, every single answer, every single references about to hear in this train minute, minute episode, came from me searching all of my notes and highlights.

That option is now available to you if you like what you hear, if you think it's valuable, if you're already running a successful company and you want an easy way to reference the ideas of history. S great entrepreneurs search able database that you can go through at your convenience anytime you want. Do you go to founders notes dot com and sign up? I want to start out first with why this is so important.

There's actually this book that came out in like one thousand nine ninety seven. It's a called in the company giants. I think it's about two or eight of founders.

It's two different from N, B, A students to remember correctly. And they're interviewing a bunch of technology company founders and in the sea jobs as one of them. This is know right.

I think even before he came back to apple and they were talking about, well, yeah, we know it's important higher. But in a typical startup, a manager or founder may not always have time to spend recruiting other people. And I I first read this, the seas answer to this, you know I don't know, two years ago and I never forgot IT.

I think it's excl. I think it's sets up why, uh, this question so important and you should really be spending existing. The early is pacify all your time. Doing this in a typical sort of commander may not always have the time to spend recruiting other people. Then Steve Johnson, I disagree totally, I think, is the most important job.

Assume you're by yourself and a start up and you want a partner, you take a lot time finding a partner, right? He would be half of your company and going to post there. This idea of looking at each new higher as a percentage of the company is genius.

Why should you take any less time finding a third or fourth of your company or a fifth of your company? When your N A start up, the first ten people will determine whether the company succeeds or not. Each is ten percent of the company.

So why would would you take as much time as necessary to find all a players if three, three other ten h we're not so great, why would you start a company where thirty percent of your people are not so great? A small company depends on great people much more than a big company does. okay.

So to answer this question, the advantage that um that I have making founders and that you have a big part of listening founders is not only that I you know three hundred and biography of entrepreneurs out but I have all of my notes and highlights stored in my read wise APP and that means I can search for any topic. I can look at the past highlight of books, I can search for keywords so what I did is first of all, like what i've started do with these may um questions as I read them, decide which one i'm going to do next and then think about IT for a few days. I don't put me that just literally that that I know that the next question, just let my brain work on IT in the background for a few days and then i'll go through in searching all minutes and so that's what I did here.

And so there's a bunch of unit on up. I may have like ten or fifteen different founders talking about hiring. The first idea is the most obvious, but I think probably works best when you're already established.

So Steve jobs are talking about, hey, you know, the great weight of to higher is just find great work and find the people that did that and then try to hire them when your Steve jobs, that's a lot easier right then if you're just somebody does have reputation, may we don't have resources made your companies rather new or not as well? No, David ogly, I just did confessions of an advertising man couple episodes a three, o six or something like that through seven and he did the same thing. But he's David ogden y at that point.

So he would find he'd goes through magazines, find great advertising, great copywriting, and he'd write the personal letter and then set up a phone call. And he says he went, he was so well known, and you know, one of the best in his field that he couldn't even have to offer a job. Just the conversation.

Then the person would the he'd want to hire the person never mention IT and the person would apply to him. Um and so again, I think if you can do that, then of course the state ford find for somebody is great work. Usually you can do this. I actually have a friend. I can't say who IT is.

He's doing the story now actually um every friend that's really good at doing this he's finding people that do great stuff unit and then just called called daming them and then getting convinced mental welcome things and that usually work success of people like Younger people earlier in the korea. There's a bunch of different ways to think about this in a bunch of different ways to priority. So the first thing that that that came to mind, but I found surprising, is you read any biography on rockfeller and he had a couple ideas where he felt the optimization, you know, tables stakes at your intelligent, in your driven, in your hardworking, don't like everything to this, really know that.

But he prioritized hiring people with social skills. And so this is what he said. The ability to deal with people is as purchase for a commodity as sugar or coffee.

And I pay for I pay more for that ability than any other under the sun. There's two. The second part of this though, and this is also where twelf you have access resources.

He, he rockfalls would hire people as he found, as he found out to people, not as he needed them. It's only okay, standard oil has six open spots. Let's go find six canada, right? He come across what he considered a counter person.

He didn't even matter. Or if he didn't know what they're going to do, he like i'm just going to stack his team. And if you really think about the his partner of senator oil, he essentially built a company an executive team of founders, of course, because he was buying up all our company is very rare.

But um there's a line from tight now want to be to taking for granted the growth of his empire. He hire count people as found, not as needed. And then I found another idea in the hiring like the actual interview process.

So there's just going to have vanier bush did two episodes know I think it's two seventy and two seventy one. He is the most important american ever, uh, in history of in in terms of connecting the scientific field, private improves and the government. The most important person to keep alive the american war effort was F D.

R the second one was vana bush. Vana bush is like the forrest gump of this historical. He is involved in everything from the manhandling ject to discovering like a Young clock shanon to building a mechanical computer like this guy literally has done.

He just, he pops up in these box over over again. If you are reading about american business history during world war ii and post war two, you are going to come across the name beneath bush over and over again. I read his fantastic autobiography called pieces of the action and a this weird highlight.

And so this is his brilliant and unusual job interview process. And so he talked about the orange ation he's running called amma at ammirati harried, a Young physicist from texas named cg smith. The way I hired him is interesting.

An interview of that sort is always likely to be on on an artificial basis in somewhat embarrass. So I discussed with him a technical point on which I was then genuinely puzzled. The next day he came in with a they need solution, and I hired him at once.

Here's another idea. This is from no ambition, no ambition ones. The founder of a tari founder, trucker, she's and Steve jobs mentor. He hired Steve jobs. When Steve jobs was like nineteen at a tory, he would ask people they're reading habits in interviews.

This is why one of the best ways his whole thing was he wanted to build all of his companies, laid on the foundation of creative people. So that's what he's looking for him like. I need creative people, one of the best ways to find creative people, to ask a simple question, what books do you like? I ve never met a creative person in my life that didn't respond with enthusiasm to a question about reading habits.

Actually, which books people read is not as important as a simple fact that they read at all. I've known many talented engineers who hated science fiction but loved, say, books on bird watching, a blind but often accurate generalization, people who are curious and passionate read, people who are apathetic in a different don't I remember what that that's such a great line, and I always agree with bit. I remember one i'm going to read again, a blind, but often accurate generalization.

People who are curious impassionate read, people who are apathetic and and different. Don't I remember one particular woman who, during an interview, told me that he had read every book that I had read. So I started watching books I hadn't read, and SHE had read those two.

I didn't know how someone in her late was found that this much time to read so much, but I was impressed. I was so impressed that I hire her right there and assigned her to international marketing, which is having problems. This is why, this is why I am reading.

So second to you, a job with a lot of moving parts benefits from a brain that has a lot of moving parts. IT wouldn't be possible to have read that many books without such a brain. So you see what I mean, like we start with, see jobs.

This is the most important thing that your roles, that leader, the company, the founder to do right, and you are in, is so important to study. This is why glad this this question exists and why i'm glad that I I took the time and I had, like the four side to OK. I actually really organized my thoughts and notes, because there's no way I would have remembred all this without being being able searching my read wise, right? But you have rock flowing.

This is what's important to me. You have bushing. This is how I have now.

I you have no bush saying, well, here's another weird thing that I learned. Let me go through what warm buffet says about this. So this is about the quality.

One thing that is consistent, where is jobs buffer bassos? H Peter tio, there's just possible from over gan. They talk about the importance of trying to find people that, that are Better than you. The hiring bar constantly has to increase, then obviously the large of the company gets that's impossible.

Uh, Steve job has a great quote, where is like, you know, pixar was the first time I see I saw an entire team, entire company of a players, but they had four hundred players. They had four hundred team members. He's like at the time, apple three thousand, that is impossible to have three thousand a player.

So there is some number that your company may grow to or just you're just not you're not going to have thousands of a players in my argument. I me know if you get a four hundred of issue. I mean, i'll take steeves word for IT on there.

And pigs are definitely produce great products, but it's probably a lot lower mats. Well, so warm buffer would tell you to use David ogle's hiring philosopher and so warn at charan, I know that the right players will make almost any team manager look good again. That is why it's the most important function of the founder, maybe directly next to the product, right?

Of all the product, actually, those of people building your product, we subscribe to the philosophy of orgasm and founding the David. This would all would be said if each of us, highest people who are smaller than we are, we should become a company of jars. But if each of us higher people who are bigger than we are, we shall become a company of giants.

David or jeff bases rather use the variation of organ's idea, too. Jeff used to say in amazon, every time we hire someone, he or SHE should raise the bar for the next higher so that the overall talent pool is always improving. And talk about the idea amazon, where the the future harder that we do, should be so good that if you had applied for the job already, have an amazon, you win, get in.

That's a very interesting idea. Take your time with recruiting. Take your time with hiring. This is a great book on the history of paypal. Actually recently become friends with the author s name to SONY um and this is in his book the the most fascinating thing that I found was that paypal priorities speed so from the time they they're founded to the time they sell to ebay, like four years Jimmy spent more time researching the book than for he said, six years researching book that I was teasing because like you took a long on a book that they took start and selling company IT just speak select the quality he trying to do but that as a by product of that like obviously they move fast but they try to speed everything else except in one area.

Accruing max ledge kept the bar for talent succeeding the high, even if that came at the expensive, speedy staffing max cap, repeating a higher A B S, higher C S. So the first b you hire takes the whole company down. Let's read that again.

A players hire a players, b players hire S, C players. So the first b player you hire takes the whole company down. Uh, additionally, the team, the company leaders Mandated that all prospects is another idea for you.

All prospects must meet every single number of the team. Now the next one is the most bizarre, makes sense if you study. I did the three part in realism, three part series on the realism, actually, to read those books again, because the party is like fifty times is bigger, then then when I H publish episodes and he's just .

it's crazy. So he would hire, based on the coin, the self confidence level of the canada.

Listen to this. I have two miles. I don't like living. Okay.

this is just okay because this is .

you read about their ellison and he's one of these people like really easy interface with because you you just know exactly who you think what's important to. That's why I think it's so funny. Ellison insisted that his recruiters hire only the finest and cautious new college graduates.

When they were recruiting from universities, they asked people, are you the smartest st person, you know? And if they said yes, they would prepare them. If they said no, they would say, who is and they would go higher.

That guy and said, I don't know if you got to smart the people that way, but you definitely got the most arrogant elements. And this is why what a personality the founder is, largely the culture of the company. Apple is Steve jobs. Apple is stegall ten lives, right? I just texting founder friend of mine, he loses the podcast actually about to the podcast he's going to dislike, uh, process of self discovery like he's already started a bunch of for companies are really successful.

But he's like, I think i'm more of this type of founder than the other type of founder and that's good that he's doing that because he he's hopeful his next mission is like his life mission, you know and you can get realized mission to you to figure who you are. Ellison knew who he was. Ellison, swinging combat of style, became a part of the company's identity.

This argan culture had a lot to do with oracle success. Here's another odd idea for you. Is he shark the founder four seasons actually could figure out that in his business, which was hotels, right, that hiring, could hiring the right person, could actually be a form of distribution for his hotel.

He gave me the idea because of what, what do we know? What do you? And I know in our bones that histories greatest founders are all red biography. They all read biggies of people that came before them and took ideas from them. Is he sharp was trying to build four seasons.

What do you think he did? He picked up a biography of seizure ritts, the guy that risk called his, named after the arguably great hotel year of all time. And would he realized, oh, shit, rds.

He, he says, remembering that these are ritz made his, who's world famous by hiring some of the formal chefs, we decided do something similar. So what is he said, our rich went out important with August scofield. What seize or ritz was to to building hotels. August scope e was to french cooking. And to what happened is your partner with worldly ous ships.

People come into a restaurant that's in the hotel because the world famous shift, and now they know about your hotel, that leads to more get that lead to more activity in your restaurant at the your own, but also leads to more brand recognition of your hotel. And then as a byproduct that more people staying at hotel, so hiring as a form of distribution. This is fascinating as a fascinating idea.

Okay, here's a problem. You can identify great people, right? Maybe they even want to come work like you identify them.

You've sold them. Hey, this is what, this is our mission. This is what we we're doing.

And yet humans have complicated lives. They have spouses, they have kids. They have a reason.

Maybe they can move across the country to work for you. You know, they want to. So there's a problem solving element that you see these books on.

You have to solve like you vary identified person, you've recruit them. They can go for some other reason. Okay, well, the great founders are not going to take no for answer. I read in in this book called lift off, which is about the first six years of spaces.

This is what elon mustard they had anticipated, ted, his friends issue, having convinced, must they need to bring this, bring Young engineer from turkey on board? IT became a matter of solving the problem. His wife had a job in sanford.

Cisco SHE would need one in los Angeles, right? As for space sexes at time, these are solvable problems, and island's Better solving problems than almost anyone else must, therefore came into his job interview, prepared about half through muss, told the guy that he wants to hire. So I heard you don't want to move to L.

A. And one of the reasons is that your wife force for google. Well, I just talked to Larry and you're gona transfer your wife down to L A.

So what are you going to do now? To solve this problem, must could called his friendly ry page, the cofounder of google. The engineer sats stunned silence for mama, but then he replied, given all that, he would come to work at space.

That's really smart. There is another idea when you're promoting or you're going to promote when with in or from without, you know, that's depending on you, depending on what what's going on. I do think this is interesting though.

This is again in lush wab who built this this really a valuable chain of a like higher companies in the acidic northwest actually found out about charlie mongers. K, you should read the biography. He said he didn't say to me personally.

He said IT to in like one of the bircher meetings that to study lesh rob had one of the both uh one of the more test uh, financial incentive structures and any company that that try mugger come across. So this is what lesh wab did. He did not want to hire from.

He did want to hire other people from other companies because they might come with bad habits. He liked to train his own executives, and so he says, in our thirty four years of business, we have never hired a manager from the outside. Every single one of our more than two hundred and fifty managers and assistant managers started at the bottom changing tires.

They have all earned their management job by working up. And another thing, if you're going to hire the best of the best in a players there, a players don't like to be very romantic. And so this came in Larry Miller's automotive phy called driven.

He owns like, he owned like ninety three companies. Although utah cordial erh movie, there's all kinds of crazy, he also owned the, the, the B. T.

utah. And what was fascinating, he's trying to recruit Jerry sloan as a coach at at the point. And Jerry sloan only take the job on one condition. And I really like IT. I really like this idea.

If you hire me, let me run the team and business, right? That what you have me one of the best things we had ever done was higher Jerry song as coach at the time. He said, i'm only going to ask you for one thing, if I get fired, let me get fired for my own decisions.

If you hire me, let me run the team flash business. Here's is another idea from Thomas Edison that I think is faster. really. I the way I think about the founders is like you're developing skills that you can hire for you, you're onna hire for everything else, but you shouldn't be horrible.

And Edison wasn't Edison expressing his views on the prominent role of applied scientists, which, what he considered himself, coin the expression, I can hire mathematicians, but they can't hire me. And so when I read that paragraph for the first time, I note I left myself was develop skills that you can hire for capitalism, rewards things that are both rare and valuable. S A laughter will give you your advice that you'd need to hire people, line with your thinking and values, hire the best people, this is vital.

Hire people who think as you do and treat them well in our business, they are top priority. So this ideas that seems kind of weird, like hire people who think like you. This is obvious ly, not one right way to build a business. I think that your business should be an expression, your personal in who you as a person at the core. And so I think there is an art to the building of your business.

And the reason you use the word art, I don't mean like a hot toy ty pretentious manner that's me at all I don't give me care about are all really I mean that you're making decisions not just based on economics, like there are non economic important decisions based on how you're building your business. Like you could probably make more money doing a decision a but decision aid goes against who you are as a person or you just don't like IT or it's just not as elegant or beautiful and so therefore you don't do IT. So that's what I mean about, you know hire people who think you you do and what for whatever reason.

When I read S A lot say that I was okay that there's like this art to what she's doing. One thing that can be helps recruiting ah this compromise til I think this is the book zero to one understand that most companies don't even differentiate their pitches to potential recruits and to hiring. So therefore, like they're just going as a product that you're gona wind up with a lower overall talent base.

And so he says, what's wrong with valuable stocks? Smart people are pressing problems. Nothing but every company makes us these claims, so they won. Hope you stand out general and undifferentiated pitches to join your company. Don't see anything about why every recruiting in your company instead of money of instead of many others, that idea like your pitch, you're actual, he will tell you you you shouldn't building on difference in commodity business.

But even above, beyond, like you're the the the mission that you're trying to engage everybody to join you in that pitch, that sail, sail you're trying to make to potential recruit should be differentiated, should not if that person's playing to five real jobs, there should not be like like they may not like your mission, they may not like your pitch, but there shouldn't able to compare anything else. Uh, another quote from no ambush, no higher for passion and intensity. That's what he would do or that's what he did when he found Steve jobs.

If there was a single characteristic to separate Steve jobs from the massive employees, IT was his passionate enthusiasm. Steve had one for one speed full blast. This was the primary reason we hire him.

And one thing all these stones have in common is that you know how important hiring is, and when something important, you do IT yourself. This is, again, elon mosk hiring. He interviewed the first three thousand employees at spaces that important was one of mosques most valuable skills, with the ability determined whether someone would fit his mold.

His people had to be brain, they had to be hardworking, and there could be no nonsense. There are a ton of phonies out there and not money, who are the real deal must set of his approach to interviewing engineers. I can usually tell within fifteen minutes, and I can sure, I can for sure tell within a few days of working with them must made hiring a priority.

He personally met with every single person in the company hired through the first three thousand employees. He required late nights and weekends, but he felt he was important to get the right people for his company. And then the close on this, we started with Steve jobs telling us why IT was so important and why should be a large part of how you find time.

And now will close with what you do after, what do you do after you? Harder, the person this what he says, it's not just recruiting after recruiting, its building environment that makes people feel they're surrounded by equally talented people and their work is bigger than they are. The feeling that their work will have a tremendous influence and is part of a strong clear vision.

So that is the end to that twenty minute, minute episode. I just listen to the holding and IT IT really does. I think it's a perfect explanation and illustration of why I think founders notice so valuable because some of those books I have read in five, six and just they really need to have a hertug database of all these, these ideas like this, collected knowledge of some of the issues, greatest entrepreneurs to reference and then contextually apply to our own businesses.

It's nothing short of like it's magic. It's a really the way think about that. I think it's a massive super power, gives me a massive superpower. I couldn't make the power without. I also think if you have access to IT to make your business butter. And so if you ready running a successful business, I highly recommend you invest in the scription and you can do that by going to founder notes dot com.