WEBVTT 00:00:00.000 --> 00:00:02.580 Welcome back to the Deep Dive. Today we are tackling 00:00:02.580 --> 00:00:06.290 a subject that is, well... It's quite literally 00:00:06.290 --> 00:00:09.210 too big to ignore. It's everywhere. It really 00:00:09.210 --> 00:00:11.609 is. We're talking about a legacy that's visible 00:00:11.609 --> 00:00:14.029 in pretty much every corner of the globe and 00:00:14.029 --> 00:00:16.050 certainly every corner of the United States. 00:00:16.170 --> 00:00:18.789 You see the blue vests. You see that Spark logo. 00:00:18.989 --> 00:00:21.230 You see the massive parking lots. It's part of 00:00:21.230 --> 00:00:23.250 the physical landscape now. Absolutely. It's 00:00:23.250 --> 00:00:25.690 just woven into the fabric of daily life. But 00:00:25.690 --> 00:00:29.010 the machinery behind that landscape, it's arguably 00:00:29.010 --> 00:00:31.530 the most efficient economic engine ever built. 00:00:31.760 --> 00:00:34.039 by a single human being. It's a legacy that defines 00:00:34.039 --> 00:00:36.820 modern retail. Yeah. I mean, it didn't just participate 00:00:36.820 --> 00:00:39.899 in global commerce. It effectively rewrote the 00:00:39.899 --> 00:00:43.000 rules. It absolutely did. But before we get into 00:00:43.000 --> 00:00:45.140 the stores and the trucks and the, you know, 00:00:45.159 --> 00:00:47.140 the supply chains, I want to throw some numbers 00:00:47.140 --> 00:00:49.179 at you, because when we talk about this specific 00:00:49.179 --> 00:00:52.340 family, the numbers just they kind of stop making 00:00:52.340 --> 00:00:55.000 sense to the average human brain. Oh, yeah. They're 00:00:55.000 --> 00:00:57.460 abstract. Yeah. It creates a distortion field 00:00:57.460 --> 00:01:00.960 almost. The wealth is so vast. It's just hard 00:01:00.960 --> 00:01:03.939 to comprehend on a human scale. Exactly. So let's 00:01:03.939 --> 00:01:05.900 just look at the bank account for a second. As 00:01:05.900 --> 00:01:09.359 of January 2025, the family behind this empire, 00:01:09.700 --> 00:01:13.340 the Waltons, they remain the richest family in 00:01:13.340 --> 00:01:16.019 the United States. Still. After all these years. 00:01:16.079 --> 00:01:18.459 Still. We are talking about a collective net 00:01:18.459 --> 00:01:23.219 worth of approximately $440 .6 billion. That 00:01:23.219 --> 00:01:25.700 is just a staggering amount of capital concentrated 00:01:25.700 --> 00:01:28.500 in one lineage. To put that in perspective for 00:01:28.500 --> 00:01:31.540 you, that's a GDP larger than many mid -sized 00:01:31.540 --> 00:01:34.340 nations. Wow. It's wealth that generates its 00:01:34.340 --> 00:01:36.560 own gravity, you know. And the company itself, 00:01:36.700 --> 00:01:38.620 it grew to be the world's largest corporation 00:01:38.620 --> 00:01:41.859 by revenue. And not just that, it is also the 00:01:41.859 --> 00:01:44.420 biggest private employer on the planet. Which 00:01:44.420 --> 00:01:46.379 means the decisions made inside that company, 00:01:46.780 --> 00:01:48.719 don't just affect shareholders, but even close. 00:01:48.879 --> 00:01:51.459 They affect labor markets, global supply chains, 00:01:51.680 --> 00:01:54.560 and local economies everywhere. In what way? 00:01:54.760 --> 00:01:56.519 Well, think about it. If they decide to change 00:01:56.519 --> 00:01:59.959 a policy on, say, cardboard packaging, the entire 00:01:59.959 --> 00:02:02.980 global packaging industry has to pivot. That 00:02:02.980 --> 00:02:04.959 is the level of influence we're discussing here. 00:02:05.420 --> 00:02:08.300 Precisely. And honestly, when you hear Walmart... 00:02:08.469 --> 00:02:10.990 You probably have a very specific image in your 00:02:10.990 --> 00:02:12.750 head. Maybe it's the greeter at the door. Maybe 00:02:12.750 --> 00:02:14.830 it's the rollback smiley face. Or maybe it's 00:02:14.830 --> 00:02:16.689 just the sheer convenience of buying, I don't 00:02:16.689 --> 00:02:18.509 know, tires and milk in the same trip. Right. 00:02:18.889 --> 00:02:22.550 It's a brand. It's a fixture. But today we aren't 00:02:22.550 --> 00:02:24.590 just talking about the brand. We're going back 00:02:24.590 --> 00:02:28.389 to the source. We're asking a very simple yet 00:02:28.389 --> 00:02:31.729 incredibly confusing question. How does a farm 00:02:31.729 --> 00:02:34.810 boy from Kingfisher, Oklahoma, who grew up milking 00:02:34.810 --> 00:02:37.550 cows during the Great Depression, build an engine 00:02:37.550 --> 00:02:40.550 that literally changes the global economy? It 00:02:40.550 --> 00:02:42.490 is the story of Sam Walton. All right. And to 00:02:42.490 --> 00:02:44.569 understand the empire, you really have to understand 00:02:44.569 --> 00:02:47.210 the man because the DNA of Walmart is, for all 00:02:47.210 --> 00:02:49.210 intents and purposes, the DNA of Sam Walton. 00:02:49.229 --> 00:02:52.169 It's his neuroses, his drive, his values. All 00:02:52.169 --> 00:02:54.370 of it just scaled up to a global level. Samuel 00:02:54.370 --> 00:02:57.969 Moore Walton, born 1918, died in 1992. And the 00:02:57.969 --> 00:03:00.530 contrast between how he started and how he finished 00:03:00.530 --> 00:03:02.990 is, it's what really gets me. It's dramatic. 00:03:03.310 --> 00:03:05.490 We have this image of him near the end of his 00:03:05.490 --> 00:03:08.560 life. He's 74. He's in a hospital bed in Little 00:03:08.560 --> 00:03:12.639 Rock, Arkansas. He's got bone cancer. He is literally 00:03:12.639 --> 00:03:16.120 days away from dying. And most people in that 00:03:16.120 --> 00:03:18.479 situation are, you know, saying their goodbyes. 00:03:18.479 --> 00:03:20.740 They're sleeping or maybe watching TV. But not 00:03:20.740 --> 00:03:24.000 Sam. No. According to his son, Rob, he's in that 00:03:24.000 --> 00:03:26.580 bed reviewing sales data. In the hospital bed. 00:03:26.680 --> 00:03:29.240 Days before he died. Yeah. He's got the spreadsheets 00:03:29.240 --> 00:03:31.560 for the entire chain spread out. He wants to 00:03:31.560 --> 00:03:33.710 know how the stores are doing. That is a level 00:03:33.710 --> 00:03:35.789 of obsession that I think we really need to unpack 00:03:35.789 --> 00:03:38.229 because you just don't get from milking the family 00:03:38.229 --> 00:03:42.169 cow to reviewing billions in sales data on your 00:03:42.169 --> 00:03:44.789 deathbed without a very specific and very intense 00:03:44.789 --> 00:03:47.330 personality type. That isn't just hard work. 00:03:47.430 --> 00:03:49.830 That's something else. That's a fundamental inability 00:03:49.830 --> 00:03:52.009 to switch off the engine. And that really is 00:03:52.009 --> 00:03:54.250 the mission of this deep dive. We want to move 00:03:54.250 --> 00:03:57.189 past the logo and the storefronts. We want to 00:03:57.189 --> 00:04:00.009 analyze the specific strategic pivots, the failures. 00:04:00.210 --> 00:04:02.150 And believe me, there were significant failures. 00:04:02.189 --> 00:04:04.810 failures and the logistical innovations that 00:04:04.810 --> 00:04:07.050 Sam Walden pioneered. Yeah. We're going to talk 00:04:07.050 --> 00:04:08.930 about something later called the Newport lease 00:04:08.930 --> 00:04:11.770 disaster, which it sounds like a legal thriller, 00:04:11.969 --> 00:04:14.409 but it's actually the origin story of his entire 00:04:14.409 --> 00:04:17.310 business philosophy. It was a catastrophe for 00:04:17.310 --> 00:04:19.670 him at the time, a total disaster, but it was 00:04:19.670 --> 00:04:22.490 a necessary one. It was his real world MBA moment 00:04:22.490 --> 00:04:25.050 before he ever really got started. And we're 00:04:25.050 --> 00:04:26.569 also going to talk about the Meiser influence 00:04:26.569 --> 00:04:29.029 and how Walton wasn't always the brilliant inventor, 00:04:29.269 --> 00:04:31.470 but he might have been the best copycat in business 00:04:31.470 --> 00:04:34.949 history. Hey, adaptation is its own form of genius. 00:04:35.449 --> 00:04:38.490 And he knew that better than anyone. So buckle 00:04:38.490 --> 00:04:40.949 up. This is a story of resilience, obsession 00:04:40.949 --> 00:04:43.870 with detail. And what happens when you apply 00:04:43.870 --> 00:04:47.370 a certain kind of rural strategy to global capitalism? 00:04:47.889 --> 00:04:49.750 Let's start at the very beginning. Section one, 00:04:49.870 --> 00:04:52.709 the foundation. And context is everything here. 00:04:53.000 --> 00:04:55.800 Sam Walton wasn't born into retail royalty. He 00:04:55.800 --> 00:04:58.439 wasn't some dynasty kid. He was born in 1918 00:04:58.439 --> 00:05:01.319 to Thomas and Nancy Walton in Kingfisher, Oklahoma. 00:05:01.660 --> 00:05:03.860 In 1918. That's upside. That sets him up to grow 00:05:03.860 --> 00:05:05.759 up right alongside the Great Depression. His 00:05:05.759 --> 00:05:08.620 formative years are defined by it. Exactly. And 00:05:08.620 --> 00:05:11.300 the family dynamic was, well, it was interesting. 00:05:11.720 --> 00:05:14.560 They lived on a farm initially, but farming in 00:05:14.560 --> 00:05:17.339 the early 20s in Oklahoma wasn't exactly a goldmine. 00:05:17.420 --> 00:05:19.660 It just didn't provide enough money to raise 00:05:19.660 --> 00:05:22.240 the family. So his father, Thomas Walton, had 00:05:22.240 --> 00:05:24.879 to pivot. He did. He went into farm mortgaging. 00:05:24.959 --> 00:05:27.180 He started working for his brother's company, 00:05:27.420 --> 00:05:30.060 the Walton Mortgage Company, which was an agent 00:05:30.060 --> 00:05:32.279 for Metropolitan Life Insurance. Okay, so he 00:05:32.279 --> 00:05:34.740 goes from working the land himself to handling 00:05:34.740 --> 00:05:36.800 the paper for the land. And it was a grim job, 00:05:36.980 --> 00:05:39.139 especially then. This was the depression. His 00:05:39.139 --> 00:05:41.660 father was the guy who had four clothes on farms 00:05:41.660 --> 00:05:45.370 when people couldn't pay. Oof. That has to shape 00:05:45.370 --> 00:05:47.910 a kid's perspective on money and stability. I 00:05:47.910 --> 00:05:50.170 mean, watching your dad have to take farms away 00:05:50.170 --> 00:05:53.029 from neighbors, people you probably know because 00:05:53.029 --> 00:05:55.069 they couldn't make their payments. It certainly 00:05:55.069 --> 00:05:57.069 instills a sense of the fragility of success, 00:05:57.310 --> 00:05:59.769 doesn't it? Yeah. You see firsthand that hard 00:05:59.769 --> 00:06:02.029 work isn't always enough if the wider economy 00:06:02.029 --> 00:06:03.810 turns against you. And because of this work, 00:06:03.889 --> 00:06:06.009 the family moved constantly. That's another piece 00:06:06.009 --> 00:06:07.930 of it. They moved from Oklahoma to Missouri, 00:06:08.110 --> 00:06:10.430 just hopping from one small town to another trying 00:06:10.430 --> 00:06:12.430 to scrape by. It's a really important detail. 00:06:12.649 --> 00:06:17.089 He didn't have one single hometown growing up. 00:06:17.089 --> 00:06:20.110 Not really. He had to learn to adapt to new places 00:06:20.110 --> 00:06:23.410 constantly. He had to learn to read rooms, make 00:06:23.410 --> 00:06:25.930 friends fast. And figure out the social hierarchy 00:06:25.930 --> 00:06:29.069 of a new school instantly. He got good at it. 00:06:29.170 --> 00:06:31.550 Eventually they did settle in Columbia, Missouri. 00:06:32.050 --> 00:06:35.089 But that scrappiness was just baked into him 00:06:35.089 --> 00:06:38.279 from a very early age. And there's this philosophy 00:06:38.279 --> 00:06:40.199 he talked about later in life, this idea of being 00:06:40.199 --> 00:06:43.079 a giver versus taker. Yes. This comes from his 00:06:43.079 --> 00:06:45.180 childhood chores, right? I read that he wasn't 00:06:45.180 --> 00:06:47.220 just doing chores for pocket money. It was way 00:06:47.220 --> 00:06:49.600 more serious than that. He was contributing to 00:06:49.600 --> 00:06:51.819 the family's actual survival. It was essential 00:06:51.819 --> 00:06:54.560 labor. It wasn't optional. He milked the family 00:06:54.560 --> 00:06:56.500 cow, but he didn't just milk it for the kitchen 00:06:56.500 --> 00:06:59.199 table. He bottled the surplus milk. And drove 00:06:59.199 --> 00:07:01.579 it to customers. He was a dairy delivery man 00:07:01.579 --> 00:07:03.500 as a kid. He was running a tiny distribution 00:07:03.500 --> 00:07:06.980 network at like age 10. And a paperboy. He had 00:07:06.980 --> 00:07:08.939 a paper route for the Columbia Daily Tribune. 00:07:09.040 --> 00:07:11.920 And on top of that, he sold magazine subscriptions. 00:07:12.339 --> 00:07:14.740 So he was just hustling on multiple fronts from 00:07:14.740 --> 00:07:17.639 day one. He said later in life that he learned 00:07:17.639 --> 00:07:20.379 from a very early age that it was important for 00:07:20.379 --> 00:07:23.980 kids to help provide for the home, to be givers, 00:07:23.980 --> 00:07:27.139 not takers. That work ethic wasn't just about 00:07:27.139 --> 00:07:30.120 earning his keep. It was about contributing to 00:07:30.120 --> 00:07:32.569 the survival of the family unit. That's a subtle 00:07:32.569 --> 00:07:34.649 difference, but it's a big one. It's the difference 00:07:34.649 --> 00:07:38.009 between I want some money for candy and I need 00:07:38.009 --> 00:07:40.930 to help put food on the table. That has to wire 00:07:40.930 --> 00:07:43.310 your brain differently about the value of a dollar 00:07:43.310 --> 00:07:46.069 and the purpose of work. Precisely. And that 00:07:46.069 --> 00:07:49.670 drive didn't just manifest in labor. He was incredibly 00:07:49.670 --> 00:07:52.329 achievement -oriented in his social and academic 00:07:52.329 --> 00:07:55.050 life, too. I mean, if there was a badge to earn 00:07:55.050 --> 00:07:58.000 or a title to win, Sam Walton wanted it. Yeah, 00:07:58.040 --> 00:07:59.800 I was looking at his list of accolades from when 00:07:59.800 --> 00:08:01.500 he was young. It's almost annoying how good he 00:08:01.500 --> 00:08:03.379 was at everything. You know that kid in school 00:08:03.379 --> 00:08:05.540 who's good at sports gets straight A's and is 00:08:05.540 --> 00:08:07.779 also, like, super nice and popular? That was 00:08:07.779 --> 00:08:10.120 him. He was just highly, highly driven. In the 00:08:10.120 --> 00:08:11.879 eighth grade, when he was living in Shelby and 00:08:11.879 --> 00:08:13.939 Missouri, he became the youngest Eagle Scout 00:08:13.939 --> 00:08:16.120 in the state's history at that time. The youngest 00:08:16.120 --> 00:08:19.160 in the whole state? In eighth grade? That's intense. 00:08:19.319 --> 00:08:21.459 That requires a level of organizational discipline 00:08:21.459 --> 00:08:24.600 that most adults don't have. It is. And it wasn't 00:08:24.600 --> 00:08:27.529 a fluke. Later in life, he actually received 00:08:27.529 --> 00:08:30.529 the Distinguished Eagle Scout Award from the 00:08:30.529 --> 00:08:32.850 Boy Scouts of America, which is a huge honor. 00:08:33.029 --> 00:08:35.750 But it wasn't just scouting. In high school, 00:08:35.830 --> 00:08:38.230 at David H. Hickman High School in Columbia, 00:08:38.450 --> 00:08:41.740 he was voted... Most versatile boy. Most versatile 00:08:41.740 --> 00:08:44.240 boy. I love that. It sounds like a superlative 00:08:44.240 --> 00:08:46.399 that doesn't exist anymore, but it fits him perfectly, 00:08:46.620 --> 00:08:49.039 doesn't it? He wasn't just the smart kid or the 00:08:49.039 --> 00:08:51.240 jock. He was the guy who could do it all. And 00:08:51.240 --> 00:08:53.740 that versatility just continued right into college. 00:08:54.000 --> 00:08:55.980 He went to the University of Missouri. He was 00:08:55.980 --> 00:08:59.179 an ROTC cadet. He waited tables in exchange for 00:08:59.179 --> 00:09:01.960 meals again. That constant necessity to work. 00:09:02.080 --> 00:09:04.080 He wasn't coasting on family money. He was literally 00:09:04.080 --> 00:09:06.539 working for his supper, even in college. Not 00:09:06.539 --> 00:09:09.240 at all. He joined the Beta Theta Pi fraternity. 00:09:09.529 --> 00:09:12.289 He was tapped by QEBH, which was this secret 00:09:12.289 --> 00:09:15.210 society, honoring the top senior men on campus. 00:09:15.409 --> 00:09:18.250 And he was in the Military Honor Society, scabbard 00:09:18.250 --> 00:09:19.909 and blade. He was a joiner. He was a leader. 00:09:20.029 --> 00:09:21.669 But here's the one that really stands out to 00:09:21.669 --> 00:09:24.470 me. Looking back at his future career, leading 00:09:24.470 --> 00:09:28.490 a massive organization. He served as president 00:09:28.490 --> 00:09:31.190 of the Burrell Bible class. What is that exactly? 00:09:31.389 --> 00:09:34.149 It sounds huge. It was. It was a large class 00:09:34.149 --> 00:09:35.909 made up of students from both the University 00:09:35.909 --> 00:09:39.320 of Missouri and the nearby Stevens College. We're 00:09:39.320 --> 00:09:41.659 talking about leading a massive volunteer group 00:09:41.659 --> 00:09:44.200 of his peers. OK, so that requires charisma. 00:09:44.220 --> 00:09:46.720 That requires real organization. You can't just 00:09:46.720 --> 00:09:49.200 order people to do things in a situation like 00:09:49.200 --> 00:09:50.919 that. You have to inspire them. It's community 00:09:50.919 --> 00:09:53.340 organizing, basically. And it tells you something 00:09:53.340 --> 00:09:55.580 that when he graduated in 1940 with a degree 00:09:55.580 --> 00:09:59.169 in economics, his classmates voted him. Permanent 00:09:59.169 --> 00:10:01.330 president of the class. Permanent president. 00:10:01.370 --> 00:10:03.350 That implies he was the guy everyone looked to. 00:10:03.429 --> 00:10:05.809 The natural leader of the pack. He just had that 00:10:05.809 --> 00:10:08.470 magnetic quality. He wasn't just a grinder. He 00:10:08.470 --> 00:10:10.649 was a leader of people from a very early age. 00:10:10.690 --> 00:10:13.490 So he graduates in 1940. The world is on the 00:10:13.490 --> 00:10:17.070 absolute brink of chaos with World War II. But 00:10:17.070 --> 00:10:19.730 before the war fully pulls him in, he gets his 00:10:19.730 --> 00:10:22.649 first real taste of corporate retail. He does. 00:10:23.819 --> 00:10:27.299 Three days after graduation, he joins JCPenney 00:10:27.299 --> 00:10:29.679 as a management trainee. In Des Moines, Iowa. 00:10:29.960 --> 00:10:32.759 Yep. Three days. He didn't take a gap year or 00:10:32.759 --> 00:10:35.240 a summer off. He went straight to work. And the 00:10:35.240 --> 00:10:39.399 pay, what was he making? $75 a month. $75 a month. 00:10:39.440 --> 00:10:41.519 Wow. I know inflation is a thing, but even back 00:10:41.519 --> 00:10:44.600 then, that's humble. That is starting at the 00:10:44.600 --> 00:10:46.639 absolute bottom of the ladder. It was a starting 00:10:46.639 --> 00:10:49.139 wage. Yeah. But this is where he learns the system. 00:10:50.559 --> 00:10:53.389 JCPenney was a machine. They had manuals. They 00:10:53.389 --> 00:10:55.970 had procedures. They had protocols for everything. 00:10:56.169 --> 00:10:58.570 And Sam just soaked it all up. How long was he 00:10:58.570 --> 00:11:01.169 there? He spent about 18 months there. But then, 00:11:01.289 --> 00:11:03.529 you know, history calls. He resigned in 1942, 00:11:03.850 --> 00:11:05.990 anticipating he'd be inducted into the military 00:11:05.990 --> 00:11:08.370 for the war effort. And this is where that logistics 00:11:08.370 --> 00:11:11.070 brain starts to get some formal high -stakes 00:11:11.070 --> 00:11:13.129 training, I imagine. He wasn't on the front lines 00:11:13.129 --> 00:11:16.110 charging beaches, was he? No. Due to a minor 00:11:16.110 --> 00:11:18.309 heart irregularity, he wasn't cleared for combat. 00:11:18.590 --> 00:11:20.549 So he joined the U .S. Army Intelligence Corps. 00:11:20.990 --> 00:11:23.110 He ended up reaching the rank of captain. And 00:11:23.110 --> 00:11:25.649 what was his role? His job was supervising security 00:11:25.649 --> 00:11:28.590 at aircraft plants and prisoner of war camps. 00:11:29.309 --> 00:11:31.889 For instance, he served for a time at Fort Douglas 00:11:31.889 --> 00:11:34.549 in Salt Lake City, Utah. Okay, stop and think 00:11:34.549 --> 00:11:37.230 about that. Supervising security at an aircraft 00:11:37.230 --> 00:11:40.590 plant during wartime. That is all about systems, 00:11:40.690 --> 00:11:43.889 details, preventing loss, monitoring the flow 00:11:43.889 --> 00:11:46.850 of people and materials. Exactly. Intelligence 00:11:46.850 --> 00:11:49.470 work requires a meticulous, almost obsessive 00:11:49.470 --> 00:11:52.450 attention to detail. You have to understand vulnerabilities 00:11:52.450 --> 00:11:54.929 in a system. You have to understand choke points. 00:11:55.129 --> 00:11:57.250 You have to look for the cracks in the wall before 00:11:57.250 --> 00:11:59.529 someone else exploits them. Those are skills 00:11:59.529 --> 00:12:02.490 that are 100 % directly transferable to retail 00:12:02.490 --> 00:12:05.269 logistics and loss prevention. If you can secure 00:12:05.269 --> 00:12:07.570 an aircraft plant, you can probably secure a 00:12:07.570 --> 00:12:09.850 supply chain. It's the same mindset. So the war 00:12:09.850 --> 00:12:12.830 ends. It's 1945. Captain Sam Walton is a civilian 00:12:12.830 --> 00:12:14.850 again. He's married now to Helen Robson. They 00:12:14.850 --> 00:12:18.049 married in 43. And he's got this idea. He wants 00:12:18.049 --> 00:12:19.649 to start his own business. He's ready to build 00:12:19.649 --> 00:12:21.950 something for himself. He said he realized while 00:12:21.950 --> 00:12:24.250 he was in the Army that retailing was what he 00:12:24.250 --> 00:12:28.899 wanted to do. He's 26 years old. 26. OK. So this 00:12:28.899 --> 00:12:32.440 brings us to section two, the Newport Crucible. 00:12:33.000 --> 00:12:35.220 This is where the rubber really meets the road. 00:12:35.360 --> 00:12:38.360 This is the origin story, but it's also kind 00:12:38.360 --> 00:12:40.559 of a tragedy. He takes over his first store. 00:12:41.200 --> 00:12:44.120 It's a Ben Franklin variety store, a franchise 00:12:44.120 --> 00:12:46.919 in Newport, Arkansas. And the financing of this 00:12:46.919 --> 00:12:48.860 is really interesting. It highlights the importance 00:12:48.860 --> 00:12:51.620 of family capital. Yeah, the whole self -made 00:12:51.620 --> 00:12:55.279 man myth often kind of... conveniently skips 00:12:55.279 --> 00:12:57.600 the part about the loan. Right. So he had $5 00:12:57.600 --> 00:13:00.299 ,000 that he had saved from his time in the Army, 00:13:00.460 --> 00:13:03.399 which in itself is pretty impressive. That's 00:13:03.399 --> 00:13:05.340 disciplined saving on a captain's pay. That's 00:13:05.340 --> 00:13:07.100 a lot of saved pay, yeah. But the store cost 00:13:07.100 --> 00:13:09.820 more than that. So he got a $20 ,000 loan from 00:13:09.820 --> 00:13:12.120 his father -in -law, Leland Robson. Which is 00:13:12.120 --> 00:13:14.480 a massive boost. That's the seed money. That's 00:13:14.480 --> 00:13:16.759 the rocket fuel to get off the ground. It is. 00:13:16.759 --> 00:13:19.539 It's everything. The store was a franchise of 00:13:19.539 --> 00:13:22.700 the Butler Brothers chain. And right away, Walton 00:13:22.700 --> 00:13:25.419 starts testing his theories. He had this specific 00:13:25.419 --> 00:13:28.080 insight about hometown shopping. What was the 00:13:28.080 --> 00:13:30.279 theory? What was the prevailing wisdom he was 00:13:30.279 --> 00:13:33.000 fighting against? Well, the assumption back then 00:13:33.000 --> 00:13:35.120 was that if you lived in a small town like Newport 00:13:35.120 --> 00:13:37.320 and you wanted a good deal or a wide selection, 00:13:37.580 --> 00:13:39.960 you got in the car and you drove four hours to 00:13:39.960 --> 00:13:43.600 the city. Small town stores were almost always 00:13:43.600 --> 00:13:45.879 more expensive because of lower volume. Okay, 00:13:45.980 --> 00:13:48.120 that makes sense. Walton wanted to flip that 00:13:48.120 --> 00:13:51.259 on its head. He believed that if he offered prices 00:13:51.259 --> 00:13:54.220 that were as good as or even better than the 00:13:54.220 --> 00:13:56.240 stores in the big cities, people would choose 00:13:56.240 --> 00:13:59.080 to shop at home. It sounds so obvious to us now, 00:13:59.200 --> 00:14:01.240 but back then that was a revolutionary thought. 00:14:01.379 --> 00:14:04.379 He was betting that convenience plus price would 00:14:04.379 --> 00:14:07.919 always win. Exactly. So he hustled. He ensured 00:14:07.919 --> 00:14:10.000 shelves were consistently stocked with a huge 00:14:10.000 --> 00:14:13.039 range of goods. He'd drive to other states to 00:14:13.039 --> 00:14:16.000 buy inventory cheap. He was relentless. And it 00:14:16.000 --> 00:14:18.620 worked, right? Oh, it worked spectacularly. In 00:14:18.620 --> 00:14:21.279 just three years, he grew the annual sales from 00:14:21.279 --> 00:14:26.720 $80 ,000 to $225 ,000. Wow. That's nearly tripling 00:14:26.720 --> 00:14:28.899 the business. He must have felt like a genius. 00:14:29.220 --> 00:14:31.600 He's the king of Newport retail. He's figured 00:14:31.600 --> 00:14:34.519 it out. He probably did. But, you know, success 00:14:34.519 --> 00:14:36.980 attracts attention. And this is where the Newport 00:14:36.980 --> 00:14:40.539 lease disaster happens. The MBA moment. The villain 00:14:40.539 --> 00:14:44.779 enters the story. The landlord. A man named P 00:14:44.779 --> 00:14:47.919 .K. Holmes. He noticed that this young, ambitious 00:14:47.919 --> 00:14:50.919 guy, Sam Walton, was making an absolute fortune 00:14:50.919 --> 00:14:53.539 in his building. And Holmes had a family history 00:14:53.539 --> 00:14:56.980 in retail. And more importantly, he had a son. 00:14:57.220 --> 00:14:59.700 Oh, I think I see where this is going. Nice little 00:14:59.700 --> 00:15:02.159 store you've built there. It'd be a shame if 00:15:02.159 --> 00:15:03.860 someone else took it over. That's pretty much 00:15:03.860 --> 00:15:06.639 it. Holmes decided he wanted the successful store 00:15:06.639 --> 00:15:10.120 for his own son. He wanted the Ben Franklin franchise 00:15:10.120 --> 00:15:12.519 rights back for that location. But can he just 00:15:12.519 --> 00:15:15.399 do that? Can he just take it? He could. Because 00:15:15.399 --> 00:15:17.860 26 -year -old Sam Walton had made a rookie mistake, 00:15:18.100 --> 00:15:21.240 a fatal error really. In his eagerness to get 00:15:21.240 --> 00:15:23.559 the store and get started, he had failed to secure 00:15:23.559 --> 00:15:26.440 a renewal option in his lease. Oh, Sam. And not 00:15:26.440 --> 00:15:28.700 only that, but the rent he'd agreed to was a 00:15:28.700 --> 00:15:31.840 prohibitively high 5 % of sales. So as he got 00:15:31.840 --> 00:15:34.220 more successful, his rent just skyrocketed. So 00:15:34.220 --> 00:15:35.600 Holmes basically just had to wait for the lease 00:15:35.600 --> 00:15:37.419 to run out and then say, I'm not renewing, get 00:15:37.419 --> 00:15:39.570 out. That's what happened. He built the business. 00:15:39.629 --> 00:15:41.649 He proved the concept. He did all the hard work. 00:15:41.789 --> 00:15:43.929 And then he got evicted because he didn't read 00:15:43.929 --> 00:15:46.629 the fine print. Right. Or more accurately, he 00:15:46.629 --> 00:15:48.570 didn't negotiate the fine print. That has to 00:15:48.570 --> 00:15:51.269 be absolutely devastating. You're young. You're 00:15:51.269 --> 00:15:53.529 on top of the world. And you lose it all because 00:15:53.529 --> 00:15:55.610 you didn't control the real estate. It was the 00:15:55.610 --> 00:15:59.590 defining failure of his early career. And almost 00:15:59.590 --> 00:16:02.370 every analysis of Walton points to this moment 00:16:02.370 --> 00:16:05.029 as the thing that fueled his lifelong obsession 00:16:05.029 --> 00:16:08.750 with control. He swore he would never, ever be 00:16:08.750 --> 00:16:11.110 vulnerable on real estate again. So he's kicked 00:16:11.110 --> 00:16:13.750 out of Newport. He's got $50 ,000 in his pocket 00:16:13.750 --> 00:16:16.629 from selling the inventory and fixtures to homes. 00:16:17.169 --> 00:16:20.110 He has a wife, a young son, and a very bruised 00:16:20.110 --> 00:16:22.929 ego. What's the next move? He rebounds, and this 00:16:22.929 --> 00:16:25.509 leads us to Section 3, the Bentonville rebound. 00:16:25.850 --> 00:16:28.009 Bentonville, Arkansas, which is now, of course, 00:16:28.049 --> 00:16:29.929 the global headquarters of Walmart, the center 00:16:29.929 --> 00:16:31.830 of the retail universe. But back then, it was 00:16:31.830 --> 00:16:34.830 just another small town. A very small town, even 00:16:34.830 --> 00:16:37.539 smaller than Newport. And Walton is under a lot 00:16:37.539 --> 00:16:40.960 of pressure. His wife, Helen, is pregnant with 00:16:40.960 --> 00:16:43.299 her second child. He has limited time to find 00:16:43.299 --> 00:16:45.500 a new source of income. He needs to get something 00:16:45.500 --> 00:16:48.460 going fast. He finds a spot on the downtown square, 00:16:48.679 --> 00:16:51.340 right? A little variety store. He does. He negotiates 00:16:51.340 --> 00:16:53.919 for a small discount store. But remember the 00:16:53.919 --> 00:16:56.519 lesson from Newport. Never again. No short leases. 00:16:56.840 --> 00:16:59.899 Control the property. Exactly. So he didn't ask 00:16:59.899 --> 00:17:02.100 for a five -year lease. He didn't ask for a 10 00:17:02.100 --> 00:17:06.720 -year lease. He demanded. A 99 -year lease. 99 00:17:06.720 --> 00:17:08.900 years. He went from, oops, I forgot a renewal 00:17:08.900 --> 00:17:11.880 option, to I'm going to be here until the next 00:17:11.880 --> 00:17:14.819 century. That's an overcorrection if I've ever 00:17:14.819 --> 00:17:17.220 seen it. He was not taking any chances. But there 00:17:17.220 --> 00:17:19.880 was a catch. To really make the store work, to 00:17:19.880 --> 00:17:22.019 get the volume he needed, he had to expand into 00:17:22.019 --> 00:17:23.920 the shop next door. He needed more space. And 00:17:23.920 --> 00:17:25.519 the neighbor said yes. The neighbor refused. 00:17:26.329 --> 00:17:29.950 Six times. Six times. So Walton is stuck. He's 00:17:29.950 --> 00:17:31.930 found the perfect town. He's got the lease terms 00:17:31.930 --> 00:17:34.049 he wants for the main store, but he can't get 00:17:34.049 --> 00:17:36.349 the expansion space he needs. The whole deal 00:17:36.349 --> 00:17:38.509 is about to fall apart. He had all but given 00:17:38.509 --> 00:17:40.809 up on Bentonville. He was looking at other towns. 00:17:41.109 --> 00:17:44.450 But then his father -in -law, Leland Robson, 00:17:44.470 --> 00:17:47.789 steps in again. And this is the secret deal. 00:17:47.970 --> 00:17:50.430 What did he do this time? Without telling Sam 00:17:50.430 --> 00:17:53.349 at first, Leland Robson went and paid the neighboring 00:17:53.349 --> 00:17:56.720 shop owner a visit. and he paid him $20 ,000 00:17:56.720 --> 00:17:59.900 just to secure the lease. He just walked in and 00:17:59.900 --> 00:18:02.420 handed him $20 ,000 to sign the paper. Essentially, 00:18:02.519 --> 00:18:05.920 it was what they called key money. It was a bribe, 00:18:05.920 --> 00:18:07.940 practically, or at least a very, very aggressive 00:18:07.940 --> 00:18:10.839 incentive. Wow. And Sam had just enough left 00:18:10.839 --> 00:18:13.099 from the sale of the Newport store, that $50 00:18:13.099 --> 00:18:16.480 ,000, to close the deal and reimburse Helen's 00:18:16.480 --> 00:18:18.920 father. So once again, that family capital saves 00:18:18.920 --> 00:18:21.819 the day. But this time, it got him the location 00:18:21.819 --> 00:18:24.500 and the terms he wanted. It did. They opened 00:18:24.500 --> 00:18:27.960 Walton's Five and Dime on May 9, 1950. They had 00:18:27.960 --> 00:18:30.339 a huge one -day remodeling sale to kick things 00:18:30.339 --> 00:18:33.039 off. And the numbers. Did his success from Newport 00:18:33.039 --> 00:18:36.339 translate? Immediately. The previous owner had 00:18:36.339 --> 00:18:39.740 been doing about $72 ,000 a year in sales. In 00:18:39.740 --> 00:18:43.119 his first year, Walton hit $105 ,000. The next 00:18:43.119 --> 00:18:47.200 year, $140 ,000. Then $175 ,000. He just has 00:18:47.200 --> 00:18:49.839 the Midas touch. He walks in, applies his system 00:18:49.839 --> 00:18:52.099 of low prices and high volume, and the revenue 00:18:52.099 --> 00:18:54.279 just explodes. But now he has a new problem. 00:18:54.640 --> 00:18:57.720 A good problem. The model is working so well 00:18:57.720 --> 00:19:00.779 that he wants to expand. He starts opening other 00:19:00.779 --> 00:19:03.559 Ben Franklin franchises in the region. And managing 00:19:03.559 --> 00:19:05.960 multiple stores across multiple states in the 00:19:05.960 --> 00:19:09.480 1950s is not a simple task. No, especially when 00:19:09.480 --> 00:19:11.519 they're hundreds of miles apart. Driving everywhere 00:19:11.519 --> 00:19:13.559 was just eating up all his time. And this brings 00:19:13.559 --> 00:19:16.059 us to one of the coolest images in American business 00:19:16.059 --> 00:19:20.259 history. The pilot strategy. Yes, the airplane. 00:19:20.619 --> 00:19:22.920 He just decides driving is too slow, I'll fly. 00:19:23.500 --> 00:19:25.680 He bought a small second -hand airplane, a little 00:19:25.680 --> 00:19:28.259 two -seater. And he didn't just hire a pilot. 00:19:28.359 --> 00:19:30.660 He learned to fly it himself. And his brother, 00:19:30.799 --> 00:19:32.940 James Bud Walton, who was a pilot in the war, 00:19:33.140 --> 00:19:35.579 he joined the business around this time, too. 00:19:35.720 --> 00:19:39.559 He did. And so you have this image of the two 00:19:39.559 --> 00:19:41.680 Walton brothers flying this tiny little plane 00:19:41.680 --> 00:19:45.599 all over Arkansas, Missouri, and Kansas. Imagine 00:19:45.599 --> 00:19:48.059 looking up from your farm in rural Arkansas in 00:19:48.059 --> 00:19:51.380 the 1950s and seeing this little plane circling 00:19:51.380 --> 00:19:54.140 your town over and over again. It's the Walton 00:19:54.140 --> 00:19:56.579 brothers looking for real estate. That's exactly 00:19:56.579 --> 00:19:59.019 what they were doing. They used the plane to 00:19:59.019 --> 00:20:01.460 scout locations. They could see the layout of 00:20:01.460 --> 00:20:03.640 towns. They could see the traffic patterns. They 00:20:03.640 --> 00:20:05.799 could spot where the town was growing. It was 00:20:05.799 --> 00:20:08.000 an incredible aerial advantage. It's like Google 00:20:08.000 --> 00:20:10.940 Earth before Google Earth existed. Exactly. And 00:20:10.940 --> 00:20:13.559 it allowed them to spot opportunities way faster 00:20:13.559 --> 00:20:15.940 than any competitor who was stuck on the ground 00:20:15.940 --> 00:20:19.099 in a car. But even with a plane, you can't be 00:20:19.099 --> 00:20:21.200 in all those stores at once. So he has to learn 00:20:21.200 --> 00:20:22.980 to delegate. He has to trust other people to 00:20:22.980 --> 00:20:25.299 run his stores. And this leads to another critical 00:20:25.299 --> 00:20:28.019 managerial innovation. He didn't just want to 00:20:28.019 --> 00:20:30.380 hire managers. He wanted to create partners. 00:20:30.660 --> 00:20:33.279 He encouraged them to invest in the business. 00:20:33.460 --> 00:20:36.660 To put their own money in. Yes. He strongly encouraged 00:20:36.660 --> 00:20:39.799 his managers to take an equity stake, often as 00:20:39.799 --> 00:20:42.079 much as $1 ,000, which was a lot of money then, 00:20:42.200 --> 00:20:45.059 in their own store. or in the next outlet to 00:20:45.059 --> 00:20:47.359 open. That is absolutely brilliant because if 00:20:47.359 --> 00:20:50.460 I put $1 ,000 of my own hard -earned money into 00:20:50.460 --> 00:20:52.700 the store I'm managing, I'm not just an employee 00:20:52.700 --> 00:20:55.720 anymore. I'm an owner. I'm a partner. It created 00:20:55.720 --> 00:20:58.759 an ownership mentality. It motivated his managers 00:20:58.759 --> 00:21:01.640 to sharpen their skills, to watch every penny 00:21:01.640 --> 00:21:03.900 because their own capital was at risk and their 00:21:03.900 --> 00:21:06.220 own reward was directly on the line. If you have 00:21:06.220 --> 00:21:07.920 skin in the game, you make sure the floor is 00:21:07.920 --> 00:21:10.410 swept and the customers are happy. You do. And 00:21:10.410 --> 00:21:14.150 with that model, by 1962, he and Bud owned 16 00:21:14.150 --> 00:21:16.549 stores across Arkansas, Missouri, and Kansas. 00:21:16.890 --> 00:21:19.549 He's a very successful regional franchise owner. 00:21:19.670 --> 00:21:21.769 He's rich. He could have just coasted right there. 00:21:21.930 --> 00:21:24.410 He could have, but he saw the landscape changing. 00:21:24.549 --> 00:21:26.869 He saw the future of retail, and it wasn't variety 00:21:26.869 --> 00:21:29.849 stores. It was something bigger. And that brings 00:21:29.849 --> 00:21:33.690 us to Section 4, the birth of Walmart. 1962, 00:21:34.190 --> 00:21:37.069 the year everything changed. He makes the big 00:21:37.069 --> 00:21:42.400 pivot. He does. True Walmart opened on July 10, 00:21:42.619 --> 00:21:47.019 1962 in Rogers, Arkansas, and it was called Walmart 00:21:47.019 --> 00:21:49.700 Discount City. Discount City. It sounds like 00:21:49.700 --> 00:21:52.460 a theme park for bargains. I love it. It essentially 00:21:52.460 --> 00:21:55.680 was. The core philosophy from day one was a determined 00:21:55.680 --> 00:21:58.299 effort to market American -made products. He 00:21:58.299 --> 00:22:00.119 wanted to find U .S. manufacturers who could 00:22:00.119 --> 00:22:02.720 supply his entire chain at prices low enough 00:22:02.720 --> 00:22:05.059 to compete with and beat foreign competition. 00:22:05.630 --> 00:22:08.369 Now, was this whole discount superstore idea 00:22:08.369 --> 00:22:10.750 purely original? Did a light bulb just go off 00:22:10.750 --> 00:22:13.369 in his head one day? Not entirely. And Walton, 00:22:13.470 --> 00:22:15.450 to his credit, was the first to admit it. He's 00:22:15.450 --> 00:22:17.609 a great observer, and he was heavily influenced 00:22:17.609 --> 00:22:20.190 by the Meijer chain. Meijer, like the grocery 00:22:20.190 --> 00:22:22.529 and general merchandise stores in the Midwest. 00:22:22.589 --> 00:22:26.150 Yes. As the Meijer chain grew, it really caught 00:22:26.150 --> 00:22:28.759 Walton's attention. He later acknowledged that 00:22:28.759 --> 00:22:31.420 his whole one -stop shopping center format was 00:22:31.420 --> 00:22:33.460 based directly on Meijer's original innovative 00:22:33.460 --> 00:22:35.779 concept. I love that he admitted it. He wasn't 00:22:35.779 --> 00:22:38.119 trying to pretend he was this lone genius inventor. 00:22:38.279 --> 00:22:40.160 He was a pragmatist. He was looking for what 00:22:40.160 --> 00:22:42.299 worked and how he could do it better. He was 00:22:42.299 --> 00:22:45.440 a master of borrowing good ideas and then refining 00:22:45.440 --> 00:22:49.059 them, perfecting them. But he added a twist that 00:22:49.059 --> 00:22:53.299 was purely, uniquely Walton. The rural strategy. 00:22:53.539 --> 00:22:55.660 This is the contrarian thinking. This is where 00:22:55.660 --> 00:22:57.700 he goes against the entire industry. Absolutely. 00:22:57.900 --> 00:23:00.220 The prevailing wisdom, the rule book at the time, 00:23:00.220 --> 00:23:03.240 was that big discount stores belong in big cities. 00:23:03.480 --> 00:23:05.859 You need population density. You need millions 00:23:05.859 --> 00:23:08.180 of people to support that kind of volume. Right. 00:23:08.259 --> 00:23:10.019 You put the store where the people are. That's 00:23:10.019 --> 00:23:12.619 retail 101. It's the most basic rule. Walton 00:23:12.619 --> 00:23:15.180 said, now, I'm going to do the opposite. I'm 00:23:15.180 --> 00:23:18.019 going to put my giant stores in small towns. 00:23:18.259 --> 00:23:21.240 Why? I mean. On the surface, that seems incredibly 00:23:21.240 --> 00:23:23.900 risky. For two very specific reasons. First, 00:23:24.059 --> 00:23:26.200 the competition was limited, or in many cases, 00:23:26.200 --> 00:23:28.059 non -existent. In a small town, you might have 00:23:28.059 --> 00:23:29.799 a few mom -and -pop shops, but you didn't have 00:23:29.799 --> 00:23:32.400 a Kmart or a Sears. Okay, so you get to be the 00:23:32.400 --> 00:23:34.839 big fish in a very small pond. Second, and this 00:23:34.839 --> 00:23:37.640 is the real strategic genius of it, was creating 00:23:37.640 --> 00:23:40.319 what he called the moat. The moat. Break that 00:23:40.319 --> 00:23:42.099 down for us. What does that mean? His theory 00:23:42.099 --> 00:23:45.470 was this. If a store was large enough and offered 00:23:45.470 --> 00:23:48.109 prices low enough to control the retail business 00:23:48.109 --> 00:23:51.029 in a town and its surrounding areas, it would 00:23:51.029 --> 00:23:53.589 actively discourage other big merchants from 00:23:53.589 --> 00:23:57.269 even trying to enter that market. Ah, it's a 00:23:57.269 --> 00:24:00.269 preemptive strike. If I build a massive Walmart 00:24:00.269 --> 00:24:04.069 in a town of, say, 10 ,000 people, there isn't 00:24:04.069 --> 00:24:06.529 enough market share left for a Kmart or a Target 00:24:06.529 --> 00:24:08.509 to move in later. I've already eaten the whole 00:24:08.509 --> 00:24:11.180 pie. Exactly. You lock down the market before 00:24:11.180 --> 00:24:14.059 your competitors even notice it exists. You build 00:24:14.059 --> 00:24:17.140 protective wall, a moat, around the town by soaking 00:24:17.140 --> 00:24:20.160 up all the retail demand. It was brilliant. But 00:24:20.160 --> 00:24:22.359 to make this work, to service all these stores 00:24:22.359 --> 00:24:24.359 out in the middle of nowhere, you need world 00:24:24.359 --> 00:24:26.480 -class logistics. We're back to the systems. 00:24:26.720 --> 00:24:29.099 You can't just open a giant store in a cornfield 00:24:29.099 --> 00:24:30.920 and hope the trucks show up with enough merchandise. 00:24:31.400 --> 00:24:33.579 So Walton established a non -negotiable rule. 00:24:34.129 --> 00:24:36.849 Every single store must be within a single day's 00:24:36.849 --> 00:24:39.029 drive of a regional warehouse. A day's drive. 00:24:39.250 --> 00:24:41.130 That is the tether. That's the radius of the 00:24:41.130 --> 00:24:44.519 empire. And he didn't rely on third party logistics 00:24:44.519 --> 00:24:47.759 companies. He built his own fleet, Walmart's 00:24:47.759 --> 00:24:50.079 own trucking service. This gave him complete 00:24:50.079 --> 00:24:52.740 control and allowed them to buy an absolutely 00:24:52.740 --> 00:24:55.700 massive volume and distribute it with incredible 00:24:55.700 --> 00:24:57.960 efficiency. So he's buying name brand merchandise, 00:24:58.180 --> 00:25:00.160 but because he's buying trainloads of it and 00:25:00.160 --> 00:25:02.000 moving it himself, he can sell it for cheaper 00:25:02.000 --> 00:25:04.220 than the local guy who's just buying a few cases 00:25:04.220 --> 00:25:06.700 at a time. And that model fueled the explosive 00:25:06.700 --> 00:25:11.380 growth. It went from 190 stores in 1977 to 800 00:25:11.380 --> 00:25:15.119 stores in 1985. That is just exponential. 190 00:25:15.119 --> 00:25:18.220 to 800 in only eight years. It was a rocket ship. 00:25:18.259 --> 00:25:20.460 It was a retail conquest of rural and suburban 00:25:20.460 --> 00:25:23.380 America. So while he is building this absolute 00:25:23.380 --> 00:25:25.519 rocket ship of a company, what's happening in 00:25:25.519 --> 00:25:28.619 his personal life? Let's look at Section 5. He 00:25:28.619 --> 00:25:30.240 can't just be working all the time. Well, he 00:25:30.240 --> 00:25:32.339 mostly was working all the time. But yes, he 00:25:32.339 --> 00:25:34.279 remained married to Helen Robson his whole life. 00:25:34.299 --> 00:25:36.599 They had their four children, Rob, John, Jim, 00:25:36.680 --> 00:25:39.220 and Alice. And despite the rapidly growing fortune, 00:25:39.319 --> 00:25:41.660 they really stayed grounded in Bentonville and 00:25:41.660 --> 00:25:44.599 in certain values. Very much so. They were very 00:25:44.599 --> 00:25:47.140 active in the First Presbyterian Church in Bentonville. 00:25:47.579 --> 00:25:50.019 Sam was an elder in the church. He taught Sunday 00:25:50.019 --> 00:25:52.420 school. Can you even imagine that? You drop your 00:25:52.420 --> 00:25:54.279 kid off at Sunday school, and the teacher is, 00:25:54.420 --> 00:25:57.559 by this point, the richest man in America. He 00:25:57.559 --> 00:25:59.740 taught the high school age students. And this 00:25:59.740 --> 00:26:01.660 religious context is actually pretty important 00:26:01.660 --> 00:26:03.500 for understanding the company's official culture. 00:26:04.259 --> 00:26:07.200 Walton integrated the concept of service leadership 00:26:07.200 --> 00:26:10.359 into the corporate structure. Service leadership. 00:26:10.400 --> 00:26:12.599 What does that look like in a boardroom or on 00:26:12.599 --> 00:26:15.180 a store floor? It's based on the Christian concept 00:26:15.180 --> 00:26:17.970 of serving others. He emphasized that leaders 00:26:17.970 --> 00:26:19.869 should serve their teams and their customers. 00:26:20.089 --> 00:26:22.329 It wasn't just a poster on the wall. It was a 00:26:22.329 --> 00:26:24.910 structural philosophy. The home office serves 00:26:24.910 --> 00:26:27.150 the stores, the manager serves the associate, 00:26:27.369 --> 00:26:30.269 and the associate serves the customer. It's an 00:26:30.269 --> 00:26:32.430 inverted pyramid. Now let's talk about the wealth, 00:26:32.589 --> 00:26:35.089 because by the 1980s, the secret was out. You 00:26:35.089 --> 00:26:37.589 can't hide 800 stores and billions in sales. 00:26:37.829 --> 00:26:41.069 No, you can't. Forbes magazine ranked him the 00:26:41.069 --> 00:26:43.170 richest person in the United States every year 00:26:43.170 --> 00:26:46.430 from 1982 to 1988. Number one, he was beating 00:26:46.430 --> 00:26:49.410 everyone, beating the old money Rockefellers, 00:26:49.410 --> 00:26:52.390 the tech guys, everyone. He only lost that top 00:26:52.390 --> 00:26:55.269 spot in 1989 because Forbes made an editorial 00:26:55.269 --> 00:26:57.769 decision to start splitting the family fortune 00:26:57.769 --> 00:27:00.089 among him and his four children for the list. 00:27:00.250 --> 00:27:02.430 So he was still the richest, technically. The 00:27:02.430 --> 00:27:04.609 money was just being counted in different buckets 00:27:04.609 --> 00:27:07.390 for the sake of the magazine. Correct. But even 00:27:07.390 --> 00:27:09.869 with all that money and success, he started to 00:27:09.869 --> 00:27:12.450 face some significant personal health battles. 00:27:12.609 --> 00:27:15.109 Yeah. This is the part that kind of humanizes 00:27:15.109 --> 00:27:17.890 him again after all the talk of billions and 00:27:17.890 --> 00:27:21.089 business strategy. In 1982, he was diagnosed 00:27:21.089 --> 00:27:23.430 with hairy cell leukemia, which is a rare type 00:27:23.430 --> 00:27:26.450 of blood cancer. And later? Later, in 1990, he 00:27:26.450 --> 00:27:28.650 was diagnosed with bone cancer. He went through 00:27:28.650 --> 00:27:31.190 radiation, chemotherapy. He was being treated 00:27:31.190 --> 00:27:34.049 at MD Anderson Cancer Center in Houston. But 00:27:34.049 --> 00:27:36.839 he didn't stop working, did he? Never. As we 00:27:36.839 --> 00:27:38.740 mentioned right at the top of the show, just 00:27:38.740 --> 00:27:42.059 a week before his death in April of 1992, he 00:27:42.059 --> 00:27:44.319 was in his hospital bed looking at sales data. 00:27:44.480 --> 00:27:47.440 He died at 74. He did. The news of his death 00:27:47.440 --> 00:27:49.539 was relayed by the company's satellite system 00:27:49.539 --> 00:27:54.000 to all 1 ,960 stores simultaneously. Think about 00:27:54.000 --> 00:27:58.559 that for a second. 1 ,960 stores. That's the 00:27:58.559 --> 00:28:00.619 scale of the morning. That's a small nation of 00:28:00.619 --> 00:28:02.799 employees hearing the news at the same time. 00:28:03.000 --> 00:28:05.140 And at the time of his death, the company employed 00:28:05.140 --> 00:28:08.539 about 400 ,000 people. The annual sales were 00:28:08.539 --> 00:28:11.640 approaching $50 billion. And that really brings 00:28:11.640 --> 00:28:15.359 us to the legacy section six, the world after 00:28:15.359 --> 00:28:17.680 Sam Walton. And you can't talk about his legacy 00:28:17.680 --> 00:28:20.019 without talking about the Walmart effect. It's 00:28:20.019 --> 00:28:22.440 an actual term economists use, right? It's not 00:28:22.440 --> 00:28:24.880 just a casual phrase. Oh, absolutely. It's a 00:28:24.880 --> 00:28:27.480 subject of serious academic study. It describes 00:28:27.480 --> 00:28:30.059 the significant impact, both positive and negative, 00:28:30.180 --> 00:28:33.240 on any region where a Walmart store establishes 00:28:33.240 --> 00:28:35.769 itself. So what does that look like? Well, it 00:28:35.769 --> 00:28:38.130 changes local economies in profound ways. It 00:28:38.130 --> 00:28:40.410 dramatically lowers prices for consumers, which 00:28:40.410 --> 00:28:42.670 is a huge benefit for working class and low income 00:28:42.670 --> 00:28:45.769 families. But on the other side, it puts immense 00:28:45.769 --> 00:28:48.809 downward pressure on local wages and, of course, 00:28:48.869 --> 00:28:50.990 on competing businesses. It can wipe out entire 00:28:50.990 --> 00:28:53.029 main streets. It's a force of nature. It's like 00:28:53.029 --> 00:28:55.750 an economic weather event that moves into a town. 00:28:55.930 --> 00:28:58.190 And the global footprint today is just massive. 00:28:58.599 --> 00:29:01.140 They have operations in countries ranging from 00:29:01.140 --> 00:29:04.740 Argentina and China to Zambia and the United 00:29:04.740 --> 00:29:07.000 Kingdom. And the family remains deeply involved. 00:29:07.220 --> 00:29:09.480 Yes. The ownership was left to his wife and children. 00:29:09.839 --> 00:29:12.420 His eldest son, Rob Walton, became chairman of 00:29:12.420 --> 00:29:14.779 the board. John was a director until his tragic 00:29:14.779 --> 00:29:17.559 death in a plane crash in 2005. And his youngest 00:29:17.559 --> 00:29:19.940 son, Jim Walton, is the chairman of Arvis Bank, 00:29:20.059 --> 00:29:22.140 which is the family's regional bank. I remember 00:29:22.140 --> 00:29:24.380 reading that at one point the family held five 00:29:24.380 --> 00:29:27.180 of the top ten spots on the richest people list. 00:29:27.299 --> 00:29:30.700 They did. Up until about 2005. Five out of ten. 00:29:31.160 --> 00:29:33.180 Half the list was just one family. It really 00:29:33.180 --> 00:29:36.480 is a modern dynasty. So we've unpacked a lot 00:29:36.480 --> 00:29:39.019 here. From the cow milking in the Depression 00:29:39.019 --> 00:29:42.059 to the airplane scouting in the 50s to this globe 00:29:42.059 --> 00:29:44.500 -spanning empire. It's a journey from a lost 00:29:44.500 --> 00:29:48.019 lease in Newport, a single devastating mistake. 00:29:48.589 --> 00:29:51.710 to total world dominance. When you boil it all 00:29:51.710 --> 00:29:54.069 down, what's the aha moment for you? What's the 00:29:54.069 --> 00:29:56.450 central insight? For me, it's that it wasn't 00:29:56.450 --> 00:29:58.490 just about low prices. I mean, everybody wants 00:29:58.490 --> 00:30:02.299 low prices. The aha. moment is realizing that 00:30:02.299 --> 00:30:04.799 the prices were a result of something else they 00:30:04.799 --> 00:30:07.500 were the result of logistics of real estate control 00:30:07.500 --> 00:30:10.839 and of the sheer courage to bet on small towns 00:30:10.839 --> 00:30:13.059 when every other expert was looking at the big 00:30:13.059 --> 00:30:16.119 cities he zagged when the entire world zigged 00:30:16.119 --> 00:30:18.380 and he built the infrastructure the warehouses 00:30:18.380 --> 00:30:21.039 the trucks to support that zag that's the key 00:30:21.039 --> 00:30:23.400 i agree so here's my final thought for you listening 00:30:23.400 --> 00:30:26.339 at home we talked about his philosophy of service 00:30:26.339 --> 00:30:29.920 leadership This idea rooted in his faith of serving 00:30:29.920 --> 00:30:33.299 others. How does that philosophy reconcile with 00:30:33.299 --> 00:30:36.420 the aggressive, often destructive market dominance 00:30:36.420 --> 00:30:39.019 of the Walmart effect? That is the central paradox 00:30:39.019 --> 00:30:41.500 of Sam Walton, isn't it? Can you be a servant 00:30:41.500 --> 00:30:43.480 leader and a market dominator at the exact same 00:30:43.480 --> 00:30:45.940 time? I think in his own mind, there was no contradiction. 00:30:46.700 --> 00:30:50.180 He truly believed that by lowering prices and 00:30:50.180 --> 00:30:52.519 making goods more accessible, he was serving 00:30:52.519 --> 00:30:55.099 the community. He was raising the standard of 00:30:55.099 --> 00:30:57.539 living for the American working class. Whether 00:30:57.539 --> 00:30:59.640 the ultimate cost of that service was too high, 00:30:59.759 --> 00:31:02.420 well, that's for history and for all of us to 00:31:02.420 --> 00:31:05.460 decide. Next time you drive past a Walmart, don't 00:31:05.460 --> 00:31:07.200 just look at the store. Look at the trucks pulling 00:31:07.200 --> 00:31:09.079 in and out. Look at the logistics of it all. 00:31:09.220 --> 00:31:11.619 And remember the farm boy who just wanted to 00:31:11.619 --> 00:31:14.940 beat the prices in the big city. Thanks for listening 00:31:14.940 --> 00:31:16.779 to The Deep Dive. See you next time.