WEBVTT 00:00:00.000 --> 00:00:02.759 Imagine for a moment, you live in a world where 00:00:02.759 --> 00:00:05.419 one company sells absolutely everything. And 00:00:05.419 --> 00:00:07.440 I don't just mean, you know, books and some electronics. 00:00:07.620 --> 00:00:10.019 I mean everything. You need a dress for a wedding. 00:00:10.119 --> 00:00:12.500 They've got it. A hammer for a project. Done. 00:00:12.679 --> 00:00:15.179 A hundred piece dinner set. No problem. Okay. 00:00:15.220 --> 00:00:16.760 That's already sounding pretty comprehensive. 00:00:17.140 --> 00:00:20.850 But what if you need the actual lumber? the nails, 00:00:21.030 --> 00:00:23.510 the shingles, the blueprints to build an entire 00:00:23.510 --> 00:00:26.289 house. They will pack it all up and ship it directly 00:00:26.289 --> 00:00:28.289 to your door. So you're basically describing 00:00:28.289 --> 00:00:32.960 Amazon on steroids. Or like some kind of futuristic 00:00:32.960 --> 00:00:35.859 mega corporation from a sci -fi movie? It sounds 00:00:35.859 --> 00:00:38.179 exactly like Amazon. That is the parallel everyone 00:00:38.179 --> 00:00:40.380 immediately jumps to. But what if I told you 00:00:40.380 --> 00:00:42.679 this company was doing all of this at scale starting 00:00:42.679 --> 00:00:45.340 in 1872? Then you'd be talking about the original 00:00:45.340 --> 00:00:47.439 everything store. You'd be talking about Montgomery 00:00:47.439 --> 00:00:50.640 Ward. That is exactly where we're going today. 00:00:50.840 --> 00:00:53.880 Welcome back to the Deep Dive. We are unpacking 00:00:53.880 --> 00:00:57.640 the life, the very slow motion death, and the 00:00:57.640 --> 00:01:00.439 very, very strange afterlife of an American icon. 00:01:00.829 --> 00:01:03.310 It is a truly fascinating case study. I think 00:01:03.310 --> 00:01:05.549 for a lot of our listeners, Montgomery Ward is 00:01:05.549 --> 00:01:09.430 just this this faint, dusty memory. Maybe they 00:01:09.430 --> 00:01:11.930 remember seeing the name in a mall back in the 00:01:11.930 --> 00:01:13.909 80s or 90s. Or they remember their parents or 00:01:13.909 --> 00:01:16.150 grandparents using that nickname. Monkey Wards. 00:01:16.189 --> 00:01:20.290 Monkey Wards. Yes. That nostalgia is a huge piece 00:01:20.290 --> 00:01:23.900 of it. It was just. ubiquitous. I mean, the brand 00:01:23.900 --> 00:01:26.900 was a fixture in American life for over a century, 00:01:26.980 --> 00:01:30.780 from 1872 all the way to 2001. That's a massive 00:01:30.780 --> 00:01:33.060 run. It's a huge run. But when you really dig 00:01:33.060 --> 00:01:35.620 into the records, which is what we've done, we've 00:01:35.620 --> 00:01:37.159 got the corporate history, financial reports, 00:01:37.400 --> 00:01:40.359 leadership timelines. It's not just a story about 00:01:40.359 --> 00:01:42.219 another department store that went out of business. 00:01:42.379 --> 00:01:44.519 No, not at all. If you look closely, it's a story 00:01:44.519 --> 00:01:46.659 about the invention of modern retail as we know 00:01:46.659 --> 00:01:48.939 it. It's a story about a constitutional crisis 00:01:48.939 --> 00:01:51.340 that involved the U .S. Army physically seizing 00:01:51.340 --> 00:01:53.930 a company. Which is just a wild story we'll get 00:01:53.930 --> 00:01:56.250 to. Oh, it's unbelievable. And it's also a story 00:01:56.250 --> 00:01:59.650 about a fatal economic miscalculation that you 00:01:59.650 --> 00:02:01.989 could argue fundamentally changed the entire 00:02:01.989 --> 00:02:04.349 landscape of the American suburbs. So that's 00:02:04.349 --> 00:02:05.950 our mission for this deep dive. We're going to 00:02:05.950 --> 00:02:09.009 trace the full life cycle of this retail giant. 00:02:09.590 --> 00:02:12.110 We're going from the invention of the mail order 00:02:12.110 --> 00:02:13.990 business, which was, you know, the Internet before 00:02:13.990 --> 00:02:17.449 the Internet, to that dramatic movie -like showdown 00:02:17.449 --> 00:02:20.030 during World War II, to the post -war mistake 00:02:20.030 --> 00:02:23.169 that sealed their fate, and finally to where 00:02:23.169 --> 00:02:26.210 they are now, which is, well, it's complicated. 00:02:26.469 --> 00:02:28.569 It's very complicated. We are looking at a classic 00:02:28.569 --> 00:02:31.770 zombie brand situation. A zombie brand. I love 00:02:31.770 --> 00:02:33.789 that term. But before we get to the zombies, 00:02:33.909 --> 00:02:35.939 we have to start at the birth. So let's rewind 00:02:35.939 --> 00:02:39.419 the clock. It's 1872. We're in Chicago. A man 00:02:39.419 --> 00:02:41.740 named Aaron Montgomery Ward. What's the vibe 00:02:41.740 --> 00:02:45.490 here? The vibe is 100 % startup. Pure and simple. 00:02:45.610 --> 00:02:47.729 We tend to think of the 19th century as being 00:02:47.729 --> 00:02:50.590 dusty and slow and old timey. Right. Separated 00:02:50.590 --> 00:02:52.909 from us by all those sepia toned photos. Exactly. 00:02:53.030 --> 00:02:56.610 But Chicago in 1872 was anything but slow. It 00:02:56.610 --> 00:02:59.150 was this period of rapid, almost chaotic disruption. 00:02:59.370 --> 00:03:01.409 The city was literally rising from the ashes 00:03:01.409 --> 00:03:04.229 of the Great Fire of 1871. It was a hub of energy, 00:03:04.349 --> 00:03:06.650 of capital, of new ideas. And Aaron Montgomery 00:03:06.650 --> 00:03:09.629 Ward, he was a guy who saw a very specific problem. 00:03:10.060 --> 00:03:11.840 And what was the problem he was trying to solve? 00:03:11.939 --> 00:03:14.759 Well, he'd spent years as a traveling salesman 00:03:14.759 --> 00:03:17.219 for other companies. He was out in the rural 00:03:17.219 --> 00:03:20.240 Midwest talking to farmers, and he realized that 00:03:20.240 --> 00:03:22.379 the rural customer was getting an absolutely 00:03:22.379 --> 00:03:26.860 raw deal. How so? It was about isolation. If 00:03:26.860 --> 00:03:29.500 you lived on a farm in 1872, you couldn't just 00:03:29.500 --> 00:03:31.580 hop in your car and drive to a mall. You were 00:03:31.580 --> 00:03:33.900 at the total mercy of the local general store. 00:03:34.300 --> 00:03:37.139 And because that store had a monopoly, the owner 00:03:37.139 --> 00:03:39.039 could charge whatever they wanted. The selection 00:03:39.039 --> 00:03:42.400 was awful, the prices were sky high, and often 00:03:42.400 --> 00:03:44.919 you had to buy on credit. Ah, so they kept you 00:03:44.919 --> 00:03:48.060 in debt. It was an economic trap. Ward saw this. 00:03:48.099 --> 00:03:50.699 He also saw the rise of the Grange movement. 00:03:50.840 --> 00:03:53.340 These were organizations of farmers banding together 00:03:53.340 --> 00:03:55.819 to fight against monopolies, especially the railroads 00:03:55.819 --> 00:03:58.620 and middlemen. He saw this organized, frustrated 00:03:58.620 --> 00:04:01.620 customer base and had a radical idea. Okay, what 00:04:01.620 --> 00:04:03.680 was it? He thought, what if I can sell directly 00:04:03.680 --> 00:04:06.319 to these people? What if I can cut out the middleman, 00:04:06.500 --> 00:04:09.379 bypass the general store entirely, and ship goods 00:04:09.379 --> 00:04:11.840 straight from the manufacturer to the farmer 00:04:11.840 --> 00:04:14.699 for cash? That sounds incredibly modern. That's 00:04:14.699 --> 00:04:17.050 literally the direct -to -consumer. BTC model 00:04:17.050 --> 00:04:19.709 we talk about today with brands like Warby Parker 00:04:19.709 --> 00:04:22.610 or Casper mattresses. It is the exact same principle. 00:04:22.790 --> 00:04:24.850 Cut out the middleman to lower the price and 00:04:24.850 --> 00:04:28.069 increase the selection. But, you know, doing 00:04:28.069 --> 00:04:30.529 it in 1872 required a completely different kind 00:04:30.529 --> 00:04:32.670 of infrastructure and a whole lot of trust. Right. 00:04:32.730 --> 00:04:35.519 And the actual founding story is a little. The 00:04:35.519 --> 00:04:37.139 records are a bit conflicting, which I think 00:04:37.139 --> 00:04:39.160 adds to the mythos of it. I saw some sources 00:04:39.160 --> 00:04:41.839 say his first office was just a single room on 00:04:41.839 --> 00:04:44.259 North Clark Street. Right. Very humble. Just 00:04:44.259 --> 00:04:46.399 a desk and a chair, basically. But the other 00:04:46.399 --> 00:04:48.779 story, the other location mentioned, is in a 00:04:48.779 --> 00:04:51.560 loft above a livery stable on Kinsey Street. 00:04:51.759 --> 00:04:54.439 A livery stable. I love that detail. It's so 00:04:54.439 --> 00:04:57.060 much more romantic. It paints such a vivid picture, 00:04:57.139 --> 00:04:59.019 doesn't it? It really does. You can just imagine 00:04:59.019 --> 00:05:01.560 the smell of the horses downstairs, the sound 00:05:01.560 --> 00:05:05.279 of hooves on cobblestone, the dust. And up in 00:05:05.279 --> 00:05:08.139 this loft, you have Aaron Montgomery Ward and 00:05:08.139 --> 00:05:11.660 maybe one or two partners trying to launch a 00:05:11.660 --> 00:05:15.139 retail revolution. It is the 1872 version of 00:05:15.139 --> 00:05:18.319 Steve Jobs and Wozniak in the Garage. It absolutely 00:05:18.319 --> 00:05:21.500 is. And their first product wasn't a fancy computer. 00:05:21.540 --> 00:05:24.019 It was a single sheet of paper. A single sheet. 00:05:24.759 --> 00:05:27.259 Not even a booklet. The very first catalog was 00:05:27.259 --> 00:05:29.500 just a price list on a single sheet of paper, 00:05:29.620 --> 00:05:31.839 listing the goods he could get and their prices. 00:05:32.160 --> 00:05:34.779 But it promised something truly revolutionary, 00:05:34.959 --> 00:05:37.819 something that built the whole enterprise. Satisfaction 00:05:37.819 --> 00:05:40.560 guaranteed or your money back. That was the magic 00:05:40.560 --> 00:05:43.579 phrase. We take that completely for granted now. 00:05:44.180 --> 00:05:47.139 But back then. It was unheard of. It was a world 00:05:47.139 --> 00:05:50.660 of caveat emptor buyer beware. You bought something. 00:05:51.100 --> 00:05:54.040 It was your problem. Ward introduced trust into 00:05:54.040 --> 00:05:56.819 a trustless system. He was telling these deeply 00:05:56.819 --> 00:05:59.779 skeptical farmers, send me your cash, real cash 00:05:59.779 --> 00:06:01.279 through the mail. And if you don't like what 00:06:01.279 --> 00:06:02.860 I send you, I promise I will send your money 00:06:02.860 --> 00:06:05.660 back. That was the key that unlocked the entire 00:06:05.660 --> 00:06:08.100 mail order business. And once that trust was 00:06:08.100 --> 00:06:11.120 established, the scaling was. It was just insane. 00:06:11.379 --> 00:06:13.279 We have some numbers here that are just mind 00:06:13.279 --> 00:06:16.459 -blowing for a pre -computer, pre -logistic software 00:06:16.459 --> 00:06:18.860 era. The growth curve is basically a vertical 00:06:18.860 --> 00:06:21.759 line. So by 1883, that's just 11 years after 00:06:21.759 --> 00:06:24.360 starting in that stable, the catalog is already 00:06:24.360 --> 00:06:28.199 240 pages long. And it lists... 10 ,000 different 00:06:28.199 --> 00:06:31.060 items. 10 ,000 items. Just stop and think about 00:06:31.060 --> 00:06:33.459 the logistics of that in 1883. You don't have 00:06:33.459 --> 00:06:35.660 an Excel spreadsheet. You don't have inventory 00:06:35.660 --> 00:06:38.439 management software. You don't have barcodes 00:06:38.439 --> 00:06:42.120 or scanners. You have ledgers, pens and human 00:06:42.120 --> 00:06:46.660 brains. And you have to physically source. 10 00:06:46.660 --> 00:06:49.180 ,000 unique things. Everything from sewing needles 00:06:49.180 --> 00:06:52.620 to farm plows. Get an artist to draw an engraving 00:06:52.620 --> 00:06:55.120 of it, write a description, set a price, and 00:06:55.120 --> 00:06:57.480 then actually have it in a warehouse ready to 00:06:57.480 --> 00:06:59.839 ship when an order comes in from, say, rural 00:06:59.839 --> 00:07:02.579 Kansas. It's an operational miracle. It really 00:07:02.579 --> 00:07:04.000 is. But wait, here's the stat that just made 00:07:04.000 --> 00:07:05.639 me stop and reread the source material. Yeah. 00:07:05.680 --> 00:07:08.060 We fast forward to 1904. Okay, turn of the century. 00:07:08.240 --> 00:07:11.199 In 1904, Montgomery Ward is mailing out three 00:07:11.199 --> 00:07:14.279 million catalogs. Three million. And each of 00:07:14.279 --> 00:07:16.290 these catalogs weighs four pounds. That's about 00:07:16.290 --> 00:07:19.230 1 .8 kilograms. Four pounds. Whoa. Okay, let's 00:07:19.230 --> 00:07:20.850 just do the math on that because the number is 00:07:20.850 --> 00:07:22.889 hard to even comprehend. I did the math. Three 00:07:22.889 --> 00:07:26.970 million catalogs at four pounds each. That is 00:07:26.970 --> 00:07:30.829 12 million pounds of paper. 12 million pounds 00:07:30.829 --> 00:07:33.029 of paper moving through the U .S. postal system. 00:07:33.170 --> 00:07:36.170 That's 6 ,000 tons. Think about the number of 00:07:36.170 --> 00:07:38.529 train cars you would need just to move that paper. 00:07:39.079 --> 00:07:41.500 Think about the rural post offices. You have 00:07:41.500 --> 00:07:44.100 a tiny post office in a small town in Nebraska, 00:07:44.379 --> 00:07:47.660 and suddenly thousands of these four -pound bricks 00:07:47.660 --> 00:07:49.899 arrive for delivery. It must have completely 00:07:49.899 --> 00:07:52.360 overwhelmed the system. It was an information 00:07:52.360 --> 00:07:54.699 overload, but a physical one. And you have to 00:07:54.699 --> 00:07:56.639 understand, for the person receiving it, that 00:07:56.639 --> 00:07:59.920 catalog was the Internet. It was their connection 00:07:59.920 --> 00:08:02.220 to the wider world. They famously called it... 00:08:02.379 --> 00:08:04.819 the wish book or the dream book the whole family 00:08:04.819 --> 00:08:06.800 would gather around it at night by the fire it 00:08:06.800 --> 00:08:08.579 wasn't just about buying things it was about 00:08:08.579 --> 00:08:10.779 dreaming you could flip through the pages and 00:08:10.779 --> 00:08:12.579 see what the latest fashions were in new york 00:08:12.579 --> 00:08:15.240 or even paris you could see new technologies 00:08:15.240 --> 00:08:18.360 new tools you didn't even know existed it brought 00:08:18.360 --> 00:08:21.279 the entire global marketplace right to your farmhouse 00:08:21.279 --> 00:08:23.740 doorstep that's a really powerful image the wish 00:08:23.740 --> 00:08:27.740 book it really drives home how emotional the 00:08:27.740 --> 00:08:29.980 connection to that brand was it wasn't just a 00:08:29.980 --> 00:08:33.480 store it was a lifelong to modernity. Absolutely. 00:08:34.120 --> 00:08:37.240 But as with any massive success, you can't stay 00:08:37.240 --> 00:08:39.580 the king of the hill forever. You invite competition. 00:08:40.000 --> 00:08:42.340 And we have to talk about the rivalry. The great 00:08:42.340 --> 00:08:44.259 rivalry. You can't tell the story of Ward without 00:08:44.259 --> 00:08:46.730 talking about the other guy. Richard Warren Sears. 00:08:46.990 --> 00:08:49.409 Enter the challenger. Sears gets into the general 00:08:49.409 --> 00:08:52.490 catalog game in 1896. And almost immediately 00:08:52.490 --> 00:08:54.929 it becomes this clash of the titans. It's really 00:08:54.929 --> 00:08:57.230 interesting to compare their styles. Aaron Montgomery 00:08:57.230 --> 00:09:00.509 Ward was seen as more dignified, the satisfaction 00:09:00.509 --> 00:09:03.570 guaranteed pioneer. Richard Sears, he was a showman. 00:09:03.649 --> 00:09:06.450 He was a born promoter. His copywriting was more 00:09:06.450 --> 00:09:08.490 aggressive, more sensational. And the numbers 00:09:08.490 --> 00:09:10.610 show just how tight this race became and how 00:09:10.610 --> 00:09:13.509 fast. By 1900, it's only four years after Sears 00:09:13.509 --> 00:09:16.169 launched his big catalog. Montgomery Ward had 00:09:16.169 --> 00:09:19.649 sales of $8 .7 million, which is a huge number. 00:09:19.929 --> 00:09:23.049 Massive for 1900. An absolute behemoth. But Sears 00:09:23.049 --> 00:09:26.580 had $10 million. So in just four years, Sears 00:09:26.580 --> 00:09:29.159 had already caught up and edged slightly ahead. 00:09:29.399 --> 00:09:31.559 They were neck and neck from the get go. And 00:09:31.559 --> 00:09:34.740 this rivalry, Ward versus Sears, it basically 00:09:34.740 --> 00:09:38.259 defined the entire 20th century retail landscape. 00:09:38.500 --> 00:09:41.740 It is the original great American business rivalry. 00:09:42.059 --> 00:09:45.360 It's Coke versus Pepsi. It's Apple versus Microsoft. 00:09:45.700 --> 00:09:47.919 And families would take sides. Right. Oh, absolutely. 00:09:48.100 --> 00:09:50.200 You were a Sears family or you were a Ward family. 00:09:50.320 --> 00:09:51.980 It was part of your identity. You trusted one 00:09:51.980 --> 00:09:55.019 wish book over the other. And this incredible 00:09:55.019 --> 00:09:58.659 growth, this intense rivalry, it required a massive 00:09:58.659 --> 00:10:00.299 physical footprint. We can't just talk about 00:10:00.299 --> 00:10:01.860 the catalog. We have to talk about the buildings. 00:10:02.299 --> 00:10:05.519 In 1908, Ward opens the Montgomery Ward & Co. 00:10:05.639 --> 00:10:08.139 Catalog House in Chicago. The Catalog House. 00:10:08.200 --> 00:10:11.159 Even the name sounds monumental. It was. It was 00:10:11.159 --> 00:10:14.639 a 1 .25 million square foot building. It stretched 00:10:14.639 --> 00:10:17.139 for blocks along the Chicago River. And it wasn't 00:10:17.139 --> 00:10:18.980 just a functional warehouse. It was an architectural 00:10:18.980 --> 00:10:21.360 statement. It had this prominent tower. It had 00:10:21.360 --> 00:10:23.429 a statue on top called the Spirit of... progress. 00:10:23.649 --> 00:10:26.529 It was a monument telling the world, we are here, 00:10:26.690 --> 00:10:28.789 we are permanent. And they didn't just stop in 00:10:28.789 --> 00:10:31.669 Chicago. They started building these giant distribution 00:10:31.669 --> 00:10:33.850 centers all over the country. They built these 00:10:33.850 --> 00:10:36.490 concrete fortresses, Baltimore, Fort Worth, Kansas 00:10:36.490 --> 00:10:40.429 City, Portland, St. Paul. The list goes on. And 00:10:40.429 --> 00:10:42.169 the sources note that in many of these cities, 00:10:42.210 --> 00:10:44.169 the Montgomery Ward building was the largest 00:10:44.169 --> 00:10:46.690 industrial structure in the entire city at the 00:10:46.690 --> 00:10:48.990 time it was built. So they were the skyscrapers 00:10:48.990 --> 00:10:51.779 of their day. But instead of offices, they were 00:10:51.779 --> 00:10:54.059 just packed to the rafters with goods. They were 00:10:54.059 --> 00:10:56.539 the physical manifestation of their logistical 00:10:56.539 --> 00:10:58.940 dominance. You can think of them like the Amazon 00:10:58.940 --> 00:11:01.919 fulfillment centers of today, but they were built 00:11:01.919 --> 00:11:04.419 out of reinforced concrete to last a thousand 00:11:04.419 --> 00:11:07.240 years. In fact, many of them are still standing 00:11:07.240 --> 00:11:10.620 today, repurposed as condos or offices because 00:11:10.620 --> 00:11:12.720 they're so well built, you basically can't tear 00:11:12.720 --> 00:11:15.379 them down. So, OK, we've got this mail order 00:11:15.379 --> 00:11:17.879 empire, these colossal buildings, millions of 00:11:17.879 --> 00:11:21.200 catalogs, millions in. sales. They are the absolute 00:11:21.200 --> 00:11:24.419 kings of the logistics game. But then we get 00:11:24.419 --> 00:11:27.440 to the 1920s. And the source material frames 00:11:27.440 --> 00:11:30.159 this as the pivot. This is a really crucial moment, 00:11:30.220 --> 00:11:34.519 a major strategic decision. Up until 1926, Montgomery 00:11:34.519 --> 00:11:37.899 Ward is mail order only. That is their entire 00:11:37.899 --> 00:11:40.980 identity. They do not have stores. You can't 00:11:40.980 --> 00:11:43.259 just walk in and buy a dress off a rack. Which 00:11:43.259 --> 00:11:45.220 seems so weird to think about now because my 00:11:45.220 --> 00:11:47.460 entire memory of them is as a physical store 00:11:47.460 --> 00:11:50.360 in a mall. Exactly. But for their first 50 plus 00:11:50.360 --> 00:11:54.039 years, they were purely remote. But in the 1920s, 00:11:54.039 --> 00:11:55.799 the world started to change in a fundamental 00:11:55.799 --> 00:11:59.559 way. The automobile. The Ford Model T. All of 00:11:59.559 --> 00:12:02.379 a sudden, that rural farmer isn't trapped on 00:12:02.379 --> 00:12:05.000 the farm anymore. He can get in his car and drive 00:12:05.000 --> 00:12:07.960 to the nearest city. He can shop. The old general 00:12:07.960 --> 00:12:10.320 store monopoly that Ward was built to fight was 00:12:10.320 --> 00:12:12.559 now being broken by the automobile. So Ward's 00:12:12.559 --> 00:12:14.860 leadership realizes they have to go where the 00:12:14.860 --> 00:12:16.860 people are now going. They have to open physical 00:12:16.860 --> 00:12:19.889 retail stores. In 1926, they break with a half 00:12:19.889 --> 00:12:22.570 century of tradition. They open their very first 00:12:22.570 --> 00:12:25.309 retail outlet store in Plymouth, Indiana. And 00:12:25.309 --> 00:12:27.769 this wasn't a slow let's dip our toe in the water 00:12:27.769 --> 00:12:30.799 kind of rollout. This was a full on blitz. Aggressive 00:12:30.799 --> 00:12:32.419 doesn't even begin to describe it. Listen to 00:12:32.419 --> 00:12:35.700 this growth curve. They have one store in 1926. 00:12:36.100 --> 00:12:40.779 By 1928, just two years later, they have 244 00:12:40.779 --> 00:12:44.919 stores. Wow, 244. That's opening a new store 00:12:44.919 --> 00:12:47.259 roughly every three days for two years straight. 00:12:47.440 --> 00:12:52.039 And they're not done. By 1929, 531 stores. They 00:12:52.039 --> 00:12:56.000 went from zero retail stores to 531 in three 00:12:56.000 --> 00:12:58.700 years. Think about the operational strain of 00:12:58.700 --> 00:13:00.960 that. It's just mind -boggling. You have to find 00:13:00.960 --> 00:13:03.019 the real estate in over 500 different towns. 00:13:03.120 --> 00:13:05.340 You have to negotiate and sign the leases. You 00:13:05.340 --> 00:13:07.519 have to hire store managers, hire clerks, train 00:13:07.519 --> 00:13:09.779 them. You have to stock all the shelves. You 00:13:09.779 --> 00:13:11.700 have to completely re -engineer your distribution 00:13:11.700 --> 00:13:14.299 network from a ship -to -customer model to a 00:13:14.299 --> 00:13:15.799 ship -to -store model. And again, you have to 00:13:15.799 --> 00:13:17.940 do all of that without computers, without any... 00:13:18.029 --> 00:13:19.830 modern communication tools. It was an incredibly 00:13:19.830 --> 00:13:23.070 high risk, high speed pivot. High risk. And as 00:13:23.070 --> 00:13:25.519 it turns out, just terrible timing. The worst 00:13:25.519 --> 00:13:27.620 possible timing in American history. Because 00:13:27.620 --> 00:13:30.759 what happens in late 1929? The stock market crashes. 00:13:30.860 --> 00:13:33.799 The Great Depression begins. So they have just 00:13:33.799 --> 00:13:36.840 massively overextended themselves, spent all 00:13:36.840 --> 00:13:39.000 this capital opening hundreds of stores, and 00:13:39.000 --> 00:13:41.519 suddenly their customers have no money. It was 00:13:41.519 --> 00:13:45.220 a catastrophe. By 1930, Ward is struggling badly. 00:13:45.340 --> 00:13:47.639 They're bleeding cash. And interestingly, the 00:13:47.639 --> 00:13:50.259 sources note that in 1930, they actually decline 00:13:50.259 --> 00:13:54.759 a merger offer from their rival Sears. Wow. Imagine 00:13:54.759 --> 00:13:57.460 that alternative history for a second. A combined 00:13:57.460 --> 00:14:00.360 Sears -Ward monopoly heading into the Depression. 00:14:00.679 --> 00:14:02.580 It would have been a colossus. We'll come back 00:14:02.580 --> 00:14:04.820 to that idea later. But in 1930, they say no. 00:14:05.000 --> 00:14:07.440 They want to try and go it alone, but the investors 00:14:07.440 --> 00:14:09.879 are panicking. The stock price is in the tank. 00:14:10.059 --> 00:14:13.139 So J .P. Morgan Jr., yes, the son of that J .P. 00:14:13.159 --> 00:14:15.200 Morgan, intervenes. When a Morgan gets directly 00:14:15.200 --> 00:14:18.259 involved, you know things are serious. The heavy 00:14:18.259 --> 00:14:20.419 hitters are now calling the shots. And they decide 00:14:20.419 --> 00:14:22.379 the current leadership team isn't cutting it. 00:14:22.759 --> 00:14:24.980 They need a fixer. They need a tough guy to come 00:14:24.980 --> 00:14:26.679 in and turn the ship around. And that's when 00:14:26.679 --> 00:14:29.159 Sewell Avery enters the picture. Sewell Avery. 00:14:29.240 --> 00:14:31.299 This name is going to become very, very important 00:14:31.299 --> 00:14:34.240 to our story. Describe him for us. What kind 00:14:34.240 --> 00:14:36.320 of person are we talking about here? He is a 00:14:36.320 --> 00:14:38.860 serious man. He came from the U .S. Gypsum Corporation. 00:14:38.960 --> 00:14:41.679 That's building materials. He wasn't a retailer 00:14:41.679 --> 00:14:44.940 by trade. He was a ruthless numbers guy. He was 00:14:44.940 --> 00:14:47.360 known for being stern, conservative, disciplined, 00:14:47.559 --> 00:14:50.879 and very autocratic. He believed in top -down 00:14:50.879 --> 00:14:54.049 control. So he takes over as president in 1931. 00:14:54.470 --> 00:14:57.129 What are his first moves? He does exactly what 00:14:57.129 --> 00:14:59.190 you'd expect a fixer to do. He cuts the fat. 00:14:59.330 --> 00:15:01.509 He starts closing the unprofitable news stores. 00:15:01.629 --> 00:15:05.009 He fires staff to slash payroll. But he also 00:15:05.009 --> 00:15:07.269 makes a really brilliant observation about the 00:15:07.269 --> 00:15:10.129 business itself. He realizes that the company 00:15:10.129 --> 00:15:12.429 is trying to run its news stores like they're 00:15:12.429 --> 00:15:14.980 pages in a catalog. What do you mean by that? 00:15:15.139 --> 00:15:17.139 Well, the store managers were all catalog guys. 00:15:17.279 --> 00:15:19.500 They knew logistics, they knew inventory, but 00:15:19.500 --> 00:15:22.100 they didn't understand things like visual merchandising 00:15:22.100 --> 00:15:24.440 or customer service or how to lay out a store 00:15:24.440 --> 00:15:27.480 to encourage browsing. So Avery fires the catalog 00:15:27.480 --> 00:15:29.659 guys from the stores and hires actual experienced 00:15:29.659 --> 00:15:32.820 store managers. That seems like such common sense, 00:15:32.980 --> 00:15:35.039 but I guess when you're in the middle of a massive 00:15:35.039 --> 00:15:38.019 chaotic pivot, you can miss the obvious. Exactly. 00:15:38.019 --> 00:15:40.320 He professionalized the retail side of the business. 00:15:40.519 --> 00:15:43.669 He brought in discipline. And it worked. It really 00:15:43.669 --> 00:15:46.250 did. The records show they were profitable again 00:15:46.250 --> 00:15:48.830 before the end of the 1930s, right in the middle 00:15:48.830 --> 00:15:52.070 of the Depression. This is the era that cemented 00:15:52.070 --> 00:15:54.070 the image of the Montgomery Ward store for a 00:15:54.070 --> 00:15:57.860 generation. The green awning stores. If you look 00:15:57.860 --> 00:16:00.360 at photos from the late 30s, you see these tidy 00:16:00.360 --> 00:16:03.460 storefronts with distinctive green awnings dotting 00:16:03.460 --> 00:16:06.639 main streets all across America. Thanks to Avery, 00:16:06.799 --> 00:16:09.100 by the end of the decade, Montgomery Ward is 00:16:09.100 --> 00:16:11.840 the country's largest retailer. So at this point 00:16:11.840 --> 00:16:14.759 in the story, Sewell Avery is the hero. Absolutely. 00:16:14.779 --> 00:16:16.740 He's the man who saved the company from the Great 00:16:16.740 --> 00:16:18.779 Depression. He's the king of retail. He can do 00:16:18.779 --> 00:16:22.740 no wrong. But then the 1940s happen. And this 00:16:22.740 --> 00:16:25.279 is where the story takes a sharp turn from a 00:16:25.279 --> 00:16:28.799 business case study into more of a political 00:16:28.799 --> 00:16:32.259 troller. This is Section 3, the showdown, the 00:16:32.259 --> 00:16:34.500 government seizure. I have to say, I was genuinely 00:16:34.500 --> 00:16:36.480 shocked by this part of the research. I had no 00:16:36.480 --> 00:16:38.419 idea this ever happened. It's one of the most 00:16:38.419 --> 00:16:40.700 dramatic confrontations between a corporation 00:16:40.700 --> 00:16:43.779 and the U .S. government in history. And yet 00:16:43.779 --> 00:16:45.820 people have almost completely forgotten about 00:16:45.820 --> 00:16:49.039 it today. So set the scene for us. It's 1944. 00:16:49.679 --> 00:16:52.220 The country is in the thick of World War II. 00:16:52.500 --> 00:16:55.799 Right. The entire U .S. economy is mobilized 00:16:55.799 --> 00:16:58.220 for the war effort. Factories are churning out 00:16:58.220 --> 00:17:01.899 tanks and planes. Labor is tight. And the government 00:17:01.899 --> 00:17:04.420 has set up a body called the War Labor Board 00:17:04.420 --> 00:17:07.720 specifically to prevent strikes because a strike 00:17:07.720 --> 00:17:09.859 means stopped production and stopped production 00:17:09.859 --> 00:17:12.059 hurts the war effort. And what's going on at 00:17:12.059 --> 00:17:14.099 Montgomery Ward at this time? There's a massive 00:17:14.099 --> 00:17:16.119 labor dispute, a nationwide strike involving 00:17:16.119 --> 00:17:19.200 about 12 ,000 workers. They want better wages, 00:17:19.359 --> 00:17:21.299 and they want the company to recognize their 00:17:21.299 --> 00:17:23.740 union. And the War Labor Board steps in to mediate. 00:17:23.880 --> 00:17:25.779 They do more than mediate. They order Sewell 00:17:25.779 --> 00:17:28.019 Avery to settle the strike. They tell him, you 00:17:28.019 --> 00:17:30.380 need to recognize the union. You need to extend 00:17:30.380 --> 00:17:32.680 the workers' contract. The country needs its 00:17:32.680 --> 00:17:34.900 goods distribution network running smoothly for 00:17:34.900 --> 00:17:38.180 morale and for the economy. And Avery, the man 00:17:38.180 --> 00:17:40.700 who saved the company by being tough and unyielding. 00:17:40.940 --> 00:17:43.019 He does what he always does. He digs in his heels. 00:17:43.119 --> 00:17:46.019 He flat out refuses. He just says no to the federal 00:17:46.019 --> 00:17:49.240 government during wartime. He defies them. His 00:17:49.240 --> 00:17:51.500 argument was that Montgomery Ward was not a war 00:17:51.500 --> 00:17:54.319 industry. He basically said, we sell clothes 00:17:54.319 --> 00:17:56.519 and furniture. We don't make bullets. The government 00:17:56.519 --> 00:17:58.380 doesn't have the authority to tell me how to 00:17:58.380 --> 00:18:01.180 run my business. He is throwing down the gauntlet. 00:18:01.440 --> 00:18:03.319 And challenging the president of the United States, 00:18:03.539 --> 00:18:07.119 Franklin Delano Roosevelt. He is. And FDR, especially 00:18:07.119 --> 00:18:10.180 in 1944, was not a man you wanted to challenge. 00:18:10.240 --> 00:18:13.579 He saw this as a threat to his authority and 00:18:13.579 --> 00:18:16.279 to the war effort. So what happened next? The 00:18:16.279 --> 00:18:20.200 president did not blink. In April of 1944, FDR 00:18:20.200 --> 00:18:23.779 issued Executive Order 9438. He cited the War 00:18:23.779 --> 00:18:26.240 Labor Disputes Act and his powers as commander 00:18:26.240 --> 00:18:28.779 in chief, and he ordered the Secretary of War 00:18:28.779 --> 00:18:31.400 to seize all Montgomery Ward properties nationwide. 00:18:31.819 --> 00:18:34.279 Seize the company. That sounds so abstract, but 00:18:34.279 --> 00:18:36.819 this was not an abstract event. Not at all. It 00:18:36.819 --> 00:18:40.319 was incredibly physical and dramatic. U .S. Army 00:18:40.319 --> 00:18:42.619 troops, we're talking actual soldiers in uniform 00:18:42.619 --> 00:18:45.099 with helmets and rifles, marched into the Chicago 00:18:45.099 --> 00:18:47.529 headquarters of Montgomery Ward. Can you just 00:18:47.529 --> 00:18:49.809 imagine being an employee there? You're sitting 00:18:49.809 --> 00:18:51.789 at your desk, you're typing up an invoice for 00:18:51.789 --> 00:18:54.829 a sofa, and suddenly a platoon of soldiers walks 00:18:54.829 --> 00:18:56.910 into your office building. And they march straight 00:18:56.910 --> 00:18:59.609 up to the executive suite to Sewell Avery's office. 00:18:59.630 --> 00:19:01.529 The attorney general of the United States is 00:19:01.529 --> 00:19:03.750 with them. And Avery still refuses to comply. 00:19:03.970 --> 00:19:06.750 He still won't leave. He sits calmly at his desk 00:19:06.750 --> 00:19:09.170 and refuses to budge. According to the reports, 00:19:09.410 --> 00:19:12.369 he told the attorney general to hell with the 00:19:12.369 --> 00:19:14.369 government. He was going to force them to physically 00:19:14.369 --> 00:19:16.960 remove him. So what did the soldiers do? They 00:19:16.960 --> 00:19:19.240 picked him up. Yeah. Literally. There's an incredibly 00:19:19.240 --> 00:19:21.420 famous photograph of this. It was on the cover 00:19:21.420 --> 00:19:24.140 of newspapers all over the country. Two soldiers 00:19:24.140 --> 00:19:27.180 are holding Sewell Avery in the air by his arms 00:19:27.180 --> 00:19:29.859 and legs, carrying him out of his office like 00:19:29.859 --> 00:19:32.019 he's a piece of furniture. I've seen that photo. 00:19:32.509 --> 00:19:35.890 His face. He looks so dignified, but absolutely 00:19:35.890 --> 00:19:38.910 furious. He's wearing this pristine suit and 00:19:38.910 --> 00:19:41.250 tie, and he's just staring at the camera with 00:19:41.250 --> 00:19:44.049 this look of pure contempt. They carried the 00:19:44.049 --> 00:19:46.609 CEO of America's largest retailer out of his 00:19:46.609 --> 00:19:49.250 own building and essentially dumped him on the 00:19:49.250 --> 00:19:52.009 sidewalk. That is just unbelievable. It's such 00:19:52.009 --> 00:19:54.950 a perfect symbol of that clash between corporate 00:19:54.950 --> 00:19:57.509 autonomy and government power during a national 00:19:57.509 --> 00:20:00.329 emergency. It became a massive political scandal. 00:20:01.009 --> 00:20:03.349 Conservatives and business leaders saw Avery 00:20:03.349 --> 00:20:06.869 as a martyr for private property rights. Liberals 00:20:06.869 --> 00:20:09.509 and union supporters saw him as an arrogant traitor 00:20:09.509 --> 00:20:12.650 who was obstructing the war effort. It immediately 00:20:12.650 --> 00:20:15.289 went to the courts. And how did it all get resolved 00:20:15.289 --> 00:20:18.319 in the end? Well, ultimately the war ended. In 00:20:18.319 --> 00:20:21.240 1945, with the national emergency over, President 00:20:21.240 --> 00:20:23.720 Truman ended the seizure of the company. The 00:20:23.720 --> 00:20:25.720 Supreme Court case that was pending was dismissed 00:20:25.720 --> 00:20:27.779 as moot because the government had already given 00:20:27.779 --> 00:20:30.500 the property back. Sewell Avery walked right 00:20:30.500 --> 00:20:32.539 back into his office and took control again. 00:20:32.720 --> 00:20:35.279 So in a way, he won. He outlasted the government. 00:20:35.420 --> 00:20:38.220 Got his company back, yes. But here is the critical 00:20:38.220 --> 00:20:40.799 twist in the story. The trauma of that event, 00:20:40.940 --> 00:20:43.519 or perhaps just his own deepening pessimism, 00:20:43.559 --> 00:20:46.380 it set the stage for the next and most disastrous 00:20:46.380 --> 00:20:49.200 chapter of the company. Section four, the fatal 00:20:49.200 --> 00:20:51.799 miscalculation. This is the real tragedy. If 00:20:51.799 --> 00:20:53.740 the government seizure was the climax of the 00:20:53.740 --> 00:20:55.960 movie, this is the tragic downfall of the main 00:20:55.960 --> 00:20:58.599 character. So Avery is back in charge. It's 1945. 00:20:58.940 --> 00:21:02.240 The war is over. The GIs are coming home. The 00:21:02.240 --> 00:21:06.819 general mood in America is one of... Relief, 00:21:06.839 --> 00:21:09.279 right? Yeah. And optimism. The post -war boom 00:21:09.279 --> 00:21:12.079 is just starting to bubble up, but that is not 00:21:12.079 --> 00:21:14.880 what Sue Lavery saw. What was his prediction 00:21:14.880 --> 00:21:17.119 for the post -war economy? He looked at history. 00:21:17.380 --> 00:21:19.740 He looked at the recession that happened after 00:21:19.740 --> 00:21:21.980 World War I. He looked at the Great Depression 00:21:21.980 --> 00:21:24.839 that he had just so brilliantly navigated. And 00:21:24.839 --> 00:21:27.720 he became convinced, absolutely 100 % convinced, 00:21:27.900 --> 00:21:30.660 that the post -war economic boom was a temporary 00:21:30.660 --> 00:21:33.200 illusion. He believed the U .S. was about to 00:21:33.200 --> 00:21:35.019 fall back into a massive, crippling depression. 00:21:35.579 --> 00:21:38.619 Now, to be fair to him, he wasn't the only economist 00:21:38.619 --> 00:21:40.500 or business leader who feared that. It was a 00:21:40.500 --> 00:21:43.180 common concern. It was a concern, yes. But his 00:21:43.180 --> 00:21:45.559 reaction to that fear was extreme and total. 00:21:45.740 --> 00:21:48.480 What was his strategy then to prepare for this 00:21:48.480 --> 00:21:53.019 coming depression? One phrase, hoard cash. He 00:21:53.019 --> 00:21:56.059 decided to freeze the company in time. The goal 00:21:56.059 --> 00:21:59.099 was to preserve liquidity above all else. He 00:21:59.099 --> 00:22:01.940 thought when the inevitable crash comes. Sears 00:22:01.940 --> 00:22:04.279 will go bankrupt. JCPenney will go bankrupt. 00:22:04.420 --> 00:22:06.279 And I will be the only one sitting on a mountain 00:22:06.279 --> 00:22:09.039 of cash. I will buy all of my competitors for 00:22:09.039 --> 00:22:12.019 pennies on the dollar. That's an incredibly bold 00:22:12.019 --> 00:22:14.460 contrarian bet on the future of the American 00:22:14.460 --> 00:22:16.599 economy. It's the kind of strategy that makes 00:22:16.599 --> 00:22:19.500 you look like an absolute genius if you're right 00:22:19.500 --> 00:22:21.960 and an absolute fool if you're wrong. And how 00:22:21.960 --> 00:22:25.200 strictly did he enforce this company wide freeze? 00:22:25.599 --> 00:22:28.910 It was draconian. The rule was. No new stores, 00:22:29.130 --> 00:22:32.470 period. None at all. Zero. At the very moment 00:22:32.470 --> 00:22:34.390 that the American suburbs are being born, while 00:22:34.390 --> 00:22:36.529 Levittown is going up, while the baby boom is 00:22:36.529 --> 00:22:38.269 starting and families are moving out of the cities, 00:22:38.509 --> 00:22:41.329 Montgomery Ward builds zero new stores to serve 00:22:41.329 --> 00:22:43.390 them. That's stunning. And what about the stores 00:22:43.390 --> 00:22:45.549 they already had? This is the detail that really 00:22:45.549 --> 00:22:47.470 stuck with me from the store's material. He did 00:22:47.470 --> 00:22:50.089 not even permit his managers to spend money on 00:22:50.089 --> 00:22:52.009 paint. He wouldn't let them paint the walls of 00:22:52.009 --> 00:22:54.849 the stores. No paint, no new light fixtures, 00:22:54.890 --> 00:22:57.910 no renovations. He effectively ordered his company 00:22:57.910 --> 00:23:00.549 to let its stores rot from the inside out. So 00:23:00.549 --> 00:23:02.829 just try to imagine the customer experience in, 00:23:02.869 --> 00:23:06.390 say, 1950. You walk into a Montgomery Ward. It 00:23:06.390 --> 00:23:09.930 looks exactly like it did in 1935. It's dingy. 00:23:09.950 --> 00:23:12.430 The paint is literally peeling off the walls. 00:23:12.509 --> 00:23:15.430 The lighting is bad. It feels old. It feels tired. 00:23:15.569 --> 00:23:18.049 It feels depressing. And then you get in your 00:23:18.049 --> 00:23:20.289 car and you drive five minutes down the road. 00:23:20.799 --> 00:23:23.259 to the brand new Suburban Shopping Center. And 00:23:23.259 --> 00:23:25.819 there is a brand new Sears. And it's bright, 00:23:26.039 --> 00:23:28.380 and it's modern, and it's well -stocked with 00:23:28.380 --> 00:23:31.200 the latest goods. And most importantly, it's 00:23:31.200 --> 00:23:33.099 right there in the middle of the new suburb where 00:23:33.099 --> 00:23:35.220 you and all your neighbors live. It's a complete 00:23:35.220 --> 00:23:37.279 no -brainer for the consumer. It was a slaughter. 00:23:37.759 --> 00:23:40.759 Sears snapped up all the prime real estate locations 00:23:40.759 --> 00:23:42.980 in the new booming suburbs. They captured the 00:23:42.980 --> 00:23:45.420 loyalty of an entire new generation of American 00:23:45.420 --> 00:23:49.039 families. And Montgomery Ward just sat on its 00:23:49.039 --> 00:23:51.220 pile of cash, getting older and sadder, waiting 00:23:51.220 --> 00:23:53.640 for a depression that never came. The source 00:23:53.640 --> 00:23:57.259 material puts it so bluntly. A conservative strategy 00:23:57.259 --> 00:23:59.500 became a death sentence in a booming economy. 00:23:59.779 --> 00:24:02.900 That's the perfect summary. Avery had brilliantly 00:24:02.900 --> 00:24:05.519 prepared for an economic winter. But what America 00:24:05.519 --> 00:24:08.940 got. was an endless summer. At some point, the 00:24:08.940 --> 00:24:11.019 shareholders must have revolted against this. 00:24:11.180 --> 00:24:13.680 They did. But it took a shockingly long time. 00:24:13.740 --> 00:24:17.000 It wasn't until 1955. That's a full decade after 00:24:17.000 --> 00:24:19.759 the war ended. A completely lost decade. And 00:24:19.759 --> 00:24:22.619 in the world of retail, you cannot afford to 00:24:22.619 --> 00:24:25.640 lose a decade and survive. The damage is permanent. 00:24:25.940 --> 00:24:29.180 So in 1955, an activist investor named Louise 00:24:29.180 --> 00:24:32.619 Wilson launched a high profile proxy fight. A 00:24:32.619 --> 00:24:35.160 proxy fight is basically when an outsider tries 00:24:35.160 --> 00:24:37.440 to convince all the other shareholders to vote 00:24:37.440 --> 00:24:39.380 with him to kick out the current board of directors. 00:24:39.779 --> 00:24:43.240 It was a nasty very public battle. Wolfson just 00:24:43.240 --> 00:24:45.900 pointed to the obvious. Ward was dying on the 00:24:45.900 --> 00:24:48.369 vine while Sears was conquering the world. And 00:24:48.369 --> 00:24:50.569 he won. Well, he didn't get full control, but 00:24:50.569 --> 00:24:52.369 he put enough pressure on the board that the 00:24:52.369 --> 00:24:55.009 aging Sewell Avery was finally forced to resign. 00:24:55.130 --> 00:24:57.390 The king was dethroned. But the damage was already 00:24:57.390 --> 00:24:59.869 done. Oh, it was irreversible. Sears had all 00:24:59.869 --> 00:25:02.509 the best locations. Ward had a pile of cash, 00:25:02.710 --> 00:25:04.970 but nowhere to put it. They were now and would 00:25:04.970 --> 00:25:08.089 forever be a second tier player. So this ushers 00:25:08.089 --> 00:25:11.130 in the struggle for identity era. Section five. 00:25:11.710 --> 00:25:15.130 The 60s, 70s, and 80s. This whole period is just 00:25:15.130 --> 00:25:17.150 painful to watch if you're a student of business 00:25:17.150 --> 00:25:21.089 strategy. It's basically three decades of flailing. 00:25:21.329 --> 00:25:23.230 They're just trying everything they can think 00:25:23.230 --> 00:25:25.950 of to catch up. In 1961, they bring in a new 00:25:25.950 --> 00:25:28.630 president, Robert Elton Brooker. And you'll never 00:25:28.630 --> 00:25:30.700 guess where they found him. He was a former vice 00:25:30.700 --> 00:25:33.319 president and board member at Sears. Of course, 00:25:33.480 --> 00:25:36.319 the classic, if you can't beat them, hire them 00:25:36.319 --> 00:25:38.740 strategy. And he brought a bunch of Sears managers 00:25:38.740 --> 00:25:40.799 with him. They tried to streamline the company, 00:25:40.940 --> 00:25:42.809 make it more efficient. The source notes mentioned 00:25:42.809 --> 00:25:45.109 some pretty drastic cuts. They slashed the number 00:25:45.109 --> 00:25:47.630 of suppliers they used from 15 ,000 down to 7 00:25:47.630 --> 00:25:50.210 ,000. They cut the number of different brands 00:25:50.210 --> 00:25:53.569 they carried from 168 down to just 16. So they 00:25:53.569 --> 00:25:55.210 were trying to be more efficient, focusing on 00:25:55.210 --> 00:25:57.730 their own private label goods. And it helped 00:25:57.730 --> 00:26:00.109 the bottom line for a little while, but it didn't 00:26:00.109 --> 00:26:03.150 solve the fundamental problem, which was nobody 00:26:03.150 --> 00:26:05.670 knew what Montgomery Ward was anymore. Were they 00:26:05.670 --> 00:26:09.569 a high -end store? A discount store? A rural 00:26:09.569 --> 00:26:12.569 store. A suburban store. They had no clear identity. 00:26:12.910 --> 00:26:16.250 And then the corporate weirdness really begins. 00:26:16.490 --> 00:26:20.650 The mergers. In 1968, they merge with the Container 00:26:20.650 --> 00:26:22.730 Corporation of America. A company that makes 00:26:22.730 --> 00:26:25.170 cardboard boxes. To form a new entity called 00:26:25.170 --> 00:26:28.599 MarCore. MarCore. It sounds like the name of 00:26:28.599 --> 00:26:30.900 a villain's company in a James Bond movie. It 00:26:30.900 --> 00:26:33.460 really does. It was a classic conglomerate. The 00:26:33.460 --> 00:26:36.119 idea in that era was to smooth out the business 00:26:36.119 --> 00:26:38.880 cycles of different industries. But it gets even 00:26:38.880 --> 00:26:43.660 stranger. In 1974, a very, very big fish enters 00:26:43.660 --> 00:26:46.559 the pond. Mobile oil. Yes. The company with the 00:26:46.559 --> 00:26:49.259 gas stations and the flying red horse. Okay, 00:26:49.319 --> 00:26:51.079 I have to stop you here because this makes no 00:26:51.079 --> 00:26:53.660 sense on the surface. Why on earth would an oil 00:26:53.660 --> 00:26:55.799 company want to own a struggling department store? 00:26:55.940 --> 00:26:57.880 You have to put yourself in the context of the 00:26:57.880 --> 00:27:01.500 mid -1970s, the oil crisis. Oil prices were going 00:27:01.500 --> 00:27:03.519 through the roof. Mobil was absolutely drowning 00:27:03.519 --> 00:27:05.779 in cash. But they were also worried. They thought 00:27:05.779 --> 00:27:08.079 maybe the oil era is ending. Maybe the government 00:27:08.079 --> 00:27:10.579 will break us up for being a monopoly. We need 00:27:10.579 --> 00:27:12.900 to diversify our assets. So they went shopping 00:27:12.900 --> 00:27:15.720 for a non -oil business. They wanted to buy a 00:27:15.720 --> 00:27:19.019 big, established American company that was completely 00:27:19.019 --> 00:27:22.880 different from oil. And they landed on Marcor. 00:27:23.240 --> 00:27:27.380 By 1976, Mobil owned Montgomery Ward outright. 00:27:27.660 --> 00:27:29.970 It just feels like such a mismatch. The skill 00:27:29.970 --> 00:27:32.670 set required to sell gasoline and the skill set 00:27:32.670 --> 00:27:35.349 required to sell bed sheets feel very, very different. 00:27:35.569 --> 00:27:38.569 It was a massive culture clash. The oil executives 00:27:38.569 --> 00:27:41.170 in their New York headquarters just did not understand 00:27:41.170 --> 00:27:43.869 the rhythms of retail. They didn't understand 00:27:43.869 --> 00:27:46.210 fashion cycles or the importance of the Christmas 00:27:46.210 --> 00:27:49.230 rush. But to their credit, under Mobil's ownership, 00:27:49.470 --> 00:27:51.710 they did try some innovative things. I was really 00:27:51.710 --> 00:27:53.690 interested in this home computer project I found 00:27:53.690 --> 00:27:56.589 in the notes. Ah, the Cyber Vision 2001. Yes. 00:27:56.769 --> 00:28:00.849 The year is 1978. This is extremely early in 00:28:00.849 --> 00:28:03.309 the home computer game. This is just a year after 00:28:03.309 --> 00:28:06.089 the Apple II and the Commodore PET came out. 00:28:06.170 --> 00:28:08.109 And Montgomery Ward decides they're going to 00:28:08.109 --> 00:28:10.529 sell a home computer under their own brand name. 00:28:10.630 --> 00:28:13.029 The CyberVision. It sounds so futuristic. And 00:28:13.029 --> 00:28:15.289 it was for the time. It connected to your television 00:28:15.289 --> 00:28:17.950 set. It used cassette tapes to load data and 00:28:17.950 --> 00:28:20.650 programs. But it failed. It was a total failure. 00:28:20.690 --> 00:28:22.710 There were manufacturing problems with the company 00:28:22.710 --> 00:28:25.630 they partnered with. And frankly, the idea of 00:28:25.630 --> 00:28:27.829 buying a computer from a department store catalog 00:28:27.829 --> 00:28:30.500 was... a really hard sell when specialized computer 00:28:30.500 --> 00:28:33.079 stores were starting to pop up. They pulled the 00:28:33.079 --> 00:28:35.680 plug by the early 80s. But it shows they were 00:28:35.680 --> 00:28:38.019 at least trying. They weren't completely asleep 00:28:38.019 --> 00:28:39.819 at the wheel. They were trying to find that next 00:28:39.819 --> 00:28:41.720 big thing that would save them. And they also 00:28:41.720 --> 00:28:43.940 tried to pivot hard into the discount market 00:28:43.940 --> 00:28:47.299 with this Jefferson Ward experiment. This is 00:28:47.299 --> 00:28:49.359 another one of the great heartbreaks of their 00:28:49.359 --> 00:28:52.740 late history. By 1980, Mobile's management realizes 00:28:52.740 --> 00:28:55.339 that the traditional ward stores are just bleeding 00:28:55.339 --> 00:28:58.220 money. But they look at the market and see who's 00:28:58.220 --> 00:29:01.640 winning. The discounters. Kmart was huge. And 00:29:01.640 --> 00:29:04.460 this new cool player called Target was on the 00:29:04.460 --> 00:29:07.400 rise. Exactly. Target was the upscale discounter. 00:29:07.559 --> 00:29:10.319 So Mobile looks at its portfolio of assets and 00:29:10.319 --> 00:29:13.119 realizes they own this small, successful discount 00:29:13.119 --> 00:29:16.259 chain in Florida called Jefferson Stores. They 00:29:16.259 --> 00:29:19.900 have a light bulb moment. Aha! We will rebrand 00:29:19.900 --> 00:29:22.220 our worst performing Montgomery Ward stores as 00:29:22.220 --> 00:29:24.900 Jefferson Ward. We will become the next Target. 00:29:25.119 --> 00:29:27.480 On paper, that sounds like a pretty decent plan. 00:29:27.660 --> 00:29:30.059 It wasn't a terrible idea, but the execution. 00:29:30.539 --> 00:29:32.599 Execution is everything in retail. They tried 00:29:32.599 --> 00:29:35.269 to expand way too fast. They decided to convert 00:29:35.269 --> 00:29:38.289 about a third of all Montgomery Ward stores into 00:29:38.289 --> 00:29:40.809 Jefferson Ward stores almost overnight. And the 00:29:40.809 --> 00:29:43.009 staff just couldn't handle that kind of rapid 00:29:43.009 --> 00:29:45.549 change. The management team from the small Florida 00:29:45.549 --> 00:29:47.890 chain was completely overwhelmed. They didn't 00:29:47.890 --> 00:29:50.230 understand the northern markets. The source material 00:29:50.230 --> 00:29:52.349 notes that the buyers in the north didn't understand 00:29:52.349 --> 00:29:54.529 the southern markets. They were stocking things 00:29:54.529 --> 00:29:56.910 that sold well in Miami in stores in Minneapolis 00:29:56.910 --> 00:30:00.170 in the middle of winter. So they had like swimsuits 00:30:00.170 --> 00:30:02.740 for sale during a blizzard. Essentially. The 00:30:02.740 --> 00:30:05.299 inventory mix was all wrong. The logistics broke 00:30:05.299 --> 00:30:08.180 down. And this idea that was supposed to be their 00:30:08.180 --> 00:30:10.640 savior turned into a massive cash drain that 00:30:10.640 --> 00:30:12.460 was dragging down the whole company. And the 00:30:12.460 --> 00:30:15.519 final outcome. They gave up and sold the entire 00:30:15.519 --> 00:30:19.200 Jefferson Ward chain to another retailer, Bradley's, 00:30:19.279 --> 00:30:22.980 in 1985. It was another high -profile, expensive, 00:30:23.240 --> 00:30:27.200 failed pivot. And speaking of endings, 1985 is 00:30:27.200 --> 00:30:30.049 also the year the catalog died. The 113 -year 00:30:30.049 --> 00:30:33.589 -old catalog, the wish book, the very thing that 00:30:33.589 --> 00:30:36.049 started the entire company, they shut it down. 00:30:36.170 --> 00:30:38.210 Why would they do that? The official reason was 00:30:38.210 --> 00:30:40.369 that they wanted to focus all their energy on 00:30:40.369 --> 00:30:43.230 creating these boutique -like specialty stores. 00:30:43.609 --> 00:30:46.809 They saw the catalog as an anchor to their rural 00:30:46.809 --> 00:30:49.349 past. They wanted to be modern and suburban. 00:30:50.059 --> 00:30:51.799 It just feels like they're throwing things at 00:30:51.799 --> 00:30:53.700 the wall at this point. Let's be Target. Now 00:30:53.700 --> 00:30:56.440 let's be a collection of boutiques. No, let's 00:30:56.440 --> 00:30:59.279 sell computers. It is the perfect definition 00:30:59.279 --> 00:31:02.140 of a company that has lost its soul. They are 00:31:02.140 --> 00:31:05.579 completely reactive, not proactive. They're just 00:31:05.579 --> 00:31:07.859 chasing everyone else's tail instead of figuring 00:31:07.859 --> 00:31:09.839 out who they are. And mobile eventually just 00:31:09.839 --> 00:31:12.240 got tired of throwing good money after bad. By 00:31:12.240 --> 00:31:15.549 1988, mobile wanted out. The great diversification 00:31:15.549 --> 00:31:18.450 strategy of the 70s was a bust. They wanted to 00:31:18.450 --> 00:31:20.650 go back to just being an oil company. So they 00:31:20.650 --> 00:31:22.869 spun it off in a leveraged buyout. A massive 00:31:22.869 --> 00:31:26.170 $3 .8 billion deal. The management team at the 00:31:26.170 --> 00:31:28.730 time, led by a man named Bernard Brennan, bought 00:31:28.730 --> 00:31:31.109 the company back from Mobil. Montgomery Ward 00:31:31.109 --> 00:31:33.250 was independent once again. So we're heading 00:31:33.250 --> 00:31:36.069 into the 1990s. The company is independent again. 00:31:36.569 --> 00:31:39.509 But is it healthy? No. It's on life support. 00:31:39.750 --> 00:31:42.390 And the world around it is getting much, much 00:31:42.390 --> 00:31:45.940 more competitive. This brings us to section six, 00:31:46.119 --> 00:31:50.920 the slow decline and death. The retail landscape 00:31:50.920 --> 00:31:53.680 of the 90s was just brutal. You had the unstoppable 00:31:53.680 --> 00:31:56.660 rise of the category killers. Stores like Best 00:31:56.660 --> 00:31:59.519 Buy for electronics, Toys R Us for toys, Home 00:31:59.519 --> 00:32:02.319 Depot for hardware. Exactly. If you wanted a 00:32:02.319 --> 00:32:04.559 specific thing like a television, you went to 00:32:04.559 --> 00:32:06.359 Best Buy because they had the best selection 00:32:06.359 --> 00:32:08.779 and prices. If you wanted a hammer, you went 00:32:08.779 --> 00:32:11.079 to Home Depot. Why would you ever go to Montgomery 00:32:11.079 --> 00:32:13.339 Ward for those things? And for general merchandise, 00:32:13.779 --> 00:32:16.380 you had the planet killing juggernaut that was 00:32:16.380 --> 00:32:19.200 Walmart. And on the other end, Target had successfully 00:32:19.200 --> 00:32:22.619 captured the cheap but stylish demographic. Montgomery 00:32:22.619 --> 00:32:24.940 Ward was squeezed to death in the middle. It 00:32:24.940 --> 00:32:27.599 was seen as your grandparent's store. It wasn't 00:32:27.599 --> 00:32:29.319 cheap enough to compete with Walmart. It wasn't 00:32:29.319 --> 00:32:31.400 cool enough to compete with Target. And it didn't 00:32:31.400 --> 00:32:33.660 have the deep selection of the category killers. 00:32:33.900 --> 00:32:35.799 So the erosion of their traditional customer 00:32:35.799 --> 00:32:39.299 base was just steady and unavoidable. In 1997, 00:32:39.640 --> 00:32:42.140 the inevitable happened. They filed for Chapter 00:32:42.140 --> 00:32:45.000 11 bankruptcy protection. Bankruptcy number one. 00:32:45.839 --> 00:32:48.140 This is usually the beginning of the end. They 00:32:48.140 --> 00:32:50.980 tried a massive restructuring. They emerged from 00:32:50.980 --> 00:32:53.960 that first bankruptcy in 1999. But now they were 00:32:53.960 --> 00:32:57.960 a wholly owned subsidiary of GE Capital. GE Capital. 00:32:58.099 --> 00:33:01.400 So another massive non -retail conglomerate owner. 00:33:01.619 --> 00:33:04.079 GE was their biggest creditor during the bankruptcy. 00:33:04.099 --> 00:33:06.740 So they essentially took ownership of the company 00:33:06.740 --> 00:33:08.880 in exchange for the debt that was owed to them. 00:33:09.039 --> 00:33:12.359 And they tried one last desperate pivot. The 00:33:12.359 --> 00:33:14.680 Great Wards rebrand. That's right. They dropped 00:33:14.680 --> 00:33:16.720 the Montgomery. They were just wards. They got 00:33:16.720 --> 00:33:19.740 a new. modern logo. And they had that store within 00:33:19.740 --> 00:33:22.599 a store concept, Electric Avenue. Yes. They tried 00:33:22.599 --> 00:33:24.240 to make their electronics department look and 00:33:24.240 --> 00:33:26.759 feel just like a Best Buy inside the larger store. 00:33:26.980 --> 00:33:29.680 They used flashy neon signs and more open layouts. 00:33:29.940 --> 00:33:32.599 They spent millions and millions of dollars renovating 00:33:32.599 --> 00:33:34.380 stores to make them look more consumer friendly. 00:33:34.619 --> 00:33:37.619 It was a final last ditch effort to become relevant 00:33:37.619 --> 00:33:39.619 again. It really was. They were trying to spend 00:33:39.619 --> 00:33:41.579 their way out of irrelevance. But then comes 00:33:41.579 --> 00:33:44.230 Christmas of 2000. The ghost of Christmas past. 00:33:44.529 --> 00:33:47.849 The entire retail sector lives and dies by the 00:33:47.849 --> 00:33:49.690 sales numbers in the fourth quarter. And the 00:33:49.690 --> 00:33:52.569 holiday sales numbers for awards came in and 00:33:52.569 --> 00:33:55.289 they were soft. They were much lower than anyone 00:33:55.289 --> 00:33:57.950 had expected. And GE Capital was watching closely. 00:33:58.430 --> 00:34:00.829 GE Capital is a finance company. They look at 00:34:00.829 --> 00:34:02.730 spreadsheets. They don't have an emotional attachment 00:34:02.730 --> 00:34:05.589 to retail. They had promised to keep funding 00:34:05.589 --> 00:34:07.809 the restructuring, but when they saw those poor 00:34:07.809 --> 00:34:10.809 Christmas results, they just did the math. They 00:34:10.809 --> 00:34:13.210 realized it would take hundreds of millions more 00:34:13.210 --> 00:34:15.809 dollars to even have a chance of saving the ship. 00:34:16.050 --> 00:34:18.210 So they decided to cut their losses and let it 00:34:18.210 --> 00:34:20.449 sink. They reneged on their promises of future 00:34:20.449 --> 00:34:22.449 support. They pulled the plug. The announcement 00:34:22.449 --> 00:34:26.289 came on December 28, 2000. Just think about that 00:34:26.289 --> 00:34:29.489 timing. Two days after Christmas. Imagine being 00:34:29.489 --> 00:34:31.989 an employee. You've just worked through the insane 00:34:31.989 --> 00:34:34.710 holiday rush. You're exhausted. And then the 00:34:34.710 --> 00:34:36.849 announcement comes down from corporate. Cease 00:34:36.849 --> 00:34:39.409 all operations. Effective immediately. Full liquidation. 00:34:39.590 --> 00:34:43.510 The human toll was just massive. 250 stores closed. 00:34:43.909 --> 00:34:47.909 37 ,000 employees were laid off. 37 ,000 people. 00:34:48.070 --> 00:34:50.309 That's the population of a decent -sized American 00:34:50.309 --> 00:34:53.090 city all out of a job at once. It was a true 00:34:53.090 --> 00:34:55.829 corporate tragedy. And it really highlights the 00:34:55.829 --> 00:34:58.650 danger of that last -ditch effort. Sometimes, 00:34:58.769 --> 00:35:00.570 by the time you spend all the money to finally 00:35:00.570 --> 00:35:03.110 fix the stores, to finally paint the walls that 00:35:03.110 --> 00:35:05.710 Sewell Avery refused to paint 50 years earlier, 00:35:05.989 --> 00:35:08.690 your customer has already moved on and they're 00:35:08.690 --> 00:35:12.110 never coming back. So 2001, the liquidation sales 00:35:12.110 --> 00:35:15.070 happen, everything must go. The fixtures are 00:35:15.070 --> 00:35:17.610 sold off, the signs come down, the buildings 00:35:17.610 --> 00:35:20.630 go dark. End of story. But the name didn't die. 00:35:20.909 --> 00:35:23.699 And this brings us to our final and... maybe 00:35:23.699 --> 00:35:27.800 weirdest section, the zombie brand. This is such 00:35:27.800 --> 00:35:30.320 a strange future of modern commerce. A corporation 00:35:30.320 --> 00:35:33.039 can die. Its buildings can be torn down. Its 00:35:33.039 --> 00:35:35.800 employees can move on. But its name, its intellectual 00:35:35.800 --> 00:35:38.300 property, that can live on forever. Because that 00:35:38.300 --> 00:35:40.840 name recognition still has value. People remember 00:35:40.840 --> 00:35:43.019 it. Exactly. Even if you hadn't shopped at a 00:35:43.019 --> 00:35:45.320 Montgomery Ward in 10 years, you knew the name. 00:35:45.500 --> 00:35:47.860 It had a century of built -in trust associated 00:35:47.860 --> 00:35:50.940 with it. So who bought the corpse? In 2004, a 00:35:50.940 --> 00:35:53.679 direct mail company called Direct Marketing Services 00:35:53.679 --> 00:35:57.480 Inc., or DMSI, bought the intellectual property. 00:35:57.719 --> 00:36:01.539 The name, the logo, the customer lists. And what 00:36:01.539 --> 00:36:03.920 did they do with it? And the irony here is just 00:36:03.920 --> 00:36:06.800 so rich, it's almost unbelievable. They pivoted 00:36:06.800 --> 00:36:09.920 the brand back to an online and catalog based 00:36:09.920 --> 00:36:12.659 operation. No way they went back to the roots. 00:36:12.860 --> 00:36:15.019 They went right back to the beginning. No expensive 00:36:15.019 --> 00:36:17.619 physical stores, just a website and a mail order 00:36:17.619 --> 00:36:20.820 catalog. They realized the only real value left 00:36:20.820 --> 00:36:23.260 in the brand was in that original direct consumer 00:36:23.260 --> 00:36:25.699 model. But there was a big catch, right? This 00:36:25.699 --> 00:36:27.480 wasn't really Montgomery Ward coming back from 00:36:27.480 --> 00:36:30.099 the dead. A huge catch. The new owners were very 00:36:30.099 --> 00:36:32.130 explicit in stating that they did not. honor 00:36:32.130 --> 00:36:34.829 any obligations from the old company. So if I 00:36:34.829 --> 00:36:37.969 found an old gift card from 1999 in my sock drawer. 00:36:38.210 --> 00:36:40.150 It's a worthless piece of plastic. What if I 00:36:40.150 --> 00:36:42.570 had a lifetime guarantee on a craftsman style 00:36:42.570 --> 00:36:45.190 tool I bought there in 1985? The guarantee was 00:36:45.190 --> 00:36:48.210 void. The lifetime referred to the lifetime of 00:36:48.210 --> 00:36:50.650 the original company, not your lifetime. And 00:36:50.650 --> 00:36:53.389 that company was dead. That is that's so eerie. 00:36:53.449 --> 00:36:55.130 It's like the brand is wearing a skin suit of 00:36:55.130 --> 00:36:58.309 the old company. It is a zombie. It looks and 00:36:58.309 --> 00:37:01.949 sounds like your old friend, but there's no soul 00:37:01.949 --> 00:37:04.969 behind the eyes. It's just an empty vessel. And 00:37:04.969 --> 00:37:08.369 the zombie kept shambling on. It did. DMSI itself 00:37:08.369 --> 00:37:11.510 went to auction in 2008 and the Montgomery Ward 00:37:11.510 --> 00:37:14.750 brand was purchased by Swiss Colony. Swiss Colony. 00:37:14.829 --> 00:37:16.889 Aren't they the people who sell cheese logs and 00:37:16.889 --> 00:37:19.269 sausages and catalogs at Christmas? The very 00:37:19.269 --> 00:37:22.309 same. They are masters of the direct mail business. 00:37:22.489 --> 00:37:24.429 They know that world better than anyone. They 00:37:24.429 --> 00:37:27.250 saw the value in the Ward brand and its mailing 00:37:27.250 --> 00:37:29.610 lists. So they relaunched it again. They relaunched 00:37:29.610 --> 00:37:31.710 the website in September of 2008. They started 00:37:31.710 --> 00:37:34.469 mailing out new Montgomery Ward catalogs in 2009. 00:37:34.849 --> 00:37:36.889 And where are they today? Today, the brand is 00:37:36.889 --> 00:37:39.510 owned by Swiss Colony's parent company. colony 00:37:39.510 --> 00:37:42.429 brands. You can go to wards .com right now. You 00:37:42.429 --> 00:37:44.469 can buy furniture, electronics, kitchen gadgets. 00:37:44.630 --> 00:37:46.590 They have an installment payment plan. I saw 00:37:46.590 --> 00:37:48.670 they have their own house brand of kitchenware, 00:37:48.789 --> 00:37:52.050 chef tested. They do. And here is the ultimate 00:37:52.050 --> 00:37:55.769 final irony. You can find Montgomery Ward branded 00:37:55.769 --> 00:37:59.670 products for sale on Amazon. Wow. That brings 00:37:59.670 --> 00:38:02.159 it completely full circle. The company that was 00:38:02.159 --> 00:38:05.119 the original Everything Store is now just another 00:38:05.119 --> 00:38:07.280 third -party seller on the modern Everything 00:38:07.280 --> 00:38:09.739 Store. It's the final destination of the disrupted. 00:38:09.800 --> 00:38:12.380 If you can't beat them, you become a feature 00:38:12.380 --> 00:38:15.159 on the platform that replaced you. What a wild 00:38:15.159 --> 00:38:17.900 ride. From a loft above a livery stable in Chicago, 00:38:18.079 --> 00:38:21.039 to a four -pound wish book, to a showdown with 00:38:21.039 --> 00:38:24.099 FDR, to the mobile oil boardroom, and finally 00:38:24.099 --> 00:38:26.659 to a zombie website selling air fryers on Amazon. 00:38:27.159 --> 00:38:29.599 The story of Montgomery Ward is basically the 00:38:29.599 --> 00:38:32.099 entire history of American consumerism wrapped 00:38:32.099 --> 00:38:35.039 up in the timeline of one company. So let's unpack 00:38:35.039 --> 00:38:37.199 this. Let's step back. What does it all mean? 00:38:37.539 --> 00:38:40.460 Why should you, our listener, care about an apartment 00:38:40.460 --> 00:38:42.880 store that died more than 20 years ago? I think 00:38:42.880 --> 00:38:44.739 it matters because it's a powerful lesson that 00:38:44.739 --> 00:38:47.039 breaks the illusion of invincibility. In its 00:38:47.039 --> 00:38:49.320 day, Montgomery Ward was the biggest. They were 00:38:49.320 --> 00:38:51.880 the original innovator. For decades, they seemed 00:38:51.880 --> 00:38:54.000 absolutely untouchable. And they still died. 00:38:54.409 --> 00:38:57.610 They died because of one catastrophic, decade 00:38:57.610 --> 00:39:00.829 -long strategic mistake. The final decline was 00:39:00.829 --> 00:39:03.650 long and slow, but the mortal wound was self 00:39:03.650 --> 00:39:06.550 -inflicted in 1945 by Sewell Avery's refusal 00:39:06.550 --> 00:39:10.070 to adapt. It makes you realize that sometimes... 00:39:10.559 --> 00:39:13.539 Playing it safe can be the absolute most dangerous 00:39:13.539 --> 00:39:16.360 move a company can make. Exactly. You cannot 00:39:16.360 --> 00:39:18.460 save your way to success in a growth market. 00:39:18.539 --> 00:39:20.780 Sometimes you just have to paint the story. You 00:39:20.780 --> 00:39:22.820 have to build the new location where the customers 00:39:22.820 --> 00:39:25.179 are. And I can't help but keep coming back to 00:39:25.179 --> 00:39:27.500 that what -if scenario you mentioned earlier, 00:39:27.739 --> 00:39:31.199 that merger offer in 1930. The Sears -Ward super 00:39:31.199 --> 00:39:33.400 company. If they had merged back then, they would 00:39:33.400 --> 00:39:36.139 have had incredible scale and power. Do you think 00:39:36.139 --> 00:39:38.199 they would have survived the rise of Walmart 00:39:38.199 --> 00:39:40.619 and Amazon? That is the billion dollar question, 00:39:40.699 --> 00:39:42.420 isn't it? If they had merged, they would have 00:39:42.420 --> 00:39:44.739 had the resources to maybe fight off Walmart 00:39:44.739 --> 00:39:46.800 in the 70s and 80s. Or maybe they would have 00:39:46.800 --> 00:39:49.260 just been a bigger, slower target. A bigger dinosaur 00:39:49.260 --> 00:39:51.699 for the asteroid to hit. Merging two companies 00:39:51.699 --> 00:39:54.199 that are both struggling to adapt to a new reality 00:39:54.199 --> 00:39:57.440 usually just creates a larger, more dysfunctional 00:39:57.440 --> 00:40:00.440 company that struggles to adapt. Culture eats 00:40:00.440 --> 00:40:02.780 strategy for breakfast. And if the culture at 00:40:02.780 --> 00:40:07.420 the top was don't innovate. hoard cash, a merger 00:40:07.420 --> 00:40:09.420 wouldn't have fixed that fundamental problem. 00:40:09.679 --> 00:40:12.360 That's a really profound thought. Scale doesn't 00:40:12.360 --> 00:40:15.400 guarantee survival. Adaptability is what guarantees 00:40:15.400 --> 00:40:18.400 survival. So here's our final provocative thought 00:40:18.400 --> 00:40:21.260 for you, the listener. We all look at the giants 00:40:21.260 --> 00:40:24.119 of today. We look at Amazon, at Google, at Walmart. 00:40:24.360 --> 00:40:26.719 They seem eternal. They seem like they will be 00:40:26.719 --> 00:40:28.960 here 100 years from now. Just like Montgomery 00:40:28.960 --> 00:40:31.599 Ward seemed to a farmer looking through the wishbook 00:40:31.599 --> 00:40:34.409 in 1930. So as you look at today's corporate 00:40:34.409 --> 00:40:38.309 landscape, ask yourself this, who is the Sewell 00:40:38.309 --> 00:40:41.309 Avery of today? Which giant tech company or retailer 00:40:41.309 --> 00:40:43.389 is sitting on a massive pile of cash, getting 00:40:43.389 --> 00:40:45.869 complacent and refusing to paint the store? Who 00:40:45.869 --> 00:40:48.449 is playing defense while the next great disruption 00:40:48.449 --> 00:40:51.769 is being quietly born in a garage or maybe a 00:40:51.769 --> 00:40:53.650 modern day livery stable somewhere? That's the 00:40:53.650 --> 00:40:55.570 question to keep asking. Thank you for listening 00:40:55.570 --> 00:40:58.090 to this deep dive into the incredible rise and 00:40:58.090 --> 00:41:01.190 the tragic fall of Montgomery Ward. We'll be 00:41:01.190 --> 00:41:02.849 back next time with another stack of sources 00:41:02.849 --> 00:41:05.510 and another fascinating story. Keep looking for 00:41:05.510 --> 00:41:07.230 the patterns. See you next time.