In the episode, Jim Senegal, co-founder of Costco and protégé of retail pioneer Saul Price, reflects on the profound impact Price had on his life and the retail industry. Price's rare compliments were as infrequent as Haley's comet, yet his leadership qualities and teachings on business ethics, core values, and merchandising philosophy left an indelible mark on Senegal and many others at Fedmart and later Costco. Price's commitment to operational efficiency and customer savings laid the groundwork for big box retailers, influencing industry giants like Sam Walton of Walmart. Price's legacy extends beyond his innovative Price Club concept, as he instilled principles that business should serve society, a philosophy echoed by his son Robert Price in his book "Saul Price: Retail Revolutionary and Social Innovator." The episode delves into Price's early life challenges, his entrepreneurial drive, and his teaching approach, which emphasized understanding over rote procedures. Despite his success, Price's focus shifts, leading to the eventual merger of Price Club and Costco, highlighting the importance of maintaining focus in business. The episode concludes with a touching tribute from Robert Price, celebrating his father's life and the profound personal and professional influence he had on those around him.
"You've been very generous about giving me some credit for influencing you. I suspect that's true, but you would have been a great achiever under any circumstance."
The quote signifies Saul's recognition of Jim's potential and influence on his career, highlighting the importance of mentorship.
"Saul gave us incredible opportunities to learn the business, teaching us the skills and core principles we applied throughout our business careers, and then later when we launched Costco in 1983."
This quote emphasizes the role Saul played in educating and preparing Jim and others for successful careers in retail, particularly at Costco.
"For more than 40 years, we had worked together. I had learned that my father expected to be fully informed, openly and honestly, even if he did not like what he heard."
The quote reveals Saul's expectation for transparency and honesty in business dealings, a principle passed down to his son.
"The kids teased me a lot, and consequently, I was shy, and I compensated this by being an overachiever in school."
Saul's response to childhood teasing was to excel academically, demonstrating how early life challenges can motivate personal achievement.
"Over a period of time, I really learned far more from my clients than I ever learned in law school."
Saul credits his clients for providing practical business education, emphasizing real-world experience over formal education.
"Unlike his father, who had managed to find ways not to work, Saul thrived when he was busy working hard and feeling productive."
This quote contrasts Saul's work ethic with his father's, highlighting the development of his character and business philosophy.
"The Seven Seas was another learning experience for Seoul, an opportunity to see how a large store selling a variety of goods and services all under one roof, could be successful catering to a focused segment of the marketplace."
This quote underscores the significance of understanding niche markets, which later influenced Saul's approach to creating FedMart.
"So what's Costco famous for? They are located in non traditional retail, right." "They were convinced that Fedco type businesses could be successful in San Diego." "As soon as they returned to San Diego, Seoul took these other two guys to see the main street warehouse."
The quotes highlight the inspiration Saul Price took from Fedco's unique location and business model, leading to the idea of starting a similar business in San Diego, which would eventually become Fed Mart.
"Seoul was also really good at analyzing the business decisions and philosophies of other businesses and finding areas where he could do things differently and give him advantage." "So when I read this section, you realize that like Costco, Price, club, Fedmore, they do essentially the opposite of what everybody else was doing."
These quotes reflect Saul's strategic thinking in differentiating his business from traditional retail models, leading to the unique approach taken by Fed Mart and later Costco.
"So this is a guy that was innovating and retailing a decade before Seoul even starts working in the industry." "Corvettes sold home appliance and other household products at deep discounts from the manufacturers, suggested fair trade prices."
These quotes show the influence of early retail innovators on Saul Price and how their strategies, such as discounting and membership models, were precursors to the practices adopted by Fed Mart.
"Fortunately, Soul later recalled, most of us had backgrounds that were alien to retailing. We didn't know what wouldn't work or what we couldn't do." "That is the way with wise people. They are so wise and practical that they always know to a dot just why something cannot be done."
These quotes emphasize the benefit of approaching a new venture without preconceived notions of what can or cannot be done, allowing for innovation and experimentation.
"From the day that Fedmart opened for business in November 1954, the store was an immediate and spectacular success." "Sol described his business approach as the professional fiduciary relationship between us, the retailer, and the member, which is the customer."
These quotes capture the immediate impact of Fed Mart's opening and Saul's customer-centric business philosophy, which prioritized the customer's interests and employee welfare.
"By the late 1950s, Saul had changed his career from business attorney to businessman." "He was never driven by the need to have the most stores or the most money, but by the desire to give the customer the best deal and to provide fair wages and benefits to fed Mart's employees."
The quotes reflect Saul's career shift and his principles in running a business, which emphasized fairness to customers and employees alike, contributing to Fed Mart's success and employee satisfaction.
"People are happier at work. They serve your customers better. So Jim gave an example of, like, this is a virtuous feedback loop that he would get that." "Costco has a reputation for paying well, and so they just had a job opening. They needed to hire 200 new people. 22,000 people applied for those 200 positions."
The quotes underline the correlation between employee satisfaction and customer service, as well as the competitive advantage gained by Costco through its reputation for good wages.
"Fed Mart was paying a dollar an hour in San Diego and Phoenix. The wage decision in San Antonio was simple. Employees in San Antonio worked just as hard and as well as other fed mart employees." "Seoul told the lender that the separate bathroom provision was unacceptable and that he would not enter into the mortgage agreement unless the provision was removed."
These quotes demonstrate Saul Price's commitment to equitable wages and his proactive approach to combating discriminatory practices, which were part of his broader ethical approach to business.
"They withstood numerous obstacles in operating and opening the first pharmacy. They had pressure from the local and state pharmacy organization, pressure placed on wholesale companies not to deliver ourself to fed Mart."
This quote reveals the difficulties Fedmart faced in breaking into the pharmacy market, showcasing the extent to which established players will go to protect their interests.
"He created a fed mart subsidiary that functioned as a wholesale gasoline supplier. Gasoline was acquired in Texas and then shipped throughout the Panama Canal and offloaded in Long Beach, California."
The quote details Saul Price's innovative solution to the problem of being cut off by major gasoline suppliers, demonstrating his resourcefulness and determination to succeed.
"Jim Senegal started working for Seoul in 1954 at the age of 18. Jim recounted the time that he received a call from a reporter to answer some question, some questions." "You train an animal, you teach a person."
These quotes illustrate the profound impact Saul Price had on his employees and his philosophy on the distinction between training and teaching, which emphasizes personal growth and understanding.
"Conventional wisdom in retailing is to stock as many items as possible in order to satisfy every customer's needs and wants. The intelligent loss of sales turns that theory on its head, postulating that customer demand is most sensitive to price, not selection."
The quote explains the rationale behind the "intelligent loss of sales" strategy, highlighting how it challenges traditional retail thinking and leads to greater efficiency.
"I learned a lot from Sol price, a great operator who had started fed Mart out in southern in southern California in 1954." "I believe in the discipline of mastering the best that other people have figured out."
These quotes from Sam Walton and Charlie Munger respectively underscore the value of adopting successful strategies from other businesses and the role of continuous learning in achieving success.
"The early years of the 1970s were proving to be quite a challenge for Fed Mart." "Sol later commented that we were good at creating the business, but we weren't as good at running the business."
These quotes reflect on the challenges Fedmart encountered during a period of growth and the realization that different skills are required for starting versus running a business.
"Despite the humiliating attack launched against us, we were finally seeing Hugo Mann's true character, a side of him that executives in Germany saw every day."
This quote captures the moment Saul Price realized the consequences of selling his business and underscores the lesson on the importance of maintaining control over one's business ventures.
"Remember I just said, remember I asked you to remember what Charlie Munger was telling us? Remember he said he never invented anything. He just copied what anything else that was smart. And he blew right past them."
This quote emphasizes the effectiveness of Charlie Munger's strategy to copy and improve upon smart ideas, which has been successful for many entrepreneurs.
"The Price club idea was finally conceived sometime in the middle of January 1976. A wholesale business selling merchandise to small independent businesses."
This quote describes the initial concept of Price Club, which was to sell wholesale merchandise to small businesses, a novel approach that eventually evolved into the Costco model.
"The numbers clearly showed that if something were not done soon to change the trendline, the Price club was on its way to bankruptcy."
This quote highlights the dire financial situation Price Club faced before the innovative solution involving the San Diego City Credit Union, which helped to avert potential bankruptcy.
"Price Club was new and different, combining merchandise features brought over from Fedmart with a warehouse format."
The quote captures the essence of Price Club's innovation, combining previous retail concepts with a warehouse format, which was a key factor in its differentiation and success.
"Bernard Marcus, soon to be the founder of Home Depot, came to see the Price club and to visit with Saul."
This quote shows the direct influence Saul Price had on Bernard Marcus, who took inspiration from Price Club to create Home Depot, a successful home improvement warehouse chain.
"Real estate development was a diversion from the company's core business."
The quote reflects the criticism Saul Price faced for diverting resources from the successful Price Club business to real estate development, which was seen as a less profitable venture.
"Whatever I have learned about business, I learned from my father everything from how to read a financial statement to management, to good judgment and fair dealings."
This quote from Robert Price encapsulates the profound personal and professional influence Saul Price had on his son, teaching him valuable life and business lessons.
"I hope the stories on this podcast inspire you like they do me. I hope these ideas add value to your life."
The closing quote from the podcast host highlights the overarching goal of the podcast: to inspire and impart valuable lessons from the stories of successful founders to the listeners.