#304: Sol Price (The Founder Who Taught Jim Sinegal, Sam Walton, Jeff Bezos, Bernie Marcus)

0:00 This is Jim Sinegal, founder of Costco, writing in the foreword of this book. About four years ago, shortly before his death, and a few days after we had lunch together, I received a letter from Sol Price. Dear Jim It's always nice seeing you. And experiencing your enthusiasm, knowledge, and commitment to your values.

0:16 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. I related only the first paragraph of this letter because Sol went on to say some very complimentary things.

0:31 That I will keep personal. Upon reading the letter, I turned to my assistant and said I've been waiting fifty fucking years for this letter. It was well known that compliments from Solomon Came around about as frequently as Haley's comment.

0:45 After digesting the letter, I reflected on the fact that That here I was in my seventies. And still seeking approval from this guy. What was it about the man that engendered so much admiration and respect?

0:58 Not just for me. But from thousands of us. Who worked with Soul over the years. Certainly there was his intelligence and creativity. But that's not the complete answer because there are millions of bright people in the world and only a handful

1:12 Make a lasting impact. There was so much more to Sol's leadership qualities that touched all of us and made everyone confident that That we would persevere regardless of the obstacles. I started working at Fedmart. That's a company that's soul founded.

1:25 I started working at Fedmore in nineteen fifty four while still in college. A path That was followed by many of Costco's current executives. So gave us incredible opportunities to learn the business. Teaching us the skills and core principles we applied throughout our business careers

1:42 And then later when we launched Costco in nineteen eighty three. Soul's teachings. Had a great impact on our business ethics. Our core values. And of course our merchandising philosophy.

1:53 He believed in developing strong operating efficiencies. And he continually emphasized Passing on savings to customers. In nineteen ninety three, our two companies, Price Club and Costco, Merge to form the Costco that we know today.

2:06 We owe our legacy to the retail concept. That soul pioneered with Fedmart and Price Club. As do all of our competitors. In the industry. And Big Sbox retailers in general.

2:17 Sam Walton, who started Walmart in nineteen sixty two, eight years after Fedmart Later admitted. That he had borrowed many of Sol's innovations. Sol's greatest business legacy was the creation of the price club concept. That as many as a dozen existing retailers and startups attempted to clone.

2:34 At one point a reporter asked Sol How it felt. To be the father of an industry. To which he replied. I should have worn a condom.

2:42 The fact that he instilled these concepts And so many who are around him is in my mind. His greatest legacy. And so that was Jim Sinegal writing in the forward of the book that I'm going to talk about today, which is Soul Price. retail revolutionary and social innovator.

2:57 And it was written by his son, Robert Price. So I just finished reading this book for the second time. The first time I read it was several years ago. So there's a few reasons I wanted to read this book again. The first is that I'm unbelievably impressed with Costco as a business. And then Jim Sinegal as a founder. And as you'll see as we go through the book.

3:14 Uh, Jim is very adamant. He says, you know, every single thing that he ever learned in his career came from sole price. And so by rereading this book, I actually see the origination and like the the formation of the idea behind Costco. And another reason I wanna do it is because I'm fascinated how so few people know who Sol Price is. Yet I would argue that he's the most influential retailer of all time. If you factor in how many people are on record saying that they took Sol's ideas and applied it to their own life and work, Jim Sinegal of Cosco, obviously, Sam Walton of Walmart, Jeff Bezos of Amazon, Bernie Marcus of Home Depot.

3:47 The founder of Trader Joe's. It's pretty incredible to think about that soul's ideas have created literally trillions of dollars of value. And then finally, Sol's a very unusual person. This is a biography written by his son. And in my opinion The last the way his son ends the book, the last paragraph, which I'll share with you.

4:04 At the end. is the definition of winning at life. So I'm gonna jump right into the book. Most of uh the highlights that I have are what I wanna talk you about. are his ideas. So he was like really creative and he had great ideas, but he thought he was a poor Uh he he was poor at execution.

4:18 And one of the reasons that he identified Jim as the person he wanted to sell Price Club to later on. was the fact that he thought Jim was a world class operator. And fantastic an execution which everybody Obviously that's run into gym is agreed with. So I just but before I get into the ideas and where he uh like his ideas for his company building philosophy.

4:36 I wanna just touch on a few things in this early life. This is something that's very common. He was a misfit. He just felt the the need to prove himself through achievement. So Sol is talking about He had a physical deformity, so when you you look at pictures throughout his book The older he gets, the like his one of his eyes

4:53 Essentially looks like it's almost permanently closed. And it started drooping when he was a young man and he gave him a lot of like uh he was self conscious about it. So he says when I was three or four years old, I had an infirmity. in my left eye that caused a drooping eyelid. It was something that bothered me and made me self conscious. The kids tease me a lot, and consequently

5:10 I was shy and compensated for this. This is the most important sentence. I was shy and compensated for this by being an overachiever in school. even at a young age, so was very intelligent. But he also had like an aversion to being told what to do.

5:23 Being an overachiever meant reading at an early age, holding his own with adults in chess. And doing well in school without really trying. So skip two grades. But he was mischievous in school. This is This sentence made me think of the greatest description of an entrepreneur.

5:37 His teacher told his mom that her son was very smart. But she warned that soul could go in one of two directions. A career as a gangster. Or someone who would do much good. That

5:47 sentence made me think of the greatest description I've ever heard for the mindset of an entrepreneur. It came from Ivan Chenard. He says, If you want to understand the entrepreneur, study the juvenile delinquent. The delinquent is saying with his actions. This sucks. I'm going to g do my own thing. And so that chip on the shoulder that Soul had as a young person

6:02 I don't think ever left him. He has this constant desire from achievement. And I would argue uh it stems back to his relationship with his father. So there's this idea that you and I cover over and over again. It's it may be in every single one of these books, but I think the best way to describe this came from Francis Four Coppolo's biography that I cover back on episode two forty two.

6:19 And it says you can always understand the sun By the story of his father. The story of the father is embedded in the Son. This is so Looking back and describing his father. He said my father had contract tuberculosis.

6:31 And the doctor advised him to move to California. From the time he moved to California in nineteen twenty seven. Until he died in nineteen forty nine. My father never worked again. He received his monthly insurance disability. Now this is a crazy sentence that's coming next.

6:47 My father lived in grave danger of getting well. the monthly insurance disability payment. would pay him five hundred dollars per month as long as he was disabled. If you read between the lines of a lot of things that are happening in this book, it sounds like his dad could have worked And then he was kind of hustling the system

7:05 So he could just hey, I'd rather do nothing and get paid and hang out all day. This winds up giving soul. And his family a bad reputation. He winds soul winds up meeting his future wife. They're wind up being married, I think, for like seventy years. in high school and his future wife's parents didn't think so was good enough for their daughter

7:23 Because they thought Sol's dad was lazy. And so I think this is another example of this chip on his shoulder that was there for his entire life. My father didn't do anything except play cards and chess. So they weren't wild about me. This is his future in laws. And they didn't think I was good enough for their daughter. So you can already see that Sol has a less than positive view of his dad.

7:41 And then what happens is his dad's wind up his wind up cheating on his uh his mom So there's just this a turbulent family life that is really interesting'cause it was solved In soul's life by picking a unbelievably supportive spouse. And this idea of just having someone who believes in you. making an unbelievable amount of difference in the life of entrepreneur is something that pops up over and over again.

8:01 In fact, I think Stephen King has the best has the best way to describe it. So I'll get there in one second. But this is more about his future in laws not approving of him and his family. And you'll see Again, he's a juvenile delinquent, you'll see his by his response here.

8:13 To make matters worse, Sol's parents divorced in nineteen thirty five. Further convincing Helen's parents that their daughter should not continue to see him. Divorce in those days, particularly among Jewish couples, was almost unheard of. Bella, which is Sol's uh mother, found out that Sam was in love with another woman. But Sol picked a great spouse. Helen having been raised in a stable home with nurturing parents provided much of that

8:35 that Sol had never experienced with his own family. Soul is in love with Helen. Her parents say absolutely not, you cannot uh you cannot date this guy. Soul's response is okay. We're gonna go get married, we're gonna go elope.

8:46 Sol and Helen, recognizing that Helen's parents would never agree to to them marrying, took matters into their own hands and eloped. But before we move on, let's go to this idea that having someone who believes in you makes a lot of difference. Uh, and back in episode two ten, I read Stephen King's excellent autobiography, obviously one of the The best written autobiographies. You can never

9:04 uh come across because it's written by Stephen King. And he says something that's fascinating, like how many times do you pick up a book and at the beginning They're like, Hey, you know, I'd like to thank my spouse, my husband, my wife. And this is what he said. My wife made a crucial difference during those two years. So he is describing everybody knows who Stephen King King is, right? And if you haven't read his autobiography, or if you haven't listened to episode two ten,

9:23 What blew my mind is I didn't understand how Unbelievably poor and it that's just seeped in poverty. that Stephen King was when he was trying to make it as a writer. They liv they lived in a trailer They couldn't even afford

9:36 Uh a telephone in her house. they couldn't afford their daughter was sick and they couldn't afford the medication. He's got unbelievable stories in that book. And so he's describing that. Time period, but now From the pers uh perspective of of an unbelievably

9:50 successful and wealthy person. My wife made a crucial difference during those two years. Tabby. Never voiced a single doubt. Her support was a constant. This reminds me of Soul Price's wife. This is what I'm reading it to you.

10:01 Her support was a constant, one of the few things I could take as a given. And whenever I see a first novel dedicated to a wife or a husband, I smile and think There's someone who knows. Writing is a lonely job.

10:13 Entrepreneurship is a lonely job. I talked to I'm gonna wind up talking to more founders than almost anybody else. Alive, right? And

10:20 That comes up on Oregon. Being a founder is extremely lonely job. Having someone who believes in you makes a lot of difference. They don't need to make speeches. They don't have to make speeches. Just believing

10:32 is usually enough. And so soul and probably life's most important decision, pick the right spouse. I'm gonna uh fast forward. He went to law school. And it's it's interesting to me. There's so much uh about reading Sol's experience uh as a young lawyer that reminded me of Charlie Munger. And so Sol has a a line right at the beginning of the sh this chapter that describes his very short

10:53 Uh law career. And he says, over a period of time I really learned far more from like my clients than I ever learned in law school. Reminding me of one of my favorite quotes by Henry Ford that true education is gained through the discipline of life. And so I just want to pull out one idea that I think is very valuable. He's a uh young attorney, has no money, doesn't really have a client base.

11:13 So How's he gonna build up and like his own like his own business, his own book of business, right? He gets clients for his law firm. By giving away value for free First. So he's working with these other two older attorneys and

11:27 What he says one thing that they learned that the most valuable thing that he learned from them It's not like how to Like the technical aspects of running a law practice. It's about how everything moves with relationships.

11:38 And so he says I became a lawyer in the community for all the Jewish charities. And obviously I never charge them for it. Not charging for one's legal services, especially as a young attorney with no money. uh struggling to earn a living might not have been so obvious. His pro bono legal work introduced him to many people in the community, some of whom eventually became his clients.

11:59 Sol is living and working in San Diego at this time. He is twenty five years old. When the attack on Pearl Harbor happens. And that changes everything in his life. Uh, I d I had developed a f a reasonably fair practice and was making a halfway decent living. But literally overnight life in San Diego changed forever.

12:15 After the attack on Pearl Harbor, the United States government did not know whether or not the Japanese were capable of attacking the West Coast. So the Navy announced That it may be c it it was considered Advisable. as a precautionary measure to black out San Diego at any minute. So he's describing what Going through.

12:32 His life and work with no electricity. All of a sudden there were total blackouts every night. It's hard to even recall now how inconvenient it was. trying to get around after dark without lights in your car, without any lights in the street. And trying to figure out where you were going and how to get there. It was a very, very difficult thing, but somehow we still managed to keep moving. And I really can't recall clearly

12:50 How we did it. So in addition to having you his legal work during the day, he has to work. supporting the war effort at night. So he's working at this place called Consolidated Aircraft. that is making airplanes for the war effort. And really what I was thinking about this whole section that a little adversity goes a long way. This is the start of souls.

13:07 Unbelievably strong work ethic. He really starts to get fulfillment from working hard and being productive, and we see him contrast. his own work ethic with his father's again. Throughout the rest of the war, Sol was at his law office eight in the morning until noon. Then he worked.

13:20 He had to drive across cr town to consolidated uh the aircraft company until eleven fifteen at night. So his work days from eight in the morning to eleven fifteen at night. He would eat dinner, go to sleep, and then the next morning do it all over again. Soul did not complain. and said I actually enjoyed the experience. Unlike his father, who had managed to find ways not to work,

13:38 Soul thrived when he was busy, working hard and feeling productive. This is what I mean about a little adversity going a long way. It's actually good for you. His desire to work hard and get the most out of every hour. Of the day was not characteristic of his earlier years. So commented that he never worked very hard in school. At least not until law school. Beginning with his early career in law and his work at Consolidated

13:58 Sol would continue to live his life working hard and taking full advantage of every hour of the day. This is also something that his gr he teach his grandchildren. In his later years, Sol frequently spoke about the importance of time. His granddaughter talks about what she learned from her grandfather. The concept of time was very important to my grandfather. I remember on a couple of occasions talking to Grandpa

14:18 about how I would be able to accomplish certain goals. He explained to me that we always have more time than we think. Then he would take an inventory about how much time you're spending on different things. How much sleep do you get, he would ask. How long does it take you for you to study? How long does it take for you to eat your meals? So many questions about my day. Well you have enough time, he would say.

14:35 There are twenty four hours in a day, one hundred and sixty eight hours in a week. We waste so much of it. There is always time. I thought it was funny'cause later in the book Uh it talks about what he he'd keep one sign on his desk. It's a do it now.

14:48 And so at this point he's still a young man. I think he starts his first company when he's forty. But what he's realizing is like the the value of his legal practice was the fact that he he discovered he didn't actually like the law. And he wanted to actually he was much more interested In business. She says over a period of time I really learned far more from my clients than I ever learned in law school, and because I involved myself so deeply in their matters.

15:08 I think this is where I began to accumulate the knowledge and interest in business. And he also realized that even though a lot of his clients didn't have the like the higher education levels that he did they were much more wealthy. than uh than he was. And they just had this like basic common sense. I just wanna s give you one example.

15:24 Uh, there's this guy named Isidore Teacher. He was one of Sol's clients. He had emigrated to the United States from Scotland when he was three years old. And he had no formal education, but he was very smart. And then so also saw that okay

15:36 You don't have to have formal education to be smart in business, but you can be smart in business and bad in other aspects of your life. Uh Sol is very akin to like Ed Thorpe, where he was able to Be unbelievably professionally successful not r and without really messing up other parts of his life. Is it our teacher? had a problem picking wives. And s he also says some funny stuff here. So it says uh teacher was very successful

15:57 uh real estate investor and business person. He wasn't very successful, however, when it came to his marriages. Soul represented teacher in a divorce that ended up in the court. And so his wife's divorce attorney was threatening to have the court take all take over all of teacher's assets. So went back to teacher and told him about the threat.

16:12 Teacher's response is something that Sol said he'd always remembered. And this is what teacher said. Well that's okay if If my wife Wants to sink the ship. Let her sink the ship.

16:21 I can swim better than she can. Teacher's gutsy response made a big impression on soul. Because over the years Sol was never afraid to hang tough in a negotiation. And so it's through Sol's legal practice that we see the very first like kernel of this idea that's gonna eventually turn into Costco.

16:39 And so a major driver of the San Diego economy at this point. In history was the Navy. And so Sam sees or scroll sees This Very focused niche business.

16:51 That is unbelievably valuable. Uh, Navy regulations required sailors to depart from their ships. and come back to their ships in uniform. Because the sailors wanted to change into their civilian clothes once they were on shore. They needed a place to store their uniforms and to purchase clothing.

17:06 In response, a few enterprising entrepreneurs open these things called locker clubs. So a locker club It's stores that not only had lockers where sailors could store their uniform. but offered a wide range of goods and services for sailors to purchase. The most successful of the locker clubs.

17:21 was this business called the Seven Cs Locker Club. And so Sol starts studying the business. He says the seven Cs was another learning experience for Sol. It was an opportunity to see how a large store selling a variety of goods and services all under one roof. Could be successful. Catering. This is the most important sentence.

17:38 Could be successful catering to a focused Segment. Of the marketplace focused. segment. of the marketplace is what you and I today would describe as a niche.

17:47 This entrepreneur made a very successful business understanding a navy regulation and then solving the problem and narrowly focusing on one segment of the market. So that's the first kernel. This is the second one. His father in law dies. He's trying to help his mother in law like settle their estate. They own they own a bunch of like uh commercial real estate. And so her name is Bertha.

18:08 And it says uh So Sol was faced with the challenge of finding a tenant for Bertha's Main Street property. Soul's client. Remember, this is all this is it's amazing how all this relates. Like all the relationships that he built Uh when he was

18:21 practicing law winds up is is what g launches his like business career, but he's also paying attention. And so in the back of his mind he's like, Okay, well this is a very interesting like uh business that they they were able to build focused on Navy regulations and and sailors.

18:34 And then he's introduced to another example of this because he's trying to find a tenant. for his mother in law's commercial property. And one of his clients is like, Hey, why don't we go up to Los Angeles? And we check out this thing called Fedco. Fedco is a membership retail store.

18:50 Remember, you and I know where this ends up, right? This ends up w in Costco. Бо ви академифо is founded. And so this is the first time that Soul

19:01 generations of entrepreneurs after him are going to use. It's like okay, well wait a minute. There is a membership retail store. targeted to a specific niche. In Fedco's case They only sold to federal employees.

19:13 So he's gonna see a lot of ideas that he's like, Oh, I can use this idea. He's also gonna see one that he can actually uh change. And w one example is this is f the fact that since Fedco was sold only to federal employees. It was a nonprofit corporation. And there's gonna be all these warning signs that hey This is probably a good idea that people are not paying attention to.

19:31 And this is one of them. The Fed Co store was doing a brisk business. With customers coming From as far away as San Diego. In fact Five thousand Fed C members lived in San Diego and were driving two hundred miles round trip.

19:45 To take advantage of Fedco's bargain pricing. You and I have seen this. I think it was episode two thirty four that I did on Sam Walton's autobiography. When you have people driving far distances to save money, that is a very, very good sign. And that is something that Walmart had in the very early days as well.

20:00 Another parallel with Walmart is So and his two clients are like, Oh wait, wait a minute, this a Fed Co type business. could be successful in San Diego. We know that because there's five thousand people in San Diego that are driving two thousand miles around trip just to save some money. And we have a spot where we can put it because we can put this store

20:16 In my mother in law's vacant commercial it's a g it's not it's a commercial warehouse, basically. And so since Sol and his two clients didn't have any experience, this is something that Sam Walton uh did as well, where They call Fedco and they're like, Hey, why don't we do a joint venture? And Fedco's like, No, that we don't want anything to do with you. And Sol said, in retrospect we were lucky.

20:35 If you go back and study the early years of Walmart, he eventually he he initially purchased uh pitch the idea the idea for walmart to a larger company fact let me read uh let me pull up the the the quote from Made in America. Uh, says this is Sam Walton writing writing, Many of our best opportunities were created out of necessity. The things we were forced to learn to do because we started out underfinance and under capitalized.

20:56 In these remote small communities. This contributed mightily to the way we've grown as a company. Had we been capitalized Or had we been the offshoot of a large corporation the way I wanted to to be we might never have gone into all these other uh towns that we went into in the early days. It turned out the first big lesson we learned was that there was much, much more business out there.

21:16 in small town America than anybody, including me Had ever dreamed of. And so in other words, Sam was forced to do it himself. operating under more constraints because he didn't have as much uh resources. We see the same thing with sole price. And his partners like well, Fedco was a bigger company, they already knew what they're doing. Okay, they said no, we're still gonna figure out how to do this.

21:34 And so talked about this fact that ignorance sometimes is a bliss for an entrepreneur. He says fortunately most of us had backgrounds that were alien to retailing. We didn't know what we We didn't know what wouldn't work or what we couldn't do. I was just listening to an interview with uh Daniel Eck, the founder of Spotify on Acquired. He said the same thing. Like if I had known how painful and how difficult this was. He's like, I'm glad I went through it.

21:54 But if I'd known up front how difficult and painful it was, I would have never done it. that idea or that that experience is very common in the history of entrepreneurship. And so he s he says later on. that uh I think they opened the first store for like fifty thousand dollars and they didn't know what they were doing. And later on when they knew what it was doing it would cost five million, which is funny. Uh, but I do wanna go to

22:14 This idea that soul Like you and I are these just these learning machines constantly studying And learning from other founders. And so he he has these two stories is like Oh seven C' Locker Club. That's interesting. Ooh, Fed

22:25 Fedco, that's interesting. Then he starts studying this guy named E. J I don't know how to pronounce his name, so we're just gonna say he's the founder of E J Corvette There's a new type of retailing, discounting, was launched by this guy named Eugene, who founded this company called EJ Corvette. He opened the first discount store.

22:39 In nineteen forty eight. And this founder did much to divine define the idea of a discount department store. What he would do is he would sell products at deep discounts. From the manufacturer's suggested fair trade prices. This is very important at this time, and so was one of the people that gets these ridiculous. Ridiculous laws overturned.

22:58 There was these things called fair trade prices that said you had to charge the customer, even if you could sell cheaper. Because you had a better cost structure, because you were more efficient. Did not matter. There is these artificial like floors. On prices that Sol thought was ridiculous.

23:12 And so the founder of E. J Corvette figured out a way Like a loophole. These fair trade prices. The way Corvette circumvented the fair trade laws was by requiring That shoppers become members

23:25 In order to shop. The membership was really just a way of outsmarting the fair trade laws. This is incredible. I love how these like little weird decisions That happened think about this happened in nineteen forty eight.

23:37 That is forty years before Costco Is Invented. Or founded rather. But this idea, this like this

23:44 obviously the the the one of the benefits or the eBay benefit of Costco is like almost all their profit comes from the the the recurring membership, right? And the fact that they use their size just to buy product so inexpensive and then barely mark up, just mark it up to cover like their their their very low operating expenses. And so You go to Costco, I mean you already know this. You go to Costco and you just find a T V that's five hundred dollars cheaper than anywhere else ever.

24:07 They could be because it's like we're not making money on the TV, we're making money on on a membership fees. And this idea that the membership club for discounters started out as a way to get around a random regulation. And this regulation lasts a long time. This is nineteen forty eight. The regulation's already been uh

24:24 uh established for quite a while then. I think it's in like the nineteen seventies. where Sol and a bunch of other people play a role in getting these ridiculous fair trade Laws repealed. It's incredible how these these things like echo throughout time.

24:38 And so this is the reason he was doing this, because customers could realize significant savings at Corvette. You could say the same thing, c customers could realize significant savings at Costco's. A refrigerator might sell for four hundred dollars at Macy's and Corvette. Sold the same for three hundred dollars. Okay, so let's go to the beginning of Fedmart. Now here's the crazy thing.

24:57 Fedmort is literally Fedco. Right? It's just like okay. Let's make a membership discount store. That's available to only to federal employees only. So it says Fedmore followed uh the Fed Code template in almost every way, including membership.

25:11 Uh, so raised fifty thousand dollars from a handful of investors. including his own five thousand dollars as seed money for most of the investors a five thousand investment was not a lot of money. But for soul, five thousand dollars was a significant amount of money at the time. So at this point that he starts his own company, he's still practicing law. Doesn't have a lot of money. He's very concerned.

25:28 This is something he's concerned with his entire life that I think is smart is capping the downside. Capping his downside risk. Um so he negotiates their lease. He's like, Okay, we negotiate a lease for ten years. We were so uncertain as to the future of this enterprise that we reserve the right to cancel the lease at the end of one year if it didn't work out. And then this is what I mentioned earlier. Sol is also hilarious, as you saw with the the introduction. with Jim Sinegal.

25:49 So he's very has like this very sharp wit. And he says, I used to say afterwards that when we didn't know what we were doing, it only took fifty thousand dollars to start a business. And five years later, when we were really experienced at running Fed Marts, it took five million to open. So they opened a membership retail store in a warehouse in an industrial area of San Diego. This broke just about all conventions in nineteen fifties retailing. Shoppers had to be military or government employees and they had to purchase a membership card. And they needed to show their card in order to shop.

26:16 Just like you and I do today when we walk into Uh Costco. And we go back to this idea. It's like, hey, I have an idea that this will work because we have five thousand people Literally leaving our city, going to Los Angeles. They'd probably shop here.

26:29 If they just had Them and other people would shop here. So it says from the day that Fedmart opened for business Uh, the store was an immediate and a spectacular success. We had anti anticipated that we might do a million in the first year, and we did three times more than that. So the customers are happy, but his competitors are not, and we see that Sol Price is a fighter. He did not shy away from fighting.

26:48 At all. Uh, some of the downtown merchants try to cause problems. Right before we were about to open a guy came to the Fed Mart. And he said he w he was a bedding inspector for the state of California, who's responsible for seeing that things like pillows and mattresses do not have any deleterious stuff in them. He comes Here comes this bedding inspector and he has this long list of questions.

27:07 And the questions had nothing to do with pillows and mattresses. I politely and firmly told him to get the hell out. And if he wanted to close us down. Take your best shot. We never heard from him again.

27:18 And this is f the first part of the book where we see that soul's business philosophy. Uh, you're you're gonna see you obviously see this with Costco today. Sol described his business approach as a professional fiduciary relationship between us the retailer and And the member, the customer. If you're buying as inexpensively as possible and only marking up to cover your cost.

27:35 and making the vast majority of your mummy money just on membership fees. You're in perfect alignment with the customer as opposed to the person that you're buying goods from. And the way Sol demonstrated this is obviously a markup of say twelve percent. Over your costs. compared to thirty six or fifty percent of some other retailers, obviously that's better for the customer. And so I wrote on this page.

27:53 'Cause it's Jim Sinegal says the same thing. That soul and Jim Sinegal Soul Price and Jim Sinegal are soulmates. And so Sole Price says our first duty is to our customers. Our second duty is to our employees, and our third duty is to our stockholders. And so by the time Fedmart expands, Sol has left

28:08 practicing law. Now he's full time in the business that he founded. He's forty years old. And it says soul made his decisions from the point of view of his own experience. The fact that he was an attorney and not a retailer. And that he was an entrepreneur and not a chain store executive. 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.

28:27 And to provide fair wages and benefits to Fedmart's employees. And so Sol Price would constantly pay his employees more than his competitors because he thought it was the right thing to do. I was listening to a speech by Jim Sinegal. Who's who uses a lot of these same ideas, and he said that um Costco had twenty two thousand people. apply for two hundred open positions. I think that that was when they were opening a new store.

28:48 At this point Fedmart's expanding they're into San Diego or soon, San Antonio. Which is a cheaper cost of living than where the other Fedmart stores are, but Sol Price thought it was unethical. Less

29:00 Then he was paying other Fed Mart employees. Employers were paying their employees fifty cents per hour. He decided that the wage should be a dollar per hour. And so what's the result? Of course, everyone wanted to work at Fedmart. That's the same idea that that Costco has twenty two thousand people apply for two hundred positions. Why would he require Fedmart's wages to be twice as much as competitors?

29:18 Fedmart was paying a dollar an hour to employees in San Diego and Phoenix. The wage decision in San Antonio was simple. Employees in San Antonio work just as hard. As the other Fedmart employees. Fed Mart had excellent profits in San Diego and Phoenix while paying good wages.

29:33 Why just not apply the same wage philosophy in San Antonio and what I wrote here? It's just keep it simple. I've seen other companies like compensation structure and it's like you need like a PhD in math to figure it out. Just keep it simple. Oh, we pay them a dollar an hour in San Diego. Okay, we're opening a new store, dollar an hour there. Less time to think about it, move on to actually things that are more important. And one thing that you have to love about Sol that he always felt that he had to do the right thing no matter what.

29:56 And so at this point, there's still a lot of segregation in the United States, and he's just not with that. He's like there's no way that I'm putting these provisions in any lease. So was negotiating a mortgage for the property when it with a major insurance company when he noticed that the mortgage agreement stipulated that Fedmart must maintain separate bathrooms based on race. Sol told the lender that the separate bathrooms provision was unacceptable. And that he would not enter into the mortgage agreement unless the provision was removed.

30:21 the lender removed the provision. Once again, Sol chose the right way and was able to achieve a victory in the battle against segregation. And I think this idea of like hey, I'm just gonna do what I think is right and I'll suffer the consequences and I'll fight back if uh because I think it's important to me is really Uh like affect it can affect future generations. So like uh Costco to this day sells like drugs and prescription drugs.

30:42 Cheaper Almost all of his competitors. Uh, if you re if you research the early history of Fedmart, they were the first ones to sell to use like this heavy discounting to c to prescription drugs as well. That's been copied over and over again. The important part is that human nature never changes last week on episode three oh three. I told you when Mrs. B

30:59 was selling carpet cheaper than her competitors. She was literally sued. They called her like a bootlegger or something like that. And the the it winds up getting thrown out. But people do all kinds of crazy things. Again, that are not they're good they they may be better short term for the business because you're able to charge more. But they're not better for the customer.

31:16 And I think what Sol Price realizes, what Jim Cynigal realizes, what J Jeff Bezos realizes. What Mrs. B realizes like you should just always go for what's Better for the customer. So Soul winds up saying, you know, I'm gonna fight these regulations, these fair trade laws And he's he opens the first pharmacy inside of a discount store ever.

31:33 And he hires this guy named Wayne Mallory. who was a pharmacist. And then He comes over and starts selling drugs cheaper and His profession and other important businesses in that profession treat him like a trader. Look what they do to this guy.

31:48 It says Wayne Mallory withstood numerous obstacles in opening the very first pharmacy. Pressure from local and state pharmacy organizations. Pressure placed on the wholesale companies not to deliver or sell to Fedmart. Exactly what happened to Mrs. B. difficulty in obtaining a permit. From the state board of pharmacy. He was expelled from this is insane.

32:05 He was expelled from the local and state pharmacy organizations. He received numerous death threats. What the hell is wrong with our species? A rock was thrown through his living room window and he was treated like a traitor. To his profession.

32:18 And so Sol fights this battle on multiple fronts. And they come around they come up with an idea. uh laws think about they're gonna have their own white label company like own products. Think about how valuable like the Kirkland white label brand for Costco is now. Because fair trade laws impacted so many products, Fedmart developed a line of private label merchandise.

32:40 The F M brand. was of laundry detergent was about one half the price of the national brand. And so this goes back to his misfit like nature when he was a kid. You don't want us to sell your products for deep discounts? That's fine. We'll make our own. And then again a version of Costco before Costco.

32:56 Fedmart. Like price club after it. And like Costco after that. One of the most important factors is that Sol Sol Price believed low price merchandise with limited selection. Sol calls that an intelligent loss of sales, which I'll get his idea of intelligent loss of sales, which I'll get to in a minute.

33:11 But I wanted to bring up this part, this is what I mentioned, that he was He helped. uh get these ridiculous laws overturned. 'Cause again, at the end of the day, it's just better for customers. It's all we really need to focus on. By nineteen seventy five, consumer demand for lower prices convinced Congress that it was time to repeal fair trade laws. Only liquor. remains subject to minimum price maintenance in some states.

33:30 So what does Soul do? Sol told the Fedmart liquor buyer to purchase National Brand Liquor. and to price the liquor at a twelve percent markup. The state of California challenged Fedmart's pricing. as a violation of the state's liquor price maintenance regulation. Think about that.

33:45 Soul is getting being Just like Mrs. B. Soul is getting sued. For selling Two

33:51 Cheaply. Fedmart's attorneys argued in court that federal law preempted state law. The judge sided with Fedmark. So remember at the very beginning of the book. Jim was saying, Hey, there's this guy affect positively affected thousands of people's lives.

34:07 And part of it is because he viewed himself as a teacher. And so at the beginning of this chapter there's a fantastic quote. by Jim Cynical. And he says, If you're not spending ninety percent of your time teaching You're not doing your job.

34:18 And that's something he learned from Seo. Jim Sinegal, Costco's founder, started working for Sol in nineteen fifty four at the age of eighteen. Jim recounted the time that he received a call from a reporter to answer some questions. You knew soul for a very long time. You must have learned a lot. No, this is Jim talking.

34:33 My response was no, that's inaccurate. I didn't learn a lot. I learned everything. Everything I know. This may be my favorite part of the entire book. So focused much of his attention on teaching. He had a favorite adage that he frequently found appropriate to repeat.

34:47 You train an animal. You teach a person. Sol really wanted all Fed Fedmart employees to think about and understand why their jobs were important to the success the success of Fedmart. He was not a big fan.

35:04 For thinking. Sol's emphasis on teaching was expressed in his phrase alter ego. So It really clicked for me when I read this for the second time. That there's a great line It talks about the importance of like essentially the culture of a company.

35:18 is the f the large part the the personality of the founder. And that uh Apple with Steve Jobs with ten thousand lives. he is making at this point in the book, he's making ten thousand sole prices, right? So it's like This importance of teaching soul's emphasis on teaching was expressed in the phrase

35:34 Alter ego a rather simple concept. He used the following example. If the owner of a store was able to do all the jobs himself Greet customers, order and receipt merchandise, do the accounting, sweep the floors, et cetera. He would.

35:45 But the reality is that normally the owner can't do all the work himself. Therefore he must hire people to help. Then h t. His employees become his alter ego. So that they understand the importance of their jobs and perform their jobs as well or better than he, the owner would

36:00 If he had the time. He is creating ten thousand alter egos. He is creating ten thousand soul prices. Just so happens that one of the alter egos that he created He's one of the greatest founders to ever do it in Chim Cynical. And so one of these ideas that he spread to his alter egos

36:17 Uh, this is something Costco uses. This is something when I read the the biography or the autobiography of the founder of Trader Joe's. Like he used as a differentiator in the grocery. uh department this idea of Limited SKUs.

36:29 And so this entire section is about the logic of limited selection. An intelligent Loss of sales, which is the term that Sol put on it. And again, this is one of Sol's ideas. That is widely, widely used today.

36:41 Soul proved that it was possible to do more sales with fewer merchandise items. Also known as Skews. Why does limited selection result in higher sales? Part of the answer lies in what Sol called the intelligent loss of sales. Conventional wisdom in retailing

36:58 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 custom demand customer demand is most sensitive to price.

37:13 Not selection. Gotta repeat that. Customer demand is most sensitive to price, not selection. How does the intelligent loss of sales work? Soul's classic example.

37:23 was three in one oil. So this is oil that would you'd use around your house to like lubric lubricate, clean and like prevent rust. The manufacturer produced the oil in three sizes. Most stores carried all three sizes of three in one oil. Even though the large eight ounce size with a better value per ounce Than the smaller sizes.

37:42 Most people who need three in one oil would buy the eight ounce size if that was all that was on the shelf. The price is far better per ounce. It is acceptable for most customers. What about the customer who doesn't buy the eight ounce size? That was the intelligent

37:58 Loss of sales. What does limited selection have to do with efficiency? Because payroll and benefits represents approximately eighty percent of the of a retailer's cost of operations. Fewer items result in reduced labor hours throughout all the product supply channels. ordering from suppliers, receiving them at the distribution center.

38:18 Stocking them at the store. Checking out the merchandise and paying vendors. Put simply. The c this is so I what an excellent observation, my soul.

38:27 Put simply The cost to deal with for thousand five hundred items is І за лас Then the cost to deal. with fifty thousand items.

38:37 And why is low cost so important? The success of Fedmart and later Price Club had a lot to do with being the lowest cost Operator. Okay, so I wanna fast forward in the timeline to where Sol gets kicked out of his own company.

38:50 At this part this goes back to the idea where like one of the main ideas of the book is like It's so important. Soul was unbelievable. Uh Everybody around him said his ideas and his creativity of starting businesses was was you know

39:02 Maybe the best ever. But his execution he just he by his own mission he's like, I'm just not a good executor. Not a good operator. It's why. after he gets cut a Fedmore kicked out of Fed More, it starts Price Club.

39:13 And once he realize like grows the idea for Price Club realizes, hey, we we gotta sell to Costco because Jim's just the best operator in the world. So Fedmore Because in part because Sol shared his ideas widely. They have a ton of competition from world class operators. So you have Walmart that's already been in existence for almost ten years now. Target.

39:31 Kmart. And these operators are just operating a lot better than Fedmart is. So he has this idea where he's like, Man, we're running into all these problems. business has been going on for I think almost twenty years at this point. And so he's looking for Like new ideas or maybe eventual buyer.

39:46 Uh he's like considering a sailor merger of the business. uh some investment bankers hook him up with some f some uh Retailers. over in Europe. So he flies over Europe. This is important.

39:55 Because one of these winds up being a buyer and the other one winds up giving him an idea that he uses for price club, which is really the what we're talking about. It's like this is a still the the prehistory of Costco. This is why I'm holding the book in my hand while I'm talking to you about it, while I re read it'cause I just have a strong desire to understand Costco. at a more fundamental level. Then I do.

40:14 And it's surprising not a lot of material out there. So if you have any material about Costco, please get it to me. I'll read everything and listen to anything you find as well. Uh so it says he goes to uh Amsterdam and Germany. This is hilarious. The first meeting is this guy that's the founder of this they're called Macro. M A K R O stores.

40:33 This guy lives in a castle. In Amsterdam. And his business is A membership warehouse, but these are gigantic, much bigger than the Fed Marts were. They're over two hundred thousand square feet. And it's a similar concept where

40:47 To shop in the store, you have to purchase what they call a passport membership. And so it says soul must have been impressed. Because when he returned to the United States he talked about uh the store at length and in particular the passport membership concept for business customers. to shop at macro, you had customers required to prove that they were owners of a business.

41:06 You have to prove that you're owner of business, then you can buy the membership. So that idea he's like, Oh, I come back, he's like, Man, this is a really interesting concept. What if we had a m membership discount retailer? But You ha it was only for business customers. That is That is the idea for Price Club, which is gonna come after this.

41:21 So again, sole price is literally doing in the story what you and I are doing right now, which is learning from other entrepreneurs that came before us. Then he goes to Germany and he meets with this guy named Hugo Mann. Hugo Mann owned a chain of these things called hypermarkets. So hypermarkets is what you and I would know as like a Walmart super center today. But this is way before Walmart super center.

41:41 uh existed. Where groceries It's everything, including food and groceries and perishables. And so the issue that's gonna happen in the future, that soul doesn't know what's happening now is like Hugo Mann, the founder of like wines and dines'em, takes'em on vacu this beautiful vacation spot in Germany. turns on the charm. This is the biggest thing where a time is the best filter. You can fake being a scumbag.

42:01 For six months. For year. You can't for five, ten, fifteen years. Your true personality and who you are is going to eventually come out. They had this idea though, they're starting to negotiate with man. and some of his people and they they really don't like him.

42:14 But they got caught up in euphoria of a big deal. Uh the the other way I've heard other entrepreneurs say this in the past is like you should have a no asshole rule. And that you and another way to put this is like you can't make a good deal with a bad person and this guy winds up being a bad person. The negotiation sessions provided plenty of opportunity to gain insight into the characters we were dealing with.

42:35 Basol had decided that Fedmart had much to gain by reaching a deal with man and his group. Later on, looking back on our times with man, the warning signs seemed so obvious, but at the time we were caught up in the euphoria of making a big deal. And so man is going to to buy sixty four percent of the company is like this merger eventually just like this this takeover, really. And

42:55 'Cause he needed money'cause it's like, Okay, well I'm I'm facing some serious operators. If we get a big influx of money, we can expand and we can kinda fight That's not gonna happen. I mean the You have to avoid this mistake. You can't sell sixty four four percent Of your company. And then be surprised.

43:10 When you get fired. Which Sol does get fired. The first indication of real trouble occurred at the first meeting of the new board. This was the first time the Sol and I experienced the real Hugo Mann. Rather than the friendly person we had seen, man launched into a ninety minute tirade criticizing Sol. And Fedmart's performance. We were finally seeing Hugo Mann's true character, a side of him that executives in Germany saw every day.

43:33 And so immediately after he gets fired from Fedmart, he starts what he's gonna call the price club. So he's like what what what do I wanna do after Fed Mart? And he realized well I can just take that macro like business in Amsterdam and and do it here. Uh Macro operated a membership wholesale business in a warehouse. They sold products to small businesses in a no-frills warehouse environment. Its strategy was to offer a wide range of business products at very low prices. Sol thought just maybe there's a way to have a wholesale business selling to independent

43:59 business owners. So He's gonna have a membership based Warehouse business. It's gonna have no frills. And it's gonna sell business products at low prices.

44:08 Two business owners. And if you think about the price club idea, Costco is this. But for everybody the price club idea was finally conceived. A h wholesale business. selling merchandise to small independent businesses. The business owners would come to a large warehouse, select the products from a steel rack displays,

44:25 And pay either by check or cash. Thousands of small businesses would pool They're buying power for shopping at our wholesale warehouse. Now there's millions, I don't know, tens of millions, what a hundred I don't even know how many Costco members are. Let's say a hundred million.

44:39 In this case there was thousands of small businesses pooling their buying power Together. In Costco's case, there's a hundred million or whatever, fifty million. Customers. Pulling their buying power together.

44:50 That is a very, very powerful idea. And this may be the main idea of the book. Everything that made Price Club different Is what made Price Club successful. Price Club differed from its competitors because of the number of items offered for sale. The typical grocery or discount store carried

45:06 About fifty thousand different items compared to price clubs. Three thousand items. Price Club was a warehouse with rack storage, high ceilings, and concrete floors. And most importantly, the prices for the merchandise were far less than prices available anywhere else. The operating efficiencies of the warehouse concept

45:24 And the direct delivery of products from the suppliers to Price Club Made it possible to sell merchandise for less. And so the value proposition to the business owner is real simple for twenty five dollar membership fee a year. You have your we can pull together

45:40 thousands of you, eventually tens of thousands of you, and then you have your own warehouse. We will handle the buying and the delivery logistics. You just have to drive to your the warehouse that you're a member of and pick it up. And so the great thing about reading rather obscure books like this, I don't know how many people have read this book. Is you discovered uh the origination of like a like a cultural phenomenon. So there's this funny thing like in in Costco lore.

46:03 Is the fact that they sell uh h hot dog And uh uh soda. For a dollar fifty. And they have forever. And if there's just one of my favorite stories about Jim Sinegal.

46:13 Is what happened. uh one of the guy that was working for Jim try to try to convince Jim to increase Uh the price of the hot dog, which I'll get to Uh in a minute it's the it's

46:24 He's just my kind of founder. He's just like that is Jim is my kind of founder. Uh and then we realize like that's Th that idea came originally from Price Club. Price Club was selling a cr uh a hot dog and a can of soda for a dollar fifty. The price of a Costco hot dog And soda has remained the same.

46:39 A dollar fifty thirty six years later. This but the thing is is now it's forty six years later'cause this book was punished or published About ten years ago. So the reason I say it's my kind of founder is said There's this great back and forth.

46:51 Where it's like, Okay, Jim, we need to we need to raise the price of the hot dog. And Jim's response was if you raise the price Of the fucking hot dog. I will kill you. Figure it out.

47:01 That is a founder that is obsessed. With delivering value to his customers. The price club is so successful before it sells, it's it's gonna wind up Peter out before Costco buys it. In large part because of competitors at sole price actually created for himself. Bernie Marcus, the one of the ca co founders of Home Depot comes

47:19 and visits Seoul Sol has this fantastic reputation with world class entrepreneurs. So this is in nineteen seventy eight, Bernie Marcus came to see the price club. uh through the warehouse he suggested to Marcus

47:31 that he opened his own home improvement business using the knowledge and experience he had gained at Handy Dan. Handy Dan was had just fired Bernie Marcus. I had done this book If you don't know what I'm talking about, I think it's episode 45. It's called Built From Scratch, How a Couple of Regular Guys Grew the Home Depot. From nothing to thirty billion. And I think now Home Depot

47:50 Since that book is published. Like three hundred billion. It's a fascinating. But Handy Dan was this place where Bernie was uh working at that got fired from. So he says, Hey, why don't you take the the the hardware knowledge that you had that you gained at Handy Dan and then combine it with my idea?

48:04 And that is where Home Depot is. Marcus took Sol's advice and with his partner Arthur Blank. Opened the first home depot in Atlanta, Georgia in nineteen seventy nine, blending what Marcus had learned in the traditional hardware business. with Price Club's warehouse format. Another competitor.

48:17 that Sol Price made was Sam Walton. Sam Walton is on record saying, Hey, I I stole more ideas from Soleprice than anybody else. And considering that that so that Sam Walton had studied more retailers than anybody else, that's a hell of a statement. Sam Walton. Who had created Walmart by using Fedmart as a model called Sol.

48:34 Walton wanted to come out and have a look at Price Club. Sam was interested in learning as much as he could about the warehouse club business. Sol was open and generous with information. Sam thinks Sol and returned to Betonville. And in nineteen eighty three, Walton opened his first Sam's Club in Oklahoma City. Sol was a real believer in the importance of competition. That competition gave the consumer a better deal

48:52 And sorted out the strong operators from the weak ones. But so may have had second thoughts about sharing so much information with future competitors because his ideas were used by so many startup warehouse businesses. And so if you think about one of the main maximums of the history of entrepreneurship that you and I have gone over over and over again is that bad boys move in silence. When they find something that's working, when they find something that's lucrative. They shut up about it. Soleprice did the opposite. It all works out in the end because he sells to Costco.

49:18 But I bet if he could go back and do it all over again. He would have kept his mouth shut. And so then we fast forward in the story and now you have by this point in time You have a bunch of people. doing the same price club playbook, the same

49:30 It's just Price Club with a different name. And the problem is That two of these people that are doing this are some of the best Operators. In the history. Some of the greatest operators in history in Jim Sinegal.

49:42 And in Sam Walton. And so Jim says here, we owe Costco's legacy to the retail concept that sold pioneered with Fed Martin Price Club. as do our competitors in the industry. And big box retailing in general. The price company had a seven year head start on Costco's and Sam's Club, but Costco and Sam's were expanding aggressively.

50:01 While Price Club remained tenative. Costco and Sands were beginning to expand into price club markets. And they were outpacing price club. That is the difference between being good at ideas and being good at execution. Something I do on a lot of mornings is I listen to a rendition of General Patton's speech to the Third Army to get me fired up and going

50:21 In the in the day. And something I'm trying to be uh for to make sure that me as many people as possible are aware of founders existence. is to be very default aggressive on promotion and just making sure that people are aware that hey, you have this fantastic tool. that I hope you use for that throughout your entire career. That in an hour you can download in your brain some of the best ideas.

50:39 of history to create entrepreneurs that you can use in your career. And so there's something that I I keep on a post it note and I have saved in my phone as well. It's a quote from this this speech by Patton that I probably heard I don't know, two hundred times, three hundred times, it's hard to say. And he says, I don't want to get in this is the difference to me when I this is what came to my mind'cause it's like

50:56 What I'm about to read for Patton? Patton's uh perspective is very similar to Sam c to Sam Walton and Jim Sinegal. And Patton says, I don't want to get any messages saying I'm holding my position. Our basic plan of operation is to advance and to keep advancing regardless of whether we have to go over, under, or through the enemy. And so in this case in this story, Costco and Sam Walton

51:15 Are going Over, under, and through the competition. To the detriment of Price Club. Sol price is also making some operational mistakes. I said don't lo the have giant letters on this page, don't lose your focus.

51:27 This is a mistake, so always love real estate. uh the better idea was to dedicate those resources and that time to your core business. The company's management made some poor decisions by op by opening new locations and markets where either Costco's or SAMS was already firmly established, so they're getting out competed there. In the meantime, Sol was pushing for the price for the price club to become more involved in real estate development. Many retailers wanted to locate next to Price Club to take advantage of

51:51 of price club's customer draw. So wait a minute, are you a warehouse club or are you a real estate developer? Which one are you gonna do? You can o they own the real estate, which is smart. But now he's saying, Hey, let's build real estate next to our location, become landlords. What the hell are you doing? Some of the company's senior executives and most of the investment community frowned on the company's directing so much of its financial resources into real estate development. Real estate development was a diversion. from the company's core business. Uh uh big

52:16 Big no no. Focus on your goddamn core business. Real estate development was a diversion from the company's core business. The immediate financial returns on real estate were much lower than returns on the price club's operating business. Don't lose your focus. Back to this idea. Sol had better ideas, but Jim Sinegal and Sam Walton executed better.

52:34 Having pioneered the warehouse ko concept the price company had lost the initiative to competitors rather than sticking to a well planned business strategy Many decisions were being made reactively in response to what the competition was doing. So they're getting beat up on competition and then the worst Possible thing.

52:51 That can happen to a human. Happens. And remember, this book is written by Robert Price. Robert Price is Sam his soul's pri his soul's son. They worked together for forty five years. Uh Robert Price was a huge

53:05 Hugely important is the development of the price club. learned everything from his dad and Robert's son. His teenage son gets a brain tumor and winds up passing away.

53:18 And so Sol Price is gonna lose his grandson, Robert Price is gonna lose his son. at the exact same time where they're getting hit from all Angles is just like This is what leads them after this, like realizing what is actually important in life.

53:33 Really pushes them. to to to sell the business. Aaron's illness changed soul and me in ways that we did not fully comprehend at the time. It is not clear when Sol began to consider seriously the sale. Of the price company.

53:47 It may have been prior to Aaron's illness, but in the days, weeks, and months after Aaron's death. I came to believe that soul must have agonized over how to approach me about the subject. On the one hand, he had a strong sense that it was time to sell. He had always believed that his and my business strength were in the creative area and not in the management side of operating a big business. He was tired of the constant pressure.

54:09 From Wall Street for more growth. And perhaps most important He was concerned. A the about the burden that I had. The dual stress

54:20 Of losing the person you love most in the world and your business like struggling. Imagine like the pressure. And how difficult this was what Robert had to go through. So we're gonna fast forward.

54:33 They identify they're like, listen, there's only two buyers here. It's either Sam Walton. We had already offered. or Costco and obviously So so

54:43 Tells Robert you're gonna want to do all the negotiating, but Do do the deal with Jim. Jim was more predisposed anyway because he had a deep love and affection. First oil price, as I said at the beginning, is like I'm seven years old.

54:56 Still wanting approval from this guy. Still can't believe How impactful this handwritten letter I got after our lunch was. And so uh Jim Sinegal talked about the first time that he meets Sol Price. I think this this little story is good to give you an idea of who Sol was as a person.

55:12 Uh so he says he began working for Seoul in nineteen fifty four at the age of eighteen and considered Seul his mentor. Jim vividly recalled the first time he met Sol. I was given a call by somebody who was working in a new store in San Diego and they had some mattresses to unload and asked me to help out. I would get paid a dollar a quarter an hour. And so I said sure. The next day I'm carrying a mattress into the store and I hear a voice.

55:32 What in the hell are you doing there? Put that thing down before you break your back or worse yet, you break something in the store. So I turned to somebody who was there and I said What ticked him off? And who the hell is he?

55:43 They said he saw. He's not mad. That's just so. And so then the book goes on to what happens eventually price club and Costco merge. But really this is the most impactful part.

55:55 Of the book about life outside of all the great ideas for business. That's so hard. And so I wanna get to the end where I said it's one of the best ending paragraphs of any book that I've ever Red because of It's his soul's passed away by the time his book is published. He he died about three years before the book is published. And now you have

56:16 The son, his son. Honoring His life. And so as with every biography, you just can't help but put your yourself in their shoes.

56:25 And imagine living a life and succeeding a life like this. Where long after you're gone. This is what your son or your daughter the way they honored you. That's more impressive than any of the wealth he built.

56:40 As much as Sol's public accomplishments represent a tremendous legacy, His more enduring legacy may be on the impact that he had on the lives of the many people who knew him. All of us. can honestly say that there's at least one person who has had a transformative impact on the course of our lives. For me.

56:56 That person was my father. Whatever I've learned about business I learned from my father. Everything. He taught me how to think. And how to question and how to fall into the trap of assuming rather than checking things out for myself.

57:09 He also taught me to be humble, to appreciate the unpredictability of life. To care for people, to remain hopeful. And always to be there for people who are in need. Working alongside my father for nearly forty five years. I came to appreciate how unique our relationship was.

57:24 My father was a strong man. Who told me that he had to be tough to grow up and survive. He was very smart. Opinionated. and could make his case with anyone.

57:34 I had grown up arguing with my father. Our business relationship was not any different. He often said to me that I could drive him nuts. My natural tendency was to frequently take the opposite side of an argument Just because I knew

57:46 Nobody else would. As he and I aged We had fewer of those arguments. My father was so competent that So responsible and protective.

57:56 That is he withdrew from day to day activities. I wondered Whether I could ever carry on without him. The truth is that my father and I were very different people. But the greatest tribute I can give him.

58:08 Is that he taught me so much. Sometimes Without my even realising that a lessing was taking place. When it was time for me to step up, I was ready. What greater legacy

58:21 Could there be from a father to a son? Then leaving the gift of life skills necessary to carry on. Saul was a poster child for the American dream. His immigrant parents were born in a small Russian village.

58:35 He was raised in the Bronx. And was the first of his family to graduate from college. He earned a law degree. He became an exceptionally successful businessman and philanthropist. He celebrated seventy years of marriage.

58:48 to his beloved wife Helen. He was a good father. Who instilled high values in his son's. And he never walked away from responsibility. It doesn't get much better.

58:59 Than that. And that is where I'll leave it for the full story, highly recommend buying the book. If you buy the book using the link in the show notes, you'll be supporting the podcast at the same time. Another way to support the podcast is to sign up for Founders Premium. Subscribers can ask me questions directly.

59:14 Listen to the twenty two or twenty three AMA episodes. That I've already made. I'm also making bonus episodes for a bunch of other things I read. And I have a lot of plans to add other things to Founders Premium. That link is down below and

59:27 Available at Founders Podcast dot com. If you are not already on my email newsletter. For every single book that I read. I email you the top ten highlights of every book. That link is down below.

59:39 and available at founderspodcast dot com. That is three hundred and four books down. One thousand ago. And I'll talk to you again soon.

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