Book Club: Made In America - Sam Walton and his story of Wal-Mart
Wal-Mart takes a lot of shit.
I’m not saying they don’t deserve it, but up until about a week ago I realized my whole idea of the company was shaped by news stories I’d seen. I’m always skeptical of the media, and after looking into the founder Sam Walton my interest was piqued. I found out he actually wrote an autobiography about his life and how he built Walmart from essentially nothing.
Always interested in the words of successful men and women, I went out and read him. What fascinated me was how everyone I told about the book had an incredibly strong opinion on Walmart and thus on Sam Walton. When I posed the question “Well how much do you actually know about the company?” the responses were a mixture of “They pay their employees really low wages” and “They ruin small business in America”.
Those things maybe completely true, I’m certainly not an expert on the company. However I will say that I’m probably one out of a million that actually thought to see what this guy had to say for himself before writing him off as a profiteering soulless criminal communist terrorist child eating vampire.
Walmart is a complex “issue” if you will; to discuss it we’ll have to cover a lot of ground but I think it’s necessary for people to consider both sides. I think it’s even more necessary for them to read, and stop watching the news but that’s a rant for another time.
First, let's talk about Mr. Walton and his book! The book itself was written by Sam, and edited extremely well. It was very clear and organized, while still getting his personal voice across perfectly. That’s probably how he’d prefer it. Sam Walton as a person appeared to be a smart, hard working and most importantly humble guy. His book was not meant to showcase his accomplishments, the guy didn’t even really want to write it. In it he talks about his family, how they struggled to build what became Walmart and much more. He calls himself a merchant, and I think that’s an important mindset that may be long gone these days. His priority has always and I mean ALWAYS been satisfying the customer. More on that in a second.
The Waltons started with one variety store out in Arkansas, and after getting their feet wet in the industry, began taking on massive amounts of debt to open more stores. Sam Walton literally drove and filled up his station wagon to pick up merchandise to sell in his stores. Often painted as an idle ultra-rich individual, Walton came from the humblest of beginnings and evidence of his work ethic exploded out of modest accounts of Wal-Mart’s early days.
After reading his autobiography of sorts, Walton’s success can be attributed to three major things. His relentlessness in serving the customer, his incredible tolerance for hard work, and the ingenious notion of making employees ‘partners’ in the business. Let’s get into each of these briefly.
Serving the Customer
What a concept! This is pretty belabored in the book, but with good reason because it really is the ‘secret’ to Wal-Mart’s success. Back in the day, there weren’t super stores, there were smaller ‘variety’ stores. These stores had clerks that waited on you (the customer) and were much much smaller. Due to how these stores actually got their merchandise (purchased from middlemen essentially) and their size, prices were higher than they needed to be.
Walton was successful because he figured out that a customer would shop in an abandoned warehouse full of exposed wiring and rats, if it meant they could save 30 cents per pair on toothpaste and panties. What the customer WANTED was discounted pricing, that’s pretty much it. To get those discounts, Walton arranged to buy directly from manufacturers/suppliers, and worked to get his own trucks and distribution centers all to reduce his costs. He did not take the profits from the cost reduction and stuff them into his fat pockets, but instead passed the savings onto to his customers. Combine this with his willingness to cut profit margins well below the ‘accepted’ standard, and Walton’s stores simply sold stuff cheaper.
In defense of his business model (not that any legal model should need defense in America) I’d say that Wal-Mart grew because it actually responded to the customers, while those that continued their non-discount existence perished and whined about the ‘unfairness’ of it all. It’s really hard for me to sympathize with those unwilling to compete.
The Idea of “Partners”
This was something I did not realize about the Wal-Mart organization. Back in it’s early days (I don’t know their structure now) Walton would give his store managers a perctange ownership in the stores that they managed. Thus as a manager if your store does well, so do you. In his book Walton talks at length about the importance of getting your employees (partners) invested in the success of the business and encourages all aspiring entrepreneurs to see and treat those important in their organization as equity partners.
He even did this with part time employees after the company went public! Part time employees accumulated money each paycheck based on hours worked each year. At the end of their employment, they could opt to have a check written to them as a bonus or to receive that amount in Wal-Mart stocked. Some of his early part time people retired with over a million dollars in Wal-Mart stock. Pretty sweet.
In the book, Walton mentions multiple times the regret of not setting up profit sharing for part time employees earlier. I did some research and since he’s gone, Wal-mart’s board has gotten rid of part time profit sharing (sometime in the 2000s after Walton left). Disappointing.
Recommendation
Wow ok this was a long one for a book review. I really enjoyed reading Sam Walton and his account of his life and business, it’s always incredible to get inside the head of a self made billionaire and see what he prioritizes and why. Overall I recommend this up there with any of the top autobiographies of businessmen and women. Be careful, it might just alter your perspective a little. Buy it below if you're so inclined. Sam Walton: Made In America