“With the possible exception of Henry Ford, Sam Walton is the entrepreneur of the century.”- TOM PETERS, co-author of In Search of Excellence
One of my favorite entrepreneurs of all time is Sam Walton, the founder of Walmart. Sam was a visionary, cheerleader, great salesman, serial borrower, tough competitor, relentless entrepreneur who built a retail empire without losing his common touch. One of the most interesting things about Sam Walton was his vision for Walmart and his focus on generational wealth. As long have observed the Forbes list of the richest people globally, his offsprings have always been in the top 20 Forbes richest list, which is very impressive.
The Walton family held five spots in the top ten richest people in the United States until 2005. Two daughters of Sam’s brother Bud Walton—Ann Kroenke and Nancy Laurie—hold smaller shares in the company. The Walton family is an American family whose collective fortune makes them the richest family in the United States of America and the richest family in the world.
Samuel Moore Walton (March 29, 1918 – April 5, 1992) was an American businessman and entrepreneur best known for founding the retailers Walmart and Sam’s Club. Wal-Mart Stores Inc. grew to be the world’s largest corporation by revenue as well as the biggest private employer in the world. For a period of time, Walton was the richest man in America.
Walmart is the world’s largest retailer, one of the world’s largest business enterprises in terms of annual revenue, and with just over 2.2 million employees, the world’s largest private employer.
As of December 2014, the Waltons collectively owned 50.8 percent of Walmart. In 2018, the family sold some of their company’s stock and now owns just under 50%. In July 2020, the annual Sunday Times Rich List reported that the Walton family’s net worth was $US225.2 billion.
Sam Walton’s Autobiography: Made in America is one of my favorite business biographies as it contains lots of wisdom, insights, anecdotes, in the trenches advice, a very good read. The book chronicles his starting out, major tough early business lessons, borrowing ideas from others, customer obsession, Small Town Strategy, battling cancer, raising kids, understanding the value of a dollar among other insights.
Walton joined J. C. Penney as a management trainee in Des Moines, Iowa, three days after graduating from college. This position paid him $75 a month. Walton spent approximately 18 months with J. C. Penney. He resigned in 1942 in anticipation of being inducted into the military for service in World War II ]In the meantime, he worked at a DuPont munitions plant near Tulsa, Oklahoma. Soon afterward, Walton joined the military in the U.S. Army Intelligence Corps, supervising security at aircraft plants and prisoner of war camps. In this position, he served at Fort Douglas in Salt Lake City, Utah. He eventually reached the rank of captain.
Hustler Sam –
In his biography, Made in America, he spoke about his hustling spirit from an early age:
“Ever since high school, I had made all my own money and paid for all my own clothes. That continued in college except I had to add tuition and food and fraternity dues and date money to my expenses. Dad and Mother would have been glad to help if they could have, but it was the Depression and they had no extra money at all. I had continued to throw a newspaper route all through high school, and in college, I added a few more routes, hired a few helpers, and turned it into a pretty good business. I made about $4,000 to $5,000 a year, which at the end of the Depression was fairly serious money.”
“In addition to the newspapers, I waited tables in exchange for meals, and I was also the head lifeguard in charge of the swimming pool.”
In 1945, after leaving the military, Walton took over the management of his first variety store at the age of 26. With the help of a $20,000 loan from his father-in-law, plus $5,000 he had saved from his time in the Army, Walton purchased a Ben Franklin variety store in Newport, Arkansas. he store was a franchise of the Butler Brothers chain.
Sam Walton: Made in America – Failing Miltary Physical and meeting Wife
“By early 1942, though, the war was on, and as an ROTC graduate, I was gung-ho to go, ready to ship out overseas and see my share of the action. But the Army had a big surprise for me. Because of a minor heart irregularity, I flunked the physical for combat duty and was classified for limited duty. This kind of got me down in the dumps, and since I was just waiting around to be called up anyway I quit my Penney’s job and wandered south, toward Tulsa, with some vague idea of seeing what the oil business was like. Instead, I got a job at a big Du Pont gunpowder plant in the town of Pryor, outside Tulsa. The only room I could find to stay in was nearby, over in Claremore. That’s where I met Helen Robson one April night in a bowling alley.”
With the sales volume growing from $80,000 to $225,000 in three years, Walton drew the attention of the landlord, P. K. Holmes, whose family had a history in retail. Admiring Sam’s great success, and desiring to reclaim the store (and franchise rights) for his son he refused to renew the lease. The lack of a renewal option, together with the prohibitively high rent of 5% of sales, were early business lessons to Walton. Despite forcing Walton out, Holmes bought the store’s inventory and fixtures for $50,000, which Walton called “a fair price”
Landlord Issue: Made in America
“In all my excitement at becoming Sam Walton, merchant, I had neglected to include a clause in my lease which gave me an option to renew after the first five years. And our success, it turned out, had attracted a lot of attention. My landlord, the department store owner, was so impressed with our Ben Franklin’s success that he decided not to renew our lease—at any price—knowing full well that we had nowhere else in town to move the store.”
“He did offer to buy the franchise, fixtures, and inventory at a fair price; he wanted to give the store to his son. I had no alternative but to give it up. But I sold the Eagle Store lease to Sterling—so that John Dunham, my worthy competitor and mentor, could finally have that expansion he’d wanted.
It was the low point of my business life. I felt sick to my stomach. I couldn’t believe it was happening to me. It really was like a nightmare.”
Bouncing Back – 99 Year lease
“The whole thing was probably a blessing. I had a chance for a brand-new start, and this time I knew what I was doing. Now, at the age of thirty-two, I was a full-fledged merchant; all I needed was a store.”
“We tried to buy a store in Siloam Springs, on the Oklahoma border, but we couldn’t come to terms with the owner, Jim Dodson, who later became a friend of ours. So one day Helen’s father and I drove into Bentonville and had a look around the square. It was the smallest of the towns we considered, and it already had three variety stores, when one would have been enough. Still, I love competition, and it just struck me as the right place to prove I could do it all over again. We found an old store willing to sell—Harrison’s Variety Store—but we needed to double its size, and to do that we had to get a ninety-nine-year lease on the barbershop next door (no more five-year leases for me).”
Love of Merchandising
“It’s almost embarrassing to admit this, but it’s true: there hasn’t been a day in my adult life when I haven’t spent some time thinking about merchandising. I suspect I have emphasized item merchandising and the importance of promoting items to a greater degree than most any other retail management person in this country. It has been an absolute passion of mine. It is what I enjoy doing as much as anything in the business. I really love to pick an item—maybe the most basic merchandise—and then call attention to it”
Modest Billiionaire: Richest American
“Success has always had its price, I guess, and I learned that lesson the hard way in October of 1985 when Forbes magazine named me the so-called “richest man in America.” Well, it wasn’t too hard to imagine all those newspaper and TV folks up in New York saying “Who?” and “He lives where?”
The next thing we knew, reporters and photographers started flocking down here to Bentonville, I guess to take pictures of me diving into some swimming pool full of money they imagined I had, or to watch me light big fat cigars with $100 bills while the hootchy-kootchy girls danced by the lake.
I really don’t know what they thought, but I wasn’t about to cooperate with them. So they found out all these exciting things about me, like: I drove an old pickup truck with cages in the back for my bird dogs, or I wore a Wal-Mart ball cap, or I got my hair cut at the barbershop just off the town square—somebody with a telephoto lens even snuck up and took a picture of me in the barber chair, and it was in newspapers all over the country.”
“The simple truth is that Mother and Dad were two of the most quarrelsome people who ever lived together.”
“So Helen and I did the best we could to promote a sense of togetherness in the family, and we made sure our children had a chance to participate in the same sorts of things we did as kids. They were in Scouts, and for a time I was a scoutmaster. All the boys played football and did well. In fact, they each made the all-state team, and when Jim was about to graduate I remember the coach being quoted around town to the effect that he couldn’t face the prospect of a team without a Walton, so he was trying to talk Alice into going out for football.”
“I guess the kids thought of themselves as slave labor back then, but we didn’t work them that hard. We just taught them the value of work. And besides, I needed the help—at the store and at home. I didn’t have time to mow the lawn, and why should I anyway, with three strapping boys and a healthy girl available for chores. And it wasn’t all work. Helen and I made it a point to take the whole family out and spend time traveling or camping together. Sometimes the kids thought of these trips as forced marches, but I think that time we spent together has had a lot to do with our close relationship as a family today. We have a lot of good memories of traveling all over the country, especially in this one fine old DeSoto station wagon”
Long Term Thinking – Take Care of the People
“Anybody who has ever known anything about me knows I was never in anything for the short haul; I always wanted to build as fine a retailing organization as I could. But in those early days—before, and just after, we opened the first Wal-Mart—I got to know a lot of those promoters. As I told you, I ran the country studying the discounting concept, visiting every store and company headquarters I could find.”
“I guess I’ve stolen—I actually prefer the word “borrowed”—as many ideas from Sol Price as from anybody else in the business. For example, it’s true that Bob Bogle came up with the name Wal-Mart in the airplane that day, but the reason I went for it right away wasn’t that the sign was cheaper. I really liked Sol’s Fed-Mart name so I latched right on to Wal-Mart. I do not believe Kmart existed at that time.”
“I read in some trade publication not long ago that of the top 100 discounters who were in business in 1976, 76 of them have disappeared. Many of these started with more capital and visibility than we did, in larger cities with much greater opportunities. They were bright stars for a moment, and then they faded. I started thinking about what really brought them down, and why we kept going. It all boils down to not taking care of their customers, not minding their stores, not having folks in their stores with good attitudes, and that was because they never really even tried to take care of their own people. If you want the people in the stores to take care of the customers, you have to make sure you’re taking care of the people in the stores. That’s the most important single ingredient of Wal-Mart’s success.”
“It was always interesting to me that, except for those folks who worked in our company, our stock got very little support early on from the folks right here in northwest Arkansas. I always had the feeling that the people around here who remembered us when we had one store and three stores, or remembered me when I was president of the Rotary or the Chamber of Commerce, somehow thought we were doing it with mirrors. They couldn’t help but think we were just lucky, that we could not continue long term to do as well as we have done. I don’t think it was anything peculiar to this part of the country or me or anything like that. I think it must be human nature that when somebody homegrown gets on to something, the folks around them sometimes are the last to recognize it.”
Small Town Strategy
When people want to simplify the Wal-Mart story, they sum up the secret of our success: “Oh, they went into small towns when nobody else would.” And a long time ago, when we were first being noticed, a lot of folks in the industry wrote us off as a bunch of country hicks who had stumbled onto this idea by a big accident.”
“Maybe it was an accident, but that strategy wouldn’t have worked at all if we hadn’t come up with a method for implementing it. That method was to saturate a market area by spreading out, then filling in. In the early growth years of discounting, a lot of national companies with distribution systems already in place—Kmart, for example—were growing by sticking stores all over the country. Obviously, we couldn’t support anything like that.”
Walton married Helen Robson on February 14, 1943. They had four children: Samuel Robson (Rob) born in 1944, John Thomas (1946–2005), James Carr (Jim) born in 1948, and Alice Louise born in 1949. Walton supported various charitable causes. He and Helen were active in 1st Presbyterian Church in Bentonville; Sam served as an Elder and a Sunday School teacher, teaching high school age students. The family made substantial contributions to the congregation.
Sam’s Rules for Building a Business: Made in America.
RULE 1: COMMIT to your business.
Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you’re born with this kind of passion, or if you can learn it. But I do know you need it. If you love your work, you’ll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you —like a fever.”
RULE 2: SHARE your profits with all your associates, and treat them as partners.
In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Encourage your associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement. It’s the single best thing we ever did.”
RULE 3: MOTIVATE your partners.
Money and ownership alone aren’t enough. Constantly, day by day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale, cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Don’t become too predictable.”
“RULE 4: COMMUNICATE everything you possibly can to your partners.
The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. If you don’t trust your associates to know what’s going on, they’ll know you don’t really consider them partners. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.”
RULE 5: APPRECIATE everything your associates do for the business.
A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we’re really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free—and worth a fortune.
RULE 6: CELEBRATE your successes.
Find some humor in your failures. Don’t take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm—always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don’t do a hula on Wall Street. It’s been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. “Why should we take those cornballs at Wal-Mart seriously?
RULE 7: LISTEN to everyone in your company.
And figure out ways to get them talking. The folks on the front lines—the ones who actually talk to the customer—are the only ones who really know what’s going on out there. You’d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.
RULE 8: EXCEED your customers’ expectations.
If you do, they’ll come back over and over. Give them what they want—and a little more. Let them know you appreciate them. Make good on all your mistakes, and don’t make excuses—apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign: “Satisfaction Guaranteed.” They’re still up there, and they have made all the difference.
RULE 9: CONTROL your expenses better than your competition.
This is where you can always find the competitive advantage. For twenty-five years running—long before Wal-Mart was known as the nation’s largest retailer—we ranked number one in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.”
RULE 10: SWIM upstream.
Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long.