Book 25: “Made in America” by Sam Walton

Made In America

Sam Walton

 Released: June 1st, 1993

Book #25 complete for the year, “Made in America” by Sam Walton.  I have had this book for years.  I was issued a copy when I entered Wal-Mart management back in 2014.  It’s an amazing read, and lots of very true ideas and things that convey just what Wal-Mart is supposed to be.  I learned so many fascinating things, and there’s a lot that makes so much sense.

Here are some things I learned:

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Sam Walton was named World’s richest man in October 1985.

Fame didn’t sit easy with him.  He chose to live a basic life and when reporters and TV crews attempted to get involved in his life, he and his family set larger boundaries.

Sam was born in Kingfisher, Oklahoma in 1918.

Sam Walton established and ran Walton Enterprises as a partnership with his children.  This allowed the family to have something to generate income without involving people who look to steal or take over your company.  This was at the advice of his father-in-law.

It built a sense of personal responsibility to one another.

Sam did not actually have all the money the news outlets reported him having, he merely had assets valued as such.

“So along comes Forbes in 1985 and says I'm the richest man in America. Well, there's no question that if you multiply the Walmart stock price by how much we own, then maybe we are worth $20 or $25 billion, or whatever they say. The family may have those kinds of assets, but I have never seen that myself. For one thing, Helen and I only own 20 percent of our family's total interest in Wal-Mart. For another, as long as I have anything to do with it and I'm confident this attitude will last at least another generation- most of that Wal-Mart stock is staying right where it is. We don't need the money. We don't need to buy a yacht. And thank goodness we never thought we had to go out and buy anything like an island. We just don't have those kinds of needs or ambitions, which wreck a lot of companies when they get along in years. Some families sell their stock off a little at a time to live high, and then boom- somebody takes them over, and it all goes down the drain. One of the real reasons I'm writing this book is so my grandchildren and great-grandchildren will read it years from now and know this: If you start any of that foolishness, I'll come back and haunt you. So don't even think about it.”

“Here's the thing: money never has meant that much to me, not even in the sense of keeping score. If we had enough groceries, and a nice place to live, plenty of room to keep and feed my bird dogs, a place to hunt, a place to play tennis, and the means to get the kids good educations, that's rich. No question about it. And we have it.  We're not crazy.”

“I'm not sure I ever really figured out this celebrity business. Why in the world, for example, would I get an invitation to Elizabeth Tarlor's wedding out in Hollywood? I still can't believe it was news that I get my hair cut at the barbershop. Where else would I get it cut? Why do I drive a pickup truck? What am I supposed to haul my dogs around in, a Rolls-Royce?”

“But sometimes I'm asked why today, when Wal-Mart has been so successful, when we're a $50 billion-plus company, should we stay so cheap? That's simple: because we believe in the value of the dollar. We exist to provide value to our customers, which means that in addition to quality and service, we have to save them money. Every time Wal-Mart spends one dollar fool-ishly, it comes right out of our customers' pockets. Every time we save them a dollar, that puts us one more step ahead of the com-petition--which is where we always plan to be.”

Sam was always a high motivator, and always went into any scenario with the mindset to win.

Sam Walton earned his Eagle Scout rank at age 13.

“…I learned a long time ago that exercising your ego in public is definitely not the way to build an effective organization.  One person seeking glory doesn’t accomplish much.”

He enjoyed speech club as well as basketball and football.  

He never been on the losing side of a football game that he personally played in for his entire life.  He was sick for a few games that the team did lose.

It taught him to expect to win, to go into tough challenges, always planning to come out victorious.

“It never occurred to me that I might lose; to me, it was almost as if I had a right to win.  Thinking like that often seems to turn into sort of a self-fulfilling prophecy.”

While president of many clubs at the University of Missouri, he left all political ambitions behind when he graduated.

He made $4,000 - $5,000 a year at the end of the Depression, which in those days was good money.

“He did so many things that he would be scatterbrained at times.  He’d had so many things going on, he’d almost forget one.  But when he focused on something, that was it.” - Ezra Entrekin

He initially wanted to attend the Wharton School of Finance in Pennsylvania.  Instead, he received 2 job offers, one from JC Penney, and the other from Sears Roebuck.

“Now I realize the simple truth: I got into retailing because I was tired and wanted a real job.”

He reported to the JC Penney store in Des Moines, IA 3 days after college graduation.  He was a manager trainee, salaried at $75/month.

He was nearly called up for service in World War II, but due to a minor heart irregularity, he flunked the physical for combat duty, and was classified for limited duty.  

He met and fell in love with Helen Robson at a bowling alley in Claremore, just outside Tulsa.

Sam married Helen on Valentine’s Day 1943.

He initially agreed to open up a Federated department store via the Butler Brothers in St Louis.  Helen asked that he instead focus on smaller areas with 10,000 or less people, and to steer clear of partnerships.

The Butler Brothers took his request, and gave him a Ben Franklin variety store in Newport, Arkansas, a cotton and railroad town of 7,000 people.

Sam bought the store for $25,000 ($5,000 saved by Sam and Helen, and a $20,000 loan from Helen’s father) but quickly realized a few challenges.  The store averaged $72,000 in sales per year, and paid 5% of it’s sales in rent costs.

It’s strongest competition was a Sterling Store across the street doing $150,000 in sales each year.  It was run by a man named John Dunham.

“It was a real blessing for me to be so green and ignorant, because it was from that experience that I learned a lesson which has stuck with me all through the years: you can learn from everybody.”

He learned the most from what the top competitor across the street was doing.

He ran his Franklin store by the book, and learned an enormous amount as he went along.  They wanted him to buy the merchandise from them, do their promotions, etc.  He eventually started experimenting with things, and soon was calling the manufacturer directly to obtain his merchandise and save money.

He used to drive his truck all over the south looking for offbeat suppliers and sources who could sell him products wholesale.  It drove Ben Franklin nuts because not only was he not buying from them, but he was achieving sales at a lower price than Franklin could afford to sell.

He sacrificed profit for quantity because he know the quantity sold would far exceed the profit generated by marking items at a higher cost.

Sam would always look for ways to stretch the 80% Butler Bros buying mark for his store.

In 2.5 years, he had completely repaid the loan to his father-in-law.

Where the previous owner was only making $72,000 per year in sales, Walton generated sales of $105,000, $140,000, and finally $175,000 his first 3 years.

He got word that Dunham was going to buy the lease on a Kroger grocery store, so he went down and met with the landlord and bought it before Dunham could.  He turned it into a separate store called Eagle.

“Church is an important part of society, especially in small towns.  Whether it’s the contacts and associations you make or the contributions you might make toward helping other folks, it all sort of ties in together.”

After 5 years, his Ben Franklin store was doing $250,000 in yearly sales, led the region and state in sales.

After his successful 5 years in Newport, his lease was not renewed.  So he sold the business to his landlord and the Eagle store to Dunham.  It was a low point of his career, but he learned to read leases a lot more carefully afterwards.

Sam and his father in law found a new space in Bentonville, AR.  He almost didn’t get the lease, but his father-in-law negotiated a good deal.

His new store was only the 3rd self-service store in the entire nation.

He bought a 2nd store in Fayetteville, AR to diversify his assets and generate 2 thriving business establishments.  This later became the Walton’s Five and Dime business.

Sam was 44 when he opened his first Walmart store in 1962.

He would nose around other stores looking for good talent.

His first real hire was the first manager, Willard Walker.

The Fayetteville store is said to be the first store in the entire country with 100% metal fixtures (wooden ones were common at the time).

In the beginning, one of the strongest sellers were women’s panties.

Back in the day, different department stores controlled different states.  Sam broke that mold because he didn’t recognize borders to run business.  He thought nothing of doing business in 4 states — all in one day.

He and his brother Bud went into business opening a shopping center in Kansas City.

He was about 10 years ahead on the idea of shopping centers.  He would drive all over trying to get towns to go in on shopping centers in each town.

“Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I've ever known. And once he sees he's wrong, he just shakes it off and heads in another direction.” - David Glass

May 20th, 1957, a tornado hit the Ruskin store in Kansas City.  Sam couldn’t get through to anyone, so he drove there and found the shopping center completely leveled.  It was difficult to take because they had just lost their best store.  They rebuilt it and continued onward.

He soon realized he was driving too much due to the distance between each store.  So he decided to fly around instead to save time.

Sam bought a small 2-seat airplane with a washing machine engine.  He only ever suffered one engine failure, and was able to circle back and land with a dead engine.

They would take the profit they earned from one store, and use it to finance the opening of another store.  They would offer stakes of ownership to managers.  (Ex. If a store cost $50,000 to open and a manager invested $1,000, they would own 2% of the entire store, and retain that share.

If a manager did not want to invest in a particular store, other managers could call Sam and offer to buy it.  He usually always agreed, but would limit it to 2% per store, but since managers could have ownership in more than one store, you could have multiple stakes in multiple stores.  This taught managers to think like owners.

After seeing Herb Gibson’s ability to drive strong sales and open multiple stores in the Dallas area, he opted to build his own discount store in Rogers, AR.

Nobody wanted to gamble on the first Walmart.  Bud put in 3%, Don Whitaker, a manager of one of his variety stores in Abilene, TX put in 2%.  This meant Sam had to front all 95%.  Helen co-signed with him, and they had to pledge their houses, property, and virtually everything they had.  It was one of the biggest gambles of his entire life.

Bob Bogle, the first manager of Walton’s Five and Dime, was flying to Boston in a newer plane Sam used, and was handed a list of 4 potential names for the store.  When asked which one he liked best, he responded with “Walmart”, because it kept the family named, made it a place to shop, and with only 7 letters, signage would be easier.  Sam was quiet the rest of the trip, and Bogle didn’t press him on it.  Later, they were setting up fixtures when he saw the sign maker already out up the W-A-L and was going for the M when he realized Sam had chosen his name for the store.

On July 2nd, 1962, Walmart opened for business.

On day one, a group of officials from Ben Franklin in Chicago came down and issued an ultimatum to Sam “Don’t build any more of these Walmart stores.”  Everyone else knew that Sam Walton was not the kind of guy you issued ultimatums to.

Though the store wasn’t the greatest, it drove $1 million in sales it’s first year, far outpacing the $200,000-$300,000 the variety stores would see.

The first Walmart was very ugly.  It had watermelons that would explode in 115 degree heat, a donkey ride in the parking lot that customers would drag in fecal matter from walking outside, and was more like a barn.  Sam gambled that people would shop in his store because he sold for 20% less

K-Mart, Woolco, Target, and Walmart all opened the same year, 1962.

“Many of our best opportunities were created out of necessity.”

“He wasn’t just looking for store managers.  I think he was selecting people he thought he could go forward with.” - Claude Harris

“Sam would have us send our sales report in every week, and along with it we had to send in a Best Selling Item.  I mean we had to.  What he was doing was teaching us to look for what’s selling all the time.”  - Charlie Cate

Early Manager Phil Green would do crazy bulk discounting.  He once created the largest display of Tide in the world, around 3,500 big cases.  Even Sam Walton was taken aback at the sheer size of the order.  But, due to the publicity, it drove in more traffic and all 3,500 units sold.

*This reminds me of a time in my retail years where I ordered 300 units of Great Value paper towels.  We received nearly 20 pallets, I built a huge display, and all 300 sold easily.

Sam Walton once promoted Moon Pies in his VPI (Volume Producing Item) contest.  He sold 500,000 units in one week for $100,000.  Former CEO David Glass remarked “I think the Chattanooga Bakery, which makes moon pies, made him their man of the year.  If they didn’t, they should have.”

While Moon Pies sold well in the south, they didn’t fare too well in Wisconsin, so Sam took note of the error, and corrected for that region.

“In retail, you are either operations driven — where your main thrust is toward reducing expense and improving efficiency— or you are merchandise-driven.  The ones that are truly merchandise driven can always work on improving operations.  But the ones that are operations driven tend to level off and begin to deteriorate.”

The way he led a business trip to New York was very precise.  He never wanted expense to go over 1% of what they were spending to buy merchandise.  He did things a specific way, and Gary Reinboth recalls “I think he was trying to make a point: just because we’re in New York doesn’t mean we have to start doing things their way.”

The Walton kids grew up running the family business.  Alice would work the candy counter or run the popcorn stand.  She would worry about the debt her father was incurring and it stressed her as a child.

Sam and Helen knew they wanted 4 kids, and Sam aspired to raise them the same way Helen’s family was raised.  They truly inspired Sam, and in return gave Helen the only family she would have ever considered.

Sam briefly touches on his home life growing up.  His parents fought constantly, and really only stayed together for the benefit of him and his brother Bud.  From that, Sam resolved to constantly stay busy, and also work to prevent his family from having to see 2 parents at constant odds with one another.

Sam was a scoutmaster and a Sunday school teacher at one point.

“The only thing that might have made our family different was that, everybody was involved in working this stores.” - Alice Walton

The Walton children would receive an allowance that was less than their friends due to their father’s frugality.  However, they were allowed to invest earnings in those various stores, and the amount they made off their investments, bought them their houses and set them up for life.

“Dad thrived on change, and no decision was ever sacred.” - Jim Walton

Sam Walton had an obsession with visiting retail stores and constantly getting ideas and taking notes everywhere he went.

Sam had no idea of Alice’s fear of debt as a child.  He felt that the best way to encourage them was to allow them to be part of the business.  They knew why he did what he did.  All of the children worked, invested, and shopped in those stores.

“At Christmastime, we would get a list from the welfare office of some children who weren’t going to have Santa Claus.  We’d get the ages and sizes and that sort of thing.  I remember one night, we took our children into the store after it was closed and gave them that list and told them to go around and pick out things for them because we wanted them to have some sense of what was going on outside our privileged little family.  It was a small town, and we were a real small-town kind of operation.

Sam never pushed his kids too hard, because he never expected them to be like him.  But he did make it clear that if they went into the family business, they would be expected to work just as hard.

Rob Walton went to law school, and became the first company lawyer.  He did a great deal to help them go public.

“One way in which Sam and my dad were really different.  My dad was always talking to me about how I should live, how I should work, and challenging me to do this and that.  I don’t know that Sam did that very much with our children.  I probably did it, and they got enough from me.  He probably saw that and kept his mouth shut.” - Helen Walton

When the kids would bring grades home with A’s and B’s, Helen would always push them to get straight A’s.  Sam was happy to see them with A’s and B’s.  He never expected perfection.

John Walton once asked his father for permission to climb a bluff overlooking the Buffalo River.  Sam told him “Do anything you’re big enough to do.”  He managed his life the same way.  He invited the children to join his business, but never forced or pressure them.

“If you don’t want to work weekends, you shouldn’t be in retail.”

The biggest argument Sam and Helen ever had was over a car.  He was a Chevy Man, and she was a Ford Woman.

“I do admit to worrying sometimes about future generations of the Waltons. I know it's unrealistic of me to expect them all to get up and throw paper routes, and I know it's something I can't control. But I'd hate to see any descendants of mine fall into the category of what I'd call "idle rich" a group I've never had much use for. I really hope that somehow the values both Helen and I, and our kids, have always embraced can be passed on down through the generations. And even if these little future Waltons don't feel the need to work from dawn on into the night to stay ahead of the bill collector, I hope they'll feel compelled to do something productive and useful and challenging with their lives. Maybe it's time for a Walton to start thinking about going into medical research and working on cures for cancer, or figuring out new ways to bring culture and education to the underprivileged, or becoming missionaries for free enterprise in the Third World. Or maybe, and this is strictly my idea, there's another Walton merchant lurking in the wings somewhere down the line.”

Although Bob Bogle came up with “Wal-mart”, Sam went with it immediately because Sol Price ran a store called Fed-Mart in Southern California.

Of the top 100 discounters in 1976, 76 of them have disappeared by publication (1992).  Sam often wonders about what brought them down.

“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.

The first time Abe Marks met Sam Walton, it was at a conference for the National Mass Retailers’ Institute (NMRI) in Poughkeepsie, New York.  Sam approached him, and asked him for an opinion.  He pulled out nearly every speech and article Marks had every written.  Beneath that was an accountant’s working column all handwritten out.  He said “Tell me what’s wrong.  What am I doing wrong?”  After reading over it, (mind you this was 1966), he realized Sam Walton was bringing in $10 million a year over a handful of stores with incredible margin.  This was almost unheard of.  So he told Sam “Sam, I’ll tell you what you’re doing wrong.  Being here is wrong, Sam.  Don’t unpack your bags.  Go down, catch a cab, go back to the airport and go back to where you came from and keep doing exactly what you are doing.  There is nothing that can possibly improve what you are doing.  You are a genius.”

Sam Walton wrote the book on supply chain management.

Sam hired Bob Thornton with the idea that he would conceptualize and build a distribution center that could handle the level of merchandise that was anticipated.

Sam never did anything in size or value until he actually had to.

Sam considers the time Ron Mayer’s time with the company (1968-1976) as the most important period of development in Wal-Mart’s history.

Sam was always learning new things.  He attended the conference with IBM to learn more about computers and how that could help him create a more efficient business.  He purchase a bank in Bentonville that taught him financing and how that industry worked, and how to use it to help his business grow.

By 1970, he had 78 partners invested in his business, which had a portfolio of 32 different stores.  All who believed in the dream, worked for the dream and as a result, succeeded and profited many times over their initial investment, and since the work was done by all of them, they reaped what they worked hard for.

On October 1st, 1970, Wal-Mart became a public company.

If you bought 100 shares of Walmart stock in 1970 for $1,650 ($16.50 per share), you would currently have 204,800 shares at a value of about $17 Million.

When Wal-mart first went public, they only had about 800 investors.  Anybody who bought stock and held, made an absolutely killing.

Flying back from NYC after then going public, Sam and Ron were riding high, and they very confidently talked to a man at the airport from Baltimore who worked for a small company called T. Rowe Price.  He was sold on their idea, and as soon as he got back, made a large investment in the company.  T. Rowe Price made millions and became one of the industry leaders.

In 1977, Wal-Mart had a market value of $135 Million.  By 1992, it was over $50 Billion

Since the day Wal-mart went public, all loans were repaid, and Wal-mart has self-financed itself for over 50 years.

After the first shareholder’s meeting, Mike Smith suggested to Sam that they create a huge event out of the meeting.

Sam had to tame down the meetings after excessive drinking let to some crazy events.

Between 1977 and 1987, average annual return to investors for Walmart was 46%.

“If I were a stockholder of Wal-Mart, or considering becoming one, I'd go into ten Wal-Mart stores and ask the folks working there, "How do you feel?  How's the company treating you?" Their answers would tell me much of what I need to know.”

“What's really worried me over the years is not our stock price, but that we might someday fail to take care of our customers, or that our managers might fail to motivate and take care of our associates. I also was worried that we might lose the team concept, or fail to keep the family concept viable and realistic and meaningful to our folks as we grow. Those challenges are more real than somebody's theory that we're headed down the wrong path.”

Sam credits his ability to fly as a big reason for the company’s unprecedented growth and expansion.  He and his team were about to scout real estate locations by seeing traffic flow patterns, and locations with great potential.

Walmart never went heavy on advertising.  They built up from the south which worked well with snow birds.  They would come down for the winter, become familiar with the store and prices, and ask Sam to build more up north in their respective states.

Sam personally oversaw the real estate deals of the first 500 stores.

“I’ve played to my strengths and relied on other to make up for my weaknesses.”

“But if you asked me am I an organized person, I would have to say flat out no, not at all. Being organized would really slow me down. In fact, it would probably render me helpless. I try to keep track of what I'm supposed to do, and where I'm supposed to be, but it's true I don't keep much of a schedule.”

“One way I've managed to keep up with everything on my plate is by coming in to the office really early almost every day, even when I don't have those Saturday numbers to look over.

Four-thirty wouldn't be all that unusual a time for me to get started down at the office. That early morning time is tremendously valuable: it's uninterrupted time when I think and plan and sort things out.”

Wal-Mart went from 32 stores and $31 Million in sales in 1970, to 276 stores, and $1.2 Billion in sales by 1980.

“If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he'll make up for what he lacks. And that proved true nine times out of ten. It was one way we were able to grow so fast." - Ferold Arend

Former CEO David Glass was brought in to the company in 1976, and was the person responsible for developing the distribution processes.

Jack Shewmaker wrote Walmart’s original policies and procedures in 59 days.  A task that normally takes 6 months to a year.

“The larger truth that I failed to see turned out to be another of those paradoxes like the discounters principle of the less you charge, the more you'll earn. And here it is: the more you share profits with your associates whether it's in salaries or incentives or bonuses or stock discounts the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertis-ing. Satisfied, loyal, repeat customers are at the heart of Wal-Mart's spectacular profit margins, and those customers are loyal to us because our associates treat them better than salespeople in other stores do. So, in the whole Wal-Mart scheme of things, the most important contact ever made is between the associate in the store and the customer.”

Take care of your people, treat them well, involve them, and you won’t spend all your time and money hiring labor lawyers to fight the unions.

There was once a store in Texas that shrink out 6%.

Outside Walmart, Sam enjoyed Quail Hunting and Tennis.

He tried golf, but became so frustrated he changed sports.  

Sam would radio whatever town he was flying into and have a noon tennis date set up.

He would quail hunt in 4 different states every year.

Sam and Helen visited a tennis ball factory in Korea, and Sam noticed they did a cheer.  He took this idea back with him, and created the Wal-Mart cheer from it.

Sam once lost a bet to David Glass and had to dance the hula on Wall Street in New York City.

“Quite a few smaller stores have gone out of business during the time of Wal-Mart's growth. Some people have tried to turn it into this big controversy, sort of a "Save the Small-Town Mer-chants" deal, like they were whales or whooping cranes or something that has the right to be protected. Of all the notions I've heard about Wal-Mart, none has ever baffled me more than this idea that we are somehow the enemy of small-town America. Nothing could be further from the truth: Wal-Mart has actually kept quite a number of small towns from becoming practically extinct by offering low prices and saving literally billions of dollars for the people who live there, as well as by creating hundreds of thousands of jobs in our stores.”

“What I haven't been able to figure at all is these people who have decided we're somehow responsible for the decline of the small town. My guess is that a lot of these critics are folks who grew up in small towns and then deserted them for the big cities decades ago. Now when they come home for a visit, it makes them sad that the old town square isn't exactly like it was when they left it back in 1954. It's almost like they want their hometown to be stuck in time, an old-fashioned place filled with old-fashioned people doing business the old-fashioned way. Somehow, small-town populations weren't supposed to move out into their own suburbs, and they weren't supposed to go out to the intersections of highways and build malls with lots of free parking. That's just not the way some of these people remember their old towns. But folks who grew up in big cities feel the same way about what's happened to their cities over the last forty or fifty years. A lot of the stores and the movie theaters and the restaurants that they remember loving as kids have boarded up and either gone out of business or moved to the suburbs too.”

“Just like everybody else, in order to survive, we need to keep changing the things we do.”

“If American business is going to prevail, and be competitive, we're going to have to get accustomed to the idea that business conditions change, and that survivors have to adapt to those changing conditions. Business is a competitive endeavor, and job security lasts only as long as the customer is satisfied. Nobody owes anybody else a living.”

“We decided that instead of avoiding our competitors, or waiting for them to come to us, we would meet them head-on. It was one of the smartest strategic decisions we ever made. In fact, if our story doesn't prove anything else about the free market system, it erases any doubt that spirited competition is good for business not just customers, but the companies which have to compete with one another too. Our competitors have honed and sharpened us to an edge we wouldn't have without them. We wouldn't be nearly as good as we are today without Kmart, and I think they would admit we've made them a better retailer. One reason Sears fell so far off the pace is that they wouldn't admit for the longest time that Wal-Mart and Kmart were their real competition. They ignored both of us, and we both blew right by them.”

Sam’s Club was viewed as an entire different business entity.

Future CEO Lee Scott oversaw transportation.

Sam would quite offer go into the Distribution Centers (DC’s) at 4am with donuts and just sit and talk to the drivers.  They wouldn’t sugarcoat things and would give honest opinions of stores.

Walmart but a satellite system in the early 1980’s to manage inventory.  Sam Walton was very cautious about this, but trusted his people.  This system became the industry standard.

“The bigger Wal-Mart gets, the more essential it is that we think small.”

“For us, thinking small is a way of life, almost an obsession. And I suspect thinking small is an approach that almost any business could profit from. The bigger you are, the more urgently you probably need it. At our size today, there's all sorts of pressure to regiment and standardize and operate as a centrally driven chain, where everything is decided on high and passed down to the stores. In a system like that, there's absolutely no room for creativ-ity, no place for the maverick merchant that I was in the early days at Ben Franklin, no call for the entrepreneur or the pro-moter. Man, I'd hate to work at a place like that, and I worry every single day about Wal-Mart becoming that way.”

“There's nothing at all profound about any of our principles. In fact, they're all common sense, and most of them can be found in any number of books or articles on management theory many of which I've read and studied over the years. But I think the way we've applied them at Wal-Mart has been just a little different.”

The 6 Most Important Ways Wal-Mart tries to think small:

1. Think One Store At A Time
2. Communicate, Communicate, Communicate 
3. Keep Your Ear To The Ground
4. Push Responsibility — and Authority — Down
5. Force Ideas To Bubble Up
6. Stay Lean, Fight Bureaucracy 

In 1992, there were 12 airplanes in Walmart hangars.  Regional Managers were expected to fly to their territory, spend 3-4 days there, before flying back to Arkansas to continue their job.  They essentially do what Sam did on 1960 on a greater scale.

Wal-Mart’s fixture backhaul program where they send out out fixtures on their own trucks as opposed to hiring another company was thought up by an hourly associate.  This saved the company $500,000 per year, so they brought the associate in, recognized them, and gave them a cash incentive.

Wal-Mart runs on a 2% general office expense structure.

“In the early days, most companies charged 2 percent of their sales to run their offices. But we have always operated lean. We have operated with fewer people. We have had our people do more than in other companies. I think we came to work earlier and stayed later. It has been our heritage our obsession that we would be more productive and more efficient than our competi-tion. And we've accomplished that goal.”

*This is very true.  I worked long hours as a Walmart manager.  However, it left very little time for an outside life.

“The natural tendency when you've got a problem in a company is to come up with a solution to fix it. Too often, that solution is nothing more than adding another layer. What you should be doing is going to the source of the problem to fix it, and sometimes that requires shooting the culprit.” - David Glass

“I guess one reason I feel so strongly about not letting egos get out of control around Wal-Mart is that a lot of bureaucracy is really the product of some empire builder's ego. Some folks have a tendency to build up big staffs around them to emphasize their own importance, and we don't need any of that at Wal-Mart. If you're not serving the customer, or supporting the folks who do, we don't need you.”

Sam predicted Wal-Mart would reach $100 Billion in sales by the year 2000.  (They actually accomplished this by the year 1997, 5 years after he passed away).

Sam often wondered “Even by thinking small, can a $100 Billion retailer really function as efficiently and productively as it should?  Or would maybe five $20 Billion companies work better?”

“Creating a huge personal fortune was never particularly a goal of mine, and the proof of that lies in the fact that even to this day most of my, and my family's, wealth remains in the form of Wal-Mart stock. I think most people in our position would have hedged their bets a long time ago and diversified into all kinds of investments. As it's happened, though, our very simplistic, very personal investment strategy has turned out far better than anyone could ever have expected. So Wal-Mart stock has made the Waltons a very wealthy family on paper anyway.”

“I have to admit that I never have spent a great deal of my time, or energy, thinking about what some of the broader implications of our family’s wealth could be.  Maybe it’s because we have never had any intention of liquidating our stock.  Even so, the annual dividend income from that stock has become large in its own right, and it’s that income which represents the actual wealth available to us.”

Sam and Helen were generous with their charitable contributions.  They have given to:

• Various educational institutions 
• Church groups
• Zoos
• Libraries
• Recreation facilities 
• Hospitals
• Medical research programs
• Arts groups
• Theater groups
• Symphonies 
• Conservation & Environmental causes
• Veterans groups
• Economic development groups
• Free Enterprise groups
• Public schools
• Private schools
• Presbyterian Church 
• University of the Ozarks
• National Museum for Women in the Arts
• Citizens Against Government Waste
• Students in Free Enterprise
• Arkansas Business Council

By the publication, Sam and Helen personally sent 180 students from Central America to school in Arkansas tuition-free, after seeing the Soviet Union and Cuba had programs in place to teach their values to kids from other places.

They also sponsored 70 scholarships of $6,000 each to children of Wal-Mart associates.

Sam know his time was short (he passed away the same year this book was published from blood cancer).  He wanted education to be his main beneficiary.

“In all likelihood, education is going to be the issue we focus on the most. It is the single area which causes me the most worry about our country's future. As a nation, we have already learned that we must compete worldwide with everybody else, and our educational process has more to do with our ability to compete successfully than anything else. Unless we get ourselves on the right track pretty quickly, and start rebuilding our system into one that compares favorably with the rest of the world's, we could seriously jeopardize the future of this great country of ours. Frankly, I'd like to see an all-out revolution in education. We've got to target the inner-city schools and the rural poverty pockets like the Mississippi Delta and figure out a way to make a differ-ence. We have to start at the preschool level, and develop ways to change the environment for children so they have a chance to stay in school and learn to value their educations. We have to look at the effects of so many single mothers and fathers leaving their kids at home with no guidance, and find ways to help them encourage their kids.”

All proceeds of the book have gone to the New American School Corporation.  This was an initiative started by business leaders to raise $200 Million for the development of “break-the-mold schools” convened by President George H.W. Bush and chaired by [then Arkansas Governor] Bill Clinton.

“We're not satisfied that the traditional methods by which charitable foundations are operated really meet our crite-ria. Some people have crowed a great deal about all their philanthropy over the years, but too many of these foundations, I sus-pect, were only begun as tax shelters without much real sense of purpose. Many of them seem to have become very nice places to work for a small group of folks who have built up pretty thick crusts of administration and bureaucracy. Those are two of the things we have fought the hardest to keep out of our company, so naturally we don't want them clogging up our nonprofit efforts.”

Sam’s original home burned to the ground after being struck by lightning in 1972.

Hillary Rodham Clinton served on the Wal-mart Board of Directors.

Sam considers the greatest day of his life was when President George H.W. Bush and his wife Barbara flew to Bentonville to award Sam the Presidential Medal of Freedom.

Wal-Mart’s “Bring It Home” program, looked to work with US suppliers.  Wal-Mart committed to taking a lower markup, and manufacturers were able to produce enough product to establish anymore efficient price.  Sam used to tell them “Son, if you can’t make money on this, don’t do it.”  He was the rare leader who legitimately cared for manufacturers.

Sam’s Rules For Building A Business:

1. Commit to your business
2. Share your profits with all your associates and treat them as partners
3. Motivate your partners
4. Communicate everything you possibly can to your partners
5. Appreciate everything your associates do for the business
6. Celebrate your successes
7. Listen to everyone in your company
8. Exceed your customers’ expectations
9. Control your expenses better than your competition 
10. Swim upstream.  Go the other way.  Ignore Conventional Wisdom.

“You can make a lot of 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.”

“With the possible exception of Henry Ford, Sam Walton is the entrepreneur of the century.” - Tom Peters

Sam Walton wrote his book as he was dying of Multiple Myeloma, a form of bone cancer.  He knew it would be fatal.

“The thing is, I am absolutely convinced that the only way we can improve one another‘s quality of life, which is something very real to those of us who grew up in the Depression, is through what we call free enterprise — practiced correctly and morally.”

“But if American management is going to say to their workers that we're all in this together, they're going to have to stop this foolishness of paying themselves $3 million and $4 million bonuses every year and riding around everywhere in limos and corporate jets like they're so much better than everybody else.”

Sam’s presidential citation read:

“An American original, Sam Walton embodies the entrepreneurial spirit and epitomizes the American dream. Concern for his employ-ees, a commitment to his community, and a desire to make a difference have been the hallmarks of his career. By sponsoring scholarships for Latin America, he has also worked to bring peoples closer together and to share with others the American ideals he so well represents. A devoted family man, business leader, and statesman for democracy, Sam Walton demonstrates the virtues of faith, hope and hard work.America honors this captain of commerce, as successful in life as in business.”

He was allowed to invite anyone he wanted to his ceremony, so he invited his associates.  He was wheeled out on stage in a wheelchair.  A few days later, he entered the University of Arkansas hospital in Little Rock.

3 weeks later, his battle with cancer finally ended.

Sam Walton passed away peacefully on April 5th, 1992.

—————

Overall, an amazing read.  If you aspire to go into business for any reason, stop what you are doing, go find this book and read it.  It is one of the greatest biography/business books I ever read.  Lots of wisdom and truths here.  Wal-Mart gets a lot of talk for its negative perception in the modern world.  I have worked with people who personally met Sam, and I never heard a single bad thing about him.  The book shows the way Sam envisioned things, and it’s no wonder why long-time associates relish the founder.  The company has changed in some disappointing ways, and Sam always feared and even predicted this would happen.

This book comes with my highest recommendation, especially if you want to pursue business to any extent.

On to Book #26: Peter Pan by J.M. Barrie