*** RYAN TATE: Shocking secrets--revealed! ***





Professional bio

Media appearences



Weblog archive



Contact info

RSS feed

PGP key

415.640.6119 mobile

415.288.4968 office

510.548.4576 home

Home address and map

My building

AIM: ryantatedotcom

Recent San Francisco Business Times stories

Table set at Ferry Building (Jun. 6)

S.F. out to rattle chains (May. 30)

S.F. plan sets goal of 10,000 homes (Jun. 27)

Stanford's new senior class (Jun. 13)

Is San Francisco's housing crisis over? (Jun. 20)

Stanford Shopping Center on block (May. 23)

Insurers locking up condos (May. 23)

Developer makes bold housing play (May. 16)

Williams-Sonoma revs web (May. 9)

Residential Real Estate Deals of the Year (May. 9)

More ...

Recent personal essays

Private property (Oct. 8)

Blogs I read

Anne and her Cheese Diaries





David Warsh

Dave Winer


Philip Greenspun

Joel Spolsky

Friday, February 06, 2004

About two weeks ago I finished reading Sam Walton's Made in America, the book he and John Huey, now the number two editor at Time Inc., wrote about the rise of Wal-Mart. It is excellent, simply and honestly written with a compelling storyline.

This was a surprise for me, as I have for some time suspected Huey had sold out as a journalist and taken some cash to write a piece of propaganda. But upon actually reading the book, I became so caught up in the extensive detail of how the Wal-Mart empire was built that I stopped caring that it is a piece of propaganda, because it is a truthful and detailed and fascinating memoir that happens to double as useful propaganda rather than vice versa.

If you have any interest in retail in America, the nation of merchants, go out and read this book. If you think Wal-Mart must be stopped from coming to your neighborhood, read this book. If  you are ambivalent on Wal-Mart, read this book. If you love Wal-Mart, read this book.

Since most of you will not read this book, here is a cheat sheet, some pretty interesting things I picked up from reading it that I did not know previously, all sourced to Walton and the people he chose to have quoted, and thus to be taken with a grain of salt:

  • The reason Wal-Mart employees tolerate relatively low wages and have not unionized is probably in part because so many of them participate in company's profit-sharing plan and hope to become either rich or significantly enriched as a result. The book quotes some long-time blue collar and lower management workers who have accumulated hundreds of thousands of dollars in these plans. But because the plan has worked in part by reinvesting the shared profit into Wal-Mart stock, it is not clear to me whether it can continue generating such significant returns and thus motivating workers.
  • Sam Walton is personally very thrifty and lives very modestly. The only time you see him truly upset with an employee or partner is when some of them make some coin on Wal-Mart and spend it too extravagantly. Walton strives to keep his company overhead under 1 percent of sales, in part by keeping executive salaries low and offices very humble.
  • Wal-Mart has also succeeded by growing first in small-town America. There, it found underserved, value-conscious consumers and employees who would work hard for not too much money.
  • In case you missed it, the Wal-Mart model is to employ any number of tactics to extract lower prices from manufacturers and other vendors, including buying in large quantities, cutting out distributors and buying direct from manufacturers, always searching for new suppliers; then the company tries to merchandise the lower-priced goods in the store by, for example, creating massive or otherwise eye-catching displays but avoiding costlier merchandising like newspaper advertising.
  • Wal-Mart sees itself as an aggressive agent on behalf of the consumer in a market where fat and lazy retailers like Safeway and Macy's and your local drug store are all too content to buy goods at inflated costs and sell them with fat profit margins.
  • Sam Walton was incredibly thorough in his study of his own industry, combing through trade publications, constantly visiting stores and extracting incredible amounts of information from his competitors through the simple technique of asking them questions

Here is an anecdote excerpted from the book that I think says a lot about the company. It was related by Phil Green, an early Wal-Mart manager:

"This guy from Murray of Ohio called one day and said he had 200 Murray 8 horsepower riding mowers available at the end of the season, and he could let us have them for $175. Did we want any? And I said, 'Yeah, I'll take 200.' And he said, 'Two hundred!' We'd been selling them for $447, I think. So when they came in we unpacked every one of them and lined them all upout in front of the store, twenty-five in a row, eight rows deep. Ran a chain through them and put a big sign up that said: '8 h.p. Murray Tractors, $199.' Sold every one of them. I guess I was just always a promoter, and being an early Wal-Mart manager was as agood a place to promote as there ever was." (p. 75)

More updates