A quiet fixture of American capitalism will step down from his role as CEO of one of my favorite companies when the new year starts.
Jim Sinegal is far from a household name, but he changed what goes on in so many households through his visionary leadership of Costco Wholesale. (Heck, I even named a dog after this guy’s company!)
When I visited the company’s Issaquah, Wash., headquarters once, I found him sitting in an open cubicle furnished with used furniture. You’d have no idea he wasn’t working in the mail room; he was just that completely unassuming. He’s the kind of guy who answers his own phone, there’s no gatekeeper.
Key to Sinegal’s leadership of the company have been the idea of keeping low prices and keeping the focus on the customer.
Markups on product are capped at no more than 14% (private label goods that can be marked up by 15%.)That’s led Wall Street to hate Costco. Analysts derisively call it “the world’s largest co-op,” and they don’t believe that offering the lowest possible prices to customers at all times makes any sense.
What Wall Street doesn’t understand is that by treating employees well and providing value to members, you actually make more money over time. And that’s exactly why Costco is 50 million members strong today.
Another thing I’ve admired about Sinegal’s career and Costco is the emphasis on ethical capitalism. When you walk into the company’s Issaquah, Wash., headquarters, the Costco code of ethics is displayed. It famously starts with “Obey the law.” That’s very important because it’s a big problem in retail with buyers taking bribes. If you go to one of their store location, you’ll also see their core philosophy on the wall.
I believe it’s so important with capitalism, considering all the times we hear about scandals, to know people do it differently and the results show proof of that.
On the Costco homepage, I also found a confidential ethics hotline for suppliers on the company’s website. If anybody at any time tries to ask for money, they don’t stand for that. Ditto for gifts or favors. And if they ever did, it would not be the same company.
I think people who do it right deserve our credit and praise. Isn’t it great when capitalism has a hero instead of a goat?