Costco, every mention
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every year anyone Ben Gilbert 337David Rosenthal 211Charlie Munger 19Howard Schultz 9Michael Lewis 5Andrew Marks 3Doug DeMuro 1David Senra 1Daniel Ek 1
Verbatim, from the transcripts: the passages where Costco comes up
Vanguard: The communist capitalist who saved investors a trillion dollars (Audio) · Acquired
- ▶ 1:33:42 Ben Gilbert This is the exact same thing from our Costco episode.
- ▶ 1:34:01 Ben Gilbert Costco does this back with customers, and Vanguard does this too.
- ▶ 1:34:12 David Rosenthal Vanguard is Costco for finance.
- ▶ 1:34:15 Ben Gilbert But even further, it's like Costco on steroids.
- ▶ 1:34:18 Ben Gilbert Even Costco, who lowers prices as much as they can to reward customers and encourage customer loyalty and make everything about customer experience better.
- ▶ 1:34:26 Ben Gilbert Even Costco has outside shareholders who want the business to generate profits.
- ▶ 1:34:31 Ben Gilbert There, there is a reason you are investing in Costco as a business, and that's because you expect it to.
- ▶ 1:34:39 David Rosenthal Costco itself, several hundred billion dollar market cap company today.
- ▶ 3:02:44 David Rosenthal Again, very Costco-like.
- ▶ 3:02:46 David Rosenthal You've seen Costco expand into vacations and autos.
- ▶ 3:13:40 Ben Gilbert I think Costco thus far has been the most correct analogy that this is Costco on steroids, but it's also something else that was also an acquired episode.
- ▶ 3:26:56 Ben Gilbert I mean, we said earlier, this business like Costco has scale economies shared.
Ferrari: What happens when you staple a luxury brand to a sports team? (Audio) · Acquired
- ▶ 3:38:22 Ben Gilbert You and I have always talked about it as a Costco in the front and Hermes in the back.
10 Years of Acquired (with Michael Lewis) · Acquired
- ▶ 34:06 Ben Gilbert Like Costco.
- ▶ 34:07 Ben Gilbert I think when the ordinary consumer sees Costco, they're like, oh, I love Costco.
- ▶ 34:10 Ben Gilbert But when someone who's listened to the acquired episode on Costco thinks about Costco, they see like all the gears turning of the machine.
- ▶ 54:08 David Rosenthal Whereas if you look at our, um, Costco episode, which is now two and a half years old, or, um, LVMH, Hermes, Rolex, like they just, they just keep going.
- ▶ 1:05:17 David Rosenthal Or the Costco ballet, or like, yeah.
- ▶ 1:49:45 David Rosenthal So we made Costco, uh, in the back half of 20, 23, but it was one or two episodes after we made Nike.
- ▶ 1:50:16 David Rosenthal We decided to do Costco.
- ▶ 1:50:44 David Rosenthal The CFO of Costco gave you a one-on-one presentation.
- ▶ 1:50:47 Ben Gilbert Come over to the office and I'll sit you down and give you the entire whiteboard and PowerPoint on how the Costco business model works.
- ▶ 1:51:07 David Rosenthal When we went into starting work on Costco, we do nothing.
- ▶ 1:51:19 Ben Gilbert When you, there's a lot of think pieces out there about Costco.
- ▶ 1:51:49 Michael Lewis What, give me a few of the ones about Costco.
- ▶ 1:53:36 Ben Gilbert There's no working capital in this business other than building more Costco's.
- ▶ 1:53:41 Michael Lewis Low skew count for Costco is like low, uh, low episode volume for you.
- ▶ 1:54:01 Michael Lewis And when you walk into, it is the odd experience when you walk into Costco is the absence of choice.
- ▶ 1:54:22 Michael Lewis And you smell, you feel like Costco.
- ▶ 2:10:43 Michael Lewis Like, Ben's point, like, skew is everything in Costco.
- ▶ 2:17:55 Ben Gilbert Like if, if you come in with a point of view and you come in, let's say we try to, I was so afraid when we were making Trader Joe's that we were going to remake the Costco episode.
- ▶ 2:18:09 David Rosenthal It's just like Costco, but not as good.
- ▶ 2:18:10 Ben Gilbert Or it's Costco, but it's for furniture, like Ikea.
- ▶ 2:18:13 David Rosenthal oh, this is totally different than Costco.
- ▶ 2:46:11 Ben Gilbert Listeners, if you like this episode, go check out our episodes on TSMC, Hermes, Costco, the NFL, Berkshire, or any other episode that we talked about.
Trader Joe’s: Hawaiian shirts and counter positioning (Audio) · Acquired
- ▶ 5:28 David Rosenthal The same hotbed of American retailing innovation that produced Salt Price, Price Club, and everything that would become Costco.
- ▶ 8:23 David Rosenthal No, their market cap is about thirty billion dollars, so like a small fraction of Walmart and Costco and Amazon, etc.
- ▶ 36:16 David Rosenthal We talked about it on the Costco episode where it was illegal for retailers to sell goods below the minimum price set by manufacturers.
- ▶ 1:34:02 Ben Gilbert It's kind of like what Costco does.
- ▶ 1:34:03 Ben Gilbert They want a unique SKU for Costco.
- ▶ 1:34:09 Ben Gilbert Like I remember my classic example at Costco was I went and bought a Sonicare at Costco, but it turns out the way it was packaged, it came with different accessories.
- ▶ 1:37:42 David Rosenthal Like, I genuinely think they feel that way, and it's another take on the same thing that Costco and Saul Price and Jim Sinegal had about why they don't do sales, and Trader Joe's also doesn't do sales and doesn't have coupons.
- ▶ 1:38:14 Ben Gilbert I mean, Trader Joe's and Costco both only stock about 4000 items at a time.
- ▶ 1:45:13 David Rosenthal That's when you get the Apples, the Costcos, the Trader Joe's.
- ▶ 1:46:30 Ben Gilbert Also, it's kind of interesting that Walmart has great value, Target has Good & Gather, Amazon has Basics, Costco has Kirkland Signature, Trader Joe's has Trader Joe's.
- ▶ 1:47:34 Ben Gilbert These pretzels I'm eating with the peanut butter inside, I'm pretty sure there's a Costco equivalent of these, but a lot of the things are truly unique.
- ▶ 2:07:41 David Rosenthal Saul Price did the same thing at Costco, but Saul Price isn't the one who really built Costco.
- ▶ 2:07:46 David Rosenthal Jim Senegal built Costco, the scale Costco we know today.
- ▶ 2:16:53 David Rosenthal So we can't just stack to the ceiling like Costco.
- ▶ 2:44:23 Ben Gilbert Even Costco, who we extolled on the Costco episode, is 1200 a foot.
- ▶ 2:44:29 David Rosenthal Costco's have really big stores.
- ▶ 2:48:36 Ben Gilbert So first let's look at Costco, the most similar business in some ways.
- ▶ 2:48:42 Ben Gilbert Costco is growing about eight percent per year, so probably a little slower than Trader Joe's by most estimates, and has a three percent net income margin.
- ▶ 2:48:50 Ben Gilbert Costco trades at 1.6 X revenue.
- ▶ 2:48:56 Ben Gilbert For a second comp, Walmart, which isn't all grocery, but a lot of it is grocery, has similar net income margins, similar growth, maybe it grows a little slower than Costco.
- ▶ 2:49:30 Ben Gilbert Trader Joe's probably trades at north of one X, but probably not all the way at Costco 1.6 X.
- ▶ 2:51:03 David Rosenthal Costco works internationally.
- ▶ 2:52:34 Ben Gilbert That's the Costco thing, where they keep actually being able to open way more Costco's anywhere than they thought they could.
- ▶ 2:59:28 Ben Gilbert It's funny that I've been thinking about all the ways this is similar and different to Costco, because a lot of this will rhyme.
- ▶ 3:00:25 David Rosenthal Costco, Amazon, Walmart.
- ▶ 3:10:37 Ben Gilbert It's the same thing with Costco.
- ▶ 3:10:39 Ben Gilbert When Costco buys a SKU, they really buy a SKU.
- ▶ 3:10:48 Ben Gilbert By the way, we should say for anyone who's wondering, Costco is a much, much, much bigger business than Trader Joe's.
- ▶ 3:10:53 Ben Gilbert They're sort of cousins of each other in business model, different in all the ways we've talked about, but Costco's revenue is 10 X.
- ▶ 3:11:07 Ben Gilbert They famously only mark up 11 to 14%.
- ▶ 3:11:10 Ben Gilbert And Trader Joe's is probably, I don't know, it seems like about twice that, but Costco's much, much more scaled business.
- ▶ 3:11:17 David Rosenthal And to my point about international, Costco is an international business.
- ▶ 3:15:36 David Rosenthal There's the fascinating other example of Costco.
- ▶ 3:15:50 David Rosenthal Yeah, the one store that's out there that is cut from the same cloth as us is Costco.
- ▶ 3:26:50 Ben Gilbert Well, if you like this episode, check out our episodes, obviously, on Costco.
Google Part I: Origins of Search. How the Best Business in Human History Happened (Audio) · Acquired
- ▶ 2:12:36 David Rosenthal Like Costco is the, the extreme example of this, but Google has this too.
- ▶ 2:47:16 David Rosenthal As I've been talking to people over the last month about making this episode, talking to friends, thinking about how to position it, I've been like, this first Google episode feels like when we made the Costco episode.
Epic Systems (MyChart) · Acquired
- ▶ 3:10:58 Ben Gilbert It's very Costco.
- ▶ 3:11:00 Ben Gilbert You know, you think about all the Costco CEOs have been people who were core to Costco's operations over the years and had worked there for, like, thirty-plus years.
TSMC founder Morris Chang · Acquired
- ▶ 2:39:56 David Rosenthal You know, it's almost Costco-like in the ballet that has to go into this.
Mars Inc. - The Chocolate Story (Audio) · Acquired
- ▶ 2:24 Ben Gilbert And their corporate strategy over the years is just as clever as companies like LVMH, Walmart, and Costco.
- ▶ 1:42:59 Ben Gilbert I mean, it's very Costco-like in that way.
- ▶ 3:19:49 David Rosenthal I think it's gotta be a version of, uh, our Costco episode.
IKEA (Audio) · Acquired
- ▶ 1:02:57 Ben Gilbert In preparation for this episode, I talked to Jim Senegal, who's the co-founder of Costco, because I was asking about Ikea and the similarities, and he said he used to love going to Ikea to look at the KD furniture that they stocked.
- ▶ 1:03:22 Ben Gilbert The interwovenness with Costco is really interesting.
- ▶ 1:03:24 Ben Gilbert Another research call was with Bjorn Bailey, who ran Ikea in the U.S. in the late eighties, and he mentioned that Ingvar always looked up to Costco and thought they were, like, the greatest retailer in the world, so there's a lot of shared…
- ▶ 1:14:15 David Rosenthal So, later, once he, like Charlie Munger, got turned on to the virtues of Costco, Ingvar would hilariously formalize this idea, this manifesto, in 1995 as the hot dog product policy.
- ▶ 1:14:34 David Rosenthal Because in 1995, they copied Costco and they start selling hot dogs in the stores.
- ▶ 1:14:39 Ben Gilbert Okay, so I brought this up with Jim when I was talking about similarities between Costco and Ikea.
- ▶ 1:14:44 Ben Gilbert He did not believe that Ikea copied the Costco hot dog.
- ▶ 1:15:03 Ben Gilbert I don't think you had to look at Costco to observe
- ▶ 1:15:22 David Rosenthal The IKEA hot dogs today are priced at one dollar, which is cheaper than the buck 50 at Costco.
- ▶ 1:15:32 David Rosenthal I think, though, you can only get the buck 50 combo at Costco.
- ▶ 1:15:50 David Rosenthal We talked about all this on the episode, like part of how they do this is including the drink.
- ▶ 1:15:55 David Rosenthal Anyway, I refuse to believe that the ability to buy just a hot dog at Ikea is not a nod to the Costco deal because Ikea also has the hot dog and drink combo for one 50.
- ▶ 1:16:09 Ben Gilbert And it's right after checkout, just like Costco's is, and it entered the store about a decade after Costco started selling the hot dog.
- ▶ 1:18:18 David Rosenthal Which brings us to the other, I think, really uniquely Ikea piece of this hot dog policy that even Costco doesn't really have.
- ▶ 1:23:50 Ben Gilbert Just like Costco, they're sort of opposed to loss leaders.
- ▶ 1:24:01 David Rosenthal I think Costco was about not insulting your customers.
- ▶ 1:57:29 Ben Gilbert And actually, I happen to know, the founders of Costco made a special trip up to one of the Canadian Ikeas, even before the founding of Costco, because they had so much respect for IKEA as a brand they admired.
- ▶ 2:43:19 Ben Gilbert I decided I wanted to do a sales per foot analysis the same way that we did in our Costco episode.
- ▶ 2:44:38 Ben Gilbert Now let's compare it to the companies we mentioned on our Costco episode.
- ▶ 2:44:42 Ben Gilbert Costco is 1800 dollars a foot.
- ▶ 2:46:52 David Rosenthal With the exception of Costco, which is its own thing, none of those other businesses
- ▶ 2:48:18 David Rosenthal Two, Ikea and a whole set of other retail companies, Costco probably being foremost among them, have also shown that becoming a scale global player in a consumer market is a good position to be in.
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