Costco, every mention
415 scenes (2023) · ← back to Costco
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every year 2023 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
Holiday Special 2023 (Audio) · Acquired
- ▶ 2:22 Ben Gilbert We're just gonna do a lot of LVMH, NFL, uh, Visa, Costco, Nike, and the, you know, mixed in there.
- ▶ 14:07 David Rosenthal Is that those stories and studying the LVMHs, the Costcos, the Nikes of the world, if anything, that's like even more important than studying the great technology companies for building a great technology company.
- ▶ 14:54 Ben Gilbert But with LVMH, with Costco, maybe with Porsche, certainly with Nike,
- ▶ 15:30 David Rosenthal My favorite was a friend of mine who's a VC at Lightspeed texted me about two weeks after the Costco episode came out and said, dude, I have gotten three pitches this week from startups where at some point in the deck, they talk about how…
- ▶ 16:14 David Rosenthal Nintendo, Lockheed, Porsche, Nike, Costco, Nvidia part three, and then Visa.
- ▶ 16:46 Ben Gilbert I think the most interesting businesses, or businesses that sort of tickle me, are Costco and Visa because there's a purity to them.
- ▶ 16:58 Ben Gilbert Costco's is the purity of the way that the puzzle pieces fit together in a way that is just artful.
- ▶ 17:41 Ben Gilbert You look at Costco.
- ▶ 22:38 David Rosenthal I think our best episodes this year were LVMH, Costco, and Visa.
- ▶ 30:47 Ben Gilbert As did Costco.
- ▶ 30:48 David Rosenthal As did Costco.
- ▶ 31:13 David Rosenthal Which for me were LVMH, Costco, and Visa.
- ▶ 35:36 Ben Gilbert Whereas when we make a Costco episode, that's an end of one product.
- ▶ 50:48 Ben Gilbert It was once we started digging into Costco, Andrew suggested, hey,
- ▶ 1:55:52 David Senra So really the reason I picked this is one, it's a perfect crossover for your guys' excellent Costco episode, but this goes back to finding people that you admire, not just for their business success, but their success in life.
- ▶ 2:18:00 Ben Gilbert You sent me that picture of her eating a Costco hot dog.
Visa (Audio) · Acquired
- ▶ 1:42:26 Ben Gilbert And this actually continued until 1991 for many of their merchants and for Costco,
- ▶ 1:42:33 Ben Gilbert Went all the way to 2016, where they had the exclusive agreement with, ah, Amex, and if you were gonna use a credit card at Costco, it had to be Amex.
- ▶ 2:37:59 David Rosenthal There's the Costco card.
Charlie Munger (Audio) · Acquired
- ▶ 1:33 Ben Gilbert We talked with Charlie, of course, about Costco, his history investing in retailers over the last 50 years,
- ▶ 8:26 Ben Gilbert I had the good fortune of speaking with someone you know well, Richard Galanti, at Costco, and spending a few hours.
- ▶ 8:39 Ben Gilbert I'm curious, how did you first come across Costco, or Price Club at the time?
- ▶ 9:19 Ben Gilbert And did you get to invest in Price Club before it merged with Costco?
- ▶ 9:34 Charlie Munger Well, San Diego asked Warren to become a director of Costco.
- ▶ 9:55 Ben Gilbert And did Berkshire ever try to become a shareholder or acquire Costco?
- ▶ 12:11 David Rosenthal So in our Costco episode, we started with the joke at one of the Berkshire meetings, probably 10 years ago.
- ▶ 12:32 David Rosenthal We were hoping, could you give us your speech on the virtues of Costco?
- ▶ 13:05 Ben Gilbert What was it about Costco that made you realize this is one of those few moments in a lifetime?
- ▶ 13:10 Charlie Munger Well, they really did sell cheaper than anybody else in America, and they did it in big efficient stores, and all the parking spaces were 10 feet wide instead of eight feet nine or whatever they normally are.
- ▶ 13:26 Charlie Munger They, you know, they did a lot of rides.
- ▶ 13:30 Charlie Munger And they had a lot of parking spaces.
- ▶ 13:32 Charlie Munger They kept out of their stores, all these people didn't do big volumes, you see, and they gave special benefits to the people who did come to the stores in the way of reward points.
- ▶ 14:05 Ben Gilbert They've got 900 warehouses around the world full of high quality merchandise, none of which they have sitting on their books.
- ▶ 14:36 Charlie Munger You don't want, you got an enterprise as big as Costco.
- ▶ 14:52 Ben Gilbert Have you ever seen another business that takes advantage of the virtue of the low skew count the way that Costco does?
- ▶ 19:13 Charlie Munger Now, in Costco's case, they had Jeff Brotman, who's very smart, but not a retailer, and Jim Senegal, and they divided it up, and they had originally agreed that Brotman would be the chairman and CEO, because he was his idea.
- ▶ 26:29 Charlie Munger I would argue one of the easiest ones was when they decided a little group around Home Depot, they would copy the Costco metal and home improvements.
- ▶ 26:50 Charlie Munger There was a direct copy of Costco.
- ▶ 26:53 Ben Gilbert Do you think there are more opportunities to copy Costco?
- ▶ 26:56 Charlie Munger There was another one at Costco.
- ▶ 26:59 Charlie Munger Floor and Decor is the current imitator, and it's just, it's in vinyl, wood imitating vinyl flooring, they're, they're running a Costco model.
- ▶ 27:31 David Rosenthal Like, part of the appeal of Costco was, it was horizontal.
- ▶ 28:09 Charlie Munger But there aren't many opportunities like Home Depot and Costco.
- ▶ 28:15 Ben Gilbert Why do you think Walmart hasn't been successful once they saw Costco in competing?
- ▶ 28:46 Charlie Munger So it offended them to go against the rich suburbs and to have to pay up for the good locations, and Costco just specialized in the good locations where the rich people live.
- ▶ 44:54 Andrew Marks I'm curious what major companies that haven't been mentioned do you think people would do well to study the virtues of, like studying the virtues of Costco?
- ▶ 45:58 Charlie Munger But buying Costco at its present price, it may work out all right, but that's, again, it's getting hard.
- ▶ 48:47 David Rosenthal We turned off the mics to have dinner and then recorded a little bit more later in the evening about Costco and some life advice from Charlie.
- ▶ 48:54 Ben Gilbert So one Costco question that I've been wanting to ask you is all the puzzle pieces of the low skew count and the high inventory turnover, and there's just so many things that fit together so beautifully.
- ▶ 50:33 Ben Gilbert The one thing that fascinates me about Costco is they seem to only be able to grow 10% per year because they're not capital constrained.
- ▶ 50:41 Ben Gilbert No amount of money, if they were to access it for free, could help them.
- ▶ 51:00 Charlie Munger And so they didn't want to do more than they could comfortably handle.
- ▶ 51:07 David Rosenthal Was it 12 to 20 years that Costco had the license to operate in China?
- ▶ 51:13 Charlie Munger The first store they tried to open in China, the first store somebody wanted a 30,000 dollar bribe.
- ▶ 51:24 Charlie Munger And they just wouldn't pay it.
- ▶ 51:53 Ben Gilbert One thing I found fascinating about Costco was the fact that even though they're, you know, the lowest possible prices, their audience skews wealthy.
- ▶ 52:23 Ben Gilbert On some topics that are outside of Costco, you mentioned in the Daily Journal annual meeting this year that a young man knows the rules and an old man knows the exceptions.
- ▶ 52:43 Charlie Munger Well, take those goddamn Costco hot dogs.
- ▶ 53:41 Charlie Munger Well, of course you do that if it's safer and it's easier and so forth, but I would argue that Costco, where they've done some of these things that are extreme, like the hot dog, it's been a plus
- ▶ 54:00 Ben Gilbert And it seems like there's a spectrum where on the one side there's Costco that is just not a fast-growing company because it's very difficult to, and on BYD, like you're saying, they grew like crazy.
- ▶ 1:02:31 Andrew Marks What companies can you see today where you can confidently say, Berkshire aside, Costco aside, you can confidently say the business will be as good as it is today in 10 years?
NVIDIA CEO Jensen Huang · Acquired
- ▶ 11:56 David Rosenthal We were just talking about this on our Costco episode.
Doug Demuro on Analyzing the Car Industry, Creator-Led Businesses, and Porsche Follow Up (Raw Video) · Acquired
- ▶ 16:02 Ben Gilbert Like the, right before we released this, we released our Costco episode and Costco famously, uh, the rumor is that they make money on their credit cards rather than it being, uh, uh, an expense that, you know, they don't have to give the…
- ▶ 16:17 Ben Gilbert And it's cause they built their whole business only taking cash and check.
- ▶ 16:20 Ben Gilbert They never had the crutch of like, sure, I'll accept credit card payments.
- ▶ 16:23 Ben Gilbert They only did it when it was like absolutely on their term, their terms.
- ▶ 30:32 David Rosenthal It's like the opposite of a Costco.
- ▶ 30:35 Doug DeMuro It is the opposite of a Costco.
Costco (Audio) · Acquired
- ▶ 1:34 Ben Gilbert It is Costco.
- ▶ 1:36 Ben Gilbert This company seems very simple on the face of it.
- ▶ 1:43 Ben Gilbert But what really makes it work are the 50 clever innovations that they've refined over the years
- ▶ 1:54 Ben Gilbert Nothing about Costco is an accident, from the extra-wide parking spaces to the whole rotisserie chickens.
- ▶ 2:11 Ben Gilbert And today we will walk through the very specific path of decisions and trade-offs that Costco has chosen
- ▶ 2:33 David Rosenthal You know the great Warren Buffett joke about Costco, right?
- ▶ 2:43 David Rosenthal The hijackers each grant one of them one last wish, and they ask Charlie first, and Charlie says, I would like to give my speech on the virtues of Costco one more time before I die.
- ▶ 3:08 Ben Gilbert I mean, Charlie Munger, of course, on the board of Costco and longtime fan of the bottle, as you should be, too.
- ▶ 3:15 Ben Gilbert Costco has grown revenue right about 10% for over 30 years in a row.
- ▶ 3:21 Ben Gilbert Their revenue per square foot of their warehouses belongs more in a conversation with Tiffany than Walmart.
- ▶ 3:27 Ben Gilbert They seem to have incredible running room ahead of them to expand internationally and here in North America.
- ▶ 3:36 Ben Gilbert Their store brand, Kirkland Signature, does more revenue alone, not including anything else in the store than all of Nike.
- ▶ 5:14 David Rosenthal So, Costco was founded, as many people know, in Seattle, lovely city of Seattle, in 1983 by retail veterans Jim Senegal and Jeffrey Brotman.
- ▶ 5:46 David Rosenthal But if you were around and kind of of shopping age, shall we say, in 1983, you know that the true history of Costco dates way further back than that.
- ▶ 6:09 David Rosenthal And although Costco, quote unquote, was founded in 1983, the organization that we know and love today is actually the result of a merger between Costco and its predecessor company, Price Club.
- ▶ 6:37 Ben Gilbert In some ways, we sort of have to tell a whole industry history here, but in other ways, these kind of are all the same company because they're all stacked learnings from Sol Price and his various brain children over the years to create the…
- ▶ 8:57 David Rosenthal Jim Senegal, of course, co-founder, CEO of Costco.
- ▶ 9:25 David Rosenthal And if you are a fan of Costco or want to learn about retailing or just like all these business practices, you absolutely should try to get your hands on this thing.
- ▶ 9:35 David Rosenthal I don't think there's anywhere else in the world that lays out in detail exactly how Costco works and its predecessor companies.
- ▶ 16:38 David Rosenthal But unlike Costco today, they didn't really make any money on the memberships.
- ▶ 20:09 David Rosenthal And this is gonna flow through directly into Costco, as we'll see.
- ▶ 21:33 Ben Gilbert And so very specifically, we are not talking about what Costco is today as a wholesaler.
- ▶ 23:54 David Rosenthal We haven't even gotten to Price Club and wholesaling in Costco yet.
- ▶ 25:18 David Rosenthal So, at this .2 things happen that are gonna prove very fateful both for FedMart and for Costco.
- ▶ 26:04 David Rosenthal You can see the Costco picture coming together here.
- ▶ 26:33 David Rosenthal So the Costco gas lines, like, this started with FedMart.
- ▶ 27:06 David Rosenthal Costco pharmacy today.
- ▶ 27:30 David Rosenthal That guy's protege, who then takes over the pharmacy division for FedMart when he retires, that guy goes on to start Costco's pharmacy division and run it.
- ▶ 27:43 David Rosenthal Most importantly for the Costco story here,
- ▶ 29:05 David Rosenthal So if you're a Costco nerd out there, and there are probably many Costco investor nerds listening right now, those all probably sound very familiar to Costco's priority order values.
- ▶ 29:18 Ben Gilbert When it comes to Costco, we'll bring those up and go into each of them in depth.
- ▶ 29:39 David Rosenthal There are some very, very clear trade-offs that Sol is gonna make with FedMart, that Costco makes today, that are very different from what their competitors do.
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