How This Farm Boy Built The World's Biggest Company

Walmart is the largest company in the world by Revenue making over $600 billion a year and yet Walmart's founder was born into poverty growing up on a farm during the Great Depression he was even told by his boss that he wasn't cut out for retail work and so the story of how Walmart's founder built this gigantic business Empire is incredible but to some people the Walmart story is a tragedy of unethical corporate greed gone too far because during its rise Walmart has faced countless scandals evidence of large scale bribery and has brutally crushed its competition

using Cutthroat tactics so it's time we delve into the insane true story of [Music] Walmart Sam Walton was born on March 29th 1918 in the small town of King Oklahoma his parents were farmers but they struggled to make enough to get by so at just 8 years old Sam was already selling magazine subscriptions and doing anything he could to bring in extra money to support his family he helped his mother out with milk deliveries and even raised rabbits and pigeons to sell but unfortunately the family's financial situation only got worse the Great Depression struck in

1929 and the family farm went under Sam's father became desperate for work and took the only job he could get working for an insurance company where he was put in charge of servicing Old Farm loans that were in default this meant he was now in charge of shutting down small farms just like his own for failing to pay their debts and at many of these Farms were run by his own friends and neighbors but between 1929 and 1931 Sam's father repossessed hundreds of Family Farms watching these hardworking people lose their Farms that had been in

their families for Generations devastated Sam's father and it made a big impression on Sam who became determined to make money and more importantly never to waste it when Sam enrolled in the University of Missouri in 1936 he became even more financially Savvy he was able to save money on tuition by committing to military service after graduation and when he wasn't focused on his economics major Sam waited tables in exchange for free food he was used to providing for himself in fact during High School Sam had started a small newspaper delivery business but by the end

of his time at College he'd hired a few helpers and expanded the number of routes he was running which led to the business making over $4,000 per year Sam seemingly had a mind for business and so in 1940 after graduating Sam got a job at JC Penney as part of their Management training program where he earned $75 a month however despite being resourceful and hardworking Sam was one of JC Penney's worst employees he hated paperwork and his books were a mess his boss even threatened to fire him saying he wasn't cut out for retail work

so Sam spent months working 7 days a week from 6:30 in the morning until 8:00 at night trying to prove himself but that soon came to an abrupt end because in 1942 after the US had become actively involved in the second world war the Army called on him to serve Sam was assigned to the military police which meant he stayed stat side rather than fighting overseas and it was there that Sam's life would change forever [Music] Sam met Helen Robson in a bowling alley she was on a date with another guy at the time but

Sam didn't care he made his move and they were married less than a year later and this marriage would end up being very advantageous for Sam's career you see Helen's father was a wealthy lawyer and Banker eager to take his new son-in-law under his wing so when Sam pitched the idea of opening a retail store Sam's father-in-law was happy to write Sam a check for $220,000 of course it was just a loan but because of this loan and along with $5,000 of his own Savings in 1945 Sam was able to buy his first retail store

now he didn't start a new store instead Sam found an existing store to purchase in rural Newport Arkansas it was a franchise of the popular Ben Franklin shops which sold a wide variety of goods the problem was the reason Sam had been able to afford to buy this store was because it was losing money it had been making less than half the sales of its main competitor across the street plus Sam's rent was 5% of all the sales the store made which Sam later realized was the highest rent in the industry it's also worth noting

that Sam was just 27 years old at this point and had never actually run a store before but it was immediately clear to Sam that for the shop to be a success he needed to make some drastic changes so firstly Sam took discounting to the extreme rather than discounting a select few items and then raising the price on others Sam simply decided to sell all his products at lower prices his belief was he could make the money back with a higher volume of sales and it worked the math was simple Sean bought an item for

80 he found that by pricing it at $1 instead of $120 he could sell three times more of it less profit per item but more profit overall of course to make things as cheap as possible Sam needed cheap items and that was nearly impossible given the franchise agreement Sam had signed Ben Franklin dictated to franchisees what merchandise they were supposed to sell and then franch es Were Meant to buy most of that merchandise from Ben Franklin's own wholesale business called Butler Brothers and they charge franchises like Sam a 25% margin on each shipment Sam felt

he was trapped in the Ben Franklin franchise system so he brainstormed ways to find his own products instead and did whatever he needed to get them at night after work Sam would drive to the middle of nowhere sometimes into the mountains of Tennessee to meet obscure lowcost wholesalers then he'd fill his homemade trailer to the brim with men's shirts lady underwear literally whatever cheap items he could find that he thought would sell and sure enough when he displayed his new cheap items in the store the next day they flew off the shelves cheap products plus

low profit margins meant the lowest prices people had ever seen and customers couldn't get enough would quickly spread around the town about these cheap prices Sam also tried calling the manufacturers who made the products Ben Franklin stores typically sold and he then tried to negotiate a deal with them directly so he didn't have to pay the extra 25% commission and surpris surprisingly the Ben Franklin owners were Furious charging franchises for merchandise was a big part of how they made their money however they didn't punish Sam immediately as remember they were still making 5% of all

his sales and in Sam's first year of ownership sales increased 45% taking the store to $105,000 in Revenue that increased to $140,000 the second year so for now at least the business was growing rapidly and Sam was soon able to repay the loan to his father-in-law meanwhile Sam's brother Bud had come home from the war and started working with Sam and the two of them worked extremely long hours doing everything the store needed from doing the stock room work to sweeping the floors that's because they made their profit by keeping expenses to a minimum it

also helped that Sam was extremely competitive and would constantly go to their competitor stores to look at their prices and displays seeing if there was anything he could learn or improve on his competitors would often get annoyed seeing Sam spending so much time in their shops analyzing every detail of how they did things and seeing what prices he needed to be and thus by Sam's fifth year of running the store it was generating $250,000 in Revenue Sam had achieved his goal as it was now the number one Ben Franklin store in the whole region by

doing things differently he'd completely turned the store around but then quite suddenly that all came to a grinding halt Sam's landlord the owner of Ben Franklin decided not to renew Sam's lease knowing full well Sam had nowhere else in town to move the store he wanted to give the shop to his son instead this man Sam had no alternative but to sell the store he felt sick to his stomach and described it as the lowest point of his life it didn't seem fair Sam had built the best Variety Store in the whole region and poured

5 years of his life into it and now he was being kicked out of town and by this point Sam and his wife had four young children that they needed to provide for which meant Sam needed to figure out his next move and [Music] fast guys before we get to the next chapter I have some very exciting news for you for a while now I've been getting a lot of questions such as how are magnates media videos made how do you edit like this or hire an editor who edits like this how do you write

the videos how has the channel grown so quickly how do you get huge sponsors and what does the behind the scenes of magnetes media even look like well if you've been curious about anything like that everything is now being revealed at long last I'm pleased to announce my full YouTube system is now available you're going to be able to access everything I know about building a hugely profitable business with YouTube literally everything I've spent Years Learning all laid out in an easy to follow system that way you can create your own documentary style Channel like

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to love it so just scroll to the description now and click the course link I'll see you there Sam decided to use his frustration as fuel and so in 1950 Sam set his sights on opening a new store this time in Bentonville Arkansas he moved his family out there and immediately got to work and when it was time to sign the rental agreement this time time Sam insisted on a 99-year lease so no one could ever take his store away from him again he called his new store Walton's five and dime but how was he

supposed to get the word out about his new store in this unfamiliar town at a time where many retail stores were failing miserably racking his brain for a solution Sam remembered his first business the paper route and that gave Sam an idea he purchased the town's local newspaper the Benton County Daily Record owning the local newspaper allowed him to run advertisements for next to nothing thing so Sam plastered the paper with ads for his new store and it was only a matter of time until everyone in town knew about it and as always Sam paid

close attention to the competition for example when he heard that two stores in Minnesota were trying out the new concept of self-service Sam took a 9-hour overnight bus to go see it for himself now remember this was the 1950s and at the time the norm was for shopkeepers to fetch each item of a customer's order from the shelves themselves this made shopping a slower process cess since more staff were involved and more time was taken on each order so what Sam saw in these Minnesota shops impressed him customers assembled their own orders and brought them

to the checkout registers up front instead of relying on the clerks it seems extremely obvious to us today as that's how we're used to shopping but at the time it was a genius new way of doing things so Sam immediately implemented this system in his own store Upon returning from his trip none of the other nearby stores were doing this and so with fewer employees Sam was able to further reduce reduced the price of his Goods which brought in even more customers within less than a year Sam had tripled his income and of course Sam

kept pushing to find other ways to reduce prices which his customers loved however Sam had a much bigger Vision with more Revenue to reinvest Sam began expanding his business and opening up more retail stores his lowcost low price Model was clearly working and by the end of the decade he'd opened up 15 stores some were Ben Franklin franchises some weren't some simply opened stores wherever he saw an opportunity he even bought an old grocery store that had been abandoned because it was completely falling apart and he turned it into another successful Walton's five and dime

but Sam's expansion wasn't seen favorably by everyone even Sam's own wife thought his obsession with growth was getting out of hand one night she confronted him about it asking why he felt the need to go out and expand so much not only were the number of stores increasing but they were getting further and further away however what Sam's wife saw as the end of their success story Sam saw as the beginning he could barely rest thinking about the untapped opportunity before him he wanted to create as many discount stores as possible in as many rural

towns as he could he made it clear to his wife that he wasn't going to stop anytime [Music] soon discount stores were normally small and and located in cities and they typically didn't discount everything but Sam's new idea was to start building much bigger stores placed in small towns and that discounted everything they sold it would be called Walmart but to execute on his Grand Vision of a huge chain of discount retail stores Sam needed lots of money he tried to partner with various businesses including the Butler Brother wholesalers but no one wanted to work

with him they didn't want to gamble on the first Walmart as relying on such low profit margins with such high up front cost seemed like a big risk so Sam took the gamble himself he mortgaged his home and borrowed money from friends and any bank that would lend to him this allowed him to open his first Walmart store in Rogers Arkansas in 1962 Sam's decision to pick rural areas quickly began to look like a great move as customers were thrilled they didn't need to drive to the inner city for discounted items Sam also continued to

learn whatever he could from competitors for example he went to the headquarters of his biggest Rivals like Kmart and seers and spoke with their management officers directly he would scribble notes down on a little notepad as they openly revealed their merchandising and distribution Secrets at this point they saw Walmart as way too small and insignificant to be a threat so they openly shared details with Sam which he would later use against them by 1971 Sam had opened six new stores and had 78 Partners privately invested in Walmart what those people didn't know however was that

Sam was in serious debt several million dollars worth see Sam had always seen debt as a necessity of doing business but now Sam was in debt to practically every Bank in Arkansas and Southern Missouri he always paid his debts on time but he developed a bad habit of borrowing from One bank to pay the other the debt weighed heavy on Sam the reality was the stores weren't generating enough profit to both keep expanding and pay off their massive debts and if their private Partners found out what kind of trouble they were in and tried to

pull out that could be the end of Walmart Sam was convinced this business model could work they just needed more Capital but with creditors pressuring Walmart to pay up and sources of new money running out Sam needed a solution fast and that solution came when Sam decided to explore taking the company public on the stock market he was extremely worried about giving up control in the business but he was running out of options thus in 1972 Walmart was listed on the New York Stock Exchange and this is the point in the story where Walmart starts

to transition from being the scrappy Underdog to a Cutthroat Monopoly [Music] hey Legends it's John here just wanted to ask you a very quick favor to go follow me on Twitter or X or whatever it is we're calling it now I'm about to start sharing some behind the-scenes content doing some free giveaways and also giving advice to anyone who wants to start their own YouTube channel I'm going to be sharing stuff people never normally talk about like how you can get more sponsors build a team write better scripts make more money and also answering whatever

questions you guys have about YouTube my username is magnates Media or you can click the link in the description but remember it's not magnets media this channel is called magnates which just means wealthy and influential business people now up until this point I've not really used Twitter so I've never promoted it but I'm about to start posting there regularly so if you're at all interested in growing your own YouTube channel I guarantee you'll be very glad you followed me I'm also going to pick some of my followers a random to get some free gifts so

if you want to be with a Chance of making some money just pause this video now and go follow magnates media on Twitter I'll see you over there then let's get back to the story traveling back from New York the day after taking Walmart public Sam experienced one of the greatest feelings of his life with the weight of debt off his shoulders Sam returned to brainstorming ways to beat the competition he started by keeping his stores open for longer hours than his competitors then he found more ways to cut costs like replacing wooden shelves with

metal ones or hanging lights from the ceiling with a cheap bailing wire but the Aesthetics didn't seem to matter to Walmart customers people kept flocking to Walmart for the low prices and the company kept growing a year later Sam had 13 new stores the next year he opened 26 more and the reason for this was both genius and brutal you see Walmart was extremely Cutthroat about driving competitors out of business Walmart would open a new shop in a rural area where there wasn't a huge amount of competition just a few smaller local stores and so

when a big Walmart opened up and undercut them on the price of all their items these other stores simply couldn't compete with such a large amount of money to invest Walmart could buy items directly from manufacturers rather than wholesalers th giving them better rates and by purchasing in much higher quantities Walmart could buy the exact same items as a little M and Pop shop but at a significantly cheaper price this meant even if these smaller shop sold their items at cost price and made no profit they still couldn't compete with Walmart's pricing as Walmart was

getting the items for Less many accused Walmart of predatory pricing because of this a business strategy in which a company deliberately sets its prices at very low levels with the intent of driving competitors out of the market only to raise them later when the competition is gone Sam basically admitted to doing this but he didn't see it as predatory to him that was the point of capulus competition and he was ultimately giving customers lower prices so whilst Walmart didn't make a lot of profit in the short term if all their nearby competition went out of

business and Walmart got all of their customers they'd win in the long run Walmart was also one of the only stores at the time to have huge parking lots with no fee for parking spaces making it a no-brainer for everyone in the area to shop there by 1980 Walmart had a total of 276 stores from then on they opened about 100 stores per year part of this rapid expansion was Sam's willingness to open stores in places no nobody else would the big retailers were ignoring towns below 50,000 residents others were willing to go as low

as 10,000 but Walmart opened stores in towns smaller than 5,000 people to other retailers this seemed like a giant waste of resources but it turns out going rural had big advantages firstly in rural towns Walmart was able to save money on Advertising as everyone in the small town would know about the shop anyway secondly putting stores in such rural locations forced Sam to focus on developing Walmart's own warehousing in and communication system While others Outsource these services this was a high initial cost but this impeccable system became the Bedrock of Walmart's ever expanding set of

stores because if Walmart owned every part of the process there was no bottleneck to Walmart's expansion the system was so efficient that Sam even let other retailers buy into his Services by becoming a wholesaler himself in 1983 Sam opened a wholesale service called Sam's Club which allowed other retail business owners to buy Goods in bulk and where Sam couldn't own the process he eliminated it why buy goods from New York import houses when he could purchase clothes directly from Central America shoes directly from Korea and electronics directly from Taiwan Sam always tried to cut out

the middleman so his costs were lower and the bigger Walmart grew the more he could buy in bulk and negotiate even better deals by 1990 Walmart had over 1,000 stores and 150,000 employees and was generating more Revenue than any other retailer in the US however was it may sound like everything was going perfectly for Walmart the truth was actually very [Music] different Walmart couldn't keep up with its own expansion the faster it grew the further behind the company fell Walmart was always behind on its distribution and the warehouses never opened soon enough to stock the

new stores which looked rundown and abandoned by this point it was the 1990s Sam Walton was growing old and the public reputation of Walmart was tanking Not only was Walmart struggling to keep up with its own expansion but criticisms mounted that Walmart was putting other stores out of business because of their enormous size which was hurting local communities smaller stores simply couldn't compete with a store that had the power to buy 100,000 t-shirts at a time this became known as the Walmart effect when a mega Corporation moves into town and puts small shops out of

business even Walmart's employees were f up Walmart's entry level wages became a constant source of frustration and Strikes became common part of the issue was that because Walmart often wiped out all local competitors there weren't even many other jobs nearby where workers could go so they didn't have much choice but to accept the low wages and poor benefits now of course paying minimum wage was Walmart's right but it was a bad luck for a company making billions to not provide a livable wage to employees Sam himself admitted to neglecting employee wages because he was so

obsessed with cutting costs Sam mely tried to make employees feel better about their low-paying jobs he referred to employees as Associates which sounded more prestigious he also implemented a weekly company chant to raise morale at weekly Saturday morning meetings meanwhile he used the tricks of famous union busting lawyer John Tate to discourage employees from advocating for higher pay for instance he forced them to attend regular screenings of militant anti-union videos painting unions as corrupt and incapable of improving wages or working conditions Walmart managers also carefully monitored for any talk of unions and if the risk

of unionization got too high Walmart would use intimidation tactics to ensure workers didn't vote for it like suggesting they'd be fired or the store would be shut down if they unionized of course whilst a lot of this was quite brutal it's worth stressing that the Walmart business model worked because of cutting costs in every way possible to be able to give such lower prices to Consumers they had to control costs at every opportunity whatever your views on that there's no denying Sam was incredibly successful when he died in 1992 at age 74 Walmart had annual

revenues exceeding $104 billion not bad for a kid who'd been born into poverty on a farm however now that their founder was gone what was next for [Music] Walmart before we get to the next chapter I want to help you save time and money with today's video sponsor ship station ship station integrates everywhere you sell online including Amazon Etsy eBay shop ify and more ship station then makes it easy to automate shipping tasks and manage your business's orders in one simple dashboard you can print shipping labels compare rates organize every shipment and automate delivery notifications

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no matter where you sell or how you ship make this year your most profitable one yet with ship station go to shipstation.com slm magnates to sign up for your free 30-day trial today that's shipstation.com slm magnates by 1999 Walmart had become the largest private employer in the world with 1.4 million employees but it almost seemed like the bigger Walmart got the harder it cracked down on its workers in 2001 Walmart faced a series of lawsuits one came from employees in a store in Iowa who accused Walmart management of brainwashing them into working overtime with no

extra pay how by giving employees tasks that were impossible to complete within the time a lotted then pressuring them to finish with no overtime Walmart paid $1 million to settle the case and throughout the 2000s workers and labor organizations continue to accuse walart of mistreatment and allegations of unpaid overtime and wage theft for example in the documentary Walmart the high cost of low price employees discuss how Walmart understaffed their stores deliberately forcing other employees to pick up the slack some Walmart managers were then taught how to log into the system and change the hours that

employees had worked to avoid paying overtime rates and remember these were minimum wage workers who desperately needed that money however when it came to International working conditions things got even worse when the National Labor committee investigated a Walmart supplier Factory in China it found employees were earning 3 cents an hour working 14-hour shifts 7 days a week throughout the 2000s Walmart kept sourcing Goods as cheaply as possible from Sweatshop style factories and up with all the money Walmart was saving they could focus on their new plan International expansion however this just created a whole new

controversy in 2005 when a whistleblower described how Walmart in Mexico had bribed Mexican government officials to win market dominance in a rush to open stores Walmart had paid bribes to build stores in virtually every corner of the country they found a paper trail of hundreds of suspect payments totaling more than $24 million they also found documents showing that top Executives from Walmart in Mexico knew about the payments but had taken steps to conceal them from Walmart's US headquarters wmart Executives and lawyers worked tirelessly to conceal this scandal from the public and it seemed like they'd

gotten away with it until 2012 when the New York Times revealed they'd been doing a long-term investigation and exposed the bribery that had taken place but despite all of this and many other stories involving terrible conditions in Walmart supplier factories Walmart has managed to become the largest company in the world by revenue and the largest retailer in the United States so let me know your thoughts in the comments because whil they clearly some controversies in Walmart's history they've also lowered prices for consumers and there's no doubt from a business perspective Walmart is an incredible success

story although it's definitely not the craziest story if you want that you should go check out the story of John McAfee just trust me on this one you've never heard of an entrepreneur like him so click the thumbnail on screen and go watch that now all that's left for me to say is thank you for watching magnetes media I hope you enjoyed the Walmart story and I'll see you in this next video in just a second cheers [Music]