Costco (Audio)

Costco is not only Charlie Munger’s favorite company of all time (plus he’s on the board, natch), it’s an absolutely fascinating study in how seemingly opposite characteristics can combine to create incredible company value. For instance: Costco has the cheapest prices of any major retailer in America — and also the wealthiest customer base. They pay their hourly workers 30% above the industry norm (and give them excellent healthcare + 401k benefits) — and are almost 3x more profitable on labor than Walmart. Speaking of Walmart, Costco stocks 40x fewer SKUs than their Bentonville-based rivals — yet sells an average of 15x more volume of each. And oh yeah, practically all of Costco’s C-Suite started their careers as baggers and checkout clerks! Tune in for a mind-bending exploration of one of the world’s most iconic — and iconically unique — companies. *Links:* - The Science of Hitting: https://thescienceofhitting.com - Warren Buffett’s Costco joke: https://www.youtube.com/watch?v=Z1sTs8wkAbw - Episode sources: https://www.acquired.fm/episodes/costco#sources *Carve Outs:* - Tifosi sunglasses: https://tifosioptics.com - Dwells “take off everything”: https://www.youtube.com/watch?v=cwFmq69m3WA - Jeremy Giffon on Invest Like the Best: https://www.joincolossus.com/episodes/79714195/giffon-special-situations-in-private-markets?tab=transcript - Dogpatch: https://en.wikipedia.org/wiki/Dogpatch,_San_Francisco - David Lidsky’s great piece on Acquired in Fast Company: https://www.fastcompany.com/90927453/acquired-number-1-tech-podcast-sensation *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

Ben GilberthostDavid Rosenthalhost

Aug 21, 20233h 1mWatch on YouTube ↗

EPISODE INFO

Released: August 21, 2023
Duration: 3h 1m
Channel: Acquired
Watch on YouTube: ▶ Open ↗

EPISODE DESCRIPTION

Costco is not only Charlie Munger’s favorite company of all time (plus he’s on the board, natch), it’s an absolutely fascinating study in how seemingly opposite characteristics can combine to create incredible company value. For instance: Costco has the cheapest prices of any major retailer in America — and also the wealthiest customer base. They pay their hourly workers 30% above the industry norm (and give them excellent healthcare + 401k benefits) — and are almost 3x more profitable on labor than Walmart. Speaking of Walmart, Costco stocks 40x fewer SKUs than their Bentonville-based rivals — yet sells an average of 15x more volume of each. And oh yeah, practically all of Costco’s C-Suite started their careers as baggers and checkout clerks! Tune in for a mind-bending exploration of one of the world’s most iconic — and iconically unique — companies. *Links:*
The Science of Hitting: https://thescienceofhitting.com
Warren Buffett’s Costco joke: https://www.youtube.com/watch?v=Z1sTs8wkAbw
Episode sources: https://www.acquired.fm/episodes/costco#sources
*Carve Outs:*
Tifosi sunglasses: https://tifosioptics.com
Dwells “take off everything”: https://www.youtube.com/watch?v=cwFmq69m3WA
Jeremy Giffon on Invest Like the Best: https://www.joincolossus.com/episodes/79714195/giffon-special-situations-in-private-markets?tab=transcript
Dogpatch: https://en.wikipedia.org/wiki/Dogpatch,_San_Francisco
David Lidsky’s great piece on Acquired in Fast Company: https://www.fastcompany.com/90927453/acquired-number-1-tech-podcast-sensation
*More Acquired:*
Get email updates https://www.acquired.fm/email and vote on future episodes!
Join the Slack http://acquired.fm/slack
Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store!
_Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

SPEAKERS

Ben Gilbert
host
David Rosenthal
host

EPISODE SUMMARY

In this episode of Acquired, featuring Ben Gilbert and David Rosenthal, Costco (Audio) explores costco’s membership flywheel, disciplined trade-offs, and enduring retail execution model The episode explains why Costco’s seemingly simple “bulk discount” concept is actually a tightly interlocked system of trade-offs—low SKU count, capped markups, membership economics, and operational simplicity—that compounds into a durable competitive advantage.

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