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Odds and Ends: Culture Club
Odds and Ends: Culture Club

Costco co-founder Jim Sinegal on the price of everything from higher ed to hot dogs


Rick Tulka



"If you think about a business, it's all about people," says Jim Sinegal, co-founder and former CEO of Costco. That's just one of the viewpoints that have set Sinegal apart in the business world. Sinegal may have retired in 2012 from the company he led for nearly 30 years, but he hasn't slowed down. As a board member and adviser to the membership-warehouse empire he built, Sinegal still spends about half his time engaged with the company, including visits to many of its 650-plus stores worldwide. He also invests his time working with business schools at several institutions, including Seattle University and San Diego State University, Sinegal's alma mater. One of his top lessons? "Culture isn't the most important thing. It's the only thing."

What can higher education learn from corporate America?

When you speak to colleges about a business approach to things, they push back because they don't think the lessons of business are applicable. But as institutions expand overseas, they'll have to look at it from that standpoint. Costco operates in nine different countries, and every country is a valley of tears. It takes a lot of hard work, planning, and building of infrastructure to get started. In most instances, that's not an immediate success, so you need to have a good plan, to stay the course, and to recognize whether the product you're putting into place is going to be accepted.

What's the business case study for higher education today?

There have been all sorts of articles written about whether it's worth it to spend $50,000 to $60,000 a year for an education. Business has an obligation to discontinue something if it is not working. Universities have a tendency to install new programs without any real evaluation of whether the programs are meaningful. They want to do everything. That's not prudent, and it drives up the cost of education for everybody. We're creating an elitist system where only the people who can afford it can go to college.

Is it true that you don't hire people right out of business school because of Costco's culture?

Nothing could be further from the truth. We hire them—it's just that they have to start at the front end, pushing carts. They've got to learn our business. As you can imagine, a lot of MBAs aren't prepared to do that. We think that reasonable expectations are a very important thing that colleges should be teaching young people.

What do you mean by that?

Years ago, everybody felt like they were going to go to work for Wall Street and make a million dollars a year. Obviously, that bubble has burst in many instances. It's not as simple, and I think that colleges could do a better job of convincing people that their education is important, but they also have to learn their craft. You don't just step out of business school and learn how to run a Costco.

This may be like asking you to choose a favorite kid, but where is your favorite Costco?

It's whichever one I'm in at the moment. That is like asking me about my kids. I read an article recently that said all parents do have a favorite child, but they would never admit it. I'm the same way. I love them all. I do have a couple of favorites that I always visit, but I'm not going to tell you where they are.

What's your favorite Costco product?

Anybody in Costco would immediately say the hot dog and Pepsi for $1.50. I can hardly go into any Costco where they don't ask, "Are you going to have a hot dog today, Jim?"

—Interview by Theresa Walker

 

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