🌭 Costco’s Kirkland: How a $1.50 Hot Dog Changed Store Brands Forever | 22

Summary

Podcast Summary: The Best Idea Yet – Episode 22: 🌭 Costco’s Kirkland: How a $1.50 Hot Dog Changed Store Brands Forever

Introduction In Episode 22 of The Best Idea Yet, hosts Nick Martell and Jack Crivici-Kramer delve into the intriguing origin story of Costco’s iconic Kirkland Signature brand. This episode explores how a simple $1.50 hot dog became a symbol of Costco’s commitment to quality and affordability, transforming store brands forever.

---

1. The Birth of Costco and Fedmart The story begins in 1954 at a Fedmart loading dock in San Diego, where Saul Price, Fedmart’s co-founder, identifies a promising young worker, Jim Sinegal. Saul, a visionary in the retail industry, prioritizes low markups to ensure affordability for customers, even at the expense of traditional profit margins.

• Notable Quote (06:57):
  • Nick Martell: “Jim’s family moved out west while he was still in high school. He’s a humble guy with a strong work ethic...”

2. Saul Price’s Revolutionary Retail Strategy Saul Price’s approach emphasizes minimal markups, fostering customer loyalty through lower prices and higher sales volumes. This strategy often put him at odds with suppliers and competitors who preferred higher margins.

• Notable Quote (08:10):
  • Jack Crivici-Kramer: “Saul’s obsession with keeping markups low kind of goes against the retail grain.”

3. The Influence on Walmart Saul’s innovative methods inspired Sam Walton, the founder of Walmart. Walton acknowledged borrowing ideas directly from Fedmart, leading to the creation of Walmart’s first store in 1962. However, Walmart’s aggressive expansion eventually overshadowed Fedmart, culminating in Saul Price being ousted by a German billionaire in 1974.

• Notable Quote (11:25):
  • Nick Martell: “Sam Walton said he stole it [ideas] himself. He publicly admits that he either stole or borrowed more ideas from Saul Price than from anyone else in business.”

4. The Formation of Price Club and Birth of Costco After leaving Fedmart, Saul Price teams up with Jim Sinegal and Jeff Brotman to establish Price Club in 1976. This new venture adopts a membership-only wholesale model, offering bulk goods at competitive prices—a direct precursor to Costco.

• Notable Quote (12:36):
  • Jack Crivici-Kramer: “Jim wants to make sure that Costco isn't in direct competition with Price Club. So they plan to open in Seattle.”

5. Strategic Branding with Kirkland Signature In 1995, faced with the challenge of managing numerous private label brands, Price Costco consolidates all store brands under the unified "Kirkland Signature" label. This strategic rebranding simplifies product identification and reinforces trust in Costco’s quality standards.

• Notable Quote (29:44):
  • Nick Martell: “So what we're saying here is that Kirkland Signature is still very available as a trademark.”

6. The Iconic $1.50 Hot Dog: A Symbol of Commitment The Kirkland Signature hot dog, priced at $1.50, epitomizes Costco’s dedication to affordability without compromising quality. Despite financial pressures, Jim Sinegal adamantly maintains this price point, viewing it as a cornerstone of customer trust.

• Notable Quote (37:05):
  • Nick Martell: “Jim says if you raise the price of the effing hot dog, I will kill you. Figure it out.”

7. Costco vs. Sam’s Club: A Competitive Edge While both Costco and Sam’s Club operate on similar wholesale models, Costco distinguishes itself through its unified branding and steadfast pricing policies. Sam’s Club struggled to replicate Costco’s cult-like following, primarily because it did not fully embrace a single, strong private label brand.

• Notable Quote (40:34):
  • Jack Crivici-Kramer: “Kirkland is Costco and Costco is the anti-Walmart.”

8. Expanding Kirkland Signature: Beyond Basics Kirkland Signature now encompasses a vast array of products, from vitamins and batteries to furniture and wine. This expansion showcases Costco’s ability to leverage private label brands effectively, ensuring quality while keeping prices low.

• Notable Quote (32:14):
  • Jack Crivici-Kramer: “He's relentless... he's looking to get his cardholding Costco members the lowest price possible.”

9. Maintaining Trust and Quality Amid Growth As Costco grew to over 500 locations and $70 billion in annual sales by 2008, maintaining the integrity of Kirkland Signature remained paramount. Even during economic downturns, Costco resisted raising prices on flagship products like the $1.50 hot dog, reinforcing customer loyalty.

• Notable Quote (36:32):
  • Nick Martell: “There are so many amazing stories where Jim is just fighting tooth and price cutting nail to get you a lower price on a Kirkland brand.”

10. The Power of Psychonomics in Retail Costco’s strategy combines psychology and economics—termed "psychonomics"—to create a shopping experience that minimizes choice paralysis and maximizes customer satisfaction. By limiting SKUs and creating a “treasure hunt” atmosphere, Costco keeps shoppers engaged and eager to return.

• Notable Quote (15:20):
  • Jack Crivici-Kramer: “The treasure hunt strategy appeals to a shopper's sense of optimism.”

11. Corporate Principles and Customer Loyalty Costco’s core principles, such as capping profit margins and offering high employee wages, foster an environment of trust and satisfaction. These unbreakable rules serve as Costco’s "corporate 10 commandments," ensuring consistent customer experience and loyalty.

• Notable Quote (43:28):
  • Nick Martell: “It's a holy rule that's actually shocking.”

---

Conclusion The Best Idea Yet Episode 22 masterfully illustrates how Costco’s unwavering commitment to quality, affordability, and strategic branding through Kirkland Signature has cultivated a loyal customer base and set a benchmark in the retail industry. The $1.50 hot dog is not just a product but a testament to Costco’s enduring philosophy of putting customers first.

Takeaways

• Nick Martell: “Content is king, but curation is queen... Costco saving you time, effort, and research by curating just three simple options to choose from.”
• Jack Crivici-Kramer: “Companies should write their own corporate 10 commandments...unbreakable rules to keep them aligned on their first principles.”

Hero Facts

• Kirkland Signature: Generates $56 billion in revenue, surpassing giants like Nike and United Airlines.
• Hot Dogs: Costco sells 199 million hot dogs annually, embodying the brand’s promise of quality and affordability.
• SKU Limitation: Costco offers around 3,800 SKUs compared to Walmart’s 120,000, enhancing the shopping experience through simplicity.

Looking Ahead The episode hints at future challenges and competition, notably Walmart’s attempts to replicate Kirkland Signature’s success with their “Better Goods” brand. However, the episode emphasizes that Costco’s unique blend of quality, affordability, and corporate integrity positions it distinctly in the retail landscape.

---

Join Nick Martell and Jack Crivici-Kramer as they continue to uncover the stories behind the products you love and the bold ideas that brought them to life.

Transcript

[Nick Martell]

Wondery subscribers can listen to the best idea yet, early and ad free right now.

[Jack Kravici Kramer]

Join Wondery in the Wondery app or on Apple Podcasts.

[Nick Martell]

Wondery. Well, Jack, for this episode we did go deep on our Costco research. Because you kind of have to go deep when you're researching Costco, right?

[Jack Kravici Kramer]

I mean, I went to the store this weekend and filled up a gigantic shopping cart, if that's what you mean.

[Nick Martell]

Now that I'm speaking with a card carrying Costco member over here, I should point out over the weekend I was thinking about all this research, all the numbers, everything we crunched to put into this episode. And you know what? There is a fair argument to make. Costco is the only store in the world where you could spend your entire life within all the walls, never leave, and not just survive, but thrive. Jack, they sell bathtubs so you could have a home birth in aisle six. Okay. They sell diamond rings and wedding dresses so you get married in aisle eight.

[Jack Kravici Kramer]

Uh huh.

[Nick Martell]

You don't need to buy food. You live off the free samples. Money. I know you're worried about money.

[Jack Kravici Kramer]

Oh, they have bars and they sell.

[Nick Martell]

Credit cards and insurance over at Costco. And best of all, Jack, if you have to pass away, they got you covered because they sell caskets too.

[Jack Kravici Kramer]

From cradle to grave. That should be Costco's new slogan. But our story isn't just about Costco because the subject of this episode is found within the hallowed halls of Costco. Not one product, but hundreds of products. From paper towels to peanut butter to your dad's favorite sweatpants. We're talking about Kirkland Signature.

[Nick Martell]

That was at a party this past weekend. The bar had Kirkland Signature Tequila.

[Jack Kravici Kramer]

It's a brand created by and sold at Costco. But Kirkland products aren't actually made by Costco. They're made for Costco by companies who want to sell their products at Costco.

[Nick Martell]

Sometimes the manufacturer is no one you've ever heard of, but other times it's.

[Jack Kravici Kramer]

A name brand quality product that's basically operating in incognito mode, like Kirkland's espresso blend. For years it was actually made by Starbucks.

[Nick Martell]

And Jack, what about Kirkland batteries?

[Jack Kravici Kramer]

They're made by Duracell.

[Nick Martell]

The Costco customer base is so huge.

[Jack Kravici Kramer]

140 million members and so loyal, 90% renew their annual memberships that brands will.

[Nick Martell]

Do almost anything to earn that Kirkland stamp of approval.

[Jack Kravici Kramer]

Costco's revenues are almost three times that of Sam's Club at Walmart and more than 12 times that of BJ's in.

[Nick Martell]

Fact, Costco is so beloved by Cost Kinetics that people are even having their birthday parties at Costco. Costco Mitzvah, aisle six. And that is why Jack and I call it the cult of Costco. Because once you've joined, oh, you are obsessed.

[Jack Kravici Kramer]

But here's the thing. You may think that Costcoians love Kirkland because it's the signature brand of Costco, but we actually think it's the opposite. We think people are obsessed with Costco because of Kirkland.

[Nick Martell]

Since the debut of Kirkland Signature in 1995, this private label has become a huge driver of Costco's success. In fact, Kirkland Signature products make up one quarter of Costco's total corporate revenue.

[Jack Kravici Kramer]

That makes Kirkland, not Costco overall, just Kirkland, bigger by revenue than Coca Cola or Nike. But Kirkland's success, it didn't just happen. It was planned by Costco's co founder and longtime CEO, Jim Sinegal. Jim built the Kirkland brand by flipping the concept of a store brand on its head. So grab a huge shopping cart and get out your membership card because we are diving, diving into the origins of Kirkland Signature, which starts with the origins of Costco itself.

[Nick Martell]

You're going to discover how a bolt of lightning striking a plane actually helped give birth to Costco.

[Jack Kravici Kramer]

And how its famous hot dog plus soda combo has managed to stay $1.50 for 41 years and counting.

[Nick Martell]

Oh, and if that price ever changes.

[Jack Kravici Kramer]

What did the CEO say he'd do? Jack, he will effing kill you.

[Nick Martell]

Put down that double chunk chocolate chip cookie. Because here is why Costco's Kirkland brand is the best idea yet from Wondery and T Boy. I'm Nick Martell.

[Jack Kravici Kramer]

And I'm Jack Crevici Kramer.

[Nick Martell]

And this is the best idea yet. The untold origin stories of the products you're obsessed with and the bold risk takers who brought them to life.

[Jack Kravici Kramer]

I got that feeling again Something familiar, but no.

[Nick Martell]

We got it coming to you.

[Jack Kravici Kramer]

I got that feeling again they changed.

[C]

The game in one move.

[Jack Kravici Kramer]

It's how they broke foreign. We'd like to thank our presenting sponsor, Lenovo.

[Nick Martell]

The Lenovo ThinkPad Aura Edition imagined with intel is an incredibly thin, light and connective laptop with innovative AI built in.

[Jack Kravici Kramer]

No matter what you're making, it's possible on your Intel AI PC.

[Nick Martell]

Learn more about Lenovo Aura Edition AI [e-mail] Aura Today, the beverage aisle looks.

[D]

A lot different than it used to. America's beverage companies are working together. We're delivering the options everyone wants. In fact, nearly 60% of beverages Americans buy have zero sugar. You'll find more variety than ever, including more of your favorites now available with zero sugar. You'll also find more sizes and clear calorie information on the front of every can, bottle and pack. We know when it comes to finding balance, the more choices, the better.

[Jack Kravici Kramer]

Few places are quieter than a discount store parking lot. The week after Christmas. The holiday shoppers are gone. All that's left are some crumbled up receipts tumbling through the wind and a few off season Seagulls. It's 1954 and we're in San Diego's warehouse district. This is the loading dock of a brand new discount store called Fedmart. Its members are all federal government employees.

[Nick Martell]

For a one time $2 membership fee, government employees could get access to low priced goods from bourbon to rotisserie chicken to gas. And even though fedmart is barely a month old, its co founder and chairman, Saul Price has a feeling that this is gonna be huge. Saul's an interesting guy. He's a shrewd man with a sharp wit and he's excited to get his new business off. He was actually born in the Bronx to Jewish immigrants who worked in the garment industry and his parents were actually communists. But by the age of 38, Saul's a little different. He's working in the retail industry over on the west coast. And today he's hired a few extra hands to get his merchandise loaded in off of those Southern California trucks.

[Jack Kravici Kramer]

Saul watches the newcomers pull items off the trucks and load them onto dollars. And he notices one kid, a guy unloading mattresses, who has an extra bit of hustle.

[Nick Martell]

Yeah, Jack, we know that the mattress is literally the most difficult piece of furniture to move. It's flopping everywhere, there's nowhere to grab it.

[Jack Kravici Kramer]

But this kid is making it look easy. He's slinging one mattress after the other like human Tetris, while staying careful not to damage the goods.

[Nick Martell]

Saul notices this and he says, I gotta find out this kid's story.

[Jack Kravici Kramer]

He's an 18 year old named Jim Senegal. The son of a Pittsburgh steelworker. Jim's family moved out west while he was still in high school. He's a humble guy with a strong.

[Nick Martell]

Work ethic and a strong sense of how to lift with your legs, not your back, when moving a queen sized mattress off a truck.

[Jack Kravici Kramer]

But since heading to junior college, Jim's been feeling unfocused. His grades aren't great and he doesn't know what he wants to do with his life. He's only here because a friend invited him to come earn some extra cash. But little does Jim know, this one day gig will change the course of his entire life.

[Nick Martell]

Saul Price decides, you know what, I'm going to take this kid under my wing and he's going to give Jim a job as a grocery bagger. This is actually really lucky for Jim because Saul Price just happens to be a legend in the retail industry.

[Jack Kravici Kramer]

Fedmart is known for its great deals because Saul keeps his markups low. Saul's entire goal in life is keeping prices low for the customer.

[Nick Martell]

Charles Dickens could not have cast this better. The guy's name is literally Price.

[Jack Kravici Kramer]

His middle name is probably low because low prices may seem like a no brainer, but for retailers, your markup is how you make money. For example, if you buy a pen for $1 wholesale, you want to sell that pen for at least $2 retail. The markup is literally the profit. So Saul's obsession with keeping markups low kind of goes against the retail grain.

[Nick Martell]

This is why he is totally ahead of his time. He figures, you know what, maybe I'll lose some of that fat margin, but instead gain customer loyalty through that lower price, more customers, more volume, and boom, your profit problem is solved. Unfortunately, these methods make Saul some enemies in the retail community. Like that pen company you were just talking about, Jack. They would prefer if customers think their pens are worth $2, not $1.25 that Saw would charge.

[Jack Kravici Kramer]

If Fedmart sells them for $1.25, then that pen company's product is less valuable in consumers eyes. Other retailers even pressure their suppliers not to work with fedmart. But Saul's got a trick to deal with that. If a supplier doesn't want to work with him, he creates a store brand version of their product and offers it at a lower price.

[Nick Martell]

Saul is using his fedmart store brand as a price leverage as well.

[Jack Kravici Kramer]

If a supplier won't sell him peanut butter at the price he wants, he'll go to one of their rivals to help them make a Fed Mart version for cheap.

[Nick Martell]

I can see why he's making a few enemies over there.

[Jack Kravici Kramer]

It's a powerful motivator for companies to simply send him the product he wants at the price he wants.

[Nick Martell]

But here's what Jack and I find fascinating about this story. If Saul Price drives a hard bargain with suppliers, he actually does the opposite with his employees. He actually works with organized labor to create very generous pay packages and benefits for his workers. Yeah, that cuts into his already very slim Profits. But it also reaps tons of benefits in terms of employee satisfaction, employee productivity, even employee loyalty.

[Jack Kravici Kramer]

Hiring new employees costs money. You got to post ads, you got to go through interviews. You maybe need to offer them a signing bonus. Saul knows it's cheaper to keep the same crew with you. Ride or die. And you only earn that kind of loyalty by offering them good pay.

[Nick Martell]

So Saul is pushing lower prices and higher wages, a total 180 from everything else that big corporate executives are known for doing.

[Jack Kravici Kramer]

Saul's got the happiest customers and the happiest workers. And his protege, the mattress moving phenom Jim Sinegal makes note of all these business decisions.

[Nick Martell]

In its first year of business, Fedmar actually beats its sales goals by 4x. In fact, Fed Mart is such a hit, Saul decides to open Fedmart's doors to everyone, not just federal government employees anymore.

[Jack Kravici Kramer]

Eventually, Saul expands FedMark to 41 locations across the American Southwest. And Jim, the formerly directionless kid who couldn't make it through junior college, he becomes the VP of merchandising. If the name Sam Walton sounds familiar, it's because he founded Walmart. But what you might not know is that he stole the idea for Walmart from Saul Price.

[Nick Martell]

Are our lawyers okay with us saying he stole the idea for Walmart?

[Jack Kravici Kramer]

Yeah, they are.

[Nick Martell]

Oh really?

[Jack Kravici Kramer]

Because Sam said he stole it himself. He publicly admits that he either stole or borrowed more ideas from Saul Price than from anyone else in business. So when Sam Walton opens the First Walmart in 1962, it is directly inspired by Fedmart's whole thing.

[Nick Martell]

I mean, Jack, he even stole the name format for Walmart. Like half the Walmart name is the Fed Mart name.

[Jack Kravici Kramer]

Well, Walmart starts stealing Fedmart's customers too. Almost immediately, Walmart starts gobbling up Fedmart's market share. In less than 12 years, Walmart is dominating the space. And in 1974, a German billionaire is able to buy up a majority stake in Saul's company, pushing Saul Price out of his company not long after that.

[Nick Martell]

Now this is not an exaggeration. Saul literally gets locked out of his own office. At 60 years old, Saul has to start over completely.

[Jack Kravici Kramer]

Under the German billionaire's leadership, Fedmart itself actually collapses in just a few years.

[Nick Martell]

But we're talking about our boy from the boogie down Bronx here. Saul Price, within months has a new idea. And his protege Jim Sinegal leaves fedmart to help him kick it off.

[Jack Kravici Kramer]

By now, Jim's not a kid anymore. He's 40 years old. And he's a seasoned Retail exec. But he's fiercely dedicated to his mentor, Saul Price and their new project.

[Nick Martell]

This new store from Saul. It resembles fedmart a little bit, with aisles of toilet paper, lettuce and lawnmowers everywhere. But there is one important difference. Instead of a straight up retail store, anyone can just walk into, this will operate as a wholesale membership club.

[Jack Kravici Kramer]

For 25 bucks a year, customers get access to food and household products at wholesale prices. That's the deal. Because why buy a bar of Irish Spring for $3 when you can get 10 for $15? Essentially, Jim and Saul are offering a store that cuts out the retail middleman.

[Nick Martell]

Perfect timing, Jack. Because in 1976, the United States is in the midst of a gnarly economic recession. Everyone is worried about the price of food and gas. So a store that's focused on member only deals and saving money, that has a ton of appeal.

[Jack Kravici Kramer]

And Saul has another revolutionary idea for this new place. He's going to sell less stuff. He's going to limit the number of products they carry at a time. Instead of offering Irish Spring, Dove, Ivory Dial and a dozen other soaps like the other grocery stores, they'll maybe offer two or three brands and that's it. Take it or leave it.

[Nick Martell]

We call it psychonomics, the combination of psychology and economics. Because in psychonomics, choice paralysis, that's a real thing customers experience.

[Jack Kravici Kramer]

You know this. If you've gone into CVS and spent half an hour staring down 30 brands of moisturizing cream.

[Nick Martell]

I mean, Jack, that is a psychological insight I think we can all relate to. Too many choices completely overwhelms you.

[Jack Kravici Kramer]

A club to buy retail products at wholesale prices attracted a ton of customers. And wholesale, that requires bulk orders. So they need a ton of space to store inventory. For their new wholesale club they open in a converted airplane hangar that once belonged to the famous Howard Hughes.

[Nick Martell]

This place is ginormous.

[Jack Kravici Kramer]

But thanks to Saul's idea of limiting inventory, shopping seems less like an impossible task, more like a treasure hunt.

[Nick Martell]

Which leads to another insight from our buddy Saul. The treasure hunt. Like you're a modern day pirate plundering the aisles until you find that cute top you've always wanted.

[Jack Kravici Kramer]

That was more than a Scottish pirate if I've ever heard one.

[Nick Martell]

Well, you never said where the pirates came from, Jack. Well, this treasure hunt strategy, it's born out of Psychology 101 as well. It appeals to a shopper's sense of optimism. X marks the spot.

[Jack Kravici Kramer]

Back to our buddy Saul. He's blending psychology and economics like a Freudian Warren Buffett.

[Nick Martell]

True.

[Jack Kravici Kramer]

The new store opens in San Diego in July 1976. This new company is called Price Club, a play on its founder saw Price. Like we said, this guy was born to be a brand.

[Nick Martell]

And initially they had expected mostly small business customers to shop there. Because you know what young couple or small family needs a pallet of detergent or like 30 cans of soup.

[Jack Kravici Kramer]

It turns out everyone, Nick, everyone likes Price Club, not just small business owners. People drive miles just to get their hands on these deals. They're removing the back bench of their minivans to make space for their Price Club haul.

[Nick Martell]

And Saul, he is back on top, baby. And so is his star employee, Jim Sinegal.

[Jack Kravici Kramer]

But here's the thing, Yetis, you know, it's just a matter of time before Saul's nemesis, Sam Walton of Walmart, notices their success and gets inspired again. So just as Saul Price and Jim Sinegal are building up Price Club, Sam Walton decides he can't let them have all the fun. He launches his own wholesale club, Sam's Club, in April 1983.

[Nick Martell]

Sam Walton is building a retail empire just by ripping off these guys.

[Jack Kravici Kramer]

But being first to market with an idea doesn't protect you from the competition, especially from a man as ambitious and brazen as Sam Walton.

[Nick Martell]

Customers generally don't care who is first. They care who serves them best.

[Jack Kravici Kramer]

And that's going to be important for the next part of our story because someone besides Sam Walton wants to start a new wholesale club too. A Seattle based retailer named Jeff Brotman.

[Nick Martell]

Jeff's whole family is actually in retail, specifically in clothing.

[Jack Kravici Kramer]

And by the early 1980s, just like Sam Walton, he's got his eye on the Price Club model. Jeff wants in before the field gets too crowded. But Jeff doesn't know anything about big box stores. He'll need an experienced co founder who does. So he asks some retail buddies of his for recommendations. And all of them have one name at the top of their lists. You gotta talk to Jim Sinegal.

[Nick Martell]

Jeff cold calls Jim and basically asks, um, hey, your boss isn't in the room, is he?

[Jack Kravici Kramer]

Right.

[Nick Martell]

How would you like to leave Price Club and start a new version of it with me?

[Jack Kravici Kramer]

This is arguably the biggest phone call in retail history. Jeff Brotman, a total stranger, is asking Jim Sinegal not just to leave his mentor, Saul Price, but to become his competition too.

[Nick Martell]

Jack, this is like that scene in every biopic where the suit pulls the lead singer aside and says, hey kid, the band is just holding you back. Join me. We're gonna make you a star.

[Jack Kravici Kramer]

And Jim says yes. Now, we don't know how he breaks the news to Saul, but this must be a hard conversation.

[Nick Martell]

Jim was the Karate kid to Saul's Mr. Miyagi.

[Jack Kravici Kramer]

But now Jim and Jeff are starting at the bottom. So they spend months maxing out their credit cards to fund their startup and to woo investors.

[Nick Martell]

They're working on their elevator pitch 20 times a day. They need startup capital if they're going to pull this big vision off.

[Jack Kravici Kramer]

Now, one evening, Jeff is flying home to Seattle after a business trip and he strikes up a conversation with his seatmate by the grace of the airplane seating gods. His in flight neighbor happens to be a venture capital investor.

[Nick Martell]

Well, who hasn't found themselves on a plane sitting next to a major vc? Jack, not too shabby.

[Jack Kravici Kramer]

Jeff mentally prepares his internal slide deck to pitch the guy, blocking him from easy access to the lavatory. But then the voice of the captain comes on the PA in that super calm voice the captains use.

[Nick Martell]

This is your captain speaking. Sorry for that bit of turbulence folks. The plane has been struck struck by lightning. Please make sure your seat belts are securely fastened. We'll be making an emergency landing.

[Jack Kravici Kramer]

This episode is presented by Lenovo yetis.

[Nick Martell]

The Lenovo ThinkPad or Edition imagined with intel puts you in command of your.

[Jack Kravici Kramer]

Work, whether it's a boring, mundane spreadsheet or an artistically creative logo design.

[Nick Martell]

They got a Smart Share feature that is enabled by AI to let you transfer photos from your phone to your laptop in a tap.

[Jack Kravici Kramer]

If you're tired of pings, notifications and distractions, the Lenovo ThinkPad or Edition has smart modes that will block them all out.

[Nick Martell]

Jack, what does the screen look like on this thing?

[Jack Kravici Kramer]

Oled, which is top of the line.

[Nick Martell]

High definition and smart care, gives you an elite all day support team to fix any issues. Jack, what's the theme here?

[Jack Kravici Kramer]

Everything is smart at your service. This computer is like a brilliant butler.

[Nick Martell]

And the Lenovo ThinkPad or Edition hardware would impress NASA because it's freakishly thin.

[Jack Kravici Kramer]

And light and has a battery that lasts up to 29 hours.

[Nick Martell]

So besties, we're besties with the Lenovo ThinkPad or Edition imagined with Intel.

[Jack Kravici Kramer]

Learn more about Lenovo aura Edition AI [e-mail] Aura it's possible on your Intel AI PC.

[D]

Mochi Health is here to help you start your weight loss journey with caring personalized support. Meet one on one with board certified obesity doctors and registered dietitians who truly listen and understand your unique needs. Eligible patients can access affordable GLP1 medications delivered right to their door each month. No insurance, no problem. Mochi Health accepts FSA and HSA, making care accessible and affordable. And with 24. 7 customer service, you'll never feel alone on your path to better health. Get started with Mochi Health today. Take the free [e-mail] and use code AUDIO40 at checkout for $40 off your first month of membership. That's join M-O C-H-I.com with promo code AUDIO40.

[Jack Kravici Kramer]

When we left the entrepreneur Jeff Brotman, his plane had been struck by lightning. Perfect timing though, because he just found out that he was sitting next to a VC who might be in a position to fund his startup. Their plane makes an emergency landing in San Francisco and everyone's okay. So Jeff and the VC are stuck at the airport together. It's the perfect chance for Jeff to convince the guy to invest in his wholesale club business.

[Nick Martell]

In between the gate announcements, he's going over financial forecasts and competitive landscape slides.

[Jack Kravici Kramer]

He tells him that it's called Cost Company or Costco for short. And guess what? Jeff lands the deal.

[Nick Martell]

You know what they say? YOLO leads to Costco.

[Jack Kravici Kramer]

And with this key funding secured, Jim Sinegal and Jeff Brotman get to work planning their first location. Jim wants to make sure that Costco isn't in direct competition with Price Club. So they plan to open. Jeff Brotman stomping grounds of Seattle, Washington.

[Nick Martell]

And that brings us to the birth of Costco. They fling open the first Costco doors on September 15, 1983.

[Jack Kravici Kramer]

Costco is cut straight from the Price Club cloth. Although the businesses are a thousand miles apart, the business plans are right on top of each other. They offer memberships for small businesses for $25 and for individuals at $30 each.

[Nick Martell]

Here is where young Costco also makes a bold business decision. Costco chooses a specific profit ceiling. That's right. Costco caps their price markups at 14% for outside brands and 15% for store brands.

[Jack Kravici Kramer]

Some markups are way lower than that. In fact, the average markup for Costco products is actually just 11%.

[Nick Martell]

On the other hand, Walmart's typical markup is more like 25%. And Target's typical markup is more like 45%.

[Jack Kravici Kramer]

And of course, in other industries like pharmaceuticals or luxury, markups can be a thousand percent or more. So Costco pricing the products just 14 or 15% above cost is basically nothing. And just like Price Club, Costco decides to limit the amount of merchandise that they carry to reduce their customers choice paralysis.

[Nick Martell]

Today, a typical Costco has about 3,800 SKUs or SKUs or stock keeping units. On the other hand, Walmart, they carry about 120,000 SKUs. And it's not just that they have fewer options. Remember, you don't always know what Costco's going to have in stock, which adds to that treasure hunt vibe.

[Jack Kravici Kramer]

Find it now, Captain Blackbeard, or it'll be taken by another boss. Bargain Hunter.

[Nick Martell]

Well played, Jack Sparrow. Well played.

[Jack Kravici Kramer]

Now, the first few weeks the stores open, sales grow at a weekly rate of 25%. Within 10 weeks, this brand new Cost Company store hits $1.4 million in weekly sales.

[Nick Martell]

Oh, and it doesn't stop there, because in just three years, Costco goes from a simple concept to a $1 billion company.

[Jack Kravici Kramer]

That makes Costco the fastest non tech physical company we've ever seen. Hit the $1 billion unicorn mark.

[Nick Martell]

Costco, it's on its way. But get ready, Yetis, because their best idea is yet to come.

[Jack Kravici Kramer]

Attention Costco shoppers. Let's jump ahead about 10 years. It's 1993 and Price Club, the wholesale club run by Jim Senegal's old mentor, Sol Price, it's actually merging with Costco in a deal worth $2.2 billion to form price Costco.

[Nick Martell]

Jim and Saul, they're back together. This idea makes sense. You know, Costco was formed in Price Club's image using lessons Jim learned from Saul. So like, why wouldn't they team up again?

[Jack Kravici Kramer]

One of the lessons Jim took to heart was paying your workers above the going rate, even covering most of their health insurance premiums too. Jim has seen how much this cuts down on employee turnover and on theft. Two big costs that most retailers struggle with.

[Nick Martell]

In fact, the cost of replacing each hourly retail worker is about 1500 bucks a person. So giving someone a 1500 dollar pay raise, it actually pays for itself because it prevents that worker from leaving.

[Jack Kravici Kramer]

After the merger, Price Costco has vastly expanded its territory. They have over 400 locations pulling in $16 billion in yearly sales.

[Nick Martell]

But Jack, this expansion presents a branding challenge that goes way beyond their awkward combined name. This has to do with Price. Costco's store brands.

[Jack Kravici Kramer]

Okay, we mentioned earlier that Saul Price innovated on the idea of store brands to leverage his position with suppliers. Those store brands they create are sometimes called private label brands, meaning it's made by one manufacturer whose name you don't know, then packaged under a different company's brand name that you do now.

[Nick Martell]

Now, Jack, if we're going to talk about private label brands, we should also talk about generics.

[Jack Kravici Kramer]

You'll sometimes hear store brands referred to as generics, but that's not totally right. Rite Aid brand vitamins, they still have a brand on them. It's just the store's brand.

[Nick Martell]

That's the key distinction. True generics were born in the 1970s, driven by that horrible economic recession we mentioned. To fight the rising prices on food, stores started offering cheaper groceries with zero branding at all, cans that were just labeled beans or fruit cocktail in very simple lettering.

[Jack Kravici Kramer]

Now, generics do keep a lot of families from going hungry during economically tough times, but they're also kind of humiliating. These tend to be inferior knockoff products and embarrassing to put in your shopping cart.

[Nick Martell]

These true generics, they're actually going to fade away by the early 90s. But store brands, they take on that generic brand stink, which is why in the very beginning, Costco is doing its best to make sure that their store brands do not look at all like store brands. They're rocking about 30 unique store brands on their shelves at this point, with different store brands assigned to each and every product. Like their dog food store brand, it's called Nutra Nuggets. And their store brand, soft drink, it's called simply Soda.

[Jack Kravici Kramer]

You've got Clout, Laundry detergent, and Ballantrae Wine. These names are meant to draw your eye away from the fact that they're store brands, almost like they're trying to pass as regular retail brands. But as Costco, sorry, price, Costco expands its territory post merger, they plan to open locations in Canada and the United Kingdom where private label goods are much more the norm. In fact, Jim visits England to do some retail research and learns that 50% of the food business there is private label products.

[Nick Martell]

But here's the tricky part, Jack Costco, they're going to have to clear all those different store brand trademarks for use in foreign countries. So for every new country that they enter, they're going to need to make sure that Nutra Nuggets, dog food, or Ballantrae wine is available as a trademark name.

[Jack Kravici Kramer]

Trademarks aren't cheap, and the paperwork can be massive.

[Nick Martell]

Jim says they're going to need a room full of attorneys just to take on this task. Forget baggers and stalkers. Costco's growth is going to depend on stockpiling a whole bunch of lawyers.

[Jack Kravici Kramer]

And there's another problem with this strategy. Sam's Club.

[Nick Martell]

Because pressure from the Walmart Corporation doesn't just stop Walmart, they're aggressively expanding Sam's Club onto the Costco turf. And they've got a jumbo sized vat of Walmart money to keep pushing.

[Jack Kravici Kramer]

So picture Jim Senegal one day in the mid-90s, walking up and down the aisles of his flagship warehouse store. He studies the sacks of Nutri Nuggets, dog food, the shelves of Ballantrae One wine, and the flats of Simply Soda. All these different brands that Costco actually owns. And he gets this feeling, who are we?

[Nick Martell]

Like, what are we actually making here?

[Jack Kravici Kramer]

Because you know what? Nutri Nuggets isn't a knockoff. It's a damn good product.

[Nick Martell]

Jack. This Ballantrae Pinot, pretty good Pinot.

[Jack Kravici Kramer]

These are high quality private label goods made exclusively for Costco, thanks to deals that Senegal McDonald's negotiated himself. So he thinks, why are we hiding our store brand products? Let's let the people know that these are Costco products. Let's pull a 180 and do the opposite of everyone else and embrace the private label.

[Nick Martell]

Jim Sinegal makes the biggest move we've seen yet. He decides to change everything about how the store brands work. For maybe the first time in retail history, he's going to try to make the store brand cool. One Costco store brand to rule them all.

[Jack Kravici Kramer]

It's the all hands meeting at Costco's corporate offices in the Seattle suburb of Kirkland, Washington. It's 1995. Jim Senegal is standing at the front of the room and he's asking his staff for a name.

[Nick Martell]

And that name with Seattle Signature.

[Jack Kravici Kramer]

Nice alliteration. I like solid word length. It works easily repeatable. But they're not able to clear the trademark.

[Nick Martell]

So they're like, all right, all right, we like the signature part. But signature, what city Signature, it doesn't really work for me. Cynical signature, It's a little ego y I'm feeling. That's not a good look.

[Jack Kravici Kramer]

What about where we are right now?

[Nick Martell]

Hey, legal is Kirkland Signature Take it isn't.

[Jack Kravici Kramer]

Because despite being the 12th largest city in the state of Washington, the biggest claim to fame of the city of Kirkland is that it's the hometown of a former Ms. Washington and the lead singer of the grunge band Mud Honey.

[Nick Martell]

So what we're saying here is that Kirkland Signature is still very available as a trademark.

[Jack Kravici Kramer]

So Costco clears the Kirkland Signature trademark in every country they plan to expand to. Then they pull every single one of their 30 store brands off the shelves, replacing them all with Kirkland Signature. One small step for branding, one giant leap for Costco.

[Nick Martell]

You've seen this logo because it may be on someone's tattoo who you've come across.

[Jack Kravici Kramer]

It's a big black rectangle with Kirkland written in all caps and white letters, and then signature written in, like, a cool calico California red. So the first Kirkland item to hit Costco shelves is Kirkland Signature vitamins in.

[Nick Martell]

A 5 million count bottle.

[Jack Kravici Kramer]

Of course, so many other signature products follow. Golf clubs and dish soaps, household wipes and $5 rotisserie chickens. This is unprecedented, Nick. For the first time, a major retailer has a private label brand across nearly all its products. And immediately, this unified branding starts paying dividends. They get to spend less on packaging and branding, since they can use the same logo on all of their products.

[Nick Martell]

They also now have a single brand to stand behind that is easily identifiable to the new shoppers. People love Costco, so they start to love Kirkland. Their feelings about one are transferring right over to the other.

[Jack Kravici Kramer]

People trust Kirkland Signature, and that's because Jim, Senegal has two cardinal rules for any Kirkland product. It has to match the name branding quality and beat the name brand in price.

[Nick Martell]

On the price side, Kirkland brands cost 15 to 20% less than the name brands because they're negotiated at a lower rate. So beating the name brand's price tag, yeah, that's. That's the easy stuff.

[Jack Kravici Kramer]

But matching the name brand on product quality, that's where Costco's sourcing for Kirkland products gets really clever. We've teased the fact that oftentimes the supplier of a private label brand is actually a name brand manufacturer selling anonymously at a discount.

[Nick Martell]

Yeah, like our buddies over at Duracell who sell surplus batteries to Costco, which they turn around and rebrand as Kirkland batteries.

[Jack Kravici Kramer]

And that Kirkland Signature roast coffee, That's Starbucks coffee in disguise. Or at least it was definitely Starbucks until 2023. And we know because they name dropped Starbucks right on the label.

[Nick Martell]

And Jack, Jim can pull this off because he knows what Saul figured out years ago. Brands want to be at his store, so they're incentivized to work with him to provide store brand goods.

[Jack Kravici Kramer]

And the prices on these goods, Jim negotiates them ferociously.

[Nick Martell]

He might look and sound like a total sweetheart, salt of the earth kind of guy, but this man, oh, he drives a hard bargain. He's looking to get his cardholding Costco members the lowest price possible. So he's willing to endure some awkward pauses on the phone calls with the sales reps to get those prices.

[Jack Kravici Kramer]

When dealing with suppliers, Jim has a rule. No one gets a better price than Us he actually drops a frozen food supplier when he gets wind that they're giving Walmart a better price than they're giving Costco.

[Nick Martell]

Jack, what about the Starbucks incident? We discovered that was wild.

[Jack Kravici Kramer]

One day, Jim Senegal reads in the newspaper that there's been a global drop in the price of coffee beans. And yet Starbucks, his supplier for coffee, has not lowered their wholesale bean prices to match.

[Nick Martell]

Because honestly, who would lower an agreed upon wholesale price voluntarily?

[Jack Kravici Kramer]

Well, Jim thinks that Starbucks should. So he threatens to drop Starbucks as a supplier if they don't lower their prices to match the global market price.

[Nick Martell]

And this goes all the way up to the CEO and founder of Starbucks, Howard Schultz.

[Jack Kravici Kramer]

Howard Schultz asked Jim, who do you think you are, the price police?

[Nick Martell]

And then Jim gives him one of his awkward pauses and then says, yeah, I have the price police. You better lower those coffee prices, Howie.

[Jack Kravici Kramer]

Jim figures I'm representing millions of Costco members and I'm not leaving till I get them the best deal possible.

[Nick Martell]

There are so many amazing stories like this where Jim is just fighting tooth and price cutting nail to get you a lower price on a Kirkland brand.

[Jack Kravici Kramer]

He's relentless.

[Nick Martell]

He's come a long way from loading up mattresses in the back of a truck like a human Tetris. And you're going to see just how relentless he is when it comes to a beloved Kirkland signature staple. Actually, maybe the most beloved Kirkland signature staple.

[Jack Kravici Kramer]

Get me some mustard because we're about to talk hot dogs. This episode is sponsored by Abbott. Let's talk about a small thing that can make a big difference if you have diabetes. The Freestyle Libre 3 Plus sensor. It's amazing how the sensor gives you real time glucose readings so you can see the impact of every meal and every activity to make better choices. The Freestyle Libre 3 sensor can help you live life with diabetes on your terms. You can try it free at FreestyleLibre US offer available for people who qualify. Visit MyFreestyle US to see all terms and conditions. Certain exclusions apply for prescription only safety info found@freestylelibre US. The year is 2008 and Costco is riding high. They have long since dropped the awkward price from their name, so they're just Costco now. And they've got around 500 locations. With over 100,000 workers. Sales are sitting at over $70 billion annually, making them bigger in today's dollars than bank of America, Tesla, Tesla or Disney. They've IPO'd, they're publicly traded, and Americans are buying stock in Costco like it's an 80 ounce tin of tuna.

[Nick Martell]

And a huge driver of Costco's success. It's Kirkland signature. People have given their trust to this brand. They know that if they see that label, it's just as good as the name brand, but cheaper. Whatever the Kirkland price, it's the best deal that they're gonna get.

[Jack Kravici Kramer]

Still, though no one is immune from market for forces, the prices of goods are rising. The 2008 global financial crisis is on the horizon. And one Kirkland product in particular is stressing out Costco's accountants.

[Nick Martell]

If you've been to Costco, you know that one of its most popular features isn't just the free samples, it's the entire food court fountain. Sodas, pizza slices, churros, something called a chicken bake.

[Jack Kravici Kramer]

But the star of the food court has always been the hot dog. A 100% all beef kosher dog that's been priced the same since the store opened in 1983.

[Nick Martell]

A buck 50, 20 ounce drink included.

[Jack Kravici Kramer]

So one day, Jim Senegal is approached by one of his employees, Craig Jelinek.

[Nick Martell]

Side note, eventually Craig is going to become Costco CEO. But in 2008, Jim, still the boss.

[Jack Kravici Kramer]

Well, Craig's run the numbers and he realizes that Costco is bleeding money with these Kirkland hot dogs. So Craig suggests maybe it's time to nudge the price up. Nothing crazy, maybe just a buck 75. Nick, can you read Jim's answer to Craig's suggestion?

[Nick Martell]

Jim says if you raise the price of the effing hot dog, I will kill you. Figure it out.

[Jack Kravici Kramer]

Because to Jim, this hot dog is the purest symbol of why customers trust the Kirkland brand completely. No other retailer is offering lower prices on hot dogs than Kirkland, that's for sure. The $50 price tag is a promise that Costco will always be on the customer side.

[Nick Martell]

Remember that sacred 14% markup ceiling that Jack and I mentioned earlier? Well, Jim describes the temptation to raise prices beyond 14% as being like heroin. It's addicting once you start. And then you start raising prices more and more. Sure, he'd gain back some short term liquidity and profitability, but would break trust in an instant. Jim would rather not give in to that temptation to raise prices even once.

[Jack Kravici Kramer]

And this is why customers, customers have so much faith in Costco and the Kirkland brands. They even have a saying Costco would never.

[Nick Martell]

Yeah, as in Costco would never price gouge. They would never sneakily swap out one ingredient with something cheaper. And they'd never raise the price of a Kirkland hot dog.

[Jack Kravici Kramer]

So Craig gets the message after this death threat. And sure enough, they work out a solution to lower cost of the hot dog even more. So they can stick with that $1.50 price, Costco stops buying their dogs from outside suppliers. In fact, Costco even builds their own hot dog manufacturing plant in Los Angeles. This reduces cost enough to make the hot dogs, if not profitable, a net loss that they can afford. The Kirkland hot dog still costs $1.50, and it still includes that 20 ounce soft drink.

[Nick Martell]

In fact, Costco sells 199 million of these hot dogs a year. That's. That's $300 million of dogs. It's this faith in Kirkland that has elevated it beyond trusted brand status into cult status.

[Jack Kravici Kramer]

Thou shalt not raise the price of hot dogs ever. Okay, so as we mentioned earlier, Costco limits how many items they carry in the store. Remember, 3,800 SKUs on the shelf compared to Walmart's 120,000. Wow. In other words, Costco offers only 3% as many things in the store as Walmart does.

[Nick Martell]

And here's the psychoeconomics on that. This method, it gives Costco shopping a special, you know, scarcity boost because you don't know when they're gonna have those Kirkland sweet potato fries again. So you'd better buy three. Actually, let's make it four. Let's make it five bags right now.

[Jack Kravici Kramer]

It's an equation that Fortune magazine calls bargain plus treasure equals fandom.

[Nick Martell]

But Jack, we also should share something fascinating about the cult of Kirkland, because it's one practice that so far, Walmart and Sam's Club, they just have not been able to replicate.

[Jack Kravici Kramer]

And it's not for lack of trying. Sam's Club introduced their own private label member's mark in 1998. But the obsession factor for member's mark, it was never there. So why is that? Well, there's a couple of possibilities. First, Sam's Club did not go all in on promoting their private label brand the way that Costco did.

[Nick Martell]

Sam's Club actually maintained 21 different private label brands up until 2017, when they finally consolidated all of them under the members mark label.

[Jack Kravici Kramer]

But we actually have another theory. Kirkland is Costco and Costco is the anti Walmart.

[Nick Martell]

Those aren't our words. Those are from a New York Times article published all the way back in 2005.

[Jack Kravici Kramer]

This profile laid out all the behind the scenes stuff that Jim Senegal was doing to make Costco different. Like worker salaries 42% higher on average. Than what was being offered at Sam's Club. Like Salt price before him, Jim Senegal made fair wages and benefits not just part of his mission, but part of his brand.

[Nick Martell]

Also, Jack, we should point out that store employees are just simply nicer when they're paid better, which makes a store a lot more pleasant, a place to shop.

[Jack Kravici Kramer]

And we're glad to support a place that creates that kind of environment. Today, Costco occupies the number 11 spot on the Fortune 500 companies in America with the highest revenue. Costco made nearly $250 billion in sales last year alone.

[Nick Martell]

Kirkland generated $56 billion of those revenues. If Kirkland were a standalone company, it would be bigger than Nike. It would be bigger than United Airlines. Kirkland would even have double the revenue of McDonald's.

[Jack Kravici Kramer]

There are currently about 550 separate Kirkland products, including shirts, hair growth serum, cat food, garlic shrimp, wildflower honey, and a great set of golf clubs.

[Nick Martell]

Oh, and Jack, we should point out that Walmart is finally trying to get in on this Kirkland Signature magic. They launched Better Goods, the first new Walmart brand in 20 years. And who knows, it may threaten Costco's dominance yet.

[Jack Kravici Kramer]

But one thing we've learned, never, ever count Kirkland out. So, Nick, now that you've heard the story of Costco's Kirkland signature brand, what's your takeaway?

[Nick Martell]

Jack, my takeaway is that content is king, but curation is queen. In a world of paralyzing choice, consumers, we appreciate when someone presents us with just the best options. This is the point of, like, top 10 lists and product review sites, travel agents, personal shoppers. All these are popular because the Internet has given us just a paralyzing amount of choice In a world of 17 Mayo options, there's value in Costco saving you time, effort, and research by curating just three simple options to choose from. Content is king, but curation is queen. But Jack, what about you? What is your takeaway on Costco's Kirkland Signature?

[Jack Kravici Kramer]

Companies should write their own corporate 10 commandments. Now, they don't have to be exactly 10, but companies need a few unbreakable rules to keep them aligned on their first principles. We mentioned that Costco never raises prices beyond a 15% profit margin for Kirkland products and 14% profit margin for name brands.

[Nick Martell]

It's a holy rule that's actually shocking.

[Jack Kravici Kramer]

To have a rule like that. Most companies, if they have pricing power, they increase the prices as high as customers are willing to tolerate. But Jim, Senegal, his cardinal value, says no.

[Nick Martell]

Jack, I think you said he compared Hiking prices by like a few bucks to trying heroin.

[Jack Kravici Kramer]

Yeah, but because Costco treats the 14% profit cap as a sacred vow, a commandment, customers trust them without question. That's why there are almost 130 million Costco card holders shopping today. Before we go, it's time for our absolute favorite part of the show. The best facts yet.

[Nick Martell]

The hero stats, facts and surprises we discovered in our research. But we just couldn't fit into the story.

[Jack Kravici Kramer]

Nick, what have you got?

[Nick Martell]

So, Jack, in America, you can learn a whole lot about our states based on our favorite Kirkland products. In Arizona, California and Illinois, it's Kirkland brand Prosecco. That's their top seller.

[Jack Kravici Kramer]

In New Mexico, it's Kirkland branded leggings that are the top sellers.

[Nick Martell]

And Jack, it's not just stuff you can fit in your cart. Because Costco is also now getting into the real estate game.

[Jack Kravici Kramer]

In South LA, Costco is building a new warehouse, plus 800 apartment units on top of the store.

[Nick Martell]

Kirkland condos. It's happening, baby.

[Jack Kravici Kramer]

And finally, here are some other big ticket items besides apartments that you might not have known were sold at Costco.

[Nick Martell]

Okay, Jack. Gold bars, cars and jewelry.

[Jack Kravici Kramer]

In fact, Costco's jewelry sales are about on par with Tiffany. Maybe someday we'll even be able to go to a museum and see the Kirkland diamond.

[Nick Martell]

Although it wouldn't really be a museum, Jack. It would kind of be more like a shrine, right?

[Jack Kravici Kramer]

A shrine where the cult members worship.

[Nick Martell]

As long as you got a membership card.

[Jack Kravici Kramer]

And that is why Kirkland signature is the Best Idea Yet.

[Nick Martell]

Coming up on the next episode of the Best Idea yet. Put out your biggest snack bowl because we're talking Goldfish crackers. The Goldfish crackers follow the Best Idea.

[Jack Kravici Kramer]

Yet on the Wondery app, Amazon Music, or wherever you get your podcasts. You can listen to every episode of the Best Idea yet early and ad free right now by joining Wondery in the Wondery app or on Apple Podcasts.

[Nick Martell]

Before you go, tell us about yourself by filling out a short [e-mail] survey. The best idea yet is a production of Wondery hosted by me, Nick Martell.

[Jack Kravici Kramer]

And me, Jack Kravici Kramer.

[Nick Martell]

And hey, if you have a product you're obsessed with, but you wish you knew the backstory, drop us a comment. We'll look into it for you. Oh, and don't forget to rate and review the podcast.

[Jack Kravici Kramer]

Our senior producers are Matt Beagle and Chris Gautier.

[Nick Martell]

Peter Arcuni is our additional senior producer.

[Jack Kravici Kramer]

Our senior managing producer is Nick Ryan. And Taylor Sniff is our managing producer. Our associate producer is H. Conley.

[Nick Martell]

Research by Hannah Ward.

[Jack Kravici Kramer]

This episode was written and produced by Katie Clark Gray. We used many sources in our research. A few that were essential for this episode were the Cult of Costco by.

[Nick Martell]

Phil Waba for Fortune How Costco Became the Anti Walmart by Steven Greenhouse for.

[Jack Kravici Kramer]

The New York Times Sound design and mixing by CJ Drummler Fact checking by Molly Artwick Music supervision by Scott Velazquez and Jolina Garcia for Freeson Sync.

[Nick Martell]

Our theme song is Got that Feeling Again by Blackalac. Executive producers for Nick and Jack Studios are me, Nick Martel and me, Jack Revici Kramer. Executive producers for Wondery are Dave Easton, Jenny lauer, Beckman, Aaron O'Flaherty and Marshall Louie.

[C]

What's up, guys? It's your girl, Keke. And my podcast is back with a new season and let me tell you, it's too good. And I'm diving into the brains of entertainment's best and brightest. Okay, Every episode I bring on a friend and have a real conversation. And I don't mean just friends. I mean the likes of Amy Poehler, Kel Mitchell, Vivica Fox. The list goes on. And now I have my own YouTube channel. So follow, watch and listen to Baby this is Keke Palmer on the Wondery app or wherever you get your podcast. Watch full episodes on YouTube and you can listen to Baby this is Keke Palmer early and after free right now by joining Wondery and my headphones because it's time to get into it. Holla at your girl.