فصل 02

2

Starting on a Dime

“From the time we were kids, Sam could excel at anything he set his mind to. I guess it’s just the way he was born. Back when he carried newspapers, they had a contest. I’ve forgotten what the prizes were—maybe $10, who knows. He won that contest, going out selling new subscriptions door to door. And he knew he was going to win. It’s just the makeup of the man. My only explanation is that Sam has a lot of our mother’s characteristics.”

—BUD WALTON

I don’t know what causes a person to be ambitious, but it is a fact that I have been overblessed with drive and ambition from the time I hit the ground, and I expect my brother’s probably right. Our mother was extremely ambitious for her kids. She read a lot and loved education, although she didn’t have too much herself. She went to college for a year before she quit to get married, and maybe to compensate for that, she just ordained from the beginning that I would go to college and make something of myself. One of the great sadnesses in my life is that she died young, of cancer, just as we were beginning to do well in business.

Mother must have been a pretty special motivator, because I took her seriously when she told me I should always try to be the best I could at whatever I took on. So, I have always pursued everything I was interested in with a true passion—some would say obsession—to win. I’ve always held the bar pretty high for myself: I’ve set extremely high personal goals.

Even when I was a little kid in Marshall, Missouri, I remember being ambitious. I was a class officer several years. I played football and baseball and basketball with the other kids, and I swam in the summers. I was so competitive that when I started Boy Scouts in Marshall I made a bet with the other guys about which one of us would be the first to reach the rank of Eagle. Before I made Eagle in Marshall, we had moved to the little town of Shelbina, Missouri—population maybe 1,500—but I won the bet; I got my Eagle at age thirteen—the youngest Eagle Scout in the history of the state of Missouri at that time.

FROM THE SHELBINA DEMOCRAT, SUMMER 1932:

“Because of his training in Boy Scout work, Sammy Walton, 14-year-old son of Mr. and Mrs. Tom Walton of Shelbina, rescued Donald Peterson, little son of Prof. and Mrs. K.R. Peterson, from drowning in Salt River Thursday afternoon…

“Donald got into water too deep for him and called for help. Loy Jones, who had accompanied the boys, made an effort to get him out, but Donald’s struggles pulled Mr. Jones down several times. Young Walton, who was some distance away, got to the pair just as Donald went down a fifth time. He grasped him from behind, as he had been taught to do, pulled him to shore and applied artificial respiration that scouts must become proficient in.

“Donald was unconscious and his whole body had turned blue. It took quite a while to bring him around.”

They said I saved his life—maybe yes, maybe no. Newspapers tend to exaggerate these things. But at least I got him out of the water. Looking back on such boyhood episodes helps me to realize now that I’ve always had a strong bias toward action—a trait that has been a big part of the Wal-Mart story. Truthfully, though, talking about this embarrasses me a good bit because I worry that it seems like I’m bragging or trying to make myself out to be some big hero. It particularly bothers me because I learned a long time ago that exercising your ego in public is definitely not the way to build an effective organization. One person seeking glory doesn’t accomplish much; at Wal-Mart, everything we’ve done has been the result of people pulling together to meet one common goal—teamwork—something I also picked up at an early age.

Team play began for me when I was in the fifth grade, and a friend of mine’s dad organized a bunch of us into a peewee football team. We competed against other towns, like Odessa and Sedalia and Richmond. I played end, but I wanted to throw the ball or be a running back, even though I was a little guy and couldn’t squeeze my way in yet. Team athletics remained a big part of my life all through high school and —at the intramural level—in college too. By the time we moved to Shelbina, I had more football experience than most of the other kids in the ninth grade, so I was able to make the team as a second-string quarterback. I was still small—only about 130 pounds—but I knew a lot about blocking and tackling and throwing the ball, and by being extremely competitive I got my letter.

Then we moved on again—this time to Columbia, Missouri. There, at Hickman High School, I got involved in just about everything. I wasn’t what you’d call a gifted student, but I worked really hard and made the honor roll. I was president of the student body and active in a lot of clubs—I remember the speech club in particular—and I was voted Most Versatile Boy. I was really a gym rat. I loved hanging around that gym playing basketball, but I didn’t go out for the team—maybe because I was only five nine. When I was a senior, though, they drafted me for the team, and I became a guard, sometimes a starter. I wasn’t a great shot, but I was a pretty good ball handler and a real good floor leader. I liked running the team, I guess. We went undefeated—and in one of my biggest thrills—won the state championship.

My high school athletic experience was really unbelievable, because I was also the quarterback on the football team, which went undefeated too—and won the state championship as well. I didn’t throw particularly well, but we were mostly a running team. And I was fairly slow for a back, but I was shifty, sometimes so shifty that I would fall down with a bunch of daylight in front of me. On defense, my favorite thing was when the coach would slip me in and let me play linebacker. I had a good sense for where the ball was going to go, and I really loved to hit. I guess I was just totally competitive as an athlete, and my main talent was probably the same as my best talent as a retailer—I was a good motivator.

This is hard to believe, but it’s true: in my whole life I never played in a losing football game. I certainly can’t take much of the credit for that, and, in fact, there was definitely some luck involved. I was sick or injured for a couple of games that we wouldn’t have won with or without me—so I dodged the bullet on a few losses that I could have played in. But I think that record had an important effect on me. It taught me to expect to win, to go into tough challenges always planning to come out victorious. Later on in life, I think Kmart, or whatever competition we were facing, just became Jeff City High School, the team we played for the state championship in 1935. It never occurred to me that I might lose; to me, it was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy.

Having been the quarterback for the Hickman Kewpies—the undefeated state champions—I was already pretty well known around Columbia, where the University of Missouri is located. So my high school career just merged right on into college. Most of the fraternities were really for the more well-to-do kids, and I ordinarily wouldn’t have qualified for membership. But they rushed me even as a town boy, and I had my pick of the best. I chose Beta Theta Pi because they were the top scholastic fraternity and had led the intramural athletic league for a number of years.

When I was a sophomore, the Betas made me rush captain. So I bought a real old Ford, and I traveled the whole state that summer, interviewing potential Beta candidates. With all this competitive spirit and ambition I had back then, I even entertained thoughts of one day becoming President of the United States.

Closer at hand, I had decided I wanted to be president of the university student body. I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you. I did that in college. I did it when I carried my papers. I would always look ahead and speak to the person coming toward me. If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend. I ran for every office that came along. I was elected president of the senior men’s honor society, QEBH, an officer in my fraternity, and president of the senior class. I was captain and president of Scabbard and Blade, the elite military organization of ROTC.

FROM AN ARTICLE CALLED “HUSTLER WALTON” IN FRATERNITY NEWSPAPER, 1940:

“Sam is one of those rare people who knows every janitor by name, passes plates in church, loves to join organizations . . . Sam’s ability to lead has been the cause of much ribbing. His military uniform has let him be called ‘Little Caesar.’ For his presidency of the Bible class he suffered the nickname ‘Deacon.’”

Also while I was at Missouri, I was elected president of the Burall Bible Class—a huge class made up of students from both Missouri and Stephens College. Growing up, I had always gone to church and Sunday school every Sunday; it was an important part of my life. I don’t know that I was that religious, per se, but I always felt like the church was important. Obviously, I enjoyed running for office during my college years. But aside from dabbling in some city council politics years later, I really left my ambitions for elected office on the college campus.

I was about to graduate from the University of Missouri in June of 1940 with a business degree, and I had been working probably as hard as I ever worked in my life. I’ve always had lots of energy, but I was tired. Ever since high school, I had made all my own money and paid for all my own clothes. That continued in college except I had to add tuition and food and fraternity dues and date money to my expenses. Dad and Mother would have been glad to help if they could have, but it was the Depression and they had no extra money at all. I had continued to throw a newspaper route all through high school, and in college I added a few more routes, hired a few helpers, and turned it into a pretty good business. I made about $4,000 to $5,000 a year, which at the end of the Depression was fairly serious money.

EZRA ENTREKIN, FORMER CIRCULATION MANAGER OF THE COLUMBIA MISSOURIAN:

“We hired Sam to deliver newspapers, and he really became our chief salesman. When school started, we had a drive to get the kids in the fraternities and sororities to subscribe. And Sam was the boy we had do that because he could sell more than anybody else. He was good. He was really good. And dedicated. And he did a lot of other things besides deliver newspapers. In fact, he was a little bit scatterbrained at times. He’d have so many things going, he’d almost forget one. But, boy, when he focused on something, that was it.”

In addition to the newspapers, I waited tables in exchange for meals, and I was also the head lifeguard in charge of the swimming pool. You can see that I was a pretty busy fellow, and you can see why my notorious respect for the value of a dollar continued. But now that I was about to become a college graduate, I was ready to give up this routine, really eager to get out in the world and make something of myself in a real job.

My first exposure to the possibilities of retail had come in 1939, when our family happened to move next door to a guy named Hugh Mattingly. He had been a barber in Odessa, Missouri, before he and his brothers started a variety store chain which had grown to around sixty stores by that time. I would talk with him about merchandising, how to do it, and how well it was working out for him. He took an interest in me, and later even offered me a job.

But I never seriously considered retail in those days. In fact, I was sure I was going to be an insurance salesman. I had a high school girlfriend whose father was a very successful salesman for General American Life Insurance Company, and I had talked to him about his business. It appeared to me that he was making all the money in the world. Insurance seemed like a natural for me because I thought I could sell. I had always sold things. As a little kid I sold Liberty magazines for a nickel, and then switched to Woman’s Home Companion when it came along for a dime, figuring I could make twice as much money. The girl and I broke up, but I still had big plans. I figured I would get my degree and go on to the Wharton School of Finance in Pennsylvania. But as college wound down, I realized that even if I kept up the same kind of work routine I’d had all through college, I still wouldn’t have the money to go to Wharton. So I decided to cash in what chips I already had, and I visited with two company recruiters who had come to the Missouri campus. Both of them made me job offers. I accepted the one from JC Penney; I turned down the one from Sears Roebuck. Now I realize the simple truth: I got into retailing because I was tired and I wanted a real job.

The deal was pretty straightforward—report to the JC Penney store in Des Moines, Iowa, three days after graduation, June 3, 1940, and begin work as a management trainee. Salary: $75 a month. That’s the day I went into retail, and—except for a little time out as an Army officer—that’s where I’ve stayed for the last fifty-two years. Maybe I was born to be a merchant, maybe it was fate. I don’t know about that kind of stuff. But I know this for sure: I loved retail from the very beginning, and I still love it today. Not that it went all that smooth right off the bat.

Like I said, I could sell. And I loved that part. Unfortunately, I never learned handwriting all that well. Helen says there’re only about five people in the world who can read my chicken scratch—she’s not one of them—and this began to cause some problems for me at my new job. Penney’s had a fellow out of New York named Blake, who traveled around the country auditing stores and evaluating personnel and whatnot, and he would come to see us pretty regularly. I remember him as a big fellow, over six feet, who always dressed to the nines, you know, Penney’s best suits and shirts and ties. Anyway, he’d get all upset at the way I would screw up the sales slips and generally mishandle the cash register part of things. I couldn’t stand to leave a new customer waiting while I fiddled with paperwork on a sale I’d already made, and I have to admit it did create some confusion.

“Walton,” Blake would say to me when he came to Des Moines, “I’d fire you if you weren’t such a good salesman. Maybe you’re just not cut out for retail.”

Fortunately, I found a champion in my store manager, Duncan Majors, a great motivator, who was proudest of having trained more Penney managers than anybody else in the country. He had his own techniques and was a very successful manager. His secret was that he worked us from six-thirty in the morning until seven or eight o’clock at night. All of us wanted to become managers like him. On Sundays, when we weren’t working, we would go out to his house—there were about eight of us, all men—and we would talk about retailing, of course, but we also played Ping-Pong or cards. It was a seven-day job. I remember one Sunday Duncan Majors had just gotten his annual bonus check from Penney’s and was waving it around all over the place. It was for $65,000, which impressed the heck out of us boys. Watching this guy is what got me excited about retail. He was really good. Then, of course, the icing on the cake was when James Cash Penney himself visited the store one day. He didn’t get around to his stores as often as I would later on, but he did get around. I still remember him showing me how to tie and package merchandise, how to wrap it with very little twine and very little paper but still make it look nice.

I worked for Penney’s about eighteen months, and they really were the Cadillac of the industry as far as I was concerned. But even back then I was checking out the competition. The intersection where I worked in Des Moines had three stores, so at lunch I would always go wander around the Sears and the Yonkers stores to see what they were up to.

By early 1942, though, the war was on, and as an ROTC graduate I was gung-ho to go, ready to ship out overseas and see my share of the action. But the Army had a big surprise for me. Because of a minor heart irregularity, I flunked the physical for combat duty and was classified for limited duty. This kind of got me down in the dumps, and since I was just waiting around to be called up anyway I quit my Penney’s job and wandered south, toward Tulsa, with some vague idea of seeing what the oil business was like. Instead, I got a job at a big Du Pont gunpowder plant in the town of Pryor, outside Tulsa. The only room I could find to stay in was nearby, over in Claremore. That’s where I met Helen Robson one April night in a bowling alley.

HELEN WALTON:

“I was out on a date with another fellow, and it was the first time I’d ever been bowling. I had just rolled the ball and when I came back to the seats —they were those old wooden theater chairs—Sam had his leg up over the armrest of one of them, and he smiled at me and said, corny as it was, “Haven’t I met you somewhere before?” We discovered that he had dated a girl I knew in college. Later on, he called me and asked me for her number, and I think maybe he even went out with her. But pretty soon, he and I were going out together. My whole family just fell in love with him, and I always said he fell in love as much with my family as he did with me.”

When Helen and I met and I started courting her, I just fell right in love. She was pretty and smart and educated, ambitious and opinionated and strong-willed —with ideas and plans of her own. Also, like me, she was an athlete who loved the outdoors, and she had lots of energy.

HELEN WALTON:

“I always told my mother and dad that I was going to marry someone who had that special energy and drive, that desire to be a success. I certainly found what I was looking for, but now I laugh sometimes and say maybe I overshot a little.”

At the same time Helen and I fell for each other, I was finally called up to the Army for active duty. Because of my heart irregularity, I couldn’t see combat, but I was still able to accept my ROTC commission as a second lieutenant. By the time I went into the Army I had two things settled: I knew who I wanted to marry, and I knew what I wanted to do for a living—retailing. About a year after I went into the Army, Helen and I were married on Valentine’s Day, 1943, in her hometown of Claremore, Oklahoma.

I wish I could recount a valiant military career—like my brother Bud, who was a Navy bomber pilot on a carrier in the Pacific—but my service stint was really fairly ordinary time spent as a lieutenant and then as a captain doing things like supervising security at aircraft plants and POW camps in California and around the country.

Helen and I spent two years living the Army life, and when I got out in 1945, I not only knew I wanted to go into retailing, I also knew I wanted to go into business for myself. My only experience was the Penney job, but I had a lot of confidence that I could be successful on my own. Our last Army posting was in Salt Lake City, and I went to the library there and checked out every book on retailing. I also spent a lot of my off-duty time studying ZCMI, the Mormon Church’s department store out there, just figuring that when I got back to civilian life I would somehow go into the department store business. The only question left was where we were going to set up housekeeping.

HELEN WALTON:

“My father wanted us to move to Claremore, but I told him, ‘Dad, I want my husband to be himself, I don’t want him to be L. S. Robson’s son-in-law. I want him to be Sam Walton.”

As I mentioned, Helen’s father was a very prominent lawyer, banker, and rancher, and she felt we should be independent. I agreed with her, and I thought our best opportunity might be in St. Louis. As it turned out, an old friend of mine, Tom Bates, also wanted to go into the department store business. I’d known Tom when we were kids in Shelbina—his father owned the biggest department store in town—and Tom and I were roommates in the Beta Theta Pi fraternity house at Missouri. When I got out of the Army, I caught up with Tom in St. Louis. He was working in the shoe department of Butler Brothers. Butler Brothers was a regional retailer with two franchise operations: Federated Stores, a chain of small department stores, and Ben Franklin, a chain of variety stores, what we used to call “five and dimes” or “dime stores.”

Tom had a great idea, I thought. He and I would become partners, each putting up $20,000, and buy a Federated department store on Del Mar Avenue in St. Louis. Helen and I had $5,000 or so, and I knew we could borrow the rest from her father, who always had a lot of faith in me and was very supportive. Man, I was all set to become a big-city department store owner. That’s when Helen spoke up and laid down the law.

Helen walton:

“Sam, we’ve been married two years and we’ve moved sixteen times. Now, I’ll go with you any place you want so long as you don’t ask me to live in a big city. Ten thousand people is enough for me.”

So any town with a population over 10,000 was off-limits to the Waltons. If you know anything at all about the initial small-town strategy that got Wal-Mart going almost two decades later, you can see that this pretty much set the course for what was to come. She also said no partnerships; they were too risky. Her family had seen some partnerships go sour, and she was dead-set in the notion that the only way to go was to work for yourself. So I went back to Butler Brothers to see what else they might have for me.

What they had was a Ben Franklin variety store in Newport, Arkansas—a cotton and railroad town of about 7,000 people, in the Mississippi River Delta country of eastern Arkansas. I remember riding down there on the train from St. Louis, still wearing my Army uniform with the Sam Browne belt, and walking down Front Street to give this store—my dream—the once-over. A guy from St. Louis owned it, and things weren’t working out at all for him. He was losing money, and he wanted to unload the store as fast as he could. I realize now that I was the sucker Butler Brothers sent to save him. I was twenty-seven years old and full of confidence, but I didn’t know the first thing about how to evaluate a proposition like this so I jumped right in with both feet. I bought it for $25,000 —$5,000 of our own money and $20,000 borrowed from Helen’s father. My naiveté about contracts and such would later come back to haunt me in a big way.

But at the time I was sure Newport and the Ben Franklin had great potential, and I’ve always believed in goals, so I set myself one: I wanted my little Newport store to be the best, most profitable variety store in Arkansas within five years. I felt I had the talent to do it, that it could be done, and why not go for it? Set that as a goal and see if you can’t achieve it. If it doesn’t work, you’ve had fun trying.

Only after we closed the deal, of course, did I learn that the store was a real dog. It had sales of about $72,000 a year, but its rent was 5 percent of sales—which I thought sounded fine—but which, it turned out, was the highest rent anybody’d ever heard of in the variety store business. No one paid 5 percent of sales for rent. And it had a strong competitor—a Sterling Store across the street—whose excellent manager, John Dunham, was doing more than $150,000 a year in sales, double mine.

For all my confidence, I hadn’t had a day’s experience in running a variety store, so Butler Brothers sent me for two weeks’ training to the Ben Franklin in Arkadelphia, Arkansas. After that, I was on my own, and we opened for business on September 1, 1945. Our store was a typical old variety store, 50 feet wide and 100 feet deep, facing Front Street, in the heart of town, looking out on the railroad tracks. Back then, those stores had cash registers and clerk aisles behind each counter throughout the store, and the clerks would wait on the customers. Self-service hadn’t been thought of yet.

It was a real blessing for me to be so green and ignorant, because it was from that experience that I learned a lesson which has stuck with me all through the years: you can learn from everybody. I didn’t just learn from reading every retail publication I could get my hands on, I probably learned the most from studying what John Dunham was doing across the street.

HELEN WALTON:

“It turned out there was a lot to learn about running a store. And, of course, what really drove Sam was that competition across the street—John Dunham over at the Sterling Store. Sam was always over there checking on John. Always. Looking at his prices, looking at his displays, looking at what was going on. He was always looking for a way to do a better job. I don’t remember the details, but I remember some kind of panty price war they got into. Later on, long after we had left Newport, and John had retired, we would see him and he would laugh about Sam always being in his store. But I’m sure it aggravated him quite a bit early on. John had never had good competition before Sam.”

I learned a tremendous amount from running a store in the Ben Franklin franchise program. They had an excellent operating program for their independent stores, sort of a canned course in how to run a store. It was an education in itself. They had their own accounting system, with manuals telling you what to do, when and how. They had merchandise statements, they had accounts-payable sheets, they had profit-and-loss sheets, they had little ledger books called Beat Yesterday books, in which you could compare this year’s sales with last year’s on a day-by-day basis. They had all the tools that an independent merchant needed to run a controlled operation. I had no previous experience in accounting—and I wasn’t all that great at accounting in college—so I just did it according to their book. In fact, I used their accounting system long after I’d started breaking their rules on everything else. I even used it for the first five or six Wal-Marts.

As helpful as that franchise program was to an eager-to-learn twenty-seven-year-old kid, Butler Brothers wanted us to do things literally by the book—their book. They really didn’t allow their franchisees much discretion. The merchandise was assembled in Chicago, St. Louis, or Kansas City. They told me what merchandise to sell, how much to sell it for, and how much they would sell it to me for. They told me that their selection of merchandise was what the customers expected. They also told me I had to buy at least 80 percent of my merchandise from them, and if I did, I would get a rebate at year-end. If I wanted to make a 6 or 7 percent net profit, they told me I would have to hire so much help and do so much advertising. This is how most franchises work.

At the very beginning, I went along and ran my store by their book because I really didn’t know any better. But it didn’t take me long to start experimenting —that’s just the way I am and always have been. Pretty soon I was laying on promotional programs of my own, and then I started buying merchandise directly from manufacturers. I had lots of arguments with manufacturers. I would say, “I want to buy these ribbons and bows direct. I don’t want you to sell them to Butler Brothers and then I have to pay Butler Brothers 25 percent more for them. I want it direct.” Most of the time, they didn’t want to make Butler Brothers mad so they turned me down. Every now and then, though, I would find one who would cross over and do it my way.

That was the start of a lot of the practices and philosophies that still prevail at Wal-Mart today. I was always looking for offbeat suppliers or sources. I started driving over to Tennessee to some fellows I found who would give me special buys at prices way below what Ben Franklin was charging me. One I remember was Wright Merchandising Co. in Union City, which would sell to small businesses like mine at good wholesale prices. I’d work in the store all day, then take off around closing and drive that windy road over to the Mississippi River ferry at Cottonwood Point, Missouri, and then into Tennessee with an old homemade trailer hitched to my car. I’d stuff that car and trailer with whatever I could get good deals on—usually on softlines: ladies’ panties and nylons, men’s shirts —and I’d bring them back, price them low, and just blow that stuff out the store.

I’ve got to tell you, it drove the Ben Franklin folks crazy. Not only were they not getting their percentages, they couldn’t compete with the prices I was buying at. Then I started branching out further than Tennessee. Somehow or another, I got in touch by letter with a manufacturer’s agent out of New York named Harry Weiner. He ran Weiner Buying Services at 505 Seventh Avenue. That guy ran a very simple business. He would go to all these different manufacturers and then list what they had for sale. When somebody like me sent him an order, he would take maybe 5 percent for himself and then send the order on to the factory, which would ship it to us. That 5 percent seemed like a pretty reasonable cut to me, compared to 25 percent for Ben Franklin.

I’ll never forget one of Harry’s deals, one of the best items I ever had and an early lesson in pricing. It first got me thinking in the direction of what eventually became the foundation of Wal-Mart’s philosophy. If you’re interested in “how Wal-Mart did it,” this is one story you’ve got to sit up and pay close attention to. Harry was selling ladies’ panties—two-barred, tricot satin panties with an elastic waist—for $2.00 a dozen. We’d been buying similar panties from Ben Franklin for $2.50 a dozen and selling them at three pair for $1.00. Well, at Harry’s price of $2.00, we could put them out at four for $1.00 and make a great promotion for our store.

Here’s the simple lesson we learned—which others were learning at the same time and which eventually changed the way retailers sell and customers buy all across America: say I bought an item for 80 cents. I found that by pricing it at $1.00 I could sell three times more of it than by pricing it at $1.20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough. But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.

I began to mull this idea in Newport, but it would be another ten years before I took it seriously. I couldn’t follow up on it in Newport because the Ben Franklin program was too cut-and-dried to permit it. And despite my dealings with the likes of Harry Weiner, I still had that contract saying I was supposed to buy at least 80 percent of my merchandise from Ben Franklin. If I missed that target, I didn’t get my year-end rebate. The fact of the matter is I stretched that contract every way I could. I would buy as much as I could on the outside and still try to meet the 80 percent. Charlie Baum—who was then one of the field men for Ben Franklin—would say we were only at 70 percent, and I would foam at the mouth and rant and rave about it. I guess the only reason Butler Brothers didn’t give me a harder time about it all is that our store had quickly gone from being a laggard to one of the top performers in our district.

Things began to clip along pretty good in Newport in a very short time. After only two and a half years we had paid back the $20,000 Helen’s father loaned us, and I felt mighty good about that. It meant the business had taken off on its own, and I figured we were really on our way now.

We tried a lot of promotional things that worked really well. First, we put a popcorn machine out on the sidewalk, and we sold that stuff like crazy. So I thought and thought about it and finally decided what we needed was a soft ice cream machine out there too. I screwed my courage up and went down to the bank and borrowed what at the time seemed like the astronomical sum of $1,800 to buy that thing. That was the first money I ever borrowed from a bank. Then we rolled the ice cream machine out there on the sidewalk next to the popcorn machine, and I mean we attracted some attention with those two. It was new and different—another experiment—and we really turned a profit on it. I paid off that $1,800 note in two or three years, and I felt great about it. I really didn’t want to be remembered as the guy who lost his shirt on some crazy ice cream machine.

CHARLIE BAUM:

“Everybody wanted to go see Sam Walton’s store. We never had another store that had a Ding Dong ice cream bar in it, one of those ice cream—making machines. People went there for that, and it was fantastic. But one Saturday night for some reason they forgot to clean that machine up when they closed, and I went by there the next day with some of my clients to show them Sam’s front window. And I want to tell you, the flies in that window were just out of this world.”

As good as business was, I never could leave well enough alone, and, in fact, I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart. As I mentioned, we faced Front Street, and our biggest competitor—John Dunham’s Sterling Store—was across Hazel Street on the other corner. His store was slightly smaller than ours, but he still managed to do twice as much business as our store did before we bought it. We were coming on strong, though. In our first year, the Ben Franklin did $105,000 in sales, compared to $72,000 under the old owner. Then the next year $140,000, and then $175,000.

Finally we caught, and then passed, old John over there across Hazel Street. But next door to him, on the other side from us, was a Kroger grocery store. By now, I was real involved in the community and kept my ear to the ground pretty good, and I heard that Sterling was going to buy Kroger’s lease and expand John’s store into that space, making their store much bigger than mine. So I hustled down to Hot Springs, to find the landlady of that Kroger building. Somehow, I convinced her to give me the lease, instead of giving it to Sterling. I didn’t have any idea what I was going to do with it, but I sure knew I didn’t want Sterling to have it. Well, I decided to put in a small department store. Now Newport already had several department stores, one of which happened to be owned by my store’s landlord, P. K. Holmes. That may or may not have had something to do with the trouble which was going to come soon. But we didn’t think anything about it.

I drew up a plan, bought a sign, bought new fixtures from a company up in Nebraska, and bought the merchandise—dresses, pants, shirts, jackets, whatever I thought I could sell. The fixtures arrived on Wednesday by train, and Charlie Baum, who was supposed to be supervising my merchandising for Butler Brothers, offered to help me put everything together. He was the most efficient store layer-outer I’ve ever known. We went over to the railroad tracks and unloaded the fixtures, put them together, laid out the store, put the merchandise together—and opened six days later on Monday. We called it the Eagle Store.

So now we had two stores on Front Street in Newport. I would run up and down the alley with merchandise: if it didn’t sell in one store, I would try it in the other. I guess they competed with each other, but not much. By now, the Ben Franklin was doing really well. The Eagle never made much money, but I figured I’d rather have a small profit than have my competitor over there in a big store. I had to hire my first assistant manager to help out in the Ben Franklin while I was running back and forth, and my brother Bud had come home from the war and was working with me too.

BUD WALTON

“That Newport store was really the beginning of where Wal-Mart is today. We did everything. We would wash windows, sweep floors, trim windows. We did all the stockroom work, checked the freight in. Everything it took to run a store. We had to keep expenses to a minimum. That is where it started, years ago. Our money was made by controlling expenses. That, and Sam always being ingenious. He never stopped trying to do something different. One thing, though: I never forgave him for making me clean out that damned ice cream machine. He knew I’d hated milk and dairy products ever since we were kids. He used to squirt me when he milked the cows. I always thought he gave me that job because he knew I didn’t like milk. He still laughs about it.”

We couldn’t have felt better about our situation down there. Helen and I both have the kinds of personalities that make us want to participate in community life, and we had become deeply involved. We had joined the Presbyterian church there, and even though I was a Methodist, it worked out real well. Just as Helen and I were raised in the church, we felt that our kids would benefit from a church upbringing. Church is an important part of society, especially in small towns. Whether it’s the contacts and associations you make or the contributions you might make toward helping other folks, it all sort of ties in together. Helen was very active in her churchwork, which she still is today, and in PEO, an international women’s organization. Our four children had come along by now, and Helen really loved Newport. I was a member of the church’s board of deacons, was active in the Rotary Club, and had become president of the Chamber of Commerce as well as head of its industrial committee. I was pretty much involved in everything around town.

It so happened that on the other side of our store, also on Front Street, was a JC Penney. We didn’t compete much, and I was friendly with the manager. So one day this dapper supervisor from New York named Blake came to town to audit that store and got to chatting with the manager.

“Say,” the manager told Blake, “we’ve got an ex-Penney man right here in Newport. He came in a few years ago and really made a big success of it. He doubled sales in his Ben Franklin, he’s got two stores, and he’s the president of the Chamber of Commerce.” And when the manager told him it was Sam Walton, old Blake almost fell over. “It can’t be the same one I knew in Des Moines,” he said. “That fellow couldn’t have amounted to anything.” He came next door and we both had a big laugh about it when he saw that I really was that kid who couldn’t write so you could read it.

By now, my five years in Newport were about up, and I had met my goal. That little Ben Franklin store was doing $250,000 in sales a year, and turning $30,000 to $40,000 a year in profit. It was the number-one Ben Franklin store—for sales or profit—not only in Arkansas, but in the whole six-state region. It was the largest variety store of any sort in Arkansas, and I don’t believe there was a bigger one in the three or four neighboring states.

Every crazy thing we tried hadn’t turned out as well as the ice cream machine, of course, but we hadn’t made any mistakes we couldn’t correct quickly, none so big that they threatened the business. Except, it turned out, for one little legal error we made right at the beginning. In all my excitement at becoming Sam Walton, merchant, I had neglected to include a clause in my lease which gave me an option to renew after the first five years.

And our success, it turned out, had attracted a lot of attention. My landlord, the department store owner, was so impressed with our Ben Franklin’s success that he decided not to renew our lease—at any price—knowing full well that we had nowhere else in town to move the store. He did offer to buy the franchise, fixtures, and inventory at a fair price; he wanted to give the store to his son. I had no alternative but to give it up. But I sold the Eagle Store lease to Sterling—so that John Dunham, my worthy competitor and mentor, could finally have that expansion he’d wanted.

It was the low point of my business life. I felt sick to my stomach. I couldn’t believe it was happening to me. It really was like a nightmare. I had built the best variety store in the whole region and worked hard in the community—done everything right—and now I was being kicked out of town. It didn’t seem fair. I blamed myself for ever getting suckered into such an awful lease, and I was furious at the landlord. Helen, just settling in with a brand-new family of four, was heartsick at the prospect of leaving Newport. But that’s what we were going to do.

I’ve never been one to dwell on reverses, and I didn’t do so then. It’s not just a corny saying that you can make a positive out of most any negative if you work at it hard enough. I’ve always thought of problems as challenges, and this one wasn’t any different. I don’t know if that experience changed me or not. I know I read my leases a lot more carefully after that, and maybe I became a little more wary of just how tough the world can be. Also, it may have been about then that I began encouraging our oldest boy—six-year-old Rob—to become a lawyer. But I didn’t dwell on my disappointment. The challenge at hand was simple enough to figure out: I had to pick myself up and get on with it, do it all over again, only even better this time.

Helen and I started looking for a new town.