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All parents who fear you'll never be able to save enough money to send your daughter or son to an Ivy League university, take heart. Jim Sinegal, president and chief executive officer of Costco Wholesale stores is among the multitude of U.S. leaders who got their educations at state universities and went on to lead impressive lives.
Sinegal started at San Diego City College then went to San Diego State University to earn his degree. At the same time, he was getting a parallel education working for the retailing pioneer Sol Price. Sinegal went to work at the membership store Fed-Mart in 1954 and continued to work for Price when he founded the Price Co., parent of the groundbreaking membership warehouse stores, Price Club.
After 24 years under Price's wing, Sinegal rose in 1978 to executive vice president of Price. Then in 1983 he moved to the Seattle area where he became a co-founder of Costco.
"We’re still good friends," Sinegal says of Price. "We talk several times a month on the telephone.
In 1993 Costco acquired all the Price Clubs and merged the two membership warehouse store chains into a single company. Costco now operates more than 292 cash-and-carry stores in 23 states, nine Canadian provinces, the United Kingdom, South Korea and Taiwan. Costco has 27 million card-carrying members, 60,000 employees and annual sales exceeding $21 billion. The company also operates 14 warehouses in Mexico through a joint venture partner.
Market researchers say Costco has achieved a customer-loyalty rating equal only to Nordstrom. Costco's membership renewal rate is nearly 97 percent among active businesses.
Costco even attracted the attention of superinvestor Warren Buffett. Several years back, Sinegal received a call from Berkshire-Hathaway Vice Chairman Charles Munger, who explained that Buffett wanted to visit Costco headquarters and get a guided tour of a nearby Costco store.
Since Berkshire Hathaway, the highest-priced stock on the New York Stock Exchange, operates out of modest offices in Omaha, Neb., Buffett may have liked what he saw. Sinegal's office is an open space at the corner of an inauspicious office building. His walls, and the big table he uses as a desk, are scattered with product samples, snapshots of stores and employees, and nothing that would even vaguely pass for corporate art. Sinegal usually answers his own phone, doesn’t wear a watch and rarely wears a necktie.
Though Buffett didn’t buy Costco shares (or at least not enough to show up on Berkshire's Securities and Exchange Commission disclosures), Munger is a shareholder. A friend of Sol Price, Munger held shares in Price Club. When the two companies merged, Munger opted to convert his shares to Costco, a public company.
Sinegal also invited Munger, a member of the Forbes richest people in the world list, who buys wine, office supplies and even his wristwatch at the warehouse store, to join the Costco board of directors.
"I admired the place so much," Munger says, "that I violated my rules (against sitting on outside boards). It’s hard to think of people who've done more in my lifetime to change the world of retailing for good, for added human happiness to the customer."
Sinegal's story has so many morals that it’s difficult to choose among them. But one thing is certain. San Diego colleges and universities produce some darn good people with darn good ideas.
Sinegal will revisit his alma mater on Nov. 13 when he delivers the second annual L. Robert Payne Distinguished Entrepreneur Lecture at SDSU's College of Business Administration.
Janet Lowe is author of several investment books, including "Value Investing Made Easy" (McGraw Hill) and "Warren Buffett Speaks" (John Wiley & Sons).
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