Sam Walton: Made in America

Sam Walton was born in 1918 in Kingfisher, Oklahoma, and spent much of his childhood in small Missouri towns, in the middle of the Great Depression. His father appraised and collected on mortgaged farms, hard work at a time when almost nobody had money to spare. From early on, Walton learned that earning a little extra took initiative: he milked cows, delivered newspapers by bike before school and resold subscriptions door to door.

That kind of childhood teaches a lesson many working people recognize: if you grow up counting pennies, you don't treat money as something abstract. Walton compared prices on everything, and even as a teenager he understood that selling fast on a small margin could earn more than selling little at a high price.

After graduating from the University of Missouri, he joined the J.C. Penney chain as a trainee in Des Moines. There he learned the step-by-step of retail in practice: dealing with customers, dressing a window, closing out the register at the end of the day. Soon after, he served in the U.S. Army during World War II, in administrative roles inside the United States, away from direct combat.

In 1945, back in civilian life, Walton used a small savings and a loan from his father-in-law to buy the franchise of a Ben Franklin variety store in Newport, Arkansas. It was a small business, the kind that sold everything from thread and needles to pots and pans, but Walton saw it as a laboratory for testing his own ideas.

The main turning point was replacing the traditional counter, where a clerk fetched each item for the customer, with a self-service system, in which people walked among the shelves and picked up what they wanted with their own hands. Today that seems obvious, but back then it was unusual in a small-town store, and it made shopping quicker to run.

Walton also bet on buying straight from manufacturers, without going through a middleman, so he could sell cheaper than the competitor down the street. He put merchandise out on the sidewalk to attract people who were just passing by. Within a few years, the little Newport store became one of the most profitable in the entire franchise across the region.

The store's success drew the wrong kind of attention. The owner of the building where Walton rented his space had a son who also wanted to get into the business, and he decided not to renew the lease when it expired in 1950. Walton, excited about the growth, had never negotiated a guaranteed renewal clause in writing, and that left the whole decision in the landlord's hands.

He was forced to sell the inventory and the lease at the price the building's own owner wanted to pay, after years of building the business from scratch. The pain of losing something built with his own hands, because of a badly settled contract detail, became a lesson he carried for the rest of his career.

That kind of squeeze is familiar to anyone who has ever rented a commercial space, a house or an apartment: a contract read carelessly turns into a headache right when you least expect it. Walton learned, in the most expensive way possible, that negotiating the fine print before signing is worth as much as the business itself.