Comment by eries
6 hours ago
I love that you asked this question, although, of course, you didn't actually phrase it as a question, because this quote is literally in the book. I addressed this particular misconception as it relates specifically to Costco, because I myself once fell victim to the same misconception.
If you think Costco has endured only because of leadership, because of its strong ethos and its immense size, because you think it's just too big for Wall Street to mess with, you are not correct. My friend, nothing is too big for Wall Street to mess with. Wall Street has tried many times to dismantle Costco's ethos, and every time the unique structure of Costco is what has allowed them to resist.
The parent comment didn’t say anything about size or wall street. It said leadership is what has preserved it.
Which it doesn’t seem you have refuted in any meaningful way. You just restated what the parent comment is responding to with no further reasoning as to why leadership doesn’t account for it.
I honestly don't understand your comment, so let me try and recapitulate what I think you're saying and what I think I was saying, and then you can tell me where I missed the mark.
What I hear you saying is that the original comment simply said that leadership by itself is enough to preserve the Costco ethos. It didn't say anything about size or Wall Street or anything else. Is that right?
The reason I responded the way that I did is that the claim that something by itself is enough has to explain why most companies are able to be destroyed, even though they have really good leadership. I think the common answer when people ask about Costco is that the reason why, for them, leadership was enough when it hasn't been for other people, is something like they're so large. Does that make sense?
Either way, in order to say that leadership by itself is sufficient, we have to figure out why Costco has been able to endure as a gigantic public company when, for most companies, the larger they become, the more valuable they become as a target. Meaning that Wall Street or other financial forces will intervene to change their values.
And the answer, which I lay out in the book (not in my original comment), is that Costco is protected by a very distinctive thing I call a "governance fortress." This fortress (and not merely their leadership) is the reason why they have been able to endure for forty years.
In fact, the predecessor company of Costco, spiritually speaking, was a company called FedMart that had the leadership and ethos but did not have the fortress. I'll leave it to you to read to find out what happened to them.
Thanks for responding, I do think you interpreted my comment correctly.
I see size as negatively correlated (maybe as a semi-direct cause) with preserving company mission. Hence why I was confused by you addressing it. It would never cross my mind to argue that size has protected Costco.
I haven’t read your book, just skimmed the post so I don’t know if it’s convincing. But I’d like to argue that those companies failing their mission is proof that they did not have good leadership. however, that makes the argument a little circular.
I’m aware of FedMart (Acquired podcast on Costco is very entertaining). I think Sol Price was a bad leader and selling out to Hugo Mann was putting profit above other things.
1 reply →
I read the comment as arguing that leadership is necessary, not that it is sufficient. That is, that no amount of governance could have prevented the change in the price of the hot dog; only the leader could.
This reply genuinely reads like AI and I don't mean to insult you. Perhaps large language models have been trained too much on your books. Your first 2 to 3ish paragraph (explanation and rephrasing) is very characteristic of an AI when they're pressed (e.g. on why they recently hallucinated).
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