The Fifty-Year Letter
Sometime in 2009, a few days after a lunch in La Jolla, Jim Sinegal — then seventy-three, still running Costco, still wearing his trademark open collar and mustache — received a letter. It was from Sol Price, who was ninety-three and dying. "Dear Jim," it began. "It's always nice seeing you and experiencing your enthusiasm, knowledge, and commitment to your values. You've been very generous about giving me some credit for influencing you. I suspect that's true, but you would have been a great achiever under any circumstance."
Sinegal read the letter, turned to his assistant, and said: "I've been waiting fifty fucking years for this letter."
It was well known that compliments from Sol came around about as frequently as Halley's Comet. And yet here was the founder of Costco, a man presiding over a $70 billion retail empire, a man whose company had already become the third-largest retailer on Earth, confessing that in his eighth decade he was still seeking the approval of his old boss. "What was it about the man," Sinegal later wrote, "that engendered so much admiration and respect, not just from me, but from thousands of us who worked with Sol over the years?"
The question is not rhetorical. It is, in some sense, the central puzzle of American retail in the second half of the twentieth century — that the most influential figure in the industry was not
Sam Walton, who freely admitted to stealing Sol's ideas, nor
Jeff Bezos, who studied his methods, nor
Bernie Marcus, whom Sol personally counseled into founding Home Depot, but a prickly, cantankerous lawyer from the Bronx who never wanted to be in retail at all, who was once asked how it felt to be the father of an industry and replied that he should have worn a condom.
Sol Price died on December 14, 2009, at his home in La Jolla. He left behind two companies — FedMart and Price Club — that no longer exist under their original names, and an industry worth hundreds of billions of dollars that exists because of him. He left behind a $50 million naming gift to USC's School of Public Policy, millions more poured into the revitalization of City Heights, and a net worth estimated between $275 million and $500 million that he found mildly embarrassing. He left behind a cadre of disciples — Sinegal chief among them — who spent their entire careers trying to live up to a standard set by a man who almost never told them they'd met it.
And he left behind a question that the companies built in his image are still trying to answer: Can a business philosophy rooted in personal ethics survive the person who held them?
By the Numbers
Sol Price's Retail Legacy
$50,000Initial capital to start FedMart (1954)
$4.5MFedMart first-year revenue (4x projections)
$300M+FedMart annual sales at peak (45 stores)
94Price Club locations at merger with Costco
$7.5BPrice Club annual revenue by 1992
$16BCombined PriceCostco revenue at 1993 merger
$270BCostco annual net sales (2024)
The Tailor's Son and the Scopes Trial
He was born Sol Price on January 23, 1916, in the Bronx — the son of Samuel and Bella Price, Jewish immigrants from Minsk in the Russian Empire, who had come to America separately before the First World War and found each other in the garment district. Samuel was a tailor and a labor activist. Bella was a social radical. The family name had been changed — from either Preuss or Press — at Ellis Island, a coincidence that would acquire a certain comic destiny once Sol entered the business of selling things cheaply.
When Sol was twelve or thirteen, his father contracted tuberculosis. The family relocated to San Diego for the milder climate, arriving around 1929, just as the Depression was collapsing the country around them. Samuel's $500 monthly disability pension — from an insurance policy taken out during his garment-trade years — kept the family in relative stability, a fact that gave young Sol a lifelong appreciation for the precariousness of working-class life and the difference a thin buffer could make.
Sol was precocious. He skipped two grades, arrived at San Diego High School as a thirteen-year-old tenth grader, and graduated in 1931 at fifteen. He had already decided to become a lawyer, a choice he traced to following the Scopes trial — the 1925 courtroom drama over teaching evolution in Tennessee — in the newspapers. Something about the spectacle of Clarence Darrow arguing for the primacy of reason against the forces of dogma seized the boy's imagination. It was a formative attachment: the idea that one could use intellect and argument to challenge established orthodoxy would animate everything Sol Price ever built.
He earned his undergraduate degree from San Diego State and his law degree from the University of Southern California in 1938. He practiced real estate and commercial law in San Diego for the next sixteen years, representing Jewish charities and local businessmen, building a quiet competence that gave him an intimate understanding of how small businesses operated — their margins, their supplier relationships, their vulnerabilities. He was not preparing for retail. He was preparing, without knowing it, to reinvent it.
A Warehouse, a Tip, and a Two-Dollar Card
The origin story of modern discount retail involves a mother-in-law's real estate, a wholesale jeweler, and a 200-mile round-trip drive for cheap goods.
In the early 1950s, Sol's father-in-law died, leaving behind a piece of property that needed to be dealt with. Sol ended up trading it for a 21,000-square-foot warehouse at 2380 Main Street in Barrio Logan, near San Diego's tuna canneries — a building in need of a tenant and a purpose. Around the same time, one of his law clients, a jeweler named Mandell Weiss, told him about a remarkable store in Los Angeles called Fedco. A nonprofit membership retailer open only to federal employees, Fedco sold merchandise at extraordinary discounts by exploiting a loophole in the fair-trade laws that allowed manufacturers to set minimum retail prices. The discounts were so dramatic that some five thousand people from San Diego — a more-than-200-mile round trip — were making the drive to shop there.
Sol went to see Fedco himself. He noticed that its facility bore a striking resemblance to the warehouse he'd inherited. He tried to convince Fedco to partner with him on a San Diego location. Fedco declined.
So Sol did what he would do for the rest of his career: he built his own version, better.
He scraped together $50,000 — eight investors at $5,000 each, plus $10,000 from his law firm. He obtained his initial inventory from clients: watches from the jewelers, a few pieces of furniture, and liquor. The merchandise mix was absurd — jewelry, furniture, and booze — but it didn't matter. The store, which he called FedMart (for "Federal Employees Merchandise Mart"), opened in November 1954, offering lifetime memberships to military and government employees for $2 a head. Hours were 12:30 to 9:00 p.m. weekdays, to accommodate work schedules, and Saturdays — both unconventional for San Diego retail at the time.
Sol had anticipated maybe $1 million in first-year sales. FedMart did $4.5 million. "It was the hottest thing to hit San Diego in a long time," he later recalled.
He was thirty-eight years old. He had never worked a day in retail. He would later identify this as a competitive advantage. "Fortunately," he said, "most of us had backgrounds that were alien to retailing. We didn't know what wouldn't work or what we couldn't do."
The Anti-Merchant
To understand what Sol Price built, you must first understand what he refused to be.
Most retailers in the 1950s operated on a simple premise: buy low, mark up high, advertise aggressively, offer credit, and decorate the store to make customers feel like they were in a place worth spending money. The department store — with its window displays, its elevator operators, its tearoom luncheons — was the dominant paradigm. Shopping was a dress-up affair pursued in downtown business districts. Margins were fat. The manufacturer controlled the price.
Sol looked at this system and saw a racket. His legal training had given him a fiduciary's instinct — the lawyer's obligation to act in the client's best interest, not his own. He carried this instinct into retail with a literalness that baffled his competitors and would later astonish Wall Street analysts. "We felt we were representing the customer," he explained. "You had a duty to be very, very honest and fair with them."
This was not sentiment. It was strategy. Sol's pricing approach began with the cost of a product and marked it up as little as possible — just enough to cover selling costs and leave a small profit. He refused to engage in sales or promotional pricing, which he regarded as manipulative gimmicks. He refused to advertise, believing that "the best advertising is by our members — the unsolicited testimonial of the satisfied customer." He refused to stock products from manufacturers who enforced fair-trade minimum pricing, blacklisting companies like Samsonite and Gillette. When Safeway ran sugar below cost as a loss leader, Sol put up signs in FedMart: "Sugar is cheaper at Safeway this week. Go buy it there." His managers thought he'd lost his mind.
I don't want to sound dumb, but my idea was simple. All I wanted to do was sell for the lowest price possible.
What looked like self-sabotage was actually the purest form of competitive positioning. By refusing to play the games that other retailers played — the artificial sales, the padded margins, the credit-card fees that were ultimately passed to consumers — Sol created something that had never existed in American retail: a store that customers trusted completely. People drove extraordinary distances to shop at FedMart not because of advertising but because of reputation.
Trust, once earned, compounded.
The innovations came rapidly. FedMart was the first retailer to sell gasoline at wholesale prices. The first to open an in-store pharmacy, selling prescription drugs at dramatically lower prices than corner drugstores — a move that infuriated pharmacists and delighted customers. The first to add optical departments. The first to combine food and general merchandise under one roof. Sol pioneered large consumer package sizes — a 20-pound tub of detergent when the largest box in a standard grocery store was 84 ounces — anticipating by decades the bulk-buying revolution that would define Costco. He launched his own generic brand, anticipating private-label strategies by a generation.
And he did all of this on sawhorses and plywood. FedMart displayed merchandise on makeshift fixtures rather than in glass cases. The stores were in warehouse districts and industrial parks, not shopping centers. The aesthetic was aggressively unprepossessing. Sol had bet — correctly — that people would sacrifice ambience and geographical convenience for a good deal. He called his approach "low margin" rather than "discount," a distinction that mattered to him. Discount implied a temporary reduction from an inflated price. Low margin meant the price was always honest.
The Intelligent Loss of Sales
Of all Sol Price's conceptual innovations, the one that most confounded his competitors — and most shaped the future of retail — was his doctrine of the intelligent loss of sales.
Every hardware store in America carried three sizes of 3-in-1 Oil. Sol stocked only the eight-ounce bottle — the best value per ounce. Every toothpaste aisle in a conventional store offered a dozen brands. Sol carried the top seller, maybe the runner-up, and nothing else. Where a standard retailer might stock 50,000 SKUs, FedMart carried roughly 3,000 to 4,500.
The logic was counterintuitive but devastating. If you only stock the eight-ounce bottle, most customers who wanted the four-ounce bottle will simply buy the larger one. You lose a few sales — the intelligent loss. But you gain enormous efficiency across the entire supply chain. Fewer SKUs meant fewer suppliers to manage, fewer invoices to process, fewer items to receive and shelve and inventory. Payroll, which represented 80 percent of retail operating costs, dropped dramatically. The savings flowed directly to the customer in the form of lower prices, which attracted more customers, which generated more volume, which gave Sol more leverage with suppliers, which produced even lower costs. It was retail's version of perpetual motion.
"What does limited selection have to do with efficiency?" Sol's son Robert later wrote. "Put simply, the cost to deal with 4,500 items is a lot less than the cost to deal with 50,000 items."
The doctrine required a specific kind of courage — the willingness to say no to a sale you could easily make. Most businesses are terrified of any lost sale. Sol was terrified of complexity. He understood, long before it became management gospel, that complexity is the silent killer of operational excellence, that every additional product line, every additional option, every additional square foot of display space introduced friction into a system whose power depended on its simplicity.
Here were the seeds of an enduring paradox that would define Costco decades later: what looks at first like appetite run amok — gallon jars of mayonnaise, 48-packs of toilet paper — is in fact a sign of extraordinary restraint. The mayonnaise comes in one size because offering one size is how you keep the price impossibly low.
You Train an Animal, You Teach a Person
Sol Price paid his employees double.
When FedMart opened stores in San Antonio in 1957, the prevailing retail wage was 50 cents an hour. Sol paid a dollar. His advisors thought this was insane. The math told a different story. Turnover disappeared. Theft became almost nonexistent. The best workers in the market lined up to apply — FedMart once received 22,000 applications for 200 positions. The employees who stayed treated the business as their own, because they were being treated as if they mattered.
Sol had a phrase he repeated often enough that it became organizational dogma: "You train an animal. You teach a person." He was not a fan of training manuals because he believed manuals were a substitute for thinking. What he wanted were employees who understood the why behind every task — who grasped the underlying philosophy of the business well enough to make good decisions without supervision. If a manager had to rely on a procedure book to handle a situation, Sol considered that manager a failure.
His approach to employee relations was rooted in the politics he absorbed from his parents — the labor-socialist activism of the garment district, the immigrant conviction that dignity and fair wages were not charitable gestures but the foundation of a functioning society — and sharpened by the privations he witnessed during the Depression. FedMart's written policy stated that workers would be paid at "close to the highest prevailing wages in the community." When the company expanded into nonunion Arizona, Sol gave those employees the same contract as his unionized California workers. The logic was pure Price: if the union contract is fair, why would you offer less just because nobody's forcing you?
You must feel confident that you are working for a fine and honest company. You will be permitted, encouraged, and sometimes even coerced into growing with the company to the limit of your ability.
There was a hierarchy, and Sol was explicit about it: "Our first duty is to our customers. Our second duty is to our employees. Our third duty is to our stockholders." In 1985, addressing Wall Street analysts, he went further: "We think the stockholder comes last. But if you do the other three jobs well, the stockholder will be taken care of." The analysts did not enjoy hearing this. Sol did not care whether they enjoyed hearing it.
He kept his own salary at roughly ten times the median wage of his employees, at a time when some of his peers were making forty or fifty times that ratio. He could not understand why anybody would need more than a couple hundred million dollars. He advocated publicly for higher taxes on the wealthy, arguing that excessive concentration of wealth threatened the economic system itself. "Tax laws favor the wealthy," he said in 1995, "and the chasm between the middle class and the wealthy is widening." This was not the standard rhetoric of a man running a publicly traded retail chain in the Reagan and Clinton eras.
A Dallas contractor building a new FedMart once pointed out that Sol's architectural plans lacked separate bathrooms for African Americans, as was customary in the segregated South. Sol's response has been passed down through generations of Costco executives as a founding parable. He did not add the bathrooms. He built one set of facilities. For everyone.
The Firing and the Hangar
In December 1975, Sol Price was fired from FedMart.
He had sold a controlling stake to Hugo Mann, a German retail businessman, hoping the capital would fund expansion. Instead, Mann treated the investment as a takeover. Those who knew Sol — the man who had built FedMart from a $50,000 bet into a 45-store, $300-million-a-year chain — gave the partnership between six months and one day. It lasted almost six months. The new board informed Sol that because he had "failed to follow directions," he would be denied the $120,000 severance payment in his contract. His office locks were changed.
Sol was sixty years old. He had been locked out of the company he created. FedMart, stripped of its founder's philosophy, would be liquidated seven years later.
Most men in his position would have retired, or sued, or both. Sol, who kept a small sign in his office reading "Do it now," chose a third option. He walked the streets of San Diego with his son Robert — who had served as FedMart's executive vice president — interviewing local shopkeepers, asking them about the challenges of running a small business. What they heard, again and again, was a complaint about procurement: small businesses had no buying power. They were squeezed between suppliers who demanded high minimums and customers who demanded low prices.
Within months, Sol and Robert had synthesized something new. What if they took the distribution-warehouse system that Jim Sinegal had built inside FedMart — the system that operated almost as a separate business, a profit center in its own right — and made it the entire company? A wholesale cash-and-carry warehouse, selling merchandise directly to small businesses. The business owners would come to a large warehouse, select products from steel racks, pay by check or cash, and take the goods back to their stores, restaurants, or offices. The warehouse would buy directly from manufacturers, pool the buying power of hundreds or thousands of small businesses, and pass along the volume savings. In effect, it would be their warehouse.
The first Price Club opened on July 12, 1976, in a former airplane hangar on Morena Boulevard in San Diego — a building where pigeons flew through the rafters and the aesthetic could charitably be described as post-industrial neglect. Robert Price remembered the scene: "When we went in there were birds flying around — pigeons. And it was a God awful looking place, but we cleaned it up." Members — exclusively small-business owners — paid $25 a year for the right to shop there. Sol and Robert raised roughly $2.5 million from family and friends, with founding investors kicking in $5,000 per share.
The business almost died in its crib. Small businesses didn't come. They didn't spend money. Robert later recalled the desperation: "My wife and I were a month away from our second child being born. I remember my mother-in-law in particular figuring that she wasn't sure that her daughter had married the right person." Within weeks, Price Club was essentially going bankrupt.
Then someone suggested opening the warehouse to ordinary consumers — people who didn't own businesses but simply wanted to shop for themselves. Sol resisted, afraid of alienating the business members who were the store's entire identity. But the business members weren't showing up. So they tried it.
"All of a sudden there were people and they were shopping and there was excitement," Robert recalled. "And it felt like we had been just given some kind of a gift. I mean, it was amazing. My father said, 'You know, I think you guys are going to end up having a pretty good business here.'"
This was Sol Price at his most characteristic: the breakthrough that looked accidental was in fact the product of rigorous thinking forced into contact with reality. The membership model — charging people for the right to shop — generated cash flow that could be factored directly into gross margins, allowing even lower prices. Wholesaling from pallets meant goods sold from the same packaging in which they were delivered, requiring almost no handling. The combination of membership fees, pallet-level efficiency, and the intelligent loss of sales created something that had never existed before: a retail format so operationally lean that it could offer prices indistinguishable from wholesale to ordinary consumers.
Within a few years, Price Club had more than 200,000 members across locations in California and Arizona. The company went public in 1979, almost by accident — following stock splits, the number of shareholders had exceeded the SEC maximum for a private company, forcing a public filing with no IPO. The friends who had invested $5,000 per share became millionaires many times over.
The Protégé
Jim Sinegal came from blue-collar Pittsburgh — a steelworker's town, a place where you learned early that hard work was not a philosophy but a weather condition. He was eighteen and on winter break at San Diego City College when he accepted a one-day gig unloading mattresses at FedMart. He stayed for more than twenty years.
A few days into the job, Sol Price saw the teenager carrying a sofa across the store and hollered at him to put it down before he broke his back or, worse, the merchandise. "That's just Sol," a colleague reassured the startled kid. It was a characteristic introduction — the bark masking something warmer, the concern for the employee wrapped inside the concern for inventory, the whole transaction conducted at high volume. Sinegal would spend the rest of his life decoding this man.
"He was a tough boss, as tough as shoe leather," Sinegal told the New Yorker decades later, wearing white Kirkland sneakers and drinking a bottle of Kirkland sparkling water at eighty-nine. "But he was a marshmallow inside."
Sol saw in Sinegal what he would have seen in himself at that age — a fast mind, a relentless work ethic, an instinct for the mechanics of retail that could not be taught but could be developed. A reporter once asked Sinegal how much he'd learned from working for Sol for so many years. "That's inaccurate," Sinegal replied. "I learned everything. I was a fly on the wall observing Sol. I had such a great admiration for him, and the things he stood for and his intellect."
Robert Price, Sol's son, remembered being acutely conscious of his own status as the boss's kid, a self-awareness that sharpened when he watched Sinegal operate. "My sense is that my father saw in Jim an energy and an intelligence and a commitment to the business that impressed him a lot," Robert said. "But Jim impressed everybody. He was really, really competent."
Sinegal rose through FedMart to become executive vice president in charge of all merchandising and operations. After Sol's firing in 1975, Sinegal left to work as an independent broker for consumer brands. But the Sol Price operating system was already fully installed in his brain, running like background software. "He motivated us to do our very best," Sinegal would say at Sol's memorial service, "not just because he had a formidable presence, but we really did not want to let him down. We idolized the guy. We thought about him on a continual basis. What would he do? How would he handle this situation? And it influenced our lives."
The Cloners
Price Club's debut on Wall Street sent a signal, and the signal was received. "Suddenly," Sinegal recalled, "everybody found out how successful they were. Nobody dreamed it." Between 1980 and 1983, a parade of imitators launched: Pace, BJ's, Sam's Club. The warehouse-club format was the most consequential retail innovation since the supermarket, and everybody wanted a piece of it.
Sam Walton — the folksy Arkansan who had already built Walmart into a regional powerhouse by copying the discount-store model Sol had pioneered with FedMart eight years earlier — was the most brazen borrower. Walton had studied FedMart obsessively in the early 1960s; he even admitted that the Walmart name was inspired by FedMart's. ("I really liked Sol's FedMart name so I latched right on to Walmart.") Now Walton studied Price Club with the same acquisitive intensity, launching Sam's Club in 1983 as a direct clone.
"I guess I've stolen — I actually prefer the word 'borrowed' — as many ideas from Sol Price as from anybody else in the business," Walton wrote in his autobiography,
Sam Walton: Made in America, with the cheerful shamelessness of a man who understood that ideas are free and execution is everything.
Arthur Blank, co-founder of Home Depot, owed Sol a different kind of debt. After being fired from a hardware chain called Handy Dan Home Improvement, Blank went to see his friend Sol. Rather than encouraging a lawsuit, Sol told Blank to forget about revenge and start a retail business instead. Which he did. There is every chance that Home Depot would not exist if Sol Price had been the kind of man who advised litigation over action.
Jeff Bezos came later but studied Sol's methods with characteristic intensity, particularly the membership model — the idea that customers would pay for the privilege of access, and that the fee itself would create loyalty while funding lower prices. Amazon Prime, launched in 2005, is in many ways a digital descendant of the $2 FedMart membership card.
Charlie Munger,
Warren Buffett's partner, sat on the Costco board for years and considered the company one of the finest capitalist institutions in the world. "Sol Price was a very intelligent man," Munger said — which, from Munger, constituted high poetry.
Sol accepted these acknowledgments with characteristic deflection. When a reporter asked how it felt to be the father of an industry, the reply — "I should have worn a condom" — was classic Price: dry, self-effacing, slightly vulgar, and entirely uninterested in taking credit for something he considered obvious.
Costco Wholesale Club Comes to Seattle
In 1982, a Seattle retail heir named Jeffrey Brotman contacted Sinegal. Brotman's family had approached Price Club about opening a store in Seattle; the Prices weren't interested. Brotman suggested that he and Sinegal launch their own warehouse club instead.
The pitch they made to investors was simple and, characteristically, honest: "Let's duplicate what Price Club is doing." They wanted a plain name for the new venture. "We couldn't come up with anything clever," Sinegal said.
"Costco Wholesale Club Comes to SEATTLE," read the flyer for the first warehouse opening in 1983, faintly implying that the company already existed elsewhere. It didn't. But what Costco lacked in history it made up for in synthesis. Sinegal took Price Club's wholesale model — bulk efficiency, membership fees, pallet-level operations — and layered on FedMart's consumer-facing innovations: private-label goods, gas stations, groceries, pharmacies. He recruited FedMart veterans to staff the operation. The result was not a copy of Price Club but a shrewd recombination of everything Sol had ever built, filtered through Sinegal's own decades of operational refinement.
Costco became the first company in history to grow from zero to $3 billion in sales in less than six years. Two more warehouses opened before the end of its first year. By the early nineties, Sinegal and Brotman were gaining momentum, and Sam's Club was expanding aggressively. Price Club, meanwhile, was flagging. Sol had relinquished his official leadership role. Robert's fifteen-year-old son, Aaron, had died of cancer in 1989, devastating the family. (Sol would later create the Aaron Price Fellows Program in the boy's memory — a leadership initiative for diverse San Diego public high school students that continues to this day.)
In 1992, the Prices decided to seek a buyer. The merger with Costco closed in 1993, creating a combined company with 206 locations and $16 billion in annual sales. Robert Price had hoped for a true partnership — he would be chairman, Sinegal would be CEO, and the two companies' philosophies would fuse seamlessly. "My dad had this idea that we could take these two companies that were so similar in terms of philosophy," Robert later said, "and I would be chairman and Jim would be the C.E.O. It never worked." Within a year, Robert left.
The disciple had surpassed the master — or rather, the disciple's company had absorbed the master's. Sinegal had done exactly what Sol had taught him: put yourself in the place of a cranky, demanding customer, never stop passing savings along, treat your employees as if they matter. He just did it at a scale Sol never reached. Costco retained the fourteen-percent markup cap (fifteen for Kirkland goods) and the obsessive focus on operational efficiency. Sinegal instituted a policy that he received a report on anything marked up above thirteen percent. "You didn't want to be on that list," recalled Pat Turpin, a Costco executive in the nineties.
The $1.50 hot-dog-and-soda combo — introduced on Costco's opening day in 1984 and never raised — became the most visible symbol of Sol's philosophy encoded in Sinegal's institution. When Craig Jelinek, who would succeed Sinegal as CEO, told his boss they were losing money on the hot dog, Sinegal's response entered the company's mythology: "If you raise the effing hot dog, I will kill you. Figure it out." They figured it out by building a hot-dog plant in Los Angeles. When a reporter later asked Sinegal what it would mean if the hot-dog price went up, his answer was two words: "That I'm dead."
The Fiduciary in the Warehouse
The word that appears most often in any serious discussion of Sol Price's business philosophy is one you would not expect to encounter in the context of selling bulk toilet paper and 48-packs of Coca-Cola. The word is fiduciary.
Sol's experience as an attorney — representing clients, navigating their interests through legal complexity, holding their trust as a sacred obligation — became the foundational metaphor for his entire approach to commerce. "We felt we were representing the customer," he said. "We had a duty to be very, very honest and fair with them." This was not a marketing slogan. It was an ethical framework that determined every operating decision, from pricing to product selection to advertising — or rather, the refusal to advertise.
"If you recognize you're really a fiduciary for the customer," Sol said, "you shouldn't make too much money."
Think about this sentence. A businessman telling you that his ethical obligation to his customers requires him to limit his own profits. Not as a growth hack. Not as a loss leader. As a moral position. The fiduciary framework meant that Sol viewed excessive profitability not as success but as evidence of a broken promise — proof that you had extracted more from the relationship than you were entitled to.
This is the philosophical core of everything Costco became. The fourteen-percent markup cap. The refusal to advertise. The membership model, which separated the revenue source (fees) from the transaction (goods sold at near-cost), ensuring that the company's incentives were aligned with the customer's interest in low prices rather than high margins. The entire architecture was designed to make it structurally difficult for the company to betray its customers, because the profit came from the relationship itself — the annual membership renewal — not from the markup on any individual product.
Nick Sleep, the legendary fund manager at Nomad Investment Partnership who identified Costco's model early, called it "scale economics shared" — a perpetual motion machine in which savings achieved through purchasing power and operational efficiency are returned to the customer in the form of lower prices, which attract more customers, which generate more scale, which produce more savings. "Most companies pursue scale efficiencies," Sleep wrote in his 2004 investor letter, "but few share them. It's the sharing that makes the model so powerful."
The insight was Sol's. He just never had a name for it.
City Heights and the Obligation to Give Back
Sol Price did not believe in the separation of business from civic life. He could not understand people who accumulated vast wealth and then spent their remaining years hoarding it, as if money were an end rather than a tool.
Starting in 1994, Sol and Robert embarked on a multi-decade initiative in City Heights, an impoverished, densely populated San Diego neighborhood of roughly 74,000 residents — primarily refugees and immigrants from Latin America, Asia, and East Africa. They invested millions in mixed-use real estate development, public-private partnerships, community health centers, school-based programs, and an Urban Village that included a library and a public park built on a freeway overpass. The approach was comprehensive — the kind of systems thinking that had made FedMart and Price Club work, applied to the problem of urban poverty.
"A good businessman has to find the time to take care of being involved with his family and charity; it gives him balance," Sol said. "If you're lucky, you have the obligation to give back."
In 2011, two years after Sol's death, the Price Family Charitable Fund made a $50 million gift to endow and name the USC Sol Price School of Public Policy. The gift established the Sol Price Center for Social Innovation, dedicated to advancing strategies for improving quality of life in urban communities. Robert Price, who oversaw the gift, wanted it to reflect the alignment between his father's legacy and the school's mission — the conviction that rigorous, interdisciplinary research, grounded in a city like Los Angeles, offered the best path to effective public policy.
Sol had also donated $2 million to the construction of UC San Diego's student center and $1 million to the San Diego Hospice to establish a trust fund for families with terminally ill children. He was an early backer of Governor Edmund G. "Pat" Brown, and later of his son Jerry. Democratic presidential candidates — from Kennedy to Obama — made visiting Sol a standard campaign stop. When he met then-Senator Obama in 2006, Sol was characteristically blunt in his assessment: "He's a very, very good observer. He listens and he knows how to make you feel he's really leveling with you and not just making a speech."
His political liberalism was of a piece with his business philosophy. Both rested on the same premise: that the powerful have obligations to the less powerful, that systems should be designed to distribute benefits broadly rather than concentrate them narrowly, that the measure of success is not how much you extract from the world but how much you leave in it. He advocated for tax fairness, arguing that the proliferation of loopholes and deductions had created a system that rewarded wealth at the expense of the middle class. His salary at Price Club — roughly ten times his median employee's wage, in an era when the ratio at comparable companies was forty or fifty to one — was a deliberate statement about what he thought leadership was worth relative to the people who did the actual work.
The Third and Fourth Generation
Sol Price died on December 14, 2009, at his home in La Jolla. He had been in declining health for two years. His family did not cite a specific cause of death.
Jim Sinegal stepped down as Costco's CEO at the end of 2011, two years after Sol's passing. In a prescient interview with the Seattle Times that year, reporter Melissa Allison asked Sinegal whether his ability to maintain generous employee benefits was "a founder's luxury." Sinegal said he thought Craig Jelinek, his immediate successor, would be fine. Then he added a sentence that would haunt the company for the next decade: "It's the third and fourth generation of management that probably will have more difficulty with that."
Ron Vachris, who became Costco's third CEO in January 2024, began his career as an hourly employee at Price Club in 1992 — two years before the merger with Costco. He is the last CEO who will have been formed within the Price Club system, the last leader whose institutional DNA traces directly to the hangar on Morena Boulevard. After him, the chain of apostolic succession from Sol to Sinegal to the present will be broken.
The signs of strain, if not fracture, are already visible. Unionization efforts — historically rare at a company that paid well enough to make them unnecessary — have accelerated in recent years. In 2024, Costco drivers in Washington became the company's first truckers to unionize. A Norfolk, Virginia, warehouse voted to organize in 2023, the first to do so in more than two decades. When Jelinek and Vachris sent a joint letter expressing disappointment, a Teamsters official responded with a declaration that would have made Sol wince: "This is not Jim Sinegal's Costco anymore."
On a Reddit forum where warehouse employees compare notes, recent threads bear titles like "Overall downturn of the company?!" and "Has anyone else given up recently?" Steven Seguin, a sixteen-year Costco employee who had previously worked at Walmart, remembered Sinegal thanking each employee by name during warehouse visits. After Sinegal stepped down, Seguin told the New Yorker, the executive walk-throughs began to feel less motivational than "disciplinary." He gave his notice in the summer of 2025. "It is a great company to work for, on paper," he said. There was no managerial farewell, no handshake — just a perfunctory online exit interview in a back room.
Higher-ups have noticed the shift too. William Oliver, co-founder of an investor research service called In Practise, reported that Costco veterans describe a clear recent deterioration. "To them," Oliver said, "it's moved from 'working for Dad' toward a greater emphasis on shareholder return."
Working for Dad. The metaphor is exact. Sol Price was the father — stern, exacting, stingy with praise, generous with opportunity, operating from a moral framework so deeply held that it felt like gravity. Sinegal was the favorite son — warmer, more democratic, easier to love, but carrying the old man's values in his bones. What happens when the values become institutional memory rather than personal conviction? When the philosophy is preserved in training manuals rather than embodied in the person walking the warehouse floor?
Sol had an answer for that too. He was not a fan of training manuals. He believed that manuals were a substitute for thinking.
The Sign in the Office
In Sinegal's personal offices in Kirkland, Washington — the Seattle suburb that gave Costco's private-label brand its name before the company relocated to Issaquah in the mid-nineties — there is a shelf near several unopened bottles of Kirkland liquor. On it sits a bronze pair of sneakers, mounted with a plaque that reads:
Jim.
These are some.
Big Shoes to Fill.
Non-Foods
Jelinek has a desk in those offices. So does Richard Galanti, who stepped down in 2024 after nearly forty years as CFO. They gather there to tell old stories — the mythology of a company that knows its best days may be behind it, or may not, depending on whether the culture survives the people who made it.
Sol kept a small sign in his own office: "Do it now." Three words. No manual required.
On July 12, 2025, in Richland, Washington — a high-desert town that was once home to the Manhattan Project's first large-scale plutonium-production reactor, a barren place where the high school teams are still, improbably, called the Bombers — the nine hundred and thirteenth Costco warehouse opened. The night before, employees gathered with their families for a party. Ron Vachris shook hands and greeted babies, holding a manila envelope in which employees stuffed dollar bills with their guesses for the first day's sales — the closest guess keeping the pot, a company tradition. Outside, a handful of shoppers set up camp to be first in line for opening-day deals. Greg, who had a gray beard and glasses, and his nephew Craig, who had small blue gauges in his ears, brought a cooler, a cribbage set, and sleeping bags.
"We both like bourbon," Greg explained. "But it's become an event."
By morning, the line stretched around the corner and beyond. At the door, prospective customers and employees held their phones aloft and documented one another. The warehouse's general manager cut a red ribbon. "Without further ado," he said, "let's sell some stuff."
The sun was up over the desert. The nine hundred and thirteenth warehouse. The pigeon-infested hangar on Morena Boulevard was forty-nine years and nine hundred and twelve stores away, but the sign on Sol's desk still applied. Do it now. Sell it cheap. Pass the savings along. Trust the customer. Teach the person. Figure it out.
