#188 Joe Coulombe (Founder of Trader Joes)

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Jun 28, 2021

Joe Coulombe, the visionary founder of Trader Joe's, shares his entrepreneurial journey from Pronto Markets to revolutionizing grocery retail. He reveals how strategic decision-making and high employee compensation became cornerstones of his success. Coulombe humorously discusses being left-handed and how it shaped his hiring practices. With insights on innovative marketing, including the creation of the Fearless Flyer, he emphasizes the importance of learning from history and fostering a unique customer experience in a competitive market.

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ANECDOTE

Birth of Trader Joe's

Trader Joe's started in a bar when Joe Coulombe learned his biggest milk customer, Merritt Addison Jr., sold his company to 7-Eleven.
This threatened Pronto Markets, Coulombe's convenience store chain, as 7-Eleven was a much larger competitor.

ANECDOTE

Left-Handed Advantage

Joe Coulombe attributes his business success partly to being left-handed, believing it fostered a different worldview.
He even jokingly claimed to have run a "cab of left-handers" at Trader Joe's.

ANECDOTE

Pronto Markets' Beginnings

Coulombe's research on self-service retailing and 7-Eleven led to the creation of Pronto Markets.
At 27, he became Pronto's president, a precursor to Trader Joe's.

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Becoming Trader Joe

Mark Smeby

Joe Coulombe

Patty Civalleri

Confessions of an Advertising Man

David Ogilvy

First published in 1963, this book revolutionized the world of advertising and became a bible for the 1960s ad generation. It covers topics such as how to manage an advertising agency, acquire and retain clients, build great campaigns, write potent copy, and navigate office politics. The book is filled with Ogilvy's pioneering ideas, inspirational philosophy, and practical advice, making it an essential blueprint for good practice in business.

My Life in Advertising

Claude Hopkins

In 'My Life in Advertising,' Claude C. Hopkins shares his extensive experience and insights gained from over three decades in the advertising industry. The book is a blend of autobiography and practical guide, offering timeless principles on effective advertising. Hopkins emphasizes the importance of understanding the consumer, using specific and definite claims, and testing advertising strategies. He also discusses his methods for creating successful ad campaigns, including the use of free samples, the appeal of personalities over corporations, and the necessity of focusing on the consumer's needs rather than the advertiser's pride in their products. Despite being written in 1927, the book's principles remain relevant today, making it a valuable resource for anyone in the advertising and marketing fields.

Setting the Table

Danny Meyer

In this landmark book, Danny Meyer recounts his experiences and the lessons he learned in developing his philosophy of Enlightened Hospitality. Meyer started Union Square Cafe at the age of 27 and has since built a restaurant empire. His philosophy, which emphasizes strong in-house relationships and customer satisfaction, is applicable to any business. The book covers various aspects of running a restaurant, including selecting real estate, hiring, training, and providing exceptional service. Meyer's approach to hospitality extends to guests, the community, suppliers, and investors, and he provides practical advice on how to maintain long-term success through these relationships.

Let my people go surfing

The Education of a Reluctant Businessman

Yvon Chouinard

This book tells the story of Yvon Chouinard, who brought doing good and having grand adventures into the heart of his business life. It details his journey from his youth as the son of a French Canadian handyman to his ambitious climbing expeditions that inspired his innovative designs for climbing equipment. The book also explores how Chouinard built Patagonia into one of the most respected and environmentally responsible companies, emphasizing the importance of sustainability, personal growth, and unconventional business practices.

Zero to One

Notes on Startups, or How to Build the Future

Peter Thiel

In 'Zero to One,' Peter Thiel argues that true innovation comes from creating something entirely new, going from 'zero to one,' rather than incrementally improving existing ideas. He emphasizes the importance of vertical progress through technology and the benefits of monopoly in driving innovation. Thiel also discusses the need for long-term planning, the importance of finding the right co-founders, and the power law in startup success. The book challenges conventional wisdom and encourages readers to think critically and aim big to build the future[2][3][5].

The Mamba mentality

How I Play

Kobe Bryant

In this autobiographical book, Kobe Bryant shares his insights on his life and basketball career, highlighting his detailed approach to preparation, both physical and mental. The book includes Bryant's reflections on his leadership, his techniques on the court, and how he studied and competed against other players. It is accompanied by photographs from Hall of Fame photographer Andrew D. Bernstein, capturing Bryant's career from his first to his last NBA game. The book offers a deep dive into the 'Mamba mentality,' which emphasizes the journey over the result and the importance of hard work, dedication, and mental preparation.

The Revolt of the Masses

Jose Ortega Y Gasset

In this work, Ortega y Gasset traces the genesis of the 'mass-man' and analyzes his constitution, describing the rise to power and action of the masses in society. He criticizes the masses and the mass-men, contrasting 'noble life and common life' and highlighting the barbarism and primitivism he sees in the mass-man. The book does not refer to specific social classes but targets the bourgeois educated man who believes he has all the answers and extends his command over others, contemptuous of his ignorance in many areas. Ortega argues that the advances of civilization have led to the accession of the masses, which threatens the future of civilization[1][4][5].

The Guns of August

Barbara W. Tuchman

In this landmark account, Barbara W. Tuchman re-creates the first month of World War I, tracing the events from the funeral of Edward VII to the battles on the Western and Eastern fronts. The book focuses on the political machinations and military strategies that led to the outbreak of war, highlighting the roles of key players and the inevitability of the conflict. Tuchman's narrative is known for its comprehensive and engaging portrayal of the period, making it a classic in historical literature.

What I learned from Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys by Joe Coulombe.

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[0:01] I wrote this book to help entrepreneurs and would-be entrepreneurs. That's why there's a lack of miracles and a surplus of marketing details including buying, advertising, distributing, and running stores; and lots of discussion of how we built a successful business on high wages.

[18:09] Chapter 11 was a possibility. But I was reading The Guns of August, by Barbara W. Tuchman, with its implicit concept of multiple solutions to non-convex problems.

[19:07] This is my favorite of all managerial quotes: If all the facts could be known, idiots could make the decisions. —Tex Thornton, cofounder of Litton Industries, quoted in the Los Angeles Times in the mid-1960s.

[22:33] The most basic conclusion I drew from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you'll probably succeed. Tenacity is as important as brilliance.

[24:31] The one core value that I chose was our high compensation policies. This is the most important single business decision I ever made: to pay people well.

[30:30] The basic problem is that convenience store retailing is a commodity business that is hard to differentiate. What I needed was a good but small opportunity for my good but small company: a non-commodity, differentiated kind of retailing.

[33:38] As we evolved Trader Joe's, its greatest departure from the norm wasn't its size or its decor. It was our commitment to product knowledge, something which was totally foreign to the mass-merchant culture, and our turning our backs to branded merchandise.

[38:25] Most of my ideas about how to act as an entrepreneur are derived from The Revolt of the Masses by Jose Ortega y Gasset, the greatest Spanish philosopher of the twentieth century. I believe this book still offers the clearest explanation of the times in which we live. And I believe it offers a master “plan of action" for the would-be entrepreneur, who usually has no reputation and few resources.

[40:22] From the beginning, thanks to Ortega, I've been aware of the need to sell everybody. . . I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn his plans, but that his own troops would not.

[47:32] We assumed that our readers had a thirst for knowledge, 180 degrees opposite from supermarket ads. We emphasized "informative advertising," a term borrowed from the famous entrepreneur Paul Hawken, who started publishing in the Whole Earth Review in the early 1980s. These informative texts were intended to stress how our products were differentiated from ordinary stuff.

[52:09] All businesses have problems. It's the problems that create the opportunities. If a business is easy, every simple bastard would enter it. My point is that a businessperson who complains about problems doesn't understand where his bread is coming from.

[57:00] We violated every received-wisdom of retailing except one: we delivered great value, which is where most retailers fail.

[1:14:05] But do I regret having sold? Yes. I admit it. To mine own self I was not true when I sold. I regret not having had the guts to ride out the loss of the surtax exemptions, the employee ownership problem, the threat of death taxes, Carter's threat to eliminate capital gains preference, and all the other fears, real or phantom, of late 1978. I have to admit the truth, that I regret having sold Trader Joe's. And I have had to pay something for this, beyond the loss of my shadow.

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Other episodes mentioned in this episode:

#18 Let My People Go Surfing: The Education of a Reluctant Businessman

#20 Setting the Table: The Transforming Power of Hospitality in Business

#89 Confessions of an Advertising Man

#107 Sol Price: Retail Revolutionary & Social Innovator

#110 Distant Force: A Memoir of the Teledyne Corporation (Henry Singleton)

#170 My Life in Advertising

#179 Jeff Bezos and the Age of Amazon

#181 Copy This!: How I turned Dyslexia, ADHD, and 100 square feet into a company called Kinkos

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