The Tim Ferriss Show - #345: Doug McMillon — CEO of Walmart

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Starting point is 00:02:32 linkedin.com forward slash Tim, T-I-M, to get $50 off your first job post. Linkedin.com forward slash Tim. Take a look. Terms and conditions do apply. Well, hello boys and girls. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. I am recording out in nature because we should all get out in nature more often. And my guest this episode is Doug McMillan, president and CEO of Walmart. That is a big company. And a lot of people in Silicon Valley and elsewhere talk about Walmart as a big company, but they don't really look into the details. And I'm going to give you some facts and figures that will blow your mind in a moment. But how did this come to be? Well, I want to thank Doug and his entire team for helping to make it happen.

Starting point is 00:03:20 I visited the Heartland Summit in Bentonville, Arkansas, and I would recommend checking it out, theheartlandsummit.org, which is about, of course, making us think about more than just the coasts. And we are strongest when we're most connected to each other. And the gaps that we experience in the U.S., inequality and disconnection related to education, health, income, skill gaps, and so on, will not be solved just by California and New York. So it was a real fantastic experience to spend time in Bentonville with people from all across the U.S. at the Crystal Bridges Museum of American Art, which was the venue. And this is absolutely

Starting point is 00:04:06 mind-blowing, jaw-dropping as a location. I encourage everybody to check it out, crystalbridges.org. And let's jump into Walmart first and Doug second. So Walmart, here's some stats. In fiscal year 2018, Walmart registered approximately $500 billion in revenue, which is $5 billion more than Belgium's GDP. And there are many other countries, of course, I think Austria among them, that are dwarfed by Walmart. If Walmart were a country, it would be the 25th largest economy in the world. Walmart serves 265 million customers a week in 27 countries and across more than 11,000 stores. And of course, online is growing rapidly from an e-commerce standpoint. They have 2.2 roughly million associates.

Starting point is 00:04:50 That's employees worldwide, which means if Walmart were an army, it would have the second largest army in the world behind China, just to give you an idea. So greater than San Francisco and Denver and other cities combined and close to the population of Houston. 75% of their store management team started as hourly associates like stockers, cashiers, cart pushers. And those managers make an average of $170K per year. Walmart files thousands of patents a year in categories ranging from last mile delivery to biometrics and augmented reality. We talk about some of the technology.

Starting point is 00:05:24 They have scaled grocery pickup, that is, you order on a mobile device and get groceries loaded into your car from nothing four years ago to more than 2,000 locations today and will serve 70% of the population by the end of the year. How is that possible?

Starting point is 00:05:37 Well, 90% of Americans live within 10 miles of a Walmart and they will offer grocery delivery for 40% of the U. the US population by year end. It's really wild how big and the scope of which the breadth of which this company operates. And last fact, Sam Walton started Walmart with one small five and 10 store in rural Bentonville, Arkansas in the 50s and grew the company to be fortune number one. We hear about fortune 100 companies, fortune number one. And I spent time in that initial store, that very first original store, which is amazing. And I'm going to put some photographs up of some of the memorabilia and so on, which is quite frankly, really inspiring. And I'm not getting paid to say that. It's just amazing how incredibly large this company has become from such humble beginnings.

Starting point is 00:06:31 So to Doug. Doug McMillan. M-C-M-I-L-L-O-N. Facebook, Doug McMillan. Instagram.com forward slash Doug McMillan. LinkedIn, also Doug McMillan. He is president and CEO of Walmart. Back in 84, Doug started out as an hourly summer associate in the Walmart Distribution Center.

Starting point is 00:06:48 And in 1990, while pursuing his MBA, he rejoined the company as an assistant manager in Tulsa, Oklahoma, Walmart store, before moving to merchandising as a buyer trainee. And we talk a lot about his training as a buyer. Very important function within this entire organization. He worked his way up, and from 2005 to 2009, he served as president and CEO of Sam's Club, owned and operated by Walmart, with sales of more than $46 billion annually during his tenure. From February of 2009 to February of 2014, Doug served as president and CEO of Walmart International, a very fast-growing segment of Walmart's overall operations.

Starting point is 00:07:23 And he has served on the board of directors for Walmart since 2013 and is currently the chair of the executive and global compensation committees. In addition, he serves on the board of directors of the Consumer Goods Forum, the U.S.-China Business Council, and Crystal Bridges Museum of American Art. Once again, check out Crystal Bridges. It is incredible. Crystalbridges.org. Back to the bio. He also

Starting point is 00:07:46 serves on the executive committee of the Business Roundtable and the advisory board of the Tsinghua University School of Economics and Management in Beijing, China. Doug really came to the table. He does not normally do long interviews like this at all, and he was very willing to dance the dance and go places that he hasn't gone before. I really enjoyed it and plan to get back to Arkansas to explore the very least all the mountain biking trails. You guys can do a little Google search on that and see what pops up. But without further ado, please enjoy this very wide-ranging conversation with Doug McMillan. Is that your fan group over here?

Starting point is 00:08:28 That's my plant. I hired one person. I'll give him his 20 later. Thank you for that. So I think we should just jump right into this. What a beautiful location. This is my first time in Bentonville, and I've been absolutely surprised

Starting point is 00:08:43 by how tremendous everything is here. I was walking around all last night. I've never spent any time in Arkansas. So first of all, thank you for welcoming me here. And I know we have a limited set of time to chat on stage here today. So it feels like a lot of time and I don't do interviews that are very long. and that clock says 60 minutes on it. Could we at least start it? Cause I'm used to like 15 minutes. I don't want to be up here. We're edging in from different sides. So I guess maybe you do shorter. Usually I do two to 17 hours. So we'll meet, we'll meet in the middle on this one. And I thought we could just jump right into it with a very important question, which is, can you tell me about the bait mate story? And I do not know the answer to this.

Starting point is 00:09:29 The bait mate story. Does anyone in the room know what bait mate is? Okay, so when I moved into the home office, I worked in a store. This was 1991, and I got into our buyer training program at Walmart. And I was excited because they were putting me in sporting goods. I got to sporting goods, program at Walmart. And I was excited because they were putting me in sporting goods. I got to sporting goods and they gave us fishing tackle. And the other buyers,

Starting point is 00:09:52 I didn't know it immediately, were hazing me. And as the new person, they said, on Saturday at the Saturday morning meeting, you must present an item that you have negotiated a lower price on and reduce the retail price. And you have to explain in the meeting, the item, the price, et cetera, how many you can sell. So I didn't know the first thing about being a buyer. It was literally my first day. And so other buyers helped me. And we found a supplier who makes this product called

Starting point is 00:10:22 bait mate, which comes in several flavors. You spray it on a hard lure if you're fishing and it apparently causes the fish to think it's more real and the fish strike the lure because it's been coated in bait mate so it was over two dollars we rolled it back to a dollar 97 we maintained our margin i memorized everything about the item and i wrote the rest of the answers on the back of the label and I showed up at the Saturday morning meeting and Sam Walton was leading the meeting and so my level of nervousness went from high to somewhere off the charts so I wait till the end of the line at the end of the meeting to present bait mate to the auditorium full of hundreds of people with Sam Walton standing next to me and And I am shaking and my hand's shaking, my voice is shaking, but I get all the information out that I'm supposed to remember. And at the end, Sam says,

Starting point is 00:11:11 that's all well and good, son, but what makes you think fish can smell? How did you respond to that? I think I just walked away. I don't remember having anything pithy to say. But I think it was probably awkward because I was so nervous and he was trying to break the ice. But we sold a lot of bait, mate. Were there any other particular approaches or techniques or types of training that you received as a buyer that come to mind? Because I don't know the first thing, certainly, about buyer training. But that would seem to be a very important component of what Walmart does.

Starting point is 00:11:52 Certainly, it's a big piece of it. Yeah, it's kind of important. Getting that price down to $197 for an important item like Batemate. And what type of training did you experience? Are there any particular memories or stories that come to mind? Yeah, most of the learning that you have as a merchant, especially back then, came from the people around you. So it's really learning on the job and principles coming out.

Starting point is 00:12:16 Like back then, we didn't really sign contracts, and we had some vendor agreements to make sure we could pay people, but your handshake was your agreement. And I remember early on, one of my supervisors, a guy named Dave Dival, emphasizing to me, we were about to make a big commitment and the supplier had asked for something in writing. And Dave said, you need to explain to him that your word and your handshake is the contract. And it worked. So you learn things like you're working on behalf of the customer. You should

Starting point is 00:12:46 be tough, but you should be fair. You want suppliers to make money because you want them to be here in 10 years time. We're going to grow. We're going to need supply. So, you know, Walmart has in some circles, this reputation of being really tough. I would say we're tough on behalf of the customer, but we always try to be fair. And if you look at the financial results of our suppliers, they've done really well. And P&G still makes more money than Walmart does after all this time. So this has worked out well for everybody, but we do keep pressure on on behalf of the customer. So you learn kind of how to think on the job, but with some principles behind you. You seem to be, from what I've observed also in Facebook posts, don't worry,

Starting point is 00:13:27 a voracious reader. And I've noticed a number of books, like Team of Teams by General Stanley McChrystal. That was from, I think, your 2006 recap, where you took a photograph of books that have had a big... 2016. 2016, excuse me, big impact on your thinking that year. Are there any books that you received from people that have had a big impact on you or that you have given out more than once to people for any reason?

Starting point is 00:13:58 Yeah, there's that book about Amazon. That one comes to mind. The Everything Story? Yeah. Why do you give that book out? You need to understand what you're up against, you know? But Team of Teams has been huge. I'm still giving that one out. The truth is, if we, my house is not far from here. If we went over there right now, my book, my stack of books to read is like more than knee high right now. I'm behind. I'm trying to catch up, but I'm trying to learn.

Starting point is 00:14:27 And we've got to, Brett's on the front row, Brett's our CFO. This morning in our officer meeting, we were talking about learning and curiosity because retail is changing so fast. And the business we have today is different than it was a year ago, certainly five years ago. And it's going to be different in another year's time. So we are spending a lot of time trying to learn new things. So if you looked at my last month and the pie chart of time allocation, you'd be surprised how much of that time was learning about U.S. healthcare,

Starting point is 00:14:54 becoming a digital company, other things other than how to run a brick and mortar retail store because we're trying to figure out how to get this company positioned to be here in 50 years' time. So like on Team of Teams, Stan McChrystal, who's awesome, we've spent time together. He's been to Bentonville. I've been to his place. He talks about a few principles. One of them is shared consciousness. And when he was

Starting point is 00:15:15 in his role in the military, he took silos that had been around for a long time, army, marine, CIA, all of those historic silos and figured out a way to get them to work together, to get on the same page and know the same things. Once you have shared consciousness, you know what I know, I know what you know, then you can pivot to empowered execution. Now that you know what I know, I expect you to act without seeking input. Go. And even today in our officers meeting, we were talking, we've got a few hundred officers. We were talking about what our strategy is again, giving people a chance to ask questions and then saying to everybody, Andy, go. This is on all of us, not just me. And you now know pretty much everything I know. So those

Starting point is 00:16:04 principles that you can glean from books and things like that are really helpful. How do you pick books? Because I think everyone here, whether it's a stack of books to the knee or just considering all the books their friends might recommend or that they might see recommended on social media, might feel a paradox of choice stress about what to read. And you have a lot on your plate. You have a lot of responsibilities. If you think back, say, in the last year to anything you've read, it doesn't have to be the last year, but how did you find that book or how did you select that book as something worthy of your time? I bet some of you in the room have the same situation I do. I don't have a shortage

Starting point is 00:16:39 of books because they're constantly being sent to me. The challenge is filtering through which one you're going to read next. So right now I'm about a third of the way through Ray Dalio's Principles. And that's because Greg Penner, our chairman, asked me to read it. So it went to the top of the stack. And I'm finding that one hard to read. But most of the ones that I've been choosing on my own are related to change management and specifically becoming a digital enterprise. Because the transformation that's underway in the world, in business, and certainly at Walmart is largely a data and technology and automation transformation. Leading through that while still retaining who you are as a company and the DNA and the values and the culture.

Starting point is 00:17:28 One of our officers today during the Q&A grabbed the microphone. Her name's Jody. And Jody said, you said it earlier, but I just want to underline it. The thing that will cause us to win is our humanity. And yeah, we need to learn how to become a digital enterprise. But we understand we're a company made up of 2.2 million associates and that human interaction in the future will matter yes automation will do things that the humans might not want to do mundane routine tasks at store

Starting point is 00:17:58 level or in a warehouse or elsewhere but it's that personal interaction that sense of community that i think people will want in the future. And it won't be just digital. I mean, that you see next door or Facebook or others that are creating a digital sense of community as we're all learning that has some flaws associated with it. This sense that you can have when you come to a place and we hope it's a store sometimes where you interact with others could It could be special and warm and safe. And if you can do that while delivering good prices and all the other stuff we've got to do, we think we've got an advantage. I did come across a mention of virtual reality in training employees or associates, maybe even executives.

Starting point is 00:18:40 I don't know. Is that currently underway or is that something planned? And could you just describe that? Because I was not aware of that. Yes. So our U.S. leadership team, Greg Foran, Judith McKinnon, and others a few years ago took an idea that they'd seen us practice in the U.K. to put training academies in our stores.

Starting point is 00:19:02 And now around the United States we have about 200 locations dotted around the map that are, 138 of them actually, are in the back rooms of stores. We've been able to reduce our inventory and create classrooms. So they're nice classrooms equipped with technology, mobile technology, large screens, really, really well done. And as you're getting trained on interesting things, not just how to execute a retail store, but also some soft skills, like we're teaching people how to have a difficult discussion using VR. So if you are a supervisor or a leader at Walmart, you probably weren't trained to coach someone for improvement. You might shy away from conflict, for example. So these VR headsets have an avatar. And if you put one on

Starting point is 00:19:51 right now, Tim, you would have a conversation. And at the end of that conversation, when you take the headset off, it would score you and tell you how you did in that conversation. Watching the avatar's facial expressions and the words that come back. So we're trying to help people grow for the jobs we have. And as automation happens and some of them go on to other jobs, help prepare them for more than that. But we also teach people how to do routine tasks. Like, so, you know, Ivanka Trump is interested in workforce training and she heard about the programs we were doing and wanted to come to a store. So I met her in Mesquite, Texas about a month ago. And we put VR goggles on her.

Starting point is 00:20:30 And she stocked our vegetable wall, what we call the wet wall that's got leafy greens on it and stuff like that. She scored a 12 out of 20. So we got a little work to do there. But you can use VR in ways that, you know, get you off the sales floor, let you have an opportunity to really learn when you're not interrupted by customers. And we'll have 17,000 VR headsets deployed by the end of the year for things like that. That's incredible. I want to talk a little bit about your personal practices because you have, of course, many responsibilities to other people, but I would imagine at some point you have to put on your oxygen mask first before helping others and keep yourself focused, which

Starting point is 00:21:11 you clearly are. In the Walmart museum last night, which I found endlessly fascinating, I expected to find it interesting, but I really found it fascinating. I fixated on Sam Walton's keychain next to his red pickup, and there's a gigantic metal plate, about five times the size of, say, a nail file, and in huge font it says, go for it. I was just imagining in my mind how he might have referred to that at different points making different decisions.

Starting point is 00:21:42 Do you have any reminders built into your life or any quotes that you think of often that might in some way resemble that? I think that go for it was a phrase we used in one of our annual, we had kind of a theme for the year and we were growing so fast. And that was really a rallying cry at one point. For me personally, the first thing that comes to mind is a cross that I have in my office. There's a Sam's Club member that I met years ago named Martha Hawkins. And we happened to see Martha in Montgomery, Alabama a couple of weeks ago. She runs a restaurant, but she's got an incredible personal story overcoming a drug addiction and serving others.

Starting point is 00:22:28 And we asked her to come to a Sam's Club meeting and give us feedback on what we could do better for small business owners and restaurant owners. And we don't rehearse these things. And I'm standing in front of all of our club managers with a group that's five or ten times bigger than this. And she grabs a microphone and starts giving her personal testimony. It was awesome. And we've just been pen pals since then. And I've been to Montgomery a couple of times and eaten at her place. And she sent me this big cross and these wonderful notes about you're in this big job.

Starting point is 00:23:02 You need support. I'm there for you. I'm going to encourage you. I'm going to encourage you and I'm going to pray for you. And she says stuff like when you show up at the restaurant, like I've prayed all the calories out of the food. If that works, let me know. Yeah. She had peach cobbler that didn't feel to me like that had been accomplished. But that's that there are other mementos, but that comes to mind. Now, I had read somewhere, well, let me backtrack.

Starting point is 00:23:30 You are clearly very curious. And I think to maintain that level of curiosity, which is necessary for the business, certainly, you need to sustain a level of humility. And there are different ways to do that. So a friend of mine who's been on my podcast, Alexis Ohanian, who's the co-founder of Reddit, at one point was told by a Yahoo exec very early on, you are a rounding error.

Starting point is 00:23:55 And so he put that up on the wall for his entire team to see, which ended up working out pretty well for them. I had read, and this may not be true, so please correct me, not everything on the Internet turns out to be true, I found out recently, that on your phone, at least at some point, this was in an interview, you had the top ten retailers, I want to say, from the last five decades on your phone. Can you explain why that was or why that is? Yeah, because retailers grow and die.

Starting point is 00:24:24 And I've been doing this almost 30 years now, which is amazing to me because I still feel like that in some ways we're just getting started. But if you're a student of retail, I suppose it's probably true for other industries more or less. But in retail, they have a good idea. They have a great founder. They start moving. They expand. And then something happens over time. They get complacent, they have too much success, they don't manage inventory, and they go. So if you go back and look at when Walmart,

Starting point is 00:24:58 Kmart, and Target started, which all started in 1962, Dollar General, I think, did it the same year, the retailers that were before them, Sears is interesting to talk about this week, they thought they had it. I mean, who are these upstarts? Walmart started in Rogers, Arkansas. Where's Rogers, Arkansas? No one was scared that day when the first Walmart started. So you can go away. The thing that that can keep one of the things that can keep you from going away is an openness to change and that's the point so if we were there are some walmart people in here but if you were all walmart people and you had a leader up front and that leader were to say the only thing that's constant at walmart there's some Walmart people in here. The truth is we have a consistent purpose that we got from

Starting point is 00:25:52 our founder, some values that we share. Those are persistent too. It's not just change, but the fact that that's the thing that people underestimate about Walmart right now is that it has an ability to change. They think it is going to be what it is right now. And in some cases, I might argue most cases, they don't understand what it is right now because it's only been explained to them through the media. They've had no personal interaction behind the scenes other than in the stores or online. But they certainly don't anticipate what it's going to become. And if we can keep that kind of attitude, we got a shot at surprising people and being here in the future

Starting point is 00:26:31 when a lot of people think we won't be. So openness to change is a prerequisite to then initiating change. But a lot of people don't get to that second part because change can be really scary. Would you mind talking about any particular scary decision for you and walk us through how you thought about it as you were going through it? And that could be, it could be a decision. It could just be a difficult or dark moment for you. Because what I'd like to do whenever I have these types of conversations is to humanize the person I'm talking to so that people who are listening don't think that, and maybe this is the case, but every time you've stepped up to bat, you've hit a home run. Because that can be the impression that some people come away with otherwise. So could you walk us through a difficult time, a difficult choice, and how you experienced that? From this week?

Starting point is 00:27:28 I'm just thinking about all the stuff that's happened in the last two weeks. I would say anything that sticks out. It could be from 20 years ago, 30 years ago. It doesn't matter time-wise. But something that was truly, truly difficult for you. Well, yeah. I mean, there are a lot of them. But I guess one of the themes that comes to mind is acquisitions. These are not small decisions to acquire a company, big or small.

Starting point is 00:27:53 There are founders, Andy Dunn sitting on the front row, Andy founded Bonobos. He's got a baby. And if he wants to put it in the family, that's huge risk for him. And I don't want to let him down. Then you've got Flipkart. We invested, Stuart, $16 billion to buy 77% of a company that loses a lot of money. That sounds brilliant, doesn't it? And before that, we did the board and management Jet.com. And Jet.com was like a billion-dollar run rate and lost money and still does. These decisions, we believe, are necessary for a variety of reasons, which we can talk about if you want to. But once you do it, you take on those losses, you take on those people and responsibilities, and you've got to execute in a way that makes that a really good decision.

Starting point is 00:28:51 And boy, we fret over those. And we're moving faster now. We're taking more risk. But that's an area where I have a lot of self-doubt. You have a meeting and you hear about the strategy and you think, yeah, we got to do this. And then you go home that night and you're about to go to sleep and you think, I can't do that. And then you get up the next morning and you go back through it. And we just iterate to a point where finally you got to make a decision and go for it. How do you navigate that? Because I think a lot of people hem and haw or go back and forth on potentially big decisions. What do you say to yourself?

Starting point is 00:29:25 What do you ask yourself? Or who do you ask questions to try to gain clarity? Well, it's collective wisdom for sure. And one of the great things, it's always been true in these jobs at Walmart because, you know, people will talk to you. When you're a buyer at Walmart, you can call a CEO of a company and they'll take your call. They will take the call. Yes. And then the job that I'm in right now, I get exposed to incredible people and you can use that collective wisdom by asking questions. So that's definitely part of it. But the other thing that runs through my mind is what, you know, what do you have to believe if you want to go do this?

Starting point is 00:30:01 And this is the calculated bet you're making what do you have to believe is true yeah and if you can get to a point where after thinking about it you come back to the same things and you're convicted i really do believe those things are true then take the risk and go for it so this might be too inside baseball and if we don't want to talk about it that's fine but let's let's talk about flipkart for a second so uh i think you'll do fine on Flipkart if a few things are probably true, but very bullish. What did you have to believe to be true for that to make sense?

Starting point is 00:30:35 So the first one is, do you believe in India and the environment's 1.2 billion people with a growing middle income, with a lack of infrastructure, they've adopted mobile, they're moving to digital forms of currency. There's a lot of change happening there. A lot of challenges, a lot of governance issues. It's a very diverse place. It's not really one country. It's enormous. We've been there for more than 10 years. I've been there

Starting point is 00:30:59 quite a few times. But do you believe in India? Check. Second question, what type of business in India? And the e-commerce business in India is under 3% of the total business and we're certain it's going to get bigger. So you got a big pie and it's getting bigger and you've got a small section called e-commerce today. Is that going to get bigger? Yes. Who are the players within that? There aren't very many. The number has been whittling down, which is what we're learning about digital businesses and e-commerce businesses. It turns out to aggregate business more than bust it up in some cases, and there are a few e-commerce players. Flipkart is actually not just an e-commerce business. It's an ecosystem of businesses. There's a last mile delivery component. There's an e-commerce component related to apparel. There's kind of a traditional e-commerce business. There's a payment system called phone pay.

Starting point is 00:31:54 They're doing all kinds of interesting things with AI. They're even designing apparel with AI. So it's an interesting set of positions in the country, not just a pure e-commerce business selling dry grocery items at a loss. And then you get to the leadership team. How do you feel about values? How do you feel about their capability? We were really impressed with their ability to solve problems.

Starting point is 00:32:17 And we recognize that this is not a situation where the business model is figured out and they're just going to execute it. It's a situation where they have a business model, and they're iterating every hour of every day to change it, navigate the market, which is exactly what you need in India, because it gets disrupted in so many different ways. You have to be quick. You have to be agile. You got to be on the ground. You got to know the business. You got to be able to solve problems together as a team, and they have that characteristic, and it was that set of things that caused us to say we should do this there just aren't very many opportunities in the world that are that big and for a company like walmart that needs to move the needle in a big way you have to take some big bets but if you're going to take that much risk the rewards got to match up and in the case of flip card it does and you have the ability to iterate after that large bet which kind of

Starting point is 00:33:04 mitigates some of, some of, but not all of the risk as well. And we're going to learn things in India that we can use in other places, including here. If we talk about experimentation and openness to change, I think for a lot of, say, entrepreneurs who are listening to this who have a 10-person company, they can't even imagine what it might be like to experiment within say Walmart. And they might think that it's trying to steer a continent. Uh, I would love to, because I'm personally curious, talk about Sam's club. I grew up going to Sam's club, getting in the car. And it was like a pilgrimage to go to Sam's club to buy all the things that

Starting point is 00:33:41 we needed growing up. And, uh, I recently came across what the Wall Street Journal had called treasure hunt items. And this may go nowhere, folks. I'm warning you in advance. I don't know. But could you please explain what this means? You really don't know what that means? I really don't know what it means. I mean, I have like a one-line idea of what it might mean.

Starting point is 00:34:04 Well, we must not be doing a very good job then if we don't know what it means. I mean, I have a, like a one line idea of what it might mean. Well, we must not be doing a very good job then. Keep in mind, I was going during like the, the Pleistocene era. This was early. So I may have not come across treasure hunt. When you go to a Sam's club, you should experience great quality, fresh food. And then other items that you didn't expect to see that are affordable luxuries that make it feel like there's a bit of a treasure hunt. Like what's around the corner? Like when you sell a swing set, it should be a special and big swing set. When you sell a cooler, there should be something about it that's different than Walmart or some other place. And a long time ago when I was at Sam's, the most extreme example I could remember is we sold a jet during our holiday period.

Starting point is 00:34:43 A jet? We had a holiday catalog, and we made a commitment for a jet and sold it. Didn't make a lot of money, but it generated a lot of buzz. But we've sold like a wine basement. We've sold extraordinary travel experiences, $70,000 price points. We sold a cool Harley one time that was $75,000. We bought one and we told everybody in our ad, we have one. So whoever gets there first gets it. And we sold it to some plumber in Indiana, if I remember correctly. Okay. I can't just move on from this. So is this like the $200 hamburger with gold leaf on it that you see in almost every major city like once a year for driving foot traffic and PR? How much

Starting point is 00:35:35 of say a jet or the Harley is driving foot traffic versus PR versus other considerations? Those were more PR and buzz related, but we didn't overcharge for it. It wasn't a $200 hamburger. It was a good price on the jet. Right. But you do blend like with our, with our merchandising assortment, whether it's online or in stores, Walmart or Sam's or other brands, you blend together the practical with the more aspirational all the time, trying to attract people to come to your place. You have a reputation for being very poised, very calm, very even keeled. I had read that your competitiveness comes from your mom, which may or may not be true. Again, internet question mark. That's very true. So where does the poised calm that he's come from? She's not here. I have all the dirt, all the skeletons. So the poised and calm, is that nature? Is that nurture?

Starting point is 00:36:30 No, I'm faking that. You're faking it. This is something I think a lot of people would like to fake, if that's actually true. So tell me, talk about where that comes from, if it comes from anywhere, or if that's just from the womb onward like most of us it probably comes from your parents and your upbringing mostly

Starting point is 00:36:49 my dad's like that and then they're the older i get the more i see my father in me which you know i have mixed feelings about my mom is super competitive she is literally the most competitive person i've ever met so she's's like, we took a summer vacation this year where we brought everybody together. We had like 18 people staying in this one house. And a bunch of them are 20-year-old young men, our sons and my nephews. And we played beach volleyball two days for a week. So we'll be out there before it gets too hot. We'll be out there after it gets cooler.

Starting point is 00:37:25 And those boys are spiking the ball off her forehead and she just keeps coming. It's for real. Her nickname, her grandson's nickname for her is killer. How does that, how does that manifest in your life? Oh, I'm super competitive. Like, I don't like to lose at anything. It's bad, actually, sometimes, because, you know, I play basketball on Sunday afternoons with a bunch of friends and my son. And it's a longstanding tradition we have on Sunday afternoon. And I hate losing so bad that sometimes I'm not as friendly as I should be. I should be like the wise guy at this point that's nurturing these young men.

Starting point is 00:38:04 And I'm out as friendly as I should be. I should be like the wise guy at this point that's nurturing these young men and I'm out there battling them. I would like to be a bigger person, but I'm not there yet. Hi, you know, I was, I think I was reading, it might've been on the podcast exchange with Peter Thiel and he was describing how, and I might be getting this slightly off, but I'm paraphrasing here, looking for areas where he could be less competitive, sort of increase well-being. Are there areas where you've consciously tried to ratchet back on the competitiveness? No. All right. Can't think of one.

Starting point is 00:38:36 Moving on. What does the first say? And this may vary. I'm sure it does vary day to day. But if you have the time to follow a particular routine in the morning, are there any particular rituals or routines that you have in the first hour or two of waking up? Yeah, very much so. It gets disrupted by travel, and we travel a lot. But if I'm in town, you know, shave, shower, get some food. I'm reading the same thing. I'm reading the Wall Street Journal.

Starting point is 00:39:07 Well, first, there's a daily devotional. Right now, Tony Dungy's got this daily devotional book. So I start with that. It doesn't take a lot of time, but I do it every day. And that's something you read? That's something you read out loud? Not out loud, but like I'm in the kitchen. I've got CNBC and Squawk Box on.

Starting point is 00:39:21 I'll mute it for a second. I'll read the daily devotional. Then I'm into the Wall Street Journal, glancing at the New York Times, CNBC app. CNBC's playing in the background. CNBC's in the car watching Squawk Box. And then I get to the office. What time do you wake up generally if you're in town? 5.30 and I'm in the office at about 6.30. What does your default breakfast look like? What do you eat for breakfast? Two fried eggs and toast. That's the first time I've ever been asked that.

Starting point is 00:39:48 I got one original question. Two fried eggs and toast. Do you drink coffee? Yes. How much coffee do you drink? Too much. That sounds like a conversation. You get to the office. You get to the office.

Starting point is 00:40:05 All right. You arrive at the office. Then what do you do? If you're in town, is there, I can't imagine that it's just left to whim. So there must be some structure, some lattice work on your day or week. Are there any must-dos on a daily or weekly basis? Yeah, there's a lot of variety, which is one of the things I love about it. I try to get there early enough

Starting point is 00:40:26 to get a little bit of quiet time going. We've already seen sales. So when we get up in the morning, the first thing that we all do is look at our device and you can see in seconds how were sales around the world yesterday by format, by country. So we already know what happened.

Starting point is 00:40:47 And so try to get there early enough to get a little bit of quiet time to get ahead on reading. These days we get a lot of reading materials. Like people will send you a white paper or a deck and say, this is for tomorrow's meeting. And it's 40 pages. We have a board meeting that's got a thousand pages of reading material. So you've got all this incoming data and it's helpful because we're trying to get into meetings and not, you know, have old fashioned PowerPoint flipping, but get right to the root of issues. So it's really helpful if people can read things beforehand. So there's a lot of that going on. And then there's just a ton of variety. I mean, I talked to Lou Holtz yesterday,

Starting point is 00:41:22 the former Arkansas Razorback coach. Yes, he coached at Notre Dame and won a national championship, but we know him as the Arkansas Razorback coach. And Lou is responsible or working with a health care company, and he read in the news that we were working on health care. So it's hilarious. I got to ask him, what would you do? Could you fix Razorback football? Because we won one game this year. And he said, yeah, by the second quarter, which I thought was hilarious. Well, come do it, man. So you just never know, you know, you can walk down the hallway and Shaquille

Starting point is 00:41:50 O'Neal will be walking down the hallway. And then you go into a meeting on compliance in China and you learn about, you know, how to manage ethics within a, within that country. So it's just a ton of variety every day. And there's really not a down minute. And the days are never what you think they're going to be. But you try to plan. So like I learned from Mike Duke, my predecessor, when I moved into our international job, that I couldn't manage my international travel without a really good plan. So when I moved into the job, one of the things Mike did for me was to hand me his schedule by week for the last three years. And Mike's an engineer, and he's very disciplined.

Starting point is 00:42:24 So he was like, Argentina, I'm going to get to once a year. his schedule by week for the last three years. And Mike's an engineer and he's very disciplined. So he was like, Argentina, I'm going to get to once a year. China, we're going to get to three times a year. We're going to schedule it out this way. We're in 27 countries now. So I just copied his method. And like right now, in fact, for about a month now, I would be able to tell you for next year where I will be by day. Some of the days are kind of planned out with board meetings. And we have this thing we call meeting week where we bring everybody together. You know, Mark Laurie lives in New Jersey. And we just had people distributed. So we come together for one week, kind of three or four days every month where we all get on the same page.

Starting point is 00:43:03 And then we disperse out again. So all those kinds of things drive the calendar and the discipline. We pretty much stick with it, but within a day it can get crazy because things come up. Looking at your travel schedule, which I haven't seen all of, but you were describing just the last few weeks to me before we got up on stage. What are some of the self-care techniques or strategies that you've developed so that you just don't wear yourself out? What are some of the things you do or don't do when you're traveling, before you travel, when you land, anything like that that helps you to sustain what seems to me to be a just ultra endurance marathon that doesn't end. Yeah. So sleep's real important for me personally. Sleep's real important. I wish I

Starting point is 00:43:51 needed less, but I need, I need seven or eight hours. Time with family is really important. So protecting weekends as much as I can. I work every day some, but try to manage that in a way that's not too disruptive with my family. My family's a huge priority. Shelly and I have two boys. They're in their 20s now, but, man, that was really important to me. So I protected that a lot. So, like, getting this basketball game in on Sunday afternoon is a big deal. If I can get a good sleep on Saturday, Sunday, get in some basketball,

Starting point is 00:44:18 get enough sleep while I'm traveling, I'm in pretty good shape. The other thing that happens sometimes is Paula, my assistant, and I call them fire breaks. Every once in a while, I just have to, because it's too much, you just have to go back and say, I know what I was supposed to do on Tuesday, but clear it. Because I just need some time to get back up on my feet, read a few things. So we will call an audible and put a fire break in every once in a while. So if you think back to any one of those

Starting point is 00:44:46 fire breaks, could you give us an example of what you then do in that day? Yeah, it's usually thinking. It's strategy. We have a collaborative environment and it's definitely collaborative as it relates to strategy.

Starting point is 00:45:02 I'm a blend of an introvert and an extrovert. There are times when I gotta have interaction with people and I get energy that way. And there are times when I need to have some quiet time and just shut the door in the office to rethink that kind of stuff. Like when we, is it Berkman you take? It's one of the tests where you can kind of assess yourself.

Starting point is 00:45:21 Oh, it could be. You can be on one of these extremes. I'm kind of right in the middle and pivot both ways ways so there are times when i just i need half and i can't do it in 30 minutes i need like a few hours to think when you sit down to think for instance i need to journal when i think otherwise it's just like trying to grasp at mosquitoes i can't seem to catch anything what is what does it look like for Doug to sit down and think? Do you stare off into space? Do you read? Do you take a long shower? Listen to classical music? What does it look like? It's drawing pictures. Drawing pictures? Yes. Schematics of how strategy works

Starting point is 00:45:55 or how a problem is deconstructed. So there are people that work with me in the room. I can't hardly have a conversation with Brett without the whiteboard. And I'm so thankful. I see Jim and Lynn there. Sam Walton had a pegboard in his office. And I'm thankful for that because I had to put up a whiteboard and people said, you can't do that at Sam Walton's office. And I'm like, nope, look, there are pictures here. He had a pegboard. A whiteboard is not that different than a pegboard because I live kind of in a library or a museum in Sam's office. It's hallowed ground, so you don't mess with it too much, right? But we've got this big whiteboard, and we have conversations where Brett's got a marker and I've got a marker, and we're drawing pictures of, well, if the customer experience went

Starting point is 00:46:40 this way or went that way or the financials look like this instead of that. What does healthcare really look like? You've got a life here. You've got care here. You've got insurance. How does that work? How could you help somebody be healthier and make a margin at the same time? And how could clinics play a role in that? So for me, I'm a visual learner. And when I can't solve a problem, I'm constantly trying to draw a picture of it and trying to get other people to draw a picture of it. And when you do those, those fire breaks and you, let's just say you have blocked out three to four hours to think, how often is that by yourself versus with other people? It's by myself. I need that time by myself, but I run into things that I don't know. And so I'll run out and interrupt, place a phone call and say, I'm working on this problem. What do you think?

Starting point is 00:47:33 And then I'm trying to put the phone back down or walk back to my office and work on the next turn of the crank on the problem. Thank you. Glad I asked that. This is a tough question, but I want to go fishing and see what we get here. So it's in the last handful of years. Could be five, three, it doesn't really matter. What new, you talked about belief earlier, new belief, behavior, or habit has most improved your life or greatly improved your life, would you say?

Starting point is 00:48:01 Any change of thinking, new thing that you do or have stopped doing, anything at all, new addition to your life? It's the influence of other people and it's an openness to change. And I described my morning routine for you. I would say years ago, my whole life was more routine. And now the pivot is to let go more and be more open to change and more open to risk, realizing that continuing to do what I've always done won't result in me being the person that the company needs me to be. And if I'm rigid and routined and disciplined too often,

Starting point is 00:48:47 so will everybody else. And so we were talking about risk today with our officers and trying to encourage them to take risk. Well, they won't take risk if they don't see us taking risk. And so some of the things we've done lately, I'm a really conservative person. I would not have wanted to take those risks or historically expected to. But it's kind of liberating.

Starting point is 00:49:11 And once you survive one, the next one's a little more comfortable. And if we can get everybody thinking that way, we got a shot. What led to sort of the 15-minute increment routine, Doug, to the being more open to change? Was there a particular event or conversation or period of time that led you to realize how valuable that could be? What led to the change? Probably more than one thing. The realization that without it, we are going to have a problem. Like the retailers that fail by decade, that feeling that if we don't really open ourselves up to change here,

Starting point is 00:49:58 which starts with us, you know, change is really cool when it's for somebody else, but when it's for yourself, it's really hard. One experience we had in Walmart one time, this lady that works for Walmart was teaching us about change management, and she had us take our watch off and put it on the other hand and just leave it that way for a day. And it bugs the heck out of me. It's such a little thing, but it's indicative of how hard it is for us to change personally. So I'll put this on my right wrist, but by tonight that'll be back on my left wrist because I won't be able to take it anymore.

Starting point is 00:50:31 So if you recognize that in yourself, you got a shot at doing something about it. That watch experiment is really cool. A friend of mine had a similar experience where someone he had hired to assist his company recommended same wrist but put it on the other side and see how long it takes you to actually turn your wrist to that new side. It takes a long time. As an indication of also not just the potential importance of change but how you have to give it some time to become instilled. When you feel, and maybe you don't feel this, but when you feel, it seems like the fire breaks are one example of contending with this, overwhelmed or are unsure of what to do. Besides the fire breaks, is there anything else that you do? Prayer.

Starting point is 00:51:18 Do you have a particular prayer or type of prayer? What does that look like? This is really getting personal. We've got like 255 left on the clock. Okay, that's great. 255. This is definitely, if you want to dance around the ring until the time goes out, you can do that. That's what I'm trying to figure out right now.

Starting point is 00:51:42 There's a bigger thing at play here, and it's bigger than any of us and realizing that and realizing that if you grip that steering wheel too hard you will fail is the is the moment where that fire break comes or you let go and say okay i'm listening so that prayer is frequently not me speaking it's's me listening. It's being quiet. And he'll put people in my life. It feels like this happens frequently where there's no other reason I can think of that that person said that to me, gave me that idea at that moment, other than some other higher calling that I think is, you know, very real and tangible for me personally, given my faith, but also helpful to the company. You know, my prayer is that the company will bless

Starting point is 00:52:32 God. I can't believe you got me to say all that. Let's wrap this dude up. Who invited this guy? 122. I think we have time for maybe one more, but I'll see if I can sneak in two. Do you have a favorite failure of yours? Meaning, something that seemed like a failure at the time that ended up setting the stage for something better.

Starting point is 00:53:06 Yeah, a bunch of them. The one that was so memorable for me was early. That's why it left such a mark. But if I tell the story briefly, I was the chip buyer. I had a bunch of categories that I was responsible for in food, and Frito-Lay chips was one of my items.

Starting point is 00:53:21 And I got really excited. This is early 90s because Frito-Lay brought out one of my items. And I got really excited. This is early 90s because Frito-Lay brought out lime flavored Tostitos, lime and chili flavored Tostitos. And so I wanted to put it on the front page of the Walmart tab. And we did back then print tabs,

Starting point is 00:53:37 mail to American homes, you know, tens of millions of them. It's a big deal. And everybody knew that if the merchant screwed up the tab, you were dead. Like you had no career. Nobody makes a tab mistake. Every item, every picture, every price, all the end stocks got to be there because we print a hundred million of these things. It's got to be great. Well, we, we put, I got the whole cover of the tab. I talked marketing into

Starting point is 00:53:58 letting me have the whole thing. And we fanned out Lay's and Cheetos and right there in the front, lime and chili flavored Tostitos. And the tab hit and the phone started ringing and we learned that Frito-Lay didn't have that item west of the Mississippi. Yeah, that was the feeling. So I'm in my 20s, Shelly and I have a young child and I'm thinking, this is it. this is, this is how this ends, this is really, really bad, and to make a long story short, like, it was so bad, I went, I went to my supervisor, once I figured out it was happening, and I said, here's what's happened, and he looked at me and said, you need to go tell Bill Fields, and Bill was the chief merchant, and if Bill were here, I would say the same thing. So I'm not talking out of school. He's like Darth Vader in my mind. Like imagine Darth Vader. I love him, but he's scary.

Starting point is 00:54:52 And so I said, OK, let's go tell him. And my supervisor said, I ain't going. So that's true. I've left their name out because that's true. So I go to tell Bill Fields that we've made this mistake and that didn't go well. And so the solution was put back on me like, what are you going to do about it? And Frito-Lay gave us a coupon for a free bag of chips for any customer that complained west of the Mississippi. And we printed them at PMDC down the street and mailed them out in 24 hours so that store managers had something to give to the customer when they complained. But that didn't totally satisfy the customer. So it was really bad.

Starting point is 00:55:34 So nobody would talk to me. Like I was, I don't know, what do you call it, a pariah? Pariah. So everybody knows how bad that is. So I'm walking down the hallways and people that I thought were my friends, they had their head down. Like I'm death, like I'm dead. It's over. And this lasts for like two, three days because the tab is a week long. So you don't get to just get up the next day and forget about it. You got to live with it for a week. And there was one person in the whole company that reached out to me and his name's J.R. Campbell. J.R. was a DMM, a divisional merchandise manager, supervising buyers in another area unrelated to

Starting point is 00:56:11 mine. And he called me over to his desk. We had an open office environment at that time. And in front of other people around, he gave me a pep talk and said, you screwed up, but I believe in you. Never do this again. Learn from it. Get your head up and get back to work. And that's all I needed. And it all worked out. But I learned empathy from that mistake.

Starting point is 00:56:39 I learned what it's like when somebody that you think is really good makes a bad mistake. Just a little word of encouragement is huge. I know we're at zero, zero, zero. Very last question. Very last question. You have a billboard. That billboard, metaphorically speaking, gets a message out to billions and billions of people. Anything you would put on that, a word, a quote, a question, anything that comes to mind that you would put on that billboard? Shop at Walmart. Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little

Starting point is 00:57:25 morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric as I do. It could include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to 4hourworkweek.com. That's 4hourworkweek.com all spelled out and just

Starting point is 00:58:06 drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This episode of the Tim Ferriss Show is brought to you by LinkedIn. The right hire can make a huge impact on your business. The wrong hire can create your business. And I have seen example after example from thousands of my readers at a minimum, where they've told me stories of how finding the right person at the right time, and in some cases, not even asking, what should I do, but asking who should I find, because that person can help me determine what exactly to do more intelligently. And I've had a chance to hire two such people in the last year. And that has just made my business take a quantum leap forward and my complexity in my personal and business life get cut dramatically. And this type of simplification cannot be overvalued. We think a lot about hiring. And I think a lot about hiring.

Starting point is 00:59:04 And it is a skill that I've had to learn. It is important to find the right person. But where do you find that person? You can post a job on a job board and hope that that right person finds your job, that they are on the internet happening to scan something here and there and then find you. But think about it. How often do you hang out on job boards? The answer is probably not very often. So don't leave finding someone great to chance when you can post your job exactly where people go every day to make connections, grow in their careers, and discover job opportunities. That is LinkedIn. Most LinkedIn members haven't recently visited the top job boards, but nine out of 10 members are open to new opportunities. And with 70% of the top job boards, but nine out of 10 members are open to new opportunities. And with 70% of the

Starting point is 00:59:46 US workforce on LinkedIn, hosting there is the best way to get your job opportunity in front of more of the right people. And you can be very, very highly targeted and specific. People who are qualified for the role you have and ready for something new. This is where you find them. It's the best way to find that person, that key person who will help you grow your business. And this is why a new hire is made every 10 seconds using LinkedIn. That's bonkers. Every 10 seconds. So head to linkedin.com forward slash Tim and get $50 off your first job post. That's linkedin.com forward slash Tim, T-I-M, to get $50 off your first job post. Linkedin.com forward slash Tim, T-I-M, to get $50 off your first job post. Linkedin.com forward slash Tim.

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The Tim Ferriss Show - #345: Doug McMillon — CEO of Walmart

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Pet Camera - EBO Air 2

The Tim Ferriss Show - #345: Doug McMillon — CEO of Walmart

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