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Jim Sinegal: Absolute Legend of Business

Jim Sinegal, Costco's co-founder and former CEO

Jim Sinegal, the co-founder and former CEO of Costco, once threatened to kill his predecessor if he raised the price of the hot dog combo.

Most modern leadership advice encourages leaders to listen when their employees bring up problems and to definitely not threaten to kill them.

But to become a legend, sometimes you have to ignore conventional wisdom.

Case in point: when Costco’s new CEO suggested raising the price of their famous $1.50 hot dog and soda combo, all it took was a demand and a casual death threat from Costco’s co-founder and former CEO to kickstart innovation.

Here’s the hilarious, true story as told by Costco’s CEO Craig Jelinek:

“I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.’ 

And he said, ‘If you raise the [price of the] effing hot dog, I will kill you. Figure it out.’

That may disturb some people, but Sinegal’s demand coupled with a he’s-probably-just-joking-right threat motivated Costco’s leadership to figure it out.

“What we figured out we could do is build our own hot dog-manufacturing plant (in Los Angeles) and make our own Kirkland Signature hot dogs. Now we are doing so much hot dog business that we’ve opened up another plant in Chicago.

“By having the discipline to say, ‘You are not going to be able to raise your price. You have to figure it out,’ we took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return.”

So, listen. I’m not saying you should routinely hurl out close-minded demands coupled with death threats, but I am saying you shouldn’t be so enlightened as to rule it out on face value.


This post was first sent in a Stew’s Letter, a weekly-ish email for ambitious, curious people. You can join below:

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