Joe Coulombe [Trader Joe's]

1 00:00:00,000 --> 00:00:04,720 Welcome to Headstones and Microphones Founder Stories where we use AI to step into 2 00:00:04,740 --> 00:00:09,520 the past through a researched, first-person simulation of history's most visionary 3 00:00:09,582 --> 00:00:10,240 founders. 4 00:00:10,400 --> 00:00:12,160 I am your host, Calvin. 5 00:00:12,227 --> 00:00:16,800 While we've added some creative storytelling, our goal is to inspire your own study 6 00:00:16,827 --> 00:00:18,000 of these trailblazers. 7 00:00:18,200 --> 00:00:20,920 Now, let's meet our guest. 8 00:00:21,047 --> 00:00:25,360 Today, we are hanging out with the ultimate captain of the grocery aisles, 9 00:00:25,380 --> 00:00:30,160 the man who brought us tropical shirts, incredible values, and changed how America 10 00:00:30,240 --> 00:00:30,640 eats. 11 00:00:30,770 --> 00:00:35,440 Welcome to the show, Joe Coulombe, the legendary founder of Trader Joe's! 12 00:00:36,000 --> 00:00:37,520 Thank you so much for having me, Calvin. 13 00:00:38,000 --> 00:00:39,680 We are thrilled to have you, Joe! 14 00:00:39,800 --> 00:00:41,120 Let's dive right into it. 15 00:00:41,248 --> 00:00:45,360 When you first conceived of your business, the world was a very different place. 16 00:00:45,472 --> 00:00:50,240 What was the exact moment you realized society was moving in a direction only you 17 00:00:50,267 --> 00:00:53,520 could see, and how did you convince the early skeptics? 18 00:00:54,000 --> 00:00:58,480 It really came down to looking at the changing demographics in the 1960s. 19 00:00:58,560 --> 00:01:00,080 I noticed that thanks to the G.I. 20 00:01:00,112 --> 00:01:04,160 Bill after the second World War, a massive wave of young people was going to 21 00:01:04,210 --> 00:01:04,720 college. 22 00:01:04,832 --> 00:01:08,320 This meant a rapidly growing class of highly educated people. 23 00:01:08,434 --> 00:01:13,200 Around the same time, the Boeing 747 was coming into play, making international 24 00:01:13,257 --> 00:01:14,240 travel accessible. 25 00:01:14,600 --> 00:01:18,800 I realized that these well-traveled, highly educated people were going to be 26 00:01:18,853 --> 00:01:22,800 adventurous eaters, but many of them-like teachers, journalists, 27 00:01:22,820 --> 00:01:25,600 and classical musicians-were also underpaid! 28 00:01:25,712 --> 00:01:30,480 They wanted fine olive oil, good wine, and exotic cheeses, but they couldn't afford 29 00:01:30,500 --> 00:01:34,720 the fancy gourmet shops, and the standard supermarkets only offered bland options 30 00:01:34,752 --> 00:01:35,440 like Velveeta. 31 00:01:35,600 --> 00:01:40,560 Convincing the skeptics wasn't about shouting; it was about quietly catering to this 32 00:01:40,760 --> 00:01:45,040 "over-educated and underpaid" crowd who desperately wanted something different. 33 00:01:46,000 --> 00:01:48,560 That is a brilliant piece of forecasting. 34 00:01:48,600 --> 00:01:53,000 Leaving behind safety to build something entirely unproven is a massive gamble, 35 00:01:53,017 --> 00:01:54,000 though. 36 00:01:54,032 --> 00:01:57,120 What did your life look like the day you decided to go all-in, 37 00:01:57,140 --> 00:02:00,880 and what was the core belief that gave you the courage to take that first step? 38 00:02:01,000 --> 00:02:03,320 Oh, it was a nerve-wracking time! 39 00:02:03,453 --> 00:02:07,160 My wife, Alice, and I were young, and we had a family to think about. 40 00:02:07,360 --> 00:02:11,640 I had been working for the Owl-Rexall drugstore chain, running a small group of 41 00:02:11,687 --> 00:02:16,640 convenience stores they started called Pronto Markets to compete with 7-Eleven. 42 00:02:16,712 --> 00:02:21,960 When Rexall decided to liquidate the stores, I was faced with a stark choice: find a 43 00:02:22,020 --> 00:02:24,440 new job or buy the stores myself. 44 00:02:24,720 --> 00:02:29,720 I chose to go all-in, leveraging what I could and finding the financing to buy them 45 00:02:29,800 --> 00:02:30,120 out. 46 00:02:30,333 --> 00:02:35,320 My core belief was that small, independent operators had to specialize to survive 47 00:02:35,360 --> 00:02:37,000 against the giant corporations. 48 00:02:37,240 --> 00:02:41,960 I knew that if I stayed standard, the 800-pound gorillas of retail would crush me. 49 00:02:42,280 --> 00:02:44,600 I had to create my own niche. 50 00:02:45,000 --> 00:02:47,080 Talk about standing your ground! 51 00:02:47,560 --> 00:02:52,680 In the absolute beginning, when you had no data, no capital, 52 00:02:52,720 --> 00:02:58,040 and no blueprint, what was the one truth you held onto that everyone else around you 53 00:02:58,104 --> 00:02:58,760 dismissed? 54 00:02:59,000 --> 00:03:03,560 The truth I held onto was that consumers are smart and appreciate direct honesty, 55 00:03:03,620 --> 00:03:04,920 not promotional gimmicks. 56 00:03:05,018 --> 00:03:09,000 Everyone in retail told me I needed loss-leaders, loyalty clubs, 57 00:03:09,040 --> 00:03:11,560 and massive, flashy newspaper advertisements. 58 00:03:11,800 --> 00:03:13,400 I completely dismissed that. 59 00:03:13,680 --> 00:03:17,800 I believed that if we provided true value, outstanding product knowledge, 60 00:03:17,840 --> 00:03:21,400 and items that stood on their own merit, we didn't need to play those games. 61 00:03:21,613 --> 00:03:26,120 We focused on the value per cubic inch, and instead of big ad campaigns, 62 00:03:26,147 --> 00:03:30,840 we eventually created a simple, text-heavy newsletter called the Fearless Flyer, 63 00:03:30,880 --> 00:03:34,440 using old, copyright-expired magazine illustrations to save money. 64 00:03:34,554 --> 00:03:39,080 People thought a grocery store without standard ads or major brands would fail, 65 00:03:39,120 --> 00:03:41,720 but our customers loved being treated like insiders. 66 00:03:42,000 --> 00:03:44,960 It really flipped the whole grocery model on its head. 67 00:03:45,300 --> 00:03:50,560 But long before your company became a household name, you hit a wall where 68 00:03:50,611 --> 00:03:52,000 everything nearly collapsed. 69 00:03:52,240 --> 00:03:58,400 Take us back to that first major failure-what went wrong, and how did you find the 70 00:03:58,464 --> 00:04:00,000 willpower to restart? 71 00:04:00,000 --> 00:04:05,360 Well, the biggest crisis broke out right over my head on a Friday afternoon in 72 00:04:05,450 --> 00:04:07,920 October of 1965. 73 00:04:08,360 --> 00:04:12,640 I was sitting in a bar in Los Angeles when I found out that the local dairy 74 00:04:12,691 --> 00:04:16,800 partnering with us was selling out to Southland Corporation, 75 00:04:16,820 --> 00:04:18,880 the owners of 7-Eleven. 76 00:04:19,067 --> 00:04:23,680 Up until then, I was running 18 Pronto Market convenience stores, 77 00:04:23,740 --> 00:04:29,360 and suddenly, my biggest competitor owned my source of capital and my main supply of 78 00:04:29,424 --> 00:04:30,480 milk and ice cream. 79 00:04:30,773 --> 00:04:36,720 It felt like a ruinous setback; we were leveraged to the gills and facing a giant. 80 00:04:36,940 --> 00:04:40,720 But instead of giving up, that pressure forced my hand. 81 00:04:41,040 --> 00:04:45,040 I realized I couldn't beat 7-Eleven at being a convenience store, 82 00:04:45,093 --> 00:04:46,720 so I had to pivot entirely. 83 00:04:46,992 --> 00:04:52,160 That failure of the Pronto Market model is exactly what forced me to dream up the 84 00:04:52,227 --> 00:04:57,280 South Seas-themed, direct-buying concept of Trader Joe's, which we opened in 85 00:04:57,360 --> 00:04:59,520 Pasadena in 1967. 86 00:05:00,000 --> 00:05:02,560 Innovation really does come out of necessity. 87 00:05:02,800 --> 00:05:06,880 Now, innovation often looks like madness to contemporaries. 88 00:05:07,160 --> 00:05:12,720 Was there a specific product, philosophy, or strategy you were utterly convinced 89 00:05:12,747 --> 00:05:17,040 would work, but the public initially rejected or ridiculed? 90 00:05:17,200 --> 00:05:18,560 How did you respond? 91 00:05:19,000 --> 00:05:22,680 People certainly thought the nautical theme and the tropical shirts were a bit wild 92 00:05:22,707 --> 00:05:23,400 at first! 93 00:05:23,533 --> 00:05:27,720 We scrounged up old hatch covers sitting on barrels from salvage shops near the Los 94 00:05:27,780 --> 00:05:30,280 Angeles Harbor just to make cheap counters. 95 00:05:30,420 --> 00:05:35,000 But the real strategy people questioned was our obsession with breaking the rigid 96 00:05:35,069 --> 00:05:37,240 retail pricing of wine and alcohol. 97 00:05:37,336 --> 00:05:42,040 Back then, "fair trade" laws guaranteed high profit margins for big supermarkets and 98 00:05:42,100 --> 00:05:44,520 wholesalers by setting minimum prices. 99 00:05:44,800 --> 00:05:49,240 I spent hours reading the fine print of those regulations and figured out legal 100 00:05:49,293 --> 00:05:53,400 loopholes to buy directly and break the prevailing retail prices, 101 00:05:53,446 --> 00:05:57,960 aiming for a quality bottle of wine that a family could afford every single night. 102 00:05:58,063 --> 00:06:02,840 People thought taking on the liquor regulations and focusing so heavily on boutique 103 00:06:02,884 --> 00:06:06,760 California wines was crazy for a small neighborhood market, 104 00:06:06,800 --> 00:06:11,000 but we stuck to our strategy and became a massive force in the wine industry. 105 00:06:12,000 --> 00:06:17,120 Behind the legendary name was a human being facing immense pressure-whether from 106 00:06:17,176 --> 00:06:20,880 financial panics, internal betrayal, or personal doubt. 107 00:06:21,160 --> 00:06:25,120 How did you shoulder that burden without letting the vision splinter? 108 00:06:26,000 --> 00:06:28,960 The financial pressure in the early days was immense. 109 00:06:29,040 --> 00:06:35,600 We went from being heavily in debt to finally achieving zero leverage by 1975. 110 00:06:35,627 --> 00:06:39,600 To shoulder that burden, I focused heavily on distinguishing between decisions that 111 00:06:39,664 --> 00:06:43,520 were easily reversible and ones that were irreversible. 112 00:06:43,540 --> 00:06:47,360 For instance, I knew that signing a fifteen-year real estate lease was virtually 113 00:06:47,422 --> 00:06:52,240 irreversible, so I kept absolute personal control over those choices to protect the 114 00:06:52,280 --> 00:06:53,680 company's future. 115 00:06:53,760 --> 00:06:58,400 I also managed the mental weight by surrounding myself with incredible people. 116 00:06:58,427 --> 00:07:02,640 My mentor, Wayne Bud Fisher Jr., taught me how to be a real executive, 117 00:07:02,660 --> 00:07:07,200 and I kept a steady, reasonable strategy rather than constantly panicking or looking 118 00:07:07,220 --> 00:07:08,400 for a perfect blueprint. 119 00:07:08,580 --> 00:07:11,520 Tenacity is just as important as brilliance. 120 00:07:12,000 --> 00:07:16,400 Speaking of the people around you, who were the very first people-beyond your 121 00:07:16,440 --> 00:07:18,880 immediate family-to buy into what you were doing? 122 00:07:19,100 --> 00:07:24,800 How did you convince early workers or customers to trust an entirely unproven 123 00:07:24,880 --> 00:07:25,600 concept? 124 00:07:26,000 --> 00:07:30,800 My early employees and our executives, like Leroy Watson, were the true believers. 125 00:07:30,907 --> 00:07:36,320 To convince them to trust this unproven concept, I didn't rely on empty promises; I 126 00:07:36,384 --> 00:07:36,960 paid them. 127 00:07:37,200 --> 00:07:42,560 I fundamentally believed that you cannot afford to have cheap employees because good 128 00:07:42,606 --> 00:07:45,600 people pay for themselves through extra productivity. 129 00:07:45,840 --> 00:07:50,000 I set a goal that our average full-time crew member would earn the median family 130 00:07:50,069 --> 00:07:54,720 income for California, which was way above the standard retail or union scale at the 131 00:07:54,784 --> 00:07:55,120 time. 132 00:07:55,307 --> 00:07:58,880 We also gave them guaranteed hours and medical benefits. 133 00:07:58,960 --> 00:08:03,121 When workers realized we genuinely valued them and were willing to pay them a living 134 00:08:03,217 --> 00:08:07,921 wage, they gave us their absolute best, and many ended up staying with the company 135 00:08:07,961 --> 00:08:08,881 for decades. 136 00:08:09,000 --> 00:08:12,520 Can you take us to the exact moment where you felt the momentum shift? 137 00:08:12,696 --> 00:08:18,360 What was the specific milestone, contract, or breakthrough where you realized, 138 00:08:18,680 --> 00:08:22,680 "We aren't just going to survive-we are going to change everything"? 139 00:08:23,000 --> 00:08:27,320 A major turning point happened through pure serendipity and a bit of a supply 140 00:08:27,391 --> 00:08:28,320 accident. 141 00:08:28,440 --> 00:08:33,000 We had found an outfit in Venice called Mom's Trucking to package wheat bran for us. 142 00:08:33,090 --> 00:08:37,641 Because bran is a low-value product, they couldn't afford to deliver it by itself. 143 00:08:37,853 --> 00:08:41,720 To make the delivery worth it, they asked if we would also take some of the nuts and 144 00:08:41,773 --> 00:08:43,160 dried fruits they packaged. 145 00:08:43,373 --> 00:08:46,920 We reluctantly added them to the order, put them on the shelves, 146 00:08:46,940 --> 00:08:49,080 and they absolutely flew out the door. 147 00:08:49,178 --> 00:08:53,560 Suddenly, we became the largest retailer of nuts and dried fruits in California! 148 00:08:53,720 --> 00:08:58,280 That breakthrough made me realize our buyer-oriented strategy was a goldmine. 149 00:08:58,520 --> 00:09:03,160 We didn't need to rely on standard big-brand groceries; we could find unique, 150 00:09:03,192 --> 00:09:07,320 high-quality items, buy them directly, and change the way people shopped. 151 00:09:08,000 --> 00:09:12,400 You didn't just build a company; you built a distinct culture and philosophy that 152 00:09:12,460 --> 00:09:13,920 outlasted you. 153 00:09:14,160 --> 00:09:18,080 In the early days when it was just a handful of people in a room, 154 00:09:18,120 --> 00:09:21,040 how did you instill that standard of excellence or service? 155 00:09:22,000 --> 00:09:25,280 We established it by changing our fundamental point of view from being 156 00:09:25,351 --> 00:09:28,720 customer-oriented to being buyer-oriented. 157 00:09:28,920 --> 00:09:33,680 I put our buyers in charge and made sure every single item on the shelf had to stand 158 00:09:33,733 --> 00:09:36,080 on its own two feet as a profit center. 159 00:09:36,293 --> 00:09:40,320 We instilled a strict rule with our vendors: "Screw me once, 160 00:09:40,373 --> 00:09:41,200 shame on you. 161 00:09:41,307 --> 00:09:43,920 Screw me twice, shame on me." 162 00:09:44,160 --> 00:09:48,480 If a supplier compromised on quality or pricing twice, they were permanently 163 00:09:48,560 --> 00:09:49,120 banished. 164 00:09:49,240 --> 00:09:53,120 The crew in the stores saw this uncompromising commitment to product knowledge and 165 00:09:53,176 --> 00:09:57,360 integrity, and it naturally set a high standard of excellence for how we handled 166 00:09:57,396 --> 00:10:00,720 everything from our captains and mates down to the bells on the floor. 167 00:10:01,000 --> 00:10:05,080 History books often flatten a person's life into a neat, polished narrative. 168 00:10:05,304 --> 00:10:09,560 What is the biggest misconception people have about your journey, 169 00:10:09,592 --> 00:10:13,160 your character, or how your company was actually built? 170 00:10:14,000 --> 00:10:17,840 People often look at the success of Trader Joe's and assume it was the result of 171 00:10:17,888 --> 00:10:22,800 some grand, flawless master plan that I drew up perfectly from day one. 172 00:10:22,928 --> 00:10:27,120 They look at our unique product mix and call it "brilliant foresight." 173 00:10:27,333 --> 00:10:32,320 In reality, so much of it was responding to crises, learning from mistakes, 174 00:10:32,340 --> 00:10:35,920 and stumbling into great opportunities-like the dried fruit story. 175 00:10:36,030 --> 00:10:40,640 Another misconception is that our high wages were purely out of altruism. 176 00:10:40,733 --> 00:10:45,440 While I loved and believed in our crew, it was a highly practical business strategy 177 00:10:45,547 --> 00:10:50,400 to attract the absolute best talent and avoid the rigid constraints of unionization. 178 00:10:50,613 --> 00:10:54,880 It was good, pragmatic business, not just a polished fairy tale. 179 00:10:55,000 --> 00:10:58,760 Building an empire always requires a steep personal cost. 180 00:10:58,900 --> 00:11:03,880 Looking back at the entirety of your life, what was the hardest sacrifice you had to 181 00:11:03,928 --> 00:11:07,320 make for the sake of your vision, and was it ultimately worth it? 182 00:11:08,000 --> 00:11:12,400 The hardest part was the constant demand on my stamina and the ultimate decision to 183 00:11:12,432 --> 00:11:13,200 sell the company. 184 00:11:13,467 --> 00:11:18,800 In 1979, due to financial concerns and the shifting landscape of regulations, 185 00:11:18,853 --> 00:11:21,040 we sold Trader Joe's to Theo Albrecht. 186 00:11:21,184 --> 00:11:25,200 Even though I stayed on as CEO for several years until my retirement in the late 187 00:11:25,280 --> 00:11:30,160 1980s, letting go of the ownership of something you built from a single storefront 188 00:11:30,267 --> 00:11:32,640 is a deeply emotional sacrifice. 189 00:11:32,770 --> 00:11:36,880 Looking back at the entirety of my journey up to my final days, 190 00:11:36,907 --> 00:11:39,200 it was absolutely worth it. 191 00:11:39,280 --> 00:11:43,120 Seeing the joy the stores brought to people and knowing we proved you could run a 192 00:11:43,164 --> 00:11:48,960 business your own way, pay workers beautifully, and still beat the big guys-that is 193 00:11:48,987 --> 00:11:50,800 an incredibly rewarding legacy. 194 00:11:51,000 --> 00:11:55,480 If you could send a single sentence back through time to yourself on the very first 195 00:11:55,540 --> 00:12:01,160 day you started this venture-knowing every trial, triumph, and heartbreak that 196 00:12:01,210 --> 00:12:03,480 awaited you-what would you say? 197 00:12:04,000 --> 00:12:09,680 I would tell myself: "Trust your demographic, pay your people well, 198 00:12:09,760 --> 00:12:16,000 and remember that tenacity in sticking to your unique strategy will always carry you 199 00:12:16,030 --> 00:12:16,800 through the storm." 200 00:12:17,000 --> 00:12:20,760 Joe, before we sign off, do you have any closing remarks about the interview or the 201 00:12:20,820 --> 00:12:23,720 stories you shared that you would like to share with our listeners? 202 00:12:24,000 --> 00:12:28,000 I just want to emphasize to anyone out there trying to build something: don't be 203 00:12:28,057 --> 00:12:32,000 afraid to think outside the box and don't feel forced to follow the corporate 204 00:12:32,062 --> 00:12:33,000 playbook. 205 00:12:33,088 --> 00:12:36,800 Take care of your people, trust the intelligence of your customers, 206 00:12:36,840 --> 00:12:38,240 and enjoy the voyage. 207 00:12:38,347 --> 00:12:42,400 Thank you again, Calvin, for this wonderful conversation and for letting me share my 208 00:12:42,450 --> 00:12:43,120 journey. 209 00:12:43,227 --> 00:12:44,400 It has been an honor. 210 00:12:45,000 --> 00:12:46,840 The honor is entirely ours, Joe. 211 00:12:46,880 --> 00:12:47,880 Thank you for stopping by! 212 00:12:48,120 --> 00:12:53,240 Wow, what an incredible look into the mind of Joe Coulombe-a true trailblazer who 213 00:12:53,286 --> 00:12:57,000 proved that staying true to a unique vision, taking care of your crew, 214 00:12:57,040 --> 00:12:59,880 and bucking retail trends can build a legendary legacy. 215 00:13:00,120 --> 00:13:03,560 And that wraps up another conversation from beyond the grave. 216 00:13:03,686 --> 00:13:08,200 Thanks for joining us on The Headstones and Microphones Podcast - Founder Stories. 217 00:13:08,324 --> 00:13:12,440 Remember-legends may die, but their stories never do. 218 00:13:12,611 --> 00:13:16,040 Please help spread the word by sharing and following the pod.