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26 Most Fascinating Entrepreneurs: Jim Sinegal

From: Inc. Magazine, April 2005 | By: null


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Jim Sinegal Costco

because who knew a big-box chain could have a generous soul?

Costco's warehouse stores offer neither shopping bags nor brand loyalty -- the Gladware for sale one week might be replaced by Tupperware the next, depending on which vendor offered the best deal. Yet Jim Sinegal, 69, who started Costco in 1983, is anything but frugal in dealing with employees. Wages start at $10 an hour, and more than half of his U.S. employees earn the top pay of $18.32 an hour. Costco also covers 94% of health care costs for both full- and part-timers, and donates an amount equal to 3% to 9% of employees' pay to their 401(k)s. As a result, the company has little turnover -- an astoundingly low 5.5% for workers who have been with Costco for a year or more.

"These guys have bucked Wall Street as far as taking care of their employees, yet their return last year was pretty darn good," says Patricia Edwards, managing director of Wentworth Hauser and Violich, a San Francisco investment firm that owns 785,000 shares. Darn good indeed. Costco's 450 stores had sales of $47.15 billion for fiscal 2004. In 2003, Costco's sales topped sales at Wal-Mart's Sam's Club by 21%, even though Sam's had 28% more stores. Costco stock was up 34% for calendar 2004; Wal-Mart's stayed about even.

Even in years when Costco wasn't posting stellar profits, Sinegal has refused to cut labor costs significantly. When you see how well Costco balances the interests of employees and investors, you wonder why more executives haven't followed his lead.

Stephanie Clifford

26 Most Fascinating Entrepreneurs

  1. Martha Stewart, Martha Stewart Omnimedia
    because she took one for the team
  2. Richard Branson, Virgin Group
    because he's game for anything. In fact, everything.
  3. Michael Dell, Dell Computer
    for being brilliantly straightforward
  4. Jim Sinegal, Costco
    because who knew a big-box chain could have a generous soul?
  5. Diane von Furstenberg, Diane von Furstenberg Studio
    for staging an elegant comeback
  6. Julie Azuma, Different Roads to Learning
    for offering hope and help to the parents of autistic children
  7. Fritz Maytag, Anchor Brewing
    for setting limits
  8. Ray Kurzweil, Kurzweil Technologies and other companies
    because he is Edison's rightful heir
  9. Craig Newmark, Craigslist
    for putting the free in free markets
  10. Jack Mitchell, Mitchells/Richards
    because his family business makes an art of customer service
  11. Frank Robinson, Robinson Helicopter
    for whipping an entire industry into shape
  12. Mark Melton, Melton Franchise Systems
    for giving immigrants their shot at the American Dream
  13. Michelle Cardinal & Tim O'Leary, Cmedia and Respond2
    for rewriting the rules for husband-and-wife teams
  14. Mike Lazaridis, Research in Motion
    because someone had to stand up for all those frustrated engineers
  15. Trip Hawkins, Electronics Arts and Digital Chocolate
    for still scrapping
  16. Warren Brown, Cake Love and Love Cafe
    because only in America will someone quit a secure job as a lawyer to start a bakery
  17. Muriel Siebert, Muriel Siebert & Co.
    for being a notable first with a worthy second act
  18. Chuck Porter, Crispin, Porter + Bogusky
    for verging on reckless
  19. Katrina Markoff, Vosges Haut
    for setting a completely unreasonable goal for her business
  20. Barry Steinberg & Craig Sumerel, Direct Tire and Auto Service
    for showing the power of the peer group
  21. Victoria Parham, Virtual Support Services
    for serving as a mentor to military spouses
  22. Tom LaTour, Kimpton Hotels and Restaurants
    for staying at fleabag hotels so that we don't have to
  23. Mitchell Gold & Bob Williams, Mitchell Gold
    for creating a true comfort zone
  24. Izzy & Coco Tihanyi, Surf Diva
    for kicking sand in the face of conventional wisdom
  25. Tony Lee, Ring Masters
    for saving 16 jobs, including his own
  26. Rueben Martinez, Libreria Martinez Books and Art Galleries
    for simultaneously building a business and nurturing Latino culture

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