Disrupting Markets: The Walmart Story

Last weekend I had the pleasure of having dinner with Pitt Hyde, the Founder of AutoZone (NYSE:AZO) and just an overall impressive, humble, and great person.  Perhaps my favorite story of his was when he recounted his time serving on Sam Walton’s Walmart Board of Directors in the early days of his company.  According to Pitt, Sam would pick him up from the airport in a run-down car and take him back to the Walmart offices where they would prop up a fold out table and chairs to have their board meeting.

Apparently when Sam Walton was first starting his business, he had a unique vision where he could serve the underserved communities – areas in which larger store chains did not want to enter as they found it impossible to make profitable business cases for doing so.  Not only did Walton succeed in his strategy, he was able to make his business immensely profitable.

Walton’s First Walmart Store

“Once committed to discounting, Walton began a crusade that lasted the rest of his life: to drive costs out of the merchandising system wherever they lay—in stores, in the manufacturers’ profit margins and with the middleman—all in the service of driving prices down, down, down,”

–John Huey, 1998 Fortune Magazine(also co-authored Walton’s autobiography)

Walton started from humbling beginnings and was seen as an underdog with an unorthodox strategy, but through the years, Walton was not only able to apply his strategy effectively to underserved markets, but eventually would grow to dominate the whole country en route to becoming the largest revenue company in the entire World.

Today when people ask me to compare Ubiquiti Networks strategy, business model, and story to another company, I like to believe it’s most similar to Sam Walton and his early days in starting Walmart.  We have found a way to deliver powerful and sophisticated plug and play hi-tech connectivity solutions to underserved areas of the world while making a profitable business out of it.  Unlike other companies in our space competing for existing market share, Ubiquiti has created new markets and opportunities that didn’t exist before in places such as Africa, South America, Middle East, India, and China.  Although we are in the very early stages of the company and predominately represented in underserved areas of the world, I also aspire to drive Ubiquiti’s transformation from David to Goliath one day just as Walton did.

 

%d bloggers like this: