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Munger's Influence on Costco's Growth

Munger wasn't just a board member—he was a true believer. He once called himself a "total addict" of the store, adding, "I love everything about Costco. I'm never going to sell a share." And he meant it. The Motley Fool reported his stake in the company was worth over $100 million in 2023.

One of Costco's most famous traditions—the $1.50 hot dog and soda combo—stands as proof of its commitment to keeping prices low. It hasn't changed since 1985, even as costs rise everywhere else.

When former CEO Craig Jelinek suggested raising the price, co-founder Jim Sinegal reportedly shut him down: "If you raise the [price of the] effing hot dog, I will kill you. Figure it out." To save on costs, Costco switched from Coca-Cola to Pepsi in 2013.

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Now, the company plans to bring back Coca-Cola products in its food courts. The company's ability to attract all kinds of shoppers, including wealthy ones, is another reason for its success. 

James pointed out that "affluent people love a good deal." That's why Costco stocks luxury items like Rolex watches, Dom Perignon champagne, and 10-carat diamonds. A Porsche dealership in Seattle even displayed cars at a Costco warehouse once, and they sold out in a week.

But not everyone sees Costco's model as foolproof. Some suppliers have complained about its aggressive cost-cutting. A former vendor, in a post on Reddit, claimed that Costco's pricing demands forced them to slash wages and adopt unsustainable practices. 

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Others question how long the company can rely on low-margin goods and membership fees. Investopedia notes that this approach could put long-term pressure on earnings.

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