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Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Your feedback is welcome. For more information about the author, please visit seanallenfenn.com/faq.
Last week on Methods of Prosperity:
His franchiser, Butler Brothers, rejected Sam Walton. That pain fueled his determination to create his own discount retail chain. He started without sophisticated systems, processes, or organization. He focused on offering merchandise at the lowest possible prices. Selling a product for next to nothing is a counterintuitive way to make a profit. There’s only one way that tactic only works. Your “loss-leader” attracts attention and customers buy additional products. Walmart’s team excelled at promoting products. The trade off was an unsophisticated buying program and limited back office support. His team developed effective merchandising programs. Sam learned from competitors like Kmart. He incorporated successful strategies into Walmart’s operations. Walmart experienced rapid growth from 1958 to 1970. There remained a need for better inventory and sales tracking. Sam needed to support further growth and maintain low expenses.
The following is Methods of Prosperity newsletter number 51. It was originally deployed June 6, 2024. As of February 13, 2025, original subscribers have received up to issue number 87: Andrew Wilkinson (continued).
Part 51.
Walmart Goes Public
Sam Walton (conclusion).
TL;DR
In 1966, Sam Walton's small team was generating $10 million yearly from a few stores. But they lacked the expertise for larger operations. To address this, Walton hired Ferold Arend as VP of operations. Walmart needed better inventory and logistics systems. Walton learned about computer technology at an IBM school. This led to the adoption of IBM’s System/360 for daily sales reporting. In 1968, Sam Walton appointed Ron Mayer as VP of Finance and Distribution. Under his guidance, Walmart implemented computerized warehouses. Which made a significant enhancement to distribution and communications. Walmart went public in 1970. The IPO, though modest, paved the way for substantial growth. As of 2025, Walmart Inc. (WMT) has a market capitalization of approximately $843.91 billion. The Walton family’s estimated net worth is $432 billion as of December 2024. Today, they’re the richest family in the world. Sam Walton passed away in 1992.
Key lessons:
Learn everything you can in your field about new technology.
Incorporate your family into a business.
Take your company public when ready.
Debt is necessary for expansion.
Invest in systems and processes.
Do you know about my livestream podcast? It’s called Hidden Secrets Revealed Live (HSRL), and I record it live on 𝕏 every Wednesday.
In 1966, Sam Walton was making around $10 million per year. He was making incredible margins from a handful of stores. His team was small. They lacked knowledge of how bigger operations actually worked. For the company to grow, he needed a more experienced manager. Enter Ferold Arend. Sam hired Ferold in 1966 as the vice president of operations for the Ben Franklin stores Sam owned. The following year in 1967, Sam promoted Ferold. He headed operations for both Walmart and the Walton’s Ben Franklin stores. This placed him as Walmart’s first VP of operations. Sam knew his company had to improve. They needed a replenishment system and basic merchandise assortment. Walmart kept manual lists of inventory.
To control merchandise and logistics for absentee ownership, Sam needed timely information. There was something missing in order to open more stores and run them with efficiency. Without computers, Sam couldn’t have solved this problem. IBM had a school for retailers in Poughkeepsie, NY. Sam decided to enroll and learn everything he could about this emerging technology. There he met someone from the National Mass Retailers Institute (NMRI) named Abe Marks. Sam became a member of the NMRI board for 15 years. In 1969, Walmart installed an IBM System/360 Model 20 computer system. It allowed the company to receive daily sales reports from each store. This would ensure the right items were available for customers.
From 1968 – 1976, Ron Mayer was Walmart’s VP of Finance and Distribution. Sam met Ron at that school, who had been working as chief financial officer for another store in Kansas. Ferold convinced Sam that they needed to build a computerized warehouse. Sam was reluctant. It would be expensive, and Sam didn’t want to spend more than they had to. Distribution was a priority. Ron hired a data processing manager named Royce Chambers. Royce gave the company its first sophisticated systems. Those systems were the beginnings of a management method. Walmart was able to stay on top of that informational complexity during rapid growth. That was a crucial time for Walmart’s expansion. Ron improved distribution and communications. From that time on, Walmart started moving ahead of their competition. They beat their competition as far as investment in sophisticated equipment and technology. Sam fought against most expenditures. But he acknowledged that debt was a necessity of doing business. Every bank in Arkansas and southern Missouri knew what most people didn’t know. Sam was using financial leverage to open new stores. He was in $2 million of personal debt, which was beginning to weigh on him. Sometimes he would borrow from one bank to pay the other. He actually bought a small bank with $3.5 million in deposits in Bentonville for only $300,000. That helped him learn about financing. Sam needed a better way to finance growth. It was time to take the company public.
Sam and Bud Walton were brothers and business partners. They both knew that their stores weren’t generating enough profit to expand and pay off their debts. They were already short of cash to open a few new stores as previously planned. They had to do something. Concerned about losing control of the company, going public was a huge step. There seemed to be no other choice. Sam’s son had graduated law school and became the Walton family’s lawyer. In 1953, Sam and his wife Helen formed a partnership for their family business. It was later incorporated into Walton Enterprises. Over the years, the Walton family’s share of Walmart stock went into that partnership. By the time Sam decided to take the company public, the Walton family owned 75% of the company. Bud Walton owned 15%. Other relatives owned a percentage, and several other investors each owned percentages. They had 78 partners invested. Managers borrowed from the Walton’s bank to buy stock in the company.
Walmart went public in 1970. The initial public offering (IPO) was on October 1, 1970, offering 300,000 shares at $16.50 per share. It was well received, though not held in wide numbers. There were only 800 shareholders, but those who bought in early made an absolute killing. They were over-the-counter trades. Walmart listed on the New York Stock Exchange in 1972. Walmart stock performance has created wealth for many people. As of 2025, Walmart Inc. (WMT) has a market capitalization of approximately $843.91 billion. The Walton family’s estimated net worth is $432 billion as of December 2024. Today, they’re the richest family in the world. Sam Walton died on April 5, 1992 at the age of 74.
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