Business Books & Co.
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25 days ago

[S4E7] Becoming Trader Joe with Patty Civalleri

"How I Did Business My Way and Still Beat the Big Guys"

Transcript
David Kopec

Trader Joe's is one of the most successful and unique grocery retailers in the United States. In this episode, we interview Patty Civilari, the co author of Becoming Trader Joe, how I did Business my way and still beat the big guys. Welcome to business Books and company. Every month, we read great business books and explore how they can help us navigate our careers. Read along with us so you can become a stronger leader within your company or a more adept entrepreneur. This month, we read the 2021 memoir Becoming Trader Joe, how I did Business my Way and still beat the big guys by Patty Civillari and Joe Calum. Founded as a small chain in California in the 1960s, Trader Joe's has gone on to become one of the most unique and influential grocery retailers in the United States. Through that journey of growth, Joe Kalum, its founder, battled government regulations, competitors, and even some of his own employees. We're privileged to be joined by Patty Civilari, the co author of the book, to tell us more about that story. But before we get to the book, let's introduce ourselves.

David Short

Hi, I'm David Short.

David Short

I'm a product manager.

Kevin Hudak

I'm Kevin Hudak, chief research officer for Washington, DC based real estate research and advisory consultancy.

David Kopec

And I'm David Kopeck. I'm associate professor of computer science at a teaching college. We're really privileged to have Patty on the show. Patty, it's great to have you.

Speaker E:

Thank you so much.

Patty Civalleri

It is a privilege to be here.

David Kopec

So, Patti, let's start by learning just a little bit about your background and how you became involved with the project of creating the book becoming trader Joe.

Patty Civalleri

Well, I was off on a different tangent in my life. Writing and my background is actually history and archaeology. I had been writing and publishing books for Italy and for Italy, tourism. When COVID hit and all of tourism, that $17 trillion industry closed up in a week and went to zero, which meant nobody was buying any of my products. So I was essentially out of business.

Patty Civalleri

And not knowing what to do next.

Patty Civalleri

I kind of lucked out because one of our friends came to me and said, patty, would you be interested in working on a project about trader jokes? I said, with who?

Patty Civalleri

And he said, joe.

Patty Civalleri

I said, what's the story? And he said, well, Joe years ago had some journals and they're kind of sketchy and blah, blah, blah. But he asked me if I could help him turn this into a book. And he said, I don't know anybody that's a writer except you. And right now, you're out of business, so you can't say no.

Patty Civalleri

So that's how that came about.

Patty Civalleri

Now, I had known Joe. We had known each other socially because we all had the same friends. I've known Joe, actually for almost 30 years before he passed away. We weren't best friends, but we were friends of friends. And so we were often at, you know, we often had small conversations at different social engagements over the years, different parties, etcetera. So we kind of knew each other, but not super well. The good news is, I don't think I was a stranger at that point, and Jo didn't really like working with strangers.

Kevin Hudak

So this, this worked excellent. I was so glad to hear about your background, too, just because you added to the story of Trader Joe's, a little bit of that making the story real for the layman, who's not necessarily as engaged in business books as perhaps we all are. But tell us a little bit about the grocery market in California when Trader Joe's began. I know that Joe had first started out in the fifties and sixties with pronto markets, and he was really focused on convenience stores at first. But tell us about the grocery and convenience climate back then in California.

Patty Civalleri

You're right, Kevin.

Patty Civalleri

And in the 1950s, when Joe was asked to work on pronto markets, pronto was owned by Rexall drugs at the time in the fifties. And they had asked Joe to, they said, hey, Joe, we've got the budget to open six retail stores, but we.

Patty Civalleri

Don'T know what to do with them.

Patty Civalleri

Why don't you go around the country and find us a model? You just graduated from business school, from Stanford, so help us figure this out.

Patty Civalleri

So Joe did that.

Patty Civalleri

He hit the road, and he went.

Patty Civalleri

Around the United states, and he looked.

Patty Civalleri

At different kinds of markets and stores, looking for a model that he felt could work in California, one that didn't exist in California. He got to Texas and he found one, and he thought, now, this is interesting for a number of reasons. When he returned back to Texas to have his meeting with Rexall, he said, yeah, this is kind of interesting. This model that I found does not exist in California. It's a pretty good sized company, but because of their employee laws, their employment laws, and the way they employ their employees, they can't come to California, because there's some differentiation between how California treats employees and how Texas treats employees, he says. So I'm not real worried about them coming to California. So I think we can do this. He said, there's a new word that's going to come into our vocabulary, and that word is variety store, which was kind of interesting.

Patty Civalleri

So up till then, he really wasn't.

Patty Civalleri

Looking at a grocery store at that point. He was really looking at this variety store model.

Patty Civalleri

He started that.

Patty Civalleri

He opened the six stores. He grew a 7th store, which he owned 100%. And in the beginning, when Rexall asked him to start, they basically said, joe, we're going to give you 49% of the pronto because we want you to have skin in the game. We want you to lose sleep at night, which I think was a very wise decision. You can't have employees that don't have skin in the game to act like they do. They just don't. So anyway, so Joe started that. He grew, he created the 7th store. He went back to Rexall and said.

Patty Civalleri

Hey, guys, tell you what, I'll give you market price for your six, you.

Patty Civalleri

Know, your 51% of these six stores, and they said, give us 10% over market and it's yours.

Speaker E:

And that's what he did.

Patty Civalleri

So now he's the owner of seven stores, and he grows it to 16 stores. And now we've gotten through the fifties and we're almost through the sixties, when suddenly Joe gets some really bad news. He hears that this Texas company has figured out how to get past the California laws and how to come to California. And that scared the devil out of.

Patty Civalleri

Him, because for Joe, this company, this.

Patty Civalleri

Texas company, had a huge. They had a national budget, and Joe had 16 little stores. He did not have a. He knew these guys were going to come in and roll right over him. He'd even heard that they were going to start setting up stores across the street from all his pronto markets, which basically he took his managers aside and.

Patty Civalleri

Said, guys, pretty sure we're not going.

Patty Civalleri

To go any further than this because.

Patty Civalleri

We can't compete, he says, but I.

Patty Civalleri

Need to sleep on it. And he went home for the weekend.

Patty Civalleri

Gathered up Alice and the kids, went.

Patty Civalleri

Up to Arrowhead Mountain here, a local.

Patty Civalleri

Mountain, and sat at a cabin.

Patty Civalleri

And as he was sitting in his.

Speaker E:

Easy chair, looking out the window, he.

Patty Civalleri

Was drinking a mai tai.

Speaker E:

And mai tais, as you know, or.

Patty Civalleri

May not know, the drink, Mai Tai was invented by trader Vicks. And in the meantime, he's drinking his mai tai, the drink that was super popular back then.

Speaker E:

He was looking around and thinking Joe.

Patty Civalleri

Was a very visual human being. Things sort of swam around in his head.

Speaker E:

And he was thinking about, oh, I.

Patty Civalleri

Don'T know, taking his family to a mouse owned theme park in Anaheim. And he was thinking about a ride that he went on. You know, they were pirates in this ride pirates of the Caribbean. And he was thinking about, oh, some old romantic movie that he saw where these ships were. These guys were in these trading ships, and they were trading goods all over the Pacific Ocean, and they had a woman in every port. And Joe, all these thoughts were kind of coming together when it hit him, and it hit him kind of like.

Speaker E:

A ton of bricks.

Patty Civalleri

He grabbed Alice and the kids and said, we're going home. And he ran back down the mountain, back down Pasadena, grabbed his guys together and said, guys, hold the door here. Hold the phone. We are not going to, we're not going to roll up the carpets here.

Speaker E:

He said, here's what we're going to.

Patty Civalleri

Do, is we're going to change the playing field. Now, obviously, he didn't use those words, but it's kind of what he did. He said, okay, first of all, we're going to change everything. We're no longer going to be a variety store.

Speaker E:

We're going to get rid of all.

Patty Civalleri

The stuff that doesn't work. And we're going to change our name and change our theme.

Speaker E:

He said, we're now going to be called. We're going to do a South Pacific trading ship thing.

Patty Civalleri

We're going to find goods all over the Pacific. We're going to wear clothes, these ballet themed clothes, island themed clothes, and we're going to call ourselves Trader Joe's. And that was 1968. And the next store, the 17th store, Joe opened as the first trader Joe's. And then ultimately, he converted all of the other prontos over to. He closed some of them and he converted the others to Trader Joe's. So that was really kind of how it started. But, Kevin, you actually asked me a different question. You asked me about the grocery environment back then. Well, this is now we get into the grocery environment question because now Joe is thinking about food and he's thinking about how he does not like the grocery industry. The grocery industry was so highly regulated, he just didn't believe in regulation. He felt that, hey, I want to compete. My MBA tells me I should be able to compete honestly and fairly without having somebody tell me how I need to cut my cheese into certain size blocks and sell everything for a specific price. He says, I want to determine that. I don't want the government to do that. So that set him on a completely different path, which it really introduced quite a struggle for him because back in those days, people weren't really open to new ideas in the world of grocers. They were happy with the big brand names and they were happy with the onslaught of food that had preservatives and things and frozen dinners and the microwave, which had just come online, and canned foods.

Speaker E:

Wow.

Patty Civalleri

Shelf life, right? The United States had a goal back in the fifties and sixties. One, we had a couple of goals.

Speaker E:

One was where we're going to put.

Patty Civalleri

The first man on the moon. And the other was that we were going to be the country that fed.

Speaker E:

All the hungry people in the world.

Patty Civalleri

And that's where we came up with the Monsantos. And we put the world of food into laboratories rather than in the hands of chefs. And the laboratories came up all these incredible ways to preserve food and make it so that food can transport. So it handled two things. It allowed us to have food and distribute bread for the first time in american history, something like bread and milk into every single solitary corner of the United States. I mean, this is a real demonstration of Adam Smith's invisible hand, right? So we were able to get fresh products out there, but we were also able to get all kinds of other foods out there because we could preserve them.

Speaker E:

They were.

Patty Civalleri

They were preserved. They were, you know, what we call now fake foods. But everybody was super happy with the fact that we could transport foods and we had frozen foods and we had canned foods that can sit on our shelves.

Speaker E:

People were happy with that. They weren't necessarily open to the idea.

Patty Civalleri

Of some little guy with a couple of stores coming up with different ideas.

Speaker E:

So it was a struggle for Joe.

David Kopec

Wow, so much to unpack there. Patty, I have one quick follow up there that I wanted to ask you in the book. I really was reading that tension between government regulation and the expansion of Trader Joe's. And you alluded a little bit in your answer to Kevin's question about how Joe wanted to sometimes go around some of these regulations. And that definitely came across in the book. But of course, you know, I'm sure some consumers listening to this are thinking, well, food products, uh oh, that has to be well regulated. So I was wondering if you could expand a little bit on Joe's philosophy vis a vis government regulation.

Patty Civalleri

A lot of the regulation had to do, and some of the best examples are in the category of wine, alcohol, and dairy. And this kind of really goes, ties in well for what differentiated and still differentiates Trader Joe's from all of the other markets in our country. And Joe basically built something, and he built this from the very beginning. It's the foundation of his thinking, but he called him his pillars of differentiation. As a small business owner, we're all told that in order to compete, we have to differentiate. Everybody tells us that, but nobody tells.

Speaker E:

Us how to do it.

Patty Civalleri

And I'm going to tell you right now exactly how Joe did it. And this is a principle that can be applied to a business, whether you're a manufacturer or you could be a service. You know, it doesn't matter whether you're a product provider or a service provider. These pillars can provide if you're struggling to try to figure out how to pull yourself and separate yourself from the competition. So now you have control over your future. I mean, I'll tell you that right now. So these are Joe's pillars of differentiation. He had four pillars. The first one was price. Now everybody knows that you can differentiate yourself on based on price. Basically, all you have to do is make yourself a penny cheaper than everybody else. Well, that's all well and good, but tomorrow somebody's going to come in a penny cheaper than you and you're going to have to come back and be a penny cheaper than that. So that's kind of an unending losing game. And Joe didn't want to play that game. He didnt want to see the image of his stores to be sort of the cheapy store in town. So he redefined price as value. In other words, he said, okay, if im going to charge this month much for a product, how can I give people a greater value for that price and that product than they would get from anybody else down the street? So for Joe, price meant value.

Speaker E:

So that was one of his pillars. Two was packaging.

Patty Civalleri

Packaging for Joe meant you can change the size or the quantity. It also meant private labeling and which is another topic. But let's take it for an example.

Speaker E:

Eggs.

Patty Civalleri

Eggs were very much regulated back then. You had to buy a certain size egg, you had to buy them in packs of twelve if you were a grocery store and you had to put them on your shelf and sell them at a certain price on Saturdays you were allowed to discount them, but you could only discount them up to a certain price. This was part of the regulation.

Speaker E:

And I do remember my mom when.

Patty Civalleri

I was a kid going to the store and she would go, she'd look at the newspaper on Saturday morning at the coupons and say, okay, who's got milk, eggs and bread? Cheapest. That's where I'm going to do the shopping. But we had a really big family with a whole bunch of kids on a farm.

Speaker E:

So my mom, she was going to.

Patty Civalleri

Follow that, that model that was created for her.

Speaker E:

So what Joe did is he said okay, well, you know, my customers are.

Patty Civalleri

Telling me I have to carry eggs.

Speaker E:

But I don't want to carry the.

Patty Civalleri

Same eggs everybody else has for the same price everybody else has. I got to find a way to differentiate these eggs. So Joe, being the research hound that he was, he did a lot of research and he found a guy in California, a farmer, a chicken farmer who had laying hens, but they had a different kind of egg. So Joe had a nice discussion with.

Speaker E:

This guy and they got to be.

Patty Civalleri

Really great friends over time. This guy Joe said, he said, can I buy your eggs from my stores? And the guy said, of course you can. He said, do you have enough for my. I've got 1718 stores. Can you?

Speaker E:

Do you have enough for me?

Patty Civalleri

And the guy said, I have plenty enough for you. And Joe said, but what if the other grocery stores want to carry these eggs? He said, this egg does not exist in this country at nearly the volume enough to supply to all of the other grocery stores. So these eggs are not regulated.

Speaker E:

Well being the light went on, Joe.

Patty Civalleri

Said, this was real early in the game.

Speaker E:

Joe said, you know what?

Patty Civalleri

We're going to carry these eggs. And you know what was different about these eggs?

Speaker E:

Anybody know anybody?

Patty Civalleri

Well, they were square, extra large, right? Yes. They were not square. They were extra large. Thank you. So all the stores in the country had to carry medium eggs, medium eggs. There was plenty enough to supply all the grocers and therefore those are the ones that got regulated.

Speaker E:

Extra large eggs were not regulated because.

Patty Civalleri

There wasn't enough to provide for everybody. So the government never regulated extra large eggs. So Joe decided to carry extra large eggs. And because there was no middleman, he's buying directly from the supplier, from the.

Speaker E:

Manufacturer, essentially, he had no markup in the middle.

Patty Civalleri

So he could now sell extra large eggs for the same price that everybody else, all the other grocery stores were.

Speaker E:

Selling medium eggs for.

Patty Civalleri

So for Joe that price meant value. That was the way he could get people of value.

Speaker E:

He wanted every product in his store.

Patty Civalleri

To meet at least three out of the four pillars. So we've just gone to two. So one is price, one is packaging. Packaging, of course, is size and quantity, right. And private labeling, private labeling actually meant a lot for Joe. I talked to some of the past executives from Trader Joe's and they remember back in the day when some of the other competing markets would go to Trader Joe's and they would take pictures of some of the products and labels and so forth so they can figure out who the manufacturers were or figure out how Joe was getting, you know, could offer these at such a good price. And what Joe learned is if he.

Speaker E:

Private labeled his products, he could hide.

Patty Civalleri

A myriad of secrets behind that. And by a myriad of secrets, he means that all he needed to do was work with the kitchen of the manufacturer to say, hey, could you take out this one hormone or this one preservative and replace it with something fresh and wonderful? And we're gonna put the Trader Joe's.

Speaker E:

Label on it so nobody will really know his recipe, essentially.

Patty Civalleri

And now Joe is offering a price, let's say, I don't know, pick a product, pick a product, anything. But he could offer a product on his shelf that had a different recipe than the competing products, even though he may have even been buying it from the same manufacturer as the other stores, had a slightly different recipe. He could now put his private label on it. He had a deal with the manufacturers. He did not go through third parties, he did not go through distributors.

Speaker E:

He wouldn't do it.

Patty Civalleri

Which again, meant that he can give you a better price on a better, fresher product. Again, value, price and packaging were pulled into this. And the third pillar of differentiation for Joe was ingredients. Of course, we just talked about that, how he could change his ingredients at this point. Now we're well into the seventies, sixties, seventies. He kind of got his, he was wearing sort of his hippie dippy hat, and he was changing over time. And now he's getting into like fresh foods and things that the rest of the world wasn't doing yet. The rest of the world was really big on preservatives and hormones and steroids and all the things they were doing to accommodate long, you know, long term transportation and long shelf life.

Speaker E:

Joe was looking at fresh, fresh, something.

Patty Civalleri

That brought the farm closer to your plate. And so he would look at things like preservatives, hormones, GMO's.

Speaker E:

These were terms that the consumer didn't know back then.

Patty Civalleri

But he had learned these terms back then, steroids, and he traded them all. He traded them out for fresher ingredients. He put his private label on them. He gave them different quantities, even something simple like back in the fifties and sixties, people were living in apartments instead of houses. So he would look at, gee, people were buying 25 and 50 pound bags of rice and potatoes.

Speaker E:

Well, now when you're living in an apartment, you're not going to have space.

Patty Civalleri

To store these kinds of things. So he was selling potatoes individually, and he was selling rice in small packages. These were kinds of things that he was doing. He was buying directly from the manufacturer changing the quantities, offering a better price, and giving a better value, product by product. He made sure that every single product.

Speaker E:

On every shelf met at least four.

Patty Civalleri

Of these pillars of differentiation. So those pillars are price packaging ingredients. And the fourth is what he's really known for now, and that is uniqueness.

Speaker E:

Uniqueness is foods from all over the world.

Patty Civalleri

And then as we go back to the sixties, Joe saw something happen before.

Speaker E:

A lot of other people saw it happening. But he saw that, like Boeing came.

Patty Civalleri

Up with a 747, which made it, for the first time in history, affordable for consumers to travel around the world.

Speaker E:

He was noticing that post World War.

Patty Civalleri

Two in the fifties, that more people in the fifties were going and getting a college education and getting a higher degree than they were ever in the history of the United States. So the fifties and the sixties, the universities were growing like crazy and popping.

Speaker E:

Out these, what he called the market that he wanted to focus on. He called these people, he kind of.

Patty Civalleri

Felt a kinship to these people because he felt he was one of them, but he called them the over educated and underpaid. Yeah, we kind of define that market these days as sort of the middle class. But back then, this was the growing middle class, and Joe was watching this happen, and he felt that education was a big part of the growing middle class and affordable world transportation.

Speaker E:

But who was traveling the world? It was these people that a were from the military that got a taste.

Patty Civalleri

Of food and goods from around the world.

Speaker E:

And also these educated people that were, you know, these, they sort of had.

Patty Civalleri

They learned to give them, you know, through education. Their bar was raised in terms of what they wanted in their lives, and that included food. And these were the people buying the plane tickets, going around the world. And Joe thought, you know what? This is my audience. I see no end to that audience, and I see nobody talking to this audience today in the world of grocery.

Speaker E:

So Joe thought, yep, these are my folks.

Patty Civalleri

These are my folks. I'm going to talk to these folks. My over educated and underpaid. To this day, that is still the market that adores Joe's food, their biggest market in Trader Joe's. But if you look at where a lot of the Trader Joe's went and in their earlier growth spurts, they were very close to universities. They were in higher end universities with young families, families with children, families that were educated and that were coming out as engineers and scientists and, you know, whatever the higher end careers were, business people.

Kevin Hudak

And, Patty, sorry to interrupt, but when you. When you think about the timeline, you just put so much of Trader Joe's, well, one that was an inspiring kind of origin story that you gave us and have in the book. But so much of this is focused around the changing times, the changing cultural context you mentioned. The military, like the GI Bill, in part allowed so many of those folks to become, you know, over educated as well. And I'm wondering Trader Joe's, and Joe himself seems to have changed quite a bit with the times. He was always sort of revering what was going on, observing, but also changing himself and changing his business strategy to do that. You mentioned, and Joe mentions that there's kind of three distinct phases behind early trader Joe's. There was the good time Charlie of 1967, the whole earth Harry of 1971, and then finally the Mac, the knife of 1977 and beyond. And all three of those sort of reflected the culture and the customer needs, wants, and expectations of the time. I'm just wondering if you could just give us a brief summation of each of those three phases. If you could describe each of them in one sentence, what would that be? And it was interesting that Joe kind of made that the original manuscript, kind of the backbone of it, the timeline of events in the story.

Patty Civalleri

Well, first of all, I'm very impressed that you picked that up because I think that was a little bit more underlying. In some ways it was obvious in the book, and other ways it was kind of in the background. So I'm glad you picked it up. And thank you. So you are right on. So in Joe's earliest days, when he had pronto markets, back in the pronto markets days, his variety store days, and his very early trader Joe's days, he was good time Charlie. Good time Charlie was that young, just out of college guy. You know, he was single at the time. He, you know, he was looking at girly magazines and bullets. He wanted a store where, you know, a guy can. A guy can go shopping, right? Because all the women did shopping historically up until now.

Speaker E:

But he wanted the guy store, 70.

Kevin Hudak

Bourbon brands, I remember.

Patty Civalleri

And he wanted that store. And he did. And, you know, he tried all these different things. And by the way, one of the things I didn't get to, and that is that company in Texas, that, that Joe model pronto markets after that came in and scared him to death, was 711. And we all know that seven elevens were just this huge national company that just kind of railroaded everybody out of that space back in the day.

Speaker E:

And that's what made, and I'm really.

Patty Civalleri

Glad they did because it made Joe sit and rethink and come up with.

Speaker E:

Something new and different.

Patty Civalleri

But anyway, so good time Charlie was.

Speaker E:

Joe's good time Charlie days.

Patty Civalleri

It was his gee, I want this to be a guy store. When we get into the sixties and he puts on his hippy dippy hat and he gets into growing herbs in his garden. He eats. Somebody gave him pumpkin seeds. He grew pumpkins and squash in his backyard in Pasadena. And I don't know if you know Pasadena, but it's a real conservative layout, and everybody's super tidy. Well, squash and pumpkins, they grow anything but tidy. They just go nuts. They are like, I don't know, like that plant from that movie that says, feed me. They grow crazy.

Speaker E:

And.

Patty Civalleri

And Joe had these big, sloppy plants that were growing through the fence and out onto the sidewalk, and the neighbors were complaining. But he really got into this. He thought, wow, I'm growing these fruits, and they're amazing. And he got into the thinking of growing fresh foods and herbs and spices and fruits and vegetables and the value of the fresh vitamins that were not being boiled and steamed out of stuff before they were canned. And he really got into that. And this became his whole earth Harry days, where he started converting pretty much everything in a can into that wonderful fresh fruit area, the produce area that hes had.

Speaker E:

And that kind of pushed a lot.

Patty Civalleri

Of the other grocery stores into going in that direction as well.

Speaker E:

At the time when we got through.

Patty Civalleri

The sixties and we got into the seventies, Joe was now in his late thirties, early forties.

Speaker E:

Hes grown out of his good old boys, you know, post college days.

Patty Civalleri

He's gotten past his hippy dippy days, and now he's sharpening his pencil. He's got his business hat on. That MBA that he got at Stanford is kicking in, and this phase is now what he calls Mac the knife. And he warned everybody out of my way, because this blade is sharp.

Speaker E:

Every single product on the shelf of the store had to be profitable.

Patty Civalleri

And I'll say that again, and then I'll tell you why that's an important. There's an important reason why I said that every single item on the shelf had to be profitable. Now, in our day, we think, gee, that's a no brainer. But in the world of groceries, that isn't how it's done. In the world of groceries, the customer is not the consumer. In a large chain regulated grocery store.

Speaker E:

The customer are the brands. The brands advertise, they pay dearly for advertising.

Patty Civalleri

They are the revenue source for the big grocery stores. Back then, given that they get to decide how many skus they want the store to carry of their product, and they get to decide where in the store and how they are displayed. So, in other words, take a really big brand. I don't know. General Mills, for instance, they've got 100 brands of cereal on the shelf. How many of those brands do you think are profitable?

Speaker E:

My knee jerk guess is 80.

Patty Civalleri

20, right? 20% might be profitable, 80% probably aren't.

Speaker E:

But General Mills pay so much for.

Patty Civalleri

Advertising for the grocery stores, and they're creating all the, you know, the coupons and all the advertising, paying all of.

Speaker E:

That, that they get to tell the.

Patty Civalleri

Grocery stores what to carry. So the grocery model was an advertising model, not a consumer model. See, Joe, this whole consumer model thing was new and came out of Joe's head, and he felt, no, he didn't want to have any advertisers.

Speaker E:

He wanted nobody to tell him how.

Patty Civalleri

To run his store, what to carry, how to carry it, how to price.

Speaker E:

It, whether it was the government or.

Patty Civalleri

Whether it was a brand. If you were a brand and you.

Speaker E:

Had 100 products and he only liked one or two of your products, he.

Patty Civalleri

Was only going to carry one or two of your products, the only ones that could be profitable on his shelves. So that's why, you know, that whole model of being an advertising model, we've gone largely back to an advertising model in a lot of verticals today.

Speaker E:

Joe was about the customer.

Patty Civalleri

He was about having a dialogue directly with the consumer through his products and through the names of his products. So that's kind of where the Mac, the knife came up with.

Speaker E:

He sharpened his pencil, and he cut.

Patty Civalleri

Everything out that didn't need to be there so that he can give his.

Speaker E:

Customer the best possible value at the best possible price.

Kevin Hudak

So, Patti, that's a really great description of those three different phases. And one, there was this glowing LA Times review of the book, and they mentioned that the phases of Trader Joe's almost mirrored the phases of LA as a whole, and it sort of celebrated the linkage between the two. So it's definitely something that I. That I sensed in the book as well. We're going to talk about some differentiators, but you already went through so many of them. I thought that one, when you mentioned the Mac the knife model, clearly a differentiator. And something that we've discussed on this podcast in the past was this idea of failing fast, and Joe really wasn't afraid to discontinue skus that just weren't performing. And you just really underlined that in your response, around the Mac the knife. But one of his other big differentiators was talented, and he was focused from the start, it seems, on high wages and benefits, attracting the best talent. He loved left handed folks as well, so he paid attention to that. He interviewed employees every six months to not just learn how their store was being run, but also let them let off some steam, but also with that philosophy of paying workers well to maximize productivity. He also sort of warded off unionization for quite a bit. And I was wondering, just as someone who was a friend and, and fascinated by Joe and studied Joe and worked with him on this, why was he afraid of unionization? What were some of his ideas there?

Patty Civalleri

Well, do you remember at the time that was a real source subject was socialism and communism back in those days. And his concern was that if you let government go too far, they will. And so he watched what they were doing in other parts of the world.

Speaker E:

He didn't just not like it. He absolutely detested heavy handed government, especially in business. Absolutely.

Patty Civalleri

He purposely overpaid employees for several reasons. Obvious reasons would be that he wanted to get a higher level of talent. He wanted to find people that cared. He wanted a lower turnover because he was familiar with the rule of that it takes, what, six, six people to replace every good person you have in your organization, which is really expensive. I mean, think about the interviewing and the training and the going through the time lost of training and somebody getting then to find out they're the wrong person. Then you have to find the next one and the next one until you can find an adequate replacement to get that particular job function back on its feet again. He didn't want that. He realized that paying people more was much less expensive then having a lower turnover was much less expensive than having a high turnover at so many levels. He also did not want to train them really super well and then have them leave to the competition. He knew that the competition was paying them less, but he also wanted. He valued loyalty in his employees, and his employees was something until his dying day.

Speaker E:

Joe valued his employees, but, you know, his best friends in his life were people that worked for Trader Joe's and.

Patty Civalleri

Were his employees at all different levels. And he valued their opinions. He valued their law. When he was in trouble, there was.

Speaker E:

A couple of points back in the.

Patty Civalleri

Day when he was in trouble financially, was trying to grow the company, needed.

Speaker E:

Money to do it, and he didn't.

Patty Civalleri

Have two nickels to rub together because he wasn't taking much of a salary.

Speaker E:

And.

Patty Civalleri

And Alice wasn't bringing home much. And everything that he had, he was.

Speaker E:

Putting back into the company, but he.

Patty Civalleri

Needed money to grow. He didn't know what to do. So he got part of it on loan from, and it wasn't a bank loan. It was a loan from Adore Farms, one of his vendors. There's a vendor who was trying to get his business. Ador Farms had dairy products back in.

Speaker E:

The day, and they struck a deal.

Patty Civalleri

Ador Farms had been trying to get Joe to carry a bunch of their products in all of his stores. She said, I'll tell you what. You loaned me the money, the capital for me to grow the stores, and.

Speaker E:

I will give that back to you.

Patty Civalleri

Partially by a buying all of your products and putting them in all of my stores, which will give you a.

Speaker E:

Nice big chunk and early payback.

Patty Civalleri

And he said, and then I will add more stores and your products will go into those stores as well. Additionally, he was funded by his employees. His employees said, hey, Joe, you know, we want a part of this.

Speaker E:

We love this.

Patty Civalleri

We're part of this. We put our skin in this. We put our, you know, our days, nights, weekends and extra life into this. We put our heart and soul. We want to be part of this. Yeah, you need money, we'll give you, we'll give you money.

Speaker E:

And so his, his employees helped finance.

Patty Civalleri

Some of the growth as well.

Speaker E:

Joe was incredibly grateful, incredibly grateful to.

Patty Civalleri

His employees for stepping up, and he had the most loyal employees in town.

Kevin Hudak

Well, and also, sorry to interrupt, Patty, but it seems like you mentioned before about his products. He wanted uniqueness there. But he also mentioned that it has to be something that we can sell in an outstanding way. And it seems like he recognized that only outstanding employees can really accomplish that. And that seems to be one of the key differentiators there as well. And I know that David Short has a great segue also about some of the government regulations we were talking about earlier, too.

David Short

Yeah, id love to go deeper into, there are just a ton of these anecdotes where Joe finds a loophole in a government regulation to be able to provide a product at a better price. And id love to hear some of your favorites. Theres a ton, just with the wine, between adding the extra labels and the 1933 license. And then theres the, the Pilchard. That was actually tuna. Anyway, I'd love to hear your favorite anecdotes there.

Patty Civalleri

Oh, there's a lot of those.

Speaker E:

There really are. Let's see, what are some of my favorites? Well, there's the swiss cheese story where?

Patty Civalleri

Back in the day, a lot of his customers, I don't know if anybody remembers, but there was something called a fondue pot, where you would put cheese in it. It was a swiss thing. You'd put cheese in the fondue pot, and you'd melt it, and then you'd have these long forks, and you dip.

Speaker E:

You know, you get meat, and you.

Patty Civalleri

Dip it in the cheese or you get vegetables. Those were called fondue pots. And fondue was, like this big, trendy thing, and everybody had a fondue pot back then, and everybody was saying, hey, Joe, you got to carry swiss cheese. And Joe says, I can't carry swiss cheese. It's regulated. I don't want to carry anything at the same price and the same that everybody else has to carry it.

Speaker E:

And he wouldn't do it, but he.

Patty Civalleri

Got a lot of pressure carry swiss cheese. So Joe, his very first employee, was a gentleman who's all through the book called Leroy Watson. And Leroy Watson was this great guy.

Speaker E:

He was Joe's first employee and his best friend till death.

Patty Civalleri

Joe was the idea guy, and Leroy was the get it done guy. He'd say, hey, leroy, we got to find some swiss cheese.

Speaker E:

I don't know how to do this.

Patty Civalleri

But go back to someplace back in the midwest and learn about swiss cheese. So Joe goes back, and he finds a swiss cheese place somewhere in Wisconsin.

Speaker E:

And he is working with the guy.

Patty Civalleri

That is actually making the cheese, and the guy stirring the big pot of cheese, and it's got the heat underneath this big giant. You know, I'm picturing this big witch's cauldron with a fire underneath, but I'm pretty sure wasn't.

Speaker E:

And.

Patty Civalleri

But the guy's stirring this all up, and he's got. This cheese is boiling in this big pot, and the guy would take this big, huge ladle, and he would scoop.

Speaker E:

Out this bubbling cheese from the middle.

Patty Civalleri

And he would stick it in these cold molds that were, like, the size of. I don't know, maybe the size of a loaf of bread. And he would. And they were cold, like frozen molds, and he would pour this bubbling cheese into those and throw them all in the freezer before they had a chance.

Speaker E:

To, you know, before the bubbles could.

Patty Civalleri

Float out, and then they would slice them. And that's why you had holes in your cheese.

Speaker E:

Well, he did that and around the edges.

Patty Civalleri

Around the edges where the temperature of the pot was cooler than it was in the middle, where they. Around the edge cheese, you know, there were several inches thick around the edges.

Speaker E:

Of this giant pot that was not bubbling and boiling. And the guy would, you know, he.

Patty Civalleri

Would scrape it all out of the.

Speaker E:

Pot, and he'd put it in a different bin. And Leroy said, hey, what are you doing?

Patty Civalleri

What are you going to do with that cheese?

Speaker E:

And the guy said, well, you know.

Patty Civalleri

We'Re going to put it in our bee market. And Leroy said, what's your bee market? And the guy said, we sell them.

Speaker E:

To prisons, we sell them to schools.

Patty Civalleri

We sell them to blah, blah, blah, whatever.

Speaker E:

And that was how he defined his bee market. And Leroy said, is there anything wrong with that cheese? And the guy said, well, no, you.

Patty Civalleri

Saw, it's the exact same cheese that.

Speaker E:

We put in the.

Patty Civalleri

In the molds. It just doesn't have bubbles in it. And people don't want their swiss cheese.

Speaker E:

Without holes in it. Leroy said, can we have it? Next thing you know, it's a train load of, you know, this funny cheese.

Patty Civalleri

Coming out to California. And guess what? It's not regulated because it doesn't have holes in it. And so Joe was able to cut that up into. Into different size packaging. He gave it a new name, and it sold like hotcakes.

Speaker E:

And the.

Patty Civalleri

The name he gave it was closed eyes, baby Swiss. And it sold like crazy. And it was swiss cheese without the holes. Again, it was like the eggs which he sold were not regulated, so he was able to sell those. Another story was, while you were talking about the wines, wines were highly regulated. In fact, you had to have a specific kind of importer license to import wine from, say, Oregon or Washington or other states into California.

Speaker E:

Then they were regulated.

Patty Civalleri

You can only sell them for so much. But Joe thought, no, my market.

Speaker E:

This.

Patty Civalleri

Overeducated, underpaid audience of mine, they're not going to be. They're not satisfied with this cooking sherry that all the grocery stores have and sell it as wine. He says, wines are wonderful.

Speaker E:

So what he found out is he sent Leroy to Europe and around the.

Patty Civalleri

World to find some wines. And Leroy found some fantastic wines in France, in Italy, in Germany, in Spain.

Speaker E:

And brought them back.

Patty Civalleri

And guess what? They're not regulated because, a, they're not american produced products. So it's kind of tough for America to regulate a foreign product. So Joe was able to bring these back. And without a middleman involved, you know, going through a distributor, they were working directly with the vintners. They were able to offer fantastic wines. And Joe wanted to be the first guy in the block that had a hundred labels of wine.

Speaker E:

And one of his buddies asked him.

Patty Civalleri

Hey, Joe, who in the heck is going to drink 100 labels? He knew exactly who was going to.

Speaker E:

Drink those, the over educated and underpaid. So, I mean, he would bring back.

Patty Civalleri

A chateau Lafitte from France and sell it for less than $10.

Speaker E:

I don't know.

Patty Civalleri

Has anybody priced out a Chateau Lafitte recently?

Speaker E:

How about $400 now?

Kevin Hudak

No, definitely. And I think what we're getting into also is some of the private label goods as well. Like with the swiss cheese that you were mentioning, Patty, one of the enabling factors behind that was also educating the customer and in Joe's words, getting them to buy right through things like the Fearless Flyer, through his radio appearances and even on public television. He would do, uh, some advertising as well. But aside from that, with private labels, you know, we've talked about some of the benefits there. And if there's any benefits of the private labels that we've missed, feel free to bring that up. But I'm wondering, you know, were there ever any challenges, you know, to Trader Joe's private labels? It's the first thing I remember shopping in a trader Joe's first in 2007, and, you know, seeing those private labels and being amazed. But were there any challenges? Were there any sort of mistakes or, you know, horror stories in dealing with some of those loopholes that he found or different products that he was labeling himself?

Patty Civalleri

There were a couple. I mean, he did try a few things.

Speaker E:

Private labeling.

Patty Civalleri

I think the biggest hurdle, and it's still there a little bit, is that when you go into a grocery store and you see something that is grocery store private labeled, the automatic assumption is that it's the cheapest thing in the.

Speaker E:

Store, which means in your head, it.

Patty Civalleri

Translates to lower value, lower quality.

Speaker E:

Right.

Patty Civalleri

With Joe, it's the opposite. You know, if it has the Trader.

Speaker E:

Joe's label on it, it's, you know.

Patty Civalleri

And now I think people that know Trader Joe's know that if it has the trader Joe's label on it, it's going to be a higher value, a higher quality. But yeah, there were certain things. I mean, he tried a lot of different things.

Speaker E:

He tried, you know, make.

Patty Civalleri

He had a cutting board.

Speaker E:

I don't know if you guys knew.

Patty Civalleri

This, but he had a cutting board in the stores where they would make you a sandwich and they would cut, they would cut the meat, they would cut the bread, they would cut the cheese. You know, you just come in and say, you know, kind of like a deli now, but they would do that right there and make your sandwich for you for lunch and they would also cut a lot of things right there in the store and package them right there in the store. The problem that they had with that kind of an approach was injuries. They had a lot of injuries, mostly knife injuries with cutting hands and fingers and things like that. And that also made a devil of a mess.

Kevin Hudak

Oh, and I can only imagine the fresh pressed orange juice that was part of the, oh, that was a huge Harry. But then eventually he had to discontinue that, even though, you know, probably pained him. But like I said before, it's almost like lean startup methodology where he wasn't afraid to fail fast. Discontinue some ideas, you know, lose some skus for a while if they're not available and just iterate and get better as he, as he went.

Patty Civalleri

Well, you're absolutely right. And like, you know, he, he really liked getting rid, you know, people will say, hey, I had my favorite product at Trader Joe's, but they got rid of it.

Speaker E:

Darn it. You know, and it, and it's, it's.

Patty Civalleri

Not that, you know, they get mad at Trader Joe's for doing that, but from Joe's perspective, it's like, listen, if it's not selling, I don't have enough people buying it, I'm gonna go out and find something that's gonna appeal to more people. So he liked taking things off the shelf because he liked bringing in new things. And that's one of the things that Trader Joe's had.

Speaker E:

Did that other grocery stores, all, they.

Patty Civalleri

Still carrying the same thing that my grandmother bought because.

David Kopec

No, I know exactly what you mean. It's like they never change where trader Joe's is always keeping it fresh. Patti, you were kind of getting into some areas where there were some mistakes made, and I want to kind of broaden that. You are the narrator. You are the storyteller of this corporation that so many people are fascinated by. And im wondering, from your perspective, what were some of the biggest mistakes that Joe himself made in building Trader Joe's or that even the corporation has made since his tenure at the company is over?

Speaker E:

Well, I can't speak to the second.

Patty Civalleri

Part of that, but I can speak to the first part. I mean, one of the things that, that Joe did is he did start.

Speaker E:

His own winery that was really neat.

Patty Civalleri

I mean, they brought in grapes and they pressed the grapes and they bottled the grapes and they, you know, they aged the wine and they did the whole thing. They went through the whole process. You know, he bought a wine license that was an antique white wine license, a vintner's license, the employees, all. I mean, I have pictures, and I did. We put. Did it make it into the publisher?

Speaker E:

Leave that in the book?

Kevin Hudak

I believe there were two pictures where it was the original grape stomping.

David Kopec

Yeah, yeah, yeah.

Patty Civalleri

The employees, you know, there's. Laurie's in there, and Joe's daughter's in there, but some of the employees were.

Speaker E:

In there, and they would go in.

Patty Civalleri

On their weekends off, and they would.

Speaker E:

Help crush the grapes, and they would.

Patty Civalleri

Help bottle, and they'd help label. They would help. It was kind of fun. It was sort of a party thing to do. But Joe realized that that was just way off, way away from. He was venturing too far away from his goal, his path.

Speaker E:

And so obviously, that ended well.

Kevin Hudak

And I also love the fact that he was allowing employees to grape stomp. But then at one point in your book, you mentioned that they didn't allow table grapes to be sold in a store because they were the number one cause of slip and fall accidents amongst employees and customers.

Patty Civalleri

You're right.

Kevin Hudak

Grape stomping is allowed, but no table grapes.

Patty Civalleri

Right. I don't know. I mean, a lot of things weren't. He didn't think of a lot of things as mistakes as much as he thought of them as lessons.

David Kopec

That's a good perspective. But were there some strategic decisions, not just individual product decisions, but strategic decisions that really were unnecessary or went the wrong direction? You've kind of mentioned a couple already, but are there any other big ones that we've missed?

Speaker E:

Again, I never looked at it that.

Patty Civalleri

Way because he didn't.

Speaker E:

That's fair.

Patty Civalleri

Yeah. Strategically, I mean, I think his biggest thing was his idealism. When he started pronto and had to change that course completely, completely away from that variety store model, I would say. But again, I don't see that as a mistake. I see that as an evolution, and he did, too.

Speaker E:

He was not a negative man by any sense.

Patty Civalleri

You know, he had a very ready smile, but you knew he was in command. He was not an overbearing sob, kind of a boss kind of a guy to work with or deal with. He had a very straightforward, forthright way.

Speaker E:

He had a policy that if you couldn't.

Patty Civalleri

He didn't like dealing with corporations at all. Large companies, large vendors, large banks, because.

Speaker E:

His feeling was, hey, you know, if.

Patty Civalleri

You'Re the owner of the company and you wouldn't look him in the eye and shake his hand, he was just.

Speaker E:

Not interested in doing business with you. That's kind of old school. But I really get it.

Patty Civalleri

And I mean, I kind of smiled when I learned that, and it was kind of a nice thing. So he had really great relationships with his vendors. He showed them gratitude. He paid them much faster than anybody pays anybody pays their vendors. You ship side of, you get an okay to be in Trader Joe's, and.

Speaker E:

He would, he would pay you. You'd get your money in a week.

Patty Civalleri

Or two versus 60 day, 90 days, 100 days, or whenever they turn to profit. Joe was great. He treated his vendors extremely well. He treated his customers extremely well.

Speaker E:

He treated his employees extremely well. And I miss that. His way of business thinking is a rarity.

Patty Civalleri

I've been in business my whole life. I married an MBA. We have businesses and investments. We think about this every day of our life, how businesses get such a bad rap. And typically it comes down from the top. Trader Joe's that came down from the top. He was a kind soul who treated everybody well. And his company is a kind company that treats everybody well.

Speaker E:

And I think that's a lovely, wonderful lesson.

David Short

So why did Joe end up selling Trader Joe's? And could you go a little bit into that story, the sale process and his ongoing involvement with the company thereafter?

Speaker E:

The same way that he visualized prior things.

Patty Civalleri

You know, he saw, we had mentioned before the variety store model was an up and coming model and that variety stores were going to be an up and coming thing. He foresaw that, you know, with the combination of the GI Bill and, you know, the Boeing airplanes, that people are going to be eating differently and they're going to have a little bit more.

Speaker E:

Money and want to experiment more with.

Patty Civalleri

Fun, fresh foods from around the world. He saw these kind of things happening before everybody else saw them. He saw something in the seventies that really concerned him, and he saw a real big economic issue coming in the.

Speaker E:

Eighties, and he was real concerned about it.

Patty Civalleri

He knew he was still too small to handle it.

Speaker E:

He wanted help.

Patty Civalleri

He had a friend in the grocery industry who was a friend named Theo Albrecht from Germany. Theo Albrecht owned the largest grocery chain in Europe at the time. And they had become friends, and they had a mutual friendship and trust. They often called on each other for advice and, you know, for a glass of wine. Periodically. When Joe saw this coming, they talked about it. And, you know, Theo, I don't know who mentioned it first, but the net result is that Joe ended up selling to Theo Albrecht's family, the all back friend Albrecht family. And he did it on a, you know, a three page contract and a handshake and a hug, you know, none of these 300 page contracts that stretch out and, you know, get posted on. On X for and have everybody's two cent in it. This was really done in a very short term. But one of the things that Theo.

Speaker E:

Agreed to was to keep Joe's footprint.

Patty Civalleri

Which was very solid. His foundation, his pillars were extremely solid and proven at that point. And Theo had absolutely in what Joe.

Speaker E:

Had built and said, you know what?

Patty Civalleri

There's not a problem there. You have my word, we will not change your model.

Speaker E:

Eventually.

Patty Civalleri

Now, Theo had a couple of sons, and when Theo ultimately passed away, he left his fortune to his sons, who had split it up and ran the company.

Speaker E:

And they got, the two boys got.

Patty Civalleri

Men got in an argument over, of.

Speaker E:

All things, are you.

Patty Civalleri

Are you guys. I don't know if this was in.

Speaker E:

The book, if this made it into the book.

Patty Civalleri

The argument was about cigarettes, whether or.

Speaker E:

Not they were going to carry cigarettes in their stores. Remember, they have Aldi Marks.

David Kopec

Patty, I think there was the brief anecdote of this. Keep going, though.

Speaker E:

Sorry.

Patty Civalleri

Yeah, yeah. So it was really about, you know, whether or not they were going to carry cigarettes. And one brother said, we got to carry cigarettes. The whole world smokes. And the other brother said, no, we can't carry cigarettes. Right. And they got into, you know, quite the family feud, where it actually split Aldi in half. They split the company assets into Aldi north and Aldi South. Aldi north has a whole bunch of Aldi stores all over the world. In addition, they, Aldi north owns Trader Joe's. Aldi south has Aldi stores all over the world.

Speaker E:

But they do not.

Patty Civalleri

They are not involved at all with Trader Joe's. So those are right now two different companies. So the Aldi company and Trader Joe's are not related to each other except.

Speaker E:

By, you know, family ownership. So I know there's a lot of.

Patty Civalleri

Folklore because Trader Joe's being a private company has always kept, you know, everything sort of close to the vest. It leaves room for a lot of, you know, theories out there as to why he sold, you know, who owns what. Gee, there's Aldi. So there's a lot of theories about that. But that's basically it. It's pretty simple. Joe. That happened in 1979 when Joe and Theo agreed to make that changeover. It took a lot of pressure off of Joe because he really wanted to grow the company, knew he didn't have enough assets, but also foresaw a financial hit coming to the United States, which.

Speaker E:

Of course, was his market, but he.

Patty Civalleri

Still loved his company. So he stayed on for another ten years in Trader Joe's and ran the company for another ten years and kept everything going exactly the way it was. Eventually, he felt it was time to go. And when he left Trader Joe's, he got a whole bunch of other. He got consulting positions. He was on the board of many other companies, including Costco, cost plus world market, a couple of pharmacies. Remember, his experience came out of Rexall. So he understood how these businesses ran and was extremely. You know, I walk into a cost plus world market now, I don't know if you guys have ever walked into one. I see Joe's footprints all over that store. You know, I see, like, they have.

Speaker E:

This little sort of foreign food area.

Patty Civalleri

Where they carry some, like, you know, different foods that have been brought in.

Speaker E:

And they have their giant wine section.

Patty Civalleri

Where they carry wines in the. In the wooden crates. You know, that the wooden crate wine display idea was right out of Joe's hand, and all the guys in the stores built those first wine shelves and wine boxes to display the wines. Every grocery store since then has gone into that, that level of display. But I see that in cost plus world market, it's still in Costco, they're still displaying them in the wine boxes.

Speaker E:

But Joe went for a lot of.

Patty Civalleri

Years advising at a board level. A lot of other grocery, pharmacy, retail level companies had a lot of value to offer.

Speaker E:

And, you know, in the end, you.

Patty Civalleri

Know, I had to ask the question. You know, Joe, everybody asked the question.

Speaker E:

Joe, was it worth it? Were you happy you sold the company?

Patty Civalleri

And in order to answer that question, to get an answer to that question, I recommend that everybody read the book.

Kevin Hudak

And Patty, I absolutely love the fact that you brought up the Aldi split over cigarettes. And, you know, one of the surprises from the book that I read was that Joe had actually handled that fairly early in treater Joe's life cycle. One, he decided to discontinue cigarettes for the health impacts, but also because it was one of the number one targets for burglary and that folks would come through the ceilings. And so I've since been to a trader Joe's, and I will never look at the drop ceilings in a trader Joe's the same ever again. Knowing that sometimes you'd have burglars coming in through there, I'm wondering, you mentioned and Joe mentions in the book as well that his shadow still rested over Trader Joe's for quite some time. You mentioned his, the legacy of Trader Joe's even impacting stores today. Just very briefly, I'm wondering, when you look at the Trader Joe's of today, do you see them as still upholding Joe's original vision? Is there one thing that you could think of that you think Joe would be especially proud of, looking at how the company has progressed or that he said he was proud of before 2020?

Patty Civalleri

Joe was proud of the whole thing.

Speaker E:

This was obviously like a child to.

Patty Civalleri

Him, a child that he had raised.

Speaker E:

And I think, you know, there were.

Patty Civalleri

Certain things that Joe has said in.

Speaker E:

Confidence and were mentioned in confidence that.

Patty Civalleri

That were kind of touching at the time.

Speaker E:

And Joe is very proud at how.

Patty Civalleri

The company has grown. He's very proud of how things have been handled. He was very proud of so much about the company. He never thought of it, though.

Speaker E:

He never ever thought of it as.

Patty Civalleri

Being how everybody, it has such a huge cult following, and it's considered sort of the superstar in America's sweetheart grocer. He never thought of it that way. He just thought of himself as a neighborhood grocer. He never thought of himself as very interesting or very famous or any reason to be popular or famous or anything special. He was your neighborhood guy. So he never really thought of. He did never understood this big trader Joe's thing that he would hear about, gee, see some big article or how somebody did something crazy to get into a trader Joe's or to get employed by a trader Joe.

Speaker E:

He never understood the big cult thing.

Patty Civalleri

That built up around it.

Speaker E:

He just thought this was just a.

Patty Civalleri

Little company he built.

Kevin Hudak

Well, now, you look at, we talked about unions before, and now theres actually that case where Trader Joe's is going in with SpaceX against the National Labor Relations board over some of the unionization policies. And I think it would probably tickle Joe's fancy that Trader Joe's, of all companies, is now on the same side as a company putting people in the space.

Patty Civalleri

Yeah, if Joe could smile now, he probably would. Yes, indeed. Now, of course, all of that is speculation at this point. There's a lot of things going around right now that can be verified or not verified, depending on where they're coming from. But of course, everybody's an expert.

Speaker E:

So I wouldn't necessarily take a lot of rumors to heart, because it's hard to know what a company that plays.

Patty Civalleri

Their hand close to the vest. It's hard to know, you know, what aces they're hiding up their sleeves.

David Kopec

Definitely.

Kevin Hudak

And I do think that one of the things I took away was Joe was a man of integrity who expected integrity from his employees.

Patty Civalleri

Bingo.

Kevin Hudak

And again, it was just that kind of be outstanding culture.

Speaker E:

Yes, indeed. All the way. All the way.

David Kopec

So, Patti, I'd like to go a little bit as we finish up into your process of working with Joe on the book and what the writing process was like. So I'm wondering if you could tell us what it was like working with him because it sounds like you got to know him over the course of a number of years. And also, as we finish up, is there anything that we missed in this discussion that you want our listeners to know about the book? Because many of our listeners read the book ahead of our episodes, but some of them, they listen to the episode and then they read the book. So what are some things we missed that they should know about it?

Speaker E:

Oh, golly, there's all kinds of things.

Patty Civalleri

Other things that he did, his contributions here in the Los Angeles area. Joe was an artist. His wife Alice was started the Los Angeles Opera. And when she started the opera and she had no budget to advertise their.

Speaker E:

Performances, Joe would help out by doing.

Patty Civalleri

Things like printing the opera schedules and ticket prices on the back of the trader Joe's bags so that all of.

Speaker E:

His customers could learn about the new LA opera.

Patty Civalleri

You know, he did a lot of things like that to support, you know, and now the LA Opera is pretty large and pretty respected and a wonderful, you know, a wonderful part of Los Angeles.

Speaker E:

But, you know, he and Alice, again.

Patty Civalleri

They thought of themselves as just sort of the neighbors next door. They never thought of themselves as being, you know, and nothing ever went to their head. They were 2ft feet on the ground, really lovely human beings. Now, you know, again, I only knew Joe socially when this came to me. It was Leroy Watson that came to.

Speaker E:

Me because Joe had said, hey Leroy, can you figure out, you know, find.

Patty Civalleri

Somebody to whip my journals into shape and make this work? And, you know, when I read the journals, first of all, I fell in love with them instantly. And at this point in Joe's life, he was, you know, he was well into his eighties. He died at 89. The book was published, we signed the contract, and one week later Joe passed away. So, you know, when I was working on the book was at the very end of his life where he wasnt communicating a lot anymore, gratefully and I mean with so much gratitude. I had Leroy Watson, who, remember, was.

Speaker E:

Joes first employee when Joe first opened.

Patty Civalleri

His first pronto market. So he and Leroy traveled this route together. And of course Leroy stayed with trader Joe's another, what, 15 years after Joe left. So Leroy knew the business as well, as leroy. And Leroy was the guy that got.

Speaker E:

Everything done, you know, when Joe couldn't talk.

Patty Civalleri

It's funny, I remember, actually, Joe wasn't our young. Now I'm getting really scattered my thinking here, because I'm just thinking back over the years. I went to a funeral once, and Joe was sitting next to me at the funeral. And this was a Japanese. In a Japanese. This beautiful, beautiful japanese church.

Speaker E:

I don't know if you've ever been.

Patty Civalleri

To a japanese buddhist monastery. Not a monastery, but a church. The funeral lasted 6 hours. Well, sitting in a pew on a wooden pew for 6 hours is.

Speaker E:

Is tough.

Patty Civalleri

Joe had brought a sketch pad, and he sat next to me, and he drew and drew, and he just would lay down a layer in pencil on this pad, and then another layer would go over the top of it. Another layer. And this went on, and we, you.

Speaker E:

Know, we just kind of giggled and.

Patty Civalleri

I asked questions and we talked and we churled and whatever through this whole thing. And in the end, what he had done is he had drawn the most beautiful, intricate representation of the altar of this church.

Speaker E:

It was gorgeous.

Patty Civalleri

But what a delightful human being.

Speaker E:

He saw things visually in his head.

Patty Civalleri

You can tell, you know, when you talk to him, his eyes would go up to the left, and he would. You could see he was looking at something. When he talked to you, when he was trying to express something to you, it was really interesting.

Speaker E:

Oh, I don't know. But, you know, towards the end, I.

Patty Civalleri

Am grateful that I did have Leroy. Leroy was, at the very, very end, the only one, you know, allowed at his bedside and was super helpful through all of this and gave me so much insight because he and Joe were almost interchangeable in that, you know, in that environment, in the trader Joe's environment. So working with Joe at the end, I didn't work a lot with Joe in the end. I worked with his journals. I worked through Leroy. I worked with a lot of what I already knew. I worked with a lot of other people in the company. And when we were all finished and the book got published, his wife Alice and I did the very first signing, and we signed hundreds of books that night. And what a delightful woman she is. So I, you know, I. I have huge respect for Joe and Alice, for the people they are, for the family.

Speaker E:

They are, for the life they led.

Patty Civalleri

And their ethics, their ability to hold up. And they got pressure from all kinds.

Speaker E:

Of weirdos over the years, and they.

Patty Civalleri

Held up and knew very firmly to say no. They had scruples and they had ethics. They had morals, they had principles.

Speaker E:

You know, try to find somebody in.

Patty Civalleri

Today'S world, you know, it's. Things are so much more watered down today, I think.

Speaker E:

But having known Joe all those years.

Patty Civalleri

And having the privilege of writing this.

Speaker E:

Book, his story, putting his voice, his.

Patty Civalleri

Legacy on paper is an honor and.

Speaker E:

A privilege and something that I will.

Patty Civalleri

Take to my grave as one of the neatest things I've ever done in my life and something to which I am super grateful.

Speaker E:

And probably in terms of business, something.

Patty Civalleri

I learned more about business than I've.

Speaker E:

Learned from business school and owning businesses. I learned from Joe. What a great human.

David Kopec

Well, he sounds like he was such a special individual. And Trader Joe's means so much to so many Americans and people around the world. Actually, I know people from Canada are always coming to the US just to go to Trader Joe's, but it's such a special company. And we were so lucky to have you on the show telling the story. And of course, to be able to read your book, telling the story, wondering if you can tell our listeners a bit about your other books because you're quite a prodigious author and also how our listeners can follow you on social media or your website. Of course, we're going to put that in the show notes as well.

Speaker E:

Oh, thank you for that.

Patty Civalleri

I appreciate it.

Speaker E:

Well, I am on Facebook and LinkedIn.

Patty Civalleri

And Instagram, and I am always under Pattycivillari, if not patti dot civillari and pattycivillari.com. Or you can go to Amazon and search Patty Civilieri. A lot of my work is about Italy, but it's mostly historic.

Speaker E:

I'm taking a lot of Joe's from.

Patty Civalleri

Joe's teachings and the way I have.

Speaker E:

Written a lot of my stuff.

Patty Civalleri

A lot of what I'm doing is I'm trying to take the cheapness and.

Speaker E:

The frivolity out of, out of heavy travel.

Patty Civalleri

I mean, let's face it, you travel to Europe, you're going to pay $10,000 a person. When all is said and done. Plane rides, hotels, all the stuff you buy, all the stuff you eat, everything. When you're said and done, it's $10,000 a person. So a couple goes, that's 20 grand.

Speaker E:

Yeah, you might be able to get.

Patty Civalleri

Off a little cheaper, but it's still pretty expensive.

Speaker E:

What I did is I was on.

Patty Civalleri

The director's council of the Coatson Institute of Archaeology at UCLA for 17 years.

Speaker E:

And in that role, I got to.

Patty Civalleri

Travel around the world in search of lost and ancient cultures with archaeologists, scientists, anthropologists, geologists, botanists, every kind of scientist you can think of in search of lost and ancient cultures. One of the talks, you know, I do a lot of talks around the country right now, and one of the talks I gave is called Indiana Jones and high heels, which is sort of, you know, sort of a lot of the stories that we went through and.

Speaker E:

You know, going around to all these.

Patty Civalleri

Ancient archaeological sites in the world. Anyway, what that taught me to do.

Speaker E:

Is it taught me, first of all.

Patty Civalleri

Traveling around the world.

Speaker E:

I countless numbers of times, I got.

Patty Civalleri

Really good at traveling, but I also got really good at seeing holes in travel and understanding how the world is traveling and how the world should change and is changing in the world of travel. So I guess I sort of am not one for, you know, the fast travel, the, you know, spending your vacation time zipping through 14, you know, countries in eight days and checking it off your checklist. I think you're not doing yourself a justice. I think you're not doing the destination a justice.

Speaker E:

And we're not.

Patty Civalleri

For me, travel, for me personally, travel is about opening your mind and broadening your perspective. It's not very perspective broadening to travel that way.

Speaker E:

So I write for people that want.

Patty Civalleri

To travel deeper, that want to go slower, not faster. They want to go deeper. They're smarter. They're probably over 50. They've got better questions. They've got more money than they had when they were 18, and speed traveling. Their kids are grown. I'm talking to an audience that is the largest spending segment in travel right now that nobody in my industry is addressing. And so that's kind of what I'm doing.

Speaker E:

I'm also part of that is that.

Patty Civalleri

When we travel, we are guests of somebody else's country or land or city or whatever. How we treat them is really important. Treating them with dignity, acting like a guest and not an american idiot, traveling with good manners, making friends everywhere you go, rather than traveling as the excuse to be judgmental about other cultures. So I'm a different kind of a traveler. And so I write for people that simply want to know more, want to get more. I also write about art history, western art history. You know, I've taken apart Rome and Venice and Florence, and I've turned them.

Speaker E:

Into cities that you could go to.

Patty Civalleri

A complicated city like Rome. And I've invented a little thing that makes it so easy for you to get around that city and never be lost and always know what's around you at all times. It's so simple that it seems like a toy and it's almost not taken seriously. So it's finding like minded people that have a brain are critical thinkers and that see the world as a phenomenal educator. And so that's my world of writing.

Speaker E:

And I won over 16 awards in my travel segment.

Patty Civalleri

And I've won the equivalent of the Oscar in the travel industry. Picked up the gold award for on the same day that Richard Branson picked up the exact same award for his new cruise line, his new Virgin Atlantic cruise line. So he got it for his cruise line. I got it for destination excellence in Europe.

Speaker E:

So it's about teaching and how to use the world as our teacher and.

Patty Civalleri

How to make, you know, the value, how to get incredible amounts of value.

Speaker E:

For when you travel.

Patty Civalleri

Again, there's that price value thing. So I package things a little differently. I have a little bit different ingredients. I pull uniqueness out of these historic parts of the world.

Speaker E:

Hey, guess what?

Patty Civalleri

My pillars of differentiation.

Kevin Hudak

Well, congratulations. And it sounds like part golden rule and part Indiana Jones and Dave Kopec. Take it away.

David Kopec

Patty, it's been such a pleasure having you on the show. And we're going to have links to everything you mentioned in the show notes. So I'd encourage all of our listeners to go check out Patty's website, check her out on social media, check out her books on Amazon to find out more. Patti, thank you so much for joining us on business books and company.

Speaker E:

Oh my gosh.

Patty Civalleri

Thank you so much for having me today. I think I've gone quite a bit overtime. I apologize for that.

David Kopec

No, we loved it. We loved it. David, tell us about our next book. What are we reading for next month?

David Short

Yeah, so I'm excited to announce that for next month we'll be reading reminiscences of a stock operator by Edwin Lefaver.

Kevin Hudak

It's a bit of an outlier compared.

David Short

To our typical books, as it's technically a novel. It was first released in 1923, and its a fictionalized account of the life of legendary stock trader Jesse Livermore. Lefebvre writes the book as if its the memoir of a trader who makes and loses several fortunes. And it really provides a fascinating insight into the mind of a trader going through bull and bear markets that can really ring true even today. So yeah, really looking forward to reading it with Yall.

David Kopec

Thanks for that, David. All right, I want to remind everybody to leave us a review on your podcast player of choice that helps more people find out about the show. And we'll see you next month.

Trader Joe's is an iconic American grocery chain. And yes, there was an actual Trader Joe. In this episode we interview Patty Civalleri, the co-author with Joe Coulombe of Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys. Founded as a small chain in California in the 1960s, Trader Joe’s has gone on to become one the most unique and influential grocery retailers in the United States. Through that journey of growth, Joe Coulombe, its founder, battled government regulations, competitors, and many preconceived notions about how a grocery store should operate.

Show Notes

Follow us on Twitter @BusinessBooksCo and join our Amazon book club.

Edited by Giacomo Guatteri

Find out more at http://businessbooksandco.com