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Family fortunes
Sam Walton shrewdly structured his fledgling company as a family partnership in 1953, giving 20% stakes to each of his four children. Put differently, he handed 80% of Walmart to his kids when it was worth next to nothing, sparing them from paying billions of dollars in estate taxes to inherit his stock after he died in 1992.
King told BI he wasn’t surprised to see the Waltons near the top of a rich list dominated by technology bosses like Musk, Jeff Bezos, and Mark Zuckerberg.
“Walmart is a family firm that is in its second generation, or the initial value created by Sam Walton has not been split across multiple heirs,” King said.
The late John T. Walton’s son, Lukas Walton, ranks in the top 50 of Bloomberg’s wealth index with a nearly $37 billion fortune. But it’s true the vast majority of the family fortune remains in the hands of Sam Walton’s children.
“Wealth rarely lasts past the grandchildren or three generations, as the number of heirs in the third generation increases and they are used to living wealthy,” King said.
The management professor added that the Waltons have retained more of the company over the years because Walmart, unlike many tech companies, has largely self-financed its scaling.
“The wealth is more concentrated, because Walmart used mostly internal growth that funded expansion from revenues,” he said. “In contrast, tech billionaires are more dependent on external investors to scale up, giving more ownership to investors, versus founders.”
$100 billion club
Weinstein, the marketing professor, also told BI he wasn’t surprised to see the Waltons in the $100 billion club, as the US stock market rewards strong business performance.
Tech firms and founders are “generally the most high-profile wealth creators as it is easier to scale online companies which benefit from the network effect, and tech firms may be perceived as sexier, more interesting, and revolutionary,” he said, giving Musk’s empire of businesses including Tesla and SpaceX as an example.
“Walmart’s success takes largely a different path by truly mastering the daily business fundamentals,” Weinstein added.
Yet he ticked off several threats to Walmart. It faces competition from local rivals like Amazon and Target, as well as Chinese upstarts such as Temu and Shein.
The company might struggle to find talent when it’s already the largest employer in the US, and bagging great executives could be tough when top graduates tend to prefer management consulting and tech gigs. Retail’s long working days and weekend shifts are also a “turn-off for many excellent employees,” he said.
“One potential concern is that Walmart attracts older customers,” he added. “Will their products and stores appeal to millennial and Gen Z shoppers going forward?”