WALMART SALARIES: Salaries at Walmart have become
insane. Software engineers for example can expect to earn as much as half a million per year. Now,
such salaries aren’t too crazy at big tech companies and VC funded startups but Walmart isn’t
either of those. They’re a retailer, a legacy retailer. For perspective, the top engineers
at Target earn over $200,000 less at $278,000. And at Costco, the average software engineer is
barely able to cross a $100,000. This doesn’t just apply for software engineers either. For
product managers, they’re offering up to $500,000. For engineering managers, they’re offering up to
$600,000. And even for data scientists, they’re offering up to $400,000. In fact, Walmart is
paying so much that for certain tech job titles, they’re literally on the leaderboard for paying
the highest compensation. Take Solution Architect for example. Walmart comes in as the 24th highest
paying company for this position with a median of $223,000. This places them just $2,000 behind
Apple and $3,000 behind Facebook. This also places them ahead of some of the largest tech companies
out there including Cisco, Salesforce, Oracle, and Dell. We should also note that Walmart is
the only retailer that makes the leaderboard other than Amazon of course but they’re more of a tech
company than a retailer. Walmart on the other hand is definitely still more of a retailer but they’re
leaning into tech more than ever. In fact, they have a full on subsidiary called Walmart Global
Tech, formerly known as Walmart Labs, with 8000 employees. Why does a retailer need this
many tech employees? Well, it’s because Walmart doesn’t treat tech as an addition to their retail
business, they treat tech as the basis of their retail business. But, it wasn’t always like this.
In fact, for nearly 16 years, Walmart had stalled out. But since 2015, the retailer has tripled
their market cap growing to a valuation of just under $400 billion making them the 19th largest
company in the world. So, here’s the story of how Walmart saved their stagnating business with tech.
WALMART THE BOOMER:
Taking a look back, Walmart’s transition into tech can be traced back to the late 1990s when
Walmart was very much the boomers of the retail industry. By this point, they were already the
largest retailers in the US and the world’s largest private employer. In fact, Walmart still
holds this title to this day with a whopping 2.3 million employees. But, while things were
going great at Walmart, they were starting a see a little thorn pop up called Amazon, you may have
heard of them. At first, they started off as a no name online bookstore, but every year, they were
growing by hundreds if not thousands of percent. They were expanding into new categories all the
time and it seemed like they wanted to be the Walmart of the online world. In fact, they were
starting to poach a bunch of Walmart employees by luring them with sky high stock compensation. This
made it easy for Amazon to steal Walmart’s world class logistics and supply chain secrets. Usually,
when an up and coming competitor is able to steal your employees and perform extraordinarily well,
it’s usually a sign that they’re doing something that you’re not. With the case of Amazon,
the X factor was obviously their online presence. So, the best idea would’ve probabaly been for
Walmart to poach some tech employees from Amazon and double down on the online space. In fact,
this is precisely what they’ve been doing over the past several years. But, back in the day,
Walmart would take the boomer approach and try to bog down Amazon by suing them. While
that fiasco was going on at Walmart, our story jumps over two tech enterpreneurs named Venky
Harinarayan and Anand Rajaraman. These guys were your classic tech guys from India having both
completed degrees at IIT in India and Stanford in America. They had gone on to create an online
company called Junglee Corporation which allowed shoppers to easily compares prices and features
of various online products. This is nothing crazy today, but back in the 1990s, this was
revolutionary stuff and Jeff Bezos would take interest in the company. In 1998, he would buy
out the Junglee for 1.6 million shares of Amazon which at the time was worth $250 million. Today,
it’s worth $22 billion, so safe to say that these two had scored a pretty lucrative deal but they
were by no means ready to retire. Both Venky and Anand would join Amazon as high level directors
and closely work with Jeff Bezos himself. These two would actually end up being instrumental in
the launch of Amazon marketplace. You may not be familiar with this brand but I’m sure you know
what they do. This is the part of Amazon that allows for third party sellers to list products
onto Amazon. As you know, this is basically the bread and butter of Amazon today, so it
looks like Bezos definitely got his money’s worth with this duo. Now, while that’s cool and all,
you’re probably wondering, what in the world do these guys have to do with Walmart. Well,
these two are the ones that would create what would eventually become Walmart Global Tech.
WALMART FEELS THE PAIN: After helping Bezos launch
Amazon marketplace, our duo would help him launch Amazon Mechanical Turk. This
is basically the Fiverr of the corporate world. Companies can outsource brute force work like
data validation and content moderation through Amazon. By the time Mechnical Turk came out,
Venky and Anand had spent the better part of a decade at Amazon, and they started to feel that it
was time to move on. They didn’t directly switch over to Walmart though. They would actually lean
back into entrepreneurship and start another company together called Kosmix. Kosmix was a
rather niche company but it was extremely valuable for the enterprise customers that were in that
niche. What did Kosmix do you ask? Well, they specialized in search engine optimization. More
specifically, they aimed to transform vertical search engines into horizontal search engines.
Vertical searching is the most rudimentary type of searching. It’s when people enter a keyword
and the engine searches a given database for matches. Horizontal searching on the other hand
is more like the YouTube algorithm. It uses the keyword that you entered along with your
previous searches and purchases to display the products that you would be most likely to buy
as opposed the products that are the closest match to the keyword that you entered. Again,
standard stuff nowadays, but novel concept back in the 2000s. Venky and Anand would go onto build an
encyclopedia of nearly 5 million categories with hundreds and hundred of parameters. For example,
they accounted for where customers were searching from, what car did they drive,
what music they listen to, and even what type of cheese they like. You could use all these
parameters to display products that would be the most likely to convert into sales. So,
for obvious reasons, this technology was extremely valuable for retailers and they would eat it up.
Kosmix would end up growing hundreds of percent per year, partner with several organizations,
and even acquire smaller companies. So, Kosmix was no doubt killing it but the same could not be said
about Walmart. Walmart wasn’t exactly doing bad, but they weren’t exactly doing well either. You
see, maturity had hit Walmart like a ton of bricks and they were feeling the pain. During the 80s and
90s, Walmart had grown a ridiculous 60X putting all other retailers to shame but for 10 years now,
Walmart had gone nowhere. If the industry as a whole had stagnated, this wouldn’t be too
big of a problem but e commerce was still growing exponentially and Walmart was simply missing out.
They did have an online presence but compared to Amazon, this was largely a joke. In fact, if you
navigate back to their 2010 website, you’re hit with a “Adobe Flash player is no longer supported”
warning. Amazon on the other hand already had a recommended section and was already evolving
into its current form. Walmart clearly needed to pivot but if they wanted to stage such a large
turnaround, they needed the help of experts. And what better experts to hire than the former Amazon
directors that helped launch Amazon Marketplace and were now working on a highly valuable search
engine. And with that, Walmart would acquire Kosmix for $300 million in cash in early 2011.
WALMART PIVOTS: It’s easy to say that Walmart just bought their
way into tech but that’s not really the case. Yes, they had a lot of help from Kosmix but Walmart
deserves a bunch of credit as well. Usually with acquisitions, companies try to integrate
the child company into the parent company. They want the child company to adopt the same culture,
the same philosophies, the same salary bands, and so on. Walmart on the other hand decided to take
a much different approach. They could clearly tell that what they were already doing wasn’t working.
So, it doesn't make a whole lot of sense to force this up and coming company to also do same thing.
Instead, they would decide to adapt Walmart to what Kosmix was doing. This takes an insane amount
of humility and most companies would never make such a pivot but Walmart did. While all of their
peers were paying legacy company tech salaries like AT&T and IBM, Walmart was paying FAANG level
salaries or atleast as close as they could get. Obviously, they would never be able to pay as much
as actual tech companies as they simply don’t have the same margins. But, for a physical retailer,
they were paying extraordinary amounts. This allowed them to recruit some of the best talent
out there including a bunch of Amazon employees who were trying to escape the toxic work culture
at Amazon. Suddenly, Walmart had all the resources they needed to build a modern online platform and
that’s exactly what they would do. But, they didn’t just blindly copy Amazon. They did
indeed add their own twist. One of the biggest bottlenecks for Amazon is their fulfillment
centers. To continue driving down delivery times, Amazon has keep opening up fulfillment centers
that are increasingly omnipresent. I mean, if you wanna deliver within 24 hours to any address, you
need fulfillment centers within 24 hours of every address. That’s kind of how that works. But, the
problem with opening so many fulfillment centers is that you quickly reach the point of diminishing
returns. Opening more centers becomes more expensive than its worth, but if you wanna keep
driving down delivery times to 2 hours and 1 hour, that’s the only way. But see, this isn’t nearly as
big of an issue for Walmart because well, they’re already omnipresent atleast within the US. In
fact, the average American lives within 4.2 miles of a Walmart. So, forget 1 hour delivery, Walmart
could do 15 minute delivery. All they needed to do was convert their thousands of stores into high
tech warehouses, and that’s exactly what they’ve been doing. Walmart Global Tech could handle all
of the AI and machine learning involved in running such a large retail operation. What products
needed to be carried by which stores and when. What routes do their trucks need to make to ensure
that every store has what they need and so on and so forth. Meanwhile, Walmart’s legacy business
could focus on logistics, fulfillment, and customer satisfaction. This strategy was already
working out well in the 2010s, but the pandemic changed things up big time. You see, Walmart
had one thing that Amazon is still struggling to offer: fresh groceries for pick up and delivery.
And this was exactly the advantage Walmart needed to cement themselves as an ecommerce juggernaut.
THE TECH WALMART: Today,
Walmart has been able to regain the momentum that they had lost in the 2000s. Over the past 7 years,
their stock has tripled and their fundamentals have led the way. In fact, Walmart is the
number one revenue driver in the entire world pulling in a crazy $600 billion per year. Now,
I do want to note that their earnings have not kept up with their revenue growth but this isn’t
really a concern. The main reason for this is simply that Walmart has been investing much of
their profits into the tech side of the business and revenue growth. And for modern companies,
growth is simply way more valuable than the bottom line. Amazon for example is still not profitable
but they’re worth over a trillion dollars. So, it looks like Walmart has not only adapted to
modern tech but they’ve adapted to ther modern business landscape. And that is why Walmart is
so successful to this day. Did you realize how much Walmart was paying their tech workers?
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