The 20th-century view of shareholder primacy is flawed. By focusing first on creating wins for all stakeholders—customers, employees, suppliers, and society—companies build a sustainable, beloved enterprise that paradoxically delivers superior returns to shareholders in the long run.

A strong mission (ethos) is not enough to prevent corruption. Companies like Costco survive because they build a "governance fortress"—legal and structural protections that defend the mission against external financial pressures. The formula is Ethos + Integrity = Incorruptible.

Costco inherited its customer-first ethos but added a critical component: a 'governance fortress.' This structure intentionally protects the company's long-term mission from short-term investor pressures, demonstrating that a strong ethos requires structural defense to survive.

Public companies, beholden to quarterly earnings, often behave like "psychopaths," optimizing for short-term metrics at the expense of customer relationships. In contrast, founder-led or family-owned firms can invest in long-term customer value, leading to more sustainable success.

The famous $1.50 hot dog price reflects Costco's counterintuitive business philosophy, inspired by Jeff Bezos's "your margin is my opportunity." By intentionally keeping prices and margins low, Costco builds immense customer trust and creates a powerful, long-term competitive moat that extractive, high-margin businesses cannot replicate.

Charlie Munger prized 'win-win' systems, and Costco is the prime example. By offering clear value to all stakeholders—low prices for customers, reliable partnership for suppliers, high wages for employees, and steady returns for investors—Costco creates a self-reinforcing, durable competitive advantage that is difficult to replicate.

Contrary to popular belief, widely accepted corporate governance principles often lack supporting data. Research indicates these practices are destructive, while mission-driven alternatives consistently show superior performance across financial, loyalty, and other key metrics.

The story of Costco's success versus FedMart's failure highlights two essential elements. A company needs the 'ethos' of putting customers first, but it also needs the 'integrity' of a corporate governance structure that protects its mission from short-sighted investors and outside meddling.

Retail legend Sol Price built FedMart on being a "fiduciary to the customer." After investors fired him and abandoned this principle, the company failed. Price then founded Price Club, which became Costco, a lasting success built on his original customer-first ethos.