Some history:
At the contract signing in 1999 at Costco’s headquarters, Jim Sinegal, then the company’s CEO, seemed thrilled to be going into business with Amex. “This is a contract for life,” House recalls him saying.
The arrangement turned out to be hugely beneficial to Amex. By 2004, the number of Costco warehouses in the U.S. had risen nearly 50 percent since the alliance, to 327. Meanwhile, the total number of Amex cards rose from 46 million to 65 million. “Costco would have been a big contributor to that growth,” says Jason Arnold, a research analyst at RBC Capital Markets. Chenault, who’d become CEO three years earlier, ingratiated himself with Sinegal. Although they personified two different corporate cultures, by all accounts, the two men got along well, even when their relationship was tested by the financial crisis of 2008. Plagued by souring credit card loans, Amex won approval from the Federal Reserve to become a commercial bank, which enabled it to get $3.4 billion in funding from the Troubled Asset Relief Program. Amex also canceled cards, including some belonging to Costco members, which upset the retailer. “At that time, there was tension between the companies,” says Robert Ritchie, a former Amex manager who worked on the Costco account. “We had to mend the relationship.” The discussions were delicate; a discount chain where people bought 80 rolls of toilet paper was now able to push around the century-and-a-half-old company with the centurion logo.
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