Learn. Share. Evolve…

0:00:05 Charlie Munger once asked me how can someone give away 50% of profits and make billions
0:00:10 more than if he’d kept it all? Before I could answer he told me about Les Schwab,
0:00:14 a tire shop owner who understood incentives better than almost anyone.
0:00:17 What Schwab discovered will change how you think about business.
0:00:28 Welcome to The Knowledge Project. I’m your host, Shane Parrish.
0:00:33 In a world where knowledge is power, this podcast is your toolkit for mastering the best of what
0:00:38 other people have already figured out. This episode is for educational and information purposes only.
0:00:47 What Les Schwab discovered was deceptively simple. Most businesses treat employees like expenses to
0:00:54 minimize. He treated them like partners to enrich. The math was shocking. He gave away half his profits
0:00:59 and built a multi-billion dollar empire. Here’s how it worked. When people working in the tire
0:01:05 centers made a share of the profits, they don’t just change tires. They build relationships with
0:01:11 customers. When managers own real equity with skin in the game, they run stores like their family’s
0:01:17 “Future depends on it.” Because it does. Les documented his business lessons in his autobiography,
0:01:23 Pride in Performance. Keep it going. He wrote it himself on a 40-year-old typewriter because he wanted
0:01:29 every entrepreneur to understand exactly how he did it. No ghostwriter, no corporate polish,
0:01:36 just the raw blueprint for turning a leaky shed into an empire. Les proved that the most ruthless business
0:01:44 strategy is radical generosity. He turned employee loyalty into a competitive moat so deep that Walmart
0:01:53 couldn’t cross it. This is his story. Before Les Schwab was the name on over 400 tire stores across the
0:02:01 American Northwest, it was the name of a kid born into nothing. Bend, Oregon, 1917. His parents were desperate
0:02:07 homesteaders fighting the high desert for a living. His mother, Alice, taught him everything that mattered.
0:02:13 Then pneumonia killed her when Les was 15. That left him with his father, Bishop. A study in contradiction,
0:02:19 gentle and hardworking when sober, a maniac when drunk. Les spent his teenage years terrified that his
0:02:26 father would show up at school drunk and humiliate him. Poor but proud. That’s how Les described himself.
0:02:32 That pride was armor. A year after his mother died, they found his father’s body outside of a moonshine
0:02:39 joint. Les was 16. He was now an orphan. His relatives offered to take him in, but he said no.
0:02:44 Instead, he rented a room in a boarding house for $15 a month, decided he was an adult. The world had
0:02:50 given him a hard education and an allergy to alcohol. Most kids in his position would have taken the help,
0:02:57 moved in with family, and stayed safe. Les chose the harder path. While it wasn’t so much choosing the
0:03:02 harder path consciously, he just didn’t feel he could rely on anyone else. He wanted everything
0:03:07 on himself. I understand that. Choosing pride over comfort and independence over security
0:03:12 shows in nearly everything he went about doing. The lesson here is a bit counterintuitive. The worst
0:03:18 things that happen to you can become an advantage, but only if you refuse to let them define you as a victim.
0:03:22 Les could have blamed his circumstances. Instead, he used them as fuel.
0:03:27 Les got his first paper route before his parents died. However, this came with two problems.
0:03:33 One, he couldn’t ride a bike. Two, he couldn’t afford a bike. So he ran every day for two months,
0:03:40 running his entire paper route on foot to earn money for a used bicycle. He had to do the job to afford
0:03:46 the tool required to do the job. One morning, he couldn’t find a customer’s address. Ten miles he ran on
0:03:51 an empty stomach. He ended up collapsing in the street. Les needed to work. He had no choice.
0:03:57 He had bills to pay, and he needed a bike. Nobody was going to hand him anything. At the same time,
0:04:03 he was also washing dishes at a restaurant, earning $3 a week plus meals. Here’s his schedule as a 16 year
0:04:08 old orphan. Paper route in the morning, school all day, restaurant at night.
0:04:13 Then he started doing the math. Selling newspaper subscriptions paid 50 cents each. He could make more
0:04:18 in a few hours selling than a whole week washing dishes. So he quit the restaurant. When he finally
0:04:23 saved enough for a bike, he got a new route under Mr. Goldenberg. Goldenberg was important because he
0:04:28 taught him how to sell. Not just deliver newspapers, but actually sell them. Knock on doors, talk to
0:04:34 people, persuade them. Les doubled the route’s numbers in a few weeks. Goldenberg saw a potential.
0:04:40 So he had an idea. Start a Sunday route in farm country. It’s an underserved market, but a logistical
0:04:46 nightmare. Les would need a car. During the Depression, most 16 year olds saved for a baseball
0:04:54 glove. Les was saving for a 1926 Chevrolet with a box on the back. $75 cash. Sundays, he’d drive the
0:05:00 rural roads. On weekdays, he was back to the bicycle because gas cost too much. He liked the car, but he
0:05:06 liked money even more. He signed up 80% of farms in rural Bend. That’s when Les learned the principle that
0:05:11 would define his business philosophy. People don’t buy your product. They buy your service, your reliability.
0:05:18 They buy you. By his senior year, Les controlled all nine Oregon Journal routes in Bend. He was making
0:05:25 $200 a month during the Great Depression. More than his high school principal. Out of 500 students,
0:05:31 only Les drove a new car. A 1934 Chevrolet bought with cash. His classmates thought it was showing off,
0:05:37 but they missed the point. The car wasn’t about status. It was proof. Proof that hard work plus smart
0:05:43 thinking beats any disadvantage. What stands out to me here is the compound effect of small
0:05:50 advantages. Les turned one paper route into nine through relentless execution. A lot of people treat
0:05:55 smaller jobs as stepping stones to bigger ones. They’re never fully present in what they’re doing,
0:06:02 never giving it their all. Les gave 100% of his effort to the work right in front of him all the time,
0:06:08 and that always led to more work and more opportunity. As Charlie Munger said, the best way to get more work
0:06:14 is to do the work right in front of you. And do it well. Les met Dorothy Harlan when they were both
0:06:20 teenagers. They married at 18 and he bought them a small house. They barely had time to unpack. His
0:06:27 reputation as a newspaper salesman had spread beyond Bend. A paper in Eugene, Oregon offered him a district
0:06:32 manager job. The newlyweds packed up and hit the road, living out of motels, while Les traveled his
0:06:38 territory selling subscriptions. They called him a circulation man, someone with an almost supernatural
0:06:43 ability to boost subscription rates wherever he went. Les negotiated a new job with better pay,
0:06:49 but he had one question that revealed how he thought about the world. Who’s my boss? The owner said he’d be
0:06:55 Les’ boss. Simple enough. But within weeks, Les had three different managers giving him contradictory orders,
0:07:00 so he went straight back to the owner and laid out the problem. The owner immediately straightened out
0:07:05 the other two managers. The lesson here is if you don’t know who you’re accountable to, you’re
0:07:10 accountable to everyone, which is the same thing as being accountable to no one. Clear lines of authority
0:07:17 offer clarity and purpose. He was young and talented and perhaps even a bit cocky, but he had pulled
0:07:23 himself up from nothing, outworked almost everyone else, and learned through trial by fire. When Les took
0:07:29 over the paperboy program, he discovered it was hemorrhaging carriers. 20% of carriers quit every month,
0:07:36 so he got creative. First, he obtained lists of every 7th and 8th grader in local schools and recruited them
0:07:43 personally. Then he did something radical for the era. He hired girls. They turned out to be more reliable than
0:07:49 boys. But his real genius was the honor carrier program. Each month, one carrier won based on sales,
0:07:56 service, and bookkeeping. The prize? $25 in their picture in the paper. This was Les’ first real
0:08:02 experiment with incentive design, and he was learning how much they matter. One of my favorite mongerisms is
0:08:07 show me the incentive and I’ll show you the outcome. If you reward the behavior you want, you’ll get more
0:08:13 of it. The lesson here connects directly to building any organization. Les understood that unclear reporting
0:08:20 structures create chaos. Everyone thinks they’re in charge, so no one really is. He also grasps something
0:08:26 most managers miss. Recognition often matters more than money. That honor carrier program cost $25 a month,
0:08:32 but transformed retention. These weren’t just newspaper tactics. They were blueprints for building
0:08:38 a multi-billion dollar business. At 33, Les Schwab was consumed by a single ambition: to own his own
0:08:44 business, to be in control of his destiny. The newspaper world suddenly felt too small. He joined
0:08:50 every business club he could find, the Jaycees, Toastmasters, Chamber of Converse, anything that smells like
0:08:57 business. He was terrified of getting old, of falling into a rut that he’d never escape. And then he saw
0:09:04 it: a tire shop for sale in Prineville, Oregon. Les knew nothing about tires, but he did know sales, and
0:09:09 he figured that was what mattered. His brother-in-law offered to partner with him, then got cold feet,
0:09:14 and backed out. Racked with guilt, he came back and offered to fund Les, but no partnership. Les would
0:09:22 be on his own. The shop was an okay rubber welder’s franchise: new tires, retreads, flat repairs, hard,
0:09:29 dirty, manual work. In order to purchase it, he’d need to go all in on himself, and sell his house,
0:09:34 and borrow against his life insurance, and borrow from his brother-in-law. Les scraped together money
0:09:39 from every corner of his life. Everything he’d built, everything he’d saved, it went into this one bet.
0:09:46 On January 1st, 1952, at 34 years old, Les Schwab walked into his tire shop as the new owner.
0:09:53 It was a leaky 1,400 square foot shed with no running water and no indoor plumbing. It had one employee.
0:09:57 The annual sales for the year before were $32,000.
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0:11:14 Sign up for free at Basecamp.com. While Les knew nothing about tires, he knew a lot about selling and
0:11:20 being able to outwork other people. His first taste of real business, one he owned and controlled,
0:11:28 was about to begin. On his first day, a customer walked in wanting two six-ply tires mounted. Les got
0:11:34 right to work. There was just one problem. He had no idea what he was doing. He’d always taken flats to
0:11:41 a service station, and now he was the service station. Using hand tools on a cold concrete floor,
0:11:47 he made a complete mess of it until his lone employee arrived and saved him. That first month,
0:11:54 Les did $2,800 in sales, about what the previous owner had done. But by June, something had shifted.
0:12:03 Sales hit $10,000 a month. By year’s end, he’d done $150,000 in revenue, five times what the previous
0:12:09 owner managed. Growth created the best kind of problem. He needed help. Les appointed himself
0:12:15 outside salesman and told his one employee to hire someone. The new hire was, to put it charitably,
0:12:21 no good, so he fired him. Then something interesting happened. A man named Frank Kennedy walked in off
0:12:27 the street asking for work. He and his wife had just moved to Prineville. He was looking around town
0:12:33 and decided he wanted to work for Les. Les checked his references. Frank took to the work like he was born
0:12:38 for it. This became a pattern. The right people kept showing up, drawn to something they couldn’t
0:12:43 quite name but could feel. Les was creating gravitational pull for good, hardworking people.
0:12:48 Good people can sense when something real is being built. It’s the same energy a lot of people feel at
0:12:55 startups today. But Les was learning just how rigged the tire business was. The major rubber companies had
0:13:01 what Les called phony pricing. A truck tire might cost him $100 wholesale but he’d visit competitors
0:13:08 and find them selling that same tire for $90. He’d call his supplier furious. They’d say for that deal
0:13:14 we’ll sell it to you for $90 and give you a 5% commission. It was such a shell game. Months of paperwork
0:13:22 and bookkeeping, floating expenses all to arrive at the same 5% margin every dealer got. The entire system was
0:13:27 designed to prevent real competition. Les wrote down his philosophy in a fury of anger.
0:13:33 Never take advantage of a customer. Never take advantage of an employee. But take all the advantage
0:13:37 you possibly can of the rubber company because they are not being fair and honest.
0:13:44 The constraints forced him to innovate. Big dealers had fleets of $6,000 service trucks
0:13:50 visiting commercial accounts. Les had one store and no capital for trucks. So he flipped the model.
0:13:55 He put an ad in the paper with a simple message. You know the wholesale prices the big guys get.
0:14:01 Come to my shop and I’ll give them to you directly. No middlemen. His competitors visited customers once
0:14:06 a week. Les was at his store six days a week. A permanent fixture. Best service, best prices,
0:14:12 but you had to come to him. It was asymmetric warfare. He had low overhead. It was a simple
0:14:19 value proposition and it worked. People came in droves. What fascinates me here is how constraints can
0:14:25 become advantages. Les couldn’t afford to play by industry rules so he invented new ones. He couldn’t
0:14:31 compete on the suppliers terms so he competed on transparency. He couldn’t go to customers directly
0:14:37 so he gave them a reason to come to him. The lesson isn’t that you need resources to win. It’s that you
0:14:43 need to see the game differently than everyone else is playing it. Les was ready to expand. The nearby town
0:14:50 of Redmond needed a tire store. He bought land, put up a building, invested $10,000 total. Now he had two
0:14:56 stores. Both okay rubber franchises. But there was a problem. He’d bitten off more than he could chew.
0:15:03 Running between the two stores was killing him. So Les made his star employee Frank Kennedy a win-win deal
0:15:09 that would become the foundation of his empire. Here’s how it worked. Frank would manage the Redmond
0:15:16 store. He’d pay Les $200 monthly rent and take $400 salary. After that, they’d split all profits 50-50.
0:15:23 But here’s the genius part. Frank had to leave his share of the profits in the business until his stake
0:15:29 equaled Les’ initial investment. That was real skin in the game. Sit with that for a second.
0:15:34 Frank had zero upfront risk. Les put up all the capital. But every day Frank ran the store well,
0:15:41 he owned more of it. The better he performed, the faster he’d build equity. It was his store in every
0:15:48 way that mattered, except Les kept half the upside. Les even added another twist. If Frank wanted a raise,
0:15:53 he could give himself one. But the store’s rent would increase by the same amount, giving Les a raise too.
0:16:00 A self-balancing system. People thought Les was crazy. Why give away half your profits?
0:16:07 Les saw it differently. If I share half the profits, I still have half. And if Frank makes more money,
0:16:11 he’ll work harder to make the store more successful. And if the store is more successful,
0:16:17 my half is worth more than the whole used to be. It was pure math. But it was also more than math.
0:16:21 It was an understanding of human nature. Les remembered running his paper route on foot
0:16:26 because he couldn’t afford a bike. He remembered how the honor carrier program had motivated those
0:16:32 kids. He knew what it felt like to want something to be yours. The Redmond store turned profitable
0:16:38 immediately. Frank ran it like he owned it because increasingly, he did. The arrangement with Frank
0:16:45 became the template. Every Les Schwab store would follow this model. Every manager would be a partner,
0:16:50 not an employee. This is one of the most elegant business solutions I’ve seen.
0:16:54 Les solved multiple problems at once. He couldn’t manage multiple locations himself,
0:17:00 so he needed to retain talent. And he needed managers to think long-term. The solution aligned
0:17:07 everyone’s interests perfectly. Frank couldn’t get rich without making Les rich. Les couldn’t expand
0:17:14 without making Frank rich. Les stumbled onto his next innovation by accident. His Prineville store
0:17:19 was bursting. Retreading equipment and tires cluttered every square inch of the sales floor.
0:17:25 They were working in what amounted to a filthy garage. By now he had two stores. Les saw the problem
0:17:31 differently. Why should customers shop in a dirty garage? Why not separate the dirty work from the selling?
0:17:36 He bought a small carpenter shop nearby and moved all the retreading equipment there. Suddenly,
0:17:42 his stores looked like actual stores. Places where people might want to shop, not just get their tires
0:17:47 fixed. With retreading centralized, he could exploit the economies of scale. One set of equipment,
0:17:51 serving multiple stores. The savings would compound as he grew.
0:17:59 Time for store number three. Les set his sights on Bend, his old hometown. But there was a problem.
0:18:06 Bend already had an OK Rubber Welders franchise. This should have stopped him. Franchise territories are
0:18:12 kind of sacred. But Les had learned there’s always a deal if you’re creative enough. He pitched the OK
0:18:19 district manager something unprecedented. What if Bend had two OK stores and he’d pay royalties to the existing
0:18:26 operator and run a second location? The manager, probably thinking Les was crazy, agree. And it was
0:18:31 messy from the start. The two stores managers couldn’t get along. Les’s managers quit, leaving him with an
0:18:38 empty building and a lease. At this point, most people would have admitted it was a mistake and moved on.
0:18:44 Les, however, was not most people. He’d been planning to start his own brand anyway. He’d already been
0:18:51 advertising as Les Schwab OK Rubber Welders to get his name out there. Now seemed like a perfect time to
0:18:57 cut loose. When he told OK Rubber Welders he was going independent, they said he couldn’t do that.
0:19:04 Let’s not argue, Les replied. I just wanted to be open about it. He needed a name. Tire Center was too
0:19:09 generic. Tire Service Center wasn’t much better. He was thinking bigger than one store. He settled on
0:19:16 Les Schwab Tire Center, with his name initially in smaller print. Then something interesting happened.
0:19:22 Customers started asking for Les Schwab Tires, not Goodyear, not Firestone, Les Schwab. What strikes me
0:19:29 here is how Les bounced every time he hit a wall. No space? Centralized operations. Franchise territory
0:19:34 taken? Create a new model. Manager quits? Perfect time to go independent. But the real insight was
0:19:40 discovering that customers trusted him more than they trusted the tire brands. In a commodity business,
0:19:47 the seller’s reputation matters a lot. Store number four came from an unusual source. Gordon Pryday
0:19:52 worked at the Prineville store and every morning he’d walk in with the same greeting. When are we going to
0:19:57 open in Madras? Not good morning, not house business. When are we going to open in Madras?
0:20:03 Madras was another small Oregon town. Gordon saw opportunity there and wouldn’t let it go. Problem
0:20:10 was, Madras already had an OK Rubber franchise. Les figured if he was already fighting OK Rubber in
0:20:15 Bend, he might as well make it a proper war. He drove to Madras and found a bankrupt fruit stand for sale.
0:20:22 $10,000 got him the building and the land next door. The fruit stand had a small apartment in the back.
0:20:27 Gordon moved his family in immediately. Let that sink in. This man believed so strongly in the
0:20:32 opportunity that he moved his wife and kids to the back of a converted fruit stand. The family kitchen
0:20:37 table sat steps away from the tire racks. When customers left for the day, Gordon was still there.
0:20:43 When they arrived in the morning, he was already there. This wasn’t a job, it was a mission, and it existed
0:20:49 because of the profit sharing deal. Gordon knew that every tire he sold was building his own wealth.
0:20:56 Les and Gordon ran the numbers. They’d break even at $2,000 a month, make a small profit at $25, and do
0:21:03 pretty well at $3,000. In year one, they broke even exactly. In year two, $800 profit, split 50/50.
0:21:08 And here’s the punchline. Another tire dealer opened in Madras around the same time.
0:21:15 Shiny new building, proper equipment, all the advantages that Gordon lacked. That competitor
0:21:20 went out of business in two years. This story captures something profound about ownership
0:21:25 versus employment. The competitor had every advantage except the one that mattered, skin in the game.
0:21:32 Gordon Pryday wasn’t just managing a store, he was building his family’s future. That’s what real
0:21:36 incentive alignment creates. People who live in the back of a fruit stand because they’re not working
0:21:41 for you, they’re working with you. They’re not building your dream, they’re building their dream
0:21:48 with you. But Les had a problem. He was running OK rubber welder stores in Prineville and Redmond,
0:21:54 but Les Schwab tire centers in Bend and Madras. Two different brands, one owner. It was confusing for
0:22:01 customers and open rebellion against his franchise agreement. The corporate brass at OK had seen
0:22:06 enough. Five executives flew from headquarters to confront Les in a Redmond motel room.
0:22:10 “We’ve come for your answer,” they said. “Get out of Bend and Madras or else.”
0:22:16 Les had been losing sleep over this moment for weeks. He paced the floor at night,
0:22:22 terrified they’d seize his equipment and destroy him. The timing couldn’t be worse. His largest customer
0:22:29 was behind on payments that equaled his entire net worth. If that customer went bankrupt and OK seized
0:22:35 his equipment, he’d lose everything. But sitting in that motel room facing five corporate executives,
0:22:41 something snapped. “I don’t want any more harassment from you people,” said Les. “If you have anything more to
0:22:49 say, say it in court.” And then he walked out. It was pure bluff. Les had no money for lawyers. No case
0:22:56 to make. For months afterwards, he lived in terror that the lawsuit would end everything. The lawsuit
0:23:04 never came. Years later, Les figured out why. OK had 1100 franchises nationwide. If they sued him and lost,
0:23:10 it could set a precedent that would unravel their entire system. They couldn’t risk it. By standing up to
0:23:15 them, he’d accidentally found their weakness. They needed the franchise system more than they needed
0:23:22 to crush one rebellious dealer in Oregon. Now, Les moved fast. He repainted all four stores with Les
0:23:30 Schwab Tire Center, prominently displayed. One brand, one identity, one vision. The franchise rebellion
0:23:37 was over. Les was free. This moment reveals something crucial about negotiations and power. Les had no leverage
0:23:44 except for one thing: the cost of being wrong. They could crush him, but if they failed, they create a
0:23:50 precedent that threatened their entire business model. Sometimes your only power is making the consequences
0:23:56 of attacking you too expensive for your opponent to risk. Les won not through strength, but by understanding
0:24:03 what the other side feared losing. He saw the whole board, not just his own pieces. During the chaos of
0:24:08 growth and franchise battles, Les would escape with Dorothy on long drives. These weren’t romantic
0:24:13 getaways. They were strategy sessions. “I’m going to build a small warehouse,” he told
0:24:18 her one evening on the Columbia River Highway. “Move my bookkeeper out there, buy the tires myself,
0:24:24 do the advertising, price the tires, handle the books, maybe build six, seven, or eight stores someday.”
0:24:30 He could see it all mapped out. A central operation supporting a network of profit-sharing stores.
0:24:37 Each manager thinking like an owner because they were an owner. He’d need scale to buy tires at volume
0:24:43 discounts. He knew advertising. He knew promotion. Most importantly, he knew how to align incentives.
0:24:52 Six, seven, maybe eight stores. That seemed wildly ambitious in 1956. He would go on to build 410 before he died.
0:24:59 By the time Les had seven stores, a new problem emerged. The stores were growing. What started as
0:25:06 one manager and a helper had become teams of four, five, six people. Les wanted to extend profit-sharing
0:25:12 deeper into each store. His solution was elegant. Managers would appoint their best person as assistant
0:25:20 manager. That person would get 10% of profits. 5% from Les, 5% from the manager. The split would go from
0:25:27 50-50 to 45-45-10. The assistant manager would build equity in the store. When a new location opened,
0:25:33 they’d become the manager there, taking their accumulated profits with them. It was a self-replicating system.
0:25:39 Every store would create its own successor. The managers hated it. They didn’t want to lose the 5%.
0:25:45 This threatened Les’ entire growth model. Without succession planning, expansion would stall.
0:25:51 So Les wrote one of the most remarkable memos in business history. He said this,
0:25:56 “If a bright, young, ambitious man joins our company and wants to make our company his career,
0:26:02 does he do it because he likes Norm or Gordy or Bob? Do you men think that some little fairy sent
0:26:09 you this man just to help you build your bonus? This man is going to work for low pay year after year,
0:26:16 just so you can build your profit share into a nice, fat nest egg? No, I don’t think so.
0:26:21 This man didn’t join the company because of the store manager’s future. This man joined the company
0:26:28 because of his future with Les Schwab Tire Centers, not in you personally. If you men block this man,
0:26:34 you are being selfish. Two of the seven managers appointed assistants, and then Les dropped the
0:26:42 hammer. Effective immediately, all manager shares dropped from 50 to 45%. If they appointed an assistant,
0:26:50 that person got 10%. If they didn’t, the company kept the extra 5%. Suddenly, every store had an assistant
0:26:57 manager. And the growth engine roared back to life. This is leadership at its finest. Les understood
0:27:02 something that his managers didn’t. Their wealth came from the system he created, not just their
0:27:07 individual contributions. When they hoarded opportunity, they violated the very principle that
0:27:13 made them successful. His memo didn’t just shame them, it reminded them of their moral obligation to
0:27:18 pay forward what they’d received. But when moral arguments failed, he used economics.
0:27:25 The beauty is that once forced to share, the managers discovered what Les already knew. Developing
0:27:32 your successor makes you more valuable, not less. Coming up, the moment Les discovered he wasn’t really
0:27:39 in the tire business at all. That single insight let him charge premium prices in a commodity market
0:27:46 and made his employees run, literally run, to serve customers. If you think you know what business
0:27:52 you’re in, the next part will make you question everything.
0:27:58 Les had solved his incentive problem. Now he turned to something bigger, reimagining what a tire store
0:28:04 could be. It was 1956. On a weekend drive, Les found himself studying grocery stores.
0:28:10 Customers wandered the aisles, they compared prices, they made informed decisions. Then he’d pass a tire
0:28:14 shop, same cramped waiting room, same dealer disappearing into the back to fetch whatever
0:28:21 tire he felt like selling. What if Les wondered aloud, we displayed tires like Safeway displayed groceries?
0:28:28 Think about how radical this was. Tires were ugly industrial products. Heavy, dirty, technical. Every
0:28:32 dealer hid them in the back of the warehouse. Why would customers want to see them?
0:28:38 But Les thought differently. People buy what they can see and what they can understand.
0:28:44 He started converting his stores into supermarket tire centers. Massive showrooms, hundreds of tires on
0:28:51 display, organized by type and size. Clear pricing, educational materials. Let the customer browse,
0:28:57 let them compare, let them touch, let them choose. When he opened the next store, Les centered a company
0:29:03 memo that read like a declaration of war. This I vow, we’re going to have a supermarket tire store in
0:29:09 every town that we have a Les Schwab tire center. I hate to use threats. It’s against my policy entirely,
0:29:15 but you can visualize what is going to happen in your town if you don’t run a supermarket tire store,
0:29:21 because I’m going to have it regardless of cost. I sincerely hope I have made myself very clear. I
0:29:27 love you, but I love a supermarket tire store even more. But displaying tires wasn’t enough. They were
0:29:33 ugly. They had to be spotless. They had to be beautiful. Les would visit stores constantly looking for
0:29:40 the ideal place a person would want to buy tires. The winners were always the cleanest. Tires waxed and
0:29:46 gleaming everything in its place. He became obsessed with the details of tire presentation. He found the
0:29:52 perfect spray paint and lacquer to make tires look their best. He sent another memo to everyone telling
0:29:58 every manager exactly what brand to buy and where to get it. This is 40 years before Steve Jobs would
0:30:03 obsess over every detail of the Apple store. Les Schwab was applying the same thinking
0:30:09 to truck tires. The results were immediate. Customers spent more time browsing, they asked better
0:30:15 questions, and they bought more tires. More importantly, they trusted what they could see.
0:30:22 In the 1960s, Les made a decision that would have seemed insane to other dealers. He took down every tire
0:30:28 manufacturer sign from his stores. His sign maker asked what design you wanted for the new signs. Les looked
0:30:34 around and pointed to a standard oil station. Put Les Schwab where they have standard and put tires where
0:30:42 they have the Chevron logo. Done. With that simple instruction, Les became the first major tire dealer
0:30:49 in America to build his business around his own name instead of a manufacturer’s brand. No more Goodyear
0:30:56 signs. No more Firestone banners. Just Les Schwab. He was betting everything on one idea. People would buy tires,
0:31:02 not because of who made them, but because of who sold them. We don’t have the blimp flying around
0:31:06 like Goodyear, he’d later joke, but we’ve got something better. The Les Schwab sign. And in the
0:31:12 Northwest, that’s more powerful than the blimp. The timing was perfect. Foreign tire manufacturers were
0:31:18 flooding into America. The market was oversupplied. For the first time since World War II, the big American
0:31:25 tire companies had lost their stranglehold on pricing. Les embraced the chaos. I was so disgusted with the tire
0:31:30 suppliers that I was willing to do most anything to help my company survive, he wrote. I decided to
0:31:36 take down all rubber company signs, to go straight independent, to buy tires like Safeway buys groceries,
0:31:43 to buy the best possible tire, good quality, and at the lowest possible price. Most dealers at the time
0:31:48 stayed loyal to one manufacturer. They’d get a good deal on one brand, but that’s all they could offer.
0:31:55 Les bought from everyone. Japanese manufacturers, European imports, anyone who made quality tires at the right
0:32:01 price. His scale gave him leverage. Like Costco, decades later, he bought in massive quantities and
0:32:06 passed the savings on to customers. Here’s how it worked. Les always had one line of tires priced to
0:32:12 match his lowest competitor. But then he’d have three, four, or five other options at different price
0:32:18 points, all displayed beautifully in his spotless showroom. Customers had no reason to shop anywhere else.
0:32:24 He had the best prices, he had the best selection, and he had the best service. The tire manufacturers had
0:32:30 lost control of their own market. This move reveals a profound insight about branding and power. Schwab
0:32:36 understood that in a commodity business, the relationship with the customer matters more than the product.
0:32:43 By removing manufacturer signs, he wasn’t just changing decor. He was asserting ownership of the customer
0:32:50 relationship. The tire companies became his suppliers, not his partners. It’s the same playbook that Amazon
0:32:56 would later use with book publishers or that Walmart used with consumer goods companies. Control the
0:33:04 relationship and you control the business. By 1965, Les had 15 stores scattered across Oregon and Idaho.
0:33:10 He faced the classic scaling problem. How do you maintain quality when you can’t visit every store
0:33:16 every week? His solution was elegant. He promoted his best store managers to become zone managers. But
0:33:22 here’s the twist. They kept running their own stores while overseeing others nearby. No extra salary,
0:33:27 no corner office, just results-based pay. Think about those incentives for a second. If your zone thrived,
0:33:31 everyone made money. If it struggled, your own store suffered because you were spending time away from
0:33:37 it fixing other people’s problems. It was kind of self-regulating brilliance. Bad zone managers would
0:33:43 naturally step back to focus on their own struggling stores. Good ones would lift every store around them
0:33:47 and share in the profits. Zone meetings became the company’s heartbeat. This is where they picked
0:33:54 managers for new stores, debated expansion, shared what worked. Les ran them like board meetings. Every
0:33:59 zone manager had skin in the game. They’d all started changing tires and worked their way up through the
0:34:04 profit-sharing system. When a management position opened, it was like Shark Tank before Shark Tank
0:34:11 existed. Assistant managers would pitch for their shot at running a store. Les and the zone managers would
0:34:17 interrogate them. How much money do you have in your profit-sharing account? What’s your plan? Why should we bet on you?
0:34:22 The person with the most skin in the game usually won, but not always. But it was never the smoothest
0:34:29 talker. This structure solved multiple problems at once. It created management depth without bureaucracy.
0:34:34 It aligned regional interests with store-level execution. Most importantly, it ensured that
0:34:38 decision-makers had lived the business from the ground up. When you’re picking someone to run a new
0:34:45 store, who better to judge than people who’ve already succeeded at it? Les didn’t need consultants or
0:34:51 personality tests. He had a system that selected for proven operators with their own money on the line.
0:34:57 By 1970, Les had codified his profit-sharing into what he called the 100 story. For every $100 of store
0:35:04 profit, $25 went to the manager, $10 to the assistant manager, $27 to the employee bonus and retirement fund.
0:35:10 The company kept 38%. But here’s the clever part. The company didn’t take its share until the manager
0:35:16 had enough equity to start drawing theirs. That 38% stayed in the store as working capital,
0:35:22 building the manager’s stake. This created wealthy managers through ownership, not salary. By the mid-1970s,
0:35:27 some of the store managers were making over $100,000 annually, more than most corporate executives in
0:35:38 the 1970s. The growth was relentless. Seven stores in 1956, 35 by 1970, over 60 by 75. But the real
0:35:44 brilliance wasn’t the growth rate. It was that each new store made the whole system stronger. The central
0:35:51 warehouse bought in ever larger quantities, crushing competitors on price. Every store created assistant
0:35:57 managers, hungry to run their own locations. And most remarkably, the expansion was self-funded. Managers left
0:36:02 their profits in as working capital. When they moved up to run a new store, they brought their accumulated
0:36:09 wealth as startup capital. Les had built a machine that financed its own growth. This is one of the most elegant
0:36:15 business models I’ve seen. He solved the eternal problem of expansion capital by making his managers into bankers.
0:36:20 They funded growth not because they had to, but because they wanted to. Their equity was
0:36:24 building while it sat there. Meanwhile, the company got interest-free loans from the very people most
0:36:32 motivated to make those stores succeed. Around 1970, Les made another counterintuitive move. Instead of just
0:36:37 building new stores, he started recruiting his competitors. The pitch was simple. Keep your independence,
0:36:44 but join Les Schwab network. Get access to our buying power, our advertising, our system. Buy tires at the
0:36:50 same prices we pay. Think about the elegance of this. Every dealer who joined made Les’s buying power
0:36:56 stronger, which made his prices better, which made more dealers want to join. It was a virtuous circle.
0:37:02 JJ Stamper had been a Goodyear dealer for 40 years, barely scraping by. After joining Les’s network,
0:37:08 he built four stores and hit six million in annual sales. Within five years, 60 independent dealers had
0:37:14 joined. They added 50 million in annual sales without Les investing a dollar in real estate or inventory.
0:37:20 He turned competitors into allies. His gravity alone was enough. This is network effects before
0:37:26 anyone called them that. Les understood that in a commodity business, scale is everything. Every
0:37:31 dealer who joined made it more attractive for the next dealer to join. Sometimes the best way to beat
0:37:37 competitors is to actually make them partners. As Les’ empire scattered across multiple states,
0:37:42 he faced a new problem. How do you maintain personal relationships when managers are hundreds of miles
0:37:49 apart? His solution raised eyebrows. He bought airplanes, first a Cessna, then a Piper,
0:37:54 then eventually a Citation. Les initially resisted, but he realized planes were tools that collapse
0:38:00 geography. He could visit five stores a day, attend zone meetings, look managers in the eye instead of
0:38:06 managing through reports. The planes make all of our stores just one hour away, he said. For a
0:38:13 company built on relationships, that proximity was everything. By 1975, Les Schwab had over 60
0:38:20 company stores plus 60 member dealers. Revenue exceeded 130 million. The investment banker started
0:38:27 circling. Private equity firms made offers. The numbers were astronomical, enough to make Les one of the
0:38:32 wealthiest men in America. But he turned them all down. What would I do with the money? He’d ask. What
0:38:37 good is money beyond a certain point? But it went deeper than that. Les knew exactly what would happen
0:38:42 if he sold. Some MBA would look at his profit sharing system and ask the obvious question: Why do store
0:38:49 managers make more than executives? Les had an answer they’d never understand. That’s exactly why we’re so
0:38:54 successful. We think the most important people in the company are the people on the firing line, he wrote.
0:39:00 The ones who sell, do the service work, and take care of the customer. Most American corporations have
0:39:07 fat salaries for the top people and treat the people at the end of the line as peons. I guess that is why,
0:39:13 if you’re on the ball, you can beat them. Any buyer would try to fix his inverted hierarchy. They’d cut
0:39:18 profit sharing to boost margins. They’d pay executives more than store managers. And they’d destroy
0:39:24 everything that made Les Schwab work. The results validated his approach. In an industry notorious for
0:39:31 low margins and high turnover, Les Schwab stores outperformed competitors by 30 to 50 percent. Manager
0:39:38 turnover was virtually zero. Customer loyalty was legendary. Most telling was by 1975, Les Schwab
0:39:44 dominated the Pacific Northwest without acquiring a single competitor. Every store was built from
0:39:51 scratch or recruited as a member dealer. They’d won through performance alone, not financial engineering.
0:39:57 Les understood something that money can’t buy. The real money is in the people and the system he created.
0:40:01 Selling would have made him rich, but it would have destroyed thousands of careers built on his
0:40:08 profit sharing model. He chose legacy over liquidity. In an era of quick flips and financial engineering,
0:40:14 Les proved that sometimes the most valuable asset you can build is the one you’ll never sell. The irony is,
0:40:19 by refusing to cash out, he built something worth far more than any buyer was offering.
0:40:25 By 1975, Les was approaching 60. His model was proven. But in business,
0:40:31 there’s no such thing as the status quo. The giants were coming. Big box retailers looked at tires and
0:40:38 saw opportunity. It seemed perfect for their model. It’s a simple commodity product with a huge market.
0:40:44 It’s ripe for customer disruption through bigger scale. They had deep pockets. They had massive stores and
0:40:50 supply chains that had already crushed local hardware stores and grocers. The big retailers bought tires by
0:40:57 the train load and sold them cheap. But they treated tires like toilet paper, stacked them high, priced them low,
0:41:03 and watched them fly off the shelves. They had no service departments worth mentioning. Most failed miserably.
0:41:09 Fred Meyer was typical. They had opened 16 tire departments across their stores and within two years,
0:41:14 they were hemorrhaging money. So they approached Les with a proposition. Would he take over six of their
0:41:19 freestanding tire centers? Les took over five of them. And within a year, he had tripled the business Fred
0:41:26 Meyer had been doing. Here’s what’s remarkable. He was selling the exact same tires at higher prices.
0:41:32 It’s worth asking, how is this possible? Les understood something the big retailers missed.
0:41:37 He said this, “People don’t buy tires on price. They buy from someone they trust and from someone who will
0:41:43 smile and from someone who will give service and stand behind what they sell.” Fred Meyer thought they
0:41:49 were in the tire business. But Les knew he was in the trust business. When your car starts shaking at 70
0:41:55 miles an hour, you don’t want the lowest bidder. You want someone who will make it right. Big retailers had
0:42:01 every structural advantage. Scale, capital, real estate, supply chain, sophistication. But they were
0:42:07 optimizing for the wrong thing. They thought customers wanted cheap tires when what they really wanted was
0:42:13 to never worry about their tires. Les could charge premium prices because he wasn’t selling rubber.
0:42:20 He was selling peace of mind. The early 1980s tested whether the Les Schwab tire empire could survive
0:42:25 without Les Schwab. First, company president Don Miller suffered a heart attack. Les, who’d been
0:42:31 stepping back from daily operations, returned to run the company while Miller recovered. Then on August 1st,
0:42:39 1983, Les himself suffered a massive heart attack, open heart surgery, a week in intensive care, and a long
0:42:45 uncertain recovery. While Les was still hospitalized, Don Miller dropped a bombshell at the annual managers
0:42:52 meeting. He was retiring. The timing stunned everyone. The company faced a double crisis. Its founder
0:42:59 incapacitated while its president was departing. From this chaos emerged Phil Wick, who’d started at the
0:43:04 bottom and worked his way up like everyone else at Les Schwab. He’d become president proving the
0:43:10 succession system worked even under the worst circumstances. By 1985, Les had recovered and the
0:43:16 company was positioned perfectly for the industry upheaval ahead. The tire manufacturing giants were
0:43:22 consolidating or failing. Foreign competitors like Toyo were flooding in. While other dealers picked sides,
0:43:28 Les bought from everyone. He’d built a massive warehouse in Prineville, the town where it all started.
0:43:35 325,000 square feet of pure buying power. This let him offer customers the best tire for their specific
0:43:42 needs, regardless of who manufactured it. People kept asking Les why he didn’t create his own Les Schwab
0:43:47 tire. He had the scale. He had the reputation. He had the capital. He had the know-how. It seemed like
0:43:53 the obvious move. And Les had thought about it deeply and decided against it. His reasoning was brilliant.
0:43:58 If we have a problem with the tire, we drop the tire, pick up another one, and continue to swim.
0:44:03 If he made Les Schwab tires and they had a defect, he couldn’t just drop the line. He’d have to defend
0:44:09 it, recall it, manage the crisis. His people would have conflicts selling “Do I sell the Les Schwab tire,
0:44:14 or do I sell the Goodyear tire?” instead of “What is best for the customer?” By staying independent,
0:44:20 he could always pivot to whatever served customers best. It’s tempting to put your name on everything
0:44:26 once you’re successful. But Les understood, by not making tires, he could always offer customers the
0:44:33 best option without defending a bad product. In the long run, what is best for the customer is best for the
0:44:39 company? The 1990s brought new threats. Costco started selling tires. Online retailers emerged.
0:44:45 Industry experts predicted Les Schwab’s high-touch model was doomed. It was too expensive, too slow,
0:44:52 too old-fashioned for the digital age. The opposite happened, though. As competitors automated everything
0:44:58 and removed human interaction, the Les Schwab experience became more valuable, not less. Customers who could
0:45:03 buy tires online still drove to the Les Schwab store. They wanted someone to run out and greet them. They
0:45:08 wanted experts who knew their name. They wanted the peace of mind that comes from dealing with a person
0:45:14 they knew and trusted. The company’s decades of investing in people had created a moat that no
0:45:21 amount of technology could cross. The numbers by the late 1990s were staggering. Revenue approached $700
0:45:30 million. The employee trust fund hit $332 million, averaging over $65,000 per employee. Store managers
0:45:37 were earning over $200,000 annually, proving Les’ belief that the people closest to the customer should
0:45:42 make the most money. At 80 years old, Les began stepping back. He’d built something unprecedented: a
0:45:48 billion-dollar company where thousands of employees had become wealthy alongside him. From a leaky shed in
0:45:54 Prineville to over 400 stores across seven states, all maintaining the culture he’d established
0:46:01 in the 1950s. By 2000, annual sales crossed $1 billion. But the real measure of success
0:46:07 wasn’t in the revenue. It was in the thousands of families across the West who’d built middle-class
0:46:14 lives and genuine wealth through the Les Schwab model. I can imagine Les saying something along the
0:46:19 lines of if people knew how profitable it was to pay your people well, everyone would do it.
0:46:25 What fascinates me here is how weakness became strength. Everyone thought personal service would
0:46:31 become obsolete in the digital age. Instead, it became more valuable precisely because it was rare.
0:46:38 While competitors raced to eliminate employees, Les doubled down on his people-first bottle. Les Schwab
0:46:44 gave away 50 percent of his profits and became richer than if he’d kept 100 percent. By the time
0:46:50 he died, Les Schwab Tire Centers was distributing over half of all profits directly to employees.
0:46:58 The employees’ trust held $332 million. Store managers routinely made $200,000 a year and many
0:47:06 retired as millionaires. Meanwhile, Les paid himself $32,000 a year. Charlie Munger studied Les Schwab’s success
0:47:10 and reached a simple conclusion. He must have harnessed the superpower of incentives.
0:47:15 He must have a very clever incentive structure, driving his people, and he must be pretty good at
0:47:21 advertising, which he is. He’s an artist. But here’s what I think Munger was getting at:
0:47:26 Les didn’t just design a clever incentive system. He designed a system that acknowledged how humans
0:47:34 actually work. Give people real ownership, not promises. Share profits monthly, not maybe someday. Promote from
0:47:41 within, not from above. When Les died in 2007 at age 89, Oregon’s governor ordered flags flown at
0:47:47 half-staff. Think about that: a tire shop owner received the same honor as a fallen soldier or
0:47:54 president. 13 years later, when the family finally sold, the market value of Les Schwab’s creation was
0:48:00 over $3 billion. Not proprietary technology, not for executive products, for a culture that turned tire
0:48:07 changers into millionaires. The tools haven’t changed since 1952. Trust, incentives, and the radical belief
0:48:12 that ordinary people can build extraordinary things when you align their interests with yours.
0:48:17 Les Schwab asked himself a simple question: What would happen if I treated my employees like partners
0:48:22 instead of expenses? $3 billion later, we have our answer.
0:48:29 Wow, what a force. Les was incredible. He’s somebody we can learn a lot from. I haven’t picked up this
0:48:35 book in probably a decade or so, and just flipping through it, I was reminded of all my old highlights,
0:48:39 which are available for members and our learning community. You can read through what I highlighted,
0:48:45 but reading all my old highlights, it was interesting to me how some of the things that I didn’t highlight,
0:48:49 I highlighted this time and some of the things that I highlighted last time didn’t make as much sense,
0:48:55 but there’s so much business wisdom in this book and there’s no nonsense approach. I really loved reading
0:49:00 this again. I want to mention a few of the quotes that I highlighted that didn’t make it into the episode
0:49:06 that I loved. So one on open books, he said, “We have no secrets in our company. We have no secrets as
0:49:12 to where you stand on your profit share arrangements as we put out a P&L every month showing you exactly
0:49:18 where you stand.” On frontline workers, he said this, “Too many corporations think the brains are in the
0:49:23 main office and all the bonus money is paid to four or five high people. All the others are peons and
0:49:28 just numbers if you have a union that really makes them a number. The truth is that success is at the
0:49:34 other end. The office merely keeps their records and tells them how they are doing. The real job for office
0:49:39 people is to provide motivation, to create programs that make it possible for them to be successful,
0:49:45 to be fair, to be open, to have a really open communication, to have no secrets, and to support
0:49:51 them.” This, he went on to say, is an unusual way to run a business, but more businesses would be
0:49:56 successful if they gave more attention to the people on the front lines. Part of that quote made it into
0:50:01 the episode, but I wanted you to get the full context of that one. So on going public, he said this,
0:50:06 “When we had 12 or 13 stores, I thought a lot about going public, partly to raise money,
0:50:11 and partly to expand faster. I had the chance to buy a small public company that was nearly
0:50:16 bankrupt. It would have been an easy way to go public. I’m so glad I resisted the urge to have
0:50:21 our stock on the market. I don’t want a few investors around the country club asking about
0:50:26 our business and questioning some of our decisions.” I thought that was really interesting. That reminded
0:50:31 me a lot of John Bragg and what he said in the episode and the Jimmy Pattison outliers episode.
0:50:35 And Jimmy Pattison sort of had the reverse experience where he was public. His shares
0:50:40 got up to $42 and then down to as low as 85 cents. And he ended up buying them out.
0:50:45 on what less tells managers when they’re coming in. The big thing that I think is going to hit
0:50:50 you right between the eyes is that we expect you to run the store. You are on your own and you will sink
0:50:58 or swim according to your abilities. It takes quite a man to be a store manager. I’ve always said because
0:51:03 you must have great manager abilities, sales manager abilities, service manager abilities, and above all,
0:51:09 just plain old management ability. And finally, on not being complacent. He said this, “We have great
0:51:16 people and they do a great job, but we must constantly remind ourselves as to just why we are so successful
0:51:22 and what we must do to continue to be successful. Because if we become complacent, it’s all over with.”
0:51:28 All right, let’s talk about some of the lessons you can take away from Les Schwab. I have
0:51:32 countless lessons from the book, but I’m going to talk about eight here that I want to highlight for you.
0:51:39 And the first is win-win. The math of generosity. Les discovered that splitting profits 50-50 with store managers
0:51:45 didn’t cut his wealth in half. It multiplied it. His reasoning was pure math. If I share half the profits,
0:51:52 I still have half. And if Frank makes more money, he’ll work harder to make the store more successful.
0:51:58 And if the store is more successful, my half is worth more than my whole used to be. He gave away billions
0:52:01 to make billions more. You get rich by making others rich.
0:52:07 Number two, skin in the game. Make them owners, not employees. Les didn’t just share profits. He made
0:52:14 managers earn their ownership with real money. The deal. Manage the store, take your salary,
0:52:20 and get 50% of profits. But there’s a catch. You can’t withdraw your profit share until it equals the
0:52:26 initial investment. The result? Zero manager turnover. Don’t pay people to care. Make them actual owners
0:52:30 with skin in the game and real money on the line. And they can’t help but care.
0:52:38 3. Think in decades. Act today. Investment bankers offered less astronomical sums to buy his company,
0:52:43 enough to make him one of America’s wealthiest men overnight. He refused every offer. What would I do
0:52:48 with the money, he said? The real answer? Selling would destroy the profit sharing culture that
0:52:54 made thousands of employees wealthy. New owners would fix his inverted pay structure. Les thought in
0:53:01 decades while acting with daily urgency. By 2020, that patience had paid off. The company was sold for
0:53:08 $3 billion. Preserving the culture even after his death. Build something worth keeping, not just worth
0:53:15 selling. 4. All in or all out? At 34, Les sold his house, borrowed against his life insurance, and scraped
0:53:23 together $11,000 to buy a failing tire shop with no running water and no plumbing. He never had changed
0:53:29 a tire. His competitors had decades of experience. But Les had something they didn’t. No backup plan.
0:53:35 That total commitment forced him to figure it out. One year later, he quintupled revenue. Half measures
0:53:42 guarantee half results. 5. High agency. Everything is your job. Les bought his first tire shop,
0:53:47 having never fixed a flat tire in his life. Day one, customer needs tires mounted. Les fumbles with his
0:53:53 hands on the cold floor, making a complete mess of the situation until his employee arrives. He
0:53:59 insisted on being taught, so the situation never repeated. Within a year, sales jumped from $32,150
0:54:06 He treated every problem as his problem, whether he knew the solution or not. Sometimes the only
0:54:13 qualification you need is the willingness to figure it out. 6. Reputation works while you sleep. In the
0:54:19 1960s, Les made a decision that seemed insane. He removed all tire manufacturer signs from his store.
0:54:25 Back then, tire shops were essentially Goodyear or Firestone franchises. The signs meant manufacturer
0:54:32 support and co-op advertising money. Les gave all that up to put his own name on every store. He bet the
0:54:39 customers would buy based on who sold the tires, not who made them. Within a decade, Les Schwab became
0:54:44 more powerful than any manufacturer brand in the Northwest. Your name is either making you money or
0:54:51 costing you money. There’s no neutral. 7. Go positive, go first. Les instituted free flat
0:54:56 tire repairs for anyone, whether you’re a customer or not. Competitors called them crazy. Why would you
0:55:02 fix flats for people who bought tires elsewhere? But Les understood reciprocity. Humans are biologically
0:55:09 wired to return favors, even unearned ones. Those free repairs created a loop. Strangers who owed him
0:55:15 nothing suddenly owed him something. Most businesses wait for the transaction before the service. Consistently
0:55:22 going positive and going first is one of the most powerful forces in the universe. 8. Dark hours.
0:55:27 Every morning before dawn, teenage Les ran his paper route. Not biked, but ran. For two months,
0:55:33 he sprinted through dark streets on foot saving for a bicycle. His classmates were asleep. He was earning.
0:55:40 By senior year, Les owned all nine routes in town. He’d wake up at 4, deliver hundreds of newspapers,
0:55:47 then show up to school. Your competition is asleep from 4 to 7am. That’s three free hours to build your lead.
0:55:54 Thanks for listening and learning with us. And be sure to sign up for my free weekly newsletter at
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