#360 Robert Kierlin: Founder of Fastenal
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Organization succeed to the extent that all of their members pursue a common goal. Everything in this book goes back to that idea. IT goes back to the idea of keeping the main thing, the main thing, and how this is a very simple and powerful idea that's excessively hard to practice over a long time, because IT goes against human nature, is in our nature to drift and complicate things.

And the founder of fascinating, bob carlin, built his entire company building faces around that idea. Keep everybody in your organza pursuing a common goal. And then bob uses this book to defend his ideas, but it's laughter hable that his ideas even need to be defended.

His numbers speak for themselves. How to holds the company selling a commodity product. He says in the book he had no advantage on products. Yet that same company was able to compound all the way to a thirty eight billion dollar cap and is one of the best performing stocks over the last quarter century.

I'm friends with the cofounder and CEO of rap, eric, texting him about this book in this incredible company I was reading in researching this episode, because eric is keeping everyone in his company pursuing a common goal that would make history's greatest founders proud. Rap is building the world's best tool that gives you everything you need to control your span, watch your cost and optimized your financial Operations on a single platform. So this is what I tested to a IT describes why this obsession with cost control, that fascinate, has turned into a massive advantage.

That feels other thing. So he says anyone who claims that expense management for good is not a competitive vantage should pull up a long term chart of final stock Price and see how a company that sells nuts and bolts and keeps cost low somehow been able to eat their competitors lunch for decades. This is this very virtuous fly will that begins with keeping Operating cost and watching costs very low by keeping Operating costs very low, fascines able to pay their employees incrementally higher wages, and that's more effectively develop and retained towns in sales people.

The quality of service and depth of knowledge that the employees have eventually brings in more revenue, which grows the business and allows us to further lower Operating expenses as a revenue, thus allowing for more hiring of top calling employees, which brings in more revenue. This creates a virtuous circle of sorts. I can read that paragraph filter through the three hundred and sixty butterfly of his is great entrepreneurship ad so far for the podcast.

And some, are they even Better? History's greatest founders do that. Watching your cost was the foundation on which other competitive advantages can be built. That is why so many of the founders made cost control and obsession. Rap helps you do the same.

Rap gives you everything you need to control your span, to watch your cost, to optimize your financial Operations on a single platform, start building your competitive advantage by going to rap dot com and sign up, that is, ramp dot com. Since its founding in one nine hundred and sixty seven, fascination has grown from a small fascinate store in the annex ta into a multi billion dollar global organization. The companies known for its exceptional leadership, innovation and success.

Fascinating was the top forming stock in amErica during the course century that began with the market crash of one thousand and eighty seven. How did a small town nuts and bought sharp become on the world's most dynamic growth companies? Whenever asked? Company founder killing attributes fast and success to the company's high quality employees and their commitment to a common goal.

This is something repeat that is his main idea. He repeats most entire book that your company should be organized and oriented around a commitment to a common goal, and this is their common goal growth through customer service. So whenever ask company found a bob killing attributes faster, al success of the companies is high quality employees and their commitment to a common goal growth through customer service, the companies organized in order to serve those forwards, growth through customer service.

Underlying that simple answer is an unshakable belief in people that ordinary individuals can accomplish extraordinary things if given the opportunity. In nineteen ninety seven, killing publishes book in an effort to share the unconventional business practices that stem from this philosophy and fuel fascines success. The ideas presented within these pages flew in the face of the prevAiling business wisdom at the time, and they remain every bit as relevant in chAllenging today.

The original idea was to provide a teaching tool for future generations of fashion, al leaders, but to anyone with the courage to unleash the vast human potential within your business organization, team or group, welcome. That is, an expert from the back, cover the book and talk about today, which is the power of fascinate people, and is written by the founder of fascinating robbert carling. So the way I would describe this book is it's a cold classic.

It's hard to fine, and it's about a compounding machine. I'm going to read from the acknowledgements preface and introduction, all of which are very short. What I love about SHE gets right to the point, and then i'm going to put the book down briefly and give you overview this very unique company.

So I want to give you a little background first on bob carlin. He was the founder. He still life.

He's the, he founded fasten one thousand nine hundred sixty seven and served as the cofounder N. C. O. For thirty five years. So fast cal is going to grow from one one thousand square for location in one hundred and sixty seven to over thirty four hundred stores by two thousand twenty three.

They are doing like seven and a half billion dollars a years in sales, and their market caps are almost forty billion dollars. Before founding the company, bob got a degree in mechanical engineering, and then also in N. B.

A. And so in the acknowledged section, he tells us why he's writing the book and what what this is all about. The content of this book derives from what people have taught me, sometimes in classes, but more often do their example.

My parents were my first teachers. Those that followed in great school, high school and college added to my knowledge, I was privileged to observe good leaders in my early business career. Perhaps I was also privileged to observe some bad ones too.

I learned from them all. And the need to write this book arrives out of these two sentences. I am aware that fascination is a unique organization. Fast inal succeeds because its people succeeded. And so it's very obvious ous you start to read this book.

There's A A lot of buffet and monger ask things in IT and that popped out to me from the very first page because he's he's going to all the people. He had a thing to write the book, but then he says something like this. No need to think any types st.

However, every little character was entered by one of my fingers into a computer at home, one of charlie monger, and warm ove its favor founders is this guy. Leh wap. I've done two episodes on lesh wab rates, this incredible autobiography, which are you going to shore into the point and less starts that book with this sentence.

I did write this one hundred percent with my 4 year old type rider。 I did not have a ghost rider. I wanted IT in my own words.

And so there is going be a lot of things that bob believes in. And Tracy, he has, he's going to share in common with a lot of buff. Among her favor founders, he talks about the fact, hey, you know, this is the updated version, so is like I would to be twenty years ago.

Since then, our sales have actually grown by a factor to, and I think it's hier. But he says that all comes from this basic belief that has provided the fuel for this growth, and its bob's heartfelt belief in people and their ability to great things have given the opportunity. Now think about how crazy this is.

So he first vote wrote this one thousand nine hundred ninety seven. This updated version is printed twenty three years later. So think about all the technological change that has occurred that twenty to be your period.

Although the applications of new technology such as the internet, smartone es, barcode vending and automated stocking have changed the how of industrial distribution, which is their business, okay, it's changed. The technology changed to how they have not changed the way of a distributed success. Success still stems from the ingenuity, risk taking and hard work of people working together as a team.

And he goes back to his willia. He has one ideas where I would say this, we continue to pursue our common goal, and we continue to find ways to bring out and use the potential of our people. I'm not sure why, but when I got to that sentence or that paragraph, rather, we talk and listen.

The technology gona change. Technology that influenced your business may change the how of how you do liver your service, but IT will not change the why. Michael bloomberg, in his autobiography, said something this very interesting. He says a lot of companies mistake their product for the device that delivers IT. Listen to that.

This is from blomberg, the technology that we pioneer in the early one thousand and eighties has long since been ancient history, but we never made the error that so many others have mistaking their product for the device that delivers IT code act out that they were in the camera and film business instead of the photography business. The digital photography revolution passed them by and after more than a century, is one of the most innovative companies in the world. They filed for bankrupcy a bloomberg.

We got out of the business of building physical computers as soon as pcs began taking off. We knew our core product with data in latics, not hardware, do not make the mistake of confusing your product for the device that delivers IT. And then he ends the preface with repeating this main idea.

The first require to have a successful organization, the need to have every member of the organization pursuing a common goal. He already said, with his common goal on the very back, cover growth through customer service. And then he continues about the fact that he was a reluctant author, that he had to be pushed to write this book.

And the reason he did I love, he says, I became more aware that the people principles we practice a fascinating are uncommon, and they're in need of defense. This book has only one purpose to support ideas that don't seem either common or accepted. These ideas come from my experiences in life and are offered to Younger people with the hope that by understanding them here, they can avoid needing years to learn from their own experience.

These examples come mostly for my forty seven years with the the company. What I love about auto, half a century of experience, almost like having to read this book. I hope to listen the podcast, almost like having a one sided conversation with somebody.

Has fifty years of entrepreneur experience fashion. Al is a people centers company, fascinated, has no unique product and no unique process, but IT has some ideas about people. That are at least uncommon, if not unique.

So I want to put the book down briefly. Member, what is the title of the book? The power of people, the power of fascinate people. I want to give you this company overview and a story about the CEO, the succeed Carolan and warn buffer that I think just knowing all this at the very beginning, I think we'll make the ideas that he repeats over an gan, the bob repeat over over gan in the book. Very important.

What's the most important part of personal success that outsiders discovering the company for the first time don't understand? The number one thing is the people aspect. The goal is to unleash entrepreneur passions, a commitment that I will be self driven to do Better than what you can expect.

IT is a mindset. This is what they're telling their employees run your business like you own IT. When you trust people to solve problems and make decisions, you let them and you let them go.

That's where magic happens. That is a story of this company fashion. Al embraces a spirit of radical decentralizing and autonomy. Each of its twenty seven hundred stores Operates as a stand alone business with a clear leader and full p. Nl responsibility.

We grow from the ground up based on the actions and decisions of thousands of people who run their businesses like they own IT. I want those people to stay with us forever. They will never have to stop at a certain level.

You may have to move. You may have to learn a new market category, but there are always the opportunities here. We call ourselves a blue collar sales company when our folks in the stores are doing IT right, customers say, this guy knows my business Better than I do.

We don't care. We went to school. We care what they can't teach in school wisdom savy entrepreneurial.

We want to know our customer's businesses so well, what they spend, how they could be more efficient that they can't imagine doing business with someone else. We are not one giant organization. We are twenty seven hundred small businesses.

So keep in mind, this is what i'm reading from us about ten years old, and now they have been over thirty four. We are not one giant organza. We are twenty seven hundred small businesses rapped up into one big company.

Society tells us you are a big company. Act like IT. We say no, you don't get to define us.

We define ourselves. We go against the grain in almost everything that we do. And so there's just crazy stats about the company.

More more than ninety five percent of our current batch of general managers have been promoted from within for nearly all of our senior leaders have worked their way up from entry level position. So that leads into the second thing wanna tell you about, which is interview with the CEO that had succeeded kelland. Are bob work on bob? Uh, when he step down, his name is will overtime? Overtime started out? F, S, O.

As a store cler? So we went away from, they mean business. Look to you. And so what i'm reading from I found this out after I finish the work.

It's just obvious, as I wondered, buff in monger ever talked about this about this company or the way they are about founded thing like this. And IT turns out when you searched like, oh yeah, buffet would bring up this company in interviews. And so I just want to pull the couple things in this interview at the CEO.

So IT talks about what fascinated is is north america's largest wholesale retail district of nuts, boat hand tools and other supplies to the construction of manufacturing markets. IT is built a loyal following among customers, due quality and service, and one countless fans on wall for its drifty no nonsense ways. Warn buffer is an admire, having praised fashioned in an interview, he loved its robust financial performance in its straight forward business plan.

This is their business plan, boosting sales by adding customers and increasing its interaction with them. The unexpected shot out prompted fascinate. C.

E, O will overturn to track to omaha to have lunch with one buffett. The two cost conscious bosses hit off. We talked about the importance of sticking to the basics.

And one thing they talk about is that the CEO is not afraid to get his hand starting for, in fact, something about preaches about the book. So you know, he'll jump in where is needed and the commitment that he has. So let's say they're behind. He'll go help with deliveries, he'll help with sales head, help with customer service calls. He actually the CEO actually earned, went to the process of getting A C D L, which the commercial truck driving license so he could pitch in when drivers, truck drivers of sick.

And so there's another description of fashion that talks about the fact that when what buffet realized that he says the two cost conscious bosses hit off and how having a low cost structure is that actually a major competitive advantage because all the other things that IT feels. And so he says, anybody who claims that expense management and foggy is not a competitive vantage should pull up the long term chart of fashionable stock Price and see company that sells nuts and bolts and keeps costs low, somehow has been able to eat their competitors lunch for decades by k. This is the virtuous st cycle.

I think that buffet realized as well by keeping Operating costs very low fast and was able to pay their employees, increase incrementally higher wages, and thus more effectively develop and retain talented sales people. The quality of service and depth of knowledge that the employees have eventually brings in more revenue, which grows the business and allows us to further lower Operating expenses as a percentage of revenue, thus allowing for more hiring of top court employees, which brings in more revenue. This is an overlooked virtuous circle of sorts.

And then one last thing, before I picked back up the book, my friend rain addition, I were texting about this. So rain is the one he does. The rainmakers by cash is a phenomenal researcher. He's also the one this book is heard to find. So he's actually sent me this book.

And after reading IT, he came to the same conclusion that I did, and he says, I realized how much bob and body, the mongols ms, on incentives and how we only focus on how you can make fashion the best company to work for. The results speak for themselves. Thirty eight billion dollar market cap for a company selling commodity products.

And then he picks up on something that bob says himself. It's crazy to me how stuff like this is kind of common knowledge, but people don't really apply IT. And so immediately the book begins with an idea that's going to sound of a lot like one of mongers, famous favorite founders, which is James in ago, of costco, of costco.

Leadership must constantly be replaced. Every leader knows that a big part of leadership is training other people to be good leader. So pots right there. Every leader knows that a big part of leadership is training other people to lead.

Good leader says away, bob says, you know the way that jim signal says IT he says as a the leader, your company, if you're not spending ninety percent of your time teaching, you're not doing your job. The business organization achieve long term success by continuously replanting ing leaders inside the organization. The word inside is important.

You can bring in a leader from the outside of the oranienburg. It's much more efficient to develop those, your t hf. And then immediately, bob pushes back on this idea that the person that starts the company can be, the person leads the company.

The belief that entrepreneurs must eventually be replaced or supplemented by skilled management is false. Entrepreneurs are often time perceived to be a centric, yet definitely, this can lead to a belief that a more systematic planner is needed to coral manage organization. Entrepreneurs can learn leadership just as well as anybody else.

An entrepreneur success is as much due to his leadership skills as his work ethic. Walmart sam wolton was a leader when the company he started with small, and he remained a leader throughout its remarkable growth. Ready to, I want page six of the book for god sake, and does already been at least three examples of people that monger in buffett admire, sam walton, jim in nao lesh, wab.

The coming out between how they all run their businesses jumps attitude. In fact, the two pages later is gonna come up with an idea, or actually the next page that sounds a hell of a lot, like what monger would repeat as well. And so he starts out saying, hey, keeping your organization simple is not simple, but IT is very important.

So his idea is like the way to keep your orange zing simple, orient everything around this commitment to a common goal. Our society places too much importance on organizations. We tend to hold up. The structure is important rather than the people who make IT up, our first step is to show organizations for what they really are, groups of people who come together for a common purpose, the business organza companies, the towns of many in the pursuit of a common purpose.

All of his ideas, okay, this entire book, all of his ideas, serve that idea that you need to commit your entire organza to a common goal, and then you have to look out for things that distract from that common goal. That is why he saying, keeping the organization simple isn't so simple. Human nature goes against IT.

Successful organizations will achieve their success because they find Better ways to involve their members in the purpose of the organization. So that is what I meant about sounds a hello, a lot like monger. Monger says that the most elusive of all human goals is keeping things simple and remembering what you set out to do.

I really think this book and bob's main thesis, this what he calls, hey, we need to keep everybody in, uh, your orange zone, you know, in concentrated in pursuit of that common purpose, of that common ball goal, is the way monger would would summarize that for us, is that you have to keep things simple and then remember what you set out to do. And that's very difficult. Cause excess over a long period because IT goes against your human nature.

That's why he says it's the most elusive of human goals. And so bob, like many other great founders, they do a great job of distilling down to the essence, the principles upon which their businesses built into maximums and africa. Ms, that you can remember, you can repeat, and you can take with you.

So he says, hey, keeping the organza simple is so simple. What's next? Uncommon pursuit of the common goal? I almost feel like when i'm reading this book, he's saying, hey, guys, this isn't rocket science.

This is a simple idea that's not easy to do over A A long term. And so what is the uncommon pursuit of the common goal? Organizations succeed to the extent that all of their members pursue a common goal.

This is one of those simple ideas that are so difficult to practice. The greatest danger to the success of the organization is that IT starts developing unnecessary sub groups, and these sub groups start pursuing their own goals rather than the common goal of the organization. That is, this is what he's describing.

Listen to when the polin said nothing, this is a direct from oil on nothing is more important than unity of command. You should have one army acting on one line and LED by one commander. Bob says organizations succeed to the extent that all of their members pursue a common goal.

And what I love about the simple language and the simple example he gives the book immediate, makes you stop and made me stop. It's like, okay, what is my common goal that I am pursuing? And then once you identify that, then you start orders how you're spending your time.

And so obviously, my common goals, very simple, I hope you learn from history. S greatest entrepreneurs, and to do that Better than anybody else can in the entire world. And so the second step with us, so, okay, well, let me out IT how much you spending my time, because anything that's not in service of that common goal is a distraction and should be eliminated.

And so then bob says, well, how do you keep everybody focus on a common goal? Remember, he said, we saw commodity products are got sake. The the only competed adventure is we have as our people.

This is, how do you keep everyone focus on a common goal. First you you start treating everybody equally. The organza cannot have some people who put in different status, then the rest you don't have.

Executive dining areas and assign parking spots are stock options for only the highest ID people, or even des, for only some of the people. If the engineers can take off to wash their kids in a softball game, so can the late Operators in the data entry people. So paul, right there, immediately improve the mine.

When I get to that section, that sounds a hell of a lot like the stuff that lesh, wab and sam walton would preach as they built their businesses is from lesh robs to phy. We have had over the years some people in office, they sometimes think that they are more important in the stores. The office serves only one purpose, and that is to serve the stores.

Some of our office people sometimes wonder about this, but i've warn them, don't bitch to me because this is the way I want IT. If you, anna, go out and start at the bottom, changing tires and working to a manager job, then hop right to IT. If we weren't for those men in the stores working their asses off in all kinds of weather, missing meals and working god off for hours, you would even have a job.

So if you're working for lesh wab, is he not easy to in her face with? He's very easy to understand. There's no those that like five sentences there at the into the five sentences, you know exactly what less believes and how he want he wants to to run his business same wilton said very summer, he says.

If you're not supporting the customers, are supporting the people that support the customers and we don't have need free and warmer can t IT. Very, very simple. The reason that's important because if it's not simple won't scale, bob continues.

Make sure that everybody can enter your building through the same doors. So points like, listen, these like special stock options, these assigned parking spots, these executive dining areas, these separate entries over time. And you just your telling people with your actions, these are the special people.

You guys aren't the special people. So let me go back to chang ju yang. Chang u. Young wrote the most inspiring ing automobile, if I have ever read, I have another epson like epo. Chong you Young, right, is the founder of honi.

He starts off so poor as a son of his, a peasant of a peasant farmer, that he has eat tree bark in the winter to survive up, dying as the Richard person in south korea. This is what he says from his autographs. He, he's write his autobiography, ninety.

Rob says what bob was saying this some time ago, someone proposed installing a separate elevator for executives at the company headquarters. I rejected the idea right on the spot. I truly despise the inflated sense of superiority held by executives who expect different treatment from their workers.

Why on earth when anyone need a separate elevator? He continues, when I dropped by a construction site one day, the workers were busy laying a new carpet, believing that this was a formality that they should observe for their boss, so literally like a red carpet. So when their bosses are safe as he, he can walk on IT.

This was chung's response. Such formality is meaningless with our company model, their company more model, with diligence for galli and affection hanging right down in the wall, should they have a spread a second to think about the worker's laying carpet is laying this corporate for got a carpet was a luxury that I despised. After luxury comes corruption.

I have never seen a country prosper with a leader who enjoys luxury. I have never come across a company that thrives under a luxury loving, wasteful owner. And so we go back to bob, why is IT so important to have everybody working as a single, cohesive team, to have everybody thinking that their role of their plane is just as important as the person next to them, as fascinating? We believe that you can be the best sales person in the world.

But if the order picker doesn't pick IT right, or the truck driver doesn't get IT there on time, or the billing cler doesn't be correctly, you end up with an unhappy customer. Everyone is key. You are Better off working to make everyone equal, so they stay focused.

Comes back. What do you thinking about to say? I bet you can only finish his sentence for him. You are Better off working to make everybody equal so they stay. Focus on the common goal of easing the customer.

He's going to give us more advice on how do that you need to install reward system that keeps everyone focus on the common goal. He's talking about incentives. If you have fashion's common goal of growing our company through customer service, you will avoid any rewards that don't fit that goal.

And so when I got to this part of the book, I thought about monger a charlie mongers, like three rules for incentives. And so this is what he said. Number one, everyone unrested mates, the power of incentives. Number two, never, ever think about anything else before thinking about the power ban sentence. And number three, which bob is nAiling the most important rule in management, get the incentives right.

And again, you have to be careful of these sub groups that are going to naturally develop in your company because his all points like this in your incentives have to they have to fit your overall common goal, right? The common goal, please, and customer. And so he gives an example, if you do these incentive based on separate groups, they can optimize for things that go against your common goals.

So he gives an example that this is a really smart idea. We do not reward production people for minimizing scrap. If some of that scrap you eliminate comes from the extra parts that guarantee you have a full order quantity ready when the customer once sits, the incentive superpower among ger talks about you was clearly see by picking up the book.

We are like a quarter into the book that bob clearly thought a lot about this, of course. Yes, IT, thirty five years of experience in by the time he wrote the table, and I think forty seven years, but IT by time was published, again, something like that, just a ton decades of thinking about this and experience with a single company. Another piece of advice, if you want to use a financial reward to motivate pay IT right away, do not wait until the end of the year, or pay a special bonus for to pay special bone bonus or profession, i'd pay IT at the end of each month, if you can.

So right, you know, right after the to reinforce that good behavior that you want, or at least at the very least quarterly, do not wait to the end of the year. Another main theme of the book is the fact that he's got this radical belief in encouraging, in using everybody's creativity throughout entire organization. And he really goes against my reason.

A and this is what one of things that also remanded that I think bob had in common with monger buffer. T, when you read the shareholders to listen to them, what they said to G. M his repeat over over again, like like business school, they are teaching the bad things.

And so his whole point is like this command and control structure was not something that bb believed that he thought he was actually would limit the growth of the company. And so he said, and he gives an example of the that, like one personal, like a group of leaders, the very top should to do everything, is actually harmful and is eventually going to lead to the decreased of growth in your company. I need to learn this.

One of the ways he learned this is when he was a boy scout. He is in a Young boy. One of my first lessons in how not to promote creativity came from the boy scouts.

The troop that I joined when I was ten had a leader who did not chAllenge the kids. He arranged everything for us. So we've gone camping trips.

And is that of teaching them you know, they're obviously when you teach somebody, when you let them do something they have never done before, they're gonna mistakes. And so the true leaders like, oh, you know, all set up the the, the tent. I will do a cooking.

I will start the fire there. Who said, just sitting around, user. And he says, we watched other troops cooking, still making fires, setting up tps and rope bridges while we SAT around.

At the end of a few years, nobody was above the rank of second class scout in our trip today, I probably couldn't survive in the woods for more than a few hours. And immediately translates that lesson to what he observed in his multi I decade career. Too many business organza practice central planning to the extent that the creativity of their people is effectively ninety five percent curtailed.

And he rails against this because he was taught that this is Better management and clearly does not agree with this. Businesses that become large and to Better manage saw their markets and profits eaten up by nimble start up firms with great ideas and efficient as execution. Many large companies resemble small socialist states.

Ideas and plans all come from the top. The majority of the workers are treated differently than the top planners, and most of the workers receive little or no self a film in their jobs. And so this is when he starts repeating another one of his ideas, like, you have to learn to delegate.

He was afraid to delegate. It's a common, he calls delegate the fear. Uh, delegation common. But he thinks that a terrible bad habit. Why do companies develop such bad habit? Simply because the people, the top of the organization, start focusing on how smart they are, rather than focusing on how little they know.

If ninety five percent of the people in your company do not participate in the creation of ideas, they will spend their time thinking and talking about cars, sports and office politics to add insult to the loss of creativity. Most of the people who are ignored or on the front lines to go to less, less, you are serving the customer, serving the people who serve the customer. We don't need you.

The founder, U. P, S, G M, casey same, he didn't want to sit and talk to his executive all day. I have told the three million times because very memorable and hilarious, but I did not even hilarious, just like very informative, the fact that every he had a driver and he he instructed the driver every time that we pass a big Brown U P, S.

Truck, pull over, and jim would spend all his time, as much time as possible talking to the people on the front lines, the people actually delivering the service to his customers. So let's go back to this to add. And so to the loss of creativity.

Most of the people were ignored, are on the front lines running. The machines are talking to the customers, while the people doing the thinking in the planning are isolated from both. Which group do you think receives the best stimulus to Foster creativity? Decentralized decision making, decentralized decision making, decentralized decision making.

He wrote wrote that three times. I'm not, you know, not repeating that on my own, said a few times, so becomes a montreal he feels dealie, ed. The extreme desires is one of the most valuable things that they have in their complete culture.

With over twenty six hundred stores around the world, the decisions about which items to stock in each store are left to the people in the store. Computers helped to pick a basic starting inventory, but items are added as, uh, as store personnel gather information about customers in their local market. The people in our stores are able to special order items that their customers request that are usually unavailable within our warehouse system.

That idea of allowing them, right, you have A A one off special request from a customer that then you can filter the complete autonomy and trust from the organization to fulfill the request. What's going to hat like your vi, inform the customers like this special. We had to do this for you, and then you do IT to their satisfaction and you have a customer for life.

This is something that one of my favorite biographies i've ever read. I thinks that was a three sixteen. It's on the founder of bgd in the reason I even found this book, because I became obsessed with and safra, and I didn't want episodes on him and in by graphs to talk about, hey, his blue grant.

He was just copying what bu goi did. And so I find this like crazy bargrave abi, written by his daughter. I think you like the one thousand nine hundred sixty.

And there's a story in there. I never forgot that bu goi receives a letter from one of his customers. Okay, about a car that still Operational, a bug.

I car, uh, that the guy bought thirty years ago and he did something broke on a fixed and bagua. I reads s his letter and then write them back. And the the the the punchline is the the incredible level of customer service and just love for the work.

His work that we got had was bgi offered to customer make they didn't stock that part. They didn't even have IT anymore. He's hey, i'm gonna customer make this replacement part part for that car that almost thirty years old and i'm onna give IT to you at cost that long term view.

okay? Not trying to make a couple dollars on this com n first or even doing this remark, right? And then something at that causes actually genius because how many people is that satisfied? Customer gonna tell a lot more than whatever markup you would make on that one of part.

And so bob then tells us, why is this so important? Because it's this virtuous cycle leads to consider where your new product ideas come from. We encourage people in each door to come up with products to add to our general lines.

If a customer ask for a product that we don't currently sell, we encounter people to find a possible source to satie and starts to selling the same product to other customers are nearby stores may then also start offering the item. Eventually, IT becomes a company wide product. So a lot of people like, okay, well, how are you going to man, as you know you at the time, twenty seven hundred, these old stores in the all run independently and is a good and box.

Of course, you need some rules, but you don't need these thick manuals and nobody's reading you. You need a handful principles, all oriented, oriented around the goal of the organization. This is why so genius.

This idea of just organizing my entire company on this commitment to a common goal and then regularly checking, like is the action is the way we're spending time, is this idea in service of that common goal, yes or no? So he says, you need rules, but you can probably put them on three sheet of paper and give them to each new employee. These rules will state the common goal for the organization.

These rules should instill a good understanding of the common goal of the organization. He is repeating IT again, and he says what his common goal is, growing our corp, our company, through customer service, eliminate all those three ring binders filled with standard management practices. Another suggestion to develop the potential of people is to emphasize training most of the people who join us come at a school with little expertise in our product line.

We see their potential and give them an opportunity to achieve. Most of our executive officers started in entry level positions in fashion al store. So he's going to use this, this importance of constant training over over again.

I actually think there's a Better word for that. Sol Price, who is the most influential retailer, every live, sam walton took more ideas from him. Jim costco, jim costa, jims 3 nao of costco was sold， Prices a mentee.

And he start working for suppression like nineteen. He gives this interview when he's like seventies like people like you must learn a lot from people like, no, I don't earn a lot. I learned everything.

I know the amount of successful retailers that built in, in some cases, many cases, hundreds of billions of dollars of retail companies, costco home, deeble, walmart that talked about and learn from sol Prices. Absolutely redial. But I think soul has a Better here.

This montreal, this, this maxim he would repeat. And he says, you train an animal, you teach a person. And so when bob uses the word training, I automatic ticket substitute that for the word teaching.

That's why I think about why jim cino, who is A T uh of surprises like if you're not spending ninety percent of your time teaching, you're not doing your job. You're teaching or training all of the people in organization, the standards and expectations of this common goal that your entire businesses oriented around. And so the way bob, we describe this as he wants leaders, he does not want managers.

And if you're a leader, it's much more like a coach than IT is. And he gives us baseball, gives us sporting gy, right? And so he talks about the difference which in a coaching basketball and a manager, remember, he wants leaders, not managers and a manager in baseball.

Have you ever considered this? This will basic illustrate his entire idea on this, uh, chatter. Have you ever considered the top supervisor on a baseball team is called a manager, while the top supervisor on a baskette's called a coach? Look at the control each one hat.

His whole point is like you got to give fear of relinquishing control. The baseball manager is controlling each move of the player, waving the short shop over a little, or signaling when the runner should steal uh, the base, or ordering the picture to walk a runner in the baseball game. The managers in complete control and fits the old style idea of a manager what he means by old style idea of matters, what they teach in business school when he feels is used.

So in the basketball game, the coach is relying on each player to make quick decisions about passes and shots. This is much more bobs, uh, philosophy OK. The coach may send in a play after a time out, but control swiftly passes back to the players on the court.

In business, the manager controls what each person does, assigning tasks, communicating the results upward. Bobb does not like that. The leader, however, tells the team members what the group has to accomplish and chAllenges them to find the best way to do so.

So now that we know that he wants leaders and not managers, let's get to his definition of a leader. A leader is somewhat like that of the master learner among apprentice learners of all different levels, with the intention of developing more master learners to allow the organization to grow. Goes back to that.

His stated goal on the back cover are commitment to a common goal, which is growth through customer service. And then he tells the story to illustrate what this would look like inside of an organza. I worked one summer in quality control department of a medical products manufacturer.

There were two people who managed the department. The first was a general manager who had a separate office. The other was an assistant who had a desk out with the rest of us.

When ever we had a question or problem. Rose, nobody went to the general manager who's hiding in this cave, right? We all went to assistant who is accessible.

The assistant was growing in stature with the overall plant managers because the insistent knew so much more about everything else that was going on. So over time, the assistant leap frog, the manager within the organization, the assistant was the true leader. Stay out there on the front lines where the action takes place.

You learn more when you see everything up close, and then he repeats, do not deviate from the common goal in the way he would say, this is the teams pursuit of its common goal must be defended by outside attempts to weaken IT and then spread to out. The book is is simple, but I would say very valuable pieces of advice here is one of them, pay attention to asylum people when you are leading. If half of the people are not asked for their new ideas, you only have a fifty percent chance of finding the best solution.

Pay attention to the silent people when you're a leading. This reminds me of brad Jacobs. A one of about the most popular episodes have done recently was episode three thirty five.

It's how to make a few billion dollars by brad Jacobs. ExcEllent book, also written by a person that loves founders. Brad send me a great message that he said he was addicted to the founder book reviews, but in that book that he wrote, I thought IT was actually genius.

So you know when he buys a bunch of, uh, new companies all the time and he was shocked that how many people never solicit advice from the people working in the company is very similar to a ob sellings us here. And so he's got two questions they would ask every single employee. And I think there's genius in the simplest of this idea.

Number one, what's the single best idea to improve our company or what's your single best idea to improve our company rather? And number two, what is the stupidly thing that we're doing as a company? And he makes the point in the book like you would be shocked at how much value information that you get just for asking these two simple questions.

Sounds very similar to above here. If half the people are not asked for their ideas, only have a fifty percent chance finding the best solution. And then something bob also talks about how much he learned, just by the example, that other people, examples, good and bad, from other people, he worked with and worked for over the years.

And this is really like we're half way. We throw more than half way through the book. And a really clicked for me the first time I was going to, because you obviously, you know, before I said, not talk right now, read about.

But I reread the highlights note over over again. I read what I wrote on the note once second. He says, while attended college, I worked for a manufacturing company, then employed about three hundred people.

I spent a lot of hours in the office on saturdays. Sometimes other people came in on sunday, but only one person was certain to show up. The president and founder of the firm at the time, he was seventy two years old.

He had an obvious interest and pride, and what was going on, he knew each employee and appreciated his or her contribution. I count him as one of the three people who was most influence, who has most influences, my understanding of leadership. And so I got to that part, and I reread IT as a way, man.

He knew each employee and appreciated his or her contribution. And this is when I start to click if his goal, we're not about bob now, okay, this is my note to myself. If his goal, if bob's goal is growth to customer service, he has to fully develop every single employee that delivers that service.

His constant repeating that fascinated advantage is people serves his main goal. All of his ideas work together. It's that virtuous cycle, that virtuous fly. Well, there's another advantage of dealie ed extreme decentralize decision making, and that's the flexibility to respond to changes in the future.

The future is not just next week or next month, but years out, fascinate t has been growing at a rate where doubles and size every two and a half years. That means that in five years, we are four times the size. So our people have to think that in five years, we will hall four times as much product around the country.

I love this sentence. Good ideas start by simple approaches to what lies ahead. A proactive leader understands. And unless one attends to the future, you get locked into the past.

The main reason fashion al doesn't grow much da acquisition is that we would buy too much old baggage with acquired companies. We want our leaders to do what is best for what lies ahead, rather than repeating what brought success in the past. Anytime you stop thinking about the future, some people with Better ideas will come along to eat your lunch.

Anytime you stop thinking about the future, some people have Better ideas will come along to eat your lunch. And if you have the the flexibility and the empowerment of all and the central decision making in this complete autonomy that fashion does, sometimes you're the one that is inventing the future. So let me go back when to put the book down for one second.

And I want to go back to that story of the CEO. I was meeting with buffett to see you, the succeed government. So this giant part of fast al's business now, after this, was invented, after this booker certain OK, the first, the first, a version one thousand nine hundred ninety seven, was the fact that they have these vending machines in the way.

I think what the vending machines is like, you thank for every, anytime you've been like a hardware store, right? You got a hardware or home deeper, anywhere else. Think about how all the equipment and supplies are presented.

You know, I kind like searching through is kind like a chaotic mess. So will over ten, which was the the sea, the former seo, he's not to see you now, but he's the one that will see o after bob. Okay, Alberta in also developed an industrial vending machine system.

There's a video on youtube is faster about this. It's from fashion fashion al hazard youtube channel. You can see the vending machine if you just type in fascinate vending machine if you're interested in this SHE can uh over tin develop an industrial of vending machine? And I search for after I read this is like, I got to see what this looks like.

Overturn and developed in an industrial vending machines system, helping bob realized a lifelong goal. In nineteen fifty one, as a twelve year old, his father's auto part store. Bob was bothered by the fact that his dad had his own customers searching for nuts and bolts to someone to the store.

He imagine that a vending machine installed at his father's place might pop out fascines like gum balls. Once on his own, he tried to convert a cigarette vending machine to this purpose. He couldn't get IT to work, so he started selling fascinators over the counter.

Thus fascination was born forty years later, working with a snack machine manufactured and off the shelf software. We'll over ten got the job done. Fascines vending machines have been a big hit with customers, so their vending machines are actually installed in their customers locations.

IT cannot get similar for this. You ve got to watch the video on, tell you open, got the job done fast. Ones ever had been hit and hit with customers, generally helping them save thirty percent on supplies. The machines have cut down on theft and enabled automated reordering.

That four year old business, which I think now is like fifteen years old, that within within four years old they this new idea already started contributing to thirty six percent of the overall sales of fashioner who know I think it's like over forty percent. Now talking about that, go back. So now, picking back up the book, think about the vending machine idea, which was not invented when bob wrote these words.

This makes these words hit so hard. We want our leaders to do what is best for what lies ahead, rather than we repeating what brought s success in the past. Anytime you stop thinking about the future, some people with Better ideas will come along to eat lunch.

Thank god. Due to the unique enabling of this in the super beef, in the power of people, they were the ones that came up with the Better idea. They were the ones that invented the future, thus avoiding somebody else coming along and eating their lunch.

And so that relates to this idea of bobs that you have to overcome the common fear of delegating. And he has a really interesting way to illustrate this idea that was rather unexpected to me. And I don't think of to describe like this, this way anywhere else, the death of a family member or close friend gives us a sense of great loss, a feeling some that something will now be missing our life.

What we are missing is the unique ness of the person who has died, a uniqueness that we were privileged to know and understand. That same unique ness is present in everybody. We just don't come around to seeing IT and to understanding IT.

Our first step to becoming a Better leader is to start valuing everybody for the unique humans. When I was a Young man, I learned that everyone did Better at test than I thought they would before starting them. I recognize this as a bias within me and adjusted my willingness to delegate accordingly, delegated more than I used to.

And I saw even Better outcomes. My bias was a common fear of delegating. This came from not appreciating what talents like hidden in other people.

And he talks about people that started just picking out orders, are now CEO are a very valuable executives. People who start picking orders are entering phones at grown ad, hundreds and thousands of new team members. And so some of this fear of delegating comes from this.

The giant egos have had, a lot of people entrepreneurship have, and a lot of leaders and executives definite have. And so he's got a piece of advice, and he got four ways to do that is like you have to learn to suppress your ego and walls inside the exactly thing that listen. You don't have to have a small ego to work a walmart, but you have to be, you know, very adapt.

Hiding IT at essentially suppressing your ego is the way sam walton h. There is a way bob describes the same multis idea. So bob says, learn to support your ego.

The first place to start, if you want to suppress, is to admit that you have one, we all have one, and nobody likes theirs to be insulted. And in a work environment, egos, and a typical work environment, especially a successful company, egos are in full bloom. So how do you work at suppressing your ego? I can give you four suggestions that observed over the years.

Number one, treat everyone is equal. Number two, learn to stay silent sometimes. Number three, be willing to get dirty. That goes back to the CEO, you know, who's answering customer calls and his driving trucks he's not like on the CEO, you know, public company, how gona be a truck driver? Say, well, what's my goal?

Our common goal, our commitment is to the common golf growing through customer service is not driving a truck because we are short handed in that department and therefore, our customer delivery comes late later than IT. What if I get behind the wheel that serving our customer? Is that me being committed to this common goal? No, IT is not.

so. Number three, be willing to get dirty. Number four, do good things. Anonymous ly, and then he feels the need to offer what he calls a few words of cautious.

There are some things that you going to have to watch out for goes back to this. Number one, keep the team goal consistent with that of the main organization. So you know, you're going to have sub groups.

Because of sub groups teams, they will naturally develop their own goals, and in many cases, those goals will be conflict with that of the main organization. One department can develop such a great spirit and cohesiveness. That IT loses sight of its role in the larger organization.

Keep that team goal consistent. Make sure all your team goals are consistent with that of the main organization. In another way, to keep on the path, keep reminding yourself how little you know part of me, if I keep telling you how to forget how smart you are, even if you are snow, you're Better off for getting about IT.

Start thinking instead about how little you know, compared to the vast amount of knowledge in the world. Consider that everything that I have written here about leadership is something I learned from someone they either taught me or I learn from their example, good or bad. Nothing here stands out as a brilliant through everything is a passage of information to the length of my observations.

And I have no way of knowing how much is still out there to learn. And so he talked about early on the ball, let me go back to that very quick that even as an elderly gentleman, he's still constantly learning. At my senior citizen age, I am still improving, perhaps at a faster rate than I was several decades ago.

With the experience of a lifetime, you're able to find the final pieces to complete the puzzle. And then if you think about what he saying here is like, you know, there's nothing here stands out as a brand breakthrough. Everything that i've wrote, everything i've learned, and I learned from other people in the example or otherwise, that's another form of suppressing his ego, of keeping your ego in check.

And a good way to keep your ego track is just to keep remind yourself how little that, you know, Thomas citizen has a great quote about this and he says we don't know one one thousand percent of anything. And I think it's important to point out the reason he keeps talking about pride and ego is because that gets in the way of your organizations commitment to the common goal. So he's going to summarizes because he loves maxims, and he he thought he makes us ten basic rules about leadership.

And he says the simplicity of each rule must overcome the thick walls of pride that prevent its implementation. One can only dream of a world where these rules are univerSally practice. And we know because human nor does not change, they'll never be university practice.

And so our ability to action, learn and change our behavior will always be at odds with the larger human nature. That's why I think it's so value, not because the ideas are are so hard to understand their so hard to apply and especially apply them over. You know, since one thousand and sixty seven has number one chAllenge rather than control.

Number two, treat everyone as you're equal. Number three, stay out of the spotlight. Number four, share the rewards.

Number five, listen rather than speak. Number six, see the unique humans in all persons. Number seven, develop empathy.

Number eight, suppress your ego. Number nine, let people learn number. Remember how little you know, follow these rules and provide leadership to your world.

And then when I love, he tied this all together to serve a mission that is bigger than anyone person, anyone company, anyone industry, any one lifetime. He says, the example that we set in the workplace will live on after us. Your life is an example for all to imitate.

What parts of IT others will imitate depends on the respect they have for you. If you have earned respect through your leadership, others will imitate your actions, and you will influence people beyond your generation. The exceptional leadership of a Thomas jeffson or an Abraham lincoln, or a mariner king, or Helen keller or alex into the great lives on for centuries and makes the world a Better place for all of us.

Become a leader home and in your work, make the world a Better place because of what you do. And that is where, livid for the full story. Highly recommend reading the book we wanted buy the book using the linked its in the show out to the pocket player or a verbal founder park star com IT is supporting the podcast at the same time.

That is three hundred and sixty books down one thousand ago and not a tiguan soon. One more quick thing before you go there is a founders event taking place in person in Austin, texas from september twenty seventh through the twenty nine th. For years, people have asked me to introduce them to other founders listeners.

These events like to do. This is the third and final one this year. They exist for that reason, that sole reason only to help you build relationships with other founders investors in high value people that listen to founders podcasts. IT turns out that a good filter and easy way to build a relationship with somebody, and these relationships produce non lenient returns. There's a few separate sources for this idea that I think you'll find interesting.

I was at an in person of in texas, and I was actually having a very faster conversation with a guy where his job there is A A torn of wealthy family offices in texas, and like a lot of them, built fortunae in real state and oil and gas. And his job was to do in person events for other people that worked at other family offices and the family office he was with, they put a tune of time and energy and money and resources behind this, and had a great time to describe why. He said, because of relationship between these two types of people produce non lenie returns.

This is also true for people that listen to founders. IT is also something that we occurs in the bike phy, a united dy every week. This idea that relationships run the world.

In fact, when I, when I was able to speak to both sams out and charlie monger before they passed away, they both said similar things. They said IT. They had the same as they said in different ways.

But the idea is that you need to invest heavily in relationships, and they bow to my examples of relationships they had built and maintained over decades. And so that is why the events exist to help you build relationships with other founders, investors in high value people. That is also why I ran out the entire venue.

So every single person that you see there is for the same reason that you are and has exact same interest you do. These are also all inclusive locations, which means all you have to do is get yourself there. And I take care.

The rest are lodging ing your food access. All events is all taken care of. If you want to attend, go to founders podcast, dock on for such events as founders podcast, doc com for such events and apply. And I hope to see you in Austin.