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.
It's in our nature to drift and complicate things.
And the founder of Fastenall Bob Kierlin built his entire company building thesis around that idea.
Keep everybody in your organization pursuing a common goal.
And then Bob uses this book to defend his ideas, but it's laughable that his ideas even need to be defended.
His numbers speak for themselves.
How the hell does a 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 $38 billion market cap and is one of the best performing stocks over the last quarter century.
I'm friends with the co-founder and CEO of Ramp Eric and I was texting him about this book in this incredible company while I was reading and researching this episode.
Because Eric is keeping everyone in his company pursuing a common goal that would make history's greatest founders proud.
Ramp is building the world's best tool that gives you everything you need to control your spend, watch your costs, and optimize your financial operations on a single platform.
So this is what I texted to Eric.
It describes why this obsession with cost control that fast and all has.
Turned into a massive advantage that fuels other things.
So it says anyone who claims that expense management for quality is not a competitive advantage should pull up a long term chart of fast and all stock price and see how a company that sells nuts and bolts and keeps costs low somehow has been able to eat their competitors lunch for decades.
This is this very virtuous flywheel that begins with keeping operating cost and watching cost very low.
By keeping operating costs very low fast and all is able to pay their employees incrementally higher wages and thus more effectively develop and retain talents at salespeople.
The quality of service and depth of knowledge that the employees have eventually brings in more revenue which grows the business and allows it to further lower operating expenses as a percentage of revenue.
Thus allowing for more hiring of top quality employees which brings in more revenue.
This creates a virtuous circle of sorts.
I can read that paragraph filter through the 360-bargafries of history's greatest entrepreneurs I've read so far for the podcast and it summarizes it even better.
History's greatest founders knew that watching your cost was the foundation on which other competitive advantages can be built.
That is why so many of the great founders made cost control and obsession.
Ramp helps you do the same.
Ramp gives you everything you need to control your spend to watch your costs and to optimize your financial operations on a single platform.
Start building your competitive advantage by going to ramp.com and sign up.
Since it's founding in 1967, Fastenall has grown from a small fastener store in Wernona, Minnesota into a multi-billion dollar global organization.
The company is known for its exceptional leadership, innovation and success.
Fastenall was the top performing stock in America during the quarter century that began with the market crash of 1987.
How did a small town nuts and bolts shop become one of the world's most dynamic growth companies?
Whenever asked, company founder Bob Kirlin, attributes Fastenall success to the company's high quality employees and their commitment to a common goal.
This is something he's going to repeat.
That is his main idea. The one he repeats most throughout the 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 asked, company founder Bob Kirlin, attributes Fastenall success to the company's high quality employees and their commitment to a common goal.
Growth through customer service.
The company is organized in order to serve those four words.
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 1997, Kirlin published this book in an effort to share the unconventional business practices that stem from this philosophy and fuel Fastenall's 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 and challenging today.
The original idea was to provide a teaching tool for future generations of Fastenall leaders.
But to anyone with the courage to unleash the vast human potential within your business, organization, team or group, welcome.
That is an excerpt from the back cover of the book I'm going to talk about today, which is the power of Fastenall people and is written by the founder of Fastenall Robert Kirlin.
So the way I would describe this book is it's a cult classic, it's hard to find and it's about a compounding machine.
I'm going to read from the acknowledgements, preface and introduction, all of which are very short.
When I love about Robert, he gets right to the point and then I'm going to put the book down briefly and give you an overview of this very unique company.
So I want to give you a little background first on Bob Kirlin.
He was the founder, he's still alive.
He's the he founded Fastenall 1967 and served as the co-founder and CEO for 35 years.
So Fastenall's going to grow from one 1000 square foot location in 1967 to over 3400 stores by 2023.
They are doing like seven and a half billion dollars a year in sales and their market cap is almost 40 billion dollars.
Before founding the company, Bob got a degree in McKenna Engineering and then also an MBA.
And so in the acknowledgment section, he tells us exactly what why he's writing the book and what this is all about.
The content of this book derives from what people have taught me.
Sometimes in classes, but more often through their example, my parents were my first teachers, those that followed in grade 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 derives out of these two sentences.
I am aware that Fastenall is a unique organization.
Fastenall succeeds because it's people succeed.
And so it's very obvious as you start to read this book, there's a lot of Buffett and Munger-esque things in it.
And that popped out of me from the very first page because he's he's going through all the people he had to think to write the book, but then he says something like this, no need to think any typist, however.
Every little character was entered by one of my fingers into a computer at home.
One of Charlie Munger and Warren Buffett's favorite founders is this guy Les Schwab who have done two episodes on.
Les Schwab writes this incredible autobiography, which again is short into the point, and Les starts that book with this sentence.
I did write this 100% with my 40-year-old typewriter.
I did not have a ghostwriter.
I wanted it in my own words.
And so there's going to be a lot of things that Bob believes in and the traits that he has.
He's going to share in common with a lot of Buffett and Munger's favorite founders.
He talks about the fact that hey, you know, this is the updated version.
So he's like, I wrote this book 20 years ago.
Since then, our sales have actually grown by a factor of 12, and I think it's even higher now.
But he says it all comes from this basic belief that has provided the fuel for this growth.
And it's Bob's heartfelt belief in people and their ability to do great things if given the opportunity.
Now think about how crazy this is.
So you first wrote this in 1997.
This updated version is printed 23 years later.
So think about all the technological change that has occurred in that 23 year period, although the applications of new technology such as the internet, smartphones, barcodes, vending, and automated stocking have changed the how of industrial distribution, which is their business.
Okay. The technology changed the how.
They have not changed the why of a distributor's 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 really, he has one idea as a way 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, where he's talking about listen, the technology is going to change.
Technology that influences your business may change the how of how you deliver your service, but it will not change the why Michael Bloomberg in his autobiography said something that's very interesting.
He says a lot of companies mistake their product for the device that delivers it.
Listen to this. This is from Bloomberg's autobiography.
The technology that we pioneered in the early 1980s 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 thought 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 bankruptcy at Bloomberg.
We got out of the business of building physical computers as soon as PCs began taking off.
We knew our core product was data and analytics, 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 requirement 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 at fast and all are uncommon and they're in need of defense.
This book has only one purpose.
The support ideas that don't seem either common are 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 from my 47 years with the fast and all companies.
This is what I love about autobiographies.
You know, you guys almost half a century of experience.
It's almost like having to read this book or to listen to the podcast is almost like having a one sided conversation with somebody has 50 years of entrepreneur experience.
Fast and all is a people centered company.
Fast and all 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.
Remember, what is the title of the book, the power of people, the power of fast and all people.
So I want to give you this company overview and a story about the CEO that succeeded Kirillin and Warren Buffett that I think just knowing all this at the very beginning, I think will make the ideas that he repeats over and over again that Bob repeats over and over again in the book.
Very important. What's the most important part of fast and all 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 entrepreneurial passion, 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 go and you let them go.
That's where magic happens.
That is the story of this company.
Fast and all embraces a spirit of radical decentralization and autonomy.
Each of its 2700 stores operates as a stand alone business with a clear leader and full P&L 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 always be 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 where we went to school.
We care what they can't teach in school, wisdom, savvy, entrepreneurial spirit.
We want to know our customers' 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 2700 small businesses.
Keep in mind, this is what I'm reading from is about 10 years old.
So now they have over 3,400.
We are not one giant organization.
We are 2700 small businesses wrapped up into one big company.
Society tells us, you're 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 that more than 95% 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 positions.
So that leads into the second thing I want to tell you about, which is this interview with the CEO that had succeeded Kierland Kierland, our Bob, we'll call him Bob, when he stepped down.
His name is Will Oberten.
Oberten started out afastanel as a store clerk.
So we went all the way from, they mean businesses.
They went all the way from store clerk to CEO.
And so what I'm reading from, I found this out after I finished the book because I'm like, it's just obvious.
I wonder if Buffett and Munger have ever talked about these about this company or the way they are about the founder or anything like this.
And it turns out when you search, it's like, oh, yeah, Buffett would bring up this company in interviews.
And so I just want to pull out a couple of things from this interview with the CEO.
So it talks about what fast and all is.
It's North America's largest wholesale and retail distributor of nuts, bolts, hand tools, and other supplies to the construction and manufacturing markets.
It is built a loyal following among customers due quality and service and one countless fans on Wall Street for its thrifty no nonsense ways.
Warren Buffett is an admirer having praised Fastenel in an interview.
He loved its robust financial performance and it's straightforward business plan.
This is their business plan boosting sales by adding customers and increasing its interaction with them.
The unexpected shout out prompted Fastenel CEO Will Oberten to trek to Omaha to have lunch with Warren Buffett.
The two cost conscious bosses hit it 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 hands dirty and for in fact, this is something that Bob preaches out the book.
So you know, he'll jump in wherever he's 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. He'll help with customer service calls.
He actually, the CEO actually earned went through the process of getting a CDL, which is a commercial truck driving license.
So he could pitch in when drivers truck truck drivers are sick.
And so there's another description of Fastenel that talks about the fact that when what Buffett realized that it says the two cost conscious bosses hit it off and how having a low cost structure is actually a major competitive advantage because all the other things that it fuels.
And so it says anybody who claims that expense management and forgality is not a competitive advantage should pull up the long-term chart of Fastenel's stock price and see how a company that sells nuts and bolts and keeps costs low somehow has been able to eat their competitors lunch for decades by key.
This is the virtuous cycle I think that Buffett realized as well by keeping operating costs very low Fastenel is able to pay their employees increased incrementally higher wages and thus more effectively develop and retain talented salespeople.
The quality of service and depth of knowledge that the employees have eventually brings in more revenue which grows the business and allows it to further lower operating expenses as a percentage of revenue thus allowing for more hiring of top quality employees which brings in more revenue.
This is an overlooked virtuous circle of sorts.
And then one last thing before I pick back up the book my friend Ray Maddie and I were texting about this so Raym is the one he does the Rainmaker's podcast he's a phenomenal researcher he's also the one this book is really hard 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 embodied
the mongerisms on incentives and how he only focused on how he can make Fastenel the best company to work for.
The results speak for themselves.
38 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 a lot like one of Munger's famous favorite founders which is Jim Senegal of Costco of Costco.
Leadership must constantly be replenished every leader knows that a big part of leadership is training other people to be good leaders so it's pause right there every leader knows that a big part of leadership is training other people to lead good leaders that's the way Bob says it you know the way that Jim Senegal says it he says as a the leader of your company if you're
not spending 90% of your time teaching you're not doing your job the business organization achieves long term success by continuously replenishing leaders inside the organization the word inside is important you can bring in a leader from the outside of the organization but it's much more efficient to develop those you already have and then immediately Bob
pushes back on this idea that the person that starts the company can't be the person that leads the company the belief that entrepreneurs must eventually be replaced or supplanted by skilled management is false entrepreneurs are oftentimes perceived to be eccentric yet definitely this can lead to a belief that a more systematic planner is needed to quote unquote
manage the organization entrepreneurs can learn leadership just as well as anybody else an entrepreneur's success is as much due to his leadership skills as his work ethic wal-Mart's Sam Walton was a leader when the company he started was small and he remained a leader throughout its remarkable growth so we're already into you know I'm on page six of the book for god's
sake and there's already been at least three examples of people that monger and Buffett admire Sam Walton Jim Senegal Les Schwab the commonality between how they all ran their businesses just jumps out at you in fact the two pages later he's going to 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 with saying hey keeping your organization simple is not simple but it is very important and so his idea is like the way to keep your organization simple is 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 organization combines the talents 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 organization to a common goal and then you have to
look out for things that distract from that common goal that is why he's 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 hell of 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 is what she calls hey we need to keep everybody in uh organization you know in concentrated in pursuit of that common purpose of that common goal 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 because especially over a long period time 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 of the great founders they do a great job of distilling down to the essence the principles upon which their businesses
built into maxims and aphorisms that you can remember you can repeat and you can take with you so he says hey keeping the organization simple isn't so simple what's the next one the 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 the 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 subgroups and these subgroups start pursuing their own goals
rather than the common goal of the organization that is bureaucracy is what he's describing listen to what Napoleon said nothing this is a direct quote from Napoleon nothing is more important than unity of command you should have one army acting on one line and led by one commander Bob says organization 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 in the book it immediately makes you stop it 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 auditing how you're spending your time and so obviously my common goal is very simple it's 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 of that was like okay well let me audit how I'm actually 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 focused on a common goal remember he says we sell commodity
products or cuts sake the only the only competitive advantage is we have is our people so it says for how do you keep everyone focused on a common goal first you start treating everybody equally the organization cannot have some people who are putting a different status then the rest you don't have executive dining areas and assign parking spots our stock options
for only the highest paid people are even dress codes for only some of the people if the engineers can take off to watch their kids in a softball game so can the late operators and the data entry people so pause right there immediately when pops the mind when I get to that section that sounds a hell of a lot like the stuff that Les Schwab and Sam Walton would preach as they
built their business this is from Les Schwab's autobiography we have had over the years some people in the office that sometimes think that they are more important than 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 warned them don't bitch to me because this is the way I want
it if you want to go out and start at the bottom changing tires and work into a manager's job then hop right to it if it weren't for those men in the stores working their asses off in all kinds of weather missing meals and working God awful hours you wouldn't even have a job so if you're working for Les Schwab is he not easy to interface with he's very easy to understand and there's
no those that's like five sentences there add to the five sentences you know exactly what Les believes in how he runs his it wants it to run his business same Walton said very similar he says if you're not supporting the customers or supporting the people that support the customers then we don't have need for you in Walmart kept it very very simple the reason that's
so important because if it's not simple won't scale Bob continues make sure that everybody can enter your building through the same door so it's all points like listen these like special stock options these assigned parking spots these executive dining areas these separate entrances over time it just you're just you're telling people with your actions these
are the special people you guys aren't the special people so let me go back to Jung Joo Young Jung Joo Young wrote the most inspiring autobiography I have ever read I got to redo do another episode because I think it was like episode 117 or something like that.
Jung Joo Young right is the founder of Hyundai he starts off so poor as the son of a he's a peasant son of a peasant farmer that he has to eat tree bark in the winter to survive and when it's a dying as the richest person in South Korea this is what he says from his autobiography he's writing his autobiography was like 90 and it's gonna sound a hell of a lot like what Les Schwab
says with Sam Walton was saying what Bob is saying in this book 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 drop 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 a their boss so literally like a red carpet so they're when their boss is a site visit he can walk on it this was Jung's response such formality is meaningless with our company motto their company
model motto was diligence frugality and affection hanging right there in the wall should they have a spared a second to think about the workers laying carpet is laying this carpet practicing frugality 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 that they're playing is just as important as the person next to them at fast and all we believe that you could be the best salesperson 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 clerk doesn't bill it correctly you end up with an unhappy customer everyone is key you are better off working to make everyone equal so they stay focused goes back what do you think he's about to say I bet you can already finish his sentence for him you are better off working to make everybody
equal so they stay focused on the common goal of pleasing the customer he's going to give us more advice on how to do that you need to install a reward system that keeps everyone focused on the common goal he's talking about incentives if you have fasteners 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 Charlie mongers like three rules for incentives and so this is what he said number one everyone underestimates the power of incentives number two never ever think about anything else before thinking about the power of incentives and number three which Bob is nailing the most important rule and 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 whole point is like listen your incentives have to they have to fit your overall common goal right right the common goal of pleasing the customer and so he gives an example if you do these incentives based on like separate groups
they can optimize for things that go against your common goal 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 wants it the incentive superpower that monger talks about you
clearly see by picking up the book we're like a quarter into the book that Bob clearly thought a lot about this of course he has it 35 years of experience I think by the time he wrote the book I think 47 years by the time it was published again or 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 to pay a special bonus bonus or profit sharing at 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 and using everybody's creativity throughout your entire organization and he really goes against remember he's got an MBA and this is what one of the things that also reminded that I think Bob had an common with monger and Buffett when you read the share hotel letters you listen to
them what they said at their AGM he's repeated over and over again like like business school they're teaching you the bad things and so his whole point is like this command and control structure was not something that Bob believed in he thought it was actually would limit the growth of the company and so he said and he gives an example of the idea that like one person or like
a group of leaders at the very top should should should do everything is actually harmful and is eventually going to lead to the decrease of growth in your company and he learned this one of the ways he learned this is when he was a boy scout when he's 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 10 had a leader who did not challenge the kids he arranged everything for us so they'd go on camping trips and instead of teaching them you know and they're obviously when you teach somebody when you let them do something they'd never done before they're going to make mistakes and so the troop leaders like oh you know all set up the the tent I will do all the cooking
I will start the fire they're such a just sitting around useless and he says we watched other troops cooking stew 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 troop today I probably couldn't survive in the woods for more than a few hours and he immediately translates that lesson to
what he observed in his you know multi decade career too many business organizations practice central planning to the extent that the creativity of their people is effectively 95% curtailed and he rails against this because he was taught that this is better management and it clearly does not agree with this businesses that become large and quote unquote better
managed saw their markets and profits eaten up by nimble startup firms with great ideas in efficient 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 fulfillment 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 of delegation common but he thinks it's a terrible bad habit why do companies develop such bad habits simply because the people at the top of the organization start focusing on how smart they are rather than focusing on how
little they know if 95% 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 this loss of creativity most of the people who are ignored are on the front lines to go back to what less said less Schwab said in sam waltz said right you're either serving
the customer or serving the people that serve the customer we don't need you the founder of ups chim casey same thing he didn't want to sit and talk to his executives all day right I've told the story a million times because it's just very memorable and hilarious all right not even hilarious just like very informative the fact that every to hit he had a driver and he
he instructed driver every time that we pass a big brown ups truck pullover and gym 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 insult to this loss of creativity most of the people who are ignored are on the front lines running the machines
are talking to the customers while the people doing the thinking and 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 that three times I'm not you know not repeating that on my own say it a few times
so it becomes a mantra he feels decentralized this extreme decentralized decision making is one of the most valuable things that they have in their company culture with over 2600 stores around the world the decisions about which items to stock in each store are left to the people in the store computers help to pick a basic starting inventory but items are added
as 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 fill you the complete autonomy and trust
from your organization to fulfill their request what's going to have like and then you obviously inform the customers like hey this is special we have to do this for you and then you do it to their satisfaction you have a customer for life this is something that uh uh one of my favorite biographies I've ever read I think it's episode 316 it's on the founder of boogady
and the reason I even found this book is because I became obsessed with Enzo Ferrari and I did a bunch of episodes on him and in Ferrari's biographies it talks about hey his blueprint he was just copying what boogady did and so I find this like crazy uh biography of boogady written by his daughter I think in like the 1960s and there's a story in there that I never forgot
that boogady receives a letter from one of his customers okay about a car that's still operational a boogady car uh that the guy bought 30 years ago and he something broke on it and he needed it fixed and boogady reads his letter and then writes them back and the the the punchline is the incredible level of customer service and just love for the work uh his work that boogady
had was boogady offered to custom make they didn't stock that part they didn't even have it anymore he's like hey I'm gonna custom make this replacement part part for that car that's almost 30 years old and I'm gonna give it to you at cost that long term view okay not trying to make a couple dollars on this column first of all even doing it's remarkable right and then
selling it at cost is actually genius because how many people is that satisfied customer gonna tell a lot more than whatever markup you would make on that one-off part and so Bob then tells us why is this so important because it's this virtuous cycle it leads to consider where your new product ideas come from we encourage people in each store to come up with products
to add to our general lines if a customer asks for a product that we don't currently sell we encourage our people to find a possible source to satisfy this customer's request if successful the store may then start selling the same product to other customers or nearby stores may then also start offering the item eventually it becomes a company-wide product so a lot
of people are like okay well how are you gonna manage you know you got at the time 2700 of these little stores you know they're all run independently and he's like listen Bob's like of course you need some rules but you don't need these thick manuals and nobody's reading you need a handful of principles all oriented oriented around the goal of the organization this is why
it's 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 sheets 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's repeating it again and he says what his common goal is growing our core our company through customer service eliminate all those three ring binders filled with standard management practices another suggestion to develop the potential of your people
is to emphasize training most of the people who join us come out of 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 an entry level positions in fastinal stores so he's going to use this this importance of constantly training over and over again I actually think
there's a better word for that sole price who is the most influential retailer to every live Sam Walton took more ideas from him Jim Costco our Jim Costco Jim synagogue of Costco was sold prices uh mentee and he started working for sole price when he's like 19 he gives this interview when he's like 70s like people like oh you must have learned a lot from sole price like
no I don't learn a lot I learned everything I know the amount of successful retailers that built you know in some cases many cases hundreds of billions of dollars of retail companies Costco Home Depot Walmart that talked about and learned from sole price is it's just absolutely incredible but I think sole has a better he has this mantra this this maximum that he would repeat and he
says you train an animal you teach a person and so when Bob uses the word training I automatically substitute that for the word teaching that's why think about why Jim synagogue who was obviously mentee of sole price he's like if you're not spending 90% of your time teaching you're not doing your job you're teaching or training all of the people in your organization the standards
and expectations of this common goal that your entire business is oriented around and so the way Bob would describe this is he wants leaders he doesn't want managers and if you're a leader it's much more like a coach than it is and he gives us baseball it gives us sports analogy right and so he talks about the difference between a coach and basketball and a manager remember
he wants leaders not managers and a manager in baseball have you ever considered in this this will basically illustrate his entire idea around this chapter have you ever considered the top supervisor on a baseball team is called a manager while the top supervisor on a basketball team is called a coach look at the control each one has his whole point is like you got
to give over the sphere of relinquishing control the baseball manager is controlling each move of the player waving the shortstop over a little or signaling when the runner should steal the base or ordering the pitcher to walk a runner in the baseball game the manager is in complete control and fits the old style idea of a manager what he means by old style idea of managers
what they teach in business school which he feels is useless in the basketball game the coach is relying on each player to make quick decisions about passes and shots this is much more bobs philosophy okay 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 and communicating the results upward bob 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 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 our 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 organization I worked one summer in quality control
department of a metal 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 whenever we had a question our problem arose nobody went to the general manager who's hiding in his cave right we all went to the assistant who was accessible
the assistant was growing in stature with the overall plant managers because the assistant knew so much more about everything else that was going on so over time the assistant leapfrog 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 on 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 throughout the book of this simple but I would say very valuable pieces of advice here's one of them pay attention to the silent people when you are leading if half of the people are not asked
for their new ideas you only have a 50% chance of finding the best solution pay attention to the silent people when you're leading this reminded me of Brad Jacobs one of the most popular episodes I've done recently it was episode 335 it's how to make a few billion dollars by Brad Jacobs excellent book also written by a person that loves founders Brad sent me a great message
that he said he was addicted to these founder book reviews but in that book that he wrote I thought it was actually genius so you know he buys a bunch of new companies all the time and he was shocked that how many people never solicit advice from the people working in the company it's very similar to what Bob's telling us here and so he's got two questions they would ask
every single employee and I think there's genius in the simplicity 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 stupidest thing that we're doing as a company and he makes the point in the book like you would be shocked at how much valuable information that you
get just from asking those two simple questions sounds very similar to what Bob is saying here if half the people are not asked for their ideas you only have a 50% chance of finding the best solution and then something Bob also talks about is just 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 halfway through more than halfway through the book and it really clicked for me the first time I was going through because obviously you know before I sit on a talk to right now I read the book but I reread it the highlights and notes over and over again I'll read what I wrote on the note in one second he says while attended
college I worked for a manufacturing company that employed about 300 people I spent a lot of hours in the office on Saturdays sometimes other people came in on Saturdays but only one person was certain to show up the president and founder of the firm at the time he was 72 years old he had an obvious interest and pride in 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 influence my understanding of leadership and so I got to that part and I reread it I was like wait a minute he knew each employee and appreciated his or her contribution and this is when it started to click if his goal we're talking about Bob now okay this is my note to myself
if his goal if Bob's goal is growth through customer service he has to fully develop every single employee that delivers that service his constant repeating that fast and all's advantage is people serves his main goal all of his ideas work together it's that virtuous cycle that virtuous flywheel there's another advantage of decentralized this extreme decentralized
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 fast and all has been growing at a rate where doubles in 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 haul 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 that unless one attends to the future you get locked into the past the main reason fast and all doesn't grow much to 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 with better ideas will come along to each your lunch and if you have the flexibility and the empowerment of all and the decentralized decision making
in the this complete autonomy that fast and all does sometimes you're the one that is inventing the future so let me go back I'm going to put the book down for one second and I want to go back to that story of the CEO that was meeting with Buffett the CEO that succeeded curling so this giant part of fast and all's business now after this was invented after this book was written
okay the first the first version in 1997 was the fact that they have these vending machines and the way I think about the vending machines is like you know think of every to anytime you've been like a hardware store right you go to ace hardware or home deep or anywhere else and think about how all the equipment and supplies are presented you know I kind of like searching
through it's kind of like a chaotic mess so will overton which was the the the former CEO but he's not long as he now but he's the one that was CEO after Bob okay overton also developed an industrial vending machine system there's a video on YouTube that's fascinating about this it's from fast and all fast and all has their own YouTube channel you can see the vending
machine if you just type in fast and all vending machine if you're interested in this I thought it was actually cool uh overton developed an industrial vending machine and I searched for it after I read this because I gotta see what this looks like overton had developed an industrial vending machines system helping Bob realize a lifelong goal in 1951 as a 12 year
old working in his father's auto parts store Bob was bothered by the fact that his dad had to send customers searching for nuts and bolts to someone else's store he imagined that a vending machine installed at his father's place might pop out fasteners like gumballs 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 fasteners over the counter thus fast and all was born 40 years later working with a snack machine manufacturer and off the shelf software will overton got the job done fast and all's vending machines have been a big hit with customers so their vending machines are actually installed in their customers locations it cannot get simpler
for this you gotta watch the video I'm telling you overton got the job done fast and all's vending machines had been hit been a hit with customers generally helping them save 30% on supplies the machines have cut down on theft and enabled automated reordering that four year old business which I think now it's like 15 years old but within four years old they this new
idea already started contributing to 36% of the overall sales of fast now who know I think it's like over 40% now think about that go back so now I'm 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 repeating
what brought success in the past anytime you stop thinking about the future some people with better ideas will come along to each your lunch thank god due to their unique enabling of this in this super belief 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 Bob's 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 I've heard it described like this way this way anywhere else the death of a family member or a close friend gives us a sense of great loss a feeling
something that something will now be missing in our life what we are missing is the uniqueness of the person who has died a uniqueness that we were privileged to know and understand that same uniqueness 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
humanists when I was a young man I learned that everyone did better at tasks than I thought they would before starting them I recognized this as a bias within me and adjusted my willingness to delegate accordingly I 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 lie hidden
in other people and he talks about people that started just picking out orders are now CEOs are very valuable executives people who started picking orders or answering phones at fastinal have grown to lead hundreds and thousands of new team members and so some of this fear of delegating comes from you know this the giant egos that had a lot of people in entrepreneurship
have and a lot of leaders and executives definitely have and so he's got a piece of advice and he's got four ways to do that he's like you have to learn to suppress your ego sam waltz and said the exact same thing he said listen you don't have to have a small ego to work a Walmart but you have to be you know very adept at hiding it at some essentially suppressing your ego is the way
sam waltz and oh that's the way bob describes sam waltz's idea so bob says learn to suppress your ego the first place to start if you want to suppress your ego is to admit that you have one we all have one and nobody likes theirs to be insulted and in a work environment egos in a typical work environment especially at a successful company egos are in full bloom so how do
you work at suppressing your ego I can give you four suggestions that I've observed over the years number one treat everyone is equals 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 he's driving trucks he's not like I'm the CEO of this you know public company how how
can I be a truck driver he's like well what's my goal our common goal our commitment is to this common goal growing through customer service is not driving a truck because we're shorthanded in that department and therefore our customer delivery comes later than it would if I'd get behind the wheel is 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 anonymously and then he feels the need to offer what he calls a few words of caution there's some things that you're going to have to watch out for it goes back to this number one keep the team goal consistent with that of the main organization so you know you're gonna have subgroups he calls
them subgroups teams they will naturally develop their own goals and in many cases those goals will be in conflict with that of the main organization one department can develop such 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 and another
way to keep on the path keep reminding yourself how little you know pardon me if I keep telling you how to forget how smart you are even if you are smart you're better off forgetting 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 else they either taught me or learned from their example good or bad nothing here stands out as a brilliant breakthrough everything is a passage of information to the lens 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 book let me go back to that real 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's saying here's like you know there's nothing here stands out as a brilliant breakthrough everything
that I wrote everything that I've learned I learned from other people either through their example or otherwise it that's another form of suppressing his ego of keeping your ego in check and a good way to keep your ego in check is just to keep reminding yourself how little that you know Thomas Edison has a great quote about this and he says we don't know one one thousandth
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 organization's commitment to the common goal so he's going to summarize this because he loves maxims and he he thought he makes this 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 practiced and we know because human nature doesn't change they they'll never be universally practiced and so our ability to actually learn and change our behavior will always be at odds with the larger human nature that's why I think it's so valuable
it's not because the ideas are so hard to understand they're so hard to apply and especially apply them over you know since 1967 like fast and I'll has number one challenge rather than control number two treat everyone as your equal number three stay out of the spotlight number four share the rewards number five listen rather than speak number six see the unique
humaneness in all persons number seven develop empathy number eight suppress your ego number nine let people learn number ten remember how little you know follow these rules and provide leadership to your world and then when I love us he ties 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 Atomis Jefferson or an Abraham
Lincoln or Martin Luther King or Helen Keller or Alexander the Great lives on for centuries and makes the world a better place for all of us become a leader at home and in your work make the world a better place because of what you do and that is where I leave it for the full story highly recommend reading the book you want to buy the book using the link that's in the show
notes on the podcast player are available founders podcast calm you're supporting the podcast at the same time that is 300 and 60 books down 1,000 ago and I'll talk to you again soon one more quick thing before you go there is a founders event taking place in person in Austin Texas from September 27th through the 29th for years people have asked me to introduce them
to other founders listeners these events that I 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 and high value people that listen to founders podcast it turns out that's a good filter and an easy way to build a relationship with somebody and these relationships
produce non-linear returns there's a few separate sources for this idea that I think you'll find interesting I was at an in-person event in Texas and I was actually having a very fascinating conversation with a guy where his job there's a ton of wealthy family offices in Texas and like a lot of them built fortunes in real estate 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 ton of time and energy and money and resources behind this and he had a great line to describe why he said because a relationship between these two types of people produce non-linear returns this is also true for people that listen to founders it is also something that reoccurres
in the biographies of unised study every week this idea that relationships run the world in fact when I when I was able to speak to both sam zel and charlie monger before they passed away they both said similar things they said it they had the same idea they said in different ways but the idea was that you need to invest heavily in relationships and they both told me examples
of relationships they had built and maintained over decades and so that is why the founders events exist to help you build relationships with other founders investors and 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 the exact same interest that you do these are also all
inclusive locations which means all you have to do is get yourself there and I take care of the rest you're lodging your food access to all the events is all taken care of if you want to attend go to founderspodcast.com for such events as founderspodcast.com for such events and apply and I hope to see you in Austin
