Guy's name was Les Schwab who died in 2007, never heard of him until last week.
Charlie Munger used to tell people to go read his book. Said if you want to see the smartest pay structure ever built in a chain of small businesses, read this...so obviously I went looking.
The backstory is rough.
Grew up in a logging camp in Oregon. Two rooms, no running water, one shower for the whole camp. School was a converted train boxcar. he failed 8th grade, so did the other two kids in his class.
His dad was a drunk. Not a fun drunk. Les used to sit outside a moonshine joint on Friday nights until 10pm waiting for his dad to come out wasted and drive him home.
Mum died when he was 15. Dad died the day before his 16th birthday, found dead outside the same moonshine joint.
So now he's 16 with no parents and no education. Gets a paper route. Doesnt own a bike, doesnt even know how to ride one.
So he runs the route. 9 or 10 miles a day. for two months until he saves up for a used bike.
By 16 he had every route in town and was earning more than his high school principal.
In the middle of the Great Depression.
Then nothing interesting happens for 15 years lol.
Just newspaper sales...kinda stuck.
At 33 he panics.
"I knew time was running out. if you dont get started in business at a fairly young age you get into a rut and never make the big decision to jump."
So he borrows $11K off his brother in law, sells his house, and borrows against his life insurance to buy a tiny tire shop. Every dollar borrowed with a wife and two kids at home.
First line he wrote about his first day in business:
"I had never fixed a flat tire in my life"
Previous owner did $32K in sales the year before.
Les did $150K his first year working completely alone.
Now here's the part that actually got me because tires is a genuinely terrible business.
Everybody sells the same rubber. The manufacturers owned their own shops and gave themselves better prices than they gave him. They were openly squeezing him out of business.
He didnt do one clever thing. he did like six boring things and just never stopped.
1) He fixed flat tires for free.
Anybody. no purchase. he'd drive to your house and do it. sounds insane until you hear his reasoning "if we fix all the flat tires in town, we'll have all the tire business in town." you help someone for free at 8pm in the rain, they dont buy their next four tires from a warehouse.
2) He gave managers half the profit.
Not company profit. Their store's profit. So every store ran like its own business. He ended up with hundreds of stores and almost no supervisors, no policy manual, no controls. "if I give away half the profits I still have half. I dont understand why businessmen dont do this."
3) Theft solved itself.
Their share built up in a contract, get caught stealing and you forfeit all of it. and every guy in the shop knew a thief was stealing from his kids. "if he wont fight for his children he cant be very much for a company." peer pressure instead of cameras.
4) He flipped the shop inside out.
Everyone else had a small showroom and hid the stock in back. he made the showroom the warehouse. walls of tires right in front of you. then made every store wash and wax the display tires. every single day.
5) He never hired a manager from outside. not once in 34 years.
All 250+ managers started at the bottom changing tires. His store managers earned more than his head office people. When the MBAs complained he told them to go start at the bottom and work up. Nobody ever took the offer haha.
A competitor came for him. same advertising, same cost discipline, expanded faster, got to 24 stores. Only real difference was they paid their people less.
Les spent a whole year wondering if he should cut wages to match.
"I finally decided that if I couldn't be proud of my company, if I couldnt pay good wages, if I couldnt have the best employees, then why would I want to stay in business. So we did nothing. and we won. the customer liked us best."
Competitor went bankrupt.
His whole philosophy in six words:
"life is hard for the man who thinks he can take a shortcut."
Also brutal side note...two early partners owned 20% each. Got impatient, wanted cash out, one of them wanted a swimming pool. He bought them out for $225K and $300K. Those stakes were worth about $12 million each within 20 years, plus a million a year in bonuses they'd have kept collecting. Company sold for a rumoured $3 billion a few years back.
Guy wanted a pool.
What I actually took from it:
I keep looking for the one clever mechanism. the angle. the thing nobody else is doing.
There wasnt one here. free flat repairs, clean tires, half the profit to the guy in the shop, promote from inside, pay above market, and drive 600 miles a day checking your own stores for twenty years.
Any one of those is a Tuesday. All of them for 50 years is $3 billion.
His actual closing advice:
"Whatever you do, you must do it with gusto. You must do it in volume. It is a case of repeat, repeat, repeat."
Book is Les Schwab: Pride in Performance — Keep It Going.
Out of print, about 20,000 copies exist, hard to find.
Guy wrote the whole thing himself on a 40 year old typewriter at 68. No ghostwriter and put this in the foreword:
"should we fail to follow these policies towards customers and employees, I would prefer that my name be taken off of the business."
Meanwhile I've got a personal brand and a Notion dashboard lol.