YouSaid · the spoken record

Chester Cajo

lines on the record: 63
first: 2025-11-07
most recent: 2025-11-07
sittings or episodes: 1
sources: podcast

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“And for that reason, they build their companies to thrive long after they're gone. They take care of their employees and in turn, the employees take care of them and their companies. All companies run into some sort of problems, and when employees feel like partners, the success of the organization is very important to them. Sean and Ian close out the book with the following line. Whether you're an investor or an entrepreneur, invest in the best human capital you can find, end quote. That wraps up today's episode on intelligent fanatics. I'd like to extend a special thank you to Ian Castle and Sean Idings for allowing me to chat about this book today, since it is out of print. I think it's a very important subject that's definitely worth studying, and I appreciate Ian and Sean sharing the comment findings they found in studying these exceptional managers for us to use as a blueprint in assessing management teams ourselves. So with that, thank you so much for tuning in to today's episode.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“And tell you about how great their business is. The world truly belongs to the discontent. There's no doubt that the intelligent fanatics cover today shared many traits and they provide a high-level blueprint for building a dominant sustainable business. If you're an investor looking to invest early in these great companies that are led by intelligent fanatics, then seeking out these types of characteristics will be useful to you. To conclude the book, The authors discuss how the only truly sustainable competitive advantage is a company's human capital. Eventually, companies can and will copy products, but it's extremely difficult to copy a strong culture. All the capital in the world cannot buy and transform a poor culture into a great one. Deeply rooted cultures are built up over years. One higher at a time, and leadership in culture are as strong as their weakest link. In intelligent fanatics,”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Winston Churchill did, who stated courage is going from failure to failure with enthusiasm. Lastly, let's talk about productive paranoia. Jim Collins describes successful leaders as being paranoid, neurotic freaks. Intelligent fanatics recognize the competitive nature of capitalism and how someone is always out there trying to figure out how to eat their lunch. It's no wonder all retailers fear Jeff Bezos, as he stated to your margin is my opportunity. Productive paranoia isn't just about worrying about the competition, but actually doing something about it. Intelligent fanatics are always looking for ways to make their businesses better. They want to disrupt themselves before somebody else disrupts them. Sam Walten, for example, was never satisfied and content with his business. He said that the lines were too long at the cash registers, that his people weren't being helpful enough. But if you ask some CEOs of other retailers, they would possibly brag to you.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Innovation. For these experiments to be successful, employees need to be encouraged to take calculated risks, and the company has to be as supportive with that. If employees risk being fired for taking a calculated risk, then they really have no incentive to do so. We always hear about the success stories and those that made it to the top, but we don't know about many of the failures or the personal sacrifices that intelligent fanatics had to make. Almost all successful people went through incredible hardship, obstacles and challenges. So if you look at Charlie Munger, for example, you know, when he was around age 30 or 31, he went through a divorce, he had to financially start from zero. He lost his nine-year-old son due to leukemia, and he became blind in one eye as a result of a failed cataract surgery. Or take Herb Kelleher, who had to fight four years of legal battles to get the first Southwest Airlines flight off the ground. Intelligent fanatics persevere through adversity, for they see courage the way”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Is just 6%, while retail overall has turnover of 60 to 70 percent. And Chick-fil-A is another really good example. They have some of the lowest employee turnover in the fast food industry. The last two concepts I wanted to touch on as it relates to intelligent fanatics are experimentation and productive paranoia. Experimentation and innovation are a necessary for a company to keep up with the ever-changing environment. And as a business grows, it becomes more and more difficult for them to compete with smaller, more nimble competitors. Jeff Bezos and Amazon understood the exponential payoffs that well-thought-out experiments provide, and he knew that not every idea will work out as planned. Bezos stated, a few big successes compensate for dozens and dozens of things that did not work, end quote. This approach to business led them, of course, to launching AWS while many companies punish failure. Bezos found it to be necessary for”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“The other aspect of an employee first culture is hiring great people. If you're a manager with a shareholder first mentality, then it's likely tempting to offer lower wages for your employees or perhaps a subpar benefits package. That can work wonders from a financial perspective in the short term, but that can be detrimental in the long term. On the other hand, paying high salaries will do the opposite. It can attract a large pool of applicants free to select from, and with the right incentives, you can empower these people to create tremendous long-term value for their organization. And if you have a great culture, then these employees will stick with you for a long time. As Richard Branson stated, train people well enough so they can leave, treat them well enough so they don't want to, end quote. I think that employee turnover can be an important metric to consider when analyzing the quality of an organization's culture. So you look at Costco, employee turnover at Costco,”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Align values, and then you go and try to make them successful, or at least give them an opportunity to become successful, you are going to become as successful organization. While many publicly traded companies have a shareholder first mentality, intelligent fanatics seem to have an employee first mentality that created positive feedback loops. When employees are treated well, they treat customers well. Customers tell their friends and their friends might become customers too. And this is to the benefit of shareholders. This is in contrast to a shareholder first mentality of most corporations. Focusing purely on shareholders with little regard for employees or customers leads to companies to try to cater to the whims of the market. Intelligent fanatics had a way of getting their employees to think and act like owners. This was done with financial incentives that aligned their financial interests with that of the actual owners. And employees received intrinsic motivation to think-like owners.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“In unconventional business model and work very hard to put it in motion. We already talked quite a bit about incentives, but it's hard to overestimate their importance. A good incentive system includes both intrinsic and extrinsic factors. So it's not only just about the financial incentive. Extrinsic factors include things like money or status and intrinsic factors include things like personal growth, purpose and meaning. Having the opportunity to overcome a challenge, helping people or simply just making the world a better place. A talented individual who's going to work with both powerful intrinsic and extrinsic forces at play is likely going to beat the talented individual with the best financial incentives in place. Lesh Schwab wasn't just about enriching himself, he created his company to provide opportunities for young people to succeed. Similarly, Chester Kajo stated, If we've hired the right people with consistent”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Costco's another great example of this kind of discipline. They've built their entire business around doing just a few things exceptionally well, selling a limited selection of high-quality goods at unbeatable prices, treating employees well, and running stores with efficiency. Instead of chasing every retail trend, they stuck to their core model for decades, proving that long-term focus and simplicity can outperform complexity and constant reinvention. The bottom line is that in most cases to be very successful at something, you need to be highly focused on that one thing. Salt Price was maniacally focused on selling things as cheaply as he could. Lesch Schwab told his managers, sell tires, give service, keep expenses low, communicate with employees, and you'll come out all right. Intelligent fanatics often run their businesses without an extensive and detailed business plan. Anyone can make great projections, but few can develop a simple yet effective”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Shiny object, while underestimating the power of focusing on one or two things for a decade or more. The podcast you're listening to right now, I think, is a good example of that. We study billionaires was started all the way back in 2014, and I frequently bump into listeners who have tuned into our show for five, six, seven, eight years or more. That sort of loyalty is hard for other podcasts to”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Takeaway I've learned from my own personal experience as well. Whenever my attention gets too spread out on too many things, meaningful progress in any of these things is difficult. When you want to get ahead in life and succeed, it can be tempting to say yes to a lot of things. It reminds me of something I learned from Steve Jobs. Joni Ives, who was the chief design officer at Apple, said that Steve was the most remarkably focused person he had ever met in his life. While Steve was a maniacally focused on the task at hand or on his vision, he would ask people he worked with, how many things have he said no to? This is a powerful question because every time you say yes to one thing, we're saying no to a thousand other things. So I think intelligent fanatics are really good at understanding what they can do well, what sort of advantage they have in a fiercely competitive marketplace, and stick with those one, two, or three things. In business, it can be tempting to chase a”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Which normally takes significant upfront investment that will lower profitability in the short term. As new cores Ken Iverson stated, every decision we make as managers is rooted in long-term perspective. In quick trips, Chester Cajo stated, most everything we spend money on in any given day is important 10, 15, 20 years from now. A good majority of convenience stores in the US tend to be old, run down, and not well taken care of. Quick trip, on the other hand, continues to reinvest and renovate their stores every few years to keep them in pristine shape. It's one example that can be difficult to justify in a spreadsheet given how capital intensive the business model is, but sometimes intelligent fanatics simply go with their gut instinct. The bottom line is that the stronger a company's culture, the more likely they can stand the test of time. The book also gets into the power of focus. Over the years working on different business pursuits, this is”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Product that is manufacturing. You teach others to cooperate with you, that is organization. To succeed in business, it is necessary to make the other man see things as you see them. I say as you see them, which means that you yourself must first see and believe before you can tell another, end quote. Saul Price, who was Costco founder Jim Senegal's protege, stated, If you're not spending 90% of your time teaching, you're not doing your job. So focusing on teaching not only helps develop talent, but it's also the best way to reinforce your knowledge on the subject. And of course, the intelligent fanatics also owned a meaningful piece of the businesses they led. Their ownership position combined with execution gave them ultimate control over the long-term direction of the company. The only way to succeed in dominating a market for decades is to have that long-term focus. They built the infrastructure to support a larger business.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Commitment and consistency bias at play as popularized in the Charlie Monger speech The Psychology of Human Misjudgment. All of the intelligent fanatics covered in the book were either absolute beginners with no industry experience or they had minimal experience. Their inexperience allowed them to be open to trying something new and to challenge the old guard. These new ways of operating led to business models that the established companies simply couldn't compete with. Herb Kelleher was told that his business model would be impossible to operate profitably. But being new to the industry, he wasn't afraid to attack a problem from a different angle. Intelligent fanatics not only led by example, but they're also excellent teachers. John Patterson from National Cash Register, who was outlined in chapter 1, said the following. Business is only a form of teaching. You teach people to desire your product. That is selling. You teach workmen to make the right”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“The Warren Buffett newspaper test is a simple ethical guideline that prompts decision makers to consider how they would feel if their actions were reported in the local newspaper by smart but unfriendly reporter. If you would be uncomfortable with your friends, family, and neighbors reading about the decision, then it's a bad decision. The test is designed to evaluate decisions not just for legality, but for long-term reputation and integrity, as it highlights the potential for reputational damage and consequences beyond immediate profits. One of the other common themes with the intelligent fanatics studied was their style of unconventional thinking and how they were able to take on an established industry from a different vantage point. Industries are full of unwritten truths and established ways of thinking, and industry veterans often get accustomed to a certain way of doing or thinking about things and have trouble approaching problems from a different viewpoint. This is the”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“The authors right here offices of intelligent fanatics are rarely fancy. Due to their belief in conserving money for things that matter, end quote. Frugality sends a powerful message. It shows that leaders care more about substance than appearances, and by avoiding the excess, these leaders reinforce a culture where every dollar is valued highly and is directed towards creating long-term shareholder value. In this mindset, builds trust among employees and shareholders because people see that leadership isn't asking others to make sacrifices that they themselves wouldn't make. Intelligent fanatics have integrity and always do the right thing, even when it's hard to do so. To them, uncompromising integrity of character is invaluable. Integrity isn't something that can be taught, so great companies look to hire individuals who already have it. To help determine what the right decision is, one filter you can use is Buffett's newspaper test.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Of companies Each company has the product they sell to customers, and then they also have the product that they sell to employees, which is the culture. For a company to succeed long term, it really needs a culture that attracts the right employees and is able to promote loyalty. Another interesting angle when looking at intelligent fanatics is their views on frugality and expense control. This is an aspect of the business where both employees and leaders have 100% control, and frugality is another important value for a performance-driven culture. Intelligent fanatics often demonstrate their values of thrift by setting a good example. When Sam Walton, the founder of Walmart, became the richest man in the world, he still drove an old beat-up 1979 Ford F-150. Jeff Bezos was living in a small apartment and driving a Honda when Amazon went public, and of course, Warren Buffett still lives in the house he purchased in 1958 for $31,000.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Southwest Airlines mission was about connecting people through friendly, reliable, and low-cost travel. Employees take pride in creating joyful travel experiences and are treated as the key to the company's success. And they've been successful in getting employees to buy into that mission and vision. Leadership is critical when it comes to developing a culture because senior leaders will create these systems and structures and everyone looks to the leader's behavior for guidance on how to behave themselves. In a lot of companies, managers will say one thing and do another thing, which creates this misalignment. But someone like Kerb Kelleher was the perfect role model for those values. He expressed sincere appreciation for employees and remembered their names. Colleen Barrett, vice president of Southwest, said Herb is Southwest Airlines. He exemplifies everything the company stands for. So I've personally worked at both”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“This is really such a critical insight. Intelligent fanatics have a knack for getting people bought into the company's mission. I'm reminded of my days playing a high school basketball and football. I had an amazing coach that actually coached both sports and he knew that some people were on the team for very selfish reasons. But if you're going to win the state championship of a team sport like basketball, you need everyone bought into the mission of the team. And that's to win. Not to have the big highlight reel or getting the attention from college coaches or making our parents proud or whatever selfish reason players have in playing. I recently did an episode on Tesla whose mission is to accelerate the world's transition to sustainable energy. There are plenty of cases of engineers choosing to work with Tesla for less money because they believe in Tesla's mission. And they wanted to be a part of something bigger than themselves.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Through the organization from top to bottom. Top performing companies maintain a small company feel and have long time horizons. The intelligent fanatics outlined here displayed all of these traits. In their businesses, put together exceptional performance for multiple decades. At the end of the day, intelligent fanatics are effective leaders. The authors write here, leadership is one of the most important aspects of a successful organization. A corporation is comprised of people who weather consciously or unconsciously are essentially working for primarily selfish reasons. Great leaders can attract and most importantly retain high quality individuals by convincing them to work hard for the good of the company. Intelligent fanatics create a higher cause that all employees have the chance to become invested in and they provide an environment in which it's natural for employees to become heavily invested in the company's mission.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“A strong culture, an investment in people become the foundation for long term success. These qualities form the essence of what's described as the intelligent fanatic model. A framework for how exceptional leaders turn human potential into a lasting competitive advantage. In the 2010, Berkshire Hathaway shareholder letter Buff has stated, our final advantage is the hard-to-duplicate culture that permeates Berkshire. And in businesses, culture counts." Companies that can harness the full potential of human capital can build nimble, sustainable organizations that are hard to replicate. In covering many types of companies here on the show, it's clear that a strong and adaptable culture is a key theme that separates an industry's top performers from their peers. Traits of a strong culture include the quality of the leadership, the maintenance of an entrepreneurial environment, prudent risk-taking, innovation, flexibility, and open communication”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Employees who stuck around for that long, they tended to stick around for a very long time. According to the book here, Quick Trip's turnover rate was roughly 13% compared to the industry average of 59%. Quick Trip was also a pioneer in playing employees a bonus based on their store's operating profit and allowing employees to own a large stake in Quick Trip through the company's employees stock ownership program. Cajo's main motivation wasn't to make the most money for himself, but to develop the best people and to provide the best service to customers. He once said, it just so happens that by making our employees successful, we made our shareholder successful and we make our customers happy. So it's clear that these intelligent fanatics were able to build cultures that really empowered their people at every level of the organization. Cajo's approach at Quick Trip mirrors the same core principles seen in other great companies, where adaptability”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Employees were really encouraged to take the initiative, learn from experiences, and grow into leadership roles over time. Could Joe understood that by investing in people and giving them room to develop, he was not just building stronger employees, but future leaders who would carry the company's values forward and showcase loyalty to the company. Kajo preferred to pay new entry-level employees higher wages relative to the competitors. This led to a higher number of applicants for positions, which allowed Quick Trip to be highly selective in who would be able to join the organization. Quick Trip was in the privileged position of interviewing roughly three out of every 100 applicants they received. And due to their culture of excellence, the applicants that made it through the hiring process were also self-selective as only 70% of new hires would make it out of training. And around 50% would last in the job for six months. But for”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“And giving them opportunities to grow and succeed. On leadership, Kajo stated, leaders are not necessarily born with the highest IQs or the most drive to succeed, or the greatest people skills. Instead, the best leaders are adaptive. They understand the necessity of pulling bright, energetic people into their world and tapping their determination in drive. True leaders never feel comfortable staying in the same course for too long or following conventional wisdom. They inherently understand the importance of constantly breaking out routines in order to recognize the changing needs of their customers and employees." I think many people view leaders as someone with these naturally born talents or personality traits, but I like how Kajo, he really prioritizes more of these soft traits, like adaptability and the desire for continuous learning. At Quick Trip, this mindset translated into a culture where”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Cajo's competitive advantage over his larger rivals was his focus on employees and innovation. He would spend a large part of his time, roughly two months out of the year, in direct communication with Quick Trip employees. He had stated, without fail, each year we learn something important from a question or comment voiced by a single employee. Cajo believes in treating employees well and incentivizing them properly, and employees then provide exceptional service to the customers, so very similar to what Les Schwab was talking about. Amazing customer service will lead to customer loyalty, which is difficult to replicate, especially by competitors who don't value their employees. The authors right here, exceptional employees and a quality corporate culture have allowed Quick Trip to stay ahead of the competition from convenience stores, gas retailers, quick-service restaurants, cafes, and hypermarkets, end quote. Similar to Schwab, Cajo's main objective was always about employment.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
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2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Provided longer hours of operation than supermarkets, customers were willing to pay higher prices. In the beginning, QuickTrip did about everything wrong. They opened their first store in Tulsa, Oklahoma, but paid little attention to where the most attractive location would be, and the merchandise was poorly chosen. After the first three years, the company was on the verge of bankruptcy, but they managed to scrape by with a few lucky breaks. Cajo's success was highly influenced by his long-term mindset, his ability to adapt, and his willingness to continuously learn. For example, Quick Trip started installing gas pumps in 1972 once self-service became legal in two states, and had built up financial and intellectual capital to prepare for such a move. What's the one thing in business spreading as fast as AI? AI risk. Every new tool your team signs up for, every vendor that flips on AI features”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“That I'm able to visit. Warren Buffett once tried his hand at the convenience store business in 1951, him and his friend from the National Guard. They purchased a Sinclair service station. In those days, a service station consisted of a few pumps out front, an on-site repair garage, and limited offerings, if any, inside. Buffett was only 21 years old at the time, and there was a Texaco station right across the street, and that taught him the hard way, the importance of having a competitive advantage in business. It was seven years later in 1958 that Chester Cajo was looking to get into the gas retail business himself and like Buffett, he had no clue what he was getting himself into. But unlike Buffett, he was eventually able to go head-to-head and really compete with the other players instead of exiting the industry like Buffett did. In the 1960s and 70s, there was little competition in the convenience industry. Since these businesses”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“From one store to hundreds of stores today. And billions of dollars in revenue, generating tremendous value for shareholders. The third intelligent fanatic I wanted to be sure to cover on the show today is Chester Cajo, who's the founder of Quick Trip. For those in the audience who aren't familiar, Quick Trip is a chain of convenience stores and gas stations known for its clean facilities, friendly service, and made-to-order food and drinks. From 1962 to 2015, Quick Trip grew its revenue base from $1 million to $11 billion. Whenever my friends and I would drive down to Kansas City, one of the highlights of our trip was always swinging by a quick trip to grab a steak and cheese Taquito or one of their other convenient snacks that they have hot and ready to eat. Buckies is actually probably my favorite convenience store here in the US, but unfortunately there aren't really any in my general area. So Quick Trip would have to take the crown as the top convenience store.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“The lowest level. Store employees are oftentimes the individuals with perfect information and knowledge of the situation at hand. And once manuals are created, these manuals tend to only grow. And soon enough, your company is just another big corporation. To Schwab, the main job of the head office was to provide motivation, to create programs that make it possible for employees to be successful and to track and communicate how well stores are doing. He also implemented an open book policy. So employees could get practically any information they wanted about the business, including company profits, employee salaries, and so forth. He even put together a report that showed the net profit of each store and distributed it to employees. Leshwab Tire Centers has been a private company during its entire corporate existence, so there are few records on the profitability and revenue of the company, but regardless of the lack of data, we do know that they”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“We've covered here on the show. Schwab ran his business in a decentralized fashion and preferred that the people running the tire shop had the autonomy to run the business as if it was their own. The authors write here authority and autonomy promote a feeling of control and self-worth that is intrinsically valuable to employees. To operate with such a model is difficult without the right amount of communication among separate businesses, the hiring of quality individuals, or clear corporate values for employees to abide by, end quote. When Lesh Schwab acquired tire stores in Idaho in 1966, this was what he told the new store managers he expected of them. The big thing that's going to hit you right between the eyes is that we expect you to run the store. You're on your own and you will sink or swim according to your abilities. It takes quite a man to be a store manager. Schwab believed that decision making is best executed”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Newcomers' opportunities to succeed. As opening up a new store became more and more difficult, Schwab put programs in place to support these new owners and give them a path to profitability in their first year of business. Like other intelligent fanatics, Schwab clearly had an unconventional business acumen. Conventional wisdom was to give corporate executives large pay packages and pay the grunt workers much lower wages. At Leshwab Tire Centers, the highest overall pay packages were not to Leschwab or to these executives, but to the people who really mattered, which were the store managers. As profits are being distributed around the company, people can be tempted to try and negotiate their way to get a greater share of the pie. Schwab had a falling out with a couple of employees who wanted larger equity stakes, contrary to their origin, and Schwab wasn't interested in working with greedy people who don't keep their word. Like many intelligent fanatics that”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Was able to crack. He ensured that the new managers at top stores would be reserved for applicants who either had pioneered a new store themselves After the new system was in place, quality managers were eager to turn around some of the poorer performing stores or take over new stores in their quest to get the top spot at a top store. Another problem that Schwab faced was the rising cost of opening new stores. In the 1950s and 60s, the cost of open stores was minimal relative to the 70s, which made it difficult for a new store to reach profitability. Since rent was paid on the value of the building, the older, larger stores were paying a smaller percentage of their sales and rent, so new stores were paying a much higher percentage of sales relative to older stores. So to solve this problem, Schwab required every store to pay the same amount of rent as a percentage of sales. This allowed new stores to pay a much lower amount in the earlier years when they were just started and getting off the ground. In the older stores, we're on board with this because it aligned with the company's mission and their values of giving the new”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“More he shared with the employees, the more the business would succeed and the more resources that would eventually be available to give others opportunities to also become successful. Once employees were in these programs, it would be hard for them and the company as a whole not to become successful because the incentives were just so powerful. Schwab also wanted to offer incentives to the employees who had worked with the business the longest, which increased employee loyalty. The entire playbook was laid out for employees, and they were told in simple terms all of the details of the profit-sharing agreement. Talking about incentives sounds great on paper, but in many cases it can be difficult to effectively align the incentives. For example, if I were an assistant manager at a tire shop, it would be much easier for me to eventually replace the manager at my store who's nearing retirement than to apply to open a new store my own. This was one of the many puzzles that led”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Equity and Schwab was blunt in sharing that if there's a hardworking employee who has done well for the company and shown loyalty, then it's selfish not to give him the opportunity to advance further in his career. Due to the pushback from some, he even went as far as incentivizing managers to change. A new rule was put in place stating that if managers did not have an assistant manager by the end of the year, Schwab would end up taking 55% of the profits and leave the manager with only 45%. In the book, they shared a great quote from Schwab. He said, problems create opportunity. The solution to a problem is common sense, open communication, complete honesty, and the desire to help your fellow man become a successful person, end quote. And Schwab was a master at helping other succeed. He always encouraged his managers to treat their employees well because he believed that the way a company treated their employees would directly affect how employees would treat the customer. Schwab also believed that”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“company during that time. But quality incentives are only worthwhile if the growth opportunity for the company is present and significant. If I put myself in the shoes of the employees, there really isn't much to be excited about if I get half the profits of a company that isn't addressing a sizable need in the market. Schwab used less Schwab Tire Center as an avenue to empower young, ambitious men who wanted to become successful. So we opened up a chain of stores for others to manage. He would take half the profits and use that capital to open new stores where he felt there was good opportunities to grow. As the conglomerate and the stores themselves grew, the incentive structure needed to adapt. And Schwab recognized that. So he asked his managers to appoint their best worker to assistant manager and to give them 10% of the store's profits. With Beauche Schwab and the manager giving up 5%, some managers weren't too keen on giving up”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Incentive structures benefit someone on the upside, but they don't share in the downside risk if things go wrong. For example, if I were incentivized to double revenue of the business but didn't share any of the risk if revenue ended up going down, then I might do some risky things that simply aren't sustainable or have the potential to actually decrease revenue. It would be like a baseball player trying to hit a home run every time he steps up to the plate, even when the odds of his team winning would be much better if he just stepped up and instead tried to go for a single or double each at bat. In starting Les Schwab Tire Center, Schwab was working to unlock the superpower of incentives and generate success both for his business and his employees. Schwab's first employees, Bill Welch and Frank Kennedy, originally were part of an informal profit-sharing agreement when the business started in the 1950s. Profits were split 50-50 with the employees, which was an unusual and unconventional arrangement for any”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Top line revenue for the company I work for without significantly increasing the level of cost and I earn a financial reward just one month after that revenue is generated. It's nice that I don't have to wait a year or even multiple years to see the fruits of my labor. I've worked at jobs in the past where they throw out these vague ideas like profit sharing and the potential for promotion without giving the employees anything concrete or giving them an idea of what the potential payoffs or rewards will be down the line. So there was just much less transparency around it, which I believe led to employees that were less motivated. The other thing I appreciate about my current incentive structure is how concrete it is. I don't have to necessarily guess what my compensation will be or will I have to negotiate after the fact when it's all said and done. And lastly, just like the owners, I share in both the upside and the downside of the business. Too often”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“And was constantly tinkering through trial and error to get the most out of his people. One hugely successful system Schwab created was the Honor Carrier Program, which helped increase the newspaper's circulation significantly. The program incentivized newspaper carriers to acquire new customers, provide impeccable service, and collect and keep financial records about their routes. There were three levels that each carrier could achieve in the reward was both intrinsic and extrinsic. Top newspaper carriers would get their picture and story in the paper and receive a $25 bond. The beauty of this incentive structure was that the cost of the incentive to the newspaper was small, but it provided a large return on investment, and the carriers were challenged and pleased that their hard work actually would pay off. I feel pretty lucky to work for a company that takes a similar approach to compensating employees. I'm incentivized to increase the”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Until this book was released in the 2015-2016 timeframe, and the stock performance has been quite lackluster since then as they've struggled with increased costs of labor and fuel, which is part of the reason that margins have fallen drastically. Another intelligent fanatic that Munger spoke highly of is Lesh Schwab. The founder of Lesh Schwab Tire Centers. Schwab was born in 1917 in Bind, Oregon and had a rough upbringing as both of his parents passed away in his teens. Schwab worked his tail off for as long as he could remember and fought in World War II for his country and received his education and business in the newspaper industry. It was in the newspaper business where he started testing out different incentive programs with employees. The book writes here, The success of any business is directly correlated to its ability to motivate its people through clever systems and incentives. Les Schwab understood this like no other”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“It also helped them understand that each employee did make a real difference in such an organization with over 15,000 employees at the time. And this data is quite interesting to learn if you are working at the company. Intelligent fanatics care about their business and the well-being of their employees, so they feel an obligation to serve as a teacher to every shareholder. Kelleher's efforts at Southwest certainly paid off for shareholders as well. Investing in Southwest Airlines at the IPO in June of 1971 and holding shares until Kelleher stepped down in 2001 would have generated a 25% compounded annual growth rate relative to this S&P 500's return of 8.5% over that same time period. A true sign of an intelligent fanatic-led organization is that the business continues to outperform even after the intelligent fanatic has fully exited the business. Shares of Southwest Airlines did quite well from 2000”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“On average, they needed at least 75 customers on their flight for that single flight to become profitable. From an organizational standpoint, if you took the profit for the year and divided that by the total flights flown, Southwest had an average profit per flight of $287 in 1994. If you take that $287 of profit per flight and divide it by the average fare, that gave you the number of customers per flight that accounted for the profit generated for the year. It turned out that it was just five customers per flight, accounted for all of the profits that Southwest generated. In other words, just 7% of their customers accounted for the difference between profit and loss. When the management team framed the business in this manner, it was clearly communicated just how valuable every customer is to Southwest and to the employee.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Texas when it made financial sense to do so. Expansion was financed internally, whereas other airlines would likely take on debt to grow market share rather than profits. They recognized the hidden dangers that we're awaiting as an airline operator. For example, in 1990, Iraq invaded Kuwait, which led to a surge in jet fuel in an economic recession, which led to two major US carriers filing for bankruptcy. Most carriers weren't prepared for such a downturn. But Southwest was, and they remained profitable both in 1990 and in 1991. One of the common themes that Sean and Ian found in the intelligent fanatic studied was simple and effective communication both internally and externally. They shared a letter in the book that was a note that they'd sent internally in 1995 that discussed how important every single customer is on the plane. It outlined how the finance department found that”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Care of your employees, and it's another thing for employees themselves to actually feel that way. And one thing that's important when it comes to making employees feel valued and cared for is job security. Southwest Airlines is the only airline in one of the few corporations in any industry that has been able to run for decades without ever imposing a furlough. When necessary, they find cost reductions elsewhere. And that is promoted healthy employee morale within the organization. And one thing that some bigger, more bureaucratic companies get wrong is how they think about risk. At bigger companies, taking risks typically isn't encouraged, and thus innovation is stifled. Kelleher recognized that taking calculated risks is essential to improving the business. And with any risk comes failure. However, Southwest never took big financial risks. They grew conservatively and only expanded outside of”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“All right, back to the show. Each employee at Southwest was treated the same. In Kelleher, created a culture of employees who think and act like owners. Each employee had the opportunity to participate in a profit-sharing program, and the company offered a hefty employer match in 401k retirement plants. Because Southwest had a culture of people who thought like owners, they weren't stuck in the corporate bureaucracy and red tape that held other airlines back. For example, in 1990, word got around that Midway Airlines was out of cache and would be closing its doors in Chicago, providing the opportunity for another airline to step in to take their place. Before Midway had even made the announcement, Southwest already had a team of lawyers negotiating with city officials and letting them know that they would invest $20 million into the airport and make use of the open gates. You know, it's one thing to say that UT”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Of aircraft. The Boeing 737. This gave them bargaining power and new airplane purchases and the power to make suggestions on how these planes are designed. This also reduced the time needed to train pilots, mechanics, and other workers. Third, Southwest understood that planes are only driving revenue if they're in the air. So they reduced the amount of times that planes were on the ground by 90%. Just a 10-minute turnaround times. This allowed them to get more out of their planes and more out of their employees relative to their competitors. And finally, Southwest took good care of their employees. They're able to retain highly qualified, hard-working employees by providing an atmosphere that reinforces individual responsibility and offers opportunities for advancement. As a result, employee turnover is well below the industry average.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“To bring down the cost of air travel, Southwest did four things. First, they focused on the less costly and less congested airports such as Dallas's love field and Hobby Airport in Houston. Direct flights between these small airports allowed the company to utilize its aircraft most efficiently and get passengers directly to where they needed to go. And these airports tend to be situated closer to downtown locations, making them more attractive to customers who are time sensitive, such as businessmen. I frequently fly out of Omaha, which would be right up southwest Alley for their target customer base they described here. Omaha doesn't have an international airport, so it's quite small in comparison to an airport like O'Hare in Chicago. In Omaha's airport, it's just a six-minute drive from downtown. If you look at mini international airports, they tend to be not nearest close to the downtown areas of the city. So second, Southwest focused on operating only one type of airport.”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Southwest wanted to capitalize on the demand that was coming in the decades ahead. In the company's early days, they hired Lamar Muse as a CEO who did a great job at growing the business before going off and starting his own airline. In Kelleher would become the new CEO in 1981 and would stay in that role until 2001. He led Southwest from $270 million in revenue to $5.7 billion and was profitable every year. No other airline has been able to match that kind of record in the United States. The key to Kelleher's success was unconventional thinking. In Southwest's early days, he was told that the company wouldn't be able to survive without the six best practices that were used by other carriers. In an unconventional fashion, Kelleher would follow none of them. Kelleher wanted to”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“Between when they landed in the airport and when they took off. This includes pulling the plane up to the gate, unloading the passengers, loading the new passengers, and pushing back from the gate. Major airlines had a turnaround time around 45 minutes to an hour, but Southwest's ground operations guru, Bill Franklin, he believed that a Boeing 737 could be turnaround in just 10 minutes or less. In the workers at Southwest were too new to the industry and too inexperienced enough to not really know any different. When they were told that they were going to turn around much quicker than their competitors. Southwest was actually able to pull this off, and it became one of the hallmarks of the company. Southwest's management team was determined to bring air travel to the masses. Prior to 1971, air travel was restricted to the elite who could afford the high prices regulated by the government. In light of the deregulation that was to take place,”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT
“He's going to shoot Southwest Airlines out of the sky for a lousy $13. Then the ad described how Southwest was giving customers a choice. They could pay the reduced fare of $13, or they could pay the nominal fare of $26 and receive a complimentary whiskey or vodka beverage in non-drinkers would receive a complimentary leather bucket which was a classy bar accessory popular in the 1970s. When they ran this promotion, over three-fourths of passengers chose the normal fair price of $26 plus the gift. In Southwest was the largest liquor distributor in Texas for a few months. As you can imagine, business travelers absolutely loved the deal and they would charge the expense on their business card. And it's a classic example of an intelligent fanatic outsmarting an established competitor and getting creative with the solution to a problem. The next problem they tackled was decreasing the turnaround time for the planes”
2025-11-07 · We Study Billionaires · TIP766: Intelligent Fanatics: How Great Business Leaders Win w/ Clay Finck · IDENTIFIED FROM THE TRANSCRIPT