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Kindle Notes & Highlights
Treat employees well and incentivize them properly, and employees will provide exceptional service to the customer. Amazing customer service leads to customer loyalty, and this is hard to replicate, especially by competitors who don’t value their employees.
This could be a way to go into many different industries. Simply incentivize and treat employees better.
“I remember him telling me that the main objective of his company was to provide an opportunity for his employees to grow and succeed. Well, I called B.S. on that, but what I learned was that the leaders at QuikTrip, they live that purpose every day.”4
It's interesting to see how similar our mission is.
Chester wanted to become an engineer, influenced by a neighbor boy six or seven years his senior, Chester’s father always told him, “If you want to make any real money, you need to be in business for yourself.”7
Wow, this is exactly what Faye at the pool told me when I was fiften or sixteen.
Chester Cadieux, From Lucky To Smart
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To Chester Cadieux, a leader is not what many people think: 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 and drive.
Chester Cadieux has paid even the lowest store employees high wages compared to competitors. Currently, a new entry-level store employee is paid roughly $50,000 for working a full-time position.
QuikTrip interviews roughly three out of every one hundred applicants and then chooses from those three. The culture of excellence at QuikTrip is so high that some see it as a kind of cult.
Some businesses reward long-term employment with a watch or a pen, but at QuikTrip, an employee receives a sabbatical.
That's wonderful!!
QuikTrip promotes an intrinsic ownership mind-set among employees, and a team atmosphere. Employees at the store level are generalists, which means that their responsibilities are for any and all operations at the store. If a register needs to be manned, a toilet needs to be scrubbed, or upkeep outside of the store is necessary, store employees have to be ready to rise to the occasion.
Management gives almost all information about the company—except details about where management plans to build new stores, which could be leaked to competitors.
This is an interesting holdback
I don’t order our managers to keep in close contact with their employees. But I do nag them.
Almost none of Nucor’s employees, including James Samuel Jr. and CEO Kenneth Iverson, had any prior experience in the steel industry, and therefore they did not know what was impossible for a steel company.
Being willing to do things differently seems like a big deal. One way to do this may be to take lots of risky bets by people who genuinely think they'll succeed
He also grew up with a respect for those “who worked with their hands as well as their heads.”3
The iron rule of nature is: you get what you reward for. —Charlie Munger
According to Kenneth Iverson, Nucor’s success was ultimately tied to how the company paid its people;
The basic incentive at Nucor has always been tied to production, at every level.
This has GOT to be the case. Otherwise folks don't have the feedback loop they need.
All workers are paid a lower base salary than the industry norm (generally 65% to 70% of the norm), so employees start off each day unsure whether they will earn a competitive wage.
The second intangible but highly motivating factor at Nucor has been the opportunity for advancement. Workers have the ability to move up the organization to higher positions.
His focus on aligning all employees with the same goal, and providing employees with the proper environment to succeed, was observable
3G partners, who purposely seek out poorly managed businesses with established brands and market presence.
Fascinating. They're looking for good deals on turnarounds. I wonder if I would be a good candidate to do something similar.
Lemann was looking for “PSDs ”—those who were poor, smart, and had a deep desire to become rich. Young talent would be recruited from a wide pool, and their compensation would be heavily tied to their performance.
It comes back to great people, recruited from anywhere!
Lemann saw that the company was trading at a third of the value of its real estate, and he theorized that an injection of Garantia’s culture could drive significant value. The worst-case scenario would be that Garantia could sell off the real estate and still make money.
Look for turnarounds with a large margin of safety
Buying control of outside businesses gave Lemann the ability to promote his best talent into those businesses.
This is a fascinating idea. The investment bank isn't a talent feeder for portfolio companies. Portfolio companies are the proving grounds for investment bankers.
The first and most interesting tactic Beto utilized was to reach out to the best retailers in the United States, sending them all letters and asking to meet them and learn about their companies; neither Beto nor his partners had any retailing experience. Most retailers did not respond to his query, but one person did: Sam Walton of Walmart.
Here goes the podcast idea! Get together with experts in the space who aren't competitors and learn al you can.
Walton’s operating model and was a fanatic about attaining efficiency by containing costs, often saying, “Costs are like fingernails. You have to cut them all the time. If not, they grow.”8
Ain't that the truth. Just as importantly, folks have to be incentivized to cut costs.
Walmart operated as it had in the United States, with little regard for the Brazilian market. This led to extremely poor operations for the partnership.
Geographic changes mater a lot
I was looking at Latin America and thinking, Who was the richest guy in Venezuela? A brewer (the Mendoza family that owns Polar). The richest guy in Colombia? A brewer (the Santo Domingo Group, the owner of Bavaria). The richest in Argentina? A brewer (the Bembergs, owners of Quilmes). These guys can’t all be geniuses . . . It’s the business that must be good.9
Maybe this is the case with SaaS now
“I used to laugh and tell people within the company that we would buy Anheuser-Busch one day . . . I laughed so that people would not think I was crazy . . . Although it was a dream, there was a chance of achieving it by feeling your way forward.”
First, AB InBev creates a basic, simple prototype, to get an understanding of how the company and consumers might react. Then the company provides a small amount of capital, perhaps $50,000, to test it out further. Telles finishes: Three months from now, there are ten guys showing. Two are going to be good. You have to be merciless, to cut those that do not deliver, and then you give $500,000 or more or something [to the ideas that show promise].14
Little bets strike again. There are going to be tinkerers who love to do this kind of thing. Give them the resources to make a little bet. Be brutally honest about the results.
Folks wil do amazing with the right
- feedback loop
- incentives
- agency (power to change things)
Carlos Brito, CEO of AB InBev, Hire the Right People Speech
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Everything has to have an owner with authority and accountability. Debate is good, but in the end, someone has to decide.
Employees] give you one or two years to prove that all you are saying is really true.”
the American private equity firms buy companies and hire a bunch of people who they don’t know [mostly professionals] to send there. I mean, our system is superior because of a system that we developed at the beginning of Garantia, which was this: since we had no money and no name, we had to compete in attracting the best people to work with us [and develop them].
these Brazilian intelligent fanatics have created two hundred to three hundred multimillionaires, minted through their various businesses. Many have earned more than $10 million.
Lord, I would like to do this!!!
A corporation is composed of people who, whether 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 is natural for employees to become heavily invested in the company’s mission.
At QuikTrip, employees are told to always ask themselves, “What would your mother think about what you did today?”5
learned from Sol Price that “if you’re not spending ninety percent of your time teaching, you’re not doing your job.”14
So, I need to hire people who do and then teach.
All the successful people I ever met were fanatics about focus. Sam Walton, who built Walmart, thought only about stores day and night. He visited store after store. Even Warren Buffett, who today is my partner, is a man super focused on his formula. He acquires different businesses but always within the same formula, and that’s what works. Today our formula is to buy companies with a good name and to come up with our management system. But we can only do this when we have people available to go to the company. We cannot do what the American private equity firms do. They buy any company, send
...more
QuikTrip hires only a quarter of a percent of all applicants.
That's one hire for every 2,500 applicants
Low employee turnover is both cost effective and effective in terms of capital investment, and it helps solidify the corporate culture over the long term.
Employees only stay if it makes sense for them. There's no other way around it.
Bernard Marcus, the cofounder of Home Depot, describes how productively paranoid Sam Walton was at Walmart, and how most complacent CEOs act: But if you ask Sam how’s business, he’s never satisfied. He says, “Bernie, things are really lousy. Our lines are too long at the cash registers. Our people aren’t being helpful enough. I don’t know what we’re gonna do to get them motivated.” Then you ask some of these CEOs from other retail organizations who you know are on the verge of out of business, and they brag and tell you how great everything is.33
Someone who seeks greatness and is never satisfied.
Many growing companies fail not due to external competition but because they become overmanaged and underled.
This book’s intelligent fanatic CEOs first dominated a small market and then grew into larger markets.
Pick small problems to solve and then expand into other problems.
Intelligent fanatic CEOs create a well-oiled machine before pushing the accelerator to the floor.
An unknown writer once said, “97% of the people who quit too soon are employed by the 3% who never gave up.”
This is the biggest value I offer. I'm willing to take the risk.
How can I maintain my focus? I can really only handle three ongoing projects well. Constraints give freedom!
“Courage is going from failure to failure with enthusiasm.”
How do I screen for this quality?
Bill Gates, NUTS!
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Maintaining high profit margins while growing is a very difficult feat. What the intelligent fanatic model proposes is that the only truly sustainable competitive advantage is a company’s human capital.
Eventually, competitors can and will copy products, but it is extremely hard to copy a strong culture.
Culture is more about an environment to get things done than anything else.
Ron Wallace, author of Leadership Lessons from a UPS Driver
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