Les Schwab: Why Real Ownership Outperforms Experience, Capital, and Credentials [Outliers]

The Knowledge Project

Shane Parrish

Business, Society & Culture, Technology, Education, Self-improvement, Investing, Entrepreneurship

4.7 • 2.9K Ratings

🗓️ 15 July 2025

⏱️ 57 minutes

🔗️ Recording | iTunes | RSS

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Summary

They weren’t employees. They were partners. Les Schwab didn’t build a company. He built a culture. This episode reveals how one small-town tire dealer scaled to $3 billion by turning customers into evangelists and employees into owners. Somewhere between changing his first flat tire and opening his 410th Les Schwab Tire Center, Les discovered something profound: his people weren't just working for him, they were working with him. They weren't building his dream, they were building their own. This episode is a case study on how strategy, incentives, and trust create massive advantages that resources can’t buy. When investment bankers offered Schwab billions to sell his empire, he refused after asking himself just one question: “What would I do with the money?” Les Schwab understood something most never learn: the real wealth isn't in what you keep. Approximate timestamps: Subject to variation due to dynamically inserted ads: (01:49) Roots (11:21) In Business (27:50) Building an Empire (40:18) Maturation and Legacy (48:21) Reflections from Les Schwab (51:22) Lessons from Les Schwab This episode is for informational purposes only and is based on Pride in Performance: Keep It Going by Les Schwab Thanks to Basecamp for sponsoring this episode: basecamp.com/knowledgeproject Check out highlights from this book in our repository, and find key lessons from Schwab here: https://www.fs.blog/knowledge-project-podcast/outliers-les-schwab Upgrade—If you want to hear my thoughts and reflections at the end of all episodes, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠⁠⁠ and get your own private feed. Newsletter—The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠ Follow Shane on X at: ⁠⁠⁠x.com/ShaneAParrish Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Charlie Munger once asked me, how can someone give away 50% of profits and make billions more than if he'd kept at all?
0:07.7	Before I could answer, he told me about Les Schwab, a tire shop owner who understood incentives better than almost anyone.
0:14.9	What Schwab discovered will change how you think about business.
0:24.4	Welcome. how you think about business. Welcome to the Knowledge Project.
0:26.5	I'm your host, Shane Parrish.
0:28.6	In a world where knowledge is power, this podcast is your toolkit for mastering the best
0:32.9	of what other people have already figured out.
0:34.9	This episode is for educational and information purposes only.
0:41.7	What Les Schwab discovered was deceptively simple. Most businesses treat employees like expenses
0:47.6	to minimize. He treated them like partners to enrich. The math was shocking. He gave away half
0:54.0	his profits and built a multi-billion
0:56.0	dollar empire. Here's how it worked. When people working in the tire centers made a share of the
1:00.9	profits, they don't just change tires. They build relationships with customers. When managers own
1:07.0	real equity with skin in the game, they run stores like their family's future depends on
1:12.2	it, because it does. Less documented his business lessons in his autobiography, pride in performance,
1:19.2	keep it going. He wrote it himself on a 40-year-old typewriter because he wanted every entrepreneur
1:24.7	to understand exactly how he did it. No ghostwriter, no corporate
1:29.2	polish, just the raw blueprint for turning a leaky shed into an empire. Les proved that the most
1:36.0	ruthless business strategy is radical generosity. He turned employee loyalty into a competitive
1:42.5	moat so deep that Walmart couldn't cross it.
1:45.0	This is his story.
1:49.0	Before Les Schwab was the name on over 400 tire stores across the American Northwest,
	...

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