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Timeless business lessons from the tire king
If you’ve spent any time in the Pacific Northwest, you’re probably familiar with Les Schwab Tires, a prolific tire retail chain in the region. While waiting to get a tire repaired this week, I pulled up this extraordinary 1997 profile of the man behind the name. I learned that Les Schwab, who died in 2007, was a true poster-child of American hustle: He was born dirt poor in a two-room shack outside Bend, Oregon, orphaned at 15, and went on to build a $3 billion tire empire that was entirely family-owned—and debt free.
I’ve long believed there are consistent hallmarks of what makes a great business—and a great investment—across industries. This profile hits on many of those traits: An obsession with the customer, a relentless focus on product, the motivation of employees, growth without too much leverage, the ability to endure multiple market cycles, and much more.
After waiting roughly an hour for my tire to get patched up by a couple service techs, I went up to the cashier with my credit card out and asked how much for the repair. “It’s free,” the cashier told me with a smile. “That’s Les Schwab… Come back when you need new tires.” Smart. I realized the company views minor service repair as the cost of acquiring new lifetime customers. (And acquire a new customer they did…)
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“In a world of abundance it is discovery that matters most”
This week, Ben Thompson at Stratechery offered a solid analysis of the core differences between Spotify and Netflix, and how the long tail of value accrues (and doesn’t accrue) to platforms over time. If you’re unfamiliar with Thompson’s seminal 2015 essay, Aggregation Theory, it’s probably worth revisiting. In it, Thompson lays out a framework for winner-take-all business models in a post-Internet era.
In this week’s piece, Thompson makes the case that it is Spotify, not Netflix, that is the true Aggregator. “Spotify has, for the most part, acted like an Aggregator: the company has fought exclusives in the music business, kept its subscription prices as low as possible, and in the case of podcasts ensured its Anchor platform supports all podcast players,” he writes. “Netflix has not: the company has invested heavily in its own content, steadily increases its prices, and is now embarking on a campaign to make sure its best customers pay more for sharing access.”
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Betting on the now vs. betting on the future
Nir Zicherman, founder of Anchor, wrote a short essay this week on what he calls “The Startup Uncertainty Principle.” The essay riffs on the notion that founders (and investors) must grapple with how to make significant bets on ideas that work today vs. reserving resources and capital for unproven ideas that could have significant payoffs in the future. “There is always a compromise to be made between knowledge of the now (position) and knowledge of the future (direction),” he writes. He continues:
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A few more links I enjoyed:
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