3. Bob Kierlin, founder of fastenal company
Eric: In the first two episodes, you got to hear a little bit from me. Now we're going to switch gears and go into the first interview of The Eric Mueller Show.
I had a very unique opportunity to connect an interview an individual who I have long admired as a role model for success and integrity. His name is Mr. Bob Kierlin, The Founder of the Fastenal Company.
A little bit about Bob. He is a native of Winona, Minnesota. After graduating from Cotter High School, he attended the University of Minnesota where he received a Bachelor of Mechanical Engineering degree as well as a master’s degree in business management. He served two years as a Peace Corps volunteer in Venezuela at the industrial relations center of the University of Carabobo in Valencia, Venezuela. Upon returning to the United States, he worked for IBM in Rochester, Minnesota [00:01:01] as a cost engineer and financial planner.
While working at IBM, he developed a business plan for an idea he had since he was about 12 years old: selling threaded fasteners through a vending machine. After convincing four friends to invest in the idea, The Fastenal Company began in 1967. The vending concept didn't work out at the time, although it was resurrected by Will Oberton, Bob’s successor as CEO. But Fastenal started selling the fasteners over the counter in wholly owned stores.
Bob served eight years in the Minnesota state senate from 1999 to 2006, representing his district in southeast Minnesota. He retired from the Fastenal board when he turned 75 in 2014. He now serves as a cheerleader at Fastenal: visiting stores, writing columns for company publications and speaking to new managers. [00:02:01] He is currently engaged in several development projects in Winona that keep him busy. With his two daughters and their spouses, he is also on the board of the private Hiawatha Education Foundation that provides aid to Minnesota pre-school non-profit Montessori programs that enroll children from low-income families.
I am excited to share with you the wisdom and influence of a sensational businessman and truly admirable human being. Without further ado, let's go to the interview.
[EDM music begins playing and then fades-out]
Eric: Alright. Hello everyone. Welcome to The Eric Mueller Show. My name is Eric Mueller, your host and today, we have a very special guest. Our first interview guest on the show.
He [00:03:02] is from my same hometown of Winona, Minnesota, and he is the founder of The Fastenal Company. Welcome to the show, Mr. Bob Kierlin.
Bob: Thanks Eric. Glad to be here with you.
Eric: Yeah, it's awesome. When I was looking at people to interview for the first one, I couldn't have thought of a better person. So, I appreciate you being here. I'm really excited to get started.
So, first question I have for you Bob here. How do you define the term success?
Bob: For me, success for anybody is probably the ability to bring out the potential in other people. You know what people, like teachers, we’re all familiar with teachers. They bring out the potential by teaching their students things.
In the case of business, you really have a successful business only if you can bring out the potential of the people that are joining that business with you. So that's how really define business no, or success [00:04:02] no matter whether it's a business or profession. It's how you bring out the potential and other people.
Eric: Yeah, absolutely. And you've written a book called The Power of Fastenal People, and I believe you originally published that in 1997, and a new edition came out in 2015.
Is that correct?
Bob: That's correct. I think the original printing was 13,000 copies and how many years it took us to sell those. It's not a big seller, but it's very popular with Fastenal employees.
Everybody reads that, and it's a way to continue the culture of the company that really was instrumental in making the company successful.
Eric: Yeah, most definitely and you touched on bringing out the success in other people and allowing them to realize their full potential, and that's really strong leadership traits there.
You know in the book you go into the difference between manager and leader. Kind of [00:05:02] compare those terms throughout the course of the book and that kind of really hit home with me as far as what makes a good leader versus what just makes a manager.
Bob: Yes, the leader is one that's really relying on other people performing well. You know, as you may remember in the book, I mentioned there are only two things that the leaders of the successful organization have to do.
One is make sure that everybody that joins is pursuing a common goal. And second, the leaders have to find ways to bring out and use that potential of the people that are joining the organization.
Eric: I love what you said in the book that you said, “The best leaders will constantly develop people to take their place. If you want to receive new challenges, you need to develop your replacement so you’re available to take those challenges.” That one stuck with me a lot. I really love that part.
Bob: Yeah, it's something that we practice quite strongly, you know. I soon recall when we were out on our road [00:06:02] show when we going public in 1987. The people in the audience, the institutional buyers of stock would ask us, you know, you folks as the entrepreneurs can take a company to certain level, but at some point, you're going to have to go outside for professional management.
We never did that. We always believed that we could develop our own leadership within the company, and we've done that. You know, other people formed the Fastenal School of Business, which has certified educators teaching our people leadership, teaching us product knowledge, teaching salesmanship, accounting, anything you want to take as a course within the company you can develop your potential, and that's where our leadership comes from everybody. Everybody keeps growing.
I just had occasion to talk to the people that were celebrating their 25th anniversary with Fastenal. There were 74 people, and I [00:07:02] brought out the fact that of the 74, 5 of them were regional vice presidents. You know, that's next level to getting into the executive chairs, and 5 of those got started as assistant managers and had all grown within the company. You know, we don't go outside to hire those people.
I always like to tell our new managers that I only can find 2 skills that we've had to go outside for to hire, and I really blame that on our people because those two are lawyers and our CPAs in accounting. And that's because our people aren’t getting their law degrees and their CPA degrees so they can take over those positions. But otherwise, all of our leadership comes out from within our company.
Eric: Yeah, and that with the exception of those couple examples you gave there with just not getting that degree. You know, that's something I really have always admired with the company.
My grandfather and my dad [00:08:02] worked for Fastenal. I worked for Fastenal part-time throughout high school, and you really could see that you know, your people that were in those leadership roles regionally, nationally. You know, they started at the you know, the lower level you might say, or the entry level positions.
And to grow that from within I feel like really speaks to the integrity of the company. And like you said to bring out the best in others. If you can get someone in who starting at an entry-level job out of high school and eventually develop into a regional VP. You know, that's bringing success to the company, and it's allowing them to feel fulfilled. So that's awesome.
Bob: Yes.
Eric: So, you touched on entrepreneurship there and you know, when your company went public. At what point did you know that you wanted to become an entrepreneur?
Bob: Oh, probably when I was about eight or nine years old. I knew at the time I grew up; it was right after the second world war. It was kind of a hard scrabble time, [00:09:02] and you had to be resourceful as a kid, even. You know, the confectionery stores didn't even have bubble gum because that all had been rationed during the war.
And I remember my parents. They had 5 children. I was the youngest, and when I was born, they had just purchased a home near the downtown area, and my mother rented out the rooms upstairs help pay for the mortgage on the house. And we all live downstairs in the house.
My buddy and I; he lived across the alley in another home. And by the time we were 8 and 9, we were taking our bikes early in the morning in the summer time going around the town and picking up popsicle bags on the street. Because in those days, the popsicle company that was the iced tea company and the local dairies were making popsicles and vegetables, [00:10:03] and they offered prizes for the kids that sent in bags. But we would go around the town collecting those bags and on our bikes with a basket with a cardboard lid on it.
We would send in as many as 4,000 bags at a time and win things like baseballs, and catcher's mitts and things that we would sell to other kids in the neighborhood. You know, and it was that type of adventure for me.
And then when I my father started an auto parts store when I was 6. At the age of 7, I would go down after school. I walk down there. That was the other thing that was unique in those times; kids have more freedom to do that. Nowadays, a 7-year-old kid walking three and a half blocks from the downtown area alone might be a little suspect but I could do that. He would pay me a nickel to sweep the floor.
And then by the time I was 10, I had learned all the parts in the catalogs, and I was acting as counterman by the time I was 12. He [00:11:03] had allowed me because the store closed on Saturdays at noon, but I could stay down there. Rather than to get calls from the garages that needed parts and have to go down to open up again for them. That I could stay there, and he would pay me an eight percent commission on the sales for all the sales that I would make.
Well, my buddy and I would go down there and play cards together while waiting for customers. It was kind of penny ante poker just between the two of us. Sometimes the customers would join in. My dad never heard about that. Ha!
So, that was part of the life of the kid growing up in Winona that we did things like that, and it had really made for an environment that I thought while I was in high school of several ideas for businesses. And I knew I would eventually like to be running a factory or something of that nature. So, all through my college years, I was thinking of the businesses that might be possible [00:12:03] with the education I was getting.
Eric: Yes, so it started at a young age, and it kind of leads me to think. Do you think there's some sort of pattern or formula to becoming a successful entrepreneur? Like you have deeply ingrained within you obviously, and it started at a very young age.
So, if someone is sitting in like my position, I'm in my late 20s. Do you think it's too late or is there is there some sort of formula that I can try to harness to bring out those traits?
Bob: Well, it's not a formula as much as an advice that I would give people that are thinking of starting a business. That the first thing is to appreciate not how much you know, but how little you know.
And go out there and find the smarter people that can help you understand whatever it is you're trying to do because I have invested in other companies that didn't make it. And in two cases, it [00:13:03] was just not understanding the market. And in cases there can be things like not understanding the finances and how cashflow works.
I've been asked several times by people that are starting business. What's the thing that if you wanted to tell me one thing that really stood out what would that be? And that idea that I always would communicate to them as whatever you're doing with your business plan, whatever you think you need for cash to start this business.
Make sure you've got another 20 percent of that total in your back pocket that you can use in an emergency because you're not going to have everything thought out properly yet. And you got to have that reserve to fall back on to get a little bit over the cash demand piece that you actually have.
Eric: Yeah, that I mean that's a great piece of advice. I think that makes me start, you know, thinking, gets the gears turning. [00:14:03] As far as you know, what's important when you're trying to start a business.
And you really got to think of those nitty-gritty type of things. You might have the best idea, but if you don't think of those types of details, you might not pan out.
Is there a common myth about starting a business that you want to debunk here? Is there anything you think that people have in their mind about that this is always what happens when people start businesses.
Bob: Well, the first thing that your taught of course in business programs is to get a plan have a business plan, and I've seen good ones and I think poor ones. You know, and invariably the poor ones fall short because they haven't thought of everything. That's why I say try to learn as much as you can before you really get started in the business.
I'll give you an example in Fastenal business when we started. I had the basic idea of selling fasteners through a vending machine, which was way ahead of its time because the vending machines at that time were all mechanical. [00:15:03] There were no electronic components that you have nowadays.
And it ended up not working because we discovered that the demand for the product was such that the number of pieces didn’t fit in the vending machine that the customers needed, or the length of the fastener was too long to fit in the box. So, instead of having a vending apparatus in the building where people would come in on their own and get it; we still had to have somebody there.
So, then why have the vending machine if you had to have somebody there anyway. It's that type of thing that you realize early on that you have to make some adjustments for.
The other thing when I talk about knowing the marketplace. We knew what the market was for selling. What we didn't know was the marketplace for acquiring the product we were going to sell. None of us had any experience and acquisition or buying a Fasteners.
So, we had to scramble to find [00:16:03] out where do you get these things? And the only thing I had available for me was a catalog listing that I found of a company in Chicago that had everything in fasteners listed by commodity and what size and how many they had. And, so, I ended up buying our initial inventory, which was something like about $5,000 worth of inventory from them.
Afterwards, we discovered that outfit was a surplus and obsolete buyer of fasteners from other users. And what we had were all the oddballs.
Where if, I always said this was when I was taking care of the counter in Winona that if somebody came in in those early years and asked for a 3/8 x 2 lag screw, I would go to the shelf and discover our stock was 3/8 x 1 7/8 or 3/8 x 2 1/8. We didn't have the standard [00:17:03] size.
And so, I’d tell the customer if I found a 1 7/8 that this was better because it was safer; it wouldn't go through the wood on the other side. And if I had the 2 and 1/8, I explained it would have better holding power. So, you know, we adapted to it and eventually discovered how to really buy the Fasteners, but that was the short coming for us at the beginning, and it cost us a couple thousand dollars of our initial capital.
Eric: Yeah, that's awesome. I know that the idea of that vending machine was something I'd read about in your biography that that you had. And that idea, it didn't actually get off the ground immediately for you. But your successor as CEO implemented that successfully when it within Fastenal is that correct?
Bob: That is correct. And of course, things have changed with the machines that were available. Now, it's all electronic, and you can do with cards and you don't need to put in coins or anything of that nature to get the product [00:18:03] that you want.
I had a conversation one time with the older gentleman from the company that, at the time was when I talked to was building our machine sort of currently. And we were talking about those early days in the 1960s when I was trying to design this big vending apparatus. And at that time, he was making cigarette pack vending machines. They were the only really practical vending machine at that time, other than gum balls and things like that. And he said that when the price of a pack of cigarettes went from 50 cents to 60 cents, they had to modify their coin shoot devices.
Instead of having two holes for two quarters, they put in the third hole for the third quarter and then every pack of cigarettes had a rubber band with a dime and a nickel wrapped in to make the change, to make change back in those days.
Eric: Oh my gosh. So yeah, a lot has changed in the [00:19:03] you know, the technology. I mean that aspect is kind of what inspires me a little bit. I've aspirations to create a healthcare company namely at the intersection of healthcare and technology is what I'm looking at.
You know in 5 to 10 years, I might not, we might not be able to see what with technology is available at that time. So, to kind of have that forward-thinking, visionary mindset. I feel like that is pretty essential to being a successful entrepreneur. Would you agree with that? Do you think you know, being a visionary as well motivating people to be successful?
Bob: Yeah, you have to, and you have to have people that are working for you that are in those areas that are instrumental in developing, and that's why you have to have what is one of our strengths is centralized decision-making.
That we've got people in the departments of IT that are making the decisions about how they're going to advance the technology within the company, and same is true for our logistics and shipping. Those people are making the decisions; that they're not coming from the top down.
[00:20:04] When I consider what it is occurring with technology, there's no way that I would have ever been able to be instrumental in putting any of those ideas forward. They’re coming from people that really know the field. Tend to be younger people that have gone through the use of all these devices, and then find better ways to use them in and keep coming up with innovative ideas for us.
I really think that our IT department, one of the things that had going was our commitment early on to try to develop our own software as much as possible. When I consider that other competition was buying their software from other people and every time the customers needed something different. It's in terms of a report. They’d have to go back to the supplier of the software to get it rewired, redone.
When we would have potential [00:21:04] customers coming to visit her Winona facility, we would take them around to our IT department and our trucking and manufacturing departments, and they would see what we could do. And when they asked something about the reports that they needed to our IT people. The IT people would say well just tell us what you need. We can do that.
It wasn't a matter of going out to somebody else to get it redone and retested. We could do it all ourselves and the customers came to appreciate that.
Eric: Yeah, decentralized decision making that was a topic I really enjoyed in the book. You know, it's not your traditional, hierarchical, top-down model where you have the CEO at the top and it goes down, but you describe the CEO is in the center of a series of concentric rings.
And that allows people to be able to have their potential brought out by having that freedom to do those things. And you also mentioned chaotic communication [00:22:04] as a strategy. Would you mind elaborating on that term?
Bob: I use the term because when we started, of course we didn't have the internet we didn't have Google. So, what we did is we knew we wanted to have everybody being able to communicate with everybody else.
So, everybody had their own everybody else's phone number. And they could call anybody within the organization if they had a question about anything that they were doing, or request from a customer that they didn't know how to satisfy; that somebody else might be able to help them.
We also did a weekly newsletter that went out on our truck routes. We had by that time our own truck routes going out to all the branches, and the newsletter had all the information that we could put in there: what people were doing, about new ideas, etc. So, all of that was going on.
After the internet came on, then we had everybody with access to everybody else's internet address, so they could send an email to anybody in [00:23:04] the company that they wish to. And it's that open communication that I think is so important.
Rather than having the structure that I was familiar with in the former employer of mine. Where if I had a question for someone in another department, I discussed it with the manager of my department, who then discussed with the manager of the other department, who then went to person I really wanted to talk to.
And the whole thing came back, and by the time it came back, it was not exactly the same question that I had asked or wanted to ask. So, I learned that you want to talk directly to the person to get less static in the background and getting the best solution.
Eric: Yeah, I agree with you there. I definitely think that is a way to help, you know, help a business be more successful and just help people feel like they're more valued.
What would you define as your greatest challenge that you encountered and overcame and in your life and career? What did [00:24:04] you learn from that?
Bob: In all honestly, and I’ve said this before the greatest challenge for me and for most people is raising children. With my late wife, we raised two great daughters, and I've said that before, but you know, that's the greatest accomplish that I can cite in my life.
Now if you want to ask about business and in business, the probably the greatest achievement was to see the development of our people in the roles of the company.
You know, when we were going public in 1987, and we were asked how big can the company be? At that time, we thought because we were only in fasteners that within the United States, we could have about 500 stores. And that was the number we were using. At the time, we had 52.
So, 500 seemed large compared to the 52 we had, but [00:25:05] to see it go way beyond that with the leadership within the company and to see where we are now in, I don’t know, 25 countries in the world and still growing. And still getting new product lines, new ways of treating customer requests that we can do various ways of distribution and logistics.
It all came home for us this year. I don’t know how long you're going to have this available. You know, this being recorded November 2020 and that time pandemic is going on; we've got the vaccine coming.
But you know, to see what Fastenal people did in March and April when the reality of what was happening with pandemic. To get the product through the supply chain to the people that needed it, to do allocations and then to satisfy [00:26:05] the quality requirements because at that time, we had quality people in Asia. Not just in China but in Vietnam, Taiwan. And all of those things work together because we were so decentralized, and people could react immediately.
That we ended up in 2020 with our revenues being higher than they were in 2019, and for any business in the midst of this pandemic to do that, I think is a significant accomplishment.
Eric: Yeah, I absolutely agree with that and you've ingrained that decentralized decision making and chaotic communication in your company from the start. So, when something like 2020 pandemic happens, they're not adjusting to something new. It's already been kind of deeply ingrained within them throughout their entirety of the time with the company.
Now you mentioned Fastenal becoming big and growing exponentially as your greatest business achievement. At what [00:27:05] point did you know that Fastenal was going to become as big as it is now? I think over 2,000 stores, I believe. At that time, you said there was 52 at the time it went public.
Bob: There were you know, there were different times when you could sit back and say well this is very good, and it's going to get better. I think we knew we were going to make it after we had about five stores because we had a pattern, and we knew what we were doing.
I think another significant point was going public in 1987. I think many of your listeners will not appreciate this very well, but it was a pretty small offering. It was a million shares, and the original price range was 7 to 9 dollars, you know, so you can see how small the deal was. We were taken public and went on the road show for the week beforehand and it was very satisfying for [00:28:05] us that we're doing the roadshow presentations.
One of the salespeople for the investment banker told us after our presentation at a luncheon in New York City that he had the deal sold three times just in New York. The night before the pricing, I got the call from the investment banking house saying that they could get more for the stock than the 9 dollars top that we put on it.
And I said no because we had promised our employees of the million shares, a hundred thousand would be allocated to them on a percentage basis of the duties and how long they've been with us. And we didn't want to go above the 9 dollars because that's what they were familiar with. So, we went out at 9 dollars. Right away it shot above the price.
This was in August of 1987. [00:29:05] You may remember the stock market crashed in October of that year. We were the only one of about 500 stocks that had gone public that year that did not fall back on the crash date below their offering price. And at the end of the year, The Wall Street Journal published a list of the top 500 performing IPOs that had gone out of the price of about $5 a share. We were number one.
That we had done that for our little company back here in Winona the time with 52 stores. We really felt great about that. I had another when thinking about this. One of the times that I really came to appreciate what Fastenal was in terms of how we looked at people and what great things people can do [00:30:05] was in 1986, the year before going public.
At that time, we had built a new 50,000 square foot facility here in Winona. The progression had been when we started in ‘67, we had a 1,000 square foot building; in ‘74 we moved to a 7,000 square foot building; in ‘81, we moved to a 23,000 square foot building. Here in ’86, we had decided we were going to keep the 23,000 building but use that for manufacturing only and move the distribution center to the new 50,000 square foot building.
Well at the time, we were servicing our customers through our branch stores. Now the branch stores would call twice a day back to Winona with the want list that they had to satisfy the customer orders. And our people would fill those so that they could go out on the truck for the next delivery day. The last [00:31:05] call ends came from our branch stores at Friday afternoon at one o'clock. Right after that, everybody including the accounting departments. The people that worked as the janitors. Anybody that worked for Fastenal within 25 to 50 miles of Winona came here.
We worked all Friday night moving everything. We worked all day Saturday moving everything. A few people had to work on Sunday to pull those orders for the people that had wanted product on Friday. On Sunday night, the truck drivers who had already worked so many hours that they couldn't drive the semis, and they had delivered 50 loads, semi loads from our 23,000 square foot building to the 50,000 square foot building. And instead of the truck drivers in order to drive the truck because they couldn't; our executives, many of whom had their CDL license went and drove the [00:32:05] trucks with the regular drivers riding shotgun to give them directions on where they were supposed to go.
We didn't miss a single delivery to any of our customers on a weekend that we moved 50 truck loads into a new facility. And that Monday morning I looked in that warehouse, and I just thought you know, what deal we have here that people are willing to stretch for our customer service requirement. That you know, that's really what drives us to get the customer service and maintain that all the time. I just felt such pride in what our people had been able to do.
Eric: Absolutely, and you know building a successful customer base. I feel like is a topic that I believe to be a pretty tough thing to do. You know marketing is behind that, and were there any specific tactics that you found most successful when marketing your business as it began to grow?
Bob: Well, of course when we started out, we knew that [00:33:05] the best marketplace for us was in communities that size of Winona which is 27,000 population. We've looked for cities between 25 and 50 thousand population that had about 4,000 people or more employed in either manufacturing or construction. That was kind of the base. And we also knew that those communities typically did not have a specialist fastener distributor within the community. You know, they were relying on the metropolitan areas to service them.
So, there really wasn't any direct competition, but what we did with the marketing in those few days. This is kind of the strategy that befit us. We knew that we wanted to get the reputation for having everything that you might need in a fastener because otherwise the customers are going to hardware stores and farm fleet stores to get basic fasteners, but they’re not going to have the oddball specialties.
At that time, I was buying [00:34:05] some US government surplus, and one time I remember getting a full semi-trailer load for about $500 and just having all kinds of things that were in there including a lot of fasteners. But we would take all of the things that had any threads on them and put them on display in the front showrooms of our stores, so that when people walked into those new stores in their communities, they would see and would be a wow they really go out of their way to have specials, you got to go see this place because they've got things in there.
We also would make sure that that are our largest fasteners were all on display on the front. So, if they wanted to have a chance to see an 1 ½” x 14 grade 5 hex cap screw, we had those out on display. And the same was true of anything that was small or large. Everything was out on display. We showed them the oddballs, and that was a marketing strategy [00:35:05] that really worked.
Eric: Yeah, it sure sounds like it, and it sounds like you know unique to want to create an environment where the customer can find whatever they're looking for. You weren't just going to sell them one particular product, but you were going to try to be there to have available whatever they might be looking for that day.
So, we’ve talked a little bit about business. So, I'd like to just kind of chat a little bit more about life in general for you. Who has been your greatest inspiration throughout your life from a success stand point, from being a father, a grandfather stand point? Who has that been?
Bob: I think my, I've thought about that and been asked that several times before. I usually like to cite the 3 people that I really think had an influence on me even though didn't always come into a lot of contact with them, but it was just the impression they left on me.
One was when I was in grade school at a Catholic elementary school here. The pastor [00:36:06] eventually became the pastor of the new Cathedral it was being built. So, he obviously had administrative abilities and financial skills for fundraising, but what really impressed me is when I was in grade school when it came report card time. He would come into each classroom and the teacher would give him the report cards. He would call each person up by name, give them a report card, and he’d make some kind of encouraging statement to the child that was there.
And that really left a lasting impression that here’s a kind person that’s bolstering every child that's here and giving them encouragement. A second person would have been Joe Bambenek. Joe Bambenek was the founder of Peerless Chain Company here in Winona. Came back from the first World War and started the company.
By the time my father had started [00:37:06] his auto parts store, and I would be there as a kid. I would see this older gentleman walking down the street, and I asked my dad who that was. He said that’s Joe Bambenek, and he's a guy that started Peerless Chain and family owns the company. And after I finished my engineering school, and I have my degree in mechanical industrial engineering, I took a desire to find some part-time job where I could use my skills while getting a master's degree in business. And I wrote a letter to Joe Bambenek at Peerless, and he was kind enough to pass that on to his manufacturing superintendent who called me in for an interview, and they hired me.
This would be in ‘64 at pricey wage of $3.50/hr. I could work [00:38:06] 20 hours a week for them while going to the University of Minnesota because they let me work 10 hours on Saturday and 10 hours on my swing day, which was either Monday or Friday. That was enough to pay for my education while I was getting my master's degree. And I did so much engineering work, mostly in industrial engineering that I developed a lot of skills that I would not have had. So, I really admired Joe Bambenek for doing that.
The third person after we had started Fastenal was Al Kurtzman, who was the guy that had started a dredging company here in Winona. And I got to know him because he would always come in and buy the fasteners that he needed for his dredging equipment, and he would always encouraged us saying, you know, this you guys are doing a great job. This is a wonderful service that you provide to the community, and the people that need products like this in a community this size.
He also said that that [00:39:06] as he got older and semi-retired, he would go over to the local Elk’s clubs sometimes in late afternoon, and he find other people who had started businesses and they’d be in there playing cards. And he said you guys don't do that. You're here always working, and he said you're going to make it for that reason. You really are dedicated to what you're doing. And I thank him for that. You know, for that reason those three people really stand out as ones that I admired because they had the same perception that I was acquiring from watching them.
Eric: And on that topic of work ethic, you know working all the time and really devoting sincere time to your business. How many hours a day do you feel like you worked on average when you were acting CEO of Fastenal Company?
Bob: Well, I probably averaged not by the day, probably about 60 hours [00:40:06] a week. Because of course, I worked Saturdays and occasionally, I would do some book work on Sundays. And it was a little bit different because I would go in early in the morning when my kids are still asleep. The arrangement we had is my late wife was a ballet instructor. So, she would have the kids after school in the ballet classes, so I could be working there. But when they came home, I had the dinner ready for them.
So, I worked early morning. I called the kids on the phone to wake them up and talk to them in the morning, and then they went off to school. But I saw them in the evening and then after they went to bed, I usually did some more book work because I was doing all of the accounting at the time for the company. So that's probably it.
Oh, I'll tell you the story if you want, it’s an interesting story. Why my two children are not actively involved in the company. [00:41:06] They’re certainly interested in it and they know all about it, but they're not employed by the company. The reason is I think they were two and a half and maybe four or four and a half.
They were with me on a Sunday morning, and I had to stop and do something at the Winona store, which at the time was in our 7,000 square foot building. And the building was situated so that the windows and the door would face the street and you walked into the showroom, which is just in the front, and the office was to the side. Then there was a wall with a warehouse in the back and two doors back there. And I told them, you’ve got to stay here in the front area where I can see you and don't go out in the back warehouse. Oh yeah, they were going to do that though.
So, I'm in the office, and I looked up once, and they weren't there. They had found their way through one of the doors into the warehouse. Well, on the other side of that wall, we had shelving, but on the floor, we [00:42:06] had these cardboard boxes were about a foot square. They're open on the top. They house all of our small machine screw nuts. They are really small nuts with different threads. I found them taking a handful from one box and putting them in the next box. And I said to them. You're never coming here again, and they appreciated that.
Eric: Oh man. Yeah, that’s a wonderful story. And as far as being an entrepreneur having a family, explain how that impacted your family life. If you know, you mentioned working you found the time to make work happen in the morning and at night, so you could still spend time with your children. But other than that, how did you find entrepreneurship affect your family life?
Bob: Well, I don't think it really had much of an effect in terms of appreciation of how the business was growing. I think it came home to me one [00:43:06] day when my youngest was in college. I got a call from her. This was after you know, we were, well when she was in college, it would have been ’94-5, and she called me and said Dad. My friend here got a hold of the proxy statement for your annual report, and it shows how many shares of Fastenal stock you have, and he calculated out with the price how much that's worth. She says I never realized that, and you know that that's the way we wanted it to be. We just wanted to be normal people in our community.
Eric: Yeah, that's you know, just speaks to the humble nature of you know, when you realize you're getting big in a company and growing exponentially. And you have a net worth of “X” amount of dollars, to maintain that that humble and philanthropic [00:44:06] mindset.
Like you have. Your philanthropy has impacted numerous people, especially those in our hometown of Winona. Is there a most joyful memory you have of giving back to the community?
Bob: Oh, well, there are I could cite several. But the one thing that we did, my wife and I did that I think is the most satisfying in terms of how many people it helps was to establish something called the Emergency Services Fund here at the Winona Community Foundation.
What that does is provides emergency funds for individuals who need funds for things related to immediate shelter, help with a utility bill that they're unable to pay at the time. It can be things that people need diapers for their kids and don't have the cash. It's oftentimes things like transportation [00:45:07] to a job or to a funeral.
One that I remember very well is somebody was able to get a job because with the fund they were able to get hard toe shoes to take the job that they required those shoes on. I think we operate, well the Community Foundation handles the whole thing through about ten or twelve charitable or social agencies here, and the payout max is a thousand dollars a year to anybody, and probably the median is somewhere under $100, but it's still distributes about $130,000 a year in emergency funds like that. To me, that's one of the most satisfactory things we've done in philanthropy.
You can do a lot of things in scholarships but scholarships often times you give them, and the institution that actually receives the money, just takes it off the financial [00:46:07] aid that they were going to give the student anyway, so it doesn't necessarily have the benefit that you can see when you know that it's going to take care of a real need in the community.
The other one that is the biggest thing that our family foundation has going for it is a program that my two daughters and their spouses are the other directors. We have a grant program for pre-school Montessori programs in with the state of Minnesota that take children that are low-income, and we provide the financial aid.
So it was low income children can be in those my pre-school Montessori programs because my two daughters went to pre-school Montessori, and I think we have an appreciation of the difference that can make in those formative years from young children, and give them the head start so that when they get into the upper grades, they’re ready. If [00:47:07] they're good programs, and these are, the child comes out of kindergarten already reading and knowing the numbers.
Eric: Yeah, thank you for sharing those two examples there Bob, and it makes me think of another topic in your book where you talk about suppressing your ego. And when you when you give back to you know, in a philanthropic way, you're not doing that because of the recognition you're going to receive you're doing it because it's the right thing you know, it's the right thing to do.
For someone who is, you know, maybe 10 years down the road let's say I have created a successful business and I’m thriving in that way. What advice would you give me to suppress that ego and not let my head get too big so to speak. You know, to keep that humble mindset.
Bob: Well, I would say number one, don't build yourself a mansion or buy a big yacht. That to me is something that says you're using [00:48:07] a lot of the funds for your own pleasure and you may not need it all. You know, if you really want to be philanthropic, you appreciate that you take what you need, and you don't have any wants that are going to cause you any real problem, and what you're doing is using the wealth you’ve accumulated to help others.
I get a great deal of satisfaction knowing that my estate will benefit a lot of people, and my children are already attuned to what they'll be doing in terms of helping others when I'm no longer here.
Eric: Thanks for sharing that Bob. I know that that is it something you see with, you know company founders of, you know, bigger companies, and you see the kind of lavish lifestyle that they live and it, you know, it seems pretty glorious, it seems pretty great, but I feel like at the same time. You know, that wouldn't, the person that I am wouldn't change by being able to have those types [00:49:07] of things, or I certainly would hope that it wouldn't so keeping that Integrity. I appreciate you speaking of that point.
Bob: Thank you.
Eric: Yeah, so the backbone of my show, the backbone of The Eric Mueller Show is really to really to dive in and see what makes a successful person's inner clock tick. Is there one single driving force or maybe a couple driving forces that that that keep your inner clock ticking towards success?
Bob: I would say to always be thinking of why something is right or why something is wrong. When I read a newspaper, often times I come to the conclusion that I know the article was written by somebody, but the headline was written by somebody else, and I can judge the headline writer didn't really understand the article.
You know, it's that type of thinking, and it’s the same thing with everything that you see about how people are doing things or [00:50:08] buying things and packaging things. You know, you keep questioning. Why is he doing it this way? Is there a better way? If you stay with that type of thing thinking, you're going to be more attentive to how you can make suggestions for change that are beneficial.
I think everybody has a particular skill in something that they're going to be able to develop if as long as they stay open-minded. Once you close your mind off that what you're doing is right, and you're not going to pay any attention to anything else, you start to lose it.
I will tell you that here's an example that really stands in my mind about what you really believe in. I was being interviewed on the phone from a publisher that was doing an article where they were calling [00:51:08] probably 20 other CEOs in the same industry asking the same five or six questions of everyone so that they can publish the opinions of each interviewer or interviewee separately. And when you're doing those interviews, you become conscious that they always have one question that's kind of the oddball question. Like if you were a tree, what kind of tree would you be? That type of thing.
This particular interview that question that was that one was what is your motto? I quickly realized I didn't have one, and so I thought, if I were to have one, what are they real absolutes that I believe in, and I came up with it, and it is my motto now. Believe in people and in free markets. Those two things I think really define what has been my position both [00:52:08] with people and with economics in the economy and the political side of it. I just think that those things two things really define what people in this country are all about.
Eric: Yeah, I remember reading that in your book that the oddball question of what is your motto? And it really made me think of you know, when I was interviewed for pharmacy school at the University of Oklahoma. I was asked an oddball question of, If I was to be the producer, the writer or the actor of a film. What would I choose to be? And I thought you know, right they want to test how you’re thinking on your feet. And that's for me, I was kind of taken aback for a second and you know, I had to think quickly on what I wanted to say.
But it just kind of makes you think that you got to be prepared for everything in life really in a way. You never know what someone's going to ask you and your ability to kind of mold your answer, and it what was true came out of you at that time. [00:53:08] So your motto of believing in people and free markets that was true to you and although you didn't know that was going to be the answer at the time, it probably always was the answer, is that right?
Bob: And, what was your answer?
Eric: My answer was writer.
Bob: Writer, okay.
Eric: Yep I said, kind of like you said earlier. I mean, I'm like if I was a writer I would know that that that was my idea that came out there. The story was something I wrote, but you know on the on the credits, I'm probably not the first name. I'm definitely not on the cover of the movie box. I wasn't the director, but I know that it was mine whether people know it or not so.
Bob: That's great perspective, yes.
Eric: So, Bob we grew up in the same hometown and actually went to the same high school of Cotter High School. Do you have a favorite childhood memory of growing up in Winona, Minnesota?
Bob: Oh gosh. I really don't have one favorite, but [00:54:08] I think the overall theme was the freedom that we had. To go fishing, you know on our bikes across the, into the schools of the Mississippi River. You know, it's just being able to do that and to be able to have pickup games within the neighborhood kids at night after you know.
We lived right across the street from the courthouse, and they had a big lawn and had these inset windows that you, it was just ideal for playing hide-and-seek. Typical night, we'd have 15 kids within a block and a half of where I lived playing together, and we could all do that. You know the end of the evening when it starts getting dark, the mothers would all holler “Johnny! Come home Johnny.” That's how we lived. It was it was just great growing up that way and [00:55:08] then to see all the kids later on developed in life because they had a good background.
Eric: Yeah, I feel like it really is a unique city, and living right on the river is really something I know my family and I always love boating and fishing. In addition to you know, biking and fishing as a kid, What favorite hobbies do you have now or what ways do you spend your free time now that you are not in the CEO role of Fastenal or not on the board?
Bob: Well, for exercise, I still jog. I started when I was about 45 when my daughter wanted to go to mile road races when she was about 10, and I would take her, and then I decided well rather than sit here waiting 20 minutes for her to come back, why don't I go and start doing it myself? So, that's when I started, and I still do. I jog about 10 miles and a week. Although it's more like a walk now at [00:56:08] my age.
And then other than that, I still spend, I'd probably consider it a hobby. I still do a lot of things related to investing and projects that I have going here in Winona, construction and things of that nature. When I'm relaxing at home, what I'll do is I really enjoy doing a Sudoku puzzles, and my daughter sent me a book of I don't know how many funny sayings that are all in cryptogram. So you get the pleasure solving a cryptogram and having a good laugh at the end of it. Anyway, so it's that puzzle-solving that I think I spend my evenings doing here.
Eric: That's great and ways to spend your free time I feel like is a big topic amongst people like myself right now. I'm working full-time and have some things I'm trying to balance on the side that that I enjoy. [00:57:08] Do you have any advice for people that are trying to do what I call a side hustle, you know something outside of their 9-5?
Bob: I think you could always look on it as something that you're doing that's productive and with some success, you might find a career change.
Eric: Yeah, that's great advice. Something that you enjoy, that you're passionate about. So I really feel if you're not passionate about it, you'll lose that motivation to devote your free time to it. You'd rather do something you actually like.
Bob: You know, one of my daughter's went to film writing school and she tried doing this production of TV and then decided no, it wasn't going to be that successful. So she's now a psychiatrist. But she still is the great writer and still writes wonderful stuff that I always enjoy reading.
Eric: You bring up reading so [00:58:08] that is something growing up, you know, going through school there's a lot of required reading. People might not feel like they have as much time to do recreational reading. But is there a particular book or series of books or author that you found particularly helpful in your life and success development as well as business?
Bob: Oh, if I had to pick one that I really appreciated reading, it was Henry Adams’ Mont Saint Michel and Chartres. What it was, what struck me is it was a good explanation of philosophical theories. Where there was absolutism or nominalism, empiricism. More importantly what really struck home for me was his discussion in there of the building of the great Cathedrals in the medieval years, Middle Ages. And how these [00:59:08] countries in Europe, and they may not have been countries but provinces or whatever built these Cathedrals, and he calculated that it was the work that went into those Cathedrals was thirty percent of their gross national product.
You know, that's what the people were doing with their efforts, and he gave me an appreciation of what gross national product is all about, and how people produce goods and services, and the flexibility you have. Whether it's building Cathedrals or in some cases building roads and bridges or sometimes improving agriculture culture whatever, but it's something that society, as long as you have creativity and people willing to take a risk and chance and do things like that that are new. That's where society improves.
Eric: That's a great point. [01:00:08] I know that like, you know, when you find a good book that really resonates with you, it really I feel like it kind of changes your perspective, and moving forward you have a different mindset about what is important to you to achieve your common goal.
You touch on an organization is groups of people working towards a common goal. So I know that by reading your book, my perspective has, you know has shifted to you know, a higher level I would say. A more refined level of what truly is important. You know, if I have aspirations to start a company, really what do I need to focus on. So I really appreciate that Bob.
Bob: I'll tell you what when I talk to new managers that Fastenal. At the end of my talk, I always say that I used to have 10 ideas that I'd leave them with, and then as I got older, I couldn't remember the 10 so I would do 5, and now I'm down to just a couple.
But the one that always stands out for me [01:01:08] is learn to challenge rather than to control. When you're in a leadership position, it’s often easy to control people, and that's where you get what I call a fear of delegation. That people that are leaders don't think people are going to do as well as they really are capable of doing, but when you learn to challenge rather than control, you challenge the people, you tell them what kind of outcomes you want and don't tell them exactly how to do it. You might tell them how you been doing it, but let them find their own way to accomplish the same thing, and you'd be surprised how many times they’re going to do better than what you thought they could do and better than what you were able to do. So challenge rather than control. That's probably the main thing that I would like to leave people with that are going into business. Challenge rather than control.
Eric: Thank you Bob. Yeah, that I mean that really resonates with me as [01:02:09] someone who wants to be a good leader and wants to motivate others to be their best self because I like you, I believe that that really is the way to achieve success as a group.
You have to be working towards that common goal, but person “A” might have a skill that they never really knew they had, but if you never challenged them to develop it they won’t.
Well, perfect. Well, Bob, thank you so much for spending time with me to discuss business and life, to talk about leadership. I really, really appreciate having you on here as the first interview guest of The Eric Mueller Show. I know the audience really appreciated that.
Bob: It's an honor to be chosen. Thank you for doing that. And thank you for as I see you're wearing your Fastenal jacket. Thank you.
Eric: Absolutely. Yes, that got to rep the company for you. Well Bob, thank you so much. We'll chat with you later on. I really appreciate you being on.
Bob: And best wishes to you [01:03:09] and hope you have a successful program.
Eric: Yes. Thank you Bob.
Eric: Well, there it is. The first interview of The Eric Mueller Show. I really had a great time chatting with Bob, and I hope you all learned a lot from him and his wisdom.
Until next time, Mueller out.
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Voice audio: Written, produced and edited by Eric R. Mueller
EDM music: Produced and edited by Eric R. Mueller