The national retailer Urban Outfitters has increased its revenues by 500% in the last 10 years, expanding to nearly $3 billion today from less than $500 million a decade ago. Not only does the company grow faster than its peers, it is also more profitable, averaging 21% profit margins[1] for the past five years, versus an industry average of 14%. It is tempting to credit the standard retailing virtues of good execution and a deeper understanding of the customer for this success, but the truth is far more enlightening.

Urban Outfitters keeps winning because it was built by two people who, in co-founder Dick Hayne’s words, “knew nothing about the retailing business” when they started. The naiveté of the company’s founders 40 years ago, when they were just college students, freed them to make counterintuitive decisions that traditional retailers still resist copying today.

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