Lester Nygaard is harrassed by everyone around him. His wife nags about his inadequate job and the broken washing machine. Sam Hess, truck company owner and bully, crosses his path and reminds Lester of how he bullied him in high school, ridicules him and busts his nose. Even his brother gives him a hard time.
At the hospital, he's sitting next to Lorne Malvo. After hearing Lester's story, Lorne asks Lester if he wants Sam killed. Without an answer, Lorne visits Sam's workplace and then while Sam's having sex with a prostitute stabs him in the neck.
Lorne causes problems with Sam's sons over the inheritance. And, messes with a kid working at the hotel.
Lester tries to man up after Sam's killing and attempts to fix the washing machine. He fails and when his wife makes fun of him, he kills her with a hammer. He calls Lorne for help. The Police Chief shows up to question Lester about Sam, Lorne kills him and disappears. Lester's stuck in the basement when the cops show up, so he knocks himself unconscious to appear to be a victim.
The Chief's wife is pregnant and now all alone.
In Duluth, a police officer, Gus, pulls over a car. Lorne is driving and gives Gus a choice to either live and let him drive away or be killed. Gus lets him go.