Biography Edition: Brad Jacobs' Path to Billion-Dollar Enterprises and Strategic Hiring Mastery

Unlock the secrets to building billion-dollar enterprises with Brad Jacobs, a serial entrepreneur whose impressive career includes founding multiple billion-dollar companies and executing around 500 acquisitions. Get ready to learn invaluable insights from his book, "How to Make a Few Billion Dollars," where he emphasizes the power of combining intelligence with relentless effort, maintaining laser focus, and infusing passion into your business. Discover how Jacobs' stoic approach to managing your mindset and viewing problems as opportunities can transform your entrepreneurial journey. This episode offers a treasure trove of wisdom, including strategies that align with Jeff Bezos' philosophy on inefficiencies, ensuring you walk away with actionable takeaways.

Uncover the critical role of strategic hiring with lessons drawn from industry giants like Steve Jobs. We dissect the "hire slow, fire fast" mantra, emphasizing the importance of securing A players for your team and understanding the high cost of retaining B or C players. Through thought experiments and real-world examples, see why overpaying for top talent is an investment, not an expense. Whether you're an emerging entrepreneur or a seasoned business leader, this episode provides practical advice and inspiring stories to help you maximize team success and drive monumental growth in your ventures.

Transcript

Speaker 1: 0:00

During my 44 years as a career CEO and serial entrepreneur, I've made every possible mistake in business. I've overpaid for acquisitions and botched integrations. I've run operations for cash when I should have invested for growth. I've delegated tasks I should have done myself. Sometimes I've hired the wrong people or made strategic bets that didn't pay off, and yet my teams and I have managed to create tens of billions of value for our shareholders. This book is about what I've learned from my blunders and how you can replicate our successes. I just recently read the book how to make a few billion dollars by Brad Jacobs. This was a really interesting read, especially for I really liked the section about hiring, and also it's really good for just mentality, like having the right how to manage your mind and have the right mentality, and it's really interesting. The beginning of the book actually starts off with a bunch of acknowledgments which are maxims which I'm assuming Brad picked up through his life, through his years as an entrepreneur, and I thought that was really interesting. I'm just going to go through and read some of these acknowledgements here.

Speaker 1: 1:09

Smarts and effort are a powerful combination. Stay laser focused on what matters. That's a big one. I feel like people get distracted, including myself, get distracted on the shiny object syndrome and getting pulled away from what is the core thing. What do we really need to be working on? Infuse passion into your business Dream. Get the major trend right. This reminds me of Charlie Munger. He talks about surfing the big wave in your industry or whatever the case may be, finding the thing that is really driving growth overall. You get that major trend right and you can really surf it for a long time. Get in the game and go big. Dare to do new things. See the world for what it is, not what you wish it to be. So this one see the world for what it is, not what you wish it to be Reminds me of Jeff Bezos.

Speaker 1: 2:03

When someone comes to him with a problem, he gets excited that there's an issue that he can, because he basically his thinking is if there's an issue, that means there's an issue with efficiency and we can. If we solve it, we can. We can make more money. Basically, going back to the maximums here. Think dialectically. Small amounts of capital gain can generate gigantic returns. Drop the ego, just get the job done. Results matter. So I thought that was interesting. Usually, acknowledgements are completely different. Just acknowledging people kind of boring usually, but this one actually had really impactful maximums, like really impactful maxims, which I thought was cool.

Speaker 1: 2:45

But going back to Brad Jacobs, so his resume is really impressive. You might not have heard of him, but he has a pretty impressive resume. So here's a quote from the book I'm what's called a moneymaker. I've started five companies from scratch seven if you include two spinoffs and turned them all into billion-dollar or multi-billion-dollar enterprises. My teams and I have completed approximately 500 acquisitions. In total, these ventures have created hundreds of thousands of jobs and raised about $30 billion in outside capital.

Speaker 1: 3:19

So Brad Jacobs was born in 1956. In his early career, he co-found Amerix Oil Associates, which is a brokerage firm focused on oil trading in New Jersey, and then he moved on to the waste management industry and co-founded United Waste Systems. And then he went on to then go into the equipment rental industry, went on to then go into the equipment rental interest industry. In 1997 he founded this. He was being CEO and founded United rentals, which specialized in equipment rental services, and then, finally, he went to co-found XPO logistics in 2011. So those are kind of the big milestones in his life and he's learned a lot from doing all this and he moves incredibly fast. If you just look at the timeline that I just read through, I mean he's starting and scaling billion-dollar companies in months, not even years, like it's just so quick. So he's moving extremely fast. So it's super impressive.

Speaker 1: 4:29

Uh, and part of the book, a lot of the actually the beginning first part of the book is really about managing your mind. Um, he goes into how to manage your mind. So, uh, here's a quote from the book. When I noticed I'm feeling anxious about something, I asked myself what's the worst that can happen and how would I cope with that. Or if a friend here's a quote from the book beating myself up has been a hard learned lesson for me. I became much happier when I stopped expecting unrealistic levels of perfection from myself, my family, my friends and my coworkers, not to mention customers, vendors and shareholders. The reality is, when you're trying to make a few billion dollars, your team is likely running in multiple directions at a fast pace, except some goof ups are inevitable, and you'll find that it's much easier to maintain your mental equilibrium as you pursue big goals. So, basically, don't beat yourself up.

Speaker 1: 5:31

And another thing he talks about is saying what's the worst that could happen, and it reminds me of Marcus Aurelius. Each morning he kind of meditated on all the things that could go terribly wrong in his life. He kind of mentally prepared himself for the day. So that stoic philosophy kind of shows through, I think, in Brad Jacobs' thinking here and another part about mentality. He was talking to a mentor of his when he was younger and the mentor said this to him which I thought was really interesting look, brad, if you want to make money in business, in the business world, you need to get used to problems, because that's what business is. It's actually about finding problems, embracing and enjoying enjoying them, because each problem is an opportunity to remove an obstacle and get closer to success. And again, it reminds me of Jeff Bezos Whenever someone brought a problem to him, he'd basically get excited.

Speaker 1: 6:30

So I think our initial at least my initial inclination is, when someone brings me a problem, I kind of like, oh, okay, a little bit wrong. Now you kind of get that sinking feeling. But in reality we should have that mindset change where we should be thinking okay, great an issue, so that if we fix this issue, that makes my business better, makes me more profitable in the future. So this is good. We shouldn't be avoiding issues and sticking our head in the sand. We should be finding aggressively looking for issues so that we can fix them to make our businesses more successful. Go back to the book. Here I learned that something invaluable problems are an asset, not something to avoid looking for issues so that we can fix them to make our businesses more successful. Go back to the book. Here I learned that something invaluable problems are an asset, not something to avoid, but something to run toward.

Speaker 1: 7:14

Big ambitions often to get even bigger problems. If your initial reaction to a major sec fact is overwhelming frustration, that's counterproductive. You should be excited. Great, this is an opportunity. Opportunity for me to create a lot of value. If I can just figure out how to solve this problem, I'll be much closer to my goal.

Speaker 1: 7:28

And then there's another quote from the book Successful people are self-aware enough to avoid the following three impediments to effective leadership the belief that you're right no matter what. The belief that other people must hold the same opinions you do. And number three, the belief that every inch of potential course of action must be analyzed before you act. And I thought it was interesting. It reminds me of Steve Jobs, you know, the belief that other people must hold the same opinions you do. Steve Jobs was very abrasive and if he thought he was right on something, he would argue with people you know endlessly, but he did surround himself with very smart people and he did listen to them. If they were in a, he often would change their mind or they would change his mind. Uh, even though he was, uh, he had certain very strong beliefs and ideas. So even someone like him or Elon Musk that have are very, uh, aggressive in their, their management style, they still listen to to, to folks around them, especially folks that are smart. And, um, it also reminds me of Michael Jordan, who, who, who basically said you know, he listens to his coaches, and that was one thing. One of the things that his coaches always commented on him was that he actually took the advice that they gave him and implemented it. So we're not always right. We have to listen to other smart people and use those ideas to our advantage. I read from the book again and use those ideas to our advantage. I'm going to read from the book again.

Speaker 1: 9:00

This is an example of how to stay. If you stay calm in a situation that seems terrible, you can potentially make a lot of money. So here's an example of that the short report. So basically, someone was shorting his company stock, so the short report was packed with a lot of baloney, but of course, the market acted first and analyzed later, and our stock price went into a free fall, down 26% in one day. We did exactly what I've been describing in this chapter. We concentrated on the situation at hand, without judging what had happened to us. We went over the short report page by page, identifying the many places where the data had been twisted. The short seller crisis had made our stock extremely cheap and instead of fixating on that as bad, we focused on achieving a good outcome. From that perspective, the share price was manna from heaven and we decided to buy back $2 billion worth of our stock. No one's ever done that, something like that. Just because we were the first company to buy back such a high percentage of our stock in a similar situation didn't mean it was a bad idea. In fact, it was a once-in-a-lifetime opportunity. A couple of years later, those $2 billion worth of shares we bought back ended up being worth $6 billion, a $4 billion profit. So I think that's just an amazing example of taking a bad situation, just focusing on the problem and finding a really good solution, buying back the stock and making a bunch of money. And it reminds me of I think it was Charlie Munger or maybe it was Warren Buffett, I think it was.

Speaker 1: 10:37

Warren Buffett was on the board of the Washington Post and the Washington Post stock was basically cratering at some point and Warren Buffett recommended because he was on the board, he recommended that the Washington Post buys back some of their stock. And all the finance folks were like no, don't do that, you're not supposed to do that, because the market's always right, like the, the, for a period in time, economists and finance people like the there's the, the market's always right on the pricing of stocks. Um, so buying that stock a company buying back his own stock was considered like a bad idea in all cases. But uh, warren Buffett was like no, this makes sense, it's undervalued, so buybacks are your stock. And they did. And it turns out they were right and they made a bunch of money. Here's another quote from the book.

Speaker 1: 11:29

One of the most valuable pieces of advice I received from my mentor, ludwig Jesselson, is you can mess up a lot of things in business and still do well, as long as you get the big trend right. I've taken his words to heart and with each new company I start, I make sure I understand major trends that could threaten the business or help it soar. I'm obsessive when learning about an industry. So the big trend Charlie Munger talks about this a lot. He describes it as surfing, finding that big trend and basically surf that big trend to profit. Right. It reminds me exactly of that and I think for the painting industry there's definitely trends that are in favor of the painting industry. One of the big things is AI. We've all heard about AI. I think AI is threatening more white-collar jobs, definitely not blue-collar jobs like painting.

Speaker 1: 12:28

I saw a clip of a funny South Park episode. It was where basically all the contractors were super rich because nobody knew how to fix anything anymore and so all the lawyers and accountants and everybody was like basically on the side of the road begging for contractors to come help them fix their house and the contractors were like no, get a, get away from me, and they had like big fancy trucks. It was really funny, uh, but I think that's sort of it has a grain of truth in there, like the technology that's coming out is really it's making it easier and more effective for white collar jobs and maybe taking some of those jobs away, but not necessarily blue collar Like you can't really automate going in doing some carpentry on a house and then and then doing prep work and painting a house. That's just not going to be automated. So that's a big trend that I think is in favor of the painting industry. However, with that, I think this next passage out of the book makes sense If you want to make a lot of money in almost any industry, plan to invest heavily in tech. If you want to make a lot of money in almost any industry, plan to invest heavily in tech. And so, even though the painting industry is, you know, I think, pretty well protected from being taken over by AI, let's say there are still a lot of opportunities that painting businesses can use technology to their advantage, especially on the back office side, making sure they're streamlining the processes, creating that great customer experience for their customers with the use of software and technology. So that's a great opportunity making sure you're still investing in that technology so that you're staying ahead of your peers, providing that great experience to your customers.

Speaker 1: 14:12

Now the next section I really liked is about hiring. And here's a quote from the book make your hiring choices as perfect as they can be, because there are a few mistakes costlier than hiring the wrong person. An empty seat is less damaging than a poor fit. An empty seat is less damaging than a poor fit, and I've learned this lesson several times over. It's definitely hiring. I think you can make a lot of mistakes in your business, but if you make a hiring mistake it's so much more painful. So taking extra time to really really make sure when you're hiring something you're making the right decision and I think everyone's heard of the phrase hire slow, fire fast.

Speaker 1: 15:01

Going back to the book here screen for superior intelligence eliminates 90% of all candidates. So it's the first thing that I look at. There's just no substitute for smarts. The CEO trait most closely correlated with organizational success is a high IQ. Double down on hiring the brightest. And then he goes on on this way to think about the players that you have on your team. He breaks them down into a players, b players and C players and he gives this a description of how to think of each. So let me read this is really really helpful and it helps me when I'm evaluating my team, making hires and fires and all that stuff. So here here's an excerpt here.

Speaker 1: 15:40

I imagine that I imagine that person coming into my office and quitting without warning. Just by imagining this scenario, I can immediately tell from my own inner response whether the person is a, a player, a B player or C player. If my first thought is I was going to fire this person sooner or later anyway, so no big first thought is I was going to fire this person sooner or later anyway, so no big deal. And now we won't have to pay their severance, that's a C player. If my reaction is I don't like this, but I can live without it, the transition period might be a little bumpy. We'll, and we'll run a search and find someone else, maybe someone even better. We're talking about a B player here. But if my reaction is an internal dialogue of panic along the lines of we're so screwed, how did we get in this situation? There's no way we're going to find somebody as fantastic as this person, that's an A player. And so that's how he differentiates between A, b and C players, and Steve Jobs talks about this having a team of A players, You've got to have a team of A players.

Speaker 1: 16:39

He said that Pixar was the first team he ever had that was all A players, and look what they did there. He was trying to make Apple the same way, he said. But basically it's almost unavoidable to eventually get some B players in there. But you've got to be really careful because B players will hire C players and you can't have C players on your team. So try to get as many A players as you can. And Steve Jobs also said something really interesting was it's even more important when you're a smaller business to have all A players, because if you, if you have a team of three people you and two other people those, each person is worth 33% of the activity and customer experience that your customers are interacting with those people, so it's basically 33% of your company. So even in the beginning, it's especially important to make sure you're getting A players in your business because they're representing a huge portion of your business. So I love Brad Jacobs and how that thought experiment he uses to describe what an A player is, what a B player is, what a C player is, so super helpful in evaluating your team and saying, okay, do I have all A players? Just run that thought experiment.

Speaker 1: 17:52

Here's another quote from the book. The three companies I currently chair have a total of 174,000 employees. Not a single one of them shows up to work because they want to make money for Brad Jacobs. They come because they want to make money for themselves and their families. I do business in dozens of countries and money animates people everywhere. That's why I overpaid almost every direct report I've ever had to ensure that I had top tier people in place. And so this is this is kind of an obvious thing right, that people don't come to work for you to help make you money. Right, they're trying to. They're self-interested, they're trying to make money on their own. That makes sense. That's completely complete common sense. But it's a good reminder. Like and you should take that and make sure that you're acting appropriately with that information you should be paying If you get a players and make sure you're compensating them, because it's very difficult to define and keep your players.

Speaker 1: 18:52

And if you get ahold of a player, definitely need to pay them as much as possible, because if you think about the cost of bringing on somebody and then not be maybe they're B or C player all the training that you do with them assume that they stay on for a long time. There is taking a lot of your time because you're going to have to holding their hand on showing them how to do things and then, on top of that, they're not providing a great experience to your customers. So maybe you're losing referrals and not seeing those referrals and word of mouth being spread because you have this B or C player. This is costing you a lot of money and it's kind of hard to see on the financial statements, but it is. It's that negative word of mouth from bad customer experience can kill you and plus all the time and and even the thought space, like if you have somebody on your team this me, speaking from experience you have somebody on your team who you don't trust to finish something on time or the correct way. It just creeps into your head and it takes up you know brain space where I can be thinking about how I'm going to grow my business, how I'm thinking about is Tom or Susie going to do that task I told them to do because they've had a terrible track record of not doing it the right way. So it has a huge cost and so if you get an A player, make sure you pay them as much as possible. In this case, brad is saying overpay them, quote, overpay them.

Speaker 1: 20:17

And then, lastly, there's some good questions. He's always asking questions because he's doing all these acquisitions and he's trying to understand how can we make this company better so that we can integrate into our company and then streamline and make more efficient, get more profit. And he's always asking questions of the employees. So these are a couple of good questions what's your single best idea to improve our company and what's the stupidest thing that we're doing as a company? And those are just really, I think, solid questions that you can ask to get to the heart of things. If you're asking those questions of your employees on a regular basis to, you know, identify those problems, so you're you're fixing those inefficiencies and you're moving your company forward. So, overall, I really enjoyed reading how to make a few billion dollars by Brad Jacobs a lot of good information on kind of your mental models, having the right mindset, and also some good information on how to hire the best people and keep them. So I highly recommend it and, in the meantime, I'll see you next week.