Brad Jacobs, QXO, XPO, United Rentals & United Waste | David Senra

23:53I would like you to be better. I'd like things to go better, but they don't have to. I can still be happy. And frankly, they're not going to all the time. So I need to accept that. I need to radically accept that. I need to be in reality, not put these, you know, you mentioned Bezos. Bezos says a lot of cool stuff. One of the things he says often is, don't fight with reality because reality always wins. Yeah. So the reality of this is nothing's perfect. Like literally nothing is perfect that I found yet. He has another line I think that's related. It's similar to the idea in your book where he's just like, if you don't want to be criticized and you don't want stressed, then you don't do anything.

24:27Exactly. It's just like, then just sit in a room and watch Netflix and order a DoorDash or something, but like you're not going to do anything that you can be proud of. So that's another irrational thought you see people have. I used to have this a lot, but I don't have it now because I went through that therapy thing and it turned a switch on in my brain, is a demand that everybody likes me and everybody respects me and everybody says great stuff about me and I get good press and I get good reviews and the stock just goes up every single day. Well, that's not going to happen. That's called perfectionism.

24:57That's not reality. So you just kind of modify that to, well, sure, like everybody else, I'd like people to say good stuff about me rather than bad stuff about me, but I don't really care. If people say bad stuff about me, then okay, maybe there's some truth in it. Maybe there's some good thing I can learn from that. Or maybe they're just off and they don't know me and they're just kind of, they're imposing their distortions on me. But does that really change who I am? It really doesn't. If somebody is saying something bad about me, does that really matter? It doesn't matter really at the core.

25:28And again, it goes back to context. In the larger context of things, most problems really don't matter. They just don't matter. Maybe at the time they seem like one, and maybe we're kicking in, magnifying those problems and making them into big catastrophes and dramas. But most problems really aren't a bad thing. I always say opportunity is a strange beast. It frequently appears after a loss. There's always a play. There's always, no matter what happens, this goes back to the Jesselson conversation, no matter what gets thrown in your face, at the moment it may seem ugly and bad, there's a play.

26:05There's a way to utilize that. There's a way to use that. There's a way to embrace that and turn that into success. Anything can be turned into positivity and success, even if it starts in a bad place. Something came to mind when you were talking that's also unusual. Because most of the people that, like, I read biographies about, they go through several different companies so they find, like, their life's work. But normally they're working on something for, like, a very long time. Why do you keep starting so many companies? Like, what is going on? That's my thing. Everybody's got their thing.

26:36So everybody – so you're a great podcaster. You have a talent. Your superpower is you can consume a large amount of information and then distill it down to, like, boom, here are the most important takeaways from that. It's really brilliant. That's your thing. That's why you're doing it, right? Because that's what you're good at. You're not playing professional baseball or acting or singing or whatever. You're doing what you're good at. This is what I'm good at. I'm good at figuring out what's the right industry to consolidate. Secondly, I have a toolkit. It's the same old toolkit. You told me this last time.

27:06Can you explain this? I love the way you describe this toolkit of how you approach building your businesses. So first, I find the right industry. I find something that's large. I find something that's growing. I find something where it's fragmented. I find something where we can buy things at reasonable prices. I find things where technology could be used. It's not a very tech-forward industry. I find stuff that AI and automation are not going to disrupt at any time in the near future. So I find industries that have certain characteristics to it, whether it was garbage, whether it was construction, whether it was transportation or logistics and now distribution.

27:42they all have the same characteristics, same traits. So that's point number one. Point number two is I then put together an amazing team. I put together a team of people who are generally smarter than me and who are more talented than me in what they do. So I have a great CHRO who knows everything there is to know about HR and compensation and talent recruitment and so forth. I have great M &A team who really know how to do deals and get deals done rather than turn them into dramas. I have great finance accounting people who understand everything there is to no agency about running a fast-growing company, keeping the books clean, so et cetera.

28:19And I get the team together. Then I get the compensation sorted out. So I make everybody my partner on the senior team. And I give people tons of equity, but there's a catch. It could vest, but you can't sell it for five years. And most of it vests in the last two years. So everyone is committed, going back to long-term relationships. Sure, people come and go for whatever personal reasons or people burn out or whatever. But generally speaking, most of the team stays for a while. And you work together as a team. And then I have certain rules of how we're going to interact with each other in a very respectful way, but in a way that encourages looking at things from different angles.

28:58So we disagree and we argue. Argue is too strong of a word. We present different ways of looking at a situation that partly overlap and partly conflict. And then we, in a very scientific way, figure out, well, let's risk adjust these things, figure out what's right. It's a scientific experiment, an ongoing science experiment, like all day long of trial and error and experimentation and A-B experimenting. And so that culture that we create gives us a power. This is a power to attack the industry in a way without all the noise that a management team has. A very coherent team, like a superorganism, like a brain, like a very organized group.

29:38And then I have, between all those people, we have experience at our main job, which is to buy companies at reasonable prices, where there's a difference between what we can raise capital at and what we can deploy it at. And then we have a skill set to be able to improve the companies that we buy. These are the two main things we're good at, is buying companies in a disciplined way. Price is too high, we don't do it. Price is reasonable, doesn't have to be cheap. We're not trying to steal companies. If the price is reasonable, we go for it with gusto. And secondly, the other talent that the team collectively has is we know how to improve the businesses.

30:14We know how to improve the pricing, improve the procurement, the HR element, the compensation systems, the technology, the whole tech stack, just everything from A to Z, we're just good at transformation. We're good at taking a company that is making a billion dollars of EBITDA, of profit, and within three to five years, doubling the profit, doubling the EBITDA. That's the main criteria I look at when I look at a company is purchase price. And secondly, can we double the profit in three to five years? And most of my main acquisitions have done that. So Conway, Robert Dandasangla, all these different ones, they were great companies.

30:52And everyone says, oh, they're working really well. Okay. Well, three years later, we doubled the profit. Yeah. Because we apply the toolkit. We apply the playbook. And it's the same playbook, industry after industry. The playbook gets refined a little bit here and here, but it's the same playbook. So when you say, this is just what I do, like, to me, you now have figured out who you are as a person, right? I have this weird theory that I can't prove, but I believe. And, you know, there's like this myth of like the genius young entrepreneur. And I was like, well, I don't know. If you study like you study the history of entrepreneurship pretty intensely, you realize that like people do most of the time their best work many decades into their career.

31:27And so there's all kinds of reasons. They're like, oh, they've had more experience. They're wiser. They have more resources. They have more practice. I don't dispute that. That is all true. But I have this weird theory that they also know themselves way better. And I think the key to being a great entrepreneur is building a business that's, I used to say, building a business that's authentic to you. And then I read Michael Dell's excellent autobiography. And he has a better line. He said he built a business that's natural to him. And there's a great story. I want your opinion on this in one second.

31:58But there's a great story where, you know, Michael starts in his company was 19. He's in his 20s, and it's doing fabulously well. But he realized, like, hey, I need some, like, grown-up, like, I need some help here. And so he gets this guy. I think his name was Lee Walker, if I remember correctly. And he's about 20 years older than Michael, already started a bunch of companies. Rich, you know, didn't have to work anymore, but he saw an unusual once-in-a-generation talent, and Michael decides to help him. He lasts like four years. And so I read the book, and then I was about to make the podcast on it.

32:26I go and see it. I was like, I wonder what ever happened to this guy. And I found an interview that he did, and he's in his 80s, and he's talking about that time. And he gave me some of the best context to really understand this story and Michael's story is really a story of you and everybody and all the people. really, you know, very similar people that were studying. And he's just like, you know, Michael starts his company with$1 ,000, says, I'm going to take on IBM for my dorm room. IBM is the most valuable company in the world at the time, which I didn't know it was the first company to hit 100 billion market cap, which is nuts.

32:56And he's, you know, just the audacity to have that. And he's like, in the first few years, like, we're going against this behemoth. And I lasted four years. I started losing my hair. My back hurts. I can't sleep. I'm unhealthy. And he goes, but Michael was energized by it. He built a business that was natural to him because, like, this is what I want to do. I'm not losing my hair. I'm not, you know, depressed. My back's not hurting. I can't sleep. I'm, like, waking up every day just getting after it. So is that the way you feel about just, like, what you're doing? It's like this is – it may seem weird because it is not a pejorative way.

33:32It's not weird in a negative way. I don't know another person that started eight separate billion-dollar companies. So it's almost like you can't help yourself. That's what I do. I know how to do that. So it's just natural to you. This is just like… Yeah. I've done it many times before. And I've made every mistake in the book over the decades. And I've learned from those mistakes. And I've refined it and refined it. But I have a winning formula. I know how to execute on this. And the team I have knows how to execute on this. I don't want to underestimate the team. So one of the things about being the CEO and the founder is you get all the credit.

34:04But, like, there's a lot of people on the team who are doing these things, accomplishing these things. Yeah, you have a great line in your book, which I see over and over again. You said the CEO's most important job is recruiting superlative people. Totally. It's like you're people. So my question to you, though, is, like, what would it take to get you to stop? Yeah, I don't know because I don't see that in my near future. I just started the company in the last few months. No, but in general, like, so this is what I loved about, you know, most of the people I admire. It's like, I can still remember this.

34:35You know, I put it into the maximum. It's like, if you love what you do, your extra strategy is death, right? Like, you should be working on something. So, like, you know, Sam's out. He told me, he's like, I'm going to be doing deals until I die. Well, he was doing deals until he died. Munger, same thing. Like, I met him right after the Silicon Valley bank collapse. It was like Greg. He was like a kid in a candy shop. He just thought this was like the fun. He didn't want people to be hurt, obviously. But he's just like, you know how many financial panics that I've seen in my lifetime? I'm like, of course, this is like nothing new.

35:03So I remember I was actually having dinner. I remember I was at Harry's Pizzeria in Miami in a design district. And, you know, I was supposed to be paying attention to my wife and on our date. And I was thinking about the podcast and all the shit I'm reading. And I go and like take a bite into a piece of pizza. And I was like, people say if you love what you do, you do it for free. And I go, no, there's a different level. If you love what you do, they couldn't pay you to stop. There you go. And I was like, how much money could you have gotten to Steve Jobs and be like, hey, how much would it take for you to not work on Apple?

35:37That's not why he's doing it. That's not why they're doing it. Enzo Ferrari, Estee Lauder, Edwin Land, Coco Chanel, all these other people. Like, they just can't. Michael Ferrero. I just, the Michelin brothers. Like, there's this story over and over again. I get the same sense to you. It's just like if I said, hey, what price I'm going to pay you and you can't do any work. You have to stay home. You can't. It's just like there's no price. Everyone you just named, all those successful people, they were all in. They were 100 % in. They weren't like partly in and partly aren't. They're in. They're 100 % in and completely focused and single-mindedly concentrated on executing the plan.

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36:50That leads me to another great one of their, I don't even think you think it's a maximum, but it's how you differentiate between A, B, and C players, where you're like, I'm just going to summarize this and jump in whenever you want, but you envision, you do another thought experiment of, okay, do you want to see if you have the absolute best people on your team? Just visualize that they're coming into your office and they're saying, Brad, I quit. So then what happens next in this scenario? So I'm always interacting with my CHRO and going over talent and making sure everybody's happy and motivated.

37:23How much percent of your, like— A lot. I spend most of my time on people and talent issues. So most of your time. Well, no, no, not the most, but the most— if I did a pie chart of, like, how I divide up my time, the largest percent is on people issues. There's a funny story about this, and then I don't want to interrupt, but I do—this is inside of me, and it just has to come out all these stories because I find them fascinating. So there's two MBA students in Stanford in the late 90s, And in 97, they interview 16 technology company founders since they're in Silicon Valley at the time. And they publish this book called In the Company of Giants.

37:59And everybody's in there, Bill Gates and Steve Jobs and everybody else. And they're telling Steve, they're like, well, you're the founder. Of course, you don't have time to recruit people. And Steve's like, what? No, it's the most – it sounds exactly what you said in your book. It's the most important. He goes – and he did a great way to demonstrate the point. He goes, let's say you're starting a company, right? You're in Silicon Valley. That's what you're doing over here. you pick your co-founder. You should think long and hard about that. Your co-founder is 50 % of the company at that point.

38:27And then he goes, but it still goes out. Now you have to pick the 10th person. That person's 10 % of your company. And you're saying you don't have time? Like, what else are you doing? It's all about the people. It's all about the people. You know, systems and tech and budgets and customers and sales, all these things are really, really important. But you can't achieve excellence in those things without fantastic people, without fantastic leaders. And I spend a lot of time, especially on the top few dozen people. I want to make sure everybody's in it to win it. Everybody is fully, fully engaged.

39:00And I do a mental exercise where I picture the person coming into my office and saying, Brad, I quit. Like, this is not a conversation about you making me a counteroffer. I'm done. I've already moved. It's over with. This is about a conversation about how do we make an orderly transition because I respect you and I don't want to leave you high and dry. And then I try to feel and visualize what would be my reaction if that person came in to me and quit? If my reaction to that is, yes, I don't want to smile. I don't want to act like I'm happy about this. But, you know, nobody likes firing people.

39:33And I just didn't, you know, I just kept postponing firing that person. I shouldn't have, but I did. And this is great. I don't have to pay severance. And, you know, that solves that problem. No problem at all. We'll replace them. That's a C player. that someone really you should get the courage up to take to get off the manager get off the team right away and then on the second category if my reaction to it is you know it kind of sucks you know it's what i would have preferred that person stayed but it's not the end of the world we'll hire a head hunter head hunter we'll get someone as good maybe something better and you know things will work out that's a b player but if when i visualize that person quitting my reaction to that is pure terror and absolute panic.

40:18And like somebody took a baseball bat and just whacked me in the stomach and then punched me in the face. I'm like, oh my God. Like I'm never going to find someone as good as her. No way. Or I'm never going to have someone as talented as that person. I'm never going to have someone who brings to the table their particular superpower. I am, and I don't even, I can't even hear what they're saying anymore because I'm just like having this internal panic dialogue going on. That's what you call an A player. So I want all A players around me. I want people whose relationship with me I value so much that if it was terminated, I would be lost.

40:54And I want them to feel the same way. I want to have mutual relationships. I want people who love being in a relationship with the team, with the company, and that we all are in it together to go conquer the world. I think I had named it. It's been two years since I wrote the book. But I think I had a chapter that said how to kill the competition instead of killing each other. And that's, you know, it's kind of funny, but it's a serious title is you don't want to have a dysfunctional management team. One of the most important things that has allowed us to create tens and tens of billions of dollars of value is the management team's coherent.

41:29We have the right people on the management team and we have the rules of the road of how we're going to deal with each other in a respectful way that still encourages differences of opinion. First of all, I love the way you described because everybody says, oh, yeah, hire A players. So, like, people, it's really hard to differentiate. Like, what does that actually mean? And I think this thought experiment is perfect. It's like, we are fucked. If this person leaves, that's an A player. That's a way to think about this. But this also goes down to your gift and why I think I've learned so much from you.

41:58One partially, it's like your ability to, like, have very clear thinking and then put it in a memorable way. So you were just talking about, like, the relationships that you have with the people you work for. You have a line in the book where, like, he says an organization is like a party. You only want to invite people who bring the vibe up. My team and I spend a lot of time together, so it's a big deal that we like one another. Yeah, I agree with that. Who said that? That was a good one. Bezos has a line in, I think, his shareholder letters. It's like, life is too short to work with people you don't admire.

42:27Like, it's the same situation. It's like, you're in charge. You get to choose. Again, this goes back to one of the gifts of being the CEO, of being an entrepreneur. It's very rare that you get to literally choose who has access to, who's around you. And I love this idea. It's like, hey, the organization is just like a party. You want people to, you only want people to fight. David, it's all about the people. It's all about the people because the people then create all the different processes and work streams and transformations and everything. This is very fascinating because like it's obviously, you know, business is people, right?

42:58You're not only like the people that are building a product, but like all the businesses, the best definition of business I've ever heard actually came from Richard Branson. He says all businesses is an idea that makes somebody else's life better, right? And like there's infinite, that's why there's always more opportunity because there's infinite ways. We think technology is going to like, it changes things, but then it just usually opens up other ways to make other people's lives better. So just focus on like, if you're looking for an opportunity, how can I just serve other people? Another line that's very related to this is Henry Ford, where he says money comes naturally as a result of service.

43:27Like I think those two ideas go together. The reason I was thinking about this though, the best way I just, I've heard describe what you were just saying. It's all about people, work with the best people you possibly can. the A players, we're going to talk about, you have this great line about there's no substitute for brains. But before that, it's like the way that I've heard this described best, in my opinion, is from Ed Catmull, the founder of Pixar, right? He would go around and give all these talks. And he was actually like shocked that he would ask the audience, like, what's more important?

43:55People are ideas. He says every single time people got it wrong, they said it was the ideas. And he's like, no, it's the people. And so he has this great line where he's like, listen, if you give a mediocre idea, right, to a brilliant team, they're either going to fix it or they'll throw it out and come up with something better, something new. But if you give a great idea to a mediocre team, they're going to screw it up. So it's obviously, because ideas come from people, so it's the people. That's exactly what I'm trying to say, what he said. He says it in like just, wait, wait, but you have a very like explicit piece of advice in your book that I think is interesting, where you're like screening for, there's no substitute for brains, Screening for superior intelligence eliminates 90 % of all candidates.

44:34So it's the first thing I look at. There's no substitute for smarts. The CEO trait most closely correlated with organizational success is a high IQ. Double down on hiring the brightest. Yeah. Well, you want smart people. And I particularly want people who are smarter than me. I want people who uplift me, who teach me. I don't want to be— Do you want them specialized? Because you mentioned earlier, you said you want them smarter than you, but also better at their particular? The vast majority of them are specialized. Okay. They're a finance person. They're an investor person. They're a strategic person.

45:08They have something that they, a tech person, they bring to the table that they're an inch wide, a mile deep in. But you also want them to have certain human qualities that transcend what their specialty is. And those are as or more important than the technical skills. Well, you mentioned smart. You want people who are honest. You want people who are hardworking. You want people collegial. You want people who are really in it. Like on the work-life balance thing, boom, it's work. And their life is a lot of their work. And, you know, they enjoy that. I don't have to hold them like a schoolteacher or a stick over their head getting them to work late or coming early or working on weekends.

45:43Like they want to do that. Like they enjoy doing that. Their job, their career, their success, the collective success of the company is an important part of their gestalt. It's a really important part of their being and their purpose. Was there ever a time, I don't mean to interrupt you, but this is fascinating. and it's almost selfish to have this conversation because I get to ask you questions and learn from you. Was there ever a time where work wasn't, where you were more balanced? When was the last time you were balanced? So you started your first company at 23. I did, and I've been completely imbalanced since then.

46:12I've been working seven days a week. Yeah, because you guys scaled like four years to, I don't know, like a couple billion dollars. It was just like an insane story. But for me, it's not work. For me, it's like I'm really enjoying it. To me, it's a craft. It's a skill that I have. That I enjoy doing it. Were you always honest with yourself that it was the top priority? I think so, yeah. I had a conversation with a friend of mine on the drive over here, and I think I'm lying to myself. So let me give you an example. So, you know, in many cases, like you read these biographies of these people and it winds up being a cautionary tale, you know, because they kind of like will sacrifice everything for professional success, their health, their relationships, everything else.

46:49Well, that I'm not in favor of. No, no, no. You're still married. You're a good father. Like everything else. Yeah, for sure. But your main, It's not like you have an abundance of hobbies outside of work from what I understand. Meditation and music. That's pretty much it. There you go. So for a long time, every single person I read about it, I was like, okay, well, I even titled the episode My Personal Blueprint, which was Ed Thorpe, right? Ed Thorpe, I'll give a short run. First person to invent a quantitative hedge fund. He invented the ability to count cards for blackjack. Writes this book in the 1960s called Beat a Dealer.

47:25you know made more money than he'll ever spend but if you read his book you get to the end it's like he was much more balanced right he also came from academia and maybe this had played a role into that but essentially like lived a life adventure because he truly loved what he did once he made more money than he could spend he stopped trading more time for money he his had a good marriage till his wife passed away from cancer took care of his health but like much more of like a, let's say there's five important things and you kind of like divvied up. Maybe work was 50%, but the other four are other 50%.

48:00And I was like, oh, that's kind of my personal blueprint. And I said on the drive-rower, I go, no, I'm lying. It's like 90 % of what I think about and how I spend my time is just work. That's a beautiful thing. So all the people you've mentioned so far, all these very, very successful people, I guarantee you probably every single one of them with few exceptions, if any, were all in. And what they were doing was their passion and they were just so excited about it. They were in the flow. They were in the flow of being so absorbed on something that you'd like lose track of time and the whole rest of the universe is gone.

48:33You're just in it. You're just really into something that you do well and with people that you really like. And you're likely to be successful because you're doing what you do. When I was thinking about the amount of research that you do, that you explain when you, before you get into an industry, before you start a company. It's like the way I describe your book is buy it, read it all the way through. And then what I really think it is, you put it close to your desk because it's a reference manual, because you can just pick this up now and read one chapter that takes 10 minutes and get good ideas out of it.

49:04Do you know I'm writing a sequel? Last time you told me, he's like, I only had one book in me. I have nothing else. So I wrote the book and I got so much feedback of what people thought about it. And people asked, well, you should really talk more about this, this, this. At first I said, I'm never writing another book yes i remember it's a lot of time to write a book and i don't have a lot of time yeah but i had so many people ask me similar questions okay i'm going to write a sequel that addresses those particular questions you know the title's going to be that was how to make a few billion dollars this was going to be called how to make a few more billion dollars a great award yes let me get an early copy please you're very nice to send me another copy of this one uh but the i think what ties all this together when i think about your research process the way you go after life all the people we've been talking about from steve jobs to jeff bezos this is like mediocrity is always invisible until passion shows up and exposes it.

49:50Love it. I think that is what animates me. It's just like you see this. You're talking about like even when you buy great companies, good companies, they're like, what else could you do? It's like there's always more. Always. Because you can always infuse passion into what you're doing, obsession, work with the best people. Of course you can keep getting better and better results. Yeah. Well, I agree with that. I think so what you just said, you buy a company, it's doing very well, And then three or four years later, you've doubled the profit. What did you do? You went in with a toolkit and you went into the – attacked the pricing using algorithms and elasticity analysis.

50:23You've attacked the compensation so you've got the salespeople made partners rather than pupils to the parent authoritarian figure at corporate. You put in technology that frees up time, that allows people to spend time doing selling and doing their job rather than trying to find information. You're sharing information in very good ways. So you apply a certain toolkit, boom, you double profit. So wait a minute. This brings up something interesting that I've been talking about lately, the different archetypes there is in founders and CEOs, right? Everybody thinks like, oh, there's kind of one archetype, and especially the ones that are popularized now, it's like essentially like the Steve Jobs dictator, make almost all the decisions.

50:58I don't like that. Yeah, so exactly. I just heard the pupil part. Who am I to criticize Steve Jobs? No, no, no, no. That's not my stuff. It's not a criticism. It's just like that's the beauty of entrepreneurship is like you get to do it. I wouldn't be able to do that. So what is your archetype? What is – like let me back up before I ask you a question because I've been having long conversations with Daniel Eck, the founder of Spotify, who's become a good friend. And that's his whole thing where he – like we actually might be writing something together about like he's concerned that there's going to be young entrepreneurs out there that are like I'm not like Elon or I'm not like Steve or I'm not like all these people.

51:31So therefore, I can't be an entrepreneur. He's like there's multiple archetypes. He's like I'm not like that. He says he thinks he's a better coach than he is a player. And essentially, he has discovered, it's almost like this. He recruits some of the best talent in the world to the point where he's like, I used to be the best at product. That guy's better at product. He should do it. That guy's a better designer. That guy, that person's a better HR. That person's everything. So he's like, the way I look at it is like much more of a coach than a player. What is your like archetype? So you want to get the right people in place.

52:01You want to get the compensation aligned. And then you want to be communicating with each other in a very constructive way and a very prolific way. So Friday, we had our second MOR, monthly operating review, for this company we had bought, Beacon. And how did we come up with the agenda? It was a 10-hour meeting, two breaks. One was 10 minutes, one was five minutes. Nobody was distracted. Nobody was on phones or devices. Those were all shut off. We were very concentrating on the one person that had the proverbial microphone at a time and listening very carefully and intently what that person was saying and then debating each point and each action point.

52:35How did we come up with the agenda? Here's how. Did I, the CEO, come from above and say, here's the agenda that I think is an important thing. I'm smarter than all of you, and here's what we should be doing. No. How pompous and arrogant and kind of ineffective, really, to do that. What I do is just the opposite. I send around a question pro, an app, and we say, here's all the materials pre-read for the meeting. We don't do PowerPoints and go through all that nonsense where everyone tells each other how great they're doing. It's just a silliness that you see a lot in corporate America. We send all those decks out ahead of time.

53:10We have everybody read them. And then we have everybody fill out the app, say, based on everything I read, here are my main takeaways. And here are the main questions that I think are so important in terms of creating value that we should, the whole team, all 25 of us who were in that meeting, spend time debating and discussing around the table in the limited time we've got. Because$10 goes by like that. And then I send back out the takeaways, and I send back out the questions. People rank them on a scale of 1 to 10. Again, we have an app for this. And then I send people the takeaways. Here's how they were rated.

53:45Here's what people thought were the most important takeaways. Very valuable. Now you've got the benefit of everybody's perspectives on the same data. So people have seen the same charts, the same data, the same metrics, same KPIs. But they've seen it from a little different angle. It's very enlightening. And then I've got the questions. I tell everybody, rate the question 1 to 10. And then all the questions that are rated 8, 9, and 10, between 8 and 10, that's the agenda, David. That's what we talked about. So we just went. Then we put them in categories. Everything about tech that was rated 8 or above, here they are.

54:15Everything that was on comp or people, everything that was on strategic, everything that was on M &A, all the different categories. Only the ones that the group voted on at least in 8. Now, what is the consequence of that? Number one, we have an amazing meeting. Like, it's a good agenda, much better than I could come up with. Because now it's got everybody's angle on it. It's group sourced. Secondly, everybody's involved in it because the boss didn't come down and, like, here's the agenda. It's like, we collectively made the agenda. So people realize the truth of the matter is we really respect each other's opinions.

54:49There's no one person who's the authoritarian figure who's, like, teaching everybody else. It's a group. I've created a group. I've created a superorganism. I've created like a beehive or an ant colony or a brain or a human body, super organisms, things that are a collection of people that the sum is greater than the collection of the parts. And the whole is greater than each individual. We have a holistic, powerful approach to that. That's how I run the business. How many people would be in a meeting like that? So I've experimented with this over the years. I used to have larger meetings with 40 or 50 people.

55:24It just didn't work. And so those meetings, those monthly operating reviews, which are the most important meeting of the month. So then the most senior people in the company come together and do the exercise I just mentioned for 10 hours with almost no breaks, almost no breaks at all. That I have 25 people, and I limit it to 25. I don't want more than 25. I don't know what's so magic about 25, but 20 to 25 is the ideal group. You have enough people that you get diversity of opinion, and you have dialectical discussions, meaning looking at issues from multiple perspectives, than analyzing those and synthesizing them and finding the truth.

55:57But you don't have so many people that you're, you know, people are peacocking and trying to impress each other and don't want to be vulnerable. You want people to be vulnerable. You want people to trust the other people in the room so much that you've created a safe zone to say, you know what? I've been thinking this and thinking this, but the more I'm listening to you, the more I'm hearing about this, I made you wrong. Maybe I got this thing completely upside down. I'm starting to come around to look at it like this with one little twist. Now I think what we should do is X, Y, Z. And then what do you all think of that?

56:26That's a fantastic conversation. When you have leaders of the company feeling it's safe to show that, hey, I was wrong. I was thinking things wrong. And I model that. I role model that myself all the time. Be flexible in thinking. Don't be rigid in thinking. Don't be black and white, dichotomous thinking. But be open-minded. Be receptive. To be willing to learn and to be challenged. And that's okay to be proven wrong. It's actually a good thing. We're learning together. Two questions on that. How, what percent of the meeting are you speaking in a situation like that? So I open up usually and I ramble on for like an hour, maybe more than an hour of the state of the union from my perspective.

57:04And I try not to just mention things that I form conclusions on. But I try to frame things of these are the most important successes of the company. But these are the things where we need to improve. And here are the issues that, in my view, after reading everybody's votes and everything, I think of the things we should attention direct. We should spend most amount of time solving because I think those will create the most amount of value. And I try to keep it balanced, the good stuff and the bad stuff. Yes, I do attaboys and attagirls and rah-rahs. That's a good thing to do for leadership. But I, in equal measure, do, look, we've got to keep it real.

57:38We've got to keep it honest. Here's things that we said by this deadline we're going to do it. We're a couple weeks behind on this. Let's get going here. What's going on? Here's what we thought this outcome was going to happen, and we're only 92 % there. How can we get to 100 %? So I try to start off with a balance, but then I try to shut up. And then I try to let the mechanical going through the questions where I just go down the questions by categories and then go around the room and hear everyone's opinion. And that's – you don't want the leader talking a huge amount of time. Yeah, so you basically start with an hour.

58:09the next in this case nine hour the nine hours for this meeting you're everyone else everyone else i'll talk to but not inordinately i've already used up my hour for god's sake yeah yeah this is one of the things i felt and i've seen this with a lot with like really remarkable people is how many people like when we had this intense breakfast at your house a few months ago you had a notepad and you were i'm talking and you're taking notes like what the hell is going it's the reverse no but it should be with the reverse in fact uh i have a story about this and then i I want another question for you, was Mitch Rails, obviously one of the founders of Danaher.

58:43Great company. Oh, incredible. Danaher way. Yeah, he's actually a mentor of two close friends of mine. So I get, like, insights from them about him and just one of the most remarkable things that he did. But he was at this vertical market software conference. There was only, like, 40 people there recently. And a friend of mine, I was going for a walk in New York City about this, and he says, I don't understand. The guy sat in the front row. he's the most successful person there by far. And he was just taking notes the whole time. I was like, that is why he's successful. It's not the reverse. It's not that you go and you build a$200 billion company, whatever it is, and then take notes.

59:18He was like that his whole time. Just relentless, like, you have valuable information. Great. I just did this episode on Jimmy Iovine. He's a very fascinating person. And he's this great line. He said, great can come from anywhere. Yes. And then you have this other thing. I'll get back to my other question. Great can come from anywhere. He's in the music business. His point was that he was trying to help. He was partners and a mentor of Dr. Dre, who's one of the greatest hip-hop producers of all time. Dre didn't have an artist to work with. They wind up getting this demo tape from Eminem. And at the time, he's this poor kid in Michigan living in a trailer park, right?

59:51No, like, no resources at all. And yet they're like, we weren't looking for, you know, somebody to be controversial. We were looking for great. And guess what? It can come from anywhere. It came from this kid that was obsessed sitting in a freaking trailer park saying, I want to do this thing. I'm going to do this to the best of my ability. I want to talk about, I'm going to go back to this question I have, but you have, I love this idea of grabbing information, which is really fascinating. There's multiple examples in your book, and I find these in other books, where it's just like, it's so nuts that, especially when companies get big and older, they stop asking information from people from the front lines.

1:00:26So you're like, often when we buy a company, we discover that the frontline employees, middle managers, and even some senior executives have never been asked, what would you do to improve the company? You would think owners would want to know that. And then you have this great thing that I think is actually good for business but also personal issues. You ask, what is the stupidest thing we're doing and what is the smartest thing we're doing? This ability to like – you just almost described it in these meetings. It's like, hey, we're going to disperse and ask these questions and see what comes back and then we'll rank the information.

1:00:55So at the end of those operating reviews, once we've gone through all the lists, now we do human interactions. That's where the fun starts. So we work really hard solving all these problems and debating all these issues. Now we put that aside. And I ask a series of questions. I modify them a little bit every month, but I have a list of a few dozen questions. I pick which ones I want to ask each time. Usually one of the first ones is, what is something somebody said today that you have a different opinion on? What is something that somebody said you disagree with and you didn't get a chance to talk about it?

1:01:27And I just go around one by one to each person. That's a wonderful thing. Many management teams can't do that because everyone will get upset. Here it's like, great, and then we have a nice honest way. I ask everyone, what's your single biggest takeaway from today? What is something that 10 hours ago you didn't understand about how we're going to make money and how we're going to serve customers better and how we're going to improve employee engagement and how we're going to kill the competition? What is something you didn't know? What's something you learned? And just go around one by one by one by one.

1:01:53And then I ask him, When I think about people not in this room, but people in the organization out there in the field. who's an MVP? Who's the most valuable player? Who's somebody who's going above and beyond that you really respect, you really admire, you really think is amazing, wish we had a thousand more like that person, and why? And I sent an email to them afterwards saying, hey, I was in a meeting with the leaders of the company, and you were nominated as an MVP because X, Y, Z. People love it. Sometimes I start crying. It's a really, really emotional thing. It's a really, really nice thing.

1:02:24Validating the field. And then I bring it inwards, and I say, who around this table today in your mind, did their star go up? The star already might have been high because everyone loves each other, but even higher. And why? What is something that somebody said today in the meeting that impressed you, that made you go, aha, made you say, damn, that's a good insight. That's a good perception. I really like that. Who was it and what did they say? You go around everything like that. And I have a few other questions like that. And then I bring it down to the person themselves. And I say, finish the sentence.

1:02:58I resolve to improve the company by just go one by one. And each person stands up and says, I resolve to improve the company by. And then they say what they want to say. It's a great thing. What I didn't get a chance to do Friday because we ran out of time, what I often do is then we go into another room. We get out of the boardroom, get out of the conference room. And then we stand in a circle and just silently look at each other for the first couple minutes. A couple minutes is a long time to be like looking around everybody else. You know, it's a lot of people that's uncomfortable. It's not uncomfortable if you all like each other.

1:03:30Yeah. And look at each person and say, I admire this person because. Like, what are the strengths? What are the qualities? What are the traits? What are the skills? What are the things that they do that you really are impressed with? You really like that person a lot. And just go one by one, look at each person, and just identify that. And then after a minute or two has gone by, I say, okay, now let's do the same thing. look at each person and say, I really, so we've already said why I'm grateful they're on the team. So now I want to say, so it was gratitude. Gratitude is a wonderful leadership technique.

1:04:05And then the second thing is, I really wish that person great success in the company. And I can picture this company five years from now accomplishing X, Y, Z. And I send nice vibes. I send love vibes to that person. Just go around one by one, all silently, nothing out loud. Just one by one by one by one. And you start seeing people smile. Like always, I've done it so many times. You start seeing people smile. So you're looking at people. You see, looking at people in a very positive, uplifting way and appreciative way. And then I say, okay, now we've concluded the day and I declare the day a success and congratulations.

1:04:38Then we just clap. And we clap. Sometimes this clapping goes on for like five minutes. And that's like really, really goes on. But it's a very, then people levitate home. Go to the airport and go home. How much of the way you run your company is like guided by intuition. Like you seem like a very intuitive person to me. Maybe not as much as you think. No? Yes, there's always instinct. There's always intuition. You're always going by your gut. Well, like how would you even know? Like this is an unusual, like what you just described. Like how did you learn that? So I've experimented over time. Okay.

1:05:09I've experimented with different things. I've read a lot. I've studied positive psychology. I've studied cognitive therapy. I've studied a lot of stuff. I read a lot of stuff. I meditate a lot. I do things that worked for me. So I think of things that have worked for me on my path, my evolution of feeling gratitude and all the happiness that comes with feeling gratitude, by feeling appreciation, by problem solving, all the different things. And I try to imbibe that to other people. And then if it works, so feedback loops. One of the key tenets of all my companies is we have intense, voluminous feedback loops.

1:05:45Feedback loops between the senior team, feedback loops between the senior team and mid-level management, feedback loops between senior, medium, and frontline management, feedback loops with customers, feedback loops with vendors, feedback loops with investors, all the constituents of the constellation that make a corporation, that make a company. We have to be communicating. We have to be communicating very intensely with each other in an honest way and then sharing that information. I share information much more widely in my organisms, in my organizations than most companies. Most companies, they're afraid to share it.

1:06:24They're afraid to share the good information. They think a competitor is going to hear about it. Okay, well, they will. But let them try to copy us. They don't have all the ingredients to do that. Or they say, we don't want to share the bad stuff because then the market's going to hear our weaknesses. Okay, well, that's kind of true too. That's so much overshadowed by the benefit of we're learning where we have to improve. We're learning how to become better. I read something Jeff Bezos said that changed my perspective on the importance of high quality sleep. He said that he makes sure he gets eight hours of sleep a night.

1:06:57And as a result, his mood, his energy, and his decision making is improved. His point was that you get paid to make high quality decisions. And you can't do that if you're sleeping terribly. And the product that has made the biggest impact on my quality of sleep for years is 8sleep. I'm lucky enough to be friends with the founder of 8sleep, Mateo, and we live in the same city. A few months after I started using 8sleep, I randomly ran into Mateo at a restaurant and I was with some friends. So I go over and say hi. When I got back to my table, my friend asked me, who was I talking to? And I said, that's Mateo, the founder of 8sleep.

1:07:30And my friend replied, he looks like he gets good sleep. Mateo is living and breathing his product. I had never had the ability to change the temperature of my bed before I had an 8 Sleep. I had no idea how much that would improve the quality of my sleep. I keep my 8 Sleep ice cold. It's cold before I get into bed. So I fall asleep faster and wake up less during the night. That feature alone is worth 10 times the price. There are very few no-brainer investments in life, and I believe 8 Sleep is one of them. That is why elite founders like Mark Zuckerberg and Elon Musk have all said publicly that they use 8 Sleep.

1:08:03I would recommend getting the Pod 5, which is the newest generation of their signature product. It is a smart mattress cover that you place on top of your existing mattress, and it is next-level sleep tech. It automatically regulates your body temperature throughout the night, independently for each side of the bed. The result is you get up to a full hour of additional quality sleep per night. Make the no-brainer investment in your sleep by going to 8sleep.com forward slash Senra and use the code Senra to get$350 off. You can try it for 30 days at home and return it if you don't like it, but I'm confident you will love it.

1:08:37I will never let anyone take my Eight Sleep from me. Make sure you get yours at eightsleep.com forward slash Senra. So this is what you were describing earlier. This is like almost a constant iterative trial and error process. And just keeping the information flowing through the company. There's an idea that I think when I thought of your ideas, like, hey, we're going to buy the company. We're going to ask, like, what would you do if you were running the company? What's the stupidest thing we're doing? What's the smartest thing we're doing? I, as you know, like very, I'm not interested. I'm interested in timeless principles, not timely, right?

1:09:07And when I read that in your book, what I thought of was not you building your company. I thought of Jim Casey building UPS 100 years ago. And what he learned, because a lot of these things that these ideas have survived for a long period of time, they're not dependent on the company. They really depend on human nature because like history doesn't repeat, human nature does, right? Human nature is kind of constant, doesn't really change. And so what Jim realizes, the more successful he became, the more successful his company became, his executives, their incentives were to like hide the bad news and just tell them good things.

1:09:33Because then it's like, everything's great in the company, Jim. And so like, and I was the one that made that great. And so pay me more and like, make sure I keep this great job I have. And Jim realizes like, oh, I need to have constant unfiltered access from the people that are delivering the service to my customers. So he would do is like, he would instruct his driver. Every time we see a brown UPS truck, you were to pull over. And he would get out no matter how successful he was. And he would talk to the driver. I love it. unfiltered information. Love it. Same thing. People would go and they'd try to meet Sam Walton in Bentonville, Arkansas, right?

1:10:07They'd show up. They even have an appointment on the books. And they'd walk into the office and they're like, hey, I'm here to meet Sam for, you know, 7 a.m. meeting. And his secretary is like, he hopped on because he used to fly his own plane. He left at 5 a.m. this morning and he went to, you know, this Walmart over here and he's hanging out and like greeting customers and talking to the people, stocking the shelves and everything else. But this constant, I think there's a lot of wisdom in what you said in your book, basically, is what I'm saying. It's like you see this over and over again. They want unfiltered access from the front lines.

1:10:35They don't want the information to be massaged or presented in a manner that seems good. So Todd Combs is one of Warren Buffett's managers. And we were talking on a Saturday about, I don't know, 10 years ago, 89, 10 years ago, when he was first getting on the J.P. Morgan board and he was kind of moving up in the world, stuff like that. I lost touch with him, but really great guy, really smart guy. And he said, what are you doing? I said, I'm reading employee surveys. I'm reading all the employee surveys from the whole company of, we ask them two questions. What's your single best idea to improve the company and rate your job satisfaction scale of one to 10?

1:11:11And sometimes we add a third one of what it will take to make it a 10. And I just go through all these one by one because I feel like I'm talking to every employee and learning on that. He said, that's amazing. So what's so amazing about that? So I was just talking to Bezos, and Bezos was reading customer survey. So he's talking to customers. I'm talking employees, but it's the same concept. You need feedback loops. You don't know how you're doing unless you have radar, like sending beep, beep out there and seeing how it comes back. You have to have this very intense feedback loop. This is why I'm so obsessed with what I'm doing because nothing we're doing is new.

1:11:45You had all these people that ran all these kind of experiments for centuries, and they built great companies. And just because they passed on and maybe the company's not around anymore, it's like there's a treasure trove of data in there. So like the Bezos idea I love where he would publicize it. He used to publicize the very early days of Amazon. Jeff at Amazon.com. Email me. And he read part of the, one of the reasons that he figured out, he's like, oh, I can, we can't just sell books. Like I can sell anything. People, he'd be like, he would send emails to, I think like the top thousand customers.

1:12:11Like, what else would you buy? And one guy, he had this epiphany because they, you know, they're like, hey, I want toilet paper. I want, you know, groceries, whatever. One guy's like, I want windshield wipers. And he's like, windshield wipers? If this guy wants windshield wipers, I'm going to be able to sell everything. Like it is a true everything store. But I was thinking about this recently because I just read this book translated from French about the Michelin family dynasty, which starts out in 1891 selling tires in France. You're selling tires. There's like 350 cars on the road for God's sake.

1:12:36But there's a line in the book that is related to all this where they start – the two brothers have to take over this failing factory. And they don't know what to make because most of the products that they're manufacturing are unprofitable. They're going to bring bankruptcy. They're one profitable product, so they eliminate everything else and they focus on the one profitable product, which is a rubber brake pad for horse-drawn carriages. Say that again, though. A rubber brake pad for horse-drawn carriages. Okay. Remember, this is 1888. So it takes them like a year or two to figure out like, hey, we should manufacture rubber.

1:13:07And there's two twin phenomenons. You're talking about get – remember what Justin said, get the major trend right? Yeah. They're like, well, horse-drawn carriages have been around for a while. You know what's growing way faster? Bicycles and then cars, even from a small number. Like we need to go to where the technology is going. But the point being, he's like, so we need to make more products. We need to make rubber tires. And the guy took over a factory. He's like, I don't know how to do that. So his answer was he would go and it sounds just like, what'd you do? He only had like 50 employees that were making the rubber brake pads.

1:13:35And he would just ask questions. He's like, I came to them and I admitted my ignorance. I go, I know nothing about rubber manufacturing. Why did you do that? Can you explain to me? Can we, what if we did? And not in like what you just said, you said something about like, not like coming down from on high. It's like a peer almost like teach me. And he's like it was wildly effective. He's got a great line in that book. He's like it turns out the guy that handles the material for eight hours a day while the CEO is in the office has something to teach you. Like he's going to understand something about that process because you have like a bird level view.

1:14:06He has a very particular job and he found it very instructive. And he's like it was a wonderful way to learn the business. And then that led him to like, oh, now I know how to make things. and then from there to grow and grow and grow. And I just absolutely love this idea. It's like you should have this unfiltered access, unfiltered information over and over and over again. Completely. All the different constituents in an organization need to be talking to each other, need to have feedback loops to know how they're doing. If you're not asking your customers how you're doing, you may think you're doing a lot better than you really are.

1:14:37How do you figure out how you're doing in your position? I ask all day long. And we have different modalities of anonymous surveys and 360 reviews. And I'm interacting with the team nonstop all day long. I'm walking in people's offices. What's going on? What do you think of this? What do you think of that? You like the – you have this great line in your book where it says, I love working with outrageously talented people to deliver outside returns for shareholders in public stock markets. I love that. This constant feedback from the public market. It's fantastic. You love it. Yeah. I don't always agree with it, but some of it, there's always some truth in it.

1:15:14You get free advice from like the smartest people in the world, the global allocators, people who have raised billions of dollars from pensions and endowments and sovereign wealth funds. And now they're analyzing what you're doing and they're giving you advice. They're telling you this is what I like, this is what I don't like. Okay. You don't have to – actually, you mathematically can't agree with it all because a lot of times you get conflicting advice. People saying, you're going right, you should be going left. The other guy's saying, you should go left even more. So it's good to hear all this stuff.

1:15:45It's good to hear what people are saying. But then you have to go within yourself, and you have to make the decision. You have to be an adult. You're taking tons and tons of information and opinions and beliefs and data, as much as possible. Then you've got to kind of just ignore all that, just go inside and say, this is what I want to do. You've got to make the call. That's what a CEO does. It's what a leader does. You make the call. But you have to get all that input. Otherwise, you're in a bubble chamber, echo chamber, where you're just hearing your own thoughts instead of others. You want people challenging your thoughts all the time.

1:16:18I think for a long time, like, one big goal was, like, starting a company and then taking it public. And now I talk to a lot of founders, and even the ones that raise a lot of money, and they don't want to ever go public. I love being public. What advice would you give to somebody that's, say, 30 years younger than you? They're trying to build a great company. They've raised a bunch of money, but they don't want to go public. Well, they have to be at a level of maturity of the company to go public. Yeah. They have to be preferably profitable. But there's a bunch of them like now. They never want to go public.

1:16:48Yeah, yeah. That reach that criteria and are choosing not to. You know, it'd be interesting to ask them why. What's the reason why you don't want to? I think people think, yeah, I can't speak for them, but I think they're like maybe they're scared of the public scrutiny, the hassle, the... But that goes back to what we were talking about in Argo is, so they might have a core belief saying, I need everybody to always be like saying great stuff about me, which is never going to happen. And they may think, gee, if I go public, when you're public, at any moment in time, you have people in favor of you and people who are naysayers.

1:17:18You have people who are selling and buying. The people who are selling think you're overvalued. People who are buying get the joke and they understand you have a real business plan here that's going to create much more value. So you always have those two different things going. Maybe those people don't want to hear the naysayers. Maybe those people don't understand that naysayers sometimes can help you correct your own path, can tell you, gee, you know, maybe I'm cutting costs too much. People come in and say, you're cutting costs too much. I visited one of your locations. I didn't think the service was so great.

1:17:45Oh, wow. I didn't know that. Thank you for telling me that. So now I have to invest more around the cost. You have other people who say, you know, I'm looking at your numbers here. Your margins are growing, which is great. That's only half the situation here. The other situation is what are you doing with your top line? What are you doing with your price and volume? What are you doing with your organic growth? In my business and all my businesses, the only two things I had to do in the end in order to get great valuations and create shareholder value were grow the top line faster than the competition, faster than the market, be taking share, and growing the margins, increasing the profit margins.

1:18:19If I did those two things, everything else flowed. Everything else flowed from that. But those are the two main things. In order to accomplish those two things, you want as much input as possible. You want as many chefs in the kitchen as you possibly can. The public gets you hundreds and thousands of voices. So it's amazing data. It also, being public, allows you to build a brand much faster and much more voluminously. Explain that part. So you want to be a magnet for talent, for drivers, for people in the branches, for people in mid-level management. You want to be going back to what you said before.

1:18:50You always want great talent coming in. Well, if nobody knows who you are, they're a little skeptical about joining your company. If you have research written about you by bunches of firms and you have press releases and a public website and you're very well-known what you're doing, it's very clear what you're doing. People say, okay, I get it. You're a known quantity and I like this. I buy into it. I like what you're doing. I want to join the company. So in order – and then you can pay them. You compensate them with stuff they can look on their iPhone every day and see the value of the compensation.

1:19:18If you're private, you give people these phantom shares or whatever the compensation plan is. They don't really know the value of it until they sell it someday. And it may be very different than what they thought it was all along. So from a compensation point of view, which is a big element of success in these high-growth business plans, being public is fantastic. Was there ever a time in your career where you're like, maybe I should do a private company instead? Or you were pretty much all in on it? I've been doing public since 1992, and I'm nonstop. And I like it. I enjoy it. I find it very helpful, very constructive.

1:19:49I like the pressure. I like the ability to hear what the street says and then agree with what I agree with, but to disagree with what I think is wrong, what I feel passionately and have evidence to support, they're wrong. So sometimes the street, particularly like the hedge funds, they're very focused on like this quarter, like the next 90 days. That's a terrible thing long term. You don't want to be focusing on just what's good for the quarter. You end up – you see these public companies that go out and they cut costs in the field that hurts customer service or hurts employee morale, and they're understaffed, which is even worse than being overstaffed, which is bad.

1:20:23And here, it's a completely different story. So, yeah, I like being public. You said something interesting. I like the pressure. I do. Thrive on it. What do you mean by that? So many people give you the money, whether it's a retail individual, whether it's a high net worth family, whether it's a sovereign wealth fund, whether it's a pension plan, whether it's an endowment. All these people are invested, long only funds, mutual funds. All these people are giving, they're wiring money to buy your shares. This is an intense pressure. This is probably the biggest pressure I have in life, is to make sure that I do everything I possibly can to make sure I give them back more money than they gave me, make sure that they invest in the company.

1:21:06And if you look at my neighbors and my friends, I don't know the exact number, but I would guess over 90 % of them are invested in the company. And that's what it's been over time. Well, that's the pressure, man. That's like, wow, I don't want to disappoint them. These are my relatives. These are my friends. These are people I really love. These are people coming to say, look, I believe in you so much. I put two-thirds of my retirement plan in your stock. A single, no, no, forget the reverse vacation. Boom. I'm going all in on Brad and his team. Well, that's a lot of pressure. I like that pressure.

1:21:35I enjoy that pressure. That motivates me. That inspires me. That makes me feel, I have something to do here that's important. I think that's so important to, like, put that out. because we were talking about the negative self-talk and like, you know, just living a pretty crazy life where it's like you want to work seven days a week or you're just completely all in. And the way, again, this goes back to you can hear a sentence and just be like, oh, I feel that way too. And it kind of changes the way you approach things. And I remember reading about Herb Kelleher, which is the founder of Southwest Airlines.

1:22:02You know, it's such a crazy story that like in an industry where bankruptcy is the most common, you know, outcome, the guy had - His company was profitable for 40 straight years. He's just nuts. And he's like a nut job. He's drinking a fifth of bourbon every day. He's chain smoking cigarettes. That's not me. No, no, no. I don't advocate that. No, he wouldn't sleep. He's like, there's hilarious stories in his life. And I thought he was like, he just lived on the edge and completely like all in. There's a great story about this where they try to get him, you know, he chain smoke and then drink a fifth of bourbon every day.

1:22:34And they're like, but then he had like prostate cancer or something like that. And I'm like, you should stop smoking. He's like, I don't smoke with my prostate. but that's not the thing that I remember the thing that I loved in an interview one time they're like you deal with a ton of stress like how do you handle it he goes I don't handle it I like it he wanted the stress he's like I want to be in the game he was an attorney he didn't start his company it was his first company he was an attorney who was 35 years old and he's like hey I'm going to try to do an interstate or intrastate airline and like then he had it was like four years of legal fights before he could even take his first flight.

1:23:12He's just like, I love this shit. This is what I want. I want the pressure. Passion. What I love about this is it's in your book. You constantly talk about the other people, the other entrepreneurs, other investors, other CEOs that you learn from, the acknowledgments, all these maxims from all these other brilliant people. You talk about, obviously, Ludwig Justin. I do want to talk about, I read something on LinkedIn about other, I want to talk about the other people that you've learned from, the other founders, CEOs, executives that you admire. I want to start with Fred Smith since he passed away.

1:23:45I read his biography probably like four or five years ago. And tell me if I'm wrong, you know more about this industry than I do. It just seems like FedEx had to be one of the most difficult operational companies to ever invent. Like an unbelievable, you're talking about something you wanted pressure. Yeah, the complexity. You wrote on LinkedIn, you never missed an opportunity to spend time with them and you admired him. Could you just tell, like, why? So Fred endorsed my book. Yeah, I saw. And I was very touched he did that. Yeah. He was a competitor. Yeah. Literally, a lot of three competitors still endorsed my book.

1:24:17So Fred was an amazing guy. I mean, this is very special. You meet people in life that are just special, that have certain integrity. So I met Fred for the first time in 2013. And I was doing a bunch. I came out of nowhere from this industry. I got into 2011, but I really started doing a bunch of acquisitions out of nowhere. and suddenly I was on the front pages of the trade journals. And I was in Atlanta at the National Association of Manufacturers, the NAM conference, and Fred was the keynote. So I was in the audience watching him. And somebody said, what do you think of Brad Jacobs? I go, oh, my God.

1:24:55My heart starts to be like, oh, my God. Fred Smith's about to, like, destroy me. My brand is going to be completely crushed. You know, the icon of the industry is going to say, oh, yeah, I don't believe you. And he said, I really like watching that guy work. He said, he is coming into this industry with courage and buying things left and right and has big goals and big ambitions. And I'm going to keep an eye on that guy. And I cried. I said, wow, Fred Smith likes saying great stuff. So I went up to him afterwards, after the speech was over. And I said, Mr. Smith, I'm Fred Jacobs. I really appreciate what you said.

1:25:31He said, well, first of all, I'm Fred. And that was the beginning of a great, great friendship. And we got together many, many times. Of course, he was on the business council. He was the longest-serving member of the business council over a quarter of a century. Oh, wow. And I go to every business council meeting I possibly can to meet other CEOs and to hear what other people are thinking. He was just a generous guy. This was a guy who had vision. He had passion. Talk about grit. I mean, he was flying around all the time everywhere. Vietnam. He was decorative. He would fly helicopters with people shooting bullets at him to go get Marines who had been—he was a Marine.

1:26:05Marines who had been killed, but you don't leave any Marine behind. He'd go in the—he's risking his life with bullets like shot, reshooting at him to go get the remains of a dead Marine. Yeah. Putting his own life online. He got a Purple Heart. He got Silver. He got—I mean, serious, serious, serious, courageous, high-integrity guy. And everybody—everybody loved—everybody loved Fred. Everybody loved Fred. The opening paragraph of his biography is the craziest opening paragraph I ever heard. I'm just going to paraphrase it. Essentially, like, you know, he's in debt. He ran through, like, his dad's Greyhound bus millions.

1:26:42I think he burned through, like, 15 or 20 million. His planes are about to be confiscated. He just got fired by his board. The FBI is investigating him. He goes to Vegas. Yes. And then they're like, he thought he was, like, 30 years old at the time. He was still young, but he refused to let his federal express dream die. And the line was just like, he thought of suicide. And then the next paragraph is like, but the idea of Fred jumping out a window is ludicrous. He's more likely to throw somebody out of a window. He was just like a guy. He was like determined. You couldn't stop. Like, he just wouldn't stop coming.

1:27:15There's a few lines. No, I don't recognize that in him. So throwing someone out the window. At 30, I think he might have been a little different. Well, maybe. Yeah. But I was a direct competitor of him in transportation and logistics and more. not in package, because we didn't do package, but pretty much all the other lines of business, we competed against him. He was generous. He was charitable. He would always take a meeting with me. He used to come to my house. We'd spend hours and hours and hours talking about everything. This is what is so special. I know it's part of humanity in general, but entrepreneurship in particular is just like, you see this over and over again, just how generous these people are with it.

1:27:48Because they know how fucking hard it is. They just went through all this. And now we might be 15, 20, 30 years different in age, which is like, just like Ludwig Jostelson did when you were 23. And in many cases, like what you did with the book, like the idea, like think about Sam Walton, right? He wrote his autobiography. His cancer was all over his body. He was in pain. He knows his time is towards the end. And what does he do? He spends a big chunk of the last time he had left saying, this is what I learned in my six decade long career. That is a gift to future generations. And then in the book, they're like somebody.

1:28:21I love this part because in the book they're like, people ask me all the time, could another Walmart story happen? He's like, yeah, it's probably happening right now. And it was Jeff Bezos going around with his copy of the book, writing it, annotating it, giving it to the executives, the early executives at Amazon. It's such a beautiful thing that Fred would do that. It's a beautiful thing you did for your book. Fred and Amazon didn't get along. No, no, no. I'm saying, but like in general, yeah, obviously. Well, yeah, I can see why. But my point being is the transfer of even for competitors. Fred was your competitor, but he's transferring knowledge to you.

1:28:52Absolutely. I don't think people understand how much that goes. I'm glad you just said that. Because, yeah, you can see it in the books. You hear stories like that. Endorse my book. Exactly. You hear stories like that all the time in private. And for you to say that, I think it's really important. There's a few things I pulled out from his biography that just remind me of you. And I'm curious if you agree with some of these things. One, the amount of— If it's about Fred Smith, if I don't have that trait, I should work on getting it. Okay, perfect. the amount of information. So like, think about it.

1:29:22Like he started in FedEx in the 60s, I think, something like that. No, after Vietnam, so maybe early 70s. But in the 80s, he says that he estimated during the 1980s, he spent four hours a day reading. He says he found he relied quite heavily on his own vision backed by assimilating information, which you've mentioned multiple times so far, from many different disciplines at once. You've talked about that in meetings, you've talked about in trade journals, you've talked about all the research you do, right? This is his quote, though, that I want to read to you. The common trait of people who supposedly have vision is they spend a lot of time reading and gathering information and then synthesize it until they come up with an idea.

1:29:56That sounds like you to me. I like that. Yeah. Going back to what I was saying before, you don't want to be rigid in your thinking. You want to be open-minded. You want to be flexible. You want to be scientific about it, that if new evidence comes along that disproves your theory, then modify your theory. Go by the evidence. Go by the facts. You want to get, you want to interact with people who you respect and you want to be picking their brain all the time. But you're also like a lot – the way to describe it is like you're also alive and paying attention. Like the story in your book where you're like reading a magazine in bed on a Sunday morning and you read about like these waste management companies making like$500 million in profit.

1:30:29You're like, whoa, what? Like they're picking up trash from one spot and bring it to another. I need to learn about this industry. But that's my point. Like you're – people like Fred, people like you, I think, you know, there's a ton of people that have the same thing. Where it's like they're – the whole world is like a classroom if you're actually paying attention. Like you can pick up ideas all over the place. So the waste management business, I contrasted to the oil business. The oil business was a lot more complex. We were negotiating complicated long-term contracts and chartering vessels and negotiating processing agreements with big major oil companies and hedging.

1:31:03I mean, it's a very complicated, complex business. When I read that about the garbage business, it said that is so much easier picking up. That's a simple business. It moves some garbage and send out an invoice. I definitely think I can do that. And it seems like they make a lot of money. And the trend seemed in the right direction. So, yeah, you want to— Oh, and the application of technology, which is— Right. I love how at the end of your book you have essentially— What are all the—some key technology developed by humans starting, you know, back 300 ,000 years ago? And you move forward. I thought that was a beautiful way to, like, just put that in the appendix.

1:31:36So I got that from Kurzweil, by the way, Ray Kurzweil. Oh. So Ray Kurzweil, huge mentor of mine. Only met him once. Men for about six hours to tell. Yeah. But I've read every book he's written. I've read every article about him. I see every YouTube he's – I'm a Ray Kurzweil fan. And what I read in Singularity is Near in 2005, 2006 when that book came out was amazing. There was a chronology of the universe going – you know my meditation. I go back to space and time. I said, kindred spirit here. There's somebody who thinks in large scale of time. and what are the key things that have happened over the last 13 billion years and reducing that down to a couple hundred points.

1:32:15I thought it was real helpful. So I modified it a bit and made it more specific to business, things that would be applicable to business. But the main trend, going back to Mr. Justin about you've got to get the main trend right, the main trend for the last two million years has been humans creating tools, a.k.a. technology, to do things, to outsource to those things that do better than us, that free up our time. So whether it was fire, whether it was a wheel, whether it was the printing press, and more recently, all the digital electronic stuff we've done, and all the internet, and now artificial intelligence, and robotics, and nanotechnology, this is the trend.

1:32:54The main trend in life, and therefore in business, is technology. Outsourcing our senses, outsourcing our memory, outsourcing now our intellect, our speech to computers, to the cloud. This is big. This is really, really big. So when I looked at 55 different industries before I picked building products, I ruled out a bunch of them. So this looks like an interesting industry, but I think AI and automation are going to kibosh it. And I didn't do it. I mentioned in the book, there was one particular online education company. It was called Chegg. And I said, I don't know. It seemed like it got a good business, but I think the AI is going to come in and basically do that for free.

1:33:34Well, you know, and I said, I think the stock might come down. The stock came down a lot. It came down from 50 to single digits. So fortunately, I made a good prediction there. As Yogi Berra said, predictions are difficult, particularly when they're about the future. But that turned out to be a good prediction. Why was that a good prediction? because to me, I'm looking at it saying the main trend, the long-term trend, is to use technology to do things that we've been doing ourselves. And so I'm always trying to look at these different work streams and say, is that something that can be automated?

1:34:05Is that something that's going to be AI or robotics going forward? And then capitalizing on that. And the opportunity to always do something slightly better, which is an event tools to do so, technology. Even so when you were talking about collecting... Sometimes a lot better, not slightly better. But the good thing is, like, this is not exclusive to the time we live in. It's a constant throughout our experience. Like, you can go and look at, like, when you guys were collecting all, this is, you said before fax, before email, you were collecting all the information for Amorex. Yes, yeah. You know, 40 years ago.

1:34:36Yeah. And then the waste management, when you're like, hey, how, like, I should get into this. And then you realize, wait, they're not even using technology to figure out the most efficient route. And this constant application of technology is one of the things I'm glad. it was all my notes, but I'm glad you brought like directed the conversation there because the way I thought about this is really crystallized my mind when I read Andrew Carnegie's autobiography, right? Which is probably written 130 years ago. And for whatever reason, if you talk to somebody today, they don't think of like the production of steel as technology, which is like a crazy thing.

1:35:08At the time, it was like they literally invented a new and a better way. And then everything in the world was going to be made out of this. And so what I do is like when I'm finished reading a book, again, we go back to this idea that you and I share. It's like distill it. You're not going to remember 250 pages, but you'll remember a paragraph or a sentence if you can. And Andrew's a young person getting into an existing industry. It's a new industry, but it's still existing industry. Most of his competitors were much older and they were very resistant to your point, resistant to change. You cannot be resistant to change.

1:35:38You have to embrace the major trend, which is what your mentor told you. And so I was hearing the criticism that And his competitors, almost like when you were in that business and the guy took you out to lunch, it's like, slow down. I used to be the first. Now I'm the second. That's a terrible way to do business. It's like take your competitor out to lunch and be like, stop being better than me. It's motivation. It's not going to work. But the way I would summarize the main theme from Andrew Carnegie's book that then reappears over and over again on these stories is invest in technology, the savings compound.

1:36:13It can give you an advantage over slower moving competitors and can be the difference between a profit and a loss. And you see that over and over and over again. It doesn't matter if it's steel, waste management, software, over and over again. It's like the best entrepreneurs, the best CEOs, the best executives, they're not scared of technology. If you're scared of it, you're going to get destroyed by it. They embrace it and they invest heavily in it. And again, the benefit I have is like I'm reading about a chocolate company that was started 80 years ago and they have some of the most advanced robots making chocolate.

1:36:46I'm reading about a tire company from 150 years ago. They watch their costs and they're very efficient in how they spend their time and their money, but they invest heavily in technology. No one thinks of Walmart as a technology company. But if you go back in 1979, right, Sam's in his 60s. And they're like, hey, we're doing everything by hand. Our business is getting way too complex. We have all these distribution centers. Think about the logistics. You would know all this. Moving all this material where it needs to be at the right time. We need to invest in computers. And Sam, at first, he heard computer.

1:37:21He heard overhead. He heard expense. I can't do that. And then he was slowly allowing himself to be convinced by the talented people on his team. And he wind up, when he decided to invest, he didn't dabble. He invested$500 million in 1979 dollars, who knows what that would be today, in the most advanced computer system to handle his logistics and distribution. And that was an edge that not another retailer on the planet had, or at least in America had, that he had the technological edge over the rest of his competitors. In business, you always want to be finding waste, because there always is some, and eliminate it.

1:37:55You always want to find inefficiencies, and there always are. You want to reduce them. Technology helps you with that. Walmart's a big tech company. So my chief supply chain officer came out of Walmart. Very, very sophisticated guy. It's all about technology, all about using tech in order to get the data and then being very data-driven. I would argue that if anybody – I don't think you could be the leader in any industry and not also – we don't think of them as tech companies because we think tech has to be like Google or Facebook. It's like, no, they're all tech companies. I just did – I wanted to do more than just like American entrepreneurs because, you know – We have an outside share of entrepreneurs.

1:38:30Everybody's like, you should do more X, Y, Z. It's like, why are they all American? And I understand that. And my point being is like if you think about entrepreneurship in like the market economy, it's only a couple hundred years old. It's like, well, America's kind of dominated. So it makes sense if 75 or 80 percent of my episodes are about that. But I did one on one of the most successful entrepreneurs in Europe named Amoncio Ortega. And I didn't know anything about him. All I know is that – Is H &M? Zara. Oh, Zara. Inditex. Inditex, yeah. And then you're reading about this. You're like, it's not a fashion company.

1:39:02It is a technology company. What does that mean? He built the logistics and the system to say, me and you can walk out on the street right now and we can see, oh, there's a trend here where all these ladies are wearing dresses with whatever, you know, red flowers on them. and he can take that idea and put it through his system and he can have manufacturer dresses with red flowers in eight, you know, 25 different countries in seven days. That is technology. He says, it's like we're a technology company with a chain of stores attached to it. So Zara Inditex is a big customer of GXO Logistics, one of the companies we spun off from XPO.

1:39:34And GXO runs a lot of their warehouses in Europe and it's exactly what you're saying. It's e-commerce. It's trying to do things very efficiently and very quickly very accurately. And you need technology to do that. You need robots and you need AI. Every business, every single business is going to see more automation and more AI. People have to get on the program on that or they're going to be dinosaurs. A hundred percent. I'm going to go back to Fred Smith. He says something that sounds... Fred was in a tech. Yeah, of course. In a big way. Yeah, of course. He's always talking about this new invention he just did in the removing packages and robots.

1:40:06And we were trying to figure out some way you could use automation and LTL. He was a big LTL. FedEx is the biggest action in LTL. XPO is a big LTL. The automation is not there yet to get all the closed spaces and all the people still involved in that. But it's going to be. Package, you have automation now. Package automation is much further ahead. Yes. So there's something we haven't touched on. I have a question for you. And this is a quote from Fred in his biography. He says, you have to be absolutely brutal in the management of your time. Oh, yes. Do you have any insights? Look, if you want someone to disagree with that, you're going to have to talk to somebody else.

1:40:39No, no. I'm 100 % in agreement with that. I'm curious how you do this, though. So time. So when you're a CEO, when you're an executive, you only got two things. You got time and you get capital. And how you deploy that time and how you deploy that capital equals results. So it's your time, and it's the time of the people, the organization. So when I was running XPO, we had about 150 ,000, a little more employees worldwide. So each one of those work, the senior manager worked long, long hours. but the average worker worked eight hours a day. So you had eight times, about 1.2 million hours a day of work getting done.

1:41:16If you've got people very focused and very motivated and very well-trained and feel good about the company and feel good about their job, that productivity of that 1.2 million hours a day is going to be a lot more than if the conditions I just mentioned are not present. So managing people's time, Putting them in the right priorities and ranking what people should be spending their time on is very, very, very, very important to success. Now, how do I spend my time? I spend my time deliberately and consciously and intentionally on the things that I think make most amount of value for the company.

1:41:53How many things at any given time are you having to focus on? A fair amount. So if you're CEO, you're managing 15, 20 different things always. You're managing people. You're managing technology. You're managing budgets. You're managing investors. you're managing infrastructure, you're managing transportation, you're managing logistics, you're managing pricing, you're managing procurement with the vendors, you're managing customer relations, you're managing sales, you're managing Salesforce excellence. I mean, it's just, there's about 20 things that are your life. Like that's what a good CEO does.

1:42:24The problem with a lot of CEOs is they've come up through just sales or operations and they're good at that, but they kind of just delegate the other 15 things. That's really part of the CEO job. You look at the great CEOs. The CEOs have created a lot of alpha, a lot of shareholder value. They've been in each one of those 20 or so things. You talk to a Dave Cody, you talk to an Ed Breen, you talk to a Larry Culp. You can talk about any of those 20 things, and they have things to say, and you can learn from them. You talk to CEOs who haven't created a lot of value, who are not really good at this game.

1:42:55They'll know four or five or six or even half of those 20 things, but they don't do the other. They don't do the other part. You've got to be in all of them. But you're not in all those things in equal measure. Some things you don't have to spend as much time on. The people things and compensation things, I actually spend a lot of time on. So that's core. That's critical to get right. That's something that if you get wrong, you waste it. Budgeting, I spend a lot of time going on the budget. Customer satisfaction, I spend a lot of time on that. The employee engagements, going out to the field, doing the town halls, doing the Zooms.

1:43:27I'm all in on that. But when you say that the CEOs that you think might not be doing the best they could, are they delegating too much? Yeah. They're not – they're afraid to do the – I'm making generalizations. There's always exceptions. But generally speaking, what I find is they gravitate to the stuff they like and that they're good at. And they kind of just don't do the stuff that they don't like or they aren't very good at. And you can't. If you want to be a good CEO and have a high-performing company and be in the top decile of stock performance, like United Rentals and XPO were both top 10 stock performers in the last test case.

1:44:04That's not random that both those companies were because it was the same principles, the same structures. You've got to have CEOs, and they did, that are in the whole thing and understand from A to Z what running a business is and how you create shareholder value. and see the whole picture of the levers. So I always tell friends who are, and I have a lot of friends who are portfolio managers or analysts on the buy side, I say, when you bring a management team in, you need to ask them, what's your stock price going to be five years from now? And what are the levers that I have to believe that's going to get you there?

1:44:39And if that CEO tells you, that's a great question, I'll get back to you. Short that stock, or at least don't buy that stock, because that's the first thing the CEO has to know. First thing is a CEO and the senior management team has to know with great specificity, here's where we are right now, the stock price. We want to get massive outperformance and get to here. That's great. That's just the beginning. Here are the levers of how I get there. Here are the levers of the things that we must do as an organization that will improve our profitability, improve our multiple, generate free cash flow.

1:45:14Just how are we going to get to there? And in my case, it's not that hard because when you do the graph, the first two bars, when you do the levers, comprise the vast majority of what you have to do to create the value. And those are buying companies right, meaning being very disciplined in what you pay, and looking at lots of acquisition candidates at the same time so you don't fall in love with any one of them. And so you have alternatives and you don't – What's the distribution there? So you've done over 500 acquisitions throughout your – My teams and I have. I like to give credit to my team.

1:45:47Yeah. You and your team, for sure. So you and your team have done over 500 acquisitions. You've looked at how many? Thousands and thousands. I mean, many thousands. Like 100 ,000? You think it would be that? I've lost count. Okay. I don't know if it's 100 ,000. When I say look, look that in depth. Yeah, yeah. But in the thousands, many thousands. Okay. Going back to the time management, though, I think, especially in the age that people we're growing up in, like we're, like there's a shortened attention span, a lack of focus, in my opinion, and like really easy to give into distraction. Like how you sound like you're almost not impervious to distraction.

1:46:23That's not the right way to put it. Cause I know how you're, you're going to be humble when you describe yourself, but how do you avoid being pulled into things that are not prioritized? So many, many people know Warren Buffett. I barely know Warren Buffett. I met him a few times, but he's not a close personal friend. I wish he was, but he's not. But I know a lot of people who are close to me who are close to him and most of them have the same story so he must tell this to everybody. He tells people I'm the richest person, I'm the wealthiest person in the world and I say, well, Mr. Buffett, you work for one period of time but I think you're number four or whatever.

1:46:52He says, no, no, no, I can prove that I'm the wealthiest person in the world. I say, why is that? He reaches in, he brings out his day time or his calendar and he says, Monday, I have one appointment. Tuesday, I have no appointments. Wednesday, I have no appointments because he controls his time. Yeah. He controls his time and he has no problem saying no and refusing people time. It's a very difficult time. No, I think I have a problem saying no, though. Like, this is why I'm asking you. Well, you need to solve that problem. That's a problem you've identified. That's great. That's half of the solution to the problem.

1:47:20He has that great line where he's like, the difference between successful people and really successful people is really successful people say no to almost everything. So, like, you have 20, you know, whatever the number is. So true to that. Yeah, so whatever the number is, like, you have 20 things that, you know, you're focused on at the CEO level at this moment. You know, you know, where you want to spend your time, what you're best at. We talked about incentives and then recruiting talent. But like you also are one of the most and you're not going to like this, but like one of the most famous and wealthiest people in the world.

1:47:49You have an unbelievable amount of people that want your time. How do you stay disciplined? Like you seem to be disciplined from the outside of saying no to a lot of things. Like how is that something you learned in the last like five years, 10 years? Were you like that when you were younger? So first of all, I'm not that famous. I'm well-known in the business community. The business community. That's the only community I care about now. Like, you know. No, the average person, yeah, for sure. And I'm not one of the richest people in the world. There's many people who are vastly richer than I am.

1:48:19But in my own modest way, I've created some level of recognition and some of the wealth. And more importantly, wealth to others. You should see my inbox when it comes to you. But that's fine. That's fine. Well, I appreciate that. But in context. It's funny because people. The way you said it is a little grandiose. I don't think I am that. This is why every time I say these things to you, you say the same thing. Well, because I want to crack the record. That's fine. I don't want to get grandiose in the wrong way. No, it's a smart move. But the funny thing is when I did the I Had Breakfast with Brad Jacobs episode, now people were like, can you introduce me?

1:48:50They're like, no. You had to figure out how to get to them yourself. You can't do that. So when I was researching after XPO, I was looking for my next thing. No, no, excuse me. After United Rentals, I was looking for my next thing. and I was looking at asset management, and I went to Chicago, and I wanted to get an appointment with Ken Griffin, who now I've met, now I know, and he's a neighbor down in Florida. I don't know him well enough, and I think he'd return my call if I called him, but he turned down the meeting. He wouldn't take the meeting. He said, wow, that's kind of humbling, but you can't even spend an hour.

1:49:24He said, no, Ken is a very, and I think you interviewed him, right? No, not yet. You should. You definitely should. I want to meet him. Very interesting. I want to meet him, so if you can introduce me, please. He could be president of the United States someday. He's incredible. So this is the good thing about when I do, remember, most of the people I study are dead. When I do episodes on people that are living, this is why I was asking you some of the questions. Because, like, I'll do this episode. It reaches a very valuable community. And they're really helpful. And then I get all these crazy stories about, this guy is even more remarkable than your episode.

1:49:51And I got it about you. And I got it about Ken. And then I was like, oh, I got it. Like, I definitely want to meet Ken. Ken's in a different league than I have. Ken is, like, way, way up there. He's a very fascinating person. Oh, you should definitely do something on him. You asked how I manage my time. So I have a chief of staff. He used to work in the Oval Office and manage the most important person in the world's calendar. So I mean, he's always very, very good. And more importantly, he understands what I'm doing. He understands my priorities and he understands what I was talking to you before.

1:50:20Like the two most important things that I got to do are have organic revenue growth, better than competition, and a margin expansion and everything. He understands that. He understands that in order to do that, I have to focus on people. I have to focus on technology. He understands the different levers to do that. So you run every decision between those two? Yeah, that's my framework. In business, my framework is because I've learned if I do those two things, and it takes 100 different things to do those two things well, but if I do those two things well, I will create dramatic shareholder value.

1:50:50If I buy companies at significant lower multiples of profit than I trade at, Monday morning at 7 o 'clock after we announce the acquisition, I've already created alpha for my shareholders. That's a nice way to start the week. Number two, if I then double the profit over the next three to five years, then I'll get a nice multiple. And if I generate – those are the two main things I need to focus on. He understands that. Now, what he also understands is all the components because, you know, in the monthly operating reviews and all the correspondence, we're very good at communicating with each other what's important and what's not important.

1:51:26So he knows my priorities and therefore he's a great gatekeeper. Is there anybody that could tell you when you're getting off track from what you're professed to say is important to you? Everybody around me. So if I'm spending too much time, like I'm going to catch heck for being on this podcast. Dude, you're the man for doing this, by the way. I really appreciate it. No, I love doing it. And it will also get to, like, I do think, you know, one of the things that you obviously accomplished with the book, and, like, I try to help amplify with my work, it's like millions of people are going to benefit from your lived experience.

1:51:55You have 40, 50, almost 50 years, let's say 40 years of experience as an entrepreneur. It's like how many people that have ever lived life that have done that? Most people, you know, unfortunately they quit or they fail or whatever the case is. Like, you have so much to teach the world. Can I comment on something about the time? Yeah, go ahead. There's a phrase I used to use, and you brought it out to me, so I'm going to start using it again. I haven't used it recently. It's WOTWOM. What? W-O-T-W-O-M. Okay. Waste of time, waste of money. So when people have brainstormed, let's do this, let's do that, someone can say, WOTWOM.

1:52:27Everybody knows that's a waste of time, waste of money. How does what you're suggesting we do influence directly or even indirectly growing organic revenue growth or increasing the margin? And if it doesn't, WOTWOM. It's a waste of time, waste of money. You have limited time and you have limited capital. You've got to be directing that time and deploying that capital that things have the greatest returns. Otherwise, it's Wattwatt. And I'm so glad, first of all, it's hilarious, that I'm glad that you said that you actually have other people around you doing this too because I am kind of skeptical that no human can hit their goals and what they want to do 100 % of the time.

1:53:05I can't imagine the complexity of running FedEx and this guy's just like, no, you have to be brutal. There's a word like that. He picks it. Absolutely brutal is the word. Absolutely brutal in your time management. Yeah, I think there's a lot of things. There's another thing that Fred Smith said that again, like when I'm reading about Fred, when I was going through and rereading all my highlights from his biography, I wasn't really thinking about Fred. I was thinking about you. You know, like this to me feels like a lot of what I've learned from you. And this is a direct quote from Fred. He says, I believe that a man who expects to win out in business without self-denial and self-improvement stands as about as much a chance as a prize fighter would stand if he started a ring battle without having gone through intensive training.

1:53:47Natural ability, even when accompanied by the spirit to win, is never sufficient. If I look at the way you were building businesses when you were 23, compared to, you know, you can pick first billion dollar company, then you look at the second or the third or the fourth or the fifth or the seventh, it's like you're not even, like you'd go back and kick that dude's ass because of all the stuff you have learned since then. Well, you do get better as you keep with experience, like in anybody, in anything. But the principles are pretty the same. If you look at all my companies, the essential concepts are the same, that you want to have fantastic people, that you want to have rules of engagement with those people where you get along and go kill the competition instead of killing each other, that you want to have fair compensation so that everybody's in on the action here, so that— When did you—you kept repeating that.

1:54:34When did you understand the power of incentives? because you talk about compensation incentives a lot. Very, very early, very early in the oil brokerage days because I used to have, we had tables, like 10 brokers at a table. And every month we paid people monthly. I'd meet with everyone and say, look, we made so much this month in the bonus pool. What percent do you think you contributed to it? And then I would add it up. It would always come to like 300%. Never added up to 100%. So I had to have these difficult conversations that people said, look, you know, you think you're inflated with how much of these other than that.

1:55:04But what I realized very early on is people are coming to work not because they love me. They might love me. I might love them. But that's not their main motivation. The main motivation why they're coming to work is to make money and make money for themselves and more often to make money for others, to make money for their families, for their spouses, their kids or whoever. And that's important to understand the motivation of the other person. It's really, really important. It's called theory of mind. And a child gets that after a few years. They don't have it at first. and there have been a lot of psychological studies done on that.

1:55:37It's important to look at things from what's motivating the other person, what's driving the other person, what's important to that other person. That's good in deal-making. That's good in compensation. That's good in building teams. That's good in customer relations. That's good in vendor relations. You need to understand their point of view. You can't just be in your mind. You can't just say, here's what I want. Here's what's important to me, and I'm a bully. I'm going to go get it because people are just going to stick their tongue out. They'll turn away and do something else. You have to have a partnership.

1:56:03You have to be trading with people all the time. You've got to be figuring out what will help them, what's good for them, and how can we make money together, not me at your expense, you at my expense, but how can we go conquer the world together? I think you're a faster learner than me because, like, I don't think I ever thought about intentos. I think episode, like, 97, so this is probably like six years ago. That means I read 96 biographies before this. I get to poor Charlie's Almanac, and he's really the one that got me. Charlie was the one that really put into my mind about how important this was because I thought he was one of – I still think he's the wisest person I ever met and probably one of the most brilliant people.

1:56:41And he said something fascinating in that book where he's like, I've been in the top 5 % of my age cohort my entire life of understanding the power of incentives and how it drives human behavior. And there's not a year that goes by – and he's probably in his 60s when he said this. There's not a year that goes by where I don't underestimate the power of incentives. And he would repeat over and over again. You show me the incentive, I will show you the outcome. Remember I told you a few minutes ago that I give everyone on the top level of the company a bunch of equity, but it's locked up in five years.

1:57:08So I meet with my CHRO, who's fabulous, regularly, usually twice a month. And she shows me a spreadsheet of how much the equity is going to be worth at$50 a share,$75 a share,$100 a share. And I look at that, I look at the numbers. And I say, okay, this person has something to work for. This person's on the team. And this person, that's something that I see them working really hard to get those numbers. Or I see, gee, you know, somehow or another we messed up the comp and maybe we've got to top the person up. Or, wow, I can't take anything back, but maybe I gave too much. Whatever. But at least I know where everyone's head is at because I know what's in it for them.

1:57:41You know, there's always that joke. I listen to radio station WIFM, what's in it for me. And people are generally, they don't care about you and me, David. They care about them, which is normal. That's capitalism. That's free markets. That's a good thing. Yeah, I don't feel it's a negative thing at all. It's like we're all self-obsessed. It's what it is. But I do think you have a great line in the book where you're like money. He's like, I built businesses all over the world. When you have 150 ,000 employees, they're spread throughout. You know, people are like, oh, it's all different cultures.

1:58:08It's like, oh, guess what? Money animates people everywhere. Yeah. For the whole point, you have a great line in the book. Like they're not coming to work to make Brad Jacobs more money. Not at all. They're doing it for their families. I love this idea. I think it's really important to have a – I think it's tied to your obsession with like the public markets too. and what you said in your book about being very proud of building wealth, not just for yourself, but for school teachers, pension plans, nurses, firemen, and everything else is like the importance of having a mission bigger than yourself.

1:58:37I think like if you just live a completely selfish life, first of all, you would have stopped a long time ago. Like you didn't need to. In general, people, you wouldn't have to do this. And I've seen this in a couple different places where like Jeff Bezos, we talked about him a few times today, where his idea was when he started Amazon, he's like, I want to build the world's most customer-centric company. So I want to be an example, not just to our employees and our customers, but to other companies to see, look how you can, over the long term, you can align the interests of the customer and the shareholder perfectly aligned.

1:59:08They just have to be done so over the extremely long term. But this idea of going, it drives me. It's like, I want to build wealth, so my kids are proud of me. And I show them what it's like to chase after something and be deeply committed to it and be passionate about it and love it and also make something that's better for other people. And if you do that automatically, you know, the family will prosper and everything else. So I think that was one of my favorite parts of your book. Do you know, I think Amazon modified that mission statement. Now, something with employee engagement too. Something about workplace, great workplace environment, something like that.

1:59:44The best workplace environment in the world. It is funny when you think about it because it's one – I have this conversation. Actually, last night I went to dinner with our mutual friend Patrick O'Shaughnessy. He texted me this morning. He's like, make sure you say – tell Brad hi. That's like the best. Yeah, 100%. And we had – he was with us when we had breakfast here a few months ago. And we were having this discussion at dinner with his family. I was like, what is the most impressive company built in our lifetime? And so me and him were born in the 80s because it's like, what about Microsoft?

2:00:12Microsoft was in the 70s. It was before us. And I would say it's like, for me, the answer is like Amazon, like started in 97. Like I can't think of another company started in the 90s, like in terms of like as impressive as what Jeff has built. By reading your book, listening to your interviews, talking to you now, you kind of. For me personally, like you kind of remove any self-imposed limit that I have. where I'm like, oh, like there's no, I don't think Brad has a limit to what he thinks he can achieve. He thinks on a big scale automatically. Like you just, you operate in a very big and ambitious way where I think a lot of people have like self, there's like self-imposed ceilings that are most likely invisible in many cases, right?

2:00:53If you want to build more wealth, you want to grow great companies, just find more customers to serve. Like it's pretty straightforward process. But I do think one of the things that I absolutely love is, and it's the way I ended the episode, it's the way you ended the book. And I would summarize what I'm about to say here. as go all in, you only get one shot at life. And I think this is a perfect spot to like wrap our discussion. And so I'm just gonna read from your book to you. And you said, the summer after eighth grade, I attended the Rhode Island Governor's School for the Gifted in Art and Music, a summer enrichment program for kids who've been nominated by their schools.

2:01:24I wasn't sure what to expect. On the first night, I was captivated by a speech given by one of the leaders. I remember goosebumps rising on my arms as he spoke. This program is a special opportunity, but it's up to you to take advantage of it. You have a choice. You can waste the next couple of months and not accomplish that much. Or you can go all in. This is an opportunity to go deep on a project and do the best work you've ever done, but you have to decide if you want it. I learned what it meant to go all in. The magical connection between intensity of focus and the end result. This is, to me, the punchline.

2:01:58I love this. If I put my whole heart and soul into a project, I had it in me to create really cool stuff. he talk about the passion and going all in and the advice that you'd have for other people listening to this? I'm reliving the goosebumps, literally. But physically, I'm feeling the tingling of my sensation because that was a critical moment in my life where I understood that it's up to you. You can diddle-daddle through life and just kind of sleepwalk and then die. Or you can live life. You can embrace life. You can have big dreams and go all in and find your passion, which for most people is not going to be business or making money, but whatever it is, that's what it is.

2:02:40And really achieve something fantastic. And for me, that's a big motivator. That's a perfect place to end. Thank you very much for writing the book. Thanks for taking the time. Brad, I really admire you. I've learned a lot from you. And now I'm very humbled and privileged to call you a friend. I really appreciate it. Thank you very much. All the best. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work.

2:03:10Most of the guests you hear on this show first found me through founders.