one of the most important things I learned from Brad's book and we spoke about this when I had practice with Brad as well was the importance of working with the smartest and most talented people that you can Brad says that the most important thing that a CO does is recruit superlative people and Brad will recruit the smartest people he can find and he actually talks about this Brad says there's no substitute for smarts
and that reminded me of something that Steve Jobs said in this interview I read that Steve gave in the late 1990s and this is what Steve said I think that I've consistently figured out who the really smart people were to hang around with you must find Extraordinary People the key observation is that in most things in life the dynamic range between the average quality and the best quality
is at most 2: one but in the field that I was interested in I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to one given that you are well advised to go after the cream of the cream you need to build a team that pursues the A+ players and this is exactly what ramp did ramp has the most talented technical team in their
industry becoming an engineer at ramp is nearly impossible in the last 12 months they hired only Point 2 3% of the people that applied that means when you use ramp you now have top tier technical talent and some of the best AI Engineers working on your behalf 247 to automate and improve Pro all of your businesses Financial operations and all of this happens on a single platform
the longer you use ramp the more efficient your company becomes and this is important because as Sam Walton said in his autobiography you can make a lot of different mistakes and still recover if you run an efficient operation or you can be brilliant and go out of business if you're too inefficient ramp helps you run an efficient organization and the end of that interview Steve Jobs added
he said a small team of A+ players can run circles around a giant team of B and C players from a customer's perspective what does a team of A+ players sound like it sounds like this customer review that I read which said ramp is like having a teammate who you never need to check in on because they have it handled ramp gives you everything you need to optimize all of your financial
operations all on a single platform ramp's website is incredible make History's Greatest entrepreneurs Proud by going to ramp.com to learn how they can help your business today that is ramp.com so I want to tell you what I learned when I had the opportunity to have a 2-hour breakfast with Brad Jacobs a few week scale so Brad Jacobs is without a doubt one of the most talented living
entrepreneurs in case you aren't familiar with him he has started eight different billion doll or multi-billion dollar businesses he's done over 500 Acquisitions he's raised over $30 billion now that number is even higher he started his first company at 23 and he is 68 years old today and he's the most energetic person I think I've ever been around I don't think he has any plans to retire or to stop doing deals
and to stop building companies or really any plans to slow down at all so about a year ago he published his life story which is called how to make a few billion dollars it was one of my favorite books that I've read in the last year and the episode that I made about the book almost a year ago actually uh was one of the most popular episodes of Founders this year and one of the most remarkable things is the
fact that Brad listens to Founders in fact he sent me a message he said he's addicted to these book reviews that I do so coming from someone like Brad you can imagine that fired me up and Brad was actually kind enough to invite us and to host Us in his home so it was me and my friend Patrick oesi from the invest like the best podcast and then Brad's head of comms Joe Checker who is a super nice
guy and I'm really glad I got to meet who also listens to Founders so the idea was I want to go over just a few things that I learned from speaking to Brad for 2 hours and I guess the first story I should tell you actually happens on the flight up to see Brad so maybe like an hour and a half into the flight the guy sitting next to me turns to me and he goes do you want to be a billionaire and
I was taken aback by his question I go excuse me like keep in mind these are the first words that he has said to me so he repeats it he goes do you want to be a billionaire and so he points at me and he goes because I have never seen some someone go through a book like that and so I look at what he's pointing at and on my lap was my copy of Brad's book and so this guy sitting next to me sees
the title how to make a few billion dollars and they also had seen me going for like the last hour and a half going through all of my highlights and uh rereading my highlights and I have every single book I read obviously has a ton of Post-it notes sticking out of it and so he assumed because I was reading it and I had all these notes that I assumed that this book was an instruction manual
on how to make a few billion dollars and I found that funny because it kind of is an instruction manual to some degree uh if anything it's an counting of how Brad Jacobs made a few billion dollars and so after my breakfast with Brad I organized all my notes into basically like seven lessons and these are lessons that I want to remember for myself and I think by making into podcast it'd be
beneficial to you so the first one is go to school on everybody I have lost count how many of History's Greatest Founders that you and I study on this podcast are described at some point in their life as a sponge if you listened to last week's episode episode with about Aman Ortega people around him literally describe him they use that word that he is a sponge Amman Ortega is one of the wealthiest
people on the planet he's been building up his company for over 60 years he dropped out of school at 12 years old but his dedication to life long learning into being spongelike into going to school on everybody never ceased and I thought of this because when I got to Brad's house I was actually surprised at what Brad was doing so he was at the table next to him was a stack of papers
probably 500 pages High Brad had printed out my personal website so if you go to David center.com and if you're on my email list you already know this but basically what I do is I just I try to whittle down all my notes and highlights from every book I read to like 10 sentences as concise as possible and then for every book I read very simple I just send that list out and so Brad
printed out my entire site and you can just go through you know these books really fast it's a way to like actually really good way to review the lessons on the pod because you have 10 concise ideas for every single book and this absolutely this this is like Relentless drive to learn the this total dedication to lifelong learning is a trait that Brad shares with nearly every single I
can't think of a single person that you and I have studied he shares it with every single one of History's Greatest Founders and the reason I call this going to school on everybody is I actually got that idea in a biography of Jeff basos Cuz Jeff is definitely like this as well there's a biography of Jeff called the everything store I last covered this episode on or covered the book on episode 179 and I want to read
you a section from that book that seared this idea into my brain and it's somebody that knew Jeff really well and he said he went to school on everybody I don't think there was anybody Jeff knew that he didn't walk away from with whatever lessons he could Jeff Bezos went to school and everybody Brad Jacobs goes to school on everybody there Mitch rails the co-founder of Dan here goes to
school on everybody so Mitch cred this company called danir danir is like a $170 billion market cap company today okay A friend of mine was just telling me a story he was at this small intimate conference with Mitch recently and he was actually like Blown Away by how focused Mitch was so the entire time that Mitch was listening to the speakers he was taking pages of notes and my
friend had the thought where he's like he couldn't understand he's like why like he didn't say they verbalize this but he was thinking he say like Mitch why are you you're you're more successful than anybody else here why are you taking notes and when my friend was telling me the story I go no wrong answer there is a great line in Bill Walsh's book which is called the score takes care of itself and I think this
line is very important related to this and Bill Walsh talks about this he says Champions behave like Champions before they are champions I guarantee you Mitch rails did not build a $170 billion company and then start taking notes I guarantee you that Mitch was doing that way before he was quote unquote the most successful person in the room the entire time I was speaking to Brad he had a
notebook and a pen with him and he would jot down notes when he heard something that he thought was interesting or valuable and if you read Brad's book you know that Brad was like this from an early age too one of my favorite excerpts from the book uh from Brad's book how to make a few billion dollars I want to read to you it is about the amount of research that he does before entering an industry this part blew my
mind and so Brad writes I'm obsessive when learning about an industry I start by reading everything I can get my hands on journals periodicals newspapers trade Publications employee reviews on web-based recruiting sites you name it I look at all the websites and social media of the major players and the up-and-comers in the industry I watch lots of interviews with CEOs I use paid
services like Bloomberg alphasense and root and reiders I look at analysis from sell-side and buy side analysis or an analyst rather and search the SEC database which has large amounts of information on every publicly traded us company including IPO documents Financial reports and proxies I scope out the most valuable industry conferences and attend them saleside conferences are an opportunity to meet
management teams face Toof face and hear the questions investors are asking trade associations have a wealth of Industry data experts I interview experts I seek out people who live and breed the industry I'm considering this phase is more about getting face Toof face and listening intently I love talking to CEOs in addition to CEOs I seek out investment Bakers who are most active in
the industry and who know it deeply I also talk to venture capital firms because they spent a lot of time looking at the big trends in different Industries and I tap buy side Institutions and successful fund managers who have Battle Scars From investing in the industry industry vendors are also a good source they have a sense of the trends that could drive changes in the market environment
shareholder activists often have important insights as well as well and I reach out to journalists who know the industry because by Nature they're a skeptical bunch and I want to hear their perspectives that is the end of the quote from Brad's book what he's describing here this is one of my favorite Parts because this is all effort and enthusiasm this is just collecting more information this is
applicable to every domain there is a maxim for this and it comes from David ogy and David ogy says the good ones no more David ogrey wrote about this in this book called confessions of an advertising man which I think was like published in 1965 or something like this and this is the advice he was giving he said set yourself to becoming the best informed person in the agency on the
account to which you are assigned if for example it's a gasoline account read books on oil geology and the production of petroleum products read the trade journals in the field spend Saturday mornings in service stations talking to motorists visit your clients refineries and Research Laboratories at the end of your first year you will know more about the oil business than your boss and
you'll be ready to succeed him that's the end of the David ogy quote and the reason I think this this is the first thing I wanted to to bring up is collecting more information and putting forth more effort is still a competitive advantage today and it always will be this is not a matter of intelligence or Talent this is a matter of effort so go to school on everybody number two the importance of clear thinking and being
easy to understand and easy to interface with so I want to read something from this book called insanely simple which was written by an advertising executive who worked very closely with Steve Jobs and he talks about in the book how different Steve's Steve's CLA and all the people I've studied Steve is the clearest thinker out of anybody I've ever come across and this advertising
executive also notic this and he Compares in contrast Steve with some of his other clients and this is a great description of why this is so important it says Clarity propels an organization not occasional Clarity but pervasive 24hour inyour face take no prisoners Clarity never underestimate the degree to which people crave Clarity and respond positively to it I know a bunch of people that know Brad and they all
say things like this they say he just cuts right through it you are never confused by the point he's trying to make and I I don't know if you'd even agree with this but I I pulled a line from his book that I really think is is his one way to to understand that he's just really easy to interface with and so he says I'm what's called a money maker I love love working with
outrageously talented people to deliver outsized returns for shareholders in public stock markets when you read that line or if Brad was to say an interview when he says I love working with outrageously talented people to deliver outsid returns for shareholders in public stock markets that is Brad expressing the refinement of his thinking that is Brad making him very easy to understand and very easy to
interface with and he even talks about this with like his grander strategy so one of the things we talked about was like I really we were really curious like what is in his mind like the role of the founder the role of the CEO the role of the company leader and by answering this question he describes his basic approach to company building so you know as the founder as a leader he
has the vision that the first thing he has to set the vision he has to visualize it in his mind and I know sometimes when you bring up visualization people like think it's like some Willy Fufu thing all I can tell you is it's in a ton of these books and I take note of it every time I come across it as St Lauder talks about this Bob no the founder of Intel edin L Steve Jobs honor Schwarzenegger Tiger Woods
Kobe Bryant chungju Young the founder of hondai Jay-Z Brad Jacobs this concept comes up over and over again Brad says the leader has to have the vision they visualize it then the leader has to get the very best people then you incentivize the very best people with a lot of money but you have to tie that money to certain checkpoints along the way and then as long as you have the major Trend right and you have the best
people and you're investing into technology he says then it's very hard not to make lots of money and so when I was thinking about the conversation I with Brad I came back to this is the not left Clarity of thought taking time to refine your message so you're easy to understand and thus your message is easy to spread right because anything that's easy to understand is easy to spread
then keeping your organization committed to a common goal all of those ideas I feel are related to one of my favorite quotes from Brad's book where he says narrow your focus to your most important dreams and tune out everything else that's sounds a lot like Steve Jobs to me and just like if you go back and read about Steve Jobs people work for him say hey you might not like what Steve's
saying he's you you have you don't have to guess at what it means he's very very easy to understand so is Brad Brad's Clarity of thought was obvious when I spoke to him it was obvious in the interviews he does it's obviously obvious in the book it's also obvious to other people my friend Rick Gerson just spent a weekend with Brad and after that we were talking about Brad Jacobs and
unprompted and unsolicited Rick told me how clear of a communicator Brad is my friend Jared Kushner just invested in Brad's latest company and joined his board Jared told me he spent several hours of Brad I think this might have been at a board meeting if I remember correctly but he said it was one of the most educational and enlightening meetings they had ever had and that Brad's ideas are well thought out and
easy to understand so the second thing I took away from my breakfast with Brad is the importance of putting work into clarifying your thinking and making sure that you're making yourself easy to understand and easy to interface with the people around you the third takeaway is related to the second takeaway and you'll see how all of these work together and the third one is people are
power law and the best ones change everything Brad says that the most important thing a CEO does is recruit superlative people in his book he says make sure that your hiring choices you make your hiring choices as perfect as they can be because there are few mistakes costlier than hiring the wrong person and he's got a great maximum on this that I've I've remembered since I
read it the first time he says an empty seat is less damaging in a poor fit and so even to this day send most of his time recruiting the very best people because people are power law and the best ones change everything he says there's no substitute for smarts and you need to Double Down On hiring the brightest people you can and he also talks about the importance of not over hiring he says I find that slightly
underst staffed teams are more focused and spend less time doing redundant busy work and one thing we talked about at breakfast is the fact that not only does he spend a ton of time recruiting he thinks it's you know the most important thing that the CEO does but he says when you find the most talented people you pay them a lot of money this is what he says about this in the book he says I do
business in dozens of countries and money animates people everywhere that's why I've quote unquote overpaid almost every direct report I've ever had to ensure that I had top tier people in place and when I read that the first time the note I left myself in the book was overpay for talent because it's nearly impossible to overpay for talent the example I give is that if you think about when Apple buys next right they
paid essentially a half a billion dollars for next that's not the way I think about it the way I think about Apple paid half a billion dollars to rehire Steve Jobs and they got the deal of a lifetime this is a mistake that Brad sees other companies make he says it makes no Financial sense to skimp on salary and incentives to save $100,000 a year when hiring a second best candidate
May cost you millions of dollars in Lost profit this is something that Brad repeated find the very best people literally the best people you possibly can and pay them most people don't do this most companies fail at doing this in fact this is another thing that David olvy noticed he has a great uh line in one of his books where he says you pay peanuts and you get monkeys so whatever it takes surround yourself with by far
the most talented people my favorite the way I think about this it's Ed CML who's the founder of Pixar he talks about the importance of you know you never ever forget the dynamic range of humans and he says if you give a good this is why getting hiring the best people is so important this a camel said if you give a good idea to a mediocre team they will screw it up if you give a mediocre idea
to a brilliant team they will either fix it or throw it away and come up with something better the takeaway here is worth repeating getting the team right is the necessary precursor to getting the ideas right so find the smartest and most talented people you can and work with them zero exceptions you would rather have an empty seat than a b player okay so take away number four get
the big Trend right and invest in technology Brad spoke about one of his most important mentors at breakfast this this guy's also in Brad's book it's this guy named lwig Jon and one of the most important pieces of advice that Brad ever received from Mr juson is the fact that you can mess up a lot of things in business and still do well as long as you get the big Trend right and Brad
said he took Mr Justin's words to heart and then with each new company that he started he made sure to understand the major trends that could either threaten the business or help it sore and so I was thinking about what Brad said and what he wrote in his book about this and I thought of this blog post that Mark andreon did many many years ago it's probably 15 years old and he was trying
to figure out like what correlates the most to success is a team product or market and I'm going to read an extract from this post to you and so Mark writes and for those of us who are students of startup failure what's most dangerous a bad team a weak product or a poor Market if you ask entrepreneurs or VCS which of Team product or Market is most important many will say team that is the obvious
answer in part because in the beginning of a startup you know a lot more about the team than you do the product which hasn't even been built yet or the market which hasn't yet been explored personally I will take the third position I will assert that market is the most important factor in a startup success or failure why in a great Market a market with lots of real potential customers the market pulls product out
of the startup the market needs to be fulfilled and the market will be fulfilled by the first viable product that comes along convers ly in a terrible Market you can have the best product in the world and an absolutely killer team and it doesn't matter you're going to fail so let me pause there and I'm going to introduce another idea so this is like an idea inside of an idea
inside of an idea we're getting like Inception levels here so here and Brad speak about this then I think about the mark andreon post then I'm reading the mark andreon post and you know how I think of there I think of Billy Durant Billy Durant was the founder General Motors one of the most talented entrepreneurs to ever live but Billy Durant's business before General Motors is a perfect example of what Mark just
said Mark said in a terrible Market you can have the best product in the world and absolutely killer team and it doesn't matter you're going to fail what was Billy Durant doing before he founded General Motors he was one of the main manufacturers of H drawn carriages and at first he was very resistant to not making he was making a ton of money manufacturing horse drawn carriages and
then this new invention called the automobile comes up and then eventually he realizes oh I can have the best horse drawn carriage in the world I can have the best team inside this industry and it doesn't matter if I don't switch I'm dead so back to Mark Andre's post you can obviously screw up a great market and that has been done and not infrequently but assuming the team is competent and the product is
fundamentally acceptable a great Market will tend to equal success and a poor Market will tend to equal failure markets matter most markets that don't exist don't care how smart you are so now back to Brad and take away number four get the big Trend right and invest in technology so the second part of that is something that he's been doing since his first company at
23 there's a line in 0o to one from Peter T I think is accurate says properly understood any new and better way of doing things is technology I believe that every company especially today every company is a technology company you and I talked about this last week Amasi were TGA built $130 billion Fortune applying technology to an ancient industry he was the most technologically advanced clothing
company for God's sake and is's a great line in that Ortega biography that I think Brad would agree with where Orga says or somebody subscribing Ora's approach says there are no mature sectors where everything is already discovered but rather companies are managers with closed minds who resist Innovation I bet Brad would agree with that statement and so the advice from Brad is if you want to make a lot of
money in almost any industry you have to plan to heavily invest in Tech we obviously talked a lot about that at breakfast because that's also not a new idea go read Andrew Carnegie's biography Carnegie was building his Steel company late 1800s and his autobiography he talks about the old heads in the in his industry remember what Ortega you know the less of morteo there's no mature
sectors where everything's already discovered but rather companies or managers with closed minds who resist Innovation Carnegie ran up against the old heads in the in the steel industry and they're like why are you spending all this money investing in all these new fangled operations and Andrew Carnegie knew what Brad Jacobs knows that if you want to make a lot of money in almost industry IND any industry you
should plan to invest heavily in Tech and so the takeaway with the main takeaway I would argue from Carnegie's uh autobiography is invest in technology the savings compound it gives you an advantage over slower moving competitors and can be the difference between a profit and a loss so takeway number four get the big Trend right and invest in technology number five Pay It Forward
help the Next Generation and so Brad mentioned his mentor Mr Jon a bunch in the book he mentioned them several times during our breakfast and Mr jlon ran the largest commodity Trading Company in the world and Mr jersson took an interest in a young Brad Jacobs and he actually mentored Brad and the two would have lunch together all the time when Brad was in his starting when Brad was in his
20s and what's fascinating to me is like the bits of you know business wisdom that Brad learned during those lunches Brad still uses to this day and in his book Brad said that the most important lesson that Jon which was his most important business Mentor taught him happened when When Brad was in his 20s and I'm just going to read the story to you because it's one of my favorite stories in the book he says at one lunch
I arrived burdened with problems that I began to unload on him Mr Justin listened carefully then he said look Brad if you want to make money in the business world you need to get used to problems because that's what business is it's actually about finding problems embracing and even enjoying them because each problem is an opportunity to remove an obstacle and get closer to success
Brad says I learned something invaluable problems are an asset not something to avoid but something to run towards Big Ambitions often beget even bigger problems if your initial reaction to a major setback is overwhelming frustration that's counterproductive you should be excited great this is an opportunity for me to create a lot of value if I can just figure out how to solve this problem
I'll be much closer to my goal and this is this is one of my favorite things about entrepreneurs I try to point out and all the books I read you know most of the people I get to to build Rel with they're older than me smarter than me wealthier than me and yet they're just like Mr jerson was to a young Brad Jacobs in my mind when I think about this there's a bunch of a different
examples but you know one of my favorite books I talk about over and over again it's episode 255 it's called the fish that ate the whale about Sam Z Murray and one of my favorite stories in that book is one of the very first you know multinational companies in existence were these fruit companies and one of the biggest or actually the biggest fruit company was this company called United Fruit United Fruit was
founded by this guy named Andrew Preston and what is very common is when you have a very talented entrepreneur they know that there is a younger version of themselves and in many cases they seek that person out and they try to help them they Mentor them just like Mr jlon believed that a young Brad Jacobs had potential and was worth the investment of his time and so Andrew Preston this is one of my favorite quotes or
paragraphs from the fish the will it says when Andrew Preston the president of United Fruit visited Mobile Alabama in 1903 he asked to meet Sam zuray the Russian selling the ripes Preston was about 57 years old at the time and Sam Murray is somewhere in his 20s when this is happening and this is the description the Titan who began the trade shaking hands with the nobody who would perfect
it Preston later spoke of zuray with admiration he said the kid from Russia was closer in spirit to the banana Pioneers than anyone else working he's a risk taker Preston explain he's a thinker and he's a doer Preston winds up buying I think he invests like I think he buys 25 he thought zamur was so talented he's like oh this is another me he winds up buying I think like something like
25% of his company was fascinating and when was Preston was alive and he was running United Fruit he respected zuray and then Preston dies and you have these non-founders take over the company and they looked at zuray with scorn instead of partnering with him instead of helping him they try to compete against him the executives underestimated the person that Preston respected and so I
want to remember to the degree that I can I want to pay it for it I want to help the Next Generation and this is something you know Brad benefited from because he talks about Mr J he's also what he does for younger talented people younger entrepreneur that think or talented because there's something that Brad asks you to do when he goes to when you go to his house that has to do with
dancing okay so I have friends that Brad has helped out and taken an interest in and they had told me about this before so when Brad mentions hey come over here let's do this I go oh I know all about the dancing and he's like how do you know about the dancing I go because my friend Jake Sloan told me and what Brad said next was a perfect illustration of this he goes I love Jay Sloan he's a
young Brad Jacobs so takeway number five as much as you can pay it forward and help the Next Generation number six don't hide your eccentricities embrace them I can't tell you how many messages I got from people that heard the podcast and then bought Brad's book and were shocked at the fact that first the first part of Brad's book is all about building a strong and healthy mind he
talks about the importance of meditation he talks about the value of thought experiments and this is so important that the first chapter is called how to rearrange your brain and so probably within like the first I don't know like 20 or 30 minutes of the breakfast we're talking about visualization Brad's talking about meditation and my friend Patrick mentions like not being able to visualize like when you close your eyes
actually seeing it and so Brad immediately goes oh I can help you through this and right in the middle of breakfast right he leads Patrick through a guided meditation and I think this is the opposite of what most people try to do they they try to like present a certain act to the world and I think the most important thing is like just be a human being even in so-called Prof Prof
settings at breakfast we talked a bunch about business but I bet you it was probably 25% or less of the conversation we talked me and Brad talked a lot about our childhoods we talked about this idea that you can always understand the son by the story of his father the story of the father's bread and the son that's true for me that's true for Brad Brad gave me great advice on marriage and
what to expect when my kids are grown and they go away to college the conversation went in all kinds of unexpected and unpredictable directions and Brad is an eccentric guy and I am too and I like him even more because of that you felt it was Brad being who Brad really is and people love I think the main takeway that I always try to remember myself is like people love authenticity way more than they love
Perfection there are no perfect human beings I think it's a mistake to pretend otherwise and if you've listened to some of the other episodes I've done like these I had dinner with or I had lunch with episodes like the one I did on Charlie Munger uh the one on uh when I had lunch with Sam zel but when when you especially because monger and zel were such public they had such public
personas like you know you could go on YouTube and watch them on stage and and and watch their interviews or you could hear them on a podcast and when you're in with them in person that's exactly what you got both monger and zel were exactly that way they did not try to hide their eccentricities they embrace them and that's part of the reason that they had such a cult-like following and
so takeaway number six for me was don't hide my centricities embrace them I think I do this now but I'm going to make sure it's a coner reminder just be who I really am even if that person is imperfect so number seven relationships run the world and your reputation is everything so there is a video of Warren Buffett you can see on YouTube it's Warren Buffett 1991 I think he's testifying before Congress this when he
was having this issue with Sal brothers that big Scandal and he says something I think is very powerful and it's the advice that he was giving for not only people in Sal Brothers but he repeats this over and over again for everybody that's around him he says lose money for the firm and I will be understanding lose a shred of reputation for the firm and I will be ruthless and in later instances he says you know
why is so important he says it takes 20 years to build a reputation and 5 minutes to ruin it and if you think about that you will do things differently you'll act differently and so I would take that idea from Warren Buffett and I would tie it to this other idea that I read in a biography of David ogy one time the book is called the king of Madison Avenue and is written by a
guy who worked with David Ogie for quite a while and he has a line in there they call the David file and so he says almost everyone who brushed up against the man has a David story and so he gives an example of the first time he added to his quote unquote David file and the reason I'm telling you this I think you already see where I'm going with this there is a brad file and I'll
explain that to you so from the king of Madison Avenue the the person working for David ogy says David was 52 and famous I was 33 and a junior account executive early on he wrote a letter to one of my clients after listing eight reasons while some of the ads prepared for the company's design Department would not be effective he delivered his ultimate argument this is what David wrote the only thing that can be said in
favor of the layouts is that they are different you could make a cow look different by removing the utter but that cow would not produce results that is the end of oab's quote this is now the guy working for him so began my David file almost everyone who worked at the agency kept one so Brad has been an entrepreneur for over 40 years okay since this this happens when I make
episodes about people that are alive uh because since I made the episode about Brad's uh Brad's book I've been on the receiving end of several Brad stories that are that are very unique and just like David olvy just like brushing up against David ogy if you brush up against Brad it's going to produce a memorable story now here is the mind-blowing thing considering he's got a four de over a four decade long track
record every single story I've heard was positive and many of them are hilarious and so this idea this reminds me of one of my favorite maxims that is opportunity handled well leads to more opportunity because of his track record because of his reputation because of the compounding of his relationships Brad is now able to pursue opportunities that would have been impossible or
inaccessible when he was just starting out as a 20 3-year-old entrepreneur and I think the important reminder is the long-term view is the Right View and just like Buffett said we must never jeopardize our reputation or harm our long-term relationships for short-term gains so takeaway number seven is relationships run the world and your reputation is everything and so what I'm going to do now is I'm going to replay
the episode I made on Brad's book if you haven't listen to it make sure you listen to the whole episode if you've listened to it you know but it was over a year ago listen to it again it's worth the time to remind yourself of the lessons I will also leave a link Down Below in the podcast player and available at finp podcast.com if you haven't yet bought Brad's book highly
recommend that you do so and if you do so using that link you'll be supporting the podcast at the same time thanks for listening as far and I hope you enjoy my review of Brad's book how to make a few billion dollars during my 44 years as a CEO and a seral entrepreneur I've made every possible mistake in business I've overpaid for Acquisitions and botched Integrations I've run operations for
cash when I should have invested for growth I've delegated tasks I should have done myself I've hired the wrong people I've made strategic bets that didn't pay off and yet my teams and I have managed to create tens of billions of dollars of value for our shareholders this book is about what I've learned from my blunders and how you can replicate our successes I'm what's called a money maker I've started five
companies from scratch seven if you include two spin-offs and turn them all into billion doll or multi-billion doll Enterprises my teams and I have completed approximately 500 Acquisitions in total these Ventures have created hundreds of thousands of jobs and raised about 30 billion do in outside Capital my career began in 1979 when I started a privately owned oil brokerage company
called amorex oil Associates I was 23 with just a few thousand bucks and no experience within 4 years my partners and I had 4.7 billion in annual brokerage volume with offices worldwide we sold amrex in 1983 and I moved from New York to London to start an oil trading company called Hamilton Resources Hamilton generated about a billion dollars a year in revenue and we
made this money through an opportunistic combination of crude oil trading counter trade pre-finance and refinery processing deals in 1989 so 6 years later I moved back to the United States and entered a new sector the rapidly expanding field of solid waste management I called my new Venture United Waste Systems and took it public in 1992 so founded the company in 1989 takes it public in '92 is going to sell
it in 97 we became the industry's fifth largest player and in 1997 we sold United waste for $2.5 billion United waste taught me that I love working with outrageously talented people to deliver outsized returns for shareholders in public stock markets so he sells United waste in 1997 that same year he says I started a new company United Rentals to rent construction equipment for job
sites I took this Venture public later that same year with a growth strategy that emphasized Acquisitions from the start within 13 months we had built the largest equip rental company in the world there's a hilarious story later in the book about a lunch that Brad had with the CEO of the his major competitor in that industry I'll get to it later on in the episode within 13 months we had built the largest equipment rental
company in the world United Rental stock is aund bagger the share price at Inception was $33.50 and it now trades at more than 100 times that price in 2011 I was on to my next big thing XO Logistics XPO was the seventh best performing stock in the Fortune 500 of the last decade its main focus was Freight Transportation matching truckers with shippers forwarding Freight and Expediting urgent
shipments we built xbo into an integrated Global Logistics leader I divided xbo into three separate publicly traded companies as a value creation strategy we spun off gxo the largest contract Logistics provider in the world and rxo a freight brokerage platform that runs on technology that we developed inhouse I currently chair all three companies in each business is helmed by a strong CEO these experiences
have allowed me to share thought experiments that can help you learn to think differently which is an essential prerequisite to accomplishing big things this book is a guide if you have a burning passion to make enormous amounts of money in business or want to turbocharge your chances of success in Sports the Arts politics philanthropy or any part of your life read on that was an extra from the book I'm
going to talk to you about today which is how to make a few billion dollars and it was written by Brad Jacobs in addition to starting seven separate billion dollar companies Brad also listens to Founders sent me a very nice message saying that he was addicted to listening to these book reviews and he was kind enough to send me an early copy of this book a few months ago and I read
it and wanted to to make an episode or release the episode rather uh when it's available so you can actually order it which I highly recommend that you do and you that'll be obvious as we go through some of the ideas contained in Brad's book so I want to jump right into it he says I've come to know a lot of extremely successful people in my life they all have one thing in common they
think differently than most people all of them to a person have rearranged their brains to Prevail at achieving big goals in turbulent environments where conventional thinking often fails I want to read one more sentence and I'm going to read to you this quote from Peter teal that popped in my mind when I got to this section of the book I love that what he said all of them to a person
have rearrange their brains to Prevail at achieving big goals in turbulent environments where conventional thinking often fails making a few billion dollars doesn't just happen but it's possible with intense focus and a willingness to transform how you use your mind that is the first chapter so I got to this section immediately when I read that the one of my favorite quotes from Peter tal
popped into my mind and Peter said the single most powerful pattern that I have noticed is that successful people find Value in unexpected places and they do this by thinking about business from first principles instead of formulas that idea of finding value in unexpected places and thinking from first principles instead of formulas instead of using conventional thinking remember that uh later on we're going to talk
about this outrageous thing that happened Brad winds up making about $4 billion buying back a bunch of his stock even though bankers and advisers around him were saying hey no one's ever done something like this before and his response was perfect because you could tell he was thinking for first principles he's like well just because we were the first company to buy back such a high percentage of our stock in
this situation doesn't mean it's a bad idea and it turned out to be a phenomenal idea so I like that he starts the book with this where it's like you need to rearrange your brain to Prevail at achieving big goals in turbulent environments where conventional thinking often fails if Brad had or another way to think about that in this situation which we'll cover later if Brad had
listened and adhered to conventional thinking he'd be 4 billion him and his company would be $4 billion poor and so spread throughout the book you're going to see these like boxed Standalone maxims or pieces of advice that relate to what he's currently trying to teach us and they really like the way I think about him is he's distilling down his knowledge from ma into like simple to
remember maxims and so he says so much of success in business comes from keeping your head in a good place he talks about expect the importance of expecting positive outcomes and I think it says a lot that the first chapter of this book is called how to rearrange your brain and he spends a lot of time on the importance of managing your mind and attitude entrepreneurship is difficult and stressful requires sound
judgment and you cannot make high quality decisions if you don't manage your inner monologue your inner feelings and I love this idea of expecting positive outcomes expect positive outcomes stop beating yourself up mentally I have the next time you catastrophize something that isn't that bad understand that your reaction is a genetic survival trait that you inherited from your hunter gatherer
ancestors the only time that I've ever felt truly lost was when I stepped down from United Rentals in 2007 so he's going to talk about this is really this entire section is why understanding and controlling your mind is so important for Founders and you and I have talked about this before there's a great quote by Mark andreon that said entrepreneurs only ever experience uh two emotions
Euphoria and Terror and nothing in between it's the highest highs and the lowest lows so you got to learn to control your your mindset and your emotions the only time I felt truly lost was when I stepped down from United Rentals in 2007 I started looking for my next big thing and I couldn't find it I became depressed I'm an ambitious person by nature and a dealmaker by inclination
now I had no deal going no industry sector where I could Envision working my magic and so he starts reading like a library of psychology books trying to figure out how to fix this he says I learned to turn my internal chatter to my advantage by reframing negative thoughts as useful data as useful data rather than objective reality that is tied to another idea that he's going to use over and over again something you
and I have talked about over and over uh comes this this fantastic quote from this legendary founder named Henry Kaiser uh who was building companies around World War II I read his biography because Charlie Munger recommended it to me and actually when I went to Charlie munger's house to have dinner with him uh the book was sitting behind Charlie on the shelf and I actually got to to
ask him about it and it was incredible Charlie hadn't read that book for in like 15 years but his recall it was impecable like told me like essentially recited all of the facts that were in that book as if he had read it yesterday but Henry Kaiser has this great quote in that biography uh that says problems are just opportunities in work close and so I think it's a similar analogy to what
he's saying here it's like yeah everybody's going to have negative internal chatter in your mind why don't we reframe that use those negative thoughts as useful data rather than as objective reality back to Brad inevitably the process of running a business will test your bias towards hope or fear Euphoria or terror is the way you and I talk about this when I notice I'm feeling anxious about
something I ask this is fantastic I ask what's the worst that can happen and how would I cope with it and then he has another question he asks himself if a friend had a similar worry how would I advise them to handle it so this idea of stepping outside of yourself is something I've tried to practice as well step outside of yourself it's your problem pretend it's somebody else's
problem problem a friend a loved one uh even a competitor maybe and so okay if I had that similar Warrior the similar property problem and it wasn't me how would I tell them to solve it and then just take your own advice so he's saying putting distance between yourself personally and the source of your anxiety actually helps you uh think more objectively about positive outcomes this
idea like think about it yeah the guy has started seven separate billion dollar companies and his the the first chapter of the book is all about the importance of managing your mind and attitude so he says not beating myself up has been a hard learned lesson for me I've become much happier in my middle age when I stop expecting unrealistic levels of perfection from myself and my family I still struggle with this all
the time I beat myself up I have a very I always say my inter monologue sounds a lot like David goggin if you ever heard his Audi book can't hurt me that's what mine sounds like so I'm going to have to take Brad's advice here I've become much happier in middle age when I stopped expecting unrealistic levels of perfection from myself and my family my friends and my co-workers not to mention
customers vendors and shareholders uh the reality is that when you're trying to make a few billion dollars your team is likely running in multiple directions at a fast pace except that some goof ups are inevitable and you'll find that it's much easier to maintain your mental equilibrium as you pursue big goals this goes over several Pages try to summarize this for myself so I can remember in the
future don't beat yourself up emotions blur judgment keep a positive mental attitude and stay calm and one way that Brad does all of that is he's a big fan of thought experiments the reason you I mean you're just I think it's a no-brainer to to buy the book but there's a bunch of stuff that I'm not going to cover in the podcast that's in here uh that the appendic I think of this as what I would do is like I'd read
it straight through and then I'd keep it on a shelf or keep it on a desk and then use it as a reference and you'll go back and there's a bunch of things like all the chapters are separate things so like how to run great meetings uh how to do a lot of uh m&a without imploding your company how to build an outrageously talented team I really do think this is a fantastic reference that should stay
close um at hand and so one of the things he has in this book is a bunch of thought experiments that he uses so I just want to outline why those things are so important to him he says Albert Einstein was a consummate Daydreamer and then he preferred the term uh it's German I'm not even going to try to pronounce it but it's daydreaming thought experiments so he says thought
experiments are not limited to genius scientists gifted artists compos composers mathematicians all use them for Creative work or problem solving I usually spend about half an hour a day meditating much of this time is spent in thought experiments this uh produces a profound sense of calmness and is when many of my best decisions materialized I don't I can't remember if I've already
said this but Brad was kind enough to invite me to uh the book launch party they had in New York I flew up uh to New York just for like 16 hours just to go to the book book launch and and meet Brad um what was fascinating and I had this inclination is like he's just got great energy uh he's got great I hate to say I have no other way to say this it's just a great personal Vibe when you're
like in person with him and I talked to people that worked for him they said the same thing they like love him they enjoy like the work environment that he's created and the best source I know to experience like how Brad is is I would listen to uh the invest like the best episode that Brad did with my friend Patrick it's episode 352 of invest like the best and Brad in that interview talks a lot about the
importance of meditating he's been meditating I think for over 50 years and as he says right here in the book he he feels it's been a a a huge benefit uh to his career because that's where he feels many of his best decisions actually materialize so let's go to this what I mentioned earlier that business's problems this comes up over and over again that business's problems and great
companies the way I think about it is great companies are just effective problem solving machines and first heard that idea or that idea was planted into my mind maybe seven years ago when I read Danny Meyer the fam famous restaurant tour his autobiography and Brad's going to talk about his most important business mentor and the lesson that he taught Brad When Brad was in his 20s I've had multiple business mentors
over the years but none have been more important than Ludwig jesselson Mr jesselson ran the largest commodity Trading Company in the world I got to know him in my 20s when his company was a client of my oil brokerage business uh before long we were having lunch regularly and he would share bits of business wisdom that have stayed with me ever since at one memorable lunch I
arrived burdened remember Brad's in his 20s at this point okay at uh one lunch I arrived burdened with problems that I began to unload on him Mr Jon listened carefully and waited until I had finished speaking then he put down his Fork turned to me and said look Brad if you want to make money in the business world you need to get used to problems because that's what business is it's actually about finding problems
embracing and even enjoying them because each problem is an opportunity to remove an obstacle and get closer to success I'm going to put this book down and I'm going to go to where I have my highlights stored from Danny Meyer's book which is called setting the table it's in if you have access to Founders notes I highly recommend going searching for setting the table and then listen
then reading all them takes less than 10 minutes and it gives you a good overview or reminder of the lessons that Danny Meer was trying to teach you and I from his book but he had this a very similar experience I'm pretty sure he was in his 20s at the time as well he's having dinner with another older more successful entrepreneur at the time this guy named Stanley Marcus of the Neiman Marcus family and it's remarkable it's
very almost dead on with what's happening with Brad in when he was in his 20s when he's talking to Mr jesselson and so Danny Meer is kind of unloading his problems and his stresses to an older wiser entrepreneur he says opening this new restaurant might be the worst mistake I've ever made Stanley set his Martini down looked me in the eye and said so you this is one of my
favorite quotes I've ever read in any book so you made a mistake you need to understand something important and listen to me carefully the road to success is paved with mistakes well handled his words remain with me through the night I repeated them over and over to myself and it led to a turning point in the way I approached business Stanley's lesson reminded me of something my grandfather Irving Harris
who is a famous or not famous successful entrepreneur as well uh Stanley's lesson reminded me of something my grandfather Irving Harris had always told me the definition of business is problems is exactly what Mr Jon is telling a young Brad Jacobs the definition of business is problems his philosophy came down to a simple to a simple fact of business life success lies not in the elimination
of problems but in the art of creative profitable problem solving that's an excellent line too success lies not in the elimination of problems but in the art of creative profitable problem solving the best companies are those that distinguish themselves by solving problems most effectively the way the maximum I distill that down so I could remember myself is that business is problems and great companies are just
effective problemsolving machines as we're going to see we'll continue on this page they get a a lot of the best entrepreneurs they would get excited they would get excited when they found businesses or uh problems in their businesses and so Brad continues what he learned from this lunch uh with Mr jesson in that moment I learned something invaluable problems are an asset not something to avoid but
something to run towards Big Ambitions that's so excellent not something to avoid but something to run towards you know what let me interrupt let me interrupt where I'm at because when I got to this part again just pop right to my mind I wrote down Jeff Bezos Henry Kaiser I already told you Henry Kaiser loved problems he said problems are just opportunities and work cloth Jeff Bezos
multiple books in the everything store the first biography of Jeff Bas was written by Brad Stone there's interaction between one of one of Jeff and one of his um one of his employees and he tells him like some bad news something that like they need to improve on or whatever and he goes I brought him very bad news about our business and for some reason he got excited is that not
exactly what Brad Jacobs is saying problems are an asset not something to avoid but something to run towards later on in I think this was in Jeff's uh one of Jeff basos his Sher holder letters but he said that he finds waste uh very exciting so says uh the customer experience path that we've chosen requires us to have an efficient cost structure this is Jeff bz's writing by the way the good news for shareholders
is that we see much opportunity for improvement in that regard everywhere we look we find what experienced Japanese manufacturers would call muda uh translates into waste what experienced manufacturers would call Waste I find this incredibly energizing I see it as potential years and years of variable and fixed productivity gains and more efficient higher velocity and more flexible
Capital expenditures that is from the book invent and wander uh highly recommend I've done I think two podcasts on that already uh it's Jeff Bezos all Jeff basos shareholder letters and then transcripts of like his best speeches but I love I referen that book all the time it's exactly what Jee is talking about there he's like oh I get excited ooh this is waste good this is incredibly energizing its potential
years and years and years of improvements in our business very similar to what je uh to what Brad Jacobs is telling us here uh big Ambitions often beget even bigger problems if your initial reaction to a major setback is overwhelming frustration that is counterproductive instead do this great this is an opportunity for me to create a lot of value is that not the exact same idea that Bezos just told us in his
sharehold letters it's the exact it's the same thing it's exactly the same great this is an opportunity for me to create a lot of value if you can figure out how to solve this problem if I excuse me if I can figure figure out how to solve this problem I'll be much closer to my goal in the four decades since that lunch with Mr juson I've dealt with nearly every problem you can
imagine challenges with Acquisitions people Tech branding you name it I am not surprised when things don't go perfectly that's the nature of this universe the big gunky problems can be where the best opportunities lie so reminded me of uh when I got to to talk to Charlie Monger he said same thing and you notice this um in his last I think the last publish interview he he did or
one of the last ones was with John cson uh founder of stripe interviewed him it's actually published on the best like the best feed too it's also obvious like uh after spending a few hours talking to him when I got back to my hotel that night I had like this I immediately just put all like everything we talked about because I didn't look at my phone one time when I was with them I was like man
this is once in a lifetime experience I need I I want to document this I want to remember this and one of the things that I wrote was that Charley had a complete almost a complete indifference to problems he said they should be expected you should toughen up like just essentially suck up and cope when you have problems that come your way and then you should be wise enough to try to
prevent any any other problems uh but this idea it's like very similar to what he's saying I'm not surprised when things don't go perfectly it's impossible he's been a CEO and entrepreneur for 44 years you don't think he's run into every single problem like of course that's what makes the the book so valuable I think I saw it selling for like $27 that's absurd that's an absurd amount of value that you get you get
almost half a century of wisdom distill down at his book launch party said this he's like I don't have another book in me I'm not writing another book I gave you all my ideas get buy it if you want it uh but I just think it's it's it's uh incredible how you know everything I'm talking about this is three four pages and we see similarities in the way Brad thinks that Danny Meyer thought that the
guy from Neiman Marcus thought that Jeff basos thought that Henry Kaiser thought um that Charlie merer thought I just love uh it excites me when all these ideas um connect very very fascinating moving on on this is great he's got these great stories spread throughout the book and uh uh this is how to lose $500 million so I want to go back actually before I get into how to lose $500 million he's
got a very unique uh acknowledgement segment section I I read I have to confess that I read a lot of the acknowledgement sections in the books that I read they're usually boring and like kind of like filler every once in a while you'll find like an interesting Source or an interesting book or something Brad what Brad did was put it at the front of the book which is unusual and then what he did is like I
he just made his acknowledgement section A list of maxims that he learned from other people you have all these conversations and you just steal down one of the main ideas and it's like he learned this from Michael Moritz small amounts of capital can generate gigantic returns uh from Ludwick Jon who we just talked get the major Trend rate which we'll go into uh you know dare to do new
things see the world for what it is not where you wish it to be is one of the maximums in the acknowledgement section I'm glad I read that before I got to this story about how to lose $500 million because see the world for what it is and not what you wish it to be is exactly what Brad did and so he says he calls this radical acceptance radical acceptance quiets the noise created by
yesterday's decisions and today's wishful thinking here's a story about radically accepting a $500 million loss so in the late 1990s Congress came up with this new law called the t21 TR so it's the transportation Equity act for the 21st century in theory this is what Brad thought was going to happen this legislation was going to allocate about $600 billion to rebuild the nation's infrastructure so I was like
okay there's going to be a bunch of all this funding up for grabs I started scooping up big uh Road rental companies the ones that provide barricades cones striping and the like then I waited for the market to come to me but that never happened only about a third of the allocated Government funding was spent and that was spent in Little Bits over time my decision turned out to be a huge
mistake and there was no point in compounding it we ended up selling those Road rental companies at about a half a billion dollar loss because it was the best way forward under those circumstances so this idea of see the world for what it is not you not what you want wish it to be he he he's like oh this is going to be great they're going to spend out do out the $600 billion when that didn't happen he
didn't hold on to it what does he call uh radical exception quiets the noise created by yesterday's decisions and today's wishful thinking no reason to compound this loss let's cut our losses and move on the next story I want to tell you about is how to keep your head and make four billion dollars this is my that was my summary of what's about to happen so he at the time he's running XO which is his third
public company and I think this is in 2018 and they got hit with a short report and so this short report gets picked up by the media saying there's all kinds of problems with XO you know you should sell the stock everything else and so this is the story story from Brad the short report was packed with a lot of baloney but of course the market acted first and analyzed later and our
stock price went into freef fall down 20% or 26% in one day his response was fascinating we did exactly what I've been describing in this chapter we concentrated on the situation at hand without judging what had happened to us we spent hours going over the short report Page by Page identifying the many places where their data had been twisted and so he takes a problem any spots and opportunity which is what he's been
talking about right the short seller crisis had made our stock extremely cheap and instead of fixating on that as bad we focus on achieving a good outcome from that perspective the share price was Mana from heaven and we decided to buy back $2 billion worth of stock so this is what I mentioned earlier where the bankers are like $2 billion it's way too high you can't do that it's too high
of a percentage of your market cap no one's ever done something like that and Brad's like who cares just because we were the first company to buy back such a high percentage of our stock remember it goes from the opening like you have to you can't rest on conventional wisdom is the way Brad put it you have to rearrange your brain the way Peter teal says is hey you should successful people find Value in
unexpected places and they do so by thinking about business from first principles instead of formulas there is no formula for the situation that Brad's dealing with or if there was it'd be like oh buy you know a little bit buy like a 100 million back but you can't buy $2 billion what are you nuts just because we were the first company to buy back such a high percent stock in a
similar situation didn't mean it was a bad idea in fact it was a once in a lifetime opportunity a couple of years later those $2 billion of Shar we brought back we bought back ended up being worth $6 billion giving them a profit on that one transaction of $4 billion okay moving on what this is this might be my favorite section in the entire book uh I love how he describes all the research he does before he jumps
into an industry and it's this idea that he gets he said one of the most valuable pieces of advice received from my mentor uh Mr jesson is you can mess up a lot of things in business and still do well as long as you get the big Trend right I make sure I understand the major trends that could threaten the business or help it sore I'm obsessive when learning about an industry this this part this
entire I'd read the entire chapter I'm going to go over uh the parts that are obviously most interesting to me but it's it's another illustration of this idea that you and I speak about over and over again you see it in the books and it came came from David ogy and he says the good ones no more they just do more research they read more they talk to more people they just know more about
what they're doing the good ones know more um and so his idea is like one of the main things themes that the mega Trend uh is that technology is the the dominant mega mega Trend in our universe if you want to make a lot of money in almost any any industry plan to invest heavily in Tech and that idea is as true today as it was a couple hundred years ago I remember reading Andrew Carnegie's
autobiography uh you know many years ago I don't know maybe four years ago and he's talking about building businesses in the 1800s and he was talking about building Carnegie steel at the time and I had summarized the advice he was giving in that book uh specifically around technology as this and this this comes up in the books a lot invest in technology the savings compound it gives
you an advantage over slowing moving competitors and can be the difference between a profit and a loss that is from that's a summary of Andrew Carnegie's ideas which I think Brad uh based on the chapter would definitely agree with if you want to make a lot of money in almost any industry plan to invest heavily in Tech so this is how he starts doing research before he starts a new
company I start by reading everything I can get my hands on journals periodicals newspapers trade Publications employee reviews on web-based recruiting sites you name it I look up I look at all the websites and social media of the major players and the upand comers in the industry I watch lots of interviews with the CEOs I use paid services like Bloomberg alphasense and Thomas Rutters
uh I look at analysis from sell-side and buy side analysts and I search this SEC database uh which has large amounts of information on every publicly traded us company including IPO documents Financial reports and proxies I scope out the most valuable industry conferences and I attend them he goes to cell-side conferences because they're an opportunity to meet management teams face to face and hear the questions
investors are asking trade associations have a wealth of Industry data I interview expert experts uh I seek out people who live and breathe the industry that I'm considering this phase of the research is about getting face to face and listening intently I love talking to CEOs in addition to CEOs I seek out investment bankers who are most active in the industry and who know it deeply
just look at how much work and how much information uh is collected right this is it keeps going uh so it says in addition to CEO to se out investment bankers who are most active in the industry and who know it deeply I also talk to venture capital firms because they spend a lot of time looking at the big friends in different Industries I tap buy side institutions and successful fund managers who have Battle Scars From
investing in that industry uh industry vendors keeps going industry vendors are also a good source they have a sense of the trends that could drive changes in the market and finally or not finally there's two more shareholder activists often have important insights as well and I reach out to journalists who know the industry because by Nature they're a skeptical bunch and I want to hear their
perspectives so then what he'll do is he runs through like short descriptions of how uh to get the major Trend right in a bunch of the or how he did in a bunch of the businesses that he started and you know this goes over 40 years what's interesting is uh the first one so he talks about AMX and Hamilton resources and it's about like his time in the oil industry it reminded me of a very
important idea that I think that that you see applied to a bunch of different Industries this idea that you can identify a market with valuable but hard to get data and my favorite application of this because it's just so nuts was uh the episode I did on the the billionaire art dealer Larry gagosian uh episode 325 if you haven't if you haven't listened to that that episode it was fascinating because
that's exactly what he did he identified a market with valuable but hard to get data and then essentially made him his made uh like a personal treasure map that that his entire business uh rests upon so that came to mind when I was reading this section A little bit of luck put me in the oil industry in 1979 when I start my oil brokerage company emx it was a highly profitable business
and my realization was that a big Trend was forming around the need to capture and share information more quickly remember this is 1979 pre- internet this whole section is nuts so it says that was a trend that transformed the industry in the late 1980s we made a lot of money by being the first oil broker to get ahead of the trend at the time there's no internet no email no
centralized databases with easy Global access the main this is going to blow your mind the main source of information about the price of oil was a newsletter that came in the mail and so he talks about he's like listen we're making verbal handshakes with clients in Europe in Asia for 50 and $75 million over the phone with nothing on paper for days and so this next sentence is a description of the
problem the lack of timely information was a big problem for Oil Brokers we made our money by matching buyers and sellers and taking a commission Just Like Larry G goian I could see that there was isolated pockets of valuable oil pricing data trapped all over the globe and I knew that if we could figure out a better way to share that information we can unlock a lot of value and so there's no off-the-shelf solution
so he builds his own I think this is something he does multiple times and he says essentially they built like their own crude version of the internet um but it allowed uh us to do something revolutionary every time an AMX employee learned something useful about a buyer seller buyer or seller activity or the price of oil they entered it into our database then we could share that
information much more quickly with our Brokers around the globe that process took hours not days which was close to instantaneous back then in the 70s and 80s so Tak something it took days now it takes hours we had created a way to obtain objective insights into Global oil supply and demand and pricing Trends and then here is the trends that he identified when he set up United Waste
Systems uh the Red Bull episode that I did uh episode 333 I think uh it's pretty wild that you know that business is going to make him you his net worth between somewhere between like 20 and $40 billion he was paying himself before he died somewhere between $58 million a year he identified the opportunity from reading a magazine article and I'm like hey uh the richest guy in Japan I think
was a country makes these like energy tonics because there was no energy drink Market at the time that's interesting and that CH that reading the article changed his life forever Dietrich M mishes I think it's how you say his name but we see Brad Jacobs coming up with an idea too he's just like well the idea from United systems this is fascinating I remember vividly the moment the
industry caught my attention in 1989 I was reading Merl Lynch research reports in bed on a lazy Sunday morning I love that uh and came across a report written by the top ranked analyst for Environmental Services then the two largest companies in the waste industry at that time were each making about a half a billion dollars a year in profit remember that's why I brought up the Red Bull guy he's like what this guy is the
high paying the most he's making the most money in this entire country and he sells energy tonics and then Brad sitting in bed reading research reports right and he's like wait a minute these guys are making half a billion dollars a year in profit in 1989 and I thought how hard can it be to have trucks pick up trash deposit in a safe place and then send out an invoice I wanted to know more and so he
identifies the two big trends at the time uh landfill capacity was becoming uh precious because regulations were pushing small trash dumps out of business so that's Trend number one Trend number two integration of hauling and Disposal this creat an opportunity for endtoend consolidation I looked for a way to capitalize on both Trends and found it in Tech based truck routing so
think about the entire oil industry kind of operating blind waiting for this this letter in the mail to tell him the prices he sees a very similar Trend uh problem in the waste management business mom and pop owners were running trash collection companies by the seat of their pants and making money at it few companies were planning their truck routes methodically much less using
technology to do it I think he says that they use like a map and like push pins it's like this is he's like this is ridiculous they did not focus on optimizing routes and so he starts optimizing routes and this is the result instead of sending 50 trucks out over 5 days to pick up X tons of waste 20 trucks so more less than half could now perform the same service in 3 days so instead of 50 trucks in 5 days he's
doing the same work in with 20 trucks in 3 days our cost kept coming down as our processes improved and our profit margin grew significantly that is the company that he sells for $2.5 billion then he talks about where he gets his idea for his other company United Rentals I was looking up to roll I was looking to roll up another industry and so I set up halfday meetings with nine
different groups of bankers and analysts at Mero Lynch one of those analysts asked if I thought about going into the construction equipment rental so that's how he finds the idea for his next billion dollar company and even though it's a different industry he sees the same problem this is the part that I texted to a bunch of friends cuz I absolutely love while the rental industry overall was slowed to
computerize the larger Regional players were more techsavvy by 1997 nearly all of them were running on software developed by a company called win systems this is how to get God mode what I wrote to myself when I was a kid I played a lot of video games and you'd use like cheat codes like Game Genie and stuff like that uh and you could one of the things you were try to unlock is
something that was referred to as God mode a lot which essentially gives you like omnipresent uh like view of the entire world and like what you want to do you can think of what's Happening Here this this this idea that I absolutely love that he did he gets omnipresent data of his entire industry it's almost like operating in god mode in video games when I was a kid by 1987 nearly all of them all the larger larger
players in this industry is in now right were running on software developed by a company called wi systems this told me that software was capable of managing hundreds of thousands of pieces of equipment flowing on and off job sites because they buy construction equipment and then they rent them out it's very you know straightforward business so what does he do I bought wind systems he
bought he bought the software that all of the main players were using owning win accomplished two things one we had an industry best platform that we can continue to develop internally for our own use and the acquisition gave us access to aggregated anonymized data on macro Trends ACR across the industry this gave us a highlevel view of emerging market trends such as equipment gluts or shortages in the making making
what is buying the software company allow him to do we could now proactively adjust our pricing and asset management while the rest of the industry was being reactive I'm going to repeat that that is so important we could proactively adjust our pricing and asset management while the rest of our the industry the rest of our competitors was being reactive okay so then I love this story
that comes from the chapter on how to do lots of high quality m&a uh without imploding and it reminds me one of my favorite saying that I bring up a lot that opportunity is a strange beast and that it frequently appears after a loss what can appear to be a terrible thing actually be actually winds up being a blessing in disguise and so he gives us some advice he says be sure to cover
Your Flank it's the stuff that comes out of left field that can take a deal down in 2007 I sold United Rentals to the private Equity Firm Cerberus no way I'm pronouncing right so this private Equity Firm buys it uh for $7 billion or at least that's what Brad thought happened highly satisfied that I just sold the company I stepped down as chairman and wandered off to my private investment
firm to begin planning my next venture then the great financial crisis arrived remember this is 2007 uh great financial crisis arrives private Equity firms began welching on deals and S cerebus uh defaulted on the United Rentals agreement as a result our stock plunged 31% in 24 hours over the course of the following year the stock fell to $5 we collected a $100 million breakup fee decided not to seek another buyer
and eventually got things wred today the market cap of United Rentals is $38 billion so tried to sell it thought they sold it for 7 billion in 2007 fast forward what 15 years something like that good they good thing they did not sell it for 7 billion because the market cap is now $31 billion higher the deals I've avoided have contributed more to my success than the deals I've done and I love this
advice he talks about the importance of set setting up uh feedback loops this is something that Brad's going to have in common with just the ones that come to the top of my mind Les Schwab Sam Walton of Walmart and Jim Casey of UPS they all prioritize this and what is this it's getting data from Frontline employees they want data from the people that are actually interacting with the customers
they all talk about it in their biographies and autobiographies over and over again so he says 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 and this is insane you would think that the owners would want to know that and so what Les Schwab Sam Walton and Jim
Casey would say about this in Jim Casey's case anytime he was driving he'd see a UPS truck he'd pull over or have his driver pull over and he'd talk to them he'd want to know what's actually happening they all make they all say differently but the the the idea behind it's the same they're like your Executives the team you have around you like they over time they start to like filter information too much and they can
give you like an overly Rosy or like false like positive view of what's actually happening in your company and so the way you you penetrate that oh basos did this too I just remember he would uh work he has everybody in name was including himself would work uh customer service like in the call centers and actually answer calls directly from uh customers so anyways your Executives and the people around
you over time tend to give you like an overly like optimistic view of your company and so one way to cut through that is like Sam Walter would go in stores and he talk to people the cashiers you talked to the people at the front door he talked to the people unloading uh the trucks it's like tell me what the hell's going on in this company I want to know this like what
would you do to improve the company why are you not asking them that of course you should ask them that to them it was very uh obvious like almost I what I realized too is like almost at the end of the book he has another uh he has two questions that I thought were genius that I want to add in this section too because I think it ties to what he's saying here and so what he would
do it doesn't have to just be in a company you're acquiring to it could be in your existing company so he asks I love these questions he asked two questions what's your single best idea to improve our company what is your single best idea to improve our company and what's the stupidest thing we're doing as a company and so he would send that out companywide you know send an email I would you know you probably just
send this an email one at a time to everybody in the company respond back to this email what is your single best idea to improve our company right think about all the interesting data and ideas that uh you could could get and then what's the stupidest thing we're doing as a company I love this I love these questions for business and I was actually thinking it's actually good for a family
too like I've talked about this before where you know I'm obsessed with what I'm doing I work seven days a week uh you know if you're listening to this you're highly likely you're an obsessive person as well and yet I don't want I'm also a dad so like I'm not going to be a dad like this just not an option for me and so it sounds weird that this came to mind but uh my son's too young for this but my daughter's not and so
like I solicit feedback from from her I think I've told you this before uh but I would literally go you know I'm not like I was just like hey like how am I doing as a dad like am I like and I ask questions like this like what's the like when do I feel forgot who told me to do this like I asked her uh and I'll text her this too because she's old enough to text which is funny like what do I do
that makes you feel the most special uh like what don't you like that I'm doing or like just how I'm doing but this idea is almost basically like I think it's a good idea in the business but also the idea is like what's your your single best idea to improve our family is another way to think about that right instead of what's your single best idea to improve our company what's the
stupidest thing that we're doing as family what's the stupidest thing that I'm doing as a Dad what's your single best idea to improve what I'm doing as your father I love the Simplicity of it and I love the idea of like sending it out because you could bury the problem is like what I like about the idea of sending it out as a like an individual question right that just cuts right to
the Simplicity as opposed to putting it in you know maybe like a survey where there's like 10 or 12 other questions in there I think those questions are so powerful that they're good enough to stand on their own um so I absolutely love that idea and again so let's a feedback from from this is just good Intel like why wouldn't you do that so one thing that pops up over and over
again that's really important is you just it's like I have so many notes in the book it's like damn these guys's moving fast and they're like there's speed oh there's more speed just happens over and over again and so I mentioned this earlier this hilarious story where his main competitor the CEO of uh Herz which was the largest uh not only did they have the the like rental car
company but they're the the at the time they were the the largest uh equipment rental chain uh in the country as well and Brad has this great line here he's like yeah Herz did this and they built up a National Equipment Rental chain to about a billion dollars of annual revenue over the course of 37 years United Rentals did that in 13 months and so he gets this invitation come have lunch with the CEO he's like oh maybe
he's like trying to buy me out like what's happening let's just let me go over there and see what's up and it was ridiculous and the not life myself is a losing strategy take your competitor out to line and ask him to slow down and essentially that's what he did he's like you know you made me change one of my taglines I had the largest car rental company and the largest equipment rental
company in the world and now I've got the largest car rental company and the second largest equipment rental company I don't want to be second in anything and he's telling him slow down you're making a mess of this industry you're going too fast you're going to mess this up and fast forward uh several years and they're United Rentals is making like six times the amount of money so uh that
is a losing strategy do not take your competitor out to lunch and be like please slow down please be nicer to me no foot on the gas and foot on their neck I want to go back to the maxims that are in the acknowledgment um because this thing about maxims is they're not hard rules and you need to know when to break the rules and so he has this idea that you should lose perfectionism and so but
there's one domain where you don't want to actually lose perfectionism and that is in hiring the most important thing a see does is recruit great people yes I made the point that aiming for Perfection can be counterproductive good is usually good enough but if you're going to break that rule you break it for people make your hiring choices as perfect as they can be because they're a few mistakes costlier than hiring the
wrong person this is so good a way to way to remember this an empty seat is less damaging than a poor fit make your hiring choices as perfect as they can be because there are few mistakes costlier than hiring the wrong person an empty seat is less damaging than a poor fit this entire section is about the difference between super talented people and what they bring uh to your company
so I love this um I'm going to read Steve Jobs was asked one time uh what talent do you think you consistently brought to Apple this is his answer uh this was his answer rather and I'm going to read it to you first because I think it sets up what what Brad's trying to teach us right here he says I think I've consistently figured out who the really smart people were to hang around with
you must find Extraordinary People the key observation is that in most things in life the dynamic range between average quality and best quality is at most 2 to one pick anything it's going to be basically two to one right but in the field that I was interested in I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to one given
that you're well advised to go after the cream of the cream you can build a team that pursues the A+ players a small team of a players can run circles around a giant team of B and C players so then he's going to talk about how to build outrageously talented team and what he feels is most valuable remember Steve Jo said hey I think one of the best things I did was I figured out who the really
smart people were I hung around them tried to hire them I built incredibly outrageously talented teams Brad says screening for Superior Superior intelligence eliminates 90% of all candidates so that's the first thing I look for there's just no substitute for smarts there's no substitute for brains the COO trait most closely correlated with organizational success is a high IQ
Double Down On hiring the bright the brightest when he is interviewing people he will ask himself can this person think dialectically I'm going to Define that for us because I love this definition of dialectically the the ability to think dialectically is the ability to view issues from multiple perspectives and to arrive at the most economical and reasonable reconciliation of seemingly contradictory information
that's so important the ability to view issues from multiple perspectives and to arrive at the most economical and reasonable reconciliation of seemingly contradict contradictory information can this person think dialectically that is are they capable of thinking from multiple perspectives and reconciling streams of information that seem to flow in different directions and second
second question are they capable of changing their opinion rigid thinkers at any level of intelligence are less valuable because they are mired in their own points of view more advice you should hire ambitious people who want to accomplish big things and make a lot of money more advice it is better to be slightly understaffed I find that slightly under staff teams are more focused and spend
less time doing redundant busy work Brad is big on Vibes I think he calls it the love Vibe and he says my team and I spend a lot of time together so it's a big deal that we like one another an organization is like a party you only want to invite people who bring the vibe up and so he talks about listen man I have advice for you this is how you're going to differentiate between the a b
and c players on your team his whole thing is like you cannot have C players ever and when you figure out B players it's inevitable that you're going to have some but you can't have C players and his whole point uh is that if you if you hire B players they're likely to hire C players so you got to be very careful with the B players too but it's a organization scales you can't have all
a players this something Steve Jobs said that Pixar when he had 400 400 employees it's the first team of all a players that he ever saw in his life and he said you know at Apple I think that time had 3,000 uh people and he's like it's impossible to have a team have a company with uh 3,000 a players so of course you're can to have some B players but you got to be careful because they love
hiring C players and C players suck this is how you differentiate between a b and c players and he does this in his mind again thought experiment I I imagine this person coming into my office and quitting without warning uh just by imagining this scenario I can immediately tell for my own inner response whether this person is an a b or c player if my first thought is I was going to fire this person sooner or
later so it's no big deal that's a c player if my reaction is I don't like this but can live with it the transition period might be a little bumpy but we'll find somebody else maybe even somebody better we are talking about a b player but if my reaction is an internal dialogue of panic and it sounds like we're so screwed how did we get into this situation there's no way we're going to find somebody as fantastic as
this person that is an a player and what do you do with a players you overpay the hell out of them cuz here's the thing the reason you should overpay them is cuz you the reason you overpay for talent is because it's nearly impossible to overpay for talent think about what Steve Jobs said earlier right in in some Fields the the the the best person is not twice as good they're a hundred
times as good think about when Steve Jobs coming back to Apple Apple bought next for almost a half a billion dollars right the way to think about that is Apple paid half a billion dollars to rehire Steve Jobs and they got the deal of the century it is almost impossible to overpay for talent and Brad talks about there's a lot of things that motivate people but you you're silly if
you don't think compensation yeah they have to believe in the mission they have to like the what work they do they have to find it intellectually challenging they have to like their team they also should be paid oodles and oodles of money so he says there's 174,000 employees uh out of all the three companies that he currently chairs not a single one of them shows up for work because they want to make money for Brad
Jacobs they come because they want to make money for themselves and their families money animates people everywhere so he's talking about like I have employees all over the world world this is not just a United States thing money animates people everywhere that's why I've overpaid quote unquote almost every direct report I've ever had to ensure I had top team people in place overpay for talent it is nearly
impossible to overpay for talent that's such a important thing to remember never ever ever forget the dynamic range of humans it makes no Financial sense to skimp on salary incentives to save $100,000 a year when hiring a second best candidate May cost you millions of dollars in law lost profit oh this guy's good he's an a player let me I can save money I hate when people try to like
obviously a huge what's what's the two biggest themes in the history of Entrepreneurship right focus and watch your costs this repeated over and over again by all by the vast majority of the people you and I study watching your cost does not count when you're doing Talent that's not it's like oh I have a great a player but I can hire the for the same job I can have a Bayer play player for $100,000 less no that's not
$100,000 less you lost millions millions and in Steve Jobs case if they didn't hire him what if they said they didn't offer him I think what was it 470 what was that deal 470 million something like that they said said no no it's only going to be 200 million or whatever it is they try to Short change him by a couple hundred million he doesn't come back to Apple what's Apple is probably
out of business Apple probably doesn't exist to this day never ever ever forget the dynamic range of human beings and overpay for talent because it's nearly impossible to overpay for talent and then I want to close on what I feels almost like a Manifesto that it's an incredible honor and a good thing for the world to build products and services that make other people's
lives better to create jobs for hundreds of thousands of people in Brad Jacob's case to create wealth for your shareholders um and really is a testament to the all-important entrepreneurial spirit I love being a CEO there's a joy in creating value and an even greater joy in knowing that so many people beyond our organization are benefiting from our accomplish ments the best way to perform our duty is to fill
an unmet need in the economy with a strong business model and a responsible organization we create a healthy workplace environment for our people and we pay them well we pamper our customers and we approach challenges with practical optimism that open our minds to Solutions the great majority of the tens of billions of dollars of value that my teams and I have created have
flowed outside of my companies I am extremely proud that our company be counted on to create value this is only possible because we operate in free markets where creating Prosperity is a virtue I want to share a personal experience I had with a small business owner whose work ethic and customer focus Echo the value system that I instill in my own companies this small business owner his name is Steve Steve
handles the HVAC system at my home Steve had originally worked for the large HVAC company that had installed the system but that company was sold and Steve decided to set out on his own so again the all important entrepreneurial Spirit Steve is a hardworking take pride in your work entrepreneur who puts his customers first he cares a great deal about doing his job the way it should be
done he told me his self-esteem goes up and down with his customer satisfaction scores naturally he also measures his worth by how much money he's making to support his family there's a fair amount of criticism being voiced about profit seeking these days some people are embarrassed to talk about the importance of money but Steve is totally comfortable with it and in his pursuit
of happy customers and a good living for his family he built a successful business as a result customers flocked to him Steve is the face of the entrepreneurial spirit I wrote this book with people like him in mind people who want to work their taals off who want to outsmart the competition who want to put their customers on a pedestal and who want to make a lot of money for their families the summer after e8th grade I
attended the Rhode Island Governor school for the gifted in art and music a summer enrichment program for kids who'd been nominated by their schools I 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
he said you have a choice you can waste the next couple months and not accomplish much are you can go all in this is an opportunity to go deep on a project and do the best work that you've ever done but you have to decide if you want it he said it was there that I learned what it meant to go all in that magical connection between intensity of focus and the end result if I put my whole heart and soul into a project I
had it in me to create really cool stuff we have it in our own hands to either make life meaningful are just past time until we die that's up to us I hope you're inspired to run hard and making a few billion dollars or achieving some other big dream and I wish you the exhilaration of seeing it through to success and that is where I'll leave it highly highly highly recommend buying
the book as I said before I really do think it's a reference I'd read it through all the way uh I read it all the way through and I'd keep it close at hands as a reference the appendix uh has a bunch of thought experiments there's this really interesting history of Technology timeline because that's a huge influence in the way Brad approaches his business he because of the megat trend in the universe he's got
interview questions for job candidates recommended books uh how to conduct meetings the appendix is like full of uh you could buy the book just for the appendix obviously read the whole thing but anyways if you buy the book using the link that is in the show notes you'll be supporting the podcast at the same time that is where am I at 300 335 books now 1,000 to go and I'll talk to you again soon