How Brad Jacobs Built 8 Billion-Dollar Companies

I’m ready when you are, man.

Let’s go. I’m in the zone. I’m in the zone, man.

I hope we start with this. I love your energy. This is what I always tell people: when I did the episode on your book, thousands—and this is not an exaggeration—of people sent me messages. What I try to explain to people is, they ask, “What’s so different about Brad?” I say, “First of all, how long do you have? Second, he’s got the best energy and the most energy of any person I’ve ever been around.” I really appreciate you taking the time and agreeing to do this.

One of my favorite things is the affinity and relationship you had with your mentors. You had a bunch of them, but one of the most important ones that you mention—I think four times in the book—is Ludwig Jesselson. You have a list of maxims at the very beginning of the book that you learned from other people. The maxim you listed for him was, “Get the major trend right.” If you could talk about your relationship with him and what he meant to you, I think that’s the perfect place to start.

He meant a lot. Mr. Jesselson—I never called him Ludwig.

Mr. Jesselson.

Yeah. He was significantly older than me and much more accomplished than me, so I showed him respect by calling him Mr. Jesselson.

Mr. Jesselson was a special guy. He was deep, very profound, and had lived life fully and by principles. He was a religious guy, but I wouldn’t say he was ultra-religious. He took the morality of Judaism—the do’s and don’ts, ethical behavior, honesty, and so forth—and made that the core of his life, both his personal life and his business life.

His principles were about relationships: deep relationships, long-term relationships, honest relationships, relationships you can keep coming back to. Sometimes one person has the leverage, and sometimes the other person has the leverage. It doesn’t matter; you don’t take advantage of that. You maintain long-term relationships.

He had a few dozen deep principles. One of them was the one you just mentioned. He was a trader. He ran the largest commodity-trading firm in the world, Philipp Brothers, and his lesson was that you’ve got to get the long-term trend right.

Mm-hmm.

You can get a lot of other things right, but if you don’t get the long-term trend right, you’re in trouble. You’ve got to figure that one out. You’ve got to say, “What’s going on here?”

You need context. You need to see what’s happening, what did happen, what is happening, what will likely happen in the future, what the different future states could be, and what the probabilities are for each one of those. Then you have your risk management.

The converse of that is, if you get the major trend wrong, you can do 1,000 things right and you’re still going to lose. You’re not going to create alpha. You’re not going to create value there. That was a big lesson from him.

The other thing that I love is that you were 23 years old, having lunch with him very frequently. As you just said, he was much older, one of the most successful people in the world, and he was taking an interest in you. Yet you were still comfortable unloading your stresses and problems, and he would sit there patiently listening.

I love his response: “Business is problems.” One of the most important lessons was that problems are opportunities. There’s a line from Henry Kaiser, who in his day was as famous as, say, Elon is today. He started 100 different companies, built the Hoover Dam, and built Liberty ships for the Allies in World War II.

I read a bunch of biographies on him because he was one of Charlie Munger’s favorite founders. One biography has a line that appears in multiple life stories about him: “Problems are just opportunities in work clothes.” I read your recounting of some of your lunches with Mr. Jesselson, and it’s as if he essentially gave you the same advice.

Yeah. In the book, I talked about a specific episode when I was having lunch with him. I was down and glum, and he said, “What’s going on?” I was talking about this problem and that thing, and I was just feeling down.

He said, “Don’t stay in the business world if you’re going to get down about this stuff. These are the things you should get up from.”

Yeah.

When you have problems, challenges, and obstacles, addressing them is how you make money. You make money by solving them. The more problems you have—as long as you can solve them, figure out how to address them, and remove them—that’s how you’re creating value.

That’s a wonderful way to go through life. Number 1, it’s a great way to make money.

Mm-hmm.

You’re not always down, because you always have incoming missiles when you’re in the business world. You have problems with employees and competitors. All day long, you have incoming missiles. You have great stuff, too, but in between that are punches to the face.

If you’re going to get beaten up by that, you’re not going to be successful. Secondly, you’re not going to be happy. You’re going to go through life glum.

Sometimes you see these multibillionaire guys, and they always look like this. What’s the point of all the money? I would not want to be one of these zillionaire guys who is frowning all the time, upset, angry, and depressed. It’s much more important to me to be in the right frame of mind and to go through the short time we have in life reasonably happy. I don't have a perfectionist standard where I have to be, like, in ecstasy and bliss 24 hours a day, seven days a week, but generally happy.

Did you ever meet Sam Zell when he was alive?

I did. I’m sure many times. Great guy.

He had the same thing. I was lucky enough to have a 2-hour, very intense lunch with him. He said something very similar to you. He said, “I know all the rich guys. You wouldn’t believe how many are miserable. Don’t do that.” He said, “I wake up every single day.”

You guys have a lot of similarities. I’ll spend time with you. The very first time I met you was when I went to your book-launch party.

Right?

Yeah. I just remember thinking, “This guy’s got crazy energy.” I had already read your book by then, but something that you talk about over and over again in your book is that problems are opportunities.

It reminded me of a line from Jeff Bezos’s biography. There are several books on him, but one of his main biographies is called The Everything Store. It said that when you would tell Jeff about problems in his business, he would get excited.

Yeah.

Because he would think, “These are problems. If I solve them, this is going to increase the enterprise value of the company that I’m building. These are actually good things to identify and embrace instead of avoid.”

I did. I’m sure many times.

Okay.

Great guy.

He had the same thing. I was lucky enough to have a 2-hour, very intense lunch with him. He said something very similar to you. He said, “I know all the rich guys. You wouldn’t believe how many are miserable. Don’t do that.” He said, “I wake up every single day.”

You guys have a lot of similarities. I’ll spend time with you. The very first time I met you was when I went to your book-launch party.

Right?

Yeah. I just remember thinking, “This guy’s got crazy energy.” I had already read your book by then, but something that you talk about over and over again in your book is that problems are opportunities.

It reminded me of a line from Jeff Bezos’s biography. There are several books on him, but one of his main biographies is called The Everything Store. It said that when you would tell Jeff about problems in his business, he would get excited.

Yeah.

Because he would think, “These are problems. If I solve them, this is going to increase the enterprise value of the company that I’m building. These are actually good things to identify and embrace instead of avoid.”

I do have a question about your long-term reputation. Do you remember when Buffett got in all that trouble with Salomon Brothers?

I remember it.

He said, “Listen. You can lose money. That’s fine. But you lose a shred of reputation—”

“I’ll be ruthless.”

He said, “I’ll be absolutely ruthless.”

Yeah.

It was a very jarring experience for me at your book-launch party. First of all, I was the only one who didn’t show up in a suit, so I rectified that today. Everybody else was saying, “I’ve known Brad for 3 decades.” Basically, everybody there was saying, “How do you know Brad?” They were investors of yours, and you had made all this money for the pension fund they ran, and everything else.

The stories that I heard at the party, and then since I released the episode, make it clear that you have a fantastic long-term reputation. Do you have any advice on how you were able to maintain that, and how important it is for other people to do the same thing?

Reputation is really important. Your personal brand is extremely important because, based on that, people are going to want to do business with you, or they're going to want to not do business with you. Every day you're in the office and doing stuff, you're either raising your brand or lowering your brand. That's the main thing you have to work on.

You have to make sure that your brand reflects integrity, honesty, dependability, and stability, and that people can count on you. This goes back to Mr. Jesselson. With Philipp Brothers, this was before email—actually, it was even before faxes. It was mostly TWX and telex, which took a few days to go through, when they went through. Sometimes they didn't go through.

You could do a deal worth hundreds of millions of dollars on a handshake or on a phone call. There was no written confirmation of that for days. In the meantime, maybe the price of whatever you were trading—oil or copper—had gone up a lot. You still had to have a deal.

Yeah.

Otherwise, the whole system doesn't work. Dependability is so important. Trust is so, so important.

How old were you when he gave you that advice? Did you immediately start applying it?

In my 20s.

So you were optimizing for the long term even when you were that young?

Yeah. I think as you get older, you optimize for the long term more. When you're young, you're just so ambitious, and you want to get stuff done. You're in the now. As you get older and mature, you have more context.

I think life, in general, is about getting more context—seeing things in proportion to other things.

Can you say more about that?

We've talked about it a lot outside of your podcast.

Yeah.

I'm into meditation. A lot of the meditation I do is looking at space from different perspectives, not the normal perspective that we have right this minute. I expand my mind from the Earth to the Sun, to the solar system, to the galaxy, to clusters of galaxies, to the universe, to the multiverse. I just go way, way, way, way, way high.

Then I bring it all the way back in and go into the molecule, the atom, the proton, the nucleus, right in the middle of all that, and then go to strings. I find that making my mind like an accordion—getting really big, and then really, really small—and then doing the same thing with time gives me context.

I look at time and go back over my life over the last few decades, and then go back centuries and millennia. I just keep going way, way, way, way back, all the way to 13.8 billion years ago, back to the Big Bang. Then I go all the way forward and picture the world going forward, forward, forward, forward.

That juxtaposition of time and space, for me—different things work for different people—gives me context. It gives me humility. It gives me humbleness. It shows that I'm just one thing right here in a major, major thing going on. I'm just one little, tiny speck.

At the same time, I'm part of that. So I'm very uplifted, very inspired, and very motivated. It's like, “Wow, I'm part of a real big deal here.” It's great. We all are.

Yeah.

We're all part of this huge, huge thing.

So I think context is really important. It gives you meaning, purpose, understanding, and wisdom.

I know you hate it when I say this, because we've talked about this privately. You obviously know I study uncommon people for a living, right? The people I study on “Founders” were so good at their jobs that somebody wrote a book about their lives. You're talking about a very small group. Most of their inner monologues are negative. You're different. You have a much more positive energy.

There's almost a—

Let me give you some context here. We were together a few months ago at a mutual friend's birthday party in Miami—our friend Rick. There were a bunch of interesting people at the party. One of them was Apolo Ohno.

Apolo Ohno is the most decorated American winter Olympian of all time. He's become a friend; I met him through the podcast. He walks up to me, and this is one of the funniest things. People think, “You're an Olympian.” He had been training since he was a kid. His dad would make him get up at 5:00 in the morning and run

drills in the school parking lot.

Yeah.

But he still comes from a very positive place. He has a great relationship with his dad. Normally, it's not good when people are put under those circumstances.

He was asking me, “I see this pattern when you're reading all these hundreds of biographies about these great entrepreneurs: There is something inside of them driving them that's actually negative. It could be insecurity, it could be that they grew up in poverty, it could be a bad relationship with their family. Are they all like that?”

You were about 20 feet away. I said, “You see that guy over there?”

He goes, “Yeah.”

I said, “You know who that is?”

He goes, “No.”

I said, “That's Brad fucking Jacobs.” I guarantee you he's not driven by that.

This is what I mean: You're uncommon among uncommon people. At least from the outside, and from the conversation we had, part of this impenetrable nature that you have is that you're like, “Oh, yeah, business is problems. They're going to come. What do you think we're doing here?” You don't seem to be rattled by them.

What is your inner monologue like when you're doing huge fucking deals right now? You're doing all kinds of crazy stuff. You've built 8 separate billion-dollar companies. You don't do that by accident. What is your inner monologue like?

It goes back to what Mr. Jesselson used to say: “Problems are your friend.”

Mm-hmm.

You don't want to just tolerate problems. You want to embrace problems. You want to hug problems. Problems are the way you succeed. You want to run to the fire. You don't want to run away from the fire. You want to be brave and courageous and go into it.

I think you can start with anything that's anything. In Apolo's case, and in the case of other people he's studied, they start with negativity, trauma, stress, insecurity, fear, and anxiety. That's their motivator. They zero in on that, and then that makes them run faster.

Was that ever your case, though?

No. That's not my thing.

You're like a unicorn.

I don't know that I'm a unicorn. I don't embrace negativity. I'm okay with it, but I don't make a big deal about negativity. I'd much rather enjoy the positivity. I'm a sunny-side-up guy.

But your inner monologue—are you nice to yourself?

Your ongoing inner monologue?

I'm reasonably nice. Yeah, I am.

I'm vicious. I sound like—do you know who David Goggins is?

Oh, yeah. Oz the Mentalist was talking about him.

My inner monologue sounds like David Goggins. It's just like, “You're not doing enough. This wasn't good enough.” I see the problems, so I attack them. I'll listen to a past podcast or something I've done, and all I see are the flaws. I don't see any of the good parts.

Let me comment on that. I think there are 2 different ways you can approach that. As cognitive behavioral therapy has taught everyone, we're born with a schema—a prism through which we see life—and that can be clouded by core beliefs such as, “I'm inadequate. I'm weak. I'm defective. I'm unattractive. I'm unlovable.” All kinds of negative stuff.

There are 2 ways you can approach that. You can either dispute those things, but first validate them. Don't start with disputing. First validate them and say, “Okay, yeah, of course I'm having all these negative thoughts because I have a tough job, for example. I have a big job. There's a lot of pressure, and I'm not perfect, so I'm not getting everything right. I do mess stuff up, and I do get things wrong.”

I've had executives report to me over the years who have the exact same schema as you just described. They're always saying, “Oh, I'm no good at this. When people realize how bad I am, they'll see that I'm just faking it. I'm wearing this mask, and I'm doing a bad job. I'm going to get fired. People are holding stuff against me because they don't respect me.”

All this negative self-talk is a complete waste of time. Nevertheless, that's their reality.

Mm-hmm.

Their reality is that they have this steady drone of automatic negative thoughts. There are 2 ways to deal with that. You can either dispute them, but first validate them. Then say, “What does the evidence say here? Is this really a rational thought, or is this my schema kicking in?”

You catastrophize those negative things and make them into huge, huge issues when they really should be minimized if you put them in the proper context. So you first validate them, but then dispute them and say, “What does the evidence say here? Is this really a rational thought, or is this my schema kicking in?”

When you say that, I think you have this gift of stepping outside of yourself, which is what you're saying now. But when I say, “You step outside of yourself,” you're like, “No, I'm in myself.”

I much prefer to be in myself than out of myself.

Okay.

I like to come to center.

Okay.

I like to find the center. The first time that concept of centering came about was when I went to enrichment camp at a school in the summertime, and there was a book they gave out called “On Centering.” I don't remember who wrote it.

And it had a picture of someone making pottery. They were explaining in the book that it's all about finding the center of the pot you're making. So, centering—finding that inner calmness, finding that zone where you're in the groove—and everybody has it. Everybody has that. You just have to find it. And that's one of life's missions: to find that center, find that inner calmness zone.

Then, when I went to college and studied music under Bill Dixon, the same concept came up. I said, “Oh, I'm familiar with this.” He said, “Come back to the center.” So, we were playing improvisation, what he called Black music.

Mm-hmm.

Some people might call it jazz. He didn't like the word jazz. We were playing with some friends, and then you had to find the center, come back to center, back to the center, back to the center. There'd be a center point in the music. You could go anywhere you wanted in the music. You could improvise all over the place, but come back to center, and then everybody would come back to their common center.

So, I've incorporated this concept of centering, of finding a center, into my meditation practices, my business practices, and my philosophy of life. I like to find centers. But going back to what we were saying before, when you have this negative self-talk coming, you can take one of 2 paths. You can take the path of validating it, then disputing it and seeing it in a proper, rational way. Or you can take the approach of just witnessing it, just enjoying it: it is what it is. It's mindful acceptance of it. And I vacillate between those 2.

You asked how I do it.

Yeah.

My internal monologue, if negativity creeps in—and of course it creeps in—I'm dancing with the ghosts of my ancestors, just the way you and everybody else are dancing with the ghosts of your ancestors. Evolution worked very slowly over generations, over long periods of time. So, we always have this set of genes that were good for the survival and procreation of our ancestors, but not necessarily now.

We still have all these irrational thoughts in the gene pool. Another way to look at it is to just observe it, more of a Buddhist way. Just observe it. One of the simplest Buddhist meditations is to just observe your breath.

Mm-hmm.

Just observe your breath.

I mean, how easy can that be? All you have to do is close your—

We just did this before we started recording, when you were like, “Let's go through a miniature meditation before we begin.”

I don't ever do that, and I should probably start doing it. I just kind of wake up and go, and try to attack things. And don't get me wrong, I absolutely am obsessed with what I do.

You are.

I love my work. I work on it 7 days a week. But I wanted to be the best in the world at it, and that's where it's like, “Oh, you just see these deficiencies.”

So, that sounds to me like perfectionism. I suffered a lot from perfectionism when I was younger.

I wanted to be perfect.

Yeah.

Not only did I want to be perfect, I wanted everybody else to be perfect. Not only did I want myself and others to be perfect, I wanted the universe to be perfect. I wanted everything to go swimmingly well at my beck and call and command. It turns out that's not reality.

It's not nature's way.

None of those 3 constituents are perfect.

There's something that you said in your book. It's actually in this section that I was writing down. You're like, “I'm not surprised when things don't go perfectly. That's the nature of the universe. The big problems can be where the best opportunities lie.”

Obviously, whenever I read something, I'm not just reading it. I think about how it relates to every single thing else I've experienced and all the other books I read. I remember I got to have dinner with Charlie Munger. I spent 3 hours with him, 6 months or 8 months before he died. There's a trend here, unfortunately.

Uh-oh.

It's kind of dangerous. Remember? You're like, “I don't know if I'm going to have dinner with you.” But one of the things I loved was the top note I left myself. As soon as I left there, I wrote down what I learned. It said, “Charlie has an almost complete indifference to problems. Troubles from time to time should be expected. This is inescapable, so why let it bother you?”

It's one of the things I most admired about him. He was just like, “Yeah, it's part of life. What's wrong with you?” He had 10 decades of life experience. He was way further down the line and obviously much wiser than I was.

I have 2 comments on that. One is, when you go back to the Big Bang—the current construct model of how the universe was created—it was actually created out of imperfection. There was a slight imbalance between matter and antimatter. There's a lot of debate about what caused that. As a result, everything came out of that.

Had there been perfection at the beginning of the universe, the Big Bang would not have happened. So, we are imperfection. We are the children of imperfection. Imperfection is good. Imperfection is not bad. Expecting perfection will cause you stress and strain and won't really work.

When you were in your 20s, though, you said, “Hey, I wanted to be perfect. Not only did I want to be perfect, I wanted everybody around me to be perfect.”

Yeah.

“I wanted the universe to be perfect.” How long did it take you to learn what you just explained?

When I stepped down from United Rentals as CEO, I still stayed on as chairman. When I stepped down as CEO of United Rentals, I had done it for about 10 years, and I wanted to do my next big thing. I wanted to do another startup from the beginning. I was running a big company, and I wanted to start it from scratch.

There was a period of a couple of years when I was trying to figure out what I was going to do, and I didn't find it. Then the Great Financial Crisis came, and I was lost. It was probably the only time in my life that I was depressed. I'm just not depressed, but during that period of time, I was actually clinically depressed. I took the Beck Depression Inventory, and it came out: yep, depressed.

Wow.

So, I found an amazing cognitive therapist, and I went to the guy twice a week, an hour and a half a shot, for 2 years. It was fantastic—one of the best things I've ever done in my life—because what we did, in an environment that was very safe, confidential, and trusting, with someone who was a professional in psychology, was first identify and then notice more fully my automatic thoughts: the negative thoughts, irrational thoughts, and unconstructive thoughts.

Mm-hmm.

Then first validate them, then dispute them. First join, and then lead to a more constructive way of looking at things. That cognitive therapy approach of identifying the thoughts and then dealing with them really was the turning point in my life on this perfection thing.

After a few sessions, he said, “You know, I kind of know what's going on here now. I've gotten your measure. You want to hear it?” I said, “Yeah, I want to hear it.” And he said, “You're suffering from perfectionism.” He said, “You want everything to be perfect, and it ain't.”

So, we need to get over that. We need to reduce these demands—these musts, these shoulds, these commands—that either I, you, or the rest of the world be perfect, and turn them into preferences. I would like me to be better. I would like you to be better. I'd like things to go better, but they don't have to. I can still be happy, and frankly, they're not going to be that way all the time. So, I need to accept that. I need to radically accept that. I need to be in reality, not put these—

Mm-hmm.

You mentioned Bezos. Bezos says a lot of cool stuff, but one of the things he often says is, “Don't fight with reality, because reality always wins.”

Yeah.

The reality of this is nothing's perfect. Literally nothing is perfect, that I've found yet.

He has another line that I think is related. It's similar to the idea in your book, where he's just like, “If you don't want to be criticized and you don't want stress, then you don't do anything.”

Exactly.

It's just like, then sit in a room and watch Netflix and order DoorDash or something. But you're not going to do anything that you can be proud of.

That's another irrational thought you see people have. I used to have this a lot, but I don't have it now because I went through that therapy thing, and it turned a switch on in my brain. It's a demand that everybody likes me, everybody respects me, everybody says great stuff about me, I get good press, I get good reviews, and the stock just goes up every single day.

Well, that's not going to happen. That's called perfectionism. That's not reality. So, you modify that to, “Sure, like everybody else, I'd like people to say good stuff about me rather than bad stuff about me, but I don't really care. If people say bad stuff about me, then, okay, maybe there's some truth in it. Maybe there's some good thing I can learn from that. Maybe they're just off, they don't know me, and they're imposing their distortions on me.”

But does that really change who I am? It really doesn't. If somebody is saying something bad about me, does that really matter? It doesn't matter really at all. And it again goes back to context. In the larger context of things, most problems really don't matter. They just don't matter.

Maybe at the time they seem like big ones, and maybe our schemas are kicking in, magnifying those problems and making them into big catastrophes and dramas. But most problems really aren't a bad thing.

I always say opportunity is a strange beast. It frequently appears after a loss.

There’s always a play. No matter what happens, this goes back to the Jesselson conversation. No matter what gets thrown in your face, at the moment, it may seem ugly and bad. There’s a play. There’s a way to utilize that. There’s a way to use that.

There’s a way to embrace that and turn it into success. Anything can be turned into positivity and success, even if it starts in a bad place.

Something came to mind when you were talking. That’s also unusual, because most of the people whose biographies I read go through several different companies until they find their life’s work. But normally, they’re working on something for a very long time. Why do you keep starting so many companies? What is going on?

That’s my thing. Everybody’s got their thing.

So, you’re a great podcaster.

Yeah.

You have a talent. Your superpower is that you can consume a large amount of information and then distill it down to, boom, here are the most important takeaways from that. It’s really brilliant. That’s your thing.

Yeah.

That’s why you’re doing it, right?

Yeah, yeah.

Because that’s what you’re good at.

Yeah.

You’re not playing professional baseball or acting or—

Yeah.

—singing or whatever.

You’re doing what you’re good at.

Yeah.

This is what I’m good at. I’m good at figuring out the right industry to consolidate.

Mm-hmm.

And secondly, I have a toolkit, and it’s the same old toolkit.

You told me this last time. Can you explain this? I love the way you described this toolkit of how you approach building your businesses.

First, I find the right industry. I find something that’s large. I find something that’s growing. I find something that’s fragmented. I find something where we can buy things at reasonable prices. I find something where technology could be used.

It’s not a very tech-forward industry. I find stuff that AI and automation aren’t going to disrupt anytime in the near future. So, I find industries that have certain characteristics to them, whether it was garbage, construction, transportation or logistics, and now distribution. They all have the same characteristics and the same traits.

That’s point number 1. Point number 2 is I then put together an amazing team. I put together a team of people who are generally smarter than me and more talented than me in what they do. I have a great CHRO who knows everything there is to know about HR, compensation, talent, recruitment and so forth.

I have a great M&A team who really know how to do deals and get deals done, rather than turn them into dramas. I have great finance and accounting people who understand everything there is to know, from A to Z, about running a fast-growing company and keeping the books clean.

I get the team together, then I get the compensation sorted out. I make everybody my partner on the senior team. I give people tons of equity, but there’s a catch: You can invest, but you can’t sell it for 5 years.

Mm-hmm.

Most of it vests in the last 2 years. So, everyone is committed, going back to long-term relationships. Sure, people come and go for whatever personal reasons, people burn out, or whatever. But generally speaking, most of the team stays for a while, and you work together as a team.

Then I have certain rules for how we’re going to interact with each other in a very respectful way, but in a way that encourages looking at things from different angles. So, we disagree and we argue. “Argue” is too strong of a word. We present different ways of looking at a situation that partly overlap and partly conflict.

Then we, in a very scientific way, figure out, well, let’s risk-adjust these things and figure out what’s right. It’s an ongoing scientific experiment all day long: trial and error, experimentation and A/B testing. That culture that we create gives us power.

It gives us the power to attack the industry without all the noise that a management team has. We’re a very coherent team, like a superorganism, like a brain, like a very organized group.

Between all those people, we have experience at our main job, which is to buy companies at reasonable prices, where there’s a difference between what we can raise capital at and what we can deploy it at. Then we have the skill set to improve the companies that we buy.

These are the 2 main things we’re good at: buying companies in a disciplined way—if the price is too high, we don’t do it. If the price is reasonable, it doesn’t have to be cheap, we go for it with gusto. We’re not trying to steal companies.

The other talent that the team collectively has is that we know how to improve the businesses. We know how to improve the pricing, the procurement, the HR element, the compensation systems, the technology, the whole tech stack—just everything from A to Z. We’re good at transformation.

We’re good at taking a company that is making $1 billion of EBITDA—of profit—

Mm-hmm.

—and within 3 to 5 years, doubling the profit, doubling the EBITDA. That’s the main criterion I look at when I look at a company: the purchase price, and secondly, can we double the profit in 3 to 5 years?

Most of my main acquisitions have done that. So, Con-way, Norbert Dentressangle, all these different ones—they were great companies, and everyone says, “Oh, they’re working really well.” Okay. Well, 3 years later, we doubled the profit.

Yeah.

Because we apply the toolkit. We apply the playbook, and it’s the same playbook industry after industry. The playbook gets refined a little bit here and there, but it’s the same playbook.

So, when you say, “This is just what I do,” to me, you now have figured out who you are as a person, right? I have this weird theory that I can’t prove, but I believe it.

There’s this myth of the genius young entrepreneur, and I thought, “Well, I don’t know.” If you study the history of entrepreneurship pretty intensely, you realize that people do their best work, most of the time, many decades into their careers.

There are all kinds of reasons. They’ve had more experience, they’re wiser, they have more resources, and they have more practice. I don’t dispute that. That is all true. But I have this weird theory that they also know themselves way better.

I think the key to being a great entrepreneur is building a business that’s authentic to you. I used to say building a business that’s authentic to you, and then I read Michael Dell’s excellent autobiography. He has a better line. He said he built a business that was natural to him.

There’s a great story. I want your opinion on this in 1 second. Michael starts his company when he’s 19. He’s in his 20s and it’s doing fabulously well, but he realized, “Hey, I need some grown-up help here.”

So, he gets this guy—I think his name is Lee Walker, if I remember correctly—who’s about 20 years older than Michael, had already started a bunch of companies, was rich, and didn’t have to work anymore. But he saw an unusual, once-in-a-generation talent in Michael and decided to help him.

He lasted 4 years. So, I read the book, and then I was about to make the podcast about it. I went to see what had happened to this guy. I found an interview that he did. He’s in his 80s, and he’s talking about that time. He gave me some of the best context to really understand this story.

Michael’s story is really a story of you and everybody, and all the people we’re studying—very similar people. He said, “Michael starts this company with $1,000. He says, ‘I’m going to take on IBM from my dorm room.’”

IBM was the most valuable company in the world at the time, which I didn’t know. It was the first company to hit a $100 billion market cap, which is nuts. Just the audacity to have that.

He said, “The first few years, we’re going against this behemoth. I lasted 4 years. I started losing my hair. My back hurt. I couldn’t sleep. I was unhealthy.”

But Michael was energized by it. He built a business that was natural to him. “Because this is what I want to do. I’m not losing my hair. I’m not depressed. My back’s not hurting. I can’t sleep. I’m waking up every day just getting after it.”

Is that the way you feel about what you’re doing? It may seem weird, because it is—in not a pejorative way. It’s not weird in a negative way. I don’t know another person who started 8 separate billion-dollar companies. So, it’s almost like you can’t help yourself.

But that’s what I do.

Yeah.

I mean, I know how to do that.

So, it’s just natural to you.

Yeah. I mean, I’ve done it many times before. I’ve made every mistake in the book over the decades, and I’ve learned from those mistakes. I’ve refined it and refined it, but I have a winning formula. I know how to execute on this, and the team I have knows how to execute on it.

I don’t want to underestimate the team. One of the things about being the CEO and the founder is you get all the credit. But there are a lot of people on the team who are doing these things and accomplishing these things.

Yeah. You have a great line in your book, which I see over and over again. You said, “The CEO’s most important job is recruiting superlative people.”

Totally. Totally.

So, my question to you, though, is what would it take to get you to stop?

Gee, I don’t know, because I don’t see that in my near future.

I just started the company in the last few months.

No, but in general, this is what I loved about most of the people I admire. I can still remember this. I put it into the maxim.

“If you love what you do, your exit strategy is death.” You should be working on something. Sam Zell told me, “I’m going to be doing deals until I die.” Well, he was just doing deals until he died. Munger, same thing. I met him right after the Silicon Valley Bank collapse.

Oh, yeah.

He was like a kid in a candy shop. He didn’t want people to get hurt, obviously, but he was just like, “Do you know how many financial panics I’ve seen in my lifetime? Of course, this is nothing new.”

I remember I was having dinner. I remember where it was: Harry’s Pizzeria in Miami, in the Design District. I was supposed to be paying attention to my wife on our date, but I was thinking about the podcast and all the s*** I was reading. I took a bite of pizza, and I thought, “People used to say, ‘If you love what you do, you’d do it for free.’” And I go, “No. There’s a different level. If you loved what you do, they couldn’t pay you to stop.”

How much money could you have offered Steve Jobs and said, “Hey, how much would it take for you not to work at Apple?” That’s not why he’s doing it. That’s not why they’re doing it. Enzo Ferrari, Estée Lauder, Edwin Land, Coco Chanel, all these other people—they just can’t stop. Michele Ferrero, the Michelin brothers. There’s this story over and over again. I get the same sense from you. If I said, “What price would I have to pay you so you couldn’t do any work? You have to stay home. You can’t work,” there’s no price.

There you go.

Everyone you just named—all those successful people—they were all-in. They were 100% in. They weren’t partly in and partly out. They were in. They were 100% in, completely focused, and single-mindedly concentrated on executing the plan. That’s important, too. You want to have people on your team who share that passion and commitment.

That leads me to another great one of your maxims. I don’t even think you think it’s a maxim, but it’s how you differentiate between A, B, and C players. I’m just going to summarize this, and jump in whenever you want. You envision another thought experiment: Do you want to see whether you have the absolute best people on your team? Visualize that they’re coming into your office and saying, “Brad, I quit.” What happens next in this scenario?

I’m always interacting with my CHRO—

Mm-hmm.

—and going over talent, making sure everybody’s happy and motivated.

What percentage of your time?

A lot. I spend most of my time on people and talent issues.

So, most of your time?

Yeah. Well, no, not the most, but if I did a pie chart of how I divide up my time, the largest percentage is on people issues.

There’s a funny story about this, and I don’t want to interrupt, but I do. This is inside of me, and it just has to come out—all these stories—because I find them fascinating.

There were 2 MBA students at Stanford in the late 1990s. In 1997, they interviewed 16 technology-company founders, since they were in Silicon Valley at the time, and they published this book called *In the Company of Giants*. Everybody’s in there—Bill Gates, Steve Jobs, and everybody else. They’re telling Steve, “Well, you’re the founder. Of course you don’t have time to recruit people.” Steve’s like, “What? No, it’s the most important thing.”

It sounds exactly like what you said in your book. A great way to demonstrate the point is, let’s say you’re starting a company. You’re in Silicon Valley. This is what you’re doing. You pick your co-founder. You should think long and hard about that. Your co-founder is 50% of the company at that point.

And then it still goes on. Now you have to pick the 10th person. That person is 10% of your company, and you’re saying you don’t have time? What else are you doing?

Right.

It’s all about the people. Systems, tech, budgets, customers, sales—all these things are really, really important, but you can’t achieve excellence in those things without fantastic people, without fantastic leaders. I spend a lot of time, especially on the top few dozen people. I want to make sure everybody’s in it to win it. Everybody is fully, fully engaged.

I do a mental exercise where I picture the person coming into my office and saying, “Brad, I quit. This is not a conversation about you making me a counteroffer. I’m done. I’ve already moved, and it’s over with. This is about how we make an orderly transition, because I respect you and I don’t want to leave you high and dry.” Then I try to feel and visualize what my reaction would be if that person came in to me and quit.

If my reaction to that is, “Yes!” I don’t want to smile or act like I’m happy about this, but I didn’t have to fire them. Nobody likes firing people. I just kept postponing firing that person when I shouldn’t have, but I did, and this is great. I don’t have to pay severance, and that solves that problem. No problem at all. We’ll replace them.

That’s a C player. That’s someone you should get the courage up to get off the team right away. On the second category, if my reaction is, “It kind of sucks. I would have preferred that person stayed, but it’s not the end of the world. We’ll hire a headhunter. We’ll get someone as good, maybe someone even better, and things will work out,” that’s a B player.

But if, when I visualize that person quitting, my reaction is pure terror and absolute panic—like somebody took a baseball bat and just whacked me in the stomach, then punched me in the face—I’m going, “Oh my God! I’m never going to find someone as good as her.”

Yeah.

“No way. I’m never going to have someone as talented as that person. I’m never going to have someone who brings their particular superpower to the table.”

Yeah.

I can’t even hear what they’re saying anymore, because I’m just having this internal panic dialogue going on. That’s what you call an A player.

I want all A players around me. I want people whose relationship with me I value so much that, if it were terminated, I would be lost. And I want them to feel the same way. I want mutual relationships. I want people who love being in a relationship with the team and the company, and for all of us to be in it together to go conquer the world.

I think I named it—it’s been 2 years since I wrote the book—but I think I had a chapter called “How to Kill the Competition Instead of Killing Each Other.” It’s kind of funny, but it’s a serious title. You don’t want to have a dysfunctional management team. One of the most important things that has allowed us to create tens and tens of billions of dollars of value is that the management team is coherent. We have the right people on the management team, and we have rules of the road for how we’re going to deal with each other in a respectful way that still encourages differences of opinion.

First of all, I love the way you described this. Everybody says, “Oh, yeah, hire A players,” and I’m like, it’s really hard to differentiate. What does that actually mean? I think this thought experiment is perfect. It’s like, “We are f***** if this person leaves.” That’s an A player. That’s a way to think about this.

But this also goes down to your gift, and why I think I’ve learned so much from you. Partially, it’s your ability to have very clear thinking and then put it in a memorable way. You were just talking about the relationships you have with the people you work for. You have a line in the book where you say, “An organization is like a party. You only want to invite people who bring the vibe up. My team and I spend a lot of time together, so it’s a big deal that we like one another.”

Yeah, I agree with that.

Yeah. Well, there’s another one.

Who said that? That was a good one.

Bezos has a line in one of his shareholder letters: “Life is too short to work with people you don’t admire.” It’s the same situation. You’re in charge. You get to choose. Again, this goes back to the gift of being a CEO, of being an entrepreneur. It’s very rare that you get to literally choose who has access to you and who’s around you.

I love this idea. The organization is just like a party. You only want people who bring up the vibe.

David, it’s all about the people.

Exactly.

It’s all about the people, because the people create all the different processes, work streams, transformations, and everything.

This is very fascinating, because obviously business is people. Not only the people who are building a product, but all of business is people. The best definition of business I ever heard actually came from Richard Branson. He says, “All business is is an idea that makes somebody else’s life better.” That’s why there’s always more opportunity, because there are infinite ways to do that.

We think technology's going to change things, but it usually opens up other ways to make other people's lives better. So, if you're looking for an opportunity, just focus on: How can I serve other people? Another line that's very related to this is Henry Ford, who said, “Money comes naturally as a result of service.” I think those 2 ideas go together.

The reason I was thinking about this is that the best way I've heard what you were just saying described is: It's all about people. Work with the best people you possibly can—the A-players. We're going to talk about your great line, “There's no substitute for brains,” but before that, the way I've heard this described best is from Ed Catmull, the founder of Pixar.

He would go around and give all these talks, and he was actually shocked when he asked the audience, “What's more important, people or ideas?” He said that every single time, people got it wrong. They said it was the ideas, and he was like, “No, it's the people.” He has this great line: “Listen, if you give a mediocre idea to a brilliant team, they're either going to fix it, or they'll throw it out and come up with something better, something new. But if you give a great idea to a mediocre team, they're going to screw it up.” Obviously, ideas come from people, so it's the people.

That's exactly what I'm trying to say—what he said.

He says it in just a great way. But you have a very explicit piece of advice in your book that I think is interesting. You write, “There's no substitute for brains. Screening for superior intelligence eliminates 90% of all candidates, so it's the first thing I look at. There's no substitute for smarts. The CEO trait most closely correlated with organizational success is a high IQ. Double down on hiring the brightest.”

Yeah. You want smart people, and I particularly want people who are smarter than me. I want people who uplift me, who teach me.

Do you want them specialized? You mentioned earlier that you want them smarter than you, but also better at their particular specialty.

The vast majority of them are specialized. They're a finance person, an investor, a strategic person, or a tech person. They bring something to the table that they're an inch wide and a mile deep in. But you also want them to have certain human qualities that transcend what their specialty is. Those are as important as, or more important than, the technical skills.

Explain.

You want smart people, as you mentioned. You want people who are honest. You want people who are hardworking. You want people who are collegial. You want people who are really in it. On the work-life-balance thing, boom, it's work, and their life is a lot of their work. They enjoy that.

I don't have to hold them like a schoolteacher with a stick over their head, getting them to work late, come in early, or work on weekends. They want to do that. They enjoy doing that. Their job, their career, their success, and the collective success of the company are important parts of their gestalt. It's a really important part of their being and their purpose.

Was there ever a time when you were more balanced?

No. No.

When was the last time you were balanced?

No.

You started your first company at 23.

I did, and I've been completely imbalanced since then. I've been working 7 days a week.

Yeah, because you guys scaled in about 4 years to a couple of billion dollars. It was an insane story in the book.

But for me, it's not work. For me, I'm really enjoying it. To me, it's a craft, it's a skill, and I enjoy doing it.

Were you always honest with yourself that it was the top priority?

I think so. Yeah, I've been honest with myself.

I had a conversation with a friend of mine on the drive over here, and I think I'm lying to myself. Let me give you an example. In many cases, you read these biographies of people, and they wind up being cautionary tales because they sacrifice everything for professional success—their health, their relationships, and everything else.

Well, I'm not in favor of that.

No, no, no. You're still married, you're a good father, and everything else. But your main focus isn't that you have an abundance of hobbies outside of work.

No. Meditation and music. That's pretty much it.

There you go. For a long time, every single person I read about was like, “Okay.” I even titled the episode “My Personal Blueprint,” which was Ed Thorp.

Ed Thorp invented the first quantitative hedge fund. He invented the ability to count cards for blackjack and wrote a book in the 1960s called Beat A Dealer. He made more money than he'll ever spend. But if you read his book, you get to the end, and he was much more balanced.

He also came from academia, and maybe that played a role in it. But he essentially lived a life of adventure because he truly loved what he did. Once he made more money than he could spend, he stopped trading time for money. He had a good marriage until his wife passed away from cancer, and he took care of his health.

He was much more balanced. Let's say there are 5 important things, and he divided them up. Maybe work was 50%, but the other 4 made up the other 50%. I thought, “That's kind of my personal blueprint.” Then I said on the drive over, “No, I'm lying.” It's 90% of what I think about and how I spend my time. It's just work.

Yeah. That's a beautiful thing. All the people you've mentioned so far, all these very successful people—I guarantee you that probably every single one of them, with few exceptions, if any, were all-in. What they were doing was their passion, and they were so excited about it.

They were in the flow. They were in the flow of being so absorbed in something that you lose track of time and the whole rest of the universe is gone. You're just in it. You're really into something that you do well, and you're with people that you really like. You're likely to be successful because you're doing what you do.

When I think about the amount of research that you do, which you explain before you get into an industry or start a company, the way I describe your book is: Buy it, read it all the way through, and then keep it close to your desk, because it's a reference manual. You can pick it up and read 1 chapter in 10 minutes and get good ideas out of it.

Do you know I'm writing a sequel?

Last time you told me this, you said, “I only had 1 book in me. I have nothing else.”

So, I wrote the book, and I got so much feedback about what people thought about it. People asked, “Well, you should really talk more about this, this, and this.” At first I said, “I'm never writing another book.”

It takes a lot of time to write a book, and I don't have a lot of time. But I had so many people ask me similar questions that I decided to write a sequel that addresses those particular questions.

You know what the title's going to be? The first one was How to Make a Few Billion Dollars.

Yeah.

This one's going to be called How to Make a Few More Billion Dollars. Is that great or what?

Yes. Let me get an early copy, please. You were very nice to send me an early copy of this one.

I think what ties all this together, when I think about your research process, the way you go after life, and all the people we've been talking about, from Steve Jobs to Jeff Bezos, is that mediocrity is always invisible until passion shows up and exposes it.

Love it.

I think that is what animates me. You see this when you buy great companies and good companies. They're like, “What else could you do?” There's always more.

Always.

Because you can always infuse passion into what you're doing, along with obsession and working with the best people. Of course you can keep getting better and better results.

Yeah, I agree with that. You buy a company that's doing very well, and then 3 or 4 years later, you've doubled its profit. What did you do? You went in with a toolkit.

You tapped the pricing using algorithms and elasticity analysis. You tapped the compensation, so you got the salespeople made partners rather than pupils to the parent authoritarian figure at corporate. You put in technology that frees up time and allows people to spend time selling and doing their job rather than trying to find information.

You're sharing information in very good ways. So, you apply a certain toolkit. Boom, you double profit.

So, wait a minute. This brings up something interesting that I've been talking about lately: the different archetypes there are in founders and CEOs. Everybody thinks there's one archetype, and especially the ones that are popularized now, it's essentially the Steve Jobs dictator, making almost all the decisions.

I don't like that.

Yeah.

No.

Exactly. I just heard the pupil part.

Now, who am I to criticize Steve Jobs?

No, no, no, no. It's not a criticism. That's the beauty of entrepreneurship: You get to do it—

I wouldn't be able to do that.

So, what is your archetype? Let me back up before I ask you a question, because I've been having long conversations with Daniel Ek, the founder of Spotify, who's become a good friend. We actually might be writing something together about this. He's concerned that there are going to be young entrepreneurs out there who are like, “I'm not like Elon, or I'm not like Steve, or I'm not like all these people, so therefore I can't be an entrepreneur.” He's like, “There are multiple archetypes. I'm not like that.”

He says he thinks he's a better coach than he is a player. Essentially, he has discovered that he recruits some of the best talent in the world to the point where he's like, “I used to be the best at product. That guy's better at product; he should do it. That guy's a better designer. That person's better at HR. That person's better at everything.” So, he's like, “The way I look at it is that I'm much more of a coach than a player.” What is your archetype?

So, you want to get the right people in place, you want to get the compensation aligned, and then you want to be communicating with each other in a very constructive way, in a very prolific way.

On Friday, we had our second MOR, or monthly operating review, for this company we had bought, Beacon. How did we come up with the agenda? It was a 10-hour meeting with 2 breaks. One was 10 minutes, one was 5 minutes. Nobody was distracted, nobody was on their phones, and their devices were all shut off. We were concentrating very carefully on the 1 person who had the proverbial microphone at a time, listening very carefully and intently to what that person was saying, and then debating each point and each action point.

How did we come up with the agenda? Here's how: Did I, the CEO, come from above and say, “Here's the agenda that I think is the important thing. I'm smarter than all of you, and here's what we should be doing”?

Yeah.

No.

Yeah.

How pompous, arrogant, and ineffective would it be to do that?

Yeah.

What I do is just the opposite. I send around a QuestionPro app, and we say, “Here are all the materials, pre-read for the meeting.” We don't do PowerPoints and go through all that nonsense where everyone tells each other how great they're doing. It's just a silliness that you see a lot in corporate America.

We send all those decks out ahead of time. We have everybody read them, and then we have everybody fill out the app and say, “Based on everything I read, here are my main takeaways, and here are the main questions that I think are so important in terms of creating value that we—the whole team, all 25 of us who were in that meeting—should spend time debating and discussing around the table in the limited time we've got.”

Because 10 hours goes by like that. Then I send back out the takeaways, and I send back out the questions. People rank them on a scale of 1 to 10. Again, we have an app for this. Then I send people the takeaways: “Here's how they were rated. Here's what people thought were the most important takeaways.”

Very valuable. Now you've got the benefit of everybody's perspectives on the same data. People have seen the same charts, the same data, the same metrics, and the same KPIs, but they've seen it from a slightly different angle. It's very enlightening.

Then I've got the questions. I tell everybody, “Rate the question 1 to 10.” All the questions that are rated 8, 9, and 10—in other words, between 8 and 10—that's the agenda, David. That's what we talk about.

Mm-hmm.

So, we just went through them, and then we put them in categories. Everything about tech that was rated 8 or above, here they are. Everything that was about compensation or people, everything that was strategic, everything that was about M&A—all the different categories. Only the ones that the group voted on at least an 8.

Now, what is the consequence of that? Number 1, we have an amazing meeting. It's a good agenda, much better than I could come up with, because now it's got everybody's angle on it. It's crowdsourced.

Secondly, everybody's involved in it, because the boss didn't come down and say, “Here's the agenda.” We collectively made the agenda. People realize that the truth of the matter is we really respect each other's opinions. There's no 1 person who's the authoritarian figure who's teaching everybody else. It's a group.

I've created a group. I've created a superorganism. I've created a beehive, or an ant colony—

Yeah.

—or a brain, or a human body. Superorganisms: things that are a collection of people where the sum is greater than the collection of the parts. The whole is greater than each individual. We have a holistic, powerful approach to that. That's how I run the business.

How many people would be in a meeting like that?

I've experimented with this over the years. I used to have larger meetings with 40 or 50 people, and it just didn't work. Those monthly operating reviews are the most important meeting of the month.

Okay.

It's when the most senior people in the company come together and do the exercise I just mentioned for 10 hours, with almost no breaks at all. For that, I have 25 people, and I limit it to 25. I don't want more than 25. I don't know what's so magic about 25, but 20 to 25 is the ideal group.

You have enough people that you get diversity of opinion and dialectical discussions, meaning looking at issues from multiple perspectives, then analyzing and synthesizing them and finding the truth. But you don't have so many people that people are peacocking and trying to impress each other and don't want to be vulnerable.

You want people to be vulnerable. You want people to trust the other people in the room so much that you've created a safe zone to say, “You know what? I've been thinking this and thinking this, but the more I'm listening to you and hearing about this, the more I realize I may be wrong. Maybe I got this thing completely upside down, and I'm starting to come around to looking at it like this, with 1 little twist. Now I think what we should do is X, Y, Z. What do y'all think of that?”

That's a fantastic conversation. When you have leaders of the company feeling it's safe to show that, “Hey, I was wrong.”

Yeah.

I model that myself all the time. Be flexible in your thinking; don't be rigid in your thinking. Don't have black-and-white, dichotomous thinking. Be open-minded and receptive, and be willing to learn and to be challenged. It's okay to be proven wrong. It's actually a good thing. We're learning together.

2 questions on that. What percent of the meeting are you speaking in a situation like that?

I open up usually, and I ramble on for an hour, or maybe more than an hour, giving the state of the union from my perspective. I try not to just mention things that I've formed conclusions on, but I try to frame things as, “These are the most important successes of the company, but these are the things where we need to improve. Here are the issues that, in my view, after reading everybody's votes and everything, I think are the things we should direct our attention to, the things we should spend the most amount of time solving, because I think those will create the most amount of value.”

I try to keep it balanced—the good stuff and the bad stuff. Yes, I do attaboys and attagirls and rah-rahs. That's a good thing to do for leadership. But in equal measure, I say, “Look, we've got to keep it real. We've got to keep it honest. Here's what we said we were going to do by this deadline. We're a couple of weeks behind on this. Let's get going here. What's going on? Here's where we thought this outcome was going to happen, and we're only 92% there. How can we get to 100%?”

I try to start off with a balance, but then I try to shut up and let the mechanics of going through the questions take over. I just go down the questions by category, then go around the room and hear everyone's opinion. You don't want the leader talking for a huge amount of time.

Yeah, so you basically start with an hour, then the next—in this case, the 9 hours for the rest of the meeting, you're—

Everyone else. I'll talk, too, but not inordinately. I've already used up my hour, for God's sake, you know?

Yeah, this is 1 of the things that I've felt, and I've seen this with a lot of really remarkable people. When we had this intense breakfast at your house a few months ago, you had a notepad, and while I was talking, you were taking notes. I'm like, “What the hell is going on?” It's the reverse.

It should be the reverse. In fact, I have a story about this, and then I have another question for you. It was Mitch Rales, obviously 1 of the founders of Danaher.

Great company.

Oh, incredible.

The Danaher way. Yeah.

He's actually a mentor of 2 close friends of mine, so I get insights from them about him. One of the most remarkable things that he did was this: He was at a vertical market software conference recently. There were only 40 people there.

A friend of mine and I were going for a walk in New York City, and he was like, “I don't understand. The guy sat in the front row. He's the most successful person there by far, and he was just taking notes the whole time.”

I was like, “That is why he's successful. It's not the reverse. It's not that you go and build a $200 billion company or whatever it is, and then take notes. He was like that his whole time.” It's just the relentless attitude that you have valuable information.

I just did this episode on Jimmy Iovine, who's a very fascinating person, and he has this great line. He said, “Great can come from anywhere.”

Yes.

Great can come from anywhere. And then you have this other thing. I'll get back to that in a question.

I love that.

Great can come from anywhere.

And he’s in the music business. His point was that he was trying to help. He was a partner and mentor to Dr. Dre, who’s one of the greatest hip-hop producers of all time. Dre didn’t have an artist to work with, and they wound up getting this demo tape from Eminem.

At the time, Eminem was this poor kid in Michigan, living in a trailer park, with no resources at all. Yet they said, “We weren’t looking for somebody to be controversial. We were looking for great.” And guess what? It can come from anywhere. It came from this kid who was obsessed, sitting in a fricking trailer park, saying, “I want to do this thing, and I’m going to do this to the best of my ability.”

I want to go back to this question I have, but I love this idea of grabbing information, which is fascinating. There are multiple examples in your book, and then I find these in other books where it’s so nuts that, especially when companies get big and older, they stop asking for information—

It’s bad.

—from people on the front line.

It’s bad.

So you’re like, “Often, when we buy a company, we discover that the frontline employees, middle managers, and even some senior executives have never been asked, ‘What would you do to improve the company?’” You would think owners would want to know that. And then you have this great thing that I think is actually good for business, but also for personal issues. You ask, “What is the stupidest thing we’re doing, and what is the smartest thing that we’re doing?”

Yes.

This ability to ask those questions—you just described it in these meetings. It’s like, “Hey, we’re going to disperse and ask these questions, see what comes back, and then rank the information.”

At the end of those operating reviews, once we’ve gone through all the lists, now we do human interactions. That’s where the fun starts. We work really hard solving all these problems and debating all these issues. Now we put that aside, and I ask a series of questions.

I modify them a little bit every month, but I have a list of a few dozen questions, and I pick which ones I want to ask each time. Usually, one of the first ones is, “What is something somebody said today that you have a different opinion on? What is something that somebody said that you disagree with, and you didn’t get a chance to talk about it?” I just go around, one by one, to each person.

That’s a wonderful thing. Many management teams can’t do that, because everyone would get upset.

Yeah.

Here, it’s like, “Great!” Then we have a nice, honest debate. I ask everyone, “What’s your single biggest takeaway from today? What is something that, 10 hours ago, you didn’t understand about how we’re going to make money, how we’re going to serve customers better, how we’re going to improve employee engagement, and how we’re going to kill the competition? What is something you didn’t know? What is something you learned?”

You just go around, one by one by one by one. Then I ask them, “When I think about people not in this room, but people in the organization out there in the field, who’s an MVP? Who’s the most valuable player? Who’s somebody who’s going above and beyond, who you really respect, really admire, and really think is amazing? You think, ‘I wish we had 1,000 more like that person.’ Why?”

I send an email to them afterward saying, “Hey, I was in a meeting with the leaders of the company, and you were nominated as an MVP because of X, Y, Z.” People love it. Sometimes they start crying. There are a lot of times when it’s a really, really emotional thing.

Oh, wow.

It’s a really, really nice thing, validating the field. Then I bring it inwards, and I say, “Who around this table today, in your mind, did their star go up?” The star might already have been high, because everyone loves each other, but it went even higher. Why? What is something that somebody said today in the meeting that impressed you, that made you go, “Aha,” or made you say, “Damn, that’s a good insight. That’s a good perception. I really like that”? Who was it, and what did they say?

We go around and do everything like that. I have a few other questions like that. Then I bring it down to the person themselves, and I say, “Finish the sentence: ‘I resolve to improve the company by…’” Each person stands up and says, “I resolve to improve the company by…” Then they say what they want to say. It’s a great thing.

What I didn’t get a chance to do Friday, because we ran out of time, is what I often do next: we go into another room. We get out of the boardroom, get out of the conference room, and stand in a circle, just silently looking at each other for the first couple of minutes. A couple of minutes is a long time to be looking around at everybody else.

Yeah.

For a lot of people, that’s uncomfortable. It’s not uncomfortable if you all like each other.

Yeah.

You look at each person and say, “I admire this person because…” What are the strengths, qualities, traits, skills, and things they do that you’re really impressed with? What do you really like about that person? You go one by one, look at each person, and identify that.

After a minute or two has gone by, I say, “Okay, now let’s do the same thing. Look at each person and say, ‘I really…’” We’ve already said why we’re grateful they’re on the team. So now I want to say—

So it was gratitude.

Mm-hmm. Gratitude is a wonderful leadership technique. The second thing is, “I really wish that person great success in the company, and I can picture this company five years from now accomplishing X, Y, Z.” I send nice vibes, love vibes, to that person. We just go around one by one, all silently. Nothing out loud. Just one by one by one by one.

You start seeing people smile. I’ve done it so many times. You start seeing people smile. You’re looking at people, and you see them looking at other people in a very positive, uplifting, appreciative way.

Then I say, “Okay, now we’ve concluded the day, and I declare the day a success. Congratulations.” Then we just clap. Sometimes this clapping goes on for five minutes. It really goes on, but it’s a very—

Then people levitate home. They go to the airport and go home.

How much of the way you run your company is guided by intuition? You seem like a very intuitive person to me.

Maybe not as much as you think.

No?

Yes, there’s always instinct. There’s always intuition. You’re always going by your gut.

But how would you even know? This is unusual. How did you learn that?

I’ve experimented over time.

Okay.

I’ve experimented with different things. I’ve read a lot. I’ve studied positive psychology, cognitive therapy, and a lot of other things. I meditate a lot, and I do things that have worked for me.

I think of the things that have worked for me on my path and in my evolution—feeling gratitude and all the happiness that comes with feeling gratitude, feeling appreciation, problem-solving, and all the different things—and I try to imbue that in other people. Then, if it works, we have feedback loops.

One of the key tenets of all my companies is that we have intense, voluminous feedback loops: feedback loops between the senior team; feedback loops between the senior team and mid-level management; feedback loops between senior, mid-level, and frontline management; feedback loops with customers, vendors, and investors; all the constituents of the constellation that make a corporation, that make a company.

We have to be communicating. We have to be communicating very intensely with each other, in an honest way, and then sharing that information. I share information much more widely in my organizations than most companies do. Most companies are afraid to share it. They’re afraid to share the good information. They think a competitor is going to hear about it.

Yeah.

Okay, well, they will, but let them try to copy us. They don’t have all the ingredients to do that. Or they say, “We don’t want to share the bad stuff, because then the market’s going to hear our weaknesses.” Okay, that’s kind of true too, but that’s so much overshadowed by the benefit of learning where we have to improve. We’re learning how to become better.

So, this is what you were describing earlier: this almost constant, iterative trial-and-error process, and just keeping the information flowing through the company.

There’s an idea that I think of when I think of your ideas: “Hey, we’re going to buy the company. We’re going to ask, ‘What would you do if you were running the company? What’s the stupidest thing we’re doing? What’s the smartest thing we’re doing?’”

As you know, I’m interested in timeless principles, not timely. Right? And when I read that in your book, what I thought of was not you building your company. I thought of Jim Casey building UPS 100 years ago.

A lot of these ideas that survive for a long period of time aren’t dependent on the company; they’re really dependent on human nature. History doesn’t repeat. Human nature does, right? Human nature is kind of constant. It doesn’t really change.

What Jim realized was that the more successful he became and the more successful his company became, the more his executives’ incentives were to hide the bad news and just tell him good things. It was like, “Everything’s great in the company, Jim. I was the one who made that great, so pay me more and make sure I keep this great job I have.”

Jim realized, “Oh, I need to have constant, unfiltered access to the people who are delivering the service to my customers.” So, he would instruct his driver, “Every time we see a brown UPS truck, you’re to pull over.” He would get out, no matter how successful he was, and talk to the driver.

I love it.

Unfiltered information.

Love it.

It was the same thing with Sam Walton. People would go and try to meet Sam Walton in Bentonville, Arkansas. They’d show up—they’d even have an appointment on the books—and walk into the office like, “Hey, I’m here to meet Sam for our 7:00 a.m. meeting.”

His secretary would say, because he used to fly his own plane, “He left at 5:00 a.m. this morning and went to this Walmart over here. He’s hanging out, greeting customers, talking to the people stocking the shelves, and everything else.”

I think there’s a lot of wisdom in what you said in your book. You see this over and over again: They want unfiltered access from the front lines. They don’t want the information to be massaged or presented in a manner that seems good.

Todd Combs is one of Warren Buffett’s managers.

Yeah.

We were talking on a Saturday about, I don’t know, 8, 9, 10 years ago, when he was getting on the JPMorgan board and moving up in the world. I lost touch with him, but he’s a really great guy and a really smart guy.

He said, “What are you doing?”

I said, “I’m reading employee surveys. I’m reading all the employee surveys from the whole company. We ask them 2 questions: ‘What’s your single best idea to improve the company?’ and ‘Rate your job satisfaction on a scale of 1 to 10.’ Sometimes we add a third one: What would it take to make it a 10? I just go through all these one by one because I feel like I’m talking to every employee and learning from that.”

He said, “That’s amazing.”

I said, “What’s so amazing about that?”

He said, “I was just talking to Bezos, and Bezos was reading customer surveys.”

So, he’s talking about customers and I’m talking about employees, but it’s the same concept. You need feedback loops. You don’t know how you’re doing unless you have radar sending beeps out there and seeing how they come back. You have to have this very intense feedback loop.

And this is why I’m so obsessed with what I’m doing, because nothing we’re doing is new. You had all these people who ran all these kinds of experiments for centuries, and they built great companies. Just because they passed on and maybe the company’s not around anymore, there’s a treasure trove of data in there.

I love Bezos’s idea. In the very early days of Amazon, he would publicize it: “jeff@amazon.com, email me.” One of the reasons he figured it out was that he thought, “Oh, we can’t just sell books. I could sell anything.”

He would send emails to, I think, the top 1,000 customers asking, “What else would you buy?” They were like, “I want toilet paper. I want groceries,” whatever. One guy said, “I want windshield wipers.”

Bezos had this epiphany: “Windshield wipers? If this guy wants windshield wipers, I’m going to be able to sell everything.” It is a true everything store.

I was thinking about this recently because I just read a book translated from French about the Michelin family dynasty, which starts out in 1891 selling tires in France. There are 350 cars on the road, for God’s sake.

There’s a line in the book related to all this. The 2 brothers have to take over this failing factory, and they don’t know what to make because most of the products they’re manufacturing are unprofitable. They’re on the brink of bankruptcy. Their 1 profitable product is a rubber brake pad for horse-drawn carriages.

Say that again?

A rubber brake pad for horse-drawn carriages.

Okay.

Remember, this is 1888. It takes them 1 or 2 years to figure out, “Hey, we should manufacture rubber.”

And there are 2 twin phenomena. You’re talking about—remember what Mr. Jesselson said: “Get the major trend right?”

Yeah.

They’re like, “Well, horse-drawn carriages have been around for a while. You know what’s growing way faster? Bicycles, and then cars, even from a small number. We need to go to where the technology’s going.”

The point being, we need to make more products. We need to make rubber tires. The guy took over a factory and said, “I don’t know how to do that.”

His answer was to go to his 50 employees who were making the rubber brake pads and ask questions. He said, “I came to them and admitted my ignorance. I know nothing about rubber manufacturing. Why do you do that? Can you explain it to me? What if we did…”

Not in the way you just described—not coming down from on high. It’s almost like a peer: “Teach me.”

Yes.

He said it was wildly effective, and he has a great line in that book: “It turns out, the guy who handles the material for 8 hours a day, while the CEO’s in the office, has something to teach you.”

He’s going to understand something about that process because you have a bird’s-eye view. He has a very particular job, and he found it very instructive. He said, “It was a wonderful way to learn the business.”

That led him to, “Oh, now I know how to make things,” and then, from there, to grow and grow and grow. I absolutely love this idea. You should have this unfiltered access and unfiltered information over and over and over again.

Completely. All the different constituents in an organization need to be talking to each other. They need to have feedback loops to know how they’re doing. If you’re not asking your customers how you’re doing, you may think you’re doing a lot better than you really are.

How do you figure out how you’re doing in your position?

I ask all day long. We have different modalities of anonymous surveys and 360 reviews, and I’m interacting with the teams nonstop all day long. I’m walking into people’s offices: “What’s going on? What do you think of this? What do you think of that?”

Do you like the—you have this great line in your book where it says, “I love working with outrageously talented people to deliver outsized returns for shareholders in public stock markets.”

I love that.

This constant feedback from the public market.

It’s fantastic.

You love it?

Yeah. I don’t always agree with it, but there’s always some truth in it. You get free advice from some of the smartest people in the world—the global allocators, people who have raised billions of dollars from pensions, endowments, and sovereign wealth funds.

Now they’re analyzing what you’re doing and giving you advice. They’re telling you, “This is what I like. This is what I don’t like.” You don’t have to—actually, you mathematically can’t—agree with it all, because a lot of times you get conflicting advice.

Yeah.

People are saying, “You’re going right. You should be going left.” The other guy is saying, “You should go left even more.”

It’s good to hear all this stuff. It’s good to hear what people are saying. But then you have to go within yourself and make the decision. You have to be an adult. You’re taking tons and tons of information, opinions, beliefs, and data, as much as possible. Then you’ve got to kind of ignore all that. Just go inside and say, “This is what I want to do.” You’ve got to make the call.

That’s what a CEO does. It’s what a leader does: you make the call. But you have to get all that input. Otherwise, you’re just in an echo chamber, hearing your own thoughts instead of others. You want people challenging your thoughts all the time.

I think for a long time, one big goal was starting a company and then taking it public. Now I talk to a lot of founders—even the ones that raised a lot of money—and they don’t ever want to go public.

I love being public.

What advice would you give to somebody, let’s say, 30 years younger than you? They’re trying to build a great company, they’ve raised a bunch of money, but they don’t want to go public.

They have to be at a level of maturity for the company to go public. They have to be preferably profitable.

But there are a bunch of them now that just never want to go public—those that reach that criterion and are choosing not to.

It’d be interesting to ask them why. What’s the reason why you don’t want to?

I can’t speak for them, but I think maybe they’re scared of the public scrutiny and the hassle.

That goes back to what we were talking about an hour ago. They might have a core belief saying, “I need everybody to always say great stuff about me,” which is never going to happen. They may think, “Gee, if I go public…” When you’re public, at any moment in time, you have people in favor of you and people who are naysayers. You have people who are selling and buying. The people who are selling think you’re overvalued. The people who are buying get the joke, and they understand you have a real business plan here that’s going to create much more value.

You always have those 2 different things going. Maybe those people don’t want to hear the naysayers. Maybe they don’t understand that naysayers can sometimes help you correct your own path. They can tell you, “Gee, maybe I’m cutting costs too much.” People come in and say, “You’re cutting costs too much. I visited one of your locations, and I didn’t think the service was so great.”

“Oh, wow. I didn’t know that. Thank you for telling me that.” Now I have to invest more rather than cut costs.

You have other people who say, “I’m looking at your numbers here. Your margins are growing, which is great, but that’s only half the situation here. The other situation is, what are you doing with your top line? What are you doing with your price and volume? What are you doing with your organic growth?”

In my business, in all my businesses, the only 2 things I had to do in the end to get great valuations and create shareholder value were grow the top line faster than the competition, faster than the market, taking share, and grow the margins, increasing the profit margins. If I did those 2 things, everything else flowed from that. Those are the 2 main things.

In order to accomplish those 2 things, you want as much input as possible. You want as many chefs in the kitchen as you possibly can. The public gets you hundreds and thousands of voices, so it’s amazing data.

Being public also allows you to build a brand much faster and much more voluminously.

Explain that part.

You want to be a magnet for talent—for drivers, for people in the branches, and for people in mid-level management. Going back to what you said before, you always want great talent coming in. If nobody knows who you are, they’re a little skeptical about joining your company.

If you have research written about you by a bunch of firms, press releases, and a public website, you’re very well known for what you’re doing. It’s very clear what you’re doing. People say, “Okay, I get it. You’re a known quantity, and I like this. I buy into it. I like what you’re doing. I want to join the company.”

Then you can pay them. You can compensate them with stock that they can look at on their iPhone every day and see the value of the compensation. If you’re private, you give people phantom shares, or whatever the compensation plan is. They don’t really know the value of it until they sell it someday, and it may be very different from what they thought it was all along.

From a compensation point of view, which is a big element of success in these high-growth business plans, being public is fantastic.

Was there ever a time in your career when you thought, “Maybe I should do a private company instead,” or were you pretty much all in on it?

I’ve been doing public since 1992, and I’m nonstop. I like it. I enjoy it. I find it very helpful and constructive. I like the pressure. I like the ability to hear what the Street says, agree with what I agree with, and disagree with what I think is wrong when I feel passionately and have evidence to support that they’re wrong.

Sometimes the Street, particularly the hedge funds, is very focused on this quarter and the next 90 days. That’s a terrible thing long term. You don’t want to focus on just what’s good for the quarter.

You see these public companies that go out and cut costs in the field, which hurts customer service or employee morale. They’re understaffed, which is even worse than being overstaffed, which is bad. Here, it’s a completely different story. So, yes, I like being public.

You said something interesting: “I like the pressure.”

I do. I thrive on it.

What do you mean by that?

Many people give you money, whether it’s a retail individual, a high-net-worth family, a sovereign wealth fund, a pension plan, an endowment, long-only funds, or mutual funds. All these people are wiring money to buy your shares. This is intense pressure.

This is probably the biggest pressure I have in life: to make sure that I do everything I possibly can to give them back more money than they gave me. I want to make sure that they invest in the company and—

If you look at my neighbors and my friends, I don’t know the exact number, but I would guess over 90% of them are invested in the company. That’s what it’s been over time.

Well, that’s pressure. That’s like, “Wow, I don’t want to disappoint them. These are my relatives, these are my friends, these are the people I really love.”

People come to you and say, “Look, I believe in you so much, I put two-thirds of my retirement plan in your stock.” Forget diversification. “Boom! I’m going all in on Brad and his team.”

That’s a lot of pressure. I like that pressure. I enjoy that pressure. That motivates me, inspires me, and makes me feel I have something important to do here.

I think it’s so important to put that out there, because we were talking about the negative self-talk and living a pretty crazy life, where you want to work 7 days a week or you’re completely all in. Again, this goes back to how you can hear a sentence and just be like, “Oh, I feel that way, too,” and it changes the way you approach things.

I remember reading about Herb Kelleher, the founder of Southwest Airlines. It’s such a crazy story that, in an industry where bankruptcy is the most common outcome, his company was profitable for 40 straight years, which is nuts.

He’s like a nut job. He’s drinking a fifth of bourbon every day and chain-smoking cigarettes.

That’s not me, but yes.

No, no, no.

I don’t advocate that.

He wouldn’t sleep. There are just hilarious stories about his life. I thought he lived on the edge and was completely all in.

There’s a great story about this. They tried to get him to stop. He would chain-smoke and drink a fifth of bourbon every day, but then he had prostate cancer or something like that. They said, “You should stop smoking.” He said, “I don’t smoke with my prostate.”

But that’s not the part I remember. The part I loved was an interview where they asked him, “You deal with a ton of stress. How do you handle it?” He said, “I don’t handle it. I like it.”

Yes.

He wanted the stress.

Yes.

He said, “I want to be in the game.”

Yes.

He was an attorney. He didn’t start his company until he was 35 years old. It was his first company. He was an attorney, and then he decided, “Hey, I’m going to try to do an intrastate airline.” Then he had 4 years of legal fights before he could even take his first flight.

He was just like, “I love this shit. This is what I want. I want the pressure.”

Passion.

What I love about this is that it’s in your book. You constantly talk about the other people—the other entrepreneurs, investors, and CEOs that you learned from. The acknowledgments are full of maxims from all these other brilliant people.

You talk about Ludwig Jesselson, obviously. I read something on LinkedIn about other people, and I want to talk about the other people you’ve learned from—the other founders, CEOs, and executives that you admire.

I want to start with Fred Smith—

Oh.

—since he passed away.

Yeah.

I read his biography probably 4 or 5 years ago. Tell me if I’m wrong—you know more about this industry than I do—but it just seems like FedEx had to be one of the most difficult operational companies to ever invent.

Yeah.

You’re talking about somebody who wanted pressure.

And complexity. Yeah.

Yeah, the complexity. You wrote on LinkedIn that you never miss an opportunity to spend time with him and that you admired him. Could you tell me why?

Fred endorsed my book.

Yeah, I saw.

I was very touched that he did that.

Yeah.

Because he was a competitor.

Yeah.

Literally a Wall Street competitor, and he still endorsed my book.

Fred was an amazing guy. He was a very special person. You meet people in life who are just special, who have a certain integrity.

So, I met Fred for the first time in 2013. I came out of nowhere from this industry. I'd gotten in in 2011, but I really started doing a bunch of acquisitions out of nowhere. Suddenly, I was on the front pages of the trade journals.

And I was in Atlanta at the National Association of Manufacturers, the NAM Conference, and Fred was the keynote. I was in the audience watching him, and somebody said, “What do you think of Brad Jacobs?” I go, “Oh my God.” My heart starts beating. I thought, “Oh my God, Fred Smith’s about to destroy me. My brand is going to be completely crushed. The icon of the industry is going to crush me.”

And he said, “I really like watching that guy work.” He said, “He is coming into this industry with courage, buying things left and right, and has big goals and big ambitions. I’m going to keep an eye on that guy.” And I cried. I said, “Wow, Fred Smith’s saying great stuff.”

So, I went up to him afterward, when the speech was over, and I said, “Mr. Smith, I’m Brad Jacobs. I really appreciate what you said.” He said, “Well, first of all, I’m Fred, not Mr. Smith.” That was the beginning of a great, great friendship.

We got together many, many times. Of course, he was on The Business Council. He was the longest-serving member of The Business Council, over a quarter of a century.

Oh, wow.

I go to every Business Council meeting I possibly can, to meet other CEOs and to hear what other people are thinking. He was just a generous guy. This was a guy who had vision and passion. Talk about grit. He was flying around all the time, everywhere.

In Vietnam, he was flying helicopters with people shooting bullets at him to get Marines who had been killed. He was a Marine.

Yeah.

Marines who had been killed—but you don’t leave any Marine behind. He’d go in there. He was risking his life with bullets shooting at him to go get the remains of a dead Marine.

Yeah.

Putting his own life on the line. He got a Purple Heart, a Silver Star, and a Bronze Star. He was a serious, courageous, high-integrity guy. Everybody loved Fred. Everybody loved Fred.

In the opening paragraph of his biography is the craziest opening paragraph I’ve ever heard. I’m just going to paraphrase it. Essentially, he’s in debt. He ran through his dad’s Greyhound bus millions. I think he’d burned through $15 or $20 million. His planes were about to be confiscated. He’d just gotten fired by his board. The FBI was investigating him.

He goes to Vegas.

Yes. He was about 30 years old at the time, so still young, but he refused to let his Federal Express dream die. That line was just like, “He thought of suicide.” And then the next paragraph is like, “But the idea of Fred jumping out of a window is ludicrous. He’s more likely to throw somebody out of a window.”

He was like The Terminator. He just wouldn’t stop coming.

No, I don’t recognize that in him.

Okay. So, throwing someone out the window.

At 30, I think he might have been a little different.

Well, maybe.

Yeah. But I was a direct competitor of his—

Yeah.

—in transportation and logistics. Not in package, because we didn’t do package—

Yeah—

—but in pretty much all the other lines of business, we competed against him. He was generous. He was charitable. He would always take a meeting with me. He used to come to my house, and we’d spend hours and hours and hours talking about everything.

This is what is so special. I know it’s part of humanity in general, but entrepreneurship in particular: you see this over and over again. It’s just how generous these people are.

Because they know how f****** hard it is.

It is, yeah.

They just went through all this.

Yeah.

Now we might be 15, 20, 30 years different in age, but it’s just like what Ludwig Jesselson did when you were 23, and in many cases, like what you did for the book.

Think about Sam Walton, right? He wrote his autobiography. Cancer was all over his body. He was in pain. He knew his time was coming to an end. And what did he do? He spent a big chunk of the last time he had left saying, “This is what I learned in my 6-decade-long career.” That is a gift to future generations.

Yes.

Yeah. And then, in the book, they say, “People ask me all the time, could another Walmart story happen?” He says, “Yeah, it’s probably happening right now.”

It was Jeff Bezos going around with his copy of the book, writing in it, annotating it, and giving it to the early executives at Amazon. It’s such a beautiful thing that Fred would do that. It’s a beautiful thing what you did for your book.

So, Fred and Amazon didn’t get along.

No, no, no. I’m saying, in general. Yeah, obviously.

Yeah.

Well, yeah. I can see why. But my point is the transfer of knowledge—even for competitors. Fred was your competitor, but he was transferring knowledge to you.

Absolutely.

I don’t think people understand how much that goes on. I’m glad you just said that, because you can see it in the books. You hear stories like that all the time in private.

He endorsed my book.

Exactly. You hear stories like that all the time in private.

Mm-hmm. Yeah.

There are a few things I pulled out from his biography that just remind me of you. I’m curious if you agree with some of these things. The first is the amount of information.

If it’s about Fred Smith, if I don’t have that trait, I should work on getting it.

Okay, well, then perfect: the amount of information. He started FedEx after Vietnam, so maybe in the early ’70s. But in the ’80s, he says that he estimated that during the 1980s, he spent 4 hours a day reading. He says he found he relied quite heavily on his own vision, backed by assimilating information, which you’ve mentioned multiple times so far, from many different disciplines at once.

You talked about that in meetings. You talked about it in trade journals. You talked about all the research you do, right? This is his quote, though, that I want to read to you: “The common trait of people who supposedly have vision is they spend a lot of time reading and gathering information, and then synthesize it until they come up with an idea.” That sounds like you to me.

I like that, yeah. Going back to what I was saying before, you don’t want to be rigid in your thinking. You want to be open-minded, you want to be flexible, and you want to be scientific about it. If new evidence comes along that disproves your theory, then modify your theory. Go by the evidence. Go by the facts.

You want to interact with people who you respect, and you want to be picking their brains all the time.

The way I describe it, it’s like you’re also alive and paying attention. The story in your book where you’re reading a magazine in bed on a Sunday morning, and you read about these waste management companies making $500 million in profit—

Yeah.

—you’re like, “Whoa, what?” They’re picking up trash from one spot and bringing it to another.

Right.

“I need to learn about this industry.” That’s my point. People like Fred, people like you—I think there are a ton of people who have the same thing. The whole world is like a classroom if you’re actually paying attention. You can pick up ideas all over the place.

So, the waste management business, I contrast it to the oil business. The oil business was a lot more complex.

Yeah.

We were negotiating complicated, long-term contracts, chartering vessels, negotiating processing agreements with major oil companies, and hedging. It was a very complicated, complex business.

When I read that about the garbage business, I said, “That is so much easier: picking up garbage.” That’s a simple business. They move some garbage and send out an invoice. So, I definitely think I can do that, and it seems like they make a lot of money. The trend seemed to be in the right direction. So, yeah.

Oh, and the application of technology.

Right. Always.

I love how at the end of your book, you have essentially ordered some key technologies developed by humans, starting back 300,000 years ago, and you move forward. I thought that was a beautiful way to put that in the appendix.

So, I got that from Kurzweil, by the way. Ray Kurzweil.

Oh.

Ray Kurzweil is a huge mentor of mine. I’ve only met him once, but I met him for about 6 hours to talk.

Yeah.

But I’ve read every book he’s written. I’ve read every article about him. I watch every YouTube video of his. I mean, I’m a Ray Kurzweil fan.

What I read in The Singularity Is Near, in 2005 or 2006, when that book came out, was amazing. It was a chronology of the universe.

You know my meditation. I go back to space and time. So, a kindred spirit here—someone who thinks on a large scale of time.

Yeah.

One of the key things that has happened over the last 13 billion years—and reducing that down to a couple hundred points, I thought, was really helpful. So, I modified it a bit and made it more specific to business, things that would be applicable to business.

But the main trend, going back to Mr. Jesselson’s point that you’ve got to get the main trend right, the main trend for the last 2 million years has been humans creating tools, aka technology, to do things—to outsource to those things that do better than us and free up our time.

Whether it was fire, whether it was a wheel, whether it was the printing press, or more recently, all the digital electronic stuff we’ve done, all of the internet, and now artificial intelligence, robotics, and nanotechnology—this is the trend. The main trend in life, and therefore in business, is technology.

Outsourcing our senses, outsourcing our memory, outsourcing now our intellect and our speech to computers, to the cloud. This is big. This is really, really big.

So, when I looked at 55 different industries before I picked Building Products, I ruled out a bunch of them and said, “This looks like an interesting industry, but I think AI and automation are going to kibosh it.” And I didn’t do it.

I mentioned in the book that there was 1 particular online education company called Chegg. I said, “I don’t know. It seems like you’ve got a good business, but I think AI is going to come in and basically do that for free.” I said, “I think the stock might come down.” Well, the stock came down a lot, from 50 to single digits.

Yeah.

Fortunately, I made a good prediction there. As Yogi Berra said, “Predictions are difficult, particularly when they’re about the future.” But that turned out to be a good prediction.

Why was that a good prediction? Because, to me, I’m looking at it and saying, “The main trend, the long-term trend, is to use technology to do things that we’ve been doing ourselves.” So, I’m always trying to look at these different work streams and say, “Is that something that can be automated? Is that something that’s going to be AI or robotics going forward?” And then capitalize on that.

And the opportunity to always do something slightly better, which is—

Sure.

—and invent tools to do so: technology. It even starts out when you were talking about collecting—

Sometimes a lot better, not slightly better.

But the good thing is, this is not exclusive to the time we live in. It’s a constant throughout our experience. You can go and look at, like, when you guys were collecting all this—this is, you said, before fax, before email—you were collecting all the information for Amerex some 40 years ago.

Yes, yes.

And then the waste management, when you were like, “Hey, I should get into this.” And then you realize, “Wait, they’re not even using technology to figure out the most efficient route.”

Yeah.

This constant application of technology is one of the things I’m glad you directed the conversation toward, because the way I thought about this was really crystallized in my mind when I read Andrew Carnegie’s autobiography, which was probably written 130 years ago.

For whatever reason, if you talk to somebody today, they don’t think of the production of steel as technology, which is a crazy thing. At the time, it was like they literally invented a new and better way, and then everything in the world was going to be made out of this.

What I do when I finish reading a book—we go back to this idea that you and I share—is distill it. You’re not going to remember 250 pages, but you’ll remember a paragraph or a sentence, if you can.

Andrew is a young person getting into an existing industry. It’s a new industry, but it’s still an existing industry. Most of his competitors were much older, and they were, to your point, very resistant to change. You cannot be resistant to change.

No, no.

You have to embrace the major trend, which is what your mentor told you. I was hearing the criticism that his competitors were making, almost like when you were in that business and the guy took you out to lunch and said, “Slow down. I used to be the first; now I’m the second.” That’s a terrible way to do business. It’s like taking your competitor out to lunch and saying, “Stop being better than me.”

It just motivates you.

Yeah, it’s not going to work. But the way I would summarize the main theme from Andrew Carnegie’s book, which then reappears over and over again in all these stories, is: invest in technology; the savings compound. It can give you an advantage over slower-moving competitors and can be the difference between a profit and a loss.

You see that over and over and over again. It doesn’t matter if it’s steel, waste management, software—over and over again. The best entrepreneurs, the best CEOs, the best executives, they’re not scared of technology. If you’re scared of it, you’re going to get destroyed by it. They embrace it, and they invest heavily in it.

Again, the benefit I have is that I’m reading about a chocolate company that was started 80 years ago, and they have some of the most advanced robots making chocolate. I’m reading about a tire company from 150 years ago. They watch their costs, and they’re very efficient in how they spend their time and money, but they invest heavily in technology.

No one thinks of Walmart as a technology company.

Mm-hmm.

But if you go back to 1979, Sam’s in his 60s, and they’re like, “Hey, we’re doing everything by hand. Our business is getting way too complex. We have all these distribution centers. Think about the logistics. You would know all this—moving all this material where it needs to be at the right time. We need to invest in computers.”

Sam heard “computer,” and he heard “overhead.” He heard “expense.” “I can’t do that.” Then he slowly allowed himself to be convinced by the accounting people on his team. When he decided to invest, he wouldn’t dabble. He invested $500 million in 1979 dollars—who knows what that would be today—in the most advanced computer system to handle his logistics and distribution.

That was an edge that no other retailer on the planet—or at least in America—had. He had the technological edge over the rest of his competitors.

In business, you always want to find waste, because there always is some, and eliminate it. You always want to find inefficiencies, and there always are. You want to reduce them. Technology helps you with that.

Walmart’s a big tech company. My chief supply chain officer came out of Walmart, a very, very sophisticated guy. It’s all about technology, all about using tech in order to get the data, and then being very data-driven.

Every business, every single business, is going to see more automation and more AI. People have to get on the program, or they’re going to be dinosaurs.

100%. I would argue that if anybody—I don’t think you could be the leader in any industry and not also be a technology company. We don’t think of them as tech companies because we think tech has to be Google or Facebook. It’s like, no, they’re all tech companies.

Yeah.

I wanted to do more than just American entrepreneurs.

But we have an outsized share of entrepreneurs in America.

Everybody’s like, “You should do more of this or that.” It’s just like, “Why are they all American?” And I understand that. My point is that if you think about entrepreneurship in the market economy, it’s only a couple hundred years old. America has kind of dominated there. So, it makes sense if 75% or 80% of my episodes are about that.

But I did 1 on 1 of the most successful entrepreneurs in Europe, named Amancio Ortega.

Yeah.

And I didn’t know anything about him. All I knew was that—

Is it H&M?

Zara.

Oh, Zara. So, Inditex.

Inditex.

Yeah.

Yeah, yeah. And then you’re reading about this, and you’re like, it’s not a fashion company. It is a technology company. What does that mean? You and I can walk out on the street right now, and we can see, “Oh, there’s a trend here. All these ladies are wearing dresses with red flowers on them.” He can take that idea and put it through his system, and he can manufacture dresses with red flowers in 25 different countries in 7 days.

That is technology. And he says, “We’re a technology company with a chain of stores attached to it.”

Zara, Inditex, is a big customer of GXO Logistics, 1 of the companies we spun off from XPO. GXO runs a lot of their warehouses in Europe, and it’s exactly what you’re saying. It’s e-commerce. It’s trying to do things very efficiently, very quickly, and very accurately, and you need technology to do that. You need robots, and you need AI.

Every business, every single business, is going to see more automation and more AI. People have to get on the program, or they’re going to be dinosaurs.

100%. I’m going to go back to Fred Smith. He says something that sounds—

Fred was into tech.

Oh, of course.

I mean, in a big way.

Yeah, of course.

He’s always talking about the new inventions he’s just made for moving packages and using robots. We were trying to figure out some way we could use automation at LTL because he was big in LTL. FedEx is the biggest, actually, in LTL, and XPO’s a big LTL company.

The automation’s not there yet because of all the closed spaces and all the people still involved in that, but it’s going to be. With packages, you have automation, though. Package automation is much further ahead.

Yes. There’s something we haven’t touched on, and I have a question for you. This is a quote from Fred in his biography. It says, “You have to be absolutely brutal in the management of your time.”

Oh, yes.

Do you have any insights into—

Look, if you want someone to disagree with that, you’re going to have to talk to somebody else—

No, no.

—because I’m 100% in agreement with it.

I’m curious how you do this, though.

Time. When you’re a CEO, when you’re an executive, you’ve only got 2 things: you’ve got time and you’ve got capital. How you deploy that time and how you deploy that capital equals results.

So, it’s your time, and it’s the time of the people in the organization. When I was running XPO, we had about 150,000 employees worldwide, a little more. The senior management worked long hours, but the average worker worked 8 hours a day.

You had about 1.2 million hours a day of work getting done. If you’ve got people who are very focused, very motivated, and very well-trained, and who feel good about the company and their job, the productivity of that 1.2 million hours a day is going to be a lot more than if the conditions I just mentioned are not present.

So, managing people's time, putting them in the right priorities, and ranking what people should be spending their time on is very, very, very, very important to success. Now, how do I spend my time? I spend my time deliberately, consciously, and intentionally on the things that I think create the most amount of value for the company.

How many things, at any given time, are you having to focus on?

A fair amount. If you're a CEO, you're managing 15 or 20 different things all the time. You're managing people, technology, budgets, investors, infrastructure, transportation, logistics, pricing, procurement with the vendors, customer relations, and sales. You manage sales force excellence. I mean, there are about 20 things that are your life. That's what a good CEO does.

The problem with a lot of CEOs is they've come up through just sales or operations, and they're good at that, but they kind of just delegate the other 15 things. That's really part of the CEO job. You look at the great CEOs, the CEOs who've created a lot of alpha and a lot of shareholder value. They've been in each one of those 20 or so things.

You talk to a Dave Cote, or you talk to an Ed Breen, or you talk to Larry Culp, and you can talk about any of those 20 things. They have things to say, and you can learn from them. You talk to CEOs who haven't created a lot of value and are not really good at this game, and they'll know 4, 5, or 6—or even half—of those 20 things, but they don't do the others. They don't do the other part. You've got to be in all of them.

But you're not in all those things in equal measure. Some things you don't have to spend as much time on. The people things and compensation things, I actually spend a lot of time on. That's core. That's critical to get right. That's something that, if you get wrong, you're wasted.

Budgeting—I spend a lot of time going over the budget. Customer satisfaction—I spend a lot of time on that. Employee engagement, going out to the field, doing the town halls, doing the Zooms—I'm all in on that.

But when you say that the CEOs you think might not be doing the best they could, are they delegating too much?

Yeah. They're afraid to do the—

Yeah, please.

I'm making generalizations, because there are always exceptions. But generally speaking, what I find is they gravitate to the stuff they like and that they're good at, and they kind of just don't do the stuff they don't like or aren't very good at. And you can't. You've got to be—

If you want to be a good CEO, have a high-performing company, and be in the top decile of stock performance—United Rentals and XPO were both top-10 stock performers in the last decade—that's not random. Both those companies were there because it was the same principles and the same structures.

You've got to have CEOs—and they did—who are in the whole thing and understand from A to Z what running a business is, how you create shareholder value, and see the whole picture of the levers.

So, I always tell friends who are—and I have a lot of friends who are portfolio managers or analysts on the buy side—I say, "When you bring a management team in, you need to ask them, 'What's your stock price going to be 5 years from now? And what are the levers that I have to believe are going to get you there?'"

And if that CEO tells you, "That's a great question. I'll get back to you," short that stock. Please don't buy that stock, because that's the first thing the CEO has to know.

The first thing a CEO and the senior management team have to know with great specificity is, "Here's where we are right now—the stock price. We want to get massive outperformance and get to here." That's just the beginning. Here are the levers of how I get there. Here are the levers of the things that we must do as an organization that will improve our profitability, improve our multiple, generate free cash flow. Just how are we going to get there?

And in my case, it's not that hard, because when you do the graph—

Mm-hmm.

The first 2 bars, when you do the levers, comprise the vast majority of what you have to do to create the value. And those are buying companies right—meaning being very disciplined in what you pay—and looking at lots of acquisition candidates at the same time, so you don't fall in love with any 1 of them, and so you have alternatives, and you don't—

What's the distribution there? So, you've done over 500 acquisitions throughout your—

My teams and I have. I like to give credit to my team.

Yeah, you and your team.

They deserve it.

For sure. So, you and your team have done over 500 acquisitions. You've looked at how many?

Thousands and thousands. I mean, many thousands.

Like, 100,000? Do you think it would be that huge?

I've lost count.

Okay, so you didn't count.

I don't know if it's 100,000. And when I say "looked," I mean looked at in depth.

Yeah, yeah.

But in the thousands—many thousands.

Okay. Going back to the time management, I think especially in the age that people are growing up in, where there's a shortened attention span, a lack of focus, in my opinion, and it's really easy to give in to distraction—

Yeah.

You sound like you're almost—not impervious to distraction; that's not the right way to put it, because I know how you're going to be humble when you describe yourself—but how do you avoid being pulled into things that are not prioritized?

So many, many people know Warren Buffett. I barely know Warren Buffett. I met him a few times, but he's not a close personal friend. I wish he was, but he's not. But I know a lot of people who are close to me who are close to him, and most of them have the same story, so he must tell this to everybody.

He tells people, "I'm the richest person. I'm the wealthiest person in the world." And they say, "Well, Mr. Buffett, you were for 1 period of time, but I think you're number 4," or whatever.

Yeah.

He says, "No, no. I can prove that I'm the wealthiest person in the world." They say, "Why is that?" And he reaches in and brings out his Day-Timer, his calendar.

Yeah.

And he says, "Monday, I have 1 appointment. Tuesday, I have no appointments."

Yeah.

"Wednesday, I have no appointments." Because he controls his time.

Yeah.

He controls his time, and he has no problem saying no and refusing people time. It's very difficult to—

No, I think I have a problem saying no, though. This is why I'm asking you these questions.

Well, you need to solve that problem. That's a problem you've identified. That's great. That's half of the solution to the problem. Now you need to work on it.

He has a great line where he's like, "The difference between successful people and really successful people is really successful people say no to almost everything." So, you have 20—whatever the number is—

There's some truth to that.

Yeah. So, whatever the number is, you have 20 things that you're focused on at the CEO level at this moment. You know where you want to spend your time and what you're best at. We talked about incentives and then recruiting talent.

But you're also one of the most—and you're not going to like this—but one of the most famous and wealthiest people in the world. You have an unbelievable number of people who want your time. You seem to be disciplined, from the outside, about saying no to a lot of things. Is that something you learned in the last 5 or 10 years? Were you like that when you were younger?

So, first of all, I'm not that famous. I'm well-known in the—

Yeah, in the business community, yeah.

The business community. I'm well-known.

That's the only community I care about, though.

I'd agree.

No, the average person, yeah, for sure.

And I'm not one of the richest people in the world.

Yeah.

There are many people who are vastly richer than I am. But in my own modest way, I've created some level of recognition and some wealth—and, more importantly, wealth for others.

You should see my inbox when it comes to you. But that's fine. That's fine.

Well, I appreciate that.

Yeah.

But in context, it's not—

It's funny because people—

And the way you said it is a little grandiose. I don't think I am that.

I know. This is why every time I say these things to you, you say things like this.

Well, because I want to correct the record.

That's fine.

I don't want to get grandiose in the wrong—

No, it's a smart move. But the funny thing is, when I did the "I Had Breakfast with Brad Jacobs" episode, people flooded me with messages like, "Can you introduce us?" I'm like, "No. You have to figure out how to get to him yourself. You can't do that."

So, when I was researching, after XPO—

Yeah.

I was looking for my next thing.

No, no, excuse me—after United Rentals—

Yeah.

I was looking for my next thing.

And I was looking at asset management. I went to Chicago, and I wanted to get an appointment with Ken Griffin—

Yeah.

Who now I've met and now I know, and he's a neighbor down in Florida.

I know him well enough.

Yeah.

And I think he'd return my call if I called him. But he turned down the meeting. He wouldn't take the meeting.

I said, "Wow, that's kind of humbling." And, "You can't even spend an hour?" He says, "No." Ken is a very—

And I think you interviewed him, right?

No, not yet.

Oh, you probably should. You definitely should.

I want to meet him.

Very interesting guy.

I want to meet him.

Very.

So, if you can introduce me, please.

He could be president of the United States someday.

So, this is the good thing about when I do—remember, most of the people I study are dead. When I do episodes on people who are living, this is why I was asking you some of the questions. I'll do this episode, it reaches a very valuable community, and they're really helpful, and then I get all these crazy stories about, "This guy's even more remarkable than your episodes." And I got it about you, and I got it about Ken.

And then I was like, “Oh, I definitely want to meet Ken.”

Ken’s in a different league than I am.

Yeah.

Ken is way, way up there.

He’s a very fascinating person, yeah.

Oh, you should definitely do something on him. You asked how I manage my time. I have a chief of staff. He used to work in the Oval Office and manage—

Oh, yeah.

—the most important person in the world’s calendars.

Yeah.

He’s always very, very good.

Yeah.

More importantly, he understands what I’m doing. He understands my priorities and what I was talking to you about before. The 2 most important things that I’ve got to do are have organic revenue growth better than the competition and margin expansion. Then everything follows.

He understands that in order to do that, I have to focus on people and technology. He understands the different levers to do that.

So, you run every decision between those two—

Yeah, that’s my framework in business. I’ve learned that if I do those 2 things well, I will create dramatic shareholder value. It takes 100 different things to do those 2 things well, but if I do them well, I will create dramatic shareholder value.

If I buy companies at significantly lower multiples of profit than I trade at, then on Monday morning at 7:00, after we announce the acquisition, I’ve already created alpha for my shareholders. That’s a nice way to start the week. Number 2, if I then double the profit over the next 3 to 5 years, I’ll get a nice multiple. Those are the 2 main things I need to focus on.

He understands that. He also understands all the components. In the monthly operating reviews and all the correspondence, we’re very good at communicating with each other about what’s important and what’s not important. He knows my priorities, and therefore he’s a great gatekeeper.

Is there anybody who could tell you when you’re getting off track from what you profess to say is important to you?

Everybody around me. If I’m spending too much time on something, I’m going to catch heck for being on this podcast with my team.

Dude, you’re the man for doing this, by the way. I really appreciate it.

No, I love doing it, and I love you.

Yeah. We’ll also get to one of the things that you obviously accomplished with the book, and that I try to help amplify with my work: how millions of people are going to benefit from your lived experience.

You have 40 years of experience as an entrepreneur. How many people who have ever lived have done that? Most people, unfortunately, quit or fail, or whatever the case is. You have so much to teach the world.

Can I comment on something about time?

Yeah, go ahead.

There’s a phrase I used to use, and you brought it out of me, so I’m going to start using it again. I haven’t used it recently. It’s WOT-WOM.

What?

W-O-T-W-O-M.

Okay.

Waste of time, waste of money. When people are brainstorming—“Let’s do this, let’s do that”—someone can say, “WOT-WOM.” Everybody knows that’s a waste of time, waste of money.

How does what you’re suggesting we do influence, directly or even indirectly, organic revenue growth or increasing the margin? If it doesn’t, WOT-WOM. It’s a waste of time, waste of money.

You have limited time and limited capital. You’ve got to be directing that time and deploying that capital so that things have the greatest returns. Otherwise, it’s WOT-WOM.

First of all, that’s hilarious. I’m glad that you said you actually have other people around you doing this, too, because I’m skeptical that any human can hit their goals and do what they want to do 100% of the time. I can’t imagine the complexity of running FedEx. This guy is just like, “No, you have to be brutal.” “Absolutely brutal” is the word. Absolutely brutal in time management.

In time management, yeah.

Yeah. I think there are a lot of things. There’s another thing that Fred Smith said that, when I’m reading about Fred—when I was going through and rereading all my highlights from his biography—I wasn’t really thinking about Fred. I was thinking about you. To me, this feels like a lot of what I’ve learned from you.

This is a direct quote from Fred: “I believe that a man who expects to win out in business without self-denial and self-improvement stands about as much chance as a prizefighter would stand if he started a ring battle without having gone through intensive training. Natural ability, even when accompanied by the spirit to win, is never sufficient.”

You can pick the first billion-dollar company, and then look at the 2nd, 3rd, 4th, 5th, or 7th. You’d go back and kick that dude’s ass because of all the stuff you’ve learned since then.

Well, you do get better as you keep going, with experience, like anybody and anything. But the principles are pretty much the same. If you look at all my companies, the essential concepts are the same: you want to have fantastic people, you want to have rules of engagement with those people where you get along and go kill the competition instead of killing each other, and you want to have fair compensation so that everybody’s in on the action here.

You kept repeating that. When did you understand the power of incentives? Because you talk about compensation and incentives a lot.

Very early. Very early in the oil brokerage days. We had tables. There were 10 brokers at a table. We paid people monthly, and every month I’d meet with everyone and say, “Look, we made so much this month in the bonus pool. What percentage do you think you contributed to it?”

Then I would add it up, and it would always come to 300%. It never added up to 100%. So, I had to have these difficult conversations with people and say, “Look, I think you have an inflated sense of how much of the bonus pool you contributed.”

What I realized very early on is that people are coming to work not because they love me. They might love me, and I might love them, but that’s not their main motivation. The main motivation for why they’re coming to work is to make money.

They make money for themselves, and more often, they make money for others—for their families, their spouses, their kids, or whoever. That’s important. Understanding the motivation of the other person is really, really important.

It’s called theory of mind, where you understand what’s motivating the other person, what’s driving the other person, and what’s important to that other person. A child gets that after a few years, and there have been a lot of psychological studies done on that.

It’s important to look at things from the perspective of what’s motivating the other person, what’s driving the other person, and what’s important to that other person. That’s good in deal-making. That’s good in compensation. That’s good in building teams. That’s good in customer relations. That’s good with vendor relations.

You need to understand their point of view. You can’t just be in your mind. You can’t just say, “Here’s what I want. Here’s what’s important to me. I’m a bully, and I’m going to go get it.” Then people are just going to stick their tongue out at you. They’ll turn away and do something else.

You have to have a partnership. You have to be trading with people all the time. You’ve got to be figuring out what will help them, what’s good for them, and how we can make money together—not me at your expense or you at my expense, but how can we go conquer the world together?

I think you’re a faster learner than me. I don’t think I ever thought about incentives. I think Episode 97 was probably 6 years ago. That means I’d read 96 biographies before this. I get to Poor Charlie’s Almanack, and Charlie was the one who really put into my mind how important this was.

I still think he’s the wisest person I ever met and probably one of the most brilliant people. He said something fascinating in that book: “I’ve been in the top 5% of my age cohort my entire life in understanding the power of incentives, and there’s not a year that goes by”—and he’s probably in his 60s when he said this—“there’s not a year that goes by where I don’t underestimate the power of incentives.”

He would repeat it over and over again: “You show me the incentive, I will show you the outcome.”

Remember I told you a few minutes ago that I give everyone at the top level of the company a bunch of equity—

Yeah.

—but it’s locked up for 5 years.

I meet with my CHRO, who’s fabulous, regularly, usually twice a month, and she shows me a spreadsheet of how much the equity is going to be worth at $50 a share, $75 a share, and $100 a share. I look at the numbers, and I say, “Okay, this person has something to work for. This person’s on the team. I see them working really hard to get those numbers.”

Or I say, “Gee, somehow or another, we messed up the comp, and maybe we’ve got to top the person up,” or, “Wow, I can’t take anything back, but maybe I gave too much equity after all.” Whatever. At least I know where everyone’s head is at, because I know what’s in it for them.

There’s always that joke: I listen to a radio station, WIFM—“What’s In It For Me?” People generally don’t care about you and me, David.

Yeah. They care about them, which is normal. That’s capitalism. That’s free markets. That’s a good thing.

Yeah, I don’t feel it’s a negative thing at all. It’s like we’re all self-obsessed.

It is what it is.

But I do think you have a great line in the book, where you're like, “I built businesses all over the world.” When you have 150,000 employees spread throughout the world, people say, “Oh, it’s all different cultures.” Well, guess what? Money animates people everywhere.

Yeah.

The whole point is that you have a great line in the book: They’re not coming to work to make Brad Jacobs more money.

Not at all.

They’re doing it for their families. I love this idea. I think it’s really important to have a mission bigger than yourself. I think it’s tied to your obsession with the public markets, too, and what you said in your book about being very proud of building wealth not just for yourself, but for schoolteachers, pension plans—

Firemen.

Nurses, firemen, and everything else. The importance of having a mission bigger than yourself.

Yes.

I think if you just live a completely selfish life, first of all, you would have stopped a long time ago. You wouldn’t need to do this, and in general, you wouldn’t have to do this. I’ve seen this in a couple of different places. Jeff Bezos—we talked about him a few times today—when he started Amazon, his idea was, “I want to build the world’s most customer-centric company. I want to be an example not just to our employees and our customers, but to other companies, to show how you can, over the long term, align the interests of the customer and the shareholder. They can be perfectly aligned. It just has to be done over the extremely long term.”

This idea of going all in drives me. I want to build wealth so my kids are proud of me, and I can show them what it’s like to chase after something, be deeply committed to it, be passionate about it, and love it—

Sure.

—and also make something that’s better for other people. If you do that, automatically the family will prosper and everything else. I think that was one of my favorite parts of your book.

I think Amazon modified that mission statement now, something with employee engagement, too.

Do you remember what it was?

Something about a great workplace environment, or something like that. The best workplace environment in the world.

It is funny when you think about it, because it’s one of the most impressive companies. I had this conversation last night. I went to dinner with our mutual friend, Patrick O’Shaughnessy. He texted me this morning. He was like, “Make sure you tell Brad hi.”

Invest Like the Best.

Yeah, 100%. He was with us when we had breakfast here a few months ago. We were having this discussion at dinner with his family. I said, “What is the most impressive company built in our lifetime?” He said, “What about Microsoft?” I said, “Microsoft was in the ’70s. It was before us.” We were both born in the ’80s.

I would say, for me, the answer is Amazon. It started in ’97. I can’t think of another company started in the ’90s, in terms of—

As impressive—

A big success story—

—as what Jeff has built.

By reading your book, listening to your interviews, and talking to you now, you’ve removed, for me personally, any self-imposed limit. I don’t think Brad has a limit to what he thinks he can achieve. He thinks on a big scale automatically. You operate in a very big and ambitious way, whereas I think a lot of people have self-imposed ceilings that are most likely invisible in many cases.

If you want to build more wealth and grow great companies, just find more customers to serve. It’s a pretty straightforward process. But one of the things that I absolutely love—and it’s the way I ended the episode and the way you ended the book—I would summarize what I’m about to say here as: “Go all in. You only get one shot at life.”

I think this is a perfect spot to wrap our discussion, so I’m just going to read from your book to you:

“The summer after 8th grade, I attended the Rhode Island Governor’s 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. You have a choice. You can waste the next couple of months and not accomplish that much, or you can go all in. This is an opportunity to go deep on a project and do the best work you’ve ever done, but you have to decide if you want it.’

“I learned what it meant to go all in, the magical connection between intensity of focus and the end result.”

This is, to me, the punchline, and I love this:

“If I put my whole heart and soul into a project, I had it in me to create really cool stuff.”

Can you talk about the passion and going all in, and the advice you’d have for other people listening to this?

I’m reliving the goosebumps, literally. Physically, I’m feeling the tingling sensation because that was a critical moment in my life when I understood that it’s up to you. You can dilly-dally through life, just kind of sleepwalk, and then die, or you can live life, embrace life, have big dreams, go all in, and find your passion—which for most people is not going to be business or making money. Whatever it is, that’s what it is. You can really achieve something fantastic. For me, that’s a big motivator.

That was a perfect place to end. Thank you very much for writing the book. Thanks for taking the time. Brad, I really admire you. I’ve learned a lot from you, and now I’m very humbled and privileged to call you a friend. I really appreciate it.

Thank you, sir.

Thank you very much.

All the best.