The Titan's Series: Brad Jacobs - The Man Who Built 8 Billion-Dollar Companies
Lessons learned over a 40+ year business career.
Very few people ever build a billion-dollar business, Brad Jacobs has built eight!
In this post, I’ll break down how he did it and the lessons he has learned over a 40+ year career.
“Thinking you know it all is a trap, because you don’t—at least I don’t. If you stay humble, you’ll keep advancing.” - Brad Jacobs (How To Make a Few Billion Dollars)
I recently came across Brad Jacobs on the Invest Like The Best podcast, and listening to him pushed me to purchase his book, “How To Make a Few Billion Dollars”. In the book, he shares his business philosophy along with the lessons he’s learned over the last 40+ years of his career, during which he started and built multiple billion-dollar businesses. The most recent of which he started in 2024.
In today’s post, I will share some background on Brad’s career, followed by some of the key insights he shares in the book and through listening to him speak across a number of podcasts.
Biography
Born in 1958 in Providence, Rhode Island, Brad would attend both Bennington College and Brown University to study math and music, but would drop out before completing his education.
The 68-year-old Billionaire has founded 8 billion-dollar companies throughout his career. His first two companies were set up as private entities, the first, an oil brokerage, Amerex Oil Associates, in 1979, which became one of the largest oil brokerage firms in the world. He sold the business in 1983.
The second, Hamilton Resources, an oil trading company, he set up in 1984 in London and grew to over $1 billion in annual revenue. He sold it in 1989.
In 1989, he moved onto his next venture and in a different industry - waste collection - when he set up United Waste Systems, which he took public in 1992, eventually selling it in 1997 for $2.5 billion.
In 1997, he set up United Rentals with the goal of renting out construction equipment to contractors across North America. He took the company public that same year, and within 13 months, they were the largest construction rental company in the world. He then sold the business to Cerberus Capital Management in August 2007 for $6.6 billion.
The next step in his business journey was a further foray into the public markets when he acquired Express-1 Expedited Solutions via his private equity firm for $150 million, which he rebranded as XPO Logistics and over the next four years, he grew it from an annual revenue of $175 million to over $15 billion.
In 2021 and 2022, he was able to add even more value when he spun off two segments within XPO into two standalone public companies. First, it was their contract logistics segment, which became GXO Logistics, followed by RXO, a freight brokerage platform based on the platform they created in-house.
In June 2024, Brad founded QXO, which provides roofing, waterproofing, and complementary building products to the construction sector and is currently the company's Chairman and CEO.
Get the Major Trend Right
“You can mess up a lot of things in business and still do well as long as you get the big trend right” - Ludwig Jesselson
Brad was taught this lesson in the early years of his career by his mentor, Ludwig Jesselson, who at the time was the CEO of Philipp Brothers, the commodities trading firm, and he has tried to live by it ever since.
The idea is simple - you can do everything right, find the perfect company name, design a sleek and stylish logo, have the perfect website, you can hire the best people and raise money to run the business and offer a great product or service. However, if the market isn’t there, you will fail. Imagine if Nokia’s 3310 phone were released onto the current market today, when everyone has smartphones; it wouldn’t matter how cheap or durable the product is, it would be a total failure!
On the other hand, if you get the trend right, even if your execution isn’t perfect, you will be gifted the time and space by the market to learn and adapt your product as needed. Many of today's tech giants began without a fully finished product, but as they were surfing the right trend, it afforded them room to develop their product.
Always be on the lookout for that major trend. Research various industries, consult with experts, and stay informed about the latest news related to these industries. Don’t just look at what is popular; take a broader approach and look for what others might be missing.
When you think you have a clear path or industry in mind, take a step back and try to visualise the future of that industry and what effects new technologies, such as AI, might have on it. The last thing you want is to invest your time and/or money in an industry, only for it to disappear in several years. Don’t be like the person who invests in the horse-drawn carriages industry in the early 1900s, just as the automobile was about to take off.
Learn to Love Problems
“Look, Brad, if you want to make money in the business world, you need to get used to problems, because that’s what business is. It’s actually about finding problems, embracing and even enjoying them—because each problem is an opportunity to remove an obstacle and get closer to success.” - Ludwig Jesselson
In 2018, XPO faced a crisis, an analyst working for a capital management firm released a “short report” claiming that he felt the share price of the company was bound to drop based on his analysis of the company and its performance. In reality, he had secured a short position on XPO stock and knew that when he released his report, the internet would do its work and spread the message widely, causing many investors to sell their stock based emotion and not on the actual value of the company; as a result, the share price fell 26% in one day.
The story does not end here. When this occurs, companies take varied approaches, and most of the time, they are reactionary and filled with emotion. Brad and his team decided to accept the situation for what it was and approach it head-on.
By a stroke of good luck, there were a group of fund managers due to attend Brad’s house for dinner that evening as he was set to introduce his new Chief Strategy Officer, Matt, to the group. Instead, Matt and Brad’s “C-suite” team spent the day going over the short report, page by page, in order to break it down and prove its total lack of validity. Brad and Matt spent the evening with the fund managers, and as the topic arose, Matt was able to speak in detail about the report, highlighting just how baseless the conclusions were; as a result, they were able to ease any misgivings the fund managers had about XPO.
The real sign of the company’s ability to handle the setback was the opportunity they saw within the chaos. Brad and his team realised that the XPO stock was now very cheap, and they knew this would only be temporary. They bought back $2 billion worth of stock, against the advice of their bankers - a few years later, their shares have appreciated to $6 billion, a $4 billion return.
The world will always present problems, especially when you venture down a path of growth. It is how you learn to view and deal with these problems that helps set you up for great jumps in development.
"Problems are only opportunities in work clothes." - Henry J. Kaiser
Cultivating a Strong Business
“I’ve got a bias towards industries that are ripe for consolidation.” - Brad Jacobs
Brad is famous for spotting industries that have great growth potential, but that are also fragmented and are full of inefficiencies.
His approach, once he finds that industry, is to move fast at consolidation via mergers and acquisitions. Then he quickly moves to integrate all the businesses, streamline their systems by removing unnecessary bloat, reorganise and strengthen their teams.
Deciding on the right industry is the first step. It needs to offer scale because having a small corner of a large, growing pie is better than a large chunk of a smaller or even shrinking pie. The best way to take advantage of that is by finding a fragmented industry with businesses that can be bought for lower multiples than what your own business will trade at.
Brad usually completes multiple M&A’s in short succession, and what he is looking for is to create a synergy of businesses.
“I look for industries where there's synergy as you get bigger, there's economies of scale, there's benefits of size that as you buy things and get bigger, you just don't get bigger. You get better.”
Sometimes something as simple as reorganising the organisational chart can make an impact straight away and set the business on a path towards profitable growth. Brad saw this to be true when he purchased Con-way Inc., a freight logistics company. When he was assessing the business, he realised very quickly through viewing the business’s organisational chart that there was a lot of cost-out opportunity immediately apparent. As he described it:
“It was like someone just took spaghetti and threw it against the wall. It was three different HR organisations, three different IT organisations, three different operating divisions.”
You need to be able to run the numbers and make your best estimations of the business and its potential.
Finally, one of the most important aspects of any acquisition is who you buy from. Brad believes you should only buy from a seller that you respect and believe has integrity; you don’t want any unexpected surprises down the line. Don’t play games either, be honest about what you want from the deal and listen to what they want, then work on finding a place where you can both leave satisfied.
Build a Winning Team
“No man is an island”, John Donne once wrote. Although his context may have been more spiritual than business, it still stands up in that regard.
No business exists in a vacuum, not even small, one-person outfits. When it comes to creating large organisations like Brad, the only way to reach such heights is to surround yourself with the right people. Those who help take you to the next level. Brad believes there are a number of steps in this process.
You must assess the current members of your team and decide whether they are A, B or C players.
“Imagine someone walks into your office and says, ‘I’m quitting.’ Your immediate reaction reveals their category.” - Brad Jacobs
Once you are sure whether someone is an A, B or C player, then your next step is clearer. If someone is an A player, make sure you do what you need to in order to keep them. Ensure they know and feel they are valued, and pay them well. Money is not the only thing that makes a job worthwhile for someone, but it is an important aspect. As well as that, create an environment where they can feel they have an opportunity to grow and develop while doing work that fulfils them.
C players need to be removed from the team.
“Fire your C Players, but be nice” - Wayland Hicks
Brad received advice from his previous COO named Wayland Hicks, when he ran United Rentals. That advice was to be decisive when removing poor performers from the team, but to do so with compassion and kindness and ensure they receive a generous severance package.
When hiring new team members, you want to aim for A players, and there are four things that Brad looks for in a new employee:- Intelligence, Hunger, Integrity and Collegiality.
Intelligence
Intelligent people are generally those who are adaptable and can solve problems. There are many forms of intelligence, and it is your job to know what exactly you need in your business and find the right person for the job.
Hunger
These people have tenacity; they have a drive to make progress. Those who take a great interest in their job and who want to perform at the highest level. - They also want the rewards that come along with that.
Integrity
There are many people out there who have the first two traits, but without integrity, they can be like toxic waste in an organisation and cause a lot of damage. The 2008 banking crisis had countless examples of bankers who possessed hunger and intelligence but were lacking in integrity, and it led to record levels of economic pain and suffering for many people.
Collegiality
A business, in ways, takes on the life of a family, and when team members can build trusting, cooperative relationships with their colleagues, the business will run better.
When you come across individuals that you feel tick all these boxes, hire them. If they are genuine, they will add immensely to your organisation. If not, their true colours will shine through relatively quickly, and you will have to take decisive action and remove them from the team.
Running Great Meetings
Most meetings tend to be either a waste of time or an inefficient use of time.
They are either too long, too frequent, or there is no clear goal. It tends to be a group of people see-sawing between topics, half the people are engaged, and half may as well be asleep.
First, we need to be clear on what constitutes an effective meeting.
To Brad, these are:
“There are three ingredients for electric meetings: the right people, a crowdsourced agenda, and an atmosphere where everyone feels safe to respectfully disagree.”
Having the right people also means not having too many people, so the size of the group must make sense. Too large and there is a lack of engagement; people can hide and zone out. Too small, and there is no true variety of ideas. Brad believes in a smaller group of 15-20 people.
The best meetings are those that aren’t scripted but where the team sets the agenda and the tone.
At these meetings, each department has its turn to present to the group via a slide deck. All slide decks are to be concise and clear about the “what, when and why of each takeaway”. The slide decks are all put together in a presentation, and each member in attendance must read this in its entirety before the meeting, then send Brad their top one or two most important takeaways and their top one or two questions.
All questions are reviewed and either added to a list, starting with the most important or removed if it isn’t worth talking about. An assigned moderator handles how the team goes through the questions and how long they spend on each question, depending on its level of importance and whether a meaningful solution is being discussed.
In his companies, there are two main meetings that he focuses on. Monthly Operating Reviews (MORs) and Quarterly Operating Reviews (QORs). He likes for there to be a mix of senior management in attendance at his meetings so that they can be aware of what is going on across the company and not just in their little fiefdoms.
Dive in on, rather than ignore conflicting opinions. In a team of highly capable and opinionated people, there will be conflict and using this to get to the most effective solution benefits everyone. The environment Brad aims to create is one where colleagues can respectfully and effectively disagree so that the best decisions can be made for the business.
Each participant must both listen and speak during the meeting, and it is up to the moderator to ensure that everyone gets asked questions and chimes in with their remarks. Sitting there passively will add nothing to the team.
For those topics that are slightly more specialised and only a few key individuals can deal with, it’s fine to leave them out of the meeting and deal with them separately.
Brad believes that rules must be kept to a minimum, but the ones that are there must be followed to the letter; turn off all devices, no conversing, one person speaks at a time, disagree with respect, and give the speaker your full attention.
Understand what it is that a person is trying to get across. Sometimes people say silly things or get something wrong. In order to keep the meeting flowing as smoothly as possible is to politely disagree while also pairing that with validation. This can help to soften the blow and ensure people don’t feel they are being personally attacked or patronised.
Learning to run effective meetings can ensure high-level communication and decision-making across a business.
Enabling Your People to Thrive
Brad believes in creating a culture that encourages unity, in which a group can work together to produce some truly great results. Yet, still encourage individuality to shine through and add that creative spark that we are all capable of.
In order for this to work, communication is critical, and it begins at the top - the CEO must set the standard. This only works if the communication is honest, and this means that during good times as well as bad, employees (and the board if the company is public) deserve to know what’s in front of them. It will mean that even when the news that’s being shared isn’t positive, it will be heard from a place of trust and respect.
Maybe the most important aspect of communication is the ability to effectively listen, and it is a skill that many of us do not possess, or maybe a better way to look at it is like a muscle that we don’t exercise frequently; therefore, it is weak. The act of listening to what people are saying enables you to better understand them and the situation, and it will allow you to make more effective decisions.
“Give the person you’re with your entire attention while listening to them non-judgmentally. This is the greatest gift you can give anybody.” - Brad Jacobs
As a company grows in size and scale, its leadership become much more dependent on its employees throughout each level of the company. The environment must be one in which the employees feel like they can share their thoughts about the business and know they are being listened to, even if the management doesn’t necessarily agree. The ability to be candid is a crucial aspect of a company’s culture, and Brad tries to encourage it at every level of the business, up and down the chain, including with himself; the CEO should never be free from or protected from honest feedback.
Final Thoughts
There are very few people in the world who have created value on the scale he has, and the fact that he has so openly shared what he has learned over his career is hugely beneficial to anyone who reads his book or listens to one of the many podcast episodes in which he offers his sage-level advice.
I will leave you with one final quote from Brad:
“Problems are an asset—not something to avoid but something to run toward. Big ambitions often beget even bigger problems. If your initial reaction to a major setback is overwhelming frustration, that’s understandable, but it’s also counterproductive. Once you’re over that moment, pivot toward success: “Great! This is an opportunity for me to create a lot of value. If I can just figure out how to solve this problem, I’ll be much closer to my goal.”
P.S
Brad has been meditating every day for 3o minutes - 15 minutes in the morning and 15 minutes in the evening - and has done so since he was sixteen years of age. He believes it to be an immensely beneficial practice, and it has likely contributed to the means by which he has dealt with some of his major setbacks.
“Meditation has been my main hobby since I was a teenager. It’s helped me stay calm and think creatively in challenging circumstances.” - Brad Jacobs
What about this post made you think?
I’d love to hear from you in the comments!! 💬