Brad Jacobs - Think Big and Move Fast - [Invest Like the Best, EP.352]

My guest today is Brad Jacobs. Brad’s resumé is remarkable. He has founded seven companies, all of which are billion-dollar or multibillion-dollar businesses. He has done 500 M&A transactions and raised $30 billion dollars of debt and equity capital. Currently, he is the Executive Chairman of XPO, a commercial trucking company that he started in 2011 and has grown into one of the largest logistics businesses in the world. He has also written a book that will be out in January, titled “How to Make a Few Billion Dollars”. Brad’s energy is infectious and our conversation unpacks his strategies for M&A, his propensity for speed, and methods for earning team buy-in. Please enjoy my conversation with Brad Jacobs. Listen to Founders Podcast For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus, the modern research platform for leading investors. Tired of running your own expert calls to get up to speed on a company? Tegus lets you ramp faster and find answers to critical questions more efficiently than any alternative method. The gold standard for research, the Tegus platform delivers unmatched access to timely, qualitative insights through the largest and most differentiated expert call transcript database. With over 60,000 transcripts spanning 22,000 public and private companies, investors can accelerate their fundamental research process by discovering highly-differentiated and reliable insights that can’t be found anywhere else in the market. As a listener, drive your next investment thesis forward with Tegus for free at tegus.co/patrick. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus Show Notes (00:02:11) - (First question) - Identifying key factors in a market before investing (00:05:07) - Gleaning insights from early acquisition experiences (00:08:43) - Delving into the seller's mindset during a business sale (00:12:51) - Weighing pre-built against organic growth strategies in acquisitions (00:17:20) - Defining the elements of an ideal business (00:22:49) - Engaging constructively with Wall Street (00:24:36) - Discussing the substantial buyback of XPO shares (00:28:16) - Ambition as a recurring theme in entrepreneurial success (00:30:17) - Emphasizing the need to facilitate team agility (00:32:35) - Highlighting the joys of post-acquisition integration (00:36:09) - Drawing lessons from Ludwig Jesselson's principles (00:40:34) - Comparing the risks and rewards of early versus late adoption (00:44:09) - Reflecting on errors made in trend analysis (00:48:59) - Strategies for implementing new technologies in enterprises (00:51:59) - The significance of thought experiments in strategic decision-making (00:56:00) - Recalling transformative events from his early years (00: 57:22) - Outlining what makes a meeting 'electric' (01: 01:53) - Sharing experiences with exemplary leadership (01:05:02) - Strategies for maximizing team potential (01:07:37) - Deciding the right time to step away from a business (01:08:58) - Unveiling unexpected challenges in entrepreneurship (01:18:45) - Philosophies for leading a fulfilling life (01:21:04) - Finishing How To Make A Few Billion Dollars (01:22:53) - The kindest thing anyone has ever done for Brad

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Patrick O'Shaughnessy?

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• 0:35Patrick O'Shaughnessy?

  Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts, including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

• 1:00Speaker 01

  Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

• 1:32Patrick O'Shaughnessy?

  My guest today is Brad Jacobs. Brad's resume is remarkable. He's founded seven companies, all of which are billion dollar or multi-billion dollar businesses. He's done 500 M&A transactions and raised $30 billion of debt and equity capital. Currently, he's the executive chairman of XPO, a commercial trucking company that he started in 2011 and has grown into one of the largest logistics businesses in the world. He's also written a book that will be out in January titled, "How to Make a Few Billion Dollars." What a title. Brad's energy is infectious and our conversation unpacks his strategies for M&A, his propensity for speed and methods for earning team buy-in. Please enjoy my great conversation with Brad Jacobs.

• 2:14Patrick O'Shaughnessy?

  So Brad, it's hard to know where to begin this conversation because you have built so many interesting businesses across so many different industries. So maybe the uniting thread is what are you looking for when searching for the next opportunity? Because there's definitely through lines to what you've done, but there's also, you've made pretty big jumps. I think maybe you'll make another jump and maybe you'll never stop. What is it that you're looking for in an industry, or a market, or an area as you're sussing out what to do next?

• 2:44Speaker 02

  In a word, scalability. So the only way I know to create huge value is to create a company that five and 10 years after you started is much, much larger. And the easiest way to do that is through M&A. Of course, you have to have organic growth as well. But I look for an industry where it's large enough. If I want to create a company that's tens of billions of dollars in revenue, then I have to do an industry that's hundreds of billions of dollars in revenue. If I want to consolidate an industry, there has to be things to buy. There have to be things to buy on accretive terms. There have to be things that we can buy at lower multiples than what we're going to trade at. 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

• 3:29Speaker 02

  bigger, you get better. You spread your S&A out more, you get better technology, you get a better sales force, you get better training. So the advantage of size, you have a better cost basis, you please the customer better, you have more density, more advantages of being a national network, or maybe even a global network. Basically, it comes down to scalability.

• 3:48Patrick O'Shaughnessy?

  So if that's the metric, why aren't there 10 of you? Why is there only one distinct story like yours that somebody in a serial fashion sort of goes and builds companies with some similar ingredients in the recipe in different industries? It's strange that there's not other people that have had a similar story like yours.

• 4:08Speaker 02

  There's plenty of other people who have done M&A and created tons of value doing M&A. I've maybe done a little more M&A than most people, and the teams I've led have done it very well in terms of integration and optimization of those acquisitions. But I didn't invent M&A. M&A has been around for a long time.

• 4:23Patrick O'Shaughnessy?

  One of the things you said is the ability to do great accretive acquisitions, buy at a lower multiple than your stock trades at, maybe. I think of Henry Singleton or some of the great stories through history. What are the markers of industries that have that feature? Do they tend to be very mature industries? Do they tend to have anything else that you would look for? That would cause those low multiples to exist? Hyper fragmentation or something else?

• 4:45Speaker 02

  It's not that they have to have low multiples, although I tend to go to industries that are single-digit multiples, not double-digit multiples. Maybe low double-digit multiples, but I'm not a 15, 20 times EBITDA kind of guy. If you look at the 500 or so acquisitions that I and my team have done, average multiples in the mid to high single digits. And I don't like to buy things that are priced for perfection and everything's got to go perfectly, swimmingly right in order to achieve and maintain a 15 or 20 times EBITDA multiple. I look for industrial companies for the most part. I'm not a tech guy. I use a lot of tech. I invest in tech. I am tech forward in my companies. We utilize tech every possible place we can. We automate anything we can. But I don't buy tech companies per se,

• 5:30Speaker 02

  mainly because the multiples are too high.

• 5:32Patrick O'Shaughnessy?

  Can you tell me the story of the earliest acquisition that you did that stands out in memory as one that taught you a lot of lessons?

• 5:40Speaker 02

  Earlier ones taught me more lessons than my more recent ones because I messed up so many times. I made so many mistakes in my first few dozen acquisitions. That's where you really learn. You learn from your mistakes. You don't learn as much from your success. And the main mistakes I made in the earlier acquisitions were around people and integration. I was too slow to integrate. Now I'm real fast when I integrate. When I integrate now, I rip off the Band-Aid. And I'm on one CRM, one HRS, one ERP, one dashboard, one key performance indicator metric universally throughout the system. Everything is 11111. Because you have visibility into the business and you can manage it better. You have clear understanding of what's going on in real time. You have your finger right on the pulse of what's going on.

• 6:24Speaker 02

  And it's really important when you're leading a company, particularly when it's growing so fast. You have the controls in place. You have the oversight. You have the governance in place. When I was younger, I used to be concerned about the inevitable fallout when you do integration because people whine and scream, "Oh, I like this. I've been using this." And there's some temporary discomfort, but it's worth doing that. You've got to do it really fast. The other types of mistakes I made earlier in my career in acquisitions were sizing up the people. They've gotten better at that. You start seeing patterns in different types of personality types, different character traits and so forth. And that's the most important thing you can do is make sure you get fantastic talent.

• 7:01Patrick O'Shaughnessy?

  Max, can we talk about the positive and negative patterns that have emerged in the people? I assume you're talking about both the seller, whoever it is that is representing the seller, or the seller themselves and their teams. What are the things that you've gravitated towards and away from as you've done more and more acquisitions?

• 7:16Speaker 02

  First of all, I never buy a company if I don't really like the seller, because I've seen a correlation between how I feel about that seller and how that deal turns out one, two, three years later. The integrity of the seller is really important to me because the company that seller has created reflects the integrity or lack thereof of the owner or of the CEO of the senior leadership team. It reflects the work ethic. It reflects the amount that they are collegial and respectful and collaborative or not. I really need to like the seller. It's very important to me that I have a personal affinity for them.

• 7:51Patrick O'Shaughnessy?

  Can you define integrity?

• 7:53Speaker 02

  Integrity is real simple. It's being honest. It's doing what you say you're going to do and being straightforward about it, not playing games. And I like to work with people that don't require a lot of effort to figure out what do they really mean. I like to work with people who they mean exactly what they just said, and they say it in real simple terms. They're very predictable and very straightforward.

• 8:11Patrick O'Shaughnessy?

  What about the negative side of the ledger? Is it just not integrity? Or are there other things that you've found lead to bad deals two, three years after doing them?

• 8:18Speaker 02

  Two, three, four years down the line, if you find bad things with the company, it's really my fault if I haven't fixed it by then. But in the first year or two, sometimes it's undisclosed liabilities. Sometimes there's things in the company that you really weren't aware of because buying a company is a little bit like getting married. You don't really know who you got married to until after you've been married a little while. Fortunately, in my case, that's worked out really well. But sometimes people get surprised. And when you buy a company, particularly if you buy it in a process, if you buy it in a banker-run process, you don't get the fulsome amount of due diligence that you really need in order to responsibly buy a company and confidently think you're not going to have a lot of surprises.

• 8:58Patrick O'Shaughnessy?

  I'd love to ask a few more questions in the assembly line of the deal, so to speak. One great quote that I saw you write was that there's three times that people go insane, and one of them is when they're selling a company. What is the psychology like of a seller? And how do you take that into account when you are negotiating the deal itself?

• 9:16Speaker 02

  So I have a relative who's a psychologist. And she told me that an otherwise perfectly sane person, two times in their life, becomes temporarily insane and develops an access to personality disorder for a short period of time. And those times are when their spouse tells them, I'm divorcing you. And another time is when your boss tells you, you're fired. And it's just people have a very bad reaction to that and they can just lose it. And I've noticed that. I've noticed those two examples in many people. But I'm going to add a third to that, as I write in the book, thank you for reading it, which is when people sell a business. When people sell a business, particularly if they've spent decades building it up and they have family in the business and they're prominent in the community and their identity is associated with that business,

• 9:58Speaker 02

  they get really nervous and they get very anxious and they're very stressed out. And it's extremely important when you're buying a company to be very understanding and very respectful and very empathetic towards the seller. It's not just a personal family business either, even a corporate one. Even a corporate one, if the stakes are high and they have advisors telling them to do this and do that. And it's usually not really good advice in terms of relationship building, which for me is the most important thing in M&A is having a good relationship with the seller, with the other party. So they definitely do things that they normally wouldn't do otherwise.

• 10:34Patrick O'Shaughnessy?

  How tactically do you run these processes? And I'm especially curious, since obviously you must have built some sort of machinery around this. So you're doing so many acquisitions, you're not personally in there doing them all. So what have you learned about pacing, building relationship, but keeping moving very quickly, balancing those two things? And any other relevant machinery that you found to be most helpful for doing so many of these at scale?

• 10:57Speaker 02

  I'm probably more involved in M&A in the weeds. Like I said earlier, you need to know what you're buying. And in order to do that, you have to gobble up as much information as possible from every possible source you can get it from, external and the company directly. And that's really the main stuff I want to figure out when I'm doing a deal. I want to understand what is this company really about? Every company's got positive things about it, strong things about it, opportunities, wins, successes, and every company also has negative parts. That's normal. There is no company that's all good or all bad, at least that I've come across. So the due diligence process in M and A is to try to figure out both of those things. What are the things that make it a strong investment case? And what are the things that? These are risks. These are downsides. This is hair on the deal.

• 11:42Speaker 02

  Is this hair we can take off? Is this a risk that we can live with? And what are the chances of the risk happening? And if the risk does happen, is it fatal? Does it destroy the whole investment thesis? So you've really got to get both of those things. And I write in the book about a friend of mine who's done a lot of M and A once showed me a four quadrant chart of M and A. And the top two quadrants were large, easy deals with no hair on them, which don't exist. Below that, on the bottom part of the four quadrants are small hairy deals. Nobody should do a small hairy deal. First of all, it's small. So are you going to create a lot of money doing a small deal? And it's hairy. So if you take the hair off, it's a small deal. You're not going to make a lot of money on it.

• 12:23Speaker 02

  And then the quadrant in the bottom right are small, unhairy deals. Straightforward, easy, no problem deals, but they're small. So it's not going to work, which leaves you with the most important quadrant up in the upper right hand one, which are large hairy deals. And that's where you make the big money. You make the money on large deals that certainly they have issues, but the issues that you've thought through, you've analyzed, and you have figured out how you're going to solve them, how you're going to address them. And if you can shave off the hair on those big hairy deals, that's how you make a lot of money in M and A.

• 12:58Patrick O'Shaughnessy?

  I'm curious, in each of these different company stories, how much of the M and A was you've got some grand vision, there's some puzzle, and you know the puzzle pieces you need, and you're going out and finding them one by one to build this picture that you've pre-built in your mind versus it being more organic and bottom up where you just say, if something comes up that could slot in, we'd do that deal if it's a great deal. Deal. So is it more bottom up or top down as you've built?

• 13:23Speaker 02

  It's both. There certainly is a strategy and a plan and a vision of where you're going. But you have to be opportunistic. You have to be agile. You have to be flexible. You have to be open minded. You can't be rigid on this. You have to take deals that come to you and say, that's interesting. Wasn't in my original plan. Actually, this makes sense. So you look at XPO, for example. We started out, the very first company we bought was a company called Express One, which is where XPO came from. That was their ticker symbol. They were a small cap company, less than $200 million market cap. And their ticker symbol on what was then called the Amex was XPM. And they were in a few things. They did truck brokerage, which we liked. They were doing expedite, which we liked. And they're doing freight forwarding, which is okay, too.

• 14:06Speaker 02

  And our original plan was, okay, let's buy this company and let's keep buying more companies in those three sectors, particularly the truck brokerage, but let's also add intermodal. So we thought intermodal would go together. And a few years later, we bought Pacer, which was a big intermodal company. And that was the original vision. Over the course of time, we had opportunities presented to us to buy New Breed Logistics, which is, in my opinion, the best run warehouse, contract logistics company that's ever been around. Louis de Joy was selling at the time. And I remember Eli Gross, who's now head of investment banking at Morgan Stanley. Then he was running transportation, calling me up on a Sunday and saying, I got an interesting deal down in North Carolina. It's a little bit different, carrying the sense that it wasn't in the original strategy. It was a pivot.

• 14:48Speaker 02

  And he said, it's a little bit off what your original strategy was, but I think it fits. It fits real well. And I said, what is it? He said, it's contract logistics. And I said, okay, what's contract logistics? I didn't know what that meant. And that's a part of the world I never really explored. And so I got some fast education and tutorials about the warehousing business, supply chain management, contract logistics. I looked at who the customers were. I saw opportunities to do things with those customers in the original four things we were looking at, and made perfect sense. So that was an example of, yeah, we had a strategy. Yeah, the strategy was working, but an opportunity to enhance the strategy by getting to a whole new line of business. And over time, we bought other contract logistics companies, put them all together. Integrated on a global basis. Eventually, we spun it off.

• 15:34Speaker 02

  And today, that's called GXL Logistics, which is the New York Stock Exchange company, trading on its own and doing super well. Another example of pivoting, of being opportunistic, of having an opportunity fall on our head and instead of getting a headache, we looked at it and said, that's interesting, was I was trying to buy this company called Menlo Logistics, which was the contract logistics subsidiary of Conway. And in the course of negotiating with the Conway team and getting to know them and flying out to Ann Arbor and learning the business that they had, and in Menlo, they proposed to me, they said, you know what, why don't you just buy the whole business? Why are you just buying contract logistics? The LTL business is a fantastic business. Why? Why is that a fantastic business? But I kept an open mind about it.

• 16:17Speaker 02

  They persuaded me. They said, it's a business where there's been no new entrant of any size for several decades. There's a big moat around the business. It's got great pricing power because capacity actually has been leaving the industry, not coming in the industry. And there's ways to continually improve the business over time. So I studied it. I studied Conway and it was interesting because they told me, they said, Brad, one thing you need to know is there's not a lot of cost out opportunity here. I said, okay. And I went in and I found tons of cost out opportunity because I saw the organizational chart. It was like someone just took spaghetti and threw it against the wall. It was three different HR organizations, three different IT organizations, three different operating divisions. Everything was three for the different parts of the company instead of having a shared services, which is a more traditional way of doing it.

• 17:03Speaker 02

  And I said, wow, it's like a lot of money we can take out of this just doing that. They had a government relations division with a fairly sizable staff and significant budget, but they didn't really need that. It really didn't make a difference. So we pivoted and we said, you know what? Let's get into asset-based LTL. It was a big pivot because we had been previously doing non-asset businesses. Although Intermodal was quasi-asset because you leased the trailers, the containers. So that ended up becoming a fantastic deal. Had I turned that down, had I been rigid in my thinking on that, had I just stuck to the original initial strategy and said, you know what, no, that's a little off the beaten path, we would not have created billions of dollars of value because we bought that company for $3 billion. Today, we're not selling it, but if we were to sell it, it would be many times that.

• 17:47Patrick O'Shaughnessy?

  What are, in your mind, the components of a fantastic business, the term you just used?

• 17:53Speaker 02

  The perfect business, which doesn't exist, by the way, but if I had the perfect business, here's what it would look like, Patrick. Number one, it would be highly respected in the industry by its competitors. It would be very highly valued by the customers. The customers would say, I'm willing to pay more to do business with this company because their service is so great and their people is so great and their technology is so great. Everything about them meets my needs, delights me as a customer. It's a business that has lots of organic growth, just grows by itself in terms of price, in terms of volume. Some industries, you're not going to be able to raise price because it's too competitive. Some industries, you're not going to be able to grow volume because there's just so much market out there, maybe it's a declining market, it's not even a growing market.

• 18:36Speaker 02

  So if you can find a business that can grow both price and volume, and you have ways to continuously improve the operations and grow your margins, that's a great business. And I'll go another step further. Perfect business for me, and this is a key point for me in every acquisition I've ever done, what's their turn on capital? Because at the end of everything, that's what creates shareholder value. What creates shareholder value is you have a finite amount of debt and equity. You need to put that to use and you have to get back a lot more capital than you put out. That's what it's about. And a business that has a high ROIC, whether it's in favor, whether it's out of favor, whether it's the FAD, a moment, it doesn't matter, over the long term, will absolutely create value.

• 19:19Patrick O'Shaughnessy?

  When you think about the deals that you didn't do, how often was it price? So if you've got this fantastical business on one side, there's no business for which a terrible price can't ruin the investment. So how does and has price slotted up against the quality of the business?

• 19:36Speaker 02

  Many times I've seen An interesting business, maybe not perfect, but definitely good enough and would love to buy it, but I can't buy it at a price that makes sense. So the IC in ROIC matters. So the IC in M and A is the purchase price and whatever you're subsequently going to put into the business. If there's CapEx improvements, invested, you want to grow it and that requires capital. The aggregate of your purchase price and how much money you're going to put in over the next year or two, assuming you're going to put in rather than take out money, that's your invested capital. And that's what you have to generate a return on. So the purchase price is very important and you must stay disciplined on price. If you overpay for an acquisition, you're in a hole and it may be many years of destroying value before you're creating value.

• 20:21Speaker 02

  That's a sin. No management should do that.

• 20:23Patrick O'Shaughnessy?

  If you were to boil down source of returns and equities as simply as you could, you might say it's multiple change and fundamental change, growth of the business, change in the multiple. It sounds like change in the multiple, meaning buy well, buy at a good reasonable multiple, has been your strategy more than materially changed the business. Is that roughly right?

• 20:42Speaker 02

  Not really. All the businesses that we've bought, we've integrated very tightly into the business. We don't run a loose confederation of lots of different companies, which you see some business models and some of them have worked. I don't like doing that myself. I feel out of control. I like to have everything standardized and one way of doing everything. The price does matter, but the multiple matters too. For example, when we looked at ourselves in the mirror at XPO Logistics a few years ago, and we said, look, we've been trading at eight and a fraction times EBITDA for a while now. That's what the market says this is worth. We didn't think it was worth that. We thought if you looked at the sum of the parts of the business, this should be trading many turns of multiple higher net, significantly higher net. But we said, I don't think we're going to get there on our own because the market has spoken.

• 21:26Speaker 02

  So we decided to do something that very few companies do, which is to make ourselves smaller. And we divided the company up into three companies and those three companies, we put the circles around the different parts of the business of how we're going to divide it up with two things in mind. One was how can we run this business with greater focus operationally, execution wise? And secondly, What'll get a better model? Because Wall Street generally likes pure plays. As a general rule, not always, but generally likes pure plays. Likes to have easy to understand stories. Typical sell-side analyst, for example, covers 32 stocks. So they don't have the luxury of time to really go deep studying stuff. We divided the company up into one company that was primarily LTL, which is XPO.

• 22:07Speaker 02

  Another company that was primarily brokerage, truck brokerage, non-asset, which is RXO. And a third company, which we were talking about before, which is the supply chain business, was GXO. And now each of those companies gets EBITDA multiples of 11, 12, 13 times. It's a big change. So we unleashed the value from getting multiple expansion by dividing the company up into smaller companies. So the multiple you get from Wall Street matters because it goes back to what we were talking about a few minutes ago, where you have your cost of capital, what you can raise money at. And to put it in more simple terms, what multiple you can raise money at. And then you have businesses that you can buy, acquisitions that you can do at a lower multiple. So there has to be a spread. And when you look at all the ways that you create value, and there's dozens and dozens of levers in the business plan,

• 22:51Speaker 02

  that often is the most important lever. Sometimes it's one of the top three, but the differential, the disagio between, the delta between what you can raise capital at, what the market will give you money at, and where you can deploy it at in acquisitions, that's a big value creator. So you need to pay attention to that.

• 23:07Patrick O'Shaughnessy?

  In that value creation mechanism, the relationship with capital markets and with Wall Street specifically is obviously very important. How do you, as a CEO, manage that relationship well? What have you learned about interfacing with Wall Street in the most constructive way possible?

• 23:22Speaker 02

  I have a lot of friends who are portfolio managers and analysts, and it's very easy. They want to make money. It's as simple as that. They've never bought my stock because I'm handsome or I have a full set of hair, anything like that. They bought my stock and supported me because we created alpha and we outdid the competition and we were a great investment. Made a lot of money for investors. And I think if the investment community understands what you're doing and you're truthful with them and you tell them, as we were talking about before, the good things and the bad things going on, because there's always both. And you can't be one of these management teams like, everything is sunny, everything is great, everything you want. That's baloney. It's not like that. If you confide in your shareholders. Of what's worrying you and what the challenges are, and at the same time, what the opportunities are, what your vision is, and you consistently post up good numbers,

• 24:05Speaker 02

  consistent with what you forecasted, and they should be ambitious ones, then you'll get a following. I'm lucky and humbled that I have a pretty big following, but I have no illusions of why that is. The reason I have a big following is I made a lot of money for investors. They get bonuses.

• 24:17Patrick O'Shaughnessy?

  Have you made any major mistakes dealing with capital markets?

• 24:21Speaker 02

  I've made major mistakes in everything, including the capital markets, absolutely. So sometimes I've raised too much money and then I didn't have a use for it right away. And then it was dilutive. Sometimes I didn't raise enough money. I had these fantastic opportunities and I didn't have the capital. And when you do acquisitions in particular, you didn't have the money. You can't credibly go to a seller and say, hey, let's sign a deal and I'll go raise the money. Even if you can raise the money, things change. Geopolitical events happen, market correction, all kinds of stuff happen. And so sellers want to make sure your money is good. Sometimes they haven't capitalized the business enough. And I think in my next ventures, I will err on the side of raising more capital rather than less capital. I've lost so many opportunities over the years because I didn't have enough money on the balance sheet.

• 25:01Patrick O'Shaughnessy?

  Can you tell the story of the large buyback that you did with XPO on the opposite side of the capital allocation ledger from acquisitions?

• 25:08Speaker 02

  So that was another example of opportunism where we had something fall in our lap that we weren't expecting and wasn't in our plan. And that came in the form of this crazy short seller report back in 2018. I don't remember the guy's name, I blanked it out, but this report came out, just pure nonsense. That we were doing this, we were doing that, and this, da, da, da, da. And he was very sophisticated in the sense that he knew all the right buzzwords to say. And we researched him afterwards. He says pretty much the same thing about every company that does a short seller. It's on the word processor, that just gets the bots to repeat it and then sell the stock and to get various media outlets to write the story. And it's a near certainty that when he comes out with that report, the stock's going to go down. It's almost 100% certain. And they lever up quite a bit.

• 25:53Speaker 02

  They use derivatives and if the stock had gone up like 20 cents, he probably would have gone bankrupt. The stock's not going to go up 20 cents. It came down, in our case, it came down like 26% the first day. Big drop. And it was interesting because the day it happened, just as it happened, just by coincidence. I had Adam Carr and Matt Adams in my office, who were the two top guys running a little over billion dollar position at the time in XPO, visiting my office. Now, I was sitting in a room and someone walked into the room and passed me a paper, a screenshot, actually, of what had just gone on. The stock is down 20 something percent and some short sellers making up all this crazy stuff about it. And so we, in real time, we talked about it because every situation, there's a play. Every situation, there's a way to make money.

• 26:36Speaker 02

  If you're, stay cool and you're smart and you keep an open mind and don't take it too personally, you'll find ways to capitalize in that situation. In this case, we said, okay, look, the stock is down a lot, but for no reason. It's not like our numbers got worse. It's not like we did a pre-announcement and we're going to miss by a mile our earnings. It's not because there was some big lawsuit that was very vicious or the government regulator. There was no reality to this. It was just a bunch of silliness. And so temporarily, the stock was dislocated. So you say, okay, what's the right move here? The right move was really obvious. Let's go buy back our stock. And Orbis bought, I think they bought over a billion dollars of stock and we bought about $2 billion of our stock back. And I remember talking to the bankers when we were mobilizing to do this. And they said, nobody's ever done this before in terms of the percentage of market cap and buyback in a short period of time.

• 27:21Speaker 02

  It would be blazing new ground, new territory here. And I said, so what? That's an interesting data point, but the fact of the matter is, we're definitely going to make money on this trade. We take $2 billion and buy our stock. It was already on the low side, but after it'd fallen down like this, it was ridiculously cheap by any measurement. So I said, let's do it. So we bought it back. And two years later, the stock was three times where the price was when we bought it. We made $6 billion on that trade. So it was a very advantageous thing for us to have done.

• 27:47Patrick O'Shaughnessy?

  There's a great Winston Churchill quote, which is always more audacity. What do you think of that quote?

• 27:52Speaker 02

  I don't know. You don't want to have audacity just for the sake of audacity. You don't want to be reckless. You want to be disciplined. You want to be rational. You want to be logical, but you need to be bold, too. You need to be creative. It's a balance, like most things in life. You want to have one ounce of daringness and one ounce of cautiousness. Balance those two out and come up with really good moves, good strategies, good tactics.

• 28:15Patrick O'Shaughnessy?

  How do you think about setting your own scope of ambition? Because when I was talking to your colleague before we started and asked them to describe you in two words or two phrases, one of them was related to the scope of ambition and the second one was related to the pace of execution. We'll talk about both, but starting with scope of ambition, it does seem as though that's been a common theme in your various entrepreneurial stories, that maybe you're just wired to click the ambition dial a couple of points higher than most people are. So I'm curious how intentional that is and also whether you think more people should think that way.

• 28:48Speaker 02

  Well, it's funny you say that because I wasn't part of that conversation because it showed up earlier than I did here, but that's what I would have said. I would have answered it, think big and move fast. I don't think I invented that phrase, but that's a very good phrase that describes my team. That's our culture is to think big and execute fast because things don't get better over time. Law physics, entropy sinks in. I think it's important to think in very big scales because often you're not going to accomplish 100% of what you are achieving. If you're not thinking huge to begin with, you're not going to accomplish anything big and life goes by fast. I'm 67 years old. I feel like I'm 37, but technically speaking, I'm 67 as I am. That's my biological age. If I live to, I don't know what, 87, that's 20 years.

• 29:28Speaker 02

  You take 20 years and you multiply that times 365 days, it's only about 7,000 some odd days. That's not a lot of days and your last 1,000 or 2,000 days, I don't know, usually aren't your best days. I have 5,000 great days left here. I want to accomplish something really important every single one of those 5,000 great days. And so I think time is important to utilize properly. Time is not something to waste with frivolous things. So the goal of the CEO is to get the whole management team to collectively to buy into a big vision, big goal, very clearly thought out, very clearly envisioned what that is. And then for everybody to sign up for what are they going to do in order to help materialize that goal. So thinking big, but then you got to get a team. You can't just think big.

• 30:13Speaker 02

  You've got to get a team together to get mobilized to materialize that big goal you've put out. It's not unique, by the way. There's plenty of other companies that think big and move fast, but we've been consistently thinking. Big and very big and we'd be consistently executing with discipline on that big vision.

• 30:31Patrick O'Shaughnessy?

  What are the keys to moving fast at scale? You always hear that pace is the advantage of the startup, right? Like they can move a lot faster than the incumbent, but you're trying to do this at scale. So what's specifically about moving fast? Even when there's lots of people and lots of companies and lots of stuff going on, what have you found unlocks speed for you and your teams?

• 30:49Speaker 02

  The most important thing in order to unlock speed is have people on the management team who are comfortable with moving fast, but moving fast in a disciplined way. Use this analogy, you have a car driving down the highway as fast as it responsibly can. The hubcaps may be shaking a little bit, but they're not going to fall off. You don't want to drive so fast that you're going to have self-created problems. You can't be reckless, you need to be disciplined, you need to be professional, but you want to move fast. Jack Welch was a big proponent of speed, was always emphasizing throughout the whole organization. You've got to move fast, things get worse, not better, particularly with deals, by the way. When I do M and A, I do them very, very fast. I can get a deal done in two weeks, whereas I've gazumped, I've interfered, I've preempted

• 31:32Speaker 02

  many sell-side processes where a bank has a book and a data room and a whole schedule of here's the first round, here's the management meetings, here's the second round. Everyone gets their consultants and they spend all this time and money doing all this due diligence. I know what I'm looking for, but I don't need a lot of that due diligence. I need to meet with the people, I need the basic fundamental paperwork, obviously. But I don't need to know why SG and A is an eighth of a percent higher than it was in the forecast and hire a consultant to write a report on that nonsense. And then you just take the report and no one ever does anything with it afterwards. I need to meet with the people. If I can meet with the top dozen or so people in a company and I can spend an hour, hour and a half with each one of those people, I know everything I need to know about that company.

• 32:13Patrick O'Shaughnessy?

  Do you have favorite questions to ask in those processes of those people?

• 32:16Speaker 02

  It'll change, it'll change from company to company because what's pertinent is different from company to company. So there are some things that are the same, things about how they make money? What's the game here? What is different about their company than the next guy? What's their advantages? What are their disadvantages? What are the opportunities? If they were CEO, had they been CEO, what would they have done differently? If I buy this company, should I change because it's not optimal? What if I buy this company that I should definitely not change because it's really good? And it's working really well. And my list of questions are brief because I want to hear what the answers are. And then based on listening carefully to those answers, follow up questions. I'm much more interested in what they want to set the agenda than what I want to set the agenda. Cause they know the business. I'm just learning the business.

• 33:01Speaker 02

  They've been living the business maybe for 10 or 20 years.

• 33:03Patrick O'Shaughnessy?

  What is your favorite part about post-acquisition integration?

• 33:07Speaker 02

  Speed. Getting to the point where you no longer can tell that this is a company we bought three months ago versus the company that we home grew or 10 years ago, we bought it and it's been with us for a decade. You get the same look and feel, the same brand, the same IT, the same culture, the same excitement. They're using all the same internal social media. Cause I always like to communicate a lot through our internal social media. Then it just is identical in every way. Now, I shouldn't say in every way because every branch, every location, every district, every region does have its own flavor. It has its own personality because you have cultural differences in different parts of the country or in different countries. But the general blood and guts of the businesses is the same. And for me, that's the goal.

• 33:52Speaker 02

  The goal is to get to the point where you have fully integrated this business on every level into the rest of the company and it's part of the family.

• 34:00Patrick O'Shaughnessy?

  How do you do the cultural component of that? Especially if the culture leans most different from the culture that you've been running?

• 34:06Speaker 02

  Listening and demonstrating sincere respectfulness. So this is probably my most important learning in integration is not to come into an acquisition thinking I know it all and getting up there on stage and telling everyone, okay, and giving them a long speech of here's what we're going to do. No, what I want to do is I want to come in with a very open, receptive mind to say, look, we've just paid millions and millions, in some cases billions of dollars for this business. Obviously we think it's valuable and these are the people who are going to make this company work. And I look at those people as an extremely valuable source of information about the company that we just spent all that money to. Buy. And I often find, I write about this in the book, that I often find that employees at all

• 34:50Speaker 02

  levels, whether they're frontline, middle management, senior management, have never been asked, what's your best idea to improve the company? Tell me everything that you would do if you had my job. And when you ask them that, and then shut up and just listen carefully to what they're saying, write it down. It's an amazing experience. Sometimes you ask those questions, and then for 45 minutes, all the people you're interviewing just are piling on and interrupting each other because they're just such an exciting experience to say how they could improve the business. It's unleashing these perspectives, this knowledge, this information about the business that you don't get otherwise. I find a lot of companies, many companies, in fact, the majority of companies, they have this valuable thing there in terms of this repressed information

• 35:33Speaker 02

  that's not unleashed. And if you can go in there and figure out ways to unleash this information flow and get these feedback loops going, and recognize people for contributing to this improvement plan, wow, you can create tremendous opportunities, tremendous, and make a lot of money for everybody.

• 35:49Patrick O'Shaughnessy?

  Are there most common sources of bloat that you've seen in companies that you've acquired?

• 35:54Speaker 02

  Oh, yeah, I've seen lots of bloat. I should caveat that. I've seen two types of travesties. One is where a company just has way too much expense, just bureaucracy and red tape and people aren't really

• 36:07Patrick O'Shaughnessy?

  triplicates of every division.

• 36:09Speaker 02

  Well, and say, so how do you contribute to the value of the company? And this is long pause. They're really not. They're just on some tangent. It just wasn't managed properly. Just grew up like a weed. But I also see companies that are under invested, that haven't put enough money into the business, and they've lost opportunities to grow the business as a result of not investing in the business. Both of those, too much bloat, or actually just bloat, and too skinniness in the overhead, both of those things are bad things. You want to find, like most things in life, you want to find that middle path, you want to find that good harmony.

• 36:39Patrick O'Shaughnessy?

  Can you tell me about Ludwig Jesselson?

• 36:41Speaker 02

  I'd love to. So Ludwig, you see a big smile. So Ludwig Jesselson, may he rest in peace. He died in 1993. Ludwig Jesselson was the head of Philip Brothers, which was, before there were hedge funds, the word didn't exist back then. But he was the largest hedge fund. I would call him a hedge fund because they were a commodity trader. They traded oil, they traded metals and a global business. And Mr. Jesselson, I never heard anyone call him Ludwig, but Mr. Jesselson, I was called, sometimes Mr. Jay. Mr. Jesselson was an amazing individual and he was my first big business mentor. And anytime I met someone in my business career who was older than I was and was very successful, I tried to glom onto them and I'd just pick their brain, just ask them, so how'd you get so successful?

• 37:26Speaker 02

  How did you accomplish all this? What are your secrets? What did you achieve? And I found that every time I did that, they're very generous with doing that. Mr. Jesselson was my first big business mentor and he was a customer of mine, Philip Brothers, because I had Amrex, which is an oil brokerage firm, and Philip Brothers is a big trading firm. So I was getting oil from them and matching them together with Exxon and Shell and BP and Texaco and Gulf and all the different major oil companies and independent refiners. And I started doing a lot of business with them because we came out of nowhere and suddenly we were, after a relatively short period of time, we were doing billions of dollars of brokerage volume. And Philip Brothers was a big player, so naturally our paths crossed. One day I got a call from his secretary saying, Mr. Jesselson would like to have lunch with you. I said, wow, that's a big break. I'm in. Tell me when.

• 38:10Speaker 02

  So I went in and this became one of many lunches. I went to New York to his office. And during those lunches, I paid attention. I just zeroed in on everything he said, everything he did, his nuances, his face, everything. And I just asked him lots of questions. And he was very generous with sharing his insights on stuff. And I learned a lot about business and I learned a lot about life. He was a very religious person, much more religious than I am, and he believed in principles. He believed in certain basic concepts. And in Judaism, he was Jewish, Orthodox Jew. It was a lot about morality. It was about ethics. It was about right and wrong and about certain things are not gray. They're either black or they're right. Murder's out. Murder's not good. He saw life in terms of honesty. He saw life in terms of people who he could trade with,

• 38:55Speaker 02

  who would be reliable trading partners and people who were, in Yiddish they call ganes, thieves. And he tried not to do business with the ganes. And when he had a trading Partner that was honest, that was ethical, he did a lot of business with them. Because back then, remember, there was no email. There wasn't even the fax machine. There was telexes and twixes that barely worked. And so your word really was your bond. And you needed to trade with people that were going to perform. Because if you bought a cargo of oil for someone $23 and then the market went up to $25, you didn't want a partner that said, I'm not honoring that deal. There's nothing in writing. So you needed people who would honor their word, had integrity. He placed a very high value on integrity and dealing with people.

• 39:36Speaker 02

  And he put a lot of emphasis on dealing with people who would perform what they said they were going to perform.

• 39:42Patrick O'Shaughnessy?

  If you could have a five hour session around a nice fall fire with Mr. Jay and two or three other people, who would you pick? Who would you add to that conversation?

• 39:50Speaker 02

  I was fortunate to hang around with his family a lot of times on Shabbat. But unfortunately on Shabbat, you can't talk business. So I couldn't talk business. But that's okay. We talk about life. But I had many lunches with him and his son, Michael, who's a good friend of mine now. And I've spent a lot of time with his wife, Mrs. Jesselson, Erica Jesselson. There's an amazing story. She came out of the Holocaust. And before the Holocaust, she had dozens and dozens of, she had a pretty big family, the Pappenheim family in Austria, in Vienna. She had dozens and dozens of cousins. And after the Holocaust, she had a handful. And there's a large majority of her family died. And that really formed her worldview. That wow, evil in the world exists. And it can have very serious consequences if it's not addressed right away. I spent a lot of time with Mr. Jesselson and his family. I was very fortunate to do so.

• 40:34Patrick O'Shaughnessy?

  Pretty wonderful. If you think about the process of employing technology in your businesses, what lessons have you learned there? Because you said before, you're not a technologist, but you use a lot of technology. I imagine that today, AI is probably on the front of your mind in some way, shape or form. If you're a user of technology, how do you approach problems like this? Okay, there's a toolkit out there in the world that keeps getting better. It's pretty cool. I get to use that stuff. When do you know how to be an early adopter, a late adopter, quasi-technology business? The atoms versus bits question for you in particular seems very interesting.

• 41:06Speaker 02

  So one of the things I learned from Mr. Jesselson, and I write about this in the book, is you can mess up a lot of things if you get the major trend right. And if you get the major trend wrong, you can do a lot of things right and you're not going to make a lot of money. So getting the major trend right is very important in any business. You can't be on the wrong side of the trend. The biggest trend of them all is technology. So in the book, I have a two million year synopsis. I think it's a really interesting chronology of technology inventions, starting from over two million years ago, when cavemen started using pebbles for tools, and then invention of fire a little time later, and then when I say a little time later, like a half a million years later, and then the invention of shelters, another half a million or more

• 41:48Speaker 02

  years later, and then all the inventions that accelerated in time, leading up to today, where we are in this very AI-centered world. Technology is critical to get right. You cannot be in a business where technology is going to disrupt you and technology is going to diminish the value of the service or the product that you're providing. And on the other hand, you must be in a business where technology is your ally, is your friend, is wind to your back. And all my businesses, fortunately, we've been on the right side of technology. On technology, if you look at today, the three companies that I chair, I'm no longer CEO, but that I chair, technology is all over the place. You look at XPO, the third person I hired at XPO back in 2011 was a guy called Mario Harik.

• 42:29Speaker 02

  Mario Harik, an advanced degree at MIT in machine learning and AI, and I loved him the first second I met him, and I said, okay, I'm going to hire this guy because, like me, he talks fast and thinks fast, and we were just completely got what my vision was of automating brokerage. My original hypothesis for brokerage back in 2011 was, this is going to get automated eventually. You're not going to have people in rooms talking on phones. You're going to have computers talking to computers, and we got to get ahead of the curve on that. He understood that immediately, and I hired him very quickly, and he was my CIO for a number of years. Then he became chief customer officer, did a great job there. And then he ran LTL, and today he's CEO of the whole company, and he's doing a fantastic job. This morning, the stock was up 12%. They announced earnings and they did a great job. It's a good quarter.

• 43:11Speaker 02

  So technology has been a big part of the culture of XPO, largely due to Mario. And my support of that right from the get go. And if you look at the companies we spun off, R X O. So R X O is a very tech forward brokerage company. So they're matching together shippers and deliverers, trucks and shippers, and doing it in an automated way. When we started that business, zero percent was done automated. Today, ninety seven percent, almost a hundred percent, ninety seven percent is either generated or fulfilled electronically. So it's a complete transformation of a business using technology. If you look at the third company that I chair, G X O Logistics. So G X O is the largest pure play warehouse company.

• 43:55Speaker 02

  It's got over two hundred million square feet of warehouses with about a thousand warehouses in dozens of countries. And it's probably the most tech forward warehouses you'll ever see. Not you'll ever see in the future, they'll all be automated like that. But you will be able to see today. There's warehouses that are large warehouses that a competitor may be running and having hundreds of people running it. And G X O is running it with fifteen people. And everything's well engineered and well designed using state of the art technology. And it has a big joint venture with Nestle over in Europe of the warehouse of the future, which now is the warehouse of today. So I'm just giving you a few examples of utilizing technology, but I could give you hundreds of examples because that's a mindset

• 44:38Speaker 02

  that's in every company I've run is how do we use technology and capitalize on the trends? How do we make technology our friend, not our enemy?

• 44:47Patrick O'Shaughnessy?

  In your entire history of studying trends and making sure you don't miss the big ones, what is the fool's gold that you've seen? When does it seem sometimes there might be a trend? And what might be the reasons that something that initially appears to be the next big thing in fact is not?

• 45:02Speaker 02

  I give you one very graphic example of something I thought was a trend, and I wrongly thought it was a trend, and I ended up losing a lot of money on it. Back in, I want to say around nineteen ninety nine or so, there was this Transportation Equity Act for the twenty first century. It was called T twenty one. And the idea was to repair all the bridges and the tunnels and the roads and all the decaying infrastructure across the United States. And the government was going to spend six hundred billion To do that. And I thought that was a trend. It's wow, I gotta get in on this trend. We're gonna see a lot of, by the way, $600 billion back in 1999 was a lot of money. Today, that would, I don't know how many headlines it would even get us, not trillions. But back then, it was the equivalent of today, $200,000. And I said, we need to get in this game. And I went out and I bought a lot of barricade companies

• 45:46Speaker 02

  and cone rentals and striping and all those things that are orange on the highway of doing reconstruction, bridges and tunnels. And I said, I'm gonna be like the big equipment rental guy. This burgeoning trend of the government refixing all the roads around the country, the infrastructure. And of course, as governments often do, they didn't spend the $600 billion. They spent a much smaller fraction of it, and it didn't go to companies like, you know, rentals for the large part. So it just didn't work. I ended up getting out of the business because it was, turned out to be a lousy business. And I resold it for a half a billion dollar loss. So sometimes you spot a trend, you get all excited about it and act on it. It's not a real trend. That's an example of that. You gotta be careful that you don't have false trends.

• 46:24Patrick O'Shaughnessy?

  When I was reading the tech chronology in your book, it gave me flashbacks to reading Ray Kurzweil's work back in my twenties or something, The Singularity is Near. What do you think of that notion? Surely, anyone that looks at this, if you put it on a visual chart, you see this very Kurzweilian exponential growth. What do you think about this notion of the singularity?

• 46:44Speaker 02

  So you'll notice the very beginning of the book, I have the acknowledgements section. And usually, in the acknowledgements section, you thank your manager, and your publicist, and your publisher, and your wife, and God, whatever. And they're pretty much all the same. And I say, I don't want to waste the reader's time, do some boring thing. I tried not to put anything silly in the book. I tried to be snappy. I tried to make it substantive and respect the reader's time. Because people are busy and they're doing me the privilege of reading the book. I want to give them something in return, something that's worth reading. So like, in the acknowledgements section, I picked about 15 or 20 people that have been my mentors, that have been my teachers, that have been my friends that I learned stuff from, just people that I've really benefited a lot. Gained some wisdom, gained some insight that I wouldn't have had otherwise. And that's what I put.

• 47:28Speaker 02

  I put the person's name and then in one sentence, what did I learn from them? What's one of the most important things I learned from them? One of the acknowledgements actually is Ray Kurzweil, because Kurt Wild wrote a book in, I would say, 2006, 2006 or so, called The Singularity Is Near. And its premise was that technology is advancing at ever increasing speeds, is accelerating. And humans are not evolving as fast as machines, as technology, as software and hardware. And ultimately, we're going to keep using that technology that we're creating. Technology is a tool that we're creating, just going back to the stone tools I talked about a few minutes ago. Just like fire, just like the wheel, just like the telegraph, just like all the tools that we've invented over the years.

• 48:11Speaker 02

  This technology that we've been creating is becoming more and more integrated with us. And we're using it to enhance our senses. We're using it to enhance our cognitive functioning. We're using it now to enhance our feelings, our relationships. So many things that AI is generating, our writing, and now generative AI. And his hypothesis was, and still is, that we're merging with technology. And just as 99.9% of all the species that have ever existed on the planet have gone extinct, humans, we're going to go extinct someday too. He thinks we're going to go extinct not too long from now. He thinks we're going to go extinct in the next decades, not in the next centuries or millennia. And he thinks the next species will be a combination of humans and machines, humans and technology,

• 48:56Speaker 02

  that will be so different that you have to call it another species. And I don't know about the timing on that, but directionally, it makes a lot of sense.

• 49:03Patrick O'Shaughnessy?

  When you're evaluating how to deploy a new technology, let's just take AI. It's the one of the day for sure. Inside of a business, what are the tactics of doing that? Is it pushed down to your team? Is there a normal way that you run this process in some regular interval to say, are we using the technology of the day efficiently enough? How do you actually do it? Especially because your businesses have been so real world, heavy, CapEx heavy, asset intensive. This is not a bunch of software flying around.

• 49:32Speaker 02

  So the exact opposite of what you would originally think. I don't say, okay, here's all this technology, how can we use it? It's the exact reverse. I ask all my employees, and I have formal ways to do that, through questionnaires, through emails. And we also do town halls. A big campaign to ask all of our employees, if you had a wish list and there was no financial impediment, just an initial exercise, don't worry about what it costs, and you could design any technology you would want to have, what would make your job easier? You could do your job faster if you had it. What would you be able to please the customer more if you had it? What are customers asking you for? What are ways that instead of something taking 10 minutes could be done in 10 seconds? And fantasize, fantasize your perfect technology,

• 50:17Speaker 02

  your ideal world of technology. And then you get all these ideas come in. Then the tech people, who have to be very tightly integrated with the commercial people, otherwise they're creating stuff that there's no application for. They're very much involved in this process. They then take it together with the FPNA, with the financial people, and look at each one of these ideas and say, okay, what would be the financial impact? Supposing we did this. Suppose we automated this function, for example. How much more money would that save? And we could pass along some of that to the customer and keep some of that for ourselves and we grow margin here. And then what would it cost? And how much time would it take? What would the timetable look like on that? What would be the investment in that? And then it all becomes down to ROIC, which is the basic thing of business is ROIC. You're deploying capital and getting money back.

• 51:02Speaker 02

  And then they stack rank all those. And now we've got the beginning of a business plan for our tech group. Here's what we asked all of our employees, what's the fantasticest tech you can imagine? And now we've gone into detail of what it would cost and what the return would be and timing for it. And we've stack ranked them and now we have our plan. And then we track that plan. We execute that plan based on a time scale. We assign responsibilities to people. Now we have a checklist and we have weekly and monthly meetings where we color code our progress on that of how likely are we to hit the goal by that date that we initially said? Is it green? Is it yellow? Is it red? And then we attention direct based on that. And we don't just do with employees. We ask all of our customers and our vendors.

• 51:47Speaker 02

  We say, what could we do in technology that would make you love us more? That would make you want to do more business with us? That would make your life easier? That would delight you? And then we do the same exact process I just described. Get that all down. Maybe we have hundreds or thousands of ideas. And then we stack rank them based on ROIC.

• 52:04Patrick O'Shaughnessy?

  You seem to love problems.

• 52:06Speaker 02

  Yes, I do. And by the way, you mentioned Mr. Jesselson before. One of the things I learned from Mr. Jesselson is that problems are your friend. Problems are your opportunities. Problem solving problems, that's the way you make money. So if there's no problems to solve, you're not going to make any money. Shareholder value comes from identifying problems, running towards the problems, solving the problems.

• 52:28Patrick O'Shaughnessy?

  Talk to me about thought experiments and the role of thought experiments in your life.

• 52:31Speaker 02

  I haven't had a lot of time for a lot of hobbies because I've been very busy building great companies, leading teams and just running fast. I haven't had a lot of time for a huge amount of hobbies. So a little time I've had, my biggest hobby is meditation. So I meditate twice a day and I've been doing this since I've been 16 years old.

• 52:46Patrick O'Shaughnessy?

  Holy cow.

• 52:46Speaker 02

  51 years. I've missed almost no days. I've done it almost every morning and every afternoon. And I've tried lots of different forms of meditation and I've mashed them all together and made my own personal meditation that works for me. And one of those approaches to meditation are thought experiments. Thought experiments actually, it's not a phrase I made up. It comes from Albert Einstein, actually. Albert Einstein had a German word that I can't pronounce. It's phonetically something like Gedankenexperiment, which translates to thought experiment. In fact, using a thought experiment is how Einstein discovered relativity. Because he pictured himself, he imagined himself, did a thought experiment of riding a beam of light and pictured what that would be. And then he saw the relationship between time and space and all became clear to him. So thought experiments are picturing things intentionally in your mind.

• 53:30Speaker 02

  And I try to do things that are numinous, meaning I try to do things that are novel, that are different, that are inspiring, that take me out of my comfort zone, that give me a perspective that's not normal, so to speak. Because if I just have normal perceptions, I'm going to achieve normal results. And I want to achieve super normal results. I want to lead teams that create huge amount of alpha. In order to do that, I've got to have people think differently. I have to have people think out of the box, think in a different way than ordinary thinking. So thought experiments for me help me do that. So sometimes I think in terms of different perspectives on space, either very big, bigger than the universe, an infinite number of universes, a multiverse. Sometimes I shrink my awareness down to tiny spaces, like I'm inside an atom. Even on the quark level, there's elementary particles. Sometimes I do that not just with

• 54:14Speaker 02

  Space to do with time. I go back in time, maybe decades and memories from my childhood or growing up, smells or sights or sensations or faces or places. Sometimes I go back thousands of years or millions of years and I picture what would have been in the past. Just giving a few examples of different ways of thinking. And that's time, that space. I apply similar ways of looking at sensory activity, feelings, emotions, and some of the best emotions in life, like love, and figure out ways to amplify those emotions. And I have a lot of fun with that. Sixteen is very early to start meditating. Maharishi Masayogi, I saw a poster of. I was at Northfield Mount Hermit School. I was a junior. I was sixteen. I saw a poster of this man with a beard and there was a saying

• 54:57Speaker 02

  under the poster said, "Life is bliss." So that's interesting. That's a different. You don't really think about life being bliss. That's not like a normal saying. It was a free lecture. So I went to lecture and there was this redheaded woman, Janice Allborn, I think her name was. I still remember to this day. And she seemed to have something interesting about her, a certain calmness and glow about her. And I learned TM. I learned TM and I did it for decades. And I hung around with Maharishi. I was a student when I was younger. And then eventually I left the TM movement and I started studying other types of meditation and I built on that foundation. What was he like to be with? What was the affect? He was a very interesting guy and a person who was complex, had a lot of different things about him that were opposites. On the one hand, he was a very humble man, a lot of humility and a lot of sensitivity and a lot of caringness, a lot of love and very

• 55:42Speaker 02

  kind-hearted person, generous. And in another angle, he had a lot of big plans himself, had a lot of big things and you were either on the bus or off the bus. And if you were not helping with that, you were off the bus. But he was a very bright person, extremely intelligent, very charismatic. He was able to charm thousands, actually millions of people to follow him. I liked following him. I liked being part of a group that was different, that was learning new things, that was experimenting with, he called it consciousness as a field of all possibilities. I thought that was a really cool saying. He knew a lot about meditation. He had studied meditation deeply in India, had met many different gurus that he had met with. And he had formulated that it was something that was easy for Westerners to

• 56:26Speaker 02

  do. So he was very brilliant with meditation techniques.

• 56:28Patrick O'Shaughnessy?

  What formative experience comes most easily to mind prior to age 16?

• 56:33Speaker 02

  For me, it was education. For me, I was lucky, I was privileged to be able to go to summer enrichment camps instead of normal camps like most kids go to. My mother put us into geeky nerdy camps that were for the sciences and for the arts and educational, basically extensions of the school year. And there was one at Moses Brown School in Providence, and there was one that was called the Governor's School for the Gifted. I participated in these summer programs that I learned that there's a lot of people a lot smarter and gifted than I am. I learned it was really nice to be around, it was very enlivening to be around people who were smarter than me, people more talented than I was. Because when you're in your own school, maybe you're the top student in that class, or the top one or two students in the class, you think you're really smart. When you go to school

• 57:17Speaker 02

  for the gifted, you realize suddenly you're in the lower quartile, not in the top one or two students in your class. And I found that very enriching. In fact, they were called enrichment camps. And I remember the excitement of being in a group of really bright people, maybe 20, 30 people in a class, and a very talented teacher up in front, and that teacher bringing out a lively conversation. For me, that was a learning of an electric experience, how to run an electric meeting, which, fast forward to today, is the title of one of the chapters of my book, is How to Run an Electric Meeting. And one of the keys to that is to make sure that people in the room, have the right people in the room.

• 57:51Patrick O'Shaughnessy?

  Yeah, you're doing my job for me. You got to tell us about the electric meetings. What are the components?

• 57:55Speaker 02

  So our meetings in all three of those companies are different, very different than the typical boring meeting that most companies have. Most companies have a meeting where someone's up there, and they've got a PowerPoint, or they've got a speech they've prepared, and people are sort of semi-listening to the speech. Torture. Going back to what I was saying before, when you get my age, you only have 5,000 to 7,000 days left, you want to have every minute of that, something exciting, something valuable, something rewarding. And that's not the kind of way I want to spend my days going forward. The way we get those meetings very exciting and very valuable and productive is to first have the right people in the meeting. People who are very honest, who are very intelligent, who are very hardworking, who are very collaborative, and people who understand respectfully.

• 58:38Speaker 02

  People understand how to listen and how to be open and receptive to other people's ideas, to what other people's perspectives are, and people who can think dialectically, meaning thinking from different perspectives on the same problem, not rigid thinkers, not black and white dichotomous thinkers, not people who think I've got it all figured out and anyone who disagrees with me is wrong and I'm never going to change my mind because you don't get anywhere with that. So you want to have an atmosphere where people are encouraged to disagree, but disagree respectfully. And if you can create a safe zone for people to lean in and disagree with each other in a nice way, where the person who's being disagreed with doesn't feel bad because you're not attacking that person, you're debating that idea, very different.

• 59:20Speaker 02

  You're not labeling the person or denigrating or demeaning the person and there's no bullying or any of that kind of stuff. There's passion in those meetings, there's energy in those meetings, but it's the energy of ideas, it's the energy of a shared purpose between all the people in that meeting that we want to get to the right decisions on these things and we want to then, as leaders of the company, go back to the field and mobilize large numbers of people to create a ton of alpha. That's a fantastic meeting. The way you run an electric meeting is the leader doesn't set the agenda for the meeting, the people set the agenda for the meeting. So what I do is I send out what would normally be the PowerPoint presentation of the agenda for the meeting ahead of time and people expect it to read that. And then I have everybody, we have an app and everybody

• 1:00:02Speaker 02

  has to fill out the app and put in their biggest takeaways that they learned from reading that and from being in the business on related subjects. And secondly, they have to put in, okay, now we've read what our challenges are, what our opportunities are, what our goals are, what do you think are questions that are worth going around the room, once we meet in person, it's a good use of everyone's time, it's going to help us achieve goals of creating value for shareholders, for delighting customers, for improving their employee engagement and so forth. And then we take all those, we eliminate the dupes, because often you get a lot of dupes on the good takeaways and the good questions, and we send them back and everyone rates each one of those takeaways and each one of

• 1:00:42Speaker 02

  those questions on a scale of one to 10 in terms of the importance of the value that they think Discussing that in the group would add. And now we've got our agenda. We start with the ones that have the highest rankings and we go down until class is over. I'm joking class until the meeting is over. And that becomes an inclusive democratic way to set the agenda that people really buy into. They really pay attention to what's going on in the meeting because they set the agenda. This is what they wanted to talk about. And that's a rule of the meeting is that there are no devices on. There are no side conversations. There are no distractions here. You have to pay attention. If you have the privilege of being invited to this meeting, you're concentrating on the one person who's speaking at a time. And you're giving that person your 100% attention.

• 1:01:27Speaker 02

  Your eyes are right on that person. Your ears are listening right to moving from that person's mouth. And you're feeling what they're feeling and you get really in tune with the person. And it's such an exhilarating experience for the speaker and for the people listening, for the person speaking. Imagine how validating that is, Patrick, that you're in a meeting. You got 20 of your colleagues, of your peers there. And everyone is just looking right at you and really genuinely interested in what you have to say. It just builds up your confidence. It also gets you in the flow, gets you in the zone. And you also feel a certain inspiration and motivation to say important things because you've got all these people paying attention to what you're saying. So it gets you really in the zone. And then all the people are listening and it cultivates a flexible mindset,

• 1:02:11Speaker 02

  which is so critical in leadership in business, where you're constantly reevaluating your hypotheses based on new evidence, new information. And that's what those meetings are like. And people really want to be in those meetings. Who's the best leader you've ever experienced? I've had the fortune to have lots of great leaders in the company that I've led. If I had to point to the best leader, I'd have to say three. Because by definition, I thought they were the greatest leaders in the company because I promoted them to be CEO of the three companies. These are the people I felt that were most qualified, most suited to lead over 100,000 people. And they're very different. So you look at Mario Harek for XPO, you look at Malcolm Wilson for GXO, look at Drew Wilkerson for RXO.

• 1:02:54Speaker 02

  On the surface, very different ages, different backgrounds, different. Different cultures, different accents, ones from Lebanon, ones from England, ones from South Carolina. They look very different from each other, but when you dig down to the things that matter, not the superficial stuff, but the more important things, they're identical. These are people who are honest to the bone, that's critical for a leader. You won't get tens of thousands of people to follow you if you're a BS artist. People are smart. People are smart. They may be making $20 an hour. They're still smart. People can know if a leader is telling them the truth or if they're giving them a baloney. They can smell it. It's like the people are programmed for that. So these people have integrity. These people are hardworking. These people are not people you have to check on them and prod them.

• 1:03:36Speaker 02

  These are the people who are all in, lean in and all in and really take a lot of pride in doing a really good job. These are people who are collegial. These are people who get along with other people. These are people who are collaborative. These are people who are not arrogant. These people are humble. These are people who understand that we come and go in a few decades. We're not that important. We're just a little tiny flick and a flash in the whole universe. It's a huge universe and people don't take themselves too seriously. These are people who have, on the one hand, enormous amount of self-confidence, enormous amount of self-confidence that a leader has to have. At the same time, even though it's an opposite trait, don't over emphasize to themselves how important they are because we're not that important in the end. So they have humbleness. And so these are people have the qualities, these three people are great leaders.

• 1:04:18Speaker 02

  They have the qualities that I've just been articulating. They really embody them. They don't have to be tutored and mentored and get a coach to get them to be more honest, to get them to be more collaborative and get them to be harder working and so forth. This is what they're made of. This is their DNA.

• 1:04:31Patrick O'Shaughnessy?

  What, if anything, about business are you interested in that you feel like you haven't yet figured out?

• 1:04:36Speaker 02

  What I'd like to figure out more is something that I've figured out a lot, but haven't gotten to the end zone yet, which is how do I motivate and deal with people who aren't thinking clearly? Who are victims of their own faulty way of thinking, of their biases, their prejudices, their cognitive distortions, their schema in life, the prison that they have to interpret all the things that are happening in life. And sometimes you see people who have some significant weaknesses in the way they're thinking. And I would really like to figure out a way to better communicate with those people, to better mentor those people. Coach those people to just unthink their stinking thinking, as they say. That's something I would like to really get better at. I'm not bad at it. Actually, I'm good at it. I'm good at identifying that. I'm good at being empathetic and helping people.

• 1:05:19Speaker 02

  But I'm not proficient at it. I'm not perfect at it, and I would like to get better at it.

• 1:05:23Patrick O'Shaughnessy?

  A related question is the key to getting the most out of someone. Everyone has something to offer. It varies person to person, both in type and degree. What is the best way to get the most out of people?

• 1:05:35Speaker 02

  In business, how about paying them well? How about paying them a lot of money if they perform? So two things there, paying them a lot of money, but if and only if they perform. So most people come to work, they don't want to make money. That's the purpose. They're coming in not because they want to hang out. Although if you have a fantastic company, that is a motivation to come in because they like the people they work with. Maybe as much as the people they live with, but that's not the main reason why a person is coming in. The main reason a person is coming in is because they want to make a lot of money for themselves and actually for the people they love. In most cases, it's for the people they love. It's for their spouse and their kids and whatever else they donate to and their whatever's important in their life. They want to give back and they want to support people. They want to get the self-esteem from enabling other people to live a comfortable life.

• 1:06:16Speaker 02

  And so if you can provide them with an opportunity to make a lot more money than they're going to make across the street. But tie it to performance, tie it to them actually executing on the things that will help us materialize our big vision. People will create miracles. People will do things they didn't even know they were capable of doing.

• 1:06:34Patrick O'Shaughnessy?

  What do you want now? You're someone that has done a lot of thinking big, a lot of moving fast, had a lot of success as a result of those two things across a lot of industries. You strike me as someone that's not going to stop or slow down. So what do you want? What do you still want?

• 1:06:49Speaker 02

  I have a big, long list of things to do. My wife and I actually have a bucket list. She keeps a little book where we have our date nights and every time we come up with a place we want to go or something we want to do, she puts it down there. We're not going to get through 5% of that list because there's just not enough days left. But my main goal right now is to continue what I've been doing, which is to start companies from scratch and make them into big, multi-billion dollar companies and make the shareholders a lot of money. And make the employees real happy and make the employees a lot of money. Also, I want to have a Money Tree organization where everyone who's touching that organization is getting their fair share of gold. And for me, I get a lot of satisfaction out of that. It's something that really turns me on. I really enjoy doing that. I like the creativity of getting a big idea that starts off by definition abstract.

• 1:07:34Speaker 02

  It's all in your mind. You're just picturing something in your mind. I want to create this large industry leader. I want to create this gargantuan company that's going to be respected in the industry and customers are going to love and so forth. And that shareholders are going to want to invest in and then making that concrete. And then materializing that abstract vision with precision. For me, I really enjoy doing that. It's a creative process for me. It's the same process that a musician has or an artist has where you first got to conceive of something. And then you actually make that happen.

• 1:08:00Patrick O'Shaughnessy?

  One thing that you have to do well by definition, given you've started all these companies and all these industries is know when to leave. How do you know when a chapter is done?

• 1:08:10Speaker 02

  I was talking to James Gorman the other day, who's a retiring CEO of Morgan Stanley. And I was telling James, don't quit. He's stepping down as CEO and he's going to become executive chairman. And I have a great relationship with him. I have a great relationship with his bank. And I said, I really don't want to see you go. You're still in your 50s. You're still young. And he said, no, I feel it's time to go. I feel it's the right time to go. Everything is well and wisely put. I've got good succession plan in place. I think I can leave holding my head high and if you're real good, what accomplished. And I understand that because I've left many companies over the, I've left five companies over the years that I've built up to very large companies. And it was time to move on. There comes a point in time when it's time to move on. It doesn't feel the same. You look forward the next few years and you say, what do I want to accomplish? And is that aligned with what the company is going to do?

• 1:08:55Speaker 02

  And if it's not perfectly aligned, you know, if your heart 100% into that, you should leave. You should leave and move on. And if you feel the slightest bit bored as a leader, it's time to move on. Because if you're doing your job right, you're not going to be bored for one second. You're going to go through every day. You're going to have a to do list and you're not going to get through a quarter of your to do list every day. If you do, your to do list is too short. And when you get to the point when there's some type of a been there, done that mentality, then it's time to move on.

• 1:09:21Patrick O'Shaughnessy?

  I'd love to do a really quick tour of the businesses and something surprising about the business that you learned building them that people might not appreciate. Maybe starting All the way back with oil business and your couple of adventures there.

• 1:09:31Speaker 02

  For the first 10 years of my business career, from ages 23 to 33, I was in the oil business and I loved the oil business. It was this global business that back then in 1979 to 1989, there was no internet, there was no email. Futures exchange were just starting towards the end of that and information was hidden, particularly information about pricing. So you could go to an OPEC country and sign a contract for $23 a barrel. And they only set the price every three months or so when they would meet in Vienna or they meet in Geneva. In the meantime, the spot market is like $33 a barrel, for example, and you could resell it for $10 back to back with no risk. If the price happened to go down, you just don't lift the cargo, minimize the amount of lifting you have.

• 1:10:12Speaker 02

  So this was a wonderful business to be in because of the information immaturity, the lack of free flow of information. You would find out the pricing of oil, you weren't in the game, if you weren't in the business all day long. By a snail mail newsletter you would get from McGraw Hill, Platts Oil Grant was called. And that's how people discovered price. Now you discover it every second, it's up on the screen with futures and you see it every tick. So that was a big opportunity to make a lot of money. I would no way make the kind of money I made back then today doing the same thing. Because that just doesn't exist. The pricing is transparent and where the oil is and where it has to go is transparent. And we did a lot of processing deals. We did a lot of deals where we would rent, quote unquote, the refinery from Shell Rotterdam or BP.

• 1:10:54Speaker 02

  And we would then get the oil, charter a ship, bring it to that refinery, pay them a couple of dollars or whatever to process it. And then we would sell what came out of that. And people said, wow, that's real risky business. And we were like, really, it was almost no risk. It was a little risk, but almost no risk because we understood each component of that. And today, everybody understands that. That's not unique proprietary information, but the time was really great. The next business I went into was waste management. And this was, I started a business in 1989 and took a public in 1992 called United Waste Systems. And the strategy there was real simple. It was to go into these tertiary markets, not even secondary markets, but to go into the upper peninsula of Michigan or Appalachia, West Virginia, Kentucky, and go down to rural Mississippi.

• 1:11:38Speaker 02

  Buy up the landfill capacity and then buy the hauling companies, the collection companies that were coming, that was called tipping at those landfills and build up scale and build up a density so that you could run the business, you could run one truck instead of 10 trucks and pick up the same amount of garbage the same amount of time. Obviously, margins would increase quite a bit as a result of doing that. And we use technology to do route optimization, which now everybody does. In fact, then that was revolutionary. And that business, we outperformed the S and P 500 from 1992 to when I sold it to what's now called Waste Management for $2.5 billion by 5.6x. So if you bought one share of the S and P and one share of United Waste, you would have made 5.6 times more money on the United Waste one. What I learned from that was that the trend is important.

• 1:12:22Speaker 02

  Again, we would not be able to make that kind of money today in the waste business. We had a trend going on where, right around that time, the EPA was outlawing these dumps, which were unsanitary and were polluting the environment and really should be outlawed. And the amount of landfills decreased by a large amount. And the remaining landfills, which then cost about $4 or $5 million to build up, made a lot of money because they were the survivors. So we capitalized on that. And then after that was United Rentals, I ran for 10 years. United Rentals was based on one simple premise. The premise was there was a lot of construction equipment that was being owned by construction companies and by end users that was only used like a few months, a few weeks, sometimes a few days out of the year. We said, this is nuts. This is absolutely crazy.

• 1:13:07Speaker 02

  It makes absolutely no commercial sense. And then you had to have a maintenance team. It's almost like the Uber and Airbnb insight before them. In a way, in a different industry, yeah, absolutely. It was a form of sharing, of crowd sharing. And at the time, about 15% of construction equipment in North America was rented, 85% was owned. We said, that's going to flip. There'll come a point in time where there'll be more equipment rented for short periods of time and utilized over the course of the year by sharing it with many different users than is owned all year long. And of course, that turned out. So we had a tremendous amount of organic growth and we had a tremendous amount of M and A opportunity as well. We bought well over 200 companies in the industry and we bought them at multiples lower than what we were trading. So we created a lot of alpha.

• 1:13:49Speaker 02

  The first Monday at seven o'clock in the morning, we showed up after we bought a deal just by the accretion. And then the deal are all accretive deals. The other thing I took away from United Waste was that was my first exposure to public markets. Everything I did in the oil industry was private. The waste business was the first time I had a public currency. And I remember when we IPO'd it with the two banks that then at that time were the two leading banks in environmental services. There was Payne Weber and there was Alex Brown. Of course, now Alex Brown's part of Deutsche Bank and Payne Weber's part of UBS. But the time I went to two conferences and I saw Jim Groninger, it was an investment banker speaking for Payne Weber. And I saw Tammy Preston, who was the investment banker for this field, for Alex Brown. These were the two big shot bankers. I said, I want to use these bankers. I want to work with the people who are actually doing the most amount of business in the area, who understand the business well.

• 1:14:34Speaker 02

  And so I did. And I formed good relationships with them. I took their advice. We took it public pretty quickly. Then I said, after we sold United Waste for two and a half billion dollars, I want to build on the skill set that we've developed, that we've honed of doing M and A, of doing integration, of running a business in a standardized way. I was in the town next over from Dan Tully, who was the CEO of Merrill Lynch at the time, fantastic man, may he rest in peace. And Dan, this is in the old days when you could meet with the banker and the analyst in the same room. So Dan set up and his son, who's also named Dan, set up a series of meetings, oh, I said about a dozen meetings, with different parts of Merrill Lynch that had ideas of what should be the next industry that I should consolidate? Where are their M and A opportunities?

• 1:15:16Speaker 02

  And we looked at healthcare, we looked at financial services, we looked at education, and we looked at equipment rentals. So that got me into United Rentals. And United Rentals was a big win, obviously. United Rentals, I started at, the company was $3.50 a share. I haven't checked it today, but recently the stock has been $435. It's over 100 bagger. United Rentals was a durable business that we created. And then XPO, I started in 2011 and was a similar business plan. It was a business to consolidate an industry that was still fragmented. And that's what I did. I looked at over 2,000 acquisition opportunities and I bought 18 companies. And we tightly integrated those 18 companies. And if you look at those companies that we bought, before we bought them, they were doing roughly About a billion dollars in EBITDA collectively pro forma.

• 1:16:01Speaker 02

  You look at them today, they're doing something like two and a half billion dollars EBITDA. So we and my management teams that succeeded me have improved those businesses, have made those businesses more profitable. And that's the other component. You can't just buy stuff. You have to buy stuff and then integrate them and optimize them. And that's a very important part of the value creation opportunity. That's what I learned at XP Logistics is to, I just hone the skills and just build on the skills that we had done in the previous company.

• 1:16:26Patrick O'Shaughnessy?

  What, having listened to this, would still surprise people about you?

• 1:16:30Speaker 02

  I was talking to one of my investors the other day and he said he's learned more about me in the last three months because I've been on interviews and different forums. I've been opening up a little bit about my personal life. I've usually kept my personal life and my approach just out of it and just tried to just institutionalize myself and just be a corporate CEO and just do a real good job and deliver the numbers and get results. And people will appreciate that and do it. So I've been interviewed a bunch of times the last few months and I've taken questions like the good questions you've been asking me and I've been answering them. So I don't know what would surprise people about me. I really don't.

• 1:17:00Patrick O'Shaughnessy?

  I think I saw somewhere that you would consider something like accounting as an area that you might go check out, but then decided against it. And I'm always just so interested by why you might pass on something. Is that a real example? Did I have that right? And if so, why did you decide not to do it?

• 1:17:13Speaker 02

  Over the last year, I've looked at over 500 opportunities, mostly M and A opportunities, industries that we could consolidate, businesses we could do a lot of acquisitions in. And I've rejected the vast majority of them. I'm down to a very short list. And accounting was one of the ones I looked at. And I gotta be careful because every business I have has accountants. So I don't want to say anything that annoys my auditors, but I think there's a real existential risk to accounting. I think AI in five years, 10 years, 15 years, I don't know the timeframe, could do everything that accountants do right now, particularly the ones that are just doing individuals, personal income taxes, for example. I think that's very mechanical and anything that's mechanical and just process and can be formulaic, AI is going to rip that out and just do it for cheaper or for free even.

• 1:17:56Speaker 02

  So I don't want to get into a business where technology trends are going to be my enemy. I want to get into a business where technology trends are going to be my friend. I want to get into something where AI is going to help us grow margins, help us grow the business.

• 1:18:08Patrick O'Shaughnessy?

  Is there anything else about software versus physical technology in the software sense of incredible software businesses obviously have been built, but software can get disrupted by other software fairly easily, whereas disrupting United Rental or something, I guess is possible, but it's not going to be done by a programmer in his closet.

• 1:18:26Speaker 02

  I like to be in businesses that you can touch and kick and nothing physical there to it. That's not necessarily better. It's just me. That's what I like. I gravitate towards things like that. I like to be in businesses where the metaverse is not going to replace it. So there's certain things like your house. Eventually, even if all day long you're wearing goggles or contact lenses, or somehow you're in the metaverse for a large part of your time, you're probably going to still sleep in a bed and you're probably going to still take a real shower with a real shower and you're going to brush your teeth with a real toothbrush. There's other things that will be replaced, will be placed by AI and it's no longer going to be. And I want to make sure I'm in the first category, not in the second category.

• 1:19:02Patrick O'Shaughnessy?

  I love the idea of think big and move fast. I interpret it almost as a challenge. That's something I can take and go do, try to do more of each of those two things. Is there any other way that you would frame a challenge to those listening to live what obviously has been a very full life?

• 1:19:17Speaker 02

  The book is called How to Make a Few Billion Dollars. It's a little bit of a misnomer because it's not just about how to make money. It is. It's designed particularly with aspiring CEOs in mind, but that's not the only purpose of the book. The purpose of the book also is to help people achieve whatever they want to achieve in their personal life, in their business life, in relationships, but anything important, something that's big. Life goes by real fast and you can just dilly-dally through it and just die, or you can do real fun stuff and real exciting things and you can change the world if you want to change the world. You can help other people if you want to help other people. You can learn things that are really important to learn. You can explore the arts and the science. And there's so many things that are amazing in life. Life is a wonderful opportunity. We have a

• 1:20:02Speaker 02

  privilege. The biggest privilege we have is just being alive, being a living, breathing organism that has cognitive functioning and has sensory activity, that has purpose and a meaning and has feelings and can know what love is and have relationships with people. This is not what Most things have, but we don't have it for a long period of time. We have it just for a few decades and it goes by fast. As you get older, it goes by faster and faster. I remember when I was a kid, summer seemed like forever. Today, summer seems like it goes by in a week. I think the book is to help people dream big, have people get out of their ruts of thinking and explore bigger, newer, important ways and increase their desire, increase their goals and to help them,

• 1:20:48Speaker 02

  at least show them what's worked for me. Some of those things will resonate and will be applicable and will help people and they can use those same techniques. But hopefully even the ones that don't will give them examples and ideas and illustrations of things that they can customize for themselves. I'm not a perfect genius and know the answers to everything. I have some things that are proprietary and idiosyncratic to how I've built these beautiful businesses that I put in the book. One thing I learned from writing this book is I have a few dozen, maybe a hundred unique ideas and I put them all in the book. I don't have another book in me. This is my only book. I'm not writing another book. At least that's not my plan because I don't think I could come up with another hundred things that are

• 1:21:25Speaker 02

  unique and special and different. But I did put down in that book, every single thing that I think at least was responsible for the success that my teams and I have had. How did you get the book done so fast? Concentration, just really focusing on that. And so it's just the way we've done everything in business is having a clear vision of what we're trying to achieve. And then laser focus on that. So we talked earlier about the acknowledgement section where I listed various mentors and friends and people I've met that I've learned important things, life-changing things. And one of them I mentioned is Lewis DeJoy. One of the people is now the Postmaster General of the United States. And I got to know Lewis pretty well because I bought his company and he was on my board of directors for a while before he went into government service. And what I learned from Lewis was

• 1:22:06Speaker 02

  laser focus on the things that matter and avoid distractions. He would say that over and over again. So let's, oh, that's a distraction. When he was running a meeting, there was an agenda and it was something that came in that was just not helpful to what we're trying to achieve. He would say, no, let's refocus, let's stay focused on the points. And when he was running a warehouse, he had everybody focused on the KPIs, the key performance indicators, the metrics, the measurements. Of success that mattered and just kept coming down to that. And I watched him how he would run the business. He had these video conferences with all the managers at the different warehouses. And he got into great detail of what they were doing. And he would always bring the conversation back to the 10 or so KPIs. How are we doing on this? How are we doing on this per hour? How are we doing on this number? How are we doing on this productivity? How are we doing on employee engagement? How are we doing on customer satisfaction? How are we doing on defect?

• 1:22:51Speaker 02

  Focus, focus, focus on the things that matter.

• 1:22:54Patrick O'Shaughnessy?

  The thing that gives me joy is something that's happened today, which is I've done 400 of these. I've not met someone quite like you. You're this interesting combination of almost like John Collison's endless curiosity and optimism and energy with Frank Slootman's intensity or something like that. Some really interesting combination that I haven't encountered. And I've done a lot of these and I've met a lot of people. And so I've just really enjoyed your affect. It's really cool. The book is fantastic. I have one final question for you, and I ask everyone the same question. What is the kindest thing that anyone's ever done for you?

• 1:23:25Speaker 02

  That's an easy question for me to answer. I don't need any time to come up with the answer. It was the president of Banque Peribat was a gentleman called Christian Weyer, W E Y E R, Christian Weyer. And he's still alive. He's 101 years old, French, but living in Geneva. And Christian did two things for me. And the second one is the most kind. The first one was very helpful for me in business. He gave me a billion dollars line of credit from Banque Peribat to go do oil trading. So he had confidence in me. He believed in me and I didn't let him down. Really appreciated that. But the second thing was even kinder. He introduced me to my wife. We've been together now for almost 40 years.

• 1:24:00Patrick O'Shaughnessy?

  Fantastic. Brad, thank you so much for your time.

• 1:24:03Speaker 02

  Thank you, sir.

• 1:24:05Patrick O'Shaughnessy?

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