#335 How To Make A Few Billion Dollars: Brad Jacobs

**David Senra** (0:00)
During my 44 years as a CEO and a serial entrepreneur, I've made every possible mistake in business. I've overpaid for acquisitions and botched integrations. I've run operations for cash when I should have invested for growth. I've delegated tasks I should have done myself. I've hired the wrong people. I've made strategic bets that didn't pay off. And yet, my teams and I have managed to create tens of billions of dollars of value for our shareholders.
This book is about what I've learned from my blunders and how you can replicate our successes.
I'm what's called a moneymaker. I've started five companies from scratch, seven if you include two spinoffs, and turned them all into billion dollar or multi-billion dollar enterprises.
My teams and I have completed approximately 500 acquisitions.
In total, these ventures have created hundreds of thousands of jobs and raised about 30 billion dollars in outside capital. My career began in 1979 when I started a privately owned oil brokerage company called Amarex Oil Associates.
I was 23 with just a few thousand bucks and no experience. Within four years, my partners and I had 4.7 billion in annual brokerage volume with offices worldwide.
We sold Amarex in 1983, and I moved from New York to London to start an oil trading company called Hamilton Resources. Hamilton generated about a billion dollars a year in revenue, and we made this money through an opportunistic combination of crude oil trading, counter trade, pre-finance, and refinery processing deals.
In 1989, so six years later, I moved back to the United States and entered a new sector, the rapidly expanding field of solid waste management. I called my new venture United Waste Systems and took it public in 1992 So founder of the company in 1989 takes it public in 92, is gonna sell it in 97 We became the industry's fifth largest player, and in 1997, we sold United Waste for $2.5 billion.
United Waste taught me that I love working with outrageously talented people to deliver outsized returns for shareholders in public stock markets.
So he sells United Waste in 1997, that same year, he says, I started a new company, United Rentals, to rent construction equipment for job sites. I took this venture public later that same year with a growth strategy that emphasized acquisitions from the start. Within 13 months, we had built the largest equipment rental company in the world.
There's a hilarious story later in the book about a lunch that Brad had with the CEO of his major competitor in that industry. I'll get to it later on in the episode. Within 13 months, we had built the largest equipment rental company in the world. United Rental Stock is a 100-bagger. The share price at inception was $3.50, and it now trades at more than 100 times that price. In 2011, I was on to my next big thing, XPO Logistics.
XPO was the seventh best performing stock in the Fortune 500 of the last decade. Its main focus was freight transportation, matching truckers with shippers, forwarding freight and expediting urgent shipments. We built XPO into an integrated global logistics leader. I divided XPO into three separate publicly traded companies as a value creation strategy.
We spun off GXO, the largest contract logistics provider in the world, and RXO, a freight brokerage platform that runs on technology that we developed in-house. I currently chair all three companies and each business is helmed by a strong CEO. These experiences have allowed me to share thought experiments that can help you learn to think differently, which is an essential prerequisite to accomplishing big things.
This book is a guide. If you have a burning passion to make enormous amounts of money in business, or want to turbocharge your chances of success in sports, the arts, politics, philanthropy, or any part of your life, read on.
That was an excerpt from the book I'm gonna talk to you about today, which is How To Make A Few Billion Dollars, and it was written by Brad Jacobs. In addition to starting seven separate billion dollar companies, Brad also listens to Founders. He sent me a very nice message saying that he was addicted to listening to these book reviews, and he was kind enough to send me an early copy of this book a few months ago. And I read it and wanted to make an episode, or to release the episode rather, when it's available so you can actually order it, which I highly recommend that you do, and that'll be obvious as we go through some of the ideas contained in Brad's book.
So I wanna jump right into it. He says, I've come to know a lot of extremely successful people in my life. They all have one thing in common. They think differently than most people. All of them, to a person, have rearranged their brains to prevail at achieving big goals in turbulent environments where conventional thinking often fails. So I wanna read one more sentence, and I'm gonna read to you this quote from Peter Thiel that popped in my mind when I got to this section of the book. I love that, what he said. All of them, to a person, have rearranged their brains to prevail at achieving big goals in turbulent environments where conventional thinking often fails. Making a few billion dollars doesn't just happen, but it's possible with intense focus and a willingness to transform how you use your mind. That is the first chapter. So I got to this section immediately when I read that, one of my favorite quotes from Peter Thiel popped into my mind, and Peter said, the single most powerful pattern that I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas. That idea of finding value in unexpected places and thinking from first principles instead of formulas, instead of using conventional thinking, remember that later on, we're gonna talk about this outrageous thing that happened. Brad winds up making about $4 billion, buying back a bunch of his stock, even though bankers and advisors around him were saying, hey, no one's ever done something like this before. And his response was perfect because you could tell he was thinking from first principles. He's like, well, just because we were the first company to buy back such a high percentage of our stock in this situation doesn't mean it's a bad idea. And it turned out to be a phenomenal idea. So I like that he starts the book with this, where it's like, you need to rearrange your brain to prevail at achieving big goals in turbulent environments where conventional thinking often fails. If Brad had, or another way to think about that in this situation, which we'll cover later, if Brad had listened and adhered to conventional thinking, he'd be four billion, him and his company would be $4 billion poor. And so spread throughout the book, you're gonna see these like boxed standalone maxims or pieces of advice that relate to what he's currently trying to teach us.