CHAPTERS
- 0:00 – 5:11
Brad Jacobs' Career and the Book's Premise
David reads the book's opening excerpt, in which Brad Jacobs lays out his career from Amerex through United Waste, United Rentals and XPO and its spinoffs. David explains that Brad is a Founders listener who sent him an early copy.
- •Jacobs started five companies from scratch, seven counting two spinoffs, and completed about 500 acquisitions
- •Amerex began in 1979 and United Waste sold for $2.5 billion in 1997
- •United Rentals became the largest equipment rental company within 13 months
- •XPO was split into GXO and RXO, and Jacobs chairs all three
- 5:11 – 11:37
Rearranging Your Brain and Managing Your Mind
David covers the book's first chapter, which is about changing how you think and keeping a good mental attitude. He ties it to Peter Thiel's first-principles quote and Marc Andreessen's line about euphoria and terror. He also covers Jacobs' tools for reframing anxiety.
- •Successful people think differently and approach business from first principles rather than formulas
- •Jacobs reframes negative thoughts as useful data rather than objective reality
- •He asks what the worst case is and what he would tell a friend with the same worry
- •He stopped expecting perfection from himself and others
- 11:37 – 13:58
Thought Experiments, Meditation and Using the Book as a Reference
David describes the thought experiments Jacobs uses and his habit of meditating for about half an hour a day. David also recommends keeping the book on hand as a reference and recounts meeting Brad at the book launch.
- •Jacobs spends much of his daily meditation on thought experiments, which he says is where many of his best decisions materialize
- •The chapters work as standalone references on meetings, M&A and building teams
- •David was impressed by Brad's energy at the launch party
- •David points to Brad's Invest Like The Best interview
- 13:58 – 22:14
Business Is Problems: Jesselson, Danny Meyer and Bezos
David reads Jacobs' story of a lunch with his mentor Ludwig Jesselson, who told him business is about problems. David connects it to Danny Meyer, Henry Kaiser, Jeff Bezos and Charlie Munger. Problems are framed as assets to run toward.
- •Jesselson told a young Jacobs that business is about finding, embracing and enjoying problems
- •Danny Meyer heard a similar lesson from Stanley Marcus: the road to success is paved with mistakes well handled
- •Bezos got excited about waste and bad news in the same way
- •Munger's attitude toward problems was to expect them and cope
- 22:14 – 26:56
Radical Acceptance: Losing $500 Million and Gaining $4 Billion
David turns to two stories from the book. In one, Jacobs radically accepted a $500 million loss on road rental companies after a highway funding bill failed to deliver. In the other, he bought back $2 billion of XPO stock after a short report, which turned into a $4 billion profit.
- •The acknowledgments are a list of maxims Jacobs learned from other people
- •Jacobs bought road rental companies expecting T21 funding that never arrived and sold at a roughly half-billion-dollar loss
- •After the short report, XPO bought back $2 billion of stock despite bankers saying it was unprecedented
- •The shares later were worth $6 billion
- 26:56 – 30:51
Get the Major Trend Right: Jacobs' Research Method
David calls this one of his favorite sections. Jacobs says getting the big trend right matters more than anything, and he researches an industry obsessively before entering. His central trend is that technology is the dominant megatrend.
- •Jesselson's advice: you can mess up a lot and still do well if you get the big trend right
- •David cites Ogilvy's idea that the good ones know more
- •Jacobs reads widely, uses paid data services, attends conferences, and interviews CEOs, bankers, VCs, vendors, activists and journalists
- •Invest heavily in technology in almost any industry
- 30:51 – 38:35
Information Edge in Oil, Waste and Equipment Rental
David walks through how Jacobs applied the trend-spotting and data approach across his companies. At Amerex he built a database to speed up oil price information, at United Waste he optimized truck routing, and at United Rentals he bought the software the industry ran on. David compares this to Larry Gagosian's data-based business and the Red Bull founder's idea.
- •Amerex shared oil pricing data in hours instead of days, in an era when price info came by mailed newsletter
- •United Waste started from a Merrill Lynch research report and used tech-based truck routing to cut trucks and days
- •United Rentals' idea came from Merrill Lynch analysts
- •Buying WIN Systems gave Jacobs industry-wide data so he could adjust proactively while competitors reacted
- 38:35 – 40:21
Covering Your Flank: The Failed Cerberus Sale
Drawing on the M&A chapter, David tells how Jacobs thought he sold United Rentals for $7 billion in 2007 before the financial crisis led the buyer to default. The company collected a $100 million breakup fee and is now worth far more.
- •Jacobs stepped down after the 2007 sale, then the buyer defaulted amid the financial crisis
- •The stock fell 31% in 24 hours and later dropped to $5
- •The company collected a $100 million breakup fee
- •Jacobs says the deals he avoided helped him more than the deals he did
- 40:21 – 44:43
Feedback Loops and Asking Employees for Their Best Ideas
David discusses getting data from frontline employees, which Jacobs shares with Les Schwab, Sam Walton and Jim Casey. He covers Jacobs' two company-wide questions and how David uses a version of them with his daughter.
- •Frontline employees are often never asked how to improve the company
- •Executives can filter information into an overly rosy picture
- •Jacobs' questions: your single best idea to improve the company, and the stupidest thing the company is doing
- •David adapts the questions to ask his daughter how he's doing as a dad
- 44:43 – 46:16
Speed and the Hertz Lunch
David tells the story of Jacobs' lunch with the CEO of Hertz. Hertz built its equipment rental chain over 37 years while United Rentals did it in 13 months, and the CEO asked Jacobs to slow down. David treats it as a lesson in not easing off.
- •Hertz built a roughly $1 billion rental chain in 37 years, versus 13 months for United Rentals
- •The Hertz CEO complained about no longer being first in equipment rental and asked Jacobs to slow down
- •United Rentals later made about six times the money
- •David's takeaway: don't ask competitors to slow down, keep your foot on the gas
- 46:16 – 54:36
Hiring A Players and Overpaying for Talent
David explains why Jacobs says hiring is the one place to stay a perfectionist. He covers Steve Jobs' dynamic-range argument, Jacobs' criteria for hiring, the quit-without-warning test for A, B and C players, and why overpaying for top talent makes sense.
- •An empty seat is less damaging than a poor fit
- •Jacobs screens for high intelligence, dialectical thinking and willingness to change opinions
- •The imagined resignation test tells you whether someone is an A, B or C player
- •B players tend to hire C players
- •It's nearly impossible to overpay for talent, and money motivates people everywhere
- 54:36 – 59:35
The Entrepreneurial Spirit and Closing Thoughts on the Book
David closes with the book's manifesto about creating value and the story of Steve the HVAC owner. He reads Jacobs' story about going all in at the Governor's School and recommends the book and its appendix.
- •Jacobs says building products and creating jobs and wealth is an honor and a good thing for the world
- •Steve the HVAC owner is presented as the face of the entrepreneurial spirit
- •Jacobs learned the connection between intensity of focus and results as a teenager
- •The appendix includes thought experiments, a technology timeline, interview questions and book recommendations
- 59:35 – 1:12:56
Founders Only Conference and Founders Notes Updates
After the episode, David gives updates on the Founders Only in-person event in Austin and on the Founders Notes subscription. He also previews next week's episode on the rise and fall of a billionaire utility tycoon.
- •Founders Only is a 150-person in-person event in Austin, March 12th through 14th
- •Founders Notes offers searchable highlights, a book list and a highlight feed
- •David says Founders Notes is meant for people already running successful businesses
- •The next episode is about how to lose a few billion dollars
