How To Make A Few Billion Dollars by Brad Jacobs

1. 0:00 – 5:11

   Brad Jacobs' Career and the Book's Premise

   1. DSDavid Senra0:00

      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've invested for growth. I've delegated tasks I should've 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 money maker. 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 in outside capital. My career began in 1979 when I started a privately owned oil brokerage company called Amerex 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 Amerex 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, countertrade, prefinance, 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 founded 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, uh, about a lunch that Brad had with the CEO of the, 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 hundred bagger. The share price at inception was $3.50, and it now trades at more than a hundred times that price. In 2011, I was onto 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 wanna 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 that 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. [laughs] 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 re- to make an episode, or to release the episode rather, uh, when it's available so you can actually order it, which I highly recommend that you do, and you-- 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."

2. 5:11 – 11:37

   Rearranging Your Brain and Managing Your Mind

   1. DSDavid Senra5:11

      I wanna read one more sentence, then 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. The, the, 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 Uh, instead of using conventional thinking. Remember that. Uh, 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 $4 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, and they really, like, w- the way I think about him is he's distilling down his knowledge from ma- uh, into, like, simple to remember maxims. And so he says, "So much of success in business comes from keeping your head in a good place." He talks about expecting, the importance of expecting positive outcomes. And I think it says a lot that the first chapter of this book is called How to Rearrange Your Brain, and that he spends a lot of time on the importance of managing your mind and attitude. Entrepreneurship is difficult and stressful, requires sound judgment, and you cannot make high quality decisions if you don't manage your inner monologue, your inner feelings. And I love this idea of expecting positive outcomes. Expect positive outcomes. Stop beating yourself up mentally. I have. The next time you catastrophize something that isn't that bad, understand that your reaction is a genetic survival trait that you inherited from your hunter-gatherer ancestors. The only time that I've ever felt truly lost was when I stepped down from United Rentals in 2007. So he's gonna talk about... This is, really this entire section is why understanding and controlling your mind is so important for founders. And you and I have talked about this before, and there's a great, uh, quote by Marc Andreessen that said entrepreneurs o- only ever experience, uh, two emotions, euphoria and terror, [chuckles] and nothing in between. It's the highest highs and the lowest lows. So you've got to learn to control your, your mindset and your emotions. The only time I felt truly lost was when I stepped down from United R- Rentals in 2007. I started looking for my next big thing, and I couldn't find it. I became depressed. I'm an ambitious person by nature and a deal maker by inclination. Now I had no deal going, no industry sector where I could envision working my magic. And so he starts reading, like, a library of psychology books trying to figure out how to fix this. He says, "I learned to turn my internal chatter to my advantage by reframing negative thoughts as useful data, as useful data rather than objective reality." That is tied to another idea that he's gonna use over and over again, something you and I have talked about over and over. Uh, it comes f- there's this fantastic quote from this legendary founder named Henry Kaiser, uh, who was building companies around World War II. I read his biography because Charlie Munger recommended it to me, and actually when I went to Charlie Munger's house to have dinner with him, uh, the book was sitting behind Charlie on the shelf, and I actually got to, to ask him about it. And it was incredible. Charlie hadn't read that book probably in, like, 15 years, but his recall, like he could, he... [chuckles] It was i- impeccable. Like told me, like r- essentially recited all of the facts that were in that book as if he had read it yesterday. But Henry Kaiser has this great quote in that biography, uh, that says, "Problems are just opportunities in work clothes." And so I think it's a similar analogy to what he's saying here. It's like, yeah, everybody's gonna have negative internal chatter in your mind. Why don't we reframe that, use those negative thoughts as useful data rather than as objective reality? Back to Brad. Inevitably, the process of running a business will test your bias towards hope or fear. Euphoria or terror is the way you and I talk about this. When I notice I'm feeling anxious about something, I ask-- This is fantastic. I ask, "What's the worst that can happen, and how would I cope with it?" And then he has another question he asks himself. If a friend had a similar worry, how would I advise them to handle it? So this idea of stepping outside of yourself is something I've tried to practice as well. Step outside of yourself. It's your problem, pretend it's somebody else's problem, a friend, a loved one, uh, even a competitor maybe. And it's like, okay, if I had that similar worry or the similar prob- uh, problem and it wasn't me, how would I tell them to solve it? And then just take your own advice. So he's saying putting distance between yourself personally and the source of your anxiety actually helps you, uh, think more objectively about positive outcomes. This idea, like, think about it. The guy has started seven separate billion-dollar companies, and his-- The, the first chapter of the book is all about the importance of managing your mind and attitude. So he says, "Not beating myself up has been a hard-learned lesson for me. I've become much happier in my middle age when I stopped expecting unrealistic levels of perfection from myself and my family." I still struggle with this all the time. I beat myself up. I have a very-- I always say my inner monologue sounds a lot like David Goggins. If you ever heard his, uh, audiobook, Can't Hurt Me, [chuckles] that's what mine sounds like, so I'm gonna have to take Brad's advice here. I've become much happier in middle age when I stopped expecting unrealistic levels of perfection from myself and my family, my friends, and my coworkers, not to mention customers, vendors, and shareholders. Uh, the reality is that when you're trying to make a few billion dollars, your team is likely running in multiple directions at a fast pace, except that some goof-ups are inevitable, and you'll find that it's much easier to maintain your mental equilibrium as you pursue big goals. This goes over several pages. Try to summarize this for myself so I can remember in the future. Don't beat yourself up. Emotions blur judgment.

3. 11:37 – 13:58

   Thought Experiments, Meditation and Using the Book as a Reference

   1. DSDavid Senra11:37

      Keep a positive mental attitude and stay calm. And one way that Brad does all of that is he's a big fan of thought experiments. The reason you-- I mean, you're just-- I think it's a no-brainer to, to buy the book, but there's a bunch of stuff that, uh, that I'm not gonna cover in the podcast that's in here, uh, that the appendix... I think of this as, what I would do is, like, I'd read it straight through, and then I'd keep it on a shelf or keep it on your desk and then use it as a reference. And you'll go back, and there's a bunch of things. Like, all the chapters are separate things, so, like- How to run great meetings, uh, how to do a lot of, uh, M&A without imploding your company, how to build an outrageously talented team. I really do think this is a fantastic reference that should stay close, um, at hand. And so one of the things he has in this book is a bunch of thought experiments that he uses. So I just wanna g- outline why those things are so important to him. He says, "Albert Einstein was a consummate daydreamer." And then he preferred the term, uh, it's German, I'm not even gonna [chuckles] try to pronounce it. But it's, it's daydreaming, thought experiments. So he says, "Thought experiments are not limited to genius scientists. Gifted artists, composers, composers, mathematicians all use them for creative work or problem-solving. I usually spend about half an hour a day meditating. Much of this time is spent in thought experiments. This, uh, produces a profound sense of calmness, and is when many of my best decisions materialize." I don't... I can't remember if I've already said this, but Brad was kind enough to invite me to, uh, the book launch party they had in New York. I flew up, uh, to New York just for, like, 16 hours, just to go to the book launch and, and meet Brad. Um, what was fascinating, and I had this inclination, is, like, he's just got great energy. Uh, he's got great-- I hate to say, I have no other way to say this. He's just got great personal vibe when you're, like, in person with him. And I talked to people that worked for him. They said the same thing. They, like, l- love him. They enjoy, like, the work environment that he's created. And the best source I know to experience, like, how Brad is is I would listen to, uh, the Invest Like The Best episode that Brad did with my friend Patrick. It's episode 352 of Invest Like The Best, and Brad, in that interview, talks a lot about the importance of meditating. He's been meditating, I think, for over 50 years. And as he says right here in the book, he, he feels it's been a, a b- a huge benefit, uh, to his career, because that's where he feels many of his best decisions actually materialize.

4. 13:58 – 22:14

   Business Is Problems: Jesselson, Danny Meyer and Bezos

   1. DSDavid Senra13:58

      So let's go to this, what I mentioned earlier, that business is problems. This comes up over and over again, that business is problems, and great companies... The way I think about it is great companies are just effective problem-solving machines. And I first heard that idea, or that idea was planted into my mind maybe seven years ago when I read Danny Meyer, the famer- famous restaurateur, his autobiography. And Brad's gonna talk about his most important business mentor and the lesson that he taught Brad when Brad was in his 20s. "I've had multiple business mentors over the years, but none have been more important than Ludwig Jesselson. Mr. Jesselson ran the largest commodity trading company in the world. I got to know him in my 20s when his company was a client of my oil brokerage business. Uh, before long, we were having lunch regularly, and he would share bits of business wisdom that have stayed with me ever since. At one memorable lunch, I arrived burdened..." Remember, Brad's in his 20s at this point, okay? Uh, uh, "One lunch, I arrived burdened with problems that I began to unload on him. Mr. Jesselson listened carefully and waited until I had finished speaking. Then he put down his fork, turned to me, and said, 'Look, Brad, if you wanna make money in the business world, you need to get used to problems, because that's what business is. It's actually about finding problems, embracing, and even enjoying them, because each problem is an opportunity to remove an obstacle and get closer to success.'" I'm going to put this book down, and I'm gonna go to where I have my highlights stored from Danny Meyer's book, which is called Setting the Table. It's in... If you have access to Founders Notes, I highly recommend going, searching for Setting the Table, and then lis- and then reading all them. Takes less than ten minutes, and it gives you a good overview or reminder of the lessons that Danny Meyer was trying to teach you and I from his book. But he had this, a very similar experience. I'm pretty sure he was in his 20s at the time as well. He's h- having dinner with another older, more successful entrepreneur at the time, this guy named Stanley Marcus of the Neiman Marcus family. And it's remarkable. It's very almost dead on with what's happening with Brad in his, when he was in his 20s, when he's talking to Mr. Jesselson. And so Danny Meyer's kind of unloading his problems and his stresses to an older, wiser entrepreneur. He says, "Opening this new restaurant might be the worst mistake I've ever made. Stanley set his martini down, looked me in the eye and said, 'So you'"... This is one of my favorite quotes I've ever read in any book. "'So you made a mistake. You need to understand something important and listen to me carefully. The road to success is paved with mistakes well handled.' His words remain with me through the night. I repeated them over and over to myself, and it led to a turning point in the way I approached business. Stanley's lesson reminded me of something my grandfather, Irving Harris," who was a famous... Or not famous, a successful entrepreneur as well. Uh, "Stanley's lesson reminded me of something my grandfather, Irving Harris, had always told me, the definition of business is problems." That's exactly what Mr. Jesselson is telling a young Brad Jacobs. "The definition of business is problems. His philosophy came down to a simple, uh, to a simple fact of business life. Success lies not in the elimination of problems, but in the art of creative, profitable problem-solving." That's an excellent line too. "Success lies not in the elimination of problems, but in the art of creative, profitable problem-solving. The best companies are those that distinguish themselves by solving problems most effectively." The way-- The maxim I distilled that down so I could remember myself is that business is problems, and great companies are just effective problem-solving machines, as we're gonna see, uh, we'll continue on this page. They get... A l- a lot of the best entrepreneurs, they would get excited. They would get [chuckles] excited when they found businesses or, uh, problems in their businesses. And so Brad continues what he learned from this lunch, uh, with Mr. Jesselson. "In that moment, I learned something invaluable. Problems are an asset, not something to avoid, but something to run towards. Big ambitions..." That's so e- excellent. "Not something to avoid, but something to run towards." You know what? Let me interrupt. Let me interrupt where I'm at, because when, when I got to this part, again, it just popped right to my mind. I wrote down Jeff Bezos, Henry Kaiser. I already told you Henry Kaiser loved problems. He said problems are just opportunities in work clothes. Jeff Bezos, multiple books. In "The Everything Store," the first biography of Jeff Bezos written by Brad Stone. [laughs] There's, there's this interaction between one of, one of-- Jeff and one of his, um, [laughs] one of his employees, and he tells him, like, some bad news, something that, like, they need to improve on or whatever. And he goes, "I brought him very bad news about our business, and for some reason, he got excited." Is that not exactly what Brad Jacobs is saying? Problems are an asset. Not something to avoid, but something to run towards. Later on in, I think this was in Jeff's, uh, one of Jeff Bezos' shareholder letters, but he said that he finds waste, uh, very exciting. So he says, uh, "The customer experience path that we've chosen requires us to have an efficient cost structure." This is Jeff Bezos writing, by the way. "The good news for shareholders is that we see much opportunity for improvement in that regard. Everywhere we look, we find what experienced Japanese manufacturers would call muda," uh, translates into waste. What experienced manufacturers would call waste. "I find this incredibly energizing. I see it as potential years and years of variable and fixed productivity gains and more efficient, higher velocity and more flexible capital expenditures." That is from the book Invent and Wander. Uh, highly recommend. I've done, I think, two podcasts on that already. Uh, it's Jeff Bezos', all Jeff Bezos' shareholder letters, and then transcripts of, like, his best speeches. But I love-- I reference that book all the time. It's exactly what Jeff is talking about there. He's like, "Oh, I get excited. Ooh, this is waste. Good. This is incredibly energizing. It's potential years and years and years of improvements in our business." Very similar to what J- uh, to what Brad Jacobs is telling us here. Uh, big ambitions often beget even bigger problems. If your initial reaction to a major setback is overwhelming frustration, that is counterproductive. Instead, do this. Great, this is an opportunity for me to create a lot of value. Is that not the exact same idea that Bezos just told us in his shareholder letters? It's exact- it's the same thing. It's exactly the same. Great, this is an opportunity for me to create a lot of value. If you can figure out how to solve this problem, I'll-- If I-- Excuse me. If I can figure out how to solve this problem, I'll be much closer to my goal. In the four decades since that lunch with Mr. Jesselson, I've dealt with nearly every problem you can imagine. Challenges with acquisitions, people, tech, branding, you name it. I am not surprised when things don't go perfectly. That's the nature of this universe. The big, gunky problems can be where the best opportunities lie. This reminded me of, uh, when I got to, to, to talk to Charlie Munger. He said the same thing. And it's, you notice this, um, in his last, I think the last published interview he ever-- he did, or one of the last ones, was with John Collison, uh, the founder of Stripe interviewed him. It's actually published on the best, like the Best Feed too. It's also obvious, like, uh, after spending a few hours talking to him, when I got back to my hotel that night, I l- I had, like, this... I immediately just put all, like, everything we talked about, 'cause I didn't look at my phone one time when I was with him. I was like, "Man, this is a once in a lifetime experience. I need to... I, I wanna document this. I wanna remember this." And one of the things that I wrote was that Charlie had a complete, almost a complete indifference to problems. He said they should be expected. You should toughen up. Like, you should just essentially suck up and cope when you have problems that come your way, and then you should be wise enough to try to prevent any, any other problems. Uh, but this idea, it's, like, very similar to what he's saying. I'm not surprised when things don't go perfectly. It's impossible. He's been a CEO and entrepreneur for 44 years. You don't think he's run into every single problem? Like, of course. That's what makes the, the book so valuable. I think I saw it selling for, like, $27. [laughs] Like, that's absurd. That's an absurd amount of value that you get. You get almost half a century of wisdom distilled down. At his book launch party, he said this. He's like, "I don't have another book in me." Like, "I'm not writing another book. I gave you all my ideas. Get-- Buy it if you want it." [laughs] And, uh, but I just think it's, it's, it's, uh, incredible how, you know, everything I'm talking about, this is three, four pages, and we see similarities in the way Brad thinks, that Danny Meyer thought, that the guy from Neiman Marcus thought, that Jeff Bezos thought, that Henry Kaiser thought, um, that Charlie Munger thought. I just love, uh, it excites me when all these ideas, um, connect. Very, very fascinating. Moving on. This is great. He's got these great stories spread throughout the book.

5. 22:14 – 26:56

   Radical Acceptance: Losing $500 Million and Gaining $4 Billion

   1. DSDavid Senra22:14

      And, uh, [laughs] uh, it, this is how to lose $500 million. So, I wanna go back. Actually, before I get into how to lose $500 million, he's got a very unique, uh, acknowledgment segment, se- section. I, I read, I have to confess that I read a lot of the acknowledgment sections in the books that I read. They're usually boring and, like, kinda like filler. Every once in a while, you'll find, like, an interesting source or an interesting book or something. Brad, what Brad did was put it at the front of the book, which is unusual. And then what he did is, like, I, he just made his acknowledgment section a list of maxims that he learned from other people. You have all these conversations, and you distill down one of the main ideas, and it's like, he learned this from Michael Moritz. Small amounts of capital can generate gigantic returns. Uh, from Ludwig Jesselson, who we just talked. Get the major trend right, which we'll go into. Uh, you know, dare to do new things. See the world for what it is, not what you wish it to be, is one of the maxims in the acknowledgment section. And I'm glad I read that before I got to this story about how to lose $500 million, because see the world for what it is and not what you wish it to be is exactly what Brad did. And so he says, he calls this radical acceptance. Radical acceptance quiets the noise created by yesterday's decisions and today's wishful thinking. Here's a story about radically accepting a $500 million loss. So in the late 1990s, Congress came up with this new law called the T21 Tran- so it's the Transportation Equity Act for the 21st Century. In theory, this is what Brad thought was gonna happen, this legislation was going to allocate about $600 billion to rebuild the nation's infrastructure. So I was like, "Okay, there's gonna be a bunch of all this funding up for grabs." I started scooping up big, uh, road rental companies, the ones that provide barricades, cones, striping, and the like. Then I waited for the market to come to me, but that never happened. Only about a third of the allocated government funding was spent, and that was spent in little bits over time. My decision turned out to be a huge mistake. And there was no point in compounding it. We ended up selling those road rental companies at about a half a billion dollar loss because it was the best way forward under those circumstances. So this idea of see the world for what it is, not you, not what you want, wish it to be. He, he, he's like, "Oh, this is gonna be great. They're gonna spend out, uh, dole out the $600 billion." When that didn't happen, he didn't hold onto it. What does he call? Uh, radical exception quiets the noise created by yesterday's decisions and today's wishful thinking. No reason to compound this loss. Let's cut our losses and move on. The next story I wanna tell you about is how to keep your head and make $4 billion. This is my, that was my summary of what's about to happen. So he, at the time, he's running XPO, which is, is his third public company, and I think this is in 2018, and they got hit with a short report. And so this short report gets picked up by the media saying there's all kinds of problems with XPO. You know, you should sell the stock, everything else. And so this is the story from Brad. The short report was packed with a lot of baloney, but of course, the market acted first and analyzed later, and our stock price went into free fall, down 20% or 26% in one day. His response was fascinating. We did exactly what I've been describing in this chapter. We concentrated on the situation at hand without judging what had happened to us. We spent hours going over the short report page by page, identifying the many places where their data had been twisted. And so he takes a problem, and he spots an opportunity, which is what he's been talking about, right? The short seller crisis had made our stock extremely cheap, and instead of fixating on that as bad, we focused on achieving a good outcome. From that perspective, the share price was manna from heaven, and we decided to buy back $2 billion worth of stock. So this is what I mentioned earlier, where the bankers are like, "$2 billion? It's way too high. You can't do that. It's too high of a percentage of your market cap. No one's ever done something like that." And Brad's like, "Who cares?" Just because we were the first company to buy back such a high percentage of our stock... Remember, it goes from the opening. It's like you have to th- you can't r- rest on conventional wisdom, is the way Brad put it. You have to rearrange your brain. The way Peter Thiel says is, "Hey, you sh- successful people find value in unexpected places, and they do so by thinking about business from first principles instead of formulas." There is no formula for the situation that Brad's dealing with, or if there was, it'd be like, "Oh, buy, you know, a little bit. Buy, like, 100 million back," but you can't buy $2 billion. What are you, nuts? Just because we were the first company to buy back such a high percentage of our stock in a similar situation didn't mean it was a bad idea. In fact, it was a once in a lifetime opportunity. A couple of years later, those $2 billion of shares we brought back, we bought back ended up being worth $6 billion, giving them a profit on that one transaction of $4 billion.

6. 26:56 – 30:51

   Get the Major Trend Right: Jacobs' Research Method

   1. DSDavid Senra26:56

      Okay, moving on. What, this is, this might be my favorite section in the entire book. Uh, I love how he describes all the research he does before he jumps into an industry, and it's this idea that he gets. He said, "One of the most valuable piece of advice I've received from my mentor, uh, Mr. Jesselson, is you can mess up a lot of things in business and still do well as long as you get the big trend right. I make sure I understand the major trends that could threaten the business or help it soar. I'm obsessive when learning about an industry." This, this part, this entire... I'd read the entire chapter. Uh, I'm gonna go over, uh, the parts that are obviously most interesting to me. But it's a, it's another illustration of this idea that you and I speak about over and over again. You see it in the books, and it came, came from David Ogilvy, and he says, "The good ones know more." They just do more research. They read more. They talk to more people. They just know more about what they're doing. The good ones know more. Um, and so his idea is, like, one of the main theme, themes, the f- the mega trend, uh, is that technology is the, the dominant mega, mega trend in our universe. If you wanna make a lot of money in almost any, any industry, plan to invest heavily in tech. And that idea is as true today as it was a couple hundred years ago. Uh, I remember reading Andrew Carnegie's autobiography, uh, you know, many years ago. I don't know, maybe four years ago. And he's talking about building businesses in the 1800s. And he was talking about building Carnegie Steel at the time. And I had summarized the advice he was giving in that book, uh, uh, s- specifically around technology as this, and this, this comes up in the books a lot. Invest in technology. The savings compound. It gives you an advantage over slow and moving competitors and can be the difference between a profit and a loss. That is from, th- th- that's a summary of Andrew Carnegie's ideas, which I think Brad, uh, based on this chapter, would definitely agree with. If you wanna make a lot of money in almost any industry, plan to invest heavily in tech. So this is how he starts doing research before he starts a new company. I start by reading everything I can get my hands on, journals, periodicals, newspapers, trade publications, employee reviews on web-based recruiting sites, you name it. I look up, I look at all the websites and social media of the major players and the up-and-comers in the industry. I watch lots of interviews with the CEOs. I use paid services like Bloomberg, AlphaSense, and Thomas Reuters. Uh, I look at analysis from sell-side and buy-side analysts, and I search the s- SEC database, uh, which has large amounts of information on every publicly traded US company, including IPO documents, financial reports, and proxies. I scope out the most valuable industry conferences, and I attend them. He goes to sell-side conferences because they're an opportunity to meet management teams face to face and hear the questions investors are asking. Trade associations have a wealth of industry data. I interview experts. Uh, I seek out people who live and breathe the industry that I'm considering. This phase of the research is about getting face to face and listening intently. I love talking to CEOs. In addition to CEOs, I seek out investment bankers who are most active in the industry and who know it deeply. Just look at how much work and how much information, uh, is collected, right? He, this is, it keeps going. Uh, so it says, "In addition to CEOs, I seek out investment bankers who are most active in the industry and who know it deeply. I also talk to venture capital firms because they spend a lot of time looking at the big trends in different industries. I tap buy-side institutions and successful fund managers who have battle scars from investing in that industry." Uh, industry vendors. Keeps going. Industry vendors are also a good source. They have a sense of the trends that could drive changes in the market. And finally ... Or not finally, there's two more. Shareholder activists, uh, often have important insights as well, and I reach out to journalists who know the industry because by nature they're a skeptical bunch, and I want to hear their perspectives. So then what he'll do is he runs through, like, short descriptions of how, uh, to get the major trend right in a bunch of the b- or how he did in a bunch of the businesses that he started, and, you know, this goes over 40 years.

7. 30:51 – 38:35

   Information Edge in Oil, Waste and Equipment Rental

   1. DSDavid Senra30:51

      What's interesting is, uh, the, the first one. So he talks about Amerex and Hamilton Resources, and it's about, like, his time in the oil industry. It reminded me of, like, a very important idea that I think ... That it's, that you see applied to a bunch of different industries. This idea that you can identify a market with valuable but hard-to-get data. And [laughs] my favorite application of this, 'cause it's just so nuts, was, uh, the episode I did on the, the billionaire art dealer, Larry Gagosian, uh, episode 325, if you haven't. [laughs] If you haven't listened to that, that episode. It was fascinating, 'cause that's exactly what he did. He identified a market with valuable but hard-to-get data, and then essentially made a, his s- made, uh, like, a personal treasure map that, that his entire business, uh, rests upon. So that came to mind when I was reading this section. A little bit of luck put me in the oil industry in 1979 when I started my oil brokerage company, Amerex. It was a highly profitable business, and my realization was that a big trend was forming around the need to capture and share information more quickly. Remember, this is 1979, pre-internet. This whole section is nuts. Uh, so it says, "That was a trend that transformed the industry in the late 1980s. We made a lot of money by being the first oil broker to get ahead of the trend. At the time, there was no internet, no email, no centralized databases with easy global access. The main s-" This is gonna s- blow your mind. "The main source of information about the price of oil was a newsletter that came in the mail." And so he talks about, he's like, "Listen, we're making verbal handshakes with clients in Europe and Asia for $50 and $75 million over the phone with nothing on paper for days." And so this next sentence is a description of the problem. The lack of timely information was a big problem for oil brokers. We made our money by matching buyers and sellers and taking a commission, just like Larry Gagosian. I could see that there was isolated pockets of valuable oil pricing data trapped all over the globe, and I knew that if we could figure out a better way to share that information, we can unlock a lot of value. And so there's no off-the-shelf solution, so he builds his own. I think this is something he does multiple times. And he says, essentially, they built, like, their own crude version of the internet. Um, but it allowed, uh, us to do something revolutionary. Every time an Amerex employee learned something useful about a buyer, seller ac- buyer or seller activity or the price of oil, they entered it into our database. Then we could share that information much more quickly with our brokers around the globe. That process took hours, not days, which was close to [laughs] instantaneous back then in the '70s and '80s. So takes something that took days, now it takes hours. We had created a way to obtain objective insights into global oil supply and demand and pricing trends. And then here is the trends that he identified when he set up United Waste Systems. Uh, the Red Bull episode that I did, uh, episode 333, I think. Uh, it's pretty wild that, you know, that business is gonna make him, you know, his net worth between, somewhere between, like, $20 and $40 billion. He was paying himself before he died somewhere between $500 and $800 million a year. He identified the opportunity from reading a magazine article. And like, hey, uh, the richest guy in Japan, I think it was the country, makes these, like, energy tonics, 'cause there was no energy drink market at the time. That's interesting, and that cha- that reading the article changed his life forever. Dietrich Mateschitz, I think is how you say his name. But we see Brad Jacobs coming up with an idea too. He's just like, well, the idea from United Waste Systems. This is fascinating. I remember vividly the moment the industry caught my attention. In 1989, I was reading Merrill Lynch research reports in bed on a lazy Sunday morning. [laughs] I love that. Uh, and came across a report written by the top-ranked analyst for environmental services then. The two largest companies in the waste industry at that time were each making about a half a billion dollars a year in profit. Remember, that's why I brought up the Red Bull guy. He's like, what? This guy is the high, paying the most, he's making the most money in this entire country, and he sells energy tonics? And then Brad's sitting in bed reading research reports, right? And he's like, wait a minute. These guys are making half a billion dollars a year in profit in 1989. And I thought, how hard can it be to have trucks pick up trash, deposit it in a safe place, and then send out an invoice? I wanted to know more. And so he identifies the two big trends at the time. Uh, landfill capacity was becoming pr- uh, precious because regulations were pushing small trash dumps out of business. So that's trend number one. Trend number two, integration of hauling and disposal. This created an opportunity for end-to-end consolidation. I looked for a way to capitalize on both trends and found it in tech-based truck routing. So think about the entire oil industry kinda operating blind, waiting for this, [laughs] this letter in the mail to tell them the prices. He sees a very similar trend, uh, or problem in the waste management business. Mom and pop owners were running trash collection companies by the seat of their pants and making money at it. Few companies were planning their truck routes methodically, much less using technology to do it. I think he says they used, like, a map and, like, push pins. It's like, this is, he's like, "This is ridiculous." They did not focus on optimizing routes. And so he starts optimizing routes, and this is the result. Instead of sending 50 trucks out over five days to pick up X tons of waste, 20 trucks, so more, less than half, could now perform the same service in three days. So instead of 50 trucks in five days, he's doing the same work in, with 20 trucks in three days. Our costs kept coming down as our processes improved, and our profit margin grew significantly. That is the company that he sells for $2.5 billion. Then he talks about where he gets his idea for his other company, United Rentals. Uh, I was looking up to roll, I was looking to roll up another industry, and so I set up half-day meetings with nine different groups of bankers and analysts at Merrill Lynch. One of those analysts asked if I thought about going into the construction equipment rental. So that's how he finds the idea for his next billion-dollar company. And even though it's a different industry, he sees the same problem. This is the part that I texted to a bunch of friends because I absolutely love. While the rental industry overall was slow to computerize, the larger regional players were more tech-savvy. By 1997, nearly all of them were running on software developed by a company called WIN Systems. This is how to get God mode, uh, what I wrote to myself. When I was a kid, I played a lot of video games, and you'd use like cheat codes like Game Genie and stuff like that. Uh, and you could... One of the things that you would try to unlock is something that was referred to as God mode a lot, which essentially gives you like om- omnipresent, uh, like view of the entire world and like what you wanna do. You could think of what's happening here, this, this, this idea, which I absolutely love that he did. He gets omnipresent data of his entire industry. It's almost like operating in God mode in video games when I was a kid. By 1987, nearly all of them, all the larger, larger players in this industry he's in now, right, were running on software developed by a company called WIN Systems. This told me that software was capable of managing hundreds of thousands of pieces of equipment flowing on and off job sites because they buy construction equipment, and then they rent them out. It's a very, you know, straightforward business. So what does he do? I bought WIN Systems. He bought, [chuckles] he bought the software that all of the main players were using. Owning WIN accomplished two things. One, we had an industry-best platform that we can continue to develop internally for our own use, and the acquisition gave us access to aggregated, anonymized data on macro trends acros- across the industry. This gave us a high-level view of emerging market trends, such as equipment gluts or shortages in the makin- making. What is buying the software company allow him to do? N- we could now proactively adjust our pricing and asset management while the rest of the industry was being reactive. I'm gonna repeat that. That is so important. We could proactively adjust our pricing and asset management while the rest of our, the industry, the rest of our competitors was being reactive.

8. 38:35 – 40:21

   Covering Your Flank: The Failed Cerberus Sale

   1. DSDavid Senra38:35

      Okay, so then I love this story that comes from the chapter on how to do lots of high-quality M&A, uh, without imploding. And it reminds me of one of my favorite sayings that I bring up a lot, that opportunity is a strange beast, and it frequently appears after a loss. What can appear to be a terrible thing actually be, uh, actually winds up being a blessing in disguise. And so he gives us some advice. He says, "Be sure to cover your flank. It's the stuff that comes out of left field that can take a deal down. In 2007, I sold United Rentals to the private equity firm Cerberus." No way I'm pronouncing that right. So this private equity firm buys it, uh, for $7 billion, or at least that's what Brad thought happened. "Highly satisfied that I just sold the company, I stepped down as chairman and wandered off to my private investment firm to begin planning my next venture. Then the great financial crisis arrived." Remember, this is 2007. Uh, great financial crisis arrives. Private equity firms began welching on deals. And Cer- Cerbus, uh, defaulted on the United Rentals agreement. As a result, our stock plunged 31% in 24 hours. Over the course of the following year, the stock fell to $5. We collected $100 million breakup fee, decided not to seek another buyer, and eventually got things righted. Today, the market cap of United Rentals is $38 billion. So tried to sell it, thought they sold it in s- for seven billion in 2007. Fast-forward, what, 15 years, something like that. Good th- good thing they did not sell it for seven billion because the market cap is now $31 billion higher. The deals I've avoided have contributed more to my success than the deals I've done.

9. 40:21 – 44:43

   Feedback Loops and Asking Employees for Their Best Ideas

   1. DSDavid Senra40:21

      And I love this advice. He talks about the importance of set- setting up, uh, feedback loops. This is something that Brad's gonna have in common with j- just the ones that come to the top of my mind. Les Schwab, Sam Walton of Walmart, and Jim Casey of UPS, they all prioritize this. And what is this? It's getting data from frontline employees. They want data from the people that are actually interacting with the customers. They all talk about it in their biographies and autobiographies over and over again. So he says, "When we buy a company, we discover that the frontline employees, middle managers, and even some senior executives have never been asked, 'What would you do to improve the company?'" And this is insane. You would think that the owners would want to know that. And so what Les Schwab, Sam Walton, and Jim Casey would say about this, in Jim Casey's case, anytime he was driving, he'd see a UPS truck. He'd pull over or have his driver pull over, and he'd talk to them. He'd wanna know what's actually happening. They all make, they all say d- differently, but the, the, the idea behind it's the same. They're like, your executives, the team you have around you, like they, over time, they start to like filter information too much, and they can give you like an overly rosy or like false, like positive view of what's actually happening in your company. And so the way you, you penetrate that... Oh, Bezos did this too. I just remembered. He would, uh, work, he has everybody in Amazon, including himself, would work, uh, customer service, like in the call centers, and actually answer calls directly from, uh, customers. So anyways, th- uh, your executives and the people around you over time tend to give you like an overly like optimistic view of your company. And so one way to cut through that is like Sam Walton would go in stores, and he'd talk to people, ch- uh, the cashiers. He'd talk to the people at the front door. He'd talk to the people unloading, uh, the trucks. Like, "Tell me what the hell is going on in this company. I wanna know this." Like, what would you do to improve the company? Why are you not asking them that? Of course, you should ask them that. To them, it was very, uh, obvious. Uh, but like almost, I, what I realized too is like almost at the end of the book, he has another, uh, he has two questions that I thought were genius that I wanna add in this section too because I think it ties to what he's saying here. And so what he would do It doesn't have to just be in a company you're acquiring too. It could be in your existing company. So he asks, I love these questions. He asks two questions. What's your single best idea to improve our company? What is your single best idea to improve our company? And what's the stupidest thing we're doing as a company? And so he would send that out company-wide, you know, send an email. I would, you know, s- you could probably just send this in email one at a time to everybody in the company. Respond back to this email. What is your single best idea to improve our company, right? Think of all the interesting data and ideas that, that, uh, you could, could get. And then what's the stupidest thing we're doing as a company? I love this. I love these questions for business, and then I was actually thinking it's actually good for a family too. Like, I've talked about this before, where, you know, I'm obsessed with what I'm doing. I work seven days a week. Uh, you know, if you're listening to this, you're highly likely you're an obsessive person as well. And yet I don't want... I'm also a dad, so, like, I'm not going to be a shit dad. Like, that's just not an option for me. And so [chuckles] it sounds weird that this came to mind, but, uh, my son's too young for this, but my daughter's not. And so, like, I solicit feedback from, from her. I think I've told you this before. Uh, but I would literally go, you know, I'm not, like... I was just like, "Hey, like, how am I doing as a dad?" Like, am I, like... And I ask questions like this, like, what's the, like, when do I feel, "Forget who told me to do this?" Like, I asked her, uh, and I'll text her this too, 'cause she's old enough to text, which is funny. Like, what do I do that makes you feel the most special? Uh, like, what don't you like that I'm doing? Or, like, just how I'm doing. But this idea is almost basically like, I think it's a good idea in the business, but also the idea is like, what's your, or your single best idea to improve our family is another way to think about that, right? Instead of what's your single best idea to improve our company. What's the stupidest thing that we're doing as a family? What's the stupidest thing that I'm doing as a dad? What's your single best idea to improve what I'm doing as your father? I love the simplicity of it. And I love the idea of, like, sending it out, 'cause you could bury... The problem is, like, what I like about the idea of sending it out as a s- uh, like an individual question, right? That it just cuts right to the simplicity, as opposed to putting it in, you know, maybe like a survey where there's like 10 or 12 other questions in there. I think those questions are so powerful that they're good enough to stand on their own. Um, so I absolutely love that idea. And again, solicit feedback from, from pe- this is just good intel. Like, why wouldn't you do that?

10. 44:43 – 46:16

    Speed and the Hertz Lunch

    1. DSDavid Senra44:43

       So one thing that pops up over and over again that's really important is you just, it's like, I have so many notes in the book, it's like, damn, this guy's moving fast. And then they're like, there's speed. Oh, there's more speed. It just happens over and over again. And so I mentioned this earlier, this hilarious story where his main competitor, the CEO of, uh, Hertz, which was the largest, uh, not only do they have the, the, like, rental car company, but they're the, the, at the time, they were the, the largest, uh, equipment rental chain, uh, in the country as well. And Brad has this great line here. He's like, "Yeah, uh, Hertz did this, and they built up a national equipment rental chain to about a billion dollars of annual revenue over the course of 37 years. United Rentals did that in 13 months." And so he gets this invitation, come have lunch with the CEO. And he's like, "Oh, maybe he's, like, trying to buy me out. Like, what's happening? Let's just... L- let me go over there and see what's up." And it was ridiculous. And the, the note I left myself was, "A losing strategy. Take your competitor out to lunch and ask him to slow down." And essentially, that's what he did. He's like, "You know, you made me change one of my taglines. I had the largest car rental company and the largest equipment rental company in the world, and now I've got the largest car rental company and the second largest equipment rental company. I don't wanna be second in anything." And he's telling him to slow down. You're making a mess of this industry. You're going too fast. You're going to mess this up. And fast-forward, uh, several years, and they're, United Rentals is making, like, six times the amount of money. [chuckles] So, uh, that is a losing strategy. Do not take your competitor out to lunch and be like, "Please slow down. Please be nicer to me." No. Foot on the gas and foot on their neck.

11. 46:16 – 54:36

    Hiring A Players and Overpaying for Talent

    1. DSDavid Senra46:16

       I wanna go back to the maxims that are in the acknowledgement, um, because the thing about maxims is they're not hard rules, and you need to know when to break the rules. And so he has this idea that you should lose perfectionism. And so, but there's one domain where you don't wanna actually lose perfectionism, and that is in hiring. The most important thing a CEO does is recruit great people. Yes, I made the point that aiming for perfection can be counterproductive. Good is usually good enough. But if you're going to break that rule, you break it for people. Make your hiring choices as perfect as they can be because there are few mistakes costlier than hiring the wrong person. This is so good. Way to, way to remember this. An empty seat is less damaging than a poor fit. Make your hiring choices as perfect as they can be because there are few mistakes costlier than hiring the wrong person. An empty seat is less damaging than a poor fit. This entire section is about the difference between super talented people and what they bring, uh, to your company. So I love this. Um, I'm gonna read. Steve Jobs was, was asked one time, uh, "What talent do you think you consistently brought to Apple?" This is his answer. Uh, this was his answer, rather. And I'm gonna read it to you first because I think it sets up what, what Brad's trying to teach us right here. He says, "I think I've consistently figured out who the really smart people were to hang around with. You must find extraordinary people. The key observation is that in most things in life, the dynamic range between the average quality and best quality is at most two to one." Pick anything. It's gonna be basically two to one, right? "But in the field that I was interested in, I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to one. Given that, you're well advised to go after the cream of the cream. You can build a team that pursues the A+ players. A small team of A players can run circles around a giant team of B and C players." So then he's going to talk about how to build a outrageously talented team and what he feels is most valuable. Remember, Steve Jobs said, "Hey I think one of the best things I did was I figured out who the really smart people were. I hung around them, tried to hire them, and built incredibly outrageously talented teams. Brad says, "Screening for superior, superior intelligence eliminates 90% of all candidates, so that's the first thing I look for. There's just no substitute for smarts. There's no substitute for brains. The CEO trait most closely correlated with organizational success is a high IQ. Double down on hiring the brigh- the brightest." When he is interviewing people, he will ask himself, "Can this person think dialectically?" I'm going to define that for us because I love this d- definition of dialectically. The, the ability to think dialectically is the ability to view issues from multiple perspectives and to arrive at the most economical and reasonable reconciliation of seemingly contradictory information. That's so important. The ability to view issues from multiple perspectives and to arrive at the most economical and reasonable reconciliation of seemingly contradictial-- contradictory information. Can this person think dialectically? That is, are they capable of thinking from multiple perspectives and reconciling streams of information that seem to flow in different directions? And second, second question: Are they capable of changing their opinion? Rigid thinkers at any level of intelligence are less valuable because they are mired in their own points of view. More advice. You should hire ambitious people who want to accomplish big things and make a lot of money. More advice. It is better to be slightly understaffed. I find that slightly understaffed teams are more focused and spend less time doing redundant busywork. Brad is big on vibes. I think he calls it the love vibe, and he says, "My team and I spend a lot of time together, so it's a big deal that we like one another. An organization is like a party. You only wanna invite people who bring the vibe up." And so he talks about, "Listen, man, I have advice for you. This is how you're gonna differentiate between the A, B, and C players on your team." His whole thing is like you cannot have C players ever. And when you figure out B players, it's inevitable that you're gonna have some, but you can't have C players. And his whole point, uh, is that if you, if you hire B players, they're likely to hire C players. So you gotta be very careful with the B players, too. But, uh, as this, uh, organization scales, you can't have all A players. This is something Steve Jobs said, that Pixar, when he had 400 pl- 400 employees, it's the first team of all A players that he ever saw in his life, and he said, you know, at Apple, I think that time had 3,000, uh, people. And he's like, "It's impossible to have a team, have a company with, uh, 3,000 A players." So of course you're gonna have some B players, but you gotta be careful because they love hiring C players, and C players suck. This is how you differentiate between A, B, and C players, and he does this in his mind. Again, thought experiment. Uh, "I mi- I imagine this person coming into my office and quitting without warning. Uh, just by imagining this scenario, I can immediately tell from my own inner response whether this person is an A, B, or C player. If my first thought is, 'I was gonna fire this person sooner or later, so it's no big deal,' that's a C player. If my reaction is, 'I don't like this, but I can live with it. The transition period might be a little bumpy, but we'll find somebody else, maybe even somebody better,' we are talking about a B player. But if my reaction is an internal dialogue of panic, and it sounds like, 'We're so screwed. How did we get into this situation? There's no way we're gonna find somebody as fantastic as this person,' that is an A player." And what do you do with A players? You overpay the hell out of them. 'Cause here's the thing. The reason you should overpay them is 'cause you-- The reason you overpay for talent is because it's nearly impossible to overpay for talent. Think about what Steve Jobs said earlier, right? In, in some fields, the, the, the, the best person is not twice as good. They're 100 times as good. Think about when Steve Jobs came back to Apple. Apple bought NeXT for almost a half a billion dollars, right? The way to think about that is Apple paid half a billion dollars to rehire Steve Jobs, and they got the deal of the century. It is almost impossible to overpay for talent. And Brad talks about there's a lot of things that motivate people, but you, you're silly if you don't think compensation. Yeah, they have to believe in the mission. They have to like the w- what work they do. They have to find it intellectually challenging. They have to like their team. They also should be paid oodles and oodles of money. So he says there's 174,000 employees, uh, out of all the three companies that he currently chairs. Not a single one of them shows up for work because they wanna make money for Brad Jacobs. They come because they wanna make money for themselves and their families. Money animates people everywhere. So he's talking about it's like, "I have employees all over the world. This is not just a United States thing. Money animates people everywhere. That's why I've overpaid, quote-unquote, almost every direct report I've ever had to ensure I had top team people in place." Overpay for talent. It is nearly impossible to overpay for talent. That's such an, uh, important thing to remember. Never ever, ever forget the dynamic range of humans. It makes no financial sense to skimp on salary incentives to save $100,000 a year when hiring a second-best candidate may cost you millions of dollars in lost profit. Oh, this guy's good. He's an A player. Let me-- I can save money. I hate when people try to, like, obviously, a huge... What's, what's the two biggest themes in the history of entrepreneurship, right? Focus and watch your costs. That's repeated over and over again by all-- by the vast majority of the people you and I study. Watching your costs does not count when you're doing talent. That's not, it's like, oh, I have a great A player, but I can hire the, uh, for the same job, I can hire a B payer, pl- player for $100,000 less. No. That's not $100,000 less. You lost millions. Millions. And in Steve Jobs' case, if they didn't hire him, what if they said they, they didn't offer him, I think, what was it? 470? What was that deal? 470 million, something like that? They said, instead, "No, no, it's only gonna be 200 million," or whatever it is. They try to shortchange him by a couple hundred million. He doesn't come back to Apple. What's-- Apple's probably out of business. Apple probably doesn't exist to this day. Never, ever, ever forget the dynamic range of human beings and overpay for talent because it's nearly impossible to overpay for talent.

12. 54:36 – 59:35

    The Entrepreneurial Spirit and Closing Thoughts on the Book

    1. DSDavid Senra54:36

       And then I wanna close on what I feel is almost like a manifesto, that it's an incredible honor and a good thing for the world to build products and services that make other people's lives better, to create jobs for hundreds of thousands of people, in Brad Jacobs' case, to create wealth for your shareholders. Um, and really is a testament to the all-important entrepreneurial spirit. I love being a CEO. There's a joy in creating value, and an even greater joy in knowing that so many people beyond our organization are benefiting from our accomplishments. The best way to perform our duty is to fill an unmet need in the economy with a strong business model and a responsible organization. We create a healthy workplace environment for our people, and we pay them well. We pamper our customers, and we approach challenges with practical optimism that open our minds to solutions. The great majority of the tens of billions of dollars of value that my teams and I have created have flowed outside of my companies. I am extremely proud that our company could be counted on to create value. This is only possible because we operate in free markets, where creating prosperity is a virtue. I want to share a personal experience I had with a small business owner whose work ethic and customer focus echo the value system that I instill in my own companies. This small business owner, his name is Steve. Steve handles the HVAC system at my home. Steve had originally worked for the large HVAC company that had installed the system, but that company was sold and Steve decided to set out on his own. So again, the all-important entrepreneurial spirit. Steve is a hardworking, take pride in your work entrepreneur who puts his customers first. He cares a great deal about doing his job the way it should be done. He told me his self-esteem goes up and down with his customer satisfaction scores. Naturally, he also measures his worth by how much money he's making to support his family. There's a fair amount of criticism being voiced about profit-seeking these days. Some people are embarrassed to talk about the importance of money, but Steve is totally comfortable with it. And in his pursuit of happy customers and a good living for his family, he built a successful business. As a result, customers flock to him. Steve is the face of the entrepreneurial spirit. I wrote this book with people like him in mind, people who wanna work their tails off, who wanna outsmart the competition, who wanna put their customers on a pedestal, and who wanna make a lot of money for their families. The summer after eighth grade, I attended the Rhode Island Governor's School for the Gifted in Art and Music, a summer enrichment program for kids who'd been nominated by their schools. I wasn't sure what to expect. On the first night, I was captivated by a speech given by one of the leaders. I remember goosebumps rising on my arms as he spoke. "This program is a special opportunity, but it's up to you to take advantage of it," he said. "You have a choice. You can waste the next couple months and not accomplish much, or you can go all in. This is an opportunity to go deep on a project and do the best work that you've ever done. But you have to decide if you want it," he said. It was there that I learned what it meant to go all in, that magical connection between intensity of focus and the end result. If I put my whole heart and soul into a project, I had it in me to create really cool stuff. We have it in our own hands to either make life meaningful or just pass time until we die. That's up to us. I hope you're inspired to run hard at making a few billion dollars or achieving some other big dream, and I wish you the exhilaration of seeing it through to success. And that is where I'll leave it. Highly, highly, highly recommend buying the book. As I said before, I really do think it's a reference. I'd read it through all the way, uh, I'd read it all the way through, and I'd keep it close at hand as a reference. The appendix, uh, has a bunch of thought experiments. There's this really interesting history of technology timeline, because that's a huge influence in the way Brad approaches his business. He calls it the mega trend in the universe. He's got interview questions for job candidates, recommended books, um, how to conduct meetings. The appendix is, like, full of... Uh, you could buy the book just for the appendix. Obviously, read the whole thing. But anyways, if you buy the book using the link that is in the show notes, you'll be supporting the podcast at the same time. That is, where am I at? 300? 335 books down, 1,000 to go, and I'll talk to you again soon. It was fascinating in Brad's story how many times, if you just listen, uh, that products or opportunities will be pulled out of you. Like, if you think about him sitting in bed reading [chuckles] analyst reports, realizing, "Hey, maybe this waste management company, uh, this waste management industry is a good, could be a good opportunity," or a meeting with, uh, those analysts and getting an idea to enter into a new industry. The same thing, um,

13. 59:35 – 1:12:56

    Founders Only Conference and Founders Notes Updates

    1. DSDavid Senra59:35

       has been happening to me. So I wanna give you an update real quick on two things, uh, before you go. One is Founders Only. Founders Only is the first ever in-person, I'm calling it a conference, uh, that's taking place in Austin, Texas on March 12th through the 14th. Really is, uh, a way for founders to build in-person relationships with other founders. That is the purpose. That is the, the North Star. That is the mission of the event. It's limited to 150 people. You can apply by going to foundersonly.com. That's founders with an S, foundersonly.com. That link will als- obviously be in the show notes as well. So if you've already applied and haven't heard back, I'm wor- first of all, there's way more... The reason I started this was saying that if you just listen, uh, you'll find opportunities, 'cause for years people have been asking for ways to connect with other founders, especially other founders that listen to Founders. And so that, that product was kind of pulled out of me. And so as a result, the demand has been higher than I Anticipated, I guess? And it's taken me a while. Like, I, I just have a lot of applications to go through. So if you have already applied, you don't have to reapply. I'm going through them. I promise you will hear back from me. Um, if you haven't yet applied, even though there's more, way more applications than there are slots, go and apply if you're interested to meet, to come to these in-person events, these in-person conferences, and build relationships. Something that comes up on the podcast over and over again is relationships run the world. A single relationship can be life-changing. Brad Jacobs just talked about the relationship that he built with Mr. Gustafson, and that he had a bunch of business mentors and a bunch of relationships throughout business. Some are obviously gonna be more important than others, but one can literally change your life, and so that is what I'm trying to, to do because this has happened in my life because of the podcast, because so many founders listen to Founders. Uh, the, the network I have, the relationships, the friendships I've built, like, the, the before and after of my life, it's just not comparable a-at all. Uh, and so maybe the most, uh, uh, the most valuable asset I have isn't even something that you can put a price on or that you could buy, and the most valuable asset I have by far is my network. It's the friendships and the relationships that I've built, b- and they all came from the podcast, and so I'm in a u-unique position, I feel, to be able to connect other people that have the same interests. So the reason I would say is even though there's way more people on the list than I can, than we can do for the, than I can do for the first time is if you're interested in doing this, go and apply, um, and then what I'll be able to do is, like, figure out, okay, where does everybody live? Where can I do other event... Like, I'm gonna, like, this gives me the ability to really figure out, it's like, how many people wanna do this? And then I can immediately put my, my events team. I have a world-class events team behind me. I'm using the same people, uh, that plan Capital Camp. So if you ever b- go on a Capital Camp, you know, uh, you know, that that's an, uh, once-a-year event. It's, you know, one of the highest end investor conferences in the country. There's a massive demand. Usually, there's, you know, 10, 10X the amount of people that wanna go, uh, to that than can actually, they can actually fit. So they've been doing this for many years. They're-- I've gone to it. It's a world-class event. So I was like, "Oh, I'm gonna use these same people." And so that's who's, uh, helping me not only do all the logistics, the planning, but also helping me go through and really figure out, okay, if there's... I may be vastly underestimate-- The point I'm telling you this, and I know I'm rambling, the, I may be vastly underestimating the demand here, and I shouldn't have because people have been asking me this for years. So it's really important. The, the sooner you get in on the list, the sooner you put in your application, the higher priority you have for e- future events, and you can kinda help me figure out, okay, this is the map. This is where everybody's at. And I'm willing to travel, you know, anywhere. I don't live in Austin. I'm just going to Austin because the venue where I'm hosting the first Founders Only event, I spent a few days there at this other event, uh, last year, um, and I thought it was incredible. I was like, "This is perfect." And so I was like, "Oh, okay. Well, at least I've, I've spent a few days here. I liked it. I enjoyed it. It makes perfect sense for what I'm trying to do, what my o- overall mission is. I should just, the first one should just do, uh, should just be here." And so I'm gonna be doing these, a-assuming they're successful, assuming I, I'm, you know, good at doing this, uh, which, you know, I can learn. You know, I'm gonna be doing this every year. There's people coming in already. This is insane, and I really do appreciate it. Uh, there's people flying in from all over the world already for the first Founders Only event. That's insane. Main point here is apply as soon as you can. It's helpful for you because you'll have priority for either future events or maybe even this one, and it really helps me understand, like, where I should be doing these in the future. So foundersonly.com, foundersonly.com. That's the place to do that. Again, I think it's a no-brainer. Uh, relationships around the world, uh, meeting another founder, another, another person that is interested in the same things that you're doing. These driven A players. Uh, the relationship between these two people, they produce nonlinear returns, so I think this is something that you should prioritize and something I'm definitely prioritizing. Not only have, have I been for the past few years, but definitely even more so moving forward. Okay, so that's that. Foundersonly.com, foundersonly.com. The second thing is foundersnotes.com. Founders with an S, foundersnotes.com. This is another example of how just listening, paying attention to what's going on around you, uh, you're gonna find opportunity and ways to serve other people. So people for years, for years, this is the most common request. So, like, "I want access to all your notes. You're kinda this ps-psychopathically obsessed person sitting in a room documenting the history of entrepreneurship for now eight years. Uh, you have all these ways to tie these ideas together. How the hell did you do that?" People think I have a good memory. I promise you I don't. It's because I have wha-what at the time was, uh, what I said over and over again is the, the most valuable app that I've ever paid for, which is Readwise, and all Readwise allowed me to do is, like, store all of my notes and highlights for all the books I, I read, right? So I have a history, and I can go back and search them, and what it allows me is, like, you know, let's say I have a couple, I think I have, there's 280 books in there right now, and I still have more I have to enter. I can go and search any term, anything that I'm thinking about. Uh, so if you sign up for foundersnotes.com, once you sign up, once you get a, a welcome email from me, and it explains in detail how I use the product, so use that as a reference. And the second thing, it's gonna drop you on this page, and the page, you're gonna have a bunch of options. The first one is search highlights in this big box at the top, and that's, you know, very self-explanatory. Anything that you're thinking about, a person, a place, something that you need in your business, hiring, recruiting, talent. We talked a lot about that in the Brad Jacobs episode. In fact, Brad, the highl- Let me give you an example. The highlights from the Brad Jacobs, uh, book are already in Founders Notes. They're, they're, they're waiting for you to explore. So search highlights I use all the time. I u- It's in the browser. This is, uh, right now it's only available on the web, so just keep the browser open or keep the tab open in your browser. Eventually, it's going to be in an app. Uh, you just gotta give me some time to, to work through everything. I'm still testing it, making sure everything's, uh, functioning as I want it to function, so we're making improvements all the time. So keep the tab open in your browser. Search it for anything that comes to mind, okay? The next thing I do, this is, I think... The searching is invaluable to me. I could not make the podcast without it. I use it in conversations with, with friends or founders when we're trying to figure out problems they may have. And a way to like essentially on demand tap into the collective knowledge of history's greatest entrepreneurs is what I'm trying to do. And it will keep improving. So if you think about it now, if you invest in a subscription today, by next year, there'll be another 50 books in there. There's probably another, I don't know, 4,000 highlights or something like that, more connections to be made, more notes to be made. So the product improves every single day. Uh, you can also, also just go by books if you tap on books, and then obviously what I would do, I think I mentioned in that episode that you just listened to, it's like, you know, go and find Danny Meyer's book and just read through all the highlights. It takes 10 minutes, 15 minutes, probably less than that if you're really focused. Um, I just clicked on books, like "How to Make a Few Billion Dollars" is there. My highlights from Oprah, uh, the Bugatti, uh, book that is impossible to find. There's 59 highlights there. You could probably read that in 15 minutes and have a good idea and remind yourself of like what was important to the founder of Bugatti, Napoleon, Tiger Woods, Ted Turner, Charlie Munger, Christian Dior over and over again. So what I would do is when you have extra time and you wanna read something, instead of wasting time scrolling social media, go and read the highlights of a book. Now, the, I think the most valuable feature, and I hate to say this 'cause the search feature is... Search feature is probably mo- most valuable feature, but the feature that is like really interesting to me, and the one I use a lot, is the highlight feed. Because the highlight feed is... Think about it, um, my friend Morgan Housel, the bestselling author, his book "Psychology of Money" has sold like four million copies. It's crazy. Um, I talk to him all the time. He's a massive fan of Founders. Uh, he called, he said he heard me say this on a podcast one time, that I think the highlight feed is a smart Twitter feed. And so he's like, "That's exact-" And he starts using it, and he's like, "That's exactly what it is." And so I just clicked on the highlight feed, and what it does is instead of reading... Think about when you go on any social media, right? It's just like random collection of either posts if it's in text, if it's like, you know, Twitter. A random collection of videos if it's, you know, Reels or TikTok. Well, the highlight feed is random highlights presented to you from all the books that I've ever covered, and if you can train yourself... Now, he, I, I, I need to back up. I built this product for people already running successful companies, right? That's, I think you already know this. You probably obviously, but Founders has the most valuable entrepreneur audience in the world. If you knew who was listening to this and who I get to interact with and talk to, it'd blow your mind. So those are the people that are gonna get the most value from this because they already have existing successful businesses and empires where if they read one thing, they can apply that lesson immediately. Just like Brad Jacobs. I mean, him, he already had a lot of success, so he's reading that analyst report in his bed in London. [chuckles] He already has the resources to act on that idea, right? When he goes to have that meeting with Merrill Lynch, he has the resources to act on that idea. So this is not... People are always like, "Can I get a free trial?" The podcast is the free trial. If you're not in a position where you don't, you're not already running a successful, a successful business, do not sign up for Founders Notes. Don't. Listen to the podcast. Get yourself into a pos- Use the lessons to build, to get your business into a position where it makes perfect sense. It's like a no-brainer. Of course, I would subscribe to this. I would invest in subscription because I could read it for f- 40 years and only, you only need one idea. Think about what Charlie Munger said. You know, he read Barron's for 50 years and made $400 million. He's like, "I found one idea that I can act on in Barron's Magazine." He acted on it because he had the resources to do so. He turned that, I think he made $80 million from that one idea that he got in Barron's Magazine, and then gave that $80 million to Li Lu, and Li Lu, one of his favorite investors, turned that 80 million into 400 million. And it was like, oh, this is... If Charlie Munger's alive, right, and his eyesight was better, he would be using this because it's such a giant... Like of course you would do this. So the highlights feed. And then I'm gonna wrap this up because I don't wanna belabor this point too much. The highlights feed I really feel is magic, and that is why I'm so, so, um, adamant. Like we have a bunch of ideas on the product roadmap. The f- the first one we're doing next is the Founders GPT, so you'll be able to like query, um, and like, you know, use the chat interface. But after that, it's gotta be the app because y- you can read Founder, the, the highlight feed in the browser, and I'm doing that right now and I do it all the time, um, 'cause I have this big ass iMac that I like to, to use. But I also love it on the go, and it's just perfect as an app. You know, anytime I'm stuck at a light, so I'm waiting for, you know, I'm meeting somebody for lunch and they're running late, or I'm at a doctor's office, whatever. But getting in the habit of just reading the highlights feed, I really think that's like the killer feature here. Um, because it's just, again, it's almost like history's greatest entrepreneurs talking to you, speaking to you. Like most of these highlights are like tweet sized, so you can read it. Some of them don't apply at all. You're like, "Okay, move on to the next one." Just like if you're reading any random, you know, anything online. Now, that doesn't apply to me. That's not helpful. Okay, move on. But get in the habit of spending time with this, and then once you do that, you wanna be constantly reminded of these lessons because now you have a way to actually apply them. And so you could take knowledge and turn it into profit. And so that, if that is you, and you're in a position to take knowledge and turn it into a profit, then I would heavily su- uh, adv- I would heavily advise you to invest in a subscription to Founders Notes, and you can do that at foundersnotes.com. I've already been speaking, uh, a ton. I gotta work on, I gotta go reading, uh, read and work on the next episode. The next episode, I'll give you a sneak peek. So this episode was how to make a few billion dollars. The next episode is going to be how to lose a few billion dollars. The rise and fall of a billionaire utility tycoon is coming next week. Thank you very much for your support. I hope you do an application for Founders Only. I hope you come to one of these events. And I hope, uh, assuming you're in the right position, I hope you invest in a subscription to foundersnotes.com. I will talk to you again soon.

Episode duration: 1:12:56