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My First MillionMFM #169: How One Man Has Built 5, Billion Dollar Companies
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75 min read · 14,899 words- 0:00 – 1:05
Andrew’s unexpected call with Warren Buffett (and why it inspired him)
- AWAndrew Wilkinson
It was pretty crazy. I, I got a chance to talk to Warren Buffett on the phone. Um, some, some guy I, I was talking to, I was saying, you know, "I'm trying to figure out philanthropy and how to give money away," and literally he goes, "Oh, you should talk to Warren Buffett." And I was like, "W- what do you mean?" And then he just like CC: introed me to Warren Buffett, right? It was one of the weirdest things that's ever happened to me, and, uh, it was amazing. And I was like kinda nervous. Like, Warren Buffett's like my hero. Uh, you know, I, I was never, not expecting this. It was just like a random Friday, and Warren Buffett's secretary emails me back and just says, "Oh yeah, you know, call, call him whenever, you know. He'll, he'll pick up." And so I call, and they go- I get put right through, and it's just Warren freaking Buffett on the phone. And basically he said, you know, "Oh yeah, I've, I'm not doing anything. I can talk for as long as you want." And I just got to pick his brain for an hour. Uh, and it was insanely inspiring.
- SPSpeaker
Yeah. I feel like I could rule the world. I know I could be what I want to. Uh, I put my all in it like no days off. On the road less traveled never looking back.
- 1:05 – 3:12
Setting up “Billy of the Week” and checking in on Andrew’s public-company learning curve
- SPSam Parr
All right. Uh, Shaan is out with his new baby. I asked Andrew to come on and do this, and I wanted to do a special segment today called Billy of the Week. We actually used to do these at the end of some episodes, but people liked it, and I wanna do them more often. I asked Andrew to come on. We have two people who we're ready t- to discuss, and Andrew, uh, Andrew doesn't know the format. The way that... Here's what I wanted to do. I'll go first, 'cause I think I did more research than you, but it looks like you actually did a fair bit. Um, I'll go first. I'm gonna tell you who I'm talking about, and I'm gonna explain to m- to you why they're interesting, and then maybe... And I, and I picked this person on purpose. Maybe you can tell me who... Or like, what other opportunities are in this space. Or, uh... And I kinda picked someone similar to you, but the guy is probably twice your age, so, uh, he's further along his journey. Um, but I think it's interesting to you. But we can also talk about anything else we wanna talk about as we go.
- AWAndrew Wilkinson
Yeah, sounds awesome.
- SPSam Parr
Um, also, what's going on? How are you? Uh, you enjoying being the CEO or the founder of a publicly traded company?
- AWAndrew Wilkinson
Yeah, yeah. It's interesting. It's kind of like, um, you know when you start your company, it's really exhilarating. Um, you know, you have your first employees, you start dealing with problems, and you've never done it before, and so your stress level is like 10 out of 10 when you're first doing it. You're like, "I don't know what matters. I don't know what best practices are. If I have a problem with an employee, how do I deal with it?" All that kinda stuff. It's that same learning curve, so it's like incredibly exhilarating and exciting. Having a public company is like a huge milestone, but at the same time I'm like, I'm like a new entrepreneur. Like I don't know what actually matters, who to listen to, where to focus sometimes, and that's just, you know, you do anything new and it's stressful. So it's been stressful, uh, for sure, but now I feel like we're on the other side of it. We're starting to feel, uh, figure it out, and, uh, it's been really good.
- SPSam Parr
Is your stock... I ha- I u- I check your stuff once a week. Um, is it up this week or down? Or do you not even look?
- AWAndrew Wilkinson
I think it's, it's kinda coasting. I try not to look at it.
- SPSam Parr
Yeah.
- AWAndrew Wilkinson
Um, it's kinda jumping between about $650 million and a billion dollars depending on the week.
- 3:12 – 5:33
Andrew’s investing identity and the scale of his deal activity
- SPSam Parr
Wow. Um, and our podcast has been growing a ton, and people have criticized me for not doing introductions. So first of all, I'm Sam Parr. I co-host this with Shaan Puri, who is now way more famous than I am 'cause he's crushing it on content. Um, but I started this thing called The Hustle. Just sold it for mid-eight figures to, uh, HubSpot. And then Andrew is a friend of Shaan and I's. Uh, Andrew... I, I'll do a quick introduction for you, and then you can say, but Andrew, uh, started this thing called Metalab, which is, uh, uh, an agency that makes all types of amazing stuff, and using the products... Or using the profit from his agency, he went and bought a ton of companies and invested in a ton of stuff. Now his whole enterprise does like 100 million-ish in revenue, very profitable, and he just, uh, did a SPAC and took one of his, uh, uh... Pixel Union, one of... Or, w- uh, WooCommerce. He took one of his companies that makes Shopify plugins and took it public, and it's now at a 6- $500, $600, $700 million market cap. Did I miss anything there?
- AWAndrew Wilkinson
Yeah, I mean, I, I kind of, uh... I always think, like I'm a designer who ended up becoming an investor, just like how Sam's a writer who ended up becoming an entrepreneur. Um, it's been a process of just kind of stumbling into stuff. And a lot of why we've gotten as big as we have is 'cause I just, I don't like doing stuff that I don't like doing. And so I just kept delegating the stuff I didn't enjoy, and when you do that a lot, uh, in its kind of final form, that's just investing, where you're hiring CEOs to run your companies and incentivizing them. Um, yeah, it's, it's crazy. I never would have thought we would get to the size we're at now, and it's been, it's been a cool ride.
- SPSam Parr
And the reason I'm asking this next question, it's because it's related to the first story I wanna get to. But how many companies does, uh... How many... Let's say, how many companies do you guys own or partly own, and then how many have you invested in and own, like a, like a le- like a smallish check size?
- AWAndrew Wilkinson
So we control, um, as in like we have over, you know, 50, 51% in, I think, 35 businesses, and then we have another probably 40 to 50, um, minority investments. So those would be anything from like little $100,000, um, venture bets to minority pref equity, where we might own 10 or 15% of a business.
- SPSam Parr
So in the 100 range-ish total deals, right?
- AWAndrew Wilkinson
Yeah, something like that.
- 5:33 – 8:28
Brad Jacobs: five massive companies and a repeatable roll-up playbook
- SPSam Parr
So the guy I'm gonna talk about today, his name is Brad Jacobs. Bradley Jacobs, I think he goes by, but, uh, we're gonna call him Brad Jacobs. And this person is super interesting because they have started, uh, five companies that have either gone public or are worth over a billion dollars. He started at age 23. He's 64 now. Uh, Google him, Brad Jacobs. He's worth somewhere in the range of 3, 4, 5 billion dollars, and he's bought or in- Both. But he doesn't, like, invest passively like a venture check. They buy companies, and he's bought something like six, seven hundred companies, and he's done it across a variety of industries, and he's done the same strategy over and over and over again in different industries, and it's incredibly interesting. And this guy, uh, is very fascinating to me for a variety of reasons that I'm going to explain. But Andrew, have you heard of this guy, Brad Jacobs? Do you know anything about this guy?
- AWAndrew Wilkinson
No, never. I don't know anything.
- SPSam Parr
That's kinda why he's cool. He's kind of un- under the radar. If you Google him, he's, uh, he's got, like, a bald head, and he looks like a finance guy because he wears a tie and he's, like, pretty, um, well-spoken, and you think that he's just, like, a private equity person. And I guess maybe he is, but he's really an entrepreneur. He's very entrepreneurial, and he's, uh, far, uh, more interesting than just a lot of the typical New York hedge fund-y type of folks. And so I'm gonna give you a quick story about his background. So he started five things that have been quite meaningfully sized. So the first was, uh, it was called Amerex Oil Associates. He started it when he was twenty-three, and it was an oil biz. Um, it was basically like an oil brokerage firm, which, uh, I'm not entirely sure what that entails, but I imagine it just means, uh, connecting folks who created the oil to large businesses who are buying the oil. And within a very short amount of time, only about four years... Uh, remember, he started this when he was twenty-three, so by the age of twenty-seven, Amerex, his oil business, was doing four point seven billion dollars in gross bro-- uh, gross oil bookings, meaning he would-- that's how much oil they're buying and, uh, and selling. Now, I imagine his company kept a tiny percent of that, like one or two or three percent, but incredibly impressive for a young guy. Um, and after a few years, he sells that business for a billion dollars. Then, only a couple months after that, he starts this thing called Hamilton Resource. Uh, l- Hamilton Resource, he starts it out of, uh, uh, England. He convinces a French bank to give him a billion dollars line of credit, which he was quite successful already, even though he was crazy young. But, uh, he made it happen, and he went and secured a, a line of credit. And here's what he said. He goes, "We moved physical cargoes of oil from one place to another. The '80s turned out to be a great time in the oil business, and I built Hamilton up to about a billion dollars in revenues and did business in dozens of country-- uh, dozens of countries before I moved back to the States in nineteen eighty-nine." So
- 8:28 – 11:25
United Waste: consolidation, route optimization, and scaling a fragmented industry
- SPSam Parr
between '83 and '89, he started this business, and it also was huge. I believe he ended up selling it for a billion dollar-- north of a billion dollars. So that's business number two. Business number three, a little bit of a, uh, of an odd one, was waste management. Um, I don't think there's anyone out there doing waste management stuff now that's brand new, but there's a ton of companies that, at the time, started in the '70s, '80s and '90s, like Waste Management, the company Waste Management. And what they did was, they would go out and find tons of mom-and-pop waste management companies, because back then, that's how it was, and probably is a little bit to this day. But he started this thing called United Waste Management, which eventually became the fifth largest solid waste business in America. And it had a very, very, very simple business plan, which was buy landfills in small markets by many of the local trucking companies that were serving those markets, optimize the truck routes, maximize the pricings, get margins up, achieve size so that, uh, they had the ca-capability to scale. And they did that, and the strategy worked really well. And in just five years, our earnings compounded annually, annually by fifty-five percent. And the, and he took the company public something like eight months after starting it, and the stock price went up as well fifty percent every single year for like five years. Eventually, that company grew to three point nine billion dollars in revenue and one point two billion dollars in EBITDA, with seven hundred and fifty locations and thirteen thousand employees. Is this freaking crazy? Oh, sorry, that-
- AWAndrew Wilkinson
It's insane
- SPSam Parr
... I just gave you the numbers, I gave you the numbers for, um, his next business. But the waste management grew to two point five billion dollars in revenue. Oh, sorry, uh, two point five billion dollars in, in exit to Waste Management. Nuts, right?
- AWAndrew Wilkinson
That's crazy. So I, I, one of the most interesting things about this is, like, there-- I always think there's, like, um, four different types of entrepreneurs, right? There's the innovators. So let's just take, let's take, um, Chipotle as an example, right? So there's the innovator. There's the guy who rolled the first burrito and was like, "Oh, shit, this tastes really good." Um, then there's the remixer. There's the person who creates Chipotle. They take the burrito. They package it up. They create a brand around it. Then there's the scalers, the person who scales Chipotle to a hundred locations. And then there's the optimizer, the person who just sits on top, makes sure it doesn't blow up, and gets as much as possible, gets as much juice out of the lemon as they can. And this guy's a great example of a scaler, someone who just takes something that already works, that's already proven, and just does a much better job of it and rolls it out, makes it scalable, um, and builds something massive. And it's super, it's super interesting, um, 'cause I'd say I, I kind of fall into this camp. Um, at the same time, I feel like what's sexy about this guy is actually how boring the businesses are, right? They're, they're so basic. These are things that are, like, undisruptable, and when you build them, it's like a hundred-year business or something, which I think is really cool. Whereas what we do is, like, five... You gotta think in five-year, uh, chunks.
- 11:25 – 13:25
Raising capital with clarity: the SEC Q&A document and the importance of plain-English strategy
- SPSam Parr
I completely agree. And if you scroll up to this document that we have open and you click Source, um, the source that I'm using for a lot of this, and this is so interesting. Um, so we're on business number three. I'll, I'll get to four and five in a second. But when he... What this guy does-- And then when I wrap up all five, I'll explain to you what my lessons l- uh, learned from this guy are. But I'll say one of them right now, which is what this guy does is he raises money like a madman, and it's not like a ridiculous amount. I mean, I, s-saying you're raising tens of millions of dollars, I guess, for the, for the average Joe, yeah, that is a ridiculous amount. But he's got a track record, and he turns them into multi-billion dollar things. But, uh, so, so kinda tens of millions of dollars is not that much money. Um, but But if you click that source thing, what, what does that take you to?
- AWAndrew Wilkinson
To the SEC.
- SPSam Parr
Okay, I found this file on the SEC, and I don't really know what this is. But I don't even remember how I came across it, but this is what interested me. It's a Q&A session of him having written it out, and he basically lays out the strategy of his fourth and fifth business. And so what this appears to be is a Q&A that he prepared, and they showed this to a ton of potential investors, a ton, a ton of potential banks, and they decide to invest in him. And I think this was before the company even started. Is that what that is?
- AWAndrew Wilkinson
So you're saying this is what he raised on? Like, there's no deck, there's nothing, it's just this is the thing. He goes out and he says, "Read this document and you can invest."
- SPSam Parr
I'm not entirely sure, but I think that is part of it. I, I... This is called a Schedule 14A, which I, I'm not an expert in the SEC. I believe that is something that you have to answer before a board of directors at a publicly traded company, um, raises money. But I, I'm not entirely sure. But it's interesting though because he writes in wonderful, straightforward, simple English, and you could read his entire
- 13:25 – 16:13
United Rentals: acquisitions plus greenfields, fast IPOs, and scaling with purchasing power
- SPSam Parr
strategy, which I'm gonna go through in a second. Um, but skim that while I bring, while I fi... I'll, I'll summarize the next two businesses that he did. So he started, um, I told you he started two oil things, but bas- those, those were oil brokerage businesses. Then he started, um, well, waste management business. Now, his fourth one is called United Rentals. Now, I don't know if you see this in Canada, but if you pay attention to this now, and if you're listening to this and you live in America, go on a drive in downtown, the downtown city wherever you live, and look at the big box trucks and look at the rental equipment. So look at, um, like the Caterpillars or the Bobcats or the, the, um, the construction equipment, as well as the, um, porta potties and anything involving construction or trucking. Go and look at those things and I guarantee you on a lot of them you're gonna see United Rentals. Well, that is the fourth company that he started. And he started it with the idea of the same thing of w- of waste management. He wanted to go out and he wanted to find a, a massive industry that was highly segmented by small businesses wh- that were profitable and great, but they didn't have enough capital to grow and they were kinda bad at sales. And that's what he did. And so he founded it, and in just five years, five years, it grew to $4 billion in revenue and $1.2 billion in EBITDA. And, uh-
- AWAndrew Wilkinson
Is he growing via acquisition or is he just rolling this out and crushing competition across the country?
- SPSam Parr
We're gonna talk about that. But what he said was, "We got there partly through acquisitions, partly through organic growth, developed, by developing greenfield locations." Um, he goes, "We grew by using the same strategy at United Waste. We bought about two-thirds of the branch locations and cold started another third from scratch. I actually prefer cold starts," is what he said. Um, "The business plan for United Rentals was to become the largest equipment rental company in the world and leverage our purchasing power, branding, and other advantages of size. Within 13 months we became number one, leaprogging, leapfrogging Hertz, which had become the equipment rental... which was the number one equipment rental business in 1965. Another thing we did was we went fast, uh, we went public fast. We formed the company on Labor Day weekend, and we were trading on the New York Stock Exchange by December." Labor Day weekend is in May I think, right?
- AWAndrew Wilkinson
Mm-hmm.
- SPSam Parr
So they started the company in May, and five months, is that five? Six, uh, seven months. That's seven months later they were public. "Merrill Lynch said it was the fastest growing or the fastest IPO they have ever seen. And I stepped down, uh, uh..." And so he stepped down of United Rentals in 2007, this is only five years after starting, and to start the next company. But when he stepped down, United Rentals, if you look it up now, I believe their
- 16:13 – 18:17
XPO Logistics and the repeatable ‘study industries + interview experts + hire great people’ method
- SPSam Parr
market cap is $25 billion [laughs] . So he spent five years on this company and it's worth $25 billion. It's crazy. So listen to what he did after this. Um, "After I stepped down, I began looking for my next big thing. I studied tons of industries and I ended up concentrating on transportation and logistics. It's larger and more fragmented than the industries I've been, I've previously been involved in. It's a $13 billion, um, thir-, uh... sorry, a $13 trillion industry." And here's what this guy says. This guy at the time is already multi-billionaire. But let me see if I, um, I have... He wrote out what he does, which was basically, he basically spends three months, he reads tons of reports, and then he calls 100 experts in each industry. And he just goes and he sits down with them and he just asks them questions. It might as well be a podcast. All... That's like exactly how he learns. So he's this multi-billionaire, he's this big shot, he's done all this amazing stuff, and he calls these people and he just sits down and he listens. That's all he does. It's pretty amazing. And he did this, and then he's, in this, with his new thing, it's called XPO Logistics. Have you heard of this?
- AWAndrew Wilkinson
I have, I have heard of this. I think it's a, a delivery and logistics company, like a competitor to FedEx, at least that's my understanding.
- SPSam Parr
Well, we'll put this in the show notes, but in that document up top, that is the document from where he was raising money for XPO Logistics. And in plain English-
- AWAndrew Wilkinson
It looks like it's, it looks like it's like supply chain. So it's like getting people things they need that are critical on time.
- SPSam Parr
Well, in there he, um, in that document that I sent you, he... I didn't, I, I, I couldn't study the whole thing, but in plain English he explains kinda what they did and his reasoning for getting into it. And he just says, "Well, I just studied loads of industries. This one seemed industry interesting. I went and, um, interviewed 100 people who are experts on it. I hired really good people and we're gonna do X, Y, and Z." And that X, Y, and Z is exactly what he's done in his, uh, last Uh,
- 18:17 – 20:13
Jacobs’ operational formula: buy small platforms, hire intense sales talent, and integrate with software
- SPSam Parr
businesses. And now I wanna wrap up by, by giving you guys incredibly detailed, um, stats or, uh, uh, incredibly detailed strategy on what he does. So his first thing that he does, he looks for huge industries with lots of fragmentation that are small and profitable but don't have the capital to s- uh, to scale. So here's what he says. He goes, "In a nutshell, this is how you ramp up a business. You buy a brokerage or some type of small business with thirty million dollars in revenue, and you add thirty to forty bodies to it, and you double revenue in time. I've looked into companies that have executed this plan, but most of them don't have the capital to sustain it. I try to find those businesses, and I bring all the capital to do it." The second thing that he does is he hires salespeople. So he says, "I like to hire hungry, talented salespeople at a low base but big upside for incentives. I fund their training for a few months, and it's not that hard for the winners to build a million-dollar book after a year or so. Um, it's a business where you have to make ninety-nine calls a day and do one or two deals. So you have to hire people who are psycho..." I, I actually don't know this word. What's this? "We have to hire people who are psycho chromatically test high on the need to win scale and low on the need to be liked scale. A salesperson will have a base of twenty-five thousand or thirty-five thousand but can make many times that amount through an incentiviz- uh, a really good incentive program. Once you get the right people in the system and integrate them on the right IT, it can be really powerful." And finally, speaking of IT, when someone asked him what was the best acquisition of all time they ever made, he said they made a powerful software acquisition with a politically incorrect name called Rentalman, and we used that to integrate all of our rental businesses we rolled up into that company. We couldn't have made the hundreds of acquisitions we did without Rentalman, and that was his best acquisition of all time. And that, my friend, is Brad Jacobs. And I can go on and talk-
- 20:13 – 22:33
What drives builders like Jacobs? Integrity, employee retention, and the unknown ‘money question’
- AWAndrew Wilkinson
He sounds, he sounds... I, I li- I both love and, and, um, find these guys kinda mysterious, and I kinda wonder, like, what, uh, the thing that's missing in all this is, like, what keeps him going? What's his purpose? How do you, how does he use his money? And, and, like, why does he do this, right? What's the driving force?
- SPSam Parr
I researched him, and the guy looks like a Wall Street stiff. Did you look up what he looks like?
- AWAndrew Wilkinson
Yeah, he looks kind of like, um, there's, like, a character actor that he looks like. I'll try and find a photo of him.
- SPSam Parr
I think I know who you're talking about.
- AWAndrew Wilkinson
But he's just kinda like a generic nerdy, bald-
- SPSam Parr
Yeah
- AWAndrew Wilkinson
... like Steve Ballmer-looking kinda guy.
- SPSam Parr
Yeah, he looks like he would be, like, in Biden or Trump's cabinet. Uh-
- AWAndrew Wilkinson
Yeah
- SPSam Parr
... yeah. But I've actually seen interviews with him. He's very endearing, and I think that he's not actually just a stiff, like Wall Street, like just milk all the numbers out. I actually think that he, um, just th- this is his build. This is his urge. He just loves to build. And, and, and, and he constantly talks about integrity. He goes, "The common denominator of everything we buy is the people who we buy from have to have high integrity. And also, one of our moats is we take care of the people of the businesses, uh, who work for the businesses that we're inheriting. In fact, the biggest risk of our plan is that the people who we buy companies from, they leave, and so we treat them all really, really well." And so I don't think this is actually bullshit because when I got his energy from interviews, I actually believed that he was a good dude, and this was just his art.
- AWAndrew Wilkinson
What do you think, though, what do you think he does with his money? D- is that kinda public? Does he do any philanthropy or, or anything? 'Cause I always find it so interesting. I mean, there's two ways to look at, like, doing good in the world. It's like, okay, you, you do capitalism, right? You employ a whole bunch of people. You make an industry more efficient. You add to global GDP. You know, good things happen because he does this, right? But on the flip side, like, what's driving making more money? And maybe it is just continually maniacally going industry by industry and improving them and optimizing them. That's his, like, gift or whatever. But, um, but the guy I'm gonna talk about next is really interesting because he basically uses all his money to do crazy good things, right, which is really fascinating. I'll talk about him in a minute. But do you have any sense of what this guy does, like-
- SPSam Parr
No
- AWAndrew Wilkinson
... with his money? Like, does he, like-
- SPSam Parr
No, he's very private
- AWAndrew Wilkinson
... buy a bunch of jets? Like-
- 22:33 – 28:32
Lessons and cautions from Jacobs: ambition, buying cheap, and using debt (with risk awareness)
- SPSam Parr
I, I don't, I cannot figure it out. But I will, I can wrap this up by saying there's a few things that I've learned from this person. The first is, like, taking the red pill, which is, like... Ha- have you heard? Uh, I, I don't know. [laughs] Someone just used that phrase to me the other day, and I'm, and I, and I, and I'm picking it up.
- AWAndrew Wilkinson
You should, you should be careful. It's, uh, associated with all sorts of n- not so, uh, not so positive connotations.
- SPSam Parr
Oh, well, I didn't know that. What I mean is like-
- AWAndrew Wilkinson
Yeah
- SPSam Parr
... I guess his perspec- like when you look at what this person's capable of doing, you think... Or when you read what he's done, if you didn't know it was true, you would say, "Well, that's impossible. No one can do that." But the person has done it repeatedly over and over and over again, and he seems pretty nonchalant about that. And so my, what I'm learning from him is that, um, you can create these amazing things, and it's hard, but it maybe could be kind of simple.
- AWAndrew Wilkinson
Well, it's so inspiring, right? You basically go find an industry that has... Let's, let's look at the restaurant industry in general, right? Restaurants are disorganized. They're very difficult businesses. They're very low margin. Um, people have done this essentially in restaurants by building fast food chains, right? So you go in, you build systems, you do training, you incentivize people the right way, and you can make a lot of money doing that. But you can't make a lot of money usually in an individual restaurant. So what he's done is he's gone out and fi- he finds these fragmented, disorganized industries like, you know, waste management or logistics, and he goes, "Okay, I'm gonna do the fast food chain, uh, except for that industry."
- SPSam Parr
It-- Yeah. And, and it's really, really cool. Um, the second thing that, that I learned is he actually does the same thing as you. Well, I actually don't know your numbers, but I bet you they're similar. He likes to buy companies between five and ten times earnings. Um, and that's like his number. Um, that's what he looks at.
- AWAndrew Wilkinson
Yeah, I'd say I love to buy businesses for that, um, that valuation or whatever. Um, but the problem, the problem with buying a business at that valuation is, like, you're buying kind of a crappy business often if it's gonna be that low. Um-
- SPSam Parr
Well, these are trash companies
- AWAndrew Wilkinson
... but what, what he's doing... Yeah, exactly. What he's doing is kind of building a platform where he's like, "I just need one so I can build the systems, and then I can go and acquire a whole bunch more."
- SPSam Parr
And the final thing, and then we can move on, is the guy loves debt. And oftentimes that ends bad, but I personally have zero debt in my life, and I've never really had debt. And I actually think, though, that not having debt or not having some type of leverage w- is silly. And I've read articles about him, and he talks about it very unemotionally. Like, he seems like a really charismatic, emotional guy, but he's like, "Yeah, look, like, this makes total sense because I can grow this business at 30%. Uh, therefore, the cost... If I look at the cost of capital, I should allocate capital to this, and it just makes sense." And I hear that, I'm like, "Yeah, everything you're saying makes total sense. I'm just so fearful, and it's really cool that you don't seem to have that fear," and I think that's interesting.
- AWAndrew Wilkinson
Yeah, and I think debt, that's... It goes back to, like, not having fatal potentia- potential blowups in your life, right? So I've heard everything from, like... You know, I was talking to a guy and he was saying, "I..." Super rich guy, and he goes, "I've paid off my house in full. I never have a mortgage or whatever," and it just gives him that sense of security. Maybe this guy has... He's so rich, he's already made a whole bunch of money on other stuff, that he can take a little more risk, or he knows how to structure debt or whatever it is. Um, you hear both things, and the problem is you only hear the stories about the guys who levered up and did really well. There may be a whole bunch of other Brad Jacob types who went out, levered up, and it totally fucked them. They hit a speed bump-
- SPSam Parr
Oh, yeah. Yeah
- AWAndrew Wilkinson
... lost all their money. So the, the interesting thing about this though, um, the, and the difference between what we do and this guy is this guy's essentially starting a new business. Um, and what we like to do is find a business that's already working where we can actually just leave it and make it... You know, maybe we'll help plug in a new CEO or something like that, but we're actually not messing with it. We're not changing the DNA. This guy's, like, modifying the DNA. He's doing, like, CRISPR on these businesses-
- SPSam Parr
He's working, he's working his ass hard
- AWAndrew Wilkinson
... and warping them. He's warping them and turning them.
- SPSam Parr
Yeah.
- AWAndrew Wilkinson
He's working really hard, right? So I don't like to work hard. I get really excited when I hear about people like this. I'm g- so glad they exist, but I'm like, "Oh my God, this is a big lift. I, I don't wanna do this."
- SPSam Parr
It's a big lift, but it does seem cool. Uh, it's cool. Uh, it's, uh, this is like cornrows or sleeve tattoos. I think they're cool. I just don't want it.
- AWAndrew Wilkinson
They're cool for certain people-
- SPSam Parr
[laughs]
- AWAndrew Wilkinson
... and it works great for them. Exactly. Face tattoos, not for me.
- SPSam Parr
This is like a-
- AWAndrew Wilkinson
Great for some people
- SPSam Parr
... this is like a neck tattoo. It's pretty sick that-
- AWAndrew Wilkinson
Totally
- SPSam Parr
... someone else has it, but I don't know if I want it. [laughs]
- AWAndrew Wilkinson
Totally. Totally.
- SPSam Parr
Um-
- AWAndrew Wilkinson
Yeah. And I-
- 28:32 – 39:24
Dan Gilbert: building Quicken Loans and using wealth to bet big and rebuild Detroit
- AWAndrew Wilkinson
So yeah, my guy is, um, Dan Gilbert. Um, and the reason I thought he was super interesting, I've talked about him a little bit in the past, but this guy has had a freaking massive year. So, uh, you know, two years ago or something, he was worth, like, six, seven, $8 billion, uh, baby billionaire. Now he's worth 57 billion. Um, and he-
- SPSam Parr
Wait, five, seven?
- AWAndrew Wilkinson
Five seven. 57. He's number 21, one of the wealthiest people in the United States. Um, and this is... He's had a crazy couple years. So I think it was about two years ago, he had a massive stroke. So he was on the golf course with a friend, and, uh, the do- the friend just happened to be a doctor, and he said, "Oh, that's weird, I'm having these symptoms." So his doctor got him to the hospital and they, he had a stroke in the hospital, and in the hospital they were able to do this special procedure that if he hadn't been in the hospital, he might have died or it might have been way worse, right? So he got super lucky. He, and, you know, as lucky as one can be having a stroke. Horrible thing. And, uh, now he's been basically rehabilitating himself and getting back on his feet for the last two years. And so he's had this horrible personal tragedy, but at the same time, he's become worth, you know, 6X, uh, you know, as much, and I bet he would give it all away to not have had the stroke or whatever. So it's super fascinating. Um, this guy, uh, he described it really well. Uh, when they IPO'd, they just IPO'd his mortgage business. He said, "This is a 30-year, uh, or sorry, an overnight success 30 years in the making." Um, so this guy's been at it for a really long time. Um, I think he's super interesting because he started with nothing. Um, his dad owned a struggling Detroit bar. He worked in pizza delivery. He just kinda stumbled into hustling and was a good salesperson, and he started a business, and that business was a company called ... uh, Rock Financial, which became Quicken Loans, which I'll talk about in a second. Um, one of the reasons I think he's really interested, interesting is that he's invested into revitalizing his home city. So his mission is to revitalize Detroit and get it back on its feet, 'cause it's struggled a lot. Um, he's like a capitalist Batman in Detroit. Uh, and I'll talk about some of the cool stuff he's done. Um, and one of the things I like about him as well is that he, uh, he, uh, does a lot of stuff that might not work. He takes big swings, takes big risks that he think can make the world better. Um, and he invests in all sorts of crazy ideas. Uh, he also has five kids, which I think is pretty freaking cool. Uh, I love to see that-
- SPSam Parr
[laughs]
- AWAndrew Wilkinson
... with these, you know, billionaires. They're not just, like, miserable by themselves, and they care about kids and stuff, and seems pretty family-focused. Um, and then, you know, he's been through these personal challenges, the stroke, and then also his eldest son was born with this disease called neurofibromatosis, which is, like, super rare, and he's poured a bunch of money, uh, his own money into funding research around that disease. So it's been fascinating. Um, so he said, uh... There's a quote, he said, "When I... When we grew up, all I wanted to do, uh, was do two things: own a sports team and a casino." And now he owns both. Uh, so this is kinda like a childhood dream. And his companies are Quicken Loans, which is the largest home mortgage lender in the United States. They're bigger than Wells Fargo, which is freaking crazy. Uh, he owns the Cleveland Cavaliers, the basketball team, and a few other sports franchises. Uh, until recently, he owned a casino, uh, I think it was called Jack, which owned a whole bunch of casinos, but I think he sold it. And then he also owns Rock Ventures. And Rock Ventures is where all the big swings happen and all the philanthropic stuff happens. So, um, they own a ton of real estate, almost all in Detroit. Um, and then they do venture capital. And they've invested in everything from, uh, restaurants to, um, you know, real estate businesses, hotels, crazy tech companies, and all sorts of other stuff. He owns Robb Report, which is like a-
- SPSam Parr
Ca- Can I, can I tell you one more thing that he o-
- AWAndrew Wilkinson
Sorry, go ahead. Yeah
- SPSam Parr
Can I tell you a few more things that he owns that's interesting? Um, so he owns... I think he owns Fathead. Do you know Fathead?
- AWAndrew Wilkinson
Yeah, yeah.
- SPSam Parr
I believe-
- AWAndrew Wilkinson
Like a sports... It's like s- those, like, big hands and stuff, and, like-
- SPSam Parr
Yeah
- AWAndrew Wilkinson
... you get weird blobs on your face
- SPSam Parr
It's typically, like, if you're a kid and you wanna put, like, a, like, a f- the face of Michael Jordan on your wall. It's, like, a decal that you put on your wall. I think he owns the whole thing. He just bought dictionary.com and thesaurus.com. Um, which is-
- AWAndrew Wilkinson
Totally random. We were actually... We helped him. I, I know him. I, I'll talk about that a little bit, but, uh, we helped him with that acquisition a little bit.
- SPSam Parr
Oh, no way. So you know about it. It was like a tw- it's like a $20 million-
- AWAndrew Wilkinson
Yeah
- SPSam Parr
... revenue thing, or more maybe. Um, it's been doing that for, like, 10 years. I w- I, I mean, I don't have any insider information. Um, these are guesses. Um, and am I right?
- AWAndrew Wilkinson
So, yeah, yeah. He owns dictionary.com and thesaurus.com. Um, and, like, when you talk to him about why he bought it, he's just like, "You know, I think this is cool." Like, he's just like, "I had all these ideas of things I could do with it." He's not, like, going, "Oh, I bought it for X times EBITDA and I'm gonna make a 20% return." And this is what I find so cool about this guy, is he'll just say yes. So he owns, like, Robb Report, which is, like, a magazine for rich people, dictionary.com. Um, he owns Shi- or has a very large stake in Shinola. So Shinola has this, like, insane hotel in Detroit. They make watches. Uh, he owns, uh, StockX, which is, like, a m- it's basically like a stock market for sneakers and watches. Um-
- SPSam Parr
Which is awesome that he got in on that
- AWAndrew Wilkinson
... he's a large investor
- SPSam Parr
Because, like, he, like, and it's-
- AWAndrew Wilkinson
Dude, he co-founded it. He's the co-founder of it.
- SPSam Parr
I know. And he's, like, in his s- how old... Is he in his 70s yet? Or 6-
- AWAndrew Wilkinson
He's, like, 50. 50-something. 56, I think.
- SPSam Parr
Oh, he's that young. Wow. Okay.
- AWAndrew Wilkinson
Yeah, yeah.
- SPSam Parr
I'm still a little bit older than, like, a sneakerhead. Uh, and he-
- AWAndrew Wilkinson
Totally
- SPSam Parr
... uh, he's a co-founder. I didn't know that. So he was in... He, he was part of that.
- 39:24 – 41:16
Gilbert’s operating style: culture as strategy, saying yes, and staying unusually hands-on
- AWAndrew Wilkinson
He has real estate, casinos. You know, all these... StockX is worth, I think, a couple billion dollars now. Um, so i- he's just got this crazy collection of stuff. And, and so Chris and I got to meet him. Um, the other cool thing about this guy is, like, he's just a wild card. Like, I... So I read about him in the New Y- New York Times. They did this profile of him. And I, I have this habit of just cold emailing people I think are interesting, and like 95% of the time, I just don't hear back. But I wrote him an email at, like, 1:00 in the morning and said, "Hey, you, you know, I'd love to meet you." And I get an email back like five minutes later, and he's just like, "Yeah, sure." And then I get a follow-up from his assistant, and we ended up flying to Detroit. And it... You know, sometimes when you go and meet these billionaires, they're like, "Whatever." You know, you walk in, you get 20 minutes with them. That's that. He was, like, incredible. They, like, planned this whole tour of Detroit. It was, like, this two-day thing. Like, ev- they set us up in their hotel. Um, and then Dan spent, like, two hours with us, and he's just this super nice guy who's, like, deeply interested in what we're doing, um, and super engaged. And, like, every business I mentioned to him, he'd be like, "How does that work? How can we get involved? What can we do? How can we do it?" Like, he wants to say yes to ideas, which I always find really inspiring, right? 'Cause I think some of these people who've gotten really rich, they've gotten rich by being, like, hyper-disciplined and just saying no to everything, but he says yes before no.
- SPSam Parr
That's really interesting. That's what Shaan acts like. And I usu- I usually say no to everything. Shaan says yes to everything, and my joke is that, like, I'm like, "My success is probably gonna be quite predictable, and it will be really good. Shaan's success is he's gonna go, go completely broke and die, like, but die young-
- AWAndrew Wilkinson
[laughs]
- SPSam Parr
... or he's gonna become a billionaire super fa- Like, you know, it's like a, it's a high-risk, high-reward type of thing.
- 41:16 – 1:10:39
From billionaire profiles to real life: public attention, anonymity, and the burdens of scale
- AWAndrew Wilkinson
Totally.
- SPSam Parr
And that's not the reality, but that's my joke. But, um, and you actually... Can you tell the story of how you met someone recently who's a big deal, and they said, like, "Oh, just call whenever. Like, I'm free all day"?
- AWAndrew Wilkinson
Yeah. Uh, so I recently got, um, an opportunity to-
- SPSam Parr
You don't have to name names if you don't want to.
- AWAndrew Wilkinson
Yeah. Well, I got... I... It was pretty crazy. I, I got a chance to talk to Warren Buffett on the phone. Um, some, some guy I, I was talking to, I was saying, "You know, I'm trying to figure out philanthropy and how to give money away," and literally he goes, "Oh, you should talk to Warren Buffett." And I was like, "What do you mean?" And then he just, like, CC introed me to Warren Buffett, right? It was one of the weirdest things that's ever happened to me, and, uh, it was amazing. And I was, like, kinda nervous. Like, Warren Buffett's, like, my hero. Uh, you know, I, I was never... not expecting this. It was just, like, a random Friday. And Warren Buffett's secretary emails me back and just says, "Oh, yeah, you know, call, call him whenever, you know, he'll, he'll pick up." And so I call, and they go- I get put right through, and it's just Warren freaking Buffett on the phone. And basically he said, you know, "Oh, yeah, I've... I'm not doing anything. I can talk for as long as you want." And I just got to pick his brain for an hour, uh, and it was insanely inspiring, right? Like, this guy He was exactly who you'd expect him to be. I find with a lot of these guys, it's like don't meet your heroes, and, uh, they're not who they appear to be on TV.
- SPSam Parr
So he, but, but he would be available all day?
- AWAndrew Wilkinson
He's available all day. He talked to me for an hour and a half, and he was just the nicest guy. He's exactly like he was on his CNBC interviews, showed a ton of interest in what I was doing, and like, I literally just like grilled him for like 30 minutes. Um, it was crazy.
- SPSam Parr
Was he on a landline, do you think?
- AWAndrew Wilkinson
And so... Yeah, he's definitely on a landline. And it, it was just, it's always, it's always really nice when someone is what you hope they'd be.
- SPSam Parr
That's great. So we'll bring it back to Gilbert, but just so you know, I have a feeling the clip that you just said about Buffett, that's gonna go viral. Um-
- AWAndrew Wilkinson
[laughs]
- SPSam Parr
Uh, so hopefully you're okay with that. Uh, and if you're not, you can tell us. Um, all right, um, you, you have something here about his strategy and his culture, 'cause I actually wanna know what motivates this guy. Um, and do you think that he was... So I actually sent this to you, I think. I, I use newspapers dot, newspaper.com and I actually like to read old articles, and I read a ton of old articles about Rock Financial. And even before it got bought by Quicken, Dan was like a Detroit guy it seemed like, and was like, he was very, um, confident. Not arrogant, but he was like, uh, he just had the it factor at a young age it seems like. And, um, then I read his, uh, what's it called? A 10-K or S1 when they go public, and, uh, he was like 30, and everyone on his company was like in their 40s. So it was like, he was like a young guy, and the business was booming, and, um, very interesting, very, seemed like a very, um, confident person at a young age. What do you think motivates him?
- AWAndrew Wilkinson
He's been, I think he's been super rich for a long time. Well, yeah, I was gonna say, like he says, there's this great quote, he says, "One of our things is that money follows, it does not lead. So we want people that are fired up and passionate about their mission, and people that aren't so married to spreadsheets and thinking that ki- that kind of voodoo controls the future, because it doesn't." So this theme of doing things 'cause it's cool or 'cause it makes sense or 'cause you're driven to do it, versus based on financial analysis. And that's the feeling I get about this guy, is like he says yes, and he wings it, and he takes risks, and he takes big bets. And I, I think it goes back to this thing of what's the point of making a bunch of money if you're not gonna try and do cool stuff with it? Um, and so he's just very, very inspiring, uh, in that way. And one of the ways that he wins is that he focuses massively on culture. So when we visited him, uh, you know, he probably had 5,000 or 6,000 employees at the time, and he said, "I still personally onboard every single employee. So once a month, I go into like a conference center and there's a, you know, 100 or 200 new employees coming in, and I will spend all day with them, talking to them about our culture and what, you know, what we represent." And he gave me this book, and he, he calls it Isms. These are the, like the ideals that, that they live by or whatever. And usually you get these stupid corporate BS-y things like, you know, we value integrity or whatever. But it's this series of, um, of kind of like words to live by. Um, so you know some of them, uh, yes before no, money doesn't follow, it leads, uh, we'll figure it out, every second counts. Eh, a penny saved is a penny. You know, don't obsess over saving, just do the right thing. Uh, anyway, I, I just love how he does that. Um, and then I also love, again, this barbell strategy, uh, where he's got a conservative cash flowing business, and that funds crazy shit, and big bets, and interesting stuff. Um, and you know, he also said, "Anyone who dies with money in the bank is a failure," right? So this is not a guy who's gonna go hoard it or whatever. He's gonna give it all back to society, which I think is super cool.
- SPSam Parr
That's great. Do you think, does he have, um... So none of this would've been fi- uh, possible without Quicken working out, yeah?
- AWAndrew Wilkinson
Yeah.
- SPSam Parr
Was he, has he, was he always hands-on or did he delegate right away you think?
- AWAndrew Wilkinson
Well, he's got this really smart CEO called Jay Farner. And Jay, my understanding is Jay now runs that business, and Dan floats above doing all of his different stuff. But I don't know, I think Jay's been there for a really long time. Um, so I'm not sure. But I think he was the, he's the chairman or something. I think he's kind of taken that role where he starts up the business, he's super involved. He's still hands-on, but he, he kinda lets someone else operate it day to day.
- SPSam Parr
Damn, this is awesome. I, I've heard him talk. My, uh, and I judged him incorrectly I think, because he's a n- nice dresser, and he's kinda good looking. I, and he like slicks, like literally slicks his hair back. I thought that he was frankly kind of a douche. Um, and I heard him talk a couple times and I'm like, "Oh wait, this guy is not how I thought he was gonna be."
- AWAndrew Wilkinson
He's super humble. Yeah. He t- he talks like with a Michigan accent. He is super down to earth, super funny. Like we, when we were meeting him, we're like, "God, this guy's like, he owns casinos. He's got slicked back hair. He almost dresses like a gangster or something."
- SPSam Parr
Right. He's like a slick-
- AWAndrew Wilkinson
"He's got like kind of like a serious look to him."
- SPSam Parr
Yeah.
- AWAndrew Wilkinson
Yeah, you look... And it, you know, there's a story about him like punching a guy in the face at a party. Like, you're kinda like, "Who is this guy?" But when you meet him, he's just completely real and down to earth, and cool. And, and I would say one, we've met lots of very successful people, and I'd say he's one of the only ones that I would go, you know, there's a small list of people where I'd go, "I'd really wanna be like this guy," right? I'd love to trade lives with him.
- SPSam Parr
Is he grinding still or does he relax a little?
- AWAndrew Wilkinson
Well, I don't know. I mean, I think with the stroke, there's a question of, you know, did he have the stroke 'cause he was stressed or, you know, high blood pressure? I, I don't know. Um, but I, I'm not sure. I, I don't know what his, uh, approach to work is or whatever. I haven't worked super deeply with him. I mean, we looked at that dictionary.com thing for him, gave him our feedback on what we would do with it. Um, and we've, we've done, like, you know, Metalab worked with, with Quicken Loans a little bit, and Dan's lit me up before via text saying, you know, "This design sucks and you need to make it better." But again, like, that's what's cool about him, is, like, he's running this freaking $60 billion empire, and yet he's still texting me going, "Hey, this website sucks, and that color's wrong, and, you know, tweak this." Um, he's just a r- he's a real person, right? And so many of these guys, they're like reptilian, right? These bill- bus- they're s- they're too slick. They, they're never, uh, you know, never out of place. They won't admit any of their flaws. And, you know, s- it's neat when you meet people and they're just real. They're flawed human beings. Uh, they're doing cool stuff.
- SPSam Parr
That's great. I've, I've just become a Dan Gilbert fan. I, I prepared more than you, I think, and I think you, you picked the right guy and you won. I think, I think you've won. Uh, I've become a, uh... You've convinced me to become a, um, a Gilbert fan, a Dan Gilbert fan. He, um, he also, uh, is really into hip hop culture. So, like, he did, um... I think he's the biggest investor in Rap Genius, which is not really relevant anymore, but-
- AWAndrew Wilkinson
For better or for worse
- SPSam Parr
... yeah, for better or for worse, correct. But it's, whatever. I mean, you, you're gonna lose sometimes if you say yes to everything. And, but that's cool that he said yes to that. And he's in, uh... So he's kinda got, like, street cred, and he does actually seem like a pretty cool guy. Um, um, and then that dictionary.com deal, I, the, according to the news, it said that he bought it for 100 million, which is pretty sick. I bet you that company could do $10 or $15 million a year in profit if it wanted to. Um, but you would know more than I do. But that's pretty sick. I'm a, I'm a Dan Gilbert fan now.
- AWAndrew Wilkinson
Yeah. Me too.
- SPSam Parr
Um, Abreu, what do you think of our first episode of Billy's, Billy's, but Billy of the Week?
Episode duration: 1:10:55
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Transcript of episode qZCT-6pRYjw
