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

Brad Jacobs, a seasoned CEO and serial entrepreneur, shares insights from his 44-year career in his book, "How to Make a Few Billion Dollars." Despite numerous business mistakes, including overpaying for acquisitions and hiring the wrong people, Jacobs has successfully created billions in shareholder value. His ventures, spanning oil brokerage to logistics, emphasize learning from failures and thinking differently to achieve big goals. Jacobs underscores the importance of managing one's mindset, expecting positive outcomes, and embracing problems as opportunities. He advocates for assembling talented teams, overpaying for exceptional talent, and leveraging technology to stay ahead. His journey reflects the entrepreneurial spirit of creating value and prosperity in free markets.

• The speaker reflects on making numerous mistakes in business, including overpaying for acquisitions, poor integrations, and hiring the wrong people.
• Despite these blunders, the speaker and their teams have created significant value for shareholders, demonstrating resilience and learning from failures.
• The speaker has started multiple companies, turning them into billion-dollar enterprises, emphasizing the importance of learning from past mistakes.

"During my 44 years as a CEO and a serial entrepreneur, I've made every possible mistake in business... and yet my teams and I have managed to create tens of billions of dollars of value for our shareholders."

• The quote highlights the speaker's extensive experience and ability to create value despite making numerous mistakes, emphasizing resilience and learning.

• The speaker has started five companies from scratch, including two spin-offs, and turned them into billion-dollar enterprises.
• They have completed approximately 500 acquisitions, creating hundreds of thousands of jobs and raising significant capital.
• The speaker's career began with an oil brokerage company and expanded into various sectors, including solid waste management and equipment rentals.

"My career began in 1979 when I started a privately owned oil brokerage company called Amorex Oil Associates... within 4 years, my partners and I had 4.7 billion in annual brokerage volume with offices worldwide."

• This quote illustrates the rapid growth and success of the speaker's initial venture, setting the stage for future achievements.

• Successful individuals think differently, often rearranging their brains to achieve big goals in challenging environments.
• The speaker emphasizes the need for intense focus and transforming how one uses their mind to achieve significant success.
• The concept of finding value in unexpected places and thinking from first principles is crucial for success.

"I've come to know a lot of extremely successful people in my life... all of them have rearranged their brains to prevail at achieving big goals in turbulent environments where conventional thinking often fails."

• The quote underscores the importance of unconventional thinking and mental adaptability in achieving success.

• The speaker stresses the importance of managing one's mind and attitude, especially in entrepreneurship, which is inherently stressful.
• Expecting positive outcomes and reframing negative thoughts as useful data are key strategies for maintaining mental equilibrium.
• The speaker shares personal experiences of feeling lost and depressed, highlighting the importance of controlling one's mindset.

"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."

• This quote reflects the speaker's journey towards self-acceptance and the impact of managing expectations on personal happiness.

• Thought experiments are vital for creative problem-solving and decision-making, used by geniuses across various fields.
• The speaker dedicates time to meditation and thought experiments, which help produce calmness and lead to better decisions.
• Meditation has been a significant benefit to the speaker's career, aiding in decision-making and maintaining a positive mindset.

"I usually spend about half an hour a day meditating... much of this time is spent in thought experiments, producing a profound sense of calmness."

• The quote highlights the role of meditation and thought experiments in enhancing decision-making and maintaining mental clarity.

• Business is fundamentally about solving problems, and successful companies are effective problem-solving machines.
• Problems are seen as assets and opportunities to remove obstacles and get closer to success.
• Embracing and enjoying problems can lead to innovative solutions and business growth.

"Problems are an asset, not something to avoid but something to run towards... each problem is an opportunity to remove an obstacle and get closer to success."

• The quote emphasizes the positive perspective on problems, viewing them as opportunities for growth and innovation.

• Jeff Bezos finds waste exciting as it signifies opportunities for improvement and productivity gains.
• Bezos emphasizes the importance of an efficient cost structure for enhancing customer experience.
• The concept of "muda," or waste, as seen by Japanese manufacturers, is a motivating factor for Bezos.

"The customer experience path that we've chosen requires us to have an efficient cost structure... everywhere we look we find what experienced Japanese manufacturers would call muda, translates into waste."

• Bezos sees waste as a chance for years of productivity gains and efficient capital expenditures.

"I see it as potential years and years of variable and fixed productivity gains and more efficient higher velocity and more flexible capital expenditures."

• Waste is viewed as an energizing opportunity for creating value and achieving business goals.

"Great, this is an opportunity for me to create a lot of value. If I can figure out how to solve this problem, I'll be much closer to my goal."

• The idea that setbacks and problems are opportunities for value creation is echoed by other successful entrepreneurs like Brad Jacobs and Charlie Munger.

"I'm not surprised when things don't go perfectly... the big gunky problems can be where the best opportunities lie."

• Radical acceptance involves seeing the world for what it is, not what you wish it to be.
• Brad Jacobs shares a story of losing $500 million due to a miscalculation regarding government funding.
• He emphasizes the importance of accepting reality and cutting losses when necessary.

"Radical acceptance 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 ability to accept and adapt to reality is crucial in business decision-making.

• Brad Jacobs faced a crisis with a short report that caused a significant drop in stock prices.
• Instead of panicking, he saw it as an opportunity to buy back stock at a low price.
• This strategic move resulted in a $4 billion profit.

"The short seller crisis had made our stock extremely cheap... we decided to buy back $2 billion worth of stock."

• Jacobs' approach demonstrates the importance of focusing on opportunities within crises.

• Jacobs highlights the importance of understanding major industry trends for business success.
• He conducts extensive research before entering a new industry, utilizing various sources and experts.
• Technology is identified as a dominant trend that can drive business success across industries.

"I start by reading everything I can get my hands on... I look at all the websites and social media of the major players and the up-and-comers in the industry."

• Successful business strategies often involve identifying and capitalizing on major trends.

"You can mess up a lot of things in business and still do well as long as you get the big Trend right."

• Jacobs shares his experience in the oil industry, where he identified a need for faster information sharing.
• He created a system to capture and share oil pricing data quickly, gaining a competitive advantage.

"I could see that there were 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 could unlock a lot of value."

• The importance of leveraging technology and data for business innovation is emphasized.

• Jacobs' approach to business involves identifying valuable but hard-to-get data in various industries.
• He successfully applied this strategy in the waste management industry by optimizing truck routes.

"Instead of sending 50 trucks out over 5 days to pick up X tons of waste, 20 trucks could now perform the same service in 3 days."

• His ability to recognize and act on market inefficiencies leads to significant cost savings and profit growth.

• Jacobs stresses the importance of continuous learning and adaptation in business.
• He seeks advice from mentors and experts, constantly updating his knowledge and strategies.

"I'm obsessive when learning about an industry... I interview experts, I seek out people who live and breathe the industry that I'm considering."

• The pursuit of knowledge and understanding is crucial for long-term business success.

• The acquisition of Win Systems provided a strategic advantage by offering industry-wide data and a robust platform for internal development.
• Access to aggregated data enabled proactive pricing and asset management, distinguishing the company from reactive competitors.

"Owning Win accomplished two things: one, we had an industry-best platform that we could continue to develop internally for our own use, and the acquisition gave us access to aggregated anonymized data on macro trends across the industry."

• The quote highlights the dual benefits of the acquisition: technological advancement and strategic data access, allowing for informed business decisions.

"We could now proactively adjust our pricing and asset management while the rest of the industry was being reactive."

• This emphasizes the competitive edge gained through proactive strategies enabled by comprehensive industry data.

• The importance of anticipating unexpected challenges in mergers and acquisitions is crucial, as shown by the failed sale to Cerberus.
• Unexpected financial crises can significantly impact deals, underscoring the need for strategic planning and flexibility.

"In 2007, I sold United Rentals to the private equity firm Cerberus... then the great financial crisis arrived, private equity firms began welching on deals, and Cerberus defaulted on the United Rentals agreement."

• This illustrates the unpredictability of financial markets and the importance of resilience and adaptability in business transactions.

"The deals I've avoided have contributed more to my success than the deals I've done."

• The quote conveys the value of discernment in business, emphasizing that sometimes the best decision is to refrain from pursuing certain deals.

• Engaging frontline employees for feedback can provide invaluable insights and improve company operations.
• Encouraging open communication within the company can uncover innovative ideas and identify inefficiencies.

"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."

• This highlights the often-overlooked resource of employee feedback and its potential to drive positive change.

"What's your single best idea to improve our company and what's the stupidest thing we're doing as a company?"

• These questions demonstrate a proactive approach to gathering actionable insights from employees.

• Rapid growth and decisive action can outpace competitors, as demonstrated by United Rentals' swift expansion.
• Maintaining momentum and not slowing down for competitors is crucial for sustained success.

"United Rentals did that in 13 months... do not take your competitor out to lunch and be like please slow down, please be nicer to me."

• This underscores the importance of maintaining competitive pressure and not becoming complacent.

• The significance of hiring top talent and the cost of hiring mistakes is emphasized.
• An empty seat is preferable to a poor fit, highlighting the critical nature of recruitment decisions.

"The most important thing a CEO does is recruit great people... make your hiring choices as perfect as they can be because there are few mistakes costlier than hiring the wrong person."

• This quote stresses the importance of meticulous hiring practices and their impact on organizational success.

"An empty seat is less damaging than a poor fit."

• This succinctly captures the potential detriment of a bad hire compared to the temporary inconvenience of a vacancy.

• The dynamic range between average and exceptional talent can be vast, making it crucial to pursue top-tier candidates.
• Overpaying for exceptional talent is justified by their disproportionate contribution to success.

"You must find extraordinary people... a small team of A players can run circles around a giant team of B and C players."

• This highlights the strategic advantage of assembling a team of exceptional individuals.

"Overpay for talent; it is nearly impossible to overpay for talent."

• This statement reinforces the idea that the value brought by top talent far exceeds their cost.

• Building products and services that improve lives and create jobs is a noble endeavor.
• The broader impact of entrepreneurship extends beyond profit to societal contributions.

"It's an incredible honor and a good thing for the world to build products and services that make other people's lives better."

• This quote encapsulates the broader mission of entrepreneurship to contribute positively to society.

• Emphasizes the importance of the entrepreneurial spirit in creating value and benefiting society.
• Discusses the role of a strong business model and a responsible organization in filling unmet economic needs.
• Highlights the importance of creating a healthy workplace environment and prioritizing customer satisfaction.

"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."

• The speaker stresses the importance of addressing economic needs through effective business strategies and responsible practices.

"Steve is the face of the entrepreneurial spirit."

• Steve, a small business owner, exemplifies the entrepreneurial spirit by prioritizing customer satisfaction and building a successful business.

• Personal anecdotes highlight the significance of focus and dedication in achieving success.
• The speaker recalls a formative experience that taught the value of going "all in" on projects.
• Encourages listeners to pursue big dreams with intensity and passion.

"If I put my whole heart and soul into a project, I had it in me to create really cool stuff."

• The speaker underscores the power of dedication and focus in producing outstanding results.

"We have it in our own hands to either make life meaningful or just pass time until we die."

• Emphasizes the individual's responsibility in making life purposeful through commitment and effort.

• Stresses the importance of building relationships and networks for personal and professional growth.
• Highlights the role of relationships in accessing opportunities and achieving success.
• Mentions an upcoming event, Founders Only, aimed at fostering connections among entrepreneurs.

"Relationships run the world. A single relationship can be life-changing."

• The speaker highlights the transformative potential of relationships in personal and professional contexts.

"The most valuable asset I have by far is my network."

• The speaker identifies their network as an invaluable resource, underscoring its significance.

• Discusses how listening and paying attention can uncover new opportunities.
• Provides examples of how insights and ideas can emerge from unexpected sources.
• Encourages a proactive approach to identifying and seizing opportunities.

"If you just listen, you'll find opportunities."

• The speaker advises being attentive to uncover opportunities that might otherwise be missed.

"Listening, paying attention to what's going on around you, you're going to find opportunity."

• Emphasizes the importance of awareness and attentiveness in discovering new ventures.

• Introduces Founders Notes, a resource for accessing notes and highlights from entrepreneurial books.
• Describes the utility of the platform in searching and exploring insights from successful entrepreneurs.
• Encourages using the platform to enhance knowledge and apply lessons in business contexts.

"People for years have been asking for ways to access all your notes."

• The speaker addresses the demand for shared insights and knowledge from their extensive reading.

"The highlights from the Brad Jacobs book are already in Founders Notes."

• An example of the type of valuable content available through the Founders Notes platform.

• Advocates for the ongoing pursuit of knowledge and learning from successful figures.
• Highlights the value of revisiting and reflecting on insights to drive personal and business growth.
• Encourages leveraging historical knowledge to inform current decisions and strategies.

"You want to be constantly reminded of these lessons because now you have a way to actually apply them."

• Stresses the importance of continual learning and application of knowledge for success.

"Take knowledge and turn it into profit."

• Encourages using acquired knowledge to create tangible business outcomes and profitability.