Brad Jacobs
Founder of eight billion-dollar companies including United Waste, United Rentals and XPO Logistics
Where to hear and read about Brad Jacobs1 episode or test
Brad Jacobs is a serial founder who has built eight billion-dollar companies, including United Waste, United Rentals and XPO Logistics, and is now running the same playbook in building products distribution. The most useful thing to learn from him is a repeatable system: pick a large fragmented industry on the right long-term trend, fill it with A players paid as partners, buy at disciplined prices and double the profit.
If you get the major trend wrong, you can do a thousand things right, you're still going to lose.
How Brad Jacobs Built 8 Billion-Dollar Companies
Brad Jacobs: the story and the lessons
1How Brad Jacobs got his start
A summer speech after eighth grade taught Jacobs to go all in. At the Rhode Island Governor's School for the Gifted in Art and Music, a speaker gave two choices: waste the summer, or go all in.
Jacobs took from it that intensity of focus is directly linked to the quality of the result. His version: you can sleepwalk, and then die, or embrace life, dream big and achieve something fantastic.
Ludwig Jesselson of Philipp Brothers was his formative mentor. Jesselson ran Philipp Brothers, the largest commodity trading firm in the world, on a few dozen moral principles drawn from Jewish ethics. Jacobs always called him "Mr. Jesselson."
Honesty sat at the core, along with long-term relationships over leverage in any one deal: sometimes one side holds the leverage, but you don't take advantage. Getting the long-term trend right was another of his principles.
Trading on handshakes taught him reputation is built every day. At Philipp Brothers, deals worth hundreds of millions were done on a call or handshake, with Telex confirmation days later, even if the price moved against you.
Jacobs applied this in his 20s. He says every day you either raise or lower your personal brand, and people decide whether to do business with you based on it.
An oil brokerage showed him how people really think about pay. When Jacobs asked each broker what share of the monthly bonus pool they had earned, the estimates always added up to about 300%, never 100%.
He concluded people come to work mainly to provide for their families, not because they love him.
A magazine story moved him from oil into garbage. A Sunday magazine piece on waste companies earning $500 million in profit started his garbage career.
Garbage looked far simpler than oil, which involved long-term contracts, chartered vessels, processing agreements and hedging.
After United Rentals he fell into clinical depression. After about 10 years as United Rentals CEO he stepped down, couldn't find his next startup, and then the financial crisis hit. He scored as depressed on the Beck Depression Inventory.
He then did two years of cognitive therapy, which he calls one of the best things he has ever done. He went on to build XPO and, after it, a company in building products distribution.
2Brad Jacobs's playbook for picking an industry
Jacobs gets the long-term trend right before anything else. He judges a trend by what did happen, what is happening and what will likely happen, then weighs possible future states and their odds and manages risk around them.
He says he applied Jesselson's trend lesson to every later industry choice.
He only enters large, growing, fragmented, buyable industries. His screen: large, growing, fragmented, acquirable at reasonable prices, not tech-forward, and unlikely to be disrupted soon by AI or automation.
Garbage, equipment rental, logistics and building products distribution all fit, which lets him reuse one toolkit. He says his talent is spotting the right industry to consolidate.
He treats technology as the main trend and screens for AI risk. Before choosing building products he looked at 55 industries and dropped interesting ones he thought AI would hollow out. He passed on Chegg, whose stock fell from around 50 to single digits.
He sees human history as outsourcing senses, memory and intellect to tools, a timeline he took from Ray Kurzweil's The Singularity Is Near. "The main trend in life, and therefore in business, is technology."
Jacobs believes every industry leader is a tech company. He points to Sam Walton spending $500 million on a logistics computer system in 1979, and to GXO, spun off from XPO, running Inditex's European warehouses with robots and AI.
He notes package automation is far ahead of less-than-truckload freight, where closed spaces and many workers slow it down.
3How Jacobs buys companies and doubles their profit
Jacobs buys at reasonable prices and walks when they aren't. Reasonable doesn't have to mean cheap, but if the price is too high they pass. His teams have done over 500 acquisitions after looking at many thousands.
They look at many candidates at once so they never fall in love with one. "Price is too high, we don't do it."
His acquisition test is whether profit can double in three to five years. Con-way and Norbert Dentressangle were already great companies, and their profit doubled within about three years.
The toolkit is fixed: algorithmic pricing and elasticity analysis, procurement, compensation that turns salespeople into partners, a better tech stack and widely shared information.
Buying below his own multiple creates value on announcement day. Buying companies at lower multiples than his own stock creates value the Monday the deal is announced, and doubling profit then earns a better multiple.
Everything comes down to out-growing the market and widening margins. Once organic revenue grows faster than the market and margins rise, he says everything else follows, including valuation. United Rentals and XPO were both top-10 stock performers over a decade.
It takes about 100 different things to move those two levers, but they are the test for every priority.
He wants any CEO to know the five-year stock price and its levers. Jacobs tells buy-side friends to ask a CEO where the stock will be in five years and which levers get it there. If the answer is "I'll get back to you," short it.
For him the first two levers are buying companies right and improving them.
4How Brad Jacobs hires and pays his team
Recruiting people smarter than himself is the CEO's top job. Screening for superior intelligence first eliminates about 90% of candidates. His book says the CEO trait most correlated with success is high IQ.
He cites Steve Jobs: if your co-founder is 50% of the company, the 10th hire is 10% of it, so what else could you be doing instead of recruiting?
He hires deep specialists who are also honest and driven. His hires in finance, M&A, strategy, HR and tech are "an inch wide and a mile deep," but he screens equally for honesty, hard work and collegiality.
He wants people for whom work is a big part of life, so he never stands over them "like a school teacher with a stick."
Jacobs tests A players by imagining them quitting. Pure panic means an A player. A search for a replacement means a B player. Relief means a C player, and that he waited too long.
He admits he kept postponing firings because nobody likes them, and now advises removing C players right away. He spends the largest share of his time on the top few dozen leaders.
Senior people get big equity they can't sell for five years. Most of it vests in the last two years. About twice a month he reviews with his CHRO what each person's stake is worth at $50, $75 and $100 a share.
That tells him who has something to work for and who needs a top-up. He says most of the team stays a while, though some leave for personal reasons or burnout.
He designs every deal and pay plan around the other side's motive. Jacobs calls this theory of mind and applies it to deals, pay, teams, customers and vendors. A bully who only states what he wants gets ignored.
The aim is partnership: "how can we go conquer the world together?"
5How Jacobs runs his monthly operating review
The team, not the CEO, sets the agenda. Pre-read materials go out through an app, each leader submits takeaways and questions, and everyone rates the questions. Only those rated 8 or higher out of 10 make the agenda.
There are no PowerPoints. Jacobs finds a CEO announcing the agenda pompous and ineffective.
He caps the room at 25 after larger meetings failed. Meetings of 40 or 50 didn't work. Twenty to 25 gives enough diversity for debate without people peacocking.
He models saying "I may be wrong" to make it safe for others.
Jacobs frames for an hour, then listens for nine. The review runs 10 hours. He opens with about an hour on the state of the union, balancing wins with problems.
He gives praise and hard truths together, such as being 92% there and asking how to reach 100%.
The meeting ends with rituals that build trust. Each person names a point they disagreed with and their biggest takeaway, the group nominates field MVPs whom Jacobs emails, and each finishes "I resolve to improve the company by..."
It closes with a silent circle of gratitude and applause, sometimes for five minutes. He calls the result a superorganism.
6Why Jacobs runs on feedback and public markets
He builds intense feedback loops with every constituency. Employee surveys ask for each person's single best idea and a 1 to 10 job satisfaction score, plus what would make the job a 10. He adds anonymous surveys, 360 reviews and walking into offices.
He asks frontline staff at acquired companies what they would improve, which he says they were often never asked. Without outside input, he says, a leader sits in an echo chamber.
He shares information widely despite the competitive risk. Jacobs accepts that rivals may see it because learning where to improve outweighs the exposure.
His answer to copycats: "let them try to copy us."
Jacobs has run public companies since 1992 and likes it. Research coverage makes the company a magnet for talent, and staff can check their equity's value daily, unlike private phantom shares.
Critics have caught real problems: one found weak service and said he was cutting costs too much, and his answer was to invest more. He warns that cutting field costs to please 90-day hedge funds hurts service, and being understaffed is worse than being overstaffed.
Other people's money is the pressure that drives him. He guesses over 90% of his neighbors and friends own the stock, and one person put two-thirds of a retirement plan into it.
He calls it the biggest pressure in his life, and says building wealth for teachers, nurses and firemen gives the work a mission beyond himself.
7Brad Jacobs on time and the CEO's job
A CEO has only time and capital to deploy. At XPO, roughly 150,000 employees worked about 1.2 million hours a day, and directing those hours is part of the job.
He agrees with Fred Smith that you must be absolutely brutal in managing your time.
Anything that misses his two goals is WOT-WOM. In brainstorms anyone can call "waste of time, waste of money" if an idea doesn't move organic growth or margins.
His chief of staff, who once ran calendars in the Oval Office, acts as gatekeeper, and Buffett's near-empty calendar is his model.
A great CEO must be fluent in all 20 or so parts of the job. Weaker CEOs know four to six areas and delegate the rest. Jacobs names Dave Cote, Ed Breen and Larry Culp as CEOs who can speak to all of them.
He spends the most time on people and pay, budgets, customer satisfaction and field engagement.
Jacobs has never had work-life balance and doesn't want it. He has worked seven days a week since age 23 with very few vacations. Outside work he has only meditation and music.
He draws the line at sacrificing health and relationships: he is still married and a good father.
8How Brad Jacobs handles problems and perfectionism
Jesselson taught him that solving problems is how you make money. When a glum 23-year-old Jacobs vented about business troubles, Jesselson told him to leave business if problems got him down.
Jacobs now runs to the fire, not away from it, and says this makes the job both more profitable and happier.
Cognitive therapy turned his demands into preferences. He saw a therapist twice a week for an hour and a half for two years and learned he was a perfectionist who demanded that he, others and the universe be perfect.
Wanting everyone to like him was perfectionism too. He now treats criticism as possibly true or possibly distorted, and says "we are the children of imperfection."
He handles negative thoughts by disputing or simply watching them. He validates the thought, then checks the evidence, or observes it the way a meditator watches the breath.
He calls himself a "sunny side up guy" not driven by insecurity, and stretches his mind from the atom to the multiverse to gain context and humility.
Jacobs built his playbook from other leaders' maxims. His book credits each lesson to the entrepreneur, investor or CEO it came from, and Fred Smith of FedEx, a direct competitor, endorsed it.
When Smith said "I really like watching that guy work" at a 2013 conference, Jacobs cried. He is now writing a sequel, How to Make a Few More Billion Dollars.
How Brad Jacobs Built 8 Billion-Dollar Companies
Brad Jacobs explains how he repeats one playbook across industries: pick a large fragmented market on the right side of a major trend, assemble people smarter than himself, pay them as partners, buy at disciplined prices and double the profit. The result is eight billion-dollar companies, and the episode shows the people systems, meeting habits and time rules behind that repetition.
A summer speech after eighth grade taught Jacobs to go all in. At the Rhode Island Governor's School for the Gifted in Art and Music, a speaker gave two choices: waste the summer, or go all in.
Jacobs took from it that intensity of focus is directly linked to the quality of the result. His version: you can sleepwalk, and then die, or embrace life, dream big and achieve something fantastic.
Ludwig Jesselson of Philipp Brothers was his formative mentor. Jesselson ran Philipp Brothers, the largest commodity trading firm in the world, on a few dozen moral principles drawn from Jewish ethics. Jacobs always called him "Mr. Jesselson."
Honesty sat at the core, along with long-term relationships over leverage in any one deal: sometimes one side holds the leverage, but you don't take advantage. Getting the long-term trend right was another of his principles.
Trading on handshakes taught him reputation is built every day. At Philipp Brothers, deals worth hundreds of millions were done on a call or handshake, with Telex confirmation days later, even if the price moved against you.
Jacobs applied this in his 20s. He says every day you either raise or lower your personal brand, and people decide whether to do business with you based on it.
An oil brokerage showed him how people really think about pay. When Jacobs asked each broker what share of the monthly bonus pool they had earned, the estimates always added up to about 300%, never 100%.
He concluded people come to work mainly to provide for their families, not because they love him.
A magazine story moved him from oil into garbage. A Sunday magazine piece on waste companies earning $500 million in profit started his garbage career.
Garbage looked far simpler than oil, which involved long-term contracts, chartered vessels, processing agreements and hedging.
After United Rentals he fell into clinical depression. After about 10 years as United Rentals CEO he stepped down, couldn't find his next startup, and then the financial crisis hit. He scored as depressed on the Beck Depression Inventory.
He then did two years of cognitive therapy, which he calls one of the best things he has ever done. He went on to build XPO and, after it, a company in building products distribution.
Jacobs gets the long-term trend right before anything else. He judges a trend by what did happen, what is happening and what will likely happen, then weighs possible future states and their odds and manages risk around them.
He says he applied Jesselson's trend lesson to every later industry choice.
He only enters large, growing, fragmented, buyable industries. His screen: large, growing, fragmented, acquirable at reasonable prices, not tech-forward, and unlikely to be disrupted soon by AI or automation.
Garbage, equipment rental, logistics and building products distribution all fit, which lets him reuse one toolkit. He says his talent is spotting the right industry to consolidate.
He treats technology as the main trend and screens for AI risk. Before choosing building products he looked at 55 industries and dropped interesting ones he thought AI would hollow out. He passed on Chegg, whose stock fell from around 50 to single digits.
He sees human history as outsourcing senses, memory and intellect to tools, a timeline he took from Ray Kurzweil's The Singularity Is Near. "The main trend in life, and therefore in business, is technology."
Jacobs believes every industry leader is a tech company. He points to Sam Walton spending $500 million on a logistics computer system in 1979, and to GXO, spun off from XPO, running Inditex's European warehouses with robots and AI.
He notes package automation is far ahead of less-than-truckload freight, where closed spaces and many workers slow it down.
Jacobs buys at reasonable prices and walks when they aren't. Reasonable doesn't have to mean cheap, but if the price is too high they pass. His teams have done over 500 acquisitions after looking at many thousands.
They look at many candidates at once so they never fall in love with one. "Price is too high, we don't do it."
His acquisition test is whether profit can double in three to five years. Con-way and Norbert Dentressangle were already great companies, and their profit doubled within about three years.
The toolkit is fixed: algorithmic pricing and elasticity analysis, procurement, compensation that turns salespeople into partners, a better tech stack and widely shared information.
Buying below his own multiple creates value on announcement day. Buying companies at lower multiples than his own stock creates value the Monday the deal is announced, and doubling profit then earns a better multiple.
Everything comes down to out-growing the market and widening margins. Once organic revenue grows faster than the market and margins rise, he says everything else follows, including valuation. United Rentals and XPO were both top-10 stock performers over a decade.
It takes about 100 different things to move those two levers, but they are the test for every priority.
He wants any CEO to know the five-year stock price and its levers. Jacobs tells buy-side friends to ask a CEO where the stock will be in five years and which levers get it there. If the answer is "I'll get back to you," short it.
For him the first two levers are buying companies right and improving them.
Recruiting people smarter than himself is the CEO's top job. Screening for superior intelligence first eliminates about 90% of candidates. His book says the CEO trait most correlated with success is high IQ.
He cites Steve Jobs: if your co-founder is 50% of the company, the 10th hire is 10% of it, so what else could you be doing instead of recruiting?
He hires deep specialists who are also honest and driven. His hires in finance, M&A, strategy, HR and tech are "an inch wide and a mile deep," but he screens equally for honesty, hard work and collegiality.
He wants people for whom work is a big part of life, so he never stands over them "like a school teacher with a stick."
Jacobs tests A players by imagining them quitting. Pure panic means an A player. A search for a replacement means a B player. Relief means a C player, and that he waited too long.
He admits he kept postponing firings because nobody likes them, and now advises removing C players right away. He spends the largest share of his time on the top few dozen leaders.
Senior people get big equity they can't sell for five years. Most of it vests in the last two years. About twice a month he reviews with his CHRO what each person's stake is worth at $50, $75 and $100 a share.
That tells him who has something to work for and who needs a top-up. He says most of the team stays a while, though some leave for personal reasons or burnout.
He designs every deal and pay plan around the other side's motive. Jacobs calls this theory of mind and applies it to deals, pay, teams, customers and vendors. A bully who only states what he wants gets ignored.
The aim is partnership: "how can we go conquer the world together?"
The team, not the CEO, sets the agenda. Pre-read materials go out through an app, each leader submits takeaways and questions, and everyone rates the questions. Only those rated 8 or higher out of 10 make the agenda.
There are no PowerPoints. Jacobs finds a CEO announcing the agenda pompous and ineffective.
He caps the room at 25 after larger meetings failed. Meetings of 40 or 50 didn't work. Twenty to 25 gives enough diversity for debate without people peacocking.
He models saying "I may be wrong" to make it safe for others.
Jacobs frames for an hour, then listens for nine. The review runs 10 hours. He opens with about an hour on the state of the union, balancing wins with problems.
He gives praise and hard truths together, such as being 92% there and asking how to reach 100%.
The meeting ends with rituals that build trust. Each person names a point they disagreed with and their biggest takeaway, the group nominates field MVPs whom Jacobs emails, and each finishes "I resolve to improve the company by..."
It closes with a silent circle of gratitude and applause, sometimes for five minutes. He calls the result a superorganism.
He builds intense feedback loops with every constituency. Employee surveys ask for each person's single best idea and a 1 to 10 job satisfaction score, plus what would make the job a 10. He adds anonymous surveys, 360 reviews and walking into offices.
He asks frontline staff at acquired companies what they would improve, which he says they were often never asked. Without outside input, he says, a leader sits in an echo chamber.
He shares information widely despite the competitive risk. Jacobs accepts that rivals may see it because learning where to improve outweighs the exposure.
His answer to copycats: "let them try to copy us."
Jacobs has run public companies since 1992 and likes it. Research coverage makes the company a magnet for talent, and staff can check their equity's value daily, unlike private phantom shares.
Critics have caught real problems: one found weak service and said he was cutting costs too much, and his answer was to invest more. He warns that cutting field costs to please 90-day hedge funds hurts service, and being understaffed is worse than being overstaffed.
Other people's money is the pressure that drives him. He guesses over 90% of his neighbors and friends own the stock, and one person put two-thirds of a retirement plan into it.
He calls it the biggest pressure in his life, and says building wealth for teachers, nurses and firemen gives the work a mission beyond himself.
A CEO has only time and capital to deploy. At XPO, roughly 150,000 employees worked about 1.2 million hours a day, and directing those hours is part of the job.
He agrees with Fred Smith that you must be absolutely brutal in managing your time.
Anything that misses his two goals is WOT-WOM. In brainstorms anyone can call "waste of time, waste of money" if an idea doesn't move organic growth or margins.
His chief of staff, who once ran calendars in the Oval Office, acts as gatekeeper, and Buffett's near-empty calendar is his model.
A great CEO must be fluent in all 20 or so parts of the job. Weaker CEOs know four to six areas and delegate the rest. Jacobs names Dave Cote, Ed Breen and Larry Culp as CEOs who can speak to all of them.
He spends the most time on people and pay, budgets, customer satisfaction and field engagement.
Jacobs has never had work-life balance and doesn't want it. He has worked seven days a week since age 23 with very few vacations. Outside work he has only meditation and music.
He draws the line at sacrificing health and relationships: he is still married and a good father.
Jesselson taught him that solving problems is how you make money. When a glum 23-year-old Jacobs vented about business troubles, Jesselson told him to leave business if problems got him down.
Jacobs now runs to the fire, not away from it, and says this makes the job both more profitable and happier.
Cognitive therapy turned his demands into preferences. He saw a therapist twice a week for an hour and a half for two years and learned he was a perfectionist who demanded that he, others and the universe be perfect.
Wanting everyone to like him was perfectionism too. He now treats criticism as possibly true or possibly distorted, and says "we are the children of imperfection."
He handles negative thoughts by disputing or simply watching them. He validates the thought, then checks the evidence, or observes it the way a meditator watches the breath.
He calls himself a "sunny side up guy" not driven by insecurity, and stretches his mind from the atom to the multiverse to gain context and humility.
Jacobs built his playbook from other leaders' maxims. His book credits each lesson to the entrepreneur, investor or CEO it came from, and Fred Smith of FedEx, a direct competitor, endorsed it.
When Smith said "I really like watching that guy work" at a 2013 conference, Jacobs cried. He is now writing a sequel, How to Make a Few More Billion Dollars.