“While the rental industry overall was slow to computerize, the larger regional players were more tech-savvy. By 1997, nearly all of them, including Hertz, were running on software developed by a company called Wynne Systems. This told me that the software was capable of managing hundreds of thousands of pieces of equipment flowing on and off jobsites. I bought Wynne. Owning Wynne accomplished two things. 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. This gave us a high-level view of emerging market trends, such as equipment gluts or shortages in the making. We could proactively adjust our pricing and asset management, while the rest of the industry was being reactive. For example, if our data flagged an instance of too much equipment of a certain type in the Southeast, we’d lower the rental rate there and target customers who wanted the machine for several months, rather than just days or weeks. In other words, we were able to manage our rental rates efficiently based on equipment utilization to get the best return.”
How to Make a Few Billion Dollars
Brad Jacobs
146 highlights · 14 concepts · 54 entities · 2 cornerstones · 5 signatures
Context & Bio
Serial entrepreneur who built seven billion-dollar companies including United Rentals, United Waste Systems, and XPO through systematic industry roll-ups powered by technology.
Serial entrepreneur who built seven billion-dollar companies including United Rentals, United Waste Systems, and XPO through systematic industry roll-ups powered by technology.
“I was discussing the construction industry with one of the analysts when he asked me what I thought about going into construction equipment rental. I hadn’t heard of it, but I kept an open mind. It turned out to be exactly what it sounds like: Companies buy machines like boom lifts and backhoes and rent them out to contractors who need the equipment but don’t need to own it. My team and I moved fast to scrutinize the industry before concluding the big trend was the most exciting we’d come across so far. The addressable market had only 15 percent rental penetration, which didn’t make any commercial sense. A lot of the equipment in the remaining 85 percent was sitting idle on worksites getting rusty and dusty. We could capitalize on that disconnect. In addition, the equipment rental industry was growing organically; had only one national provider, a subsidiary of Hertz; and offered thousands of potential acquisitions, without widespread computerization or standardization. It was a big, juicy opportunity, and only a matter of time before economist Adam Smith’s “invisible hand of capitalism” swooped in. United Rentals was born.”
In 2 books
“I can't afford to waste my time making money.”
Quoting Jean Louis Agassiz on the philosophy that drives his approach to billion-dollar ventures
“Look, Brad, if you want to make money in the business world, you need to get used to problems, because that's what business is. It's actually about finding problems, embracing and even enjoying them—because each problem is an opportunity to remove an obstacle and get closer to success.”
Early career advice that shaped his approach to business challenges
“You can mess up a lot of things in business and still do well as long as you get the big trend right.”
Quoting Ludwig Jesselson's advice that became central to his investment philosophy
“Great! This is an opportunity for me to create a lot of value. If I can just figure out how to solve this problem, I'll be much closer to my goal.”
His mental reframe when facing major business setbacks
Why linked: Shares Brad Jacobs, Martin Seligman, and Albert Einstein.
“Meditation has been my main hobby since I was a teenager. It’s helped me stay calm and think creatively in challenging circumstances.”
“Problems are an asset—not something to avoid but something to run toward. Big ambitions often beget even bigger problems. If your initial reaction to a major setback is overwhelming frustration, that’s understandable, but it’s also counterproductive. Once you’re over that moment, pivot toward success: “Great! This is an opportunity for me to create a lot of value. If I can just figure out how to solve this problem, I’ll be much closer to my goal.””
““Think of M&A as having four quadrants defined by size and risk,” he said. “Big, low-risk deals are the ones everyone wants, but they don’t exist. Small, low-risk deals do exist, but you can’t make much money from them because of their size. Small, hairy deals are the worst quadrant, because the reward is limited and the odds are stacked against you, so why bother? The bingo quadrant is the big, hairy deals. If you can find a big, hairy deal with solvable problems, that’s where the real money is.””
“companies from scratch—seven if you include two spin-offs—and turned them all into billion-dollar or multibillion-dollar enterprises. My teams and I have completed approximately 500 acquisitions and opened more than 250 greenfield locations. In total, these ventures have created hundreds of thousands of jobs and raised about $30 billion in outside capital.”
“We sold Amerex in 1983, and I moved from New York to London the next year to start an oil trading company, Hamilton Resources, also privately owned. Hamilton generated about $1 billion a year in revenue, and we made this money through an opportunistic combination of crude oil trading, countertrade, pre-finance, and refinery-processing deals.”
“I created XPO with a private investment in public equity (a “PIPE”) that gave me control of a logistics company with about $175 million in revenue. Its main focus was freight transportation: matching truckers with shippers, forwarding freight, and expediting urgent shipments. I felt confident we could create a business model with a major upside to earnings by applying scale and technological innovation, and we did that, building XPO into an integrated, global logistics leader.”
“More recently, I divided XPO into three separate, publicly traded companies as a value-creation strategy. Between 2021 and 2022, we completed the spin-offs of GXO, the largest pure-play contract logistics provider in the world, and RXO, a leading freight brokerage platform that runs on technology we developed in-house. As a result, XPO is now primarily a less-than-truckload (LTL) transportation provider—a road-freight service that combines shipments from multiple customers on the same truck to move them efficiently through a high-speed network. I currently chair all three companies, and each business is helmed by a strong CEO.”
“what’s love got to do with making a few billion dollars? It has a lot to do with getting your brain in the right place to make good decisions. Fast-paced business environments swing between ups and downs, with many stressful interactions. Love is in an expansive emotional state that allows you to neutralize conflict and get everyone to a better place.”
“It’s much easier to make a lot of money with a team that’s in the love vibe.”
“I want to give you another way to create a durable love vibe in your company—this time, through one-on-one “gratitude conversations.” This is my modification of an exercise called gratitude letters developed by Martin Seligman, one of the fathers of positive psychology. In my version, think of a particular person you work with who deserves your gratitude, and write notes to yourself detailing why you’re grateful. For example, maybe that person is good at solving thorny problems, or is a customer service all-star, or is simply fun to be around and uplifts the tenor of the whole organization.”
“So much of success in business comes from keeping your head in a good place.”
“find a quiet time to sit down with that person, notes in hand, and verbalize why you’re grateful to them in a direct, personal manner. This simple act of giving and receiving gratitude can produce an overwhelming sense of happiness in both of you that can last for weeks or even months.”
“Successful people don’t always think positive thoughts. Because of the way humans are programmed, most of us—especially people with dynamic personalities—find that negative thoughts surface automatically. “I’m inferior. I’m defective. I’m weak. I’m vulnerable. I’m unattractive. I’m a loser. I’m doomed. It’s hopeless.” Any of that imposter syndrome stuff sound familiar?”
“The next time you catastrophize something that isn’t that bad, understand that your reaction is a genetic survival trait you inherited from your hunter-gatherer ancestors.”
“When we put our kids to bed at night, we’d ask them the same question many parents do: How was your day? Sometimes, we’d hear the good, sometimes the bad, and sometimes the ugly. Then we met Martin Seligman, and he suggested asking children a slightly different question: What was the happiest moment of your day? We tried it. The change was dramatic—no bad, no ugly, just the good. And maybe because our kids knew the question was coming, they kept their antennas up all day with the expectation that the happiest moment could happen at any time. What an easy way to create an optimistic frame of mind!”
“The question, “What was the happiest part of your day?” has a more uplifting effect than “How was your day?””
“When I have negative automatic thoughts, I use a two-step process to achieve a calmer, more rational state of mind and make better business decisions. First, I acknowledge the negativity as my natural, self-critical psychology kicking in. Then I challenge the validity of that perspective because, millions of years ago, our human psyche was programmed to default to anxiety and fear as a survival mechanism. We’ve been slow to evolve. Automatic negative thoughts are a knee-jerk mental reaction to a situation that almost always can be reframed in a positive light.”
“Give Yourself a Break The only time I’ve felt truly lost was when I stepped down from United Rentals in 2007. I started looking for my next big thing, but I couldn’t find it, and for the first and only time in my life, I became depressed. Maybe I was just coming down from the rush of success, but I’m an ambitious person by nature and a dealmaker by inclination. Now I had no deal going, no industry sector where I could envision working my magic. What was next for me?”
“Our thought processes are full of all sorts of cognitive distortions, from catastrophizing (thinking of small problems as enormous impediments) to perfectionism, where anything less than perfect execution causes intense frustration.”
“Another common cognitive distortion is dichotomous thinking (having rigid or “all-or-nothing” views). By learning to recognize these thought patterns and course-correcting accordingly, I’ve spared myself a lot of trouble. I learned, for example, to turn my internal chatter to my advantage by reframing negative thoughts as useful data rather than objective reality.”
“Inevitably, the process of running a business will test your bias toward hope or fear. Are you being too conservative about your projections? Is your fear keeping you from jumping into an opportunity? Is your anxiety fact-based, or are your biases spurring negative emotions? By keeping any biases at arm’s length from your decision-making, you’ll have a far better chance of success.”
““What’s the worst that can happen, and how would I cope with that?””
““If a friend had a similar worry, how would I advise them to handle it?””
“If we accept that life is imperfect, we’ll make fewer self-defeating demands for perfection on ourselves and others.”
““Not beating myself up” has been a hard-learned lesson for me and those around me. I became much happier in my middle age when I stopped expecting unrealistic levels of perfection from myself and my family, my friends, and my co-workers, not to mention customers, vendors, and shareholders.”
“The reality is that when you’re trying to make a few billion dollars, your team is likely running in multiple directions at a fast pace. Accept that some goof-ups are inevitable, and you’ll find that it’s much easier to maintain your mental equilibrium as you pursue big goals.”
“That’s why I find time for thought experiments that encourage me to think in large arcs of time and space—millions and billions of years instead of decades or centuries, light-years rather than inches, yards, or miles. I visualize space getting bigger and bigger and I try to identify with the totality of the universe. Or it could be a vast multiverse containing an infinite number of universes spreading out in every direction. My goal is to feel like a “bodiless mind floating in space,” which is the feeling so elegantly expressed by the noted hypnotherapist Milton Erickson.”
“Inside my home’s entrance hall is another piece of art, this one called Cluster by Chicago artist Lincoln Schatz. It’s comprised of four adjacent TV monitors with a webcam that starts recording whenever there’s motion in the frame. A hard drive holds 25 years of video that plays back on a monitor, superimposing four different feeds—two recent and two from the past. You can simultaneously see something from 25 seconds ago, 25 weeks ago, 25 months ago, and 25 years ago. The background of each video clip is the same, but the content is ever-changing, interweaving people with time, space, and memory in relation to each other. The overall effect is an elegant, timeless montage of family members, friends, and colleagues waving, smiling, and dancing.”
“I’m not suggesting you can daydream your way to huge success. But if you want to see problems and opportunities differently, you’ve got to push yourself. Thought experiments can help rearrange your brain in specific ways so that your mind can go anywhere it needs to go and feel comfortable wherever it ends up.”
“Albert Einstein was a consummate daydreamer; he preferred the term gedankenexperiments, the original German name for thought experiments. During one such gedankenexperiment, while he was picturing riding a beam of light and imagining what time and space would look like, Einstein came up with the relationship between energy and matter that he famously expressed in his equation E = mc2.”
“I usually spend about half an hour a day meditating—15 minutes in the morning, 15 minutes at night—and much of that time is spent in gedankenexperiments. For me, this creates a feeling of profound calmness, which is when many of my best decisions materialize. Some gedankenexperiments fill me with awe at the sheer magnificence of the universe. Or I think about how it felt to see a beautiful work of art, watch a sunrise, connect with a piece of music, or hold my child in my arms. Daydreaming exercises remind me that positive emotions matter, especially in chaotic business environments.”
“When my energy is low, my favorite technique to rejuvenate and unleash creativity is to close my eyes and allow my attention to gently float in my brain.”
“If you stare at your hands for a few minutes, the strong brain-hand connection can trigger dissociative, trancelike experiences. My feeling-the-brain technique is similar, but instead of directing my awareness to my hands, I put it on my brain. I close my eyes and gently allow my mind to merge with its physical counterpart, the brain, to “feel” it like a tactile sensation. The effect is a spontaneous explosion of rich and unusual experiences. Often, the boundaries of my senses get mixed up and I slip into synesthesia. I might see sounds, or hear colors, or smell emotions. If I’m tired or just not in the zone, I can close my eyes and feel my brain and be instantly energized. Feeling the brain is a powerful technique that can help you rejuvenate and be more creative. I encourage you to try it and see for yourself.”
““Look, Brad, if you want to make money in the business world, you need to get used to problems, because that’s what business is. It’s actually about finding problems, embracing and even enjoying them—because each problem is an opportunity to remove an obstacle and get closer to success.””
“The fact is, you’re not going to create a huge amount of value unless you’re courageous, and problems are the by-product of risk. As long as you’re honest with yourself, recognize mistakes as soon as they surface, and course-correct with no ego, the things about your business that aren’t good can become great. Tackle it head-on: Where are the inefficiencies in the process that created this problem? Where can my team reduce operational defects with Lean Six Sigma? Do I have the right people in place in key positions?”
“Embrace everything that comes your way, the good and especially the bad. And don’t just accept adversity—figure out how to capitalize on it.”
“If you plan to do M&A, you have to rearrange your brain to lean into those big, hairy deals and figure out how to cut off the hair and de-risk. You’ll need to be flexible, fearless, and open-minded, and stay attuned to your internal chatter. This is where your rearranged brain is going to kick in and look for solvable problems in big, hairy deals. Figure out whether these are problems you can address, either by removing them or by quantifying them and living with them. If not, move on.”
“Being dialectical means looking at something from different perspectives and interpreting it in multiple ways that are all valid.”
“Richard Feynman, summed up the value of dialectical thinking when he said, “We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.””
“lastly, the belief that every inch of a potential course of action must be analyzed before you act. This holds true whether it’s hiring or firing someone, doing a deal, raising capital, investing capex, or any other major decision. A CEO who waits for perfect terms and ideal conditions before acting creates corporate constipation. I critique myself on all high-value decisions, scanning constantly for prejudices that might be skewing my reasoning—but not to the point of procrastinating just because things are imperfect.”