Brad Jacobs

"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.”"

"WHEN IT COMES TO making a few billion dollars, I’ve got a bias toward industries that are ripe for consolidation. Acquisitions are the best way I know of to scale up fast and gain the advantages that come from a large number of locations and greater market share. With scale, I can professionalize the operations by integrating best practices, spread my cost base over a larger revenue base, and attract desirable customers and management talent. Even though the companies I’ve built had different business models in unrelated industries, each one felt comfortable to me because the opportunity was similar: “obscene profits.” There’s a story behind that, and it starts about 11 years before I ever made an acquisition."

"We transformed the traditional brokerage business model by capitalizing on the intersection of two big, advantageous trends: the shift toward using truck brokers as middlemen, and the efficiencies of automated services in an industry where that was not yet the norm. If I was to sum up the genesis of XPO, GXO, and RXO, it would be the vision I shared with Mario in my living room in 2011: Automate everything you can. The importance of that, within the context of this chapter, is that we got the big trend right in our industry a dozen years ago, when it was far less apparent than it is today."

"I started United Waste Systems with my own money, followed by outside capital from placements with friends and family about a year later. I ran the company privately until 1992, when our IPO launched with the two leading banks in the waste management sector at the time: Paine Webber and Alex Brown. The public capital markets were a whole new world to me, and it allowed me to go full throttle on acquisitions, beyond the initial deals we’d completed. The timing could not have been better. Environmental regulations were forcing municipal dumps to transform into state-of-the-art landfills, and the new bond requirements alone cost millions of dollars. A lot of small landfill owners were eager to sell out and let us shoulder the capital investments. There was also an opportunity to integrate vertically with trash collection companies strapped by rising disposal fees."

"A good M&A deal should drive stockholder appreciation over the next five or ten years. Here’s how my team runs the numbers to look at a potential return, calculated on the most recent available earnings of the acquisition target. We use ten years of earnings at zero growth as a baseline. From there, we make assumptions about what kind of organic revenue growth rate we can achieve in the business over ten years, and what kind of margin we can realize. We also estimate how much annual and cumulative cash flow the operation will generate or consume over ten years. For us, these projections need to be substantially higher than what the target is generating now, either because of the synergies inherent in being part of our larger company, or because we’re more accomplished operators, or both. There’s no such thing as a sweet deal without a clear path to significant growth."

"Our M&A game plan from the start was to avoid going head-to-head with the largest waste management companies. Instead, we went into tertiary markets like rural Mississippi and the Upper Peninsula of Michigan, places that the big incumbents overlooked, where we could be a big fish in a small pond. We rolled up landfills, then bought the collection companies that were hauling waste to those sites. In short order, we had geographic density and economies of scale. Eight years in, we sold United Waste for $2.5 billion."

"Some companies struggle to clarify this basic rationale for allocating M&A capital. There are ways to start getting a handle on it before you even run the math—including common-sense conversations with your team. For example, in advance of doing a deal, I like to ask my key salespeople how they think our existing customers will react if they hear we bought Company X. Will they be happy because it adds…"

"Keep Up the Pace, Not the Pressure Speed has been one of our sharpest edges in winning competitive deals. We can typically cut the due diligence and negotiation period from two or three months to a matter of weeks. To achieve this, we do a lot of research before we make our initial contact with the target business. As a result, our first or second meeting with a seller often goes something like this: “This is what we’re prepared to pay for your business, on these terms. If this is acceptable, we can be signing a definitive agreement in two weeks.” That’s going to get their attention."

"Another tenet of my M&A philosophy—and one that I’ve impressed on my teams—is the importance of removing every trace of vanity from the process. I’ve never done an acquisition, even a small one, merely to boost my company’s image or get coverage in the financial press. I can’t think of anything less appealing than expending capital, taking on cost, and disrupting operations for no compelling advantage to my shareholders and customers."

"When we buy a business, we expect to own it for a long time, so we search for hidden flaws that may surface down the road and cause harm. I like acquisitions where the primary risk in each case is operational execution. I have faith in my team’s ability to fix most flawed operations, because I’ve recruited the best possible operating talent for my companies."

"Control Your Outcomes You’ll find it’s much easier to succeed at M&A if your acquisition process is aligned with your business plan and your high-level strategy for creating value. With United Rentals, for example, I could clearly envision what companies I wanted to buy and why—the list was right there, hundreds of small companies doing the things we intended to do on a grand scale."

"We’ve created a systematic evaluation process that lets us move quickly, with less risk. And while there’s no one-speed-fits-all in M&A, faster is almost always better. Here are some of the specific questions my team and I answer as…"

"In addition, I knew that I’d be able to relate to the people I’d be negotiating with in these deals, because rental business owners on the whole are entrepreneurial, and so am I. The tenor of negotiations has a major influence on controlling the transactional outcomes. With the United Rentals acquisitions, I knew that a compatible mindset across the negotiating table gave me a high chance of success."

"Lastly, before I finalize an acquisition, my team puts together an integration playbook that’s a combination of “math and music”—hundreds of prescribed action points, but with room to be creative in response to the human part of the integration. Well in advance of closing, we’ve visualized every aspect of the process that will harmonize the acquired operation within our company. Every integration is an abstraction until you make it a reality, and there’s a great deal of satisfaction to be found in seeing that outcome come to fruition."

"I wasted a lot of time early in my M&A career because I thought I could pay less by playing hard to get. I learned it’s better to let sellers know how excited I am to do a deal and the price and terms that work for me."

"That’s the part of United Rentals’ history people tend to remember: the roll-up. What’s less apparent is the hard work and the loads of humility it took behind the scenes to buy up businesses at speed and emerge as one cohesive company with a shared culture. My first piece of advice is simple—set your priorities up front and don’t stretch your team too thin, or your service levels could deteriorate in the business you bought, or your legacy business, or both. Competitors will try to poach customers and personnel when changes are underway, and any slipup leaves you vulnerable."

"Don’t Expect to Force-Fit a Culture A fundamental mistake I made early in my M&A career was not attaching enough priority to understanding the culture of a prospective acquisition. It’s hard, if not impossible, to make wholesale changes to a business culture. The goal is to buy companies with cultures compatible with yours so that change can happen naturally, and for the benefit of everyone, as the integration proceeds."

"One of the best uses of my time in the due diligence process is to do face-to-face talks with the top 15 or so people in the company we’re in the process of buying. I give these interviews an extra-high priority. They take about 90 minutes each, and I get the gist of what’s going on inside the company, the positive and the negative. I also get a sense of whether these are straightforward people I can trust. As a bonus, some of the information shared during these talks can help my team anticipate the improvement initiatives that will be needed for the integration playbook and start executing on them right away."

"First, Cultural Integration Cultural integration is the single most important thing to get right after the deal is signed. It’s the foremost reason why my companies have been able to do so many high-speed acquisitions without blowing up. We address it like this: First, we leverage the cultural intelligence we gathered during due diligence. This becomes the basis for our ability to communicate credibly with employees, customers, and other stakeholders. Second, we don’t come in with a heavy hand and an arrogant, my-way-or-the-highway attitude, causing the employees to feel disrespected. A lot of acquirers get an “F” for internal communications. That’s not our style. With every acquisition we undertake, we’re careful to be respectful toward our new team members through our words, our actions, and even how we think. This can’t be faked—people can tell if you’re giving them baloney. We cultivate a mindset of feeling grateful toward the people who sustained the company we just bought."

"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."

"We also set internal and vendor deployment schedules for rebranding the acquired operations with our company’s name and logo, including the installation of new signage. Ideally, a visitor to any one of our sites won’t be able to tell whether we opened that location from the ground up or we acquired it ten years ago, or one year ago."

"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."

"Set Up Early Feedback Loops Often, when we buy a company, we discover that the frontline employees, middle managers, even some senior executives have never been asked, “What would you do to improve the company?” You’d think owners would want to know that! We do just the opposite through multiple feedback loops: surveys, town halls, one-on-one interviews, group meetings, internal social media—whatever best fits the size of the acquired employee base and the time frame. Asking for input is a way to show respect, and we find it pays dividends on both sides."

"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."

"Overorganize A lot of mystique surrounds M&A integrations, but experience has taught me that it’s all quantifiable. When we acquire a company, the to-do list can stretch to hundreds or even thousands of tasks needed to make the integration work. My strong preference is to assign these tasks to individuals, not working groups. If we have one person owning each task and being accountable for achieving it on time, we’re more likely to succeed than if the task is owned by a group."

"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."

"the rationale for any acquisition should be, “How will doing this deal contribute to the two main drivers of shareholder value, which are pleasing customers and propelling financial results?” Put another way, “How will doing this deal convince…"

"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!"

"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?"

"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."

"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."

"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."

"“What’s the worst that can happen, and how would I cope with that?”"

"The surest way I know to create immense shareholder value is to buy businesses at valuations well below our own, and then drive revenue…"

"Mental synthesis is how we imagine what doesn’t exist. Then we build it."

"The final must-have on my checklist, and one that’s especially exciting to me, is finding an industry that’s somewhat tech backward. This may sound counterintuitive—shouldn’t I want to jump into an industry that’s already benefiting from the latest technologies? Actually, it’s the opposite. If the companies that will be my competitors are already tech savvy, where’s my edge? I don’t want to compete on someone else’s playing field, where they already have the advantage. I want to walk into an industry where the cool, mission-critical technology has been overlooked and businesses are still using Excel spreadsheets and gut instinct to make critical decisions. These…"

"When I was evaluating potential industries for QXO in 2022 and 2023, several caught my attention but ultimately fell short. Exchange-traded funds (ETFs) initially looked appealing. I thought I could roll up dozens of smaller ETFs—$500 million of assets under management here, a billion dollars there—and create an ETF juggernaut with $50 billion to $100 billion of assets. But when I got deeper into due diligence, it became clear that the economics weren’t on my side. The acquisition multiples for the larger targets…"

"If an industry isn’t ripe for consolidation, optimization, and organic growth—the trifecta of my M&A strategy—I look elsewhere. I also stay away from sectors where private company valuations sit too close to public company multiples. What I look for here is meaningful multiple arbitrage—acquiring businesses at valuations…"

"Oil and gas was another industry I gave serious consideration to, partly because I know it well from the decade I spent in the energy trading sector early in my career. Exploration and production targets were cheap when I did my analysis, sometimes trading at just 4x or 5x cash flow. The idea was tempting. I would buy active wells at low valuations, get all my money back in four or five years, and then effectively have a royalty stream for another 15 or 20 years. But when I spoke with potential investors—sovereign wealth funds and pension funds that had backed me before—they were adamant that ESG mandates and poor industry performance in recent years made oil and gas a nonstarter for them."

"Before I look at growth trends, fragmentation, economies of scale, or technology, I first look at an industry’s size. Without a large enough total addressable market (TAM), it’s nearly impossible to create the revenue growth…"

"Formulate a bold yet attainable strategy that meaningfully benefits…"

"With QXO, our sights are set on building a $50 billion business, so that eliminated industries with TAMs of $25 billion or even $100 billion. We focused on analyzing big trends in industries that have at least hundreds of billions of dollars of total market size—ideally closer to a trillion.…"

"Every industry I’ve entered over the last four decades has nailed my trait checklist. If they had been missing even one of these characteristics, it would have been much harder for me to create dramatic shareholder value. You can use this same framework to pick your own industry, adjusting for your targeted scale, and the concepts…"

"I’m dealing with any of the myriad challenges that inevitably land on a CEO’s desk, I practice mindfulness to get back into the zone. In a way, it’s the easiest recentering tool in the toolbox because it requires no real effort at all. In fact, it’s a process of not resisting, not expending energy, but simply experiencing something fully. At the same time, it’s not static. It’s deeply present and aware, paired with a heartfelt appreciation for the moment. I believe that’s the secret to radiating personal charisma: the simple but rare combination of focus and gratitude."

"Why is scale so important? Because you can’t capture the entire market. A $50 billion company in an $800 billion industry holds about 6% market share. That’s a significant…"

"Distorted thought: I messed this up. I always screw things up. Reframed thought: This one didn’t go as planned, but I’ve done well before, and I can learn from this."

"Thay taught mindfulness as the practice of easily noticing what’s going on, using simple phrases like “Breathing in, I calm my body. Breathing out, I smile.”6 Thay’s approach brings a beautiful clarity to the idea of mindfulness. Instead of treating it like an esoteric practice, his teachings show how mindfulness can be woven into the most ordinary parts of life—walking across a room, eating a tangerine—everyday actions that become meaningful when you’re fully present for them."

"How to Stubbornly Refuse to Make Yourself Miserable About Anything—Yes, Anything!1 “No matter how badly you act, no matter how unfairly others treat you, no matter how crummy the conditions you live under are—you virtually always have the ability and the power to change your intense feelings of anxiety, despair, and hostility. Not only can you decrease them; you can annihilate and remove them.” “When you rigidly hold certain irrational beliefs—when you dogmatically command that you must do well, have to be approved by others, have got to have people treat you fairly, and always ought to live with easy and enjoyable conditions—when you stoutly hold these irrational beliefs, you will tend to make yourself needlessly miserable and will probably defeat some of your most cherished goals.” “You largely (not completely) create and control your own disturbed thoughts and feelings, and therefore you have the power to radically change them.”"

"Linehan offered a blueprint for staying centered in the middle of the chaos. She categorized human psychology in three ways: the impulsive and reactive emotion mind, where thoughts and behavior are controlled by emotions; the detached and analytical reasonable mind, where thoughts and behavior are controlled by logic; and the wise mind, which is the balanced integration of the emotion mind and the reasonable mind: calm, intuitive, and centered."

"Beck’s method and ask, What automatic thoughts are going through my mind? Was my reaction unwar-ranted because it was warped by my schema?"

"There are a couple of ways I can approach this. I might use Albert Ellis’s method and ask, What am I telling myself right now? What is my irrational belief that I need to reframe?"

"I know that our brilliantly flawed universe will inevitably generate some outcomes I don’t like. Not only am I okay with that, I also recognize that good things can come from those outcomes, or at the very least, I can learn from them. When I stopped expecting flawlessness from myself and others, I could let go of frustration and put that energy to good use. I believe in this imperfection mindset so strongly that I’ve woven it into the culture of each new company I start. Mistakes aren’t failures; they’re the very substance of growth."

"Ellis would then ask the person to close their eyes and get in tune with that negative emotion. When he felt they were ready, he’d say “Okay, now make yourself half as upset as you just were.” He’d let them sit in silence for a minute or two and then ask, “Do you now feel roughly half as upset?” If the person said yes, he’d respond, “Okay, great. Now open your eyes,” followed by “Tell me what you told yourself in order to feel less upset by half.” The person would answer something like, “My boss is acting like a jerk, but so what? He’s under a lot of pressure, and I’m optimistic that once that passes, he’ll return to his pleasant self” or “Sure, I have an illness I wish I didn’t have, but it’s not fatal. I can live with it.” This was a brilliantly simple technique because Ellis was demonstrating that external events, in and of themselves, don’t make you upset; what makes you upset is what you tell yourself."

"Your best ideas won’t come from thinking harder, but from thinking in different ways."

"Each of us can actively create numinous experiences. Breathing in and out isn’t inherently numinous, but breathing love into the universe can be. A musical chord alone is not numinous, but an inspiring series of notes and chords can be. I want to become that music and live a life filled with numinous experiences. Numinosity is a high priority for me as a person, an entrepreneur, and a CEO because it enhances the creativity that inspires success. Meditation is my main method for achieving that."

"“Knowing others is intelligence; knowing yourself is true wisdom” and “Mastering others is strength; mastering yourself is true power.”"

"While Qigong-inspired visualizations expand consciousness outward, I also want to turn my focus inward before I meditate. For this, I use techniques I adapted from hypno-therapy to deepen the connection between my mind and body. I’ll do a technique, based on a Qigong practice, where I open my hands outward, close my eyes, and think, I am in the universe. As I do this, I’m picturing the entire observable universe—all 546,000 billion trillion miles of it. I let myself become a mind without a body, floating in a vast, mostly empty space. It’s a very liberating feeling. Then I’ll bring my arms inward, cupping them as if I’m holding a globe or egg in front of me, and think, And the universe is in me. I picture Hiranyagarbha, the Hindu golden egg of the universe, between my hands. I lift that imaginary egg to my mouth and, visualizing the universe being placed in my mouth, I swallow it, repeating silently, The universe is in me. Sometimes I’ll take it further. After I swallow the universe, I’ll think, I love the universe and feel love pouring out of me, filling every speck of the cosmos. Then I’ll think, And the universe loves me, as my arms come in, almost like a self-hug. I imagine this is how a baby might feel wrapped in a mother’s hug but multiplied by a million. If I want to deepen the experience, I envision not just…"

"TM is a process of thinking a thought in an increasingly abstract way, until you go beyond the thought and experience a state of unbounded awareness. One metaphor that’s sometimes used is the ocean, where all evident activity is near the surface—waves, fish, boats, birds—and the more you sink down into the depths, the more boundless and abstract it becomes. In those early days, meditation felt to me like entering a vast space that was both calming and exhilarating at the same time. I was hooked. It wasn’t just about the relaxation; I was discovering a deeper, subtler state of awareness that was beyond everyday thought yet profoundly practical for daily life. Maharishi had described it as experiencing bliss within yourself, and for me, it delivered exactly that: a sense of ease that made everything feel more manageable."

"Having great leadership talent on board is a huge milestone. I tell them, “Here’s my vision” and challenge everyone to poke holes in the plan and suggest ways to improve it. I listen carefully and gather lots of perspectives; then I retreat into solitude to reflect, visualize, and strategize."

"A lot of it comes down to striving for clarity and reducing my own bias. I can look at a situation and know where I went wrong and where I got it right. I can see the idiosyncrasies—even the eccentricities—that enable my team’s success. And I’m comfortable with a little bit of anxiety, even fear, when facing a decision that has huge consequences because I believe that’s a healthy trait in a leader."

"Maharishi just laughed. “We’re doing research into consciousness as a field of all possibilities,” he told me. “If it’s natural and blissful, Brad, go for it.” Those words freed me to explore even more deeply, blending meditation with other schools of thought, including Milton H. Erickson’s self-hypnosis, Richard Bandler’s Neuro-Linguistic Programming, Paramahansa Yogananda’s Kriya Yoga, and the teachings of Thích Nhất Hạnh, the father of mindfulness."

"When I create a company, it starts in my mind. I want to have a very clear mental picture of what the business will look like out of the gate, then a year later, five years later, a decade later. Next, I gather a group of supersmart people to be the founding management team."

"Each of my companies has been more tech-forward than the previous one. I believe in being an early adopter of technology, but I’m also a realist. I know that I’ve absolutely got to get the big trends right, and what’s “right” could change in an instant. I want to have a…"

"This time I chose the truck brokerage sector, which had a business model that was similar to oil brokerage. I spotted a big trend I was confident would drive more broker penetration of the for-hire road freight transportation market over time. For context, truck brokers don’t own tractors and trailers; they match industry carriers to shippers who have a full truckload of freight to move. Importantly, brokers are pretty much the only ones with a connection to the entire freight landscape on both sides of the equation. For the most part, shippers who use an in-house department to source trucks can only see the capacity of the limited number of carriers they deal with, while small carriers don’t have the market-facing resources to reach out to a large number of shippers. The truck broker who uses information most efficiently will get a load to its destination with the fewest empty miles, most fuel efficiency, and lowest cost. In 2011, most truck brokers were still doing the bulk of their business over the phone instead of digitally. I could envision a time when everyone involved in these transactions—truck owners, drivers, dispatchers, retailers,…"

"Jean Louis Agassiz that says, “I can’t afford to waste my time making money.” To me, that doesn’t mean that you shouldn’t make billions of dollars—but you should only do it if you truly enjoy it, and only if it gives you more satisfaction than using your time some other way."

"The second trend that could impact supply chains in the long term is electric vehicles, or EVs. A major truck manufacturer asked XPO to test its EV trucks, and it turns out our drivers love them. They’re quiet, safe, clean-running, and powerful. But they currently cost about three times the price of diesel trucks. They’re not going to be competitive without huge government subsidies. But with the U.S. currently in debt by tens of trillions of dollars, and Europe as a whole not far behind, it’s difficult to see where that money would come from. Regarding EVs overall (consumer and commercial vehicles), I still don’t understand whether EVs are good or bad for the environment. Buying an electric vehicle is emotionally satisfying, but there are some significant downsides. As more EVs are put into use, they’ll require a lot more…"

"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."

"Spotting big, actionable trends in technology is especially complicated when the impact ripples beyond industries and has existential implications for humanity. Many researchers, computer engineers, and CEOs of tech companies have posited that technology is on a trajectory that could replace human beings within this century."

"XPO By the time I was looking in earnest for a new venture in 2010, the world was rapidly moving into an extreme phase of instant gratification in communications and data access, thanks to smartphones. The trend toward on-demand everything, which I had bet on with equipment rental ten years earlier, was now well established. And the concept of dynamic pricing, which we had deployed so effectively at United Rentals, had by now increased the profitability of a whole raft of other industries, including transportation, entertainment, and hospitality. I knew that whatever line of business I went into next, tech was going to be essential to making a lot of money."

"At the same time, there’s a lot of money to be made by identifying industries that might benefit strongly from AI over the next 20 years; these include parts of the healthcare, retailing, and manufacturing sectors. Other industries are unlikely to see significant impacts one way or another in the near term. Homebuilding, for one, will benefit from AI in terms of design and marketing, but an actual physical home won’t go away anytime soon. Even if we start spending a lot of time in the metaverse, as long as we have physical bodies, we’re still going to sleep in a real bed, brush our teeth over a real sink, take a real shower, and use a real toilet. At the moment, AI appears to be more of a friend than foe to the homebuilding industry, along with staple sectors of the economy, such as clothing and food."

"In addition to CEOs, I seek out investment bankers who are most active in the industry and who know it deeply—bankers who have close relationships with management teams, have advised on lots of acquisitions in the space, and…"

"The most time-consuming task in my methodology is processing all the digital information that I accumulate; it’s a far cry from 44 years ago, when I physically went to the library to start researching industries. But I’ve got a team of super smart people who are good at distilling tons of source information. As I go through the material, I note my observations in preparation for the next step—my interviews with experts. After absorbing a lot of data and arming myself with questions, I seek out people who live and breathe the…"

"One of the first things I look for in an industry is scalability. I want to be able to envision how I’ll take a business from a few million dollars to tens of billions of dollars. What will be the path to do that, and how fast can we move along that path? Is the industry growing much faster than GDP so that we’ll probably generate top-line growth each year just by showing up and can build from there? What’s the base price/volume combination we need to be profitable, and how realistic is it to significantly increase our profit margin over time? What could prevent us from doing that? If you want to make a lot of money in almost any industry, plan to invest heavily in tech. Structurally, is it an industry where companies have advantages of size and economies of scale? Are there ways to grow the business organically or through M&A? What multiples will I likely have to pay for companies I acquire, and is that number a large enough discount from the multiple I’d expect my company to trade at? This is important because the arbitrage between our cost of capital and what multiple we’re able to buy companies at is the biggest value-creation lever in a roll-up. Improving the actual profitability of the business is the second-biggest lever."

"It’s also good to pay attention to tech trends that have the potential to disrupt economic models but haven’t hit their stride yet. Two examples relate specifically to the supply chain industry, where I’ve spent the past 13 years. 3D printing (also called industrial additive manufacturing) will drive seismic change in supply chains in the long term. It’s had a slow start—in the ’80s and ’90s, there was a joke that 3D printing was endlessly ten years away from being viable. Now, it’s being adopted for all kinds of purposes, especially in medicine. Ten years ago, dentists were giving patients a temporary tooth for a couple of weeks while a crown was made from an impression of the tooth. The last time I went to the dentist, he took measurements and told me to hang out for an hour while the office printed my crown. Hearing aids are 3D printed now, too; so are a lot of prostheses. Sophisticated industrial products, including structurally critical parts for jets, are 3D printed out of metal. As the cost continues to go down, I expect that 3D printing will be a growing part of local autonomous manufacturing. That will change the transportation industry, the global supply chain, and the entire geopolitical balance. Currently, the global economy is still based on an outdated model of sourcing cheap labor overseas, especially from China, and then paying a high price to get it transported to the consumer. For example, the goods travel on a plane or ship from Shanghai to Los Angeles, and then the dray containers go by rail to Chicago, where they’re put on a truck and driven to a warehouse in Kansas City. Eventually, the product is trucked the “last mile” to…"

"When I’m on the hunt for a new venture, there’s now an AI dimension to my lens. The questions I compile include the following: How will this industry be disrupted by advances in AI? How soon could that happen? What are the risks and opportunities in that disruption? For example, I looked at doing a roll-up of accounting firms, but there’s a chance that accountants will be replaced by generative AI over the next decade. I could build up a big accounting business over the next few years and see it suddenly go into a black hole because people start using AI to close their books."

"Trend-spotting an industry requires objectivity and open-minded analysis. I don’t pick an industry just because it’s in vogue. My team and I make detailed lists of pros and cons and create word clouds to illuminate macro themes from the information we’ve gathered. This helps to uncover an industry’s strengths and defects from the standpoint of making money for investors, which is the prime mission of a public company. After completing these steps, I know a great deal about the industry I’m considering, and I can detach myself from distracting details to lock on to the big questions. What direction do I think…"

"The evolution of technology may sound far removed from making a few billion dollars, but I’ve found it to be integral to every major goal I’ve ever pursued—and now more than ever. Tech is the dominant megatrend in our part of the universe, and to consider its future impact, you have to first visualize its history. Here are some selected highlights from the history of technology timeline to illustrate the accelerating frequency of culture-shifting innovation."

"Ludwig Jesselson, is, “You can mess up a lot of things in business and still do well as long as you get the big trend right.” I’ve taken his words to heart, and with each new company I start, I make sure I understand the major trends that could threaten the business or help it soar."

"Take Your Questions to the Experts I use a three-part methodology for my research: I educate myself on the industry as thoroughly as possible, compile a list of questions that matter, and then do my best to get in front of the most knowledgeable experts I can find on each topic. It’s not a perfectly linear process, because more questions arise as I continue my research, but that’s the basic structure. I start by reading everything I can get my hands on—journals, periodicals, newspapers, trade publications, employee reviews on web-based recruiting sites, you name it. I look at all the websites and social media of the major players and the up-and-comers in the industry. I set Google Alerts for industry CEO names or other keywords, and I watch lots of YouTube interviews with CEOs. I also use paid services like Bloomberg, AlphaSense, and Thomson Reuters. In addition, I look at analyses from sell-side and buy-side analysts and search the SEC database—www.sec.gov/edgar—which has large amounts of information on every publicly traded U.S. company, including IPO documents, financial reports, and proxies. I also scope out the most valuable industry conferences and attend them if I can. Events like the Wall Street Journal’s The Future of Everything Festival and the Consumer…"

"Practice Radical Acceptance Accepting your own imperfections is the gateway to an even more daring mindset: accepting the world as it is, not as you wish it would be. This is another fruit of my adventures in cognitive behavior therapy. About 20 years ago, my wife and I went to some workshops on mindfulness led by Marsha Linehan, whose techniques incorporate a core principle she calls radical acceptance. This boils down to being fully present in the moment and accepting reality. It requires that you let go of the illusion of control by acknowledging the facts as they are, even though you may want them to be different."

"“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.”"

"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.”"

"“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.”"