WEBVTT - How Brad Jacobs Will Invest $4.5 Billion to Reshape Building Supplies 0:00:03.120 --> 0:00:16.400 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:20.920 --> 0:00:24.120 Hello and welcome to another episode of the Authoughts podcast. 0:00:24.200 --> 0:00:25.480 I'm Tracy Allaway. 0:00:25.320 --> 0:00:26.440 And I'm Joe wysnt Thal. 0:00:26.840 --> 0:00:30.880 Today we are bringing you a live episode recording that 0:00:31.000 --> 0:00:35.120 took place at Bloomberg's recent invest conference, where we sat 0:00:35.200 --> 0:00:39.800 down with Brad Jacobs, the billionaire and serial entrepreneur now 0:00:39.880 --> 0:00:41.920 chairman and CEO at QXO. 0:00:42.159 --> 0:00:45.000 We talked to Brad late last year about his new company, 0:00:45.080 --> 0:00:49.520 QXO and the basic plan of buying up companies within 0:00:49.640 --> 0:00:54.640 the building supply distribution industry. And since we talked to him, 0:00:54.720 --> 0:00:57.680 he's raised four and a half billion dollars and so 0:00:57.720 --> 0:01:00.320 we wanted to learn a little bit more about how 0:01:00.320 --> 0:01:01.920 he's actually going to deploy his money. 0:01:02.120 --> 0:01:04.560 Four and a half billion dollars is a lot to spend, 0:01:04.840 --> 0:01:07.360 I think I read somewhere it was the biggest ever 0:01:07.520 --> 0:01:12.479 capital raising in the building materials industry. So definitely worth 0:01:12.520 --> 0:01:13.319 talking to him again. 0:01:13.600 --> 0:01:16.760 Yep, we still don't know he hasn't bought any companies yet, 0:01:16.760 --> 0:01:19.360 but we got a better sense of where he's at 0:01:19.400 --> 0:01:22.280 and his sort of approach to figuring out how he's 0:01:22.319 --> 0:01:23.480 going to deploy his cash. 0:01:23.560 --> 0:01:24.199 Take a listen. 0:01:25.160 --> 0:01:30.120 So, as Tracy mentioned before, we are here interviewing Brad Jacobs, 0:01:30.160 --> 0:01:34.399 Chrman and CEO of the Newish firm QXO, which is 0:01:34.440 --> 0:01:38.720 going to make a major splash in the building material space. Brad, 0:01:38.760 --> 0:01:40.960 thank you so much for joining us. 0:01:41.080 --> 0:01:43.039 Slight correction, we've already made it. 0:01:43.080 --> 0:01:44.320 Oh, yes, you've already made this. 0:01:45.360 --> 0:01:45.880 What have you done? 0:01:45.920 --> 0:01:48.560 I've seen you've raised a ton of money? Is that counts? 0:01:48.640 --> 0:01:51.400 So since I first, well, thank you for okay, thank you, 0:01:52.080 --> 0:01:54.560 But since we did that podcast. 0:01:54.920 --> 0:01:56.600 We talked to Brad, I think in December. 0:01:57.040 --> 0:01:59.559 That seems like a long time ago. Yeah, we've done. 0:01:59.600 --> 0:02:02.760 We built out the management team. Okay, so I have 0:02:02.840 --> 0:02:07.200 fifteen amazing people now, one of whom was the head 0:02:07.240 --> 0:02:09.520 of M and A at Barkley's's on Garden Leave, and 0:02:09.560 --> 0:02:11.160 all the rest I know really well because they either 0:02:11.200 --> 0:02:13.639 worked at XPO or GXO. 0:02:13.440 --> 0:02:14.600 Some company with EXO in it. 0:02:14.680 --> 0:02:16.520 Yeah it didn't have XOO in it. On the next 0:02:16.960 --> 0:02:20.320 we didn't hire them. And then also we raised money. 0:02:20.720 --> 0:02:24.239 We raised we put our billion dollars into the pipe 0:02:24.440 --> 0:02:26.760 that we did into that public company, and then we 0:02:26.840 --> 0:02:30.200 raised another three and a half billion dollars from institutional investors, 0:02:30.320 --> 0:02:34.200 mostly long only funds, who know us, and now we're 0:02:34.200 --> 0:02:36.760 out there. But the next stage is let's go buy 0:02:36.760 --> 0:02:37.359 some companies. 0:02:37.560 --> 0:02:40.720 Wait, so four and a half billion dollars raised must 0:02:40.760 --> 0:02:45.320 be the biggest single raise in the building industry's history. 0:02:45.720 --> 0:02:45.880 Yeah. 0:02:45.960 --> 0:02:49.240 Right, So what's the pitch when you're going out to 0:02:49.240 --> 0:02:52.560 people and saying, give us your money for this as 0:02:52.639 --> 0:02:56.480 yet unproven business model. I know you have a number 0:02:56.480 --> 0:03:01.640 of companies all three three letter acronyms, but like, why 0:03:01.680 --> 0:03:03.040 do they want to give you four and a half 0:03:03.080 --> 0:03:05.800 billion dollars or three and a half Okay, here's a secret. 0:03:06.160 --> 0:03:08.280 I know most of the people who invest in us, 0:03:08.560 --> 0:03:11.560 mostly people have invested in one of the xos or 0:03:11.639 --> 0:03:15.800 gundamentals in other ways, the historical investors who did well, 0:03:15.840 --> 0:03:18.440 and they're betting that we're going to do well again. 0:03:19.400 --> 0:03:22.160 So when you're talking to investors who already know you, 0:03:22.360 --> 0:03:25.400 what do they think is the Brad Jacob's playbook for 0:03:25.560 --> 0:03:26.480 creating companies? 0:03:26.520 --> 0:03:28.440 Well, as you know, I actually have a book. We 0:03:28.480 --> 0:03:29.640 have the playbook in there. 0:03:29.800 --> 0:03:33.200 Oh yeah, Brad's book has also a very modest title, 0:03:33.240 --> 0:03:35.040 which is how to make a few billion dollars. 0:03:35.160 --> 0:03:37.560 I think that's a good title. Catchy title gets people 0:03:37.640 --> 0:03:42.520 to remember. So the playbook is pretty straightforward. It's first 0:03:42.520 --> 0:03:46.080 of all, talent, making sure the people in the company 0:03:46.120 --> 0:03:50.760 are amazing or honest or hardworking or collaborative or really 0:03:50.800 --> 0:03:54.040 special people that they can get along with each other. 0:03:54.120 --> 0:03:57.520 And we figure out ways where we can debate issues 0:03:57.560 --> 0:04:01.000 honestly and disagree with each other without being a jerk, 0:04:01.400 --> 0:04:04.160 being still nice and respectful, but you know, honestly debates. 0:04:04.200 --> 0:04:07.760 We gets the right decisions, is moving fast, being decisive. 0:04:08.520 --> 0:04:10.560 And it's an M and A play which means we 0:04:10.560 --> 0:04:13.600 look at many, many acquisitions at the same time, so 0:04:13.640 --> 0:04:16.000 we don't fall in love with one of them and overpay. 0:04:16.560 --> 0:04:18.960 That's the cardinal sin in M and as. Overpaying that's 0:04:19.000 --> 0:04:23.960 the ic and roic. And then integrating those businesses very 0:04:24.000 --> 0:04:27.240 thoroughly so we have one company, one brand that has 0:04:27.240 --> 0:04:28.520 a power in the marketplace. 0:04:28.920 --> 0:04:31.799 Okay, So one of the things we learned the last 0:04:31.800 --> 0:04:34.080 time we talked to you, I think you said, across 0:04:34.120 --> 0:04:38.680 the US and Europe, building products eight hundred billion dollar industry. 0:04:38.680 --> 0:04:40.920 At least it was back then, maybe it's higher now. 0:04:41.200 --> 0:04:43.280 We know there's a lot of building going on. There's 0:04:43.560 --> 0:04:47.960 housing there's infrastructures, there's all the green stuff, there's data centers, 0:04:47.960 --> 0:04:51.840 et cetera. We learned it's extremely fragmented this market. There's 0:04:51.920 --> 0:04:55.320 no one big giant in the space with three and 0:04:55.320 --> 0:04:57.400 a half billion dollars or four and a half billion dollars. 0:04:58.200 --> 0:05:00.279 Are you going to start with some big deal that's 0:05:00.279 --> 0:05:02.080 a big chunk of that or do you see that 0:05:02.240 --> 0:05:05.120 going to a range of companies that go then consolidate. 0:05:05.200 --> 0:05:08.360 Stay tuned. I'll give you the scoop. Get give us 0:05:08.360 --> 0:05:08.960 a little week. 0:05:09.040 --> 0:05:09.360 Come on. 0:05:09.640 --> 0:05:12.080 So we're not looking at tiny little companies. We're going 0:05:12.120 --> 0:05:15.039 to build a fifty billion dollar company, fifty plus billion 0:05:15.080 --> 0:05:17.920 dollar company over the next decade. So you know we're 0:05:17.960 --> 0:05:19.760 going to have to chop some big wood here. So 0:05:19.800 --> 0:05:22.200 we're looking at more larger acquisition. 0:05:21.839 --> 0:05:24.920 But more than one that do you see more than one? 0:05:25.040 --> 0:05:27.120 We're going to do more than one acquisition or over 0:05:27.160 --> 0:05:28.800 in the coming years. We're going to be acquisitive. So 0:05:29.040 --> 0:05:32.919 it'll go start and integrate, Yeah, M and A and 0:05:32.960 --> 0:05:36.040 then integrate M and A, integrate and when we after 0:05:36.080 --> 0:05:39.040 we integrate, we pay attention to a bunch of metrics 0:05:39.240 --> 0:05:43.760 like customer satisfaction, employee engagement, on time, performance and so forth. 0:05:44.080 --> 0:05:46.360 And if it's humming, we're closing the books on time, 0:05:46.440 --> 0:05:49.039 get clean numbers, everyone is in good shape. Then we 0:05:49.120 --> 0:05:51.640 go back and rinse, wash, repeat and go buy something else. 0:05:52.480 --> 0:05:55.560 I remember every Sunday when I was growing up, my 0:05:55.600 --> 0:05:57.600 parents used to give me ten dollars for my allowance. 0:05:57.600 --> 0:05:59.840 It was actually one thousand yen, but back then I 0:06:00.000 --> 0:06:02.880 grow up in Japan. Back then it was about ten dollars, 0:06:03.120 --> 0:06:05.279 and that will always be the exchange rate in my mind. 0:06:05.560 --> 0:06:08.680 But I would get my allowance on Sunday and I 0:06:08.720 --> 0:06:10.400 would go out and I would buy like the first 0:06:10.440 --> 0:06:12.680 thing that I saw. You've got four and a half 0:06:12.800 --> 0:06:16.919 billion dollars, do you feel a sense of urgency to 0:06:17.000 --> 0:06:17.520 spend it? 0:06:18.080 --> 0:06:21.320 So we feel a sense of urgency in life in general. 0:06:21.520 --> 0:06:23.480 We feel that time goes by fast, and if you 0:06:23.520 --> 0:06:26.520 want to make your mark, do something big. Let's do 0:06:26.560 --> 0:06:29.440 some stuff. So we're prone to action. The fact that 0:06:29.480 --> 0:06:31.640 we've got four and a half billion dollars and we've 0:06:31.720 --> 0:06:34.799 got leverage we could add on to that. That's completely irrelevant. 0:06:34.839 --> 0:06:36.920 That doesn't put more pressure on us to do a deal. 0:06:37.560 --> 0:06:39.880 What we have pressure on us is to do good deals. 0:06:40.440 --> 0:06:44.720 A creative deals, strategically compelling deals, deals that make sense 0:06:44.760 --> 0:06:47.680 to do, deals that we can grow them over five 0:06:47.760 --> 0:06:50.160 or ten years and they'll be much bigger businesses at 0:06:50.160 --> 0:06:50.640 that time. 0:06:51.080 --> 0:06:53.400 Let me ask the question in a slightly different way. 0:06:54.040 --> 0:06:58.159 Before you announced QXO, did you have a potential list 0:06:58.200 --> 0:07:00.359 of targets in your mind? Is that how it so. 0:07:02.320 --> 0:07:05.919 Fast? Rewind so a year and a half ago or so, 0:07:06.600 --> 0:07:09.479 I stepped down as being CEO. I'm still chairman executive 0:07:09.520 --> 0:07:11.240 chairman of XPO, but I stepped down as the day 0:07:11.240 --> 0:07:14.400 to day running Mario Parkers doing that do a fantastic job. 0:07:14.920 --> 0:07:18.240 And I looked at fifty five different industries to see 0:07:18.600 --> 0:07:21.840 which one does my playbook fit that we can create 0:07:21.880 --> 0:07:26.040 some shareholder value with. And I hired two consultants who 0:07:26.080 --> 0:07:30.000 have expertise in this, consulting firms, and part of the 0:07:30.040 --> 0:07:33.080 mission was to educate us about the business fast. Part 0:07:33.080 --> 0:07:35.320 of the mission was give us a list of like 0:07:35.320 --> 0:07:36.920 who would we buy it? Give us like a one 0:07:36.960 --> 0:07:39.760 or two pager on. So we put together about a 0:07:39.800 --> 0:07:42.679 thousand names to look at, and Matt Fassler and Austin 0:07:42.720 --> 0:07:45.200 Landa worked me very closely on that project. And then 0:07:45.240 --> 0:07:47.800 we paired it down, paired it down, we filtered it 0:07:47.800 --> 0:07:51.239 to about forty names that have about three hundred billion 0:07:51.240 --> 0:07:53.440 dollars in aggurate revenue, and then we paired it down 0:07:53.480 --> 0:07:56.160 even more to the to the top dozen and those 0:07:56.200 --> 0:07:57.840 are the ones that we're really focusing on. 0:07:58.560 --> 0:08:03.960 Let's talk about building products. So and there's a lot there, 0:08:04.000 --> 0:08:06.280 and this is a wide ranging space. One of the 0:08:06.320 --> 0:08:09.000 things that we talked about on the last time we 0:08:09.280 --> 0:08:11.360 talked to you, and one of the things that Tracy 0:08:11.400 --> 0:08:14.160 and I have learned over the last several years we've 0:08:14.160 --> 0:08:17.640 done a lot of logistics and supply chain related episodes, 0:08:18.040 --> 0:08:21.200 which is that much of this space the physical world, 0:08:21.400 --> 0:08:25.840 ordering a bunch of lumber, ordering HVAC equipment, whatever, it 0:08:25.880 --> 0:08:28.560 does not feel like twenty twenty four. And there's a 0:08:28.600 --> 0:08:31.080 lot of old tech. Yeah, still like that, and so 0:08:31.120 --> 0:08:33.560 it still seems like there's an opportunity. You talked about 0:08:33.559 --> 0:08:36.600 this already, that there's an opportunity to upgrade the tech. 0:08:36.679 --> 0:08:39.240 So here's what I want to ask. If I go 0:08:39.800 --> 0:08:41.640 or let's say I'm a contractor and I need to, like, 0:08:41.720 --> 0:08:44.120 you know, buy some equipment, some bricks or something like that, 0:08:44.720 --> 0:08:47.840 what is the experience like today and what is the 0:08:47.880 --> 0:08:52.320 experience going to be like after you've applied your secret sauce. 0:08:52.360 --> 0:08:54.680 Okay, it's a ton of stuff in there. So first 0:08:54.720 --> 0:08:58.120 of all the long term growth and demand. Yeah, so 0:08:59.440 --> 0:09:04.880 the residential let's start with there. Okay, residential construction is unconstructed. 0:09:04.920 --> 0:09:08.040 There's millions of units were short on. And I live 0:09:08.080 --> 0:09:10.760 in Greenwich and Connecticut, and I have friends who want 0:09:10.760 --> 0:09:12.240 to move from Manhattan and they're on a real tough 0:09:12.280 --> 0:09:14.280 time finding a property to buy. It's very, very tight. 0:09:14.640 --> 0:09:17.439 That's not a Greenwich phenomenon. It's a country wide phenomen 0:09:17.480 --> 0:09:20.720 it's a phenomenon in Europe too. We've underbuilt and now 0:09:21.559 --> 0:09:24.920 so it's going to be growth. There's growth, there's gonna 0:09:24.960 --> 0:09:28.680 be and is it old? So most houses in America 0:09:28.720 --> 0:09:31.000 are like the average house is like forty something years old, 0:09:31.400 --> 0:09:34.040 which is old. I was a kid ten years old, 0:09:34.160 --> 0:09:35.520 was like an old house. As someone who was living 0:09:35.559 --> 0:09:38.040 in a fifteen twenty years I says, your father having 0:09:38.040 --> 0:09:42.480 a bad time, Like what's going on? So this is old. 0:09:42.520 --> 0:09:44.240 So this is gonna be repairing and remodeling and there 0:09:44.240 --> 0:09:46.480 will be new construction. Commercial is the same thing, which 0:09:46.520 --> 0:09:49.040 is actually older. Commercial is like fifty years old is 0:09:49.080 --> 0:09:51.800 a typical commercial building. And then you got the infrastructure 0:09:51.920 --> 0:09:54.760 building all the roads, the bridges and the tunnels. No 0:09:54.880 --> 0:09:56.600 trillions gonna have to be sent on that. So I 0:09:56.640 --> 0:10:00.600 think if you fast forward ten years from now, high 0:10:00.640 --> 0:10:03.680 high likelihood, there's going to be more demand for building 0:10:03.720 --> 0:10:06.520 products than there is today. I think it's so one 0:10:06.559 --> 0:10:08.320 of the things I filtered for when I looked at 0:10:08.360 --> 0:10:11.640 those fifty five industries was is this an industry that's 0:10:11.679 --> 0:10:14.959 going to get disrupted by AI or another form of 0:10:15.040 --> 0:10:17.800 tech or automation? And I think it's a safe bet 0:10:17.840 --> 0:10:21.480 that ten years from now will still have some form 0:10:21.520 --> 0:10:24.160 of physical body, and we'll sleep in a physical house 0:10:24.760 --> 0:10:27.199 with a physical roof from physical windows and physical doors, 0:10:27.240 --> 0:10:29.800 And so I think there'll be more demand as a 0:10:29.840 --> 0:10:30.640 result of all that. 0:10:46.200 --> 0:10:48.800 Just to follow what's the buying experience? Right now? 0:10:48.920 --> 0:10:50.800 Buying experience is not the right What happened? 0:10:50.880 --> 0:10:52.960 Someone goes to a warehouse? How does that work? I 0:10:52.960 --> 0:10:56.040 imagine there's pen paper facts as emails, Yeah, you got it? 0:10:56.040 --> 0:10:56.880 What perfectly right? 0:10:56.960 --> 0:10:59.680 And then what's gonna what's it gonna look like? When 0:10:59.720 --> 0:11:02.600 that's the same person goes to the same distribution center 0:11:02.679 --> 0:11:06.320 aka warehouse and is after it's QXO five. 0:11:06.559 --> 0:11:09.880 Yeah. So right now, when you talk to customers and 0:11:09.920 --> 0:11:13.920 you say what do you think, they generally think the 0:11:13.960 --> 0:11:16.880 industry gets about six out of ten, you say, we 0:11:16.920 --> 0:11:18.800 have great the industry one out of ten in terms 0:11:18.800 --> 0:11:22.800 of your customer experience. How delighted are you? Ten meaning delighted, 0:11:23.000 --> 0:11:25.760 one being it's a stinker. It's about a six. That's 0:11:25.760 --> 0:11:28.960 what I generally hear from people, and the two main 0:11:29.040 --> 0:11:31.240 reasons why people only give it a So send the 0:11:31.280 --> 0:11:33.240 follow up question what would make it a ten? Yeah. 0:11:33.679 --> 0:11:36.240 The two main things that you hear are, you know, 0:11:36.280 --> 0:11:39.600 I ordered ten things, I needed the ten things and 0:11:39.640 --> 0:11:41.560 I got six and I got back ordered on the 0:11:41.559 --> 0:11:45.240 other four. And the other complaint they have is, you know, 0:11:45.240 --> 0:11:48.520 I'm in a project and I ordered it, I needed 0:11:48.559 --> 0:11:50.680 it buy a week from Tuesday, and you know I 0:11:50.679 --> 0:11:52.480 got it like a week late, and that costs me money. 0:11:52.600 --> 0:11:55.360 So it's very frustrating you to customers to not know 0:11:55.480 --> 0:11:59.560 why is this happening. It goes to the other question technology, 0:12:00.040 --> 0:12:03.240 sense of technology. So one of the companies that we 0:12:03.280 --> 0:12:05.600 spun off that I still chair it is called GXO. 0:12:06.000 --> 0:12:08.320 It's the largest pure play warehouse company in the world. 0:12:08.320 --> 0:12:10.760 It's got over two hundred million square feet of warehouses, 0:12:10.760 --> 0:12:13.800 get one thousand warehouses in a couple dozen countries. If 0:12:13.840 --> 0:12:17.840 you go to a tip to a GXO warehouse, you're 0:12:17.960 --> 0:12:22.000 likely to see collaborative robots, likely to see robotic arms, 0:12:22.120 --> 0:12:27.480 autonomous equipment. You'll see a very sophisticated WMS, a warehouse 0:12:27.520 --> 0:12:31.720 management software system that keeps track of every single SKU 0:12:31.800 --> 0:12:34.960 in the warehouse and does inventory on a daily basis, 0:12:35.320 --> 0:12:37.840 so you know everything's in the warehouse. And one of 0:12:37.840 --> 0:12:40.800 the benefits of that is that you can do demand 0:12:40.840 --> 0:12:43.840 forecasting and then you can do inventory management so you 0:12:43.880 --> 0:12:47.720 get just the right amount of SKU, not too much, 0:12:48.120 --> 0:12:51.679 and then you're killing working capital, not too little. You're 0:12:51.679 --> 0:12:54.520 annoying customers not stocked upright. So I think if we 0:12:54.600 --> 0:12:59.760 use tech to do proper twenty twenty four inventory management, 0:13:00.040 --> 0:13:01.839 I think we can delight customers and I think that'll 0:13:01.840 --> 0:13:03.920 differentiate us in the eyes of customers. 0:13:04.200 --> 0:13:06.760 I'm going to ask the obvious question then, But you 0:13:06.800 --> 0:13:10.720 know we're talking about inventory management making the company more efficient. 0:13:11.160 --> 0:13:15.360 Why don't existing building distribution companies already do this? 0:13:15.360 --> 0:13:17.440 This is about a half a dozen actually are, so 0:13:17.559 --> 0:13:20.319 Ferguson gets the joke and they're doing that. Wats Go 0:13:21.040 --> 0:13:24.160 understands this is doing that. Build This first source seems 0:13:24.160 --> 0:13:26.320 to be doing a good job doing that too, and 0:13:26.360 --> 0:13:29.000 a few other companies are too, but by and large 0:13:29.440 --> 0:13:31.800 the industry, I have a theory to answer your question. 0:13:32.080 --> 0:13:36.319 It's not proven. This my hypothesis. My hypothesis is, this 0:13:36.400 --> 0:13:40.160 is an industry where you get about roughly seventy five 0:13:40.200 --> 0:13:45.280 percent ish conversion from EBIDAH to free cash flow. So 0:13:45.320 --> 0:13:47.280 there's not a lot of capex, there's working capital, there's 0:13:47.320 --> 0:13:49.200 not a lot of capecks, so it spits off a 0:13:49.200 --> 0:13:52.120 lot of cash. So in a downturn, there's not a 0:13:52.160 --> 0:13:54.840 lot of bankruptcies. So if you're in the trucking business 0:13:55.120 --> 0:13:57.000 or if you're in the garbage business, you're in a 0:13:57.040 --> 0:13:59.920 construct you have high fixed costs, you have him into 0:14:00.000 --> 0:14:03.440 When you have a downturn, you see people who like 0:14:03.520 --> 0:14:05.920 messed up and they took on too much leverage. They 0:14:05.920 --> 0:14:08.200 can't pay their debt, they can't service it. Boom, they're out. 0:14:08.480 --> 0:14:10.559 You see people have inventory and they can't get rid 0:14:10.559 --> 0:14:12.160 of it fast enough, so they have to sell it 0:14:12.160 --> 0:14:15.400 to stressed prices. It kills them. You don't see that here. 0:14:15.440 --> 0:14:19.160 So in this industry you don't have the lean six 0:14:19.240 --> 0:14:24.720 sigma continuous improvement kais in mindset of every day I 0:14:24.720 --> 0:14:26.720 gotta find some sofas to turn over and shake and 0:14:26.760 --> 0:14:29.640 find some nickels and some fennies and some dimes. That's 0:14:29.640 --> 0:14:33.280 not the mentality. So I think we'll bring that operational 0:14:33.360 --> 0:14:36.600 rigor that focus on operational excellence, and I think we'll 0:14:36.600 --> 0:14:39.120 bring that to the industry. There are some companies doing 0:14:39.120 --> 0:14:42.000 a good job. Don't misunderstand me. I'm not casting the 0:14:42.040 --> 0:14:45.440 whole industry and doing a lousy job. I think in general, 0:14:45.720 --> 0:14:47.960 particularly the smaller ones, they could improve. 0:14:48.400 --> 0:14:51.080 Is that a matter of balance sheet capacity? You're bringing 0:14:51.120 --> 0:14:54.840 a lot of balance sheet capacity as such, you don't 0:14:55.040 --> 0:14:59.160 you have the maybe luxury to invest across The stacle 0:14:59.240 --> 0:15:01.440 is that basically a. 0:15:01.440 --> 0:15:03.720 Couple of things. One is having the size to be 0:15:03.720 --> 0:15:06.120 able to afford that. And we're going to invest hundreds 0:15:06.120 --> 0:15:08.440 and hundreds of millions of dollars into technology. If you're 0:15:08.440 --> 0:15:10.200 only doing one hundreds of millions of dollars in revenue, 0:15:10.200 --> 0:15:11.920 you're not going to put hundreds of millions dollars in 0:15:11.960 --> 0:15:14.280 a tech. But we need to do that. That's what's 0:15:14.280 --> 0:15:17.560 going to differentiate us from the have nots. That's the 0:15:17.600 --> 0:15:21.320 main thing there. The second thing is it's a mindset 0:15:21.560 --> 0:15:24.160 of what I was talking about before. The industry as 0:15:24.200 --> 0:15:29.160 a whole has not had this passionate, intense commitment to 0:15:29.200 --> 0:15:32.520 continuously improve the business and to delight customers more and 0:15:32.560 --> 0:15:34.440 more and more and more. It's not that passion is 0:15:34.480 --> 0:15:37.160 not there in general. Some companies have it, but in general, 0:15:37.200 --> 0:15:38.120 the industry doesn't have it. 0:15:38.920 --> 0:15:42.240 So Joe and Brad and maybe some odd blocks. Listeners 0:15:42.280 --> 0:15:44.400 know that my husband and I are currently building a 0:15:44.440 --> 0:15:47.680 shed in Connecticut. And when I say shed, it's actually 0:15:47.720 --> 0:15:49.280 in New York. It would probably be the size of 0:15:49.280 --> 0:15:52.880 a small house. But because we're doing this and we're 0:15:52.920 --> 0:15:55.440 doing it by hand, I now feel empowered as a 0:15:55.520 --> 0:15:59.520 construction expert, so I can ask Brad all these questions. 0:15:59.560 --> 0:16:02.760 But you mentioned the frustration of getting supplies and having 0:16:02.800 --> 0:16:05.600 to wait ages for you know, did you have to wait? 0:16:05.960 --> 0:16:08.400 Yes, did you get did you get your ordered delivered 0:16:08.440 --> 0:16:09.640 in full or just in part? 0:16:09.840 --> 0:16:10.200 In part? 0:16:10.280 --> 0:16:12.800 There you go, ok Okay, okay, there you go. 0:16:13.040 --> 0:16:15.840 But I take I take the point about efficiency and 0:16:15.880 --> 0:16:19.080 reducing lead times and things like that, How does technology 0:16:19.120 --> 0:16:22.120 aid with quality control? Because I'm sure this is the 0:16:22.160 --> 0:16:24.800 other big thing for anyone who's ever done construction work. 0:16:25.200 --> 0:16:28.200 You order a piece of ply wood, you think that waterproof. 0:16:28.280 --> 0:16:31.320 I'm getting very specific here. I think that waterproof coating 0:16:31.400 --> 0:16:32.840 is going to be on the wood, and then maybe 0:16:32.880 --> 0:16:34.240 it's not as good as you thought it was. 0:16:34.480 --> 0:16:37.680 That's that's two things. It's tech. The system should be 0:16:37.720 --> 0:16:39.600 able to track that, and it should be controls on that. 0:16:40.080 --> 0:16:43.760 And secondly, it's a cultural thing of caring. So I 0:16:43.840 --> 0:16:46.680 mentioned before that we do M and A and then 0:16:46.720 --> 0:16:48.960 we stop and we measure a bunch of things. And 0:16:49.000 --> 0:16:51.280 one of the things we mentioned we measure that I 0:16:51.360 --> 0:16:55.280 mentioned was employee engagement. You want very high levels of 0:16:55.320 --> 0:16:59.040 employee morale. You want employees to care, to really really 0:16:59.080 --> 0:17:01.120 care about the customer, and you want to hire people 0:17:01.120 --> 0:17:04.800 who have that customer pleasing mentality. And as I was 0:17:04.800 --> 0:17:06.840 saying before, I think the industry could use a little 0:17:06.840 --> 0:17:07.280 more in that. 0:17:08.000 --> 0:17:11.080 You do one of these exo companies like every ten years, 0:17:11.080 --> 0:17:14.879 and you've done several. I'm guessing this is the first 0:17:14.960 --> 0:17:18.240 one that's I don't know if it's the first one actually, 0:17:18.280 --> 0:17:21.240 but for the first time in a long time. There's 0:17:21.280 --> 0:17:23.840 a high cost of capital interest rates, so where they are, 0:17:23.880 --> 0:17:26.399 they may not come down anytime soon. What is the 0:17:26.480 --> 0:17:31.119 difference today in looking at or evaluating deals in twenty 0:17:31.200 --> 0:17:34.600 twenty four versus whatever you are buying in twenty fourteen. 0:17:34.960 --> 0:17:37.960 So let's talk about this. Does that an important point? 0:17:38.040 --> 0:17:40.359 Let's talk about cost to capital? Okay, debt is higher 0:17:40.520 --> 0:17:42.560 than it was the last ten years because it was 0:17:43.080 --> 0:17:45.960 almost free. Yeah, so definitely is a cost to debt. 0:17:46.040 --> 0:17:47.600 But we're not going to be highly levered. We're going 0:17:47.640 --> 0:17:50.280 to lever this business something around one to two times 0:17:50.320 --> 0:17:53.480 as our standing target. Sometimes you might go over for 0:17:53.560 --> 0:17:55.480 short period of time in connection with an acquisition, but 0:17:55.520 --> 0:17:57.760 our target is to keep it at one to two times. 0:17:57.960 --> 0:18:01.200 Equity is not more expensive. I mean markets are all 0:18:01.240 --> 0:18:04.160 time high and yeah that's right. Equity is okay. Equities, 0:18:04.359 --> 0:18:05.560 But just on the. 0:18:05.880 --> 0:18:09.520 What about when it comes to the buying the company part? 0:18:09.640 --> 0:18:12.600 Does the math change at all in this environment? Does 0:18:12.640 --> 0:18:14.800 it affect sellers? Do they say, oh, I want to 0:18:14.800 --> 0:18:17.480 wait for rates to come down in multiples to go 0:18:17.560 --> 0:18:20.280 up or Etcider Like, how does this current environment affect 0:18:20.320 --> 0:18:20.760 that process? 0:18:20.800 --> 0:18:22.800 It's a dynamic market and you have a whole range 0:18:22.840 --> 0:18:25.520 of people. You have some people saying, you know, I 0:18:25.560 --> 0:18:27.760 think I think it's going to get better over the 0:18:27.760 --> 0:18:29.359 next couple of years, and the industry is going to 0:18:29.400 --> 0:18:31.280 come down, and I'm not selling now, let's pay some 0:18:31.280 --> 0:18:33.600 really crazy high price. Yeah. Other people say, you know what, 0:18:34.160 --> 0:18:36.280 kind of feel soft out there. Some of the public 0:18:36.280 --> 0:18:38.800 companies has been missing their numbers recently, and some of 0:18:38.800 --> 0:18:41.360 the indicators coming out looks like construction might be softening, 0:18:41.359 --> 0:18:44.280 the industry might be slowing in general, the economy might 0:18:44.359 --> 0:18:46.639 be slowing possibly over the rest of the year. So 0:18:46.680 --> 0:18:48.640 they want to sell now. So it's a range, It's 0:18:48.640 --> 0:18:49.240 a whole range. 0:18:49.359 --> 0:18:51.440 Wait, tell us more about this, because of course everyone 0:18:51.480 --> 0:18:54.280 looks at construction as a leading indicator for the economy. 0:18:54.280 --> 0:18:56.480 It's not the most leading. Transportation is more leading. 0:18:56.560 --> 0:18:58.160 Oh wait, okay, talk about that too. 0:18:58.920 --> 0:19:01.240 You definitely have of you on the farm with all 0:19:01.240 --> 0:19:01.560 the bords. 0:19:01.640 --> 0:19:03.480 You're talking to a bunch of different. 0:19:03.160 --> 0:19:04.560 Tell us what's happening right now? 0:19:05.400 --> 0:19:10.760 Okay, there are there are two categories of professionals who 0:19:10.840 --> 0:19:15.040 traditionally have fairly consistently been wrong about predicting the economy. 0:19:15.280 --> 0:19:19.440 Actually three, it's one of them. Podcasters, economists, the FED, 0:19:19.640 --> 0:19:23.240 and CEOs. So I was at a. 0:19:22.560 --> 0:19:24.199 You spirit journalists, so thank you. 0:19:24.800 --> 0:19:28.000 Journalists haven't been better at because journalists are providing both sides. 0:19:28.400 --> 0:19:30.000 They don't really take a few on the one hand 0:19:30.040 --> 0:19:31.520 because on the other hand, you could do like that. 0:19:31.760 --> 0:19:35.720 So I always at a CEO Trade Association thing a 0:19:35.720 --> 0:19:38.119 couple years ago, and you know, you have these little 0:19:38.119 --> 0:19:41.200 slideo apps where you can vote in the audience. People 0:19:41.240 --> 0:19:42.880 get their phones out and they vote. You should never 0:19:42.880 --> 0:19:44.280 do that because they never come back to what you're 0:19:44.280 --> 0:19:46.440 doing and once they're on their phones, but you take 0:19:46.440 --> 0:19:49.080 a vote, and the vote was what's the likelihood of 0:19:49.119 --> 0:19:54.600 a severe recession, a moderate recession, no recession growth? Over 0:19:54.720 --> 0:19:59.280 ninety percent of these you know smart quote unquote CEOs 0:20:00.080 --> 0:20:01.880 said there was either going to be a severe recession 0:20:02.040 --> 0:20:05.320 or motor session. Well there's no recession. So it's hard 0:20:05.320 --> 0:20:08.240 to predict this stuff. And right now it's much harder 0:20:08.280 --> 0:20:10.000 than it has been in the past. And I say 0:20:10.000 --> 0:20:13.159 that because you have these two opposite things going on. 0:20:13.400 --> 0:20:16.639 You still have a bunch of stimulus, which is inflationary 0:20:16.680 --> 0:20:20.520 by definition, and you have interest rates having gone up, 0:20:20.560 --> 0:20:22.439 which is like the breaks and slowing things down, So 0:20:22.800 --> 0:20:25.480 the economy is like really weird. You have, it grows, 0:20:25.560 --> 0:20:28.720 but then it contracts. There's a tension there. So I 0:20:28.800 --> 0:20:31.360 don't know who's going to win the arm wrestle here. 0:20:31.400 --> 0:20:33.000 So I don't know the answer is the understands. So 0:20:33.040 --> 0:20:35.480 I don't have a firm view with strong conviction, like 0:20:35.680 --> 0:20:36.159 the rest. 0:20:36.040 --> 0:20:51.360 Of the year is going to be stronger weak. 0:20:54.119 --> 0:20:57.680 Well, since I mentioned conversations with other companies, here's something 0:20:57.720 --> 0:21:01.879 I always wanted to ask a a serial roll up er, 0:21:02.119 --> 0:21:06.000 if you will, or a M and a person. Warren 0:21:06.040 --> 0:21:07.920 Buffett is still on my list to ask this question, 0:21:08.000 --> 0:21:09.800 but maybe one day, but. 0:21:11.240 --> 0:21:11.800 Maybe I will. 0:21:11.880 --> 0:21:16.240 It takes when you approach a company, how do you 0:21:16.240 --> 0:21:18.440 actually do it? What's that initial contact line? 0:21:18.560 --> 0:21:21.800 Very straightforward, so you send it a d M on 0:21:22.160 --> 0:21:24.760 X slash call somebody. I just call him up and say, hey, 0:21:24.800 --> 0:21:27.320 you know, I'm Brad Jacobs. I haven't heard of me. 0:21:27.359 --> 0:21:31.199 I'm trying to do some acquisitions. Learn there you go 0:21:32.280 --> 0:21:35.840 three dollars every time you buy, and and you know, 0:21:35.880 --> 0:21:38.080 I could have an interest in buying your company. I 0:21:38.119 --> 0:21:39.399 don't know yet. I got to learn more, but I 0:21:39.440 --> 0:21:42.040 could have an interest in you know, the reaction usually 0:21:42.240 --> 0:21:44.040 is one of two things, like, look, I'm happy to 0:21:44.040 --> 0:21:46.480 meet you could be an interesting guy, but we're not 0:21:46.520 --> 0:21:50.200 selling the company. That's like part sometimes true and sometimes 0:21:50.240 --> 0:21:52.399 blown me and and other times people say, hey, you know, 0:21:52.400 --> 0:21:55.000 at the right price, why not come on over. I 0:21:55.040 --> 0:21:58.320 find a different reaction depending on who the seller is. 0:21:58.960 --> 0:22:01.159 So there's this bec term of types of folks. The 0:22:01.240 --> 0:22:04.359 private family companies are great because I call them up 0:22:04.359 --> 0:22:05.840 and they say, yeah, come on over, and it usually 0:22:05.840 --> 0:22:07.679 turns into like a three day event. We were just 0:22:07.720 --> 0:22:11.080 hanging out meeting the people, touring the facilities, and I 0:22:11.119 --> 0:22:14.200 really understand the business, and I appreciate that and reciprocate 0:22:14.240 --> 0:22:16.240 for that, because that's really great. On the other end 0:22:16.280 --> 0:22:18.840 of the spectrum would be private equity owned ones where 0:22:18.840 --> 0:22:22.200 it's very controlled and very choreographed and you have to 0:22:22.240 --> 0:22:24.920 really keep your intendant up to figure out what's true, 0:22:25.000 --> 0:22:27.359 what's not true, and what are the real numbers and 0:22:27.359 --> 0:22:31.200 so forth. And in between that I would put corporate companies. 0:22:31.680 --> 0:22:34.680 We've done very well with the carve outs corporate carbouts, 0:22:34.680 --> 0:22:36.879 and that works well. We're looking at some in this 0:22:36.960 --> 0:22:39.919 industry as well, but even buying whole public companies has 0:22:39.920 --> 0:22:41.920 worked out. Well for us too. We just just announced 0:22:41.920 --> 0:22:43.480 one with RXO a couple of days. Well, actually it 0:22:43.480 --> 0:22:45.439 wasn't a public Corani's division of public coanies carve out. 0:22:45.560 --> 0:22:47.920 It was Coyote from you Coyote, yeah right, and the 0:22:48.000 --> 0:22:50.040 stock the investors really liked that deal. 0:22:50.160 --> 0:22:50.280 Up. 0:22:51.760 --> 0:22:55.320 Why buy an existing company as your sort of vehicle 0:22:55.640 --> 0:22:58.439 at all? Like, why not start from scratch and do 0:22:58.480 --> 0:22:58.919 an IPO? 0:22:59.080 --> 0:23:02.840 Is it just I did the same exact thing with XPO. 0:23:03.000 --> 0:23:06.040 If you remember back in twenty eleven, there was a 0:23:06.080 --> 0:23:10.600 trucking company called this brokerage company called Express One, which 0:23:10.600 --> 0:23:13.719 is where XPO comes from. Express One. It was trading 0:23:13.760 --> 0:23:16.320 on what was then called the MX American Stock Exchange 0:23:16.359 --> 0:23:20.520 that NYS bought and we did a pipe. We did 0:23:20.520 --> 0:23:22.720 a pipe into the company, took control of the board, 0:23:23.240 --> 0:23:26.240 moved the headquarters to Grantwich, and off to the races. 0:23:26.240 --> 0:23:28.160 We kept buying, buying more companies. I did the same 0:23:28.160 --> 0:23:30.280 thing here. I found a public company, we did a 0:23:30.280 --> 0:23:33.720 pipe into the company, and we're continuing to grow the company. 0:23:33.960 --> 0:23:37.960 After that, A million territories for me to repeat. 0:23:39.000 --> 0:23:41.440 Going back to building products, So there's a lot, as 0:23:41.480 --> 0:23:45.320 you mentioned, that's getting built because there's housing, there's infrastructure, 0:23:45.400 --> 0:23:48.800 there's all the energy stuff, there's all the data centers that. 0:23:48.720 --> 0:23:51.840 Are energy is not the strongest of them, okay. 0:23:51.600 --> 0:23:53.480 But there's all the data that all the data centers 0:23:53.480 --> 0:23:54.160 are huge. 0:23:54.440 --> 0:23:55.639 Electricity is huge. 0:23:56.040 --> 0:23:59.239 Are they competing with each other like for some of 0:23:59.280 --> 0:24:03.760 the same supple so agree? Is the supply chain intention. 0:24:03.600 --> 0:24:06.800 No, they're fairly segregated. So electrical is a whole different 0:24:06.800 --> 0:24:11.760 than plumbing and HVAC and lumber and your case, they're 0:24:11.800 --> 0:24:12.480 fairly different. 0:24:12.920 --> 0:24:14.600 Are you going to be in the data center? Is 0:24:14.600 --> 0:24:17.640 there anything that will come through your warehouses or distribution 0:24:17.760 --> 0:24:19.200 centers that may go to data centers. 0:24:19.320 --> 0:24:21.239 I would love to have exposure to data centers. I'm 0:24:21.320 --> 0:24:24.040 very bullish long term about the demand for data centers. 0:24:24.359 --> 0:24:27.760 The AI growth needs data centers, a lot of them, 0:24:27.880 --> 0:24:29.879 a lot of power. So yeah, I think that's a 0:24:29.920 --> 0:24:30.440 growth area. 0:24:31.200 --> 0:24:35.960 You mentioned distribution for commercial real estate earlier, and I'm 0:24:36.000 --> 0:24:40.560 curious are there additional considerations for commercial versus something like 0:24:40.640 --> 0:24:43.560 residential or infrastructure. And one of the reasons I ask 0:24:43.720 --> 0:24:46.800 is because we were speaking with I think it was 0:24:46.840 --> 0:24:49.520 the CEO of Chactor Supply how lowten, and he was 0:24:49.560 --> 0:24:52.440 talking about how expensive it is to build out these 0:24:52.480 --> 0:24:55.800 big stores nowadays, and he was talking about ways to 0:24:55.880 --> 0:24:59.200 save money in that space, and I think I jokingly 0:24:59.280 --> 0:25:02.520 said to him, like, well, you know, you run a 0:25:02.560 --> 0:25:05.879 distribution company. Essentially you bring goods into the store and 0:25:05.880 --> 0:25:08.760 then you sell them. Couldn't you become your own supplier 0:25:08.840 --> 0:25:11.880 and distributor for construction materials? And he was like, yeah, 0:25:11.880 --> 0:25:14.520 that's something we're looking at. Would you expect to see 0:25:14.720 --> 0:25:19.280 more big commercial companies like a Walmart for instance, or 0:25:19.320 --> 0:25:22.560 a tractor Supply start to be their own suppliers and 0:25:22.600 --> 0:25:25.640 distributors for construction materials they have the scale already. 0:25:26.119 --> 0:25:29.400 Yeah. Both those are good customers of the XPO families. Yeah, 0:25:29.440 --> 0:25:29.880 I like both. 0:25:29.960 --> 0:25:32.600 I think the Waltons are invested in the new company 0:25:32.640 --> 0:25:32.920 as well. 0:25:33.000 --> 0:25:36.720 Right, no comment, okay Bloomberg speculation. I didn't. That wasn't 0:25:36.720 --> 0:25:40.600 from us, So I think you already. I mean sometimes 0:25:40.640 --> 0:25:44.000 it's not through distributors. Sometimes, if you have these big purchasers, 0:25:44.240 --> 0:25:45.199 is they go direct? 0:25:45.320 --> 0:25:45.560 Yeah? 0:25:45.680 --> 0:25:47.920 Right, direct? And that's fine. It's like in most industries, 0:25:48.080 --> 0:25:51.160 the ones that have the massive size, massive procurement, they 0:25:51.160 --> 0:25:53.320 tend to go direct. But that's an exception, not the rule. 0:25:53.400 --> 0:25:55.120 That's few at the top. 0:25:55.880 --> 0:25:59.080 Question from the audience. That's good, by the way, I 0:25:59.119 --> 0:26:01.920 think there's a way ye Tracy mentioned, there's a way to. 0:26:02.080 --> 0:26:03.720 There's the QR code if you want to enter in 0:26:03.760 --> 0:26:07.160 a question. There is others, as you mentioned, there's others 0:26:07.240 --> 0:26:11.120 in the space in the building's products industry. Others are 0:26:11.119 --> 0:26:14.320 trying and presumably seeing the same thing of consolidating this 0:26:14.600 --> 0:26:18.280 hyper fragmented space. How do you think about competition for 0:26:18.359 --> 0:26:21.240 deals and how do you balance that competition while not 0:26:21.320 --> 0:26:24.440 avoiding the winner's curse or overpaying for company. 0:26:24.480 --> 0:26:26.960 We don't overpay, we don't underpay. We don't try to 0:26:26.960 --> 0:26:28.800 steal a company or take advantage of anything like that. 0:26:28.960 --> 0:26:32.119 We pay a fair price, a fair price. We don't 0:26:32.560 --> 0:26:36.080 pay these trophy prices. So sometimes you see in many 0:26:36.080 --> 0:26:41.840 industries companies they're not really professional m and A machines 0:26:41.880 --> 0:26:43.960 there there once in a while do a big deal 0:26:44.440 --> 0:26:47.720 and and and they overpay. And when you overpay, it 0:26:47.760 --> 0:26:49.919 takes years and years and years to get your costing. 0:26:50.160 --> 0:26:52.560 It doesn't work in terms of creating shareholder value. If 0:26:52.560 --> 0:26:57.159 your focus is on shareholder value creation, then you need 0:26:57.200 --> 0:26:59.360 to pay a reasonable price in order to get good 0:26:59.400 --> 0:27:02.479 returns on that competition for M and A is normal. 0:27:02.560 --> 0:27:04.720 I mean, in every industry I've been in, I haven't 0:27:04.760 --> 0:27:07.800 had a monopoly on being a consolidator. Yeah. 0:27:07.880 --> 0:27:10.240 I'm going to ask a very cliched question, but I 0:27:10.280 --> 0:27:14.120 think it might it might be illuminating in the sense 0:27:14.119 --> 0:27:16.439 of what you look for in an acquisition. But is 0:27:16.480 --> 0:27:19.040 there a particular deal that you're most proud of? 0:27:21.040 --> 0:27:24.240 Well, you know, it's like asking who's your favorite kid, 0:27:24.240 --> 0:27:26.560 Like you can't answer that there's I should get Christmas 0:27:26.600 --> 0:27:29.320 cards from, like most of the people life, it's I 0:27:29.359 --> 0:27:31.840 there's a there's a Yeah, there are. I would say 0:27:31.840 --> 0:27:33.679 two deals, they'd hard to pick which ones was so 0:27:33.720 --> 0:27:37.960 in to too fifteen at XPO, we did two deals. 0:27:37.960 --> 0:27:41.240 We did Conway, which got us into LTL and now 0:27:41.280 --> 0:27:45.239 it's we're, you know, an LTL behemoth. And the other 0:27:45.280 --> 0:27:48.240 one was Norba don Song, which was a French company 0:27:48.240 --> 0:27:52.040 that did contract logistics and trucking and brokerage and LTL 0:27:52.640 --> 0:27:54.720 and different parts of that company we put with the 0:27:54.760 --> 0:27:57.640 different different spins and both of those were really good. 0:27:57.760 --> 0:27:59.919 And both those are really good because they gave us 0:28:00.040 --> 0:28:03.320 al and they gave us an opportunity to apply our 0:28:03.359 --> 0:28:07.800 playbook to those businesses and dramatically improve the profitability in 0:28:07.800 --> 0:28:10.320 the return on capital on both of them. So from 0:28:10.320 --> 0:28:13.640 a point of view of shareholder value creation, those were 0:28:13.760 --> 0:28:15.880 very remarkable deals. So I would pick those two. 0:28:16.000 --> 0:28:17.880 Why don't you tell us more about that Conway deal? 0:28:17.960 --> 0:28:21.719 So less than truckload carrier when you see we applied 0:28:21.720 --> 0:28:24.639 our playbook, because that's what we're trying to understand further, 0:28:24.880 --> 0:28:29.200 what did you do Conway? Conway? Conway came into the house, 0:28:29.240 --> 0:28:30.080 and what did you do with it? 0:28:30.680 --> 0:28:32.520 First thing we did is we looked at the organization 0:28:32.640 --> 0:28:35.800 chart and figured out and when you have an organization chart, 0:28:36.040 --> 0:28:38.640 I've looked a lot of organization charts, it should be 0:28:38.680 --> 0:28:42.120 real elegant. It should be simple and geometric and just 0:28:42.160 --> 0:28:46.200 really really simple, simple and straightforward. Their organization chart was 0:28:46.440 --> 0:28:49.240 spaghetti throw out a painting. You know, there's some artists. 0:28:49.360 --> 0:28:51.880 You look at the painting, you say, kind of looks 0:28:51.920 --> 0:28:53.560 like you just like took a bunch of mud, put 0:28:53.560 --> 0:28:56.480 it in paint on the canvas. That's what their org 0:28:56.600 --> 0:28:59.520 chart looked like. It's very unsatisfying to look at it, 0:29:00.040 --> 0:29:02.440 and there is a there is a correlation between the 0:29:03.120 --> 0:29:05.600 beauty of it elegance of it and the effectiveness of it. 0:29:05.600 --> 0:29:08.520 It's a very very interesting concept. Theirs wasn't, and they 0:29:08.520 --> 0:29:11.040 had multiple It was a business that had grown up 0:29:11.160 --> 0:29:15.120 Cluegate style kl Uge meeting just they bought some stuff 0:29:15.160 --> 0:29:18.040 and they never really integrated it thoroughly. You know, to 0:29:18.080 --> 0:29:21.480 do integration, you need courage, you need confidence, you need 0:29:21.520 --> 0:29:23.000 to know that what you're doing is the right thing 0:29:23.120 --> 0:29:25.719 and execute on it. They were more a sheepist about that. 0:29:25.760 --> 0:29:28.920 So they had three I organizations, the three HR organizations, 0:29:29.000 --> 0:29:31.800 the three finance accounting organ the three of everything. And 0:29:31.960 --> 0:29:34.440 you don't need three of everything. That's two x extra 0:29:34.680 --> 0:29:36.640 that you really need. So we went in there and 0:29:36.680 --> 0:29:39.480 we did an exercise that we do all the time 0:29:39.480 --> 0:29:42.560 as part of continuous improvement, which is look at everything 0:29:42.800 --> 0:29:45.240 that we're spending and look at everyone who's on the 0:29:45.240 --> 0:29:50.400 payroll and think, how are they contributing to achieving our goals? 0:29:51.000 --> 0:29:55.200 And are they must have costs, must have people, or 0:29:55.280 --> 0:29:58.120 they kind of nice to have but it's not really critical, 0:29:58.560 --> 0:30:01.360 or are they like the hell did this get an organization? 0:30:01.720 --> 0:30:03.600 You find a lot of that kind of stuff, particularly 0:30:03.600 --> 0:30:06.880 in bigger companies where things just kind of grew and 0:30:06.920 --> 0:30:08.920 no one got rid of it, but it's served its 0:30:08.960 --> 0:30:11.320 purpose and it's not doing much more. So we went 0:30:11.320 --> 0:30:15.080 through the whole organization and made it streamlined and more effective, 0:30:15.440 --> 0:30:18.640 and then in the last few years we got our 0:30:18.680 --> 0:30:21.280 service levels up really, really high, and as a result 0:30:21.360 --> 0:30:24.000 of that, we're able to get yield growth and we're 0:30:24.000 --> 0:30:27.000 able to get take market share as a result of that. 0:30:28.040 --> 0:30:31.480 A good question from the audience, they ask, what's the 0:30:31.520 --> 0:30:35.840 biggest challenge of breaking into the building products supply chain. 0:30:35.880 --> 0:30:39.120 I guess another way of asking that is, what's stopping 0:30:39.160 --> 0:30:41.720 you from making one billion dollars of revenue right now 0:30:41.800 --> 0:30:43.480 as opposed to the end of the year. 0:30:43.760 --> 0:30:45.240 Give me a little time and we've been in the 0:30:45.240 --> 0:30:47.360 business like ten seconds, but we'll get there. I will 0:30:47.400 --> 0:30:51.840 satisfy you on that goal. So the biggest the biggest 0:30:52.160 --> 0:30:56.080 obstacle to achieving big goals personally too, by the way, 0:30:56.080 --> 0:31:00.160 personally and professionally or people, the people that you associate with, 0:31:00.240 --> 0:31:02.720 people you surround yourself with, people who deal with all 0:31:02.800 --> 0:31:06.480 day long, the people whose exhales you inhale and vice versa. 0:31:06.560 --> 0:31:11.400 That's the key thing. If you can get fantastic people, smart, honest, 0:31:11.400 --> 0:31:13.760 hardworking people who get along with each other, and get 0:31:13.760 --> 0:31:15.720 the right culture of how you interact with each other. 0:31:15.920 --> 0:31:19.200 You can accomplish enormous things. You can dream big and 0:31:19.280 --> 0:31:22.520 actually achieve it. If you don't have that, if even 0:31:22.920 --> 0:31:25.160 you have to have it universally. You can't just have 0:31:25.720 --> 0:31:27.640 like your top twenty five people. You can't have like 0:31:28.160 --> 0:31:31.200 fifteen are hardworking, but ten, you know, maybe the work 0:31:31.320 --> 0:31:33.920 they don't worry. You can have like fifteen honest ones 0:31:33.960 --> 0:31:36.080 and ten are just honestly. It has to be all 0:31:36.320 --> 0:31:38.440 in this example, twenty five out of twenty one hundred percent. 0:31:38.600 --> 0:31:41.959 If you can concentrate on the quality of the people 0:31:42.640 --> 0:31:45.760 and the rules of engagement between that constellation of people, 0:31:46.400 --> 0:31:48.000 you can move mountains. 0:31:48.400 --> 0:31:50.360 I think there might be someone in the audience who 0:31:50.400 --> 0:31:52.600 also is planning a roll up because they want to 0:31:52.640 --> 0:31:55.480 know what is the what was your number two? What 0:31:55.600 --> 0:31:58.160 almost made the cut? You know, the fifty industries you 0:31:58.200 --> 0:32:01.280 looked at, what didn't happen, So therefore there's an opportunity 0:32:01.360 --> 0:32:01.880 for someone else. 0:32:02.000 --> 0:32:06.280 So my absolute favorite one apart from this, was oil 0:32:06.320 --> 0:32:08.239 and gas so or emp oiling gas. So I used 0:32:08.280 --> 0:32:09.880 to be in the oil business a long time ago, 0:32:10.520 --> 0:32:14.040 and right now, right now, you can go out and 0:32:14.040 --> 0:32:17.160 you can buy bruising properties for three times cash flow, 0:32:17.440 --> 0:32:20.240 and then you have an annuity for like fifteen years 0:32:20.320 --> 0:32:21.600 or just getting. 0:32:21.200 --> 0:32:24.360 And that's right today, these bright right right this minute. 0:32:24.400 --> 0:32:27.720 However, you can't finance it. You just can't finance it. 0:32:27.880 --> 0:32:32.080 I went to seventeen sovereign wealth funds and long only 0:32:32.120 --> 0:32:36.680 funds that have historically financed XPO in the past and said, 0:32:36.800 --> 0:32:38.480 went over, like the things I was looking at, so 0:32:38.600 --> 0:32:41.240 what do you think of energy? Every single one said no, no, no, 0:32:41.520 --> 0:32:43.440 don't do energy. We can't do that. It's a ESG 0:32:43.720 --> 0:32:46.360 or they got burnt during the boom or for whatever reason. 0:32:46.400 --> 0:32:49.520 It was just like they're sellers not buyers. Well that 0:32:49.640 --> 0:32:52.080 makes low prices when there's not a lot of buyers. 0:32:52.080 --> 0:32:55.200 And now similar phenomenal you see in Europe sort of, 0:32:55.200 --> 0:32:56.840 I mean the analogy backs down at a certain point. 0:32:56.840 --> 0:33:00.680 But in Europe right now in building products distribution, very 0:33:00.680 --> 0:33:04.200 few buyers, very few buyers. Yeah, I can't think of 0:33:04.280 --> 0:33:08.000 one big strategic that's doing a roll up in Europe, 0:33:08.360 --> 0:33:10.520 and the private equity firms is just a handful of them, 0:33:10.520 --> 0:33:12.240 whereas here in the United States, you know a couple 0:33:12.280 --> 0:33:13.200 dozen of them, we're active. 0:33:14.120 --> 0:33:16.360 Would you have for two renewables. I mean, since you 0:33:16.400 --> 0:33:20.040 brought up renewables, since you brought up the financing point, 0:33:20.120 --> 0:33:22.920 I mean I don't think people Yeah, I don't think 0:33:22.920 --> 0:33:25.760 people are falling over themselves to finance renewables necessarily, but 0:33:25.800 --> 0:33:28.680 you don't necessarily have the mandate constructions. Is that something 0:33:28.680 --> 0:33:29.720 you see any value in? 0:33:30.080 --> 0:33:35.320 I think green renewable, this is all sustainability. These are 0:33:35.360 --> 0:33:38.040 long term real trends. This is this is this is 0:33:38.120 --> 0:33:40.160 this is the future. It's it's not just a story. 0:33:40.680 --> 0:33:42.800 And I think any company that wants to succeed and 0:33:42.840 --> 0:33:45.600 prosper needs to be thinking about am I leaving the 0:33:45.600 --> 0:33:47.840 world in a better place? So I think every company, 0:33:47.880 --> 0:33:49.800 not just our company, not just our industry, needs to 0:33:49.800 --> 0:33:50.920 be thinking about all those things. 0:33:52.760 --> 0:33:56.880 Another question about global supply chains, and obviously we hear 0:33:57.000 --> 0:34:01.000 a lot about friends shoring or companies feeling that they 0:34:01.080 --> 0:34:06.080 have to reduce their exposure to China because reasons or whatever. 0:34:06.200 --> 0:34:09.040 How is that going? How are those trends going to 0:34:09.080 --> 0:34:11.719 play out within the context of building supplies? So what 0:34:11.760 --> 0:34:16.360 are you seeing in terms of geopolitical risk hedging? Maybe 0:34:16.440 --> 0:34:18.319 is the way to put it, and the just and 0:34:18.400 --> 0:34:21.720 the sort of changing geography of supply chains within building supplies. 0:34:21.719 --> 0:34:24.040 Well, China is certainly a risk because the relationship between 0:34:24.080 --> 0:34:25.799 China and the West is probably an all time low, 0:34:25.960 --> 0:34:31.440 so it's a it's very difficult time. So diversifying your 0:34:31.440 --> 0:34:35.160 supply chain away from China is probably not a bad idea. Now, 0:34:35.440 --> 0:34:38.520 in our case, we're we have a very clear perimeter 0:34:38.600 --> 0:34:41.320 that we're going after. We're going after North America. Primarily, 0:34:42.040 --> 0:34:44.400 We're not say North America, I mean USA and a 0:34:44.440 --> 0:34:46.560 little bit of Canada, most of the USA, not not 0:34:46.600 --> 0:34:50.480 so much Mexico and Western Europe, so France, Germany, Spain, 0:34:50.640 --> 0:34:53.200 so forth. That's really our perimeter. And that's about eight 0:34:53.239 --> 0:34:55.000 hundred billion dollars between those two. 0:34:55.200 --> 0:34:57.680 But there must be products that you expect to come 0:34:57.760 --> 0:35:00.759 through your distribution centers, oh yea, from all over the world. 0:35:00.760 --> 0:35:03.279 There'll be some source from China, but you don't want 0:35:03.320 --> 0:35:06.919 to have a preponderance of your supply chain coming from China. 0:35:06.920 --> 0:35:07.760 That's highly risky. 0:35:08.400 --> 0:35:10.759 Is that different to how you would have maybe done 0:35:10.840 --> 0:35:14.000 this kind of business previously, Like that newfound supply chain 0:35:14.040 --> 0:35:15.360 resiliency is at the background. 0:35:15.400 --> 0:35:17.640 Absolutely. I mean I gave the keynote at a big 0:35:17.680 --> 0:35:20.480 trade event out in California about I know, eight or 0:35:20.560 --> 0:35:22.759 nine years ago, and the topic was globalism. Now it's 0:35:22.760 --> 0:35:25.520 a big champion for thinking globally, but the world's changed 0:35:25.520 --> 0:35:26.440 a lot in last decade. 0:35:26.520 --> 0:35:28.360 Yeah, you don't hear that much anymore. 0:35:28.000 --> 0:35:29.279 No, they don't. 0:35:29.560 --> 0:35:32.880 I have a question that I thought of earlier, and 0:35:32.960 --> 0:35:34.680 I don't want to forget to ask it. It's about 0:35:34.760 --> 0:35:37.839 warehouse tech, and we did this episode. It was actually 0:35:37.880 --> 0:35:40.319 about the snack food industry and why there are so 0:35:40.400 --> 0:35:44.600 many proliferations of snacks like you know, Korean prawn flavored 0:35:44.640 --> 0:35:46.279 Doritos and stuff like that. And the guy was saying 0:35:46.320 --> 0:35:48.800 that one of the technological breakthroughs is that with the 0:35:48.920 --> 0:35:51.440 robots and the warehouses, they can get a lot more 0:35:51.480 --> 0:35:54.560 skews within a given amount of square footage because they 0:35:54.560 --> 0:35:56.480 could pack the warehouses in different ways. And if the 0:35:56.520 --> 0:35:58.560 robots go around and stuff like that. What do you 0:35:58.600 --> 0:36:00.920 see on that? Like in your for your years of 0:36:00.960 --> 0:36:04.960 dealing with warehouses, do you are you able to get? 0:36:05.040 --> 0:36:07.120 Is that the same in the various industries you work with, 0:36:07.120 --> 0:36:09.600 that a given amount of square footage can have a 0:36:09.640 --> 0:36:12.480 greater diversity of goods. These days, due to automation. 0:36:13.120 --> 0:36:17.120 A warehouse man as well can be far more productive 0:36:17.200 --> 0:36:21.920 and efficient than one that's like a hardware store. So slotting, 0:36:21.960 --> 0:36:24.400 for example s L T T I G means you 0:36:24.520 --> 0:36:28.160 use the data to analyze which SKUs tend to go 0:36:28.239 --> 0:36:32.040 out together, and you position those in the warehouse. You 0:36:32.080 --> 0:36:34.279 locate them next to each other, so you save a 0:36:34.320 --> 0:36:38.520 lot of time for example, and everything. So warehouse should 0:36:38.560 --> 0:36:41.160 be less in the warehouse of the future is less 0:36:41.160 --> 0:36:45.880 and less people and more and more collaborative robots and automation. 0:36:46.160 --> 0:36:48.080 If you go to some of the more advanced jicks 0:36:48.120 --> 0:36:50.640 of warehouses and you look around, you, hey, where's the people? 0:36:50.960 --> 0:36:54.600 Very quiet here, very efficient and very very effective. What 0:36:54.640 --> 0:36:56.040 it does? That's the future for sure. 0:36:57.040 --> 0:36:59.480 This is a question from the audience, but they're asking 0:36:59.600 --> 0:37:02.680 because the industry is so fragmented and often, you know, 0:37:03.480 --> 0:37:06.279 very regional. Is there part of the country that you're 0:37:06.280 --> 0:37:08.680 more focused on, at least initially. 0:37:08.600 --> 0:37:12.360 No, Nationally, we want to be nationally, want to be global. 0:37:12.480 --> 0:37:14.800 Global in the sense of Western Europe and North America. 0:37:14.800 --> 0:37:17.120 We're not really pursuing the other parts of the world. 0:37:17.760 --> 0:37:20.000 But like people talk, for example about you know, there's 0:37:20.040 --> 0:37:23.239 great business migration to the southeast Southwest, et cetera. 0:37:23.320 --> 0:37:25.840 But that's not at there's there's a lot of the 0:37:25.880 --> 0:37:29.240 growth rate for constructions, certainly bigger down down south. 0:37:29.600 --> 0:37:31.759 Wait, here's something else. I always wanted to ask a 0:37:32.440 --> 0:37:37.239 roll up er to use rollbrevious and M and a 0:37:37.320 --> 0:37:40.719 profession serial entrepreneur, billionaire I suppose would work. 0:37:40.760 --> 0:37:43.000 Don't call me a billionaire, but M and a professional. 0:37:43.040 --> 0:37:43.440 I like that. 0:37:43.520 --> 0:37:46.040 OKAYM and a profession here. But okay, we know that 0:37:46.080 --> 0:37:48.239 you want to buy a bunch of companies. Does the 0:37:48.280 --> 0:37:50.880 sequence that you buy them in matter? 0:37:51.400 --> 0:37:51.520 Like? 0:37:51.680 --> 0:37:53.480 Is the idea Okay, I buy this one, I buy 0:37:53.480 --> 0:37:55.040 that one, and then I put them together and I 0:37:55.080 --> 0:37:56.640 get to that level and then I do this and 0:37:56.719 --> 0:37:59.280 that or is it just like we have all these targets, 0:37:59.440 --> 0:38:02.000 let's just try to complete as many deals as in the. 0:38:01.960 --> 0:38:05.480 Perfect world, which doesn't exist. Yes, the sequence would be 0:38:05.560 --> 0:38:08.440 deliberate and you'd have lots of synergy between number one 0:38:08.480 --> 0:38:10.720 and number two and number three. In the real world, 0:38:10.880 --> 0:38:15.000 there should be some level of opportunism and seeing what's 0:38:15.080 --> 0:38:17.400 what's out there and what's actionable, what's a good value. 0:38:18.239 --> 0:38:21.280 Since we're at a conference and it's the year twenty 0:38:21.280 --> 0:38:24.359 to twenty four, I have to ask an AI question. Great, 0:38:24.400 --> 0:38:27.360 and I'm sure you know everyone's doing something with AI 0:38:27.640 --> 0:38:30.480 et cetera, and I'm sure it's all great efficient, but 0:38:30.560 --> 0:38:35.000 what specifically, what does it mean and when we you know, what, 0:38:35.400 --> 0:38:37.600 when you when it's at this company or some of 0:38:37.640 --> 0:38:40.480 the other exos, what does it mean to you to 0:38:40.560 --> 0:38:43.800 put like AI into practice? And are there any specific 0:38:43.840 --> 0:38:46.040 areas where you can say, look, this is a tech 0:38:46.080 --> 0:38:48.920 that I want to call artificial intelligence, and it's either 0:38:49.120 --> 0:38:52.200 improved the product or significantly saved on costs. 0:38:52.480 --> 0:38:56.000 So XPO was all about machine learning and AI. When 0:38:56.040 --> 0:38:59.280 I first hired Mario Harrik from my CIO now CEO 0:38:59.360 --> 0:39:03.040 when you CIO, so the vision was, here's all these 0:39:03.040 --> 0:39:05.840 brokers and they have like these halls with like hundreds 0:39:05.880 --> 0:39:08.680 of kids, and they're on two phones at a time 0:39:08.800 --> 0:39:11.120 and they're playing. And we said, why do you need 0:39:11.160 --> 0:39:12.680 these people? This is stuff that should be done on 0:39:12.719 --> 0:39:15.200 an app. The shipper would prefer it would be better 0:39:15.280 --> 0:39:17.160 for the shipper to be doing on an app, be 0:39:17.160 --> 0:39:19.080 better for the dispatcher on the trucker to be doing 0:39:19.080 --> 0:39:21.560 an app. And why you're paying a third of your 0:39:21.600 --> 0:39:24.440 gross margin to sales repsen you know that this is 0:39:24.680 --> 0:39:28.080 not adding in some cases enough value to justify that. 0:39:28.800 --> 0:39:33.640 And at that time zero percent of the business was automated. Today, 0:39:34.360 --> 0:39:37.280 our XO, the one that just bought Coyote from the EPs. 0:39:37.800 --> 0:39:41.920 OURXO is where we put the brokerage spin. Ninety seven 0:39:41.960 --> 0:39:45.040 percent of the orders are either sourced or covered digitally, 0:39:45.719 --> 0:39:48.440 and I believe that is the main reason, not the 0:39:48.440 --> 0:39:51.640 only reason. It's the main reason why OURXO has been 0:39:51.640 --> 0:39:54.680 growing at three times industry growth rate, because the model 0:39:54.719 --> 0:39:55.280 works better. 0:39:56.000 --> 0:39:59.640 Are there specific pieces of technology or technology platforms that 0:39:59.680 --> 0:40:02.879 you can whole out of XPO or GXO and use 0:40:02.960 --> 0:40:06.319 for QXO. Like do you use, for instance, like those 0:40:06.400 --> 0:40:09.239 trackable palettes? Those are very cool I find could you 0:40:09.320 --> 0:40:10.640 use something like that for distribution? 0:40:10.840 --> 0:40:13.000 So there's tons of stuff we could do with the exos. 0:40:13.000 --> 0:40:14.560 We gotta a little careful about that. That has to 0:40:14.600 --> 0:40:17.640 all be arm's length and market and so forth. But yeah, 0:40:17.680 --> 0:40:20.000 there's tons of things that we could use from the exos. 0:40:20.760 --> 0:40:23.560 You got to remember this business has a big component 0:40:23.600 --> 0:40:27.760 of transportational logistics. This is a business where you're transporting 0:40:28.120 --> 0:40:32.440 building materials from the OEM from the manufacturer by truck, 0:40:32.640 --> 0:40:36.080 mostly a little intomotive, but mostly truck to the warehouse 0:40:36.440 --> 0:40:39.440 that you're managing we were talking about before, and then 0:40:40.080 --> 0:40:42.920 you're delivering it in the last mile generally to the 0:40:43.000 --> 0:40:46.440 job site, almost always by truck. So there's a big 0:40:46.520 --> 0:40:50.279 cost and a big efficiency and productivity and ability to 0:40:50.320 --> 0:40:54.680 delight or annoy the customer by getting transportation logistics just right. 0:40:55.120 --> 0:40:59.080 Someone asks, in perfect dovetails with your answer there, how 0:40:59.120 --> 0:41:01.080 far up and down this supplied chain do you go 0:41:01.160 --> 0:41:03.760 to ease bottlenecks? When you think of I mean supply 0:41:03.920 --> 0:41:06.480 chain risk. I know supply chain professionals, this is what 0:41:06.520 --> 0:41:09.280 they've always done. But for the rest of us, supply 0:41:09.400 --> 0:41:11.319 chain risk is this new thing that most of us 0:41:11.320 --> 0:41:14.319 started talking about in the last three or four years, 0:41:14.320 --> 0:41:16.640 and I have to imagine it's going to stay on 0:41:16.760 --> 0:41:20.000 the minds of many business managers, particularly with the China 0:41:20.080 --> 0:41:22.719 risk and so forth. Talk to us about some of 0:41:22.840 --> 0:41:27.600 what you will do with QXO to hedge against that 0:41:27.680 --> 0:41:30.040 or protect against supply chain risk. And how close do 0:41:30.080 --> 0:41:31.920 you want to get to the producer, how close do 0:41:31.920 --> 0:41:34.560 you want to get to the end customer to ease 0:41:34.600 --> 0:41:35.200 those concerns. 0:41:35.280 --> 0:41:37.000 I want to get very close. We want to buy 0:41:37.040 --> 0:41:40.799 directly from the manufacturer and want to sell directly to 0:41:40.960 --> 0:41:44.880 either the final end user or the contractor that's servicing it. 0:41:45.040 --> 0:41:47.360 More often not so much. They see more the b 0:41:47.680 --> 0:41:50.680 that's serving the sea, the business that's serving the consumer. 0:41:51.360 --> 0:41:53.200 So yeah, you want to be close. That's the whole business. 0:41:53.239 --> 0:41:53.759 How do you do it? 0:41:53.800 --> 0:41:58.040 The business plan is to buy in large quantities at 0:41:58.120 --> 0:42:01.120 a price that reflects at a lower price that reflects 0:42:01.120 --> 0:42:04.120 those larger quantities and the risks you're taking by storing 0:42:04.120 --> 0:42:07.000 them and putting in inventory and selling them retail, and 0:42:07.080 --> 0:42:10.680 smaller amounts at a price that is appropriate for retail, 0:42:10.680 --> 0:42:12.360 and that's your margin. That's how you make your business. 0:42:12.719 --> 0:42:17.800 The supply chains, yeah, but you can't blame the manufacturer. 0:42:18.000 --> 0:42:21.000 You can blame anybody on the supply chain, but ourselves, 0:42:21.040 --> 0:42:25.279 if we're a distributor, that's our responsibility. Our responsibility is 0:42:25.320 --> 0:42:28.440 to get the supply chain right, to use technology and 0:42:28.480 --> 0:42:31.799 to use and to use culture, to use compensation and 0:42:31.880 --> 0:42:35.160 recognition to get people to take that seriously so that 0:42:35.200 --> 0:42:38.320 we always have the right amount of products in stock 0:42:38.719 --> 0:42:42.040 so when customers want a product, we got it, and 0:42:42.040 --> 0:42:44.520 that when a customer needs it by a certain date, yes, 0:42:44.600 --> 0:42:46.279 we can do that. And if we do that, if 0:42:46.280 --> 0:42:50.520 a distributor does that professionally, I believe you'll get a 0:42:50.520 --> 0:42:52.640 little more price, not a huge amount more price, but 0:42:52.640 --> 0:42:54.600 you get a little bit more price, and you'll get 0:42:54.600 --> 0:42:56.440 greater share of wallet. That's my thesis. 0:42:56.600 --> 0:42:58.640 I need treated plywood by this weekend. 0:42:58.680 --> 0:43:02.359 Brad, I know again, so this is bad. 0:43:03.400 --> 0:43:06.320 Okay, there's one more question from the audience. And before 0:43:06.360 --> 0:43:08.080 I ask this one, I'm just going to give a 0:43:08.120 --> 0:43:11.360 plug to Brad's book because it's all about his experience 0:43:11.520 --> 0:43:13.920 as an m and a professional. But it is one 0:43:13.960 --> 0:43:17.919 of the more unusual sort of entrepreneurial books that I've read, 0:43:17.960 --> 0:43:22.239 because you do have some unusual strategies in the way 0:43:22.239 --> 0:43:24.520 you think about business. So I remember there's a chapter 0:43:24.560 --> 0:43:27.560 where you talk about thought experiments to make you think 0:43:27.600 --> 0:43:29.600 in new ways, and one of the thought experiments was 0:43:29.680 --> 0:43:33.719 imagine yourself as a banana. That one sticks in my head. 0:43:33.840 --> 0:43:34.520 I like that one. 0:43:34.640 --> 0:43:37.960 But you also worked and this actually led to another 0:43:37.960 --> 0:43:40.800 all thoughts episode. But you've also worked with an ex 0:43:41.120 --> 0:43:44.719 CIA official who was very instrumental in the use of 0:43:44.840 --> 0:43:48.360 lie detectors as someone to help you do due diligence 0:43:48.520 --> 0:43:51.399 on different companies we did and he was amazing. It's 0:43:51.560 --> 0:43:55.240 a good episode. But this brings me to the audience question. 0:43:55.640 --> 0:43:58.960 They ask, as you've applied various new and improved management 0:43:59.000 --> 0:44:02.279 techniques to your aqui positions, what are some old techniques 0:44:02.320 --> 0:44:05.759 that you found have to go or just aren't very 0:44:05.840 --> 0:44:06.640 useful anymore? 0:44:07.520 --> 0:44:10.439 So my approach is, as you can tell from reading 0:44:10.480 --> 0:44:12.920 the book, is really simple. It's very straightforward. You get 0:44:12.960 --> 0:44:18.280 great people, You figure out big goals with great specificity 0:44:18.280 --> 0:44:21.279 and clarity. What are you trying to achieve? But bold 0:44:21.840 --> 0:44:24.040 We're going to create a fifty billion dollar company. I've 0:44:24.040 --> 0:44:26.640 got everyone in the organization completely signed up for that. 0:44:27.360 --> 0:44:29.319 And then you figure out what do I have to 0:44:29.360 --> 0:44:32.480 do to get from here to get to there? What 0:44:32.520 --> 0:44:35.160 are the steps I have to do? And then who's 0:44:35.200 --> 0:44:37.719 going to be in charge of that? And then how 0:44:37.719 --> 0:44:40.440 do we tie compensation to that? So that and how 0:44:40.480 --> 0:44:44.719 do we measure it, keep people accountable accurately and appropriately 0:44:44.800 --> 0:44:48.520 and fairly, reward people for achievement on that, and keep 0:44:48.520 --> 0:44:51.640 people on track. That's my basic playbook. There's a lot 0:44:51.640 --> 0:44:54.200 of other details to it. That's my basic playbook. Great people, 0:44:54.680 --> 0:44:58.080 big vision, hold people accountable, and go make it happen, 0:44:58.160 --> 0:45:00.640 and as a result of that, you create, in all 0:45:00.760 --> 0:45:02.680 likelihood great shareholder value. 0:45:03.760 --> 0:45:07.360 The book's been out for several months, has anyone, And 0:45:07.360 --> 0:45:08.759 it's called how to Make a billion dollars? 0:45:08.840 --> 0:45:09.560 Right? Few billion dollars? 0:45:09.600 --> 0:45:12.720 How to make a few billion dollars? Sure, sometimes Tracy 0:45:12.719 --> 0:45:15.239 and I, because we've been doing the podcast for several years, 0:45:15.280 --> 0:45:17.040 like we'll get a email. It's like, by the way, 0:45:17.080 --> 0:45:18.919 I just want to say I listened to this episode 0:45:19.400 --> 0:45:21.719 and then I went to business school, and now I 0:45:21.760 --> 0:45:23.319 got my first job on Wall Street. You've been doing 0:45:23.320 --> 0:45:25.600 it for a while. Has anyone called you up and say, Brad, 0:45:25.600 --> 0:45:27.120 I just want to thank you. I've made a billion 0:45:27.160 --> 0:45:29.400 dollars since buying your book, or a few billion billion? 0:45:29.800 --> 0:45:32.239 Not yet, but I'll underline the word yet. But I 0:45:32.280 --> 0:45:33.920 tell you what I have had a lot of people 0:45:34.000 --> 0:45:35.719 like what Tracy thought experiments. 0:45:36.440 --> 0:45:38.080 I have imagined myself as a banana. 0:45:38.120 --> 0:45:41.760 It's true because the commonality of DNA between a banana 0:45:41.760 --> 0:45:44.240 and the humane is it's quite Significant's like ninety something percent. 0:45:44.400 --> 0:45:47.360 It is more than you would expect. I'll say that, Brad. 0:45:47.440 --> 0:45:49.279 There's one There's another question I want to ask you, 0:45:49.320 --> 0:45:52.040 which is you know you're an m and a professional 0:45:52.200 --> 0:45:55.839 serial entrepreneur. You start one company that's very successful, then 0:45:55.880 --> 0:46:00.560 another that's very successful, and now another. How much runway 0:46:00.600 --> 0:46:03.000 do you give yourself for each company? And when do 0:46:03.040 --> 0:46:06.359 you declare like, Okay, I've done it here and now 0:46:06.400 --> 0:46:08.040 I'm going to move on to the new thing, or 0:46:08.080 --> 0:46:10.279 now I feel prepared to take an additional thing on. 0:46:10.880 --> 0:46:13.720 If you look at my bio 'es, basically every decade 0:46:14.440 --> 0:46:17.279 I really get into something I started from scratch, this 0:46:17.400 --> 0:46:19.800 big idea. Get everyone, we do it, do it, do it, 0:46:19.840 --> 0:46:23.239 do it. Ten years later we did it, and I 0:46:23.360 --> 0:46:26.200 do it again. That's my psychic Everyone's got their bio rhythm, 0:46:26.239 --> 0:46:27.600 that's mine. Once a decade. 0:46:27.719 --> 0:46:31.400 Well, we'll have you back here in a decade and 0:46:31.440 --> 0:46:33.480 you can tell us about your next venture. 0:46:33.680 --> 0:46:37.280 Great, it'll have x O in it. 0:46:37.320 --> 0:46:40.200 Sounds good, Brad Jacobs QX So thank you so much 0:46:40.239 --> 0:46:44.280 for coming on. Odd lots, thank you, good question. 0:46:57.400 --> 0:47:00.880 That was our conversation with Brad Jacobs at Bloom invest 0:47:01.160 --> 0:47:04.479 I'm Tracy Alloway. You can follow me at Tracy Alloway and. 0:47:04.400 --> 0:47:07.200 I'm Joe Wisenthal. You can follow me at The Stalwart. 0:47:07.400 --> 0:47:10.920 Follow our producers Carmen Rodriguez at Carmen armand dash Ol 0:47:10.920 --> 0:47:14.480 Bennett at Dashbot and Kelbrooks at Kelbrooks. 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