I'm ready when you are, man.
Let's go. I'm in the zone. I'm in the zone, man.
We're going to pick up right... I hope we start with this. I love your energy. This is what I always tell people when, you know, I did the episode on your book. Right? And since then, thousands, and this is not an exaggeration, thousands of people have sent me messages. But what I try to explain to people, they're like, "Well, what's so different about Brad?" I was like, "Well, first of all, how long do you have? Second of all, he's got the best energy, and the most energy of any person I've ever been around." So, like, I really appreciate you taking the time and agreeing to do this. One of my favorite things is your affinity and relationship that you had. You had a bunch of mentors, but one of your most important ones that you mentioned I think four times in the book is Ludwig Jesselson. You have a list of maxims, in the very beginning of the book, that you learned from other people. The maxim that you listed for him was, "Get the major trend right." So, if you could just talk about your relationship with him, and what he meant to you. I think that's a perfect place to start.
He meant a lot. So Mr. Jesselson... I never called him Ludwig.
Yeah. He was, you know, significantly older than me, and much more accomplished than me, so, I showed him respect by calling him Mr. Jesselson. Mr. Jesselson was a special guy. This was someone who was deep, very profound, and had lived life fully, and by principles. And he was a religious guy, but I wouldn't say he was, like, ultra-religious. He was more taking the morality of Judaism, the do's and don'ts, and ethical behavior, and honesty and so forth, and that became the core of his life. That became the core of his personal life, and his business life. Relationships, deep relationships, long-term relationships, honest relationships, relationships you can keep coming back to. And sometimes one person has the leverage, sometimes the other person has the leverage, doesn't matter, you don't take advantage of that. It's long-term relationships. And he had about a few dozen deep principles. And one of them is the one you just mentioned, which is because he was a trader.
He ran the largest commodity trading firm in the world, Philipp Brothers. It was, you got to get the long-term trend right. You can get a lot of other stuff right.
But if you don't get the long-term trend right, you're kind of in trouble. So, you got to figure that one out. You got to say, "What's going on here?" You need context. You need to see what's happening, what did happen, what is happening, and what will likely happen in the future, and what are the different future states that could happen, and what's the probabilities for each one of those? And then you have your risk management. So, yeah. The converse of that is, if you get the major trend wrong, you can do a thousand things right, you're still going to lose. You're not going to create alpha. You're not going to create value there. So yeah, that was a big lesson from him.
The other thing that I love is you were 23 years old. You're having lunch with him on a very frequent basis. Like you just said, he's much older. He's one of the most successful people in the world. He's taking an interest in you. And yet, you were still comfortable to unload your stresses and your problems, and he would sit there patiently listening. And then I love his response where it's just like, "Yeah, business is problems." Like, one of the, I think, most important lessons was just, like, problems are... There's a line from Henry Kaiser who was, you know, in his day, was as famous as, say, like, an Elon is today, or you're becoming, and, you know, he started 100 different companies. He built the Hoover Dam. He built Liberty ships for the Allies in World War II. And I read a bunch of biographies on him, because he was one of Charlie Munger's favorite founders. And he said a line in the biography, that's in multiple life stories about him, that problems are just opportunities in work clothes. And so, I read your recounting in your book of some of your lunches with Mr. Jesselson. And it's like, oh, he essentially gave you the same advice.
Yeah. So, in the book, I talked about a specific episode when I was having lunch with him, and I was kind of down and glum, and he said, "What's going on?" I was talking about this problem, and this thing, and I was just kind of down, you know? And he said, "Well, don't stay in the business world if you're going to get down on this stuff. These are the things you should get up from."
When you have problems, when you have challenges, when you have obstacles, by addressing those, that's how you make money. You make money. So, the more problems you have, as long as you can solve them, as long as you figure out how to address them, and remove the problem, that's how you're creating value. That's a wonderful way to go through life. Number one, it's a great way to make money.
Because you're not always down. Because you always have incoming missiles when you're in the business world. You have problems with employees, with competitors, with regular... I mean, just all day long, you have incoming missiles. You have great stuff too, but in between that is punches to the face. And if you're going to get beaten up by that, you're not going to be successful. And secondly, you're not going to be happy. So, you're going to go through life, like, glum. Sometimes you see these, like, multi-billionaire guys and they always look like this. Well, what's the point of all the money? If they're... Seriously. So, I would not want to be one of these zillionaire guys who's, like, frowning all the time, and upset, and angry, and depressed. That's much more important to me to be in the right frame of mind, and to go through the short time we have in life-
... happy, reasonably happy. I don't have a perfectionist standard where I have to be, like, in ecstasy and bliss 24 hours a day, seven days a week, but generally happy.
Did you ever meet Sam Zell when he was alive?
I did. Yeah, I'm sure many times.
He had the same thing. I was lucky enough to have a two-hour very intense lunch with him. He said the very similar thing to you. He's just like, "I know all the rich guys." He's like, "You wouldn't believe how many are miserable." He's like, "Don't do that." He's like, "I wake up every single day." You guys have a lot of similarity where, like, I'll spend time with you. You know, the very first time I met you when I went to your book launch party.
I just remember like, "Oh, this guy's got crazy energy." And I'd already read your book by then, but something that you talk about over and over again in your book is just, like, problems are just opportunities. It reminded me of there's this line from Jeff Bezos'... There's several books on him, but one of his main biographies is this book called "The Everything Store." And they said that Jeff, you would tell him problems about his business, and he would get excited.
Yeah.
Because he's like, "Oh." And he talks about it in the shareholder letters. It's like, "Oh, this is like, these are problems. If I solve these problems, this is going to increase the enterprise value of the company that I'm building. These are actually good things to identify and embrace instead of avoid."
One of the most important things that I learned from Brad Jacobs is the importance of working with the smartest and most talented people you can. Brad says the most important thing that a CEO does is recruit superlative people. Brad recruits the smartest people he can find, and says there's no substitute for smarts. Steve Jobs believed that this was important too. Steve said, "I think that I've consistently figured out who the really smart people were to hang around with. You must find extraordinary people. The key observation is that in most things in life, the dynamic range between average quality, and the best quality is at most two to one. But in the field that I was interested in, I noticed that the dynamic range between what an average person could accomplish, and what the best person could accomplish, was 50 or 100 to one. You need to build a team that pursues the A+ players." That is the end of the Steve Jobs quote, and that is exactly what Ramp has done. Ramp has the most talented technical team in their industry. Becoming an engineer at Ramp is nearly impossible. In the last 12 months, they hired only .23% of the people that applied. That means when you use Ramp, you now have top tier technical talent, and some of the best AI engineers working on your behalf 24/7 to automate and improve all of your business' financial operations. And they do this on a single platform. That means the longer they use Ramp, the more efficient your company becomes. This is important, because as Sam Walton said in his autobiography, "You can make a lot of different mistakes and still recover if you run an efficient operation, or you can be brilliant and still go out of business if you're too inefficient." Ramp helps you run an efficient organization. From a customer's perspective, what does a team of A+ players sound like? It sounds like this customer review that I read, which said, "Ramp is like having a teammate who you never need to check in on because they have it handled." Go to ramp.com to learn how they can help your business save time and money today. That is ramp.com.
I do have a question on your long-term reputation, okay? So, there's this line, do you remember when Buffett got-
... in all that trouble with Salomon Brothers.
You can lose money. That's fine. But you lose a shred of reputation-
... I'll be absolutely ruthless."
Yeah. It was a very jarring experience for me at your book launch party. Because first of all, I was the only one that didn't show up in a suit. So, I rectified that today, right? And then everybody else was just like, you know, "I've known Brad for three decades." Basically, everybody there was like, "How do you know Brad?" It's like, you know, I was investor of his, you know, he made all this money for this pension fund that we run, and everything else. And, like, the stories that I've heard at the party, and then since I released the episode, it's just like, you have a fantastic long-term reputation. Do you have any advice on how you were able to maintain that, and how important it was for other people to do the same thing?
Reputation is really important. Your personal brand is extremely important, because based on that, people are going to want to do business with you, or they're going to want to not do business with you. So, every day you're in the office and doing stuff, you're either raising your brand, or you're lowering your brand. And that's the main thing you got to work on. You got to make sure that your brand reflects integrity, and honesty, and dependability, and stability, and people can count on you. This goes back to Mr. Jesselson. So, Philipp Brothers, this is before email, actually, it was even before faxes. It was more TWXs and Telexes. So, which took a few days to go through, when they went through. Sometimes they didn't go through. So, you could do a deal worth hundreds of millions of dollars on a handshake, or on a phone call. There's no written confirmation of that for, like, days. In the meantime, maybe the price of whatever you were trading, oil or copper, had gone up a lot. You still had to have a deal.
Otherwise, you know, the whole system doesn't work. So, dependability is so... Trust is so, so important to do.
How old were you when you... When he gave you that advice, did you
... immediately start applying it? In my 20s.
So, you were optimizing for the long term even when you were that young?
Yeah. I think as you get older, you optimize for the long term more. I think. I think when you're young, you're just so ambitious, and you want to get stuff done, you're in the now. As you get older, and as you mature, you have more context. I think life, in general, is about getting more context, seeing things in proportion to other things.
Can you say more about that?
Well, you know, because we've talked about it a lot outside of your podcast.
I'm into meditation. So, a lot of the meditation I do is changing... Looking at space from different perspectives, not the normal perspective that we have right this minute. So, I expand my mind from the earth, to the sun, to the solar system, to the galaxy, to the clusters of galaxies, to the universe, to the multiverse. Just go way, way, way, way, way high. And then bring it all the way back in, and then go into the molecule, and the atom, and the proton, and the nucleus, and right in the middle of all that, and then go to strings. And I find that making my mind like an accordion, getting really big, and then really, really small. And then doing the same thing with time, looking at time, go back towards my life over the last few decades, and then go back centuries, and millennia, and just keep going way, way, way back, all the way back 13.8 billion years, go back all the way to the Big Bang, and then go all the way forward. And, like, picture the world going forward, forward, forward, forward. That time and space juxtaposition, for me, at least, different things work for different people, gives me context. It gives me humility. It gives me humbleness. It shows that I'm just one thing right here in a major, major thing going on. I'm just one little, tiny jet. But at the same time, I'm part of that. So, I'm very uplifted, I'm very inspired, I'm very motivated. Like, "Wow, I'm part of, like, a real big deal here." It's great. We all are.
We're all part of this huge, huge thing.
So, I think context is really important. It gives you meaning, it gives you purpose, it gives you understanding, it gives you wisdom.
I know you hate when I say this, because we've talked about this privately. It's like, you obviously know I study uncommon people for a living, right?
You do a great job at it.
Yeah. I appreciate it. But, like, think about how crazy it is. Like, the people that I study on "Founders" is they were so good at their job, somebody wrote a book about their life. Like, you're talking about very small. But most of their inner monologues, you're different. You have a much more positive energy. And, like, there's almost like a... Let me give you some context here. We were together a few months ago at a mutual friend's birthday party, in Miami. Our friend, Rick. There was a bunch of interesting people at the party. One of them was Apolo Ohno, okay? Apolo Ohno is the most decorated American winter Olympian of all time. He's become a friend. I met him through the podcast. And he walks up to me, and this is one of the funniest things. And, you know, because he has... People think you're an Olympian. Like, he was training since he was a kid. His dad would make him get up at 5:00 in the morning and run
... drills in the school parking lot.
But he still comes from, like, a very positive... He has a great relationship with his dad. Normally, it's like, you know, not good, when they're put under the circumstances. So, he was asking me, he's just like, "I see this pattern in, you know, when you're reading all these hundreds of biographies about these great entrepreneurs that, like, there is something inside of them, driving them that is actually negative." It could be insecurity, it could be, you know, they grew up in poverty, it could be a bad relationship with their family. And he's like, "Are they all like that?" And you were, like, 20 feet away, "You see that guy over there?" He goes, "Yeah." And I go, "You know who that is?" He goes, "No." I go, "That's Brad f****** Jacobs." I was like, "I guarantee you he's not driven by that." This is what I mean. You're uncommon amongst uncommon people, because, at least from the outside, and the conversation we had, it's like, I think part of this impenetrable nature that you have in like, "Oh, yeah, business is problems. It's going to come. What do you think we're doing here?" Like, you don't seem to be rattled by them. So, like, what is your inner monologue? Like, when you're doing huge f****** deals right now. You're doing all kinds of crazy stuff. You've built eight separate billion-dollar companies. You don't do that by accident. So, how do you... I'll stop talking there. What is your inner monologue like?
So, it goes back to what Mr. Jesselson used to say is, "Problems are your friend."
You don't want to just tolerate problems. You want to embrace problems. You want to hug problems. Problems are the way you succeed. You want to run to the fire. You don't want to run away from the fire. You want to be brave, you want to be courageous, go into it. I think you can start with anything that's anything. And in this case, in Apolo's case, he starts with, and other people he's studied start with, negativity, trauma, stress, insecurity, fear, anxiety, and then that's their motivator. They zero in on that, and then that makes them run faster.
Was that ever your case though?
I don't know that I'm a unicorn. I don't embrace negativity. I'm okay with it, but I don't make a big deal about negativity. I'd much rather enjoy the positivity. I'm a sunny side up guy.
But your inner monologue, are you nice to yourself? Your ongoing inner monologue?
I'm reasonably nice. Like, yeah, I am.
I am vicious. I sound like... You know who David Goggins is?
Oh, yeah. Oz the Mentalist was talking about him.
My inner monologue sounds like David Goggins. Where it's just like, "You're not doing enough. This wasn't good enough." Like, I see the problems, so, like, I attack them. It's like, oh, I'll listen to a past podcast or something, anything I've done where it's like... And all I see are the flaws. I don't see any of the good part.
So, let me comment on that. I think there's two different ways you can approach that. So, yes, as cognitive behavior therapy has taught everyone, we're born with a schema, a prism through which we see life, and that can be clouded by core beliefs of, "I'm inadequate, I'm weak, I'm defective, I'm unattractive, I'm unlovable." All kinds of negative stuff. Now, there's two ways you can approach on that. You can either dispute those things. First validate, then dispute. So say, "Well, of course I'm hearing this." I have executives who report to me over the years that have the exact same schema as you just described, where they're always saying, "Oh, I'm no good at this. Oh, when people realize how bad I am, I'm just faking it. I'm wearing this mask, and I'm doing a bad job. I'm going to get fired. People are hiding stuff against me, because they don't respect me." All this, like, negative self-talk. It's a complete waste of time. But nevertheless, that's their reality.
Their reality is they have this steady drone of automatic negative thoughts. There's two ways to deal with that. Either you can dispute them, but first, validate it. Don't start with the disputing. First, validate it and say, "Okay, yeah, of course I'm having all these negative thoughts, because I got a tough job," for example. "I have a big job. There's a lot of pressure, and I'm not perfect, so I'm not getting everything right. And so, I do mess stuff up, and I do get things wrong," and all that negative talk. And then, you catastrophize on those negative things, and make them into huge, huge issues when they really should be minimized, if you put them in proper context. So, you first validate it, but then dispute it, and then say, "Well, what does the evidence say here? Is this really a rational thought, or is this my schema kicking in?"
To me, when you say that, it's like, I think you have this gift to step outside of yourself, which now you're saying... But when I say, "You step outside of yourself," you're like, "No, I'm in myself."
I much prefer to be in myself,
... than out of myself. I like to come to center.
I like to find the center. The first time that concept of centering came about was when I went to enrichment camp at a school in the summertime, and there was a book they gave out called "On Centering." I don't remember who wrote it. And it had a picture of someone making pottery. And they were explaining in the book that it's all about finding the center of the pot you're making. So, centering, finding that inner calmness, finding that zone where you're in the groove, and everybody has it. Everybody has that. You just got to find it. And that's one of life's missions is to find that center, find that inner calmness zone. And then, when I went to college and I studied music under Bill Dixon, same concept came out. I said, "Oh, I'm familiar with this." He said, "Come back to the center." So, we're playing improvisation, what he called black music.
Some people might call it jazz. He didn't like the word jazz. Playing with some friends, and then you have to find the center, come back to center, back to the center, back to the center. So, there'd be a center point in the music. You could go anywhere you wanted in the music. You can improvise all over the place, but come back to center, and then everybody would come back to their common center. So, I've incorporated this concept of centering, of finding a center into my meditation practices, into my business practices, into my philosophy of life. So, I like to find centers. But going back to what we were saying before, so you have this negative self-talk coming. You can either take one of two paths. You can take the path of validating, and then disputing it, and seeing it in a proper, rational way. Or, you can take the approach of just witnessing it, just enjoying it, and just it is what it is. It's mindful acceptance of it. So, acceptance of that. And I vacillate between those two. Sometimes I do the...
My internal monologue, if negativity creeps in, and of course it creeps in. I'm dancing with the ghosts of my ancestors, just the way you and everybody else are dancing with the ghosts of the ancestors. Evolution worked very slowly over generations, over long periods of time. So, we always have this set of genes that were good for survival, and procreation of our ancestors, but not necessarily now.
We still have in the gene pool all these like, irrational thoughts. So, another way to look at it is, just observe it. Kind of more of a Buddhist way. Just observe it. Like one of the ways... The most simplest Buddhist meditation is just observe your breath.
Just observe your breath. I mean, how easy can that be? All you got to do is close your...
We just did this before we started recording. Where you're like, "Let's go through a miniature meditation before we begin." And like, I don't ever do that. And I should probably should start doing it. I just kind of wake up and go, and just try to attack things that I feel like... And don't get me wrong, like I absolutely am obsessed with what I do.
I love my work. I work on it seven days a week. But I wanted to be the best in the world at it, and that's where it's like, "Oh, you just see these deficiencies."
So, that sounds to me like perfectionism. So, I suffered a lot from perfectionism when I was younger.
Not only did I want to be perfect, I wanted everybody else to be perfect. Not only did I want myself and others to be perfect, I wanted the universe to be perfect. I wanted everything just to go swimmingly well at my beck and call, and command. Well, turns out, that's not reality.
... constituents are perfect.
There's something that you said in your book. It's actually in this section that I was writing down. You're like, "I'm not surprised when things don't go perfectly. That's the nature of the universe. The big problems can be where the best opportunities lie." And so, obviously, you know, like any time I read something, it's not that I'm reading it. I think about how it relates to every single thing else I've experienced, and all the other books I read. And I remember I got to have dinner with Charlie Munger. I spent three hours with him, you know, six months, eight months before he died. There's like a trend here unfortunately, where it's like-
Remember? You're like, "I don't know if I'm going to have dinner with you." But one of the things I loved, it was the top note I left myself. Because as soon as I left there, I just wrote down, like, what I learned. And it said that, "Charlie has an almost complete indifference to problems. Troubles from time to time should be expected. This is inescapable, so why let it bother you?" And it's like one of the things I most admired about him. He's just like, "Yeah, it's part of life. What's wrong with you?" Like, you know, he had 10 decades of life experience. He was way further down the line, and obviously way wiser than I was.
I have two comments on that. One is, when you go back to the Big Bang.
The current construct model of how the universe was created, it was actually created out of imperfection. There was like a slight imbalance between matter and anti-matter. Just a slight imbalance. A lot of debate of what caused that. As a result of that, everything came out of that.
Had there been perfection at the beginning of the universe, the Big Bang would not have happened. So, we are imperfection. We are the children of imperfection. Imperfection is good. Imperfection is not bad. Expecting perfection will cause you stress, and strain, and won't really work.
When you were in your 20s, though, you said, "Hey, I wanted to be perfect. Not only do I want to be perfect, I want everybody around me to be perfect."
"I wanted the universe to be perfect." Like, how long did it take for you to learn what you just-
... explained? So, when I stepped down from United Rentals as CEO, I still stayed as chairman. When I stepped down as CEO of United Rentals, had done it for about 10 years, and I wanted to do my next big thing. I wanted to do another startup from beginning. I was running a big company. I wanted to start it from scratch. And there was a period of a couple years where I was trying to figure out what I was going to do, and I didn't find it. And then the great financial crisis came, and I was kind of lost. I was kind of... It was probably the only time in my life that I was depressed. I'm just not depressed. But that period of time, I was actually clinically depressed. I took the Beck Depression Inventory, and I came out, yep, depressed.
So, I found a amazing cognitive therapist, and I went to the guy twice a week, hour and a half a shot, for two years. It was fantastic. One of the best things I've ever done in my life, because what we did was, in an environment that was very safe, and confidential, and trusting, with someone who was a professional at psychology, I was able to, first of all, identify, and then notice more fully my automatic thoughts, the negative thoughts.
And irrational thoughts, unconstructive thoughts. And then, first validate them, then dispute them. First join, and then lead to a more constructive way of looking at things. So, that cognitive therapy approach of identifying the thoughts, and then dealing with them, really was the turning point in my life on this perfection thing. Because after a few sessions, he said, "You know, I kind of know what's going on here now. I've gotten your measure. You want to hear it?" I said, "Yeah, I want to hear it." And he said, "You're suffering from perfectionism." Like, "You want everything to be perfect, and it ain't." So, we need to get over that. We need to reduce these demands, these musts, these shoulds, these commands that-
... either I, or you, or the rest of the world is perfect to, you know, preferences. Where I would like me to be better, I would like you to be better, I'd like things to go better, but they don't have to. I can still be happy, and frankly, they're not going to all the time. So, I need to accept that. Need to radically accept that. I need to be in reality, not put these... You know, you mentioned Bezos. Bezos says a lot of cool stuff. But one of the things he says often is, "Don't fight with reality, because reality always wins."
So, the reality of this is nothing's perfect. Like, literally nothing is perfect, that I've found yet.
He has another line that I think is related. It's similar to the idea in your book, where he's just like, "If you don't want to be criticized, and you don't want stress, then you don't do anything."
It's just like, then just sit in a room and watch Netflix, and order a DoorDash or something, but like you're not going to do anything that you can be proud of.
So, that's another irrational thought you see people have. And I used to have this a lot, but I don't have it now, because I went through that therapy thing, and it turned a switch on in my brain, is a demand that everybody likes me, and everybody respects me, and everybody says great stuff about me, and I get good press, and I get good reviews, and the stock just goes up every single day. Well, that's not going to happen. That's called perfectionism. That's not reality. So, you just kind of modify that to, "Well, sure, like everybody else, I'd like people to say good stuff about me, rather than bad stuff about me, but I don't really care. If people say bad stuff about me, then, okay, maybe there's some truth in it. Maybe there's some good thing I can learn from that. Maybe they're just off, they don't know me, and they're just kind of imposing their distortions on me." But does that really change who I am? It really doesn't. If somebody is saying something bad about me, does that really matter? It doesn't matter really at court. And it, again, goes back to context. In the larger context of things, most problems really don't matter. They just don't matter. Maybe at the time they seem like one, and maybe we're kicking in, magnifying those problems, and making them into big catastrophes, and dramas, but most problems really aren't a bad thing.
I always say opportunity is a strange beast. It frequently appears after a loss.
There's always a play. No matter what happens... This goes back to the Jesselson conversation. No matter what gets thrown in your face, at the moment, it may seem ugly and bad. There's a play. There's a way to utilize that. There's a way to use that. There's a way to embrace that, and turn that into success. Anything can be turned into positivity and success, even if it starts in a bad place.
Something came to mind when you were talking, that's also unusual, because most of the people that, like, I read biographies about, they go through several different companies until they find, like, their life's work. But normally, they're working on something for, like, a very long time. Why do you keep starting so many companies? Like, what is going on?
That's my thing. Everybody's got their thing.
So, you're a great podcaster.
You have a talent. Your superpower is you can consume large amount of information and then distill it down to like, boom, here are the most important takeaways from that. It's really brilliant. That's your thing.
That's why you're doing it, right?
Because that's what you're good at.
You're not playing professional baseball or, you know, acting or-
You're doing what you're good at.
This is what I'm good at. I'm good at figuring out what's the right industry to consolidate.
And secondly, I have a toolkit, and it's the same old toolkit.
You told me this last time. Can you explain this? I love the way you described this toolkit of how you approach building your businesses.
So, first, I find the right industry. I find something that's large. I find something that's growing. I find something where it's fragmented. I find something where we can buy things at reasonable prices. I find things where technology could be used. It's not very tech-forward industry. I find stuff that AI and automation are not going to disrupt anytime in the near future. So, I find industries that have certain characteristics to it, whether it was garbage, whether it was construction, whether it was transportation, or logistics, and now distribution. They all have the same characteristics, same traits. So, that's point number one. Point number two is I then put together an amazing team. I put together a team of people who are generally smarter than me, and who are more talented than me in what they do. So, I have a great CHRO who knows everything there is to know about HR, and compensation, and talent, recruitment, and so forth. I have great M&A team, who really know how to do deals, and get deals done, rather than turn them into dramas. I have great finance accounting people who understand everything there is to know A to Z about running a fast-growing company, keeping the books clean. So, et cetera. And I get the team together, then I get the compensation sorted out. So, I make everybody my partner on the senior team. And I give people tons of equity, but there's a catch. You can invest, but you can't sell it for five years.
And most of it invests in the last two years. So, everyone is committed, going back to long-term relationships. Sure, people come and go for whatever personal reasons, or people burnout, or whatever. But generally speaking, most of the team stays for a while. And you work together as a team. And then I have certain rules of how we're going to interact with each other in a very respectful way, but in a way that encourages looking at things from different angles. So, we disagree, and we argue. Argue is too strong of a word. We present different ways of looking at a situation that partly overlap, and partly conflict. And then we, in a very scientific way, figure out, well, let's risk-adjust these things, and figure out what's right. It's a scientific experiment, an ongoing science experiment, like all day long of trial and error, and experimentation, and A/B experimenting. And so, that culture that we create gives us a power. It gives us a power to attack the industry in a way, without all the noise that a management team has. We're a very coherent team, like a superorganism, like a brain, like a very organized group. And then I have, between all those people, we have experience at our main job, which is to buy companies at reasonable prices, where there's a difference between what we can raise capital at, and what we can deploy it at. And then, we have a skillset to be able to improve the companies that we buy. These are the two main things we're good at, is buying companies in a disciplined way. Price is too high, we don't do it. Price is reasonable, doesn't have to be cheap. We're not trying to steal companies. If the price is reasonable, we go for it with gusto. And secondly, the other talent that the team collectively has is we know how to improve the businesses. We know how to improve the pricing, improve the procurement, the HR element, the compensation systems, the technology, the whole tech stack, just everything from A to Z. We're just good at transformation. We're good at taking a company that is making a billion dollars of EBITDA
... and within three to five years, doubling the profit, doubling the EBITDA.
That's the main criteria I look at when I look at a company, is purchase price, and secondly, can we double the profit in three to five years? And most of my main acquisitions have done that. So, Con-way, Norbert Dentressangle, all these different ones. They were great companies, and everyone says, "Oh, they're working really well." Okay. Well, three years later, we doubled the profit.
Because we apply the toolkit. We apply the playbook. And it's the same playbook industry after industry. The playbook gets refined a little bit here and there, but it's the same playbook.
So, when you say, "This is just what I do," to me, you now have figured out who you are as a person, right? I have this weird theory that I can't prove, but I believe. And, you know, there's like this myth of the genius young entrepreneur. And I was like, "Well, I don't know." If you study the history of entrepreneurship pretty intensely, you realize that, like, people do, most of the time, their best work many decades into their career. And so, there's all kinds of reasons. They're like, "Oh, they've had more experience. They're wiser. They have more resources. They have more practice." And I don't dispute that. That is all true. But I have this weird theory that they also know themselves way better. And I think the key to being a great entrepreneur is building a business that's... I used to say building a business that's authentic to you, and then I read Michael Dell's excellent autobiography. And he has a better line. He said he built a business that's natural to him. And there's a great story. I want your opinion on this in one second. But there's a great story where, you know, Michael starts his company when he's 19. He's in his 20s and it's doing fabulously well, but he realized, "Hey, I need some grown up, I need some help here." And so, he gets this guy, I think his name is Lee Walker if I remember correctly, and he's about 20 years older than Michael, already started a bunch of companies, rich, you know, didn't have to work anymore. But he saw an unusual, once in a generation talent in Michael, decides to help him. He lasts like four years. And so, I read the book and then I was about to make the podcast on it, I go and see. I was like, "I wonder whatever happened to this guy." And I found an interview that he did, and he's in his 80s, and he's talking about that time. And he gave me some of the best context to really understand this story. And Michael's story is really a story of you and everybody, and all the people really, you know, very similar people that were studying. And he's just like, "You know, Michael starts this company with $1,000." He says, "I'm going to take on IBM from my dorm room." IBM is the most valuable company in the world at the time, which I didn't know. It was the first company to hit $100 billion market cap, which is nuts. And, you know, just the audacity to have that. And he's like, "And the first few years, we're going against this behemoth. And I lasted four years. I started losing my hair. My back hurts. I can't sleep. I'm unhealthy." And he goes, "But Michael was energized by it. He built a business that was natural to him."
"Because this is what I want to do. I'm not losing my hair. I'm not, you know, depressed. My back's not hurting. I can't sleep. I'm like waking up every day just getting after it." So, is that the way you feel about just, like, what you're doing? And it may seem weird, because it is... in not a pejorative way. It's not weird in a negative way. I don't know another person that started eight separate billion-dollar companies. So, it's almost like you can't help yourself.
I mean, I know how to do that.
So, it's just natural to you. This is just like...
Yeah. I mean, I've done it many times before. And I've made every mistake in the book over the decades. And I've learned from those mistakes. And I've refined it and refined it, but I have a winning formula. I know how to execute on this. And the team I have knows how to execute on it. I don't want to underestimate the team. So, one of the things about being the CEO, and the founder, is you get all the credit. But like, there's a lot of people on the team who are doing these things and accomplishing these things.
Yeah. You have a great line in your book, which I see over and over again. You said, "The CEO's most important job is recruiting superlative people."
So, my question to you though, is what would it take to get you to stop?
Gee, I don't know. Because I don't see that in my near future.
I just started the company in the last few months.
This is what I... No, but in general, like, so this is what I loved about, you know, most of the people I admire. It's like, I can still remember this. You know, I put it into the maxim. It's like, "If you love what you do, your exit strategy is death," right? It's like you should be working on something... So like, you know, Sam Zell told me, he's like, "I'm going to be doing deals until I die." Well, he was just doing deals until he died. Munger, same thing. Like, I met him right after the Silicon Valley Bank collapse.
It was like [unintelligible]. He was like a kid in a candy shop. He just thought this was like the... He didn't want people to get hurt, obviously. But he's just like, "You know how many financial panics that I've seen in my lifetime? Like, of course, this is like nothing new." So I remember I was actually having dinner. I remember where it was. I was at Harry's Pizzeria in Miami, in the Design District. And, you know, I was supposed to be paying attention to my wife on our date. And I was thinking about the podcast and all the s*** I'm reading. And I go and, like, take a bite into a piece of pizza. And I was like, "People used to say, 'If you love what you do, you'd do it for free.'" And I go, "No. There's a different level. If you loved what you do, they couldn't pay you to stop."
And I was like, "How much money could you have gone to Steve Jobs and be like, 'Hey, how much would it take for you to not work in Apple?'" That's not why he's doing it. That's not why they're doing it. And Enzo Ferrari, Estée Lauder, Edwin Land, Coco Chanel, all these other people, like, they just can't... Michele Ferrero, the Michelin brothers. Like, there's this story over and over again. And I get the same sense to you. It's just like, if I said, "Hey, what price I'm going to pay you, and you can't do any work. You have to stay home. You can't work." It's just like, there's no price.
Everyone you just named, all those successful people, they were all-in. They were 100% in. They weren't like partly in, and partly aren't. They're in. They're 100% in, and completely focused, and single-mindedly concentrated on executing the plan. And that's important, too. And you want to have people on your team who share that passion, that commitment.
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That leads me to another great one of your... I don't even think you think it's a maxim, but it's how you differentiate between A, B, and C players, where you're like... I'm just going to summarize this, and jump in whenever you want. But, you envision, you do another thought experiment.
Of, okay, do you want to see if you have the absolute best people on your team? Just visualize that they're coming into your office and they're saying, "Brad, I quit."
So, then what happens next in this scenario?
So I'm always interacting with my CHRO-
- and going over talent and making sure everybody's happy and motivated and-
How much percentage of your...
A lot. I spend most of my time on people, and talent issues.
Well, no, not the most, but the most... If I did a pie chart of, like, how I divide up my time, the largest percent is on people issues.
There's a funny story about this, and then I don't want to interrupt, but I do. This is inside of me, and it just has to come out, all these stories, because I find them fascinating. So, there's two MBA students in Stanford in the late '90s, and in '97, they interview 16 technology company founders, since they're in Silicon Valley at the time, you know, and they publish this book called "In the Company of Giants." And everybody's in there, you know, Bill Gates, and Steve Jobs, and everybody else. And they're telling Steve, they're like, "Well, you know, you're the founder. Of course you don't have time to, you know, recruit people." And Steve's like, "What?" Like, "No, it's the most..." It sounds exactly like what you said in your book. "It's the most important." And a great way to demonstrate the point. He goes, "Let's say you're starting a company, right? You're in Silicon Valley. Like, this is what you're doing over here. You pick your co-founder. You should think long and hard about that. Your co-founder is 50% of the company at that point."
And then he goes, "But it still goes out. Now you have to pick the 10th person. That person's 10% of your company, and you're saying you don't have time?" Like, "What else are you doing?"
It's all about the people. It's all about the people. You know, systems, and tech, and budgets, and customers, and sales, all these things are really, really important, but you can't achieve excellence in those things without fantastic people, without fantastic leaders. And I spend a lot of time especially on the top few dozen people. I want to make sure everybody's in it to win it. Everybody is fully, fully engaged. And I do a mental exercise where I picture the person coming into my office and saying, "Brad, I quit." Like, "This is not a conversation about you making me a counteroffer. I'm done. I've already moved, and it's over with. This is about a conversation about how do we make an orderly transition, because I respect you, and I don't want to leave you high and dry." And then I try to feel, and visualize, what would be my reaction if that person came in to me and quit? If my reaction to that is, "Yes!" I don't want to smile. I don't want to act like I'm happy about this, but, you know, I didn't have... You know, nobody likes firing people. And I just didn't, you know...
I just kept postponing firing that person when I shouldn't have, but I did, and this is great. I don't have to pay severance. And, you know, that solves that problem. No problem at all. We'll replace them. That's a C player. That's someone, really, you should get the courage up to get off the team right away. And then, on the second category, if my reaction to it is, 'You know, it kind of sucks. You know, I would have preferred that person stayed, but it's not the end of the world. We'll hire a headhunter. We'll get someone as good, maybe someone even better, and, you know, things will work out.' That's a B player. But if when I visualize that person quitting, my reaction to that is pure terror, and absolute panic, and like somebody took a baseball bat and just whacked me in the stomach, and then punched me in the face, I'm going, 'Oh my God!' Like, 'I'm never going to find someone as good as her.' Or, 'I'm never going to have someone as talented as that person. I'm never going to have someone who brings to the table their particular superpower.' And I can't even hear what they're saying anymore, because I'm just like having this internal panic dialogue going on. That's what you call an A player. So, I want all A players around me. I want people whose relationship with me I value so much that if it was terminated, I would be lost. And I want them to feel the same way. I want to have mutual relationships. I want people who love being in a relationship with the team, with the company, and that we all are in it together to go conquer the world.
I think I named it... It's been two years since I wrote the book. But I think I had a chapter that said, 'How to Kill the Competition Instead of Killing Each Other.' And, you know, it's kind of funny, but it's a serious title, is you don't want to have a dysfunctional management team. One of the most important things that has allowed us to create tens and tens of billions of dollars of value is the management team's coherent. We have the right people on the management team, and we have the rules of the road of how we're going to deal with each other in a respectful way, that still encourages differences of opinion.
First of all, I love the way you described. Because everybody says, 'Oh yeah, hire A players.' And I'm like, it's really hard to differentiate, like, what does that actually mean? And I think this thought experiment is perfect. It's like, 'We are f***** if this person leaves.' That's an A player. That's a way to think about this. But this also goes down to your gift, and why I think I've learned so much from you. One, partially, it's like your ability to have very clear thinking, and then put it in a memorable way. So, you were just talking about, like, the relationships that you have with the people you work for. You have a line in the book where you're like, 'An organization is like a party. You only want to invite people who bring the vibe up. My team and I spend a lot of time together, so it's a big deal that we like one another.'
Yeah. Well, there's another- Who said that? That was a good one. Bezos has a line in, I think, his shareholder letters, just like, 'Life is too short to work with people you don't admire.' Like, it's the same situation. It's like, you're in charge. You get to choose. Again, this goes back to the gift of being a CEO, of being an entrepreneur, is like, it's very rare that you get to literally choose who has access to you, who's around you. And I love this idea. It's like, hey, the organization is just like a party. You only want people who bring up the vibe.
David, it's all about the people. It's all about the people, because the people then create all the different processes, and work streams, and transformations, and everything.
This is very fascinating, because like, it's obviously... You know, business is people, right? Not only just like the people that are building a product, but, like, all of business is. The best definition of business I ever heard actually came from Richard Branson. He says, 'All business is, is an idea that makes somebody else's life better.' Right? And, like, that's why there's always more opportunity, because there's infinite ways. We think technology's going to, like... It changes things, but then it just usually opens up other ways to make other people's lives better. So, just focus on, like, if you're looking for an opportunity, how can I just serve other people? Another line that's very related to this is Henry Ford, where he says, 'Money comes naturally as a result of service.' Like, I think those two ideas go together. The reason I was thinking about this, though, the best way I've heard described what you were just saying, it's all about people, work with the best people you possibly can, the A players. We're going to talk about... You have this great line about, 'There's no substitute for brains.' But before that, it's like, the way that I've heard this described best, in my opinion, is from Ed Catmull, the founder of Pixar, right? He would go around and give all these talks, and he was actually, like, shocked that he would ask the audience, 'What's more important, people or ideas?' He says every single time, people got it wrong. They said it was the ideas. And he's like, 'No, it's the people.' And so, he has this great line where he says like, 'Listen, if you give a mediocre idea, right, to a brilliant team, they're either going to fix it, or they'll throw it out and come up with something better, something new. But if you give a great idea to a mediocre team, they're going to screw it up.' So, obviously, because ideas come from people, so it's the people.
That's exactly what I'm trying to say. What he said.
He says it in just a great way. But you have a very, like, explicit piece of advice in your book that I think is interesting, where you're like, 'There's no substitute for brains. Screening for superior intelligence eliminates 90% of all candidates. So, it's the first thing I look at. There's no substitute for smarts. The CEO trait most closely correlated with organizational success is a high IQ. Double down on hiring the brightest.'
Yeah. Well, you want smart people. And I particularly want people who are smarter than me. I want people who uplift me, who teach me. I don't want to be-
Do you want them specialized? Because you mentioned earlier, you said you want them smarter than you, but also better at their particular...
The vast majority of them are specialized. They're a finance person, they're an investor person, they're a strategic person. They have something that they... Tech person, they bring to the table that they're an inch wide and a mile deep in. But you also want them to have certain human qualities that transcend what their specialty is. And those are as, or more important, than the technical skills.
Well, you want... So, you mentioned smart. You want people who are honest. You want people who are hardworking. You want people who are collegial. You want people who are really in it, like on the work-life balance thing, boom, it's work. And their life is a lot of their work. And, you know, that they enjoy that. I don't have to hold them like a school teacher with a stick over their head, getting them to work late, or come in early, or work on weekends. Like, they want to do that. Like, they enjoy doing that. Their job, their career, their success, the collective success of the company is an important part of their gestalt. It's a really important part of their being and their purpose.
Was there ever a time... I don't mean to keep interrupting you, but this is fascinating, and it's almost selfish to have this conversation, because like, I get to ask you questions, and learn from you. Was there ever a time where work wasn't... Where you were more balanced?
When was the last time you were balanced?
So, you started your first company at 23.
I did. And I've been completely imbalanced since then. I've been working seven days a week. Very few vacations.
Yeah, because you- You guys scaled in, like, four years to, I don't know, like, a couple billion dollars. It was just, like, an insane story in the book.
