XPO Chairman Jacobs Shares Career Highlights, Advice | Bloomberg Businessweek

Thank you, and great to be here.

That's a lot of questions. It always is. You look at any year for the last 50 years, there's always stuff going on.

Yeah, we have a lot being thrown at us. And every year it seems like, well, this year might be a little bit different, we're this close to nuclear war. And we're always this close to nuclear war. That's not a new thing. It doesn't change you in terms of business investment, what you want to do. You just kind of move ahead. Yes, I try to find business plans that are not dependent on calling the macro correctly. As long as I don't get in at the rock bottom of the cycle or the rock top of the cycle, I'm okay.

I think we've started to see the economy slowing down for sure here and in Europe. I think it's going to continue to slow down, and depending on what the Fed does, it could start picking up. But it depends on what the Fed does.

The Fed is more important than what the Houthis are doing. The Houthis are driving up shipping costs, which will be passed along to consumers in the end. But the Fed is the overall stimulator or slower-downer of the economy, so that's more important.

I think the Fed should keep looking at the data and do what the data says. Ignore everything else and go by the data. If inflation cools down more, then it may make sense to start lowering rates. If inflation continues to rear its ugly head, then it's not the time to be lowering rates.

It's more slowing down and having slowed down than inflation coming back. So I look at wages a lot since it's a big part of all of our businesses. Wage growth has slowed. Input costs are still going up but they've slowed. Rents have gone up but they're going up slower. So it does feel it's slowed down quite a bit.

Well, first of all, we couldn't even find workers a couple years ago, right? But you always want to hold on to your talent. In the book, I talk all about that. Your number one asset is your people, and you've got to make sure you have a plus. But you know what? When you run a publicly held company and you're worried about any kind of slowdown, you've got to start to look at your costs again. And workers certainly play a part. You should be looking at your costs in every part of the cycle, managing your costs intelligently.

Absolutely. I'm about to start a new company.

North America and Europe. So it's exactly what I said I was going to do when I saw you last time. We've agreed to put a billion dollar pipe in equity investment into a very small cap company. We're going to spend that company back to its legacy owners, give them a $2.5 million dividend, give them a small, less than half percent of equity ownership in our new company QXO, and we'll have a pure play called QXO which will consolidate the $800 billion building products distribution industry. So where are we in the process? We're a couple months or so away from finishing that, depending on the various approvals we have to get from the SEC and so forth. And then we'll be off to the races.

Oh yeah, we're talking to lots of companies. We have a lot of discussions going on. Privately held, smaller players, mid. For right now, because our budget is only a billion dollars, they're all private.

I'm going to follow the same exact playbook that I've done for the last few decades. I'm going to buy companies that are good companies but can be better. I'm going to buy companies where, when you put them together, you find synergies, particularly in procurement, which is the biggest line item in building products distribution. I'm going to apply technology to be the most tech-forward building products distributor in the world. And I'm going to do all that together and get economies of scale as we get bigger and bigger. I've put the numbers out there. I expect to be at at least a billion dollar revenue run rate after year one, at least a $5 billion revenue run rate after year three.

Absolutely. And most importantly, tens of billions of dollars of revenue over the decade.

Long term, there are three drivers. In residential construction, houses are old. The average age of a house is over 40 years, which is old. So there's repair and remodeling going on, and there's more construction that will be driven by that. On the non-residential construction side, they're even older. Non-residential buildings are over 50 years old on average. On the infrastructure side, there's about $2 trillion of infrastructure spend that needs to be done over the next 20 years. So there's a lot of activity that has to happen here.

I love the job. I've been a CEO since I was 23 years old. It's just a fantastic job. You get to be very creative, you get to think big, you get to dream these large business plans, you get to recruit people you love to work with, you design compensation programs so everybody's in it to win it, and you come to work every day and just knock down the list and make it happen. And you create and share huge amounts of money, not just for the employees but for the shareholders. Our companies over the years have really excelled at shareholder value creation. If you looked at XPO Logistics, our initial investors made 32 times their money. If you look at United Rentals, we started it at $33.50 a share, today it's over $550 a share. So a lot of value has been created for a lot of people, and I just love that. I take a lot of pride in that.

I can do this business plan regardless of what happens in the economy. If it's strong, if it's weak, if it's flat, I can still do this business. Why? Because there are 7,000 distributors to buy in the United States and North America including Canada, and there are 13,000 to buy in Europe. A lot of them are owned by private equity, and private equity will have a choice. They can dribble out over a number of years through an IPO and a secondary at a discount, or they can sell to me on a win-win deal where I pay them a premium.

First thing I think about is how to get my head in a good place before I start getting into business. How do I center myself? I do a series of meditation exercises to expand my mind and to think about very large areas of space, and then I try to shrink it into very small, like down into atoms. I have a whole spiritual exercise I do in the morning. I like to get in the zone.

A little more now. I was doing it then, though.

Yeah, that's interesting.

I started Transcendental Meditation when I was a teenager in high school. I did that for decades, for a long time. Then I started experimenting with other forms of meditation. I studied Milton Ericksonian neuro-hypnotherapy, and I studied psychotherapy, different mindfulness techniques, cognitive therapy techniques. I kind of blended them all together, picked and chose, and made my own thing. Why? Because I think, as I say in the very first chapter, you need to rearrange your brain in order to accomplish big stuff.

I saw a poster of Maharishi Mahesh Yogi up on a screen. It said something like "Life is bliss." I said, "That's interesting. I think I'll go to the lecture."

I do yoga, yeah.

I don't think anybody can make a few billion dollars because mathematically, there are only a few people who do that. But I think anybody can rearrange their brain to think in a different way that's big, confident, strong, very off the beaten track, and accomplish great stuff. That doesn't have to be making money. It can be all kinds of stuff. It can be just being a great mom or dad, a great artist, a great musician, a great anything. But yes, I think what I've shared in the book are the techniques that worked for me in order to attract great people and to organize those people in a way to accomplish big things. I think that can be taught.

You need to think in your mind very clearly who you're trying to attract. What are the traits, qualities, and characteristics that you're looking for? I know what those are very clearly for me. I look for people who are super smart. They've got to be smarter than me. Why do I want to depend on people less smart than me? I want to depend on people smarter than me. So I always try to get people who are hopefully significantly smarter than I am. They may not have this... I bring certain business talents and commercial sense to the table, leadership talents. But in terms of raw IQ, I like smart people. I really enjoy that. I want people with grit. I want people who are hungry, who want to work really hard, who actually like working, who find it enjoyable. And then I want people who are honest as the day is long. I definitely don't want people where I'm trying to analyze what they really mean. I want people who are collegial, collaborative, team players, who play well in the sandbox with each other so that you can create, if you will, a superorganism. I talk about that in the book. You want to create a culture that's a superorganism, not just a bunch of people, but a highly integrated group of people.

Oh, lots of people.

I admire Jeff Bezos. I admire Elon Musk, even though he has certain traits I don't admire, but I do admire his ability to think huge.

I've always used technology to my advantage. All my companies have been tech-forward right from the very first one. When I was in the oil business, way before the internet, our main edge was to have a rudimentary technology system to collect information globally about buyers and sellers of crude oil and refined products. When I was in the waste management business, we were the first to pioneer very advanced route optimization software so the trucks weren't just randomly driving around; we efficiently optimized the routes. When I was in the construction equipment rental business, one of the first acquisitions we made was a company called Wind Systems, which was a way to record where all the equipment is. We had billions of dollars of equipment, and we knew where everything was at any one point in time, predicted and monitored its utilization so we could replenish the fleet where needed, where there was demand, and know where to lower or raise prices depending on demand. XPO was all about technology. One of the first few people I hired was Mario Harik, now the CEO of XPO, as my CIO, because the vision was to automate truck brokerage. Fast forward to today, we've spun that off as RXO. Drew Wilkerson runs it, and 98% of their orders are either sourced or covered electronically. That was 0% when we started the company. So yeah, I've always embraced technology. I think it's really important to do that.

Over the last year, I've looked at dozens of industries and hundreds of companies, and I had a checklist of everything I wanted: size, growth, fragmentation. One of them was bigger is better. That means there are economies of scale. In the case of QXO, the big economy of scale is purchasing power, procurement, because if you buy lots of materials, you're going to get a cheaper price.

Thank you.