The Business Lessons That Made Him Billions

KEYPOINTS

• 01

  Get the main trend right and you can mess up a lot else; get it wrong and you’re swimming upstream.

  Jacobs credits his mentor Lou Glickstein with this rule and deliberately spends time on context: where a situation came from, its present conditions, the ways it could go and the catalyst for each. Today that trend is AI—he endorses Ray Kurzweil’s singularity thesis that humans will merge with their tools, and hopes machines eventually gain empathy and theory of mind.

• 02

  Rational thinking is trainable, and he treats psychology as business capital.

  He fell into his only depression in the mid-2000s after stepping down as CEO of United Rentals—he’d been a CEO since 23. That led to two years of therapy three hours a week and study with Albert Ellis (REBT) and Aaron ‘Tim’ Beck. He now catalogues his automatic thoughts, biases and cognitive distortions and applies CBT, DBT and positive-psychology tools to stay calm amid billion-dollar market-cap swings.

• 03

  Borrow therapists’ technique: non-judgmental concentration, then ‘join then lead.’

  Therapists create safety before asking hard questions, give 100% attention and validate before disputing. In his ‘electric meetings’ all devices are off, one person speaks at a time, and everyone concentrates on them. With angry customers he first pictures how the failure hurt their supply chain or job, shows he has heard both the words and the feeling, then gives an action plan.

• 04

  Business improvisation comes from jazz: there is no wrong note, only a new key.

  Classically trained, he studied with Milford Graves and Bill Dixon at Bennington and still identifies as a musician first. Rigid multi-year plans fail because markets change; opportunities you never planned for appear, and rejecting them as ‘not our thing’ is a costly mistake. Math supplies the other half: reducing complexity to a simple formula and seeing relationships.

• 05

  A messy org chart is a money-making opportunity.

  Org charts should be ‘pretty’—simple, geometric, light at the non-revenue top and heavy where people touch customers. If you find something messed up and easy to un-mess, ‘boo-ya, there’s your money.’ Shane adds that bad ideas hide in complexity but not simplicity; Jacobs agrees that clear KPIs, metrics and pay tied to goals leave nowhere to hide.

• 06

  Take a ‘Zen Buddhist’ approach to debt: not too much, not too little.

  Zero debt is suboptimal because leverage shrinks share count and boosts per-share returns. But with geopolitical risk in the Middle East, Ukraine and Taiwan, heavy leverage is dangerous—companies go bankrupt only from debt they can’t repay, as COVID showed. QXO targets one to two turns of EBITDA; he’ll briefly go to four times for a deal, then delever via asset sales and free cash flow.

• 07

  Doing what everyone does yields average returns by definition.

  His companies beat their indexes not by 100–200 basis points but sometimes several-fold, returning 32x and in one case 150x invested equity—five times in a row, which he says rules out luck. He admires contrarian holders like Orbis who buy heavily when a stock is temporarily dislocated.

• 08

  M&A is the most reliable risk-adjusted value creator—if you pick the industry first.

  His teams did ~500 acquisitions after reviewing thousands. The checklist: big, fragmented, scale advantages, tech-backward, culturally compatible. He chose building-products distribution: ~$800B across North America and Western Europe, ~20,000 distributors, only six or seven tech-forward, so 6% share means a $50B company. The two biggest value levers are the spread between his cost of capital and acquisition multiples, and how much he improves what he buys.

• 09

  Buying is easy; integration is the job—standardise everything from day one.

  Anyone can wire money. He integrates from signing: one ERP to close books promptly, uniform dashboards to benchmark every location, one HR system, one CRM, one internal social network—one company and culture. He criticises private-equity roll-ups that bolt together $5–20M EBITDA firms for a bigger multiple but leave a mess. Keep great talent; exit weak players ‘gracefully and generously.’

• 10

  Pay people heavily, but only when shareholders win.

  He wants employees openly motivated by money. Equity vests on total shareholder return versus the S&P 500: nothing below roughly the 55th percentile, partial at 65th–75th, double at 85th–95th. He borrowed old Goldman’s practice of paying partly on how many colleagues say you helped them. Asked to choose between recognition and money: ‘I’m going with the money.’

• 11

  FP&A is the omnipresent scorekeeper of capital and time.

  A manager manages only two things: return on capital and return on time. FP&A attaches probabilities to initiatives (90% in the bag versus a 10–20% long shot), budgets daily, and flags who sandbags and who habitually over-promises by 3–5%. It reports to the CFO with a dotted line to him so he knows instantly if guidance is at risk.