No. 1 CEO: The Strategies I Used to Build 5 Billion-Dollar Companies (And How You Can Use Them)

so I looked at that org chart and said this is a messed up org chart which is great for making money if you can find something that's messed up and easy to unmess up boyah there's your money there's your opportunity to make a lot of money you've made a few billion dollars what lessons have you learned about money and spending money and living with money that you wish you knew sooner you you throw me off a little bit with the question cuz when you look at the the numbers the real growth has been through m&a

through Acquisitions what's been my secrets Acquisitions here's the gist a lot of people have a rigid business plan that's spelled out for many years and that's it and it's very that doesn't usually work why because life changes markets change economies change and if you're rigid if you're just rigid thinking you're going to have things come your way to make money for shareholders and feel well it's nice it's great but it's really not our thing that's a bad way of thinking you've said you can get a lot of things wrong if you get the big Trend

right what major Trend are you most interested in right now I'm most interested in because it is the trend it is the number one Trend Ray kurtwell who wrote The Singularity is one of your Heroes and you recently met him I'm curious what you took away from that conversation and what it was like well I did recently meet him and it was like meeting Albert Einstein or meeting someone on Michelangelo because when you look at his context his wide context he's looking at the history of the universe going back 13 point something billion years and

how we got here and then looking at those Trends and where are we going he identifies the most important trend of all which is homo sapiens have created technology created tools starting with stone Pebbles and over a couple million years ago and then fire and then settlements and and over the last couple hundred years so much so much more so much more in the last 20 years accelerating accelerating and now with AI it's accelerating even more and where's that going where's that going is the tools that we've created the technology we've created is becoming more

capable than we are at certain of our trades and we're able to Outsource a lot of our activities to our own technology and Ray predicts a singularity where by technology becomes more intelligent more capable than humans and we merge with technology that we use so much technology in our own in our own bodies with wearables and Nanobots so forth that and Ai and Outsourcing our memory and sensory and so forth that that you really can't call it Homo sapiens anymore because the traits characteristics have changed so much that we'll say Homo sapiens has become extin

and there's a there's a new new species and I I think he's probably right what do you think the benefits of that are and what what do you think the drawbacks are well the benefits are we should be able to accomplish a lot more so if you look at us as a planet 8 billion people there's a lot of things we do well but there's a lot of things we don't do well primarily get along with each other and information sharing is not there resource sharing is not there I think with advances in technology we

will be able to distribute resources more intelligently and and and uh more abundantly and have more resources for more people and I think uh medicine will be better and SC science will be better we'll be able to live longer we'll be able to be more in touch with the way we think and to be able to think more constructively because that's one of the places it's an area of improvement for humans is we don't think rationally a lot of times and I think with technology and AI advancements that we will think more rationally so it'll

be non-stop therapy so to speak how do you think rationally when you have all this the information coming at you from all over the world you're emotional you have big swings I mean you've lost billions of and in market cap in a day I don't always think perfectly rationally I'm not a per perfect person I've paid attention to the way I think over the course of my life and I've studied with various people who that's their specialty is analyzing how you think and I did a couple years of therapy for three hours a week for

for a couple years so I I have spent a lot of time reflecting on how I think what my automatic thoughts are what my biases are what my cognitive distortions are and I'm aware of those and I apply various techniques and tools in the toolkit that you learn from cognitive therapy dialectical behavior therapy positive psychology Etc to to think more rationally and more constructively and more accurately and I think that helps me in business quite a bit in business you need to keep your head on your shoulders you need to be calm you need to

be cool you need to be collected you need to be dealing with lots of changing unplanned circumstances and then capitalizing on those and not being over overwhelmed by those not being beat up but be but utilize what comes in capitalize on what comes in to create money to create money for shareholders so I think the the human capital in the in the psychological uh uh sense is very very important so I I I put energy into that you've said you can get a lot of things wrong if you get the big Trend right what major

Trend are you most interested in right now I'm most interested in AI because it is the trend it is the number one Trend whereby our technology software that intelligence will be able to consume so much information much more than we human beings can even with 100 billion brain cells the the power of comp Computing is so much greater and be able to then analyze that and be able to spit things out and be able to eventually I I'm looking forward to the point where computers become emotional where they do have emotion they do have empathy

just like we have mirror neurons in the front of our bra in the prefrontal cortex I'd like to see that Trend FR materialize where computers can feel can have theory of mind can be sitting here with a conversation with Shane parish and and feeling what you're feeling and and feeling happy about what you're feeling happy about and feeling sad about something you're not feeling happy about I'm looking forward to that Trend a lot now saying AI is sort of everybody recognizes AI as being a trend but you've spotted several Trends well before people recognize them

and you were way ahead on the AI curve too as I understand it how do you spot th those Trends before they become mainstream well I do spend a lot of time thinking about Trends I look I spent a lot of time thinking about the wider context of things like okay here's a situation what's the context of that situation what's its origin what's its present conditions and characteristics what are the ways could go and what would be the Catalyst to make it go right or straight or left so I I intentionally think about Trends quite

a bit because in business in the business world you got to get the major Trend right you've got to get the major Trend right and as my main business Mentor make rest in peace lud jerson used to say you can mess up a lot of things but if you get the main Trend right you're gonna make a lot of money and conversely if you don't get the main Trend right you're swimming Upstream you can do a lot of other things right but you you're not going to make a lot of money so I I intentionally

spend time thinking about what's the where does all this fit in and where could it be going what's your research process like I like people and I like picking people's brains and I'm Shameless about asking people their opinions and I like to be a student more than a teacher I find a lot of people make the mistake as they get older or they get more successful they they think they know everything they start teaching all the time I'm sharing through the book I wrote and through podcasts like this and so forth the few little things

that I think have insights that I can give back to but I absolutely view myself as a student of life I'm I don't view myself as as a guru who's figured it all out by a long shot and I think if you keep that that element of profound curiosity of really interesting in being very interested to learn and being involved with the sensory experience be involved in the intellectual experience be involved in analytical capabilities I think you can learn a lot more and you can see trends that otherwise you don't see it you're just in

it and you're living it but you're not seeing the trend you're just kind of going along a lot of people who reach your level of success sort of Outsource a lot of this work to other people and by that I mean um do research on this come back to me give me these points but you seem very Hands-On in the weeds very involved in the detail why is that important to you I do both Shane I do have a team that researches things for me but I also I I like to roll up my sleeves

and get into myself I like to find even like when I do m&a so you know my teams that I've LED have done about 500 Acquisitions I've been involved in those Acquisitions I I I get into the details of what are we buying and to buy those 500 companies we looked at thousands and thousands of other companies that we didn't buy and I and I I love the process I love studying each company figuring out how they get to the point where now there are millions or hundreds of millions or billions of dollars of of

Revenue and they started from scratch and how do they do that it's like a miracle it's fantastic I'm I'm very impressed and excited and enamored with entrepreneurs and companies that have created huge growth and huge value and I want to understand that so I want to get into the detail of it I want to pick their brains I I I see a big value in asking lots of questions people now today you're the one asking questions and I'm answering but normally it's a role reversal normally I'm asking a lot of questions if you go into

a management meeting I'm usually asking lots of questions what have you learned about asking questions that you wish you knew five years ago I take questioning from the therapist so I wrote In the book that the only time in my life that I've been depressed but I was really depressed was in the mid 2000s when I had stepped down from being CEO of this big company United Rentals and now I didn't have anything to do I didn't you I was I was doing some art I was you know studying art and buying art and I

was doing things with my family so forth but I didn't have a business and I learned learned from that that everyone has their own thing that makes them excited me is running businesses i' I've been a CEO since I've been 23 years old and I like being a CEO I really like that job real a lot now I wasn't a CEO and I felt a big gap I felt I felt depressed I was down and had a lot of unconstructive thoughts and inaccurate thoughts and so forth and that Drew me to to meeting a lot

of fantastic psychotherapist and I mean fantastic at the top of their game so there was a psychotherapist in uh New York City called Albert Ellis he died about 101 15 years ago and he had formed a school of therapy called rational emotive behavior therapy rebt but in short it was cognitive therapy it was cognitive behavior therapy he together with another psych Psy psychiatrist actually Aaron Beck whose family and friends called him Tim I got the privilege of meeting him too and spending time with him and his family Tim Beck or Aaron Beck and Albert Ellis

were the co-founders of cognitive therapy and I find that therapists have of all the different professions are the best at asking questions and the best of getting a person to relax getting a person at ease and to open up and what I learned from studying those psychotherapists first is you need before you start badgering someone with questions and inquiring and asking them all these important things sometimes personal things intimate things private things you need to create you need to create an atmosphere you need to create EnV environment that's a safe place that's a Zone where

you're it's okay to be vulnerable it's okay to say what you really feel it's okay to take off your mask and show who you really are warts and all and that's really really important and to do that you need to be listening and and I learned from studying them that the most maybe the most maybe the single most powerful thing you can do in a relationship whether it's personal whether it's professional is to give someone your 100% like you're doing now you're giving me 100% of your attention I can see it you're you're looking at

me you're listening to me you're actually paying attention to what I'm saying and that feels good by the way that's making me put a little pressure on me to perform better give give good answers but you're doing something powerful you're you're giving me your attention you're giving me 100% of your attention and I find with therapists that's that's their their little that's one of their tricks one of their skills one of their techniques is you have your session for 45 minutes or two hours or whatever it is and during that time they're all yours they're

all listening to you and they've got all their attention on you and that has a certain effect on the person speaking and secondly they're not being judgmental so they're not they're going with you now there's they're not they're not disagreeing with you without first finding a way of agreeing with you joining then leading validating then disputing so even when they are changing a way you're thinking and say GE is there a better way to look at that is there another way we can look at that be more constructive before doing that before that disputing before

that changing that transforming they're first joining they're they're showing that they understood you they listen to you they got you they got what you said message received and I find that's really powerful in business whether you're dealing with employees or whether you're dealing with someone whose business you're trying to buy or you're dealing with a vendor or you're dealing with a investor or an upset customer it's a it's very good to do that it's very nourishing and nurturing to give someone 100% of your attention and listen to them non-judgmentally I call it non-judgmental concentration I

I think I made up that phrase maybe I didn't I forgot and I should have attributed to someone else but that's a phrase I use non-judgmental concentration when you're really taking all your Consciousness in giving it to someone and and not judging them but going with them trying to get into their way of thinking their their way of feeling even so not just what are they thinking but how are they feeling so what's the emotion that's underlying that and and I use that I use that quite a bit and you in the book I have

a chapter on how to have an electric meeting how to run an electric meeting which means a meeting that's powerful a me a meeting that everyone goes away exhilarated everyone goes away with lots of things to do that can create a lot of value for the shareholders not just one of these whole home meetings and and an element of that meeting is everyone in the meeting shuts off all their devices and concentrates concentrates non-judgmentally non-judgmental concentration on the one person who's speaking at a time no side conversations no talking over each other one person speaks

at a time but everyone in the room gives them all their attention it's really powerful thing I I like that a lot it's sort of the secret to our podcast in a way which is I want to see the world through your eyes I don't have to agree or disagree that's not my job is I just want to see what you see think what you think smell what you smell and then that way I can truly understand where you're coming from and I think that so often listening is transactional in the sense of I'm waiting

for you to stop so I can just say something or I I have this point you don't understand it so I'm not really listening to you because you're talking about something else now and I think it's one of the biggest reasons we miscommunicate yeah is the work with the the psychotherapist is that where you learned about rearranging our brain and controlling the mind and the importance of sort of thought experiments and mindset or talk to me a little bit about that was one of the places you know for my my main hobby since I was

a teenager has been meditation and various forms of meditation and then from meditation into learned self hypnosis and then and then from there I learned all the mindfulness and the positive psychology and cognitive therapy and so forth so I've mixed and matched a lot of different schools of thought and customized it for me my own personality and my background and my individuality so it's not just one thing I've had a many different influences that have created the way I look at life and the way I I deal with reality and a lot of that's was

my education when I was a kid was I studied music I studied music in math but in music it is a lot about relationships unless you're a solo performer and I was not I like playing a group I like I like a band I like playing with other people interacting with the other folks is part of the magic of making really great music that that's had a big influence on me too I I Define myself I self-identify as a as a musician more than a business person which you might find odd because I've spent a

lot of time building big businesses and running large Enterprises but when I think about myself I think about myself as a Music musician who happens to be doing a lot of business and has done well at business but I I feel like a musician and by that I mean my sense of sound is the dominant sense and I'm I listen very I listen to sounds I listen to my heartbeat listen to my breath I listen to sounds in this room going on right now I I suffer quote unquote and I put air quotes on it

because I don't consider it suffering I consider it fantastic uh ttis where where you have have ringing in your ear from when I was a teenager probably from listening to music too loud and I have it right now I'm hearing very high pitch sounds I love it it keeps it interesting it's my friend it keeps me in tune sometimes they get louder sometimes they get softer now some people have tontis and they and I might be mispronouncing that but you know what I'm talking about yeah ringing ear that and they say oh my God it's

a terrible thing it drives me crazy and they get all upset about the thing I have just the opposite attitude I feel I'm lucky to have that I'm I really am lucky and I I wouldn't know what life would be like without it and that's part of being a musician part of part of being a musician is embracing sounds no matter what they are no matter what they are and that's that's the reality of the moment and you should be in that reality and and go with that what's the relationship if you had to guess

between music math and business a lot for me is a lot so let's start with the business and then that'll show how those other two things relate to it business is about making money for shareholders at at court the the report card for a business is you take money from other people the form of equity the debt you pay back but the equity is deer and people invest Equity into the business and now you have to give them back that money when they sell their shares but much much more money than they gave you so

in my companies we've been fortunate that we've been able to give back 32 times the money in one and another company is over 150 times so really really large large large returns like over the top unusually high returns that wasn't by luck that wasn't um coincidental if it was coincidental it wouldn't happened five times in a row in in large amounts that was because there was a Playbook that because there was a a method to it and that method incorporates many many different elements and I talk about quite a bunch of them in the book

that together give you an ability to create what we call Alpha in the business World which is not just beta which is the Market's going up so you're going together with the market but Alpha which exceeds the beta exceeds the overall uplift that pretty much all boats are lifting by the same tide and part of the part of the ingredients to that formula to make huge huge returns for shareholders involve analytical thought uh careful analysis of numbers is all the math uh making order out of disorder trying to see where how does this all fit

together and seeing the relationships between different things how to reduce things to Simplicity because a great mathematicians reduce very complicated things to a formula for example yeah expressed with just a few handres so that's math that's mathematics that's the beauty of mathematics is seeing the patterns seeing the seeing the the how it makes sense out of this and on the music side it's being able to improvise because my training was originally classical but then I had the fortune to study with um U African-American musicians in in um in Bennington College Milford Graves Bill Dixon and

part of that whole training was to be spontaneous and to be improvising and to be in the moment and there is no wrong note if someone plays a note that's just a new note it's not the wrong note it's like okay we changed keep let's go with that come on let's get going now now we're on so so that ability to go with the flow in music you need to have that in business sh a lot of people have a rigid business plan that's spelled out for many years and that's it and it's very not

non-flexible that doesn't usually work why because life changes markets change economies change people change results change you get opportunities that you hadn't even thought of at the beginning so you need to you need to improvise you need to capitalize on that and to make money from that and if you're rigid if you're just rigid thinking if you're not a musician if you're not a musical business person you're going to lose opportunities you're you're going to have things come your way to make money for shareholders and feel well it's nice it's great but it's really not

our thing well that's a bad way of thinking I I'll share with you one of the best business deals I did in my life was U I bought in 2015 a less than truckload trucking company called Conway it's based in an Arbor Michigan it a few billion dollar deal it was a pivot because this was a hard asset business had tens of thousands of trucks and drivers it was a asset heavy as asset heavy businesses as you're going to get with fixed costs and depreciation amortization was not an asset like brokerage business which is how

I started XO as an asset like non-asset-based business but here was an opportunity to buy something really really cheaply at a small fraction of what it was worth and even a smaller tiny fraction of what I knew we could make it be worth within a few short years this is a company that had a lot of excess overhead the organization chart was not mathematical going back to Symmetry and formula things that relationship makes sense I like to take I love or charts I just love to geek out on or charts and or chart should be

pretty or chart should be simple they should be elegant they should be geometrical they should not be really complicated like you took some spaghetti and threw it like an abstract art on a canvas this was this was this was a bad orc chart this had three things of the three different HRS and three different it organizations and a lot of duplications and it just didn't make any sense a lot of silos and heavy heavy on the non-revenue generating top part of the organization which should be the lightest part of any organization the heaviest part should

be parts of the organization that make money they generate Revenue they get close to the customer they generate sales so I looked at that org chart and said this is a messed up org chart which is great for making money if you can find something that's messed up and easy to unmess up Booyah there's your money there's your opportunity to make a lot of money and that was it it was just like I got so excited about the opportunity to take this company and I saw a way we could significantly grow the profit margin in

the cash flow that I pivoted I pivoted and uh go ahead and did the deal I got beat up real bad by the market they said oh it's a change and I said give me some time and I remember I remember Eli gross who now runs investment banking for Morgan Stanley but at the time he was covering me XP as a Transportation uh banker and he said you know you're going to be in the dogghouse here for a little while because it's a pivot and markets don't like pivots but assuming you're right and I know

you have high conviction and you deliver the numbers over time you're going to be a hero here and everyone's GNA understand what you did and fortunately he and I were right and you look at that deal even though it was a pivot it was a change was an improvisation we bought it for about $3 billion roughly half of it was equities really bought it for a billion and a half dollars plus plus some leverage today it's worth something like $15 billion and that's after having taken out many like five billion dollars of net cash from

it that's after selling off $550 million of the truckload business that's after taking its Warehouse business the supply chain business which was called meno and putting that into our gxo subsidiary that was after taking brokerage business and putting that with our rxo brokerage business so this was the gift they kept giving Conway it's been an amazing amazing amazing ride and the returns it's been a I can't do it in my head but something like a 20 bagger 15 bagger a huge huge return on invested capital and uh had I not been trained as a musician

and a mathematician I don't know that I would have saw it Shane I don't know if I didn't have the mathematical skills I would have been able to see okay this is a mess but we can make it clean I don't know if I would have been able to have the courage to improvise and to change from what the the script was for something that I that I had a high conviction would be very very lucrative for our shareholders and in business the bottom line the report card is how much money did you generate for

your shareholders that's the that's the one it's it's an examination with one question on it it's how much did you make your stockholders how much money did you make for your stockholders how much how much Bliss did you give to your investors in terms of return on on on their Capital they invested in you they trusted you with you're a fiduciary in business you're you're a you have a solemn sacred obligate responsibility where you're taking other people's money debt and Equity particularly the equity and you're the custodian for that you're a custodian of it that

you're temporarily using their their money and your job is to multiply that they have a thousand other places they could put that money they've picked you yeah they've picked you now you've got a big big responsibility and I think the the training of a mathematician the training of a musician and then all these experimentations I've done in in meditation and therapy and so forth I think that's been what largely explains at least as far as I can understand why my companies have created so much Alpha I have so many rabbit holes I want to go

down there I I I think the opportunity hiding in complexity is really interesting because the way that I think about this and correct me if you see it differently is bad ideas can easily hide in complexity but they can't hide in Simplicity once your reaction to that I need to digest it my immediate reaction is yeah I think I get that because when it's when so so go back to that organization chart that I saw at Conway it was just a mess it was just like wow it's all over the place triple dotted line lines

and squiggly lines and you to have different colors and different it's like that's not a real elegant or yeah I I think I see what you're saying in that you could hide inefficiencies as opposed to when it's a clean organization chart everyone's got clear kpis key performance indicators everyone has clear metrics everyone has clear goals and the compensation is tied to that and people are rewarded for achieving those goals yeah it's hard to hide the the other thing that I thought was really interesting is is you brought up the leverage Point how do you think

about leverage and debt and employing it and at what point does it become too risky um and at what point do you think of future opportunity costs you mentioned sort of taking advantage of whatever the world brings but if you take on too much debt at now for an acquisition you're reducing your ability to adapt in the future should interest rates rise should uh a company become available that you really want that's a dream that wasn't available when you took on all the debt how do you think about that a Zen Buddhist approach to debt

not too much not too little I don't think it's an optimal balance sheet if you have no debt because you can improve the returns by shrinking your your your Share account because you have few shares so the same amount of returns is is greater per share to have few returns so I think it's good to have a little bit of Leverage I don't think you should have a lot of Leverage particularly in today's world I don't think you should have a lot of Leverage because the significant geopolitical risk there's geopolitical risk in the Middle East

in Ukraine in Taiwan there's United States politics is very volatile there's a lot of things that could go wrong real quick and and uh a kind of shock to the system would would hurt companies that have too much debt because business would slow down look what happened during covid if you were very highly levered during covid if you had way too much debt and then everything slowed down and your revenues went down you might not have been able to make your interest payments or your debt repayment payments and you could have gone bankrupt companies don't

go bankrupt unless they have too much debt you go bankrupt from not being able to repay your debt so I don't think you should have too much debt in my new company that I'm forming qxo we're going to have I think our Target a healthy Target should be one to two turns of debt by that I mean we take our our our iida which is a measure of our cash flow and and we say let's have one or two turns of that so if our IID ends up being for instance in a period of time

for example bill well let's have one or two billion dollar a debt that's that's a comfortable amount not too much more than that now you could have for short periods of time you could lever up like when I bought Conway we levered up to about four times a little more than four times but we very quickly sold off I mentioned that truckload division for $550 million boom we paid down a whole bunch of debt right from that we generated a lot of free cash flow we took that free cash flow instead of doing more Acquisitions

we paid down debt so you can get your leverage under control by one of two ways by impr improving your profits by increasing your iida or by paying down your actual gross amount of debt and I I think you can manage that and that's uh that's something a good CFO does you've said in the past that you need to be liked and loved and yet you're quite contrarian at times in your approach to things how do you reconcile these two things I think you have to be contrarian I think if you want to make a

lot of money in business you can't just be a conformist to do at what is in in fashion and what everybody else thinks if you're going to do what everyone else thinks you're going to get returns that everyone else gets which is by definition average so my companies have not made average returns my companies have outperformed their indexes not by one or 200 basis points but sometimes by five or six times what what the index was so you have to do you have to think differently and take things that are from a different point of

view so one of my favorite investors in my companies has been orbis uh out in California and in Bermuda and they're contrarians they're willing to make a bet and a significant bet if they have a high conviction about a trend or a company that the Market's not seeing something's out of favor but the market doesn't understand something about maybe a company's not studied enough it's not covered enough maybe management is not good at communicating their story and and it's dislocated the price is dislocated and you can get a real good value by buying those shares

and then being patient playing it out the cycle and make real good returns and I've seen them do that with my companies when something happened in the marketplace that made us uh a cheap stock for for a short period of Time Boom they came in they bought a lot of shares and rode them up and then sold there really really high I think that contrarian value approach to investing to business is is profound I think that's important and I remember I remember when I sold my first company amarx my old broker company we started a

company in 1979 bunch of broke Scrappy kids and we were in the right place at the right time and the Iranian Revolution took place and the Sha got kicked out and Ki came in and they took 400 hostages and and the oil prices went way way way up so it was a great time it was a sad time for the world it's a lot of lot of chaos and pro problems but it was really good to get in the oil business Oil Business was really volatile and some young whipper snappers like us could come in

and be taken seriously by Exxon and mobile and Texico and shell and Gulf and BP and all the customers that became our big customers over time we built that business up over four quick years to about a little under five billion dollars in brokerage volume so that's that was really big rapid rapid growth curve and I had a good team doing that around the world and then I sold it and I wanted to start a new business and I wanted and I was ambitious I was single I wasn't married didn't have kids I could take

risk I could afford to do that and I was remember speaking with my my uncle Howard and uh may he rest in peace he long long passed away uh and of course my uncle Howard was born in the 1920s maybe even late late 190s and grew up in the depression obviously and uh during World during World War II and so forth and it was very tough times so he's very you know he grew up in a time when there's a lot of emphasis towards being very frugal and very risk averse he became an accountant and

worked for the government and I remember talking to him and saying yeah I'm going to I'm going to start another company instead of being an oil broker I'm going to I'm going to go to the I'm going to go to the adult table instead of the Kitty table I'm gonna I'm Gonna Be An Old Trader because I've been I've been making all this money for my clients where they're making three four five dollars a barrel and I'm making five or ten cents a barrel of course I had no risk but they were taking positions said

now I'm gonna I'm gonna put my money where my mouth is I'm GNA put my money into into a bank I'm GNA get a letter of credit I'm GNA actually buy and sale as opposed to just broker you said oh Brad don't do that don't do that you should maybe take a small percent of your savings and put it into your new business but take the vast majority of your money and just tuck it away just in case the next thing doesn't work out and fortunately I overruled my uncle Howard and I to go with

what he said I did exactly the opposite I took a completely contrarian position where I took I think it was like a $100,000 or maybe at most $200,000 and I tuck that away I took all the rest of my money I deposited it with Bank Perry bar and now it's B&P Perry bar back then it was Perry bar and they gave me a billion dollar line of credit and I swung for the fences I I used sometimes up to 990 million dollar that line of credit doing counter trade deals doing pre-finance deals doing barter doing

processing Deals Deals that I they were very complex going back to the math very very complex but organized I knew what I was doing and sometimes people would look at it and say wow there's a lot of elements to what you're doing there you're buying it you're shipping it you're refining it you're hedging it there's a lot a lot of moving Parts there said yeah but I understand each one of these parts and it's just math to me and I actually feel this is low risk this is basically just execution risk and I'm comfortable taking

on the execution risk part of it I don't have Market risk even though it looked like I did but I really didn't and and as a result of not taking his advice and taking contrarian position and Having the courage or the guts the the strength to believe in what I wanted to do that I had a thought and I had the courage to say okay I'm gonna run with this thought I'm gonna go with this I'm gonna bet on myself I'm gonna bet on this idea we built a really nice oil Trading Company and did

very very well for for our Sal and for our shareholders where did that confidence come from well I don't know probably confidence comes at a young age I would think so when you ask a question like that you know normally you start thinking about like what did your mother say what did your father say yeah so if if I had to think about what did my mother say what did my father say that was very uh transformational the first things that would pop my mind are with my dad who I loved and I had a

lot of respect for and he was a great dad and a very honest person and he was a very dedicated and good provider for the family but he was very uh very blunt in what he said he wasn't very diplomatic what he said he just said what what he really thought and I remember one time when we were doing we had been doing erand we're driving home and he was in the driver's seat and I was in the passenger seat and we're at a stoplight and my father turned to me and said and he was

a big guy with a low voice and you know big laugh and and said Bradley and my mom and dad were the only people ever call me Bradley but anyone who knows he calls me Brad he said Bradley it's really good that you have a really good personality because you're surely not going to get anywhere with those looks I laughed real real loud and that moment was a was a deep moment for me because on the one hand I was crushed I was like 13 years old you don't know whether you're good-looking or ugly when

you're 13 years old you just are you just are what you are just don't even think about that but the message I was getting from my father was you know I may not be such a good-look guy okay on the other hand the other message he was giving me was but you have leadership skills you have personality you have Charisma you can you can get people to follow you you can become the president of your class you can become your group leader you can be the the leader of your band and so forth you can

be president of the student council and somehow or another despite your your what he considered bet not pretty appearance not beautiful appearance you're were able to be a leader and accomplish things and get stuff done and get form teams get people so I think in a very a very very paradoxical kind of way my father insulting me on that uh gave me confidence it gave me confidence of okay so maybe I don't have great All-American good looks who cares I've got something else I've got something in terms of being able to to lead so maybe

that that helped give me confidence because that's that's a an experience that I've relived many times over my life my father it's a big deal what your father thinks of you what your mother thinks of you on my mother's side if I had to think what was something that gave me a lot of confidence with my mother okay so so my mom passed away about 10 11 years ago and you know from the book one of the questions I like to ask people because I learned this from Marty Seligman father of positive psychology is what's

a what's the happiest moment of your of your day as opposed to how did your day go and just have a little different angle to that question and we like to be validated we like to feel we're appreciated we're recognized we're understood we're approved of particularly from our parents and myom mom was was on her deathbed and my brother and sister and I were hanging out on her deathbed for good couple weeks and I don't know if you've been around people who have died but you know they they're sort of dying and then suddenly they

wake up and like talking to you like nothing's going no no problem and and then they lie down again start dying again and they go in and out and it's kind of half dying and half not dying so forth and my mother had been lying there and that breathing funny when they when they're dying it's like really strange way of breathing it's not normal way of breathing it's irregular breathing and then then not breathing for periods of time and is a very bizarre experience death and you never we didn't quite know whether this was it

like we're never going to talk again she's done and she suddenly like sat up she looked all three of us in the eye and said I'm really happy each of you turned out so well oh and smiled with a with a mother's love and and just kind of gracefully lied down and continue the dying process but that moment that might be the happiest moment of my life when when my mother my mom the the person whose body I came out of the person who took care of me from Young right from day one even before

day one nine months before day one approved of me and uh validated me and and gave me a stamp of approval and uh that's given me confidence even though that's later in life that gave me a boost that was right at the beginning of starting XO Logistics which of all the different companies I've started that was the one that was the the biggest so far the most most successful so I would say that confidence later in life came from that boost that my mother gave me of just approving of us by the way I've learned

something from that I've learned something from that and I try to learn from all these things how I can apply this to business because I'm a business person I'm trying to make money for shareholders that's my goal in life so all these things that I'm going through life learning about I'm then trying to take them and apply them to business to make money for shareholders so what did I learn from that I learned that the relationship between a parent in this case my mom and me or the other example my dad and me it's a

real important experience has a big influence on the person what the authority figure thinks about the person and when you're in business particularly if you're the CEO you're the authority figure you are kind of like the dad you are kind of like the mom of in my case 150,000 employees and you have to be careful what you say and it's not just it's not just what you say Shane you can't just be you can't fake it and if you don't like someone disagree with somebody like say oh yeah aren't you great because because people are

smart people realize when you're bsing them they just know that they know when it's phony and they know when it's real too so what I've learned is you've got to rearrange your brain going back to the book you got to rearrange range your brain your way of thinking so that you are positive about people because nobody's all good and nobody's all bad no I know at least and if you can train yourself to see the real good in someone and to reflect that to them and to make sure when you're doing the change part the

Improvement part when you're giving them constructive feedback of how they could be doing a better job do that second don't do that first first thing is be like my mom and say you know I'm just so happy how how well you all turned out that that say that first you know when I do performance appraisals when I do performance reviews my direct subordinates my reports my direct reports I always start out with the Positive stuff I don't start right off with okay here's some things that you're messing up that you need to be doing better

it's important to have that part of the conversation too because you need to help the person achieve more and do better but you want to start the conversation with I really want to congratulate you for XYZ I really want to appreciate I I want to express my appreciation because you've done one two and three but it's got to be sincere it can't be phony baloney false flattery that is like you're better not say anything than do than giving phony compliments but you should I try to rearrange my brain so I appreciate a person and say

well why did I hire this person in the first place what did I love in this person what did I admire what did I respect what did I what really got me made them real high in my estimation and then translate that to okay how is that materialized and what they've done and what concrete things have they done not have compliments that are just like General compliments but have very specific concrete compliments of you know you did this this and this Kudos tip of the Hat good good job on that and uh it goes back

to the psychology of validate then dispute join then lead I apply that to business I do that with with customers in in the world of business you know we've had millions millions and millions of customers they're not always happy because we're not no service provider is perfect once in a while you mess stuff up and you have a you have a difficult conversation with a customer maybe they're not trained in rearranging your brain and they go right into the insults and they skip the whole part about hey we really like what you're doing here they

just go right to darn it you've youve been late on this or you've damaging that or your invoicing is messed up or whatever it is and what I learned from all that to answer your question is I've got to empathize with that I've got to first I have to put my mind in their mind I've got to put myself in their shoes I've got to I've got to say I've got to really I got to picture clearly how much what we did messed up their supply chain or cost them money or cost someone a job

or whatever or just C someone annoyance or just made it difficult shoot up their time or and and and made them frustrated or whatever whatever I have to figure out what's upsetting them going back to what are they saying and what are they feeling so I've got to I've got to get in tune with how they're feeling and I've got to show them that I've heard them I've felt them I've both heard understood them what they're said and I've also felt the emotion that they're feeling and and and that I I get that and that

and that I'm I I'm I have a an action plan to solve it so that is a sequence to all that I like your human Centric approach to this there there's a lot of people who sort of take for granted maybe positive feedback and so they offer uh negative only feedback to the people who the who they work with is that a blind spot or what do you think of that I think it's a mistake I think it's a mistake to give only positive feedback or only negative feedback so for example right now I'm in

the middle of performance appraisals and we're each person is writing three things that they're really proud of that they've accomplished in the last few months and that they feel good about and they're it's an achievement it's definitely a A plus not a negative but also three things that you know we could have done better or we will do better going forward things that we didn't quite achieve that we hoped to achieve so it's a balance it's three good things it's three bad things but when I run meetings I like to make it like an Oreo

cookie I like to make the good stuff the negative stuff but then end on the good stuff it's very important how you end a meeting for whatever reason psychologically how you end a meeting makes a big difference and how that person leaves the meeting so ideally even if we've had a tough meeting where we said look these numbers are in the red they're not in the black these numbers are down they're not up and we need to up our game and here's our action plan and here's how we're going to hold ourselves accountable and here's

how we're going to Tinker with compensation in order to reward people for doing better and to not and take hit their bonuses and maybe eliminate their bonuses if they don't get better fast those are tough conversations that that you have to have but I don't like to end on that yeah I like to end done exercises along the lines of having everyone in the room okay now we've done all the all the all the tough stuff we worked hard on the business okay now let's put that aside take a breath now let's just talk about

who I'll ask each person I'll go around the room supposed I have a dozen people in a meeting and I'll say tell me some so we just been meeting for two hours we've been working hard can't with some we identified some really important problems we need to solve and that if we solve them we're going to create a lot of money for our shareholders so good job team it was tough but good job we were went through a good rigorous process and you worked hard and and a lot of a lot of imperfections came up

during the meeting and that was was humbling in a lot of ways but now I want to ask you something after working two hours collaboratively in a meeting like this difficult meeting who star went up and why who said something that they maybe you already held him in high esteem but you even you hold him in even higher esteem now as a result of the way that they thought their thinking process or maybe the elegance and Grace with which they expressed a difficult subject or the way they tackled something from an Innovative way someone who

contributed to the magic of creating Alpha creating money for our sheer holders how did they do oh they they handled a situation of conflict because you have conflict in business in a way that was nice that was kind-hearted that was not mean-spirited so whatever why tell me every I go around the whole room I say tell me someone in this room who said something or did something or didn't say something or didn't didn't do something that made their star go up and why and people feel really good about that and I have a whole series

of exercises and questions I do like that one of them I do is when we have long meetings sometimes we have like 10hour meetings or even 12 hour meetings we have people coming in from around the world and we're doing a quarterly operating review we're really covering lots and lots of material we take just few breaks we just keep going at it going at it so people are tired at the end of that it's been long long day we've been going from 7 in the morning to 7 at night for example with just a few

quick um 10 or 15 minute breaks we work right through lunch right right through dinner I like to end with sometimes with getting everyone at the end of all that we stand in a circle and and I don't want to say anything I just want I just want to spend five full minutes five minutes is a long time to be standing in a circle with 15 or 20 other people not saying a word and I want I want everyone to look at each person and I want them to do two things I want them to

think to themselves think to themselves I really respect this person because or I really admire this person or I'm so grateful that this person is on my team is on the team with us this or the these these this person has XYZ qualities that are so Noble so fantastic so positive regard that of each person each person one by one I want them to look around around the circle and the second thing I want them to do is I want them to say not only am I grateful for being on the same team with this

person I really wish this person a lot of success I hope this person has a fantastic future at this company I hope this person has a fantastic career I hope they knock it out of the park in terms of their numbers in terms of profit the generation they're going to do and and I find those that two-handed experience of gratitude of praise gratit the gratitude that comes from honest Praise of of each person and then the the wish the well-wishing to each person it just everyone goes away from the meeting just figuratively flying on ear

people go away with a really good feeling and feelings count in business in business I have I write about this in the book The Love vibe that you want the love Vibe you don't want the hate Vibe you want the you want that Good Vibration going around in the company you want people feeling good about themselves good about the com good about the people they're working with good about the customers good about the vendors you want them to be like one big happy family and you have to work at that that doesn't happen just by

itself that's not a natural event that's something that requires effort that requires intentionality that requires some skill you've made a few billion dollars what lessons have you learned about money and spending money and living with money that you wish you knew sooner you know inter you throw me off a little bit with the question because I don't Define myself as in terms of how much money I've made like that's like just not like the big deal for me but it's it's a report card but it's not it's not who I am and it's not my

be all and end all I happen to be in a business that makes a lot of money so I make a lot of money my occupation is making money for shareholders when I look at my motivation if you want to understand my gal how I look at the world how look at myself it's really I if you take those psychological tests I score very high on need to be appreciate so how does that translate into being a CEO well that translates into well I give you a perfect example last week we had a call with

my 75 co-investors in my new company qxo so my wife and I are putting in $900 million and then Sequoia and uh a few dozen friends and family like really friends in like my sister my brother my niece and nephew uh are putting in another $100 million we'll have a a cool $1 billion even putting into into this company and I told them at the end of the call it was an hour call just give him an update of what I'm working on I thank them not for the100 million because I didn't need the $100

million I could put another 100 million in mine in but I thank them for for giving me motivation giving me inspiration giving me a purpose because I want to please them I want to make them happy I want to make them a lot of money I like being happy I like being feeling good about myself I like looking in the mirror and like who I'm seeing and how I Define that is pleasing the people that I love and those are my investors my co-investors my my close friends and family and the people who have been

good to me over the years and I give back to them let's Deep dive on m&a how do you think about it at a high level and then specifically walk me through your process for not only evaluating companies but beginning to end including integration m&a has been a big part of my business career not in the first 10 years in the first 10 years from 1979 to 1989 I was in the oil business it was all organic we didn't do one single acquisition was all just trading and brokering and building up a business organically but

since 1989 I've been doing roughly about 500 Acquisitions I've done a lot of m&a I love m&a I love m&a as a way to create value value for shareholders because I don't know of another way on a risk adjusted basis on a certainty level that is more likely to create massive shareholder value than doing sensible m&a in order to understand how to create value I have to understand how am I going to scale up the business I I I only know how to create tremendous shareholder value by growing a business tremendously that that's how I

know how to do it and of course it's organic and I've had very good organic growth the companies I've LED have been well performing companies that have had good market share and growing market share and we've taken customers away taken business away from our less not as our competitors weren't managed as well but the real when you look at the the numbers the real growth has been through m&a through Acquisitions what's been my secrets on Acquisitions I'll try to be concise because I did a hour and a half podcast with McKenzie a couple years ago

with Andy West that was the only question asked one question I babbled on for an hour and a half it's still a big people still watch that that podcast because I really told everything about it here's the gist the gist is you first have to select an industry you can't just do m&a so I spent the last year going around studying dozens of Industries looking at hundreds and hundreds of acquisition opportunities mostly with Goldman sack Morgan Stanley and some other sequ and some friends figuring out could I apply my PlayBook to this industry is the

industry big enough is the industry fragmented enough is there m&a to do is bigger better that's not always the case are the economies a scale do you have a competitive Advantage by being bigger is there a way to apply technology because my companies have always been teched forward to the industry because the industry is a little sleepy on technology as the way I run a business the way I do the intake of people and the culture and the way we interact with each other and so forth is that something that'll work in this industry is

applied in this industry is it it's something related to something I know about Industrial Services for example most of my companies since 1989 have been Industrial Services and I looked at many many different Industries and I settled on the one that checked every single box which was Building Products distribution and the name of my company is going to be qxo and m&a will be a big big component of what we do there are there 8800 billion dollars of distributors in Western Europe and in North America which is where I want to plant my flag I

want to build a company that's called $50 billion I can do that if there's an $800 billion size I can take 6% of that through acquisition and through organic growth I can get to $50 billion there's many other industries that are nice but I'm not gonna be able to get to $50 billion I want to get to $50 billion so this industry there's a clear path of how I can do that now I can't just buy and there's roughly about 7,000 Distributors here in the United States is about almost twice that amount in Western Europe

so roughly about 20,000 Distributors you've got to be very careful about who you buy there has to be a reason why you're buying that company there has to be a strategic a compelling strategic reason of why you're buying that company what what make what makes sense for that why is that good for customers why is that going to make our business a better business why does that fit with the other things that we've already bought and put together how's it going to integrate well I like to look at the multip that I pay for an

acquisition the price that I pay for an acquisition is very very important because when I look at the levers of how we we create shareholder value what contributes to that the biggest lever the biggest component is the differential between what I raise Capital at due to my relationships with mostly institutional investors and because of the track record and what I can deploy that at on doing Acquisitions the second biggest lever is how much can I improve the business businesses that I buy those are there's many many levers but those are the two biggest levers so

I pay close when I've studied all these different Industries I've studied historical acquisition multiples and one of the reasons I like Building Products distribution is I believe that I'll be able to buy companies at lower multiples of their profit than I'll be able to raise Capital at and that's going to be a big that tagio that spread that difference that Delta is going to create value boom just right away right from the first day now you asked about integration integration is extremely important anybody can buy a company it's not that hard you write a you

send a wire you sign a document it's few dozen Pages lawyers have gone over it and you wire the money and you own it so that's not the hard part the hard part is after you've selected the right industry after you've selected the right companies within that industry to buy after you've had disciplined so that you don't so that you pay the right price for all those then you have to integrate them I've never run companies that have like hundreds of different companies all running separately with different names and different sift systems and different back

offices and there is some level of decentralization where you need to be closer to the customer but I have a very strong appetite for standardization standardization of the Erp system that you close the books with uh so you close the books promptly right after the close of the month and that you can have standardized dashboards so all the managers have the same format of the numbers they're looking at the kpis and they see them graphically very easy to understand I like to see so they can Benchmark every comp every location to every other location every

District to other districts every region to other regions and for that you need standardization I like to have very standardized hris Human Resources system system where all the people in the organization and we'll build build this company up we'll have hundreds of thousands of employees I need to have a standardized data system for all of our employees everyone's on this for 401k it's the same exact way of doing all the benefits are the same all the performance appra are the same compensation I can see right away I need to have transparency to the information about

I need to have the organization charts very accessible right away and every time we do an acquisition I need to pull that information up right away while we're studying it quickly so we have a competitive advantage against other biders to see what would the synergies be so I need standardized HR technology throughout throughout everything I need a standardized CRM customer relationship management system like salesforce.com there several others as well and for that to be able to make sure we're looking at customers the attractiveness of those customers the profitability of those customers the size of their

spend so therefore the potential of those customers going forward all the interactions we've had with those customers I need to see that in a standardized way all across the globe everywhere in every country we're functioning in so I need a standardized technology for customer relationship for Sales Management so I'm giving I need a standardized internal social media I happen to like I've used um workplace by Facebook it's not the only one but I like that one really well it's nice and the interface is really really good so I like to have everyone on the same

one because I like to have one company with one culture where everybody body can ping each other I like I don't want to have these silos of companies like sometimes you see these companies roll up many different companies but it's all a mishmash it's all separate I I don't like that at all I I you see a lot of these Middle Market private Equity firms do that they roll up these small companies they're doing five 1020 million ebit each and they B they just buy a bunch of them and now they're up to 100 million

200 million Ebon they just get a bigger multiple because they're bigger but it's a mess whoever buy those whoever buys those there's a lot of work to be done youve got to now standardize everything and integrate everything and opportunity to improve them but also a lot of cost and time to fix all that stuff up so I I integrate from the moment that we agree to buy a company we're starting the integration process and the day we close the acquisition gazam we're in there and and we're standardizing everything as much as we possibly can and

we're communicating and communicating quite a bit a big part of the success for m&a is forming the relationship with people and making sure we get off on the right foot and making sure that we don't lose the great talent and making sure we on at the same time we're identifying the weak players and gracefully and generously exiting them so there's a lot of different components to m&a I'm summarizing a lot of different faction each one of those things we could talk for an hour just on that that block but those are the kinds of things

that go through my mind in my approach to m&a yes some unique questions when you interview sort of the top 10 to 15 people as part of the diligence process can you walk me through what at least two or three of those questions are where you get the most useful information yes so you see some companies when they're negotiating by a company do this very lengthy and detailed and bureaucratic diligence process and they hire a firm and they write this big huge memo that nobody ever reads and some won reads it but nobody important reads

it and it's basically just to cover their butt I'm not trying to cover butts I'm trying to make money for shareholders my goal is to make money for shareholders period And so what I'm looking for in diligence is I want to know how they make money I want to know the history of this company I want to know the current state of this company I want to ask those people I like to interview the top 15 or so people one-on-one like an hour hour and a half and I like to ask them if this was

your money would you buy this company and what would if you did buy it what would you change what would you do differently where's the opportunity to do something differently than it's been done and I like to ask them okay if you were B buying this company what would you not change what what is so good about this company that's making it successful that's attracted a big bidder like ourselves that we should make sure we we'd be crazy to change that so I like to ask questions like that questions that give me insights into how

the business got to where it is what are what's the future of this company how could we improve the company going forward where where are the things that have been blind spots of the current wether company's been run that we could fix and what are the things that are working well that maybe we could put more resources into where have we not been spending enough money where have we not investing enough money into something that could be a good return on investment on the other hand where have we been where has the company been wasting

money where has the money been gone into things that why are we doing that doesn't really help customers it doesn't Delight customers does make customers happier or doesn't improve our our customer business reviews so why are we even doing it that's a i' like to ask those questions and they're really revealing the the first person who I talked to who had questions like that was cat Cole who is the vice president now at athletic greens when she turned around Cinnabon that's what she would do she went and worked in the stores and asked the employees

what they would do differently and it was so revealing in terms of what they ended up Chang I find so many times in corporations people don't ask those questions yeah and I'm big in asking those questions I'm big at surveying using Town Halls oneon-one interview small group interviews asking questions about how are we going to win how are we going to win what are we doing wrong what what can we be doing better what are we doing right that we should do more of and I find it um very valuable very very valuable it yields

a a great return on time and as I write about in in my book there's only two things a manager manages return on Capital and return on time and I believe that asking the employees and getting them involved in the process is a great return on time and a great return on Capital what's the role of a board in uh a strong founder Le company like qxo when you're you're investing 900 million of your own money you're the founder the CEO largest shareholder what role will that play how does that change the role of a

board especially when it comes to m&a I've been really fortunate to have fantastic boards boards that are very strong PE comprised of people who are really competent people have they're invested in the company they're leaning in they take the job seriously they they are passionate about the company and my relationship with the board is a little bit different than most most boards we're completely transparent completely open any board member can reach out to any person in the company anytime they want and ask them anything they want and there's no supervision or people have to accompany

them or none of that so I want board members to be very very informed I want board members to get copies of the customer surveys I want the good and the bad I want them to see that I want and I want them to see the analysis I want them to see the analysis of the customer surveys of where we're doing well and where we're falling short I want them to know that I want the board members to have all all the employee surveys and see all the word cloud word cloud analysis that we do

all the trend analysis and all the benchmarking we do I want them to see where the pain points are of employees I want them to see where employees are happy I want them to see the trends of employees I want the directors to be invited to every operating View and every monthly operating view every quarterly operating view of any part of the company that tickles their fancy I want them the more they're involved the better off we're benefiting from them so I like to have board members that are very involed involved very knowledgeable and we

have good conversations about the important stuff and I don't run board meetings the way most Fortune 500 company boards are run most Fortune 500 company board members board meetings are kind of they're very scripted and they sometimes they even rehearsed and there's a careful story that's being told by management and it's done by PowerPoint it's done by rehearsed presentations that come up and just a complete waste almost a complete waste of time uh you could do that whole thing just by sending them a document there's no reason to convene a meeting for that it's just

a it's just a kabuki dance it's just I like to have real board meetings where ahead of time everyone's read all that data and between board meetings they've been in the business through what I've been talking about and they come to the meeting and we bring in over the course of a day somewhere between 10 and 20 managers EX Executives sometimes senior ones sometimes mid-level managers sometimes front level exe managers employees and and I I go around the room and I like every single director to ask whatever they want to ask I don't want to

ask I don't want them to tell me ahead of time what they're gonna ask and I don't want them to tell the man the managers who they're interviewing to to know what the questions are ahead of time I don't want our Executives or our Frontline employees to waste time and I'm using the word waste deliberately preparing for the meeting some speech some script some sometimes phony baloney sales story about how great things are I want to ask real questions I want to including the tough ons and I want people to answer them honestly and spontaneously

in the moment and completely so that those I love our board meetings so I'm now chairman at the moment of three different companies uh XO gxo and rxo and so we tend to have our board meetings every three months around the same time around the same twoe period it's some of my favorite meetings the whole year because I have highly engaged directors who are knowledgeable about the business and who ask really good question I learn a lot I learn a lot at the board meetings I don't dominate the board meeting with I'm the person speaking

all the time A lot of times you find that the the chairman or the CEO is like making a whole big deal about themselves board meeting should not be about the chairman and the CEO or the chair and the CEO the board meeting should be about the directors getting the information they need to get they want to get they should be getting should it be focused on problems or what's going well or how do you think about that from a board level and then I want to get into more specifically management meetings but like at

the board level how how would you organize that around how do you craft an agenda for that I don't craft the agenda so I what I craft is I figure out who are the right people to bring in but even that in terms of the management we should bring in I don't do that all by myself I get input from the lead independent director I get put from the vice chair we come up with something together with the CEO and then I distribute it around to the whole board said what do you think how does

this look anyone have any changes people usually have changes people say that's great but I'd also like to have a section on HR just even yesterday we're preparing for a board meeting and one one of my vice chair said you know that's that's good but I want to have a section on human Capital Management people management so we we rearrange things and we're bringing some HR folks so my goal is to get the right people in the room in front of the directors and and then let the directors ask what they feel is right to

ask I don't want to micromanage the agenda because that's my agenda I want I am never going to be smarter than the sum of all the directors that's never gonna happen mathematically or you have the wrong directors right very much so yeah and I I I like directors who are smart and who are engaged and really want to improve the company they want to play their role they want they take their fiduciary duty very very carefully they have a strong duty of loyalty they have a strong duty of care when you think about decision making

how often are decisions made by committees in the companies you run versus made by individuals well I hate the word committee period committee is just like a bureaucratic red tape slow kind of low energy kind of word I just can't stand the word so I try not to call things committees just to nomenclature however there are times when a group of people will have to make a decision because it's more than one discipline that's required to get to the right decision there might be a tach that we have that has a financial element so you

need someone from Finance accounting that certainly has an operational element to it you need Ops person there but also have a big people element so I need an HR person there and so I could have if it's a big decision with big impact then I'm going to have CA level the COO the CFO the chro that's a big decision I'm not going to waste those very important people's time with small decisions fpna financial planning analysis plays a big role in my company more than in most companies the fpna people are the ones who are turning

all these IDE they're in a meeting they're listening to all these ideas and they're turning them into numbers they're turning them into forecasts they're turning them into projections they're turning them into probabilities they're turning them into the look we we have this these 10 things we're going to work on to create Alpha for our shareholders they're attaching probability to teach one of those I got a 90% chance of this is in the bag this is going to happen this is a long shot this is like a 10 20% chance of happening but it's not a

zero% it's a 10 or 20% and it's got a high return if we achieve it so it's worth putting the effort in but I'm only going to give 10 or 20% credit maybe I'm gonna give less credit than that and and they're also doing budgeting constant iterative budgeting we don't do budgeting once in a while we do budgeting every day every single day where we've got our our our budget our our numbers that our plan is our plan and where are we tracking versus the plan and the FPA people are are are are really good

at figuring out who's sandbagging and who's exaggerating by that what what I mean by that is you have some managers who just do their personalities or for whatever reason or maybe they're playing games with their bonus they want to lower expectations so they come out looking like Heroes well that's not good because we want to know the real likely outcome so we can plan around that on the other hand you have some people who are um overly self-confident and they think this is definitely going to happen and I'm gonna grow this that but if you

look at their history if you look over the last three years they've missed their predictions by three to five percent like pretty much every year so they're going to discount them based on the past predicting their future likelihood of succeeding so the fpna people play a big big role in that figuring out what is is the highest lowest and likeliest outcome for all these different Endeavors that we've got and they're also playing a big role for allocating Capital so we talked before about the two big things that senior Executives do is is decide what kind

of ways we're going to spend money allocate Capital it's finite even if it's billions of dollars it's not trillions gazillions it's billions is finite Capital how we going to SP invest that capital of all the different ways we can invest what's the highest and best uses of that capital and how we going to manage time how we going to get everyone focused on the things that really matter and not waste their time on the silly stuff that really doesn't matter is not going to create massive value for our shareholders which is what our mission is

the FPA people help with understanding that putting it into numbers because sometimes you can get very inspired and motivated and it's a really really creative fantastic uh inspiring project comes up but when you analyze the numbers eh it's really not a really good return on time or return on Capital so maybe we shouldn't be spending so much time on that so we're we're also managing how much time are we spending as an organization on what kind of projects you find a lot of time in Corporate America somehow or another they get lost management gets lost

on these tangents that are not Central to their main mission of creating value for shareholders and the fpna people keep track of that they're the scorekeepers to keep everyone honest of how we're investing Capital how are the Returns on that Capital versus what we expected it to be what we planned on how we spending our time is how we're spending our time proportionate to what has the highest impact of how we're spending our time and this is a very important role so fpna ends up being kind of omnipresent throughout the organization anytime we're making big

decisions because they're really good at getting all this down to to reality to real numbers and they report to the CFO is that the structure internally uh FPA has has a two lines one is to the CFO on the and they have a dotted line to operations and to me so I I rely on my fpna person like every day I want to know for two reasons I want to know internally how are we doing on the projects that we're we're we're attaching high priority to I also want to know how are we doing on

our commitments to shareholders to investors when you're a CEO of a public company you have a really important mission in that you've promised what your numbers are are going to be in the in the future how much your profit is going to be how much your organic Revenue growth is going to be how much your margin is going to be what your return on capital is going to be how much your free cash flow is going to be and now you've got a you've got a promise out there you've got a guidance you've got a

forecast and and you're working really hard to achieve that I need to know and FP is the best place to know that how we tracking against that and if we're tracking higher than that and significantly higher than that there's a big deviation from that well well we'll talk to to legal and we'll talk to IR the investor relations and we'll say should we update the the investment Community ahead of the quarter ahead of when we normally produce our results and equally importantly maybe even maybe even more importantly I want to know God forbid if we're

tracking below our estimates and once I know that then I have a meeting and I say whoa we're me of our of our six or seven top metrics that we've promised to our investors we're doing well on these five or six but on these or two no no no it's not doing very well what are we going to do to get back on track so constantly using our sensing information gathering and then getting back on track getting back on track do you do the forecasting because you're going to be going to the capital markets for

for Capital at some point in the future with an acquisition strategy or would you not do that if you knew you weren't going to raise additional Capital well I I am a big user of Capital Market markets because all my companies have grown through uh Acquisitions and i' I've needed Capital to grow those Acquisitions we've raised money from the largest Sovereign wealth funds in the world and some of the largest Pension funds in the world some of the largest long only funds and you know all endowments and a lot of different people whose money we've

taken and given them back a lot more money than they than they gave us so in order to do that you've got to hit the you've got to meet your promises your results matter results matter they're very very important so even if we weren't raising Capital the fact that we've taken capital and sometimes we've gone for years without raising cap well we've maybe refinanced debt to take advantage of changing interest rates or something like that but in terms of raising equity which is the deer thing raising Equity sometimes we've done some Acquisitions like in 2015

we did two big Acquisitions and then we digested them and we integrated and optimized and doubled and tripled the profit without doing any Acquisitions during that period of time we didn't need to raise equity and we didn't so but even though we weren't raising Equity even though we were not going to back to the capital market chain we still paid extremely rigorous attention to how we doing on the numbers that's our job our job as Executives as managers custodians to this business is to produce results and that's measured ultimately in financial results it's also produced

in in operating results it's also concerned of customer satisfaction employee satisfaction but all those things lead to financial metrics and you've got to stay focused you have to have the whole organization focused on delivering those financial metrics and that's how you deliver them it's it's a conscious intention and a sense of honor and a sense of I need to do this this is this is what we need to do this is our promises promises made Promises Kept when people tell you they're not motivated by money you get suspicious why well I actually respect people highly

if they're not motivated by money uh I know a lot of artists I know a lot of musicians I have um friends and relatives who are professors or retired professors in Academia just not into money I mean there's not into money they don't think about they don't read The Wall Street Journal they're not interested in that whatsoever and and I respect that they have a higher calling in a way they're they're focused on some deeper parts of life um but that's not who I want in my company I want my company people who are absolutely

motivated by money who are raw capitalists who people who want to make money for themselves and their families and that we can figure out a way that by being part of our company they can help us make money for shareholders so that we can pay them more money here than they can make somewhere else I've had people on the senior level make many many people make become millionaires multi-millionaires I've had people become tens of millionaires I had one person who made over hundred million I have couple people now who are on track to make very

large amounts of money this is a good thing this is a this is a outgrowth of success because we've tied everybody's compensation we've been very thoughtful about compensation plans we've tied their compensation to contributing to our big goals and the only way they can make all this money is if they're making money for shareholders so I love compensation plans for the senior Executives that have a big component of equity that's tied that's dependent on TSR total shareholder return so we look at what do the how does our stock perform versus called S&P 500 and what

percentile are we if we're less than called it the 55th percentile I'm not so sure they should get any that I'm not sure that Equity should vest I could argue that if we're only getting roughly half roughly we're very middling in the results we're giving that's not why people invested in us people gave us the Sovereign wealth funds or pension the big investors they've given us money because they expect us to be much much higher returns than the average company so I like to have people bet on themselves so that if if our if our

shareholder returns are less than 55% or so I don't want it to vest if it's 65% invest some if it's 75% invest more if it if it if if it's 85% 90% 95% I want it to I want them to make I want it to double vest I want them to make twice as much as they would otherwise so I want their interest aligned with the shareholders I want it to be so that the shareholders are saying wow I really hope senior management team makes a fortune because the only way they're going to make a

fortune is if we're beating all the competition in terms of the returns with our investment so I like to I like that to happen one thing I liked about Goldman sachs's compensation PR that I took for them uh years and years ago when they were partnership a big chunk of their compensation plan I'm not up to dat in their Compensation Plan now now but back when they were a private partnership a big chunk like a significant percent of their comp was based on how many other partners said that they helped them with what they were

working on yeah in other words I didn't just work on what I was trying to work on but I helped you Shane with your C with your client and that group effort going back to being a super organism so if we can have people on the front line and the midlevel management be rewarded financially because that's the biggest reward not the only rewarded but financially financially rewarded for helping other people achieve their goals that's a good thing too so we have all these bespoke compensation plans that are welld designed that a lot of thought go

into that result in the magic meaning creating outsized returns for shareholders that's the that's how we do it now we also do just general recognition that's not as powerful as as Financial rewards but it's it's still a good thing so we have all the usual things of people getting Awards and rewards and trips to to places and president's clubs and employee of the month all all those kind of things where people feel good about themselves because they're recognized for going above and beyond but if I had to pick just one or two the field good

stuff or the money I'm going with the money it's a powerful motivator I like how everything's tied to sort of like win-win everybody wins right you're it's not one of those places where you're you can get outside compensation even if our shareholders ERS lose that's a terrible thing that's an unfair thing that's that should never happen you should you you shouldn't you should have a complete alignment between how shareholders do with their investment in the company and how the employees do either both of those groups should be making a lot of money or not a

lot of money now the shareholders can't control that all they're doing is investing their money the employees control that if the employees are selected well are working together in a good culture well are using technology or using ways that they they can succeed or have good feedback loops and they're they're making good decisions and being held accountable for those decisions they're exceeding them and delivering the numbers and the share price reflects that the share price goes up that's great the shareholder should make a fortune and the employee should make a fortune neither one should make

a lot of money at the expense of the other that's not fair that's just not that's not right what CEOs do you think are underappreciated capital allocators when I look at um the companies that have uh taken money and and had small amounts of money and turned it into huge amounts of money immediately I'm thinking Mike Mo at SEO seoa he was chairman of seoa capital now he's retired from that he's at Square Heritage he's a senior adviser Square Heritage but if you look at his career everything he's done over the decades and I've studied

Mike very very well for many many decades he was one of my first outside investors Square Capital came into my United wayte system systems way back in 1989 1990 and what is he the CH what is he the genius of He's The Genius of taking small amounts of money and turning them into huge amounts of money so you look at at Google at Yahoo at Netscape it's Sun micr all these companies that he invested relatively small amounts of money in and ended up being worth like 10 billion bucks that's that's good Capital allocation that's really

really intelligent Capital allocation so I I I immediately think of I think of a mikee Morris for something like that I think in the industrial sector there's also people who who have gone through the same kind of processes I've gone through and been been disciplined at how they allocate capital and achieved high roic as a result of that you think of the academy level CEOs over the years Dave Cody for example when he was at honey well for years he was very very rigorous at this was very mathematical very dispassionate very intelligent about okay guys

this is how much money we've got where we going to get the biggest returns allocating it very very carefully there so those are the people who come to mine off off top of my head talk to me about the relationship between quality and speed you need both so you see companies sometimes be really good on quality but oh my God they take forever so it's it's really not achieving what you're trying to achieve you see other companies that move real super fast but it's at the sacrifice of of qaqc of quality insurance quality control the

real golden mean is how do you move fast but move fast intelligently so that you're not sacrificing qu quality in fact you're moving fast and improving quality at the same time that goes back to mathematics that goes back to engineering that goes back to planning understanding the lay of the land understanding what exactly is the inefficiency that we're trying to take out of the system what's the biggest lesson you've learned from the past year you could pick any time frame whether it's last 12 months last 10 years last my whole life and ask me what's

the biggest lesson I've learned for sure I'm going to immediately default to something with people it's first I'm going to default the people and then I'm G to default to technology these are the two things because these are the two biggest needle movers these are the two biggest categories of things that make a difference so in the last year what have I learned about people okay one thing I've learned about people is I'm working with a team now at my my new company that's largely the same they were on my teams before they were either

XO or one of the exos and what I've learned is it's great to have the band back together it's great to work with people that you know that you've been in the battles with you've shared the glories you've shared the pain it's great to be work work with people who we've been in the dark days together we've been in the strong days together we've won together we've Victorious together we can complete each other's sentences we we get each other we know each other's spouses we know each other's kids that's that's a beautiful thing I haven't

always had that I have brought some people from company to company usually initial founding management for qxo are all xo people and uh one thing I've taken away from that is I really love these people these are people I really just respect and admire and I I just I'm just so thankful that I get to work with them like I feel and I think we all feel this way I think all of us feel that each of us is getting the long end of the stick by working with the rest of this team it's very

hard to find a team a group of people this size that all love each other that all respect each other that all admire each other's professional and personal characteristics and traits and that's that's a beautiful thing that's a big takeaway for me now I'm going to go for on this what's my biggest Takeaway on technology in the last 12 months on technology what I learned was I went through this process of studying dozens of Industries and I went through the checklist and one of the checklists one of the things on the checklist was can I

play can I take technology and apply our Tech forward mentality and our willingness to invest in technology and put put our money word mouths and put money in technology in in an industry where will get a competive advantage and I found an industry building products distribution that I can do that I found a company an industry that's got 20,000 companies and there's about six or seven that are doing really cool things in technology and that's pretty much it and I hate to say that so negatively but I think that's an objective assessment of it I

think there's half a dozen or so companies the biggest ones that are couple of of medium-sized companies too but mostly the biggest ones who are approaching technology in the same spirit that we approach technology now we're going to double down on that and spend a lot more money and have the best techn technologists involved like we always have in our companies but if you look at the 99% of all the other companies they're were other industries were 20 years ago now I like that Shane I like going into an industry where I got something I

can bring to the industry that's G to help I can be transformational I can be a catalyst to improve the quality of the industry I'm happy to get everyone all excited and share the vision about investing in technology but we always uh or I guess I always end with the same question what is success for you on on the professional level it's very simple it's continuing my tradition of generating superlative shareholder returns like off the charts great returns for investors that's my report card that is Success period there's a lot of other things that build

up to that I have to have an Engaged workplace I have to have good good relations with my local communities after to do all those good stakeholder stuff but at the end of the day the report card is one question what is my share price performance versus The Benchmark and not only relative but absolute terms as well so it's it's about stockholder appreciation for sure professionally all the things I'm doing of hiring people and putting in techn all the things we've been talking about last couple hours that all comes down to to making money for

shareholders if you're not making money for shareholders it's just jabber jabber it's just talk so for me success is defined by how is my stock price performance versus everybody else's so that's that's clear for me it's very very clear in my mind personally you know it's about my family it's about my friends it's about my relationships with them it's about can I create ways where in the limited time I I don't have as much time as most people because I'm really into the business but in the limited time that I do have can I make

those enriching experiences can I make those experiences where there's a lot of love in the room there's a lot of good stuff going going on there's a lot of positive vibes and um I they're very symbiotic wonderful relationships where I'm helping the people I I love and they're helping me and if I can achieve that that's success that's amazing thank you so much for your time today this was a fascinating and wide ranging conversation I really appreciate the opportunity sh