Better Than Amazon? How Bradley Jacobs Turned A $63M Bet Into A $12 Billion Transportation Empire (2024)

Decades ago, Bradley Jacobs studied math and piano (classical and jazz) at Bennington and Brown before dropping out to make money. Now the balding 61-year-old CEO of XPO Logistics invokes that background to explain how he's parlayed sequential roll-ups in the gritty businesses of garbage collection, heavy equipment rentals and delivering stuff into a $2.6 billion net worth. "Anyone can buy a company. You just have to sign a contract and wire the money," he says. But conceiving how those acquired company parts can be integrated into an organically growing entity takes a special creative talent. "Even though I'm not writing a song [in integrating companies], I'm thinking of ideas that are abstract. It's a combination of math and music. I'm visualizing them as clearly as I possibly can in space and time and then actually executing on them."

If that sounds a tad highfalutin, consider this: In September 2011 Jacobs' family investment firm ponied up $62.5 million to gain control of Express-1, a Michigan-based freight expediter doing $170 million in sales a year. He renamed Express-1 after its XPO stock symbol, moved its headquarters to Connecticut and over four years spent more than $7 billion on 17 acquisitions. Today XPO's stock trades at $102, giving it a market cap of $12.3 billion, for a compound annual return of 38% under Jacobs' watch. That's more than double the S&P's return and better than Amazon's.

Jacobs' own stake is worth $2 billion, making up the bulk of his fortune, which includes a 50-acre Greenwich estate, a 17,000-square-foot Palm Beach waterfront mansion just down the road from President Trump's Mar-a-Lago, and a starter modern art collection with works by Picasso, de Kooning, Calder and Lichtenstein.

Truth is, corporate roll-ups have a bad rep. Some operators have overpaid, taken on too much debt, touted synergies that didn't exist or even cooked the books. Yet 14 of 16 analysts covering XPO rate it a buy, persuaded by Jacobs' dealmaking smarts, his execution and his vision of an integrated logistics company that uses technology to capitalize on the growth of e-commerce and the worldwide supply chain. After Jacobs' acquisition run, XPO has strong positions in the U.S. and Europe in freight brokerage, last-mile delivery (getting heavy goods like refrigerators from warehouses to consumers), less-than-truckload shipping and contract logistics (handling all of a company's logistics). Last year it netted $312 million ($2.45 per diluted share) on $15.4 billion in revenues. Free cash flow increased 77% to $374 million in 2017, and XPO projects it will top $600 million in 2018.

Significantly, after leveraging up in 2015 to buy U.S. trucker Con-way and France's Norbert Dentressangle, a top player in the more efficient European logistics market, Jacobs turned off the spigot and returned to headquarters to focus on making the whole thing work. Headquarters is a single-story unfinished concrete building on the edge of Greenwich, where glass walls mean employees can't duck Jacobs' view and "Results matter" slogans hang on conference room walls. "Missing quarters to me is like termites. Where there's one there's more," Jacobs lectures. Matthew Adams, an analyst at Orbis Investment Management, XPO's largest outside shareholder, with a $2 billion stake, says of the entrepreneur: "You have the financial sophistication of a great capital allocator, combined with someone who's also a true operator."

Jacobs has hardly sworn off acquisitions; with XPO's leverage reduced by half since 2015, he brags about having $8 billion in "dry powder." But these days he's talking up organic growth and the $450 million a year XPO is pouring into automation and technology. Of its 95,000 employees, 1,700 are tech professionals, including 100 data quants. "Anything we can automate, we are either automating already or we have on the drawing board to automate," he says. In addition to pricing algorithms, XPO has developed the Uber -like apps Drive XPO and Ship XPO, which allow truckers to pick up loads and customers to see their cargo move in real time.

"Back in the 1990s I wrote reports saying FedEx is a technology company disguised as a transportation company. Today the same could be said about XPO," observes analyst Donald Broughton, who tracks transportation companies at his own St. Louis-based firm.

For most of his career, Jacobs has been doing deals, moving things and looking to make money from an information edge. His father was a jeweler in Providence, but college dropout Jacobs was drawn to the big profits being made in oil as prices spiked in the late 1970s. He read up on oil brokers and then cold-called his way into the business, enlisting the legendary Ludwig Jesselson, head of commodity house Phillip Brothers, as a mentor. (Jesselson's son is now XPO's lead independent director.) Eventually Jacobs moved to London (where he met his oil-trader wife, Lamia) and made millions by securing oil from places like Russia and Nigeria and chartering ships to transport it to Europe. By 1989, however, futures markets were squeezing the profits of globe-trotting arbitrageurs like Jacobs, and he returned to the U.S. to research his next venture.

Jacobs settled on waste hauling after reading an analyst's report describing fat profits at Browning-Ferris. Looking for both talent and inside dope, he interviewed dozens of industry managers. Two former Browning-Ferris execs told him the company had ignored rural areas. Jacobs hired them and went on an acquisition tear, consolidating hundreds of mom-and-pop collectors with overlapping routes in areas like southern Kentucky and Michigan. He took United Waste public in 1992 and sold it in 1997 (to what later became Waste Management ) for $2.2 billion, netting $120 million on his original $3 million investment.

As that sale closed, Jacobs was already working with investment bankers on his next roll-up play: heavy equipment rentals. He liked it, he says, because it was not only a fragmented market but also a growing one, as companies switched from owning to renting equipment like bulldozers, generators and scissor lifts. He invested $35 million and in December 1997 took United Rentals public. By March he had raised a total of $285 million in two offerings, retaining a 42% stake. Jacobs traveled the country tearing out Yellow Pages listings to find mom-and-pop rental shops to buy. After hundreds of deals, URI passed Hertz to become the world's largest equipment renter.

But in 2004 the Securities & Exchange Commission began investigating URI's accounting practices. Two former top execs eventually pleaded guilty to fudging the books from 2000 to 2002 to meet earnings forecasts. Jacobs was never implicated in wrongdoing, and in July 2007 private equity firm Cerberus agreed to buy URI for $4 billion, or $34.50 a share, a 25% premium, plus the assumption of $2.6 billion in debt. Jacobs, then URI's chairman, resigned and went off to run his private investment company. Five months later, as credit markets tightened, Cerberus lost its financing and backed out of the deal. URI's stock eventually fell below $5; Jacobs himself wanted to take URI private but couldn't get the money. Yet since his departure from URI, Jacobs' vision for that roll-up has been vindicated: The stock now trades at $180, for a market cap of $15 billion.

It took a bit longer for Jacobs to find his next target industry. In 2011 he began assembling a team of logistics insiders to capitalize on what he frames as a highly fragmented but growing $3 trillion global market for moving goods. His thesis: Companies don't want to own their logistics headaches and will happily turn the worry over to an outfit like XPO that offers everything from intermodal and full-truckload shipping to partial-load shipping, distribution warehouses and deliveries of heavy goods to a consumer's door.

Jacobs purposely started out in a capital-light niche of the market. Freight brokers like Express-1 don't own trucks; they're middlemen connecting shippers with truckers. But that was only a beachhead for staging acquisitions. After lining up more financing, Jacobs snapped up 3PD, which gave him a presence in home deliveries and installations; intermodal shipping outfit Pacer; and contract logistics leader New Breed, which has such blue-chip customers as Disney, Boeing and Verizon. A big push now is cross-selling between units. Jacobs says 94 of XPO's 100 top customers buy multiple lines of service from it, up from 86 a year ago.

As for his controversial 2015 decision to spend $3 billion for Con-way, Jacobs makes no apologies. He coveted its Menlo Logistics unit in Silicon Valley and considered Con-way's fleet of trucks insurance against a capacity crunch--indeed, as the economy heats up, a truck shortage and surging freight costs benefit XPO. Today the company owns 16,000 tractors, 39,000 trailers and 10,000 53-foot intermodal boxes worldwide, plus it has 11,000 trucks with independent owners under contract and another million trucks available for brokered shipments in its freight network. It has 775 contract logistics warehouses, with 170 million square feet of space, and big plans for opening more hubs in North America and Europe for those last-mile deliveries to consumers.

"XPO is going to be a global logistics juggernaut," says Stephen DeNichilo, a portfolio manager at the $6 billion Federated Kaufmann Fund, which holds XPO shares. He calls the stock undervalued relative to peers J.B. Hunt, C.H. Robinson and Old Dominion Freight Line .

And if the economy turns? Say this for Jacobs: He gets the value of improvisation. "In jazz, if you hit a wrong note, there's no such thing as a wrong note. That's the note, that's the reality. You radically accept that, and you build on it," he riffs. "Music is really business. ...You have to be using all of your senses at the same time, and you have to be dancing with the circ*mstances and evolving."

Better Than Amazon? How Bradley Jacobs Turned A $63M Bet Into A $12 Billion Transportation Empire (2024)

FAQs

How much is Bradley Jacobs' net worth? ›

How did Brad Jacobs make his money? ›

In the 1990s he consolidated rural trash hauling, building United Waste and flipping it to Waste Management in 1997 for $1.9 billion. He then built United Rentals into the biggest heavy equipment rental company in the world. Its shares trade on the New York Stock Exchange.

How much of XPO does Brad Jacobs own? ›

In 2011, Jacobs invested approximately $150 million in XPO (then named Express-1 Expedited Solutions), a transportation and third-party logistics provider. He became chairman of the board and CEO and gained ownership of approximately 71 percent of the company.

Who is the parent company of RXO? ›

(“RXO”), a wholly owned subsidiary of XPO that will hold the assets and liabilities associated with XPO's North American truck brokerage business, as well as its services for managed transportation, last mile and freight forwarding (the “RXO Businesses”).

Will QXO be publicly traded? ›

The Private Placement is expected to close early in the third quarter of 2024, after which QXO will have approximately 341.6 million outstanding shares of common stock. QXO is traded on the NASDAQ under the ticker QXO.

Where is Brad Jacobs from? ›

Bradley Robert Jacobs (born June 11, 1985) is a Canadian curler from Sault Ste. Marie, Ontario. He currently skips his own team out of Calgary, Alberta. He is an Olympic champion skip, having led Canada to a gold medal at the 2014 Winter Olympics.

How does Jacobs make money? ›

With approximately $16 billion in annual revenue and a talent force of more than 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector.

Who owns XPO? ›

It was acquired by Brad Jacobs and renamed to XPO Logistics in September 2011. In June 2012, XPO listed its shares on the New York Stock Exchange. XPO has acquired a number of logistics businesses in North America and overseas. Some notable acquisitions include: 3PD, Inc.

How to make a few billion dollars brad jacobs summary? ›

His book, "How to Make a Few Billion Dollars," serves as a guide for those with a burning passion to succeed in business or any endeavor. Jacobs emphasizes the importance of a positive mindset, the transformative power of technology, and the critical role of assembling an exceptional team.

Is XPO going to split? ›

(NYSE: XPO) today announced that its board of directors has approved the previously announced separation of its tech-enabled brokered transportation platform through the distribution of all of the outstanding shares of common stock of its wholly owned subsidiary, RXO, Inc., to holders of XPO common stock.

Is XPO Logistics being sold? ›

STG Logistics has acquired XPO Logistics' intermodal division for $710 million, the companies announced Friday, advancing XPO's spin-off plans revealed earlier this month. Approximately 700 employees and 48 locations have been transferred to STG in the transaction, according to an XPO news release.

Is XPO Logistics in debt? ›

Financial Health criteria checks 2/6

XPO has a total shareholder equity of $1.3B and total debt of $3.2B, which brings its debt-to-equity ratio to 238.1%.

Did XPO change their name? ›

XPO Logistics Unveils RXO as Company Name for Planned Spin-Off. XPO Logistics, Inc. (NYSE: XPO), a leading provider of freight transportation services, today announced that a new company identity has been created in connection with the planned spin-off of its tech-enabled brokerage platform.

What is the meaning of XPO? ›

Perpetual options (XPO) are option contracts without an expiration date. Typically, a standard option contract gives its holder the right to purchase or sell a specific amount of an asset for a predetermined price, before or at an expiration date.

How many trucks does RXO have? ›

Unrivaled Carrier Network

Leverage over one-million trucks accessed through more than 100,000 independent carriers in the RXO network.

What is the net worth of XPO Logistics? ›

XPO Logistics has a market cap or net worth of $12.44 billion as of July 3, 2024. Its market cap has increased by 90.01% in one year.

Is Brad Jacobs still married? ›

Brad Jacobs was born on June 11, 1985 in Sault Ste. Marie, Ontario, Canada. He is married to Shawna Jacobs.

Is Ryan Harnden married? ›

Personal life. Harnden is the son of three-time Northern Ontario champion Eric Harnden. He attended Sault College (where he received a business diploma), the University of British Columbia (for real estate appraisal) and Algoma University (geography). He is married to Jasmine Gassi.

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