If you want to see how to build a 50 Billion dollar company in real time, pay attention to $QXO, where Brad is Chairman and CEO. QXO made their first acquisition earlier this year, a company called Beacon (which was the largest publicly traded distributor of roofing and waterproofing). Brad just made a good chunk of his post acquisition playbook public. Here are a few things that stood out to me: 1. "If you want to turn a current customer into a former customer, keep telling them that you don’t have what they want in stock." 2. Flatten the org structure. Went from 9 levels to 4 to increase decision making speed and accountability. (Removed about 250 mid-level and senior roles where the org was over-staffed.) 3. Established a national "win room" call center to reactivate dormant accounts. (Hiring 100 "hunters" to win new customers and activate dormant accounts.) 4. Procurement and pricing are among the most powerful levers of value creation. (Procurement is fragmented, and unsophisticated. Most distributors don't achieve proper economies of scale.) 5. Implemented stricter pricing override controls and contribution-margin dashboards (addresses about $200m in leakage from undisciplined discounting). 6. QXO plans to win by being in stock, quoting quickly, and delivering on time and in full. (Velocity, Reliability.) 7. New compensation plans linking pay to profit and volume. 8. Started to centralize procurement authority, consolidating terms across top 20 vendors (70% of spend). Using bots and other automation for some procurement negotiations. 9. 4% of SKU's represent 80% of sales, implemented immediate replenishment to make sure they're never out of stock 10. Launched pilots embedding AI into quoting, routing, and sales workflows, already delivering double-digit productivity gains. 11. "The senior team is a mix of exceptional leaders I’ve worked with closely over the years, plus “best athlete” new hires from elite operators in procurement, operations, finance, etc." Watching Brad operate is a front row seat to a world class operator doing what he loves with people he loves. ---- Patient Capital Opportunity Equity Strategy stated the following regarding $QXO: “QXO was the top contributor to performance during the quarter following the completion of its $11B acquisition of Beacon Roofing in April. This marks the first of what is expected to be a series of acquisitions, as the company pursues a roll-up strategy in the highly fragmented building products distribution industry. "QXO is leveraging a proven playbook that its management team has successfully executed across other sectors. With a strong track record and investor confidence, the company benefits from the ability to raise capital on attractive terms, giving it a competitive edge vs peers." "Furthermore, management has proven their price discipline walking away from a bidding war for GMS Inc., which was ultimately acquired by Home Depot. We view this disciplined approach as a testament to management’s long-term focus. Over the next decade, QXO is targeting more than $50B in annual revenue. We have high conviction in Brad Jacobs’ leadership and believe the company is well positioned to become a long term compounder.” This is Brad Jacobs, the CEO of $QXO. Let's first understand Brad's track history. He founded United Waste Systems, United Rentals, XPO logistics, and a few other companies. Each of these companies operated in a 'boring' space: waste collection, construction equipment rental, and logistics. They each used technology to bring newfound efficiency to their respective areas, and in the process, produced money hand over fist. Each of these companies produced massive returns. United Rentals (URI) is up 3,997 % all time. XPO logistics (XPO) is up 6,952% all time. These are fantastic companies that have done very, very well. Brad has a history of simply delivering massive results. Brad's newest company: QXO operates as a distributor of roofing and building products, working with contractors, builders, and suppliers. QXO is taking Brad's tried and tested formula of using technology to drive efficiency in an otherwise fragmented, slow industry. $QXO went public in june of 2024 through a reverse merger with Beacon Roofing Supply. This is important to keep in mind when looking at charts, since they stretch back well before this time. Since then, the stock has done alright, but the performance has been meh in the context of the broader market, which has also done well during this time. ![[Pasted image 20251016232719.png]] Their total acquisiton of Beacon closed this past quarter, which makes trends, etc much tougher to analyze. We need time to let the company actually operate. However, a few things are clear: The market is bullish, the leadership is exceptional, and the TAM is huge. ![[Pasted image 20251016232751.png]] > When people think about disruption in construction supply, very few think about QXO , but they should. With Brad Jacobs’ track record and a massive opportunity to consolidate a fragmented industry, QXO is not just another distributor. ![[Pasted image 20251016233031.png]] ![[Pasted image 20251016232502.png]] ![[GzdWE5tX0AAA7sR.jpeg]] ![[G1tsT6oWkAAdZj_.jpeg]] ![[G1tsT6oXAAAl0fT.jpeg]] ![[Gz5oQKUWUAAcpLE.jpeg]] [[QXO Deep Dive]]