Serial entrepreneur Brad Jacobs, who has built five multibillion-dollar companies largely in the trucking business, announced Dec. 11 the creation of a new business, QXO Inc., that seeks to become a major force in building product distribution in North America and Europe.
The company's goal: "achieve a revenue run-rate of at least $1 billion by the end of year one, at least $5 billion within three years, and tens of billions of dollars over the next decade," the company announcement said. What's less specific is what parts of construction supply Jacobs will get into and when.
“I want to play in residential, non-residential, and infrastructure," Jacobs said Dec. 11 at an Economic Club of New York event. He said he was motivated to invest in building products in part because there's a need to build new homes and fix up older ones. Transport Topics coverage of a Bloomberg report said QXO will take on Builders FirstSource and Ferguson, but at the Economic Club, Jacobs didn't name any companies in residential construction supply that attracted him. At the end of his talk, he mentioned Watsco, a player in HVAC, and praised SiteOne Landscape Supply and Pool Corporation for dominating their markets.
"Each one of these verticals has its own nuances," he said. "Some work together, some are head-scratchers if we try to put them together."
In general, Jacobs preferred to talk big picture, saying building products distribution is an $800 billion business growing at 7% annual with 7,000 distributors in the U.S. and 13,000 in Europe.
"We'll be busy for the next 10 years," he said, adding later that he liked building materials because they are physical things that need moving. "I wanted to do something that wouldn't get Metaversed, destroyed by [artificial intelligence]."
But techology will play a huge role. The first move by Jacobs Private Equity, a fund led by Brad Jacobs, was to purchase SilverSun Technologies, and rename it as QXO.
"The industry’s nascent use of technology, particularly AI and B2B e-commerce, represents a compelling opportunity for tech-focused entrants," the QXO press release said. "According to industry data, the percentage of industry revenue derived from e-commerce is currently only mid-single digits, and this share is expected to triple by 2030. Additional types of tech adoption by distributors have the potential to be transformative through price optimization, demand forecasting, warehouse automation and robotics, automated inventory management, route optimization for delivery fleets, supply chain visibility, and end-to-end digital customer connectivity. QXO’s strategy anticipates that these drivers, among others, will be central to the company’s goal of outsized stockholder value creation.
Jacobs has made roughly 500 acquisitions over his career. Among his creations is XPO, a provider of LTL truckload services; GXO, touted as "the largest pure-play contract logisitcs provider in the world;" RXO, a freight brokerage platform, and United Rentals.