The diligence questions Jacobs asks the top 15 people

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 1:08:04

   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 wonk 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.

2. 1:08:27

   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. I like to ask them, if this was your money, would you buy this company? And if you did buy it, what would you change?

3. 1:08:52

   What would you do differently? Where's the opportunity to do something differently than has been done? and I like to ask them, okay, if you were buying this company, what would you not change? 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'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's the future of this company? How could we improve the company going forward? Where are the things that have been blind spots of the current where the 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

4. 1:09:38

   return on investment? On the other hand, where has the company been wasting money? Where has the money been gone into things that, why are we doing that? It doesn't really help customers. It doesn't delight customers, doesn't make customers happier, or doesn't improve our customer business reviews. So why are we even doing it? I like to ask those questions. And they're really revealing. The first person who I talked to who had questions like that was Kat 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 changing.

5. 1:10:22

   I find so many times in corporations, people don't ask those questions. And I'm big at asking