Step-by-Step: How To Grow Your Brand from Scratch Without Quitting Your Job | Exclusive Interview with Codie Sanchez

24:26Yeah. And so you can have sort of like five chiefs. I've had up to eight or ten. It's doable. It's kind of miserable. So I basically try to only have five, which means the head of content is one of the five that's allowed to report into me. So I guess maybe it's more reasonable to say I spend one-fifth of my time on content. But this gentleman heads all of our teams. So he heads a – we channelize by segment or we segment by channel. So he heads somebody who heads all of the video components of our business. So that's Instagram, YouTube, TikTok. Yeah. Anything that would be video related is run by another guy.

25:06Then there's a written social team. So that's like Twitter, some of the written stuff we do for Instagram, LinkedIn. And then there's a newsletter editorial team. And that's kind of put together like a traditional newsroom. And actually we just had a really exciting hire there. So that's cool. So we have a new head of content. And then underneath him he also has a content ops team that just manages all the difficulties between those two. Posting, whatever. Posting. And is it on brand or not? And what happens, you know, when we do something that we don't like and we need to get rid of it, all that jazz.

25:40And just to be clear, so for like Twitter, LinkedIn, is there just one person focused on each channel or is it one person just touching the written social platforms? Right now, and I'm not sure this is the right way to do it, but there's just one person. And almost all of it stems from like two things, our newsletters and our YouTubes. And so they sort of affect everything else that we do. Those are your pillar pieces, right? Those are the pillar pieces. And then I do a lot of, not a lot, but a decent amount of news segments. So a lot of the time the research team is pulling stuff where I'm like, huh, like after today, I'm like, I want to see what the vacancy rate is in Los Angeles right now in office space.

26:23And let's get real numbers. And so I'll ping them and say like, can you send that to me? or when like Beyonce and Taylor Swift stuff was going on, I was like, let's see who's actually going to make more in their tour transaction overall and how much more per tour date did Taylor make than Elton John, who was the previous former grossing. And so, yeah. I bet you he'd be down to do an episode here because I know you do these in-office episodes. That's a whole side thing. Oh, that'd be cool. So, okay, the last thing on content then is Alex and I talked about this concept of the deal box, right? So Warren Buffett has your circle of competence, but also there's like a content box, right?

27:01So like for me, it's like these long – I've realized – I've re-realized again because my video team is like, dude, like when you do these long for once, it's like day and night. Like your energy is like next level, right? Oh, interesting. Versus like when I'm direct to camera, I have no energy. Like I just do not give a shit to do direct to camera. So like what is it for you? Like what is your content? What's within your content box? Yeah, that I like to do. Well, if you want to succeed in life, you have to figure out not what do you want out of life, but what are you willing to sacrifice to get what you want, right?

27:31And so typically I work backwards and I go, what is the thing that I want so badly that I'm willing to sacrifice just about everything else to get? And then what are the three to five activities that will most drive my likelihood of success? And if one of those things is direct-to-camera content, then fuck it, I'm doing it. Cody, you talked about how the dream of retirement is basically done. It's gone. Can you elaborate on that? I think this generation knows that to be true. Anybody 45 and older will probably wonder. But there's a few different ways to think about it. One, on average, our generation stays at a job for three to five years, five being the outlier, three being the norm.

28:17and we no longer have pensions like we used to. And I think in the past people thought that you spent your life in pursuit of one thing and you stayed there for a period of time until finally you were awarded for that loyalty with some sunset cruise at the silver age terror period of your life. And now our generation, one, I think is sort of uninterested in late retirement, may be curious about early retirement for a period, as evidenced originally by Tim Ferriss. But my belief is we will never retire as a nation going forward because we won't have our social security system to stand alongside us at current projections, and because we won't have pensions in the same way we do historically, and because most humans don't own equity increasingly, they don't own homes, and they don't have multiple income streams.

29:11I think there's a little bit of an issue in the world today. I think there's lots of solutions, but that's why I think the retirement part of the American dream is no longer alive. Right. And we'll come back to that in a second, but I think also your personal mission aligns with this. So just for people that don't know your personal mission, what is it? Yeah. Well, we want to create 100 ,000 small business owners and I want to create 1 million financially free humans. Hopefully we can do more than that. But my belief is that we need skin in the game, things that you and I have, the ability to see if we do X action at work and it drives Y profit or value to the company, we get some reward for that.

29:47And over time, we get aligned to our incentives in our company so that we have ownership in what we do. And the way I know how to execute that the best is for small businesses here in the US. I mean, I was just reading, there's a story going around that I've talked about a bit about what's happening to Japan and the fact that increasingly we're seeing small businesses sell for zero dollars or just shutter across the country. Some homes are just like abandoned too. Abandoned. Yeah. And because the next generation doesn't want to buy them and there's no infrastructure set up for that delivery to happen.

30:19And so I think that is already happening in the U.S. and in our worlds of Twitter, you know, sort of back and forth, it seems like everybody's looking at small businesses. But, you know, those people live on the coasts like where we are right now and they're not in cities in the middle of the country where those places are shutting down. In fact, how fascinating is it? We're in a skyscraper today and look at this place. It's fucking empty. Yep. The downstairs, empty. Two of the largest, most premier spots. We were just in another skyscraper in Burbank and 32 stories high. I asked the guard, I'm like, nobody's here today.

30:54What's going on? He's like, yeah, Friday. It's like a hundred people, maybe max in this building. Think about that. And what's the typical capacity in that building? Oh, my God. Well, I mean, just one floor. This is probably what, you could probably have 150 people at office capacity in here, which means this is, there's probably 10 of these on each floor. So we're talking about a building that has thousands and thousands, if not tens of thousands. And we're at, you know, 1 % capacity. I want to come back to this because this building itself is an asset, right? Earlier, you talked about the importance of owning assets.

31:28Like, why is it important to own assets? Why is it important to own equity? Well, it's certainly true that you can't take your W-2 with you. And also the country set up from a tax perspective to advantage those who are either 1099, which is fascinating because in California they don't want contractors. They say it's bad. It's actually better for your taxes in a lot of ways. Or people who have ownership in something. And so most people I think who are in W-2s today don't realize – they don't realize what they're being penalized by from the government on a taxation basis. And also, you know, these small businesses all over the country, they're assets that you can invest in both with time, equity or expertise.

32:13But they're also things that you can pass on to the next generation. and you know like I don't know what you want to do with your businesses next but you can sell it for a multiple of your profit right and you've bought and sold businesses and done it that way you can't do that with the W-2 and so there's no real way to exit so if retirement doesn't happen there aren't pensions anymore you are in your W-2 it's it's not tax advantaged and you have no ability to exit either to retirement or to selling your business like what are you going to do and so So I think we need to restructure the way that we have ownership and employment in this country.

32:48And it doesn't mean that everybody should be an owner because you and I know how hard that is. Like owning an actual business can suck. But it does mean that you want to get somewhere where you can get some of the benefits of both the tax structure and the asset. Yeah. And also, I mean, the assets continue to appreciate over time. And it's, you know, the dollars that you hold depreciate, right? Right. And so it's like, well, and then this is how people continue to get screwed. So we have, so I have a friend actually that he, his whole thinking here is like, the only time I'm going to buy depreciating assets, like a car, for example, or buy like stupid stuff is with my, not my earned income, but my investment income.

33:27Like, how do you think about that? Yeah, I think there's the smart rich, which was probably created right by Robert Kiyosaki, rich guy, rich dad, poor dad. but essentially said, hey, I want to buy, I don't know, a new house, which is$1 ,000 a month. In order to buy that new house, instead of just paying out of pocket, how could I acquire some sort of asset that would pay for that$1 ,000 a month? And it's a lovely little triangle. You get the fun thing, you buy the asset, the asset pays for your fun thing. I try to think about it a little bit bigger than that. I feel like that's a great 1.0 framework.

34:02The 2.0 framework is we only have so many hours in the day. We only have so many talents. How can we pair the least amount of hours in the day to our highest talent for whatever our acquisition is? And so as opposed to thinking, well, I just want to cover this$1 ,000 payment that I have, why wouldn't I think instead, all right, if I'm going to spend time on investing in something, which means I need to understand it, I need to fund it, and I need to manage it in some way, shape, or form, what's the best way to do that for my time and talents? And so I need to think about a framework for that. But for me personally, that means that I'm looking a lot, a lot, a lot.

34:38I'm pretty disciplined and looking all over the place. And when I make a transaction, I hope it pays for 50 fucking houses as opposed to just replacing one for one. What do you think your superpower is? Because ideally you're spending most of your time on that. Yeah. Yeah. It's something I really obsess on all the time. I think most people, including me, you spend – you sacrifice what is important for what is urgent constantly. constantly, every single day. And urgency is so much louder than what is important. Important is quiet. It's persistent, but it's quiet. And so my unique skill, I think overall, usually is a stack with everybody, right?

35:17I can't remember who came up with that. I think that was Scott Adams, the skill stack. The skill stack, yeah. And so if I think about my unique skill stack, part of it is certainly that I've done acquisitions for a long time. Another part of it is media or content. Probably another part is selling people on a vision that I have so I can get other people to come along with me. Another part is probably simplifying things and getting to the core of an issue. Now, many things I'm bad at. So I'm definitely not the most quantitative mathematically. I'm not the best at like modeling and spreadsheets.

35:51I'm not the most focused. I can be very highly distracted. I don't have a good memory, so I forget stuff a lot. And so I try to spend more time on the first and outsource a lot of the second, which I know you do the same thing. So my day often, something I stole from Jay Papasan, which is the one thing. So basically I write down what's my one thing every single day that if I did this, 80 % of what I need happens, and I get it from 20 % of the action. So if I did this one thing, how can I make everything else irrelevant? And usually that one thing is a who problem, not a how problem. It's who can I hire?

36:28Who can I go to? Who can I talk to that's an expert on this as opposed to figuring it out myself? Can you elaborate more on that? Because I think earlier, especially people that are starting out right now, it's like, how can I become the best at this, right? But then you realize later that it's not how, to your point, it's who. Yeah, well, you are gonna realize when you're trying to make real change in your life that in the beginning you want to look like you know what you're talking about and then you want other people to think you know what you're talking about and then eventually you don't really fucking care and you just want the answer and so in the beginning I was more worried about looking like I knew and now I'm more interested in getting my answer as fast as humanly possible and I don't so much care if somebody thinks that I'm wrong or off subject or don't know what I'm talking about.

37:15And because of that, I can find a lot of great who's because typically if we weren't having a podcast, I'd be trying to ask you way more questions than you got to ask me. That's the beautiful part about podcasts, right? You're like, I don't want to tell you answers. You give me answers and you get to ask people questions. And so the who is so, this is something that nobody's going to care about if they're, if they've never managed people, never led a company. Like I didn't care about this until 20 years too late. Like I should have cared about this 20 years ago. But once I realized it after reading that book, Who Not How, everything I did got easier because when I wanted to start a new company, I would think one, I don't want to start it.

37:55I want to buy it because I want profits from day one. Two, who could I go to that's an industry expert in that industry that could help me do the acquisition faster? Three, who could operate that company so that I don't actually have to do it day to day. And then four, another who, who could oversee them plus all the execution of the varying companies that I have so that I don't have to be inside of each individual one. All of those, you don't hear me for once say, how do I do X, how do I run a laundromat? I don't actually know the answer to that. But what I do know is the multiple guys that I have that run them for me.

38:26And it's a win for them because they make a bunch of money too. Right. Yeah. I want to bookmark that one, come back to maybe how you're thinking about incentives on compensation because, again, if you're going to hire the best, like the best also need the best compensation. It's hard. One of the quotes I think you had, I was listening to a podcast you were on and you talked about how you were a scaredy cat before, right? And I think anybody that's starting out, it's like that is the default feeling. So can you elaborate on that? Yeah. First of all, you're going to be scared all the time. I'm still scared frequently.

38:56I'm a worrier. I assume the negative usually first. I'm pretty much always convinced that I'm going to run out of money, lose money, making mistakes, doing something incorrectly. And where does that come from? Immigrant mentality, don't you think? You probably have the same thing. Oh, for sure. Yeah, immigrant mentality. And we have failed. You and I have both failed the businesses. And we've failed, you know, and I've lost, you know, I've had to fire employees before and I've made a lot of mistakes. So I know only one thing and that's that I am completely fallible. Anything else I'm unsure, but that I know.

39:29And so when you know, you also know, I guess, that you'll survive. So no matter what, none of this stuff is going to kill you if you just keep going. And so, you know, I do think that there's some beauty in that. You realize at some point, my husband, you know, was in the military before. And his joke, he'll call me sometimes and we'll be having a really tough day and something will be going sideways. And his joke is always, well, is it going to kill us? I'm like, no, yeah, no, we're talking about accounting software. Everybody's going to be fine, you know. The only thing that'll kill is like a little bit of your ego, maybe.

40:00It might kill a few steps of your forward momentum. But for the most part, nothing we do in business is going to kill us unless we stop and unless we kill ourselves. And so once you realize that, you're like, ah, the ability to persist, I'm actually pretty good at that because I've done it for 37-ish years thus far. Why not continue? you. But the scaredy cat, I think, is what keeps most of us in corporate jobs for longer than we want, or in a job we don't like for longer than we want, or as a startup or founder for longer than we want, when we realize, fuck, I just thought that I should be this because everybody said I should, but I'm actually a happier number two.

40:36I'm a happier employee for somebody else that's awesome. And I want to start talking about that more, because I really want people to have ownership, not necessarily the burdens of being an owner. And they're slightly different. Yeah. I think people also need to just figure out, like earlier I asked about what your superpower is, right? I think that's also partly related to being authentic. And I feel like people throw that phrase around a lot, but it is like truly understanding what resonates with you and what you like. One thing you just talked about your husband, I remember you had a tweet recently and this kind of goes into relationships a little bit, but I think it's helpful for any relationship almost.

41:11What was the phrase again? So if you guys are like pissed at each other, it's like how big or whatever, like, can you elaborate on that? Yeah. The too small trigger. Yeah. So basically it goes like this. I often get mad at things that are small and then realize later, oh, we just had a fight about something so inconsequential. I'm a little bit embarrassed by it. And I remember one time I was talking to our therapist about it and she was like, yeah of course you do. Everybody does. She's like literally everybody I've ever communicated with has this exact same problem. The small things become the big things because we don't know how to enable them and they become these small triggers because of all the stuff you have in your past that you haven't dealt with.

41:51So basically when my husband and I get in a fight if there's a moment where one of us is able to just be the viewer and not be elevated or starting to get upset which usually happens. There's usually one person who's upset and one person who's like, this seems kind of dumb. And in that moment, if we can, without judgment, go, you know, can you just rate this for me on a one to five? How much does this matter to you? Like what's happening right now? It makes the other person kind of snap out of it for a second. You're like, well, it's not a five because five is you're dead. And it's not a three even because that's like we need to have a huge talk, go to our therapist.

42:25Is it a two? Like we do need to sit down right now and talk? No, it's probably a one. And so because we have definitions for each one of those, it often snaps us out of it. Not every time, but often. And do you find the majority of the time it's usually like a one or a two? Yes. It's almost, now it takes some practice to get used to acknowledging that. Because what will happen is you'll get, or at least what happened for me is I would get scared that if I was saying things are ones and twos too often, somebody, I would become his doormat. So then nothing I say matters and none of my problems are big enough.

42:59And now you're not even going to pay attention to them. If I say it's a one or two, you won't listen to me. And once your partner doesn't have that action and instead they go, okay, it's a one or two. So can we talk about it tonight when we have like our check-in? And you're like, yeah, that's true. And then they hold their promise and they talk about it that night. The next time you're like, hey, I'm feeling something. It's not that big a deal. It's a one or two. Can we talk about it tonight? Yes. Great. Adults. But I just wish I was taught stuff like that earlier because my immediate normal reaction is more like let it sit for a long time and then have like my tea kettle moment.

43:34Yeah, and blow it. Right. Later for something that makes no sense. Got it. And what is your daily check-in? Like how does that all work? Yeah, that one we call team. That one I stole from our therapist actually. And basically that one's pretty easy. So like say we were in a relationship and you're sitting with your partner. usually what happens, you have little micro fights during the day or little micro incidents, like every human does. And typically what you do is you call those out in the moment and those can feel like nagging or they can feel like, you know, they can feel like they're stacking up throughout the day.

44:10And because of that stacking, eventually you sort of erupt. And so we found that was happening to us. And instead she's like, you just do this daily check-in for me. And I would say we do it 60 % of the time, not every single day. But when we haven't done it for, let's say, a couple weeks, that's almost always when we fight. We never fight when we do the daily check-in. And so basically at the end of the day, five or ten minutes, we sit down. It's called team. The first one starts with touch. So I always joke when we're upset, we like touch our fingers together like this, like ET. But, you know, maybe holding hands, sitting next to each other, whatever.

44:42And then education, I'd be like, ah, I learned this thing today. It was so sweet. Eric taught it to me. Let me tell you. And you get that novelty with your partner. And then appreciation, like, man, you brought me food. That was so cool. Thanks. I appreciate that. You just can't repeat the same one every day. And then the last one is metric. Like remember when I told you today about that like one or two, you were late, you know, you know, I don't like when you're late. Can we work on that? And because it's not in the moment, somehow the emotion gets removed from it. And so that's worked really well for us.

45:11Cool. So the last part is that the M is like almost like a clearing exercise. And then what does the T stand for again? Touch. Touch. Okay. Why is the touch part important? It's important because it reminds you you're not a roommate. Like this is your partner. You're not sitting down having a business meeting. You're like holding hands. You're reconnecting. And it's kind of hard to be pissed at somebody when you're like holding their hand or sitting next to them. You don't want to slap them in your hand. Yeah, exactly. And if the worst thing that you're going to do when you're kind of mad is you're like ET touching, it's a little funny.

45:38So it breaks the ice. Got it. And a lot of people, you know, you'll get a lot of hate if you start talking about this with other couples. because often couples won't commit to doing these actions. It feels like work. Yep, yep. This is not a business. We're humans. Right, exactly. But business is humans. Business is humans. Yeah, it's all just communicating your expectations and desires and hearing somebody else's. Yeah. And so I think it's really sad when humans won't engage on the next level. Not that it's always easy, but worth it. Got it. And then I want to move forward to talk about the content piece and the whole co-piece.

46:18But also before that, you kind of touched upon how we're, I mean, really we're programmed, we're wired from our childhood, right? So you mentioned, I think in that tweet you mentioned like the Latina might come out or whatever, right? And I think like for you, are you, I'm sure you're much more aware of that wiring now, but have you done anything to work on it or is it just like you're aware of it? Yeah. Yeah. Well, I joke about the Latina because I think it's relatable, but I'm actually pretty much like this. It's very hard to - Yeah, I don't think you have the Latina. Yeah. I don't really get riled up.

46:51My husband probably gets riled up more than I do. I mostly am benefit of the dowdy. So I'm like, we all are these messy little monkeys running around trying to figure it out. And I'm certainly not perfect. I've messed up so many times. and the reasons we mess up are usually because of like fear, scarcity, thoughtlessness, lack of context. Very rarely is it malicious. And so for the most part, it's hard to get me upset. But there's a problem with that too, which is people who are relatively calm and stable, usually that means that they or you push a lot of stuff down. You're probably similar. Like I doubt you have outbursts.

47:30No, I don't. Yeah. But you probably carry a lot of stuff. I get annoyed really easily, but I don't have outbursts. Yeah. And when you feel certain ways or when you're in fights, do you typically like shove it down for later? No, I've gotten a lot better at being direct, but I feel like probably because we've worked on this type of stuff. So yeah, it's like, hey, like I'm feeling like this. I need this. Exactly. Yeah, I think it might be like also the generalized immigrant mentality. You know, I just, I kind of didn't deal with it. And then as I've gotten older, I've done a lot more therapy to say like, oh no, in this moment, my chest feels tight.

48:03And I want to move around a lot, which is my natural state, which means I'm aggravated. So I should probably, before I continue this conversation, go on a walk. And body awareness has actually really helped me. And some of that stuff, if you had told me, like, Cody, it's about body awareness. Two years ago, I'd been like, Eric, get the fuck out of town. Felt too touchy-feely hippie nonsense. And then you realize, oh, no, we're actually all just like giant receptors at all time that have fight or flight instax. It's totally rational that if your body starts to feel tight and you're thinking fight or flight that you're going to react some way, shape or form.

48:38And did you learn that from your therapist? Yeah. And, you know, I think also probably being in Austin with all the hippies helped. And then being a growth mindset sort of person, listening to all the stuff you and I do, having all the friends we do, you know, being able to kind of see us all evolve at different speeds and ways and ask questions. I think age is actually a really lovely gift in a lot of ways. I'm with you. 30 is the new 20. Yeah. Can you elaborate more on Blackstone? Obviously, it's huge, right? And just how much influence they have because kind of the theories or maybe the conspiracy theories here are like a lot of these ESG agendas or whatever are being pushed by like Blackstone, right?

49:24So I don't know. I just read about it. Oh, that's interesting. Yeah. Well, I remember when I was at State Street, we touched one in every$4 in the U.S. economy because we were the custodian of most of the big companies' banks. So when I was working in part of their business, the fixed income cash business, I could actually see who was moving money where at varying points. It was super interesting in retrospect. And I was at Goldman Sachs during the 2008, 2007, 2008, 2009 crisis. And so I saw Lehman Brothers fall real time. I saw my friends pack up boxes in the office and security walk them out.

49:56I had to break through protest lines to go into the office every single day. You know, I had my grandma call me up, ask me how I could work for those criminals, like all of the things, right? And as I watched that, I realized again that the actions from those on high, whether it be Blackstone, politicians, and actually I think Goldman was incorrectly labeled there. I do not think – I think they were actually doing it better than a lot of other firms. The actions from on high have huge repercussions for those of us who have no ability to affect the outcome one way or the other. And so you saw during the financial crisis what can happen when banks fail because they're allowed to have an unfair advantage, in my opinion, based on the government allowing Fannie Mae and Freddie Mac to expand their tentacles to all of these mortgages in the US and extend mortgages to people who shouldn't have gotten a mortgage.

50:53They weren't financially ready yet. And the government mandated that under Clinton and continued it through multiple presidents because they thought that the American dream was owning a home. The American dream is the ability to own a home, not that you just get a home. It's an important clarifier. And so because of that change, the entire country had to go through a massive recession. And then the government blamed the banks. But in fact, the government was the trigger. And so I saw that and I think something similar has happened in the US right now with assets overall. And so Blackstone, it's not that any of these people are malicious.

51:31I don't believe in these crazy conspiracy theories where they're out doing all these wild things. I think that once you get power, you don't like to give it back as humans. And we each think that we are more uniquely skilled than anybody else at executing. And so, you know, I saw it firsthand. I met with Lloyd Blankfein when we were at Goldman Sachs. And I remember listening to them talk about what was happening and realizing that they had no fucking idea what an average American was going through because they were so far out of context. How could they? So that's what I'm concerned about in this country and why I think we need more people to get ownership.

52:05And it's not because I'm a saint. It's because I think I might be uniquely positioned to talk about it. I find it fascinating. It's a cool problem to solve. and also if I want to have kids and I want to proliferate, I don't want them only to have Walmart, Starbucks, Burger King as options. Now going to the Holdco, what kind of numbers can you share around the Holdco? I think last time you reviewed, at least from what I saw, it's like, okay, Holdco does like 50 million or so, like whatever numbers you can share. Yeah, we're higher than that now. The holding company overall is interesting because what I want to focus on increasingly is profit.

52:45So we could have a company that does X in revenue and first of all, do we own 100 % of that? So I think it can be really misleading how people talk about their holding companies. Profit is most important to me. I want the holding company to be a$100 million EBITDA business. Or we could say profit just to simplify it for people. That's the goal. We're not there yet. And so what I've thought about a lot lately, I was actually talking to some mutual friends about it the other day, is like does it serve people to tell them the size of it all? It's interesting because this morning – so Neil and I, we both spoke at the HubSpot conference and we're just like, yeah, it's like never helpful to reveal that stuff.

53:28It's also never helpful to really build in public because you just get destroyed. Yeah. I see more downside and upside. Yeah, I think about it a lot. And not like downside also. And then also I think it's unrelatable. Yeah. And so maybe what's more relatable is like why I break down some of our micro deals. Because for that reason, you can really see the growth. And I hope I get judged in some way based off of more of the businesses that we create than just what I've created. And that somehow because I've built something that's worth hundreds of millions of dollars, I provide more value. But I see both sides.

54:04So I'm ruminating on it lately, but I've been slightly more private about it lately as it's gotten bigger. And like you won't see from me a lot of I'm worth X, blah, blah, blah. And I was more open to that in the beginning. And then it just felt weird. It feels like, I don't know, like it's on one end it's like, okay, marketers should self-promote themselves. But on the other end, like if it starts to feel icky, it probably is. Yeah. Yeah. Oftentimes I ask myself, would future Cody like the actions current Cody is taking? And if we sell some of our companies for a huge valuation and I get to pay my employees a bunch from it and I think we have a really cool outcome, fuck yeah.

54:49I'll shout it from the rooftops. But until then, I don't know that future Cody loves that idea. I think it's tradeoffs too, right? Because when you look at like Oprah, for example, it's like, okay, she's a billionaire, right? Yeah. It's like, that's cool. Yeah, but she doesn't say it. Yeah. She doesn't – other people say it about her. Yeah. So I guess that's the difference. Maybe that's okay. So I'll just start leaking it. Yeah. I'll just leak the financials, you know? Yeah, yeah. That's the way. But the whole thing – the part about the holding company that's interesting is like I'll circle back with you, you know, in the next let's call it like six months too.

55:19But we're making a pivot there that I think is going to be really interesting because what happens, you know, when you open up your Aperture and you get a bunch of deal flow, right? and you get a bunch of data in and you start creating content online. Optionality comes, like you talked about. So all these different things. And you can either get overwhelmed by it or you can start categorizing it. So we're pretty good at taking all the data and the stuff that comes in and sort of trying to categorize it to figure out what we want to focus on. And over the last year I've been doing that, which is why I haven't made giant acquisitions.

55:49Because I've watched other people do them and I'm like, I think you're going to regret that acquisition. So I'm going to wait because I don't have investors. And because of that I have no pressure to execute more quickly than anybody else. I don't need to exit and I don't have to cash flow on any of this more than I am now. So it's sort of a nice waiting game. The person who wants it least always wins a negotiation, right? And so as I've been watching that, I've realized that there's like two or three acquisitions that if we make them, I think we can have an unfair advantage in just about everything that we do.

56:17So over the next year, I'm narrowing down the scope from what, because I do think also what got me here won't be the thing that gets me to that billion. And I have to change games. and you've had this happen so many times in your life, so have I. Anybody listening, like you're going to play a 1.0 game to get from 0 to 100K. And then from 100K to a mil, you're going to have to play a slightly different game, but probably pretty similar. From a mil to 10 mil, you actually need a totally different game, I think. And then from 10 mil to 50 mil, you need a totally different game. And then I imagine from 50 mil to 250 mil, astronomically different game.

56:54So they keep unlocking for me the more of them that I get. Actually, so you brought up this quote in a video where you were talking to one of your billionaire friends. And the quote, and I'm paraphrasing again, was the billionaire told you, hey, do you think that you buying small businesses has caused you to think small? Dude, this fucking guy, Bill Perkins, and he's fine if I talk about him on the internet because he told me. He literally – look at what he texted me today. Want to be a billionaire and then just some link about somebody else who's doing something bigger than me. Bill Perkins. I know.

57:28He's the best. It's so good to have friends doing things so big that allow you to reframe the way you think. I mean, speaking of the hormones, I was just talking to Alex today and Layla and I was like, I'm so thankful for you two because I'm launching a book next year and I had a plan mapped for it and how I want to do it. And then I saw you guys do this wild thing and I'm not going to do exactly that wild thing, but damn if you didn't kick me in the shins to think of something totally different. And so every time I see a friend unlock a new level of the game, I'm like, oh, this is amazing. Thanks.

58:02Now I have the cheat code and I get to level up from it. And so he's amazing because he has so many more zeros that I do that the way he thinks about the world, if all I do is - You're talking about Bill. Bill. Yeah. If all I do is create a company that does, you know,$50 million in EBITDA, he'll be like, meh, okay. And that's wild. Because young Cody was like, 50 bucks is pretty cool. Yeah. You know? Yeah. Interesting. Okay. And I think there were, but by the way, I have to ask you. So in that video, it seemed like, cause Alex just did his launch recently. Right. And there's like all the screens in the back.

58:36It's like, you know, but you were doing the same thing there too. So what was that all about? Oh, that was me. I spoke at a friend's event. So the funny thing about Alex's thing, and he would tell you this too. So the event that I did the week, maybe four weeks before that was Dean Graziosi's vet, who's Tony Robbins' partner, right? And they do these every three months or twice a year or something like that. And that guy is an animal. He had like 8 million people on the one he did with Matthew McConaughey. 8 million attendees? 8 million subscribers, 2 million attendees. Sorry, Dean, if I fuck up that number.

59:14He's talked about it publicly, so you could go Google it. And on the one that I was at, he had over a million subscribers to it and more than 400 ,000 live. That is nuts. Yeah. So I'm in this – I've never seen anything like it. I've come from finance. I have no idea. I walk into the place. He's the nicest guy ever. He's a pro. He's been doing this forever. And I walk into his studio and it's kind of set up like this. And he's got this huge back area full of computers and screens and all this stuff. And I'm like, Dean, how much did this cost you? And, you know, and he tells me some of the numbers.

59:50I'm like, whoa, that's wild. And then we walk into the thing and there's like two screens on both sides. I'm like, how much did that cost you? And he's telling me the numbers. And then on the screen while I'm talking, there's like applause. And then there's like people's faces jumping up. Were those applauses real? Probably not. I don't know. I heard people laughing. It sounded like a sitcom a little bit. Yeah. It was like there was like stars shooting across them. There were likes coming. I was like, this is wild. And then Jay Shetty spoke after me. Great. Yes, exactly. I was like, oh, great.

1:00:23I'm followed by a monk. Like this is not going to be good for anybody. Everyone was ready to go. So that's cool. Exactly. But yeah, I think those events are really cool post-COVID. I think those have become more normalized. And so why are you doing a book, whatever you can talk about with the book right now? Because the book is a huge pain in the ass. Oh, yeah, I know. It's like a labor of love, right? I mean, you're in it right now. So please tell us. Why? You know, I'm a writer at heart, like different maybe than a lot of people who write books. I started off as a journalist. I've been a journalist for most of my life.

1:00:58And I think best when I write. And so if I want to explain something to somebody verbally, I'm not as eloquent as I am written. And so it felt to me like if I really want to have my mission, I should probably do it in the language in which I'm most fluent, which is writing. And then simultaneously, they last longer. I think a legacy written in pen is longer than a legacy in Bytes on the Internet. And so it feels to me like this is what I want to pour into. I mean, I'm pouring more time and will pour more money, I think, into the book than just about anything. And I hope it's not my last. And I hope it serves people.

1:01:42What will it be about if you can reveal it? Oh, yeah. I mean it's probably not going to surprise anybody. It's about business buying but with a twist. And so I'm hoping this can be a real guide for humans who want to do this and a little bit of a call to arms for why it's so important. I found a lot of people in the M &A community or who talk about business buying do it from a really shallow, become really rich XYZ standpoint. And they also hide and hoard a lot of information. A lot. Well, and I read some of the other books out there and they're by people I know and I respect, but they're shallow.

1:02:18And so I wanted one that was only what you need to know to begin the journey, but everything you need to know. Got it. And I think we might have achieved that. We'll see. It's still messy. So we're working on it. So you're going deep. Okay. So we're going to continue to go down Hold Co. a little more. But what do people need – and we'll do another podcast when you get closer to the lodge. Oh, cool. Thanks. But if you want to do it. Yeah, totally. I love my studio. You got to come to Austin by then. We just bought an office. I will come to Austin. Yeah, yeah. We just bought an office there and we're tricking it out.

1:02:52Tell us about that. So what's going into the office right now? Do you have like a – there's a podcast studio. What else is in there? Yeah. So we're doing like – it's cool. It's an old house. So it's a historic, you know, on the east side of Austin, they have like a mixed use, you know, funky old houses and stuff. And I remember, so, I mean, I was, I was corporate for 12, 13 years, something like that. I remember hating coming into a traditional office building and like this gives me PTSD, these lights up here, like, you know, just the fluorescent lighting in the thing, I couldn't handle it. And so when I wanted to build my own office, I was like for the 1.0 version, while we're still small enough while we can.

1:03:32I want it to feel like a cool place that you go. I don't want fucking foosball and all of that, but I want it to feel like a place where somebody might hang out and really have inspiring ideas, almost like a salon. So it's kind of a cool setup of a place. I'm hoping our company also is never hugely giant. I want more of the Berkshire Hathaway, smaller size of business. Head office. Yeah. I want a head office and then I want to enable a bunch of other people to run businesses and make a lot of money as opposed to build this huge, you know, I don't want to own an office building. And, and so anyway, so I hope, I hope it turns out good.

1:04:07It's in design phase right now, which is kind of fun. Got it. So I've been talking with my friends. I mean, literally at lunch today, even with the, we'll call him the, the tenant for this office over here, Ryan, or just like, man, do we go, do you go remote? Do you go full time in office? Do you go hybrid? Like, how are you thinking about that? It's, I feel like good leaders are really thinking about that right now. What do you do? What is the future of the workforce? We did an analysis last week to look at trends of people returning to office buildings or not, or office spaces in general. And I do think that the era of complete remote work is over.

1:04:47And the data seems to support it. We're seeing anywhere from a 30 % to 60 % increase in return to office. That being said, I don't think it ever goes back to the way it was. I don't think we'll ever have companies that are 100 % in office all the time again as the norm. And so hybrid seems to me the only way. And yet I don't think we'll go back to COVID levels. It's interesting because at least what he said is like hybrid doesn't work. And he's like you either go for remote or you go in office. Interesting. Why? So that's just his thesis. Mine is like we did like a little mastermind in Turkey a couple months ago.

1:05:21and we were having this debate and one of my buddies, he has like 1 ,300 employees, right? And he's built eight, nine figure businesses and all he's known is in office. And then on the other side, we have another friend and all he knows is like remote. And he said the most, I guess, you know, kind of a light bulb moment thing. He was like, you know, like I've just been used to doing it this way and this is what works for me. Like you have done office, that's what works for you. And interestingly enough, like I'm in the middle, like hybrid is what's worked really well for me. So really like my thinking is like it's really whatever works for you.

1:05:54Actually, I think that might be true because I've always run hybrid teams actually way before COVID. I've run largely remote decentralized businesses with a hub for 10 years. Yeah. So that might be the way. But our biases are so funny. Yeah. Also, I do think that it depends on the type of business too. Because for content, you need people here helping you. Like 100%. And there is something about creative juices for content being in the same room. Like being on a Zoom call for writer's room is like awful. Well, even this. I mean like we're creating – you're largely driving it but we're creating together right now.

1:06:31And wouldn't this be awful if we were doing it all over Zoom compared to this? Oh, I mean it would be done like – it would be done way earlier. Yeah. Because I just get like fatigue. It's not because you suck or anything. It's just like I'm just tired. Yeah, your eyes literally hurt from staring at a screen. Yeah. So yeah. Yeah, but probably not everything needs that. And I really don't want to try to own everybody's time, but I do think it depends on the level of employees you have too. Like when I ran most of my decentralized businesses or remote hybrid businesses, the employees were relatively high level and they had really clear incentive alignment.

1:07:03Oh, yes, got to talk about that. Yeah, if you know that if you do X, you are performing, if you do Y, you are not performing, then remote and hybrid can work. but if not and you have to have a lot of micromanagement and oversight I imagine it's quite hard totally okay so I want to come to incentives but also a preview of the book I guess people are probably wondering what do I need to do to get started to buy a business and most of the time you don't necessarily need a lot of capital I'll let you talk about it I don't ever like the idea of you can buy a business with$0 down in 30 days I don't think that's real what I do think is real is that it's probably a mixture of simpler than you think it is and a bit harder to execute than you think it is.

1:07:51Like it's not easy. It is hard work, but it is relatively simple. The problem with buying businesses is that it's complicated. Maybe it's similar to you when you think about talking about marketing. You're like, well, how do you market a company? You're like, fuck, that question's so big. I don't even know what to do with it. I think where people start and where I like to get them to start, We have something called the investor operating system, which is basically like, I don't even want you to think about buying a business until you can understand the language of money. Until you understand the terms and the lingo, don't waste your money because you're just going to make mistakes.

1:08:24And once you understand the language of money, which I think takes like, let's say, like, I'd be thinking about it like a course, you know, like you need one quarter of understanding the language of money. And if you have already run a business, you could probably skip that step because you know a lot of it, but maybe not. And then I think you need another quarter of how do I do acquisitions? Because where most people get it wrong, they're like, Cody, what's a good business to buy? I'm like, wrong question. And just to pause for a second too, just what is the language of money? Because I remember you talked about it on another pod.

1:08:52I think it's important for people to understand. So the language of money is basically this. It's that in finance, we earn our money by getting people to give us their money and they give us 2 % of their profits. I'm sorry, 2 % of every dollar and 20 % of the profits. That's how we make money in private equity. There's no incentive structure for private equity people to explain to the normies, people like you and me, how to execute what they do because then you don't pay them these exorbitant, very high fees, in my opinion. And so because of that, we might be taught the language of math or accounting, but we're not really taught the language of money and specifically doing deals.

1:09:31And so if you don't understand, we have a list on our website, actually. I think it's like, if you don't understand these words, don't do a deal. And it's all the things that could fuck you up in doing your first deal. And it's all the terms. And it's things like, if you don't actually truly understand EBITDA, net revenue, gross revenue, margin, profit, non-compete, NDA, LOI. If you don't understand these terms, you shouldn't be doing a deal yet. And then that's first layer. First layer is understanding all those terms. I think we listed something like 60, 75 terms loosely we think is necessary.

1:10:05And then the next level is if you don't understand what is good or bad in those terms. So I could say, well, I understand EBITDA. It's interest, preferred earnings, taxation, depreciation, amortization. Okay, great. Now what does that mean? Like what is a good EBITDA number? What's a bad one? What's a good EBITDA percentage for a company? So you have to understand the language and then the context, right? Which I think of like filler verbs. So can you fill in like the filler words around to the main ones in a language? And then once you've done those two things, then you have to know thyself, which is basically what do I want?

1:10:39Like somebody today, I was talking to them. They're like, I want to buy a nail salon. I'm like, why? She's like, well, I get my nails done and I want to own a boring business and I like have the salon near me. And I was like, okay. I was like, why do you want to own a nail salon? She's like, you just asked me that question. I'm like, ask it again. And she's like, well, I want to make money. And I'm like, you don't want to own a nail salon then. You want to make money and you just need to figure out what is the highest and best use of the way for you to make money. And so then you've got to really understand what do you want.

1:11:05That's where we get into your deal box. So what is a good or bad deal for you? And then you understand, okay, now I speak the language. I understand the context. I know what I want. Now how do I find a deal? How do I finance a deal? How do I execute a deal? And how do I run a deal? And once we can do all of those things, you can string them together to buy a business. And it's not really that complex, but it is hard work. Got it. Yeah, well, we'll complete the cycle next time that we do this. Yeah. But also the buying the business is the first step, right? But a lot of these people that are buying probably don't know how to operate.

1:11:42Oh, yeah. And so how are you finding these good operators? Yeah. Well, a couple things. One, the worst thing you could do in buying a business or in running a business is run out of cash, right? It's the only sin you cannot commit. in business. Because if you run out of cash, you're dead. Game over. Out of oxygen. And so the most important part is really understand, like, do you have a business? Can it continue over time? And can you afford to keep it running? And so that's sort of where we start. And if you can do that with enough cushion, then you can learn how to run the business, how to put in a good operator, et cetera.

1:12:17But if you fuck up that first part, then none of the second part matters. And so we obsess a lot on that. So how can we get people to think about doing deals that make sense for them individually where they can continue to profit. And then the second part really comes down to understanding when you do a deal, like, what are you good at? So like, I have a guy who was in our academy who he worked in a tech company, got laid off in March or May, and was quite successful, and then ended up wanting to buy a business. He was really good at marketing, actually and an engineer in marketing so pretty technical yeah and um so he's looking at all these businesses and he finally settled on a tutoring company because he realized oh the company's rolling this works everything's growing but they're only operating about 30 capacity so all they need is leads i can handle the 70 capacity it's a simple business there's not that much overhead i could let go of people in and out as necessary and this is really part of my lead gen skill set.

1:13:17And so I think that that part's really important where there are other people that are like, gosh, I'm just really good at simplifying businesses and creating operational structure. And so they might buy a business that's like pretty logistics heavy because they know they could make things cost less and they could make it more efficient and thus run the business. So you're looking for, I think Alex used this phrase, you're looking for companies that have specific incompetence in what you're strong at. Yeah, it's a good point. Yeah, you're looking for the, I think when you analyze businesses, you need to understand where your weight lies and then you need to understand what the counterweight is to it.

1:13:57So if you are a really good marketer, you know, this is where my weight lies. What would be the counterweight to that? Well, a business that has great product, but not a lot of leads. And so what you're looking for is how can we balance out the two things, my strengths with the business's weakness. Got it. And then on the finding the good operator piece, where are you going for that? A couple of things. One, if you're a first-time business owner, I think, or business buyer, I'm biased. I think you should run the business yourself. I don't think that it's reasonable to say, I've never bought a business.

1:14:30I've never run a business, but I'm going to buy a business, put somebody else in there to run it, and I'm going to continue to do my W2 all day. I'm going to advocate. Yeah. I think you need a few more reps than that. Now, you could do that if you're doing it with your partner or brother or like very close other person that's going to run it with you. Okay, that could work or you're going to be a funding mechanism for them. That certainly could work. But I have a bias towards getting your hands dirty on the first deal. And then when it comes to operators, there's three types or three categories of operators that I like.

1:15:02There's proven talent, there's unproven talent, and there's experienced talent. and I'm sorry, proven talent, known talent and experienced talent. And basically what I'm looking for ideally is somebody who's proven. So I've already worked with them in this capacity, let's say. So your CEO and your current marketing company, you put him in another CEO company and he runs them for you. But maybe it's not a marketing company, it's something else. There's known talent, aka like I've known this person for a long time, they might not have run this role before. And then there's experienced talent, which is like I've already been the CEO of a marketing company, I'm going to drop you in.

1:15:44In my perfect world, I want proven, known, and experienced. And in a non-perfect world, I'll usually take experienced and I'll take known. And these are traits. Because I want to have the devil that I know. Got it, okay. So that's helpful. Let's go to your deal box, and then I want to talk about incentives. So what is in your deal box right now? What's required? because you have a lot of different types of businesses. Yeah. Well, my deal box right now just got really narrow. But let's say historically, what would have been a good business for me? And it depends on your asset level. But there's a couple different characteristics.

1:16:18And we have something, I think if you Google like contrarian thinking deal box, there should be a specific spreadsheet you can look at. We can send it to you afterwards. So a couple of things. One, you want to look at profit. How much does the business make? So for me, let's say that's$100K a year. You want revenue. So how much revenue does the business do overall? You want profit margin, byproduct of the two, basically, to understand what sector or what percentage you're comfortable with. You want sector. So marketing, accounting, landscaping. You want geography. How close is it to you if it's not a remote business?

1:16:56You want is this a business that you're going to own and operate or be an investor in overall? You want financing method. So are you going to seller finance this? Are you going to use an SBA loan? Are you going to use cash for this business? Is this a platform acquisition? So you're going to just buy this as the first company and then add on? Or is this a one-off business? And does this fit your unique skill set? Yes or no. So I guess there's, what is that, nine of these that we try to make sure we have a range on. and everybody's is different, but you want to stay in your range as much as humanly possible.

1:17:35Got it. And you mentioned you just narrowed it recently. Like, was it way wider before? Like, what got you to narrow it? What got me to narrow it is that we're in that stage where I need to find my platform company. I have one particular type of company that I want to buy because I want to build on top of it. So I'm going to buy this one and then I'm going to add a bunch of acquisitions to it. Historically, I just bought businesses for cashflow. Like, you know, I just, all right, this business could net me a million dollars a year and we have a great operator in it. So that was what was necessary for me before.

1:18:04I wanted, let's say, a million dollar profit a year business to me or my holding company. I needed a really strong operator and a second in command because I didn't want to deal with something going sideways. And I needed it to be in an industry that I think made sense for us to manage, oversee, et cetera. And if it had those three things, then we would give it a pretty hard look. Got it. And so just for people to understand, And when you talk about platforms, like you could be buying a bunch of HVAC companies, rolling them up and selling them for a higher multiple, right? Exactly. That's exactly right.

1:18:35So you're basically, I think acquisitions are usually more successful if you're going to operate and run them, or if you have one really strong operator, and then that strong operator you can augment with more acquisitions. It's not always necessary, but it's like a 2.2 way to do it. So our uncle Charlie Munger says, show me the incentive and I'll show you the outcome. And so how are you setting up incentives for your operators? Because I think you tweeted something a long time ago about how – I thought this was interesting where sometimes you'll give them an option to just buy you out, right?

1:19:11So how are you structuring these incentives? Like what's your bread and butter typically? Yeah. So it definitely changes. But when we do a deal with an operator, almost always there's equity in it, three to five-year investing period. So they get some percentage of it over each year that they're with us and or it's milestone-based. So if you hit XYZ metrics, then you get XYZ type of equity. Usually the equity percentages are somewhere in the realm of 0.5 % up to 10 % depending on the company. Plus they have a pretty decent salary, I'm assuming. Yeah. Almost all of our operators are taking six-figure salaries at this point.

1:19:53But in the beginning, when you're smaller, you can skew more towards equity, long-term more expensive, but short-term take less salary. That's for sure. So that's typically how it works. You start out in buying small businesses and putting an operator in and you're like, take a bigger chunk of equity, but I'm not going to pay you much salary. And the only thing you want to be careful on there is that you allow it to vest over time. But the part that I've been thinking about a lot lately is you really have to explain to people the dream of where you're going when you're going to do this. Because the natural predilection or the place people typically go when they negotiate incentives is if you tell somebody they're going to get 0.5 % of a company, they're like, what?

1:20:36That's nothing. That's awful. And then you have to go to Google and go, look at what these people on average get of a startup when they are the founding member of the startup. And so you have to reframe people's perspective on what it means to get equity unless they're willing to put in a lot of cash. So I think the way to do that typically is to show them two things. It's like everything – nothing is good or bad except by comparison. So typically when we're doing incentive comp, I'll say like, all right, you got two options. 0.5 % equity,$150 ,000 salary, an ability to earn another 5 % equity over a 10-year basis if you hit these milestones, and bonuses depending on X, Y, Z.

1:21:15Okay, cool. Or option B, 10 % equity, you pay in a million dollars, we give you a$50 ,000 salary plus these additional bonuses. Which one is more interesting to you? Because we're essentially showing them that this value that we're giving them has a, is real, has a real value. And you can't just make up the number. You can't just go like, this is 50 million. But you're like, oh no, this company is valued at X and Y and Z. And you're showing them some comps too. You're coming into it. Yeah. Got it. And are you, with the vesting, are you doing like a one-year cliff type of deal? Three to five. Three to five.

1:21:51So three to five years, but then - The first year. First years. Is where the cliff comes. Got it. Okay. Yeah. And then, let's see. I had, damn, I had a really good question, but it is gone now. How do you structure yours? Because you've had operators for your businesses. So typically there'd be a pool of 10 % and that goes to, so 10 % would go towards the operator and then 10 % would be like a pool. An employee pool? Yeah, an employee pool. And then, you know. Do you do three or five year periods or do you do 10? Four years and then a one year cliff. Yeah. Yeah. So they'd have to wait a year. And what percent of your operators are successful, you think?

1:22:26We've had one operator that committed fraud. and so that one was not successful and this is just inside of our hold co not in private equity fuck I've seen it all but like when we ran our funds people are crazy man people are crazy but in ours I suppose we've only had that one guy quote unquote fail because he committed fraud but we've been lucky thus far we haven't had any of our operators leave yet. We've had some sell. And we haven't had any failures in the portfolio yet. That's amazing. You need to write a book on hiring operators too or maybe that goes into the big piece because I think that's really hard.

1:23:12It's not hiring. It's buying the right company that already has an operator in it or starting with the operator and then doing the acquisition. What I actually have not done a lot is buy a business and then go out independently and search for an operator. I haven't done that. I've done that inside of businesses. I'm trying to think if I've ever done that independently. Yeah, I guess I've done it one or two times. But I usually start with the operator. Got it. You know this Warren Buffett quote. You want to buy a business that an idiot can run? That's exactly right. Yeah, and these operators are often incredible, but I try to not get myself into businesses that I don't understand.

1:24:01And because of that, since I have such a low knowledge barrier on these businesses, it means that the person who operates it has to be pretty competent as well. Got it. And I'm also, what I will say is I'm pretty good at the exit. So if I see that a company's not working, we will put somebody else in there pretty quickly to help stabilize and or move to sell. And how quick is pretty quickly? I mean, the one that we had fraud on recently, we found that out 30 days. I was on vacation. Oh, the worst. Oh, yeah. I was in Europe, so it was awful. And we had a new operator in there inside of two weeks messing around with it.

1:24:45And at the end of 30 days, full transition to them. Still some things outlined. Yeah, I learned from an incredible, two incredible operators at this company called EEC. that I used to work for, Tiffany and Joe. And we had this one company actually here. If I told you the name of the company, I bet you'd know who it was in cannabis. Total fraud, this guy. $25 million he lost in a cannabis company, which is an extra lot. And these two flew and turned around the company over a weekend to stabilize it. And then were able to turn around that company eventually and sell it. So I learned a lot from watching them.

1:25:20That's amazing. It's speed and violence of action. Like every time I think I should fire somebody, I should have already fired them. And every time you think somebody's stealing from you, they've been stealing from you for months. And you're 100 % right. You're 100 % right. Every time. Yeah. It's the gut feeling piece. Yeah. And you always want to try to give people a second chance, but you really can't give them a second chance at the top. Yeah. And then the other thing that I learned is it also doesn't work to demote people. So like I've had it happen before where a head of a business is like, well, I really think I want to do this other thing where I need to take like a lower role.

1:25:53the second that that happens, you should help them move on to somewhere else because that is a signal. And I've just never had it work out where they could go to a lower tier and still be a good performer. Same here. Yeah, I think they're just psychologically out at that point, even though they say they're in. So terms around the deals that you do, I mean, I've seen like one guy, he does like a training on buying businesses and he has like 225 terms. What are your favorite go-tos? You mentioned seller financing or deferred down payment or whatever type of stuff. I like incentive alignment. So if you think about it, if you go to buy a business, who has the least risk and who has the most?

1:26:35The buyer has the most risk and the seller has the least. They have an absolute information advantage over you of 100%, basically. And your entire due diligence process or the process of buying the business, your entire thing is try to transfer that 100 % information advantage from them to you. It's very hard to do because they've been running this business for years and often a lot of the information is in their head. It's not even in the finances. It's not in the taxes. It's not in their employees. And so when I go to explain to a business owner how I'm going to buy their business, I often say like, I'm at your mercy.

1:27:07You have complete information advantage over me. And in order to, again, counterbalance out where we are more even, we have to take some of the risk off the table for me that you are lying to me and or that you just don't understand something in your business or I don't understand what you understand in your business. So even if you're not a bad actor, I might be missing something that you see from your decades of running this business. And so do you think it's reasonable and fair that I should give you 100 % of the cash when I have 100 % of the information disadvantage? And I think the answer is typically no.

1:27:40Now that's not true at later stage businesses because they're better organized, you have better risk systems, etc. but at the smaller end of the spectrum, it's almost always true. And so I find sellers to be quite reasonable for real players. What screws them up and what I'm trying to teach people to not do are bad actors who go in there and they're trying, I want to buy your company for$0 down and I've never run this business before and I want no personal guarantee on anything. Like, no. And also the fact that some people do really silly deals and pay for stuff that they shouldn't. Yeah. Your, well, earlier you just said kind of your information bar is low or whatever you were trying to say, but I just, I think you are a avid reader.

1:28:28You're actively trying to learn. So like what is in your learning stack right now? This is so silly. But the thing I'm obsessing on right now the most is how to be non-reactive to things happen in your environment around you. And so I'm almost learning nothing right now, technical. And I'm rereading, did you ever read the book Untethered Soul, Michael Singer? I've only gotten through half of the book. Yeah. Did you read his other book, The Surrender Experiment? No, I couldn't. It's very touchy-feely. I got through one chapter and I couldn't do it. Try it with audiobook the first time. It was audiobook.

1:29:06Oh, God. You couldn't even do the audiobook? I'll try just because you said it. Some of these books are time and place for the right person. But what I'm realizing is we're building these big things. We have all these companies. There's always stuff going wrong in the companies. And I think the best leaders and CEOs are ones that can be sort of the calm amidst the storm always. And other people can react around you, but you have to be the one that doesn't. And that's increasingly what I strive towards is like if it does not help me to react to things negatively or positively. Like, you know that old saying, do you remember the, I think it's a Chinese proverb where a father has a son and the son returns one day with a horse.

1:29:47Have you heard this one? I think I know where you're going, but not completely yet. Okay. I'll speed it up. So basically a father has a son. He lives on a farm. The son one day goes out for the day and comes back with a horse. And the neighbors go, the father, this is incredible. Your son brought back a horse. And he goes, maybe it is, maybe it isn't. The next day, the father goes out and the son was riding the horse and he broke his leg. And the neighbor goes, this is awful. And the dad goes, maybe it is, maybe it isn't. And the next day, the father comes out and the town is being, all the young men are being herded up to go to war, except those who have some sort of disability, like his son.

1:30:24And they're like, this is so lucky. Like, maybe it is, maybe it isn't. And the moral of the story is we never really know if things are good or bad. And so our reaction to them is completely unnecessary and usually unhelpful. All we can do is the best we can with the information that we have. And so I want to try to operate like that as a leader of my companies with this idea of a vision so big it dwarfs everything else and a leader so steadfast on it that they can be a calm amidst the storm. So you just triggered a thought. I mean you being a leader, that means you have to be involved. Again, you can't abdicate the vision, right?

1:30:57Yeah. And I'm just noticing like Ryan Peterson, the founder of Flexport, he's back, right? Yeah. I'm looking at my other friend. He was out for two years. at his company, he's back. And then, you know, one of my friends, Syed, he has the WordPress holding company, right? He's back in it, right? So like everyone's kind of back in it. Like, you know, the whole like 2020, 2021, people got lazy. People are like, oh, let's try all these different things. Let's invest in all these things. Like I'm very much back in it again, right? And so it's like, you can't, in my mind, I'm like, yeah, you just can't abdicate this vision because it's a big vision, right?

1:31:30So the question for you here is, what is the 25-year vision for Cody? I've actually gotten pretty clear on this lately. The vision that we have for contrarian thinking is that this is a multi-billion dollar company that is the infrastructure for small business acquisition and Main Street revitalizing in the US. And in the same way that we saw companies like, let's say, CBRE, Zillow, BiggerPockets create homeownership as the American dream and enable an entire generation to easily access homeownership, that's what I want us to do. And so we are going to do that with American, I hope, small business and maybe business overall.

1:32:17And, you know, the real reason I think that's so important is because, you know, we've seen all this division in our country, obviously, continuously. And we've lost a little bit of that town square, right? And I think we were all yearning for it. After 2020, we realized, oh, my gosh, being stuck in a house by ourselves for months is awful. And we want to come back together in some way, shape, or form. And I'm not sure that the way we're going to come back is in offices and work like we used to. I think it might be in our small towns, in our communities, and getting away from buying really big and going really corporate.

1:32:53And so I think that's really important. And if we don't do this, then we let the people on high run everything. And we've already seen that they can fuck things up pretty royally. Totally with you on that. I love the mission. And we'll kind of – this will be the final segment. Yesterday we had dinner. It was like Neil was there and then the CEO of Wistia was there. And we were talking about how like B2C creators, B2C marketing in general is always ahead of B2B marketing. And so you've seen a lot of B2C creators, right? But now there's a rise of B2B creators as well. And I would put you in that category.

1:33:29You're B2B creator, I think, in a sense. Or maybe B2C. Give me an example. So like an example of a B2C creator would be like a Mr. Beast. And then like a B2B type of creator would be like a Gary Vee or like a – Why is he B2B? Oh, because Vaynerchuk Media, because he sells. VaynerMedia, yeah. But also you can argue that he's also B2C as well. Yeah, but I guess he doesn't sell anything. He's very philosophical, right? Yeah, right, right. And I think for you, you could be B2C to be maybe, because you are going to consumers, but you're also trying to get them to start a business as well. Yeah, and I guess I want them to have a certain stack.

1:34:02Okay, yeah, track in. Yeah, so okay, so there is, what do you think about how the power might shift in the next decade or so with creators, right? Because there's people talking on Twitter now, It's like, yeah, creators will have a lot more power than operators. We're already seeing it happen, right? Well, I don't think, one, I think any creator that's saying that they have more power than operators does not understand what's going on. Because operations are the key to every single business alongside leads. And so maybe it's just the age-old, maybe it's not that much different. Maybe it's the age-old trial of the COO versus the CRO or the head of sales.

1:34:43And the sales guy always says sales first. We're the best. Yeah, and the ops product guy always says we're the best. And the truth is somewhere in between. What I think is interesting about this space, and we were talking about it, and you're like, can we talk about this on the pod? I was like, yeah, let's do it, is I think you're seeing a lot of creators right now figure out different risk trades to make because sponsorships and ads are way down. And most of them made their money through sponsorships and ads for, I don't know, the entire Times creators have existed. And then they started doing B2B or B2C products, which worked well for them.

1:35:20But they found that a lot of them had to go run those businesses or essentially give away a big percentage of equity in the business to run the business. And so I'm interested to see what happens. I think the mistake that I'm trying to not make there and that I think we all have to be aware of is just wearing too many hats. And so, you know, one of the things I'm really thoughtful about in our business is I really think about it like we're a Berkshire Hathaway. So the way I think about buying businesses is, like I said, I buy businesses with the operator in mind or already in position. And I have this Berkshire Hathaway private equity background that I've already done this before.

1:35:58What I get a little bit nervous about is when people are not buying businesses, but when they're spinning up businesses. And we've spun up one, and I think we'll see what happens long term with it. But startups, one, have a high failure rate. And two, your operator is everything in a startup. And so if we don't have an incredible operator to execute on the velocity that I can drive, it won't work. So when I buy a business, I only have three businesses that are accelerated by our media company. and only one business that I really talk about publicly because it can handle the scale thus far. But I can create a business overnight with mid-six figures in MRR with my audience in the right product market fit.

1:36:41You can literally create demand. Right, but that doesn't mean that you can fulfill demand. Exactly. And so that's the big issue. So even the accounting company we're looking at now, it's like, no, you're going to have to be profitable, operational, and independent by yourself. and then we will wait list people into the ecosystem because you can't handle 500K or a million dollars in MRR right now. Right. And until you have more of a product size service, that might not even work at all. Yeah. I mean, to your point, I think the creator, sure, the creator is the X factor, but also the operator kind of is as well.

1:37:14Oh, yeah. And so what I was talking about on stage was, hey, like I think you're going to see a rise of creator-led agencies. Yeah. And the one that you're helping, I think it was viral cuts, right? I think there's potential there for sure. But I'm seeing a lot more of these rise up. I'm just like, man, like I think it's two things that will happen. One, like the creator will drive a ton of demand. And to your point, they won't be able to fulfill and just see massive churn. And it's going to destroy brand equity. There you go. And then the second piece is like maybe like brand equity starts getting destroyed.

1:37:44But then the creator is like, well, I can't let that happen. And then they just like will do everything in their power to lift it up. But that's kind of my thesis. It's like if it does, I think we'll see more failures than like successes. Yeah, they're startups. So like 100%. I think people assume that if you have sales, then you're automatically going to win. And it's definitely much easier. It's like I think the smart move is you buy businesses that already have operations, etc. in place. I mean, it's what we've seen all the big celebrities do. What do they do? Does The Rock go spin up Terramana?

1:38:17Of course not. He buys the business and has a bunch of pro operators come into this business and then they scale up like a motherfucker. Logan Paul. Does he start Prime? No, of course not. So they have an infrastructure that works and they become glorified lead gen. That to me is probably highly functional. And then you know this better than I, but the problem that I have with agencies is they're fucking hard. It's not my favorite business model. Tell me about it. Yeah. But, you know, SaaS companies you guys know are even harder. you just have to be so smart to do SaaS up front. But you can start an education or a content business.

1:38:53You can start an agency and you can scale that first mill. But after the mill, it's hard. Well, we can talk about this later. I think there is a playbook for it. I think starting it is probably not a good idea. I want to tell you the real play I want to make too and get your take. Yeah. Well, anyway, we're going to do a round two when we get closer to the book. Dot, dot, dot. Yeah, dot, dot, dot. But Cody, this has been great. What's the best way for people to find you online? Cody Sanchez and all the things in contrarianthinking.co is the newsletter alright thanks for doing this thanks dude