Codie Sanchez on How to Become a Main Street Millionaire: The Secrets to Profiting from 'Boring' Businesses

26:15He made millions of dollars. Like that was his business and made millions of dollars doing that. I love that. They're all around, you know, I saw this really sad little post today on Twitter that, that hurt my heart. And as Twitter does sometimes, because it's been a cesspool, but it was basically this, you know, this guy says, I think my son is embarrassed that I'm a garbage man, advice. And it talks about how he went to his son's school yesterday. And, you know, I told the kids that I was a garbage man that picks up their trash every day and that his son seemed a little embarrassed by the end because all of his other parents were lawyers, bankers, scientists.

26:50Well, in the book, actually, the first chapter is talking about one of my favorite billionaires, which is Wayne Hazinga, who built Waste Management, one of the multi-billion dollar companies, American companies, that he started as like, he was a total fuck up. He basically went to school, couldn't get a job, really wasn't very good in the military either, got out of the military and ended up driving a garbage truck. And his colleagues talk about being like, oh man, I saw Wayne the other day. You'd see him driving a truck. I better go get a gig because it's that hard out here. He can't even get a job.

27:24And turns out he turned that one little garbage truck into then a$500 purchase of another garbage truck, cheaper trucks back then, obviously, to a multi-billion dollar enterprise. Then he owned a bunch of sports teams, dated models, all the things. And it all started from garbage. And so I think we got to get over ourselves about the titles matter in. It turns out that if you build something that people need and they will pay you for it and you make money for it, you're cool. And so, you know, you're not just cool because you have a tech backed startup or went to Harvard, you know? Yeah, no, I think, you know, even as an investor, I like this.

28:08Now this gets technical. I like investing in rollups, like a company that, they're in every region. They do air conditioning fixing. They buy companies that do HVAC I don't know what you call it, installations and fixing and so on. Companies like that where it's like the more you buy, the more you're able to get these synergies at the back end and the profit goes up, the multiple on the profit goes up as you get bigger. It's just like a solid business idea that's going to work if you have good operators. And these types of investments never fail. They're not going to return like a thousand X, but they might return like a solid 10 X, which is still great.

28:49And those are like perfect investments, but they're boring. You can't convince other people to invest alongside of you. Oh, I'm investing in this air conditioning company. You want in? No, no, no. Just show me the AI crypto thing. Yeah. Right. Well, I think you and I got burned too many times on these startups. Like I've lost millions of dollars in startup land. And the only way I would do startup investing again today is in a fund structure where it's like, that's the right amount of money. It's, you know, a couple of my millions, millions of other people's or not millions of other people, other people's millions too.

29:24And it's dedicated to a 90 % failure rate. We just know it. But like, I think we did a disservice to a lot of humanity by like these crowdfunding platforms and saying, hey, let's all go invest in these startups that have an extremely high failure rate before we've even made our first million bucks. It's just probably not a good idea. Yeah, I agree. Like, well, tell me, how did you make your first million? I worked for other people. I was an employee when I made my first million bucks. So you did build some wealth as an employee, as a salaried employee. Yeah, well, I think that the cheapest MBA you can get is working for a big corporation.

30:06Goldman Sachs and State Street and Vanguard, they spent hundreds of thousands of dollars training me when I knew nothing. And I was like a little young idiot running around, not kind of knowing anything. And they even paid for part of my grad school degree. And so I think a corporate training ground is incredible. And I think if I went back again, I wouldn't stay so long. I stayed for a really long time, like 12 years or something. But I think having a first couple of years at really hard jobs where you work for other people means that you're not going to lose your money out the gate. You get to learn on their dime and you get paid to learn.

30:44So I'm actually a huge proponent for that. I'm not so huge of a proponent for like MBAs. I think this is a really important point. MBAs, you learn nothing. The day you learn it, it's out of date already. the professors are out of date. Like, what do they know about running a business today? Because they became a professor 20 years earlier. And it's just, and you're spending like hundreds of thousands of dollars to go to school. When, like you said, I would say this is an important point. Like you worked at Goldman Sachs. Every industry has one or two places that are like the gems of that industry, where you look at the CEOs of all the other companies in the industry, and they've spent time at that gem company.

31:22so like i also did a similar route i worked for three years at hbo which was like the the gem of the entertainment industry like the ceos of any other entertainment company at that time came from hbo and it was i learned so much about business i only did it for three years though which is about what i would recommend i feel like 12 years is too much yeah way too much at least if you want to be an entrepreneur i think there are plenty of people that are like you know what I just want to stay in my job forever. I like what I do. Don't bother me about it. I don't need to be a psychopath running a P &L and responsible for everybody.

31:56But I still think even if you do want to just, quote unquote, just still really important, be an employee, then at least you should get some skin in the game. So some upside, invest in things on the side. What I worry about is like, you know, we saw it happen. Layoffs.io or layoffs.fyi, that incredible website where they started tracking all of the tech layoffs. Remember that in 2000? Well, I remember fuckedcompany.com. Same thing. Yeah. And I was always looking for my own company on there. Oh, yeah. Because it was like a free indicator, right? Yeah. Yeah. And people would complain about the company and you'd hear all sorts of stuff.

32:37But how did you then – when did you start making the leap from a job to – When did you buy your first business? So I bought my first business when I was an employee. And I had like three kind of failures at it first. First, I bought like a marketplace, a tech company that I really didn't know what I was doing. It didn't work out very well. It was a sexy - Like an online marketplace? Yeah, fashion styling. It was called Threads Refined. Total idiot move. And I didn't lose that much money, but I didn't make that much money. Then I bought a consulting firm. was really like buying a job there. I just didn't make very much money doing that job.

33:15I feel like if you buy a total service business, it's hard to scale. Yeah, well, that one was almost like, it would be like buying one consultant's Rolodex, right? It was like one guy doing a thing and I basically bought his clients. And so that would have worked okay if I already had a consulting firm, I think, and I integrated it into my business, but I didn't. And so it just ended up being a lot of work. But then I ended up buying a laundromat and that one actually worked out well for me and turned into a series of other laundromats. Then car washes. But that was, I mean, I was in finance working a 60 or 70 hour week when I started buying these little side businesses and making kind of a lot of money because I just was too scared to leave my job.

34:04I was like a total wuss. no it's hard to make that leap like i had when i was working at hbo i started my business on the side and i was going to my startup all night and then back at hbo all day i didn't sleep at all and i stayed at hbo for 18 months after i started my business because i was afraid to take that leap and also when you're at goldman sachs or a really great company you realize people return your calls because you're at goldman sachs because i was at hbo they might not return the calls when you're at just some startup like everyone else. And I was really afraid of that. Oh yeah, me too.

34:39Well, and I mean, I did all the goofy things early too. Like I started a pod, I must have started a podcast in like 2010, which I really should have kept that thing going. Maybe that would have been turned out well, but it was so funnily named. It was like the struggle isn't real or something like that, which I think was just me trying to manifest the opposite of what was going on in life. you know? So I did the Rolodex of like, tried a bunch of things. And, you know, I think a lot of us, I came from immigrants. So, you know, my dad in particular and my mom, they just really wanted me safe. They wanted me to just make money, be happy, you know, stay in a steady job, be easily married, have a couple of kids, just like take it easy.

35:20And so I think I tried to stay in their sphere for just decades because they thought that I was crazy for leaving a place like Goldman Sachs or First Trust or State Street. They're like, why would you do that? And so I do think we often become, you know, we build our own prison of other people's expectations of us. And then, you know, my friend Bill Perkins says it best. He's like, I remember he said to me, he's like, you have zero risk. And I'm like, what are you talking about? I have zero risk. Like I could lose all of this right now. Look what I've built. I could lose it at any moment. Like that still horrifies me.

35:51He's like, so what? You going to die? Are you going to be homeless? Are you going to starve? I'm like, maybe. I don't know. He's like, no, that's totally unrational. None of that's going to happen with your network and skill set. You could go become a bartender and probably make 100K a year. You need to get over yourself that you have total risk. He's like, what you have is ego risk, that you want to play the relative game and you don't want to lose your relative posture, which is a real mental risk, but not physical risk. And that changed my mind a lot, made me take more risk because he's right.

36:23And Bill's very interesting. He's been on the podcast. He basically built up a net worth of$50 million and then quit. And why that's interesting is everyone around him was obsessed with building up a net worth of over a billion. And it's easy to get caught up into that mindset because we all choose our hierarchies. And if the hierarchy you choose is everyone around you is, is you're a failure. If you make only, only quote unquote 50 million, you're going to go for that billion. But he pulled himself out of that and now he lives the life he loves. So, but, but like in that first laundromat would maybe walk us through that.

36:58Like, like, did you do seller financing? Like, how did you find it? How did you structure it? Cause this is sort of the, the, what people really should be doing. Yeah. So the first laundromat I had, I think there's three legs of the stool to buy in a business. so I call it the business buying tripod and so you can basically have money capital you can have experience or expertise or you can have time sweat equity and so for this individual deal I was working a lot I had no time and I had no expertise I didn't know anything about laundromats I don't even know how to do my own laundry half the time like not my area of expertise but I had some cash I had 100k and so um 100k was not like nothing for me like I that money was important to me but it wouldn't bankrupt me if I lost it.

37:42So in that deal, I used the 100K outright, didn't do a loan, didn't do anything fancy and bought this laundromat. But my leverage was that I found a guy who had run a laundromat before, but inside of his real estate endeavors. And so he ended up running it for me. And then I ended up finding some more laundromats for us to tack on and he would run them. And was it profitable enough? That first laundromat, was it profitable enough that you could pay him, pay all your costs and still have profit for yourself afterwards? And did you calculate that into the deal? Correct. Yes, we did. So you found some laundromat, like some old guy had a laundromat for sale.

38:22It had been around a while. And we could talk about how you find those things in a little bit. But you made the deal and you found the operator because you didn't have time to operate it. And there was enough profit somehow in this mix. And you calculated this out beforehand that you could pay the operator pay yourself and potentially invest a little in growing the business. Exactly. Yeah. We basically at the time, I probably wouldn't do this again, but we split it 50-50. So I think at the time, the Launder amount was making like$67 ,000 in profit when we bought it. The profit was really the guy's salary for running the thing, right?

38:55So$67 ,000 wasn't the most amount of money for me at the time, although that's a great amount of cash in a deal that you only paid$100 ,000 for. But was the$67 ,000 after paying the operator? Well, he was a little unique because we split the$67 ,000 down the middle, basically. That didn't end up being what it was by the end of the year, but for illustrative purposes. So yeah, so I paid him, let's call it just about$25 ,000. I took$25 ,000. It made a little bit less than we thought right up front. And he was willing to only take$25 ,000 to run it because I sold them on this idea of like, let's buy a couple more.

39:37And one way to think about this, I just, for the listeners is, if you have$100 ,000 or$10 ,000 or whatever amount, if you put the money in a savings account, you get 3 % interest. If you do what you did, you're getting, you invested 100 ,000, you're getting 25 ,000 a year out of it. And that's 25 % interest. So with minimal work, because you had an operator. I'm not saying you did minimal work ultimately, But in a worst case scenario, it would be minimum work and you're making 25 % a year on your$100 ,000. That's exactly right. And then the part that I think a lot of people don't think about is your real goal, the$25 ,000 is awesome.

40:13But your real goal is let's make the laundromat more valuable so that if I buy the laundromat for$100 ,000 and then I grow the laundromat 2 or 3x. Well, when I sell a laundromat, even though I, if I grew up by two to three X, that might also mean that I get to sell it not for two to three X more, but maybe for four to five X more. This is a key point that people don't understand. Like as you grow a business, it's kind of the calculus of it. The first derivative is, is positive. So the more you grow the business, the, the, even more you grow the value of the business. So if you grow the business 50%, the value of the business might grow a hundred percent.

40:53Yeah, you're exactly right. I mean, it's really easy to see with graphs. That's what I try to do in the book is show you like, all right, if you buy it for this and you make this much money on it, then versus a saving account, this is how you're doing. You're doing relatively pretty good. But if you go out this much, then you sell it, then you're doing really good. Then you've just gotten your salary back in two to three years. And then what do you do? You take another portion of what you've made, you put it in another business and you do it again and again. And so amateurs always yell at me about that first deal.

41:21They're like, this is a shitty deal, $67 ,000 isn't enough for all the headaches that come with laundromat. And my point is like, I don't ever say that buying a business is easy. I do say that it's simple and that once you've bought one and you figured out how to scale it, it's super worth it if you can learn this skill set.

41:55And how did you scale that first laundromat? Like, what did you know about scaling laundromats? Yeah. Well, thankfully I knew a lot about marketing and sales. So, and my father was in commercial real estate, so I probably had an unfair advantage there, but laundromats are all really about visibility and notoriety. And so we did the, remember like when you go outside of places and you see not the wiggly guy, but they're like a sign that kind of like wiggles in the air. So we did those outside, you know, with the name on it. We did a little bit of a facelift on the front of the laundromat. Nothing expensive.

42:28We just put these like tented signs out front so people knew. We did little things like book. We did like a book event once a month. So it's like, oh, come for coffee and like a book trade. You can have free books. So it's like community outreach, basically, just to get more people aware of what we were doing. Then the other thing that we did, so that was one, so more notoriety. The second thing that we did is we increased the average order value of each individual. So back then I probably wouldn't have even known that term very much. But basically, if originally they might only spend, I don't know, three or six bucks with me doing a couple of loads of laundry, could I also sell them the soap?

43:08Could I sell them the dryer sheets? Could I put a gumball machine in there so that now they're spending not three to six dollars, maybe now they're spending nine to twelve? and so I've maybe done, it's not that dramatic, but you know, I've maybe increased my individual order value of each customer by like 25%. Well, that's material. I'm sorry to always interrupt, but like each thing is passing. So I want to comment on that a little bit. When somebody starts a business like this, it's very, I find it's very hard for people to raise prices because they feel like they know their customers. They feel like they're betraying their customers if they raise prices.

43:45But almost every small business that I've given advice to over the past, let's say, 20 years, the first thing I tell them without even thinking about it is just raise your prices. Because I know they're like personally attached to the price that they're charging. And they always find they don't lose customers. And sometimes they're able to like even double their prices and just make double the money. It's great. You're so right. You know, the average small business, they say, is anywhere from 30 % to 300 % underpriced versus what the market is. which is like crazy numbers. And so I think you're right.

44:21On average, we don't realize that for things like, you know, if you ask me like, what does it cost to mow the yard? Like I don't exactly know. And so if my lawn man was charging me a hundred bucks to mow my lawn every other week, but he increased it to 120 or 125, that is a material impact on his business. Probably not that material to me. And so, but you know, my landscaping guy for landscaping guy, for instance, he literally, James, I have to chase him to pay him. He like doesn't have auto pay. I still give him a check. He's definitely never raised my prices. He's never upselled me on anything ever.

45:01He's never cross sold me other people's products. I mean, he's a perfect example of a business where you're just like, Oh man, like all the time, like Jorge, like, do you want to do my tree trimming? And he's like, yeah, sure, I'll do it. I'm like, why don't you tell me that? Like once a year, that's like a thousand bucks that you could get. And so it's just a lot of these people are tradesmen. They're not businessmen and women. And so you get a chance to get in there and potentially help these guys make a lot more money or you if you buy the business. Right, so you have a laundromat. You could, as you mentioned, you could do a little bit of marketing to drive in some more customers.

45:36You could sell them more things. Like I like the gumball machine. Just put things in there to encourage people to spend a little bit more money. You could raise prices. You could sell them kind of related items like soap. And you mentioned this in the book. You could even buy your own soap company. So you're getting the soap wholesale and you could sell it retail. You could wash and fold and deliver for them. So you mentioned in the book, you could expand by buying a small delivery business of some sort. And there's all these ways to scale. and then you could take profits and buy the next laundromat.

46:12And two is going to be, it's not one plus, like we were talking about before, it's not one plus one equals two, it's one plus one equals three now because now it's a chain of laundromats with just two, so it's valued more. Yeah, it's exactly right. I mean, and I met a couple the other day that I just, like, you know when you look in an entrepreneur's eyes, James, and you've just like, you're like, oh shit, you're going through it right now. Like you could just look at them and be like, oof, how's the business going? I'm like, I can tell. And I was in a laundromat the other week and they had started it from scratch, which I just think is a really tough thing to do.

46:46And I would never advocate for because each machine costs like 30 K in a laundromat. Plus you got all this weird build out you got to do with like pipes and water and electricity and some zoning stuff sometimes, depending on how you get rid of soap. So anyway, it's like kind of an expensive build out. And so I saw this big, beautiful laundromat and we were talking to the owners and I was like, you guys just you know you built this how you doing and she was like oof you know we she's like it was miserable it cost us two million dollars to build out this laundromat oh my gosh nine months over uh the timeline to execution she's like we almost went bankrupt she's like it's beautiful now but like we are gonna have to i mean a two million dollar laundromat to build out um you know if the average laundromat makes 15 or 20 profit margins i mean we're talking about not getting your money back for years and years.

47:36And so fully recouping your cost of capital. And so for her, I was like, if you did one thing differently, what would it be? She was like, yeah, we should have listened to you. We should have bought a laundry mat instead. And I was like, yes. So many of these legacy businesses already exist and we're getting sold ideas of how to make them fancy and shiny and new, but we could do that over time, little by little. Our parents used to redo our houses, right? Like, you know, remember like growing up, I remember living in a construction zone like three or four times, like a whole part of the house like tented kind of, you know, and they were working on one part.

48:14Now, what do we do? It's like, we build a whole new house. We totally redo the thing. And I think business is the same way. It's like, how can you be just 1 % a little bit better every day? And you'll be shocked at how much more money you make if that's all you do. Yeah, and I think people, I think people underestimate every aspect of this. Like, let's say now you want, instead of doing$2 million on a build out, you could buy with that$2 million, you could probably buy several laundromats. Like talk about how do you find, like how do you arrange the seller financing? How do you, what is it? Like, how do you convince someone to do it?

48:48Why is it beneficial to you? Yeah. And so on. Well, we have a couple of things. I was trying to find the book that I had already written notes on, but of course I can't find it. I think my team stole it from me, But the one that I already took notes on, there's a segment in here that I think is really important. And it basically talks about how to find the right seller avatar. Yeah. And so for most people going to buy a business, if you're going to go buy a business from 30-year-old Cody, who's growing her business double digits every year, who's only been doing it like three to five years and likes what she does, that's a terrible seller financing avatar.

49:24And so we have this checklist in there that's like, okay, has the person been in business over five years? Is the person over X age? Is the person in an area or an industry that is growing at like three to 5 % growth per year, which is pretty average for a small business? And do they have some version of the seven Ds, which are disease, dullness, departure, disagreement, distress, divorce. Death. Death. Good one. And if you have one of those, you often have the perfect seller avatar. And so that's what we're trying to look for. And that's because, like, let's say someone dies. Now the kids have to sell, have to either shut down the laundromat.

50:10I'm using a laundromat, but it could be a car wash. It could be any of the number of businesses from the industries you mentioned, but let's keep with laundromat as our placeholder. But the kids might have inherited a laundromat. Now they have to pay tax on it. They don't want to run a laundromat. They just have to sell it. That's exactly right. Yeah. Or there's a fight inside of the business and one kid wants it and one kid doesn't, but one can't afford it. And so they got to sell the business outright in order to get the cash out. Or there's a divorce and the husband can't afford to pay the wife.

50:42what her payout is unless they cash out the business. There's so many reasons, but a lot of these days it's really retirement. That is the number one big one is that the entrepreneur is tired. They don't have an exit plan. Their kids don't want to take over. They want to move. They're ready for the next adventure. And this is their example. I mean, I was just talking to a seller the other week and the business was making right around$400 ,000 a year. they were probably doing two two and a half uh thousand dollars in revenue so that's a healthy business 400 000 in his pocket every year at the end of the year and he'd been running that business for like 12 13 years and before that he had another business just like it that he had sold so like in aggregate he had actually run a business like this for probably like 30 years but just you know two shots on goal and um you know when i asked him i'm like so why why are you looking to sell this thing.

51:38You know, you're making nice money. You appear to have a good life. You got a good team going on there. He was like, you know, I just realized that this isn't my favorite thing to do every day anymore. You know? And so I'm getting a little older, you know, he and his son are really into pickleball of all things, which is like a new whatever. And so he's like, I can still kind of play pickleball right now. And he's like, I don't know how many more years I got without like my son. And then I got a grandkid coming up. And so he's like, so I just, you know, I want to spend more time playing pickleball and I want to spend more time with my church.

52:06And so because of that, I'm kind of ready to sell, but like I'm not in a fire sale. And also I don't actually need the money because I've been making 500K a year for 30 fucking years. So he's actually sitting pretty. And, um, and these are so common. Um, but the problem is they're not always listed publicly. They're the ones where you got to go find them. Yeah. I think again, it's one of these things, people have a shame factor. Like they don't want people to know their son. They don't want their employees to know they're selling their business. I don't know. It's like a private thing almost. Yeah.

52:35I mean, if you think about it also, you're probably a little nervous that your business is going to implode if you tell people. And also for a lot of these guys, this is the first business that they've ever run and definitely the first one that they've ever sold. So they've never done this before. Anytime you've never done this before, it's scary. What kind of business was it? Can you say? What kind of business did that guy do? A home services business. Yeah. He actually had a flooring restoration company. So they did cleaning and restoration, I think, because he had a recurring revenue component, which was nice.

53:08That was his cleaning business. So he would come into corporate centers and he would have contracts just to come in and clean. But then he would also restore floors. And I don't know exactly what kind of floors. I see. So it wasn't dependent on him necessarily. It's just he had a process, the business had experience and reviews and testimonials and he was able to send anybody in and restore the floor and so on. And what kind of deal would you structure with someone like that if you were to buy the business? So$400 ,000 a year profit. I typically go to two to three X. So like you would offer, let's say$800 ,000.

53:46Yeah. And he would probably say no at$800 ,000 and he'd probably want more like a million for it. I find also seven figures is often like a number that a lot of people want when they sell. So he'd probably say no. He might try to push me up to like 1.2, 1.3 for it, but I think that would be too much. So I'd probably do something like I'd start at 800K and at 800K, I'd be pretty happy. I'd do a reasonable deal there. But then if you want it a lot higher than that, that's where I'd start layering on some terms. So I'd say, well, I could meet you at that price level, but we're going to pay X now and we're going to pay this other amount if you hit all your metrics over X period of time.

54:24And you're going to have to stay on a little bit to make sure that we hit those metrics. And then - So what's like a typical deal? Like, let's fill in the numbers. Like, what's a deal you've done where you were able to pay less upfront and do an interesting structure? Yeah. I mean, lots. But let's take a really tiny deal as an example, and then we could go bigger. So the one that I was proposing to this guy, which was actually for a member of our community, I wasn't going to buy this deal. it's a little too small for me. But for that deal, the proposed structure would be something like 720. That was the number we got to.

54:56And the reason we got to 720 on that number is because we think that even though he is not really involved all the time day to day, we still need an operator in there. And so we were like, nah, we actually think like we need another 150K-ish, give or take, for somebody to be involved in the business. So this actually lowers your profitability a little it, we'd be more comfortable at 720. So we got to 720. The guy didn't like 720. He's a nice guy though. So I think they still may do the deal, which means that the second phase is milestone based. So they put seller financing in front of the guy, about 20 % down on both deals.

55:30It's two guys going in to buy this business with him. And they're going to offer him up to 1.1 is what they they've lightly agreed to now. But in order to do that, he actually has to hit last year. They did like 498, 498 or 598 last year. And then they're down to like 450 or something. It really ranges from like 400 to 500 at the high end. And so they're like, well, in order to hit that 1.1, you got to hit those bigger numbers again this year. We got to get back up to 500K for a couple of years, and then we'll be comfortable paying this large number. so we'll pay it out over time. I believe their term is seven years for the debt.

56:09So what would they put down? What would be the first payment? What would they put down? What's 20 % of 720? So like 150, about 148, 144. So they'll probably put something like that, 100 to 150K down for that business. And would they borrow that or would they just - These two guys are going to, they're comfortable up to 200K down, but I'd be more comfortable closer to 150. So they'll put$150K down. They'll have another amount in escrow. I think the guy wants another$150K in escrow. So I don't know if they have all of that or if they'll have to bring on a third party for it. So let's call that$300K.

56:49So it'll sit in an escrow account for a year. And if they hit their$500K number, then another portion of that gets released to the guy. They want to do over a seven-year period. And I think they negotiated quite a nice interest rate. on it too. The average loan right now at the SBA is somewhere between eight and 12%. But because it's seller financed, as opposed to the bank, they're going to get like a five and a half percent loan, I think. So he'll make even a little bit more than the number that he wants because they'll pay him interest each year on top of it. But I like the interest to be a little bit less because we need the cashflow in a business like this.

57:26This one doesn't have a lot of, it doesn't have like a lot of operating expenses. They've got some machines, they've got some trucks, but they don't have like construction materials for, for floor refurbishing. It's mostly just the machines and labor. And are employees fine with a new operator coming in? Like, like, so you, you hot, you put out an ad, Hey, we need an operator of this business. And are the existing employees like cool with just a new guy coming in and bossing them around? Yeah, it's such a good question. I always come back to the, I think it's Maya Angelou quote that says, they won't remember what you said, but they'll remember how you made them feel.

58:06And I think that's true in doing deals, but I think it's like worse than that. They'll remember exactly what you said and how you made them feel when you do a deal. So I think one of the keys when you take over a business is the thing that finance guys typically do not do well, which is we kind of want to obsess on the team that you're acquiring, because those are going to be your friends, your homies. And a lot of times in the beginning of taking over these businesses, though, there's a lot of positive upward momentum because these businesses have only been growing by three, 5 % per year, if at all.

58:37And so nobody's making more money over time. Everybody's kind of like just doing exactly what they've been paid to do. There's nobody really driving anything forward. So we have a little protocol we do in the first 90 days for how to get people on board. But suffice to say, it's really important, I think, when you get in there to immediately rip the bandit off. Hey, I'm here. I'm in charge. But number two, I'm not here to cut away all the fat and make this a miserable business. I bought it because I like this business as is. All I want to do is make it better for us. And then you got to get rid of the cancer.

59:12So there will be like one or two people who are just not going to be a good fit. You need to move them out quicker rather than later. And it's sort of like, tell me if I'm wrong, it's sort of like you have to bring someone in because I would be worried that existing employees might know ways to kind of steal from the company or to charge customers and not let you see what they're charging. I don't know. There's like lots of ways you could get cheated and you describe in the book being cheated on several occasions. But I feel like if I bring my own operator slash bookkeeper, it's a little harder for them to do that.

59:44Not that I'm distrustful as a person, but you got to always look at the worst case scenario when you're doing a financial transaction. It's a great point. I've done both. It really is personality driven. I found a lot of times the founder types are the ones that will justify stealing from you. The ones where you have like a GM who works in the business who you're elevating to the next level, I found they often just want help. Like those aren't the people that have cheated me. The people who have cheated me are like people that I thought were really strong operators and they were going to crush it for me.

1:00:18And they were all charisma and bullshit. And so, um, I'm sure it's also happened quite a bit where the accounting team steals from you because they, they actually could at a base level. So we do always have our, like, I have a third party look at all the financials of our businesses, but, um, I've had plenty of businesses where I kept operators from inside the company and I even promoted some of them because they were underutilized under the last person who was in charge. How do you know with this cleaning and restoration business, the employees aren't going into the corporate building and doing some cleaning and then the building manager says, hey, I heard you guys do restoration also.

1:01:00Can you do that for me? And they just do the job on their own without the business behind them. They certainly could. I find that it's hard to lie consistently over time. And at some point you get caught. Basically, what I use as a barometer is we use a 13-week cash flow report. So every single week, I want to know what is the average amount of money we make every single week? What is our margin every single week? What are the amount of deals we have outstanding each week? And if I start to see that dip or move, that's how you can decide fraud. Like I had a guy who stole a bunch of money out of one company.

1:01:32And it was because we were in a period where I couldn't quite understand what was happening. There was like build out of a product set we were doing. So there were more inflated costs. He was like, no, no, no, we're going to be profitable later. We're going to be profitable later. But if you buy a boring, stable business, you should already know what the profit margin is, how much we make each month. And when there's moves on one side or the other, that's your job. You investigate it. It's really interesting. The subject of cheating is sort of universal across almost every activity, whether it's sports, business, games, I don't know, elections, that basically people tomorrow are going to pretty much do the same thing they did today.

1:02:14So like if someone is in a sport and they run, you know, a marathon in three hours, that's probably what they're going to do tomorrow also. Like they're not going to suddenly do it in two hours or some phenomenal thing. You know, it's like in school. If somebody gets C's on every test and then suddenly he's getting A's on every test, they're probably cheating. And so you could kind of tell from the numbers that improvement is gradual. It's very rarely like a sudden leap unless like we were talking earlier, like you just double prices. But in general, if the business is roughly the same tomorrow, everything else, all the money you make, the money you lose and so on should be the same.

1:02:56Yeah, I think that's true. Also, the more simplistic people are in their explanations, I usually find the less likely they are to steal from you. So if they can't really explain stuff and you're getting confused and they're overcomplicating it, that's usually a red flag for me. If they're like, oh, we're down 20 % this month because we lost a big corporate contract and I can check that out. it probably checks out. But if it's like, well, what happened is, you know, that fulfillment was bad. And then because fulfillment was bad, it's often like a red flag. Either they're inept, they're not really involved or working that hard because they can't explain it, or they're trying to confuse you.

1:03:55Let's say someone's listening to this and they're like, okay, well, I can't, how am I going to find a business? I don't know any laundromats. I don't know any car washes. What are some other industries? I keep saying laundromats and car washes. I know. Well, let's talk about like 10 of my favorite businesses to buy right now. One of the ones I'm kind of obsessed with today is addiction recovery centers, small ones. I mean, single family homes where you put people covering from addiction in them. Huge growing industry, needed overall, tons of government grants, not that expensive to start. Also grants for you to buy your own property if you're going to do this.

1:04:29That one's interesting. Similar vein, senior care homes. Again, not a big center, but one-off individual homes. Huge demand for it in the US. Simple business. Do you get worried about liability with stuff like that? I think if you're properly covered from an insurance perspective, it's very insurable. It's just expensive to have that kind of business. So it's basically like buying... And in a case of a senior facility, you're basically buying a piece of real estate that has maybe added income streams as opposed to just rent. Exactly. Yeah. So oftentimes the incomes are like two to three X typical room and board, which means you have a nice little profit margin, but you do have to provide some additional services.

1:05:13So those are cool. I once owned part of a, for teenagers, an addiction recovery facility where it was for, it was like teenage girls. And so, uh, they, you know, our business was limited basically in the number of rooms that we had. So we're always trying to buy like abandoned hotels just to, and then get them regulated by the state and then build out the business. And then we sold to a roll up that didn't have a presence in our state, which was Connecticut. And, and, uh, it was a great deal, but these are like great businesses. They're great businesses that nobody talks about. They're also not that complex.

1:05:50It's pretty simple if you're willing to do the dirty work. I also really like home services businesses. So like window cleaning, we own a window cleaning company. We own a painting company. I almost like window cleaning better than painting because it has recurring revenue. Like you can do commercial contracts continuously with window cleaning. Painting commercial contracts are a little bit harder unless you're in a really harsh state with like winter or like Phoenix, you know, your paint cracks every year. Um, we also, I really like, uh, we have a handyman business and I really like the handyman trades because I think people will pay subscription, uh, help for handyman continuously.

1:06:32But right now that's service people don't really offer. Um, it's all. And you don't think it's, that's personality based. Like, Oh, you get used to your handyman. Oh, I know I can trust, you know, Charlie comes every week to fix everything up. Oh, what do you mean? There's a new guy coming. I'm just going to look around now. Is there a moat around that? Yeah, I think there could be. But I think if you brand the company as opposed to the individual, then you're a lot better. I also think that there's insurance that helps a lot with handyman companies. So most handymen are not insured tradesmen.

1:07:06And if you are a homeowner, you actually kind of want that. There's also a lot more about safety, security, timeliness, follow-up, you know often we keep cards on file so they'd have to like cancel that to go with this guy so sure there's going to be some churn but I think less than we anticipate anything that makes it easier for us as humans to like get things done will probably mean we stay with the company more consistently we also have a roofing company roofing companies are kind of interesting really depends where they're located they can be kind of scammy and like insurance claim oriented, especially in Texas.

1:07:44There's lots of people who like chase hailstorms to fix roofs. So you need to be careful about that. But it's a great business to be in because people need roofs on a consistent redoing of routes on a consistent basis. And you can also get pretty big commercial contracts. What else do I like recently? I mean, we did a really interesting video on a garbage man business. I didn't know this existed, James, but apparently they're still, I thought like every city, township, whatever had a big, huge corporate garbage company that went around and covered them and that you didn't get to choose. Like I can't choose where I am in Austin to get a different garbage company.

1:08:22It's like the city provides it. I have to pay for it. I don't know. But in a lot of HOAs and municipalities, you have these third party providers that you can use. And so, you know, a friend of mine, Spencer just got really annoyed at his HOA garbage company and spun up his own garbage company. And now they're doing multiple six figures a year in revenue. And so - So wait, he started up his own garbage company. He got his own HOA to use them as opposed to the existing company. And then he expanded out to other HOAs? Yeah, and he did it even smarter than that. He was like, he posted a picture on Facebook, like neighborhood or marketplace, whatever that thing's called, where like everybody goes and talks to their neighbors.

1:09:00So on his Facebook neighborhood page and also on like a neighborly and basically said, hey, is anybody else super annoyed at how terrible our garbage service is? If I started my own, who would sign up for it? And he had like hundreds of people respond. And so he just started DMing them a link to prepay for a monthly service. Prepayed like, I don't remember how much, I think it was like$15 ,000 he did in prepay. So then he was like, all right, here's my startup capital. He went, got a loan on a truck, bought a bunch of used garbage bins, slapped some logos on top of them, and then made some like cute merch.

1:09:38He calls it Lone Star Trash. And so, you know, he basically grew the business from that. And he used to be a software guy. And now he jokingly like goes to his kids school every day and says like, I'm your garbage man. I rode around the truck with him. It was actually like, plus I thought the dump would be gross. You know, I was like, this has got to be disgusting. And it's not like you don't touch garbage at all. It just has these clampers. And the people at the dump are super nice. And it's kind of fun driving the huge truck. And everybody's super nice to you. And yeah, it was not what I thought it was going to be for sure.

1:10:19I mean, and these are the ways people all over the country are making millions of dollars. And so you talk about the, I think it's the four A's, how you find deals, because the average person maybe doesn't know how to find a garbage company that's for sale or a laundromat that's for sale. Yeah, well, there's lots of ways that we can find a company. First, I mean, I like to break it down from off-market and on-market deals. So off-market deals would be people like Spencer, who maybe you find out about his business. You're like, hey, do you want to sell this thing? Because you've got it started, but I want to grow it.

1:10:51So this is like our center of influence strategy. It's who do you know? Who do your parents know? Who do your kids' friends' parents know that might have a small service business that you could just start a conversation with? These are off-market deals. They don't even know that they want to sell. We call them the quiet sellers. The second way is on-market deals. This is traditionally big, huge sites like Biz Buy Sell existed. I didn't love that site, so we started our own called BizScout. I actually bought the marketplace first, and then I built it, trying to follow my own medicine. How did you find this marketplace for sale?

1:11:27I found it on Twitter. There was a guy on Twitter that basically was talking about how he got annoyed trying to find deals. And he built originally just an off-market deal scraper, which still exists. We just upgraded it. So if you're like, James, I want to go buy child care centers and nurseries in Piedmont, North Dakota, then I can go on my off-market deal scraper on BizScout and search for that. Or if I'm like, huh, I want to buy a garden and nursery center in Scottsdale, Arizona. I can go find all of those. It pulls in all the contact information we can humanly find on the owner and the business.

1:12:02So you can reach out to them individually on LinkedIn or maybe Twitter or get their email address and ping off market deals. And then we layered on top of that on market deals. So those are from, I think we have like 52 different data sources now where we pull businesses from other websites. and then we're about to add proprietary listings. So obviously I have a big following and a bunch of people are telling me all the time, I want to sell my business. Let's put them on there so people can find them. And that's, I think - I'm going to go to BizCout right now. Most people will buy businesses through a site like that, but right now it's not.

1:12:34So you've been doing an interesting strategy too of not just sort of like, you know, oh, let's do this, buy a bunch of businesses, combine them together, sell it, do it again. You've been really building a social media presence for yourself to A, that's a business in its own right, and B, probably it gets more deal flow to you. People know you're in this industry, so they call you with deals. Yep, yeah. When did you start building the social media site? Well, that was 2020 is when I realized that I didn't want to be a partner with anybody else in a private equity firm, so I exited that partnership.

1:13:12And at the same time, I thought about just going and buying a ton more businesses. We already own quite a few, you know, 25, 26 or something now individually. And I was like, well, we could go try to become the next BlackRock or KKR, our version of it. And then I was like, God, I hate private equity owned companies. Like I can tell. I can tell when I walk into a joint if it's been bought. And in anointing. How can you tell? Yeah, like small things, like super corporate every single time. Uh, everything's private equity is all like systems and processes and profit, uh, maximization and revenue, uh, maximization and expense cut.

1:13:53And so, you know, you can kind of go into Starbucks and go, yeah, it's definitely not locally owned. You know, there's no local, there's no like board in there that says what's going on in the local community. Like you can't get to the owner. Um, there's nothing, um, there's like lost its soul somehow. and I feel that a lot in businesses. And so I was like, eh. What makes you different from private equity though when you go in and buy, let's say a car wash that you don't really, you know, you're the new person, you don't really know anything about the business. Like how is it different from private equity?

1:14:26I think my point was if I kept going, I would have been just like them. Like if I started to own 300 car washes across the country and built it into a huge conglomerate at some point, that we're probably not that different. At least still, if you're the owner of that one business and that is all you do, then you can still become obsessed with that one thing. I think when you start creating a private equity portfolio, it's financial maximization. And at some point, you don't care individually, culturally about each individual company. And so I was worried that that's what I was going to become.

1:15:03And at some point, I mean, I've done pretty well. I've made a decent amount of money. So I was like, I want to be happy with the thing I built. And so, but I still want to build a billion dollar company, but my idea was like, all right, instead of just doing roll ups everywhere, let's let other people do that. Let's like help more people own their individual companies and all build businesses that haven't existed before, but they'll leverage my unique talent. So that was like, all right, let's build this business buying and selling marketplace. That would be really hard for an individual to do at scale everywhere.

1:15:35It actually gets net better the more users that are on it and the more consolidated it gets. So that's... Right, it has the network effect. Exactly. And do you also, I think you do, but I'm not sure, do you do an online course on how to build a business? We do. we have what we call the Contrarian Academy, which is we have two communities. We have, and we're working on a third and a fourth. So we have one for buying a business. Then we have one for you've bought the business. Now do you scale the business? Then we're going to have a third for now you've scaled the business to like 10 figures plus.

1:16:12Do you want to create a portfolio of business? And then finally we're going to have exit. So now you want to sell your business. And the idea is like, could we create our own little financial MBA program? But like, one one hundredth of the cost for people who want to build up small businesses? And then can we have events sort of all throughout the country doing the exact same thing? And I'm going to try to not be elitist about it and like limit participants artificially. It'll be like, if you qualify and it's like an appropriate right fit, then you should come into the academy. And then the third leg that we have there is we invest in the venture capital companies that support small business.

1:16:51So again, economies of scale are real. If you have the best laundromat software out there, we invested in one called Sense that aggregates data across the entire laundromat industry. It has the CRM and the backend and the order flow processing, et cetera. And so I'm trying to do the same thing I tell people, which is like, take the one thing you're good at and then build a satellite of companies around you, which allow you to diversify your revenue streams for your business too. And I would say you're really exceptionally good at building a social media following. Like you said, you started this in 2020 and you've already built this enormous platform.

1:17:28You're a great writer on social media. You present great content. I just saw a tweet, I think it was yesterday from you, where I didn't know this about you at all. You were a journalist covering the border at some point and you described all this horrific stuff. and somehow I guess you did that in between before or before Goldman Sachs. I don't even know. Like you were like the James Bond of the border for a while. Oh, hardly. Well, that was, yeah, that was, I was still in college. I, uh, the last year of college at Arizona state, I got something called the Howard Buffett foundation grant, which is Warren Buffett's son to cover border issues across the U S Mexico border.

1:18:07And so they gave us money and, And I didn't graduate fully a year early, but my last year was for my thesis. I was in the honors college. And so we got to go live and work on somewhere along the border covering stories. And so I chose Alaprieta, which is a little border town, and this other town called El Paso and Juarez. And at the time, you know, you're young and dumb when you're young and dumb. I really didn't think very much about covering border. In fact, I thought it was really cool. I thought it was super cool to like go and cover border issues. And that was like, that would have been 2007, 2008 period of time.

1:18:45And that was like some of the worst cartel violence along the U.S.-Mexico border. I think they were saying in that three-year period, something like 10 ,000 people died in Juarez. So it was awful. But it was fascinating as a journalist. We were covering things where I remember vividly there would be two newspapers every day in Juarez, and they would both have body counts every day, but the body counts would be different. And so one was supposedly managed by the cartel. At the time, the big fighting was the Sinaloan and the Sonoran cartel, and then the other newspaper would be the government. And so you would kind of be able to triangulate who was fighting who and what was happening through the two newspapers.

1:19:30But yeah, I mean, I think I'm similar to you. You like to write, right? Oh, yeah. I would say that's my main interest. I am actually not as much a fan of business. I've just been lucky that I'm good at it. And also out of necessity, I had to get good at it. But writing is like the thing I love to do. I'm the same. So I think whenever I get pissed off, I usually do my best writing. I don't know. Yeah. Yeah. It's like pissed off. But this is why probably you're a good content creator. Like people don't realize writing and content creation is, I hate using the phrase content creation. So writing is a skill.

1:20:09It's a skill that's developed over years. Everybody thinks, oh, they can write a LinkedIn post and they can make a tweet. They're a writer. But the way to build a social media following as you've done is write good stuff. Yeah. And I think actually live your life. You know, the best content creators or the best artists or whatever have been through some shit, you know, like heavyweights, the best of all time. Why? Because his life was fucking bananas and he could just understand the full spectrum of the human experience. And he did things that, you know, are wild, you know, from from catching the biggest fish to being in war zones, to going to Africa, to big game hunts.

1:20:50And that informed his writing style in the sense that he realized he didn't need to have flowery prose. He didn't want any of the prose to get in the way of the experience that had happened to him. So that's how he developed his minimalist writing style, which was really great and so many people mimic today, but he really mastered it. Yeah. I mean, and I got, I mean, if you've ever read, did you ever read, um, uh, uh, his story about the Indian, uh, is like Indian wife or Indian. I don't think so. I'll have to send it to you afterwards. You just read it and you're like, ah, it's so short. It's so poignant.

1:21:30And like the last line, you're like, oh my God, I, I was thinking I understood this whole thing. And the whole thing is the opposite of what I, what I thought. And so, um, you know, some of my experience today in business and otherwise is I think influenced by the fact that like, I've seen what happened to people who have no money. They have no power and terrible things happen to them and they can't push back and nobody gives a fuck. And so I get really mad thinking about people not having money because money is freedom. And the less you have of it, the more other people take advantage of you.

1:22:04And, uh, and that I think just was carved into my soul while I was a journalist for that very first short period of time. And it's why I get annoyed too when people don't talk about money and when people try to make it seem this really big, difficult, terrible thing. It's like it's hard, but it's not rocket science. And I think more people could have more of it than they imagine.

1:22:43I mean, every aspect of money is, there's psychology, there's shame, there's fear, there's ego. There's so much involved that it's really, it's like how someone makes money. You know, like for instance, you work at Goldman Sachs, most banks, maybe Goldman Sachs is one of them, maybe not, but most banks are basically run by total scumbags. Like in everything they do is, you know, in some gray area against their customers, against their employees, against shareholders. Like it's, it's really hard to figure out what the motives of some of the things they do are. And yet that's totally respectable.

1:23:22It's the most respectable thing. Oh, I worked at Goldman Sachs. But if you do something like, for instance, you know, I sell a financial newsletter and had a business for many years, which I sold, but doing that, that's all, it's shameful. That's a schlocky thing or whatever. Even though I might legitimately, I am legitimately interested in helping people out, do a better job investing, don't make the mistakes I initially made and so on. But it's a little bit more of a shameful industry. Well, I think you were just ahead of the curve. I think in 20 years, that flips. I was reading a tweet yesterday and I can't remember who said it, but I was like, yep.

1:24:02It's like, contrary and take, you pay$200 ,000 to a traditional university, you will be in debt. But anybody who spends$200 ,000 and applies what they do, what they learn to a technical school or a online system, like you and I have, like many other people we know, likely to cover the costs. I mean, think about it for a second. Absolutely. Like the ROI on it is so real. And so of course people are calling you schlocky and saying it's shameful or whatever because you are disrupting an entire industry that has been built for decades on the idea that you don't need to know. I know, give me your money, I'll take care of it.

1:24:50I'll take two and 20 or I'll take 1 % and see you later, bye. And so - Yeah, the whole two and 20 thing is ridiculous. Like hedge funds charge 2 % of assets and 20 % of the profits. And then you look at their holdings and their SEC filings. They own Microsoft, Exxon, Google, Tesla. They own the same things everyone can just own without paying 2 % of assets and 20 % of the profits. Like it's a total scam. And yet, oh, these are respectable billionaires. Like we have to listen to them. They're going to tell us what to do. Well, also, I mean, you think about it for a second. you can have unlimited upside on your education.

1:25:27Unlimited. If you keep learning, you can keep earning. You have a limited upside on what you can earn from any type of investment. I mean, the best businesses in the world, maybe if you're Tesla, Elon Musk, I guess you have unlimited business upside. Or maybe if you get really lucky in Amazon, you have almost unlimited upside and getting in really early in the stock. But by and large, you're better off investing in your knowledge than you are investing in any sort of investment. And I think that's the other thing that they don't want us to realize is until you've really mastered, hey, how can I learn how to buy a business the best, like the best way possible?

1:26:05How can I really make sure that I understand real estate investing? And then you go invest, you're going to make way more than if you throw cash immediately at a deal, or you throw it in a mutual fund. And I wish that more people talked about that too. I mean, people say that to me sometimes with our academy or whatever, like, hey, you know, should I do this or should I just go buy the business? I'm like, honestly, if you have to ask that question, you should just go buy the business and see what happens. Because what's going to happen is you don't actually know what you're doing yet. You have to learn.

1:26:35And you can either learn by doing it, but that means you're putting cash into it, or you can learn with a group of other people that are doing it all at the same time and you can steal their 10 ,000 hours. And so it'll be interesting. Did you say that? That's totally true. Like, like, and look, the time, let's say, let's take writing as a great example too, of like getting skill acquisition is so important. And again, there's, there's this idea, well, you need to put in 10 ,000 hours or, or, or a thousand hours or 500, you know, some amount of time you have to invest and perhaps some amount of money to get a skill, but skills pay off.

1:27:09And other things like going to college, you don't necessarily get a skill. You might learn a couple of things that you're going to forget 98 % of, but you don't really learn a skill. Whereas, you know, there's a saying, better to be the only than the best. So if you're the only person who's talking about real estate investing, but you also happen to be like a great writer, you're going to build a huge social media empire because you're going to have this skill that no one else has you, you're competing with. Yeah, I think you're totally right. I mean, I think, I imagine in the next 10 or 20 years, the way that university accreditation happens right now will be completely flipped, especially under this next administration.

1:27:51He already came out with a tweet yesterday saying he's going after the university accreditation system. And I think he should because I think it is right now a mafia. And I think we assign accreditation and we mandate that schools continue to raise prices. but you know you've seen the inverse curve it's basically like schools continue to to be more expensive to go to than ever but their return for individuals continues to decline on a relative basis and so um that to me means that we have an entrenched industry with a bunch of incumbents and lobbyists that want to keep status quo so of course they're going to hate people on the internet who are providing value at you know one one hundredth of the price um but i've never really cared that much about what other people's, it used to bother me that people didn't like, um, education businesses or that people didn't like influencers or people didn't like people with newsletters.

1:28:46And now, you know, God, the election, I was part of this think tank, James, like one of the more preeminent think tanks in the world. And it's on the conservative side. And I would go to all these events. Can you say the name of the think tank? I don't want to talk. I'm talking about to talk a little shit. I'll tell you later. and they go to these events and they were really talking badly about podcasters like Tucker and Joe and this was right prior to the election like six months prior to the election and they were like you know these guys blah blah and mind you this is a conservative think tank and I was sitting there listening and thinking you guys are so out of touch because I thought that this election would be decided by podcast because you and I have one and we understand the power of it so I was like nobody cares about the mainstream media anymore.

1:29:33They're late. They're slow. It's not relevant. We get updates on Twitter. And, um, and so I thought that was going to be the case. And so I remember that to them saying like, you know, don't you guys think that you're slightly behind the times that you are, you are legitimately going against these, these podcasters. Cause you think they're lesser than the mainstream media because of like credentials or something. I don't even know why. And, and I remember they kind of laughed at me and I was like, all right, I don't know, maybe they're right. Maybe I'm wrong. And then this election happened and I was like, huh, it's the old institutions don't want to change and they are going to push back, but they're losing.

1:30:09You're totally right. Like this was the whole philosophy around my book, Choose Yourself, which I wrote 10 years ago, which is that, oh, maybe I'm not going to work at Goldman Sachs, but I could actually be a one man Goldman Sachs by writing a newsletter or about the finance industry and then giving advice to some businesses and helping people invest or help people meet businesses that they can invest in or whatever. And it's the same thing with education. Okay, maybe I don't need to go to Harvard, but I can, on YouTube, there's, or Coursera or Khan Academy, there's a million places to learn. Or I could start my, if I have an expertise or something, I could start my own education site.

1:30:46It's going to be much better than Harvard for what the specific things I'm teaching are. Like there's always an opportunity, like media. I'm not going to be a television star, but that's okay. I can start a podcast which has more listeners than the average TV show has viewers. So there's always an opportunity right now to do your own thing. Yeah. I mean, and you are way ahead of the curve there because you're exactly right. I mean, we see it everywhere. And I guess it's all the ideas sort of converging on this reality that we as individuals are more capable than we give ourselves credit and that certainly then society wants us to be.

1:31:24And why? Because on average, when institutions and individuals get power, they don't like to give it back. And not because they're evil, nefarious geniuses, but because they think they know better than other people. And this is probably why we've gone from like, I don't know, 70 % of people being self-employers to 2 % because there's that momentum that keeps people down more and more. 100%, not to mention massive government regulation, which makes it harder to start your own small business, harder to be profitable, helps incumbents. Big companies can afford regulation. Little companies, it destroys them.

1:32:03And so, I mean, one of the things that I was talking to the administration about is we need to change how the SBA runs. Like right now, the SBA, we could solve a lot of issues in this country if we allowed business owners who are currently 60 plus to sell their businesses to an individual, not a corporation, in the next generation. And we gave a tax write-off to the business owner for selling the business to the next generation. and we had an incentivized structure for the small business buyer to be able to sell the business owner with creative financing. And what if we could actually standardize the mechanism for seller financing?

1:32:44Why do we need middlemen? Why do we need banks? Why do you need a title company, for God's sake? When you do a mortgage transaction, it makes no sense at all. It's like a fake one in a million need that's a huge industry. Right, and you need like title insurance. It's like crazy, all the things you need. And I would even go one step further with SBA. I would make it an opportunity for it to be peer to peer. Like, let's say I want to invest, on the stock market, I can't invest in a laundromat. And let's say I'm not interested in running a laundromat. What if I want to invest in like 200 laundromats around the country?

1:33:20Oh, I could put$100 and contribute to an SBA loan where I'm getting like 8 % to 12 % interest as opposed to 3 % of my savings account, like they should allow peer-to-peer participation in the SBA. A hundred percent. I mean, there's so many small things that we could do like this. You know, an education process to notify small business owners that they can actually sell their business. You know, an awareness campaign to actually bring both people to the table and get them to think about how to do deals. You know, standardization of term sheets, similar to what Y Combinator did with standardizing the standard VC term sheet.

1:33:59Let's standardize the standard business selling or buying term sheets so people don't have to pay$20 ,000 to get it done individually when most of the deal terms are the same. Well, why don't you do it? It'd be like kind of LegalZoom's The Sequel. We're going to try to do everything possible. I'm going to try to use BizScout as a mechanism for all of this. And these days, if you want to get something done with the SBA, I'm just going to start tweeting about it and say, hey, if I was in charge, here's the policy decisions that I'd make. But similar to you, I don't want to be in charge. I'm very happy to assist and not have any positions of power in the political sphere.

1:34:36What if they offered you a position of power? I'm so busy building right now that it's just not on my radar. I think it'd be a disservice, but I would happily help them find somebody who I think was better suited to it. I think like public politics, like you should go into it after you've done like some decent contribution to society. And then you should go into it for like four to eight years and then peace out, which is what I would want to do. I have no desire to be a career politician. well that's good because i think it would it would ruin your excellent you know i enjoy reading your stuff every day whenever you put out a newsletter whenever you put out a tweet it's always something interesting that i'm going to learn from and that's why i was so happy a few months ago when i heard you were putting out this book main street millionaire i knew this was going to be the perfect book people should read about essentially making wealth this is this is definitely an avenue I feel is people are unaware of how successful this strategy for building wealth is.

1:35:42It's much more successful, I think, than any other strategy for building wealth, hands down. Unless you're like a super software guy and you've been living in Silicon Valley for 20 years, so you know everybody. Silicon Valley is all a game. You have to kind of live there, know everybody, and then, oh, you're going to get a billion-dollar valuation when your company's not better than the company that got a$3 million valuation for doing the same thing. It's so true. And it's such a, it's such a club. Like now that we run a venture capital fund and I've met a bunch of these people with all due respect, it's all a game of who you know.

1:36:17And like, oh yeah, let me make that intro for you. Let me make that intro for you. And you're like, what do you do? You're a professional intro or like they're not builders. And so. I mean, I was a VC for a while. I was so bored. I couldn't. And then everybody comes in with their pitch deck and it's exactly the same pitch deck. Everybody's got the kind of right-handed smile. It's like, oh, zero revenues within a trillion in revenues when we sell a refrigerator to every other person in China. And I had a Defender arcade machine in my office and I would just like leave a meeting in the middle and just play Defender for the rest of the meeting until everybody left.

1:36:53I want to ask your opinion on something. One thing that I think I'm struggling with with the book is what I really want people to realize is that even if you don't want to buy a business, you should learn how to do deals and how to talk terms. And like you should understand, it's like the language of money is deals and deal terms and structuring. It's negotiating your salary. It's getting equity in the business you work for. It's like buying a business. And so I'm trying to think right now about like, how do I explain this to like the normal person who's like, I will never buy a business in my life because that's too crazy.

1:37:33And I don't want to, but they, I think, I think it's impossible, right? They think it's too big a task or you need too much money. And look, there was one example you gave in the book. That was really a great example where you could start off with like zero money and talk to your cleaning lady and turn that into a potentially a huge business. Like you have a, you walk people through a great example of the simplest possible way, like the, the minimal viable business one can start in some sense. And this is possible. And the fact that like, like you said, this is like the language of money, understanding that things work on profits and work.

1:38:13And how do you scale things? Like, Oh, you can scale this way. You can scale this way. These are ideas. Scaling could apply to anything. It could apply to how you scale your work at your job or how you scale a book that you're writing. All these things that you wrote about in this book could apply to other industries, other endeavors in life. I think it's important. People just don't know this. Yeah. Okay, good. Because I didn't know if I was... You know how you have confirmation bias because it's the thing that made me a lot of money and we have this academy, so I've seen 3 ,000 people go through it.

1:38:47I'm like, this works for people. Everybody should know it. But I'm not delusional that thinks that everybody should own their own business always. I am delusional in that thinking that if you don't understand money at all, I'm not sure you're going to make it ever. And so I do want more people to understand dealmaking. I made my mom read the book. She's a 30-year special education teacher. But I'm like, I want you to understand why right now with your house, you're sitting all this money because their house is totally paid for. They have no debt anywhere. And I'm like, this asset isn't being used very well.

1:39:22And so let's talk about what that means and why. I don't think we can afford to not know this stuff anymore. Yeah, I agree. Because like you said, nobody is really, particularly if you don't have a lot of money, nobody is looking out for you. The government is not looking out for you, even though you would like it to. Your college that you went to is not looking out for you. even your family is not looking out for you. They want you to make a lot of money so that they don't have to worry about money. So it's important to understand the language and psychology of money, particularly the psychology of money is so difficult and everybody has troubles with it.

1:39:59But in any case, Cody, I think it's a great book. This is the one book I'm going to make sure my kids read. Oh, you got to tell me if they do. Tell them to reach out to me if they, end up buying a business. I feel like they would because they're your kids. They probably have already started one and then now they need to buy it. No, not yet. Not yet. They have to go through, like I didn't want to do what my parents did. And so I rebelled for a while until ultimately, they were both computer people. And then ultimately I got into computers, but my kids still rebel in this way a little bit. And like I said, they went to college when I didn't want them to go to college and well i understand why kids go to college it's fun yeah it's fun and you you socialize and you don't have to do any anything serious for four years the real and then everybody complains now when they go to work oh my god i have a commute and i i'm not making enough money to live and i have to have a huge commute like everybody i'm not saying my kids do that but i see them it's like the latest thing on tiktok is all these 24 year olds complaining about their job Like I lived on a futon like three hours away from my first job.

1:41:10Like it's hard. Being young is hard. Being young is hard. It's supposed to be hard. Yeah, it's so hard. And I always like try to remind people that it's not hard because like you're like, oh, this work is so hard. I can't figure out this work. It's hard because it is mind-numbingly stupid, low-level work that you feel like you could do in your sleep often. And that persists for years. Right. That's why they give you the job because you're useless and everything else. Yeah, exactly. We should be, we should really be motivational speakers for young kids. We need to be booed off. You guys suck. Just be throwing stuff at us.

1:41:49Oh, but I will say though, everybody always says, oh, this next generation is not as good as the last generation, my generation or whatever. Their kids are lazier now. But actually like you go on Instagram or TikTok, these kids have like superpowers now. They're like climbing up walls and there's amazing musicians. Like they have so many talents that I didn't know anybody with these talents when I was a kid. Like each generation gets better, I think. Me too. But somehow it doesn't seem that way at first. Like they get better and worse at the same time, but then it all comes together. Yeah, me too.

1:42:21No, I think we're at like a little bit of an American renaissance here. We're at the edge of it with a lot of technology. but I also think, I mean, we had a guy in our group that is, he was 19 years old when he joined. We had started like three years ago. So whatever, what is he, 22 now or something like that. And he bought his first business when he was 20 and has just sold it. I'm like, oh my God, you know, when I was 19, I don't remember what I was doing. It was a multimillion dollar business as an agency, a marketing agency for real estate agents, and sold the business at like a perfectly timed moment, is now looking for his next deal.

1:43:02And he's about the nicest kid in the world. But every time I see him, I'm like, you think you have an excuse? That kid's 22. And he's already sold the business. And did he start with nothing? He started with nothing. He negotiated the deal to get a percentage. He grew the business. So he negotiated the deal to get a percentage of all net new sales in the marketing agency. That did really well. So he ended up owning 20, 30 % of the business, both distributing. So distributions, distributing equity and just equity in the business. And then the founder of that business had a few agencies and real estate was like his lease.

1:43:36It was his smallest one. So he basically was like, let's just sell our finance that you're killing it. Take over for this business. He seller financed the business. The other guy kept a portion of it. And they both made money when they sold. So that is awesome. And look, that is, people just need to know that that's possible. And just knowing that will inform other areas of their life. I think that's a valuable thing in your book as well. And there's a lot of techniques also you write about in the book that we haven't even talked about, like the whole process of, I think you call it like 100-50-30-whatever, like the 100 days to research something, 50 days to identify a business that's possible, 30 days to then negotiate.

1:44:16I forget the exact things, but there's a lot of parts of this book that people need to read to understand this. And again, instead of having some crappy job for 30 years, this is a better way to make money. I also think, I was a day trader for a long time and I thought, oh, I'm going to get rich quick day trading. I wish I had done this instead. It was such a waste of my time for years and years day trading instead of being out there actually looking for something that really creates value and makes profits and is fun. Yeah. One of my cousins was so funny with day trading. He was trying to tell me, this was like kind of during the hype of when everybody's really getting excited about day trading.

1:44:58He's a younger young man. He's super smart and he's super entrepreneurial, real, but he gets caught up sometimes in those get rich quick schemes. And so he was scheming and he did some day trading and he's like, look at how much I'm up. Like I am so rich. You know, I started from this and I now at this, I'm like, that's amazing. And I kind of wasn't paying attention that much. The next day he came to me and he's like, Oh my God. He's like, I lost everything. I'm like, that was fast. How that happened. He's like, well, I didn't realize all the fees that they were charging too. And so between fees and then the market moved, I now owe some money.

1:45:30And I was just like, Jesus Christ. Yeah. It is a brutal way to live. I don't know why. I thought it would be, this is going to be fun. It's going to be easy. It is not. No. And I made a living at it. I did well, but I probably lost several years of my life doing it. It's so stressful. Well, and you really need a big brain like yours. You have to have a big mathematical ability often to be able to do any sort of quantitative trading. And then even to analyze the company. I mean, you're just competing against the smartest people in finance. That's just it. You mentioned this in the book and it made me think of Peter Thiel's book, Zero to One, where he says essentially the same thing.

1:46:13Competition is bullshit. You do not want competition for what you do. You want to figure out how to structure your life so you're not competing with anybody if you can. Yeah, yeah. It's so true. And even the game they don't tell most people is that the game of hedge funds and asset management is by and large just management fees. You know, it's raise a ton of money, make money on holding the money and like, yeah, perform kind of well over time and, and you know, you'll do well, but, but just making money from your own money is real, real hard. I mean, God, who are the, who are the only people that have really done that over time?

1:46:49Like Renaissance maybe? I mean, we're like, well, yeah. Renaissance And look, but they initially started making money off the fees. And then finally when Jim Simons had billions, he's able to just say, okay, everybody else take your money. I'm just doing it on my own. Warren Buffett's the same thing. He didn't have any money himself. He made money on the fees, but he was doing really well. And he kept pouring his fee back into his – he didn't take a management fee to his credit. He just took a fee on profits. Profits above a certain percentage. I think it was above like 6 % or 7%. He would take 15%, I believe, on profits above 7 % each year and no management fee.

1:47:27And then he would roll all the money that he was making back into the business. So it would kind of grow over time. So I would say Buffett is the closest example of a financial manager who generated a billion dollars from his own investing. Yeah. And I mean, rare. And I certainly don't profess to be smarter or harder working or better connected than that guy. like incredibly well connected to from a governmental perspective. Yeah. But he compounded his, his connections and his network and his in the value he created over 70 years. I love that quote. He's like, what was it? Bezos asked him like, why do you tell everybody your secrets?

1:48:06If like they work so well. And he's like, because nobody wants to get rich slowly, which is just so true. I also think there's a right place, right time sort of thing. Like he kind of came of age in the early fifties after world war two, when, you know, finally depressions and wars were over and America, the American stock market went on this enormous boom that's still kind of continuing. And so he was, he, and he was, you know, 20 years old, right at the beginning of that. So he was able, he was definitely at the right place in the right time. And people, you know, in everything, like, you know, Malcolm Gladwell has spoken about how people like Bill Gates, Steve Jobs, all those guys were basically the same age because they were in their early twenties when the computer started to be big and they were able to benefit from that.

1:48:55So you sort of have to also find where you can be the right place at the right time. But that's also the benefit of your book is that laundromats are always in. Everybody needs plumbing no matter what, like if your toilet is clogged, you will spend your last dime to unclog it. Like, so stuff like that is, is important. You know, I wonder about though, uh, there are some businesses, I wonder if, if robotics or, or whatever, well, like, like car washes, will car washes always be necessary when every, every car is self-driving and you probably won't need as many cars on the road. I don't know. Yeah.

1:49:31I mean, certainly could be, I don't think we're at the other thing about car washes that's unique though is that um they're real estate plays too so typically your car wash over the long term isn't going to be the best land use for the real estate so often you can use them as a land hold so um maybe they're not necessary forever but like think about how hard it is to find a car wash in an urban center so i think as we become more and more urban you know maybe that looks differently but um yeah i mean we could play a game too thinking about all the different ways that robotics could change boring businesses.

1:50:06But I think the flip side is they're just going to take over our accounting, our legal, our finance, our graphic design, our PowerPoint presentation jobs so much faster. I think all about Goldman. Remember back in the day when we all had to do decks and stuff for finance? We did the decks ourselves. We did the Excel spreadsheet. We did the miserable work actually coding it properly. We did the PowerPoint presentations. Now, a couple of my friends that are at the big firms, they're like, oh, we come up with the idea broadly. We kind of like throw it in there and then we send them to India and they like redo them every night overnight for us.

1:50:44And then they like send them back. I was like, God, that would have been nice back in the day. But that means that like this many fewer people now have those jobs, those really high paying analyst associate jobs where we were totally overpaid. And then in the future, like even less we'll have it because we'll have India and we'll have like really smart AI doing those jobs. And here's the thing. It's not like, so everyone's worried, oh my gosh, AI is going to take jobs faster than industry will replace them. But I feel like people always say that and it's never happened. Now, we never, we don't know what jobs the old typewriter makers eventually got.

1:51:17They probably weren't making computers, but they did eventually find jobs. It wasn't like everybody in the typewriter industry was on the bread lines and homeless. People just find new jobs naturally at some point. Industries evolve. Yeah. I mean, what about like right now in like record unemployment still? Although a lot of that seems to be government jobs growing. So maybe that's numbers, not totally real. But I so appreciate you reading the book and having me on today. Every time we get to chat, I always leave with a couple ideas. So I always like to do what you tell us back in the day, which is one, ask for advice.

1:51:54Two, I'm going to send my list of my recommendations to the SBA, like you always say to do, to give other people free ideas. So I'm going to do that too. Just send them. Send them to Trump. Send them to Elon Musk. Like post it on a Twitter thread and address like Elon Musk and Donald Trump and maybe like one other like third or fourth level person underneath them. I'm going to. I'll send it to you when I do it and say this was inspired. Oh, yeah. CCD on it too. Yeah. Well, Cody, thanks once again. You're always a welcome guest on the podcast. It's such a pleasure. And I really enjoyed the book.

1:52:29Again, I'm serious. I'm going to get my kids to read this at gunpoint. I will force them and we'll see what happens. And I'll let you know if they buy a business. I love it. All right. Well, when it launches December 12th or something, if they're in New York, we're going to do some fun things. So if they're in New York, I'll have to tell them to come and you can tell them that you'll give them an extra hundred bucks if they go learn something about finance. You know, I've tried financial incentives for them and it doesn't work, but I'm going to try it again. We'll see. All right. You're the man.

1:53:01Thanks for having me, James.