Codie Sanchez, founder of Contrarian Thinking, emphasizes the importance of thinking critically and taking risks to achieve financial freedom.
Starting a "boring" business can be less risky and more profitable in the long run.
"Skin in the game" means being willing to take risks and put yourself on the line to succeed.
Deal making involves negotiation and compromise, understanding the other party's interests, and giving your all to succeed.
Starting a "boring" business can be less risky and more profitable in the long run.
"Skin in the game" means being willing to take risks and put yourself on the line to succeed.
Deal making involves negotiation and compromise, understanding the other party's interests, and giving your all to succeed.
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NewsTranscript
00:00 Humans are at a base level convenience junkies.
00:05 That's the key.
00:06 Usually you're finding answers.
00:07 Your curiosity usually leads to an obsession
00:10 and your obsession becomes your unfair advantage.
00:12 Where we are today, entrepreneurs are being glorified.
00:15 Like what do you get so obsessed with that you can't stop?
00:18 (upbeat music)
00:28 Today's guest is on a mission that's both inspiring
00:31 and unconventional to create financially free
00:34 and free thinking individuals.
00:36 She's the visionary founder of a media company
00:38 called Contrarian Thinking, where the focus
00:40 is on teaching people how to think critically
00:42 and achieve financial freedom through what she calls
00:45 boring businesses.
00:46 Her journey to this point has been nothing
00:48 short of remarkable.
00:50 Her career path started as a journalist
00:51 at the Mexico border, where she witnessed
00:53 life altering events that convinced her
00:55 that money equates to power and with power
00:58 comes the ability to change the world.
01:00 Today, she values experience over degrees,
01:03 bets on herself over making money for others,
01:06 and champions Main Street over Wall Street.
01:09 Without further ado, please welcome my good friend
01:11 and guest, Cody Sanchez.
01:13 Welcome to the show, Cody.
01:16 - Thanks for having me, man.
01:17 - Thank you for coming.
01:18 I've been anxious to get you here.
01:20 You're Austin and San Diego Travels,
01:22 but you are somebody who I am so excited
01:24 to get into all of this stuff with
01:26 because your background is so unique
01:29 and so on point for so many people.
01:31 And I mean, your content's incredible.
01:33 You're an inspiration, so thank you.
01:34 - Oh, jeez.
01:35 - Yeah.
01:36 - I appreciate that.
01:37 - You have a college degree.
01:39 I won't get into the fact you went to ASU
01:41 'cause U of A, but we'll allow that to go.
01:44 But Georgetown and then the PhD,
01:47 and then world of finance.
01:49 And you were on Wall Street for a while.
01:50 - That's right.
01:51 - Doing all the stuff that a lot of people
01:53 go to college for.
01:55 And then you had that pivotal switch
01:57 and you launched Contrarian Thinking.
01:59 But there had to be something pivotal
02:01 in your background that led that transformation.
02:05 - Yeah, I think probably a lot of people listening
02:10 maybe felt the same way.
02:11 But in 2020, I think the world shifted a little bit.
02:15 And for me, I felt like we weren't
02:18 having conversations anymore.
02:20 We weren't questioning things.
02:21 I went to college to be a journalist originally.
02:24 And that's the key, usually, to finding answers
02:28 is knowing the right questions.
02:30 And so in 2020, when I stopped running around
02:33 doing deals all over the country,
02:37 I had some free time.
02:38 And I started having conversations with people
02:41 about why they thought the world was changing.
02:43 And I realized that the only way we would have real change
02:49 would be by asking hard questions.
02:52 And that's what spawned Contrarian Thinking.
02:53 So we started a newsletter, like many people in 2020,
02:57 in a tiny bedroom here in San Diego, actually.
02:59 It was my husband's first house that he bought
03:01 when he was on his first deployment.
03:03 So it's this little bungalow.
03:05 And in it, I just started, I think my very first email
03:08 was titled, "What if we started asking the right questions?"
03:11 And from there, it turned into pretty big business.
03:14 But I think like most things in life,
03:17 the best things happen by following your curiosity.
03:20 And your curiosity usually leads to an obsession,
03:24 and your obsession becomes your unfair advantage.
03:27 And most people ask the question of,
03:28 well, what should I do with my life?
03:30 Well, what should I do next?
03:31 And I think the right question is,
03:33 what do you do when nobody's looking and no one pays you?
03:36 And if you answer that question
03:38 by continuing to do the thing,
03:41 eventually you'll find a business in it.
03:43 And it doesn't, I'm not talking about your passion,
03:45 'cause I think that word's played out.
03:47 I'm talking about, what do you get so obsessed with
03:49 that you can't stop learning about it?
03:51 - But how do you, so if it's not passion,
03:54 what's the right word for it?
03:56 - Curiosity. - Curiosity.
03:57 - Because a passion could be like, I love playing golf.
04:00 Okay, well, that's great.
04:02 Or I love gardening.
04:03 But are you obsessed with it?
04:05 Do you think about it in the dead of night
04:07 and keep trying to tweak your strategy
04:08 and become so involved in it that you lose track of time?
04:13 And do you wanna become one of the best in the world
04:15 at that thing, not because you think you can make money,
04:18 but because you have some unique skill
04:21 that is aligned with this thing that sits in front of you
04:26 that keeps you up in the dead of the night?
04:28 And so that, for me, was always writing and doing deals
04:33 in some way, shape, or form.
04:34 I'm a little bit of a deal junkie.
04:36 And that's how Contrarian Thinking started,
04:38 was basically one email sent,
04:39 and now we do 100 million views a month
04:41 and have 500,000 subscribers,
04:44 and it's been pretty cool to watch.
04:46 - I mean, it's fascinating, and congratulations.
04:48 But I have to unpack a little bit of that
04:49 because from one email sent to 100 million,
04:52 we've all sent an email.
04:53 Sometimes people don't wanna receive that email,
04:55 but how did you start that list?
04:57 How did you decide, okay, I have this amazing newsletter,
05:00 well, you knew it was gonna be amazing,
05:02 Contrarian Thinking, everyone wanted to read it,
05:04 but no one knew about it yet.
05:05 That gap is where I think a lot of people get stuck.
05:08 - Yeah.
05:09 You know, when your friends start having kids
05:12 or getting married, right,
05:14 they start sending out invitations to the baby shower
05:16 or to the wedding, and you gotta show up,
05:19 you gotta pay a bunch of money to do stuff,
05:21 you gotta be involved.
05:22 And I've always thought when somebody launches
05:25 a new venture or somebody starts a new business,
05:27 there should be something like that, right?
05:28 It should be like, I'm launching this new thing,
05:31 and I'd love you to partake in it in some way, shape, or form.
05:33 - Like a new business shower.
05:34 - Basically.
05:35 Maybe we should come up with that.
05:36 - A better name.
05:38 - I love it.
05:39 So with this new venture, I did exactly that.
05:42 I said, you know, I've had a business baby,
05:46 and I sent out an email to basically anybody
05:48 I'd ever met, ever, and all of my friends,
05:51 and said, I'm launching this thing.
05:53 And I've never once launched a thing to any of you guys
05:55 over the past however many years I've been in finance
05:58 and doing corporate jobs.
06:00 So I said, well, you know, I'm gonna announce this,
06:03 and then I'm gonna ask people to participate.
06:05 I'm gonna say, I'm not gonna put you on the list
06:07 or anything, but if you think this thesis,
06:09 which was, if we ask the right questions,
06:11 we will get the right answers,
06:14 if you believe that to be true,
06:15 and if you also think that the world is a little chaotic,
06:17 and if you also think that perhaps you don't know
06:20 where the intersection of money, freedom,
06:23 and critical thinking lies, then maybe you should come along
06:26 on this journey with me.
06:28 Just sign up.
06:29 And then if you wanna pay for the VIP experience,
06:33 perhaps you could forward it to a few people.
06:35 And I said, if you do, tell me who they are,
06:38 and I'll respond to them individually.
06:39 But for me, consider this my baby shower,
06:42 my wedding shower, whatever.
06:44 And it's sort of funny because I am married,
06:46 and my husband and I didn't have a wedding.
06:49 We didn't have an engagement party.
06:50 We didn't ask for anything.
06:52 But what I do ask of the people closest to me
06:55 is for them to participate in the thing that I am building.
06:58 I think that's a lot more important
07:00 than getting a random present
07:04 for an event you're gonna have in your personal life.
07:08 - It's true, and I don't think we do a good enough job
07:10 as community of friends to support each other
07:13 when we do these ventures.
07:14 As a serial entrepreneur myself,
07:15 I can't tell you when I start something,
07:17 it might be eight months later, and a good friend of mine,
07:20 who's a good friend of mine, will say,
07:21 you know, I've been meaning to go check it out.
07:23 And I'm thinking to myself, you're my good friend.
07:27 If I called you and asked you, you'd come,
07:28 but shouldn't you do that anyway?
07:30 And I don't think it's just society,
07:32 we don't have it programmed yet to have that,
07:35 exactly what you just said, a baby shower support group
07:38 for all these new ventures.
07:39 - No, it's exactly true.
07:40 I mean, when we first were chatting
07:42 and we were gonna do this podcast,
07:44 what's one of the first things I did?
07:45 And I texted you a picture of it.
07:46 I'm like, I just bought a bunch of stuff from Everbolt.
07:49 - You did. - And why?
07:50 We're not even really friends yet,
07:51 but I was like, one, I wanna experience
07:53 what this gentleman's built
07:54 that I'm gonna do something with.
07:56 And then two, I'm gonna spend the money somewhere.
07:59 I'm hungry, so why wouldn't I do it
08:00 with a person that I already know?
08:02 And so I think that can also be a huge difference
08:05 in your life.
08:06 We have this mutual friend, Dan Fleshman,
08:07 who's here and sort of connected us,
08:09 and he's the master at this, right?
08:11 He not only connects every single human
08:14 that he thinks is value-added to one another,
08:16 but then he takes it one step further
08:18 and he signs up for your emails
08:20 and your new business venture and your new products.
08:24 And so if you wanna be in the game with players,
08:28 then I think you've gotta be the one
08:30 to pass the ball around, and most people won't do that.
08:33 - And why do you think most people don't do it?
08:35 - I mean, humans are at a base level convenience junkies.
08:42 I mean, we do the thing that's easiest for us,
08:45 that's right in front of us, that's most natural.
08:47 And it takes some extra steps to go and sign up
08:51 for your friend's XYZ when you've already done
08:54 this other thing for a long amount of time.
08:56 And then also, most people have never felt the pain
08:58 of entrepreneurship or the pain of ownership.
09:01 I actually think that we're having an ownership crisis
09:03 in the US right now, that most of us buy
09:06 from businesses we've never stepped foot in,
09:09 with owners we will never shake their hand,
09:11 who probably aren't located, not only not in our city,
09:14 but in our state.
09:15 And so we have given away our purchasing power,
09:19 our dollars that we spend, one out of every three days
09:23 in your adult life, you'll spend working
09:25 over your entire lifetime.
09:27 And because of that, we should be really careful
09:31 where we put our dollars, but we aren't.
09:33 And if we were thoughtful about it,
09:34 we'd probably rather give it to a neighbor
09:36 than give it to, no shame in his game, Jeff Bezos, right?
09:40 Who we're never gonna meet, and he probably doesn't need
09:41 another one to go on his yacht.
09:43 And so I think it's really important.
09:46 And the other thing, if I could, if anybody's listening,
09:49 and you have friends that are entrepreneurs,
09:51 I have a huge belief too, that I don't give discounts
09:57 to friends and I never take one.
09:59 So I would never go to your business and say,
10:03 like, hey Jeff, I'm here, you wanna hook me up
10:04 with something?
10:05 Doesn't matter if I need the cash or not.
10:07 I'm always gonna be the one to pay a little bit more
10:10 and do the next thing, because you're not helping
10:12 your buddy out by asking for a discount,
10:14 you're actually being a little bit obnoxious.
10:16 You're not gonna go ask for Amazon's discount, right?
10:18 - It's true.
10:19 I mean, and my rule with that is, if it is your main thing,
10:23 I need to pay you.
10:24 Like I have good buddies, oh, I'll take care of this
10:26 for you, I'm like, wait, wait, wait, that's your main thing.
10:28 If I ask you to help me move, I'm not paying you.
10:31 'Cause you're not a moving company,
10:32 come help me move some boxes.
10:34 But if I go to your business, that's your main
10:36 source of income, I agree with you.
10:38 I don't wanna, I never ask for them to do it for free,
10:41 'cause a lot of times they'll offer, or,
10:43 you know, I'll give you the hookup.
10:45 Unless you give everyone the hookup, in which case
10:46 I'm just one of the norm, sure.
10:48 Or it's a not professional course of action for you.
10:52 - Yeah, I mean, I think it's pretty cool to say,
10:54 no man, I think what you're doing is incredible,
10:56 - Yeah, you wanna pay twice.
10:56 - Yeah, I wanna pay full price.
10:59 And that's also like a little dollar put in the piggy bank
11:04 of relationships, which I think are probably
11:06 the best income generating asset you have.
11:09 - But you know I agree with you.
11:10 That's the premise of my book and my thesis in life
11:13 is relationship capital is everything.
11:16 - Yeah, yeah, yeah.
11:17 - And you mentioned entrepreneurship and a lot of people,
11:19 and I have a belief that where we are today,
11:23 entrepreneurs are being glorified.
11:25 Because of social media, because of the ability
11:27 to understand the faces and the personalities
11:30 of the titans that are running all these companies,
11:32 the greatest men and women in America and around the world
11:34 and what and how they're doing.
11:35 And I think it's a good thing,
11:37 but I also think it's a dangerous thing.
11:39 And I was actually having a conversation with Amy
11:40 in my office yesterday about this exact topic.
11:43 Because when you look at the glorification
11:46 of entrepreneurship, we're basically saying
11:47 everyone should be an entrepreneur.
11:49 - Yeah.
11:50 - And I don't think everyone should be an entrepreneur
11:51 because I don't think everyone's meant
11:53 to be an entrepreneur.
11:54 I think everyone should be entrepreneurial minded,
11:56 regardless if you work with a team, for a team,
11:59 or you're the leader of a team.
12:00 That's a mindset.
12:02 But the ability to actually go down that path
12:05 and start your own company, acquire your first company
12:07 and be the head honcho or, honcho is gender neutral?
12:11 - I think you nailed it.
12:12 - All right, we're gonna go with it.
12:13 - We're gonna go with it.
12:14 - Isn't for everybody.
12:16 Now, being a deal junkie yourself,
12:17 and obviously contrarian thinking,
12:19 do you agree with that premise?
12:21 Or do you have a different perspective?
12:23 - I think the world would be a better place
12:26 if every human had some skin in the game.
12:29 Do I think that they need to run the business?
12:31 Absolutely not.
12:32 It is, you know how you see a president pre getting elected
12:37 and post getting elected?
12:38 And instantly in those four, eight year periods,
12:40 they age 35 years?
12:42 I think that's the same thing with entrepreneurship.
12:44 You know, it's really hard.
12:47 It's a hard game.
12:48 It's worth it if you're willing to do the work,
12:50 but it's not worth it if you're not
12:52 because you can go bankrupt
12:53 and you can lose a lot of sleep for many, many nights.
12:58 So I think I agree with you there.
12:59 Now, where I try to align is in every one of my businesses,
13:03 wherever it's humanly possible,
13:05 I like my employees to have skin in the game.
13:07 Meaning, if you do X and achieve X goal,
13:12 you will get Y additional compensation.
13:15 You might get some revenue split.
13:17 You might get some profit split.
13:18 You might get some equity.
13:21 Really depends on the type of business,
13:23 not every employee in every company deserves equity.
13:26 Just not popular opinion, but absolutely true.
13:29 And you have to earn equity over time
13:31 'cause it's like a marriage.
13:32 Then we're married for the rest of the time
13:34 this company exists.
13:35 But I do think skin in the game is important.
13:37 So as long as people are striving for a way
13:41 when they do better for them to earn more, I'm aligned.
13:45 'Cause I think the worst thing in the world
13:47 is what we're seeing in the government right now,
13:48 which is basically, you know,
13:50 they have maximum incentive misalignment.
13:53 So if you run a government entity,
13:56 you have one goal really,
13:58 which is you want to increase the budget of that entity
14:01 because with budget comes power,
14:03 comes new hires and comes usually new committee placements.
14:07 And so their goal each year
14:09 is just to spend the most humanly possible.
14:11 How wild is that?
14:12 And they have no incentive alignment to earn more,
14:15 to cut savings, really even to deliver programs.
14:18 And I think a lot of corporations are the same.
14:21 It's like your main priority is to get more budget
14:24 because then you have more people
14:26 and you're not incentive aligned.
14:27 You don't have skin in the game.
14:29 And I want my people to have skin in the game.
14:30 And I think the 2.0 evolution of that is
14:33 can you have skin in the game in the downside too?
14:36 You know, my dad famously said,
14:38 when somebody asks him for additional,
14:40 like a revenue share or profit share, they go, perfect.
14:42 So when I lose money, you pay me.
14:44 And that changes people's perspectives pretty quick.
14:47 - It does, it does.
14:48 And it's a quote my dad used to always tell me.
14:51 He said, never put too much stock in anyone's opinion
14:54 who doesn't have to live with the outcome.
14:56 - Exactly, exactly.
14:57 It's the whole, you know, Nicholas Nassim Taleb.
15:01 He's pretty famous on this idea of skin in the game
15:05 and incentive alignment.
15:06 And so if a government employee has no repercussions
15:09 because of what they do,
15:11 it's probably not the right person to be in charge.
15:13 - It's true, it's true.
15:14 And so with contrarian thinking,
15:16 what is the, when you started it,
15:19 did you have it all mapped out?
15:20 Did you have the entire vision?
15:22 Like where you were, 'cause clearly you had a thesis,
15:24 you had an email, you had this idea
15:26 that people were gonna wanna come around,
15:28 come along for the journey and be part of that.
15:31 But I don't know that you had it all visioned out
15:34 to where you are today
15:35 and where maybe you're gonna be tomorrow.
15:36 - Oh, absolutely not.
15:37 I had no idea what I was doing.
15:38 No fucking idea.
15:39 I thought it was an email.
15:40 I didn't even know emails were businesses.
15:42 I knew nothing about internet marketing.
15:43 I had no idea that people really made money
15:45 on the internet in this way.
15:46 I was in finance.
15:47 I mean, we were in a little hole looking at spreadsheets,
15:49 doing deals, flying around in suits.
15:51 And then when I started the email newsletter,
15:54 I really did it because an acquaintance of mine,
15:57 this guy Sam Parr,
15:58 had started a business called The Hustle.
16:00 And then we weren't friends, now we're friends,
16:02 but I had watched him build this newsletter business.
16:06 And I was like, "Oh, that's kind of cool.
16:07 "Maybe I'll start a newsletter."
16:09 And it was right at the time where tech enablement began,
16:11 which is usually, I think,
16:12 when entrepreneurial enterprises take off like crazy.
16:15 And that was this thing called Substack at the time.
16:18 And so Substack just made it one, two, three-click easy
16:22 to do a newsletter.
16:24 And because of that, I thought,
16:25 "Well, I think I have things to say,
16:26 "so I'm gonna start saying them.
16:28 "We'll see if anybody agrees."
16:29 And it wasn't until probably about a year in
16:31 that I realized, "Oh, this is a business.
16:33 "Oh, there's this thing called the attention economy.
16:34 "Oh my gosh, if I have eyeballs,
16:36 "I could actually convert the eyeballs
16:38 "and direct them to varying things for them to buy,
16:40 "and that might mean revenue and equity back to me
16:42 "in some way, shape, or form."
16:44 But I had no idea,
16:45 which is why I think the only unfair advantage was
16:47 I was really curious about it,
16:48 and I wanted to figure,
16:49 I wanted to take the Rubik's Cube
16:51 and mess with it continuously.
16:53 And I found joy in the immediate feedback loop
16:57 that was I do X activity.
17:00 I send out a tweet or a LinkedIn post
17:02 to my audience of zero people,
17:04 and a few of them somehow sign up,
17:06 and I could watch this newsletter chart go up.
17:09 And I think half of that is the game of business.
17:11 We're just addicted to the video game of business
17:13 as opposed to Call of Duty.
17:14 - Yeah, the gamification of it.
17:17 Which, if that doesn't light your hair on fire,
17:21 don't be an entrepreneur.
17:22 'Cause you're gonna lose and compete with people
17:24 who it is.
17:25 And that's the scariest part of entrepreneurship.
17:27 I taught a class about this,
17:30 and I was explaining to them,
17:31 like when you think of the NFL,
17:33 there's 32 teams.
17:35 When you think of business,
17:36 you don't know, even if you're Jeff Bezos,
17:38 Jeff Bezos has no idea if some 16 year old
17:41 or 80 year old or 50 year old
17:43 is sitting in their garage,
17:44 inventing the Amazon killer.
17:46 And there's no rules to it.
17:47 There's no, it's 32 teams,
17:49 and no one else is allowed in without billions of dollars.
17:51 Anyone can participate.
17:53 And so if someone comes in with that love
17:56 and passion and curiosity and dedication
17:58 to the gamification of I'm gonna do this thing
18:01 and play with it until I find it,
18:03 that just happens.
18:05 And it disrupts the industry,
18:06 or it disrupts the world,
18:07 or disrupts your company overnight.
18:09 So you can never take your foot off the gas.
18:11 - No, it's so true.
18:12 You know, another friend of mine,
18:14 Sean Puri, tells a story about Jeff Bezos.
18:17 I don't know if it's true.
18:18 But he basically says that he,
18:21 he bought this gent's company,
18:25 and I can't remember which one.
18:26 So Jeff goes and buys this guy's company.
18:28 This guy's like, great, you've spent,
18:29 I don't know, let's make up the number,
18:30 $50 million buying my company.
18:32 He's gonna go have business with Jeff Bezos.
18:34 They sit, or have breakfast with Jeff Bezos.
18:36 They sit down at breakfast,
18:38 and Jeff orders like this weird black squid breakfast.
18:43 And so the guy's like, okay, that's interesting.
18:46 They sit down and they start talking.
18:47 And the guy asks Jeff,
18:50 so, you know, why'd you buy my business?
18:54 And it becomes pretty apparent pretty quickly
18:55 that Jeff has really no idea what his business does.
18:59 And Jeff finally looks at him and he goes,
19:03 your business is this pasta.
19:06 This like black, squidded, weird breakfast pasta.
19:09 And he goes, I thought I'd try it.
19:12 And I was like, that's so interesting.
19:15 Why would Jeff Bezos buy a company to like try it on
19:18 because it looks so weird?
19:19 And the reason is exactly what you said,
19:21 because Jeff knows, hey, some upstart
19:24 who becomes really obsessed with this individual thing
19:26 that's slightly different from everything else
19:28 that we're doing, but could maybe disrupt it,
19:31 because I've never seen anything like this before.
19:33 The risk is if I buy it, I spend 50 million,
19:37 that's like 50 bucks to me.
19:39 If I don't buy it, he's tinkering, he's tinkering,
19:42 and he might get close and then it might be really expensive.
19:44 So I'm just gonna buy it right now.
19:45 And I think that is what a lot of people
19:47 don't realize about entrepreneurship,
19:49 is you have a lot of these big dogs out there
19:51 who are looking at the marketplace and saying,
19:53 like, I'm sort of watching what all these people are doing
19:55 because I know at any point it's like whack-a-mole.
19:57 They're gonna come up and we're gonna start
19:59 bringing them all in, which is why I get obsessed
20:01 with acquisition, because I think it's the fastest way
20:04 to growth, it's also the fastest way
20:06 to kill innovation and competitors.
20:08 - It is, and we can look at the greatest example
20:10 where a company failed to do that,
20:12 when Blockbuster could have bought Netflix
20:13 for almost nothing.
20:15 - Wild, yeah, or you remember that story
20:17 from Alexis Ohanian at Reddit, the founder of Reddit,
20:22 went to Yahoo, and Yahoo was gonna buy Reddit.
20:26 And by the end of the meeting, the CEO of Yahoo
20:28 at the time basically said to them, you know,
20:30 we brought you in, we looked at this stuff,
20:32 but you guys are basically a round in air,
20:34 and so we're not gonna buy.
20:35 And so Alexis and his co-founder went back to their office,
20:38 beautiful office like you have,
20:39 and wrote on the wall, round in air.
20:41 And ever since then, they were like,
20:43 anytime somebody's keeping me down,
20:46 I'm gonna have this chip on my shoulder of round in air,
20:47 and lo and behold, Reddit becomes much larger than Yahoo,
20:50 and now who even uses fucking Yahoo anymore?
20:53 - I mean, seriously, I can't remember the last time
20:55 I went to Yahoo.
20:56 - Oh yeah, does it exist anymore?
20:57 I bet it's huge, actually still.
20:58 - I mean, I know they have articles,
20:59 but do they really?
21:01 If you go to yahoo.com, can you please send me a message?
21:04 'Cause I need to know if anyone actually goes to Yahoo.
21:06 - Yeah, you're right, I don't know that they do.
21:08 That might just be another dark corner of the internet.
21:11 - Hey everybody, looking for great insights?
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21:39 Hey there, it's your host, Jeff Fenster,
21:43 and I have something very exciting to share with you today.
21:46 You know, here on the Jeff Fenster Show,
21:48 we're all about growth, both personally and professionally.
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22:31 - So with contrarian thinking and the big audience,
22:37 that didn't lead you directly into today,
22:39 which my favorite thing about you that I learned
22:42 as I was getting to know you before today
22:45 is your self-proclamation of,
22:47 "I like to buy boring companies."
22:48 So that's fascinating to me
22:53 because most people want extravagant,
22:55 exciting glitz and glamor.
22:58 And I think I know the answer,
22:59 but I want to hear it from you.
23:00 Why specifically boring companies?
23:02 - I don't listen to the narrative
23:05 and I look at the numbers often.
23:08 And when you look at the numbers,
23:10 you see that most of, not most,
23:14 the largest grouping of the Fortune 100 and 500
23:18 got there from acquisitions of things
23:22 that I would classify as boring businesses.
23:25 It's like the Koch brothers in energy and food production.
23:29 I mean, you see it obviously across the Walmart family
23:32 with grocery stores.
23:34 These businesses, because they've been around
23:36 for a long time, they have a much higher likelihood
23:38 of continuing to be around.
23:39 It's called the Lindy effect.
23:41 There's actually this phenomenon
23:42 where if something has existed for a period,
23:44 it's de-risked that it will continue to exist
23:47 in the future, which is interesting
23:48 because when I tell people I own laundromats,
23:50 they go, "Does anybody even use those anymore?"
23:53 And what turns out to be true
23:54 is that something that has a lot of hype
23:57 usually is a flame in and a flame out,
23:59 aka NFTs in their first version form.
24:02 Huge flame in and then complete flame out.
24:05 And it's because you're not able to predict the future
24:09 based on past numbers.
24:11 And so boring businesses to me,
24:13 it was all about the math.
24:15 It was like these businesses make a lot of money
24:18 and yet we don't pay attention to them
24:21 and we wanna start social apps and dating apps, et cetera,
24:24 'cause that's what we see on the news, glorified.
24:25 We all are really a product of like,
24:28 you can't be what you can't see.
24:29 And so when we see people doing X, Y, Z,
24:32 we think, "Oh, that's what I must be doing."
24:34 And so anyway, I started to buy into
24:35 a bunch of these companies.
24:37 But then the deeper I got into it,
24:39 the more I realized, "Oh no, actually,
24:42 "each community has a backbone that it needs
24:44 "in order to survive."
24:46 So if you think about your local community,
24:47 you need a doctor, you need a dentist,
24:50 you need a roofer, you need an HVAC,
24:53 you need a builder, you need, right?
24:55 There's probably like 50 different types of companies
24:58 that you need in order to make a modern community exist,
25:03 not thrive, but exist.
25:05 And I thought about the world we're coming into
25:07 and saw a lot of the things that I think look recessionary
25:10 and thought, "Huh, if a recession happens
25:13 "and my toilet's broken, I'm still gonna call a plumber.
25:16 "So I wanna own that company.
25:18 "And maybe it'll be better to sell fancy coffee
25:22 "in the short term, but in the long term,
25:25 "I think that business actually has a harder road to hoe."
25:27 So that's why I started buying them.
25:29 - I mean, it makes a lot of sense.
25:30 And I like your flame in, flame out.
25:33 It's the rabbit and hare,
25:34 rabbit, the rabbit and the tortoise story.
25:37 - Oh yeah, you're right.
25:38 - All the things we always need to know in life
25:40 we get taught as a kid.
25:41 We just gotta remember it, right?
25:42 - Yeah, that's true.
25:43 Yeah, I mean--
25:44 - Slow and steady wins the race.
25:45 - Yeah, and my business is,
25:48 if you think about it, when have you ever had an experience
25:50 with, what's something that we all touch all the time?
25:53 When have you had an experience with your electrician
25:58 hooking up your TV, setting up your lights
26:01 in your new apartment, whatever,
26:02 and you've thought, "That was an incredible experience.
26:05 "I'll remember that guy's name.
26:07 "What a cool email marketing campaign they had.
26:09 "Oh, the text message follow-up was incredible.
26:11 "Oh, they have affiliate services
26:13 "that they actually push us out to."
26:15 The branding, exceptional.
26:16 Like, that doesn't happen in that world.
26:18 Now, in your world, so for Everbol, for instance,
26:22 you have to have incredible branding
26:23 because it's part of the vibe,
26:25 and you're setting a tone, and it's aspirational.
26:28 For my electric company, it's like,
26:29 "Who's available fastest
26:31 "and looks like they have some decent reviews?"
26:34 And so, if I'm not a genius, which I don't think I am,
26:38 but I'm pretty good at executing,
26:40 then I have such a low floor or ceiling, really,
26:44 that I can be the best.
26:47 I could be the best customer experience electrician company
26:50 in my community, and it wouldn't even be that hard.
26:53 - True.
26:54 - Now, there's lots of things
26:55 that are hard about the business, right?
26:57 It's hard to hire people.
26:58 It's hard to understand the business.
27:01 It takes some cash to start it.
27:02 All those things are true,
27:03 but that's why I like boring businesses,
27:04 because you don't have to be a genius.
27:07 You don't have to be an innovator to start one.
27:10 - So, I'm on the other side.
27:12 I'm the guy who starts companies.
27:14 I don't acquire many companies.
27:16 So, I would think like you, and I'm like,
27:17 "Okay, I wanna vertically integrate.
27:18 "I want an electrician company."
27:20 I'd start one.
27:22 Why acquire over start?
27:23 - It's a cheat code.
27:26 I like to think about it like you can run a relay race,
27:31 and let's say there are 10 legs of the relay race,
27:35 and I could start from the beginning of the relay race,
27:39 and I could run the whole thing,
27:40 and me and my team could switch back and forth,
27:43 and we could get pretty tired by the fifth, sixth, seventh,
27:47 or I could go grab the baton
27:49 from the fifth, sixth, seventh, or eighth person,
27:52 and just run the last couple legs of the race.
27:54 And so, I really like to steal
27:55 other people's homework, basically.
27:57 So, with these businesses,
27:59 if you understand the game of acquisitions,
28:01 deal-making, and structuring,
28:03 then you have a foundation on which to build so much faster.
28:06 I mean, think of all the stuff
28:08 in the beginning with Everbull
28:09 that it's why you guys have a franchise, right?
28:12 Because franchisees can look at your model and say,
28:17 "Jeff spent, I don't know, $500,000 in losses
28:21 "to learn these lessons.
28:23 "I'm just gonna not give him my $500,000 in losses.
28:27 "I'm gonna pay him a couple hundred K,
28:28 "and I'm going to take all of the lessons
28:30 "that he learned and apply them,
28:31 "and I probably have a higher likelihood of success."
28:34 And so, it's the same thing,
28:36 except I don't always love a boss,
28:38 and so I was nervous about the franchise model,
28:41 because I wanna make sure
28:42 that I can run the business the way I wanna run it.
28:45 - Which is the hardest part of being a franchisee.
28:49 And one of the things I learned with franchising Everbull,
28:51 which I was never going to do, and then COVID,
28:54 but you have entrepreneurs who are buying into your brand,
28:58 and in the absence of clear SOPs and clear answers,
29:03 entrepreneurs are going to be entrepreneurs,
29:05 and they're going to solve problems how they see fit.
29:08 And so, as a franchisor, it's frustrating,
29:10 and I'm sure as a franchisee, it's frustrating,
29:12 'cause franchisees say, "This doesn't make sense, Jeff."
29:15 But what they are failing to realize is,
29:17 "I have to make decisions for the totality
29:19 "of our stores around the country, for uniformity,
29:22 "not for the market issues
29:23 "in one small community in America."
29:25 - Yeah, well, and half the time,
29:26 you've already seen, you've seen the movie before.
29:29 You go, so you think, it's actually a superpower.
29:31 So, the fun part is, when you do a bunch of deals,
29:33 or when you run a business, you go,
29:35 "Okay, tell me about your problem."
29:36 And they go, "Well, we can't get customers
29:40 "in the door."
29:41 And you go, "Huh, okay.
29:43 "Well, is your sign out front illuminated,
29:46 "'cause most of your customers
29:48 "come off of the freeway at night,
29:49 "'cause you're located in a trucking zone."
29:51 "Oh, no, wait, it's not."
29:53 And you get to see into the future.
29:55 It's this fascinating thing.
29:56 And so, it's the same with my team,
29:59 in multiple different ways.
29:59 They'll say, "Well, why don't we do it this way?"
30:01 And I'll go, "Here's how it's going to play out,
30:02 "steps one through five.
30:03 "Do you want to do it anyways,
30:04 "just so you can kind of see how that works,
30:06 "and I can tell you I told you so at the end,
30:08 "or do you want to listen to the experience
30:10 "that I've already had?"
30:11 And most of the time, people do want to copy your homework.
30:15 And the other thing that I've realized, too,
30:16 is like you said in the beginning,
30:17 not everybody wants to be an entrepreneur, 100%.
30:20 Lots of people actually need a handhold, and like it.
30:24 They like to have somebody standing alongside them,
30:26 and telling them, "It's okay,
30:28 "and here's the right way to do it."
30:29 And so, for that type of human,
30:30 a franchise is actually amazing,
30:33 because you have skin in the game,
30:34 you have ownership, you have equity,
30:36 and yet, you have somebody who's standing right beside you.
30:38 - And you have the community, the buying power,
30:41 the economies of scale, the camaraderie, the brand,
30:45 all those things. - 100%.
30:46 100%.
30:47 - Versus the competition of starting yourself.
30:50 - Yeah, and a lot of people don't have an idea
30:52 to start themselves.
30:54 I am actually not that creative.
30:55 I had no ideas for starting a business,
30:57 which is why I bought a bunch of them.
30:59 I didn't have that thing inside me
31:00 that I couldn't sleep for the want of it, right?
31:03 If I did, I probably would have started that app,
31:05 or that business, but I didn't.
31:07 And so, I thought, "Well, what I really want is freedom,
31:10 "not this thing to exist in the world."
31:12 And if that's true, then what's the fastest path to freedom?
31:15 If I buy a business, then I can close that deal,
31:18 and on day one, that deal can be profitable to me.
31:20 That's interesting, 'cause all I really want
31:23 is the money and freedom.
31:23 I don't actually care about building that thing.
31:26 And then, one day, you will find the thing you wanna build,
31:29 and you do that after you've already made some profits,
31:31 which, to me, just feels better than sleeping on a couch,
31:34 trying to figure it out.
31:36 - So, what was the first acquisition,
31:37 the first company you bought?
31:39 - Well, the very first company I bought
31:41 was actually a website.
31:42 It was way back in the day,
31:44 and I was working at a company then called State Street.
31:49 And I was working in Latin America,
31:51 and for the first time, trying to figure out
31:55 how to sell investment products south of the border.
31:57 And so, I bought this little website,
31:59 and then I changed the name to Selling South,
32:00 and it ended up becoming a consulting website
32:04 for cross-border finance transactions.
32:07 So, I bought that business,
32:09 but then I was doing a nine-to-five while I was doing that,
32:11 and my boss did not like that.
32:13 And so, I ended up having to sell that business.
32:16 - Did you make money on the sell?
32:17 - Yeah, but not much.
32:19 It was a long time ago, but probably nothing
32:23 like the money I was making in finance.
32:25 But I was like, oh, so you actually can buy this thing.
32:28 I sort of bought it by accident,
32:30 'cause I wanted the website.
32:31 And then, when I sold it, I was like,
32:33 oh, this is just like a transaction I would do in finance,
32:36 but I just did it on this side deal.
32:37 And that's when my little wheels started turning about,
32:40 I suppose I could do a bunch of deals like this,
32:42 just like a private equity firm could,
32:44 but they don't have to be huge.
32:46 And if I don't like the business,
32:47 I just kind of sell it a few months later.
32:49 So, I've now sold quite a few internet companies,
32:51 some for as low as, I think we bought one internet business
32:55 for 3K and sold it for 8K.
32:57 Like, that was a nice little transaction
33:00 for me back in the day.
33:01 Now, maybe not as material.
33:02 - But 5K is always nice.
33:05 I'll always take 5K.
33:05 - I could buy a lot of Everbulls with 5K.
33:08 - You could.
33:08 A lot of Everwitches, Everbulls, maybe a shirt.
33:11 - Yeah, there you go.
33:12 - It'd be fun.
33:14 So, when you buy a business,
33:15 I guess the hardest thing that I struggle with
33:18 when I've looked to acquire is the valuation dilemma,
33:23 where seller wants X, I wanna buy it for Y.
33:29 And yes, negotiating and discussion, et cetera,
33:32 but then in my head, I look at cost to acquire
33:35 versus what it'll cost to start.
33:38 And I always just lean on, I can just start this thing
33:40 and grow it and scale it pretty quickly.
33:42 And then I talk myself out of acquisition.
33:44 How do you look at that acquisition component of valuation
33:51 and say, okay, this is what I'm willing to do
33:54 and actually getting the deal flow to happen
33:56 to get them there?
33:57 - Yeah, well, a couple things.
33:58 It's gonna be really different
33:59 depending on where people are at.
34:01 So, let's say for the normal human
34:03 who doesn't have businesses that do tens of millions
34:05 and hundreds of millions of dollars,
34:07 most small businesses sell for two to three X their profit.
34:10 So, if I make 100K that goes in my pocket,
34:13 then I might sell that business for 200 to $300,000.
34:17 You could go up to 500, 600K,
34:19 but I like to keep my transactions pretty reasonably valued.
34:24 And so, typically when I talk to a seller,
34:26 I start with that.
34:27 Hey, I'm Cody.
34:29 I buy small businesses sort of like yours.
34:32 The market for the selling of small businesses
34:35 is usually a two to three X multiple on profit.
34:38 So, I give them that 100K explanation.
34:41 Is that something that you might be interested in?
34:44 Like, would you be interested
34:45 in potentially selling a small business
34:47 knowing that the range is typically something like that?
34:50 And what you're doing is you really have to educate sellers
34:52 'cause sellers go, I want a million bucks.
34:54 You're like, you don't make any money.
34:56 They're like, but seven figures.
34:58 And so, you have to kind of move them to that.
35:01 And then I have a lot of research that backs it up.
35:02 So, we send them some research reports.
35:04 They're like, hey, here's what businesses
35:06 sell for in your sector.
35:07 This is just the math.
35:08 And it's again, any time you can go back to numbers
35:11 and get away from narrative,
35:12 then conversations become easier
35:14 because you just go, this is facts.
35:15 It's harder to argue with.
35:17 And I try to find sellers who are already predisposed
35:20 to want what I'm selling,
35:21 which is they want to exit the business.
35:24 They have some event that they need to exit the business.
35:27 And moving them towards selling for my multiple
35:30 is reasonable.
35:31 They're interested in that.
35:32 And then I think the more you learn about acquisitions,
35:35 the more you're like, man, there's all these levers
35:36 and it becomes fun.
35:38 So, if they really want 5X the $100,000 purchase price,
35:42 I say, okay, well, what are you willing to do
35:45 to increase the value to 5X?
35:48 Then they might say, well, how about if I stay on for sales
35:54 and for X amount of sales,
35:56 you give me this percentage of the profits?
35:58 You're like, okay, that could work.
36:00 - That's reasonable.
36:00 - Or how about if I stay on for two years
36:05 and do these duties?
36:06 Okay, that's reasonable.
36:07 And so those are called milestones or earnouts
36:11 or transition plan for anybody watching.
36:13 And so there's lots of ways once you get into deal-making
36:17 to pull levers to change outcomes
36:20 in a way that you can't do it with real estate.
36:21 So that's where I'd start.
36:22 Now, for a guy like you with a bunch of businesses,
36:25 you would typically wanna do what's called
36:27 a creative M&A, right?
36:28 So like, I own something and I wanna buy something
36:31 that makes my thing that I own more valuable.
36:33 And so your acquisitions are probably gonna be
36:37 a little bit more expensive
36:39 because they're probably already have a growth trajectory
36:41 that looks a little bit like yours.
36:43 And the entrepreneurs are probably usually younger,
36:46 which means they're hungrier, they're not tired yet,
36:49 they're not looking to get out of the business.
36:50 And so it really depends on what type of acquisition
36:53 you're doing.
36:53 Are we doing a gray hair acquisition?
36:56 Are we doing a growth acquisition?
36:58 And that's where you could get into the lane
37:00 where you're like, nah, I could grow this thing faster.
37:03 - Sure.
37:04 - But after you do a few of these deals,
37:05 then you get addicted to it.
37:06 And you're like, oh yeah, I just pull this thing in,
37:08 it takes no time, and immediately.
37:10 Like, think about it this way.
37:12 The average small business underprices their services
37:15 by anywhere from 30 to 300%.
37:19 So I think about it like a Costco hot dog.
37:21 - 30 to 300?
37:23 - 300%.
37:24 - Why is that?
37:26 - They've been around for a long time,
37:27 five, 10, 15, 20 years.
37:30 People don't realize the cost of inflation
37:32 eating away at their prices.
37:34 They're not very sophisticated.
37:37 You know, very few businesses do quarterly mark to markets
37:40 on what their competitors are charging,
37:43 or even annual mark to markets.
37:45 And so a lot of times we have something called
37:48 the 3M strategy, where you kind of look at your businesses
37:50 and you go, huh, so these guys are underpriced by 100%.
37:54 So day one, I think I could increase their price by 100%.
37:58 We'd probably lose some clients.
38:00 So let's say we now have 180% more revenue,
38:05 'cause we lost some clients, but we increased the price.
38:07 And they also have, you know, they're bloated.
38:11 The company has huge offices, or too many trucks,
38:14 or too many people.
38:15 Wow, they're using actual written invoices
38:20 that they have to file as opposed to a software?
38:23 Okay, great.
38:24 And so once you get under the hood, you're like,
38:26 huh, they want to sell this business to me for 5X,
38:28 but day one I take over, I am gonna increase the price.
38:31 So now it's really only like a 3X.
38:34 And then I'm gonna add all these automations
38:36 and get rid of this boat.
38:37 So now this company's at like a 1 1/2X,
38:39 and it becomes a lot more doable.
38:41 - That's cheap. - Yeah.
38:42 But you gotta know what you're looking at,
38:43 which is why understanding the game of business,
38:45 learning all of this stuff is so valuable.
38:47 I wish I learned it earlier.
38:49 'Cause even if you don't buy a business,
38:50 you'll never look at business the same.
38:51 It's like seeing the matrix in front of you.
38:53 - As an entrepreneur, I know how meaningful it is
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39:48 Now, let's get after those goals.
39:50 - Yeah, in that, when you are going through
39:55 that 3M process, and you just said that,
39:58 as companies kind of look at the pricing,
40:00 and if you raise 100% of the cost,
40:02 and you're gonna lose, say, 20%, or 10, in your example,
40:05 10% of your customer base,
40:08 will you always say, "I will lose the customer base
40:09 "and raise 100," or would you just consider raising 80
40:12 and try to retain 100, but still accumulate extra?
40:15 'Cause that's something we go through regularly
40:18 when you're evaluating price increases.
40:20 - Yeah, every business is different, you know?
40:23 If I have five clients, I'm really gonna try
40:25 to retain those five clients.
40:27 If I have 5,000 clients, but, like most businesses,
40:31 20% of them drive the 80% of your revenue,
40:35 I'm gonna pay attention to what those 20% do.
40:38 And the 80%, I might not care as much about.
40:42 And so, I think, one of my mentors said to me,
40:46 "If you wanna get rich, you have to understand
40:48 "the language of money, except most people
40:50 "don't even speak it at a first-grade level."
40:53 And so, if you wanna build a huge business,
40:55 you gotta understand the language of P&Ls and financials.
40:58 Otherwise, you're never going to make your first million,
41:01 nor your 10 or 100 million, for sure.
41:04 And so, I think people, getting under the hood of a business
41:06 and almost thinking about yourself as, like,
41:08 your job in life, if you wanna play this game
41:11 of entrepreneurship, is to think about yourself
41:13 as a mechanic, and you're working on a car
41:16 for most of your existence, your business existence,
41:19 and you wanna be able to figure out what all of it does.
41:22 You know, how does the carburetor work?
41:24 What happens when I turn this knob?
41:26 What happens when it's hot out?
41:27 What happens when it's cold out?
41:29 And you become so obsessed with it until you're like,
41:31 "You hand me this car in any situation,
41:33 "and I will know which knobs to turn."
41:36 And I don't think most people think
41:38 about business like that.
41:39 They think about, like, what is the one thing
41:41 that I can do really well, and not,
41:43 can I actually understand how the business works
41:45 and what the language of it is?
41:47 And that's the fun of it, is figuring out
41:52 how to make sure that a car functions at all times.
41:54 - And that barrier is great,
41:56 because that also is the opportunity.
41:58 - Yeah, totally.
41:59 - The people who are willing to invest and learn
42:00 and take the effort, they're gonna get that prize.
42:03 - Totally, yeah.
42:05 And the only other thing I would say
42:07 is then you get in really cool rooms.
42:09 Like, you're in these rooms all the time.
42:10 But people are like, "How do you know Drew Brees?"
42:13 "How do you know Shaq?"
42:15 It's like, well, they went really deep into one skill set,
42:18 and they became obsessed with the game of X
42:20 until they could fix that car that was basketball
42:24 in any way, shape, or form.
42:25 They were the best mechanic out there
42:27 at their game of basketball, or football.
42:30 And then, when they're done with that, what do they do?
42:33 They're ready for the next type of car.
42:35 They're ready for the next adventure.
42:37 And so, then they come to people like you,
42:39 and they're like, "All right, so I did this physical thing.
42:41 "Now I'm getting older.
42:42 "I can't do the physical thing anymore.
42:43 "I need somebody to help me
42:44 "figure out this game of business."
42:46 And that's how you get in the cool rooms,
42:48 is you become an invaluable human.
42:50 And the more valuable you can be,
42:52 and the more irreplaceable you can be,
42:54 the cooler rooms you'll get in.
42:56 - 100%, couldn't have said it better.
42:58 So I have to ask you, because obviously,
43:00 the premise of our show is success formula.
43:03 So I have two questions I'd like to ask our guests.
43:04 The first is, what is Cody's non-negotiables?
43:07 - Long-term games, long-term people.
43:11 I stole that one from Naval Ravikant.
43:13 Every time I've lost money, I've been unhappy,
43:16 I've taken myself down the wrong path,
43:18 is when I get short-term focused and greedy.
43:21 And/or I'm around people who are short-term focused,
43:25 or greedy.
43:26 So now, I really try to think about,
43:29 how can I have a very tight circle
43:31 with people that wanna play for a long time?
43:34 And the best predictor of future behavior
43:36 is past behavior, right?
43:38 How do you know if somebody will be good
43:40 in a relationship for you?
43:42 How were they in the past, with other relationships?
43:44 Were they always saying, "Oh, it was that chick's problem.
43:47 "She was a psycho."
43:48 Other one, also a psycho.
43:49 Third one, definitely a psycho.
43:50 You're like, "Huh, if everybody's the asshole, what are you?
43:53 "You're actually the asshole."
43:54 And so, learning that the people
43:58 that you surround yourself with
43:59 is the singular indicator to success,
44:01 I think, took me a long time.
44:02 I thought I could do a lot of it myself.
44:04 And then, realizing that pros
44:08 know that longevity is everything.
44:10 I was telling the story yesterday with Tanner
44:12 that I sat next to this guy called,
44:15 his name's Jeffrey Kent,
44:16 and he owns a company called Abercrombie & Kent on a plane.
44:19 And he's a billionaire,
44:20 and built one of the biggest travel companies in the world.
44:24 And he's in his 80s now,
44:26 and he's run the company for 60 years.
44:28 And I was like, "Gosh, I can't think of anything
44:30 "I want to do for 60 years, that's a long time."
44:33 I said, "How do you do it?"
44:34 And he basically said,
44:36 "I think one of the keys to wealth might be
44:39 "longevity plus time plus consistency.
44:42 "And you pair just being able to deal with the pain
44:46 "for a long time," that is any business,
44:49 "with consistency, and you win."
44:52 It's also like our other friend, Andy Frisella,
44:55 who I know you know, too.
44:56 He's been at the game since, like, what?
44:58 '94 or something?
45:00 So he's been 24 years in the business plus.
45:03 And because of that, he's one of the greats.
45:06 - You stay long enough,
45:07 and you just win by attrition as well.
45:09 - Yeah, 100%. - 'Cause most will quit.
45:11 - Most will quit.
45:12 - And weathering the storm,
45:13 I mean, it's the Forrest Gump in the shrimp boat.
45:15 Right, just get out there in the middle of the seas
45:17 and fight the fight, all the shrimp boats are gone,
45:19 you're left.
45:20 - Yeah, yeah, it's actually true.
45:21 - Even if you're not great at it.
45:22 - Yeah, it's very true.
45:23 I do think consistency compounds
45:26 at a rate far above inflation.
45:28 And so most people think about
45:31 how could I be the best right now?
45:33 And you see these professional dabblers.
45:34 I have them as friends.
45:36 You know, and they're flashy.
45:37 They look fun, actually.
45:39 A lot of them are influencers.
45:40 They do what we do, and they talk on the internet, too.
45:42 And they're like, one weekend, crypto.
45:44 Next weekend, NFTs.
45:46 Next weekend, Airbnbs.
45:49 And I have a joke, one of my friends is like this,
45:50 and I love the guy,
45:51 but he picked stock trading right before the crash.
45:56 Then he went into Airbnb right before the market pullback,
46:00 and I just, I finally called him.
46:01 I was like, hey, man,
46:01 just tell me when you're gonna get into the next sector,
46:03 'cause I wanna short it.
46:04 - Can you text me as well, please?
46:06 - Exactly, it's just like a forward indicator.
46:07 - Yeah, he's the metric.
46:09 - Yeah, yeah.
46:10 - He's the TA that I need to look at.
46:11 - Yeah, that's exactly right.
46:12 And I think if instead you just stayed in the game,
46:15 then, first of all, you can see in the future,
46:17 'cause you've got all these reps,
46:18 and second of all, everybody that's against you
46:21 has cleared out, they're the shrimp boats.
46:24 - Yeah, so I've got curiosity, I got consistency,
46:28 got longevity, and got boring businesses.
46:31 Is there any other success principles
46:32 that if you started over and tomorrow
46:35 you had to go into an industry with zero experience,
46:37 that you would just lean on these core values,
46:39 these success principles to ensure Cody is successful?
46:43 - Pain tolerance.
46:46 - Pain, embrace the suck.
46:47 - Yeah, I cannot think of an entrepreneur
46:51 who has had it easy the whole time.
46:54 Or really anyone in life, right?
46:56 I think it was Buddha who says that struggle is life.
47:01 And so over my career I basically have tried to think about
47:06 how could I do what Mark Twain says,
47:09 which is if you're gonna eat a frog,
47:12 eat it first thing in the morning,
47:13 and if you're gonna eat two, eat the big one first.
47:15 And I've tried to think about that a lot with business.
47:18 Like what do I not want to do in the morning?
47:19 Typically I don't want to get up at 5.30 and work out,
47:21 but I do it.
47:23 And once you do that hard thing first,
47:25 everything else gets a little easier.
47:26 You've pushed the snowball off the hill
47:28 and the avalanche begins.
47:32 So pain tolerance seems to be that.
47:34 I love, you had Tim Grover here, and I met him with Dan.
47:37 And I think his book, "Winning and Relentless,"
47:40 the two books, there are two that I come back to
47:42 again and again to listen to when I'm struggling
47:46 as an entrepreneur.
47:48 Because I think the truth is that.
47:51 The truth is not how I got rich in 30 days
47:54 by doing this thing that took four hours of work.
47:56 That's just not the truth.
47:58 - It's not.
47:59 You're not, and fun fact,
48:00 you're not gonna get rich in 30 days following any gurus.
48:04 This is how I do it in six easy steps
48:06 and you don't need to know how to do anything
48:07 and no skill required, no pain required, no money required.
48:11 Let me know how it works.
48:12 - No, it doesn't.
48:13 - No money's coming your way.
48:14 - No, it doesn't work.
48:15 Yeah, you know, the other day too,
48:16 we were talking with a group of people
48:19 and man, I thought it was interesting.
48:22 It was a lot of people that wanted to be,
48:24 you know, people on the internet.
48:26 Let's say they wanted to train people on stuff generally.
48:30 And one, I think the two most dangerous words
48:33 in our modern day economy are life coach
48:35 because think about that for a second.
48:37 Think about having the idea that you have life
48:41 so figured out that I'm going to coach you on it.
48:44 Like what the fuck, nobody does.
48:46 First of all, we all die.
48:47 Second of all, everybody's confused all the time.
48:50 We're just a bunch of anxious monkeys running around
48:51 trying to figure it out.
48:52 And so I think the epitome of ego, you know,
48:57 an ego is to say that you're a life coach.
48:59 If you're 24, that's just like adding insult to injury.
49:02 My husband always says,
49:03 I wish I had the confidence of a 24 year old life coach.
49:06 And that's not popular in Austin
49:09 'cause there's a lot of them.
49:10 But I think what you can have is like deep expertise
49:15 and narrow expertise in one area.
49:18 And that is really helpful.
49:22 But anybody who says that they have it figured out,
49:24 that they have an easy path,
49:25 that you're not going to need pain,
49:27 I just, I've never seen it.
49:29 Maybe it exists, but I've certainly never seen it.
49:31 - It might exist.
49:32 I just don't think it yields the success people want.
49:34 - Yeah, it's true.
49:35 - Success is something everyone's chasing
49:37 and it's running from so many.
49:38 And no one seems, I have found traveling the country,
49:42 meeting so many aspiring entrepreneurs,
49:43 entrepreneurs, employees, people.
49:46 Everyone wants to find happiness that they're not finding
49:48 because they're chasing the wrong things.
49:51 And I don't think they're leaning into the enjoyment
49:53 and the sheer, you know,
49:56 can't wait to wake up and tackle it,
49:59 what you said, curiosity,
50:00 or call it whatever verb you want, or adjective.
50:05 But they're struggling because they can't find
50:11 that overarching success in whatever they're doing
50:15 because they either lack consistency,
50:16 they lack tenacity, they lack the pain threshold.
50:19 They feel that there's these barriers
50:21 and they're just jumping, jumping, jumping, jumping.
50:23 And it's like the little seed you plant in the ground
50:26 and it sprouts and the roots go first
50:28 and it hasn't yet touched the surface.
50:30 So you dig it up 'cause you don't see the results.
50:31 So you move on to the next one.
50:33 And you just keep doing that.
50:34 When you realize, man, if you just would have stayed there
50:35 just a little bit longer.
50:37 So I'm gonna end with this question
50:39 because I get asked this whenever I use that analogy.
50:42 How do you know when it is time to move on?
50:44 How do you know when it's like, you know what,
50:45 I bought this business, or I'm doing this thing,
50:48 and I'm doing the pain threshold,
50:50 and I'm doing all the stuff I should,
50:52 but I'm not seeing the results yet.
50:54 Do I, I can stay and keep going,
50:56 but eventually sometimes it's a bad idea.
50:58 So how does Cody go through that?
51:01 - Well, I think you have to be able
51:07 to really look yourself in the mirror
51:09 and ask yourself, have you given it everything?
51:13 And have I listened to people who are farther along
51:16 than I am, who have had more success than I am
51:19 on the truth of where I'm at?
51:21 'Cause typically the people who aren't gonna tell you
51:23 are the people who, one, don't have skin in the game.
51:26 So they're like, yeah, keep going.
51:27 One day you'll figure it out.
51:29 Have you ever bought my thing?
51:30 Oh, you haven't?
51:30 I'm not listening to you.
51:32 And then two, there are people who haven't actually achieved
51:35 the stuff that you want.
51:35 I mean, life hack is don't take someone's advice
51:38 who doesn't have the thing that you wanna achieve
51:40 and hasn't actually done the work yet.
51:42 And so I think that's first and foremost.
51:45 Most often we kinda know, like you know,
51:48 if you've put in the work and you know if the idea is good
51:51 and will continue, you just don't wanna look in the mirror
51:54 and be honest.
51:56 And then the other thing, I mean,
51:58 I was like watching this woman yesterday
52:00 and she was talking about how she wanted to,
52:03 she wanted to help people in business.
52:05 And yet she was saying that she's never sold anything.
52:08 She's like giving away all this free information
52:10 and this is free advice, but she knows it's so valuable.
52:13 And she was kinda starting to tear up.
52:15 And I was watching it and I was thinking,
52:17 man, you aren't ready to give advice yet.
52:20 You're not ready maybe to run that business that you have.
52:22 You're not ready to be in charge.
52:25 And so like, look at yourself a little bit.
52:26 It doesn't mean you never will,
52:28 but I think that the way forward in business
52:32 is that you prove yourself by doing really hard,
52:35 difficult things for an extended period of time
52:37 to get the skills needed to succeed.
52:39 And most people skip the pain and skills needed to succeed.
52:43 And if you're in a business that isn't working,
52:45 it's usually because you're not good enough yet
52:48 at the things you need to be in order to succeed.
52:51 Because it could be a bad idea,
52:52 but Amazon was a bad idea to begin with.
52:54 Like an online bookstore, if that's where Jeff stopped,
52:57 that would have been a bad idea as a company.
53:00 But the problem wasn't the idea.
53:01 The problem was the entrepreneur
53:03 or the solution was the entrepreneur.
53:04 He kept skill stacking and he was a great entrepreneur.
53:08 And so it's probably not your idea.
53:10 It's probably you.
53:11 Can you look yourself in the mirror
53:12 and figure out what skills you don't have,
53:15 execute on getting the skills,
53:17 and then the right business will follow.
53:18 - I love that.
53:19 The daily mirror moment we all need to do.
53:22 - Yeah, it's painful, but it's important.
53:23 - It is, but you wanna be successful,
53:25 that's part of the process.
53:26 - Yeah.
53:27 - Growth is painful.
53:28 It's called growing pains.
53:29 - Yeah, and nobody else is really gonna tell you the truth.
53:32 - That's true.
53:33 - Unfortunately.
53:34 - Well, Cody, this was awesome.
53:36 - Thanks for having me.
53:36 - I think you are such a valuable addition
53:39 to the entrepreneurial community.
53:40 I've been following you since I had the privilege
53:42 to get to know you, not personally,
53:45 but through your content,
53:46 'cause I think your content
53:47 is some of the best on the internet.
53:48 - Thank you.
53:49 - You speak real, you speak truth,
53:51 you provide great guidance.
53:53 You give everyone an opportunity to be successful
53:55 that maybe is sitting on the sidelines going,
53:57 I just don't see myself in what I'm seeing out there.
54:00 You're that common feel,
54:03 that peace that makes people say, I can do this.
54:05 And I think your newsletter is fantastic.
54:07 And if you're not already a subscriber,
54:09 stop, pause this right now and go subscribe
54:11 because you are going to expand your thinking.
54:14 And as the Mathis twins say, exposure leads to expansion.
54:18 So what you don't know, you don't know.
54:20 So get into the room, hear those conversations,
54:23 start having that critical thinking
54:25 and asking the right questions,
54:26 which will give you the right answers.
54:27 So Cody, thank you.
54:29 - Thanks for having me.
54:29 - This was awesome.
54:30 I'm excited for a friendship with you
54:31 and to continue to watch you shine
54:32 and learn from you.
54:34 And anything else you want to say to the audience
54:37 where you want them to go
54:38 and how they can better interact with you and your brand?
54:41 - I mean, I think contrarianthinking.co is the newsletter.
54:44 I suppose what I would say to anybody watching,
54:47 I was thinking about it yesterday,
54:48 that if I could go back to like 20 year old Cody,
54:52 I felt a lot of FOMO for not doing the things
54:56 that everybody else was doing.
54:58 I wasn't going out in the evenings or if I did,
55:00 I was guilty about it the next day.
55:03 And I remember I was going through an old journal
55:05 of what I write every day.
55:08 And so I was going through my old journal
55:09 from back in the day.
55:10 And I remember at some point
55:11 when my career started turning,
55:13 I wrote, "You are not boring, you are building."
55:17 And that realization that it's okay to be boring,
55:22 to not be doing the exciting things,
55:25 to not be adventuring, to not be YOLOing for the summer,
55:28 'cause you're in build phase.
55:29 It's just a phase.
55:30 But if you do that for a while,
55:32 then like you talked about at some point,
55:34 you're gonna have this breakout moment
55:35 where everybody first kind of laughs at you,
55:39 everybody second says you're crazy,
55:40 and then finally they ask you how you did it.
55:42 So if you're listening to this today,
55:44 don't worry about being boring.
55:45 Don't worry about being in a boring business.
55:47 Don't worry about being boring on the weekends
55:48 'cause that's what leads to big building.
55:51 - I absolutely love it.
55:52 Cody, thank you.
55:53 - Thanks for having me.
55:54 - And thank you guys for listening.
55:55 Thank you so much for listening.
55:59 If you're looking to level up your relationship
56:01 capital game, then take a minute and text the word Jeff
56:04 to 33777 for a free copy of my
56:08 Network to Millions playbook.
56:10 The link will also be provided in the show notes below.
56:12 See you guys next time.
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