Becoming a Main Street Millionaire with Codie SanchezHow to Get Rich the Simple Way #podcast

So this is hot off the press, but I was having my team pull together the numbers of percentage ownership of small businesses in the US, and it's pretty staggering. So when the US was created around 1820, 80% of people were employed by themselves. So we were largely employed. By 1870, only 33% were self-employed. So that was right after the Industrial Revolution. And then today we would be thrilled if we were at 10%. We're closer to 6%, and the way we know we're losing is Canada is beating us. Canadians have a higher percentage individual ownership than we do.

This isn't your average business podcast, and he's not your average host. This is the James Altucher Show. The thing about being quote-unquote on brand for me is that I unfortunately have not followed my own advice. I, I, for For decades I wrote, I'm never sending my kids to college. All my kids went to college. I said, I'm never going to own a home again. I own a home. I've always written, I don't like pets. I have 3 horses, 2 dogs, and a bird. And I just suck at, at paying attention to myself because I still think I'm right about everything. I just, I guess I said earlier, I can't get talked into anything. I do get talked into everything and I'm a sucker.

Well, they do say like the best marketers and salespeople are the most easily sold. Like, I'll buy all the things. Like, I'll buy any book that comes out. 'Cause I'm like, yeah, I might, it doesn't mean I'll read it, I'll buy it.

Yeah. Like, I totally judge a book by its cover. Yeah. Like, if it's a nice cover, I think this book is probably good and I'll buy it.

Yeah, I kind of agree with that. I actually was obsessed with making the COVID really nice and then I was sort of chuckling to myself 'cause I'm like, I don't know that anybody actually cares about this, but that I knew it would be up behind me forever. So I was like, what if it's really ugly? And then I gotta look at it for 10 years.

No, it, it's nice. And I love the title, Main Street Millionaire.

You do?

So thank God.

Yeah. They told me it's a terrible title at first.

They're like, no, I think it's very hard to have a good succinct title that is both, you know, clever and just a few words. Like I actually, I really don't like subtitles at all. And I know every book has a subtitle. Your publisher makes you do it. How to Make Extraordinary Wealth Buying Ordinary Businesses. But I hate, like, no one ever remembers a subtitle. No one re— I don't read subtitles, but Main Street Millionaire, I feel kind of like, oh, I wanna find out what that is. It's different enough. I wanna open the book and, and like, what is that? What does she mean Main Street Millionaire? Like, I sort of know, but I don't really know what it means.

Yeah.

I mean, I do now. I've read the book and know you.

Well, I think the other thing I was thinking with the book cover at least is the that also somebody could be the thing. Like you could be like a main— you could be a Main Street Millionaire and then you also could read the book Main Street Millionaire. And so I liked that.

That's a good way to think about it. I like that because I always think of a cover as like a call to action. It like, for instance, when I wrote Choose Yourself, that's like a call to action. And then I feel those titles are good. Wait, what was—

but, but Choose Yourself. Wait, what was your other really big one? I read Choose Yourself.

I've had a bunch. I had, Uh, uh, my most recent one's called Skip the Line. I also had one that was The Power of No.

Oh yeah. Yeah.

The Power of No is not a call to action. That was, this publisher called me up and said, we'd love to do a book with you. And I said, let's do The Power of Now, but take out the W. And they said, deal. And so I did that book.

That's hysterical. I, we, so Choose Yourself, I think was the big book I read from yours first.

Right? Yeah.

But back when you wrote Choose Yourself, I mean, that was like sort of You know, that was, that was rare. Or like a lot of people needed to hear that basically. Wasn't it? Yeah.

Like I, I feel like, like yours is the new type of business self-help, which I really like now, which is just very specific. Here's step by step what you need to do. Here's what I did to make millions of dollars. Mine was kind of, I don't wanna say inspirational, but a lot of people were still reeling from the Great Recession and failure and, and loss. And, and so I describe how I came back from that. On that. But right now I feel like the general business self-help book, which is like, oh, how to lead to success or how to find, you know, how to change yourself through charisma. I don't know, just all these bullshit self-help books. Yours is very specific and I really, I'm, I'm gonna give, I was thinking I'm gonna give this book to my kids. I have to force my kids to read your book because this is what anybody who hates their job should be reading your book.

Well, thank you.

Yeah.

Well, I felt like a lot of the inspirational books got written Like, you guys wrote those. Like, if somebody was struggling to leave their job to like go strike out on their own, I would send them yours. Like, I don't need another one, you know? And so I think that, but say like habits, like how many more books on habits do we need? Not really. We got James Clear. It's like, just send them that one. Now it's like the next evolution is shit that hasn't been written on, or it's like cult of personality and then the books kind of like go like this and then they die.

Right. I think someone like you would be in danger of writing something like that. Fortunately you didn't. Right. So everybody feels like, okay, I, I'm starting to get an audience or I have this huge audience now. I need to have a book to sort of cement it because if all things being equal, the person with the book gets the, the speaking gig or whatever over the person who doesn't. So I was afraid you were gonna do something like that. Fortunately you didn't.

Thank you. Yeah, no. I about die on the inside when there's a book that could have been like a sentence. And I think that's— but there's a lot of great books today too.

Do you find you read less because of YouTube?

Not at all. I'm, I'm the opposite. I'm so old school. I don't think I learn well from watching something actually. A Loom video, when my employees send me something, I like— that is a huge hack actually. I'm like, don't schedule a meeting, you know, don't write me a 42-page something. Put me a Loom on 2x with like a 1-page document. I'm happy as a clam. But like, I don't want to watch anybody's YouTube video for an extended period. So I, I read, I like to read books because you can skim them real fast. You could like find the one thing you're looking for, you know. The YouTube video, I'm like, oh my God, you know, ah, when do we get to this thing that I want?

Yeah, no, that's true. I could see that, particularly if it's like an hour-long video, which I hate. 5 minutes is like my limit on videos.

Yeah, but I think I'm old. I don't think that's normal. I think people these days want like they love learning from video. I like podcasting. I really, I like this. I like listening to it. I don't even want to look at both of our faces. I just want to hear our little meat lips flapping and pushing out.

Your face is fine. I don't want anyone looking at my face.

But true, what a great face and great hair. We both have great hair.

There you go. That's the one thing I can hold on to. So, okay, let's talk about it because I love this topic. I believe it or not, I can't stand the flashy tech businesses, although it's an exciting thing, AI, crypto, all that. But this really is the way to make real money, which is, I'll just summarize in one line, buying existing businesses that already make a profit. And the key of course is finding those businesses, buying them cheaply, expanding them, running them. And that's what your book is about. How do you, you know, like I didn't know so many businesses are basically just shut down as opposed to sold. Maybe let's start with that.

Yeah, I mean, I was just doing research this morning, actually, so this is hot off the press, but I was having my team pull together the numbers of percentage ownership of small businesses in the US, and it's pretty staggering. So when the US was created around 1820, 80% of people were employed by themselves. So we were largely employed. By 1870, only 33% were self-employed. So that was right after the Industrial Revolution. And then today we would be thrilled if we were at 10%. We're closer to 6%. And the way we know we're losing is Canada is beating us. Canadians have a higher percentage individual ownership than we do.

Why is that? What are Canadians up to?

I don't know. It's the only thing they're more free about than we are these days. But we need to dig further into the data. I mean, it might be most small businesses in the US, like more than 60% of businesses that are categorized as small businesses are just sole proprietorships. Individuals that don't have any employees. So like increasingly, you know, we don't own anything. It's sort of like that trope that went around a while with the guy who either said it or didn't say it about you will own nothing and like it, except like that is what's happening to us. And so these small businesses, I think, are our chance to push back because if they shut down all over the country, then there's gonna be like 2% of people that own small businesses in the US. And if we don't have ownership, I think it's a lot harder to be rich.

And, you know, you make a really good point in the book that we've been sort of scammed into believing that you could build wealth from a high-paying job, like a high-paying 9-to-5 job. It just is not true. No matter what your salary is, like, I know people who make huge, huge salaries at whatever— they're lawyer, doctor, even CEO. They just can't— they can live well, They're not going to build wealth that way, though.

Oh, yeah. I mean, taxes used to be a four-letter word for me. I was like, I'm just— my brain breaks and I don't want to talk about that. But, you know, even if you just look at the tax code, right, you know, if you, if you are an employee and you're in California or New York, then, you know, you're looking at close to 50% income tax when you include federal and state. I mean, if you layer on sales tax, if you layer on property tax, we can get crazy with how much we're taxed in this country. And really there's only like two ways to push back on taxes, and that's real estate ownership and ownership of a business or investments or assets. Even if all things are equal, even if you make $1 million and you're an employee versus $1 million and you're an owner of a small business, you are making potentially 25%, 30% more money being a business owner because of the way the government taxes us.

Also, if you sell a business now, you're talking about like a 15% capital gains tax as opposed to a 40% income tax. So getting a chunk from capital gains as opposed to income, whether it's you sell an investment that you held for a long time or you sell, sold a business, that's the only way I've ever kind of accumulated money is in a big chunk that is taxed differently than income.

That's a really good point too, because everybody obsesses on salary. Really bad way to get rich. They think, how much money do I make per year? What they don't realize is most people who are rich, they made it in big chunks. They, they had a rollercoaster ride that for a lot of it they were like kind of flat to down. And then at one point they went up high. And that comes from being able to sell stock investments, a house, a business. And so yeah, we do kind of obsess on that. And then actually this is like a little technical but kind of fun that also I think one of the ways we can push back on ownership today is we think that in order to buy a small business, we have to have a lot of cash. But another cool way that you can get around taxes for sellers of businesses is by doing seller financing. So instead of getting a big, huge chunk of cash when you sell your business to somebody else and you go through a bank and you got to pay all the taxes upfront, even though it is capital gains, get taxed at a lower rate or long-term capital gains, likely because you've held the business for a long time. If you instead structure out the payments over time and you allow yourself to keep an LLC in order to have write-offs around your business, you can really lower that tax benefit and the buyer of the business could use your future profits of the business to buy it. So slightly technical, but another way.

But important. And, and we're go— we're going to get technical because a key, I think a real key aspect of your methodology here is how to buy businesses by having the seller of the business finance part of the acquisition. So you could actually pay, let's say a business, It is, let's say a laundromat is trying to sell itself for $1 million or $200,000. You could offer actually more for the business, but pay less upfront so you can actually get control of the business and control the profit stream and control of managing the business. You could get that fa— and do it faster as opposed to paying the whole purchase price upfront. Maybe you pay a little bit more, but the seller agrees for you to pay it out over the time from the profits of the business. This is a really important method in, in what you're doing.

Yeah, you're exactly right. Yeah. There's some cool graphics in the book that, cuz I think a picture's worth a thousand words, right? Especially when you're doing a deal, if you can show somebody firsthand what it looks like, if, if you structure the deal the way that is best for both you and them to win, it's way easier to get better price and terms. And so we show the 3 different reasons why a seller would sell a business to you for $0 down using seller financing. The first reason is you can pay more for the business cuz you can say the bank only gives me $100,000 for this business, but if you finance the business for me using seller financing, I can pay you $150,000. Because we can make sure that the financials are real and we can do it over time. Tranche investing. So I can pay you more money. And then you can go to the average small business loan takes 120 days to close. What if we close in like 2 or 3 weeks instead? We can close way faster. I'll pay more. I'll get you your money faster. And then 3, taxes. Do you want to pay a huge check to Uncle Sam or do you want to structure it out over time? And we can do some smart taxation strategies in order for you to not have to pay at all.

I never thought about that. The tax part, which is because they can, because you're paying it out over time, they have more business costs. Whatever they do in their life, they have more business costs over time that they could write off. So they do pay ultimately less capital gains on the business, right?

Yep. That's exactly right. And then you can also change how you structure it over time. If you're buying the business using seller financing, you can get more creative with what you categorize as intellectual property in the business, which is better for them and worse for you as the buyer. You could categorize like goodwill and what would be called the brand separately. And so you can negotiate a lot of this stuff that helps both of your tax burdens. But I think if you go to a seller and try to tell them any of this stuff straight up, they're going to be like, what are you talking about?

Right? Like, all they're going to hear is like, oh, I wanted $500,000 and you're giving me $50,000. That's not good.

Right? Exactly.

Look, it's very interesting that most businesses— again, there's all these businesses run by baby boomers, as you point out, like a plumbing company or a set of street, well, set of laundromats or a self-storage company. And they might be making millions of dollars, but they just shut down the business when it, when they're done as opposed to selling it. And so it gives you an opportunity to sort of step in there and buy the business. And I wanna walk through some examples, but I think it's also important, this phenomenon you talk about in the beginning, the Lindy effect, that the longer our business has been around, the more likely it's to be, it's gonna be around the same amount of time. So like if a laundromat's been on this corner and successful for 5 years, it's probably gonna gonna be around another 5 years at least. And that's an important concept. There's 2 types of startups. There's one, oh, I'm gonna make this new AI thing that's an AI crypto thing that's great and it's gonna be worth $10 billion, or I'm gonna buy an existing business that spins off a profit. And which one's more likely to succeed? Obviously the business that's been around 5 years.

Yeah, exactly.

Yeah.

I mean, it was the, the Lindy Effect was actually created in New York, which is kind of interesting. But from this exact idea that like, if we took 1,000 businesses and looked which of these businesses will be more likely to succeed in the next 10 years based on the data over the last 10 years. And you might say, well, Codie's laundromat versus James' AI startup. You're like, God, does anybody use laundromats anymore? Why would that still exist in 10 years? That's probably gonna be taken over by robots. And you're like, James' AI startup, AI's hot right now. Everybody's loving it. Well, if Codie Sanchez's laundromat had been in existence for 10 years and James's AI startup had been in existence for 6 months, we know that my 10-year business has an 80% higher likelihood of succeeding than your 6-month startup.

And, and this is really interesting, like everybody always says, oh, don't do a startup. It, you have a 90% chance of failure. This is how people talk each other out of doing a startup. But if you buy an existing business, what really is, and a particularly your focus is on these boring businesses like a car wash, a laundromat, a preschool, whatever. What really is the odds of success in if your startup is, oh, I'm gonna buy an existing business?

Yeah, well, the way to determine, so if you were gonna say, Codie, tell me how likely I might have failed if I bought a profitable existing business that had been around for at least 5 years, what would your answer be? Well, I'd say let's go to the SBA loan default rate and let's see what it is at the worst period and the best period. Worst period, about 25% of SBA loans defaulted. Okay, so you have a 75% chance of success with an SBA loan during the worst years. Best years, there was like a 7% default rate. So we're talking about a 93% chance of default. Now, I think those could be a little higher because there's something called workout, which is basically the banks may be like, we're going to sell some of the assets, we're going to move stuff around, but the entrepreneur still doesn't really get anything. So let's say it's like 30% and 15% or even 35% and 20%. We, we're still sitting at, you know, double to triple X what a brand new startup has as the survival rate. So it's just a totally different way to think about entrepreneurship that we're not taught because it seems like only rich people buy businesses.

Yeah. And to your point, again, I think we've been fooled into thinking, oh, I better get a really good job 'cause that's safe. And yet, you know, laundromats in the Great Recession, it's not like people get, you know, stopped doing their laundry in 2008. Like they keep going. And, and I think the key is avoiding anything that's cool or hot. So you, on the one hand, we talked about AI, crypto, but even like restaurants, people buy a, people buy a restaurant because they, they like food. They wanna buy a restaurant. It's not because like there's an amazing, that is one area where it's just kind of like a vanity thing. Or, or a hotel you mentioned is also like maybe a vanity type of purchase. The guy I bought this house from, he was in the business of buying garbage and sifting through it for steel and then getting the steel, extracting the steel out and selling it. He made millions of dollars, like that was his business and made millions of dollars doing that.

I love, 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, it was basically this, you know, it— 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, uh, by the end because all of those other parents were lawyers, bankers, scientists. Well, In the book, actually, the first chapter is talking about one of my favorite billionaires, which is Wayne Huizenga, who built Waste Management, one of the multi-billion dollar companies, American companies that he started as like a, he was a total fuckup. You know, he, 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, a garbage truck. And his colleagues talk about being like, oh man, I saw Wayne the other day. You see him driving a truck. I better go get a gig 'cause it's that hard out here. He can't even get a job. Job. And 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, you know, dated models, all the things. And you know, all started from garbage. And so I think we gotta get over ourselves about like the titles mattering. 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're not just cool 'cause you have a tech-backed startup or went to Harvard, you know?

Yeah. I, I think even as an investor, I like investing in rollups, like a company that they're in every region, they do air conditioning fixing, like they buy companies that do HVAC installations and fixing and so on. Companies like that, where it's like the more you buy, the more you're able to kind of 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 1,000x, but they might return like a solid 10x, which is still great. And 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, but right. Well, and 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, and 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.

I agree. Tell me, how did you make your first million?

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. Like, I mean, Goldman 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, you know, running around, not kind of knowing anything. And they even paid for part of my grad school degree. I think a corporate training ground is incredible. If I went back again, I wouldn't stay so long. I stayed for a really long time, like 12 years. 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 to get paid to learn. So 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— 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 you're spending like hundreds of thousands of dollars to go to school when, like you said, you— 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. So like, I also did a similar route. I worked for 3 years at HBO, which was like the gem of the entertainment industry. The CEOs of every other entertainment company at that time came from HBO. And it was, I learned so much about business. I only did it for 3 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 wanna be an entrepreneur, I think there are plenty of people that are like, You know what? I just wanna 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. But I still think even if you do wanna 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, thousands.

Well, I remember fuckedcompany.com.

Fucked, same thing.

Yeah, it was that, but I was always looking for my own company on there. Oh yeah.

So it was, 'cause it was like a free indicator, right?

Yeah. Yeah. And people would complain about the company and you'd hear all sorts of stuff. How did you then, when did you start making the leap from a job to like, when did you buy your first business?

So I bought my first business when I was an employee and I had like 3 kind of failures at it first. I bought 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.

So like an online marketplace? Yeah.

Fashion styling. It was called Threads Refined. Total idiot, those. And I didn't lose that much money, but I didn't make that much money. Then I bought a consulting firm. I just didn't make very much money doing that job.

So I feel like if you buy a total service business, it's hard to scale.

It's 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've 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. And 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, I just was too scared to leave my job. I 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 'cause 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. Well, 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've 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? Sure. Um, 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, my dad in particular and my mom, they just really wanted me safe. They wanted, they wanted me to just make money, be happy, you know, stay in a steady job, be easily married, have a couple kids, just like take it easy. And 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. Look what I've built. I could lose it at any moment. Like that still horrifies me. He's like, so what, you gonna die? Are you gonna be homeless? Are you gonna starve? I'm like, maybe, I don't know. He's like, no, that's totally irrational. None of that's gonna happen with your network and skillset. You could go become a bartender and probably make $100K a year. Like, you need to get over yourself that you, you have total risk. He's like, what you have is ego risk that you wanna play the relative game and you don't wanna 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.

And Bill, 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. Yep. 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 a failure, if you make only quote unquote $50 million, You're gonna go for that billion, but he pulled himself outta that and now he lives the life he loves. So like in that first laundromat, would maybe walk us through that? Did you do seller financing? How did you find it? How did you structure it? 'Cause this is sort of what people really should be doing.

Yeah. So the first laundromat I had, I think there's 3 legs of the stool to buying 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 $100K was not like nothing for me. Like, I, I, that money was important to me, but it wouldn't bankrupt me if I lost it. So 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, um, endeavors. And so, uh, 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.

Was it profitable enough, that first laundromat, was it profitable enough that you could pay all your costs and still have profit for yourself afterwards? And did you calculate that into the deal?

Yes, we did.

So you found some laundromat, like some old guy was like, or was, had a laundromat for sale. It's been, had been around a while.

Yep.

And we could talk about how you find those things in, in a little bit. Yeah. 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 laundromat was making like $67,000 in profit when we bought it. The profit was really the guy's salary for running the thing, right? So $67,000 wasn't like 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 this the $67,000 after paying the operator?

That was after, well, he was a little unique because we split the $67K, like 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 $25K. I took $25K. It made a little bit less than we thought right up front. And he was willing to only take $25K to run it because I sold him on this idea of like, let's buy a couple more. And let's—

and one way to think about this 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, 'cause you had an operator, in a worst-case scenario, it would be minimal work and you're making 25% a year on your $100K.

That's exactly right. And then the part that I think a lot of people don't think about is your real goal. The $25K is awesome. But your real goal is let's make the laundromat more valuable so that if I buy the laundromat for, you know, $100,000 and then I grow the laundromat 2 or 3x, well, when I sell a laundromat, even though I, if I grew it by 2 to 3x, that might also mean that I get to sell it not for 2 to 3x more, but maybe for 4 to 5x more.

Because this is a key point that people don't understand. Like, as you grow a business, the first derivative is positive. So the more you grow the business, the even more you grow the value of the business.

Yeah.

So if you grow the business 50%, the value of the business might grow 100%.

Yeah, 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, you're doing relatively pretty good. But if you grow it this much, then you sell it, then you're doing really good. Then you've just like gotten your salary back in 2 to 3 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 like amateurs always yell at me about that first deal. They're like, this was 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've figured out how to scale it, it's super worth it if you can learn this skillset.

And so, and how did you scale that first laundromat?

Huh?

Like, what did you know about scaling laundromats?

Well, thankfully I, 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, a, a sign that kind of like wiggles in the air. So we did those outside, you know, with, with the name on it. We did a little bit of a facelift on the front. Of the laundromat, nothing expensive. We 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 was like, oh, come for coffee and like a book trade. You can have free books. And so it was like community outreach basically just to get more people aware of what we were doing. Then the other thing that we did, so more notoriety. The second thing that we did is we increased the, uh, 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, $3 or $6 with me doing a couple of loads of laundry, could I also sell them the soap? Could I sell them the, um, dryer, you know, sheets? Could I put a gumball machine in there so that now they're spending not $3 to $6, maybe now they're spending, you know, $9 to $12. And so I've maybe done, and 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 good. The two—

can I comment? Can I? 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 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. But 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. And because they had, they're like personally attached. To the price that they're charging, and they always find they don't lose customers and they're able to sometimes 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. On 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 $100 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, right. But you know, my landscaping guy, for instance, he literally, James, I have to chase him to pay him. He like doesn't have autopay. I, I still give him a, a check. I, he's definitely never raised my prices. He's never upsold me on anything ever. He'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 I'm like, Jorge, do you wanna do my tree trimming? And he is like, yeah, sure, I'll do it. I'm like, why don't you tell me that like once a year? It's like $1,000 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, so you have a laundromat. You could, as you mentioned, do a little bit of marketing to drive in some more customers. You could sell them more things 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 related items like soap. And you mentioned in the book, you can even buy your own soap company so you could wholesale, you know, you're getting the soap wholesale and you could sell it retail. You could wash and fold and deliver for them. 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. And 2 is going to be, it's not 1 plus, like we were talking about before, it's not 1 plus 1 equals 2. It's 1 plus 1 equals 3 now because now it's a chain of laundromats. With just two, so it's valued more.

Yeah, it's exactly right. I mean, 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, you're going through it right now. Like you could just look at them and be like, ooh, how's the business going? 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. And I would never advocate for because each machine costs like $30K 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, fools. You know, we— she's like, it was miserable. It cost us $2 million to build out this laundromat.

Oh my gosh.

It was 9 months over 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 $2 million laundromat to, 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. And so fully recouping your, your cost of capital. And so for her, I was like, if, if you did one thing differently, what would it be? She was like, yeah, we should've listened to you. We should've bought a laundromat instead. Like so many of these legacy businesses, already exist and we're getting sold ideas of how to make them like fancy and shiny and new. But we could do that over time, little by little, like our parents used to redo our houses, right? Like, you know, remember like growing up, I remember living in a construction zone like 3 or 4 times, like, like a whole part of the house, like tented kind of, you know, and they were working on one part. Now 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 underestimate every aspect of this. Like, let's say now you want— instead of doing $2 million on the buildout, 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— how do you convince someone to do it? Why is it beneficial to you?

Yeah.

And so on.

Well, we have a couple things. 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. For most people going to buy a business, if you're gonna go buy a business from 30-year-old Codie who's growing her business double digits every year, who's only been doing it like 3 to 5 years and likes what she does, that's a terrible seller financing avatar.

Right.

We have this checklist in there. That's like, okay, has the person been in business over 5 years? Is the person over X age? Is the person in an area or an industry that is growing at like 3 to 5% growth per year, which is pretty average for a small business? And do they have some version of the 7 Ds, which are, you know, 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 either shut down the laundromat, and I'm, I'm using a laundromat, but gonna be a car wash. It could be any of the number of indi— businesses from the industries you mentioned. But let's keep with laundromat as our placeholder. But if, if the kids might have inherited a laundromat, now they have to pay tax on it. They don't wanna 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, you know, the husband can't afford to pay the wife what her payout is unless they cash out the business. There's so many reasons, but a lot of these days it's really retirement. Like that is the, the number one big one is that the entrepreneur is tired. They don't have an exit plan. Their kids don't wanna take over. They wanna 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 $2,000, $2,500 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, 2 shots on goal. And you know, when I asked him, I'm like, so why, why are you looking to sell this thing? You know, you're making nice money, you, it, 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. 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 with that. And like my son, and then I got a grandkid coming up. And so he is like, so I just, you know, I wanna play, spend more time playing pickleball and I wanna spend more time with my church. And 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 is actually sitting pretty. And, and these are so common, but the problem is they're not always listed publicly. They're ones where you gotta go find 'em.

I think again, it's one of these things people have a, a shame factor. Like they don't want people to know they're selling. They don't want their employees to know they're selling their business. There's, it's like a private thing almost.

Yeah. I mean, if you think about it, you, you are like probably a little nervous that your business is gonna implode if you tell people. And, and so 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.

And what kind of business was it?

Can you say what kind of business did that guy do? A home service business.

Yeah.

He actually had a flooring restoration company. So they did cleaning and restoration, I think, because he had a recurring rev— recurring revenue component, which was nice. That was his cleaning business. So he would come into like corporate centers and he would have contracts just like, you know, to come in and clean, but then he would also restore floors. And I don't know exactly what kind of floors, but I see.

So it wasn't dependent on him necessarily. The business had experience and reviews and testimonials. Yeah. And he was able to send anybody in and restore the floor.

Yeah.

What kind of deal would you structure with someone like that if you were to buy the business? I mean, with a $400,000 a year profit, I typically go 2 to 3x. So like you would offer, let's say $800,000.

Yeah. And he would probably say no at $800,000 and he'd probably want more like a million for it. Yeah. 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 he wanted 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 gonna pay X now. And we're going to pay this other amount if you hit all your metrics over X period of time. And you're going to have to stay on a little bit to make sure that we hit those metrics.

And then what's like a typical deal? Like, what'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?

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 was going to buy this deal. It's a little too small for me, but for that deal, the proposed structure would be something like $720,000. That was the number we got to. And the reason we got to $720,000 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. 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 bit. So we got to $720,000. The guy didn't like $720,000. 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. It's two guys going in to buy this business with him and, uh, they're going to offer him up to $1.1 million 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 $498,000. $498K or $598K last year, and then they're down to like $450K or something. It really ranges from like $400K to $500K 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 7 years.

What would be the first payment? What would they put down?

What's 20% of 7?

So like $150K, about $148K, $144K.

So they'll probably put something like that, $100K to $150K down for that business.

And would they borrow that or would they—

These two guys are going to— they're comfortable up to $200K down, but I'd be more comfortable closer to $150K. So, 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. So it'll sit in 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 7-year period. They negotiated quite a nice interest rate on it too. The average loan right now at the SBA is somewhere between 8% and 12%. But because it's seller financed as opposed to the bank, They're gonna get like a 5.5% 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 cash flow in a business like this. This one doesn't have a lot of, it doesn't have like, uh, um, a lot of operating expenses. They've got some machines, they've got some trucks, but they don't have like construction materials for floor. Refurbishing. It's mostly just the machines and labor.

And are employees fine with a new operator coming in? So 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. And I think that's true in doing deals, but I think it's 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, that finance guys typically do not do well, which is we kind of wanna obsess on the team that you're acquiring, cuz those are gonna be your, 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 3, 5% per year, if at all. And so nobody's making more money over time. Everybody's kind of like just doing exactly what they're, what they've been paid to do. There's nobody really driving anything forward. So, you know, 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 bandaid off. Hey, I'm here, I'm in charge. But number two, I'm not here to like, I don't wanna, you know, cut away all the fat and make this a miserable business. I bought it 'cause I like this business as is. All I wanna do is make it better for us. And then you gotta get rid of the cancer. So there will be like 1 or 2 people who are just not gonna be a good fit. You need to move 'em 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 in my own operator/bookkeeper, it's a little harder for them to do that.

It's a—

not that I'm distrustful as a person, but you gotta always look at the worst case scenario when you're doing a financial transaction.

It's a great point. I've done both. Uh, it, it really is like 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. 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 gonna crush it for me and they were all charisma and bullshit. I'm sure it's also happened quite a bit where the accounting team steals from you cuz 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. 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, the last person who was in charge.

Like, 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, do restoration also. Can you do that for me? And they just do the job on their own without the, you know, 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 it 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 outta one company. And it was because we were doing, 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 gonna be profitable later. We're gonna 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. So like if someone is in a sport and they run a marathon in 3 hours, that's probably what they're going to do tomorrow also. Like they're not going to suddenly do it in 2 hours or some phenomenal thing. It's like in school, if somebody gets C's on every test and then suddenly is getting A's on every test, they're probably cheating. 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, the money you make, the money you lose and so on should be the same.

Yeah, 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. 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 like check that out, it probably checks out. But if it's like, well, what happened is fulfillment was bad, and then because fulfillment was bad, it's often a red flag. Either they're inept. They're not really involved or working that hard 'cause they can't explain it, or they're trying to confuse you.

Yeah. So now let's say someone's listening to this and they're like, okay, well I can't, how am I gonna find a business? I don't know any laundromats, I don't know any car washes. What are some other industries?

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 recovering 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. That 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. Strong—

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.

So it's basically like buy in, in a case of like a senior facility, you're basically like 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 2 to 3x typical room and board, which means you have a nice little profit margin, but you do have to provide some additional services.

I once owned part of an addiction recovery facility for teenage girls. Our business was limited in the number of rooms we had, so we'd always try to buy abandoned hotels. 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 so 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. It'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, that your paint cracks every year. We also, I really like, we have a handyman business and I really like the handyman trades because I think people will pay subscription help for handyman continuously. But right now that's service people don't really offer.

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, well, 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 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. Most handymen are not insured tradesmen, and if you are a homeowner, you actually kind of want that. It's also a lot more about safety, security, timeliness, follow-up. Often we keep cards on file, so they'd have to cancel that to go with this guy. Sure, there's gonna be some churn, but I think less than we anticipate. Anything that makes it easier for us as humans to get things done will probably mean we stay with a company. More consistently. We also have a roofing company. Roofing companies are kind of interesting. It really depends where they're located. They can be kind of scammy and, and insurance claim oriented, especially in Texas. There's lots of people who 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 roofs 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 there are 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. It'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, 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, you know, multiple six figures a year in revenue.

And so, so 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. So 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 prepaid. 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. He calls it Lone Star Trash. And so, you know, he basically grew the business from that. 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. 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. 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, it was not what I thought it was going to be for sure.

I 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 4 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 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 wanna sell this thing? 'Cause you've got it started, but I wanna grow it. So 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 wanna sell. We call them the quiet sellers. The second way is on-market deals. This is traditionally big, huge sites like BizBuySell existed. I didn't love that site, so we started our own called BizScout. Actually bought the marketplace first and then I built it. Um, trying to follow my own medicine.

How, how'd you find the marketplace for sale?

I 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, he built originally just an off-market deal scraper, which still exists. We just upgraded it. So if you're like, James, I wanna go buy childcare 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 wanna buy a garden and nursery center in Scottsdale, Stale, 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. So 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 wanna sell my business. Let's put 'em on there so people can find them. Most people will buy businesses through a site like that, but right now it's not.

So you've been doing an interesting strategy too of not just sort of like, 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 when I realized that I didn't wanna be a partner with anybody else in a private equity firm. So I exited that partnership and 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 or 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 a no—

how can you tell?

Like small things, like super corporate every single time. Everything's private equity is all like systems and processes and profit maximization and revenue. Maximization and expense cut. And 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. It feels like it's lost its soul somehow. And, and I feel that a lot in businesses.

And so I was like, 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?

I think my point was if I kept going, I would've been just like 'em. Like if I started to own 300 car washes across the country and built it into a huge conglomerate, at some point, yeah, we're probably not that different.

Yeah.

At least still, if you're the owner of that one business and like 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, like you just, it's financial maximization. And at some point, like, you know, you just, you don't care individually, culturally about each individual company. And so I was worried that that's what I was gonna become. And at some point, I mean, I've done pretty well, I've made a decent amount of money. So I was like, I wanna, I wanna be happy with the thing I, I built. And so, but I still wanna build a billion-dollar company. But my idea was like, all right, Instead of just doing rollups everywhere, let's let other people do that. Let's like help more people own their individual companies and I'll build businesses that haven't existed before, but they'll leverage my unique talents. So that was like, all right, let's build this business buying and selling marketplace. Like that would be really hard for an individual to do at scale everywhere. It actually gets net better the more users that are on it and the more consolidated it gets.

That's right. It has the network effect.

Exactly.

And, and do you sell, do, 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, uh, 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 gonna have a, a third for now you've scaled the business to like 10 figures plus. Do you wanna create a portfolio of business? And then finally we're gonna have exit. So now you wanna sell your business. And the idea is like, could we create our own little financial MBA program, but like 1/100th of the cost for people who wanna build up small businesses? And then can we have events sort of all throughout the country doing the exact same thing? And I'm gonna 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. So again, like 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 that has like the CRM and the backend and the order flow processing, et cetera. Take the one thing you're good at and then build like a satellite of companies around you, which allow you to diversify your revenue streams for your business too.

Well, 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. You'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. Somehow I guess you did that in between or before Goldman Sachs. I don't even know. You were like the James Bond of the border for a while.

Wow. Well, that was, yeah, that was, I was still in college. I, 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 US-Mexico border. And so they gave us money and I, 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, on somewhere along the border covering stories. And so I chose Agua Prieta, which is a little border town, and this other town called El Paso, Juárez. 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've been 2007, 2008 period of time. And that was like some of the worst cartel violence along the US-Mexico border. I think, I think they were saying in that 3-year period, something like 10,000 people died in Juárez. So it was, it was awful, but it was fascinating as a journalist. Like, you know, we were covering things where I remember vividly there would be 2 newspapers every day in Juárez 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 like who was fighting who and like what was happening through the, the two newspapers. But yeah, I mean, I think I'm similar to you. You like to write, right?

Oh yeah. That's— 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.

Yep.

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, like what?

Yeah.

It's like pissed off.

Well, 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.

Yeah.

And it'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 you, 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 Hemingway's 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, 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. And so, you know, a lot of—

and that, and 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 really great. And so many people mimic today, but he really mastered it.

Yeah. I mean, and, and I thought, I mean, if you've ever read, did you ever read, uh, uh, his story about the Indian? His like Indian wife or Indian baby?

I don't think so.

Ah, 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. And like the last line, you're like, oh my God, I understood this whole thing. And the whole thing is the opposite of what I what I thought. And so, 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. And that I think just was carved into my soul while I was a journalist for that very first, you know, short period of time. And is why I get annoyed when people don't talk about money and when people try to make 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.

I mean, every aspect of money is there, there's psychology, there's shame, shame, there's fear, there's ego. There is so much involved that it's really— it's like how someone makes money. You know, like for instance, you worked at Goldman Sachs. Most banks, maybe Goldman Sachs is one of them, maybe not, but most banks are basically run by total scumbags. Like, and everything they do is, you know, in some gray area against their customers, against their employees, against shareholders. It's really hard to figure out what the motives of some of the things they do are. And yet that's totally respectable. It'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. You know, it's— that's a schlocky thing or whatever, even though I might legitimately, you know, I am legitimately interested in helping people out, you know, 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. You know, I was reading a tweet yesterday and I can't remember who said it, but I was like, yep, it's like contrarian 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 an 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. I'll take 2 and 20, or I'll take 1% and, you know, see you later. Bye. And so, yeah, the whole 2 and 20 thing is ridiculous.

Hedge funds charge 2% of assets and 20% of their 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% in assets and 20% of the profits. It's a total scam. And yet, oh, it's— these are respectable billionaires. Like, we have to listen to them. They're gonna tell us what to do.

Well, also, I mean, you think about it for a second. You can have unlimited upside on your education. Unlimited. Like, 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, 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. 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 have really mastered, hey, how can I learn how to buy a business the best, like the best way possible? How can I really make sure that I understand real estate investing? And then you go invest. You're gonna 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 gonna happen is you don't actually know what you're doing yet. You have to learn and 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 steal—

that, that's totally true. Like, like, and look, let's take writing as a great example. Skill acquisition is so important. And again, there's this idea, well, you need to put in 10,000 hours or 1,000 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. And 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 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 who you're competing with.

Yeah, I think you're totally right. 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. He 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 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, 1/100th of the price. But I've never really cared that much about what other people's— it used to bother me that people didn't like education businesses or that people didn't like influencers or people didn't like people with newsletters. And now, you know, God, the, the election, I was part of this think tank, 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 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 6 months prior to the election. And they were like, you know, these guys, blah, blah, blah. And mind you, this is a conservative think tank. And I was sitting there listening and thinking, you guys are so outta touch because I thought that this election would be decided by podcasts. 'Cause you and I have one and we understand the power of it. So I was like, nobody cares about the mainstream media anymore. They're late. They're slow. It's not relevant. We get updates on Twitter. And so I thought that was gonna 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 cuz you think they're lesser than the mainstream media because of like credentials or something. I don't even know why. And, uh, I remember they kind of laughed at me and I was like, I don't know, 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 getting pushed back, but they're losing.

You're, you'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 gonna work at Goldman Sachs, but I could actually be a one-man Goldman Sachs by writing a newsletter 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 in something, I could start my own education site. It's gonna be much better than Harvard for what the specific things I'm teaching are. Like, there's always an opportunity. I'm not gonna 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, we see it everywhere and, and I guess that's, 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's certainly than society wants us to be. Because on average, when institutions and individuals get power, they don't like to give it back. 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 70% of people being self-employed 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. And so, I mean, one of the things that, you know, 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+ 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 or 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? 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 the SBA. I would make it an opportunity for it to be peer-to-peer. Like, let's say I want to invest— I, I— 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 Oh, I could put $100 and contribute to an SBA loan where I'm getting like 8 to 12% interest as opposed to 3% in my savings account. Like they, they should allow peer-to-peer participation in the SBA.

100%. I mean, there's so many small things that we could do, like an education process to notify small business owners that they can actually sell their business, an awareness campaign to actually bring both people to the table and get them to think about how to do deals. Standardization of term sheets, similar to what Y Combinator did with standardizing the standard VC term sheet. Let'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 gonna try to do everything possible. I'm gonna try to use BizScout as a mechanism for all of this. And these days, if you wanna get something done with the SBA, I'm just gonna 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 wanna be in charge. I want— I'm, I'm very happy to assist and not have any positions of power in the political sphere.

What if they offered you a position of power?

I'm, I'm so busy building right now that that's— it's just not on my radar. I think it'd be a, a disservice, but I would happily help them find somebody. Who I think was better suited to it. I think like public policy, 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 4 to 8 years and then peace out, which is what I would, I would want to do. I have no desire to be a career politician.

Well, that's good because I think 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 gonna 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 gonna be the, the perfect book people should read about essentially making wealth. This is definitely an avenue I feel is p— people are unaware of how successful this strategy for building wealth is. It's much more successful, I think, than any other strategy for building wealth, hands down.

Thanks. I appreciate it.

Unless you're like a super software guy and you've been living in Silicon Valley for 20 years, so you know everybody. Like, Silicon Valley is all a game. Like, 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 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. And like, oh yeah, let me make that intro for you. And you're like, what do you do? You're a professional introer. Like, they're not builders.

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, but then a trillion in revenues when we sell. A refrigerator to every other person in China. And, 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.

I wanna 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 underst— it's like the language of, 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 and 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 walk people through a great example of the simplest possible way, like the minimal viable business one can start. In some sense. And this is possible. And the fact that, like you said, this is like the language of money, understanding that things work on profits and work and how do you scale things? Like, oh, you could scale this way, you could scale this way. These are ideas. Scaling could apply to anything. It could apply to your, you know, how you scale your work at your job or how you scale some, a book that you're writing or, Like all of these things that you wrote about in this book could apply to other industries, other endeavors in life. You know, I think, I think it, it's important. People just don't know this.

Yeah. Okay, good. 'Cause I didn't know if I was, you know how you have confirmation bias because it's a thing that made me a lot of money and you know, we have this academy, so I've seen 3,000 people go through it. I'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 gonna make it ever. And so I do want more people to understand dealmaking. Like, I made my mom read the book, you know, she's a 30-year special education teacher, but I'm like, I want you to understand, you know, why right now with your house you're sitting on all this money. 'Cause their house is totally paid for. They have like no debt anywhere. And I'm like, this asset isn't being used very well. And so like, 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. Like, 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.

Yeah.

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, but yeah, you know, in any case, Codie, I think it's a great book. This is the one book I'm gonna make sure my kids read.

Like, oh, you gotta tell me if they do. Tell them to reach out to me if they end up buying a, buying a business. I feel like they would, 'cause you're, they're your kids. They probably have already started one and then now they need to buy it.

No, not yet.

Not yet.

There's, I, they have to go through, like, I didn't wanna 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. My kids still rebel in this way a little bit.

Yeah.

But, and like I said, they went to college when I didn't want them to go to college.

Well, I understand why kids go to college. It's fun.

It's fun. And you socialize and you don't have to do anything serious for 4 years. The real world. And then everybody complains now when they go to work, oh my God, I have a commute and like 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 on, 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 3 hours away from my first job. Like it's hard. Being young is hard.

Being young is—

It's supposed to be hard.

Yeah. It's so hard. And I wish, and, and I always like try to remind people that it's not hard because like you're like, oh, this, 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.

That's why they give you the job, because you're useless in everything else.

We should really be motivational speakers for young kids. We'd just be booed off.

You guys suck.

We're just throwing stuff at us.

Oh, but I will say though, everybody always says, oh, this next generation is not as good as the last gen— or my generation or whatever. Their kids are lazy now. But actually, like, you go on Instagram or TikTok, I, 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, I didn't know anybody with these talents when I was a kid. Like the, each generation gets better, I think.

Me too.

But, 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.

You know, 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, when he joined. Uh, we, we had started like 3 years ago, so whatever. What is he, 22 now or something like that? Um, 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 multi-million dollar business at an agency, uh, marketing agency for real estate agents and, uh, sold the business at like a perfectly timed moment, is now looking for his next deal. And he is 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 actually 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 we ended up owning 20, 30% of the business, both distributing, so distributions, distributing equity and, and just equity in the business. And then the founder of that business had a few agencies. Let's just, the other guy kept a portion of it and they both made money when they sold.

And there's a lot of techniques also you write about in the book that we haven't even talked about. Like you're the whole process of, I think you call it like 100-50-30-whatever. Like 100 days to research something, 50 days to identify a business that's possible, 30 days to then negotiate. I 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 being— instead of having some crappy job for 30 years like this is a, a better way to make money. I also think like, you know, 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. Like, 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 when everybody was really getting excited about day trading. He's younger, younger, young man. He's super smart and he's super entrepreneurial, 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. And the next day he came to me, he's like, oh my God. He's like, I lost everything. I'm like, that was fast. How'd that happen? He's like, yeah, I didn't realize all the fees they were charging too. And so between fees and then the market moved, I now owe some money. And I was just like, Jesus. Describes.

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, I— 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 like a, a big mathematical ability often to be able to do any sort of quantitative trading. And then even to like analyze the company, I mean, and you're just competing against the smartest people and fun.

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. Competition 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, it's so true. And even, you know, the game that 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, you know, you'll do well. But just making money from your own money is real, real hard. I mean, God, who are the only people that have really done that over time? Like 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, his— he didn't take a, he didn't take a management fee to his credit. He just took a fee on profits.

Wow.

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. And 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 $1 billion 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 too, from a governmental perspective.

Yeah. But he compounded his, his connections and his network and his, and, and the value he created over 70 years. Well, wasn't it—

Bezos asked him like, why do you tell everybody your secrets if like they work so well? And he is like, because nobody wants to get rich slowly.

Yeah.

So true.

I also think there's a, a right place, right time sort of thing. Like he kind of came of age in the early '50s after World War II 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 definitely at the right place in the right time. And people, you know, in everything, like, you know, Malcolm Gladwell spoken about how people like Bill Gates, Steve Jobs, all those guys were basically the same age because they were in their early 20s when the computer started to be big and they were able to benefit from that. So 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.

Yeah.

Like, so stuff like that is important. You know, I wonder about though, there are some businesses I wonder if, if robotics or whatever will 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, I mean, certainly could be. I don't think we're at— the other thing about car washes that's unique though, is that 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 landhold. So 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 yeah, I mean, we could play a game too, thinking about all the different ways that robotics could change boring businesses. But 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. Remember back in the day when we all had to do decks and stuff for finance? Like we did the decks ourselves, like 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 'em to India and they redo 'em every night, overnight for us. And then they'll send them back. I was like, God, that would've been nice back in the day. But that means that this many fewer people now have those job, those really high paying analyst associate jobs where we were totally overpaid. And then in the future, even less we'll have it because we'll have India and we'll have really smart AI doing those jobs.

And here's the thing, it's not like, so everyone's worried, oh my gosh, AI's gonna take jobs faster than industry will replace them. But I feel like people always say that and it's never happened. We don't know what jobs the old typewriter makers eventually got. They probably weren't making computers, but they did eventually find jobs. It wasn't like everybody in the typewriter industry was on the breadlines and homeless. People just find new jobs naturally at some point.

Yeah.

Well, I mean, 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 number is not totally real. But, 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. Two, 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.

Just send them. I send them to Trump, send them to Elon Musk, like po— post it on a Twitter thread and, and address Elon Musk and Donald Trump and maybe like one other like third or fourth level person underneath them.

I'm going to send it to you when I do it and say this was inspired.

Oh yeah. CC me on it too. Yeah. Well, thank Codie Sanchez Sanchez. Thanks once again. You're always a welcome guest on the podcast. It's such a pleasure and I really enjoyed the book. I, again, I'm serious, I'm gonna get my, my kids to read this at gunpoint. I will force them and we'll see what happens. And I, 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 gonna do some fun things. So if they're in New York, I'll, I'll have to tell them to come. And you can tell them that you'll give 'em an extra $100 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 paint. I'm going to try it again. We'll see.

Well, all right. You're the man. Thanks for having me, James.