Watch these 50 minutes if you want to be a millionaire in 2024

Our communities are under attack. We're under attack from the really big and the really Centralized. No more KFCs, no more Walmarts. I want small businesses. If we as a society do not all start buying more of these businesses, then who does? The biggest players out there. And the big boys get richer and the little guys become workers. And we become a nation of renters and employees when we started as a nation of owners. Ladies and gentlemen, make some noise for Cody Sanchez. Hello. What's going on, everybody? So there is zero chance I'm gonna have as much energy as that guy. So if you guys are expecting that, everybody probably should just wrap it up right here. We're not gonna make it any further. First of all, I'm really excited to be here with you. Second of all, I think you all are so smart for being here today, because the world. Okay, I'll let that sink in. I like that attitude. The world for this next year is going to be tough, people. It's not going to feel like today. It's not going to feel like the past year, except maybe if you were in crypto, might feel a little bit like that. It's not going to feel great, 2023 for most people, except I think, for those who are really ready for it. And so that's what we're going to talk about today. We're going to talk about buying businesses in a recession. We're going to talk about how to buy a business if you've never bought one before. We're going to talk about how to buy business with $0. We're going to talk about how to buy a business maybe that you already work in. And we're going to talk about why right now, I think, is the best time to be in a choir ever in history. That's what we're going to hit on. But we're also going to go into something a little bit deeper than the how. And so I want you to just like I want you to get out your pens, I want you to get out your pieces of paper. Because the truth is, I'm not here to fucking entertain you today. I'm not a dancing bear. This is going to be technical. There's going to be lots of specifics in what I'm going to talk about. And for the people who listen, who actually use this coming into the next year, I feel very confident saying this is generational wealth creation. These are those moments where your kids look back and they're like, thanks, mom and dad, for doing that. But it's going to mean that you all have to really be here with me. I thought about what I was going to present out to this crew, and Ryan's like, I got 1,000 people. You come out to Vegas, I will you help talk to them? And I thought, yeah, I could rile them up. I could get them excited. I could make them feel good about themselves in life, or I could make them a lot of money. And so today, we've chosen violence. I choose violence. We've chosen a little bit of money today. Okay, so why are we here? We're here because you guys are the few who do, not the many who speak. There's a big difference between the two. And we are here to do what I call building a baby Berkshire Hathaway. Building a baby Berkshire. We're gonna get our Warren Buffett on today. And so there's gonna be two levels to this talk. There's a 101 and there's a 202. I want to meet you where you are. We're gonna talk about how to not just make your next couple zeros, but how to build your empire. Because that's, I think, the more interesting game in this one life that we get to live. Let me first tell you maybe why to listen to me for 30 seconds. In case you guys don't know me, there's plenty of things I don't know much about. One thing that I do know a few things about is building a portfolio of businesses. We now have a portfolio of businesses that do $50 million a year. These are boring, unsexy businesses that when I was a kid, I certainly never wrote down. I wanted to be a car wash owner when I grew up. And yet, through all my years at Goldman Sachs and building businesses and doing investment banking, it turns out this one skill is the thing that creates more members of the Forbes 100 list than anything else. And it's acquisitions. That's what we're going to break down today. The reason we're getting into it is Baron Rothschild has a famous quote that if you're any Wall street or whatsoever, you know, buy when there's blood in the streets, especially if the blood is their own. If the blood is your own. And the blood, in my opinion, is coming. And it doesn't mean that we have to be predators. This can be a win win for humans. And I'm going to tell you why. Because $5.1 trillion in small businesses are owned by this one segment of baby boomers. Now, we tell a lot of jokes about boomers, but it turns out that this group of humans is about to transfer more wealth than any generation ever before, and we are potentially here to receive it. Now, what happened over these last two years to these boomers? Well, they retired at rates that we've never seen before, faster than ever. And this is accelerating more regulation, getting older, getting closer to death, Thinking about what matters. Boomers are saying we are passing the baton, but most people are not ready for this. And that's why we come with this idea that we are here to make massive amounts of money. But one thing, one thing I want to say to you first is we want to buy businesses, Especially anybody here. Follow me on Instagram. Oh, no way. Look at that. Then y' all know, especially f Laundromats. How much do I love these things? Now, the reason why I talk about laundromats so much is because they're what I call the gateway drug to business buy in. If you can't understand putting a quarter in a machine in order to wash and dry clothes, you probably shouldn't, you know, you shouldn't buy business. But if you can understand this one thing, then you, too, can acquire businesses. It's actually not rocket science. It's not easy, but it's simple. We will get back to me on stage in just a second. But first, this thing showed up at my house this morning that I got to show you guys. It's this. So basically, when you're at an event like this, the one that I'm at right now with hundreds of people, how do you stand out? Or. I don't know if you're like me, but you end up with 472 business cards by the end of a conference, and you don't do anything with a single one. Capture those bad boys in one place. Better way to network. So forget boring business cards. All you do is put your card against a phone just like this, click on a little profile, and all of a sudden, I'm gonna remember you. Plus, I can't lose your business card contact info because it's right here. Just finished setting up my profile. Took, like, one second. You guys want to know how I actually found out about this company? Originally, my husband. We were at an event. He met a billionaire casually, as one does. They wanted to exchange contact information, which I thought was wild. I'm standing in the background, like, cheering him on, right? Then he pulls out this card and taps it to the billionaire's phone. And I was like, that is such a boss move. I should reach out to these guys, and they should sponsor my Video. So thank you guys to OVOO for sponsoring this. And because I don't do deals unless you get a deal, all the contrarians get 10% off. So you too can have one of these cards. Maybe I'll see you with one next time. Now, a lot of people ask me, why would you? Cody, theoretically, if buying businesses can make you so much money, why are you out here on stage? Why don't you get back home, go run around on spreadsheets and buy more of them? Why tell 1,000 people this? The reason why is that right now, at this moment, there's 11 million small businesses for sale in the US. They are everywhere, on every corner. And I would imagine. Actually, let's play a game. How many people in here own a business right now? Raise your hand. Nice. Keep your hands up. Nope, keep them up. How many people in here own a business? How many of you guys would sell your business at the right price and the right terms? Keep them up. Oh, yeah. That's like all of you. And so everybody always says to me, cody, there's no deals around. Oh, I couldn't find a business. And I go, you guys, you're in a room full of a thousand people. If you can't find a deal here, you can't find a deal anywhere. They're all around. But bigger than that is my belief in something. That our communities are under attack and that you guys are going to be the solution to that. And we're under attack from a few different things. We're under attack from the really big and the really centralized. And my belief as a human, not just a business buyer or a private equity buyer, is that if we as a society do not all start buying more of these businesses, then who does? Kkr, Blackstone, the biggest players out there. And the big boys get richer and the little guys become workers and we become a nation of renters and employees. When we started as a nation of owners. And that is why I want you so badly to do the thing that we're going to talk about today. I want you to see intersections like this and think, no more. No more KFCs. No more Walmarts. I want small businesses. We did a study for thousands of small businesses. More hardware stores, grocery stores, car washes are owned by conglomerates than by locals. And guess what? Does the CEO of Amazon ever come to your neighborhood? Do they care about your corner store? No. How about the fact that Amazon and Walmart own one in every four grocery stores in the us? Think about that for a second. If there's some sort of supply chain issue. And it happens at one of those two stores. Most people can't get their groceries. What about not just big businesses, but big government? How much easier is IT to tax 500 corporations or 5 million small business owners? Then the sad truth, during COVID how many of you know somebody who lost a business, who closed a business forever because they closed their doors once? That is coming again. Then there's another epidemic, which is the hiring epidemic. I see a lot of male faces in the audience. I bet you didn't know this. 16.5% of prime age males are without work right now during the depression. 14%. You remember those bread lines at the during the depression that we saw in those old photos where nobody could get a job? Less people working today in that demographic than during the depression. And you guys are going to be the answer to that because SSMBs aren't ready. 27 days of cash is what the average SMB owner holds at any point in time. They are teetering on the brink of bankruptcy almost always. And that might be why Most more than 60% of small businesses had trouble paying their rent sometime in the fourth quarter. So this is like, you know, uncle sam, you're the answer, right? This is you guys. Most people come up on stages like this and they tell you, I'm gonna make you rich. I'm gonna make you so rich. And this is how. And it's gonna be great. And I think it'd be great for you guys to be rich. I like that for you. Rich looks good on you. But I'm actually more interested in what we do with the money than just making it. Because you get to a certain point, you realize it's all a game. People told that to me when they were younger, and I was like, that's cute. I want a BMW. Then when I got older, I started to realize, no, no, no, it actually is all a game. And so we get to choose the game that we're playing, and we get to choose if we want to write the rules or let somebody else write them. So you guys are going to write the rules. Now, I want to give you some examples of deals Because I'm going to get technical. This chick might look familiar to you. There are deals all around, and I want to give you two flavors of deals we can do. One of the first businesses I talked about publicly on the Internet was a laundromat I bought for $100,000 that did $67,000 in profit. Now, a lot of you guys here are in Real estate, right? Who here is in real estate? Yeah, a lot. How many of you guys make $67,000 off of one house you buy for 100k a year? Oh, weird. Yeah. Not that many, huh? And this is why I like buying businesses. Because in a world where real estate maybe isn't at the bottom of the trough yet, you want to. Wait a minute. You buy businesses that offset your revenue and they are all around. So I'm going to teach you how to do a deal like this. Now, how many of you have some limiting beliefs in your head like I did when I first started buying a business about why you can't. Why, why it won't work? I want to plead with you for one thing. Every time you in your head say something like, this won't work for me. This can't work. Not for somebody else. Maybe not for me either. I want you to instead flip that and say, how could this work for me? How? Because you have two options. You can either make money or make excuses. I choose the former, not the latter. And that's what we're going to do today. First, we're going to kill some of your excuses. Like, let's say you don't have cash. Is this too soon? A little SPF meme for everybody. Usually I hear people say something like, I don't have cash. Must be nice, Cody. Must be nice for daddy's money. How about that rich husband? I'm like, motherfucker. My dad was an immigrant. My husband was in the military. Have you seen these salaries you think they paid for my acquisitions? God. The truth of it is you don't need to have cash to do this stuff. Does it make life easier? Yes. Do I do way more deals because I have money? Absolutely. But we have something called the get rich tripod. What the get rich tripod is, is if you think about a tripod, you have three legs to the stool, right? Those three legs look like this. Three legs to the tripod. We got money, we got experience, and we got sweat. Any one of those three legs of the tool you can lean on to do deals. Here's how they go. In order of leverage, money is the highest leverage activity you have. How much more expensive is an hour of Jeff Bezos time than $100 from Jeff Bezos? Infinitely more expensive. Why? Because it's a limited commodity. But he has lots of cash. Once you start to get a lot of cash, you realize doing cash based deals is the cheapest thing you can do. But when you don't have a lot of Cash. You use your sweat when you don't have a lot of cash, but maybe you have some expertise. Use expertise. And when you have cash, use cash, because that's the highest leverage. Let me give you an example. We have a member of one of our groups in unconventional acquisitions. Her name was Amber. She worked as a vendor doing graphic design for companies and also prepping them for webinars, Right? So she did the marketing for webinars she made. I'm gonna fuck up the numbers, but let's say that she was making $5,000 a month on retainer for this company. She realized, though, that she was making the company something like $100,000 every two months. So what did she do instead? She used our get rich tripod to negotiate equity in what's called a sweat equity deal through Rev Share. And she said, business owner that I currently work for, skip the 5k a month. I don't need it. Keep it. How about instead you give me 25% of every dollar I bring in through. Through four year webinars above the amount that we already make. We already make 100k. If we only make 100k on it, don't worry about it. You don't have to pay me anything. Free work. But if we make 150,000, I want 25% of that. If we make 200,000, I want 25% of that. The business owner says, that sounds great. I got no money down. It's only upside for me. She gets the guy to agree. And then she adds the kicker, which is really important. I want it in perpetuity. I wanted an equity as a pro rata, which means a percentage of the total revenue of the company that I bring in. I want to own equity in that company. Now, Amber, Instead of making five times 12, 5,000 times 12 months a year, she now has a reoccurring revenue stream.5% of the business, and she makes about $250,000 in pure profit to her from no deals. That's the power of a sweat equity deal. Now, there's three ways to finance a business. Everybody in here know what the SBA is. Okay? We got a few. I'm going to rapid fire through these because what I want to do is I want to plant a seed in your head. And then for those of you that actually want the seed to grow, you're going to water it. You're going to go to Contrarian Thinking, the free newsletter. You're going to go to Unconventional Acquisitions, the free newsletter. And you're going to learn more But I want a seed planted, and you get to decide if you water it. Sba, Small Business Association. That means if I want to buy a business for $100,000, how much money will the SBA give me for that business? Do you know? 90,000, give or take. If the financials are correct, the SBA, the government, will give you a loan for 90% of the purchase price of a business in order to buy it. You know how you go to get a mortgage right now for a house? And they go, I don't know, Matt, how much money do you make? What do you weigh? Now you have to get a colonoscopy and I guess I'll give you a mortgage, right? To buy a small business opposite of that. They want to know about the business's financial health. So there is a personal guarantee component, just like a mortgage. But the SBA gives you free money. I've bought 10 or 12 businesses like that. You can have it up to a certain limit. That's the first way you get a business without a lot of cash. The second way is my favorite. I actually taught another guy who was here this week, I think Pace Mori, he told me he was going to talk about it this week. Did he talk to you guys about buying businesses without cash? That guy was good. I was on one call with that motherfucker. He was scribbling notes. I'm like, paisley, this is good. I must be think. Next thing he texts me, he's like, I just bought two businesses, not one. I'm like, great. How much you pay is like $0 down. I'm like, oh, that's on brand. Yeah, I believe that. So seller financing is basically the seller pays you from the future profits of the business to buy their business. And this is when you go, what an idiot. What idiot would do that for my business? Why would they pay me to buy their business? And that's when I'd tell you, 60% of all deals done in small business land are done with seller financing. 60%. And on top of that, most small businesses, imagine this. Imagine a street in your real estate empire, and on that street there are 11 nice houses. The houses are cash flowing a year. And of those 11 houses, only one house will sell in one whole calendar year. That'd be weird, right? You would probably want to buy more. That's what small businesses are. There's so many of them that the demand inelasticity is off. And then last is other people's money raising cash. This is actually the most expensive way to do it. But it's another avenue for you. All right, Then people say something to me like this. How many people in here get stressed when they looked at something like this? This is a P and L or a financial statement. Does this kind of stress you out? You don't love modeling. Math class was terrible. Your teacher was a jerk. Yeah, me too, actually. Fun fact for all of you. So I've worked at three asset management businesses. I built one to a billion dollars. I've done more than a billion dollars in transactions. My math teacher when I was in high school told me, I kid you not, that Helen Keller had more of a chance at winning an archery contest than I did at succeeding in finance. Can't make this up. Like, I want to find him. Mr. Ross. I remember that guy. But let me tell you what, when people start to get stressed about financial models and they start stressing about this, I say, first of all, I. Bankers are largely just on TikTok these days. Like these guys. You should not be intimidated by them. Second of all, I don't use DCF models. These are fancy things, discounted cash flow models that most investment bankers use. I don't use three statement cash flow models. I use three things. I look at a company's balance sheet. I say, does it make more money than it spends? I look at the debt service, AKA if I have to get a loan, can it pay me the profit that I want, plus pay off the loan? And three, I assume no future growth. I talk about it like this. I buy businesses that are facts, not dreams. I don't buy dreams. Dreams are startups. That's great. We can play in that lane when we have lots of cash. Cash. We don't play in it now. So as long as you can tell yourself that you two only invest based on profitable businesses on the P and L, you're golden. And then maybe say, this is kind of small, but let's say that you're like, cody, I really want to model. I'm super stressed. There's no way I can do the financial modeling. I spend about 500k a year on Upwork and sites like Upwork, where people will charge you $100 to analyze your business for you. In one hour, they'll put together a model for you. What you want to make sure that you're doing is you're leveraging other people's experiences just like you are today. Let's say right now you're like, I don't know anything about Laundromats, Cody. I could never buy one. I'd Love to have the passive income, the quarters. I like the ASMR of the coins falling into the buckets. The whole thing. Let's just imagine. And they're like, but the problem is I don't know anything about laundromats. Totally stresses me out. No way could I own one. And then I go, bar is pretty low. Anybody notice anything there? You don't even have to know how to spell to own a laundromat, apparently, is what we're talking about here. The world is so much simpler than people want us to know. Why? Two words, two and 20. In finance, every time I do a deal, I charge people 2% of the total money that they give me and 20% of the profits. So I don't tell people about things because we in finance like to get rich quietly off of everybody else being ignorant. I don't think that's that fun. All right, now say you want to somebody shout out a type of business they want to buy, like a sector. Towing, tire repair. What else we got? Laundromat, car wash. Okay, now here's a super quick hack. Any type of business that you want to buy, I want you to open up Twitter, I want you to go to the search, I want you to type that sector into search, and what you're going to find is a bunch of dudes who nobody talks to about a sector that typically nobody cares about. You're going to find people like Mark. I bought a laundromat from Mark. Mark Vasklamp, laundry specialist, SMB acquisition attorney. All he does is talk about buying businesses all day. James Camp talks about buying websites. Sam Leslie talks about H vac plumbing. These guys are desperate to talk about these kind of businesses and they're all over the place because their wife is tired of hearing about them talk about plumbing. You're going to solve their problem by being their resource. The second little hack, if you don't know a sector and you want to buy in that is called Reddit. I fucking love Reddit. If you guys haven't spent any time there, that's really where the trolls come out to play. Now Reddit is amazing because look at this. I can't remember the exact numbers, but electricians of Reddit I think is like 120,000 electricians on there. Say you want to buy an electrical company and you don't know if it's a good deal or not. Do you think you could maybe go to Reddit and type in some of the specifics on the company and get an answer for free? $99. The answer is yes. The goal with all of this is, is we want to go to the experts and steal their 10,000 hours. And that is what I am teaching you guys how to do today. Now, let's say you don't know how to structure deals. Now, you guys are real estate pros, so probably you do. But there's really only four things I want you to think about with structuring a deal. And actually there's one big huge one over that, which is. You guys all know this one. Follow along. If you can say it with me. You can either have my price and your terms or your terms and my price. Right? My price, your terms, your terms, my price. Does everybody know that saying, if you don't, you should. Which one do you want? Price. Terms. Terms. Why? Because. What's your name? Yell it. Nick. All right, Nick. Nick, I want to buy your company for $10 million. Does that sound good? Sounds great. Nick says, awesome. I'm going to buy Nick's company. How much revenue do you do in your company right now, Nick? He does a million bucks. Okay, great. I'm gonna buy it for 10 million. Does that seem like a good deal for Nick? Wrong. You wanna know why? He didn't ask the terms, but he accepted my price and my terms are. Nick, I'm gonna buy your company for 10 million bucks. A dollar a day until I pay off the 10 million. Do you still want to take my offer? No, of course not. Because Nick's not an idiot. He's got a million dollar business. This is what I want you guys to think of. In real estate land, you can't mess with the price and the terms that much, right? There's a lot that's set. Imagine buying a business like the Wild West. Very few rules you get to pick. So as long as you control the terms, you actually control the price. Four things I want you to know. Milestones. Basically means I'm going to buy your business if X for X price. I'm going to buy your business for $100,000 if you hit $100,000 in revenue this year. If not, I'm going to decrease the price. Earn outs. I'm going to buy the business from you for $100,000 if you do XYZ in the business. If you don't decrease the price, I'm going to buy your business for $100,000 if you don't compete with me for the next three to five years. If you do, I pull back money out of escrow. Transition periods. I'm going to buy your business for xyz. As long as you work inside of the business for the next X amount of time doing X amount of things. You guys give yourselves a round of applause. You just took a little deal making MBA right there. All right, now you know literally more than 99% of the population on doing deals and on structuring. There is a whole universe past that. But the biggest problem with most people is they stop too soon. You guys aren't going to do that. Now how do we take this to the next level? I would love to, if you guys did one thing from this event and that is pair up with one other human here, one human in this room who no matter what you've agreed to, I don't care if you buy a business, I don't care if you buy a fucking house, I don't care if you buy a mobile. I don't care what you do. Whatever your goals are, pick one human who's going to hold you accountable. Your likelihood to actually succeed increases by double digit multiples. The other two things you need to do deals consistently is somebody to review deals with. Could be this guy. And you do need an attorney and I'm not talking about like rocket lawyer, okay? I want you to get an actual attorney and I want you to negotiate down the price and I want you to tell them that you're going to pay on a per deal transaction. None of this hourly bullshit. Okay? Now you guys are like your own little mini private equity firm. The next thing is every time you do deals, I want you to picture that little mom and pop again. I want you to go back and I want you to kind of visualize for a moment for me that street we do not take advantage of business sellers. Why would you when there's so much opportunity? The difference between us and private equity is that we live in the communities that we buy. So anybody that's in my ecosystem, if they're talking about screwing over the little guy, they get out. I'm not interested in that. We play long. There we go. That's right. That's the type of humans you guys are. You don't need to be shady, you don't need to take advantage. You need to negotiate and get the best deal possible. But if you play long term games with long term people in this industry, you will never go hungry. So what I would say is that one person that you choose to be with here, I want you to make sure that you're pulling the next person up after you do your first deal. And then you're pulling the next person up. There's a reason I take a phone call with Pace Morby. There's a reason that I teach him to buy a deal even though he could compete with me. It's because I believe in that hand up. And I know you guys do too. Okay, let's do some examples really quick. The way that I found out about buying businesses, and maybe some of you guys have heard this story before, is I have an uncle, his name is Uncle Eb, and he actually just passed. And Uncle Eb, he ran a company called EB Homes Plumbing. They did about five or six million dollars a year in revenue, about two to three million dollars in profit. He was a sharecropper. He had more siblings die than live growing up. Hard, hard times. He built this business up from nothing. And then one day he got that phone call that nobody wants to get with that six letter word that stops so many families. And when he found out he had cancer, he didn't know what to do. But he knew he didn't want to keep running the business. He wanted to spend time with his loved ones. And so what do you think Uncle Eb did with a business that did two to three million dollars a year in profit that he had spent 30 years building? Shut it down. He shut down the business. Why? Because he didn't have people like you to buy it. He didn't know that this was a world where this was an option. He just thought, it's a job. I stopped doing the job. And it's something that still haunts me to this day and why I still talk to his now widow about it and make sure she's okay. Okay, how about we break down a deal real quick? What do you think about that? Wanna break down a deal? All right, this is where we get a little technical. I like the pens coming out. This is a real deal. All right? $332,000 in revenue, $112,000 in profit. This business was bought for 2x. Pause on that for a second. What is the multiple at which most small businesses are sold? Does anybody know? 2 to 4x? Nailed it. Now, are there more expensive ones? Are there cheaper ones? Of course. But if you don't want to get fancy and you don't like those models, you say I buy businesses for two to four times the price of the business. I'm sorry, the profit of the business. Okay, so they bought it for 2x, which means total valuation was $224,000. They did $0 down. This is an employee in this business reached out to the owner of the business. Didn't know the owner was interested in selling. The owner was, was looking for somebody to take over the business. Happily gave the business to the employee for an annuity. Over a five year period, the seller financing full amount, they make $9,000 in profit minus the seller financing loan payment, which means they make about $9,000 a month in profit for no money down. These deals happen every day, all day. And you can do them too. How about a big boy? Let's go from the top to bottom of this. $1.5,548,000 in profit. The monthly payout to the buyer on this, $35,000 in profit, 188% cash on cash return. This one, they did put down some cash. $164,000. This is for a series of laundromats that they raised from third party. The guy was a realtor in California. Decided to buy these laundromats, used $0 of his own money and came away with $35,000. Distributed some of this to the investors too. These deals happen every single day now. Now I want to take it to a 202 level. Can I do that? Okay, so I want to talk about buying businesses. Yes. But then this weird thing happens. You guys, you buy your first business and then you're like me. You get deals confused because you've done a lot of deals at a certain point and you buy multiple businesses and then you create a holding company and then your businesses work for you and you don't work in your business. That's, that's where I want you to get eventually. Five steps. We're gonna go through every single one of these. Then we're gonna take it one step further. Then we're gonna show you how to add an operator that will actually run the businesses for you. Okay? Now I don't start with this because let's not be irrational. You're not gonna do your first deal with zero time, zero money, zero time. After you buy, make a ton of thousands of dollars in profit and go buy your Bugattis and jet off. It's probably not going to happen. Right? You're going to spend some time up front, but afterwards, watch how this compounds. I'm going to tell you the things that I wish people told me in the beginning. And I never really understood why they didn't. Here's the 101. If you want to do deals right now, you need you a phone, an attorney, and you need to kind of know what you're doing, AKA learn buying businesses. Not that difficult of a skill. We have plenty on our website for you to learn how to do it. Guess how much this all costs per deal? Basically all free, except your time and maybe 2 to $5,000 in legal costs, typically. Now, if you want to do a 202 level, you ready for that Warren Buffett shit? Is that where we want to go? All right, if you're ready for that, here's how you build an actual holding company with a operator in it. And you do a ton of deals. You need a right hand, a head of each business. Eventually you might need a cio, chief investment officer and maybe a turnaround specialist. Now if this is sounding kind of nutty because you're doing your first flip, or maybe you flipped a couch or a house or a dog or whatever, what are you guys flipping? You guys flip everything. Even if you're here, I want you to know where the goal is. Because there's that stupid quote as kids about if you shoot for the moon, you land amongst the stars. It except oddly, it's true. And so here's what it looks like at a pro level. So when I run my business, what does it cost me? Nobody tells me that. I'll tell you guys. A right hand chief of staff who basically oversees just about everything that touches me costs me 100 to 300k a year ahead of each business, usually gets 10% of the business plus 100k plus salary. I use milestones and a 3 year vest in period. Google that shit if you don't know what it is. And then I have a CIO of my portfolio of businesses. These typically start about 150k plus a percent of the total return of everything they manage. This is how family offices run. And then maybe if I want to go 303level, I have a turnaround specialist. You know what that is? It's like, you know when you guys, you guys know way more about real estate than I do. So watch me butcher this. Like I do talking so sports. But like, you know, you buy a house and you get a general contractor to come in and fix up the house because it's a nightmare, right? And lots of people buy for their first house, like, oh, I got this deal because this house is terrible, but it's on a great block. And then you go, yeah, okay, that's cool. But how many times does construction come under budget and faster than you thought it was going to? Does that ever happen? No. So that's why we don't do Turnarounds. And I. Our first deal. The second your accountability buddy comes to you or you DM me on Instagram and you go, cody, I just bought this terrible business that's unprofitable. It's going to be awesome because we're going to turn around. I'm going to be like, you obviously weren't at Tyke Summit, because that's not what we're doing. So this is 303 level, but that's where you make the real FU money. Now, this is the cool part. Here's just the coolest part. So this is the same deal we just looked at, except look what happens. Same deal, except I add at the bottom my operator payout, my fractional CFO oversight, and my right hand, AKA my chief of staff, across the portfolio. As long as I have three businesses, I still make 17k off of this acquisition. Just myself with everybody else handling anything that could possibly go wrong in that business. Don't even call me. I'm on a beach somewhere. The. The cool part about this is the more deals you do, the less each deal costs you in overhead and the more money you make. This is how the pros do it, and it's the beginnings of how private equity companies are formed. Private equity companies don't like to talk about it, but we do. Now, you might be saying, all right, Cody, I believe you. We should buy businesses. I can do deals. I kind of understand the structure of doing deals. Now. What type of business? Here's a strategy that I came up with. I call it sows. I want stale, old, weak, simple businesses. Stale, old, weak, simple. If you come to me and you say the word proprietary, I'm out. If you say that you are running a biotech company and it's going to be the next hot new thing, what do you think? I am out. I want the opposite of sexy. I want boring businesses that are so simple, my grandma understands them. Grandma doesn't get it. Cody doesn't buy it. That's your rule. Okay, now, what does Salz exactly mean? This is a real company. We bought. This company was actually a sick purchase, if I might say. All right, stale. I want revenue that's flat for three years. I want it to be an old company, 12 years old. In this instance, I don't need it to be that old. Three to five years typically is cool for me. Weak, meaning not a lot of marketing. They wouldn't know what to do with Ryan Pineda and his Instagram account. That would blow their fucking minds. Simple. This was an outsourced chat company, which basically means there's a group of people in the Philippines. And when you want to go to a lawn, when you want to go to a. Get your handyman to come fix your house, you know, you gotta wait until they open the next day. That doesn't really work. Right. So these people are triaging in the Philippines responding to you. This was $150,000 in, let's make it easy and call it profit a year. I, I bought it for 75k. Now they do $300,000 a year. And our goal, which is this year now is a million bucks. Why would they do that deal with me? This seems crazy, right? Well, I gave them a small size to the upside. This was the guy's third business. He had had it forever. He was ready to retire and I could plug it into my giant ecosystem. This is what I call your unfair advantage. That's 404 level things. But first I want you to learn to find good deals. Then the real pros know how to find really good deals for them. We'll talk about that. All right, next. You know how that, who's that guy, like the, the Asian dude who's in front of the houses and he kind of like yells at you to Burr. You guys seen that? All right, so I take that and I got a little spin. It's called Burt. So I got, I guess I got to put my like Rolls Royce in front of like a shitty house next. And do Instagram's videos. I think that's what he does anyway. I want to buy boring businesses. I want to add recession resistant. I want to buy them in recession resistance sectors. I want to raise the prices and I want to add technology. Now this is my process again and again for doing deals. I sit on the board of a six and a half billion dollar hedge fund. Not tiny. And I was talking to him about, his name's Alex, who runs it, and I've been friends with him for a long time. And I was like, Alex, what are we going to do to manage inflation, Right? Because I actually, some people think inflation is going away. I don't. I think we're going to hit a recession. I think inflation is going to stay here for a period of time. I think it's going to get worse before it gets better. And so I was like, what's the best thing we can do? A hedge fund can do anything. They can short, they can do commodities, they can do derivatives, they can go wild. And he's like, the best thing you can do is Buy boring businesses in recession resistant sectors, raise prices and add technology. And I was like, are we sure? I mean, I know that's what I talk about. Are we positive on this? And then we started doing the exact allocation, and it turns out so far, he's right. Now, if you want to know what I consider to be these BRRT strategies, we have a blog post. This is free too. 130 boring businesses I love to buy. You can take a picture and go to the website and check those out. Out. You'd probably guess what some of them are. Roofing companies, landscaping companies, event planning companies, social media companies. These are businesses that. You know how sometimes people will say to me, cody, well, that business doesn't have a moat. I go, how? How hard do you think it is to compete with the landscaping companies in your neighborhood? Have you ever had a landscaper that you're like, well, that motherfucker shows up on time, it's subscription pay. He offers, offers additional services, and he refers me out to other providers? Never happened. Not in the history of the world. So the businesses that exist already are so easy to compete with that you don't care as much about emote, you care about profit. All right, let's talk about what is a good deal. You ready for that Bezos level shit? No, no, no, not that Bezos. I talk about this Bezos. Let's be serious here. You guys think I. I'm gonna bring you that amateur stuff, all right, now, the next two slides I'm gonna show you are technical. I don't want them to intimidate you. There's gonna be some bigger numbers on there. There's gonna be some more specifics. You don't have to do this right at the start, but unlike most people that will just give you this in order to sell you this, I'm gonna give you this, and you will get to find your way here. Okay, so this is a truth. I was giving a speech. Not that dissimilar to this one, actually, so you guys probably got a steal. I was giving a speech to my friend's group of people that had to be worth 10 or $20 million. It was about like 200 people, let's say a bunch of people worth hundreds of millions of dollars in the room. I asked them all to raise their hand if they'd ever done a deal before. Everybody's hand goes up, they've done a deal before. And I go, how many of you guys have this? An investment memo? How many of you guys actually write down why you did a Deal. Have criteria for why you did a deal, and then track if it was a good deal or not. What do you think the answer was? In a room of 200 people worth $20 million to $100 million. Zero. It shocked me. I can't believe you guessed it. I was shocked. And then I asked them another question. I'm like, wait a second. How much have you guys allocated? And one of the guys who runs the group is like, you know, probably 600, 700 million across the group. I'm like, jesus Christ. If you do one thing, make sure it's this. The only way to learn is to measure your progress. Would you ever go play golf? I hate golf. Sorry, Ryan. So. But I'm gonna use it. Cause I know that's what you guys are into. Some of you. But say I was into golfing. And I, unlike any. Have you guys ever seen the meme, by the way, which also cracks me up? It's like a woman looking up like this at her husband, and he's like, yeah, I par forward on a birdie. I don't know what I'm talking about here. And she has this look on her face. And at the bottom, it's like, no woman ever anybody. There's not enough women in the audience because they feel me on this. Thank you. Nobody cares. Nobody cares about the golf score. That said, you men and women who play golf, you track your score, right? Each time you're like, I'm trying to get a little bit better. I want to get better here. I want to get better there. As an investor, you've got to do the exact same thing. If you don't keep a scorecard, you'll never know if you're getting better or winning. So here's my investment memo. This is usually very proprietary. Oh, I used that word, proprietary, meaning that investment firms don't share. I have a ranking system. You can see here, there's basically one to nine categories. You guys can steal it if you want. You don't have to use math on it. You can use gut level feelings, too. But I basically am saying, are the terms good? Do I like the team? Do I think that this asset class has room to run? Do I like the financials of this business? Do this and you will do what people with 20 and $100 million apparently do not do. That's how we take their chairs, huh? So that this next room is full of all of us at their level. The second thing, this is a little wild. This is called an outcome calculator. Now, when I Think about a deal. I actually, despite having bought, done hundreds of deals, despite being public on social media, I'm actually super risk averse. I hate, I don't like risk. I would never gamble. I'm super nervous about losing money. And. And yet I allocate tens of millions and sometimes hundreds of millions of dollars a year. The reason I get comfortable doing it is because I use something like this. What this basically says is from top to bottom. Top is worst case scenario, bottom is best case scenario. Best case scenario is that company approachment crushes it, we add software to it, we sell it for a billion dollars. Worst case is the tech doesn't work, all the clients leave us. And I want to understand probabilities. So if you guys get really serious, I want you to have an outcome calculator. But you don't have to have it now. And the reason you don't have to have it now is because what will stop most humans is over complicating things. So I did a deal with a guy who was a Stanford grad, Harvard mba. We were looking at a dental manufacturing company in Chicago. Super sexy, I know. And we almost did this deal about 3 million dollar deal. And we show up to due diligence, which means we're analyzing the company and he's like, he pulls out this spreadsheet. You know, it's almost like those memes where they're like, you want to know the list? And then they drop it down and the thing rolls out. So he brings out that version of a spreadsheet. I'm like, God, I really can't understand this, man. This is a lot. What do you have in here? And he's like, well, I did a forecasting model, and then I did this and then I did that. And I go, okay, cool. So I asked the guy, I'm like, can I see your tax returns? Did you guys make money on your tax returns the last three years? Oh, no. $0. Oh, wait, can I see your bank statements? But did you lose money the last three years? Oh, yeah, well, like 200,000. But it's actually from this and this and this. No, no, no. Deal's done. I don't need a model. So what will kill most people is over complicating. Don't do that in the beginning. You don't need to. This is all you need to do a deal. 10 Steps to Buying a business starts with, you guys are already on step one, which is you know about this opportunity all the way to your first 90 days. You buy a company and take it over. This is the path. And the path is not a 472 page spreadsheet. Now, the cool part about today is most people do the opposite of what they should when the market is tanking, what do they do? Sell. When the market is at all time highs, what do they do? Buy. And this is why we have a nation of speculators and the investors have all the money. But you guys are learning how to do deals and you will have something really key that most people that are already investors will not. It's called an investment hangover. You are scientifically proven to do worse on deals after you have just had a couple deal losses. We know this in investing because we track it. So typically you have something called a shelf in investments in private equity. If like your last couple deals sucked but you're still good, they'll just say you gotta be on the shelf for a second, man. You're not gonna run point on a deal for a minute because your deal mojo's off. For lack of a better word. You got a hangover, you gotta like drink some water, you gotta, I don't know what, but we gotta fix that, you know, karmic thing you got going on. And that's very typical for humans that don't have an investment hangover. You are much more likely to do deals and succeed. And what I want you to remember is that you guys are gonna be the type to buy when there is blood in the streets, because there is about to be. Now, I'm gonna close with if you guys want to be on the email list and if you want to. We're not actually launching something in this space right now. That's an old slide. But if you want to be on the email list, it's free. And in this too, I believe you get the PowerPoint. So if you liked anything on the PowerPoint, you can take a picture of that and it should download automatically. If it doesn't respond to that email, we'll take care of it. I want to end with this. There are moments in both life and your investing life where you can have what's called an asymmetric return. You can make much more than you probably should because you chose a point in time in which most people probably wouldn't. I believe 2023 is coming into that moment. I believe that if you guys lean on this opportunity of investing into, in my opinion, but choose your poison boring businesses, you'll probably find me some somewhere in 10 years and there will be some form of thank you. How funny. Is that you're gonna tell me thank you next time I see you. But truthfully, buying businesses at this point in time is a life changing activity. The only thing that I'll say your cautionary word of advice is your first deal is your most important deal. Because if you lose money on your first deal, you're gonna think business buying is bad, not I did a bad deal. So what I want you to think long and hard about is choosing the poison. Which deal do you want to do first? And then let's end with this. How many of you guys feel like not just the economy is a little tough, but maybe the world that's out there right now needs a hand? How many of you guys feel like it's a little harder than it's ever been before? How many of you guys think maybe the direction of this country is a little. Is a little tougher than it's ever been before? I guess I want to ask you why you can't be part of the solution to fixing that. What if 1,000 people in this room go out to 1,000 cities across America and you get rid of the Starbucks on the corner and you buy the other small business next to it, and you make sure that Amazon isn't the only place where you can buy clothes from China? What if instead of us giving up all of the ownership to the big boys, we take a little bit back? I think that you can do that, And I hope you do it to make a bunch of money. And I hope you drive a Bugatti if you want one. And I hope you buy a giant house bigger than Ryan Pineda's, because I hear he's got a big one. But even if you don't do that, I really hope that you help this country, because I think if you don't, nobody else will. Thank you so much for having me. Give it up for Cody Sanchez.