Watch these 60+ minutes if you want to change your life in 2025

Every once in a decade, Warren Buffett says that the economic skies darken and the clouds rain gold. And I think that might be what's about to happen in the world around us. So when I got asked to come and speak at this conference event in at Dallas, I thought long and hard about that. I thought about what did I wish that I knew in 2007 and 2008 when I was at Goldman and investing and felt what it felt like to lose money for the first time in the stock markets. What would I wish to. To have known then that would have changed everything for me? And so I put together a presentation that talks about the ideas happening in the world around us and how we can actually make money despite the economy. I thought about Baron Rothschild's quote, which is that buy when there's blood in the streets, especially when the blood is yours. And this video, I think, can teach you how to do that. It might be one of the favorite presentations I've ever given. So I hope you like it and enjoy. Oh, and if you don't know who I am, I'm Cody Sanchez. I run Contrarian Capital, which is a holding company of a bunch of boring businesses that do about $40 million in revenue. And we have a newsletter called Contrarian Thinking that goes out for free to 1.5 million people across a bunch of different channels. So enjoy and stay safe out there. I was gonna say it's good to see your faces, but it's basically, I'm blind up here, so I hope you guys didn't have too heavy of a lunch. I'm gonna set this for phone down here. I'm excited to be here today for a couple different reasons. One, man, I don't know about you all, but can you feel it? Can you feel the change that has happened in the world just in the last three weeks? Let's call it the last two weeks. I mean, I love that only this crowd would clap because you guys are ready for it. Anybody else would be like, yeah, mother, I felt it in my bank account. But you guys are obviously in an abundance model mindset. I knew this was coming. Not because I'm some genius, because you'd have to be an idiot to not see this coming. Mark knew this was coming. We've been talking about this for years. And yet I probably like many of you, I felt it, you know, when I saw even my portfolio, that's pretty protected drop. I own now 26 businesses. I do have a couple of streams of income or two, but I felt this market change and I felt it because I had some employees that made comments about it. I felt it because my parents made some phone calls to me. Where should we be investing? What should we be doing now? And so that's why I'm talking about what I'm talking about with you guys today, which I think this is going to come up on the stage here. Yep. Perfect timing. Thank you. About how to thrive amidst the struggle. Because the truth of the matter is, is that I don't think it's going to get easier. Does anybody in here think it's going to get easier over the next year? I don't think so. I think it's going to get harder. And so the entire reason I've built and talk about anything I talk about, which we'll hit on in a second, is because I have one goal. This is a goal. Creating sovereign humans. Now, this isn't a play on the sovereign man. And everything that was happening in crypto, this was an idea that financial freedom leads to all freedoms. You can't be actually free until you can pay your rent. Then you could maybe have physical freedom, AKA you get to choose what you do, whatever you do every day. Maybe then you could have philosophical freedom, AKA you don't have to listen to the narrative, you could have your own opinion. But until you have financial freedom, you can't do much because somebody else owns you. And that was my second thought, is I never wanted to be owned. I never wanted somebody else to be the architect of my life. I don't know if you've ever felt that too. I wanted to write the plans, I wanted to draw up the blueprint. And then you have to think about the macro, what's coming around the corner. These are the two things that I think all of us would be crazy if we didn't touch on today. But I'm going to spend very little time here because you guys, unlike most people, I think, have already been thinking about this. If you're in this room. But before we get too far, why the listen to Kody, besides her love of profanity, which, if you think about it, I think four letter words are about the most efficient thing you could do out there. It's a noun, it's a verb, it's an adjective, all in one. But besides that, I did finance for many years. I worked in investment banking at Goldman Sachs. I built up a private equity company or two. I've been in markets in Latin America, markets here in the US and then I've built this portfolio of what I call boring Businesses, which is what we're going to talk about today. In my world, this is called micro pe. But I spent most of my entire life in financial markets the traditional way. Did the PhD, did the MBA, got all the accolades and realized, man, I was making a lot of money for other people and I wasn't taking home as much of it, especially when I was W2 and didn't have my own business. And so we started a company called contrarian thinking about two years ago and that grew to 1.5 million followers across social and a couple hundred thousand email subscribers. All because the market was so hungry for this idea of how do you not get owned, how do you own your own life? And so I have a couple things for you here today. Because I'm a benevolent dictator up here on stage, I'm going to ask you, do you want the good news or the bad news first? Bad news. Perfect. Because you didn't really have a choice. The bad news is we have some things that we just have to accept. And the first one is, I'm sure you guys saw over the last couple weeks, I like to look at leading indicators just like any former economist, which was one of my degrees. Oh, that was a gross humble brag. But I did actually study economics. If you haven't seen this, I like going to this site. This is layoffs, FYI. And basically what you're looking at here isn't pretty. You're seeing some of the really big name VC funded companies start layoffs. And if you saw in the last slide, These layoffs are 25 to 30% of their workforce, even Robinhood, 9% of their workforce, one of the most funded companies out there. What do you think happens if the companies that have billions and billions of dollars that have been given to them by Silicon Valley are starting to cut now? What do you think happens to the smaller companies that are out there today? They probably have some of the downstream effects too. It's just next, especially when companies have to deal with this. Inflation is this funny thing. You don't say, I got a little bit of it, I'm a little pregnant. You're like, no, no, no, it's here or it's not. Because inflation is typically accelerating. Unless we have a government, which I don't know what you guys think, that has massive backbone that's going to come in here, that's going to fix inflation early. Is that what's going to happen? Probably not. And so we have to deal with the fact that inflation's here. They lie to us about it. And we don't know what to do about it because it's really hard to get real numbers. As a former economist, even economists cannot properly track inflation today. Given the way CPI is calculated. There is not really good metrics around this. And so what do we do? We have to realize that even though you guys are in this room today, and even though I've built up some businesses, you haven't done enough and I haven't done enough to prepare for what's coming. In my opinion now, the glass half full is that we have some opportunities, but the glass half empty is we're going to have to make some moves today. So do a little game for me really quick. Raise your hand for me. How many of you guys in here own a business right now? Nice. We got a lot. Okay, how many? Keep your hands up for me. How many people in here own multiple businesses? Okay, how many people in here own multiple diversified businesses that your cash flow won't get hurt in? Let's call it a scenario where the market goes down 25, 30%. Okay, so we actually have some, I would say it looks like 15% of the audience, something like that. What I want to prepare you guys for is the only area of the market, and I won't talk crypto, because that's not my specialty. The only area of the market that I think is truly protected in both a recessionary environment and an inflationary environment. And I'm not really biased here. I buy everything. I have crypto. I have land, I have real estate. I have lots of different businesses. But when I'm talking to some of my smartest friends or the hedge fund that I sit on the board of, this is the only place where I see a safe harbor. One good thing about today, and I try to sit in this, is something called cognitive dissonance, which basically means you can hold two ideas in your head at the same time that are conflicting. It could be the best time to be an investor, and it could be the worst time to be an investor. And I do think it's this Tale of Two Cities is what we have right now. So, all right, everybody's depressed, needs a Whiskey. It's only 3:30, but let's get to the good news because I do think there's a lot we can do together to change this. So one thought here, too. I just want to make sure this thing is working down here, right? Because I can't see the seconds, but it's on. So I don't keep you guys over. Okay? By the end you are going to get a plan to fix all of this. The plan is that this will move you forward and you will be able to take some action. This is the goal. If I haven't delivered this goal at the end, you can yell at me, heckle me, we can have some fun. Basically what I want to do is I want to have a couple things to protect on the downside. But more than anything, I want a plan for us to grow while everyone else is shrinking. That's the goal today. We want to grow and expand because what did we say in the beginning? You guys have this more abundance mindset. You kind of see what's happening. One of my favorite investors, Sam Zell, he did it in real estate. Do you guys know anything about Sam Zell? Do you know who he is?

Apartment.

Apartment. Yeah, exactly. So like kind of an OG real estate guy, did multifamily, start out in student housing, billionaire many times over. And what Sam Zell did is he is actually known for going in when the market gets really rough. And his billions are typically made in really bad down markets. And so that's what we want to talk about today. I want you to do a little game for me really quick. I'm going to flash two questions and I want you to write down a word or two. I don't know how many. How many of you have a plan for what's coming. Like, if you have a business, you have a contingency recession plan. If you have a business, you have a contingency inflation plan. Your portfolio, you know what's in it and you have a model that shows you what happens if it goes down 25 or 30%. Does everybody have that? Nice. We got one person in front. Okay. If you don't have that, I would make a suggestion that should be at the top of your list because those layoffs that happened, those are going to ripple across the market and you are going to get people that are scared working for you and you are going to get portfolios that go down. So if you don't already have a plan for your financial portfolio and a plan for each of your businesses to not just deal with it when the market goes down, but to thrive, I probably wouldn't do anything for the next week. And I would hit on that because we aren't here to just progress slowly. We're here to thrive in these markets. And I was talking to him about psychology of humans and he had this fascinating story for me where he talked about how almost within about 30 seconds of meeting a human he can figure out if they're fear or greed driven. And he said every human, not just in varying scenarios, but every human is innately fear driven or greed driven. And if you need to know this about yourself, it's not necessarily a good or bad thing, but every human is one of these two things. And as soon as you know what you are, and as soon as you know those who work with you, what they are, you can play off that and you can talk somebody into things that they would never probably do one way or the other, but you can talk them into it if you understand their human psychology. The interesting part about this is, you know, I was talking to a friend the other day and I told him that I think stock market gurus will. They'll evaporate. And they already kind of are. Have you guys followed anybody on the Internet and kind of seen them maybe pivoting to somebody else, something else? Maybe not talking as much about the stock markets? Because stock market gurus can only be with one type of person. What type? Greed based. You do not sell stock market disciplines on buy and action calls off of fear. You really can't. Now you can sell diversified portfolio theory. You could sell, sell protection, you could sell insurance, you could sell other things. But that stock market guru thing will go away. Mark my words, in a year, if we continue the market that we think we have, those won't exist anymore. And what that means for each of us is we're going to have to figure out are we playing to fear or greed and are we properly situated? The two things that I'm doing that I'll break down for you is I'm going to talk to you about how many people in here have bought a business before? Has anybody in here bought a business? Okay, let's call it 2%. Has anybody in here sold a business? Let's call it another 2%. A different 2%. Okay, we're going to talk about how you can buy your profits, how I buy businesses. Because when the streets get bloody, and I'll just say it in here to you, to a few really close, you know, my 500 new best friends, that the best time to buy a business is when everyone is operating on fear. Fear. So I started talking about buying businesses publicly in 2020. In 2020, the valuations on one type of business that I was talking about publicly, and now we're kind of big, were 2x. So 2x profits is what most of these businesses were at. They were laundromats. Now, the multiple on those businesses, what do you think they are in 2022, 4 to 7x. So a laundromat that literally cannot change materially over the course of two years. Like, there are only so many levers you can pull on that business. The Same business in 2020 and 2022 is worth anywhere from two to three times more. Worth more valued at more. That is going to change materially. So we're going to talk about how to get you guys ready to not allocate a single dollar today. I would tell you to keep all of your pennies in your pocket. If anybody is going out right now and telling you that they are allocating aggressively to real estate despite the inflation that's happening, I think they're nuts. I think that is a tough market move right now. I think if anybody is out there allocating aggressively to venture capital right now, today, I think they're nuts. And I think those are two signs that, you know, that that person doesn't know what they're doing in down markets, that they are still building off the hype. Because you shouldn't be allocating today, in my opinion, you are going to want to have some dry powder. So over the next six and 12 months, this is when billionaires are made, is when everybody else is panicking. All the people that were following those stock market gurus, they're out of the market in six to 12 months. And who is in the market? Very few people. And that's when you make all your money. Okay, we're going to talk about an idea that I don't know everybody here has talked about much. The first thing is called the great retirement. The great retirement is basically this. Do you guys see what's happening here? This is the acceleration of baby boomers leaving the workforce. Look at this chart. Since 2010, we are seeing baby boomers leave the workforce at an accelerating rate that basically 3x'd during January of 2020 and is continuing today. These baby boomers are leaving with them more small businesses than we've ever seen before. Baby boomers are the greatest generation of business owners and builders that has ever existed. And they are leaving the workforce at a time when their valuations are about to become less than maybe they've been in five or ten years. Look at these numbers. $5.1 trillion. Do you know what that number is? That is the total amount of assets that baby boomers own in small businesses. Not just any baby boomers, but baby boomers that are in the range of five to seven years from retirement. So they are damn close to wanting to be passing on their business. The problem with these businesses is how many baby boomers have kids that would rather do tiktoks than run their plumbing company? How many baby boomers out there that have kids that would rather do a YouTube than run a $3 million H vac company? Have you seen what's happening to the trades? Do you see millennials just sprinting over to University of Phoenix to get their degree in carpentry? Not happening. That's funny, because actually, I think the opportunity in the next 10 years will be exactly here. We've seen this massive run up in tech stocks, right? We've seen everybody valuing. I mean, what's that car called? That was commission competing with Tesla suv. Rivian. There you go. Did you guys see the valuation on Rivian? Absolutely astronomical. Valuing a company that hasn't barely produced any cars at more than the entirety of the American auto industry traditionally. Tell me that makes sense long term. It doesn't. And the best part about it is that nobody sees it. They're starting to feel it. But you are going to see CBC's squirm and squeal and hold on to their startup numbers as much as possible. But the truth is right here, and the truth here is 2.4 million small businesses are listed for sale right now. You want to know something crazy? Do you know how many small businesses sell within a year that get listed? Let's say there's 12 small businesses that go up for sale. How many of them get sold within a year? Who wants to shout it out? Who knew? One. That's the answer. Imagine a house in Florida, Miami. A block, 12 houses wide. All 12 are up for sale, and only one sells. I don't think we've ever seen anything like that. It just doesn't exist in real estate. And yet in small business, it exists everywhere. Why? Because millennials want to be tiktokers. Because the market's more disjointed. Because it is more work to. To buy and run a business than it is to buy a piece of real estate. And because it hasn't been democratized yet. So think about it. How normal is it for you guys to go out and get a mortgage on a house? I mean, you don't really even think about it, right? You go buy a piece of property, it's no big deal. But then somebody tells you you can get a loan to buy a small business, but you have to have a personal guarantee on your assets. And most people, that feels weird, right? What's the average Loan on a mortgage, 30 years, and you're probably going to need all 30 to be able to pay off your mortgage. Because mortgage on real estate, typically your real estate appreciates by 4% a year. Now, a business, on the other hand, has some different numbers, and I'm going to show you those. The difference between the two is that instead of buying an asset, Mark and I were talking about. He's out there somewhere. Mark and I were talking about buying an asset. Do you want to know the asset that Mark is buying right now? Do you think he's told you? Goats. Who said goats? That mother's buying goats. And you want to know what's so funny about this to me is, is this the biggest part of Mark's portfolio? Absolutely not. However, this is funny. You buy one goat, the guy told me today, you get anywhere from two to five baby goats out of it. So you buy one goat for 75 bucks, then you got two to five baby goats out of it, you see, Sell them each for 75 bucks and they mow your lawn. Great deal. Love it. Now, that might not be that scalable unless you're him and you got this big old ranch in Texas and you could just have your herd of goats and be prancing around with. But for me, what that makes me think of is buying businesses. You cannot buy a piece of property in Miami that positive cash flows you more on traditional short term, on traditional rentals than like 20 goats. Maybe that's how it's going to be. Like how we explain buying real estate now. Well, I could get about 75 to 400 bucks. So that's about 10 goats actually out of this house. That then you put hundreds of thousands or millions of dollars down for that is a terrible risk trade. If I had to think about the asymmetric risk, meaning my upside to my downside on that property, I couldn't have a worse trade right now, which is. Which is why I've sold a lot of my real estate and I can't wait to buy it back when things get bloody. This is how we do it in small business land. For those of you who haven't bought a small business before, here's some truths that probably people don't tell you about. Because in my world of private Equity, we take 2 and 20 and we don't tell you anything because we just want your money and we don't want you in the game. But here's the truth. You can buy a small business today. Lots of different types of you can diversify that small Business. You can buy that business with somebody else's money, like SBA loans or seller financing. We'll explain those briefly. And we can sort of, like, have some Q and A surrounding it. And you can take advantage of this massive thing called the great retirement that's happening, and you can probably do it at some of the lowest valuations out there. And I'm going to break down some deals for you. The other interesting part is we've talked about the great retirement, but we haven't talked about the great resignation, which is, you know, millennials, people like all of us that are tired of working for the man and don't want to go into the office anymore. And so we're going to YOLO on a bunch of tech stocks, right? And that trade's about to be done. It's not going to work so well anymore. But one thing that they do have, right, is that I talk a lot of crap about my generation, the one behind us. But actually, generation is really smart. They're very tech savvy. They're very efficient in how they work when they want to work. And this generation is going to take over a new realm of businesses that's going to have implications that we can't quite appreciate yet. So I want to talk to you about a deal I did in 2020. And I'm going to use this deal because it's very relatable. This is a very small deal. Now, I own a series of laundromats across the Western states. I own laundromats, car washes, landscaping businesses, plumbing, H Vac. I mean, if it's dirty, boring, and you wouldn't think you'd want to own it, I own it. And these type of businesses, typically pre2020, had metrics that looked like this. I bought a laundromat that did $67,000 of profit a year with $0. Well, his. I'm a woman, small detail of my own cash use, 100k in seller financing, which means that I use future profits of the business to buy the business, and then I finance the rest with equipment loans. So I'm going to break down how this deal works for you. But what I want you to take away from this is this deal does not exist now in 2022. There are some of them out on sites and we can talk about where to find them, like Biz Buy Sell, Empire Flippers, Quiet Light Brokerage. Those are the names of some places you can find businesses to buy. But what I really want you to do is Mark talks about, I'M gonna mess it up. What's Mark's first rule of like wealth? It's creation. Wealth creation, right. And then you go into wealth, something else, and then protection. Skip the one in the middle. So what most people get wrong is when they think about buying a business. People like you will leave a conference like this where I talk about doing SMB sales, small business buying and sales, and they'll want to go buy a business tomorrow. And what I think you should do first is you should learn about the asset class. If you haven't studied micro PE, if you haven't done private deals before, you spend 30 or 60 days learning about the asset class and then you take action on it as soon as you've kind of gotten your feet wet in the space. Let me tell you first, none of this stuff is rocket science. So lots of times when people hear me talk about buying a business, it sounds scary or intimidating or maybe like a lot of work. Like I could instead press this stock on Robinhood, buy this thing, buy this crypto and make a lot of money. That is true, but I don't think that's how we profit long term. So I don't want you to be intimidated by this, but I don't want you to go out and buy a business tomorrow. I want you to spend 30 days learning about it, 20 minutes a day, and then take action. Okay, so here's how this deal looked. This is a balance sheet. I don't know if you guys can read this kind of far away. Here's a balance sheet, like what a balance sheet would look like of a Laundromat. This was the Laundromat that I bought. Basically what you can see here, like what I would scan if I looked at something like this. All of the months look pretty similar. There's not massive variability. There's really no seasonality in the business. The gross income overall is 113k. Then we have expenses, which gets us to about $67,000 in net income. Now, because I own not 11 or so of these laundromats, I have a guy run them for me. Turns out, I don't know if you could tell by me, but I don't really want to work in a laundromat. 24 7. Not exactly my cup of tea. However, I do want to employ somebody that makes like one hundred and something thousand dollars a year who runs this whole portfolio for me. He started with a few of them we added on, and then each Laundromat we try to get bigger. Now I have One laundromat that does $3 million. By the way, I use laundromats because if you can't understand a business where you wash clothes and you put quarters in to buy the clothes, then I can't help you. Don't buy a business. Leave the room now. But I'm not saying that you should buy a laundromat. This is actually not the best business to buy always. It is just the simplest business. I think it's like the gateway drug to boring businesses, right? Like, everybody's like, I want to own a Laundromat and come. And I'm like, God damn it, I up. It's not what I meant to do. What I am saying is that this is a really easy business to understand. What I actually want you to do afterwards and remind me if we don't get there all the way is I want to talk to you about your personal P and L review. That is how you're going to figure out what business you like. What's your name? Kate. Kate, okay. That's how Kate is going to figure out the business that she should buy. Because everybody out there has a business like my laundromat where you get a business that, that literally you could. I mean, I just bought a business. I just bought a business Tuesday of last week that does 120 ish thousand dollars in profit. And we bought that business for $50,000. And this is a business we're going to plug into something else I have in our media company. It's like a. It's a human version of a chatbot. You know when you go to a website and you wish somebody would answer your question, but instead, instead there's like a yes, Todd, wait a minute, I'll be right with you. And then 14 hours later, you're talking with somebody in India. Except it's actually a bot online. Okay? It's not that it's a human that actually engages with you. So I'm going to plug it into a couple of my boring businesses. Because wouldn't that be nice if when you needed a locksmith, there was something that you could text, they would text you back and they would send you out. A locksmith. Cool company, right? I was able to buy that company at that much of a discount because this was my deal. I had an unfair advantage to this deal, which is that it's a 26 year old business. The guy didn't want to run it anymore and I gave him a percentage of the profits because he really wants to give it to his Great granddaughter. He owns a bunch of businesses. This one was for her. Guess what? Surprise, surprise. She didn't want to run it. So it's going to be just a bond for her, but I'm going to grow it. So we're going to get to the point where Kate figures out which business she needs to buy and Tom and Brad and everybody. But for now, we're going to talk about Laundromats. Okay, so here's the balance sheet and here's the deal. The deal basically looks like this. I cleaned up some of the numbers slightly. They're not going to be all zeros obviously, but revenues for the business, $113,000 profit, 67k the purchase multiple, which means the amount that I'm buying the business for based on Its profit is 1.8x. Valuation for this business was 125k. Business assets were a little bit more than that because some of the businesses is IP intellectual property and some of it are the actual machines that they owned. Business funds raised, 0, no outside capital. Closing payment, 25k, which I would have had to pay except I got a loan on the equipment, which meant that I put $0 down for future payments. I would pay the seller $100,000 over three years. So $100,000 divided by three. I'm paying them 33ish thousand dollars a year. And then a personal investment, like I said up front with the 25k. But then I pay for it with the equipment loans. Here's what this shakes out with on a comparative basis because nothing is good or bad except by comparison. Monthly payout to the buyer, me about 6k cash on cash return. If you calculate it like I put the 25k down, otherwise the number doesn't make sense. If the number is 0,268%. That's how you get goat money out of buying a business that's full circle. Do you guys like how I came back on that one? Okay, so what I'm trying to say here is you cannot do this with real estate. You cannot do this with most things that don't have massive speculation on future prices. Sure, you could get 268,268% on Google, but are you going to cash flow on Google in the meantime? I'm sure there are people out here that know about bitcoin mining and maybe how to do it that way or defi. But I've been in finance for 15 years. I have a PhD. I have an MBA. I used to do quant trading at Goldman Sachs. I understand derivatives and bonds and I cannot understand half the stuff they're talking about with Defi. And when I send it to my hedge fund friends who are much smarter than I, and some of them went to MIT and Cambridge and I just went to Georgetown, they don't understand either. So I have a rule. You need to be able to explain it to me like I'm a toddler, otherwise I'm out. I don't have any ego about being the smartest person in the room because I definitely know I'm not. What I do know is that I can figure out how to buy a Laundromat. And so I'm going to keep doing small, boring business deals and I'm going to keep preaching it to the average person. And let me tell you why, because jobs in the U.S. do you know how many jobs in the U.S. are given by small businesses? Like what percentage? So the calculation is anywhere from 60 to 2/3. 60 to 75% of small businesses provide most of their. I'm sorry, 60 to 75% of jobs. Jobs in the US are provided by small businesses. Small businesses in the US got decimated during COVID That's why I get deals like this. They're about to get decimated again. In this environment. If you haven't already seen your loans shrink up if you're a business owner and capital become more constrained, it's coming. And so when I think about where I want to put capital, when I think about the humans I want to invest in, let me tell you what it's not. It's not a tech worker, you know, sitting inside of their sleeping pod that I want to give more capital to Google for. It's like the hard working men and women that are in my car washes, Laundromats and at Mark's ranch. And so when I say that you guys haven't done enough, I imagine if you can afford to be in this room, there are really two things that you should do today. Yes, you should worry about yourselves. You should protect yourselves, you should protect your family. But also, Mark also talks about something else. He uses the word community a lot. So, so do I. And here's the thing we kind of learned over the last two years that most of the people on high do not care about the people down lower. And that's all of us. None of us are considered high to those people. And so if we don't take care of the other owners in this country, if we don't take care of the other mainstreamers, then who's going to. And once you have a certain amount of wealth, it's just all options, right? And you get to choose what kind of world do you want to build? Yeah, you get to be the architect for your life. But can you also be the architect of somebody else's life? Can you make it a little bit better? Somebody in here was just telling me, maybe stand up, I can't remember your name. You own a car wash storage business. Shout it out. All right, and what did you just do with one of your employees that you gave something to so that they could do something else too? So he gave away 25% of his business to his operator so that man could become an owner and he could sit back and passively get income off of it. Like, tell me that that is not better than throwing money at a price speculative asset. Tell me at the end of your days when you count up all the zeros at your funeral and they put it on your tombstone because that's what really matters. That you're not going to feel better about having made that man's life a little bit better while cash flowing. Because those are my humans, the people who care about stuff like that I want to see when otherwise I don't really care about being on stages like this. Like I've kind of made what I need to make. I got the backup plans like Mark's got. But these small businesses, these people don't have people like you guys. They're not able to come in rooms like this. And so I think we have a moral prerogative to make a difference on them. And that's what I try to do. All right, let's talk deal structuring. Here's how a structure like this goes down, all right? Purchase price 125k. You put down 25k deposit. Theoretically, you get that payout over a three year basis. You asset finance. You can't do this on an SBA loan up front. An sba? How many people in here know what an SBA loan is? All right, Small Business association, this is called Uncle Sam finally doing something good for you. It is free money. Not free necessarily, because it's a personal guarantee, but it is money that the government sets aside so that everyday humans who are US citizens can go and buy businesses up to 90% of their purchase price. So let's say you go to your local small business association, every district has one, and you say, I want to buy a laundromat for 100k, and they value your laundromat at 100k. They will give you $90,000 for you to go purchase your Laundromat. And you will often give them a personal guarantee saying, hey, if the laundromat goes south, I'll pay off this loan. But in the meantime, they're going to give you free capital. And the rate is something similar to 5 to 6.5% right now. This happens all around the country every single day. In this instance. The SBA loan, though, wasn't what I used. I used seller financing. But an SBA loan has to be what's called first lien position, which basically means the government gets paid before anybody else gets paid. So if I screw up my Laundromat and lose all $90,000, I got to pay them before I have any other loans. Then there's something called seller financing. You guys know what that is? Yeah. Used to happen a lot in real estate. Now they're like, that's cute. You want me to pay you to buy my house? No, thanks. But in buying a business, 60. 60% of businesses are sold with seller financing. 60%. That's just the norm because getting credit is difficult. And when you have a buyer's market, aka 11 houses don't sell. When 12 houses go for sale, then you get to drive terms. So with seller financing, I did 90% of the purchase price with future payments and the rest with equipment loans, which basically means at the end of this, I can get cash out of this deal. Something to the tune of, let's call it 200 to 225, depending on when you're talking about the end. Closed seller financing, then close asset financing. This deal is all over the Internet. If you have. This would be a small deal for most people. The biggest mistake you can make in buying a business is buying a job. So for most of you guys, you already have businesses. You already have things that you're passionate about. You're probably not dying to go wash cars for a living. I don't know, maybe you are, but you're probably not. And so what you need to make sure you don't do is buy a business like this that doesn't have enough cushion in there for you to have somebody to give a portion of the business to in order to run it for you. You want to make sure you're buying an asset and not a job. But these deals are all over the Internet. In fact, there's a company called Biz Buy Sell that I checked last week, has something like 2.7 million listings on it. Now, of those, 2.7 million are a bunch of them. Garbage, definitely. But are a bunch of them small businesses that are too small for private equity firms, but just about right for normal humans? Yes, they are. Okay, this is kind of how it works to buy a business. This is what I call the 10 step business buy in process. You basically go, and we can. What I'm going to try to do is leave lots of time for us to try a few little case studies and play around a bit. Buying a business goes through 10 steps. The first step is foundation. So that basically means, oh, this is how small business buying works. There's a bunch of them out there. Check the box. I understand that you guys are in that box right now. Then it goes to deal Clarity. AKA what do you want to buy? How much money does the business have to make for you? How much money do you want to spend on the business? Where does it need to be located? What kind of business do you want to buy? Then it goes to origination, which basically that's a fancy way of saying sourcing. How do I find a business? Then selling you. Which means when you stand in front of a business owner, getting them to sell their baby to you, because this is somebody's baby, they've poured 26 years of their lifeblood into it. Then we've got negotiation, how to get them to agree to your terms or price. Then we've got valuation, which is how do you know what it's worth. Then we've got financing. How do you get money for it? Structuring. This is the cool part, you know, in buying a house. Like, you don't ever really sit down and think, well, I'm going to do like a, you know, 10 year note and they're going to give me part of the money for it and then I'm going to do some here and then a milestone based. If I can rent it out on Airbnb this much. You don't have that kind of option when you buy a business. You're the architect. There are no rules in business buying. You can make up your own. There'll plenty of people that tell you you can't do it that way, but they're just telling you they wouldn't do it that way, not that you can't. And then you have closing. How do you close the business? All right, here's where I want to take a little pause and everybody has with them like a piece of paper and a pen. Right? Okay. I want to take a pause and I want you to think about something. We're going to do Something called our personal P and L. First, let me ask how many people in here are interested in potentially buying a business? All right, cool. If that's the case, what I want you to think about here is I'm going to tell you sort of two little stories and then I'm going to break you guys into little small groups and you're going to talk amongst yourself for a minute and you're going to think about how you could find your unfair advantage or your unfair deal. Okay? And I might pull like one or two of you up here and we can do this live. So remember I told you about that business that I found that I bought for 50k, that's doing 120, $30,000 or something like that in revenue. The way that I found that business is I looked at all the costs that my business has and I go down the list and I do an exercise where I say, okay, step one, and maybe you write this down or maybe you don't. Step one, this cost that's associated here. And I take it from my biggest costs to my least cost because I don't want to deal with the ones up top. I want to deal with my biggest pain points. Can I get to the owner of this company? Is it small enough? I can't go by Google, probably, but is this a small enough business that I could get to the owner? Step one. Step two is, is this meaningful or interesting enough for me to potentially acquire? So let's say I'm looking at my P and L and I'm like, oh man, I own a bunch of multi families and I spend half of my expenses on landscaping. Yeah, I would like to own the landscaping company. That makes sense. Step three is I want you to think about this business. Could I have the knowledge or could I figure out an operator to run this business for me? Those are really the three things I want you to think about. And then what I want us to do is I want us to sort of workshop this a little bit. My goal is you leave today with a couple of ideas of how you could go approach an owner. Which is kind of interesting when you think about it. Because what if you could buy with future profits a business that could cash flow, that has an ability to change prices. So you can't if you buy bitcoin, let's say there's lots of reasons to buy bitcoin. I own plenty. But let's say you wanted to cash flow off of bitcoin and you wanted to be able to affect the amount that you cash flowed Off Bitcoin. That'd be hard. That'd be hard to do. But let's say that you owned a service company and you see costs going up in, you know, to the tune of, let's say, 10%. Could you charge more for your landscaping business this month than last month and essentially absorb all of that and then blame the government entirely for the increase in prices? Yeah, it's probably happened to you guys, whether you know it or not. I mean, Netflix increased their prices by like 33% or something. Insane. So I think we could probably do the same thing with businesses. In fact, we're already doing it. So those are the three things I want you to think about. I want you. Can you guys. Do you have in your head or a way to think about what are your biggest costs and can you get to those people and can you workshop that with each other? Do you guys feel like you have enough information to play this game? Yeah. Okay, then what I want you to do, because it's kind of of a wait. You guys could sit here and listen to me talk about buying boring businesses until you're blue in the face. But unless you actually take some action now, there's something called decreasing marginal utility, which basically means, like, the closer you are to something, the more likely you are to take action on it. I want you guys to actually leave here having some action items, okay? So I want you to sit amongst yourself and you're going to talk about. In my business, okay? So you can start talking. I'm going to talk over you. Write down right now, what are some businesses where I know the owners? What are some businesses where I spend money on them right now? What are some businesses where I think that I could add some growth to them, some oversight that I could operate? And I want you to write down these businesses for me, because what we're going to do next is we're going to talk about how you can approach them. All right? Start writing. I'm going to give you guys, like two minutes or something like that, maybe three. All right? And I'm just going to talk over you, but don't stop. The only other thing I want you to think about is I want you to think about what of these businesses could I get to within the next 30 days? What of these businesses could I get into within the next 30 days? Oh, hey, I hear this worked out kind of well for Coinbase during the Super bowl, you know, totally crashed their sites. Millions of people downloading it. I think the same thing's gonna happen with you Guys, today, minor item about crypto now being a fire sale. So we partnered with somebody that hasn't lost, I don't know, 26% of its value in the last six months and, like, half of that yesterday. You wanna see it? Oh, see this QR code? There it is. Yeah. You guys see it again? You get it, you get it. If you're into real estate, check out the sponsor of this here video. It's fundrise. Drop in the comments, what you think. I actually started investing with them in April of 2018. So it's kind of wild that now a company that I invested in for a long time sponsors this video. How cool is that? Check it out. Okay, cool. Was that interesting? Did you get your juices flowing? A little bit. Is everybody thinking more? Yes. Okay, good. Now, I want to do a couple case studies, so I'm going to call on some people. So be prepared, because I think the best way to learn is not through theory, but through case study. It's the Socratic method. Right. It's what they teach at all the fancy schools where they don't teach you anything anymore. Okay, let's call on who has an idea for a business that they want to buy from. This last conversation, does anybody want to be brave? Yes, my friend. Tell me your name and what do you do and what's the business you want to buy? Sorry. Stand up and then yell. I know. Yes. Look at. Let's give him a round of applause. Look at this guy. Jonathan. Oh, there you go. And yell. Jonathan Catino.

I do real estate. The business that I'm looking into buying is my auto.

I like it. Now tell me why test that.

Thank you.

So I don't have to keep paying so much for my car breaking down all the time.

Yeah. Yep.

But the other thing is, is I've been going there for probably the last four years. I constantly see there's cars there. They're constantly busy. They've had some changes. The father passed away. The mother's kind of hands off. The sons run it. They. I mean, there's potential there. They just got to be able to hire people. And that's one of the main things we were talking about, is the. The lack of people wanting to work.

Yeah. Oh, that's a good one. We'll get to that. Okay, let me ask you one more question. What do you do in real estate?

My main thing is to. I have half a portfolio of rentals, half a portfolio of owner finance.

Oh, great. Okay. So I want to push back on two things. Maybe the Automotive company is the right thing. It could be, but there's a difference between a deal for the street and an unfair advantage deal. I am lazy and I am not that smart. And I always want, you know, I'm the highest, hardest working, unsmart person you'll meet. And so the over here. I want unfair deals. Why do you think I play in boring businesses? Why did I build a multi billion dollar business in Latin America? Because it wasn't very crowded. You know, nobody. I go around and try to talk to people about buying laundromats. And up until two years ago, people are like, I literally couldn't want to talk to you less. Couldn't want to talk to me less. Right now the thing about an unfair advantage deal is that automotive company. Do you know a lot about cars?

A lot? No.

Do you have a business plan for them that you think is completely differentiated? Do you have an in with them that you think is completely differentiated?

The in? Yes. As far as. Have I sat down and worked out a plan for it? No, not yet.

Okay, so. So here's where I would push back. That would be an interesting one. It's just good to chase deals because then you get something that I call your deal maker lens, which is basically. You know, when you guys buy a new car, you know this good example. You know when you buy a new car and you're like, you're thinking about that Porsche all the time. You're gonna buy the Porsche and then you buy the Porsche, and before you bought the Porsche, you didn't see it anywhere. And then you buy the Porsche and you're like, oh, shit, there's Porsches all over this place. They're everywhere, right? This is what happens when you start learning about deal making. You. You will drive all of your friends crazy. Because everywhere you go, you're gonna be like, you know what? I bet this business is up for sale. That guy in the back. They don't have a website. Look at these Yelp reviews. It's just gonna happen. So it's good to just test out your muscle. But here's where your unfair advantage deal would be. Your unfair advantage deal would be. I own a real estate portfolio that's very large. I don't want to buy any more real estate right now because with interest rates going up, those deals are becoming much less attractive for me. So what do I want to do? I want to go to the ancillary satellite companies surrounding my real estate portfolio, and I want to acquire them. Why? Because day one, I could turn my liabilities into an asset. Right. So your biggest expense expenses on your real estate portfolio. I don't know. Maybe it's property management. That'd be an easy one. Maybe it's landscaping. Maybe it's marketing for, you know, tenants come in your real estate portfolio. Maybe it's a SaaS company that you use to put up all those, like, videos. Realtors do that, then they send them out to people. Your unfair advantage deal would be if you can take that deal and you already decrease it by the amount that you pay. And then your second unfair advantage deal would be, I bet you have a bigger network of people that would be buyers of one of those companies than users of an automotive firm. Right. You probably know people who own hundreds or thousands of rental units, let's say, that could use your product. So this is why I like you guys to think about your personal P and L. Because the way you get deals for less than they're worth is that they are worth more to you than they are to anybody else on the street. Cool. Is that useful?

Yes.

Okay. Rad. Thank you for sharing. Let's give them a round of applause. That's awesome. All right, I want to do another one of these. Who has another business? And here's what I want, you guys. When I'm doing these, I hope you're sort of writing down, like, if I'm. We're going to talk to Colin. He was somewhere around here in a second. But if I own a business where I'm a marketing genius, I want to think about businesses that need my marketing genius so that my price for buying that business is less than what it would be on the street. If I am a coding and tech genius, I want to think about a business where my coding and tech genius makes the business worth more to me than anybody else on the street. And so when you're listening to other people talk about their businesses, that's what I want you to ponder is where can I be an unfair lever to this business? This is called value add in private equity, and it's what every PE firm out there tries to do. We buy a company. We typically buy a company in what's called a turnaround. I do not think you guys should do that for your first deal. You know how, like, people will typically say to me, oh, this business isn't doing that well, so I want to buy it. I'm like, awesome. You're buying a business, you're buying a problem. You're literally buying somebody else's problem. And then you, who's never Run an H VAC company. You're going to go in there and solve it. All of a sudden, day one, you're going to increase the operational efficiency of a bunch of guys fixing things you don't understand. No, it's not going to happen. It's not going to happen. But we humans are funny. We apply this real estate lens of like, I want to buy the house and I'm going to flip it. Let me ask you guys a question. How many times have you done a construction project and it is under budget and early delivered? Has that ever happened? 1. 1. Get your hand down. Nobody does that, all right? We're not listening to that guy. So that doesn't happen. Right? And it's the same with businesses, except typically a little bit larger risk. So you don't want to buy some somebody else's problem. Why don't you want to do that? Because there's 11 non problems to buy on every street. All you're looking for is somebody that already wants what you're selling. The reason that people buy or the reason that people sell business is a lot of people say to me, well, Cody, what idiot. What idiot sold you that laundromat for $100,000 when it was doing $67,000 in profit? Idiot. And then I'll say the. The guy was 75 years old, he had cancer and his wife had passed away and he wanted to retire. But he didn't want all the money up front because guess what? Taxes. He wanted an annuity over the long term and he wanted me to keep the name on that laundromat because it was his wife's name. Yeah, he was an idiot. People don't realize that the reasons people sell businesses are varied. You get divorced. Hell, I sell businesses. This all the time. I sold a business not two weeks ago. Why did I sell a business? I don't. I don't need the cash for it because I don't want to run it anymore. The business is doing well. It makes something like, I don't know, $300,000 a year profit. I owned 40% of that business. You guys do the public math so I don't have to. I sold that business for something like 2x because it was too small for me to run. It wasn't a net positive to any of my businesses. It was a satellite. And the guy who run it would just call me too much. I just didn't want to deal with. Deal with it. So I sold him the shares of that business. Is that a bad deal for him? Is that a bad deal? For me? No, it's just a deal. Think about marriage. 50% of marriages end up in divorce, right? Probably more. And of those 50% of marriages that end in divorce, think about businesses. How many business partners stay together for life? How many people run one business for their entire life? That's weird actually. But somehow we think it's business that businesses are for sale at massive discounts and it's not. Okay, so I want to do one more case study. Who here? And then we're going to move on to talking about how do you talk to sellers about this? Who here has another business that they think they want to buy? Yes. In the back. And give me your name, what you do. Oh, whichever one. I saw this guy.

Okay, me.

Alright, rock and roll. Tell me your name, what you do and what kind of business.

So my name is Chris. I own several companies but I utilize online content creation to basically drive leads for all of them.

Great. Love it.

And so the business I was looking at is in photo and video studio.

A photo video studio.

Correct.

Cool. And give me some characteristics. Why do you want to buy this business?

So I've been wanting to up the level of the content creation. I've been wanting to. I also run a marketing and media company, so it's a, a way to up the level of products and services that I'm offering. It's. It, it just, it's 10 minutes. It's so funny because I started looking at that website and I literally found the business 10 minutes from my house.

Dude, I love applause. That's you. Actually.

It feels like destiny. It's super cool.

Yeah. So this is the crazy part. Well, first of all, I like this business a lot. Obviously. Who knows? Could be a nightmare underneath the scenes. Sure, Dyodd, which means do your own due diligence. But what I like about it is from a trajectory standpoint, that's the exact type of business I want you to find. For your first business, you need something that's almost a win win. Like you want the business anyway. You take a liability off your balance sheet and you buy profits. That's awesome. Then what I think could be interesting about this and some questions you'd want to ask yourself is do you know anything? So this is one you found online, you don't know anything about this business?

No, I literally just found it.

Perfect. You're going to lead us in the next section. Nicely done. Okay, so now we're going to talk about what do you do now? So you found this business. What do you do. Let me tell you what not to do first. So when you're going to reach out to this owner, what a lot of people do is say, I want to buy your business for this price. Or they start talking price right away. It's actually the exact opposite of what you want to do. You never want to bring up price, you never want to bring up terms. What you have to remember about these small business owners, especially if they're publicly listed, they have a lot of looky loos that are wasting their time. Has anybody, a few of you guys told me you've sold a business? Do you know how hard it is to keep your eye on the ball and your business range running once you've even thought about selling it is so hard. And then you have some guy or gal saying, well, what about your P and L here? What about this? Can you give me this document? Sending 42 different emails requesting your financials is very distracting. And so I think the first thing that you want to do, I'm going to give you some words to say and then I want you guys to talk amongst yourself about how you think you would approach some of these, these owners and then we'll workshop it. So here's what I would do. I would reach out to this owner and I would say something like this and I would be very deliberate with my words. I would say, I don't know, you're going to go to the business broker, if it's on biz by sell, but you're going to say to whoever the person is listed on the account, hi there, my name's blah, blah, blah. I'm located in this industry. I'm a business buyer and I'm interested in your company. I know what a demand it is on your time in order to vet, you know, have people vet your deal. So I just want you to know I'm a serious buyer. I already understand the industry. I usually close a business like this in something like 30 days pending. You can give me all the materials that I need and I'm not looking to waste either of our time. I don't have a lot of it and I know you don't either. Are you interested in, in having a phone call? At which point you're going to have the broker call you immediately and the broker then is going to ask you a bunch of questions and you're going to proceed with due diligence. But the way that most deals die is from incompetence on the buyer side, not even the seller side. Remember, if you're buying a photo studio company where you're buying a car wash or you're buying a laundromat. Do you think that the owner of that business is super sophisticated? You know, do you think they have like be beautifully clean P&LS located on QuickBooks color coded for the past 15 years? Probably not. So you're gonna have to be the one that's a little bit more organized. Okay, so that was awesome. What I'd love you to do is it'd be fun if you wanted to play a game.

Sure.

Of trying to reach out to that broker right now and see what he says. Write him something like that. Ping them something in the buy box and see what happens and how quickly they get back to you. Maybe we'll have something by the end of the next. Call it. 30 minutes.

So hit the contact button on here.

You're gonna hit the contact.

All right.

Should he hit the contact button? Should we have him do that? Okay, I think we should have him buy a business right now. We're gonna do it live. You feel a little naughty now, don't you?

Yeah, it's cool. So there's a contact form here. Just fill that out.

You're gonna fill that out.

All right.

And you're gonna put something exactly like what I said.

This is awesome.

Okay, so here's what I want you guys to do. Now if you haven't, you can currently available funds.

What do you want? What's the advice to put in there?

For what?

For the. There's a box currently available funds. Like I'm filling out a form.

Oh yeah, Whatever you need to have. Okay, so if the business is for a million bucks, you say a million bucks plus.

Perfect.

You're basically just checking off that you're not like, I would like to buy your business for a million dollars. I have 50 bucks. Is that cool? It's not cool. So you can sit down, fill it out and then we'll come back to you. Okay. So submitted. Woo. Nicely done. Okay, now I know a little hand clap. But before we get too excited for him, just know that very rarely do you get your first deal that you apply. So that would be awesome. It would be pretty crazy if that happened. But you're probably gonna have to kiss a few frogs. None of this stuff is as easy easy as clicking a button to buy a trade on Robinhood. Okay, so now here's what I want you guys to do. You've thought of a few businesses that you might want to buy and maybe you don't have any Businesses that you want to buy at this moment. But what I want you to be prepared for is remember how I told you that Porsche analogy? I want you to be ready for when you find the Porsche, right? I want you to be ready for when it stumbles across your path. Because I can guarantee you, I've given this talk a lot of times now in varying ways. And every single time after this, within the next 24 hours, one of you will hit me up on Instagram, Twitter, email and you'll basically say, oh my God, I just put in an offer on a business within 24 hours. I swear to God, it's the weirdest thing I've ever seen. It happens all the time. And so the thing is, you have to be ready for those conversations when they come across your plate. So what I want you guys to spend the next, let's call it five minutes is thinking about how am I going to communicate with these people. And what I want you to do, workshop across the group is basically you're going to talk amongst yourself and say, ok, here's what I think I would say to a business buyer. Here's how I think I might reach out to a few of them. What do you guys think about pinging them this way? What do you think about pinging them this way? This has worked for me in the past. I don't think that's a good idea, Bob. No, don't say that. That's what I want you guys to do in your small group because I want you to be ready to actually take some action. Alright? The last thing I have before I'm going to send you on your merry way for a few moments here is this. When you're thinking about how to find people to buy businesses, do you want to know one of the best ways to find a business to have it fall in your lap? Any crazy ideas? Sell a business. What? Sell a business. That's a good one. What else? Customers. Good one. What's that? Help people. Yep. Ask in the community. Love it. One where you're a customer. Good. Okay. All of those are good. You want to know a really good way masterminds this room? I can guarantee you that in this room. Let's play a game. How many people in here have a business? Maybe it's not your main business that you might be willing to sell, Raise your hand. Oh, there's a couple businesses for sale. Did you guys have to go far? And that's not to mention all the people in here who are lying and keeping it close to their Vests, like, I don't see you, but I see you. One of the best places to buy businesses from is concentrated areas like this. These are people that, by and large, you're here because you have multiple streams of income or you want to build them, or you're transitioning into something else or you want a new opportunity. Somebody over here said almost every business has a price, and that's true. So what you should be doing is in every conversation, you know what I tell people? They're like, cody, what do you do? I'm like, I buy businesses. They're like, what kind of business? And I'm like, yes, every time, yes. And the reason I say that is because then what happens? They go, oh, would you think about a business that looks like this? I say, oh, yeah, I might think about a business like that. And then I go, oh, good, because I own one and I'd like to sell it to you. That happens continuously. So you're in a room full of a bunch of people that you could probably buy businesses with. So while you're speaking amongst your group and while you're speaking at cocktail hour, maybe throw that in there. Are any of you guys at the table, like, if you're not comfortable asking this of a table of people that are directly around you right now, are you going to pick up the phone and cold call like. Like, we might have this kind later? Probably not. So when you're thinking about ways you're gonna reach out to people, I'm gonna come back to you afterwards and I'm gonna ask who has the most creative ways to reach out to people to buy businesses? And I want. And maybe we could give a little prize to somebody who is actually sharing a business, selling a business, or might wanna buy from each other at a table. So now your homework is, next couple minutes, you're going to share with each other how. How you could potentially reach out to buyers or sellers where you could find them. And does anybody around you have a business you could buy? Okay, everybody get it? Yes. There's like three people that said yes. Is this. I mean, if you can't understand these directions, I don't know if you could buy a business. Okay, ready? Go. Okay, cool. All right, I want to hear your brilliant ideas. Anybody have a brilliant idea about how to reach out to businesses, how they're going to reach out to businesses? Anybody want to be our guinea pig? Yes. Stand up and yell for me. Thank you. If you have a problem with a business, even a minor one, escalate the owner. Yeah. I actually love that because, you know, one of the best things to do this is like a little super sneaky squirrel stuff for you is you want to talk to owners, and you want them to feel certain things when you're talking to them. You're trying to trigger a buying a selling response, right? You're trying to trigger their feelings. Feeling to want to get rid of this baby that they've spent their life building because you think it's best for them and for you. And so what you want to do is you want to say things to them like, hey, I'm so sorry I gotta escalate this to you. You know, I'm a business owner too. I totally get it. But, like, you know, this hap. I'd want to know in my business. Wouldn't you want to know in your business? Yeah, yeah, yeah. You bond with them. Well, yeah. And then you say, how many times does this happen? Does it happen often? Oh, man. How many late nights have you pulled dealing with this? Man? Employees are tough, huh? Hiring these days. Oh, you're answering the customer service still. Wow. Yeah. Do you feel good at the end of the day? Because I always feel drained. Oh, you feel drained. Aha. And what you're basically doing is you're leading them to this point of remembering how kind of miserable it is to often run a small business for an extended period of time. And you are sure shoving them right into your open arms as a buyer of this business. So I think that's brilliant. Thank you for shouting that one. And one other quick example is it's fascinating how Domino's turn something, a coupon, who cares if you get $3 off of a pizza into? You get a tip to go pick up your own pizza, and they don't even give you the money. They give you a coupon for next time. There you go. I like it. Now, one thing I will say. Couple businesses I don't ever buy restaurants. Terrible businesses to buy. Losing money. I can tell you how to do it quickly by a restaurant. Second type of business, I don't buy hotels. Why? It's a real estate play disguised as a business. Another type of business I don't buy. I personally do not like franchises. I like to invest in them fractionalized. I do not like to run a business because I am what we call unemployable. I do not want to work for somebody else. I don't want somebody else's rules. I don't want McDonald's to tell me I got to put up a new sign that's going to cost 100k and I got to do it. Otherwise I'm in breach of contract. No, thank you. I also do not want businesses that are dominant on one platform, fba, fulfilled by Amazon. Jeff Bezos thinks it'd be nice to go ahead and get right into your business and all of a sudden that business that you bought gets decimated because the algorithm changes. You can make a lot of money on those businesses. I just don't like to buy them because I am anticipating at least three to five years of consistent performance for what the business is doing right now in order for me to recoup my returns. And so if Jeff turns off my algorithm, he decimates my business purchase. I'm not into that. So those are just two quick caveats. Give me one more example. Another idea for reaching out to a business and getting them to sell to you. Hands. Yes. A lot of times we go after businesses that are under duress and usually things like disability, divorce or death. And so you can go through the bankruptcy attorneys or you can go through the estate attorneys. And also there's lists available of people that you can directly approach and you can correlate it with the businesses. I love it. So this is called the three Ds. Death, disability, divorce. Those are great reasons to buy a business. One, you're doing them a solid because they need to have this item remedied. Two, this is not for beginners. The only way that I would buy this type of business is if it was a super healthy business and probably like divorce or death is in the mix. But you have a good attorney and you make sure that all your I's are dotted and your T's are crossed. But for most people, you don't want to buy a turnaround, but you do want to buy a trigger. That's the good type of tea. This is a trigger. So this, I have a friend, Lisa Song, she only buys businesses based on trigger trustee sales because she used to be a bankruptcy attorney. And so she has a great story where we were in Vegas together and she's this like five foot one, crazy little former Miss Nevada Asian, wears stilettos everywhere, prances around, and she owns a mail pack and ship center and frequents bankruptcy sales. Like just, you know, you wouldn't know, but she went to a bankruptcy sale and she looked around for what the assets were online. They didn't really list a ton of assets, but when she got to the sale, they had 150 golf carts that were up for purchase and everybody that was at the bankruptcy sale. Because usually who goes to bankruptcy sales are like big asset purchasers. They want to buy the entire golf course. They want to buy all the condominiums on the golf course. 150 golf carts. They don't know what to do with that. So what. At least it. Lisa googled the golf carts and what an average price for a golf cart was and said, I'd like to take all 150 golf carts. And a bunch of other people were there that could have done it. And they were like, God, I can't get the golf carts out of here. I don't know how I'm going to sell them. Whatever. And Lisa just, you know, prances up to the guy and is like, oh, can I pick these up tomorrow? And what does she do? She spends the night going on Craigslist, lists a bunch of those bad boys all over any Internet site she can find and has them come pick up for price, purchase tomorrow for half price. So there are so many ways to buy businesses that you could never imagine, and that's just one of them. Each state, city, county has different bankruptcy or trustee sales. So that's like a masterclass. You're ready for the 202 version. We're at the 101 today, but that is a little bit of a sneak peek. Okay, So I have 24 minutes here. So I think what I'm going to do is I'm going to talk about this next stage. So as you can tell, there's 10 different parts of the business buying journey. We've talked about a few of them. I could hold you hostage here for another six hours and we could go through the rest. But I'm not going to do that to you. What I am going to do is I'm going to talk to you about my version of the 202. There's something else happening in small business. That last time I gave this speech with Mark's group, I didn't think about yet. I wasn't ready for this play and neither was the market. And then something happened over the last couple of months that made me change my mind. And this is, I think, the 202 version of what is happening in small business acquisitions. So if I've wet your lips and made you think about small business acquisition as an interesting target, let's talk about how to layer on what I call vc, like returns to small businesses. This is a thesis I have. I've applied it a few times, but I haven't applied it 65 times like I have with Small businesses. But let's play this out, see what you guys think. So how am I investing today? I already own 26 of these small businesses. What I'm doing right now is I'm consolidating the bigger ones and I'm selling off the smaller ones. And the reason that I'm doing that is because I want a higher ROI for every dollar that I invest beyond what I can get in just laundromats and cards. Car washes might surprise you, but I have to own a lot of car washes to make tens of millions of dollars a year, which is what my goal is. I now want businesses. I do not want a business that doesn't make me at least a million dollars. EBITDA needs to make me a million dollars profit in order for me to be interested in a business. When I first started out, it was like a thousand bucks a month. Yep, let's get that. Now you climb up the ladder just like you do in real estate. You, you start with a studio, then you get your townhouse, then you get your multifamily, then you buy your industrial building, right? So I did the same thing in business buying for many years. I think the next stage of the ladder is fascinating, and I didn't anticipate this happening. Here's what it is. The idea is we don't just own the laundromat. We also own the infrastructure that underlies the laundromat. This is what I call technology. Tech enabled businesses. I want to start buying businesses that take businesses from a. Hey, I forgot to tell you that your automobile's been ready for 24 hours and I don't give you a subscription to it. And oh, by the way, I don't answer my phone. I want to turn those old school businesses into a business that says, here's a text when your car is ready. Here's a text when your oil change and maintenance should be done. Here's a text for you as a woman, because I don't know anything about cars. Stereotypical kill me Internet that tells you, hey, here's what the average price across a bunch of these different services that you need in the industry is. I want businesses that are smart and boring. The fascinating part, this is what I think is going to happen. Here's my thesis. Great Retirement happens, right? We see $5 trillion in assets come down the pipe out of businesses. And where do they go? They either go away or millennials buy them. From the Great resignation. So we're having a transfer of wealth from the older generations to the younger generations. How many of the younger generations are going to use paper ledgers? How many of the younger generations are even going to use QuickBooks? No, they're going to use bench. How many of the younger generations are going to use old school financing from community banks as opposed to pipe? That does factoring online AI, automated. What's going to happen is these boring businesses that we own are going to come into the 21st century. And for those type of businesses, we're going to make not just the cash flow I already talked about, but venture capital style returns. I think most venture capitalists are too busy right now. If you look, where is all the money going from? Like Andreessen, Horowitz, Sequoia, all the big venture capitalists, what are the two things they care about right now? Crypto Web 3 and the Metaverse. Those guys will not shut up about it. They won't stop hiring new general partners that are head of the Metaverse. Whatever. I see more newsletters every day on NFTs and crypto. It's fine. I'm not smart enough to play in the game where it is incredibly crowded and early on the end of the curve. I want to play in a game where there's something happening that nobody else is thinking about. I call this ignoring the noise and finding the numbers. The truth of the matter is unprofitable businesses like the businesses that we're seeing create all these layoffs are not going to have the same multiples they do in the future. What will boring profitable businesses that all of us use every day? I'm not going to because we have a recession. I'm not going to stop paying for somebody to cut my lawn. I'm at a certain level, income wise, where that's just not going to happen. But I might get rid of Hulu, Netflix, hbo. How many of these things do we need? I might do that. And in fact, I definitely am going to do that and so are all of you because we've already seen Netflix earnings come down, right? And so this is my thesis. So here's the idea. We want to invest in companies that are like this. So here's three examples. Anybody know Jobber? Pipe deal? These sound familiar. These are so boring, but I love them. So what Jobber does is basically they take a company like somebody was talking about storage over here. I don't like storage right now. It's way too expensive. It's way too crowded. Have you guys ever been down a highway and not seen at least 52 and a half storage companies on Them I know I haven't. Storage companies are everywhere. It's become a crowded market because it is the highest performing real estate asset class that's generally measurable. Besides maybe Airbnbs, which is, I think, the next bubble. And I own some Airbnbs. So I don't want to own storage. But you know what I would like to own? I would like to own the software that all of the guys who bought storage run on. Yeah. All on that business. Why? Because these people are going to continue to have to be more and more efficient and they're going to have to do things like offer systems and processes in order to compete. It's no longer enough to be the only storage company. You're going to have to offer better services as more of them come. That's what Jobber does. So they essentially go out and for any service business, they make service calls really easy. They make systems and processes for hiring a bunch of manual labor really easy. Or we've got Pipe. Pipe is the fastest company to ever hit a billion dollars. Pipe is owned by a friend of mine, Harry Hurst. He's out of Miami. And Harry, all he does is he does something called factoring. Do you guys know what that is? Yeah. So you basically, somebody's gonna give me money in the future. I'm an E commerce company. They only pay me net 9 90. Right. Which is like I give you this shiny bracelet and you pay me as the wholesaler 90 days later. So I gotta float you for 90 days. And pipe says that doesn't seem fair. So we're gonna actually take the fact that you have invoices and orders outstanding with Walmart and we're going to pay you now so that you can continue to grow your business. That's Pipe. Now, Pipe has API integrations everywhere. But when Harry talked about this idea, nobody came cared or Deal. Deal is a company I wish I got into. I didn't get into that one. And deal essentially takes anybody have international people that they work with, contractors like graphic designers, et cetera, that you work with. Okay, Fascinating. See, this is why this is gonna happen. There's like five of you in here that raise your hand. That is going to change. Because in the future, increasingly, what do we not have to do anymore? Post Covid. Go to the office. What does that mean? We don't have to hire locally for anything that could be outsourced or automated. We don't need American talent. And guess what that means we get to buy talent at pennies on the dollar. But what's the Problem about that. There's actually a ton of liability when you have international contractors, because I have contractors for my companies and, like, I don't know all the countries imaginable. And every time I have one of those, I open myself up to liability. Because you have a separate tax system and a separate hiring system that you have to track. Deal handles all of it. I outsource my liability to deal. They pay my designer in Pakistan, in Bangladesh, in India, appropriately, with US regulation and local regulation. And they do it like this. And they do it every single week. These companies are not what the focus of Silicon Valley is because they're not sexy. There's no Metaverse Ing over here, there's no bored apes. Nobody's got cartoons on these companies. And yet this one has a $5.5 billion valuation. And this is. I want you guys to start thinking this way because I just turned on for the first time ever in two years. So I've raised billions of dollars over my career. How do you know somebody worked at Goldman? They usually tell you in the first five minutes. I waited an hour. So I deserve a round of applause for that. Yeah. But I worked at Goldman back in the day and I raised billions of dollars for them. State Street Vanguard, this other company called First Trust, that I built their Latin American business. And I have not taken a penny from anybody in two years. Why? The market was insanity. Anybody who was raising and deploying massive amounts of capital in. In the last two years to startups, definitely, and probably to real estate, and I've allocated some, but I haven't allocated other people's money to it. There's going to be some pain that will happen here. Not saying everybody, but for a lot of people now, we're already seeing this in Silicon Valley. We're seeing our first down rounds ever. Right. So that means I gave you money at $100 million valuation. You need more money for me. And now I'm going to say, give it to $60 million valuation. And they say, yeah, I need it. I don't know what else to do. Fine. That's going to happen everywhere. I didn't do that. I didn't raise money because I thought that was coming. And so what's interesting, this is closed already, but this is what we look at. So we raised $5 million. This is wild. The power of the Internet. For anybody who here markets on the Internet or has a community on the Internet. Okay, cool. This will be interesting for all four of you that are in here. So basically, I usually talk about there's four types of leverage. The type of leverage that we began with was labor, right? So back in the day, there was slaves, then it became employees, then it became so, then it was serfs, then it was employees. That's the first type of labor. It's the least efficient, but it was the first. The second was capital, right? When did the Rothschilds and the big ten titans of the US Come into their money? Do you know what the actual trigger was for those guys becoming massive billionaires? The advent of the banking industry. That's when the first banks were established in the US Capital is what allowed them to become tycoons. The third type of leverage was code. Now that's how we got Jeff Bezos and Bill Gates and Elon Musk. They have armies in the form of leverage, of robots online, basically, Right? And then the fourth type of leverage is the type of leverage that I've never seen one more powerful, actually, and that is the power of audience, community, whatever you want to call it, attention. And one thing that's interesting just for you to put in the back of your brain as you're thinking about all the tools in your toolkit to go out and buy businesses and create wealth. We have an audience of 1.5 million. We now have something like 50 to 60 million views every single month. That contrarian thinking. And what's wild about that is, throughout all my life, when I'm raising billions of dollars, what do I have to go do? Like, okay, great. Nice to meet you. Yep, let's sit down, let's have a steak. Then I go do it again. Then I got an airplane, then I go on 452 roadshows. Then I'm in every conference room imaginable. Everybody's having coffee every day. I'm smiling a lot. It's miserable. Raising capital is miserable. And if anybody doesn't believe that, they haven't raised a lot of money. And then what happened? Then, let's see. That was Thursday of last week. We sent out one email to our audience, a newsletter, and within one email, and one day, we had $2 million raised. And then the next day we had $4 million raised. And then by the end of the period that we had a fund open, we had $5 million raised. And I cut it off because I didn't want to raise any more capital. And that is the power of having community in this fourth type of leverage. So for those people in the audience that have communities, I think you should be playing a bigger game there. A lot of people try to sell their Audience members products. You know, we have info products too. We sell courses on how to buy businesses for sure. But actually the most powerful thing your audience can do is three things. One, in my case, they can give me deals. So the reason that I'm out here talking about all this all the time is I heard a few of you saying it and I was going to save it for later. What's the best way to find a business, Cody? What's the best way to do a business? And somebody goes, you, Cody? And I go, exactly. That's right. That's what I want everybody to remember. I'm out here talking about doing deals and buying businesses because if you have a business, I bet you might call me because you know that I have $50 million deployed into small businesses. And I just for the first time ever allowed my retail investors to invest $5 million at a cap of. Nobody was allowed to invest more than $100 at $100,000 into this thesis. And so this is a really interesting way for you to get more deal flow. So that's the first reason I talk about this publicly. The second reason is investors. I want more people to give me money easily because I hate going and begging for it and having stakes with a bunch of people that I don't really want to have steaks with. It's not that fun. And the third reason that I do it is because there are reciprocal effects for my portfolio companies. So I could stand up here for you right now and which companies are you going to remember that I talked about? Do you guys remember any of the three companies I talked about? Shout out their names. Oh, that's so great. Because I'm an investor. So you might go and you might do something with one of those companies. You might become a client, you might tell somebody else about it. And what does that mean? You're building up one of my portfolio companies while we're doing this. The cool thing about all of this is it's a triple sided win. You don't have to buy something from me. The future isn't the Metaverse and it's not NFTs where XYZ ticket gets sold. Whatever the future of learning is, you'll get paid to learn. The people who invested in contrarian thinking capital, which is what our fund is called, the people who invest in that fund, they're going to get paid to learn because they'll get a return. Theoretically, if I'm not terrible at my job, the people will get paid to learn that give me deals and, and deal flow. Because they'll be in our community. How interesting is that? In the past you paid Harvard to learn. Now in the future you can get paid to learn. There's a fascinating difference that I don't think people realize. And if any of this is interesting, you. By the way, we have a free newsletter called Contrarian Thinking Co. It's not comm. Because that was cheap and that was expensive and I didn't want to buy it. So contrarianthinking Co. You can go to the free newsletter and on there are the details about the fund. So. So if you like any of this, I'm going to show you guys a bunch of our investment memos, our deal memos or whatever. You can click on that and see all of it for yourself. You can also see we just invested in a company today called Here, which is cool. I'll explain to you what it is. Okay, you can take a screenshot of this, but these are the type of companies that I invest in in what I'm calling the 2.0 of boring businesses. And the reason I think you should take a screenshot of this is because if I was going to invest in startup capital, it would be this way and no other way than this. The interesting part is I think we're going to be able to invest in these types of companies at levels we've never been able to invest in before because we're going to have down rounds. That's my thesis. I could be horribly wrong. That's what I think. Now here's a couple just resources for you before I'm going to spend the last 10 minutes walking through this. If you're going to invest in businesses, if you're going to buy businesses, you can take a screenshot for this. Oh, actually at the end there should be a QR code. You can get the whole presentation how to rank a company. I have something. This is our investment memo. Every single deal I do goes through this investment memo process. Makes perfect. You need one. It doesn't have to be mine. You also have to have a ranking mechanism. Every business I look at to buy, every company I look at to invest in gets ranked on these specific metrics. They get a score from 0 to 45. 45 being perfect. Those don't usually exist. 0 being atrocities. And that way when I go back, I can see if I thought a business was good or bad and I can see if I was right or wrong. Here's how we rank each business. You can basically see it's things like entry and exit analysis that basically means, hey, I really like this company, but they want me to invest in $100 million valuation. So the score that they get as a company is awesome, but their valuation is a one. And that's going to. Because it's going to decrease my likelihood of getting a good return. Right. So you need some sort of ranking like this then. I like to try to predict the future. This is basically what's called an exit prediction model. And so here you're trying to figure out if these things happen, what value will each company have, what is the multiple that I think they're going to have, and what's the irr?