ATHLLC1072731737

00:00:00.000 | (upbeat music)

00:00:01.800 | - Hello, and welcome to another episode of All The Hacks,

00:00:04.840 | a show about upgrading your life, money, and travel.

00:00:07.880 | I'm Chris Hutchins, and I'm so excited you're here today.

00:00:10.580 | Now, when I think of a small business like a laundromat,

00:00:13.560 | I don't usually think of it as an investment opportunity,

00:00:16.080 | let alone a cashflow business

00:00:17.520 | that could make millions of dollars.

00:00:19.520 | But my guest today, Cody Sanchez,

00:00:21.720 | quit a lucrative career in finance

00:00:24.260 | to start investing in what she calls boring businesses

00:00:27.100 | like laundromats, car washes, vending machines.

00:00:30.240 | And since then, she's successfully built

00:00:32.640 | a $50 million portfolio out of it.

00:00:35.340 | She is a true contrarian thinker

00:00:37.240 | who has an exceptional ability to see beyond the surface

00:00:40.640 | and find hidden opportunities that others often overlook

00:00:43.580 | because they seem too boring or unexciting.

00:00:46.380 | Cody also runs Contrarian Thinking

00:00:48.380 | where she uses her own experience

00:00:50.060 | to teach people to think critically

00:00:51.620 | and build cashflow unconventionally.

00:00:54.120 | We're gonna talk about how anyone can start investing

00:00:56.400 | in these small, boring businesses,

00:00:58.440 | why you might want to, what you might want to look out for,

00:01:01.560 | the do's and don'ts of deal-making,

00:01:03.560 | different ways to incorporate contrarian thinking

00:01:05.900 | into our daily routine and our relationships,

00:01:08.180 | and a lot more.

00:01:09.480 | So let's jump in right after this.

00:01:11.640 | When it comes to building wealth,

00:01:14.720 | taxes are such a big part of the strategy.

00:01:17.420 | And even if you've already filed,

00:01:19.080 | being proactive about this year

00:01:20.560 | to lower your future liability is so important.

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00:02:17.880 | you have to check out Gelt.

00:02:19.780 | And as an All The Hacks listener,

00:02:21.240 | you can skip the wait list and get started today.

00:02:23.780 | Just head to allthehacks.com/Gelt, G-E-L-T.

00:02:28.120 | Again, that's allthehacks.com/G-E-L-T.

00:02:32.000 | Cody, thank you for being here.

00:02:36.020 | - Thanks for having me, I'm excited.

00:02:37.560 | - So I love that you've owned the phrase,

00:02:39.540 | contrarian thinking.

00:02:40.640 | I really like that people challenge the status quo,

00:02:42.560 | go against the grain, whether it's life,

00:02:44.260 | investing, or anything.

00:02:45.440 | We both had these early finance careers.

00:02:47.700 | You had a lucrative career on Wall Street,

00:02:49.100 | and then you left it to do something,

00:02:50.740 | invest in boring businesses.

00:02:52.040 | I'm sure so many people talked you out of it.

00:02:54.280 | What drove that kind of early contrarian thinking for you?

00:02:57.880 | - I can't remember who said it, but I loved that quote.

00:03:00.280 | What it takes to be successful is,

00:03:02.220 | first you have to be contrarian,

00:03:03.520 | and then second, you have to be right.

00:03:05.360 | And I think that's true.

00:03:07.260 | I mean, you know from being in finance too,

00:03:08.520 | you can't make money if you follow the herd.

00:03:10.260 | You'll basically pick up pennies continuously,

00:03:12.860 | but that won't ever amount to dollars.

00:03:14.600 | I think the thing that made me wanna leave

00:03:16.400 | actually had nothing to do with being contrarian.

00:03:18.600 | It was that it was categorically fucking miserable

00:03:21.660 | being in finance for so long,

00:03:23.600 | especially when I was at the big firms

00:03:25.340 | like Goldman Sachs, State Street, Vanguard.

00:03:28.340 | Vanguard, I thought was like, sorry, Bogle,

00:03:31.220 | but like left of communism from like a worker's perspective.

00:03:35.280 | It was just, everybody is the same.

00:03:38.020 | It doesn't matter if you outperform.

00:03:39.920 | It was the opposite of a meritocracy,

00:03:41.420 | which is what I wanted.

00:03:42.620 | You could only progress in your career

00:03:43.960 | at certain levels and years and timelines like the military.

00:03:46.760 | So I was like, this is awful, gotta go.

00:03:48.820 | Then I went to Goldman Sachs and at Goldman,

00:03:51.160 | it was the opposite.

00:03:52.360 | It was like, no matter what, 20% cut every single year.

00:03:55.060 | And if you don't perform, cut.

00:03:57.300 | And if people don't like you, cut.

00:03:59.640 | That was a really aggressive environment

00:04:01.340 | and I actually liked it more, I think.

00:04:03.540 | But then finally where I ended up was in private equity

00:04:07.220 | running with a couple other partners.

00:04:08.840 | And I think what I realized, Chris, is you were smart.

00:04:10.520 | You were like, I didn't last that long in finance

00:04:12.760 | and I got out.

00:04:13.960 | And I think I thought, oh, it's just not this company.

00:04:16.420 | It's not this company.

00:04:17.320 | It's not this company.

00:04:18.160 | And then I realized, oh no, I hate finance.

00:04:20.760 | It just took me 12 years to figure this out.

00:04:23.320 | And in actuality, maybe I'm more entrepreneurial

00:04:26.800 | and I wanna do my own thing.

00:04:28.240 | And I just got sort of a really long PhD

00:04:32.340 | in how to buy businesses and how to structure deals

00:04:35.300 | from being in finance for a long time.

00:04:36.640 | You remember, I mean, when you were an investment banker,

00:04:38.680 | how long did you work?

00:04:40.120 | - My kind of tipping point was I didn't see

00:04:42.320 | my girlfriend then, now wife, for a week awake.

00:04:45.320 | And I was like, this is just untenable.

00:04:46.920 | Like, what's the purpose?

00:04:48.620 | And then I had the same experience.

00:04:49.720 | I moved to management consulting

00:04:51.320 | and I remember we were courting like a Fortune 50 company.

00:04:55.700 | And a friend of mine's mother-in-law

00:04:58.160 | happened to be the CEO of that company.

00:05:00.060 | And I remember going to the managing director and saying,

00:05:02.940 | "Hey, I know you guys are courting this company.

00:05:05.140 | "I'm gonna be at the CEO's house this weekend

00:05:07.600 | "because my friend happens to be her son-in-law.

00:05:10.040 | "How can I help?"

00:05:10.980 | And they were like, "Your job is to make slides.

00:05:13.320 | "Like, why would you help?"

00:05:14.520 | And I was like, "I actually have a relationship

00:05:15.740 | "with the person you're trying."

00:05:16.840 | And they're like, "That's not your job.

00:05:18.480 | "This just seems like you're not thinking about business

00:05:21.160 | "as a way to like take every advantage

00:05:23.020 | "and try to be successful.

00:05:23.880 | "You have these rules."

00:05:24.920 | And I was like, "I don't like rules.

00:05:25.920 | "I don't like rules that don't make sense.

00:05:27.260 | "I love rules that make sense.

00:05:29.120 | "I don't like rules that don't make sense."

00:05:30.500 | And that was like the downhill of that career.

00:05:32.600 | So it was just brutal work.

00:05:34.640 | The no meritocracy thing was driving me nuts.

00:05:36.860 | It was just like, this is what you do.

00:05:38.600 | I ultimately got laid off.

00:05:39.600 | So that kicked me out earlier.

00:05:40.940 | So maybe you didn't have that good fortune,

00:05:42.880 | which in hindsight feels fortunate

00:05:44.400 | and in the moment wasn't,

00:05:45.980 | but it's not like you went into this other career

00:05:47.720 | that everyone knows and it was very popular.

00:05:49.620 | You started doing something that I think

00:05:51.480 | even years later is not popular.

00:05:53.860 | So maybe give a little context

00:05:55.520 | to what it is to buy these businesses,

00:05:57.440 | but what led you to start doing it?

00:05:59.320 | The secret is, I think, that the really, really wealthy

00:06:02.920 | have always bought these businesses.

00:06:05.020 | I mean, richest guy in the world, owner of LVMH.

00:06:07.580 | How did he get there?

00:06:08.420 | Did he start those companies?

00:06:09.680 | No, he bought them.

00:06:10.760 | He bought a bunch of these companies.

00:06:11.960 | Some of them basically out of bankruptcy like Dior

00:06:14.600 | and he amassed a massive empire from the fact of buying,

00:06:19.480 | I mean, if we think about it,

00:06:20.400 | really bad companies, right?

00:06:21.920 | Clothing companies, they just have fancy labels on them

00:06:24.240 | that are highly overpriced.

00:06:25.700 | That's how the richest guy in the world made his money.

00:06:28.600 | The richest guy in India made his money

00:06:30.620 | through a conglomerate of businesses that he bought.

00:06:33.320 | You look at a lot of the Fortune 500

00:06:35.800 | and what you see if you peel back the layers

00:06:37.520 | and you get rid of all of the heirs of Walmart, let's say,

00:06:42.400 | and the heirs of some of the large historical industries

00:06:45.560 | like Rockefellers, et cetera,

00:06:47.000 | you find that most of these people actually got there

00:06:49.320 | not always from starting companies, but from buying.

00:06:51.960 | The second most common is from buying companies.

00:06:54.240 | And so in finance, private equity, we did that all day.

00:06:57.180 | I think that, they're not gonna like that I say this,

00:06:59.800 | but I think people in private equity are brilliant in a way,

00:07:04.240 | but it's slightly predatory.

00:07:06.080 | We are so sneaky that we make entrepreneurs think

00:07:11.080 | that putting their sweat and tears into companies

00:07:15.080 | is like the fun game.

00:07:16.560 | This is what it means to be an innovator.

00:07:18.360 | This is what it means to be a creator

00:07:20.920 | and to build huge businesses.

00:07:22.640 | And then right about at the point

00:07:24.320 | where they wanna slit their wrists,

00:07:26.040 | private equity swoops in and we say,

00:07:28.320 | is it miserable running your company?

00:07:29.800 | Do you not wanna do this anymore?

00:07:31.300 | Are you ready for something else?

00:07:32.680 | What if we give you a great offer?

00:07:34.260 | And what the entrepreneur doesn't realize

00:07:36.340 | is that zero to one is the least profitable period of time

00:07:40.160 | in your business.

00:07:41.220 | The most profitable period of time

00:07:43.220 | is actually the next stage.

00:07:44.980 | And then the stage where you continue to cashflow

00:07:47.060 | for a really long time on it.

00:07:48.700 | And so we sort of scoop up these businesses

00:07:52.040 | at a period of time where the entrepreneur

00:07:53.740 | is in pain often, and then we cashflow on them forever.

00:07:57.500 | And it's a gross generalization.

00:07:58.660 | That's not what all private equity firms do.

00:08:00.900 | But once I realized that, I was like, wait a second.

00:08:03.220 | So we don't have to be clever enough

00:08:04.820 | to come up with an idea.

00:08:05.980 | I'm not clever enough to come up

00:08:07.280 | with some crazy new billion dollar idea for a company.

00:08:10.140 | I don't know.

00:08:10.980 | But what I do know is how to look at what are expenses

00:08:14.300 | and what is income, AKA a P&L,

00:08:18.020 | and tell me if this business is making money or not.

00:08:20.660 | And do I think that this business could continue to exist

00:08:23.140 | inside of the next three to 10 years?

00:08:24.940 | At which point I'll have all of my money back

00:08:26.700 | plus three to five X, let's say.

00:08:28.860 | I can't go figure that out.

00:08:30.260 | And because that's not that difficult,

00:08:31.860 | why couldn't I do for myself what the big, huge guys do

00:08:34.300 | with LBOs, leverage buyouts, and all of that,

00:08:36.560 | but at a tiny scale with laundromats and car washes

00:08:39.360 | and things that cost $50,000 or $100,000,

00:08:42.620 | and then scaling up to a million and then five and then 10?

00:08:45.260 | It's the same game.

00:08:46.660 | It's just I'm playing it at a smaller level,

00:08:48.740 | at the mom and pop level, than what I call,

00:08:50.780 | or what is called micro P.E.

00:08:52.980 | - I think when anyone listening is thinking,

00:08:54.460 | oh, wow, Cody goes and buys businesses.

00:08:56.340 | She must be a billionaire.

00:08:57.780 | It sounds like something you could actually

00:09:00.180 | make part of your investment portfolio

00:09:02.460 | at a very early stage in your wealth building journey

00:09:05.840 | and grow from there.

00:09:06.820 | Would you say it's for anyone

00:09:08.220 | or who is buying a small business for?

00:09:11.300 | - The only people it isn't for are the lazy

00:09:13.940 | and the completely risk averse.

00:09:16.100 | So if you wanna do zero work,

00:09:17.940 | if you want to have zero risk, then don't buy businesses.

00:09:21.700 | It's just not gonna work out for you.

00:09:23.300 | So if people are trying to sell you Airbnb arbitrage

00:09:26.100 | and you take no risk and you bring on these people

00:09:28.260 | and you make your millions, okay, fine, do that.

00:09:30.740 | But I think for people that are willing to put in some work,

00:09:32.820 | there's no better way to make a return on it

00:09:35.100 | than having equity ownership that cash flows over time.

00:09:38.580 | And the problem is, if you look at the S&P 500

00:09:41.380 | or where people typically invest,

00:09:42.860 | what is a good dividend paying stock?

00:09:45.140 | Three to maybe 9%, I mean, gosh,

00:09:47.380 | if you could get a 12% paying dividend stock,

00:09:49.540 | you're probably thinking

00:09:50.380 | that it's gonna have some downside, right?

00:09:51.980 | 'Cause that's too much.

00:09:53.220 | But in a small, boring business,

00:09:54.820 | you could have a return on your money

00:09:56.700 | of high double digits in a year.

00:09:58.580 | You could return all of your capital within a year.

00:10:00.780 | And so I think it is for quote, unquote,

00:10:03.100 | anybody that's willing to put in some work.

00:10:05.180 | Now, the flip side to that is then people go,

00:10:07.740 | Cody sounds great,

00:10:09.060 | but I don't actually have millions, right?

00:10:11.180 | And I like to give examples like,

00:10:12.780 | I bought a newsletter for $3,000 just for shits and giggles.

00:10:16.540 | I wanted to put it into our media empire.

00:10:18.820 | I realized it didn't really fit.

00:10:20.580 | It wasn't gonna grow the way that I wanted to.

00:10:22.580 | So I turned around and sold it,

00:10:23.660 | I think a week later for $8,000.

00:10:25.860 | And that for me at the stage that I was at

00:10:28.220 | was not meaningful.

00:10:29.740 | But for young Cody,

00:10:30.860 | like the Cody whose parents had no money,

00:10:33.140 | who used to bounce her checking account every weekend,

00:10:35.900 | who kind of thought her first job

00:10:37.860 | making $37,000 a year was amazing.

00:10:40.180 | That was like, I'm rich.

00:10:41.740 | Like I just made 5K in a week

00:10:43.620 | off of flipping somebody else's asset.

00:10:45.340 | That's fascinating.

00:10:46.540 | And so if you can start at that level,

00:10:48.940 | you can start to understand the bigger levels,

00:10:51.100 | the $100,000 deals, the million dollar deals

00:10:53.580 | and the hundred million dollar deals, I think.

00:10:56.140 | So yes, the return expectations of the stock market,

00:10:58.620 | maybe five, seven, 8%.

00:11:00.460 | But it's very easy to maintain a job

00:11:02.380 | and do that on the side 'cause there's no work.

00:11:04.780 | Is the amount of work you need to go buy a boring business,

00:11:07.740 | a laundromat or something,

00:11:08.660 | enough that you don't need to quit your job?

00:11:10.860 | Can it be a side hustle?

00:11:11.980 | Or how full time is doing this type of investing?

00:11:16.100 | Very similar to rental properties, right?

00:11:18.980 | What sucks about getting rental properties?

00:11:21.340 | Well, first you have to understand the market.

00:11:23.060 | You got to understand what's a good buy, what's a bad buy.

00:11:25.580 | Then you've got to actually get a mortgage.

00:11:27.860 | You've got to figure out what that looks like.

00:11:29.660 | Then you have to figure out how to get somebody

00:11:31.100 | to rent your property out.

00:11:32.380 | But after you have that first period of understanding,

00:11:35.020 | you either Airbnb it out with some consistency

00:11:37.340 | or you get a property manager that manages it, right?

00:11:40.340 | And I think it's really similar to businesses.

00:11:42.420 | Depending on the size and scale and type,

00:11:45.220 | you can have a business that's less active.

00:11:47.420 | I try to not say passive

00:11:48.660 | 'cause I think that's a fallacy overall,

00:11:50.540 | but that's less active.

00:11:51.660 | I use the example of car washes

00:11:53.860 | and laundromats and vending machines.

00:11:55.500 | I call them the gateway drug businesses.

00:11:57.500 | So basically like you can get your little skin in the game.

00:11:59.940 | You can get your little first hit of being in business

00:12:02.420 | and being the owner.

00:12:03.580 | And then as you do that, you're like,

00:12:04.940 | oh wait, this game's kind of fun.

00:12:06.980 | Maybe I'll do another one.

00:12:08.220 | I'm more capable than I thought.

00:12:10.180 | And I just, the world looks a lot better

00:12:11.900 | if we have more humans with skin in the game.

00:12:14.020 | And I think you can absolutely do it

00:12:16.020 | while you're still working.

00:12:17.380 | My caveat is always just,

00:12:19.260 | I had a boss basically back in the day.

00:12:22.020 | We were in Latin America

00:12:23.420 | and we were running an investment business in there.

00:12:26.100 | And we basically had to do this evolution

00:12:29.980 | with one of the government entities

00:12:32.020 | where they wanted us to run a process

00:12:34.220 | to make sure that our security protocols

00:12:37.300 | and the way we were investing

00:12:38.580 | met their government requirements, right?

00:12:41.180 | And so we ran that once, check.

00:12:44.420 | All the boxes checked that we were supposed to.

00:12:46.180 | They wanted us to run it again.

00:12:47.540 | So we ran it again.

00:12:48.940 | And then the last time,

00:12:50.420 | they wanted us to run it one more time.

00:12:52.340 | And now I didn't agree

00:12:53.340 | that we should run this exercise three times.

00:12:55.020 | I thought that was ridiculous.

00:12:56.620 | But my boss basically said,

00:12:58.940 | hey, this go round, I'm agreeing to this.

00:13:01.820 | And the reason why is because I wanna get our leaders

00:13:04.220 | to trust me a little bit more.

00:13:05.780 | And I also want to get our team used to doing things

00:13:09.740 | that are hard that we don't wanna do

00:13:11.580 | because we're gonna have to do some really hard stuff

00:13:13.300 | for this project we were working on.

00:13:14.500 | There was a lot of turnaround assets.

00:13:16.260 | So I need you guys to support me in doing that.

00:13:19.660 | And we kind of looked around and I remember I asked,

00:13:22.060 | I was like, are they actually gonna know

00:13:23.940 | if we did this or not?

00:13:25.340 | Like, can we just check the box that we did this?

00:13:28.500 | And he just kind of looked back at me and was like,

00:13:31.980 | what do you think would be the right thing to do?

00:13:34.060 | And I was like, oh, fuck, fine.

00:13:36.500 | And so basically I think the right way to do a business

00:13:39.860 | while you have a job

00:13:41.180 | is to make sure you're doing it the right way.

00:13:43.420 | And I think the only thing I see going wrong

00:13:46.140 | in people's lives is I've seen people get fired

00:13:49.020 | from their jobs when they don't disclose

00:13:50.980 | that they have a side hustle.

00:13:52.380 | And I think it like eats at your soul a little bit

00:13:55.020 | to not live in the light.

00:13:56.620 | And so as an owner of a business,

00:13:58.940 | I take it personally if people are working in my business

00:14:01.660 | and on my business,

00:14:02.820 | and really they're like focused on something else,

00:14:05.260 | they wanna be doing something else.

00:14:06.740 | And remember when you own a business in the future,

00:14:09.140 | you will be the person with employees

00:14:10.740 | that might be distracted.

00:14:11.980 | So I always kind of push people to think

00:14:13.660 | like you already are an owner

00:14:15.020 | and then ask yourself what would you want

00:14:17.060 | your employees to do?

00:14:18.300 | That's my only caveat to side hustles these days.

00:14:20.660 | I think the Reddit sites where they have 400 different jobs

00:14:23.860 | and these people who talk about having 37 side hustles,

00:14:26.980 | I actually think it makes you distracted,

00:14:28.900 | it makes you less happy,

00:14:30.940 | and it often makes you less money.

00:14:32.900 | And so if you're gonna buy a business,

00:14:35.580 | make sure you do it the right way,

00:14:36.820 | set the right amount of hours.

00:14:38.460 | And if your job doesn't allow for it,

00:14:40.380 | then pick a different job or take the risk entirely.

00:14:42.900 | But don't be a human not living in the light

00:14:45.540 | is my only caveat.

00:14:47.260 | - That makes sense.

00:14:48.100 | So you made the reference to rentals.

00:14:49.740 | Why do you think it is that buying a rental property

00:14:52.900 | is for some reason so sexy

00:14:54.900 | when it comes to how do you spend your money

00:14:56.420 | and build your wealth,

00:14:57.460 | and buying a business like a laundromat

00:15:00.100 | is just not even on the same radar

00:15:02.140 | in terms of like societal opinion?

00:15:04.460 | It sounds from what I heard you say,

00:15:05.900 | like the returns might be even better.

00:15:07.740 | They both are work.

00:15:09.420 | How I haven't people caught on,

00:15:10.460 | is this like the secret?

00:15:11.540 | Obviously you're the champion of it.

00:15:13.300 | - Buying rental properties is a one to 10 step process

00:15:17.740 | that is clearly defined

00:15:19.740 | and most everybody knows what you're supposed to do.

00:15:23.140 | There's not a lot of variation.

00:15:24.780 | You can't take a house in a neighborhood here

00:15:27.820 | and make one house do 100X more

00:15:30.740 | than the house located next to it in rent typically.

00:15:34.660 | You could maybe make a house do a little bit more in rent

00:15:37.260 | by having a nicer house,

00:15:38.380 | but you're putting a ton more cash in there.

00:15:40.260 | So you go step one through 10,

00:15:41.780 | you have a rental property.

00:15:42.900 | Those are clearly defined.

00:15:44.740 | And because of that, lots of people do it.

00:15:47.220 | And so the opaqueness

00:15:48.540 | or what we would call the arbitrage window

00:15:50.300 | of people who don't know the good trade to do

00:15:52.460 | and people who do know that the good trade to do

00:15:54.660 | is actually really tiny in rental land

00:15:57.220 | 'cause everybody's playing the game.

00:15:58.940 | In buying small business,

00:16:00.620 | steps one through 10 look really different

00:16:02.420 | if you buy a laundromat,

00:16:04.380 | than if you buy a online business,

00:16:06.660 | than if you buy a education company.

00:16:09.140 | And so there's not a clearly defined process,

00:16:11.500 | which typically freaks people out.

00:16:12.900 | People on the internet love for me to tell them,

00:16:14.780 | "Here's the three businesses I would buy.

00:16:16.540 | "You should go buy them right now.

00:16:17.620 | "This is what they cost.

00:16:18.620 | "This is why you should buy them.

00:16:20.060 | "This is what they should make."

00:16:21.540 | But the truth of it is,

00:16:22.740 | is that in business buying, it's all personal.

00:16:25.100 | So a good deal for me,

00:16:26.500 | it's probably not a good deal for you

00:16:27.940 | because you live in San Francisco, I live in Austin

00:16:30.780 | because you need the deal to make you a million dollars a year

00:16:33.620 | and I only need the deal to make me $100,000 a year

00:16:36.260 | 'cause you wanna spend 40 hours on a business

00:16:38.100 | and I wanna spend zero hours on a business.

00:16:40.420 | And so that's the difference,

00:16:42.300 | is anytime there's an arbitrage window like this,

00:16:45.220 | where there's no clearly defined process,

00:16:47.180 | there aren't a ton of people doing it,

00:16:48.700 | you're gonna have more opportunity,

00:16:49.940 | but you're gonna have less action takers

00:16:51.820 | 'cause people like to be led.

00:16:54.020 | - If there's not a lot of information

00:16:55.460 | or I guess there's not a lot of process defined

00:16:57.340 | for every business 'cause it's unique,

00:16:59.340 | how much expertise does someone really need?

00:17:01.500 | Or said a different way,

00:17:03.220 | how much work would it be to get up to speed

00:17:04.980 | to be able to buy a laundromat?

00:17:06.900 | Like, I don't know anything about how laundromats run.

00:17:09.100 | Do I need to become an expert there

00:17:10.660 | to really make that work?

00:17:12.140 | - In my opinion, no.

00:17:13.100 | I bought a laundromat.

00:17:14.100 | I couldn't even tell you today how to fix machines.

00:17:16.700 | We own laundromats that do like $3 million a year.

00:17:18.820 | I have no idea how to run them.

00:17:20.980 | I don't know any of their SOPs and processes.

00:17:23.220 | It's not that I'm lazy on that stuff.

00:17:25.620 | It's just leverage.

00:17:27.180 | It's like when you run a business.

00:17:29.100 | Somebody asked me right now,

00:17:30.100 | how do you run your marketing segment of your business?

00:17:34.380 | What do your funnels look like?

00:17:35.580 | Do you have ads that go to your business?

00:17:37.260 | I'm like, I have no idea, that's Chris.

00:17:38.700 | I gotta talk to this guy.

00:17:40.140 | And it's the same with buying businesses.

00:17:42.500 | So what you need to learn is how to be a deal maker,

00:17:44.900 | which I think is actually way more important.

00:17:46.500 | You gotta learn what a good business looks like for you.

00:17:49.380 | And we have a 10-step process in this,

00:17:51.580 | but you basically have to learn what's a good deal for you.

00:17:53.980 | You have to learn how to sell yourself.

00:17:55.660 | You have to learn how to negotiate.

00:17:57.500 | You have to learn how to finance the deal.

00:17:59.900 | You have to learn how to do diligence to deal,

00:18:01.940 | make sure they're not lying to you.

00:18:03.460 | You gotta learn how to close the deal,

00:18:06.220 | like the proper structure, terms, et cetera.

00:18:09.740 | You gotta get your deal team together.

00:18:11.380 | So your attorney, accountant.

00:18:13.260 | You have to understand what your first 90 days

00:18:14.980 | will look like post-close.

00:18:16.660 | You have to learn how to value a deal,

00:18:19.620 | like what the deal is actually worth.

00:18:21.700 | And you gotta learn origination, how to find a deal.

00:18:24.420 | If you learn those 10 steps,

00:18:25.620 | you can apply those across any industry.

00:18:27.460 | And I think the opportunity for us is like,

00:18:30.260 | most people say, I don't understand HVAC,

00:18:32.580 | so I could never buy that.

00:18:33.540 | I don't understand a painting company,

00:18:34.900 | so I would never buy that.

00:18:36.460 | And if you actually just understand how to buy businesses,

00:18:38.860 | you can find experts and consultants for nothing

00:18:41.860 | to help you understand a sector.

00:18:43.740 | You've just gotta find the right deal.

00:18:45.540 | - So for anyone who just heard that and was like,

00:18:46.700 | whoa, whoa, whoa, whoa, 10 steps.

00:18:47.900 | I'm hoping that you can either send me a link

00:18:49.700 | or I could just pretty easily find those 10 steps

00:18:51.780 | written somewhere,

00:18:52.700 | and that we don't have to go deep down each one

00:18:55.100 | because that could probably be an entire conversation.

00:18:57.700 | Assuming that's correct.

00:18:58.940 | - Yes, I will send that to you.

00:19:00.580 | - Awesome, perfect.

00:19:01.420 | I will put that in the show notes.

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00:21:44.300 | - So the deal-making's important.

00:21:46.220 | Anything else someone needs to be thinking about

00:21:48.260 | when it comes to, like, what is a good opportunity,

00:21:50.420 | what is a bad opportunity,

00:21:51.420 | what does it look like when things go wrong?

00:21:53.580 | There are really two things that people do

00:21:56.060 | that make them unhappy that they bought a business.

00:21:59.220 | One is they buy a job, not a business,

00:22:02.180 | so they go too small.

00:22:03.700 | So they're like, ah, I'm gonna do this deal,

00:22:05.940 | it only has $60,000 in profit,

00:22:08.340 | but I only have to pay $100,000 for it,

00:22:10.220 | so this is awesome.

00:22:11.500 | And then they realize, oh man,

00:22:12.980 | now I own a cleaning company in which I am the cleaner.

00:22:15.940 | Not ideal, right?

00:22:17.600 | So typically, you wanna go a little bit bigger.

00:22:19.820 | And then the second thing they do wrong

00:22:21.340 | is they don't follow some of our key commandments.

00:22:23.740 | And over the years, I've realized a few.

00:22:26.460 | Like, first of all, 50/50 partnership's bad.

00:22:30.020 | Somebody's in control, somebody's not in control.

00:22:32.640 | That has to be the case.

00:22:33.980 | No partnerships.

00:22:35.340 | Two, your partner or operator who runs the business

00:22:38.460 | never gets equity day one.

00:22:40.460 | They earn it over time investing year over year,

00:22:43.820 | where basically if they hit X parameters, then they win.

00:22:46.940 | Three, you stay out of the five areas

00:22:48.860 | that I don't like to invest in,

00:22:50.500 | things like restaurants, FBA, hotels.

00:22:53.740 | Those businesses, for a myriad of reasons, are my favorite.

00:22:57.060 | Four, people, when they buy their first business,

00:23:00.780 | often buy what they think a business can be,

00:23:04.440 | not what a business is.

00:23:06.220 | So I buy facts and realities.

00:23:09.500 | People often buy hopes and dreams.

00:23:11.740 | And so what you really wanna do

00:23:13.380 | is make sure that the business is profitable today,

00:23:16.580 | that the valuation you're paying is the right valuation

00:23:19.500 | for how much profit you make and nothing else,

00:23:22.180 | and that you're not focusing on,

00:23:24.300 | what could I do to this business?

00:23:26.300 | This business is gonna be a fixer-upper

00:23:27.860 | and it's gonna be worth a million bucks

00:23:29.060 | 'cause I'm so awesome.

00:23:30.400 | Instead, I assume I'm an idiot,

00:23:31.860 | I won't be able to get this business

00:23:33.180 | to do any more revenue than it's doing right now,

00:23:35.900 | but that revenue is worth the price I'm paying.

00:23:38.740 | If you do those things, you're usually pretty tight.

00:23:41.220 | - Sounds like take all the advice that I learned

00:23:43.180 | being a venture capitalist

00:23:44.180 | and investing in early-stage startups

00:23:45.660 | and do the exact opposite for every single deal,

00:23:48.560 | throw it all out.

00:23:49.820 | And for someone listening and thinking,

00:23:50.860 | wow, you have it all figured out,

00:23:52.100 | I have to imagine there's at least a story or two

00:23:53.980 | of a deal that just didn't turn out well

00:23:55.780 | and that everyone makes mistakes

00:23:56.980 | and that's just part of the process.

00:23:58.960 | - Oh, yeah.

00:23:59.800 | What usually goes wrong is people lie to you

00:24:02.180 | and you believe them.

00:24:03.100 | I think humans, we're really good at one thing,

00:24:04.940 | which is making ourselves believe the lies that we tell.

00:24:08.620 | I actually think humans are incredible self-rationalizers.

00:24:11.020 | So it's not always that the owners are bad,

00:24:13.720 | it's that they have talked themselves into a story.

00:24:16.300 | We had one company I bought,

00:24:18.100 | it was actually in the cannabis space

00:24:19.700 | and it was a pretty big deal.

00:24:20.700 | I think it was like a $12 million deal.

00:24:22.980 | And this cannabis company,

00:24:24.620 | it was like the backbone of cannabis.

00:24:26.060 | They did like packaging of products, basically.

00:24:29.260 | And all the financials checked out.

00:24:32.140 | We did a review of them.

00:24:33.340 | We looked at their accounting.

00:24:34.980 | We looked at the money that they had in the bank,

00:24:37.060 | all reasonable, the profits seemed reasonable.

00:24:39.340 | So we buy the company and we leave the operator in.

00:24:41.860 | We're gonna buy a large majority, 60, 70% of the business,

00:24:45.220 | and then he's gonna keep a 20% stake,

00:24:46.980 | but he's gonna continue to run it

00:24:48.260 | and it's growing pretty nicely.

00:24:50.180 | But lo and behold, this guy got one of his friends

00:24:54.260 | to put all the money in.

00:24:56.180 | So all the cash in the bank account was not right.

00:24:59.060 | Had his accountant in on it,

00:25:00.900 | who was actually one of his family members.

00:25:03.420 | And so his family member accountant had cooked the books,

00:25:06.980 | which we didn't realize.

00:25:08.220 | He was actually in San Francisco

00:25:09.540 | and he was doing cocaine and mistresses

00:25:12.820 | and all sorts of stuff and had like an extra apartment.

00:25:15.820 | So one day we have this tracking app

00:25:18.300 | that we use to follow the cash that they have

00:25:20.580 | and we see a big drop in the bank account.

00:25:23.700 | And so we get confused by that.

00:25:25.620 | He says, "Oh no, it's moving inventory around."

00:25:28.100 | And give some example, I don't really remember.

00:25:30.060 | And then two weeks later, he calls us and he's like,

00:25:32.060 | "The thing is, we're out of cash

00:25:33.860 | and in two weeks we'll be closed down."

00:25:35.940 | And we were like, "What the,

00:25:37.460 | this company had like $3 million in the bank

00:25:40.060 | and was profitable at making 5 million.

00:25:41.900 | How did, what?"

00:25:43.300 | So anyway, that deal was a ton of work.

00:25:46.260 | So what that meant is we had to fire him,

00:25:49.260 | lawsuits happened, we had to take over the company,

00:25:51.740 | we had to put in a new operator

00:25:53.620 | and that happens in doing deals.

00:25:57.100 | But typically you're not gonna get

00:25:59.420 | like massive fraud and lies upfront, just sometimes.

00:26:03.100 | - You've done, I don't know,

00:26:04.500 | probably close to 100 deals I'm guessing at this point.

00:26:07.260 | What's the success rate

00:26:08.580 | of these buying small business deals?

00:26:11.380 | - Oh, like 99%, most of the deals work out.

00:26:14.700 | I can count on like one hand.

00:26:16.900 | I've maybe had three deals go wrong.

00:26:18.980 | That cannabis company, my very first investment,

00:26:21.940 | which was a little bit more like a venture style deal.

00:26:24.780 | I invested in a friend,

00:26:26.100 | which is a good way to have things go shaky

00:26:28.900 | without much due diligence.

00:26:30.580 | The only other one that went wrong

00:26:32.460 | was a business that I invested in and it was too small

00:26:36.860 | and I bought a large majority of it,

00:26:38.860 | but the operator still wanted to be involved

00:26:41.060 | and it was just a waste of time basically.

00:26:43.380 | So I got all my money back in that deal,

00:26:45.140 | plus three or four X.

00:26:46.860 | I actually just ended up giving the business back to him.

00:26:48.580 | I was like, the thing is just never call me again.

00:26:50.980 | And he was happy 'cause he had his business

00:26:52.940 | to motor along with and I was like,

00:26:54.180 | oh man, this isn't a big enough deal for me.

00:26:56.300 | But for the most part, we don't have the 88% thing.

00:26:59.220 | I mean, in your venture funds,

00:27:01.260 | you guys kind of assume what,

00:27:03.180 | one to five to 10% of them are gonna return the fund?

00:27:06.420 | - Usually, yeah.

00:27:07.260 | The goal is you're looking for the deal

00:27:08.660 | that will return the fund.

00:27:09.580 | It's a totally different multiple.

00:27:11.300 | I wanted to humanize the fact that

00:27:12.940 | just because so much in this space,

00:27:14.420 | you started somewhere where you didn't

00:27:16.100 | and you still had some bumps along the road,

00:27:18.100 | but also the success rate overall is pretty high

00:27:20.940 | because I think that's important

00:27:22.180 | for anyone thinking about this as an asset class.

00:27:24.540 | But when you talk about buying businesses,

00:27:26.580 | you briefly touched on ways to finance things,

00:27:29.420 | but I think one of the most interesting things

00:27:31.620 | I've learned from you and your content

00:27:33.620 | is just that you don't actually have to have $100,000

00:27:36.620 | to buy a $100,000 business,

00:27:37.980 | which is just like the big unlock that no one knew.

00:27:40.820 | Can you talk a little bit about

00:27:41.900 | or maybe give some examples of why that is true?

00:27:44.260 | Because it certainly doesn't seem it.

00:27:46.660 | - It's two magic words when you don't have money

00:27:48.700 | and that's seller financing,

00:27:50.340 | which used to be a thing in real estate.

00:27:52.380 | You used to be able to sometimes buy a house

00:27:54.980 | and from the future profits you got off a rental unit,

00:27:59.980 | you could buy that house for $0 down

00:28:02.420 | and pay them over time, right?

00:28:03.860 | So the seller would finance your purchase.

00:28:05.900 | Now it's not so normal,

00:28:07.540 | but in buying businesses, it's very normal.

00:28:09.180 | 60% of all businesses are bought

00:28:11.380 | using essentially the seller's future profits.

00:28:14.940 | And the reason why is because you've run a business

00:28:17.460 | or seven before.

00:28:18.860 | So how miserable is running a business sometimes?

00:28:22.260 | It's tough, right?

00:28:23.500 | And so for a lot of these sellers,

00:28:25.300 | they've been doing this for 10, 20, 30 years.

00:28:28.260 | And at some point they're ready for the next thing,

00:28:30.060 | even if it's a profitable business,

00:28:31.900 | but they're stuck in it because unlike a job,

00:28:35.060 | not everybody knows how to exit a business.

00:28:37.300 | Everybody knows how to leave a company.

00:28:39.100 | Not a lot of people know how to sell their company.

00:28:41.060 | Not a lot of people know you can even sell your company.

00:28:43.820 | And so there are a ton of sellers out there

00:28:45.460 | who are trapped in their business.

00:28:47.260 | Most of these sellers do not have enough cash for retirement.

00:28:50.820 | More than 70% of them do not have a transition plan

00:28:54.340 | for the next generation to take over

00:28:56.260 | or somebody else to take over.

00:28:58.020 | And so you come in as a little bit of the solution for that.

00:29:00.260 | And how that works really quickly, for instance,

00:29:02.220 | I always use this one deal

00:29:03.180 | 'cause it was one of my smaller deals in the beginning,

00:29:05.900 | is I bought a laundromat for like 100K a year

00:29:09.020 | that did $67,000 in profit.

00:29:11.940 | So that's one and a half X the profits of the business

00:29:14.420 | is how you value these for everybody listening.

00:29:17.300 | So I buy this laundromat,

00:29:18.980 | but I don't use my own cash to do it.

00:29:20.820 | I tell the seller over a three-year period,

00:29:23.300 | I'm gonna pay you back from the profits of the business

00:29:25.700 | to take over your business.

00:29:26.740 | And at the end of three years, great,

00:29:28.380 | you have your full 100K.

00:29:29.700 | And at the end of the three years,

00:29:30.940 | I own the business outright.

00:29:33.020 | And this is very common.

00:29:35.100 | And I would say it's not always common you get 100%,

00:29:37.300 | but it's more common than people think.

00:29:39.140 | - So a business costs $100,000,

00:29:40.700 | the business is making enough profit to pay for that.

00:29:43.900 | Like, why is this a good deal for the seller

00:29:45.740 | just to get out?

00:29:46.580 | It seems like a great deal for you

00:29:47.860 | 'cause the business pays him back with the profits,

00:29:49.700 | you don't spend anything.

00:29:50.860 | - Yeah, it goes back to the old supply and demand curve.

00:29:53.340 | When you have a lot of supply and not a lot of demand,

00:29:56.860 | then you're in charge.

00:29:58.380 | There's somewhere around the range

00:30:00.180 | of 10 to 12 billion small businesses for sale,

00:30:02.820 | and there just aren't enough buyers.

00:30:04.740 | I mean, there was a great article, actually,

00:30:06.340 | we did a video on it, about Japan,

00:30:08.420 | and that they have a crisis in business owners

00:30:10.820 | starting to give away their business for $0.

00:30:13.540 | I'm not talking $0 seller financing, I'm talking $0,

00:30:16.780 | because the next generation doesn't wanna run

00:30:19.820 | a goat herding business,

00:30:21.420 | or they don't wanna run a plumbing business.

00:30:23.740 | And so the founders of the companies just shut them down,

00:30:27.740 | or they try to give them away.

00:30:29.140 | So this is a real thing that happens every day.

00:30:31.580 | In fact, a lot of people don't think

00:30:33.220 | that they have a business.

00:30:34.220 | They think that they have a job.

00:30:35.500 | So think about your neighborhood wedding photographer,

00:30:38.540 | who also happens to have some contracts

00:30:40.820 | for high school photos that they do every year.

00:30:44.140 | They do $100,000 in revenue a year.

00:30:46.980 | It's a great little business for them, right?

00:30:48.980 | That's their business.

00:30:50.060 | They do $100,000 a year.

00:30:51.900 | And when you take out their salary,

00:30:54.180 | which at this point they pay themselves the full amount,

00:30:56.140 | but let's say you take out their salary of 60, $70,000,

00:31:00.380 | that leaves 30 to $40,000 profit.

00:31:03.420 | That person, when they're done being a wedding photographer

00:31:06.140 | and a high school photo photographer,

00:31:07.940 | they probably just like stop and go do something else.

00:31:10.580 | But those contracts with the high schools

00:31:12.340 | are worth something,

00:31:13.500 | that residual revenue is worth something,

00:31:15.580 | their gear is worth something,

00:31:16.900 | their website, the SEO that's built up,

00:31:19.900 | all of these jobs have inherent value to them.

00:31:23.380 | And it's just that a lot of people,

00:31:25.700 | there's a big mismatch.

00:31:27.060 | And it's one thing we're working on.

00:31:28.180 | I'm trying to build right now,

00:31:29.140 | as I should talk to you about,

00:31:30.500 | but I'm trying to build right now a better mousetrap

00:31:33.300 | because there's something called Biz Buy Sell,

00:31:35.660 | which is like the Zillow or Redfin

00:31:37.660 | of small businesses to buy, except it's awful.

00:31:40.900 | Like bad UI, UX, a bunch of garbage on there.

00:31:44.380 | The financials aren't clean.

00:31:46.260 | They have business brokers that never respond to you.

00:31:48.380 | It's not a great site,

00:31:49.540 | but it's the best of all of the bad, right?

00:31:52.980 | And so we're trying to figure out

00:31:55.540 | how to build a marketplace where sellers can come

00:32:00.140 | and trust that there's gonna be non-looky-loo buyers on it.

00:32:04.300 | And we can normalize the information and pair the two,

00:32:07.940 | but there's not a lot of that right now.

00:32:09.500 | So that wedding photographer can't find you,

00:32:12.860 | the young new photographer,

00:32:14.060 | that would love to buy that business

00:32:16.300 | because you, the young photographer, are just thinking,

00:32:18.220 | "Oh, I'm just gonna go start my own,"

00:32:19.860 | as opposed to, "What if I could buy it?

00:32:21.580 | What if I could, instead, when I graduate dental school,

00:32:24.420 | what if I could buy somebody's practice

00:32:26.460 | and I could give them an annuity in retirement?"

00:32:28.740 | I think buying small businesses is the next real estate.

00:32:32.740 | And in 10 to 20 years,

00:32:33.860 | they'll be completely commoditized and normalized

00:32:36.380 | in a way that it is not today.

00:32:38.260 | But until then, there's a lot of opportunity.

00:32:40.380 | If there's not a platform to do it, is it knocking on doors?

00:32:43.260 | Is that how you find these businesses

00:32:45.060 | in your local community?

00:32:46.300 | Well, actually, we bought a company called BidScout,

00:32:48.860 | BidScout.io, and that company sources off-market deals.

00:32:53.100 | And so, basically, if you wanna buy a car wash

00:32:55.900 | in your geographic area,

00:32:57.260 | it pulls together all the data from Yelp and Google

00:33:01.260 | and business listings and pulls them into one location,

00:33:03.980 | also cross-references that with PPP loans

00:33:06.580 | so you could try to get to who the owner

00:33:08.220 | is in your location and maybe needed some help,

00:33:11.260 | and so might be more likely to sell now,

00:33:13.540 | and then also pulls this list of proprietary deals we have

00:33:16.340 | from having this big audience.

00:33:17.500 | So BidScout is the one that we wanna build off of.

00:33:20.380 | It's what I use right now.

00:33:21.620 | I think the best way to buy a business

00:33:24.060 | is different than buying a house.

00:33:25.580 | It's almost like buying a house back in the day.

00:33:27.740 | Before realtors, you would be like,

00:33:29.980 | "Oh, my friend Sally's selling.

00:33:31.540 | "You wanna get into the neighborhood?

00:33:32.820 | "Like, you should talk to Sally," right?

00:33:34.740 | That's like foreign to my generation.

00:33:37.180 | Like, we can't even imagine you just buy houses

00:33:39.780 | on word of mouth.

00:33:40.620 | What's wrong with you people, right?

00:33:42.100 | But that is actually the best way to buy a small business,

00:33:45.260 | is to build up your network

00:33:47.260 | or do what I call a personal P&L review,

00:33:49.500 | where you look at all of your expenses

00:33:51.100 | and you see which CEOs of those companies

00:33:53.020 | you could actually get to,

00:33:54.260 | and you start nurturing relationships and saying,

00:33:56.260 | "Oh, man, you guys produced my podcast on all the hacks.

00:34:00.060 | "How's that business going?

00:34:01.020 | "Is it profitable?

00:34:01.860 | "How long have you been doing it?

00:34:02.860 | "A while, cool.

00:34:04.100 | "Is this something you wanna do forever?

00:34:05.420 | "You wanna keep running this business?

00:34:06.660 | "No, you don't.

00:34:07.500 | "You're ready for the next thing?

00:34:08.340 | "Interesting.

00:34:09.180 | "I actually buy small businesses.

00:34:10.220 | "If you had an offer at the right price

00:34:12.220 | "and the right terms,

00:34:13.060 | "would you be open to a conversation

00:34:14.500 | "on potentially getting acquired

00:34:15.820 | "or an investment that comes with distributing equity,

00:34:18.260 | "cashflow, something like that?

00:34:19.620 | "Oh, you might be interested in that?

00:34:20.740 | "Great, now we're in the game."

00:34:22.180 | - So you mentioned deal-making earlier

00:34:23.580 | being an important skill,

00:34:24.500 | and then you just said at the right price

00:34:25.740 | and the right terms.

00:34:26.700 | I think you have a pretty contrarian perspective there

00:34:28.860 | that most people think price is the most important,

00:34:31.660 | but I think you believe terms are actually more important.

00:34:33.660 | Can you talk about that?

00:34:35.420 | - Only amateurs think price is the most important thing.

00:34:38.100 | That is something that people egotistically

00:34:40.980 | want to put on their Twitter feed.

00:34:43.540 | I sold for seven figures.

00:34:45.660 | That's awesome.

00:34:46.700 | Because you know that,

00:34:48.260 | you have a great leverage point

00:34:50.380 | that you should just poke at.

00:34:51.980 | The real pros know that terms

00:34:54.020 | are the only things that matter.

00:34:55.420 | If I was to say to a seller,

00:34:57.500 | "Hey, I'll buy your business for $2 million,

00:34:59.980 | "which is what you want.

00:35:01.420 | "I think your business is only worth a million dollars.

00:35:04.100 | "So here's how we're gonna do it.

00:35:05.740 | "I'm gonna give you X dollars upfront.

00:35:09.220 | "And then if your business hits the goals

00:35:11.420 | "that you say it's going to hit,

00:35:12.780 | "because your business is so great

00:35:14.220 | "and it should be worth $2 million,

00:35:16.060 | "I will pay you that amount over time.

00:35:17.980 | "In fact, we can put it in escrow,

00:35:19.420 | "we can put it in writing,

00:35:20.580 | "you can have a clawback provision

00:35:22.420 | "if you hit those numbers.

00:35:23.860 | "But until then, I'm only gonna pay this amount."

00:35:26.620 | And so you can say,

00:35:27.780 | "Hey, Chris, great.

00:35:28.620 | "I'll buy your business for $2 million."

00:35:30.500 | But that amount might only end up being 500,000

00:35:33.140 | or 750,000 if you structure the deal right.

00:35:35.780 | That's where the game is.

00:35:37.020 | That's where like the fun part for me is in deal-making,

00:35:39.540 | because you sell a house,

00:35:41.260 | there's no wiggle room.

00:35:42.220 | You're like, "Here's the price.

00:35:43.140 | "It is what it is."

00:35:44.500 | Maybe you get a realtor to skip their commission

00:35:46.580 | or you get a better rate,

00:35:47.740 | but like that's it.

00:35:49.180 | Buying a business,

00:35:50.380 | you can play as many chords as you want to.

00:35:53.260 | - It's funny 'cause as you said that,

00:35:54.340 | I was like, "I tried to play that game

00:35:55.580 | "when I was buying a house,

00:35:56.420 | "but at the end of the day,

00:35:57.500 | "I got them to throw in some plants,

00:35:59.300 | "a TV, and like rebate half a percent of the commission."

00:36:02.540 | It's nowhere near the kind of impact you're talking.

00:36:04.460 | It felt good.

00:36:05.300 | I'm doing an episode maybe in a month or two

00:36:06.660 | about how to optimize the home buying process.

00:36:08.420 | There are levers there,

00:36:09.500 | but they don't sound nearly as opportunistic

00:36:12.140 | and awesome as the levers you could play buying a business.

00:36:14.700 | - I think maybe the key to life and being successful

00:36:16.620 | is playing the right games.

00:36:18.100 | And if you only have like so many words

00:36:19.820 | you can say a day,

00:36:20.660 | so many hours in the day,

00:36:22.380 | where is it worth the negotiating or deal-making

00:36:25.180 | and where isn't it?

00:36:26.300 | And most people spend their time

00:36:28.060 | on really low-level activities,

00:36:29.700 | coupon cutting, asking for a discount at a restaurant

00:36:32.860 | or for wine or buying furniture, whatever.

00:36:34.860 | Okay, that's fine.

00:36:35.940 | But instead of doing that,

00:36:37.180 | you could just be a little bit more strategic upfront

00:36:40.420 | and think about if I negotiated my salary

00:36:42.820 | every single year, for sure,

00:36:45.340 | but maybe even twice a year, mid-year review time,

00:36:48.740 | maybe if you're really good quarterly,

00:36:50.940 | I can never clip a coupon again

00:36:52.820 | and make more from just negotiating my salary.

00:36:55.260 | And then a second level from that is,

00:36:57.180 | man, if I could figure out how to negotiate,

00:36:59.220 | how to buy assets that cashflow

00:37:01.940 | and can do 100X or 300X return to me,

00:37:05.780 | then I don't even have to negotiate my salary that much

00:37:07.780 | because I just take the salary, use the salary,

00:37:10.140 | apply it to assets that I keep buying.

00:37:12.300 | Those keep cash flowing for me.

00:37:14.020 | So it's all about like, what level are you playing?

00:37:16.140 | Lots of people play level one games.

00:37:18.180 | And I think the pros, they don't bother with that.

00:37:20.660 | They don't Dave Ramsey their way to millions.

00:37:22.980 | It's not the fucking Starbucks.

00:37:24.500 | Have the Starbucks if you want it,

00:37:26.180 | but instead try to get really smart

00:37:28.500 | on negotiating or deal-making

00:37:29.980 | so you can play the level six games

00:37:31.740 | and then buy whatever coffee you want.

00:37:34.220 | - I feel like I like playing all six levels of games

00:37:36.980 | at the same time, which is maybe my problem

00:37:38.940 | is I end up spending too much time there.

00:37:40.700 | But I agree that you could save a little here or there,

00:37:43.380 | worry about that.

00:37:44.220 | But if you're not working on your salary,

00:37:45.580 | if you're not working on income,

00:37:46.500 | if you're not working on your investments,

00:37:47.780 | it's not there.

00:37:49.060 | But I think for the right person,

00:37:51.340 | getting that Starbucks for free

00:37:53.020 | because you played the Starbucks rewards thing

00:37:55.060 | and they had a double star day,

00:37:56.420 | like it just feels good sometimes.

00:37:58.220 | So I think that's my challenge is that every now and then

00:38:00.780 | knowing that you got this thing for half the price,

00:38:03.660 | that satisfaction just kind of like fuels

00:38:05.620 | and makes me excited,

00:38:06.780 | but I'm not doing it for the money to be clear.

00:38:08.420 | Like it's a different type of game

00:38:10.300 | where it's like really more about enjoyment

00:38:11.940 | and satisfaction of what I'm doing day to day.

00:38:14.260 | But I have realized that as you level that up,

00:38:16.140 | it's not about trying to save $2.

00:38:19.940 | It's like, how do I apply that principle to something else?

00:38:22.500 | I think I've talked a few times about working on this book

00:38:24.380 | about principles of optimization in life.

00:38:26.780 | And part of it is that,

00:38:28.100 | it's like, how do you go 80%,

00:38:29.820 | get the 80/20 out of optimizing your travel?

00:38:32.340 | And then instead of going down the 20,

00:38:34.500 | think about what do I care more about?

00:38:35.740 | Oh, maybe I care about my health.

00:38:36.780 | Let's go do the 80/20 on my health before I go.

00:38:39.180 | Once you've done all the 80s, sure.

00:38:41.100 | Go take 10% more on each one.

00:38:43.300 | So that's, I think the next level thing

00:38:44.820 | that I'm working on just generally

00:38:46.660 | and trying to put a little bit more thought behind it

00:38:48.500 | because it's a broad topic.

00:38:50.140 | - I love that.

00:38:50.980 | It's interesting because you're right.

00:38:52.260 | You play a lot of the points games,

00:38:54.540 | which I think are fun and valuable.

00:38:56.460 | I love a discount.

00:38:57.340 | I do love a discount.

00:38:58.380 | I love a deal.

00:38:59.340 | I think I will always, no matter how wealthy I am,

00:39:04.060 | try to get them to optimize the sides I want on a dish

00:39:08.220 | and give me them for free

00:39:09.660 | as opposed to add-ons to the dish,

00:39:11.420 | which really ticks me off.

00:39:12.740 | I play that game,

00:39:13.860 | but I think the question that I come back to,

00:39:16.700 | and I'd be curious your take on,

00:39:18.460 | is if we're gonna play these optimizing games,

00:39:22.060 | I think a lot of people fuck around

00:39:23.620 | and find out these days.

00:39:24.860 | They're like Twitter guys talking about their ice baths

00:39:29.460 | and their saunas and these things that have,

00:39:33.380 | could you even say a 1% difference?

00:39:35.180 | One to 5%.

00:39:36.420 | Let's be generous and say ice baths and saunas

00:39:39.660 | give you a one to 5% better overall health,

00:39:42.700 | which I think that would be a lot maybe.

00:39:45.100 | Even go 10%.

00:39:46.300 | It's like instead, man, I looked at your profile picture.

00:39:49.340 | How about you go to the gym five days a week for one hour?

00:39:52.500 | And then instead,

00:39:53.420 | how about we skip some of the processed food?

00:39:56.300 | And a day a week, you try to not do processed food.

00:39:59.660 | And so I think a lot of people choose the wrong games

00:40:02.100 | and they make life way harder than they need to.

00:40:04.020 | And I do this in many different ways.

00:40:06.020 | I wanna optimize all these things on the fringes

00:40:08.300 | because they seem cool.

00:40:09.700 | When if you wanna get fit, it's just be more active,

00:40:12.820 | eat healthier food, and that's it.

00:40:15.260 | But instead, we wanna add 37 supplements and 472 podcasts

00:40:19.140 | and three ice baths before you've fully woken up.

00:40:22.180 | - It's funny 'cause I was listening to a talk

00:40:23.940 | Peter Attia gave and he wrote this really long book

00:40:26.420 | that I really enjoyed about life.

00:40:28.260 | It's called Outlive.

00:40:29.460 | And someone was saying, if you could just do one thing,

00:40:31.220 | he's like, look, almost none of this book matters

00:40:34.100 | if you're not just exercising.

00:40:35.700 | If you're not exercising, don't even open the book.

00:40:38.180 | You don't need to do all of these things.

00:40:39.860 | But if you are exercising and you are eating healthy,

00:40:42.580 | the data on sauna is pretty great

00:40:44.860 | in terms of longevity and health,

00:40:47.380 | but it's nowhere near as good as the data

00:40:49.860 | on what it means to just go out and exercise

00:40:51.900 | and go on a run or lift weights

00:40:53.260 | or whatever form of strength or cardio

00:40:55.020 | or zone, whatever you want,

00:40:56.660 | that is going to do more than other things.

00:40:59.660 | But if you're already doing that,

00:41:01.820 | I think decide where you wanna spend your time.

00:41:04.140 | If you have a family history of a certain type of illness,

00:41:07.020 | okay, what's the thing that might be best

00:41:08.500 | at preventing that?

00:41:09.540 | Great place to spend time.

00:41:10.860 | But I agree that if you're not exercising

00:41:13.100 | and you're eating like crap,

00:41:14.340 | any amount of little tiny optimizations

00:41:16.260 | are not the priority to focus on.

00:41:17.500 | Might make you feel good,

00:41:19.060 | but you need to get out and you need to get some exercise

00:41:20.700 | or stay in.

00:41:21.540 | I don't care where you do it, but you need to do it.

00:41:23.580 | - That's so true.

00:41:24.420 | I have a great friend, John, who's a categorical badass.

00:41:27.620 | He was in the foreign service.

00:41:28.780 | He did incredible things for our country.

00:41:30.860 | He's one of those guys.

00:41:32.060 | So he basically does a workout

00:41:33.500 | and he eats whatever's in front of him.

00:41:34.900 | And he's this brilliant dude,

00:41:36.500 | but he's like, "The thing is

00:41:37.340 | "I have to start with ice baths."

00:41:38.540 | And I was like, "This is what I know.

00:41:39.660 | "Twitter's gone too far."

00:41:41.020 | I think you're right.

00:41:41.860 | Choose the right games and then optimize for the 10%

00:41:44.460 | in everything.

00:41:45.460 | - I've talked to lots of people about ice baths, cold plunge.

00:41:49.340 | There's one aspect of it,

00:41:50.700 | which is this is a thing that might help my health.

00:41:53.380 | And compared to exercise, maybe it's not there.

00:41:55.260 | But there's also the,

00:41:56.220 | this is the thing that gets me fired up

00:41:57.780 | every day in the morning

00:41:58.780 | and makes me feel alert and ready to kick ass

00:42:00.700 | on my business, on my work, on my career.

00:42:02.620 | And so I put those in two camps.

00:42:04.340 | There's the, this is the thing that recharges me.

00:42:07.100 | This is the thing that helps me recover

00:42:08.740 | from run or whatever it is.

00:42:10.380 | And then there's the, will this increase my longevity?

00:42:13.820 | If I'm not exercising, maybe no.

00:42:15.900 | But if that ice bath makes you like pumped for every day

00:42:18.660 | and makes you work 10 times harder,

00:42:20.740 | by all means, jump right in.

00:42:22.780 | - I agree.

00:42:23.620 | We'll stop beating up the poor ice baths.

00:42:24.780 | I have one, I use it.

00:42:26.620 | Sorry, ice bath company that gave me one.

00:42:29.060 | I think as humans, if we could really figure out

00:42:32.220 | this beautiful secret,

00:42:33.340 | which is that we have a finite amount of energy

00:42:35.700 | and focus is the only thing that matters

00:42:39.220 | if you focus on the right things first,

00:42:42.140 | most humans, let's be honest,

00:42:44.460 | one out of 10 people in the U.S.

00:42:47.500 | will die wealthy when they die, one out of 10.

00:42:50.620 | Everybody else inside of there will largely die broke,

00:42:54.980 | will die before the age of 60,

00:42:56.900 | will be on government subsidization.

00:43:00.180 | So sometimes I try to not forget

00:43:01.980 | that, man, we have so many different paths in the U.S.,

00:43:04.660 | but by and large, we have a lot of people

00:43:06.860 | who if we don't overwhelm them,

00:43:08.740 | and just like when I was younger

00:43:10.620 | and I didn't even know what a mutual fund was

00:43:12.780 | and I didn't even know how to not overrun my bank account,

00:43:15.860 | but we just make it really easy for them

00:43:17.900 | to make one or two good decisions,

00:43:20.580 | then everything else gets a lot easier.

00:43:22.460 | But I'm sure the people on your podcast

00:43:23.820 | are doing all the right things.

00:43:24.780 | So if you guys are here listening,

00:43:25.860 | you should probably ice bath and do red light therapy,

00:43:28.020 | which I also love.

00:43:29.340 | - Oh, interesting.

00:43:30.180 | So I wanna go down a handful of paths.

00:43:31.820 | One, we talked a lot about one aspect

00:43:34.340 | of investing that you do,

00:43:35.300 | and it's become your core thing.

00:43:37.020 | When it comes to money,

00:43:37.860 | are you still doing any other types?

00:43:39.180 | Are you diversified?

00:43:40.020 | Or is everything all in on buying businesses?

00:43:42.820 | - Yeah, no, I'm diversified.

00:43:44.380 | I have like probably a 20% bucket

00:43:47.380 | that's stocks, bonds, typical things.

00:43:50.500 | I have a financial advisor

00:43:51.660 | that manages all of that for me.

00:43:53.460 | I probably have another 20% bucket

00:43:55.860 | that's startups, early stage companies,

00:43:59.180 | and then the rest are in either real estate

00:44:02.580 | or my boring businesses.

00:44:04.180 | And that's without leverage.

00:44:05.340 | Obviously, if I applied the leverage

00:44:07.260 | that I have to the boring businesses,

00:44:08.620 | it would be maybe 90%, maybe 100%, basically.

00:44:12.420 | But if we take leverage off the game,

00:44:14.060 | then I probably am like 55, 60%

00:44:17.060 | in these cash boring businesses,

00:44:19.580 | and the rest of them are in startups or stocks and bonds.

00:44:22.340 | - And another money thing

00:44:23.260 | that I think maybe other people listening,

00:44:25.180 | myself included, are thinking is,

00:44:27.620 | one of the greatest things about running a business

00:44:29.060 | is you have all these business expenses,

00:44:30.660 | great opportunity to rack up unlimited number of points,

00:44:33.580 | miles, cashback, whatever it is.

00:44:35.500 | Please tell me that you're like

00:44:36.580 | at least playing that game a little.

00:44:38.100 | I know you're not as deep as maybe I am,

00:44:39.860 | but is that kind of a side benefit

00:44:41.580 | to owning all these businesses?

00:44:43.260 | - After me talking about all this,

00:44:44.500 | I probably should have just a one-on-one call

00:44:46.540 | where you could consult me on my points.

00:44:48.100 | No, I think if you looked at my Amex,

00:44:49.620 | I probably have like millions of points

00:44:51.220 | that have never used them.

00:44:52.660 | And we don't optimize that at all.

00:44:54.660 | Maybe we optimize a little bit

00:44:56.060 | because we have everybody use company cards

00:44:57.900 | across all the businesses

00:44:59.020 | and those get aggregated in a few different ways,

00:45:01.060 | and then we spend some big expenses on that.

00:45:03.820 | But for the most part,

00:45:05.500 | the games that I play with that are taxes.

00:45:08.060 | So are we buying the right real estate

00:45:10.060 | that's gonna allow us to do accelerated depreciation,

00:45:13.020 | amortization, because that could be a huge benefit.

00:45:16.100 | Are there some businesses where I could acquire them,

00:45:18.420 | but I could acquire them like, oh, this is a fun one.

00:45:21.060 | So I was out there looking for a head of production, right?

00:45:24.500 | I needed somebody to produce part of my media company.

00:45:27.460 | And I was having a really hard time finding this role

00:45:29.620 | and I needed actually a few roles underneath it.

00:45:31.660 | And I just wasn't having time to hire for it.

00:45:33.540 | Then I was like, wait, pause.

00:45:35.140 | What if I could acquire these roles that I need

00:45:37.820 | in the form of a business as opposed to hire them?

00:45:40.940 | And so I went out to a few vendors

00:45:43.300 | and I started working with a few vendors

00:45:45.340 | and all of those vendors were open to being sold,

00:45:48.420 | which will surprise you guys.

00:45:49.740 | Almost every single business owner out there

00:45:52.100 | is open to being bought at the right price at right terms.

00:45:54.940 | And so three of them were open to it.

00:45:56.740 | Two of them, I didn't like the deal.

00:45:57.900 | One of them, it was perfect timing.

00:45:59.620 | I had mentioned this to them.

00:46:00.820 | They had a little bit of a conflict inside the company.

00:46:03.140 | And I said to the guy,

00:46:03.980 | "Hey, how about if I acquihire you guys?

00:46:06.220 | "How about I buy your company

00:46:07.860 | "and I'm gonna buy out you four plus your gear.

00:46:11.180 | "We'll give you some multiple on that,

00:46:12.980 | "but it'll happen after you've been with me for 90 days

00:46:15.300 | "and you've been executing and I'll pay you in salary."

00:46:18.740 | So through that acquisition,

00:46:20.420 | I have decreased my overall profits in the business

00:46:24.160 | by hiring them with an increased salary,

00:46:26.620 | but that is a complete before the line tax write-off.

00:46:30.220 | Say I acquire all of them for salary of 100K for the year,

00:46:32.860 | I can't write off that acquisition

00:46:34.940 | dollar for dollar in my business.

00:46:36.860 | But if I hire all of them through an acquihire

00:46:40.420 | and that $100,000 rolls through

00:46:42.700 | as an expense payment for payroll,

00:46:45.300 | that lowers the total profits in my business

00:46:47.460 | and thus decreases my tax bill dollar for dollar.

00:46:50.100 | And so that was a cool way

00:46:51.720 | that I sort of gamed my little point system.

00:46:54.060 | But no, I'm terrible at Amex cards

00:46:55.700 | and lights and all of that stuff.

00:46:57.900 | - We're gonna have that one-on-one at some point.

00:46:59.680 | We're not gonna do it live, but we'll get to it.

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00:49:50.100 | I just wanna thank you, Quick,

00:49:52.900 | for listening to and supporting the show.

00:49:55.180 | Your support is what keeps this show going.

00:49:58.020 | To get all of the URLs, codes, deals,

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00:50:02.500 | you can go to allthehacks.com/deals,

00:50:06.060 | so please consider supporting those who support us.

00:50:09.200 | - You also mentioned the most important game

00:50:11.020 | is to figure out where you spend your time

00:50:12.700 | and what you're focused on.

00:50:13.660 | How do you think about when to spend your time

00:50:16.340 | on certain activities or how you spend your time?

00:50:18.700 | - I used to be really bad at this,

00:50:20.440 | and it's just something I struggle with daily.

00:50:22.300 | I think I, probably like a lot of entrepreneurs,

00:50:24.700 | have mild ADHD.

00:50:26.500 | Everything's distracting.

00:50:27.660 | I have FOMO all the time,

00:50:29.380 | and there are a couple things that made a big difference.

00:50:31.820 | One is, by and large,

00:50:33.780 | we think that technology is going to help us,

00:50:35.980 | so we have Tinder and Bumble

00:50:38.620 | that would make dating so much easier.

00:50:40.340 | The world was going to be better

00:50:41.500 | because instantly we would be paired with other humans.

00:50:44.260 | According to some algorithmic match,

00:50:46.220 | we would find love, we would find sex,

00:50:47.820 | we would find meaning.

00:50:48.700 | What happened in set?

00:50:49.920 | Loneliness numbers at all-time high,

00:50:52.080 | people having sex at all-time lows,

00:50:54.140 | decreased marriage likelihood,

00:50:55.800 | decreased people having children.

00:50:58.020 | This technology that was supposed to help us

00:51:00.060 | actually seemingly did not,

00:51:01.660 | and in fact, through what I think

00:51:03.580 | is just massive optionality

00:51:05.040 | and overwhelm from paralysis by analysis,

00:51:07.900 | means that we're not engaging anymore in that way

00:51:11.100 | from an intimacy perspective.

00:51:12.740 | I think a lot of the tech that helps us in business

00:51:14.740 | is the same thing.

00:51:15.780 | Slack is one of the most useful thing in my business.

00:51:18.300 | It's also the worst thing in some of my businesses.

00:51:21.260 | So if you were to look at my calendar, for instance,

00:51:23.900 | you would see basically

00:51:25.380 | that I do not take a phone call before 12 p.m.

00:51:28.980 | I would say I'm not 100% of the time.

00:51:31.320 | I am about 70, 80% of the time.

00:51:33.940 | So no calls before 12.

00:51:35.600 | I am 100% of the time before 10 a.m.

00:51:38.480 | No phone calls, no mediates.

00:51:40.180 | You'll also see that we have in our business,

00:51:42.020 | we have reminders that go out on our Slack channel

00:51:44.780 | that says, "Are you being productive or are you being busy?"

00:51:47.100 | So every so often in the general channel,

00:51:48.780 | like a thing will come on,

00:51:49.960 | and then the people in the companies will be like,

00:51:51.340 | "Oh, fuck, I am fucking around on Slack.

00:51:52.820 | "I shouldn't be on here."

00:51:54.020 | That's fine.

00:51:54.840 | And then actually I met with Bill Perkins,

00:51:56.660 | our mutual friend, this last weekend,

00:51:58.620 | and he kind of messed with my mind, Chris,

00:52:00.560 | because we were meeting,

00:52:02.260 | and he wants me to go big in acquisitions and small business

00:52:05.060 | and let him invest in my company,

00:52:06.820 | and I don't let anybody invest in me right now.

00:52:08.700 | We have all our own cash in it.

00:52:10.780 | And he's like, "Cody, the thing is this.

00:52:13.260 | "You have been investing and playing

00:52:15.260 | "in small business land for so long.

00:52:17.460 | "I think small has infected your thinking."

00:52:19.680 | I was like, "What?"

00:52:20.980 | Like, one, ouch, kind of hurt.

00:52:23.580 | Two, I rolled it around in my mind for a second and thought,

00:52:27.320 | "Huh, he's kind of right."

00:52:28.700 | And so I was like, "What do you mean by that?"

00:52:30.220 | He's like, "One, you have a portfolio

00:52:31.860 | "that does $60 million in revenue.

00:52:33.840 | "That would be a lot to most people."

00:52:35.900 | He goes, "But you have run billion dollar funds before.

00:52:38.380 | "Why don't you have a billion dollar?"

00:52:39.860 | And then he's like, "Two, how many things do you do

00:52:42.540 | "throughout the day that are not high-leverage activities?

00:52:46.080 | "Count them."

00:52:46.920 | And my husband was there with me,

00:52:48.020 | and so we started naming off a bunch,

00:52:49.340 | and I was like, "Shut up,"

00:52:50.500 | like elbowing him beneath the table.

00:52:52.580 | And so really quickly I realized,

00:52:54.260 | gosh, there are all these things

00:52:55.940 | where because I didn't come from money,

00:52:58.460 | because I still am always scared that I'm gonna be broke,

00:53:00.860 | because I never feel like we're rich

00:53:02.380 | no matter how much money we have,

00:53:03.920 | I keep doing that is really holding me back

00:53:07.220 | from getting to the next level.

00:53:08.660 | And so now I have a question on my computer

00:53:11.100 | that says two things.

00:53:12.260 | One is about content.

00:53:13.460 | So it says don't ship a product

00:53:14.820 | unless it makes you pee a little bit,

00:53:16.180 | which means it should be funny, it should entertain you,

00:53:18.560 | anything that we go out in media.

00:53:20.060 | And the second thing basically says long-winded,

00:53:22.860 | but does this seem important or is this important?

00:53:26.180 | So now I try to remind myself of that.

00:53:28.300 | Has Bill ever messed with your mind like that?

00:53:30.500 | - His whole book kind of messed with my mind

00:53:32.260 | 'cause I kind of played a little bit

00:53:34.140 | in that financial independence, retire early world,

00:53:36.780 | it was all about saving.

00:53:37.780 | And we were on a call doing an interview

00:53:40.260 | and he told me,

00:53:41.100 | when you're trying to use all your points and miles,

00:53:42.380 | you're optimizing for the best deal,

00:53:43.540 | you're not optimizing for taking the trip.

00:53:45.340 | And I left the meeting, went to my wife and I was like,

00:53:47.340 | we've always talked about going on a trip for the holidays.

00:53:49.620 | This year is like the perfect time.

00:53:51.200 | Who cares whether it's gonna be a lot of points

00:53:52.860 | or not a lot of points, let's just do it.

00:53:55.180 | The awesome part about that was once I committed,

00:53:57.440 | then I still found a way to make a great deal.

00:53:59.760 | But like, I was afraid the deal wasn't gonna be good

00:54:01.940 | 'cause it was the holidays, so we weren't gonna do it.

00:54:03.540 | So he kind of has really messed with my mind,

00:54:05.820 | which is like, make sure you're optimizing

00:54:07.220 | for the right thing.

00:54:08.040 | And for anyone who hasn't listened to the episode

00:54:09.740 | I did with him on his book, "Die With Zero",

00:54:11.340 | go back and find it.

00:54:12.740 | It was excellent.

00:54:14.100 | It might be one of, if not the most listened to episode

00:54:17.340 | of the show.

00:54:18.580 | And so he's really messed with me,

00:54:19.900 | just like, let's make sure I'm really focused

00:54:22.100 | on what I want to get out of life in more broad sense,

00:54:25.140 | but not in a business sense.

00:54:26.700 | But what he said about your business,

00:54:29.060 | all I could think about when we were talking about renting

00:54:30.820 | was, well, I understand that real estate is an asset class

00:54:34.380 | that could be interesting to invest in.

00:54:36.220 | I don't want to be a landlord.

00:54:37.580 | And so I have some percentage of my portfolio in a REIT.

00:54:40.820 | You have convinced me that these opportunities,

00:54:44.020 | these millions of small businesses,

00:54:45.660 | buying them and running them, operating them,

00:54:48.140 | growing them, buying their suppliers,

00:54:49.980 | it's a great place to invest time and energy and money.

00:54:52.860 | But I also have my own business and I'm like,

00:54:54.220 | now is not the time with two small kids to do it.

00:54:56.780 | What's the REIT of that?

00:54:58.740 | And it sounds like the answer is

00:55:00.060 | there are like private equity things,

00:55:01.740 | which are much more up the high net worth

00:55:04.260 | and in that level of business,

00:55:05.900 | I wonder if there's as much arbitrage

00:55:08.100 | as it sounds like you've found,

00:55:10.180 | but I also don't necessarily want to do it.

00:55:11.900 | Is there a thing in that space

00:55:13.180 | or is that what Bill wants you to go do?

00:55:15.420 | Well, that is what Bill wants us to go do for sure.

00:55:17.900 | But private equity funds have varying sizes.

00:55:21.540 | What I've found is below the $10 million in revenue mark

00:55:25.340 | is actually where a lot of the meat is still on the bone.

00:55:29.020 | Once you get past 10,

00:55:30.340 | definitely $20 million in revenue,

00:55:31.980 | you're more playing with some of the bigger,

00:55:33.900 | lower middle market firms

00:55:35.620 | that are buying up some of these companies.

00:55:38.140 | But below that, there's just not enough people playing

00:55:40.260 | because it's riskier and it's harder to scale.

00:55:42.500 | If you think about these companies, KKR, Blackstone,

00:55:45.300 | they're not just billions of dollars,

00:55:46.980 | they're hundreds of billions of dollars.

00:55:48.940 | And it's how much easier is it

00:55:50.340 | to allocate $100 million once

00:55:53.380 | or to 100 deals for $1 million, right?

00:55:57.100 | The second is categorically harder to scale than the first.

00:56:00.660 | And so because of that,

00:56:01.780 | they go up market bigger and bigger, bigger.

00:56:03.700 | It's the same reason why in venture,

00:56:05.220 | you saw everybody start doing later stage deals, right?

00:56:08.020 | Because what, you're gonna put like 525K checks

00:56:12.300 | into a brand new company

00:56:13.820 | and hope that something pans out, that's a lot of work.

00:56:16.020 | When instead I could just pick a few companies

00:56:18.180 | that are larger later stage

00:56:19.900 | and I can allocate a bigger chunk,

00:56:21.100 | I could put $20 million in it,

00:56:22.380 | I could put $100 million in it.

00:56:24.260 | And so what we're trying to figure out

00:56:26.100 | is there a way to scale the low end of the totem pole?

00:56:28.780 | For most people though, they don't care.

00:56:30.420 | Like for you, you don't care.

00:56:31.980 | Can I scale this to 100 million?

00:56:33.380 | You're like, how do I pick a couple of businesses

00:56:36.020 | where I can have an operator that runs this business

00:56:39.500 | and I just cashflow on it?

00:56:40.860 | I'm like the money

00:56:42.140 | and maybe I'm the counselor once a month

00:56:44.820 | or I'm a strategic advisor quarterly.

00:56:47.420 | And that's the real game.

00:56:48.940 | So for people who already have a business like you,

00:56:51.620 | I would do a couple of things.

00:56:52.980 | If I was to tell you, Chris Hutchins,

00:56:55.060 | what sort of business should you invest in right now?

00:56:57.180 | I would say, Chris, take your businesses today

00:57:00.140 | and look at all your expenses.

00:57:02.100 | Look at every single thing that costs you money each month.

00:57:04.420 | Just throw it in an Excel spreadsheet,

00:57:06.180 | categorize it by who the vendor is,

00:57:08.540 | get rid of the majority, right?

00:57:10.420 | So let's call it 60% of the costs are like Amazon,

00:57:14.500 | Riverside, like stuff that you can't buy, right?

00:57:18.060 | So you're gonna get rid of all those.

00:57:19.580 | And then you're gonna be left with 20 to 30 to 40%

00:57:22.860 | and you're gonna get rid of all the repeat transactions,

00:57:25.140 | which means you're probably gonna be down

00:57:26.420 | to like 10 to 50 different companies.

00:57:29.620 | And in those 10 to 50 different companies,

00:57:31.780 | you're gonna look at them and go, oh, you know what?

00:57:34.340 | I spend $50,000 a month on PPC on ads

00:57:39.340 | that I give my vendor for ads.

00:57:41.900 | But I have a podcast that gets hundreds of thousands

00:57:44.180 | of listens, right, a month.

00:57:46.500 | And I have a bunch of friends who use paid ads.

00:57:50.940 | So what if I go to this guy and say, here's the thing.

00:57:53.620 | I really like you.

00:57:55.060 | Are you gonna continue to run that?

00:57:56.180 | And you do that thing that I said to you.

00:57:57.620 | You would say like, would you ever sell the business,

00:57:59.060 | I don't know.

00:57:59.900 | Most likely this guy's young

00:58:00.900 | because paid ads business is newer.

00:58:02.820 | So this person's probably a little younger.

00:58:04.380 | They're not ready to sell.

00:58:05.460 | And so instead you go, hey, how about this?

00:58:07.580 | I'm gonna partner with somebody.

00:58:08.980 | I'm going to invest in the form of financial return

00:58:13.980 | that I give you by talking about you on my platform

00:58:18.140 | in somebody's paid ads company.

00:58:20.460 | I'd like it to be you.

00:58:21.500 | I really like working with you.

00:58:22.760 | I like us paying you $50,000 a month.

00:58:25.460 | And I think that I could probably get you

00:58:26.900 | another $200,000 a month in paid.

00:58:29.620 | Would you be interested, if we set it up right,

00:58:32.180 | it works out perfectly for you.

00:58:33.580 | I get the right terms for you.

00:58:35.060 | Would you theoretically be interested in partnering

00:58:37.380 | where I do some deal, where I take a portion of equity

00:58:40.340 | in your company, but that equity distributes

00:58:42.660 | as a portion of revenue.

00:58:44.280 | So I'm not gonna be messing around,

00:58:45.500 | trying to figure out what your profit is,

00:58:46.820 | bothering you in the daily.

00:58:48.280 | I'm just gonna say, talk line.

00:58:50.060 | I'm gonna take a percentage of total revenue that we make,

00:58:53.380 | and you're gonna send it to me.

00:58:54.620 | Just like you would send me a rent check

00:58:56.460 | if I was a landlord.

00:58:57.460 | Would you be open to something like that?

00:58:59.100 | What you're gonna find is like,

00:59:00.740 | honestly, I have a high record,

00:59:01.840 | but somewhere between one to four people

00:59:05.900 | that you talk to out of five

00:59:07.420 | will be interested in that deal.

00:59:09.180 | And you're gonna structure a deal

00:59:10.340 | where you start to own a portfolio of small businesses

00:59:13.100 | in chunks because you have a platform that can distribute,

00:59:17.220 | and also because you've figured out

00:59:19.180 | how to get distributing equity deals.

00:59:21.180 | That's what I would do if you,

00:59:22.360 | I wouldn't go out and buy a car wash,

00:59:24.160 | unless alternatively you have your wife

00:59:26.820 | who doesn't wanna work 40 hours a week,

00:59:28.860 | but she would love like a five, 10 hour a week thing

00:59:32.260 | that could be hers, that she could make her own money.

00:59:34.540 | She could do it her way.

00:59:35.780 | Then you could buy a small business too.

00:59:38.020 | - I think my wife is more of a business mercenary than I am.

00:59:40.900 | She would be like, let's go buy 50 businesses

00:59:43.140 | and I will run that empire.

00:59:44.340 | Maybe that's the path.

00:59:45.420 | But if someone doesn't own a business,

00:59:47.180 | in real estate, there's like these private real estate deals

00:59:49.540 | where you can go in and instead of buying a unit,

00:59:51.820 | there's a developer doing this.

00:59:53.540 | Does that stuff exist in businesses?

00:59:55.780 | Like when you buy businesses,

00:59:56.900 | do you ever get financing outside?

00:59:58.780 | I think you said no, but do other people like you do that?

01:00:01.740 | - Yeah, totally.

01:00:02.580 | I don't do it right now.

01:00:03.540 | I use all my own cash, but there are search funds.

01:00:06.100 | Those are typically people pull together assets

01:00:09.020 | and then find an operator who wants to buy a business.

01:00:11.540 | And that operator goes and buys a business

01:00:13.020 | and he has pooled funds.

01:00:14.100 | People raise independently for buying businesses.

01:00:17.060 | Part of the reason that I started a mastermind group

01:00:19.180 | where we talk about all that said unconventional acquisitions

01:00:21.500 | is because I invest in my people's deals.

01:00:24.820 | We have 600 members in there.

01:00:27.020 | The average person buys a business inside of 11 months

01:00:30.300 | that does at least $250,000 in revenue.

01:00:33.220 | I invest in a bunch of those deals.

01:00:34.900 | So I invest in their one-off deals.

01:00:36.820 | I invest in pooled funds like search funds.

01:00:39.460 | And then there are certainly like micro PE funds

01:00:41.500 | that'll take, the problem is you really need 25K

01:00:44.860 | at least to do that.

01:00:46.120 | And a lot of them have 100K minimums.

01:00:48.140 | But when you're raising for one-off deals, those don't.

01:00:50.620 | The other nice part about this is these distribute.

01:00:53.780 | When you invest in a VC fund or an angel investment,

01:00:57.300 | eight out of your 10 deals, you're gonna lose money on.

01:00:59.480 | And you're not gonna get your money

01:01:00.780 | for at least five to seven years,

01:01:02.700 | but more likely 10, right?

01:01:04.580 | And so this one's a little different.

01:01:05.940 | I like doing deals where I cashflow within the first 30 days

01:01:09.500 | but I'll sell for 90.

01:01:10.700 | - So it sounds like find the places

01:01:13.100 | like the community you've built where people are doing this.

01:01:15.820 | And I think this is the answer

01:01:16.920 | for almost any type of industry business

01:01:18.700 | that you wanna get into.

01:01:19.820 | It's go find where the people are talking,

01:01:21.660 | whether it's a meetup, whether it's a forum,

01:01:23.380 | whether it's a mastermind and just start talking

01:01:25.420 | and you will slowly build the relationships you need

01:01:28.020 | to find ways to get into this.

01:01:29.820 | And maybe you'll just decide,

01:01:30.700 | oh, this is something I wanna do

01:01:31.860 | or I met someone, they love doing it.

01:01:33.620 | I can invest in their next deal.

01:01:35.220 | - Yeah, 100%.

01:01:36.060 | And I really just think it's such a skill.

01:01:38.740 | I was talking to a guy who owns maybe one

01:01:41.020 | of the largest fitness companies in the country today.

01:01:43.500 | And he's like, I don't even know

01:01:45.260 | if I know how to buy businesses.

01:01:47.460 | This guy does almost a billion dollars in annual revenue.

01:01:49.940 | I'm like, it's not that hard.

01:01:51.140 | What is it that scares you

01:01:52.620 | or why don't you think you could do this?

01:01:54.620 | And his comment was, well, I've grown so fast organically,

01:01:58.500 | it feels scary to me to take my eye

01:02:00.980 | off the thing I do every day to try this other thing.

01:02:04.340 | And I think that's the other biggest reason

01:02:05.660 | why people don't buy businesses

01:02:07.340 | because you feel like I don't wanna take my eye

01:02:09.420 | off podcasting and my business

01:02:10.780 | and everything that's working right now, it's a distraction.

01:02:13.100 | And that is true often if you feel like you're playing,

01:02:16.260 | let's call it a level six game, a really high level game.

01:02:20.260 | But if you're in a job you don't love,

01:02:22.140 | if you're making the same amount of money continuously,

01:02:25.220 | I think you should spend at least 90 days learning

01:02:28.980 | how to acquire things because then you'll never have

01:02:32.460 | to do something just for the money again.

01:02:35.220 | You can do it if you want to.

01:02:36.900 | I don't think everybody should go

01:02:38.100 | and be a laundromat owner forever.

01:02:39.980 | And that's their highest and best use.

01:02:41.980 | But I think if you have assets behind you,

01:02:44.580 | then you get to choose, you don't have to do.

01:02:47.100 | Super interesting.

01:02:47.940 | It's something I'd never considered

01:02:48.780 | until I ran across your content,

01:02:50.020 | which is like, we have to have this conversation

01:02:51.580 | 'cause I just wanted people to know about it.

01:02:52.940 | We briefly went over life.

01:02:55.020 | You talked about your calendar, about how you spend time.

01:02:58.020 | Are you a big fan of outsourcing a lot of things

01:03:00.340 | to team members, assistants, that kind of stuff?

01:03:02.740 | How do you, on the personal side, manage your time

01:03:05.940 | and not get caught up in kind of those small questions

01:03:08.300 | and focus on what's most important?

01:03:10.460 | This one I've always been pretty good at.

01:03:12.980 | I think I read "The 4-Hour Workweek."

01:03:14.620 | I think I read that like way too early almost.

01:03:17.020 | I was like, "I shall outsource everything."

01:03:19.100 | But I read that really early and I've tried to live it.

01:03:21.340 | It's actually helped a ton.

01:03:22.300 | So I've had a VA since I made like my first 100K.

01:03:25.060 | The second I hit 100K, I was like,

01:03:26.860 | "Hire a virtual assistant."

01:03:28.420 | And now I have a few virtual assistants.

01:03:30.460 | And then I have an assistant

01:03:32.340 | that manages the virtual assistants.

01:03:34.340 | And then I have my chief of staff

01:03:36.900 | who all of them report into.

01:03:38.940 | The key though, I think, in delegation

01:03:41.580 | is realizing that you can only really have,

01:03:43.500 | in my opinion, five, max 10 people report to you directly.

01:03:48.500 | I think once you get past that 10 direct reports,

01:03:51.300 | even if the direct report is your nanny,

01:03:54.300 | your housekeeper, your property manager,

01:03:58.540 | you need those to funnel up.

01:04:00.060 | And so one thing people don't talk about enough

01:04:01.820 | in delegation, I think,

01:04:03.300 | is that you have to have an org chart

01:04:05.860 | for the people that help you even.

01:04:07.700 | This is a higher level game.

01:04:08.940 | This is for people who have some disposable income

01:04:11.860 | that they can use.

01:04:13.300 | If I was you,

01:04:14.460 | I actually think the easiest thing to do with delegation

01:04:16.940 | is if you can afford to start with a chief of staff.

01:04:19.540 | So like a higher level person,

01:04:21.380 | maybe you're paying that person.

01:04:23.260 | You could get a young, hungry person for like 65K a year

01:04:26.860 | all the way up to chief of staffs

01:04:28.540 | can make hundreds and hundreds of thousand.

01:04:30.860 | And that person can be your go-to contact for a VA

01:04:34.700 | that only costs you a thousand bucks a month.

01:04:36.900 | And for your housekeeper

01:04:38.780 | that only costs you 400, 500 bucks a month,

01:04:41.420 | but they all go through this one person.

01:04:43.860 | That's really the key

01:04:45.340 | because the thing stopping you

01:04:47.420 | from getting where you're going

01:04:48.860 | is typically you don't have enough people working for you.

01:04:53.060 | Your 100% can never be as powerful as five people's 50%.

01:04:58.060 | So it's a fallacy that if you're great at something,

01:05:02.220 | you're the only person who can do it.

01:05:04.060 | And simultaneously, those five people with 50%

01:05:07.100 | will distract you hugely.

01:05:08.980 | So how can you put a barrier between the two?

01:05:11.620 | I do that well now, but I haven't always.

01:05:14.460 | - I have never done it well.

01:05:15.860 | And in the last two weeks, maybe,

01:05:17.980 | I'm very early in this experiment, I hired a VA,

01:05:21.780 | but I would say based on two weeks,

01:05:24.580 | I feel like this person falls in the spectrum

01:05:26.660 | of like VA to chief of staff,

01:05:28.060 | like way more qualified than just,

01:05:29.980 | I'm gonna send an email to this person.

01:05:31.940 | And they could do the full spectrum.

01:05:33.780 | And this is early.

01:05:34.900 | And I worked with a company called oceansxyz.com.

01:05:37.580 | Feel free to tell them.

01:05:38.500 | Maybe go to allthehacks.com/oceans.

01:05:40.460 | And before you hear this, I'll go get some deal.

01:05:43.220 | That's my plan.

01:05:44.060 | So go to allthehacks.com/oceans

01:05:45.700 | and we'll see what I can do.

01:05:46.980 | But it has been so interesting to try

01:05:50.420 | and really force that.

01:05:52.380 | And I wanna do a whole episode on outsourcing things.

01:05:54.820 | And this is not just work.

01:05:56.380 | Like this is personal.

01:05:57.340 | This is everything from email to meal planning

01:06:01.260 | to researching.

01:06:02.940 | But what I did was I started in advance

01:06:05.980 | of let's go and write down for like two weeks

01:06:08.860 | everything I could outsource.

01:06:10.020 | So similarly, as I was going through anything,

01:06:12.220 | I would just got in my mind.

01:06:13.060 | Okay, could this go out?

01:06:13.900 | Okay, I'm putting a list.

01:06:15.100 | Once I saw the magnitude of that list,

01:06:17.540 | if you think about the cost of hiring virtual assistants,

01:06:19.540 | you said it could be anywhere from one to $4,000 a month

01:06:22.700 | for a full-time person.

01:06:24.260 | And there are other options

01:06:25.260 | if you want fractional and all that stuff.

01:06:27.620 | Imagine what you could do with that,

01:06:28.940 | whether it's spending it just with your family

01:06:31.140 | or on really big strategic things with your business

01:06:34.660 | or maybe you don't have time to buy a small business

01:06:38.500 | like you just heard us talk about

01:06:40.340 | because you have so much stuff going on

01:06:41.540 | in your personal life.

01:06:42.580 | What if you could outsource a lot of that personal life stuff

01:06:45.180 | so that you could go and buy a small business

01:06:47.220 | and end up finding out that this all pays for itself.

01:06:50.020 | Now you can roll that person's compensation

01:06:52.300 | into that small business.

01:06:53.540 | Now it's a deductible expense above the line.

01:06:56.020 | There's all kinds of interesting stuff.

01:06:57.420 | But I am going to do a whole episode

01:06:59.900 | on this kind of process of everything we've organized

01:07:03.140 | and how it worked and how I looked

01:07:04.300 | and all the companies that I interviewed.

01:07:06.220 | Fancy Hands was by far the worst option

01:07:08.420 | for outsourcing tasks.

01:07:10.020 | I can do nothing more than wholeheartedly tell you

01:07:12.740 | do not use this company.

01:07:14.060 | It was an awful experience.

01:07:15.820 | - Really?

01:07:16.780 | - It was task-based VA and it was so bad.

01:07:20.060 | A waste of money, completely zero value.

01:07:22.820 | Sorry, Fancy Hands.

01:07:23.820 | Unfortunately, completely not satisfied.

01:07:26.020 | But I'm incredibly satisfied

01:07:28.500 | with the woman I'm working with from Oceans

01:07:30.460 | and it's early, but so far I am so optimistic.

01:07:34.500 | - I have this friend, Dan,

01:07:36.300 | who runs a company called My OutDesk.

01:07:38.740 | It's another one of those companies you just talked about,

01:07:41.740 | but they do something called like the Notepad Challenge.

01:07:44.940 | I gotta find this for you.

01:07:46.500 | But basically he had me do the same thing.

01:07:48.660 | The long and short of it is,

01:07:49.900 | and I'll find it so you can link it,

01:07:51.380 | basically you track for an entire day

01:07:55.020 | every single activity that you do.

01:07:56.660 | And then he says that for a week after,

01:07:58.860 | for an hour a day,

01:08:00.380 | you should track all of your activities that you do.

01:08:02.740 | And then you catalog them along a quadrant.

01:08:06.220 | And to the left, it's high leverage, low time.

01:08:10.300 | And on the bottom, it's low leverage, high time.

01:08:13.660 | So the bottom would be the worst.

01:08:15.420 | It's something that takes me a ton of time

01:08:17.300 | and it doesn't have a great outcome for me.

01:08:19.660 | And at the top, it takes not a lot of time

01:08:22.140 | and it's a great output for me.

01:08:23.900 | And the goal is basically you wanna spend all your time

01:08:26.980 | in the left quadrant at the top,

01:08:29.700 | very little of your time in the bottom right.

01:08:32.260 | So you wanna outsource all of those tasks.

01:08:33.980 | And then there'll probably be another quadrant

01:08:35.460 | right next to it that's like high output, lot of time.

01:08:39.180 | So you're spending all of your time in the top two

01:08:41.820 | and the bottom two quadrants,

01:08:43.060 | you're basically trying to offload all of those tasks.

01:08:46.140 | And so every so often I go back

01:08:48.260 | and do this version of the Notepad Challenge

01:08:50.580 | and it's really, really helpful.

01:08:51.980 | In the beginning, you do what you can afford.

01:08:53.820 | And then you layer on top of it.

01:08:55.740 | There's a saying, I can't remember who said it,

01:08:57.500 | but that you are one hire away

01:08:59.220 | from a completely new business.

01:09:00.860 | And I think that's true also for your life.

01:09:02.340 | Like you are one hire away

01:09:04.180 | from a completely different life.

01:09:06.460 | And it can be very small thing.

01:09:08.460 | It's like, I can't remember the last time

01:09:10.540 | I had to get on the call with AT&T or Verizon

01:09:13.980 | or deal with a cable provider or schedule my doctors.

01:09:17.300 | Six years ago, I spent hours on that stuff,

01:09:20.860 | haggling, dealing with issues, changing flights.

01:09:25.260 | I don't do any of that anymore.

01:09:26.860 | And it probably costs me about a thousand bucks a month

01:09:29.340 | to save me tens and tens of hours a month.

01:09:32.940 | And it's not just hours.

01:09:33.820 | It's like the overhead of having to keep track

01:09:36.260 | of all of the things.

01:09:37.620 | So I'm a huge fan of that.

01:09:39.540 | We're almost out of time.

01:09:40.860 | I'm gonna ask you one more thing.

01:09:42.300 | You have all of these great posts and threads

01:09:44.940 | where you're like,

01:09:45.780 | here's the way I've optimized this aspect of my life.

01:09:48.220 | I'm gonna mention one

01:09:49.580 | and I'll just link to it in the show notes,

01:09:50.900 | which is this 160 rule on Sundays

01:09:52.980 | about how you ask yourself

01:09:54.020 | and check in on what you're doing.

01:09:55.380 | I think it's great.

01:09:56.580 | But the one that I was most recently looking at

01:09:58.820 | that's a bit of a tangent from this conversation

01:10:00.940 | was about a check-in you do on your relationship.

01:10:03.180 | And so I think maybe as a total aside

01:10:05.300 | from everything we've talked about,

01:10:06.780 | maybe share that a bit because I adopted it.

01:10:08.980 | I thought it was so great.

01:10:10.260 | Oh, that makes me happy.

01:10:11.500 | I had no idea this would go as viral as it did.

01:10:13.620 | It's just what we do.

01:10:14.980 | We're busy.

01:10:15.820 | My husband works a lot too.

01:10:17.980 | He's a pretty serious guy, former Navy SEAL,

01:10:20.420 | sort of a tough dude.

01:10:21.780 | And what was happening is we were building up tension

01:10:25.100 | throughout the day.

01:10:25.940 | So like little things,

01:10:27.260 | why are your socks out?

01:10:28.580 | Why didn't you put the car keys away?

01:10:31.100 | Very small things would get blown out of proportion

01:10:34.300 | or they would just nag throughout the day.

01:10:36.340 | So we came up with this thing

01:10:37.740 | in partnership with this woman called Brandy

01:10:39.500 | who helped us called Team.

01:10:41.260 | And basically what it is,

01:10:42.500 | it's an end of day check-in.

01:10:44.700 | And our goal is the little things

01:10:47.260 | that come up throughout the day,

01:10:48.700 | instead of just word-vomiting them at each other

01:10:51.260 | at any given point in which you feel annoyed

01:10:53.460 | and you're elevated,

01:10:54.580 | what if you wrote them down

01:10:55.900 | and you save them for later

01:10:57.300 | in a place where maybe you're having a nice glass of wine

01:10:59.740 | or for you biohackers out there,

01:11:01.220 | you're doing whatever you do in the evening

01:11:03.300 | and you sit down with your spouse.

01:11:05.580 | The first tenet is touch.

01:11:07.140 | So T for touch.

01:11:08.700 | And it basically means you sit next to each other,

01:11:10.700 | you hold hands,

01:11:11.620 | you put your feet on each other on the couch, whatever.

01:11:13.660 | Or when you're really mad,

01:11:14.780 | we jokingly do this little E.T. one-finger touch thing.

01:11:17.700 | 'Cause sometimes at the end of the day,

01:11:18.780 | you're still mad from what's going on.

01:11:20.820 | And you start with touch

01:11:21.900 | because you're reminding each other,

01:11:23.260 | you guys are in this together, you're a team.

01:11:25.060 | The second step is education.

01:11:27.180 | So you know how you come home from work,

01:11:28.740 | a lot of times you're like,

01:11:29.580 | how was your day, honey?

01:11:30.420 | Good, how was your day, honey?

01:11:31.260 | Blah, blah, blah, same conversation.

01:11:32.660 | You don't get that deep.

01:11:33.660 | And that I think really leads

01:11:35.420 | to why a lot of people actually get divorced

01:11:38.140 | or cheat or whatever.

01:11:39.300 | You stop dating your spouse

01:11:41.220 | and you stop getting the most interesting information

01:11:44.020 | out of them because your routine has meant

01:11:46.460 | that you ask the same lazy questions always

01:11:48.740 | and you tell lazy stories.

01:11:50.940 | And so education means you have to tell your spouse

01:11:53.580 | one thing that you learned that day that was new to you.

01:11:56.540 | And so that means it's usually a great conversation starter.

01:11:59.220 | So like the education part will usually go longer.

01:12:01.620 | So I might be like, today I was with Chris

01:12:04.180 | and I just realized that we have a million points on Amex

01:12:07.620 | and now I'm super stressed because we have never used these.

01:12:10.140 | And so now I have to figure out how to optimize this.

01:12:12.300 | And did you know that there's a whole group of people

01:12:13.780 | that this is all they do and we're not doing it?

01:12:15.420 | And so maybe that's my thing.

01:12:16.860 | And then he'll tell me something.

01:12:18.300 | And then the next is appreciation.

01:12:19.780 | So even when you're mad,

01:12:21.580 | there is a reason why you chose this human to be with

01:12:24.780 | for life, for now, for whatever.

01:12:27.100 | And so giving a little piece of gratitude

01:12:29.620 | typically helps diffuse what comes next.

01:12:31.780 | If you're mad, it could be,

01:12:33.820 | I appreciate you taking out the trash today.

01:12:35.780 | Our only rule there is you can't keep repeating

01:12:38.020 | the same ones.

01:12:39.020 | You're so beautiful, I love your hair.

01:12:40.780 | No, you gotta get a little bit more creative.

01:12:42.500 | And then the last one is metrics.

01:12:44.780 | And here we basically say,

01:12:46.980 | well, I kept my list of things that annoyed me today

01:12:49.100 | that I wish you would do differently.

01:12:50.700 | Or here's this big thing that I want us to talk about.

01:12:53.500 | Or some days we really have nothing.

01:12:55.460 | But because you're not telling the person in the moment

01:12:59.060 | when you're upset at them about this thing,

01:13:01.620 | the level of intensity, emotional intensity is so decreased

01:13:06.620 | that typically we get through the metrics

01:13:08.660 | in a way where we're in our rational brains,

01:13:10.900 | we're not elevated so we can have a really

01:13:13.540 | pretty easy conversation.

01:13:15.100 | And then the internet has actually changed up

01:13:17.540 | this one a little bit and they now think it is teams.

01:13:20.460 | And at the end, it should be S for sex.

01:13:23.380 | And that's how you should add it.

01:13:24.460 | So up to you, that's an optional add-on at the end.

01:13:28.380 | So I know that was a departure,

01:13:29.740 | but I think you have a few of these.

01:13:31.420 | I'm gonna link to a couple of the other ones

01:13:32.820 | that you've done where you've just like,

01:13:33.820 | hey, here's the way I've optimized this thing in my life.

01:13:36.020 | And what I love about having conversations with people

01:13:38.540 | that have thought very deeply about one area of their life

01:13:42.060 | is that they've generally actually done that other places.

01:13:44.420 | You create content, so it's a little easier,

01:13:46.020 | but the hardest thing for me is pulling it out.

01:13:48.020 | Maybe before you made that post,

01:13:49.300 | you said you didn't think it would go viral.

01:13:50.620 | Well, it's just a thing I do.

01:13:51.940 | It's like, no, you've applied all these lessons

01:13:54.500 | you've learned about business relationships

01:13:56.220 | and tracking things and trying to find this way.

01:13:58.460 | Oh, let's just apply it to this relationship.

01:14:00.100 | And it turned out amazing.

01:14:01.980 | Not to say just this relationship,

01:14:03.380 | the most important relationship, of course.

01:14:05.340 | So that was awesome.

01:14:06.180 | Thank you for sharing that.

01:14:07.060 | I'll link to the rest.

01:14:08.540 | We're way over time.

01:14:09.980 | Where can people go and learn more

01:14:12.300 | about everything you're doing in your community,

01:14:14.100 | about buying businesses, follow you, everything?

01:14:17.580 | Hey, contrarianthinking.co is probably the best,

01:14:20.380 | or I'm Cody Sanchez on all the socials.

01:14:22.220 | Take your pick.

01:14:23.060 | The free newsletter comes out weekly and is awesome

01:14:25.260 | if you wanna learn two things,

01:14:27.540 | mental frameworks and you wanna learn monetary frameworks.

01:14:31.660 | So how to make money and how to think better.

01:14:33.580 | That's Contrarian Thinking's newsletter.

01:14:35.540 | Awesome.

01:14:36.380 | Thank you so much for being here.

01:14:37.860 | Oh, thank you for having me.

01:14:38.700 | This was a blast.

01:14:39.660 | Gotta get my points now.

01:14:40.860 | I really hope you enjoyed this episode.

01:14:44.740 | Thank you so much for listening.

01:14:46.500 | If you haven't already left a rating and a review

01:14:48.620 | for the show in Apple Podcasts or Spotify,

01:14:51.380 | I would really appreciate it.

01:14:53.100 | And if you have any feedback on the show,

01:14:54.540 | questions for me, or just wanna say hi,

01:14:56.940 | I'm chris@allthehacks.com or @hutchins on Twitter.

01:15:01.220 | That's it for this week.

01:15:02.260 | I'll see you next week.

01:15:03.460 | (upbeat music)

01:15:06.260 | (electronic beeping)

01:15:09.340 | (electronic buzzing)

01:15:12.420 | (birds chirping)

01:15:15.180 | [BLANK_AUDIO]