Building Wealth Through Boring Businesses and Other Contrarian Ways To Live and Invest

00:00:00.000 | And if you only have like so many words you can say a day, so many hours in the day,

00:00:04.240 | where is it worth the negotiating or dealmaking? And where isn't it? And most people spend their

00:00:09.600 | time on really low level activities. Coupon cutting, asking for a discount at a restaurant,

00:00:16.320 | or for wine, or buying furniture, whatever. Okay, that's fine. But instead of doing that,

00:00:21.280 | you could just be a little bit more strategic upfront and think about, "If I negotiated my

00:00:26.480 | salary every single year for sure, but maybe even twice a year, mid-year review time. Maybe if you're

00:00:33.440 | really good quarterly, I can never clip a coupon again and make more from just negotiating my

00:00:39.920 | salary." And then a second level from that is, "Man, if I could figure out how to negotiate,

00:00:44.560 | how to buy assets that cashflow and can do 100x or 300x return to me, then I don't even have to

00:00:51.840 | negotiate my salary that much. Because I just take the salary, use the salary, apply it to assets

00:00:56.880 | that I keep buying, those keep cash flowing for me." So it's all about like, what level are you

00:01:01.040 | playing? Lots of people play level one games. And I think the pros, they don't bother with that.

00:01:05.920 | They don't Dave Ramsey their way to millions, right? Like it's not the fucking Starbucks.

00:01:11.600 | Have the Starbucks if you want it. But instead, try to get really smart on negotiating or deal

00:01:16.480 | making so you can play the level six games and then buy whatever coffee you want.

00:01:22.800 | Cody, thank you for being here.

00:01:27.440 | Thanks for having me. I'm excited.

00:01:28.720 | Yeah. So I love that you've owned the phrase contrarian thinking. I really like that people

00:01:33.280 | challenge the status quo, go against the grain, whether it's life, investing, or anything.

00:01:37.520 | And nothing really highlights that to me then. We both had these early finance careers. You

00:01:41.760 | had a lucrative career on Wall Street, and then you left it to do something,

00:01:45.040 | invest in boring businesses. I'm sure so many people talked you out of it.

00:01:48.400 | What drove that early contrarian thinking for you?

00:01:52.320 | I can't remember who said it, but I loved that quote. "What it takes to be successful

00:01:56.800 | is first you have to be contrarian, and then second, you have to be right."

00:01:59.840 | And I think that's true. I mean, you know from being in finance, you can't make money if you

00:02:04.560 | follow the herd. You'll basically pick up pennies continuously, but that won't ever amount to

00:02:09.600 | dollars. And so I think the thing that made me want to leave actually had nothing to do with

00:02:14.480 | being contrarian. It was that it was categorically fucking miserable. It was miserable being in

00:02:21.040 | finance for so long, especially when I was at the big firms like Goldman Sachs, State Street,

00:02:26.480 | Vanguard. Vanguard, I thought was like, sorry, Bogle, but left of communism from a workers

00:02:34.240 | perspective. It was just everybody is the same. It doesn't matter if you outperform. It was the

00:02:40.160 | opposite of a meritocracy, which is what I wanted. You could only progress in your career at certain

00:02:45.360 | levels and years and timelines like the military. So I was like, this is awful. Got to go.

00:02:49.600 | Then I went to Goldman Sachs. And at Goldman, it was sort of the opposite. It was like, no matter

00:02:53.760 | what, 20% cut every single year. And if you don't perform, cut. And if people don't like you, cut.

00:03:00.800 | And so that was a really aggressive environment. And I actually liked it more, I think.

00:03:05.760 | But then finally, where I ended up was in private equity, running with a couple other partners. And

00:03:12.080 | I think what I realized, Chris, is you were smart. You were like, I didn't last that long in finance,

00:03:15.920 | you know, and I got out. And I think I thought, oh, it's just not this company. It's not this

00:03:20.640 | company. It's not this company. And then I realized, oh no, I hate finance. It just took

00:03:24.960 | me 12 years to figure this out. And in actuality, maybe I'm more entrepreneurial and I want to do

00:03:31.120 | my own thing. And I just got sort of a really long PhD in how to buy businesses and how to

00:03:38.160 | structure deals from being in finance for a long time. But you remember, I mean,

00:03:42.720 | when you were in investment banking, how long did you work?

00:03:45.040 | My kind of tipping point was I didn't see my girlfriend then, now wife, for a week awake.

00:03:50.080 | And I was like, this is just untenable. I just don't... What's the purpose?

00:03:54.480 | And then I had the same experience. I moved to management consulting.

00:03:58.240 | And I remember we were courting like a Fortune 50 company. And a friend of mine's mother-in-law

00:04:06.400 | happened to be the CEO of that company. And I remember going to the managing director and

00:04:11.040 | saying, "Hey, I know you guys are courting this company. I'm going to be at the CEO's

00:04:14.800 | house this weekend because my friend happens to be her son-in-law. How can I help?"

00:04:20.000 | And they were like, "Your job is to make slides. Why would you help?"

00:04:23.920 | And I was like, "Well, I actually have a relationship with the person you're..."

00:04:26.480 | And they're like, "That's not your job." And I was like, "This just seems like you're not

00:04:30.160 | thinking about business as a way to take every advantage and try to be successful.

00:04:34.080 | You have these rules." And I was like, "I don't like rules. I don't like rules that

00:04:37.040 | don't make sense. I love rules that make sense. I don't like rules that don't make sense."

00:04:40.880 | And that was the downhill of that career. So it was just brutal work that... The no

00:04:46.960 | meritocracy thing was driving me nuts. It was just like, "This is what you do."

00:04:51.280 | But I ultimately got laid off. So that kicked me out earlier. So maybe you didn't have that

00:04:58.160 | good fortune, which in hindsight feels fortunate. And in the moment, it wasn't.

00:05:03.200 | But what was it that led you to something that...

00:05:06.080 | It's not like you went into this other career that everyone knows, and it was very popular.

00:05:10.080 | You started doing something that I think, even years later, is not popular.

00:05:14.400 | So maybe give a little context to what it is to buy these businesses. But what led you to start

00:05:19.600 | doing it? The secret is, I think, that the really,

00:05:23.120 | really wealthy have always bought these businesses. I mean, richest guy in the world,

00:05:27.360 | owner of LVMH. How did he get there? Did he start those companies? No, he bought them.

00:05:31.680 | He bought a bunch of these companies. Some of them basically out of bankruptcy, like Dior.

00:05:35.600 | And he amassed a massive empire from the fact of buying... I mean, if we think about it, really,

00:05:42.000 | bag companies, clothing companies. They just have fancy labels on them that are highly overpriced.

00:05:46.960 | And so that's how the richest guy in the world made his money. The richest guy in India

00:05:52.400 | made his money through a conglomerate of businesses that he bought.

00:05:55.840 | I mean, you look at a lot of the Fortune 500, and what you see, if you peel back the layers,

00:06:00.480 | and you get rid of all of the heirs of Walmart, let's say, and the heirs of some of the large

00:06:07.360 | historical industries like Rockefellers, etc, you find that most of these people actually got there,

00:06:12.320 | not always from starting companies, but from buying. The second most common is from buying

00:06:16.480 | companies. And so in finance, private equity, we did that all day. I think that... Oh, they're not

00:06:23.920 | going to like that I say this, but I think people in private equity are brilliant in a way, but it's

00:06:29.680 | slightly predatory. We are so sneaky that we make entrepreneurs think that putting their blood,

00:06:38.160 | sweat, and tears into companies is like the fun game. This is what it means to be an innovator.

00:06:43.520 | This is what it means to be a creator and to build huge businesses. And then right about at the point

00:06:49.440 | where they want to slit their wrists, private equity swoops in and we say, "Is it miserable

00:06:54.880 | running your company? Do you not want to do this anymore? Are you ready for something else? What

00:06:58.720 | if we give you a great offer?" And what the entrepreneur doesn't realize is that 0 to 1

00:07:03.680 | is the least profitable period of time in your business. The most profitable period of time

00:07:10.800 | is actually the next stage. And then the stage where you continue to cashflow for a really long

00:07:15.280 | time on it. And so we scoop up these businesses at a period of time where the entrepreneur is in pain

00:07:22.320 | often, and then we cashflow on them forever. And it's a gross generalization. That's not

00:07:26.560 | what all private equity firms do. But once I realized that, I was like, "Wait a second."

00:07:31.760 | So we don't have to be clever enough to come up with an idea. I'm not clever enough to come up

00:07:35.840 | with some crazy new billion dollar idea for a company. I don't know. But what I do know is

00:07:40.320 | how to look at what are expenses and what is income, aka a P&L, and tell me if this business

00:07:47.680 | is making money or not. And do I think that this business could continue to exist inside of the

00:07:52.160 | next 3 to 10 years? At which point I'll have all of my money back plus 3 to 5X, let's say.

00:07:57.360 | I can't go figure that out. And because that's not that difficult, why couldn't I do for myself

00:08:01.520 | what the big huge guys do with LBOs, leveraged buyouts, and all of that, but at a tiny scale

00:08:06.080 | with laundromats and car washes and things that cost $50,000 or $100,000 and then scaling up to

00:08:12.000 | a million and a 5 and a 10. It's the same game. It's just I'm playing it at a smaller level,

00:08:17.200 | at the mom and pop level, and what I call or what is called micro P&E.

00:08:21.680 | And that mom and pop level, I think when anyone listening is thinking, "Oh wow,

00:08:25.280 | Cody goes and buys businesses. She must be a billionaire." It sounds like something you could

00:08:29.760 | actually make part of your investment portfolio at a very early stage in your wealth building

00:08:35.920 | journey and grow from there. Would you say it's for anyone or who is buying a small business for?

00:08:42.720 | The only people it isn't for are the lazy and the completely risk averse. So if you want to do zero

00:08:48.640 | work, if you want to have zero risk, then don't buy businesses. It's just not going to work out

00:08:54.640 | for you. And so if people are trying to sell you Airbnb arbitrage and you take no risk and you

00:09:00.320 | bring on these people and you make your millions, okay, fine, do that. But I think for people that

00:09:04.400 | are willing to put in some work, there's no better way to make a return on it than having equity

00:09:09.040 | ownership that cash flows over time. And the problem is if you look at the S&P 500 or where

00:09:14.640 | people typically invest, what is a good dividend paying stock? Three to maybe 9%. I mean, gosh,

00:09:20.720 | if you could get a 12% paying dividend stock, you're probably thinking that it's going to have

00:09:24.720 | some downside, right? Because that's too much. But in a small, boring business, you could have

00:09:29.600 | a return on your money of high double digits in a year. You could return all of your capital within

00:09:35.280 | a year. And so I think it is for "anybody" that's willing to put in some work. Now the flip side to

00:09:42.320 | that is then people go, "Cody, sounds great, but I don't actually have millions," right?

00:09:46.960 | And I like to give examples like I bought a newsletter for $3,000 just for shits and giggles.

00:09:52.880 | I wanted to put it into our media empire. I realized it didn't really fit. It wasn't going

00:09:57.440 | to grow the way that I wanted to. So I turned around and sold it, I think a week later for $8,000.

00:10:01.440 | And that for me at the stage that I was at was not meaningful. But for young Cody,

00:10:07.200 | like the Cody whose parents had no money, who used to bounce her checking account

00:10:12.000 | every weekend, who thought her first job making $37,000 a year was amazing.

00:10:17.600 | That was like, "I'm rich. I just made $5K in a week off of flipping somebody else's asset."

00:10:23.040 | That's fascinating. And so if you can start at that level, you can start to understand the

00:10:28.160 | bigger levels. The $100,000 deals, the $1 million deals, and the $100 million deals, I think.

00:10:33.520 | Yeah. So one of the nice things... So yes, the return expectations of the stock market,

00:10:37.600 | maybe 5%, 7%, 8%. But it's very easy to maintain a job and do that on the side because there's no

00:10:44.160 | work. Is the amount of work you need to go buy a boring business, a laundromat or something,

00:10:48.960 | enough that you don't need to quit your job? Can it be a side hustle? Or how full time

00:10:53.680 | is doing this type of investing? I think it's very similar to rental

00:10:58.320 | properties. What sucks about getting rental properties? Well, first, you have to understand

00:11:03.440 | the market. You got to understand what's a good buy, what's a bad buy. Then you've got to actually

00:11:08.080 | get a mortgage. You've got to figure out what that looks like. Then you have to figure out how to get

00:11:11.760 | somebody to rent your property out. But after you have that first period of understanding,

00:11:16.000 | you either Airbnb it out with some consistency or you get a property manager that manages it.

00:11:20.640 | And I think it's really similar to businesses. Depending on the size and scale and type,

00:11:26.480 | you can have a business that's less active. I try to not say passive because I think that's

00:11:31.520 | a fallacy overall, but that's less active. And those businesses are, I think, all around.

00:11:37.280 | I use the example of car washes and laundromats and vending machines less because they're incredibly

00:11:42.560 | passive, but more because I call them the gateway drug businesses. So basically, you can get your

00:11:47.760 | little skin in the game. You can get your little first hit of being in business and being the

00:11:51.600 | owner. And then as you do that, you're like, "Oh, wait, this game is kind of fun. Maybe I'll do

00:11:56.240 | another one. I'm more capable than I thought." And I just think the world looks a lot better

00:12:00.640 | if we have more humans with skin in the game. And I think you can absolutely do it while you're

00:12:05.040 | still working. My caveat is always just... I had a boss, basically, back in the day.

00:12:12.640 | We were in Latin America and we were running an investment business in there. And we basically

00:12:19.760 | had to do this evolution with one of the government entities where they wanted us to

00:12:25.920 | run a process to make sure that our security protocols and the way we were investing

00:12:31.360 | met their government requirements. And so we ran that once. Check, check. All the boxes checked

00:12:39.040 | that we were supposed to. They wanted us to run it again. So we ran it again. And then the last time,

00:12:44.240 | they wanted us to run it one more time. And now, I didn't agree that we should run this

00:12:48.160 | exercise three times. I thought that was ridiculous. But my boss basically said, "Hey,

00:12:53.920 | this go around. I'm agreeing to this. And the reason why is because I want to get our leaders

00:13:00.080 | to trust me a little bit more. And I also want to get our team used to doing things that are hard

00:13:06.640 | that we don't want to do, because we're going to have to do some really hard stuff for this project

00:13:10.080 | we were working on. There's a lot of turnaround assets." And so he's like, "So I need you guys

00:13:13.920 | to support me in doing that." And we looked around and I remember I asked, I was like, "Well,

00:13:21.440 | are they actually going to know if we did this or not? Can we just check the box that we did this?"

00:13:26.640 | And he just looked back at me and was like, "What do you think would be the right thing to do?"

00:13:34.960 | And I was like, "Oh, fuck. Fine." And so basically, I think the right way to do a

00:13:42.880 | business while you have a job is to make sure you're doing it the right way. And I think the

00:13:47.680 | only thing I see going wrong in people's lives is I've seen people get fired from their jobs when

00:13:53.680 | they don't disclose that they have a side hustle. And I think it eats at your soul a little bit to

00:13:58.880 | not live in the light. And so as an owner of a business, I take it personally, if people are

00:14:04.240 | working in my business and on my business, and really they're focused on something else, they

00:14:09.120 | want to be doing something else. And remember, when you own a business in the future, you will

00:14:13.200 | be the person with employees that might be distracted. So I always kind of push people to

00:14:17.040 | think like you already are an owner, and then ask yourself, "What would you want your employees to

00:14:21.520 | do?" That's my only caveat to side hustles these days. I think those sites where people have the

00:14:27.600 | Reddit sites where they have 400 different jobs, and these people who talk about having 37 side

00:14:32.880 | hustles, I actually think it makes you distracted, it makes you less happy, and it often makes you

00:14:38.560 | less money. And so if you're going to buy a business, make sure you do it the right way,

00:14:43.360 | set the right amount of hours. And if your job doesn't allow for it, then pick a different job

00:14:47.840 | or take the risk entirely. But don't be a human not living in the light is my only caveat.

00:14:53.760 | That makes sense. So you made the reference to rentals. Why do you think it is that buying

00:14:58.880 | a rental property is like, for some reason, so sexy when it comes to how do you spend your money

00:15:03.920 | and build your wealth, and buying a business like a laundromat is just not even on the same radar

00:15:09.840 | in terms of societal opinion? When it sounds from what I heard you say, the returns might be even

00:15:15.440 | better. They both are work. Why haven't people caught on? Is this like the secret? Obviously,

00:15:22.640 | you're the champion of it, but... Buying rental properties is a 1-10 step process

00:15:28.880 | that is clearly defined. And most everybody knows what you're supposed to do. There's not

00:15:34.640 | a lot of variation. You can't take a house in a neighborhood here and make one house do 100x more

00:15:41.840 | than the house located next to it in rent, typically. You could maybe make a house do a

00:15:47.440 | little bit more in rent by having a nicer house, but you're putting a ton more cash in there.

00:15:51.360 | So you go step one through 10, you have a rental property, those are clearly defined.

00:15:55.840 | And because of that, lots of people do it. And so the opaqueness or what we would call the

00:16:00.480 | arbitrage window of people who don't know the good trade to do and people who do know what

00:16:04.720 | the good trade to do is actually really tiny in rental land because everybody's playing the game.

00:16:09.440 | In buying small business, steps one through 10 look really different if you buy a laundromat

00:16:15.440 | than if you buy an online business than if you buy an education company, right? And so there's

00:16:21.600 | not a clearly defined process, which typically freaks people out. People on the internet love

00:16:25.680 | for me to tell them, "Here's the three businesses I would buy. You should go buy them right now.

00:16:29.360 | This is what they cost. This is why you should buy them. This is what they should make."

00:16:33.040 | But the truth of it is, is that in business buying, it's all personal. So a good deal for me,

00:16:38.800 | it's probably not a good deal for you because you live in San Francisco, I live in Austin,

00:16:43.120 | because you need the deal to make you a million dollars a year. And I only knew the deal to make

00:16:47.120 | me $100,000 a year because you want to spend 40 hours on a business and I want to spend zero

00:16:51.360 | hours on a business. And so that's the difference is anytime there's an arbitrage window like this,

00:16:58.320 | where there's no clearly defined process, there aren't a ton of people doing it.

00:17:01.760 | You're going to have more opportunity, but you're going to have less action takers

00:17:05.440 | because people like to be led.

00:17:07.280 | If there's not a lot of information, or I guess there's not a lot of process defined

00:17:10.560 | for every business because it's unique, how much expertise does someone really need? Or

00:17:14.960 | said a different way, how much work would it be to get up to speed to be able to buy

00:17:19.840 | a laundromat? I don't know anything about how laundromats run.

00:17:23.040 | Do I need to become an expert there to really make that work?

00:17:26.000 | In my opinion, no. I bought a laundromat. I couldn't even tell you today how to fix

00:17:30.320 | machines. We own laundromats that do like $3 million a year. I have no idea how to run them.

00:17:35.920 | I don't know any of their SOPs and processes. It's not that I'm lazy on that stuff. It's just

00:17:41.840 | leverage. It's kind of like... Somebody was asking me right now, "How do you run

00:17:46.480 | your marketing segment of your business? What do your funnels look like? Do you have ads that go

00:17:51.360 | to your business?" I'm like, "I have no idea. That's Chris. You got to talk to this guy."

00:17:54.800 | And it's the same with buying businesses. So what you need to learn is how to be a dealmaker,

00:17:59.680 | which I think is actually way more important. You got to learn what a good business looks

00:18:03.600 | like for you. And we have a 10-step process in this, but you basically have to learn

00:18:08.080 | what's a good deal for you. You have to learn how to sell yourself.

00:18:10.880 | You have to learn how to negotiate. You have to learn how to finance the deal.

00:18:15.120 | You have to learn how to do diligence, the deal, make sure they're not lying to you.

00:18:18.720 | You got to learn how to close the deal, the proper structure, terms, etc.

00:18:24.960 | You got to get your deal team together. So your attorney, accountant,

00:18:28.480 | you have to understand what your first 90 days will look like post-close.

00:18:31.920 | You have to learn how to value a deal, what the deal is actually worth. And you got to learn...

00:18:38.000 | You've got to learn origination, how to find a deal. And so if you learn those 10 steps,

00:18:44.480 | you can apply those across any industry.

00:18:46.320 | And I think the opportunity for us is like most people say, "I don't understand HVAC,

00:18:51.440 | so I could never buy that. I don't understand a painting company, so I would never buy that."

00:18:55.600 | And if you actually just understand how to buy businesses, you can find experts and consultants

00:19:00.160 | for nothing to help you understand a sector. You've just got to find the right deal.

00:19:04.400 | So for anyone who just heard that and was like, "Whoa, 10 steps. I'm hoping

00:19:08.160 | that you can either send me a link or I could just pretty easily find those 10

00:19:11.040 | steps written somewhere and that we don't have to go deep down each one because

00:19:15.120 | that could probably be an entire conversation." So assuming that's correct...

00:19:18.960 | Yes. I will send that to you.

00:19:20.160 | Awesome. Perfect. I will put that in the show notes. So the deal making is important.

00:19:24.240 | Anything else someone needs to be thinking about when it comes to like,

00:19:27.440 | "What is a good opportunity? What is a bad opportunity? What does it look like when

00:19:30.160 | things go wrong?"

00:19:30.880 | Oh, what does it look like when things go wrong? There are really 2 things that people do

00:19:36.560 | that make them unhappy that they bought a business. One is they buy a job, not a business.

00:19:42.720 | So they go too small. So they're like, "Ah, I want to do this deal. It only has $60,000 in profit,

00:19:48.800 | but I only have to pay $100,000 for it. So this is awesome."

00:19:52.000 | And then they realize, "Oh man, now I own a cleaning company in which I am the cleaner."

00:19:56.560 | Not ideal, right? So typically, you want to go a little bit bigger.

00:20:00.320 | And then the second thing they do wrong is they don't follow some of our key commandments.

00:20:04.320 | And over the years, I've realized a few. First of all, 50-50 partnerships, bad.

00:20:11.120 | Somebody's in control. Somebody's not in control. That has to be the case. No partnerships.

00:20:16.400 | Two, your partner or operator who runs the business never gets equity day one.

00:20:21.520 | They earn it over time in investing year over year, where basically if they hit X parameters,

00:20:27.280 | then they win.

00:20:28.240 | Three, you stay out of the 5 areas that I don't like to invest in.

00:20:32.000 | Things like restaurants, FBA, hotels, those businesses for a myriad of reasons aren't my

00:20:37.360 | favorite. Four, people when they buy their first business, often buy what they think

00:20:45.280 | a business can be, not what a business is. So I buy facts and realities. People often

00:20:52.240 | buy hopes and dreams. And so what you really want to do is make sure that the business is

00:20:56.880 | profitable today, that the valuation you're paying is the right valuation for how much

00:21:02.800 | profit you make and nothing else, and that you're not focusing on "What could I do to

00:21:08.800 | this business?" And thus, this business is going to be a fixer-upper and it's going to

00:21:12.720 | be worth a million bucks because I'm so awesome.

00:21:14.960 | Instead, I assume I'm an idiot. I won't be able to get this business to do any more in

00:21:18.560 | revenue than it's doing right now. But that revenue is worth the price I'm paying. If

00:21:23.360 | you do those things, you're usually pretty tight.

00:21:25.360 | Sounds like take all the advice that I learned being a venture capitalist and investing in

00:21:28.960 | early-stage startups and do the exact opposite for every single...

00:21:31.920 | Throw it out the window.

00:21:32.720 | Throw it all out.

00:21:33.520 | Out.

00:21:34.880 | And for someone listening, thinking, "Wow, you have it all figured out." I have to imagine

00:21:38.240 | there's at least a story or two of a deal that just didn't turn out well and that everyone

00:21:41.920 | makes mistakes. And that's just part of the process.

00:21:43.920 | Oh, yeah. What usually goes wrong is people lie to you and you believe them. I think humans,

00:21:51.120 | we're really good at one thing, which is making ourselves believe the lies that we tell.

00:21:56.720 | I actually think humans are incredible self-rationalizers. So it's not always that

00:22:00.560 | the owners are bad. It's that they have talked themselves into a story. But we have one company

00:22:05.760 | I bought. It was actually in the cannabis space. And it was a pretty big deal. I think

00:22:09.440 | it was a $12 million deal. And this cannabis company, it was the backbone of cannabis.

00:22:14.800 | They did like packaging of products, basically. And all the financials checked out. We did a

00:22:21.680 | review of them. We looked at their accounting. We looked at the money that they had in the bank.

00:22:26.960 | All reasonable. The profit seemed reasonable. So we buy the company and we leave the operator in.

00:22:32.320 | We're going to buy a large majority, 60-70% of the business. And then he's going to keep

00:22:36.560 | a 20% stake, but he's going to continue to run it. It's growing pretty nicely.

00:22:40.640 | But lo and behold, this guy got one of his friends to put all the money in. So all the

00:22:47.200 | cash in the bank account was not right. Had his accountant in on it, who was actually one of his

00:22:52.720 | family members. And so his family member accountant had cooked the books, which we didn't realize.

00:22:58.560 | And then he was actually in San Francisco. And he was doing cocaine and mistresses and

00:23:09.360 | all sorts of stuff and had an extra apartment. So one day, we have this tracking app that we

00:23:15.680 | use to follow the cash that they have. And we see a big drop in the bank account.

00:23:21.840 | And so we get confused by that. And he says, "Oh no, it's moving inventory around."

00:23:27.040 | And give some example. I don't really remember. And then two weeks later, he calls us and he's

00:23:31.280 | like, "The thing is, we're out of cash. And in two weeks, we'll be closed down."

00:23:35.600 | And we were like, "What the... This company had $3 million in the bank and was profitable

00:23:40.880 | and making $5 million. What?" And so anyway, that deal was a ton of work. So what that meant

00:23:48.640 | is we had to fire him. Lawsuits happened. We had to take over the company. We had to put in a new

00:23:53.760 | operator. And that happens in doing deals. But typically, you're not going to get massive fraud

00:24:02.880 | and lies up front, just sometimes. You've done, I don't know, probably close to 100 deals,

00:24:08.640 | I'm guessing at this point. What's the success rate of these buying small business deals?

00:24:14.880 | Oh, like 99%. Most of the deals work out. I can count on one hand. I've maybe had 3 deals go

00:24:22.160 | wrong. That cannabis company, my very first investment, which was a little bit more like

00:24:26.800 | a venture-style deal. I invested in a friend, which is a good way to have things go shaky.

00:24:33.360 | Without much due diligence. And I had one deal... The only other one that went wrong

00:24:38.720 | was a business that I invested in, and it was too small. And I bought a large majority of it,

00:24:45.680 | but the operator still wanted to be involved. And it was just a waste of time, basically.

00:24:50.160 | So I got all my money back in that deal, plus 3 or 4x. But at some point, I actually just ended

00:24:55.360 | up giving the business back to him. I was like, "The thing is, just never call me again."

00:25:00.480 | And he was happy because he had his business to motor along with. And I was like, "Oh man,

00:25:04.000 | this just isn't a big enough deal for me." But for the most part, we don't have the 80% thing.

00:25:09.760 | I mean, in your venture funds, you guys kind of assume

00:25:12.880 | what? 1% to 5% to 10% of them are going to return the fund?

00:25:17.600 | I mean, usually, yeah. The goal is like you're looking for the deal that will return the fund.

00:25:21.840 | It's a totally different multiple. I wanted to humanize the fact that

00:25:25.040 | just because you know so much in this space, you started somewhere where you didn't,

00:25:29.120 | and you still had some bumps along the road, but also the success rate overall is pretty high.

00:25:33.680 | Because I think that's important for anyone thinking about this as an asset class.

00:25:38.480 | But when you talk about buying businesses, you briefly touched on ways to finance things.

00:25:43.520 | But I think one of the most interesting things I've learned from you

00:25:46.560 | in your content is just that you don't actually have to have $100,000 to buy a $100,000 business,

00:25:52.560 | which is just kind of... I think it's probably the big unlock that no one knew.

00:25:56.800 | Can you talk a little bit about or maybe give some examples of why

00:25:59.680 | that is true? Because it certainly doesn't seem it.

00:26:02.560 | Yeah. It's 2 magic words when you don't have money. And that's seller financing,

00:26:06.640 | which used to be a thing in real estate. You used to be able to sometimes buy a house.

00:26:11.920 | And from the future profits you got off a rental unit,

00:26:17.360 | you could buy that house for $0 down and pay them over time.

00:26:21.440 | So the seller would finance your purchase. Now it's not so normal.

00:26:25.040 | But in buying businesses, it's very normal. 60% of all businesses are bought using essentially

00:26:30.720 | the seller's future profits. And the reason why is because you've run a business or

00:26:35.520 | 7 before. So how miserable is running a business sometimes?

00:26:39.440 | It's tough, right? And so for a lot of these sellers, they've been doing this for 10,

00:26:44.560 | 20, 30 years. Then at some point, they're ready for the next thing,

00:26:47.920 | even if it's a profitable business. But they're stuck in it because unlike a job,

00:26:52.960 | not everybody knows how to exit a business. Everybody knows how to leave a company.

00:26:56.960 | Not a lot of people know how to sell their company. Not a lot of people know you can

00:27:00.160 | even sell your company. And so there are a ton of sellers out there who are trapped in their business.

00:27:04.560 | Most of these sellers do not have enough cash for retirement.

00:27:08.720 | More than 70% of them do not have a transition plan for the next generation to take over

00:27:14.640 | or somebody else to take over. And so you come in as a little bit of a solution for that.

00:27:18.720 | And how that works really quickly, for instance, I always use this one deal because it was one

00:27:22.640 | of my smaller deals in the beginning, is I bought a laundromat for like $100K a year

00:27:28.080 | that did $67,000 in profit. And that bit... So that's a one and a half, roughly X.

00:27:34.080 | And one and a half X, the profits of the business is how you value these for everybody listening.

00:27:40.880 | And so I buy this laundromat, but I don't use my own cash to do it. I tell the seller,

00:27:47.840 | "Over a three-year period, I'm going to pay you back from the profits of the business to take

00:27:52.080 | over your business. And at the end of three years, great, you have your full 100K. And at the end of

00:27:56.400 | the three years, I own the business outright." And this is very common. And I would say it's

00:28:01.840 | not always common you get 100%, but it's more common than people think.

00:28:05.280 | So a business costs $100,000, the business is making enough profit to pay for that.

00:28:10.080 | Like, why is this a good deal for the seller just to get out? It seems like a great deal for you

00:28:15.200 | because the business pays him back with the profits, you don't spend anything.

00:28:19.440 | Yeah, it goes back to the old supply and demand curve. When you have a lot of

00:28:23.040 | supply and not a lot of demand, then you're in charge. And so there's somewhere around the range

00:28:29.840 | of 10 to 12 billion small businesses for sale. There's a great article, actually, we did a video

00:28:34.480 | on it about Japan, and they have a crisis in business owners starting to give away their

00:28:40.000 | business for $0. I'm not talking $0 seller financing, I'm talking $0 because the next

00:28:45.120 | generation doesn't want to run a goat herding business, or they don't want to run a plumbing

00:28:50.960 | business. And so the founders of the companies just shut them down, or they try to give them

00:28:56.880 | away. So this is a real thing that happens every day. In fact, a lot of people don't think that

00:29:01.680 | they have a business, they think that they have a job. So think about your neighborhood wedding

00:29:07.680 | photographer, who also happens to have some contracts for high school photos that they do

00:29:15.360 | every year. They do $100,000 in revenue a year. It's a great little business for them. That's

00:29:21.360 | their business. They do $100,000 a year. And when you take out their salary, which at this point,

00:29:26.960 | they pay themselves the full amount. But let's say you take out their salary of like $60,000,

00:29:31.520 | $70,000, that leaves $30,000 to $40,000 profit. That person, when they're done being a wedding

00:29:38.160 | photographer and a high school photo photographer, they probably just like stop and go do something

00:29:42.480 | else. But those contracts with the high schools are worth something, that residual revenue is

00:29:47.600 | worth something, their gear is worth something, their website, the SEO that's built up, all of

00:29:53.520 | these jobs have inherent value to them. And it's just that a lot of people, there's a big mismatch.

00:30:00.240 | And it's one thing we're working on trying to build right now, so I should talk to you about,

00:30:03.760 | but I'm trying to build right now, a better mousetrap, because there's something called

00:30:07.600 | Biz Buy Sell, which is like the Zillow or Redfin of small businesses to buy, except it's awful.

00:30:14.400 | It's like bad UI/UX, a bunch of garbage on there. The financials aren't clean. They have business

00:30:21.200 | brokers that never respond to you. It's not a great site, but it's the best of all of the bad,

00:30:26.400 | right? And so, we're trying to figure out how to find... How to build a marketplace where

00:30:33.280 | sellers can come and trust that there's going to be non-looky-loo buyers on it. And we can

00:30:40.160 | sort of normalize the information and pair the two. But there's not a lot of that right now.

00:30:46.240 | So that wedding photographer can't find you, the young new photographer, that would love to buy

00:30:52.000 | that business. Because you, the young photographer, are just thinking, "Oh, I'm just gonna go start my

00:30:56.640 | own." As opposed to, "What if I could buy it? What if I could... Instead, when I graduate dental

00:31:01.440 | school, what if I could buy somebody's practice and I could give them an annuity in retirement,

00:31:06.480 | but I get to start that?" Instead, people just retire.

00:31:10.000 | I think buying small businesses is the next real estate. And in 10 to 20 years,

00:31:15.040 | it will be completely commoditized and normalized in a way that it is not today.

00:31:19.040 | But until then, there's a lot of opportunity. If there's not a platform to do it,

00:31:22.880 | is it knocking on doors? Is that how you find these businesses in your local community?

00:31:27.200 | We started one company... Well, actually, we bought a company. I bought a company called

00:31:30.960 | BizScout. BizScout.io. And that company sources off-market deals. And so basically,

00:31:37.520 | if you want to buy a car wash in your geographic area, it pulls together all the data from

00:31:42.960 | Yelp and Google and business listings and pulls them into one location. Also cross-references

00:31:48.320 | that with PPP loans, so you can try to get to who the owner is in your location.

00:31:52.640 | And then... And maybe needed some help. And so might be more likely to sell now.

00:31:57.520 | And then also pulls this list of proprietary deals we have from having this big audience.

00:32:01.520 | So BizScout.io is the one that we want to build off of. It's what I use right now.

00:32:05.440 | And then... Yeah. I mean, I think the best way to buy a business is different than buying a house.

00:32:12.240 | It's almost like buying a house back in the day. Before Realtors, you would be like, "Oh,

00:32:16.960 | my friend Sally is selling. You want to get into the neighborhood? You should talk to Sally."

00:32:21.360 | That's foreign to my generation. We can't even imagine you just buy houses on word of mouth.

00:32:27.120 | What's wrong with you people? But that is actually the best way to buy a small business

00:32:32.000 | is to build up your network or do what I call a personal P&L review, where you look at all of your

00:32:37.040 | expenses and you see which CEOs of those companies you could actually get to. And you start nurturing

00:32:41.840 | relationships and saying, "Oh man, you guys produced my podcast. All the hacks. How's that

00:32:48.720 | business going? Is it profitable? How long have you been doing it? A while. Cool. Is this something

00:32:53.440 | you want to do forever? You want to keep running this business? No, you don't. You're ready for

00:32:56.480 | the next thing. Interesting." I actually buy small businesses. If you had an offer at the

00:33:02.320 | right price and the right terms, would you be open to a conversation on potentially getting acquired

00:33:06.640 | or an investment that comes with distributing equity, cash flow, something like that?

00:33:11.280 | "Oh, you might be interested in that? Great. Now we're in the game."

00:33:13.840 | So you mentioned deal-making earlier being an important skill. And then you just said

00:33:16.720 | at the right price and the right terms. I think you have a pretty contrarian perspective there

00:33:21.280 | that most people think price is the most important. But I think you believe terms

00:33:25.200 | are actually more important. Can you talk about that?

00:33:27.200 | Only amateurs think price is the most important thing. That is something that people egotistically

00:33:32.880 | want to put on their Twitter feed. "I sold for 7 figures." That's awesome. Because you know that,

00:33:40.080 | you have a great leverage point that you should just poke at. The real pros know that terms are

00:33:45.920 | the only thing that matters. If I was to say to a seller, "Hey, I'll buy your business for $2

00:33:52.400 | million, which is what you want. I think your business is only worth $1 million. So here's

00:33:57.520 | how we're going to do it. I'm going to give you X dollars upfront. And then if your business hits

00:34:04.000 | the goals that you say it's going to hit, because your business is so great, it should be worth $2

00:34:08.080 | million, I will pay you that amount over time. In fact, we can put it in escrow. We can put it

00:34:13.360 | in writing. You can have a clawback provision if you hit those numbers. But until then, I'm only

00:34:19.840 | going to pay this amount." And so you can say, "Hey, Chris, great. I'll buy your business for

00:34:24.160 | $2 million." But that amount might only end up being $500,000 or $750,000 if you structure the

00:34:29.760 | deal right. And that's where the game is. That's where the fun part for me is in dealmaking.

00:34:34.640 | Because you sell a house, there's no wiggle room. You're like, "Here's the price. It is

00:34:39.520 | what it is." Maybe you get a realtor to skip their commission or you get a better rate.

00:34:43.840 | But that's it. Buying a business, you can play as many chords as you want to.

00:34:48.880 | It's funny because as you said that, I was like, "Wow, I tried to play that game when I was buying

00:34:52.240 | a house." But at the end of the day, it was like, I got them to throw in some plants, a TV, and

00:34:57.440 | rebate half a percent of the commission. And it's nowhere near the kind of impact you're talking...

00:35:01.600 | It felt good. I'm doing an episode maybe in a month or 2 about how to optimize the home buying

00:35:07.760 | process. There are levers there, but they don't sound nearly as opportunistic and awesome as the

00:35:13.360 | levers you could play buying a business. I think maybe the key to life and being

00:35:16.720 | successful is playing the right games. And if you only have so many words you can say a day,

00:35:21.280 | so many hours in the day, where is it worth the negotiating or dealmaking and where isn't it?

00:35:26.880 | And most people spend their time on really low level activities. Coupon cutting, asking for a

00:35:33.840 | discount at a restaurant or for wine or buying furniture, whatever. Okay, that's fine. But

00:35:38.960 | instead of doing that, you could just be a little bit more strategic upfront and think about,

00:35:44.240 | "If I negotiated my salary every single year, for sure, but maybe even twice a year,

00:35:50.080 | mid-year review time, maybe if you're really good quarterly, I can never clip a coupon again

00:35:56.320 | and make more from just negotiating my salary." And then a second level from that is, "Man,

00:36:01.840 | if I can figure out how to negotiate, how to buy assets that cashflow and can do 100x or 300x

00:36:08.800 | return to me, then I don't even have to negotiate my salary that much because I just take the

00:36:13.120 | salary, use the salary, apply it to assets that I keep buying. Those keep cash flowing for me."

00:36:18.080 | So, it's all about what level are you playing? Lots of people play level one games. And I think

00:36:22.640 | the pros, they don't bother with that. They don't Dave Ramsey their way to millions, right? It's not

00:36:29.200 | the fucking Starbucks. Have the Starbucks if you want it. But instead, try to get really smart on

00:36:34.400 | negotiating or dealmaking, so you can play the level six games and then buy whatever coffee you

00:36:38.800 | want. I feel like I like playing all six levels of games at the same time, which is maybe my

00:36:44.480 | problem as I end up spending too much time there. But I agree that you could save a little here or

00:36:49.360 | there, worry about that. But if you're not working on your salary, if you're not working on income,

00:36:52.720 | if you're not working on your investments, it's not there. But I think for the right person,

00:36:57.360 | getting that Starbucks for free because you played the Starbucks rewards thing

00:37:01.840 | and they had a double star day, it just feels good sometimes.

00:37:05.120 | So I think that's my challenge is that every now and then, knowing that you got this thing

00:37:10.240 | for half the price, that satisfaction just fuels and makes me excited. But I'm not doing it for the

00:37:15.440 | money, to be clear. It's a different type of game where it's really more about enjoyment

00:37:20.800 | and satisfaction of what I'm doing day to day. But I have realized that as you level that up,

00:37:25.040 | it's not about trying to save $2. It's like, "How do I apply that principle to something else?"

00:37:31.440 | And so I'm working... I think I've talked a few times about working on this book about

00:37:35.440 | principles of optimization in life. And part of it is that. It's like, "How do you go 80%,

00:37:39.760 | get the 80-20 out of optimizing your travel? And then instead of going down the 20,

00:37:45.200 | think about what do I care more about? Oh, maybe I care about my health. Let's go do the 80-20 on

00:37:48.480 | my health before I go... Once you've done all the 80s, sure. Go take 10% more on each one."

00:37:53.920 | So that's, I think, the next level thing that I'm working on, just generally,

00:37:58.160 | and try to put a little bit more thought behind it because it's a broad topic.

00:38:01.840 | I love that. Well, yeah. It's interesting because you're right, you play a lot of the points games,

00:38:09.520 | which I think are fun and valuable. I love a discount. I do love a discount. I love a deal.

00:38:14.800 | And I think I will always, no matter how wealthy I am, try to get them to optimize the sides I want

00:38:24.720 | on a dish and give me them for free as opposed to add-ons to the dish, which really ticks me off.

00:38:30.400 | And so I play that game. But I think the question that I come back to, and I'd be curious your take

00:38:38.880 | on, is if we're going to play these optimizing games, I think a lot of people fuck around and

00:38:45.520 | find out these days. They're like Twitter guys talking about their ice baths and their saunas,

00:38:54.160 | and these things that have, let's call it, could you even say a 1% difference? 1% to 5%. Let's be

00:39:03.200 | generous and say ice baths and saunas give you a 1% to 5% better overall health, which I think

00:39:09.920 | that would be a lot. Maybe even go 10%. It's like instead, man, I looked at your profile picture.

00:39:16.080 | How about you go to the gym five days a week for one hour? And then instead, how about we skip some

00:39:21.600 | of the processed food? And for a day, a day a week, you try to not do processed food.

00:39:27.600 | And so I think a lot of people choose the wrong games and they make life way harder than they

00:39:31.680 | need to. And I do this in many different ways. It's like, I want to optimize all these things

00:39:37.120 | on the fringes because they seem cool. When if you want to get fit, it's just like be more active,

00:39:42.400 | eat healthier food, and sort of that's it. But instead, we want to add 37 supplements

00:39:48.320 | and 472 podcasts and like three ice baths before you've fully woken up.

00:39:53.360 | It's funny because I was listening to talk Peter Atiyah gave, and he wrote this really long book

00:39:58.480 | that I really enjoyed about life. It's called Outlive. And he was someone saying, "Well,

00:40:03.120 | if you could just do one thing." He's like, "Look, almost none of this book matters if you're not

00:40:07.120 | just exercising. If you're not exercising, don't even open the book. You don't need to do all of

00:40:12.240 | these things. But if you are exercising and you are eating healthy, the data on sauna is pretty

00:40:17.920 | great in terms of longevity and health, but it's nowhere near as good as the data on what it means

00:40:24.800 | to just go out and exercise and go on a run or lift weights or whatever, whatever form of strength

00:40:28.880 | or cardio or zone, whatever you want, that is going to do more than other things. But if you're

00:40:35.520 | already doing that, I think decide where you want to spend your time. If you have a family history

00:40:40.640 | of a certain type of illness, well, okay, what's the thing that might be best at preventing that?

00:40:45.440 | Great place to spend time. But I agree that if you're focusing on... If you're not exercising

00:40:49.760 | and you're eating like crap, any amount of little tiny optimizations are not the priority to focus

00:40:55.280 | on. But sometimes it might make you feel good. But you need to get out and you need to get some

00:40:59.120 | exercise or stay in. I don't care where you do it, but you need to do it.

00:41:01.760 | That's so true. I have a great friend, John, who's a categorical badass. He was in the

00:41:07.120 | Foreign Service. He did incredible things for our country. And he's one of those guys. He's like...

00:41:13.920 | So he basically does a workout. He eats whatever's in front of him. And he's this brilliant dude.

00:41:18.080 | But he's like, "The thing is, I have to start with ice baths." And I was like,

00:41:21.520 | "This is what I know. Twitter's gone too far."

00:41:23.440 | I think you're right. Choose the right games and then optimize for the 10% in everything.

00:41:29.280 | The interesting thing about... I've talked to lots of people about ice baths, cold plunge.

00:41:34.720 | There's one aspect of it, which is like, "This is a thing that might help my health."

00:41:40.000 | And compared to exercise, maybe it's not there. But there's also the,

00:41:43.200 | "This is the thing that gets me fired up every day in the morning and makes me feel alert and

00:41:46.800 | ready to kick ass on my business, on my work, on my career." And so I put those in 2 camps.

00:41:51.360 | This is the thing that recharges me. This is the thing that helps me recover from run or whatever

00:41:58.000 | it is. And then there's the, "Will this increase my longevity? If I'm not exercising, maybe no."

00:42:03.600 | But if that ice bath makes you pumped for every day and makes you work

00:42:07.760 | 10% or 10 times harder, by all means, jump right in.

00:42:11.920 | Yep. Yep. I agree. We'll stop beating up the poor ice baths. I have one.

00:42:15.280 | But I think... Sorry, ice bath company that gave me one. But I think... I just think...

00:42:23.520 | I think as humans, if we could really figure out this beautiful secret, which is that we have a

00:42:29.760 | finite amount of energy and focus is the only thing that matters if you focus on the right

00:42:36.160 | things first, most humans... I mean, let's be honest. 1 out of 5 people will die... I'm sorry.

00:42:43.520 | 1 out of 10 people in the US will die wealthy when they die. 1 out of 10. Everybody else

00:42:51.520 | inside of there will largely die broke, will die before the age of 60, will be on government

00:43:02.880 | subsidization. And so sometimes I try to not forget that, "Man, we have so many different

00:43:09.520 | paths in the US." But by and large, we have a lot of people who if we don't overwhelm them,

00:43:14.720 | and just like when I was younger, and I didn't even know what a mutual fund was,

00:43:18.800 | and I didn't even know how to not overrun my bank account, but we just make it really easy for them

00:43:23.920 | to make one or two right, good decisions, then everything else gets a lot easier.

00:43:29.440 | But I'm sure the people on your podcast are doing all the right things. So if you guys are here

00:43:32.560 | listening, you should probably ice bath and do red light therapy, which I also love.

00:43:35.840 | Oh, interesting. So I want to go down a handful of paths. One,

00:43:39.440 | we talked a lot about one aspect of investing that you do and it's become your core thing.

00:43:44.960 | When it comes to money, are you still doing any other types? Are you diversified or is everything

00:43:48.800 | all in on buying businesses? Yeah. No, I'm diversified. I have

00:43:53.760 | probably a 20% bucket that's stocks, bonds, typical things. I have a financial advisor that

00:44:00.000 | manages all of that for me. I probably have another 20% bucket that's startups, early stage

00:44:06.480 | companies, and then the rest are in either real estate or my boring businesses.

00:44:13.520 | And that's without leverage. Obviously, if I applied the leverage that I have to the boring

00:44:18.080 | businesses, it would be maybe 90%, maybe 100% basically. But if we take leverage off the game,

00:44:26.960 | then I probably am like 55%, 60% in these cash flooring, boring businesses,

00:44:32.480 | and the rest of them are in startups or stocks and bonds.

00:44:35.120 | Okay. And another money thing that I think maybe other people listening, myself included,

00:44:40.720 | are thinking is one of the greatest things about running a business, you have all these business

00:44:44.160 | expenses, great opportunity to rack up unlimited number of points, miles, cashback, whatever it is.

00:44:49.360 | Please tell me that you're at least playing that game a little. I know it might not be...

00:44:53.840 | You're not as deep as maybe I am, but is that a side benefit to owning all these businesses?

00:44:59.040 | I really probably... After me talking about all this, I probably should have just a one-on-one

00:45:04.160 | call where you could consult me on my points. No, I think if you looked at my Amex, I probably

00:45:07.840 | have millions of points that have never used them. And we don't optimize that at all.

00:45:14.320 | Maybe we optimize a little bit because we have everybody use company cards across all the

00:45:18.000 | businesses and those get aggregated in a few different ways. And then we spend some big

00:45:22.400 | expenses on that. But for the most part, the benefits or points that I play, the games that

00:45:28.800 | I play with that are taxes. So are we buying the right real estate that's going to allow us to do

00:45:34.800 | accelerated depreciation, amortization? Because that could be a huge benefit.

00:45:41.040 | Are there some businesses where I could acquire them, but I could acquire them like, "Oh,

00:45:44.960 | this is a fun one." We just bought... So I was out there looking for a head of production.

00:45:50.880 | I needed somebody to produce part of my media company. And I was having a really hard time

00:45:56.000 | finding this role. And I needed actually a few roles underneath it. And I just wasn't

00:45:59.440 | having time to hire for it. And so then I was like, "Wait, pause. What if I could acquire

00:46:04.320 | these roles that I need in the form of a business, as opposed to hire them?"

00:46:08.720 | And so I went out to a few vendors and I started working with a few vendors. And all of those

00:46:14.240 | vendors were open to being sold, which will surprise you guys. Almost every single business

00:46:19.040 | owner out there is open to being bought at the right price and right terms. And so three of

00:46:23.680 | them were open to it. Two of them, I didn't like the deal. One of them, it was perfect timing.

00:46:27.360 | I had mentioned this to them. They had a little bit of a conflict inside the company.

00:46:30.880 | And I said to the guy, "Hey, how about if I acquire you guys? How about I buy your company?

00:46:35.680 | And I'm going to buy out you four plus your gear. We'll give you some multiple on that.

00:46:41.200 | But it will happen after you've been with me for 90 days and you've been executing.

00:46:44.880 | And I'll pay you in salary." So through that acquisition, I have decreased my overall

00:46:50.560 | profits in the business by hiring them with an increased salary. But that is a complete

00:46:56.960 | before the line tax write-off. Because if I had just bought them... So say I acquire all of them

00:47:02.000 | for salary of $100K for the year. Well, I can't write off that acquisition dollar for dollar in

00:47:08.240 | my business. But if I hire all of them through an acqui-hire, and that $100,000 rolls through as

00:47:15.280 | an expense payment for payroll, that lowers the total profits in my business and thus decreases

00:47:21.280 | my tax bill dollar for dollar. And so that was a cool way that I sort of gamed my little point

00:47:26.560 | system. But no, I'm terrible at Amex cards and flights and all of that stuff.

00:47:30.320 | We're going to have that one-on-one at some point. We're not going to do it live.

00:47:34.000 | But we'll get to it. You also mentioned the most important game is to figure out where you spend

00:47:38.880 | your time and what you're focused on. How do you think about when to spend your time on certain

00:47:44.640 | activities or how you spend your time? I used to be really bad at this. And it's

00:47:49.120 | something I struggle with daily. I think I, probably like a lot of entrepreneurs,

00:47:52.880 | have like mild ADHD. Everything's distracting. I have FOMO all the time.

00:47:57.760 | And there are a couple of things that made a big difference. One is, I find that technology,

00:48:06.480 | by and large, we think that technology is going to help us. So we have Tinder and Bumble

00:48:12.320 | that we're going to save, we're going to make dating so much easier. The world was going to

00:48:16.160 | be better because instantly we would be paired with other humans. According to some algorithmic

00:48:20.720 | match, we would find love, we would find sex, we would find meaning. What happened instead?

00:48:24.960 | Loneliness numbers at all-time high, people having sex at all-time lows,

00:48:29.280 | decreased marriage likelihood, decreased people having children.

00:48:33.040 | This technology that was supposed to help us actually seemingly did not. And in fact,

00:48:37.360 | through what I think is just massive optionality and overwhelmed from paralysis by analysis,

00:48:43.760 | means that we're not engaging anymore in that way from an intimacy perspective.

00:48:48.480 | I think a lot of the tech that helps us in business is the same thing. Slack is one of

00:48:52.240 | the most useful thing in my business. It's also the worst thing in some of my businesses.

00:48:57.120 | So if you were to look at my calendar, for instance, you would see basically that I do

00:49:02.480 | not take a phone call before 12pm. I would say I'm not 100% of the time. I am about 70-80% of

00:49:10.400 | the time. So no calls before 12. I am 100% of the time before 10am. No phone calls, no meetings.

00:49:17.840 | You'll also see that we have in our business, we have reminders that go out on our Slack channel

00:49:22.400 | that says, "Are you being productive? Are you being busy?" So every so often in the general

00:49:26.080 | channel, a thing will come on. And then the people in the companies will be like, "Oh,

00:49:29.200 | fuck. I am fucking around on Slack. I shouldn't be on here." That's fine.

00:49:32.720 | And then actually, I met with Bill Perkins, our mutual friend, this last weekend. And he kind of

00:49:37.520 | messed with my mind, Chris, because we were meeting and he wants me to go big in acquisitions and

00:49:44.080 | small business and let him invest in my company. And I don't let anybody invest in me right now.

00:49:48.560 | We have all our own cash in it. And he's like, "Cody, the thing is this." He's like, "You've

00:49:54.240 | been investing and playing in small business land for so long. I think small has infected

00:49:59.360 | your thinking." I was like, "What?" One, ouch, kind of hurt. Two, I rolled it around in my

00:50:07.200 | mind for a second and thought, "Huh, he's kind of right." So I was like, "What do you mean by that?"

00:50:11.520 | He's like, "One, you have a portfolio that does $60 million in revenue. That would be a lot to

00:50:16.480 | most people." He goes, "But you have run billion dollar funds before. Why don't you have a billion

00:50:20.720 | dollars?" I was like, "That's kind of a good question." And then he's like, "Two, how many

00:50:25.600 | things do you do throughout the day that are not high leverage activities? Count them."

00:50:31.040 | And my husband was there with me. And so we started naming off a bunch. And I was like,

00:50:34.240 | "Shut up." Elbowing him beneath the table. And so really quickly, I realized, "Gosh,

00:50:40.000 | there are all these things where because I didn't come from money, because I still am always scared

00:50:44.960 | that I'm going to be broke, because I never feel like we're rich no matter how much money we have,

00:50:49.120 | I keep doing that is really holding me back from getting to the next level."

00:50:53.840 | And so now I have a question like if you were able to see this here, I have a little question

00:50:57.360 | on my computer that says... Well, it says a couple... There's two things. One is about content.

00:51:03.600 | So it says, "Don't ship a product unless it makes you pee a little bit," which means it should be

00:51:08.560 | funny, it should entertain you. Anything that we go out in media. And the second thing basically

00:51:13.360 | says, "Long-winded, but does this seem important or is this important?" And so now I try to remind

00:51:20.320 | myself of that. Has Bill ever messed with your mind like that? I mean, his whole book messed

00:51:25.520 | with my mind because I would say played a little bit in that financial independence, retire early

00:51:31.280 | world. It was all about saving and it really... We were on a call doing an interview and he told me,

00:51:37.360 | he's like, "When you're trying to use all your points and miles, you're optimizing for the best

00:51:40.160 | deal. You're not optimizing for taking the trip." And I left the meeting, went to my wife and I was

00:51:43.920 | like, "Why don't we just go on a... We've always talked about going on a trip for the holidays.

00:51:48.640 | This year is the perfect time. Who cares whether it's going to be a lot of points or not a lot of

00:51:52.320 | points. Let's just do it." The awesome part about that was once I committed, then I still found a

00:51:57.280 | way to make a great deal. But I was afraid the deal wasn't going to be good because it was the

00:52:01.280 | holidays and we weren't going to do it. So he kind of has really messed with my mind,

00:52:04.800 | which is like, "Stop. Make sure you're optimizing for the right thing."

00:52:08.000 | And for anyone who hasn't listened to the episode I did with him on his book,

00:52:10.960 | Die With Zero, go back and find it. It was excellent. It might be one of,

00:52:15.920 | if not the most listened to episode of the show. And so he's really messed with me just like,

00:52:21.360 | "Let's make sure I'm really focused on what I want to get out of

00:52:24.640 | life in a more broad sense, but not in a business sense."

00:52:27.680 | But what he said about your business, all I could think about when we were talking about renting

00:52:31.920 | was, "Well, I understand that real estate is an asset class that could be interesting

00:52:36.320 | to invest in. I don't want to be a landlord. And so I have some percentage of my portfolio

00:52:40.880 | in a REIT. You have convinced me that these opportunities, these millions of small businesses,

00:52:47.680 | buying them and running them, operating them, growing them, buying their suppliers,

00:52:52.160 | it's a great place to invest time and energy and money. But I also have my own business and I'm

00:52:56.320 | like, "Now is not the time with two small kids to do it. How can I... What's the REIT of that?"

00:53:02.160 | And it sounds like the answer is there are private equity things which are

00:53:06.880 | much more up the high net worth. And in that level of business,

00:53:10.400 | I wonder if there's as much arbitrage as it sounds like you found. But I also don't necessarily want

00:53:16.720 | to do it. Is there a thing in that space or is that what Bill wants you to go do?

00:53:20.000 | Well, that is what Bill wants us to go do, for sure. But private equity funds

00:53:24.400 | have varying sizes. What I found is below the $10 million in revenue mark is actually where

00:53:31.200 | a lot of the meat is still on the bone. Once you get past 10, definitely $20 million in revenue,

00:53:37.760 | you're more playing with some of the bigger, lower middle market firms that are buying up some of

00:53:42.800 | these companies. But below that, there's just not enough people playing because it's riskier and

00:53:47.680 | it's harder to scale. If you think about these companies, KKR, Blackstone, they're not just

00:53:52.960 | billions of dollars, they're hundreds of billions of dollars. And it's how much easier is it to

00:53:57.440 | allocate $100 million once or to 100 deals for $1 million, right? The second is categorically

00:54:06.160 | harder to scale than the first. And so because of that, they go up market bigger and bigger and

00:54:10.640 | bigger. It's the same reason why in venture, you saw everybody start doing later stage deals,

00:54:14.960 | right? Because what? You're going to put like 525k checks into a brand new company and hope

00:54:21.760 | that something pans out. That's a lot of work. When instead, I could just pick a few companies

00:54:26.240 | that are larger, later stage, and I can allocate a bigger chunk. I could put $20 million in it.

00:54:30.480 | I could put $100 million in it. And so what we're trying to figure out is, is there a way to scale

00:54:35.680 | the low end of the totem pole? For most people, though, they don't care. Like for you, you don't

00:54:40.000 | care. "Can I scale this to $100 million?" You're like, "How do I pick a couple of businesses where

00:54:44.480 | I can have an operator that runs this business and I just cashflow on it? I'm like the money,

00:54:50.400 | and maybe I'm the counselor once a month, or I'm the strategic advisor quarterly."

00:54:55.920 | And that's the real game. So for people who already have a business like you,

00:54:59.600 | I would do a couple of things. If I was to tell you, "Chris Hutchins,

00:55:03.600 | what sort of business should you invest in right now?" I would say, "Chris, take your businesses

00:55:08.400 | today and look at all your expenses. Look at every single thing that costs you money each month.

00:55:13.280 | Just throw it in an Excel spreadsheet. Categorize it by who the vendor is. Get rid of the majority."

00:55:20.160 | So let's call it 60% of the costs are like Amazon, Riverside, stuff that you can't buy.

00:55:29.520 | And so you're going to get rid of all those. And then you're going to be left with like 20% to 30%

00:55:35.040 | to 40%. And you're going to get rid of all the repeat transactions, which means you're probably

00:55:39.760 | going to be down to like 10 to 50 different companies. And in those 10 to 50 different

00:55:44.960 | companies, you're going to look at them and go, "Oh, you know what? I spend $50,000 a month on

00:55:52.720 | PPC on ads that I give my vendor for ads. But I have a podcast that gets hundreds of thousands

00:55:58.720 | of listens a month. And I have a bunch of friends who use paid ads. So what if I go to this guy and

00:56:07.200 | say, "Here's the thing. I really like you. Are you going to continue to run that?" And you do that

00:56:12.240 | thing that I said to you. You say like, "Would you ever sell the business?" "No, no, no. Most

00:56:15.360 | likely this guy is young because paid ads business is newer. So this person is probably a little

00:56:19.600 | younger. They're not ready to sell." And so instead you go, "Hey, how about this?

00:56:22.880 | I'm going to partner with somebody. I'm going to invest in the form of financial return that I

00:56:33.200 | give you by talking about you on my platform in somebody's paid ads company. I'd like it to be

00:56:40.080 | you. I really like working with you. I like us paying you $50,000 a month. And I think that I

00:56:45.040 | could probably get you another $200,000 a month in paid. Would you be interested if we set it up

00:56:51.360 | right? It works out perfectly for you. I get the right terms for you. Would you theoretically be

00:56:55.520 | interested in partnering where I do some deal where I take a portion of equity in your company,

00:57:00.560 | but that equity distributes as a portion of revenue? So I'm not going to be messing around

00:57:04.960 | trying to figure out what your profit is bothering you in the daily. I'm just going to say top line,

00:57:09.520 | I'm going to take a percentage of total revenue that we make, and you're going to send it to me,

00:57:14.080 | just like you would send me a rent check if I was a landlord. Would you be open to something

00:57:18.000 | like that?" What you're going to find is like, honestly, I have a high record, but

00:57:22.080 | somewhere between one to four people that you talk to out of five will be interested in that deal.

00:57:29.200 | And you're going to structure a deal where you start to own a portfolio of small businesses

00:57:33.200 | in chunks, because you have a platform that can distribute, and also because you figured out how

00:57:39.360 | to get distributed equity deals. And that's what I would do if you, I wouldn't go out and buy a car

00:57:44.800 | wash, unless alternatively, you have your wife who doesn't want to work 40 hours a week, but she

00:57:50.320 | would love like a five, 10 hour a week thing that could like be hers and she could make her own

00:57:55.360 | money. She could do it her way. Then you could buy a small business too.

00:57:58.960 | I think my wife is more of a business mercenary than I am. So that would not...

00:58:03.920 | She would be like, "Let's go buy 50 businesses and I will run that empire." So maybe that's

00:58:08.800 | the path. Yeah.

00:58:10.080 | But if someone doesn't own a business, is there like... In real estate, there's like these private

00:58:15.520 | real estate deals where you can go in and instead of buying a unit, there's a developer doing this.

00:58:20.800 | Does that stuff exist in businesses? When you buy businesses, do you ever get financing outside?

00:58:26.000 | I think you said no, but do other people like you do that?

00:58:28.720 | Yeah, totally. I don't do it right now. I use all my own cash. But

00:58:32.800 | there are search funds. Those are typically people pull together assets and then

00:58:37.680 | find an operator who wants to buy a business. And that operator goes and buys a business and

00:58:41.200 | use pooled funds. People raise independently for buying businesses. Part of the reason that I

00:58:47.120 | started a mastermind group where we talk about all this at Unconventional Acquisitions is because

00:58:51.680 | I invest in my people's deals. So we have 600 members in there. The average person buys a

00:58:59.120 | business inside of 11 months that does at least $250,000 in revenue. I invest in a bunch of those

00:59:05.040 | deals. So I invest in their one-off deals. I invest in pooled funds like search funds.

00:59:10.240 | And then there are certainly micro PE funds that'll take...

00:59:13.760 | The problem is you really need $25K at least to do that. And a lot of them have $100K minimums.

00:59:19.200 | But when you're raising for one-off deals, those don't. And the other nice part about

00:59:23.360 | this is these distribute. When you invest in a VC fund or an angel investment, you know,

00:59:29.840 | 8 out of your 10 deals you're going to lose money on. And you're not going to get your money for at

00:59:34.320 | least 5 to 7 years, but more likely 10. And so this one's a little different. I like doing deals

00:59:40.320 | where I cash flow within the first 30 days, but I'll settle for 90.

00:59:44.160 | So it sounds like find the places like the community you've built where people are doing

00:59:47.920 | this. And I think this is the answer for almost any type of industry business that you want to

00:59:52.080 | get into. It's go find where the people are talking, whether it's a meetup, whether it's

00:59:55.840 | a forum, whether it's a mastermind, and just start talking. And you will slowly build the

00:59:59.760 | relationships you need to find ways to get into this. And maybe you'll just decide, "Oh, this is

01:00:04.560 | something I want to do." Or "I met someone. They love doing it. I can invest in their next deal."

01:00:08.560 | Yeah, 100%. And I really just think it's such a skill. I was talking to a guy who owns a really

01:00:15.040 | big, maybe one of the largest fitness companies in the country today. And he's like, "I don't

01:00:19.920 | even know if I know how to buy businesses." And this guy does almost a billion dollars in annual

01:00:24.400 | revenue. And I'm like, "Well, it's not that hard. What is it that scares you? Or why don't you

01:00:32.160 | think you could do this?" And his comment was, "Well, I've grown so fast organically. It feels

01:00:37.600 | scary to me to take my eye off the thing I do every day to try this other thing."

01:00:43.360 | And I think that's the other biggest reason why people don't buy businesses. Because you feel like

01:00:47.520 | "I don't want to take my eye off podcasting and my business and everything that's working

01:00:50.640 | right now. It's a distraction." And that isn't true. Often, if you feel like you're playing,

01:00:55.360 | let's call it a level one, like a level six game, a really high level game.

01:01:00.160 | But if you're in a job you don't love, if you're making the same amount of money continuously,

01:01:06.160 | I think you should spend at least 90 days learning how to acquire things.

01:01:11.360 | Because then you'll never have to do something just for the money again. You can do it if you

01:01:17.680 | want to. I don't think everybody should go and be a laundromat owner forever. And that's their

01:01:22.240 | highest and best use. But I think if you have assets behind you, then you get to choose.

01:01:27.520 | You don't have to do. Yeah. Yeah. It's super interesting.

01:01:30.640 | It's something I never considered until I ran across your content, which is like,

01:01:33.440 | "We have to have this conversation because..." I was like, "I just wanted people to know about it."

01:01:37.040 | We briefly went over life. You talked about your calendar, about how you spend time. Are

01:01:43.920 | you a big fan of outsourcing a lot of things to team members, assistants, that kind of stuff?

01:01:48.560 | How do you, on the personal side, manage your time and not get caught up in those

01:01:54.000 | small questions and focus on what's most important? This one, I've always been pretty good at.

01:01:59.200 | I think I read the four-hour workweek. I know you're bud, Tim. I think I read that way too

01:02:04.400 | early almost. I was like, "I shall outsource everything." But I read that really early,

01:02:09.520 | and I've tried to live it. It's actually helped a ton. So I've had a VA since I made my first 100K.

01:02:14.640 | The second I hit 100K, I was like, "Hire a virtual assistant." And now I have a few

01:02:19.200 | virtual assistants. And then I have an assistant that manages the first virtual assistants.

01:02:24.320 | And then I have my chief of staff, who all of them report into. The key though, I think,

01:02:30.720 | in delegation is realizing that you can only really have, in my opinion,

01:02:35.440 | five, max 10 people report to you directly. I think once you get past that 10 direct reports,

01:02:42.080 | even if the direct report is your nanny, your housekeeper, your property manager,

01:02:50.160 | you need those to funnel up. So one thing people don't talk about enough in delegation, I think,

01:02:54.960 | is that you have to have an org chart for the people that help you even. And this is a higher

01:03:01.120 | level game. This is for people who have some disposable income that they can use.

01:03:06.160 | But if I was you, I actually think the easiest thing to do with delegation is if you can afford

01:03:11.200 | to start with a chief of staff. So a higher level person, maybe you're paying that person.

01:03:16.640 | You could get a young, hungry person for like 65k a year, all the way up to chief of staffs

01:03:22.960 | can make hundreds and hundreds of thousands. And that person can be your go-to contact

01:03:28.240 | for a VA that only costs you a thousand bucks a month. And for your housekeeper that only costs

01:03:33.840 | you 400, 500 bucks a month. But they all go through this one person. That's really the key.

01:03:40.000 | Because the thing stopping you from getting where you're going is typically you don't have enough

01:03:45.840 | people working for you. Your 100% can never be as powerful as five people's 50%. So it's a fallacy

01:03:55.760 | that if you're great at something, you're the only person who can do it. And simultaneously,

01:03:59.840 | those five people with 50% will distract you hugely. So how can you put a barrier between the

01:04:05.440 | two? And so I do that well now, but I haven't always. I have never done it well. And in the

01:04:11.200 | last 2 weeks, maybe --I'm very early in this experiment-- I hired a VA. But I would say,

01:04:19.200 | based on 2 weeks, I feel like this person falls in the spectrum of VA to chief of staff.

01:04:24.880 | Way more qualified than just "I'm going to send an email to this person."

01:04:30.800 | And they could do all the full spectrum. And this is early. And I worked with a company called

01:04:36.320 | Oceans. OceansXYZ.com. Feel free to tell them. I say, "Maybe go to allthehacks.com/oceans. And

01:04:44.080 | before you hear this, I'll go get some deal. That's my plan. So go to allthehacks.com/oceans,

01:04:49.120 | and we'll see what I can do." But it has been so interesting to try and really force that.

01:04:55.200 | And I want to do a whole episode on outsourcing things. And this is not just

01:04:59.440 | work. This is personal. This is everything from email, to meal planning, to researching,

01:05:06.400 | to so many things that I don't even... But what I did was I started in advance of "Let's go and

01:05:13.680 | write down for 2 weeks everything I could outsource." So similarly, as I was going through

01:05:18.160 | anything, I just got in my mind, "Okay, could this go out? Okay, I'm putting in a list."

01:05:21.360 | Once I saw the magnitude of that list, and if you think about the cost of hiring virtual assistants,

01:05:26.800 | you said it could be anywhere from $1,000 to $4,000 a month for a full-time person.

01:05:31.520 | And there are other options if you want fractional and all that stuff.

01:05:33.920 | Imagine what you could do with that, whether it's spending it just with your family, or on

01:05:39.440 | really big strategic things with your business. Or maybe you don't have time to buy a small

01:05:46.400 | business like you just heard us talk about, because you have so much stuff going on in

01:05:50.000 | your personal life. What if you could outsource a lot of that personal life stuff so that you

01:05:54.080 | could go and buy a small business and end up finding out that "Net, net, net, this all pays

01:05:59.280 | for itself." Now you can roll that person's compensation into that small business.

01:06:03.440 | Now it's a deductible expense above the line. There's all kinds of interesting stuff. But

01:06:07.600 | I am going to do a whole episode on this process of everything we've organized,

01:06:13.360 | and how it worked, and how I looked, and all the companies that I interviewed.

01:06:16.480 | Fancy Hands was by far the worst option for outsourcing tasks. I can do nothing more than

01:06:22.720 | wholeheartedly tell you, do not use this company. It was an awful experience.

01:06:26.080 | I've never heard of that. Really?

01:06:27.920 | It was just a task-based VA and it was so bad. It was a waste of money. Completely zero value.

01:06:36.880 | Sorry, Fancy Hands. I'm unfortunately completely not satisfied. But I'm incredibly satisfied

01:06:45.280 | with the woman I'm working with, Promotions. And it's early, but so far, I am so optimistic.

01:06:52.160 | I have this friend, Dan, who runs a company called My OutDesk. It's another one of those

01:07:00.560 | companies you just talked about. But they do something called the Notepad Challenge.

01:07:05.360 | I gotta find this for you. But basically, he had me do the same thing. So the long and short of it

01:07:11.040 | is -- and I'll find it so you can link it -- you basically track for an entire day every single

01:07:18.320 | activity that you do. And then he says that for a week after, for an hour a day, you should track

01:07:23.600 | all of your activities that you do. And then you catalog them along a quadrant. And to the left,

01:07:31.440 | it's like high outcome or high leverage, low time. And on the bottom right, it's low leverage,

01:07:39.840 | high time. So the bottom would be the worst. Something that takes me a ton of time,

01:07:44.240 | and it doesn't have a great outcome for me. And at the top, it takes not a lot of time,

01:07:49.040 | and it's a great output for me. And the goal is basically, you want to spend all your time

01:07:53.360 | in the left quadrant at the top. Very little of your time in the bottom right. So you want to

01:08:00.080 | outsource all of those tasks. And then there'll probably be another quadrant right next to it

01:08:03.360 | that's like high output, a lot of time. And maybe -- so you're spending all of your time in the top

01:08:08.960 | two. And the bottom two quadrants, you're basically trying to offload all of those tasks.

01:08:13.840 | And so every so often, I go back and do this version of the notepad challenge.

01:08:17.920 | And it's really, really helpful. And in the beginning, you do what you can afford,

01:08:22.320 | and then you layer on top of it. But there's a saying, I can't remember who said it, but that

01:08:27.840 | your business is one -- or you are one hire away from a completely new business.

01:08:34.000 | And I think that's true also of your life. You are one hire away

01:08:37.360 | from a completely different life. And it can be very small things. I can't remember the last time

01:08:43.760 | I had to get on the call with AT&T or Verizon or deal with a cable provider or schedule my doctors.

01:08:51.120 | But six years ago, I spent hours on that stuff, haggling, dealing with issues,

01:08:58.640 | changing flights. I don't do any of that anymore. And it probably cost me about $1,000 a month to

01:09:04.480 | save me 10s and 10s and 10s of hours a month. And it's not just hours. It's like the overhead

01:09:11.680 | of having to keep track of all of the things. So yeah, I'm a huge fan of that. We're almost

01:09:17.280 | out of time. I'm going to ask you one more thing. You have all of these great posts and threads

01:09:22.000 | where you're like, "Here's the way I've optimized this aspect of my life." I'm going to mention one,

01:09:26.560 | and I'll just link to it in the show notes, which is this 160 rule on Sundays about how you ask

01:09:30.720 | yourself and check in on what you're doing. I think it's great. But the one that I was most

01:09:35.040 | recently looking at, that's a bit of a tangent from this conversation, was about a check-in you

01:09:39.040 | do on your relationship. And so I think maybe as a total aside from everything we've talked about,

01:09:43.760 | maybe share that a bit because I adopted it. I thought it was so great.

01:09:48.000 | Oh, that makes me happy. I had no idea this would go as viral as it did. It's just what we do.

01:09:52.960 | We're busy. My husband works a lot too. He's a pretty serious guy, former Navy SEAL,

01:10:00.000 | sort of a tough dude. And what was happening is we were building up tension throughout the day.

01:10:06.800 | So little things, "Why are your socks out? Why didn't you put the car keys away?" Very small

01:10:12.880 | things would get blown out of proportion or they would just nag throughout the day. And so we came

01:10:18.640 | up with this thing in partnership with this woman called Brandy who helped us called Team. And

01:10:23.200 | basically what it is, it's an end of day check-in. And our goal is the little things that come up

01:10:29.360 | throughout the day, instead of just word-vomiting them at each other at any given point in which you

01:10:34.400 | feel annoyed and you're elevated, what if you wrote them down and you save them for later in

01:10:38.960 | a place where maybe you're having a nice glass of wine or for your biohackers out there, you're

01:10:43.040 | doing whatever you do in the evening and you sit down with your spouse and the first tenant is

01:10:50.400 | touch. So T for touch. And it basically means you sit next to each other, you hold hands,

01:10:55.280 | you put your feet on each other on the couch, whatever. Or when you're really mad,

01:10:58.480 | we jokingly do this little ET one-finger touch thing. Because sometimes at the end of the day,

01:11:02.880 | you're still mad from what's going on. And you start with touch because you're reminding each

01:11:07.200 | other, "You guys are in this together. You're a team." The second step is education. So you know

01:11:11.920 | how you come home from work a lot of times and you're like, "How was your day, honey? Good. How

01:11:14.480 | was your day, honey?" Like blah, blah, blah. Same conversation. You don't get that deep.

01:11:17.840 | And that I think really leads to why a lot of people actually get divorced or cheat or whatever.

01:11:23.760 | You stop dating your spouse and you stop getting the most interesting information out of them

01:11:29.280 | because your routine has meant that you ask the same lazy questions always, and you tell

01:11:34.240 | lazy stories. And so education means you have to tell your spouse one thing that you learned

01:11:39.040 | that day that was new to you. And so that means it's usually a great conversation starter.

01:11:43.680 | So the education part will usually go longer. So I might be like, "Today I was with Chris,

01:11:48.960 | and I just realized that we have a million points on Amex, and now I'm super stressed because we

01:11:54.000 | have never used these. And so now I have to figure out how to optimize this. And did you know that

01:11:57.760 | there's a whole group of people that this is all they do and we're not doing it?" So maybe that's

01:12:00.960 | my thing. And then he'll tell me something. And then the next is appreciation. So even

01:12:05.440 | when you're mad, there is a reason why you chose this human to be with for life, for now, for

01:12:11.520 | whatever. And so giving a little piece of gratitude typically helps diffuse what comes next. And so

01:12:18.000 | if you're mad, it could be, "I appreciate you taking out the trash today."

01:12:21.920 | Our only rule there is you can't keep repeating the same ones. "You're so beautiful. I love your

01:12:26.640 | hair." No, you got to get a little bit more creative. And then the last one is metrics.

01:12:32.400 | And here we basically say, "I kept my list of things that annoyed me today that I wish you

01:12:37.200 | would do differently." Or, "Here's this big thing that I want us to talk about." Or some days we

01:12:42.400 | really have nothing. But because you're not telling the person in the moment when you're upset at them

01:12:48.480 | about this thing, the level of intensity, emotional intensity is so decreased that typically we get

01:12:56.400 | through the metrics in a way where we're in our rational brains. We're not elevated. And so we can

01:13:01.040 | have a really pretty easy conversation. And then the internet has actually changed up this one a

01:13:06.560 | little bit. And they now think it is Teams. And at the end, it should be "Ask for sex."

01:13:12.720 | And that's how you should add it. So up to you. That's an optional add-on at the end.

01:13:17.280 | Alright. So I know that was a departure, but I think you have a few of these. I'm going to link

01:13:22.320 | to a couple of the other ones that you've done where you're just like, "Hey, here's the way I've

01:13:25.280 | optimized this thing in my life." And what I love about having conversations with people that have

01:13:29.840 | thought very deeply about one area of their life is they've generally actually done that

01:13:34.560 | other places. The hardest thing that I... You create content, so it's a little easier,

01:13:38.720 | but the hardest thing for me is pulling it out. Because they don't always think...

01:13:41.680 | Maybe before you made that post, you said you didn't think it would go viral. It's like,

01:13:44.880 | "Well, it's just a thing I do." It's like, "No, you've applied all these lessons you've learned

01:13:49.680 | about business relationships and tracking things and trying to find this way. Oh, let's just apply

01:13:54.000 | it to this relationship." And it turned out amazing. Not to say just this relationship,

01:13:58.320 | the most important relationship, of course. That's right.

01:14:01.280 | But yeah, so that was awesome. Thank you for sharing that. I'll link to the rest.

01:14:04.480 | We're way over time. Where can people go and learn more about everything you're

01:14:09.600 | doing in your community about buying businesses, follow you, everything?

01:14:13.760 | I think ContraryThinking.co is probably the best or I'm @CodySanchez on all those socials.

01:14:19.760 | Take your pick. But I think the free newsletter comes out weekly and is awesome if you want to

01:14:24.000 | learn 2 things. Mental frameworks, and you want to learn monetary frameworks. So how to make money,

01:14:31.200 | and how to think better. That's Contrary Thinking's newsletter.

01:14:35.040 | Awesome. Thank you so much for being here.

01:14:37.360 | Thank you for having me. This is a blast. Got to get my points now.

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