The Small Business Buying Blueprint with Codie Sanchez

We were two weeks away from running out of money completely, not being able to pay our employees, having massive debt, talking like millions of dollars off. Nobody knew. Not the employees, not the executives, not my partner at the time. There was a moment in the middle of the night, pitch black, I was seated on my couch, my dad has this line. So I called him, he's like, when you are head in the hands alone in the dark with no idea what to do next, that's when you know you're in the game. Until that moment, you were never really in the game. What's up, rich friends? And welcome back to another episode of Network and Chill with me, your host, Vivian too, AKA your HBFF and your favorite, Wall Street Girlie. And I often get asked, what's the most important thing I learned on Wall Street? And without a doubt, it was the art of the hustle. Working in a competitive field like trading, especially surrounded by a ton of men, is like throwing you into the deep end of a pool. You learn that it's not just about who's the smartest, but rather who is most respected, best connected, and most resourceful and adaptable when life throws another curveball. That's why I'm especially excited to introduce our guest today, because not only is she also a former Wall Street Girlie, who cut her teeth in the same hustle before branching off to share her lessons with the world, she understands exactly what I'm talking about. Today, she runs Contrarian Thinking, a multi-leg business that teaches you everything from how to buy and invest in small businesses, all the way to sharing current business news. She hosts the podcast Big Deal, and her book, Main Street Millionaire, is a New York Times bestseller, how to on everything you need to know about buying boring businesses. Cody Sanchez, thank you so much for joining me. I'm thrilled to be here. Okay, so we have to talk a little bit about our origin story. Talk to me about your experience in finance, Wall Street, like what drew you to it? Where does President Trump's speech leave us with regard to where the war is headed? And it really was, to me, the story of the commander-in-chief who weeks into this war is deeply uncertain about how it ends. I'm John Finer, co-host of the Long Game Podcast. This week, Jake Sullivan and I break down the president's speech and discuss what it's like to negotiate with the Iranians. We will also debate whether Iran should accept a deal. The episode is out now. Search and follow the Long Game wherever you get your podcasts. Yeah, well, I'm getting deja vu, or PTSD, actually, be back here in New York, if we're honest. But this is a long time ago, so I started out, I graduated from college in 2008. A really wonderful time to be graduating from college. Yeah, great time, yeah. Jobs everywhere. No, it was miserable. And so I went, first of all, to a company called Vanguard, really big asset management firm, right? And then I went to Goldman Sachs. And then from Goldman, I went to State Street and then First Trust, a bunch of these other financial firms. But I think the most interesting part about that is, I did not want to be a spreadsheet girly. I don't know if you wanted to. I actually was allergic to math. I didn't think that I was good at it. And I think part of the reason I went in there is I just thought money was power. So I was like, I don't have any power. I can't pay for anything. I didn't come from money. My parents didn't have any money. So I was like, I need to figure this out. Because it seems like you can't do anything if you don't have cash. And so I climbed my little corporate ladder in finance for many, many years, actually. How many years did you work in finance? I was there for about two and a half years in my trading seat. And then I actually moved into media and advertising, which is how I blended your BFF into the finance and the media piece. That makes all the sense in the world. So you're so much better than I am. I was really risk-averse. If you're listening and you're scared. And you're in a corporate show. I find that so hard to believe. I know it's not bizarre. But if you look at my history, I worked for corporations for 12 years. So I worked for big companies because I was too scared to go do it by myself. And I thought that you also needed the credentials. You make it when you get to Goldman Sachs and when you get to the MBA. And when I could say I went to Georgetown, I'd stacked all the things that I would tell people to never do now. And it took me a long time to feel like I could actually go out on my own and do anything. And back then, not that I'm like that old, but we didn't have people telling us, hey, you could do a deal yourself. You could buy a business by yourself. And so I remember looking down the hall at some of these managing directors in finance. And they're all dudes. I'm the youngest analyst and then associate at Goldman. I'm the youngest managing director and partner at multiple financial firms. I ran a big business in Latin America. We got probably only the young woman in the room. Totally, and the only Latina and a lot of them too. And I ran with it. When I was like, I get to be a double checkbox. I'm like, fuck it, yeah, fine. However it gets me in the room, I don't care, use it. But I remember looking down the hall at these guys and thinking they're miserable. They're on like their second or third wives. Yeah, they have a shit ton of cash, but they're really unhappy. And so I was like, wait a second. I don't actually think finance is the way for happiness. I think it's a great way to make a ton of cash. But I was like, how can we just do deals by ourselves? Because it doesn't seem happy to me to just buy, sell, buy, sell arbitrage all day as a job. Yeah. And you talk about being really risk averse and being scared to do it. Was there a turning point moment where you're like, fuck it, I'm doing it? Yeah, I mean, well, there were a couple. I was a side hustle girlie too. I was a sneaker flipper. I was like actual shoes. Yeah, like Nike's, like the really, really rare Jordans that would release. It's because you're a trader. So you're basically always looking for it where there's a market. Always. Yeah, yeah, yeah. I started out in fixed income training at Vanguard. So I get that a little bit. But even that scared me. It freaked me out. I'm like, it feels like gambling. And so there was a moment at State Street, actually. It was a really big asset management firm. And I started a little podcast. I think you can find the old episodes somewhere on the internet, which is horrifying. And I started dabbling in podcasts. And that would have been like, somebody can check my actual math here, but God, it must have been like 2010. And like, one, could you imagine how far along I'd be in a podcast now if I had started in 2010. Stuck with it, yeah. And I remember my boss found out about it because I was kind of like, it didn't make any money. And back then, these weren't very big. So, and he sat me down. And he was like, you have a decision to make. Like, do you want to work at this company and continue to be in finance? Or do you want to do this little side hustle? And I was a wuss. And so I was like, no, I want to stay. You know, kill the podcast. So that was the first moment where like, I think in your life, you typically have these micro minutes where you get to decide to take the leap and your life can change, or somebody else gets to control the dream. And in that moment, I let him control the dream. And then the second one happened when now I call it your FU thermometer. And so I think when you have a corporate job, there's like some thermometer that exists. And you might not even know where it is. But at some point it like boils, boils, boils, boils. And you can either be in a job where you can release it. You can go like, hey, that pissed me off that you did that. And I want to work in business differently to your boss or to somebody else. Or if you're in corporate finance, you have to shove it down deep inside. Deep inside. With all your emotions. And at some point, you know, I remember one of the, one of the leaders of the business I was at the time. You know, I don't want to name names, but his name was Dan. And Dan basically sent me this email, which I kept to this day. And on it was like, I kind of got a little known on the internet. It's one of the only women in like a senior finance position. So I was on a couple of magazine covers for like Hispanic, Latino women, whatever. And one of them came out and he sent me this email. And the email was like, I hope you got more followers today because you dumbed down our firm. And I was like, the fuck? And so I remember taking that email and I worked for the CEO of this company at the time. So I went into his office and I was like, Jim, what is wrong with this guy? But he was actually sort of like related to somebody that Jim was really close with. And so basically they were both like... I smell nepotism. Yeah. And so they told me to pound sand. And it was that moment where I was like, all right, I'm going to build my own thing. Because I had built this really big business in Latin America, it was growing faster than all the other international divisions, but some guy can do that. And not even have to apologize or anything. And so that was my FU thermometer moment. And thank God, now I kind of am thankful to Dan. And so is my bank account. You know, it's so crazy. I feel like every woman who has left the industry has a story like that. I have my own FU story. I just feel like there is still so much terrible culture in some of these major finance firms. And I do think it's shifting, but it's a slow crawl to an improvement. Yeah. And I think you just got to know that you're going into these jobs. In my opinion, you can make a ton of money. You'll get really thick skin. You'll learn a ton. It's cutthroat and ruthless. And that's actually a feature, not a benefit, I think, for us. It's really not a feature to the company, I think. I think they lose really smart good people for that reason. And they end up getting people that are not loyal and probably have some ethical issues, which is not good in finance. Yeah. But like, if I was a young person going into finance, I wouldn't even be crusading to change it. I'd be like, become strong enough. It's like that African proverb, you know, do you want to cover the world in leather? Do you want to wear leather shoes? Right. And so like, I got my leather shoes there. And I'm really thankful for that, because running a business is hard, you know that. And I think without finance, I wouldn't have been able to do it. Yeah. Learn and earn on their dime, and then turn around, make it your own. 100%. And you mentioned you learned a lot there. What do you think the most important thing you learned was? I call it becoming a deal maker. But I think in life, it's not, in my opinion, I'd be curious to take. You don't need to learn how to buy and sell stocks really well. You don't need to learn how to understand, you know, whether you should get a mortgage on this or put a loan down there. What do you actually need to understand? You need to understand how to do deals. All of those things are deals. A deal is, should I buy Apple versus Amazon? A deal is, should I buy a house versus a rent a house? It's all deal making. And finance at the core of it isn't spreadsheets. Is this a good deal monetarily for me, or is this not? And we are not taught that at all in school. It's so funny because you come from a corporate finance background, but I feel like I focused more on trading. So what you call a deal, I call a trade. And every, you know, all of the wisdom boiled down, I feel like it's like every trade has a winner and a loser. Which one do you want to be? 100%. And how do you even, I think most people don't, you don't even realize the game you're playing. That's the problem with most people in life. They don't know if what they make, salary wise, is actually market. Right. Most people don't actually know how much they bring into a company one way or the other. What is the value you bring to a company? Most people don't know what is reasonable to pay for their first hires. So all of this is like, when you understand how to analyze a trade or a deal, what do you basically do? And you're like, is this a good deal for me or not? Which means you got to understand what a bad deal looks like. You got to understand timing. You got to understand sizing. And so I think what you're doing is really important because most people don't talk about this. It's like the second people make money, they're like, I don't want to talk about that anymore. So the weirdest phenomenon, I get it. It could be like a little gauche, but I think you have to. But like, is it? It's only gauche when certain people do it. Yeah, and if you're doing it like a dick. I mean, you know, you get so much hate on the internet mostly from like men who are upset about it. Which money you make, which I can relate to. It happens to me on Twitter too. I mean, I remember, I'm like, you just got to expect that, especially if you're a woman, like just expect it. They're going to think you're the secretary, you're the trust fund kid, your husband's the rich one. Da da da, it's happened to me a little bit. There's a reddit thread of people talking about how I'm only well off because my husband makes a lot of money. I'm our family's breadwinner. It's so funny. That happened to me too. And my husband, I'm like, former Navy SEAL. I'm like, Google the salary. I met him when I was 32. That's when we actually started getting together. We've known each other since we were 11. But yeah, so I think you just got to expect that people are going to hate you when you're successful. And I don't really get mad at that anymore. I'm sure, I don't know if you did in the beginning, I did in the beginning. Oh, of course. Yeah, you see even tougher than I am on the internet. Like you come back at them, you're like, listen, Bob. Because you know what? I think if you are willing to let something small slide, people are just going to think that they'll be able to get anything past you, that they're going to be able to say whatever they want. And at a certain point, you just have to fact check it. You have to just be like, hey, actually, no, I'm smart and rich and I'm doing well. And frankly, I've heard you mention this. I have never ever been criticized by someone that I wanted to be. No, no, no. I mean, one of my mantras that I remember in life is like that you will never be criticized by somebody who has a bigger life than you do. It just doesn't happen. Or a life that you want. Yeah, they're busy. Even if you saw something you didn't agree with me, you wouldn't be like, unless you were funny, you might be like, I don't know, bitch, buy some stocks. You wouldn't have this time to push upon another. I also think that working and chatting and talking to someone where you don't have the exact direct beliefs is healthy and powerful, which I think is also a big problem these days. It's like we can't even have an educated conversation anymore. It feels like if you're talking to someone who doesn't immediately agree with you on everything, you just write them off. Yeah, it's actually a signal of low IQ. There's lots of studies that show the more offended you are, the more easily offended you are, the lower your IQ level is. And it makes sense because you're not allowed to hold positive cognitive dissonance, which is that it's sad that not everybody can afford a home in the US. And simultaneously, it would be really hard for the government to provide that for every person. And you could hold both of those ideas. Except that we have the internet and so now we don't. That's way too many letters for Twitter, I think. Yeah, so I do wanna take a quick pivot. Yeah. I feel like we've already gotten so much wisdom from you, but I want you to tell me a down bad story. What is the brokest you have ever been and what did you learn from that moment? I mean, let me pull out the Santa Claus list. Yeah. But I mean, a couple of things maybe you could relate to. I know the sound your credit card makes when it swipes and it declines. Declines. I know it intimately, sometimes I think about it. And I know it because for so long, I only had a debit card, I never had a credit card. I didn't understand the difference between the two. Actually, I don't think I had a credit card until I was like 22 or three. And I had no cash, so I was always kind of figuring out, how could I make the 30 bucks in my bank account last? And that was all through college and probably for the first year afterwards. I made $37,000 when I graduated college. Like not a lot of money, Vanguard did not pay well at all. I had to live at home with my parents. And then, I had that whole origin story of, my parents didn't come from money. I had to earn pretty much everything I had. And they were incredible parents. So I'm not saying this in any way, shape, or form. But I've also had maybe even the scarier thing than not having money. There's like something really scary about when you have it and you're gonna lose it. And so, you know. It's like a scarcity mindset. Right, and then they say, we actually are more scared of loss than gain, right? And you know this in trading. It's why the good traders actually have to be able to handle some risk and have a bigger risk budget. But I was really scared of loss. And so I remember one time in particular where one of my businesses, it was a pretty public business and it was doing well. And I did the thing you're supposed to do, which is I gave the keys to an operator that was gonna run my business. In a lot of ways, handled some of the financial aspects of this business. And I only found out that we were two weeks away from money out of money completely, not being able to pay our employees, having massive debt burdens, leases, I mean, all sorts of things. Because I went to go get a loan on this business to go buy another asset. And when I saw, so I went to my banker, I'm like, can I get a loan? And he's like, no, where's all the cash? I'm like, what do you mean? Like, look at the spreadsheet, we have all the cash. Well, the spreadsheet didn't track to the bank account. And so we were two weeks away. And I'm talking like millions of dollars off. And there was a mixture of fraud and also just the guy wasn't very good at managing this. And so I had to turn around a business inside of two weeks. And I remember there was a moment, my dad has this line. So I called him and I was in the middle of the night, it's pitch black, I was seated on my couch, nobody knew, not the employees, not the executives, not my partner at the time. And I called him and I was like, I'm gonna, this is maybe bankruptcy for this business. Like, I don't know what to do. And he gave me this line so good, he's like, I just want you to know, like, when you are head in the hands alone in the dark with no idea what to do next, that's when you know you're in the game. And he's like, until that moment, you were never really in the game. He goes, now you get to see what you're made of. And I was like, fuck, you know? And then, you know, and he has this line where like, I think about it for our business owners today, I think a lot of times what we've been told to do when something is really hard, it's like self-care, take a minute, pause, breathe. You don't have to do that. This advice gets told to women a lot. You know women close businesses at about 50% higher rate than men? Not don't start them, but close them. Like they'll shut down profitable businesses like men will never do. It's kind of fascinating, the gender difference. But, you know, he told me, he goes, listen, when you're on a construction site and you step on a nail on a board, you don't like look at the nail, think about it, wish it wasn't there, wonder how it got there, whatever, you pull the fucker out, you pour some alcohol on it, it stings, you put on a band-aid and then you take your next steps. So he goes, pull out the nail. And at that point, we were able to turn the business around, but there are many people whose story they weren't able to turn it around. And so I think just knowing, hey, other people out there are just like you, like I've been beaten, I didn't have money, I've lost a ton of money, I've been in a moment where I thought I would never get it back and like you can, you can overcome all that. Mm. Have you read Sun Tzu's The Art of War? Oh yeah. It reminds me of the death ground of when you're completely surrounded by an enemy. For everybody listening, this book is essentially a war playbook from ancient China, but it explains different like methodologies and thought processes that can then be applied to like modern day life. And this is essentially where you're surrounded on all sides by the enemy and somehow those are when, you know, that's the boys or men moment. Are you going to rise to the occasion and fight harder than ever and win? Because your other option is death, AKA your business shutting down and you're losing everything. Yeah. Well, so, you know, speaking of Sun Tzu, it's an incredible book to read. I always go back to his, when you're like negotiating or doing deals, I try to remember to give the enemy a golden bridge on which to retreat. And that was from a famous battle of two Chinese generals. Explain that, explain this to us. Yeah, so basically Sun Tzu was telling a story of two famous generals. And they were going toe to toe battling deeply. And one of the generals was incredibly well regarded. And a lot of times, especially for men, but especially in Chinese culture, respect is tantamount. Like it's almost more important than life. And so he knew that like most, enemies will fight till the end for the thing that is their main fear. And if this man, this general's main fear was lack of respect and failure, what would he rather be than a failure, dead? He would actually rather die and sacrifice all of his troops. And so the other general knowing this said when you have an enemy and you know that their number one fear is failure, you need to give them a golden bridge on which to retreat. Which means allow your enemy to seemingly kind of get away with some of their respect while you take all the rewards. And I read Sun Tzu and Robert Green's 48 Laws of Power probably once a year in some version because they are the non-PC truths about how humans operate. And when you're doing deals, when you're hiring, when you're dating somebody, like these are the things that nobody will ever tell you. They'll be like, just be authentic. And you're like, no, no, no, honey, that's not gonna do it for you if you wanna play the big game. Yeah. Talk to me about the big game, AKA buying your first business. What was that like? Yeah, well my first business, again, like you don't have to be really rich or really smart to buy a business. I was a wuss and I didn't wanna spend more than 100K. And I'm not saying 100K isn't a lot of money, but for me at that time, it was like a reasonable risk to take. And so- If you lost the money, you weren't gonna wonder where your next meal was coming from, but you would be very bummed. Exactly. And so I was working 60, 70 hours a week, finance hours, and I didn't have a lot of time, but I just looked down that hallway and thought, oh my God, if I have to do this for the rest of my life, I'm gonna kill myself. And so I was like, I need a way out and I'm not smart enough to come up with like a brilliant startup idea. I just, I don't know at that point, that wasn't how my brain functioned. And so I started looking at the, we did these big transactions, these big deals. I'm like, wait a second, if we buy a big company, what is really that different between buying a big enterprise that's $100 million and buying a laundromat for $100,000? I'm like, I don't think it's that different. Like the paperwork, the documents are kind of the same and both of them use something called LBO, Leveraged Buyouts, a mixture of other people's money and your own. And in small business, we call it seller financing or we might call it an SBA loan and in big boy land, you call it an LBO. And so I was like, I think it's all the same. And so I'm like, let's take a micro bet and see if I'm right because I don't wanna own real estate because I don't wanna have calls in the middle of the night to fix XYZ and I don't wanna make 200 bucks, which is the average profit a month from a single family real estate transaction. I wanna be able to make a couple thousand dollars a month. I wanted to really replace like 30K a month in income. That's what I was like looking to do at the time. And so anyway, I found somebody to operate with me. He was a real estate guy, had done some laundromat stuff before inside of his real estate properties. I'm like, I think you could do this. Why don't I buy it, you run it, we'll cut the deal and let's go. And so the first transaction made like $67,000 or something like that. That was quote unquote profit, really operator salary. And then it was a $100,000 transaction. And lots of people are like, why would somebody sell something that's making $67,000 a year for 100K? But the thing is, these are jobs and like jobs, not businesses. So all over the internet right now, if you went to our marketplace, we own Colp, Biscout, you would see 58,000 businesses for sale right now in the US. And of those 58,000, I just looked in New York yesterday, there are seven for sale right now in New York that are under $300,000, that make over $100,000 in profit. And so it's like, these businesses are everywhere. It's just, nobody knows how to buy them. So I bought that first one, it turned out well, we bought a bunch more and that was the start of all this. For the last 10 years, everything in American politics has basically revolved around one man. And as a political journalist who came of age during Donald Trump's rise in 2016, I've had a front row seat. I am officially running for president of the United States. It's going to be only America first, America first. Thousands of supporters of President Trump stormed the US Capitol building. But is it possible to talk about politics without talking about Donald Trump? That's the question I'm gonna ask in our new show from Vox. The idea of like a post-Trump or not exactly Trump focused show can exist because he's not really driving any agenda items. It really does feel like so reactive. You know, I think this Iran thing is also gonna cause a big split in the GOP. So far it doesn't among like people who say they're MAGA voters are still with Trump, but like for the first time you see on a major issue, open opposition from the start of this war. I'm Astaid Herndon and welcome to America, actually. Yeah. And you have a tagline of like buying boring businesses. Why did you decide to go the laundromat row, which is deeply unsexy versus something that is cool and young and modern? Yeah. Well, you actually make more money on average when you do things that are less sexy. There's something called the songhurst matrix. We call it the boring sexy matrix just to make it easier. But essentially, if you think about it like this, the jobs that pay the most and the jobs that pay the least have one really fascinating thing in common, which is the ones that pay the most typically are considered boring or unsexy businesses. And the way they categorize that is just by like desire of applicants, number of applicants. So if you wanna be an actor, and well, a lot of people wanna be an actor, that's a very sexy job. 40% of all actors in SAG-AFTRA, the union, cannot even afford the insurance to stay in the union from being an actor. They have two or three jobs, right? Whereas in finance, did you know a single person in finance that didn't make almost all of their income in finance? No, because it sucks. It's a terrible job. It's super hard. And so it's the same thing with electricians and HVAC and plumber. So I just looked at the math and said, wait a second, I have a higher probability of revenue and profit. Plus they're less expensive than getting into things like an agency. There's less competition. And I think you should have a stupid tax. And I was like, I'm not that smart at operating a business yet. I've never done it. Is this thing stupid enough where I can understand it? And the laundromat is like, coins in, clean clothes out, dry clothes out. I can handle that, I think. And so the only thing I wasn't sure of is could I value the machines properly? I don't know how to do that. But there's a third party that can do it just like they could value your house. So I was like, all right, pass the stupid test, pass the song Hearst Matrix test, and it's profitable today. Let's buy this business and see what happens. And it turned out OK. Yeah, it did. And that first one, sure, there were dark moments of the soul. But what do you mean a dark moment of the soul? I remember the first moment I bought that laundromat. And the first time I went in, I was actually working in other countries at the time. So I did the transaction without even being there. Side unseen? Side unseen. OK. And I walked into the laundromat. I mean, I had video recorded of it or whatever. And I walked in, and it just smelled like mold and disgusting. And it was really ugly and dirty. And I don't know if there was one or three crackheads outside the place. Like, it was not nice. Yeah. And so I was like, holy shit, I made a giant mistake. But then I just started looking at the weekly profits. And I realized there's a market for everything. And so we clean it up a little bit. We do some new signage. We do a little bit of lights. Now it's nice-ish, but it serves the market that it needs to. Just like, I mean, one of my favorite guys, Wayne Hazinga, started waste management. And that's a dirty, disgusting, smelly business. And he's a billionaire many times over from trash. Yeah. You know? And actually, they all make way more money. I think on the internet, the other thing is, a lot of people watch people like you and I. And they think that we have really cool jobs, that this is a really cool job. And I get that. It's super fun. It's a terrible way to make money. Because it's labor. Yeah, it's lit. You have a job. This is not a business. You die, net worth, and chill dies. Or you want to fuck off for a year, you really can't. And there are ways around it, sure, but it's very hard. And then simultaneously, I think you should look at every business as a level one or a level 10 business. And a level one business would be the lowest level. And that, in my opinion, those are usually job-like businesses. That is things like personal brands. That is things like even info product businesses, because they have a big degrading aspect to them. A level 10 business is a business like a SaaS company or licensing and royalties, where they continue to pay over time and have recurring revenue. And can probably continue to pay even after you're gone. Oh, 100%. I mean, one of my friends, one of my friends who's a billionaire, has the coolest business ever. He buys up old books and the rights to those old books. They're royalty rights. He packages them in what he calls a royalty fund. And then he sells that fund to pensions and people who need recurring sort of set standard payments, because these old books, they might not sell a ton, but they kind of have a set amount. Like you've seen it with your book. Like you had your big spike when it went off, but there's like some level at which it plateaus and continues to kind of sell. And so all around us are these ways to make money in really boring ways. And I usually think that the more famous you are actually, there's usually not a very high correlation to wealth. And the richest people in the world until Elon Musk and some of these people became mega, mega stars, they typically aren't on the internet. They're really, really wealthy. They're quiet. And you would never know if you walk past them on the street. Oh, 100%. So my question for you is you are, I would say you love deal making. Yeah, I do. You love buying businesses. When should the average person, like a regular person just listening to this, when should they start incorporating that into their financial picture? Is it as soon as they start making a little bit of money, is it after they have maxed out the 401K, after they've already invested in real estate, like where does this fall in the waterfall? Well, I have two components to this. One, I think it is the highest leverage skill you can have. If you can learn how to read a P&L, how to understand financing, how to make an offer and how to value something, then like work backwards from that. You're gonna understand how to price yourself, how to ask for equity, how to do a salary negotiation. You're gonna even understand how to analyze stocks because stocks are nothing but a business that is publicly traded. So like to me, and this is slightly self-serving because we have advisory business that does this, but the reason I created that business, that is not where we make the most money at all. The reason I created an education and advisory business is because nobody teaches you how to do deals, because why would they? Wall Street loves that you give them two and 20. I loved getting two and 20 back in the day. For everybody listening, two and 20 is essentially how some of these investment firms get paid. You immediately from jump pay them 2% of the assets that they're managing for you. And then for the profits that you would perhaps make, you have to then give them 20% of that on top. So it's a very husky fee. Oh, it's amazing. And you pay them 2% every year for the length of the investment period. So this is a beautiful business to own. But I, so I think every single person should go learn how to buy a business. That's step one. I think ever, like I've never met somebody that's like, man, I wish I didn't have the skill set. That does not exist. I think every single human should go do it. And that's why ours are really reasonable cost to do it. But the second hand, if you should buy a business or not, let me tell you all the reasons you are not ready to buy a business. You're in debt, handle the debt first. Bad debt, not good debt. It could get into later the difference between the two. So if you're in debt, don't buy a business. Two, if you haven't yet learned how to read a P and L and how to read financials, do not buy a business, you're not ready. If you already do not have some sort of income source or a pretty fat stack of cash, you're not ready to buy a business overall, in my opinion. What is a fat stack of cash? Really depends on how big of a business you wanna buy. But I typically think you wanna have an income source that allows you to have a couple thousand dollars a month extra to apply to this business, or you wanna have like 25 or 50k you could allocate. You can buy a pretty nice business with that amount of money down. And then the last is you really need to understand debt. And so even if you're not in debt, but you don't understand an SBA loan, you've gotta learn that first. You've gotta learn creative financing. And if you understand those four things, then I think you're ready. And then if I was to go like real estate versus buying a business, I am not a fan of buying real estate for investment. Talk to me about that. I'm just not. Let me tell you why. One, the average single family home in the US sells for $400,000. And you make about somewhere between $140 and $200 in profit. So you have a month. So you have a loan or an obligation sitting on top of your head of $400,000, almost half a million dollars. But you're only gonna make a couple hundred bucks a month in actual revenue or profit in your pocket. Compare that to a small business. If you buy a business and the business has $400,000 in let's say revenue a year. Well, we know that businesses, they typically make 15 to 30% of their revenue. That's the profit margin. So for the same sort of debt level of a business, as with real estate, you can be making thousands of dollars a month instead of a couple hundred. Now, at this point, somebody would probably say, hey, a real estate's not just gonna like go away and die overnight like a business is. And that's true. So you have to ask yourself, do you want cash flow, aka a business? Or do you want capital preservation potentially and some tax offsets? But my belief is if you want capital preservation, you should probably be investing in debt and stocks instead. And if you want tax write offs, there's no better write off in the world than a business. And so everybody hates me in real estate for this reason, but I just think we were sold a little bit of a lie on that. And there's nothing wrong with having both. So I don't actually care. I just own some assets, get ownership. Your life will change forever once you realize that you can have your money make money for you. Yeah. And you said a really key word, ownership. And I wanna bring in a topic that I feel is very touchy for my audience and probably yours, private equity. So it's unsurprising, we all see in the headlines, private equity shops are scooping up businesses, small, medium and large, everything from Jersey mikes all the way to your Nana's hospice home. So talk to me about how you're thinking about going up against these private equity giants and what regular people can do to still one, be competitive when buying businesses, but two, how can we defeat this giant behemoth? Like we are David, that is the Goliath. Yeah, it's a great, I'm really glad you're asking because that's one of the reasons we created our business. I had, you come to a crossroads in your life when you've made a certain amount of money and you can decide, it's like the Batman quote. It's like, you either die the hero, you live long enough to become the villain. And there was a moment where I started on the trajectory of buying all these businesses. And what was I gonna do? I was gonna become the thing I didn't like. I was gonna become another private equity fund that owns companies that does some sort of financial arbitrage and that ruins your neighborhood coffee shop by putting in fluorescent lights and like kiosks and whatever the fuck else. And so instead of doing that, I took a step back and was like, wait a second, we can still make a ton of money. I'm very into becoming so rich you make other people uncomfortable. I think that's fantastic. We can make a ton of money, but we could just take smaller chunks of companies. And so we don't have to be the controlling interests, which is private equity always is. They always want control. And I get why, cause it is better if you're really good for operating. And then you can control the sale too. But private equity right now, we don't realize it, but 20, as of 2000, so in 2000, private equity owned 4% of US companies. As of 2020, they owned 20% of US companies. They are slowly and stealthily stealing your Nana's hospice center, the daycare center down the street. And the problem with this is multi-fold. If we continue to allow them to buy everything, well then we live in like a Walmart, which I don't think any of us want, right? We don't want to live in this big corporate behemoth, but it's actually worse than that. What's worse than that is they do subsidization of cost for a period, but then when they corner a market, what do they do? They increase the costs. And so in the beginning, you're like, great, everything's cheaper because it's Walmart, but they aren't Walmart. They're incentivized from a financial standpoint to squeeze as much money out of it as they can out of a seven or 10 year period because they have to give their money back to the investors at the end of the seven or 10 years. So that's sad, and it's something I stand against categorically. But the cool part about it is like, you can actually compete with private equity companies way more than they ever want you to know, especially in today's day and age. And there's a couple of reasons why. One, most of these small businesses don't do very well when they're aggregated at scale. So we call it losing the soul of a business. But you felt it, you go to a Starbucks, yeah, the coffee's the same every single time, but they don't know your name. Now they've taken out the chairs from the place, the barista's mad at you. Like the whole, there's a negative experience. Whereas you go to a local coffee shop, you get to know your local market. Linda's Bakery. Exactly, and what's fascinating is that leaves about 30 cents of every dollar more in the community as opposed to when private equity is owned. And so I think there's a human touch element where you can actually really compete against these guys. And also they have this time crunch. They have seven to 10 years. If you can think a little bit more long-term and acquire a few businesses to create a holding company and then hold that thing forever, I think they're actually easier to compete with. And now, like we're starting to sniff it out. And the word is getting out on private equity. I think ever since Mitch Romney ran, he was like the first private equity guy to become really public when he ran for president. And then people were like, what is this thing? Because it's not public markets. And when that happened, now you can start to tell. Like if you go into your local dentist shop and it looks the same as all the other ones. And they have like an iPad that you check in on instead of- The worst, by the way. I hate the nasty iPad. It's this orange iPad. And they're like, oh, this is like germ free. No, it is not. Somebody else touched this iPad right before me. 100%. So if you can kind of start to see these things where they remove the human and users don't like that, especially in a world in which AI is making us less and less engaged with people, my thesis is your unfair advantage will be the tiny human things that you keep inside of a business that finance guys do not realize is valuable. And the last thing I'll say on this is like, I've become friends with Alli Webb, founder of Drybar. Like, do you remember Drybar back then? It was amazing. It was amazing. And then she sold it and I'm friends with her and I was actually at this event and create Cultivate. And I'm on stage and I'm railing about something and then somebody brings up private equity. And I'm like, like fucking Drybar. They ruined it for me. I loved that place. It was the best thing ever. And everybody's like, yeah, fuck Drybar. I get off the stage, lady walks up to me, hey, how's it going? I'm Alli Webb on the phone. Drybar is like, oh. And she's like, but really I agree with you. She's like, I stopped having control. And then I was talking to Candice Nelson who's founded Sprinkles. Yep, they just shut all the Sprinkles for a time. Yeah, I was texting her the other day. And the same exact thing happened. They expanded too fast. They took the human out of it. They stopped innovating. They all turned into those stupid little vending machines. They really do. And it's a tragedy. We need to start a fund. Like, the anti-patagonia white dude vest fund. And on the flip side of this question, we've seen the headlines. A lot of these unsexy business owners, maybe they were the plumber in the town, they are getting bought out for seven, eight figure sums to private equity. What is your perspective on these people wanting to get out of the business? Maybe they don't have like an heir who wants to take it or someone who wants to take over. Are they morally obligated to not sell? Or is it also kind of selfish of us to ask them to not sell to the highest bidder? Like, this is also their family's livelihood. No, I think you should take the bag, baby. Take as much cash as you can whenever you get a deal. But here's where they don't realize they're getting screwed. Private equity never just gives you cash. I mean, unless you are a really big company and have an insane competitive advantage, those deals when you see that they're being bought for seven, eight, I see them every day. People bid on all of our companies. They all have things called milestones and earnouts in them, which basically mean they're like, I'll pay you $100 million if these 47 things happen and you stay on for three years. And so I think the deal is not as good as people usually think. And if that is the case, then that's actually kind of cool because that means you can play this game right back with private equity and either say no milestones are announced, crazy things or allow some strategic or normal people to bid on your business and look for a deal that doesn't tie you up forever. Maybe it's slightly less expensive than the PE firms are, but on an adjusted basis, you just, you gotta realize when you're negotiating against a private equity finance guy, it's almost like the casino. They don't lose. The house always wins, yeah. The house always wins. And so you gotta assume that they know more than you do. They're at an information advantage in doing deals, even though you're at an information advantage being the business owner. And so I'm real thoughtful about doing deals with those guys. I think that's great advice. I want to hear what is the worst deal or worst business that you've heard of someone buying that didn't work out. So like warn the folks at home. Yeah, well, like let me tell you categorically the worst businesses you should never buy. Okay, let's do it. One, hotels. That's real estate masquerading as a business 24 seven service. Fascinating actually. They typically are not profitable. They actually make all of their money back on tax deductions that they get in the business. Really bad business for most people. Two, restaurants, highest failure rate of any business out there. Also just imagine you have all this inventory that's always degrading. Who's gonna sell the shrimp on a Tuesday when it really needs to be sold by then? It's a very difficult business to have. Third, I think people get too excited by absentee businesses. So let's say an ATM vending route. They actually have the tiniest margins of all time. You'd have to have hundreds of them in order for it to be profitable, except if you have an ATM that's potentially located outside of a cash bar or a cannabis store. Like then that could work. If not, we're out. Fourth, vending machines. Incredible, like entry level fun business to try to understand P&Ls. Really hard to scale. Lots of logistics, really tiny margins. So I don't like that business either. And probably the last one that I hear a lot of people talk about, and I think it's really overrated as a business, any type of agency. Agencies are incredibly difficult businesses. Marketing agency. Yeah, advertising, graphic design, YouTube production, thumbnail production. What typically happens is that somebody's good at their job. So they go take the job and turn it into an agency. And then they realize, oh my God, I left having one boss and now I have 52 and they fire me all the time. And I actually give them way more attention than I should. And I can't charge them enough. And so that's a really hard business that I would never buy too. Okay, we've heard the shit list. Give us what are your top five businesses that you do love and you think have seen a lot of success? The top businesses I would buy in 2026 are actually first, I really like senior care centers. Great margins, ton of grants for these businesses. You can actually buy single family homes in some state and run them as senior care. Plus don't be a jerk and like do it the right way for a group of people. You can charge 40% to up to 5x the cost for rent you could to a senior care as you could a normal person. So I like the senior care center. Second in that is sort of related, which is any sort of physical therapy, in-home care. We have an agent populace. This agent populace is increasingly utilizing in-home services, trying to stay out of hospitals in general. It's a super growth market. And you can start small and then those scale actually quite nicely. Third, I really like property management. I own a bunch of Airbnb's. I never liked that business. I just own them because I like to own the places and then we would Airbnb them out. Airbnb I think is really bad business for many reasons, but the property management of them, those fuckers get 20% of my earnings every single time and you can really scale those. Now it does mean that you have 24 seven call, but you don't have the assets. You don't have like the obligation over your head of if the thing breaks, it's up to you like a hotel. The next one that I really like overall is a mixture of laundry and dry cleaning. I do not like non-organic dry cleaning. You have to be really careful about that. Wait, what is that? Like most dry cleaners use toxic chemicals. Oh, okay. And so if you go to buy a dry cleaner, be really careful because it's something called remediation, which basically means all those chemicals seep into the soil and you, when you buy it, are responsible for fixing that, remediating the problem. And that can be hundreds of thousands if not millions of dollars. So careful how you buy them. And then the last business that I'm really interested in buying right now is all types of home services. So I think painting, window cleaning, roofing, exteriors, I happen to own all of those. They're incredible businesses with a lack of competition. And there's not enough. Like you literally, I'm sure you felt it, like you just had a broken something in your house, right? I was just telling you this before the camera started rolling, my HVAC was broken and it's $3,500 to fix it. Yeah. And how long did it take to get somebody out there? Oh my gosh. I mean, they came and then they were like, well, see you in a week. I was like, but I'm cold. Can you please turn the heat on now? And he was like, no, like this is gonna take awhile. I was like, okay. Yeah. So these businesses, they're massively in need. Your pain is my profit. Yeah. Love that for you. Hate that for me. Maybe that'll be your next business venture. Net Worth and Chill, it kinda could work. You know, something with Chill, we'd have to think about the name. Yeah. It'll be an HVAC company for cooling. Yes. Exactly. We have had such a fun conversation, but let's look to the future. I wanna hear about your current goals. What are the things that you hope to see for yourself this year? Well, Contrarian Thinking is our main company. Inside of it, we have a holding company for a bunch of small businesses and we have an investment arm where we invest in startups. And then we have an advisor and investment practice. And like over the last five years, we've helped about 14,000 people learn how to buy businesses, which is cool. And then of course, something scary happened, which is they would buy a business and I would have to say congratulations and I'm sorry. And because now you gotta run the business, you know, which is quite hard. And so the biggest thing that I'm excited about this year is that is our new venture, is for the last year, we've kind of quietly been building something called boardroom, which is where we help business owners go from a million to three to five to 10 to 50 to 100. And we really don't serve people over $100 million, but if you have a business that does a million dollars up to a hundred million, we got you. And I think that we can make small businesses profitable, consistent and non-agonizing. And most small business owners, I'm sure you've felt this at some point, they don't have operating systems, they don't have clear dashboards, they don't have what private equity has, which is what allows me to have a portfolio of 60 businesses and it's not that big of a deal. I'm not losing sleep every night about something going wrong. And so my thesis is, if I could change a generation to buy businesses, which I think we've made a material impact on that, and we can change a generation to like running their business, guess what? We make it a lot harder for private equity to buy them. And so that is going to happen this year. And in the boardroom, we track, we compensate our advisors by how well their businesses grow profits and revenue. That's the only thing we care about. And so yeah, it's been fun to see firsthand. And typically in private equity, they don't share their playbooks. Like they would never tell somebody else how to do this. They keep it all super proprietary firewall. And so I'm like, what would happen if we actually just like showed other people how to do this? Because your landscaping business in Tulsa doesn't compete with mine and Phoenix. It's okay to share the systems and processes. And most business owners don't want a $100 million business. They want a business that does 10 million bucks, $2 million profit, great. Enough for them to be really comfortable and maybe leave something for the next generation. I think that like insane level of greed of like, I need to be a centibillionaire, it's not actually in most people. No, no, they want a great life. They want to spend time with their kids. They want to build something meaningful. They want to not hate their job. And they want to do something they're good at. I think they need purpose. So especially in the age of AI, where I think it's gonna take that from us a lot of ways, I like owning these boring businesses because I think AI is going to take our jobs and podcasting before it takes over my roofing company. Right. I absolutely love what you're doing because correct me if I'm wrong, but I'm thinking about it this way, right? If more people start buying businesses, more individuals, private equity is going to have to compete with that. They're gonna have to pay up for the businesses that they do buy, meaning likely smaller returns. And if there's smaller returns in PE funds, then investors are less likely to give them more and more of their money. And it essentially slows the snowball rolling down the mountain. It's exactly right. And it's so fascinating because so many people don't see that. They're like, why would you, if you were actually good at buying businesses, Cody, why wouldn't you just go buy them? I'm like, well, we do, but the reason is because I don't actually think that's good for society. So it's like, you know, just because I do like McDonald's doesn't mean that I need to eat it every day. Like I like money, but I don't think we have to make that. Our only reason we exist, that's crazy. When did we decide that? And so- And at a certain point, there's diminishing marginal returns. Like having that much more does not make your life that much better. 100%. And there's something really cool about building. Like I think in finance, a lot of the reasons why those guys get divorced all the time and they have to buy 37 Ferraris in order to get over their complex is because the job doesn't allow you to touch anything you build. You know what I mean? Like you do have to have a winner or loser, but in business, you don't have to have a winner and loser actually. Because you can innovate, that doesn't exist in trading, for instance, right? And so I think the cool part about building a business is like you can create out of thin air opportunity for you and your community, and like it can matter and it can last. I love it. Okay, we're wrapping up. Rapid fire round. I like it. Just give me the first thing that comes to mind and simple short answers, okay? Best money advice you ever received? Money is everywhere, and if you hate people who have it, you will never get it. Worst financial decision you ever made? I did buy multiple supercars back in the day. So. Okay, like what kind? Oh man, the Ferrari, Porsche, a Range Rover, a couple of Range Rovers. A couple, okay, okay. No, it's so embarrassing. We had to learn that a couple times. Oh, I know, I know. Yeah, I told you, I was definitely in finance for a minute. I love that. What's one thing you splurge on without guilt? I like clothes. You do? Yeah, I actually like clothes, and the thing about clothes is you can actually make a monetary case for them. Sadly, maybe, because it's not that great for society, but you make more money when you're better groomed and you dress better. And so I've gotten into clothes lately, and I used to not care about them at all. What is a purchase that you always skip that most people wouldn't? I really like deals, I like being cheap. Like, I love, let me think of a good one. But my team can think of a lot, because I'm always like, why are you spending money on that? Well, I travel with a bunch of stuff. So I bring my own honey, for instance, everywhere. I know, because it's like, what you're gonna have to buy a big thing when you're traveling? So I bring a thing of honey, because I like it in my teas. I also bring my own tea everywhere, which is kind of unhinged, but Nicole and Samuel can attest to that. I bring my own snacks. I'm like a middle-aged soccer mom. Half the time. B-Y-O snacks, okay. B-Y-O snacks. You're not gonna catch her at a Hudson News. No, you're not, actually. So I think those tiny little micro decisions just remind me, one, to be healthier, and two, they add up cost-wise. And I'm not talking about coffee. I love a fucking latte. I'm totally fine with latte. Go buy all the lattes you want. But I love having a little bit of snacks and things on my hand. If you could give yourself at 21. Ooh, you know what else? Oh, yeah. Somebody else said this on your podcast, and I totally agree. Was it the founder of the row? Or... Rent the runway, maybe? Rent the runway. Fake, fake bags. I don't even have a designer bag on me, but I would 1,000%. I bought one in China a million years ago. It's a Chloe bag, and I swear to God, it must be kind of real, but it was like 50 bucks. So I've got no problem. I love a fake thing. That sounds interesting to me. And it's a meter, so you can actually use it. Oh, 100%. I would feel sick, I think, spending $50,000 on a Birken bag. I don't care how much money I have. I think I'd have a heart attack. Would you ever buy a Birken bag? I was just in Japan and had the opportunity to buy one, and I didn't. So what does that say about me? No, it says, like, I could buy, like, a fourth of a Launderbad for that. That is what I think about. Is it a fourth of a Launderbad or a Birken bag? I think it's unhinged behavior. I think maybe it'll be my retirement gift to myself as more of a milestone, like, remembering thing versus, like, an actual, I would like to have this purse. Because if I'm honest, I have a number of designer bags. None of them have ever felt as good as the very first one that I bought with my big girl salary. And if I'm still being even more honest, I don't really like carrying a purse when I go out. I just have my phone in my hand, and I'm like, hey, boo, do you have money? Do you have stuff? I don't have anything. And he's like, what's new? Yeah. Also overpriced shoes. I'm really not into designer shoes. You're not? No. I just want to be comfortable. I'll pay a little bit for calling. I want them to be cute. But, like, you beat the shit out of them. They're so expensive. Same with really expensive designer clothes. I mean, this wasn't cheap. But I went into, I still don't understand this. Maybe you could explain it to me. But I wanted to Chanel the other day. And I was like, that jacket's cute. And the shoes were like, I don't know, $1,500 or something. But the jacket was like $8,000. And I was like, what world is this worth $8,000? And so that's, you know, I have another friend that I think is a mutual friend of ours, Laila Hormelze. And she's always like, why are you so cheap with clothes? Because it's irrational. I don't think it makes any sense to spend that much money on it. Yeah. I think, listen, there is a level of craftsmanship that does increase when you get into the designer category. But again, back to the phrase, diminishing marginal returns. I think a jacket that you get for $500, that is a beautiful leather jacket that is 100% leather, that is sewn by hand, is one thing. But then the $4,200 brand name designer leather jacket, it's not meaningfully better. Would you buy an $8,000 jacket? No. No. I don't have one. Do you have a threshold for how much you would spend? I think it depends. And then I also think it depends on utility. So have I spent over $1,000 on a really good winter coat that's going to keep me warm? Hell yeah. Am I going to buy a purple ostrich feather jacket that I can only wear one day a year every five years? Probably not. Also poor ostrich. I know. I feel like I'm here for the ostrich. I don't know if it was one of your videos, but I saw somewhere about Coachella. Was that you? Yeah. Fuck. And how people. People are financing Coachella? On Layaway? Not OK. And then I think about all those influencers. That's where I think we have some sort of responsibility to be like, I didn't pay for this. They gave me this dress, and I wore it. And I've done that before. When I went to a red carpet, a designer sent me a dress. And I was like, this dress is sick. Thank you for sending it. Because I want people to know I might have some nice things. But even the really, really wealthy people, they don't pay for that shit all the time. I think people are also surprised to find out that when I pay a stylist to style me for an event, I then have to give the clothes back. I don't get to keep the $8,000 gown I wore, and I certainly didn't pay $8,000 to wear it. Yeah, that's sweet. Well, is that a hack then? You use a stylist. They bring you the stuff. I think it's pretty unrealistic for the average person. But I do think having a stylist for certain moments is well worth the money, especially if you are more than likely to spend more having to do that. So for example, when I made the Time 100 creators list, I was like, I need to look the best I have ever looked. Let's make this a thing. Because it's going to be memorialized forever, and you only get to do that one time. Totally, yeah. Like I think a blowout makeup totally worth it, underrated. So I want to wrap us up for everybody listening at home. Do you have one mantra, quote, or guideline that you live by? Can you share it with us? Choose your hard. Being poor is hard. Being rich is hard. You got to choose. Having a job is hard. Owning a business is hard. You got to choose. I think anything worthwhile in life is hard. And if we accept that, then it becomes so much easier to get the things that you want. And the last thing I'll say is I was listening, and I've become friends with this guy Cameron Haynes, who's like this psychopath, bow hunter. He runs a marathon every morning. He's out. Yeah, he's unhinged. Does he have knees? Yeah, and when I say every morning, he doesn't believe in rest days. And he's like 50 something, and his son runs a jeans. Anyways, I digress. He said this line that I thought was so good. He said, you don't get paid to play the game. So you get paid to practice. And I think that is right. Like, when they see you here doing a podcast, when they see somebody on stage, when they see an athlete in the arena, they don't get paid for the game because the game is the reward. That's when the fans are going crazy. That's when the crowds yelling. That's when you have your big moment. You get the award. That's the fun part. That's the fun part. You get paid for the practice, and the practice sucks, and it's hard, and it's constant. And so if we can accept that, then I think you can have a lot more games in your life. Thank you so much for joining me. And can you tell everyone at home where we can find you and where we can learn more from you? Yeah, Cody Sanchez on all the socials, and then contrarianthinking.co if you're serious about buying a business or building one. Amazing. Thank you. Thanks for tuning into this week's episode of Network and Chill, part of the Vox Media Podcast Network. If you liked the episode, make sure to leave a rating and review, and subscribe so you never miss an episode. Got a burning financial question that you want covered in a future episode? Write to us via podcast at yourrichbff.com, follow Network and Chill pod on Instagram to stay up to date on all podcasts related news, and you can follow me at yourrichbff for even more financial know-how. See you next week. Bye.