“It’s So Easy!” Money Expert Exposes The #1 Way To Get Rich In 2025 | Codie Sanchez

I didn't have money I wanted more of it and I felt like when you had more money you got to push back I wanted to be able to make so much that it made other people uncomfortable and so for that reason I obsessed on this idea of like how do I get more Financial Freedom probably shouldn't have let me in the club at Wall Street I used to think that you had to be really smart you had to have really big ideas in order to make a lot of money and I don't think that's true at all it's move fast take a lot of risk learn from that risk continuously I think it's risk that makes you money not save that make makes you money what are some of the misconceptions that people have about money the most controversial take about money these days is that it's actually good if you have it if you're young today you have such an unfair Advantage it's never been easier to start a business a trump economy is really good for people who have not made their money yet if you want to make money today with a high degree of certainty you want to [Music] go Cody thank you so much for coming on the ice coffee I really appreciate it thanks for having me so for those who are not familiar with who you are what you do could you explain it in a few minutes started off on Wall Street kind of consider myself a reformed journalist and investor spent 12 Years Learning on big corporate floors how to invest from Goldman Sachs to State Street to Vanguard to finally running my own uh Division and then country at a at a company called First Trust we built up a billion dollars in assets under management firm in Latin America but that all started from having really no idea about my money at all you know Dad came from nothing mom was a 30-year special education teacher and the only thing I kind of knew for sure is that I didn't have money I wanted more of it and I felt like when you had more money you got to push back on other people more and and I couldn't do that when I was younger always checking the bank account never had enough and so I kind of convinced myself through my road that I wanted to learn not only how money works but I wanted to be able to make so much that it made other people uncomfortable and I think that came from I started off as a journalist along the US Mexico border and so I was covering human trafficking drug smuggling and I saw some pretty awful things like what happens to young women along the US Mexico border who come and work in the Maki loras and so I saw young Cody Sanchez and then a lot of other young uh women with the last name Sanchez and I was like what's the difference between me and them probably just the fact that I have more money more so socio economics than them not even like that I was American and so for that reason I obsessed on this idea of like how do I get more Financial Freedom they probably shouldn't have let me in the club at Wall Street and I just took a lot of questions and notes about what they were doing until finally I got a chance to run my own business and run my own Financial firm and from there built a private Equity company uh in a couple different verticals and finally went out on my own and started buying up a bunch of small businesses like it's kind of private Equity 101 you buy a business it's profitable the business has been around for a long time use other money people's money to buy it and you keep growing except I didn't realize you could do that individually too and so I did it quietly on the side cuz I made a lot of money at the time and I had golden handcuffs and was too scared to leave and so um I built up my little portfolio on this side kind of without telling anybody and then uh I probably would have stayed in finance forever and always been an employee uh except I got pushed out and eventually they were like you know you can't do this other thing and this we want to run the business like this you want to run run it like that if you want to run it like that go do it yourself and so so I eventually did and then built up a media company called contrarian thinking that now gets 100 million views a month all talking about this idea of what if all of us owned our communities again what if we had a little bit more Financial Freedom instead of asking for permission from other people what are some of the misconceptions that people have about money that hold them back the first thing I wish I knew when I was young about money is that other people who have it are no smarter than you on average they don't have you know famous or Rich family members 80% of all millionaires are actually self-made in the US 79% of all millionaires are self-made in the US they're not it's not gifted to them you don't have to get permission to get it but instead uh what do they really have they've taken more risk than you have they've moved faster than you have they've probably failed a little bit more frequently and they've surrounded themselves with other people who have the things that they want and I wish I knew that when I was younger cuz I used to think that you had to be really smart you had to have really big ideas in order to make a lot of money and I I don't think that's true at all it's move fast take a lot of risk learn from that risk continuously do you have any other controversial takes about money the most controversial take about money these days is that it's actually good if you have it and that it doesn't mean that you know you're bad from being rich and somebody else is good from uh not being rich there's no virtue signal to poverty in fact it's the opposite if you have a lot of money typically what does that mean it means that you've provided a ton of value in the world I've met a lot of billionaires I don't like but I haven't met a single billionaire that made their own money that hasn't provided 10x the value to the world that they actually have in their bank account and so I think these days we get told by a lot of people that money's bad and you shouldn't want it money is the root of all evil we almost say it like we're programmed and I think we have to go back into our programming and ask ourself why would we be told from such a young age that money is the root of all evil when actually it's a it's a Biblical saying that's from the Bible money is the root of all evil but it's out of context because it's actually the desire for money is the root of all evil which is very different that is if you are driven to only get more money not if you have more money two very different where do you think the idea came that like rich people are bad or evil well power hates push back right so when you're a boss what do you not want your employees to have you probably don't want your employees to have another job that makes them more than the one that you pay them for right now why wouldn't you want that because then they have optionality and they might leave you and I think power overall does not like rich members of society you know a government overall typically wants more control they think that they know things better than us and because of that they can assert their will more on others it could even be from a nice perspective like Hey we're here to help right I've had all this abundance so I'm here to help everybody else but I think what's actually the problem with money today and why we get push back on it is because we humans are interesting when we get a bunch of money and when we get a lot of power we don't like to give it up any of us individually and simultaneously when our governments get a bunch of money and power they would rather distribute it than us have it and so I think it actually comes from centralization of power which has continued to happen over the course of history until where we're at today have you ever felt like you had to compromise your own morals for the sake of business or making more money when I was young I definitely did a lot you know I I was I'm a little bit older so when I was young in finance I mean it was the days of like you took people out to the strip club you guys know all about that in Vegas here I know Graham does that's favorite thing to do I learn about it through Jack that's not true to the viewers out there not true at all I think I see the Spider-Man meme where it's like this you guys are just we're both just at the strip club together that's not true not true we don't do that I wouldn't spend the money on it that actually tracks uh but um you know back when I was younger that that was really what the industry did I mean so it was steak dinners non-stop you took them out to to if you were in New York is an investment banker with the bottle service um strip clubs even like I was a woman I'm not really into that but if you wanted to close deals that's like that's literally what happened I could Ser oh yeah how do you close a deal at a strip club I feel it's you know loud I I don't know you're not literally like hey baby and then you know signing some paperwork right underneath whatever is going on to on the lap and you're like hold on one second sign this over here no not exactly but how does it happen at a strip club it just doesn't well a lot of times what happens when you close so what is a deal in finance so typically if you think about invest banking what are you doing you're trying to talk somebody into trusting you to take their company public to do some transaction with them and a lot of the ways that power happens in the US especially in the positions on high is through like you know traditional bonding experiences which this is how like Rich dudes in finance bond which is like you get together you have steak dinners you go out and drink it's it's not disim like American culture has the same thing in a different way than Japanese culture does so like I used to do some deals in Japan and there you're literally not allowed to turn down a seemd us why would if I'm do a deal to I don't want to do a business with somebody just because they kept drinking with me all night that makes no sense but culturally in Japan that's a big part of it so you know you can't say no to a drink if you go out for a celebratory dinner that you guys closed a transaction and it was a little bit the same in finance it was like I don't trust you if you won't maybe make make bad decisions with me so when I was younger I definitely saw crazy things thankfully I'm a woman so so like it's not like I would participate in that but when I look back on it you know when I was young I just didn't know how to say like I feel uncomfortable with that like I don't want to go to that and I sort of felt like when I was younger maybe I'll get left out of the deal like they called it the 19th Hole so if you would go to the 19th Hole was you know when you go to play golf do you guys play golf yeah and you go to the the men's locker room or whatever and so the 19th Hole had a lot of connotations in finance but it might be like a bar or you go and close a deal at a golf club and so I felt like oh man if I'm not the cool girl then am I going to close this or not um and you know I think I was one of the youngest analysts they'd ever hired at Goldman in the division that I was in and I was definitely the only woman who was also a Latina I didn't think much of the gender thing at the time but that just was a fact and then when I went to First Trust uh I was one of the only managing well what was the what was the title there I was one of the only directors of the business we didn't call managing partners then so anyway um certainly when I was younger I did now that I'm older that's another great thing about money is you get to push back do you think being a woman in finance served you or worked against you I feel like the notion these days is that if you're a part of like a quote unquote marginalized community in some capacity that you'll always be having to work a lot harder to get ahead or to stay on par how how was your experience with that I think if you call yourself a victim you're much more likely to be one and so I never felt like I was victim imized by being a woman I think when you look different there's a huge opportunity there too and so it's really how do you want to see the world do you want to see the world as you know for you or against you so for me there was never a world in which I thought hey I think men have it easier than me if anything I was like well I'm more memorable like you're going to remember this one sort of loud Latina that's in the mix maybe um but these days that's not that popular of a thing to say and um you know and there's a lot of stuff that happened back then in finance that I don't think is the Cas anymore like generationally my best mentors of all time have been men you know every almost everybody that's ever given me a job in my career was a was a dude and every single one who helped me get promoted I think except two were men and so the women were actually really tough in finance we were tough on each other I think they call it like the token uh effect which is essentially if there's only a small group of people sometimes they combat against each other and so you know you guys have all met have you ever met like um a woman who's been in business for a long time and when you meet her she's like hey yeah you know what's going on this is and it's almost like overly aggressive MH that was a lot of that going on in finance so I had to shake that off a little bit and remember like you can be a woman you could be a dude you could be gay you could be whatever and just you know do you and for the most part nobody cares if you're good competency kills just about any identity has there ever been a time though where you felt like that has held you back no the only time it's held me back is when I let it so if if I in my head said hey you know for some reason or another they're not going to give me this deal because it's just for the dudes or whatever when you tell the universe something I think it usually listens and so you got to be careful what you project out into the world and especially as a young person I did that often now I remember like you know I got my I got my ass slapped when I was younger I didn't like that and I think that probably that happens to men in different ways too but you guys are physically bigger so you know that's I speak for yourself I don't I about that that's true I promise not to slap your ass I slap his butt all the time he can't do anything I Can't Fight Back Jack don't do that you're just like I'll take it maybe you like it this podcast is really going downhill now yeah um yeah but no I don't think so the the only time I uh you know struggled in in when I was in a corporate setting was like it was mostly my fault like I'm kind of unemployable you know I think a lot of entrepreneurs are like we're super obstinate I wanted things my way I was super aggressive I thought we weren't moving fast enough and like I remember one Mentor who now is a friend of mine but back then I was really mad at him was the CEO of a company that I was uh running a big division for and uh I thought we should use the internet like I was like here's my idea I think that in the future we will sell investment products entirely online you won't go to steak dinners you won't meet with people face to face we could do literally all of this remot and that was kind of crazy like 10 years ago and he said it's never going to happen that's we don't want to run the business that way and he basically got so annoyed with me that eventually he was like listen you want to go left I want to go right it's my boat like if you're going to be on my boat then you need to to to row the same direction that I am and so I finally kind of got pushed out I left the company and um he did me a huge favor because if he hadn't done that to me I probably would have stayed there forever being an adult has its high points you can eat ice cream for dinner you can play video games whenever you want and you can even eat ice cream while playing video games but sadly it's not all fun you have to Deer taxes figure out what's for dinner every night and of course make doctor's appointments but for that one there is our sponsor Zach dooc the healthcare app that makes adulting that much easier for those una aware Zach do is a free app and website where you could search and compare highquality in network doctors choose the one that's the right fit for your needs and then click to instantly book an appointment we're talking about in network appointments with more than 100,000 Healthcare Providers across every specialty from mental health to dental health Eye Care to skincare and so much more you can filter for doctors who take your insurance who are located nearby who are a great fit for any medical need you may have and who are highly rated by verified patients you can also see their actual appointment openings choose a time that works for you and click to instantly book a visit plus Zach do appointments happen fast typically within just 24 to 72 hours of booking and you can even score same day appointments I'd highly recommend you check out Zach do because it really makes the entire process simple and in the past I'll admit sometimes I put off things like this because I just didn't want to go through the hassle but Zach do really helps to streamline everything and just makes it easy so stop putting off those doctor's appointments and go to Zach do.com to find and instantly book a doctor today it's zocdoc.com zocdoc.com with the link Down Below in the description thank you so much Zach do for sponsoring today's episode and now let's get back to the podcast now speaking of Millennials have you noticed a difference between the mindset of being a millennial gen Z or like Gen X Boomer have you seen that like maybe one generation's a little better than the other or more motivated less lazy less entitled if you're young today you have such an unfair Advantage which is it's never been easier to start a business one problem is though it's never been harder to have a profitable business and so it's actually fascinating when you look at the data we've had more businesses created since 2020 than we have for 15 years prior and that's as determined by like LLC and corporate entity uh structures and but but what's fascinating is simultaneously we know that young people 30 years old 30y olds on average are making less than their parents for the first time ever so we're creating more uh businesses than ever but we're making less money than our parents did at any time and so I think you have an incredible opportunity to start something but what's really hard is to actually make it profitable the thing between the generations that I'm really curious about is how can we have those two groups actually be each other's solution so we've talked about this before a little bit but you know if baby boomers own let's call it 60% of all businesses and 80% of businesses owned for more than 10 years by Baby Boomers are profitable as opposed to young people who start businesses today 90% of them fail thus are unprofitable well it seems like young people want to start businesses but they don't know how to make them money old people know how to have businesses that continue to make money how do we pair them up as opposed to beat them against each other and I think Boomers in many ways think that young people are idiots young people in many ways think boomers are out of touch and actually they might be the solution to each other's problem if they actually looked at the data and thought unemotionally about where the profits lay any other controversial truths about money that you've learned along the way well I don't think you can spell rich without risk and so if you look at our generation we're on average taking more uh less risk than any other generation previously as evidenced by the amount we have sex how fast we get married uh the um amount of risk we even take with risky behaviors like like drinking or smoking and I actually think that bleeds into risk that we take in our businesses too like we might start a small Etsy store on the side but we're never going to take a big risk with a business uh in the same degree that you know the generation right before us did and so I I kind of want to push back on something that young people seem to think is a good idea today which is like playing the Super safe route uh it looks like on average you know wages don't beat inflation you know we have wage stagnation at 3 to 4% per year we have inflation rates double that in some specific instances and depending on how you measure it so if you don't take more risk you stay with your job you lose money year over-year and so I think we have to take more risk today in our generation and that is not something that I was taught and I don't know if you disagree with me on that one way or the other but I think it's risk that makes you money not save that makes you money yeah for the most part I agree with that what are your thoughts on buying Starbucks I hate Starbucks I hate everything about Starbucks so I would say don't buy Starbucks because they're a corporate Behemoth that's lost all soul in every way shape or form and anytime you go holay drinks just came out though you know what I'm just I'm here to [ __ ] on all the pumpkin spice ladies I think uh I think Starbucks is like a perfect example of what's wrong with society today which is we had a corner coffee shop that our Barista knew our name they wrote it down correctly we maybe knew the owner we had walked in there multiple times the place is clean on the outside it felt like a third place that was Starbucks's original idea before and now you walk into a Starbucks and I mean have you guys been in one lately they're Jack go all the time oh gosh Jack's the problem what's it like Jack it's only 352 for a venty coffee okay how am I supposed to say no to that value um you have you have principles and morals for small business so you're telling me to skip out on the Behemoth and go to the small business yeah and I don't think that you have a a price differential I bet the small business business actually has super comparable prices if not even slightly less because you don't have brand awareness so they can charge you more because their brand is more wellknown I went last time I was here I went to a local coffee shop and loved it it was like motorcycles and defense of Starbucks they're everywhere and there's no guarantee that it is the closest coffee shop to my house Starbucks yeah I mean that makes sense I just don't think you're going to get rich by Saving from from buying Starbucks that I know we differ on but I also think that Starbucks is a perfect example of like how we lost the so of of Main Street and everything that we're pushing back against does it matter if you lose a soul if if consumers get let's just say a superior product or the same product at a lower price same thing like Walmart coming in and yeah they ruined the small businesses but you're able to get all these items at like 50% less than it would cost you somewhere else well I think Walmart has is an interesting model because Walmart's model is price return to users right that is like it is literally a lowcost offering that is what Walmart lives and dies by and I have a lot of respect for Sam Walton his book's incredible if you haven't uh haven't read Sam's biography but uh that's different than Starbucks because what happens with most others I mean we see it right now with prices across industry Netflix takes over a huge market share they lower costs for a period and then what do they do they eventually increase costs because we need to have increased margin because we have public companies because we have quarterly results and so yeah if all Starbucks did was continue to lower prices across the board maybe that would be good and you would know that you were choosing the lowcost option but I I think that's a fallacy that that's actually what happens uh what happens is brand becomes known and then uh they end up increasing their margin which is what you've seen at Starbucks and then eventually you get a inferior product because it is hard I think on scale at large to continue to serve customers well that is true they do sell their brand and relatively speaking their coffee isn't that inexpensive like you know $ and5 for just a coffee is is pretty pretty wild what do you think about those companies like aroan or those other like crazy expensive grocery stores that you buy a water and it's like $9 that's funny I mean serves a serves a product uh and a customer segment certainly but I mean I think I I we have a friend khil who owns a company called sunlife Organics which is a smoothie shop they have something called the million dooll smoothie smoothie that I think is a 47 smoothie which is like bananas what does they have in it gold um I I don't actually know what what is in and I've never bought that smoothie but try I feel like you should once you have to do it once he convinces everyone to do what he doesn't do oh okay he wants to be rich and all spender okay okay I get it yeah I mean I I'm fine with people serving a market but um and and like aran's Market is this you know people go there for what the Haley Bieber smoothie yeah again good for them and if she can Market something that expensive that's amazing it's probably not going to be what I what I buy actually Tanner gets mad at me all the time because I come on a show like this and they're like tell me what you like to spend your money on and my answer is always like I hire more people and buy more laundromats you know he's like that is so uninteresting to young people today you know they're like where's the car you're good you're a card guy you show that online I'm not that interesting because I think the most interesting thing to spend your money on is like impact like where could I grow the next thing and leave a little bit of a legacy with like the businesses we have the people that we hire I wish I liked fancy I guess I have a nice watch I don't know if that count for the average viewer out there where does the opportunity lie in 2025 and also any predictions on the Trump economy one uh we're already seeing what ha what's going to happen with somebody in office who is pro markets overall I think what you're going to see is probably a massive Resurgence um so we're already seeing the stock market go to all-time highs I don't know if that'll continue but I do think decreased regulation which Trump has historically done over time decreased taxation which he has historically done over time leads to Big booming growth my prediction is the economy looks really nice in four years now if there's a worldwide pandemic again there's always like Black Swan asymmetric events but for me this is really good especially for poor people I mean you could not like the guy but a trump economy is really good for people who have not made their money yet because it is going to make it easier to do business I mean for for instance if you want to if you want to braid hair in Louisiana you have to have a license that is a multi-year license to get in order to do braided hair and it costs five figures why because the government loves to layer things on top of industry in order to preserve safety so you're always at a you're you have this Dynamic with any industry of how do we prve preserve the safety of users versus the freedom of users what's the what's the danger with braiding hair I don't I don't understand that might also be indust incumbents so you might say I mean California is a perfect example $50,000 on average over a multi-year period to become certified in hair styling and cutting you have to go to a multiple three-year school in order to do it and if you want to add on these additional things that's where you get up to 50K 15K On The Low End why do I need a beautician's license in order for somebody to cut or style my hair why does that need to be certified by the state of California that makes absolutely no sense whatsoever and all it does is give the government more power and I don't mean like big government even like Regional government and certifiers and um and so we have that across this country in a way that we don't even get to see on a daily basis but that increases the prices for everything that we have on a day-to-day basis so we want to pull back those regulations and that's where we start to have more of a free economy especially for those who are brand new yeah is Trump ever going to do that though and get into like the hair industry and be like hey listen you don't need to go through like you know 20 grand worth of student loan debt to cut hair I think stuff like that seems really common sense to me to get rid of a lot or or at least bring it down yeah well I mean I can say you know we're talking with members of the administration right now about the Small Business Association and what we should be doing different for small business today and so you know they're already in talks about this and it's something I'm really passionate about I think about this for a second you guys if we have right now in the US in the next 5 years 11 million small businesses for sale okay and those small businesses on average only one out of 10 Sals inside of a year we have a huge Su supply and demand IM balance with small businesses most of these small businesses are like jobs not even like full businesses right but they're still transferable there's a Client List there's Revenue there's profit there might be a lease outstanding okay Banks won't lend on most of these $10 million so if somebody wants to buy these businesses what has to happen you have to get the seller to agree to seller financing to finance the business for you okay maybe you could do that 60% of all businesses sold have some aspect of that but in my mind what I'm talking to the SBA about right now is like why don't we create a where if a baby boomer sells their small business to a person under 40 let's say the the segment of the population that is making the least money that's the angriest that has the most wage stagnation they get a tax cut and so does the the baby boomer why don't we like incentivize a transfer of of wealth between between the two generations so it won't be Trump on high that cares about Hair Braiding but if his entire series of advisers they have 4,000 positions they have have to fill um which is what happens when one Administration transitions from the next about 200 of them are what we'd call material that then run down the rest of the administration and so I think if they put business people in those positions typically business people do not want to see more regulation they want less do you think there's any downsides to a trump economy do you see any risks maybe with tariffs for example sure every you know everything has in in in economics everything has second and third order effects right so you have an idea that sounds good and then you if you're a smart politician you have to look at like what's going to happen in the second and third wave of that iteration so for instance in San Francisco you might be like hey it's probably not necessary for us to put people in jail if they steal $99 worth of stuff or $999 worth of stuff let's not fill up the prisons these people aren't career criminals maybe they made a bad mistake you go that seems reasonable that seems reasonable to me your second order effect is well now we have an increase in that type of crime right because there's no incentive for you to not do it what's your third order effect well because there's an increase in that sort of crime then actually businesses can't function anymore once businesses can't function anymore because they're not profitable what do they do they pull out of that industry well what's the effect of that well then we actually don't have enough jobs in that industry so what have we done we've actually created more people that now have to steal in order to survive and so we've we've created this vicious cycle and so I think you're right any Administration has to look at their policies and go is the thing that I am going to change net net so positive potentially that the second and third order effects are going to be better than doing nothing because often nothing is better than doing more what do you think are the real effects of having a a difference in you know a new president or new Congress and stuff like that does it actually affect the average person in their daily life I think that no president is ever coming to save you but a president can really hurt you and so net net a president will not make you rich that's up to you unfortunately but you know unlike people who have never lived in a third world country and done business there have I was in Argentina doing business when Christina Fernandez the president of Argentina was in charge she nationalized almost all Industries I had a friend who had a BMW import export company that they made uh him nationalize his business BMW would no longer transport into the country because his business was nationalized and they made him turn into a coffee producing company and this coffee producing company failed obviously the guy had no idea how to run this business so they had taken over his business then they had mandated production then the business eventually failed politicians can definitely hurt you this is I mean I had a business in Money Market funds so back in the day like 2008 if people don't remember there used to be something called stable nav which basically meant your your money market fund wouldn't move from the price that it had listed at and you might be like what is this technical nonsense that matters not at all well the government changed that stable NIV they made it variable so it moved with the market and because of that they eviscerated an industry had to have the whole insurance industry redo how they price things and also had to redo the whole pension industry because they have mandated risk levels and so I think until you have had the government reach into your pocket book and pull the whole thing out you cannot understand real risk because you've probably played at a level that's not that big yet but industry there's really two risks you have to be super careful about in business when you're young and starting it's execution risk and eventually it's called it's what's called asymmetric risk where is there a risk so big that it can put you out of business with one stroke regardless of how good you are most entrepreneurs if they've never built a multi-billion Dollar business they don't know how to think about asymmetric risk but that's all over the place I mean we don't have it right now on YouTube but we theoretically could like media back in the day was was governed by an agency that could put Graham stefins out of business if you did something inappropriate on the air you would have the government say you can't do that again your business is done I don't care how many views you have I don't care what you're doing this is this is public broadcasting and you can't actually do that and so I disagree with Alex in that vein I think for most normal people um the the president cannot make you richer but it can certainly hurt you and the data just proves that that's a really great point do you feel like there is uh harm in the hustle culture lately when people are like looking at that saying all right well I'm going to take matters into my own hands and just work non-stop when you're young you should have the expectation of having to work harder than you want to for longer than you want to doing things you don't want to do you can either delay uh pain or you can frontload it and I think when you're young you have a really high ability to tolerate pain you can tolerate work pain both acute so like in an instant gosh this is really hard I don't know how to do this thing and endurance pain I'm doing this for a long time it's really sucks it's super monotonous I hate what I do every single day you can tolerate that when you're young you know what really sucks when you have to do that when you're 50 and so I do think hustle culture for all life is not necessary but I would rather I air on the side of telling somebody hey it's going to suck when you're young you're not going to like your job you're going to wake up each morning and think I I went to University for this for a period And if you expect that but you keep learning and growing and earning more it'll be worth it um the only thing that I don't agree with with some of the huster hustle porn stuff is that you have to sleep on a couch and go all in and go after one thing when you're young I don't actually think you should do that you don't know how to recognize your one thing yet like how are you going to be able to determine is this a really good game or not when you don't have enough at bats like you don't even know what sports you're good at yet so I think it's perfectly okay to diversify your risk when you're young and not to focus on the one thing once you're a stud and you know what you're doing and you've already proven yourself go hard when you find the thing that you are uniquely skilled to do but that is my biggest problem with hustle porn today is like go all in do or die it's like you can't recognize opportunity yet and your opportunity will always be limited by the amount uh you are able to see it and what's your recommendation for people that don't want to be an entrepreneur and they just want to work W2 jobs like how how would they go about becoming rich or wealthy first of all if anybody ever tells you that you're less than because you're W2 that's ridiculous I mean Cheryl sanberg makes more money than all of us combined and she's been an employee her entire career so anybody who says that being an entrepreneur or founder is better that's not true it's just if it's if you are unemployable to the point that which you cannot listen to somebody else and work within a corporate culture go be an entrepreneur but if not it's really hard starting something from scratch being the 10% that wins is rare and not everybody's meant to do it and you don't have to do it but what I do think is true is you got to get some skin in the game and equity and so for me that might mean that you go and you work for company until you become so valuable that that company needs you and wants to assign you Equity Distributing Equity upside it might be going from a cost center in a business like compliance let's say to saying I also want to understand how the business makes money it okay get some sort of commission so that I have upside for every dime that I work and then taking my cash and investing it in things continuously this is not that sexy anymore because people want to say go do the new AI startup but to be fair I don't think that that's necessary overall I I hope that one day you struggle under the mantle of being in charge I think that's good for Humanity and good for your your resiliency but I don't think that you have to if that's not something that calls to you here on the podcast we spend a ton of time talking about how to grow your wealth but there's also another question that's just as crucial what if you're not around to protect it what happens to your family your home your future well if you're asking yourself those questions don't wait for the unexpected because with today's sponsor Select Quote you can secure your family's Financial Future No Matter What tomorrow brings Select Quote is one of America's leading Insurance Brokers with nearly 40 years of experience helping over 2 million customers find over $700 billion in coverage since 1985 you see 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description thank you so much to select quote for sponsoring this episode and back to the podcast do you think AI is overhyped like are we a little ahead of ourselves I think you have a higher likelihood of failing in the AI sector than you do in AER matter Car Wash I think if you wanted to actually make money today and you wanted to do with a high degree of likelihood of winning you'd be better off running a boring business running a landscaping company running a roofing company than going and trying to jump into AI I think that most people would utilize AI in some form or fashion but it'll be 1% of companies that make a ton of money I mean think about how is AI really that different in its infancy from like what happened with you know internet companies back in the day from what happened with social networking companies in Tech you typically do not have a big distribution of wealth you have few who win really big and everybody else basically loses it's Venture Capital 10 companies one wins and so um I don't think it's overhyped and that it'll change the way we work forever but if you're thinking about me personally should I jump into the AI train because first I was crypto and then I was web 3 and now I am AI I think your likelihood of not making a lot of money is way higher than you think so what do you think the biggest opportunities are in 2025 they're mentioning taking over businesses I've been seeing this a lot on Twitter yeah well here's what I know I like to look at the data and I like to try to look forward in the future if you want to make money today with a high degree of certainty you want to go where other people have made money with a high degree of certainty in a big luck surface area so like let's think about it like this if you go right now and you want to make money as an artist making music what do we know for sure well we know that less than 1% of of artists can survive on the money that they make both Turin and Spotify so if you become an artist you better hit the top 1% otherwise you're not making much money we know however that if you dedicate your life to let's say Finance well pretty much everybody that's in finance is sustaining their entire livelihood off of Finance so you probably have like a 90% success rate to make the type of money you need if you're in the finance industry so what does that tell me I go okay well I'm not the smartest person out there so I basically want to be where the game is easiest to play um for me that's focusing on on small businesses I think there's a big wave Happening Here if you look at Japan basically Japan is like 10 to 15 years ahead of us Japan's economic industry Association has basically said that we have to Grant to our populace the ability for them to buy small businesses using government funds because if we don't so many small businesses are closing for Zar we will lose one out of every 10 jobs in Japan so the Japanese government right now is giving away money for people to buy small profitable businesses which is wild to think about I think in the US we're not that far away from that and I don't think we realize that you know 65% of all jobs are held by small businesses that most small businesses that exist have to be profitable because they have no Venture back in they're not able to get loans and so for me I think you're crazy if you want to make money don't confuse it with passion up front like make the money first and then you can add your passion on top of it buy the podcast Production Studio don't start with a YouTube channel on and a podcast it's hard to make money that way and then after you have money from the podcast production doing the boring things for other people layer on the sexy things so the best opportunity for me in 20125 is look at where all the opportunity is for you to leverage somebody else's 10,000 hours and you get to steal it I mean think about this for a second I was talking to a dude the other day his name is Adam he's going to buy a small business from his former boss so he worked at this company the company's been around 20 years it's a construction company he's going to use the future profits of the business to buy business and the business took this guy 20 years to build up it's a few million dollars in revenue and he gets to steal his 20 years by buying and buying the business through future profits and so I'm like screaming about this slightly because I think if we don't do this then these small businesses close private Equity market share grows and we're surrounded by Starbucks and you guys know how I feel about that so why can't they just sell the business to you know put it on the market and get like a really high multiple why would they sell it to an individual at that point it's supply and demand we don't have that many people who know how to buy businesses and thus they don't have a lot of buyers so one buyers and sellers both don't know how to buy businesses I mean think about it for you guys before some of us started talking about this on the internet I mean I was in finance you were in finance like I didn't know that I just personally could go buy a business that just sounds kind of like elitist and like I need to have millions of dollars to do it and it also makes me think why would somebody sell me a small business that's profitable today why wouldn't they run it for ever and the first thing I always tell people and like you guys are a perfect example you guys own a few businesses is there any point in time where if I said to you hey can I buy your business at the right price and the right terms would you guys say no you'd be like of course there's a price and there are terms to buy my business every single small business owners has the right price and the right terms and what I call the wrong Tuesday like you get a business owner on the line on a day that they don't want to run their business anymore you've got a business and so uh that's why the second reason is because most small businesses are not financeable so if you think about it how many times have you guys gone to like a dry cleaners or maybe you've gone and talked to your landscaper and you like slip them a venmo or you give them some cash or they've got like the pad in front of you well what does that mean every single time it means the money is not tracked so a bank will not back that business they're not getting internet checks where you can API check every single dollar spent and so because of that they don't have people sitting around that can say okay I can pay a couple $1,000 for this dry cleaners out of pocket and the bank says I'm not funding that so what do we have to do instead we got to go back to what we used to do which is you know back in the day when we had small businesses if you were a blacksmith or you know if you had a a construction company what did you do when you were done when you wanted to retire or in that day pass it on to the next Generation you brought on an apprentice if it wasn't your family member that Apprentice eventually took over the business we got rid of that because we inserted corporations and we in inserted institutions and we ended up having a corporate structure that we could buy and sell but that's actually pretty new so I think we have to go back to the way that we used to run some of these businesses and how do you find them how do you know it's a profitable business and what's actually good to run yeah because it seems like at that point I've seen with a lot of franchisees you just like buy yourself a job and it's not that good I think the most important part we call it the perfect fit business so the biggest misn in buying businesses is that there's a good or a bad business there's really not it's like what's good or bad for you so if I Am brand new out of college and I don't have any money but I want to make like 30k a year and I want to work for myself and I want to learn how to buy and run a business I might want to buy a laundromat that only makes me 30k a year that I can use financing from somebody else because I'm going to learn how to do it live is that a bad business or is that a right business for somebody simultaneously the ones that we always see on you know on Twitter or somewhere out publicly is like I want a $10 million a year business that makes $3 million eida and I want the seller to pay me to buy that business that's going to be hard you're going to have a lot of competition but you know the the average salary in the US is like $67,000 a year I think on the internet we get a little disconnected from like most people want to live the Unicorn type of life which is like I want to go to my kids practice I want to be able to make enough money where I get to do my two-e vacation I get to own my house I get to have my own employees um and I don't have to work for somebody else and so I think we have to like normalize what is good too and then if you want to buy a business and you want to do it in three steps here's how I would do it one there's onm Market deals we bought a company called bis Scout so you can go to like bis scout.com you can search for small businesses to buy just like you could Zillow right we're real estate 20 years behind in buying businesses second way is off Market deals so you go around to your local neighborhood and you get to know some of the owners and every time you walk into a store you say like ah this is a great place you run this place amazing tell me about that have you ever thought about transitioning this business who's going to buy it you're kid what's going to happen and the third way to buy businesses is the people that are already in your sphere we call this the center of influence strategy so that's like my dad's buddy uh is older and talking about retiring and I ran into him the other day and I've always really liked him and he's always kind of seen me like a son I want to go work for him a little bit and then maybe I could talk him into eventually selling the small business to me so those are three ways I would buy a business without having to go be really sophisticated are there any businesses that you would not recommend people get into that are just bad if you are going to buy a small business what's the worst small business you could buy one that doesn't make any money so a non-profitable business which is like what I call hopes and dreams not profits and realities a business that is a turnaround like oh there's all this stuff going wrong in this business I'm going to be the one to fix it that's really hard I would never do that and the third thing that's really bad with businesses if you're doing it for the very first time is a business that seems really cool and complex complexity makes you look smart Simplicity makes you money and so when you're buying a small business I stay away from a business like restaurants restaurants are really hard businesses because they have a lot of complexity to them you have assets that degrade almost instantly AKA food um you have a huge red Market or a red ocean as opposed to Blue you have lots of competition uh the second type of business I really don't like that I've been thinking about a lot lately and especially right now is retail so I don't want to compete with Jeff Bezos I don't want to compete with e-commerce uh in-person retail is a really tough business most retail that wins they're just they're they're an expensive billboard they lose money and they try to get you to buy stuff online people don't realize that and then the third business that I really don't like uh is are hotels hotels I think are real estate masquerading as a business this is often true even for airbnbs for instance and we saw that we've seen how airbnbs used to make people a lot of money and haven't and I sort of said that for a while and it wasn't very popular to say but hotels actually run on negative margin which is weird so like hotels if you look at the balance sheet they lose money every year the only way that they make money is through a fancy tax process that allows them to depreciate a bunch of a assets and not pay taxes so they're one of the only businesses that like net net loses money without taxes do you think real estate is a business or no I think real estate is a great way to lower your taxes and Preserve wealth I think it's an awful way for you to actually make money which really pisses people off on the internet but it seems to be true I mean play this game with me for a second all right you got two options option one you can go buy a single family home for $400,000 the average price for a single family home in the US you take $400,000 worth of risk and then you rent it out to somebody well the average rent net uh Nets you profit-wise about $167 a month so you're taking a $400,000 risk for like a couple hundred bucks a month in profit then you take the average small business the average small business maybe you could buy same way you could for buying a small uh piece of real estate a $400,000 business you put some money down and get the rest from the SBA or seller financing and the average small business makes let's be conservative and say 10 to 15% per year you're still cash flowing tens of thousands of dollars and if you're good you're probably increasing profit margin where you could be getting $100,000 plus from a business instead of a piece of real EST business will take way more work than the real estate would unless you're doing a lot of the work yourself that's the difference I see between the two it's it's totally true but what's the risk I think that's where people go wrong we've sort of started to associate work as bad and we don't think of the risk I think the risk with real estate is actually way bigger than we think which is this big asset that you have overhead and theoretically maybe it's less work but you've also got to find a renter you also have no ability to increase the upside value of the property uh materially you know most real estate increases by what four to if you're really good 10 or 13% per year you could buy a fixer cosmetic changes a lot of work and you would still be only netting a couple hundred per month on average so I think you're right it's way more work to run a business even if you have an operator and there's no such thing as a free lunch but the risk return ratio is actually higher for businesses is my argument especially if you're young like what do you have to lose with your first time going after a small business this way and and this is really not popular to say but Bill Perkins is a dear friend of mine who was the author of die with zero and obviously he has a lot of money now but he said something to me that I was like [ __ ] that's so true he's like if you in the US today for most of us especially if you're probably listening to this you have near zero risk the likelihood of you being homeless and starving is actually quite low for most of the US that's just not going going to be the case if that is true for you which is true for most of us that means our only risk is ego risk which is real which is we don't want to have a relative disconnect from where we think we are today versus our peers so we're not willing to take a risk on a business because what if we fail and we lose this nice house and podcast studio and we've got to go be a waiter right our risk is ego based and if we think that way then we should actually be taking as much risk smart risk strategic risk learning risk as we can When We're Young because the older we get then it is material then you have kids then you have a house then you have car payments and maybe you can't take care of them but when you're young man I wish I had taken more risk early on and I didn't what would you say is the biggest failure you've ever had I've I mean I I've failed miserably at businesses so I mean I lost let's see well in one in one business we lost I lost $12 million in a business transaction how does that break down fraud um I mean the biggest issue with doing big deals is not typ when you're at that level you're probably not going to do a deal really poorly um if you've done a lot of private Equity deals in order to lose that much money fast but in that deal you know we got defrauded and uh you know somebody stole a bunch of money moved out of the country um to Dubai couldn't get access to the to the assets had fudged their balance sheet like those are real risks that happen in business which is why I think you should diversify your risks so all 12 million of that wasn't mine thankfully we had a few investors and we ended up recouping some of it and growing the company back and so everybody was fine at the end but if I mean I didn't sleep for weeks with that transaction had to fly out somebody in the middle of the night what could you have done differently in that deal um there's Russian proverb which is trust but verify the the I think the biggest mistakes I've ever made are never how's but who's and that's the same for life you're always it's always going to be a human that you trusted that you shouldn't have as opposed to an action that you took that you shouldn't have almost always in deals and so my dad has a great line which is you can't do a good deal with a bad guy and in that instance we now have a rule which is we don't do new deals with people that we haven't known for a year where they're a partner in the deal where they have assets to grab the money and I think almost every entrepreneur I've met has had not just one but like multiple Soul wrenching failures uh and I'm not sure you can become really successful without a few of them yeah but in the trust but verify if they're faking documents even if you know them for a year and they're like completely forging things how would you even discover something like that you know time time actually divulges a lot like there's a I have a friend who was xcia and he said something fascinating to me he's like here's how we determine often who's lying to us or not it's duration and touch point so the longer you are with somebody the more likely you are to see what the slip is first thing in the morning somebody comes into your office to interview they've had their coffee they're buttoned up they're ready to go anybody could could fake me out in an interview probably in the morning but if I stayed with them all day long continuously at dinner after drinks after a really long grueling day I'm going to start to see a little bit of who they are more often there's going to be a red flag when they talk to a server there's going to be them maybe executing something in a way that I don't think match matches something they told me earlier and if you can do that multiple times with people you're just going to see their true colors and so that's why I think it's often really important you know um Sam zel had a famous line he basically has this idea Sam was a famous real estate investor multi-billionaire he said one of the best things he ever did to do deals was he's like hey I'm rich enough anybody will come to me to do a deal and I never do that I spend thousands of hours per year on my plane flying out to people individually why because it's a much harder to fake me out on your home turf I want to actually touch and see and feel what you have going on in your scenario and I think that's very true if you know just by being in your house today and being in the studio I can tell a lot about you as an individual I could see over time let's see small things matter to you aesthetic things matter to you you know you know how to grow something and keep it alive for an extended period you have a you have a memory for numbers $50 in growing a clam all the way to $400 if you grow it for x amount of time you know a pretty high recall on the things that are interesting for you such as like photosynthesis to a clam is how they actually grow right so like just clam from he's really into CL a lot clams I have three clams now yeah clam sushi there's a theme there there is a that's a weird parallel actually you would think you wouldn't eat the thing you love but you know um so moral the story get in touch with the human and that's how you don't let them fool you very often it's the same thing with dating like in the beginning you can pretend to be anybody but if you spend more and more time with somebody the more tired they get the more rundown they get the more life hits them in the face you're going to see who you're actually with so what are your tells if someone's lying to you yeah well the first tell is um my dad always said uh tell the truth it's easier to remember and so you'll start to notice discrepancy so like for instance with this guy he had mentioned somebody that worked for him a few times but he had used two different names and that was because he had two people in that position that were both his Mistresses which was a funny funny story so I remember being like well why is I thought you said it was Sally no it's I can't remember what the other name was Mary Beth or something and so there was like one little discrepancy and so I just kind of like write those down some people could be bad at numbers or names I'm really bad with dates I can never remember like was it you know 2010 2011 I can't really remember that um so that's first the second thing is um typically when people lie to you they don't like you or respect you and so passive aggressive uh comments are a really good indicator for are they going to mess with you in some way or the other so haven't you guys ever been around somebody and they're like oh yeah you guys are YouTube you like do something on YouTube right like oh that's cute like a little podcast H just kidding that's so cool I love your podcast that's amazing have you felt that before right and you kind of you note it there for a second but then they hit you with the it's like the slap tickle they're like oh just kidding I'm just kid they're not kidding yeah so when when they show you who they are and when they do a little passive aggressive comment note it that typically means deep inside they actually don't have a lot of respect for you the third thing I've noticed when people uh lie to you is that um they don't have a long history of relationships so be really careful about humans who do not have long-term friendships and relationships and I see this a lot online I'm sure you guys do too like how long have they employed people how long have their people been with them do they have friends like going all the way back to high school are they close with like their family or is every single time you talk to them about somebody historically it's that person's problem it was their family's problem they kind of put them to the side once they got bigger really good indicator of somebody who is probably going to do the same thing to you that is those are some yeah those are some things I've never considered before that's fascinating like people with long histories with other people yeah well think about I mean we all know a few people who are online and they come on like a storm right and like you guys we're all charismatic if we're online so we could probably make anybody like us for a short period of time but the real tell if you want to especially if you're in like a position of power or like somebody might take advantage of you is to figure out like who's been around them for a long time can you talk to people that they've done deals with before you know can you talk to ex-clients of theirs how do they talk about them and if if if you talk to a few of those people you'll very quickly see you'll see a pattern and uh and I think think it's the same with dating like I would never date a girl that says all my ex-boyfriends were toxic guess who's toxic you I would never date a guy that says all women are crazy gu who's Crazy you and so uh that is so common today and yet what we are really doing is finger pointing in the mirror what are some of the green flags to look for best predictor of future behavior is past Behavior so are have they won you know um in in sports if some if a team is on a losing streak and a team is on a winning streak who will have a higher uh betting percentage well you're going to almost always you're going to give the odds to the person who's been winning before even if the other team historically was a better team if they're on a losing streak it's hard to break a losing streak and so uh one thing I always look for is like what happened recently what's your recency bias so the last couple of EX you know ex employees xavs or whatever did you fail at all of those and if so that's that's a red flag if you've been winning at a bunch of them that's a green flag it's like oh you were at this company that company did well you were at this company that company did well okay that's probably like you're going to continue so being around so many people could you tell if someone's going to be a failure or successful like pretty quickly I can tell if I want to bet on somebody uh pretty quickly or not so like in our portfolio at at contrarian thinking Capital we have like 31 companies or something like that we look at hundreds of companies per year to figure out who we're going to invest in and I could tell pretty quickly who's going to win by a few things one is speed the faster you move the bigger your bank account is and so I think there is a bias towards speed and action that is critical in anything you do in fact you know I've gotten to know some some members of of let's say Mr BEAST's team and I remember the first time I was talking to one of them I'm like why is Jimmy so good at what he does and they were like it's really one thing he moves so fast it's uncomfortable like everything is now now now now now and because of that he gets so many shots on goal that he may actually fail more than any body else but he just has more time to execute on it and so if I can see that somebody responds to my emails right away in like a hiring process if they get back to me immediately with action items or next steps if they speak kind of quickly and move fast not always true but a good indicator of success yeah do you notice any life changes when people go from being broke to middle class to then wealthy to then like ultra wealthy in terms of maybe how they think their mentors time management I think you can't be with you can't see more than anything and so what I've noticed is every time you can get in a room where other people's Tuesday is your dream day you end up making more money and so I'm always fascinated by what happens when I get around a billionaire they just think different than you and I do you know and so a lot of times I'll write about what billionaires are like and it's because of this crazy Fascination I have with like how do you have so much abundance in your mind that you even think that's possible it's like still hard for me to categorize what like a billion dollars would look like if you were going to touch it and yet there are some people that they wouldn't do a a job or they wouldn't do a business if they don't think it is going to be a billion dollar business and so um the biggest difference I see from the really big and the really small is that they really like Risk and they want you to sort of play Hey 10 years down the future how big do we win from this because they value their time so intensely that that 10-year period better be orders of magnitude otherwise they're just not going to play the game and so I think you know a lot of times in business you know I think about a little bit like sports you know a lot of us just play these games and we don't think about opportunity cost at all we don't realize that like every time we're watching Netflix or we are selling something tiny or we are staying in a job we don't like it's not just that we're not making more money today it's that that compounds over time until the very end of time and so that's one thing that I think is really different between the two and maybe the the other thing that's different between the really rich and the poor is when they see somebody who has more money than them they're really curious as to how they got it and they don't at all see that negatively like if I was to if we were sitting here with some of my friends who have billions of dollars they would probably not talk very much they would ask a ton of questions they'd be like you guys you know one of my friends had dinner with with Warren Buffett and he said the funniest thing happened he's a multi-billion dollar hedge fund he's a great guy he sat down with Warren and they went to dinner and he was like prepared you know he had his questions he has his research he sits down with Warren starts talking to him and every time he started asking him a question Warren flipped it and asked him a question and so I I'm like so what did you learn he's like what I learned is is that Warren only asked me things he totally you know brain raped me for everything that I knew and I didn't even think about it because I was trying to impress the guy kind of and at the end of the conversation I'm much less R uh Rich than he is but he probably learned more from me than I did at that dinner you know it's funny I sometimes do that when I don't want to talk I'll just start asking people questions and let them talk because I just don't feel like it yeah you just flip it maybe Warren there's so many advantages to that though it's like the be interested not interesting you know like the D Carnegie thing I guess so well and think about it if you're if you play a game of of money what is money it's really just like a a knowledge transfer or a trust transfer you're just like it's kind of like what you guys I think are doing here which is okay uh if I want to make more money today and I I have a goal maybe I want to create a podcast that makes as much money as your guys's what would I be doing in a perfect scenario I would be sitting down with Graham and Jack and I would be saying how does this work how many people do you have here how did you get the views what does the data look like that you guys look like so what do you like thumbnails how many times do we do it oh do you guys analyze it the same way as this other podcast provider is I would be like really curious about all of your stuff and I kind of wouldn't care if you thought I was big time or interesting I would just be diving more into what you do and so I think they're really really rich they're almost always insatiably curious or they're totally uninterested do you think that they're happier than the average person I mean the data seems to show us we're happier up to at least $500,000 an annual income I do think that money decreases misery I don't know if it increases happiness and I think we should realize that more often but I would say the the the really really rich that I know are the one that are happy are from like they're like a couple hundred millionaires the billionaires are different because they get to shape the world at their fingertips like when you talk to a Joe Lonsdale who runs paler for instance um he is so uninterested in small problems and he plays at a totally different playing field and so um I do think in order to do that you're probably not optimized for for happiness you're optimized for achievement so what would you say it is that you're optimizing for in your own life right now is it achievements yeah absolutely I mean for me I I think at the end of the day the most fun game to play is building and like if you can get bit with the building bug um then nothing else is that interesting and maybe that's how billionaires think in some way too it's like I want to know actually what I'm capable like of I don't know if you guys ever think about that capable in terms of what though like what could I build what is the biggest most impactful thing I could build on this planet and the metric would be money the reason I went on the Internet is because I also want an impact at some point to me money is not that that interest in up until you have enough of it you guys should find out for yourself you should go try to get as rich as possible I think that's awesome but then you get to a certain point where you're like what are you gonna like what are you GNA buy I'm not into Yachts I'm not into all this crazy stuff I like I wouldn't even buy a plane um wouldn't even buy a plane no I think it seems wasteful like I would use it um and sometimes we do but like having one outright I don't know I don't know if I maybe unless security became an issue or something like that but impact like that's cool at the end of like when I die I hope there are a lot of people people are like I'm glad she was here that like meant something and so even if there's nothing after this people could be like hey she like helped my life in some way although really quick while we're on the topic of business for those una aware I got a coffee company and it's called bankroll coffee.com our goal is to bring you the highest quality coffee at the most affordable price but in terms of delivering on that promise we had to find an e-commerce platform that would be the best fit for our needs and that is where our sponsor Shopify was there to help Shopify is home to the number one checkout on the planet with way less CS going abandoned and way more sales going for example Shopify is this amazing service called shop pay that lets customers save their email address credit card information shipping and billing information which I kid you not boost conversions up to 50% and if you're serious about growing your business your Commerce platform better be ready to sell wherever your customers are scrolling or strolling on the web in your store in their feed and everywhere in between all in all nobody's selling better than Shopify so if you want to upgrade your business and use the same checkout that bankroll coffee uses sign up for a $1 a month trial period at shopify.com all lowercase with the link Down Below in the description again that is shopify.com to upgrade your selling today shopify.com with the link Down Below in the description it is just $1 I strongly recommend it it truly is the best platform out there thank you so much to Shopify for sponsoring this episode and back to the podcast what do you think are some of the biggest issues today that not a lot of people are talking about 2020 private equity companies owned 4% of the companies in our country today they own 20% of the companies we have the S&P 500 you know this all too well in which three companies own 40% of the S&P 500 now you might say well those are passive Investments Cody they don't actually own that they're exch they're in ETFs you know they don't get to choose who but they still get governance rights and Bill McNab CEO of Vanguard for instance is publicly whoopsie said out loud we are not passive in our governance actually so what do we have we have big companies continuing to own everything and we become renters underneath them now I thought the stockholders of those ETFs still are able to cast a vote based on how many they own so that doesn't fall necessarily on like Vanguard let's just say well it depends on what kind of structure they have it in so it depends on if it's an active versus a passive ETF it depends on how the shareholder vote works so if you have for instance like when I was at Vanguard back in the day you could have an ETF that had to get a majority of X people to vote on y situation but here's how it works Vanguard reaches out to those shareholders and pushes them to make varying decisions they also are the ones that get to educate them on what decision they think they should make or not as a shareholder of a Vanguard ETF how much do I know about what the governance of Exxon Mobile should be that's inside of there I know dick all plus I don't have time for that so what am I going to do I'm going to go with the recommendation of the company that manages my assets overall and oh by the way it's not just shareholder votes it's also what happens in the boardroom so they're not allowed to influence decisions except of course they do you don't think that if I don't know deoe has as their highest shareholder Black Rock they're not going to take meetings with black rock and when Black Rock says here's our core initiatives that we want to have all companies we work with execute on deo's not going to pay attention to that of course they are and so there's both hard power AKA shareholder voting rights and there soft power AKA what might they do if XYZ happened you don't think they would want people to vote in something that's in their best interest because it seems to me like if they're pushing people to a certain thing that certain thing will ultimately make the shareholder more money they wouldn't want to impact performance of the stock so they they want the stock price to go up like they want you to do better they have invested interest in that because they'll take a percentage I think that makes sense theoretically except what have we seen happen we've seen shareholder votes go for Dei over making money for instance frequent is that is that shareholder voting that's doing that or is that the government kind of like put their hands let's put it this way let's say uh Vanguard which has they have created this so State Street which I worked at too they've created entities uh that only investing companies that have XYZ characteristics right so those XYZ characteris characteristics might be a woman or a minority on the board right and if they don't have that they won't fit into this bucket but I thought that's because certain government agencies are funding companies like that so these investment firms have just made companies like that to get funding and because it's become more popular among certain groups they do this because it just makes money that's one bucket but not all because you have so many corporations that do no business with the government that still have these corporate initiatives that might sound good it goes back to that second and third order effect it might sound good but does it actually benefit the user like I don't know about most people listening but I don't ever want to be chosen because I'm a woman and a Latina I want to be CU I'm the best person for the job and yeah I'd like to have a wider breath of of people that we're choosing from for varying board positions but don't don't don't hire me because I'm a female that's crazy hire me because I'm best or hire somebody else um but yeah I think you have some government entities that get contracts because they are listed as veteran owned female owned minority owned sure and increasingly we see a lot of government funding going to institutions like that but we certainly have corporate non-government entities that are still being influenced the exact same way and that's just one instance I think the problem in the US today that nobody's talking about is too few people own everything and I actually think we can push back on it quite a bit and my last little you know push here is a perfect example is say you buy from Amazon I don't know coffee cups those Amazon coffee cups leave in your local economy somewhere around 10 to 16 cents if you were to go to a store locally in Vegas and buy a coffee cup you leave about 60 cents to every dollar in your local economy and so what we've had happen is we have these centers that are gobbling up tons of the the profits and not centralizing them locally in our economy and so uh I don't think we realize the implications of that yet as these big companies get so so so big it's why antitrust and Monopoly are actually important and I'm like a bit of a Libertarian so I'm kind of like the government get out of the way except they start getting subsidies and government tax credits and so maybe being libertarian is also limiting all of that it's hard for me to find a a reason why I wouldn't do the Amazon example and like purchase locally because it's just they make it so much easier you would that's the point the the whole by loo thing doesn't work so what works instead in my opinion is that you own local businesses that service customers better more consistently we can't tell users to not use Amazon it's way too convenient the product's way too good and we've given them a ton of subsidies and taxes in order for it to be better and better and better so what do we have to do instead we have to in the areas where we can compete with the big guys we need to own those businesses instead of letting private Equity companies and the big corporations own it all yeah well it really just seems like the business the only businesses worth going to are retail establishments that you can't get online like getting your nails done or getting your hair done or a dentist office yeah Services services so you can have you know personal services that's what you just me get my hair done get my nails done Home Services which would be like Roofing Landscaping cleaning Plumbing um you could also have Professional Services which is like if you guys have ever worked with a personal accountant that's local often times way better than going to Turbo Tax or a centralized uh you know Professional Services business so those three verticals human touch is still really necessary and oh by the way if you're scared of AI the last thing that'll be taken over are my plumbing companies you know those will last much longer than the graphic design companies and even than us on the internet we're going to have ai versions of us everywhere and we will be taken over before the handson service based business be Inc it just got me thinking this is what's going to happen you know those Elon Musk robots yep imagine you program them with AI and they could fix anything all of a sudden they're a licensed electrician a licensed contractor a licensed plumber and you go to your robot and say hey robot this sync isn't draining and it just downloads it just immediately searches Google finds the answer looks at the thing it's like all right I'm going to fix it so I'm going to go to the Home Depot buy the equipment that will probably eventually happen but we're we're investors in like a big a few big really big robot companies one called Figure so figure is brat Brett adcock's company multi-billion dollar company and what's interesting with these robots is it is so complex to build a human robot that has ability to do multifunctions that they just came up with a way for a robot to avoid somebody if they're coming at them like that's brand new this ability was incredibly difficult and figure's the only one that's been able to do it we are so far away from a multifunction robot that it's hard to imagine and so you know there's a lot of things that can be run uh remotely with human intervention but we're far from that what's going to happen first is that accountants and bankers and attorneys will be robotized online and that will happen much prior to it's almost difficult to understand the complexity of Plumbing like you have to have somebody come to your location you have to have somebody have a uh the ability to have tactile function with things that is incredibly difficult to replicate with humans right now I think at one time we're all going to be in a pod somewhere we're going to have our uh like robot figures like in public so you could be you but kind like you could be home right now like in a pod this sounds awful I hate this for us but you have your robot you like go to the Starbucks but that but that robot could like run faster than you could drive that is interesting sit there like a video game like you're playing the video game Avatar of yourself going to the staru in your pod you could be so perfectly regulated where you live like 300 years and then you just have your robot like actually living your life where you're like simulation controlling that and you have like an ab machine on you you're getting like carrot injected into your veins like imagine doing Roofing like you're you're a roofer except you don't have to exert your body anymore like you have the the like robot version of you going to work there as soon as you're talking it's all high level and then we start talking it just devolves I think devolves I could see that happen sure but that's such a hail Mar prediction a place where you could have your robot go and pick up heavy things way heavier than you could do yourself and it's not backbreaking work I think you think we'd be happier if we did that as a society I think it really it really depends I do yeah imagine you're you're in a pod and you could joke with all the other robots like like you're playing a video game it's like imagine you're playing a video game except you're getting paid to do a J with the only way is if it's completely indistinguishable from real life that's when it would be fine where you literally could not tell it's the simulation Theory where you could not tell but I feel like if there's a splinter of Doubt of like wait my robot is not actually me then all of a sudden that's going to send you in some sort of like a existential crisis and you're like what what am I even doing get me out of this pod get these things out of my arms I don't know well maybe I I think more likely is some sort of like Consciousness development that goes beyond um you know it's something like neurolink but I think you know it would be very I mean think about it today what do we know for sure we know that the more we use technology and the more we are in our phones and onlines and gaming the less happy we are it's what the data tells us the less human engagement that we have the less happy we are the less human touch we have the less happy we are the less you work out uh your happiness drops the less vitamin D you get from the sun your happiness drops so I think the idea of being in a pod continuously yeah maybe I'm older but I think it sounds fascinating but you go straight to Neo in The Matrix so you said you're kind of a Libertarian then how do you squash the argument that most of the things in life that are enticing to us are the things that are bad for us and especially recently when we don't really suffer any consequences for doing you know bad actions on ourselves like you know it's fine not to go to the gym because you can get medication and you can do all these other things you could take OIC and there's so many shortcuts that like long-term have really bad consequences but real you don't really see those well um I think that it shouldn't be incentivized by the government so for instance you know today we have subsidies on a lot of food types that are actually bad for us that makes them cheaper for us that I don't think is good government intervention I do think having optionality is important but we should make honesty important and so for instance it's just easy to go to healthcare because you look at food today and you know you know think about during our lifetimes you guys remember when the food pyramid was like the best thing is you should eat all the grains we should eat all the grains all the time pizza is a part of food group actually we should include that in schools and what are we finding increasingly that you know this this process sizing of all of our food is making us fatter and then you know Mike isrel an exercise scientist that I recently had on the podcast I liked his take on OIC because I tend to think that the more self- selected misery you have the more happiness actually get as a byproduct of it to your point um but his take that I thought was fascinating as he goes what most people don't understand is if you've ever been a bodybuilder you've been so hungry that it's it feels painful like before a bodybuilding competition you're starving yourself your muscles are eating itself you can't think about anything besides food you're ravenous because your food drive is incredibly High his thesis is that there are some humans who have an incredibly High food drive just like some people have an incredibly high sex drive let's say and because of that something like OIC can really help with curbing the food drive you've got a parot with Positive Solutions like working out exercise Etc but um I liked that take because in a lot of times today I think people are [ __ ] on OIC and I think anything that allows you to Kickstart is really important because it's you know in life today it's sort of like if you think about what's easier is it easier to light a match is it easier to start a lighter or is it easier to whittle two pieces of wood together until the sticks catch Flame the whittling together is definitely the hardest and so if you can instead start a fire by something like OIC have material change or gains and then make lifestyle change on top of it because forward momentum is hard to stop I think that's incredibly powerful for people but I do think we have to limit what corporations can do from a greed perspective where are you investing your own money these days is it just businesses are you buying stocks real estate I don't buy stocks uh I have some okay uh I have some and and it continues to accumulate but by and large I have um you know I have some like different Bond strategies um that my advisers might use like we use a lot of um securitized loans basically would also be like stock market Investments probably just that generalized stock market that I never touch I have a financial adviser that runs it some uh Bond varying types of bond portfolios because I want there to not be a lot of movement in the the price so that I can use it to get loans to buy more businesses or to fund businesses have lines of credit but for the most part yeah I'm buying businesses today more than anything I mean there's just not a better trade I can find like for instance you know we just bought we just bought a business in the defense space um that I think makes a ton of sense and that business is 90% seller financed it's profitable we make all our money back in like a year that's not easy to do every single time but like where can you do that in in stock market investing The Leverage is just really hard and once you get good at running businesses and inves in businesses I think it's hard to see opportunity elsewhere and then the best business investors always buy businesses that are strategic so these days it's like all right tan and I were just looking at what media assets can we acquire yeah you know so can I acquire a couple different channels what about some licensing agreements you know can we buy you know the assets of this company to plug into what we're doing here and then it becomes like this giant game that you get to play with connecting all these puzzle pieces together and that I think is like the highest level of rich like when you don't really know what you're doing in business and you don't have a lot of money you think everything's a how problem you're like how do I do this when you have some money and some understanding of business it's becomes a who problem who can I go to to solve my problem and then when you hit the final level it becomes a buy solution which is like where can I go buy with a high degree of certainty the solution to my problem today I can't hire somebody let me go do an aqua hire of a business over here you know I need more Revenue let me buy this company to insert into it and once you learn this level of the game it's really hard to be poor again I think and how does it work when you own these businesses you buy into do you just take like a percentage of the revenue as your own income or do you choose not to take income to reinvest well it depends where you're at in your life for me personally I take a percentage of most business deals we do or it goes to the portfolio now we have a company you know we have Main Street holding company and contrarian thinking Capital those two entities have teams on them so this is the stuff that like private Equity guys never tell us I don't know why I guess they don't want they don't want to moat around it but those a lot of the revenue goes to fund the companies and to like so we'll go do another deal with the revenue we get from one company goes to fund the employees we hire a few more people to run these entities um and then yeah we take a lot of revenue for ourselves I mean that's the ultimate tax play it's actually it's a little crazy that that's how the government is set up but you know you look at the difference and you know all about this but if you make just earned income and you're a high earner the government takes you know 50% of what you earn so when they say tax the rich well if you're making multi-millions they're taking 50% of what you earn if it's an earned income AKA wages but if you're able to instead get most of your earnings from distributions and capital gains you make your money do all the work for you you know you can have a 9% um tax bracket and so you know how do you get a 9% tax bracket well you'd have to have a decent uh percentage in real estate you'd have to take loans from your own portfolio and use the loans as income as opposed to taking direct distributions in capital gains like there's so many ways the rich gain the system do you think that's the way it should be no I don't how should it be then I think that the earned income is taxed at a lower rate I think that we should incentivize people to work more and deploy more capital I think why they tried to do the distributions at a lower tax rate and capital gains at a lower tax rate is because they wanted people to put more money into the economy and keep the economy growing you would be crazy imagine flipping the tax brackets the more money you make the less you're taxed I mean like do you know how much Elon Musk has paying in taxes personally a ton 10 billion he is the single biggest taxpayer in human history is that wild but what's crazy is that's a drop in the bucket though when you look at like how much the United States spends like even 10 billion yeah nothing I mean that's like a day yeah oh he funds it like the day of the government yeah that was like a very unpop reel we did once is we tried to explain uh I'm going to mess up the math so I won't do it publicly but we tried to explain how long the US government could actually fund itself if it took all income from the top 1% and it was somewhere between 30 days and 6 months and so it was like if you eviscerate the wealthy the government continues for 30 days and so um you know I think this idea of taxing the rich at the highest level doesn't really work we've got a I think the only person that has made a really good case about how to grow our way out of our debt and everything that we have happening is VC talking about GDP growth like the only way out is growth I do think a reverse tax bracket would be very interesting though because I was thinking to myself if Trump were to lower taxes significantly for the next four years and you just know for the next four years the top tax bracket is going to be 20% how much harder would you work over the next four years to maximize that yeah I would work I would yeah I would work really hard and so I'm thinking what if there's a tiered system where it's almost like a uh you know like a pyramid where it goes up and like you hit the max taxes at like four or 500,000 but then if you make over a million yeah tax a little less over five million tax a little less over 10 million tax a little less I think it would really push people over that hurdle to just all right let's make the most of this now just interesting concept I've never thought of it until now and I think actually for salary earners you already see what a decreased tax incentive does for people who earn salary all you have to do is look at the U-Haul rates leaving California and the U-Haul rates going from Texas to California it's like 2x cheaper going from Texas to California as opposed to the other way and the reason why is because people who make a lot of money are like we're not staying here they're going to tax the hell out of us we're moving to another state which is probably why Texas is booming in a way California isn't so I think you're probably right and it's good that we have like a federal system where people can make they can move with their feet um I think that's actually really really important for like health of economies because just like companies could you imagine if you were just held host by a company you could never earn more you could never leave how they would treat you they wouldn't treat you very well and so I think we should want that inside of our country too and we should we should reward the people that treat us well cities states Etc I think States should also give people an amount to move there like as in a sense Al yeah Alaska does but like Tak is anybody moving to Alaska like imagine certain St ra that amount just bright all the time 18 hours a sun alth sometimes I even get tempted you guys ever see on the internet it's like move to this small Italian city and make $200,000 if you stay and they'll give you a house I'm like that looks pretty nice third days we want to end it off on this we have some hypotheticals for you that I think are really interesting the first is about labor cost and working conditions you run a company that could maximize profits by Outsourcing labor to countries with lax labor regulations where wages are low and conditions may be subpar what is your moral obligation to workers in other countries and does your profit justify their potential exploitation uh no I think humans are humans I do think that uh if you can get a mobile Workforce and they're cheaper but it is a good quality of life for them that makes all the sense in the world to me we do it we Outsource some third-party you know rem remote tasks but do I think that you should subjugate humans for profit no nor do I think it's necessary in today's day and age there's too much transparency as is so you can actually sell worth of Premium if you say 100% made in America for instance no exploitation over time I don't think that's necessary um even though I think a lot of people do it product has a great profit potential but may pose risks if overused like a sugary food product or gambling app should you Market aggressively to all demographics including vulnerable customers or focus on responsible marketing that may limit profitability well the problem with that is thinking about like what isn't bad for you you if used excessively like God bless I mean I think everything is bad for you if used excessively you could probably die from eating too much celery so I guess the question would be like who's in charge of what's bad for you or not well it could be something maybe that's more addictive it could be like like a Tik Tok sort of dealer like the sugary Foods example where it's if you consume it it's going to lead you to want that even more here's the thing if you are good at making money you can make money doing anything which is I think something I wish more people would realize so why spend your life doing something shitty I never understood that for like I I actually I think most people are doing what they do because they think that it is beneficial in some way if they're at the highest level I think even people inside of PepsiCo or Coca-Cola who are selling you know sugary beverage drinks actually are in some way rationalizing to themselves why it's good or bad I don't think a lot of people are purely purely evil actually I think that we are incredible self-rationalizing about this is like like I can make money I can make millions of dollars with laundromats like what can't you make millions of dollars with so why would you want to go sell Vapes to teens if you wanted to make millions If instead you could probably make just as much I don't know like saving puppies or making puppy gear like choose a path that actually makes you happy and feel like you're a good human being I don't think it's necessary to do bad things in order to make a lot of money what's your biggest fear my biggest fear used to be failure but I don't think that's the case anymore because I've failed so many times it's it's the biggest fear is probably that I miss an opportunity to do something because of fear so am I playing too small I mean one of my favorite mentors really rings that in my mind again I was with him yesterday it's Bill Perkins again and he basically said this thing to me which was um when I was walking along the lake with him have you been around small business for so long that small has infected your thinking and I remember at the time thinking like you're kind of a dick that's rude but then the more I've gotten to know him you know he was just saying yesterday he's like because when I see somebody who's capable of something it makes me sad if they don't really try for something big uh in the same way that I think for a lot of us if I had a kid it would make me sad if my kid didn't try to play all out like if they held back during a sports game because they were scared they might fail if they just wanted to hit singles and they never tried for a home run I think that's kind of sad like try for a home run once in your life so my biggest fear is like where are we playing too small um because what if this is all a game what if we are in a pod right now we're sitting here our robots are out there in the actual world doing something we've chosen this game and we don't play all out you know we we know we all die at the end of the day and so why not really try what is one piece of non-financial advice that you'd want to give to all the listeners right now I think life is a lot easier if you have a belief in something bigger than you I know it's not that popular to say these days and a lot of people don't believe in God and I think you should do whatever you want with your personal beliefs but man Faith really takes you pretty far I think um every time I I worry about something I remember that I'm practicing atheism basically that I think that if if I'm so worried this isn't going to work out that I don't have a lot of faith in something bigger than me and kind of the opposite side of the equation too which is like I don't know isn't it more helpful to believe that there is a God that's got your back than just to like be existentially worried about everything all the time and so I think young people if you're lonely if you're struggling if you're scared like I don't know maybe maybe try a a church because there aren't very many places where people try to get better every single week together and they actually believe in the good of humans and I think we're a little bit happier when we do that I'm curious about this can you be a good salesperson if you're selling something that you don't like yes they exist everywhere uh because they're obsessed with the game there's lots of sales people that just love selling and so they're like you know [ __ ] I mean I could I could sell somebody if I really wanted to on most things and I think good salese can you know I could sell you this glass of water even if I knew I was sick and you probably shouldn't drink it because I might just be obsessed with the idea of selling and can I get somebody else to do a thing that I want them to do so I think that's a false narrative when people say you can't be a good sales people if you don't believe it's just more fun I think long term when you do believe in it but you could believe in just yourself and just in better in yourself and not believe in your product and sell a [ __ ] ton and the world is full of companies is to do exactly that well thank you so much I'll link to all of your information Down Below in the description where you follow check it out lots of great graphs and illustrations in there you want to see it and if you're watching this right now you're not already subscribed Please Subscribe it's totally free we spent a lot of time going through these cost you nothing it would mean the world to us Cody thank you for coming on the show thank you for having me thank you guys for watching till next time see yeah