The Big Lie Keeping You Poor And The $68 Trillion Opportunity to Break You Free! | Codie Sanchez

Wages are stagnating. We have Gen Z making less than their parents did at their age. Their university degrees are three to four X more expensive than what their parents were. Now their housing is anywhere from 1 and 1/2 to 2 X more expensive than their parents were. And simultaneously, they have had inflation eating away at their dollars. You're saying we're not as valuable and our skills aren't as good anymore. Except wait a second, our productivity level is higher than our parents generation, but we're making less money. You got to realize that there's an opportunity. Let's get normal people back into ownership. Cody Sanchez, welcome back to the show. Thanks for having me. Truly my pleasure. Researching you every time is extremely enlightening and this time something very interesting occurred to me and I want to see if you think I'm out of my mind. Mhm. What if I told you I think that there is a causal relationship between deaths of despair and plumbing? What's interesting is today we know that there are 7 million working-age men that are out of the labor force. And in the ages, you know, where they're supposed to be prime age working men, so 20 to 30, um they largely don't have work they say because they can't find it. Mhm. And and I don't actually think that's the case. I think what we have is we have, kind of like J.D. Vance popularized in Hillbilly Elegy, um and normalized, now we have the statistics to back it up, that a lot of people have lost dignity in their work. And they don't believe that the things that they do have dignity any longer. They don't believe that being an employee has dignity any longer. And I think a lot of the despair we have in this country is attributed to drugs, rightly so, fentanyl, uh suicide, especially among men, but is actually because they don't have purpose. And that sounds touchy-feely except if you go to the data and you see the employment correlation between those who are working and have uh substance abuse, uh overdoses, or uh suicides, and those who are not, you'll find an incredibly high correlation between unemployment and deaths of despair, which would be things like um suicide and and overdose. And so, what does that have to do with plumbing? Well, I think in particular with plumbing, we have lost the dignity that we thought existed with the trades back in the day. And, you know, back when we were growing up, there used to be a show called Dirty Jobs, right? Mike Rowe. And his entire purpose was to bring dignity in my 30s when when this came out, yeah. I love that you're trying to make us the same age. That's extremely generous. Don't tell them how old I am, you know. I was four. Um but but he basically popularized this idea of like dirty jobs have real dignity. And he tried to make that mainstream, and it was kind of like this niche on the internet that did get a cult following. But then we sort of popularized huge TV stars, Twitch streamers, uh you I was going to say, how dare you? Um you know, YouTubers, right? Like all these these people who like we really don't build anything. I think we do serve a purpose, but we're not the person you're going to call when your house is falling apart. And so, I think one little good avenue about today is while in the past, uh there was a study that was fascinating that showed um young people increasingly want to go into the trades, aka plumbing. For the first time ever, we've seen a 40% increase in young people wanting to go into the trades. But you know what we haven't seen? A change in their parents' perspective. Most parents, still more than 60% of parents, do not want their kids to go into the trades. They do not want their kids to be a plumber. They want them to go to school, take a huge loan out, go work uh very minimum wage job um following it. You know, the average uh college degree afterward afterwards makes somewhere between 30 and 40,000 dollars a year. A tradesman makes 75,000 dollars a year on average. So, they actually want them to make less money because of status, which is wild. And so, I think the deaths of despair because these people don't feel like their work is valued anymore because we don't value it. And then simultaneously, they can't find other work because they're not skilled in the 21st century economy. And so, the only good thing on this is I think it's starting to change. Like, there was just a Wall Street Journal article last week and the headline was millionaire uh millionaires in HVAC and plumbing, like the next generation, something like that. Now, we've been talking about this for 3 years, so I'm like, good job, Wall Street Journal, you're catching up. But, for the first time ever, they put the words plumbing and empire in the same sentence in a mainstream uh news news campaign. And so, I think we might be changing it. And there might be a way to get those 7 million men and all the women as well back into the workforce and to believe the thing that I believe to be true, which is dirty fingernails is a is a sign of dignity and labor. Yeah, so I'm always trying to figure out what's going on, what there's malaise, a deep malaise right now. Yep. And yet, the economy rip-roaring, and so trying to piece those two things together has been really jarring for me. Um I think people have been sold a bill of goods that everybody needs to go to college, get a degree, become part of the elites. And that model feels super dysfunctional. You, I think, were certainly the earliest voice that broke through the noise on this, but what is the opportunity? So, you've got the book, uh Main Street Millionaire. What is that trying to encapsulate? Yeah, well, I think if you want to make money, you should follow the math. Where are the numbers? Where can you make money more reasonably with a bigger surface area? So, of course, if you become a Hollywood celebrity or an NFL athlete, you can become one of the top 1%. But, what happens with most people? Well, the 99% never make any money. And so, that's really only good to go to the elite jobs if you're absolute best in class. If you're not best in class, you're probably better off actually being in finance or real estate or owning a business where most wealth is created. And so the idea with Main Street Millionaire is we started going down this road map and realized, "Oh man, the highest correlation between millionaires and wealth is one thing." And it is ownership. Do you have equity and ownership in a business? More than 80% of people who are millionaires have some ownership in a business structure or or a business owner themselves. And at that point you might say, "Well, must be nice. Maybe they got it all from daddy." Well, no, it turns out more than 70% of millionaires are self-made. They actually come from very medium backgrounds. We we don't see a lot of outliers as the norm. The norm is that they made it themselves. And so the idea with Main Street Millionaire is like, "Wait a second. Where are people making a ton of money? Where is the biggest indicator for for wealth? And if it's ownership, then how do we get more people to get it?" The other thing is fascinating is basically since the '40s, we've seen stock ownership and equity ownership in companies come down. So, we saw the youth get really excited about it during Robinhood etc., right? And uh and and GameStop and they started taking stock ownership, but actual ownership in a direct company down significantly from double digits to less than 4%. And this is a like profitable businesses that exist, not LLCs signed. So, tax returns as opposed to LLCs created. And if you measure by LLCs created, you'd say, "Cody, it's a boom. Everybody's got business ownership." Well, no, people have like dabbled in things, but they don't actually have real ownership. They're because they're creating their own little LLC. Yeah, there's lots of like, you know, you and I have done it. I mean, how many little one-off businesses or LLCs have you created over your life? Probably a lot. I know I've done number. Exactly. We should all actually own part of an accounting firm instead. Yeah. Um and so the idea on Main Street Millionaire is like, let's get normal people back into ownership and we can talk about sort of the waves happening in the economy right now that I think are generational wealth creation event triggering, but uh the one thing I want people to understand more than anything is if you don't understand ownership and how to get it eventually and how to trade your skills for some type of contract that allows you to earn even if you are no longer able to work, which is what equity is, um the statistics say that you have a much lower likelihood of becoming a millionaire. And so it doesn't mean you should go become your own boss, by the way. Not everybody wants to run a company, it can be totally miserable. But it does mean that you should become so valuable and know how to negotiate to a business that you can at least get a part of it. Mhm. Yeah, uh I'll say that even more aggressively, you're never going to get rich if you don't have ownership. Getting ownership though is harder than people think. I know you're going to make it simple and we'll go through that. Um but woo, it is it is a real shift in thinking. Yeah. Before we go there, I really want to put a fine point on what I think is going on in this moment right now and I want you're going to know the details of it a lot better than I do. But there the big divide right now is between young and old. As I try to piece together why do people feel really like, hey, the economy's great, jobs up, everything wonderful and yet on the street it's like this is madness. I feel like I'm being gaslit. Mhm. But I I don't know that they're lying. Like it let's just assume that it's all true. How can those things be true and there's still be a problem? And I think it goes something like this. A lot of the jobs being created are second and third jobs. They are not first jobs of somebody who wasn't working and is now working. I think it's somebody who's working but still not able to make ends meet because of inflation. Despite it being down, we were high for so long. It's not like we've started reversing the trend, we're just not growing as fast anymore. Yeah. hit this plateau that was already brutal, so people are still having a hard time paying for things. Uh but if you own assets because of the way that the debt is working and now my long-term listeners will feel very comfortable right now. So, uh, we've got so much debt that we have to keep money printing to deal with the debt, which devalues people's ability to buy things. So, even if the cost isn't going up, your purchasing power is going down. But, the way that money gets into the economy is with people that have assets. Right now, that's old people. So, old people are able to take advantage of this complete distortion in the economy, which is the debt and the money printing. Mhm. And young people are like, "Hey, bro, you yanked up the ladder. Like, I'm not sure what I'm supposed to do here." But, to me, looking at what you're doing, it's it is it's not going to be the only hope. There's never only one thing, but this really feels like a huge opportunity, which is, for better or worse, all of the people that have accumulated that wealth, they're going to die or retire. And so, we have all this wealth trapped inside of the baby boomers is an easy way to think about it. But, how do we get that back out? How is that wealth not just dissipated when they die and the business just folds? Right. Which is one way cuz this we could fumble this moment. This can either be a tremendous wealth transfer from old to young or it can be wealth destruction that poof just goes away. Yeah, that is the part that nobody's talking about. Is that right now today, if you want to get rich, what you should realize is there are $68 trillion of wealth that may be transferred in baby boomers to the next generation. May be transferred. Right. Or it could be completely destroyed. And the the And then there's a lot of people go, "Oh, great. Well, they'll just hand down their house to me. They'll give their money to their kids." Here's the problem. Of the $68 trillion in wealth transfer, what do we know? We know that most baby boomers, so more than 60% of baby boomers own a small business. What do we know about business owners? We know that business owners have 90% of their net worth on average tied up in the business. So, what does that mean? It means that 68 trillion dollars likely is tied up entirely in businesses in a way in a number that we can't quite imagine. Like we're talking somewhere between 20 and 40 trillion dollars of the 68 trillion is tied up inside of businesses and assets. And so if if we just say, "Okay, baby boomers, we wait for you to die. We take over your houses. We take over your cars." Um what will we be left with? Well, not the 68 trillion dollar number because a lot of of their wealth is tied up in small businesses. And so we only need to look to Japan to realize how real this is. So, Japan's a fascinating case because in Japan they're like maybe 10 to 15 years ahead of us. And you can see that Japan has the same issue we have. They have an older demographic population than us. They have a lot of baby boomers times, you know, two or three. And they have a slow main younger population uh from a growth rate perspective and they have no immigration. They really don't allow immigration in in Japan to meaningful numbers. And so they have this generation of business owners who are literally shutting down their businesses. And you can read about it. It's in the Wall Street Journal. Um and it's it's been such a detrimental uh force in the economy that the government created a task force to essentially help pair baby boomers who want to sell their business for zero dollars. Just transfer the assets basically to the younger generation. Meaning that they have grants. They have systems and processes. They have matchmaking agencies. They funded M&A agencies because they realize if they don't do that, one in 10 jobs in Japan is tied up in those small businesses owned by the baby boomers. And so that would be almost Great Depression level of unemployment if uh those businesses just disappear. And so it's really it's kind of scary on a macro level to think about it that big uh and that we could have this huge looming wealth transfer that could go sideways. Um but on the other hand, if you think about it opportunistically, there are so many small business owners that are baby boomers that don't even realize their businesses has a value. And and a lot of them might think the value is much higher than it is or should be. And a lot of them might not even think to sell the business. They think to just shut it down. That's what happens with most small businesses. Like only one in 11 small businesses inside of a year will sell on average. Um Whoa. Mhm. And so if we know that, then uh we have to realize that there's this big huge supply issue that's sitting out there. And And at this point people will go oddly nobody's ever handed me a business before. Where are these business Oh, there's just profitable businesses running all around? Well, I'm not saying it's not work. You have to know how to look for them, you know? We call it the our our version of the reticular activating system, right? So, you know, when you activate your reticular activating system, it's basically your brain saying, I need to care about this thing. So, I always use example like when you go buy a Porsche, before you bought the Porsche, you don't really know what notice Porsches anywhere. You buy the Porsche, all of a sudden every [ __ ] in LA has got a Porsche. What happened? Everybody bought them on the same day? No. Your brain just said, oh, Porsches are important to our survival because we're paying a bunch of attention to them. Now we're going to see it everywhere. And um and so if we can turn people's brains onto that, uh what we've found in the 3,000 students we've taught to do M&A, is then they start to see deals where they didn't before. It's kind of like you start to see the matrix, right? And so um you you all of a sudden are talking to your buddy and his dad his dad's like, yeah, you know, got to go do the plowing business again, man, it's ti- you know, I can't believe I've been been doing this for 60 years. And you're like, yeah, well, does Brian, buddy, do you want to take over the business? No, I'm a lawyer, I'm happy. I don't want to run that. Huh. Uh have you ever thought about how you're going to transition that business? And all of a sudden you just see them and you start to have meaningful conversations that allow for what we used to have in this country, which was a business, an apprentice, and a transition. Instead, we replaced that with a business and private equity, IPO-ing, or closing down. And we allowed the institutions to get in the middle, and I think we should push back on that. Okay, uh I can't stop myself uh from talking about this uh which is I think that everything moves in these cycles and it is very hard for us to avoid the sort of boom-bust of it all cuz what happens is getting into finance right now is a G way to make a ton of money. Like if you've got the brain power to pull it off, go into finance. You can get obscenely wealthy even just working for somebody else. Uh eventually it's going to stop working, but it works right now. So, this there's something really really uh difficult to deal with happening right now. You said something earlier that I think's important to now bring forward in what you're saying now, which is uh if you can if you're not going to be best in class, then hey, go buy a mom-and-pop shop, run that, whatever. Um no one is going to believe that they're not capable of becoming best in class. At least that's listening to a podcast like this. So, how do you help people um either get their feet back on the ground, be realistic, assess the situation as it actually is? Um Yeah, how do you get them to navigate that self um identification part of this? Yeah. Well, one I would say, let's let's let's bifurcate two things. Let's cut them in half. A lot of times people start a business because they want to make money, right? So, they are like, I want to start a um advertising agency. Why? Is it because your life mission is is create an advertising agency? Is it it because you can't sleep for the want of this advertising agency to be in existence? Is it because you think you are so uniquely skilled at it that you want to spend the rest of your life on this mission? If that's true, go do it. Go do the startup. Thank God that you exist. We need people like you in the world that are crazy psychopaths willing to do the startup grind, right? You and I have both been there. You cannot win long-term in being a startup, in my opinion. Uh in this environment where there are more businesses that have been created than ever before. Uh so, it's easier to start a business than it's ever been. It's harder to have a profitable business. There's what's called the four valleys of death, which is like, you know, before you make your first dollar, before you make your first million, after you make your first million until 10, uh and from 10 to to 100. And so, at those points most businesses die. So, if you can't sleep for the want of the business, go do it. But, if what you really want is, "I want cash flow and freedom." Then, you should look at it numerically. What is cash? Cash is numbers. So, now you should be saying, "Okay, where do I have the highest likelihood of success?" Cuz, yeah, maybe I'm a smart [ __ ] and I'm better than everybody else and I'm elite. Okay, incredible. You still want to be smart in the games that you play, right? So, I would much rather, even though I think I'm quite smart and clever, I would much rather go and compete against my local handyman in my region, go compete against my local landscaping business, than compete against Jeff Bezos. I am going to pick the game in which I have a higher likelihood of winning against my competitor, and I'm also going to pick the game in which most of my competitors make money. And so, where do most people not make money? Startups. That's why there's big VCs that have to fund them all the time. Why are small boring trade businesses easy or interesting? Because nobody funds them. Nobody's giving plumbers and landscapers, etc., money to start. They can't even get a loan. So, what does that tell you? That means that the first dollar that you invest in that business has to come back to you pretty quick. Otherwise, you're not going to continue to run that business. Those services businesses end up being profitable pretty quickly. So, you already know that. And then, how could I really de-risk my ability to win up front? Then, I can create an empire later if I want to. But, if I just want to win faster, what would be make more sense? The average startup costs you somewhere from $20,000 to $100,000 to start. Average is not that useful. It's probably less if you looked at the median, but let's just leave it and say so a couple tens of thousands of dollars at least. The average startup for the first 3 years. So, you pay for the privilege of eventually potentially making money. Um and then, once you do hit profitability, the average uh founder of a business makes during that first 10-year cycle about $40,000 a year, which is great, but maybe not for that much risk. Now, if you could go to a business that was already making money, so already has revenue, already is profitable, and has been profitable for the last 3, 6, or 10 years, you walk into something that has already beat that startup curve, and has a higher prediction or a higher likelihood of continuing to make money because it has historically. And then, somehow we got sold a big lie that because things are old, they're outdated, and they're not no longer relevant. Actually, the biggest risk to a human is when they're a newborn. That is when you are most vulnerable. Uh not when you're a teenager, right? The biggest risk to a business is not when you're a teenager, when you've already existed, you know how to feed yourself, you know how to dress yourself, aka profitable business, not when you're a baby. I mean, and and instead when you're a baby. And so, that's how I think about the two. Like, yes, you can be a lead, but pick the game that you have a higher likelihood of playing. Okay, so um what does somebody have to be good at in order to pull off buying a business? Cuz I think most people can imagine running the business. Yeah. What they don't understand is what they're going to have to be good at to find buy the business. Yeah. Well, um we teach 10 steps to buying a business. So, basically what I did is I worked in private equity and asset management investing for a long time. And I was like, what are what are like the bare minimum things you have to know in order to steal the private equity guys homework who buy businesses all the time. That's what they do for a living. And what I realized is there's not that much difference between doing a hundred million dollar deal and a million dollar deal. Or doing a million dollar deal and a ten thousand dollar deal. It kind of has the same steps. And the steps basically go like this. One, you got to realize that there's an opportunity. Cool. Two, you've got to figure out what a good deal looks like for you. We call that deal clarity. Some people call that, um, creating their deal box. Three, you've got to figure out how to find a business to buy. That's called origination. Uh, four, you've got to figure out how you're going to finance that bad boy. How are you going to make money? Uh, it how you're going to get money in order to buy the business. Most of us don't have maybe money to do that. How are you going to sell the owner on why you, Tom, should be the one to buy this business. How are you going to do diligence the business to make sure that you actually want to buy it and you believe the things they're telling you. How are you going to negotiate the deal in order to get the best deal possible. How are you going to structure it and put together the documents cuz this Wall Street gate kept that from us for so long. Then finally, how are you going to close the business? So, what does like the last segment look like so you transfer everything correctly kind of like when you go buy a house and you have the mortgage docs and you go to escrow and all of that stuff. Very similar for buying a business. Um, and then what is what's your first 90 days and year going to look like running the business. And so, when you put together that framework, you can see just like anything in life, it's not that you don't have the money to do it. It's not that you, um, can't do it. Most likely. It's that you don't know how. You have a knowledge gap, not a resource gap. And so, the book is is trying to say, "Hey, this doesn't have to be as big as and scary as maybe you think. And what if you could buy a business just using your expertise? What if you could buy a business just using your time? What if you could buy a really small business to start the first time? Like a $5,000 business. And then once you figure out how to do it at $5,000, you can scale up, scale up, scale up, just like you would in buying a house. So, that's what we're trying to teach people is can we make it more democratic and can we help you really think about what you might want to buy or own or buy a part of or own a part of? Because if we can get your first deal to be good, then you're more likely to do more deals. We'll get back to the conversation with Cody Sanchez in just a moment, but first, let's talk about something that I hope is keeping you up at night, the fact that your money can be inflated away. Inflation is eating away at your savings whether you know it or not. And so, if you are storing your money in dollars, you are in trouble. That's why I want to tell you about Goldbacks, a revolutionary form of currency backed by actual 24-karat gold. This isn't some get-rich-quick scheme or empty promise. Each Goldback contains real gold from as little as 1/1000 of an ounce to as much as 1/20 of an ounce. They're designed with cutting-edge anti-counterfeiting features and are accepted by over 2,000 businesses across the US. Think about this. While the dollar continues to lose value, Goldbacks have seen explosive growth. Since 2019, they've gone from $300,000 in exchanges to over That's because they offer something rare, real tangible value. If you want to protect your wealth and take control of your financial future, go to alpinegold.com and use code impact to get started with Goldbacks today. Again, that's alpinegold.com. Use code impact. You need to know that most entrepreneurs are one lawsuit away from losing everything and they don't even know it. When When you're just starting out, traditional legal protection feels impossible. Lawyers charging $2,000 an hour, massive retainer fees, complicated paperwork, but protecting your business doesn't have to be this way. That's why I'm excited about today's sponsor, LegalZoom. They've created a way to handle your legal needs and protect your business without the astronomical price tag. Head to legalzoom.com and use promo code impact to get 10% off any LegalZoom business formation product excluding subscriptions and renewals. This offer expires December 31st, 2024. That's legalzoom.com promo code impact. LegalZoom provides access to independent attorneys and self-service tools. LegalZoom is not a law firm and does not provide legal advice except where authorized through its subsidiary law firm LZ Legal Services LLC. All right, what you just said is awesome. It was not the answer to the question that I asked. So, what I'm trying to figure out is what do people have to be good at because people die in the face of tactics all the time. So, I have a university and the one thing that I see all the time is if I lead with hey, here are the tactics you're going to learn, I get people to sign up. But if I actually tell them the thing that they actually need to do, they don't sign up. Now, here's what I'm going to say is the answer to the question, you tell me if you think I'm crazy. If you want to buy a business, you have to do all the things that you just said, but the thing that you have to be good at before you can even get there, you have to have a balls. So, you've got to have a high risk tolerance. So, even if you're buying something small, you're going to put your life on hold, you're going to get into this thing, you are almost certainly going to get in way over your head. You have to have an ability to learn. You're going into something unless you're already a master in that space, you're going to have to learn about this thing. There is a methodology to learning. You have to have a willingness to suffer. This is going to be hard for sure and most people should go work for somebody else. So, don't own the plumbing business, be a plumber for somebody who owns a plumbing business because they're going to have to deal with making sure that we make payroll and all of that. And so, just by way of being honest with yourself, you have to have an ability to convince people. If nothing else, you have to go and convince that person that they should sell to you. If we're talking about a no money down thing, this is going to be hey dear person, I know that you spent your whole life building this thing up. I'm not going to buy the money I'm not going to buy the same money outright, but you can trust that I'm going to buy it out over time with earnings from the business. So, you have to be able to convince them that you're the person to be able to do this. And above all of that, you have to have a belief in yourself. Like you actually have to you you can't be trembling as you take that step forward as you walk into the business. And so, did I miss anything on that list? Like if you were to think about the people that have gone through your program that absolutely murder it, is that what they all have in common or is there something else? Well, no. I think they all have that in common, but they're still scared. You know, I think you know, pros know that you do it scared. They just understand what is a true fear, like what is an acute reasonable fear and what is a influenced fear, somebody else puts it inside of you, or what is a future state fear. So, like something that could be, but maybe it's not so reasonable. And so, if an acute fear might be I'm buying a business and it's a million-dollar and I'm putting my life savings into this business and I've never done a deal before and my house is on the line. Acute fear. You should be scared about doing that. Please don't do that until you're a really good deal maker. You don't you don't want to put your entire life on the line. An influenced fear might be somebody saying, but you've never done this before. There's no way you can. You shouldn't do that. Why don't you just stay an employee employed by somebody else? That's somebody else influencing you and implanting a fear in you. And then a future state fear is like what happens if this happens and this happens and you're not really actually you're not modeling the problem and seeing like how reasonable or likely is that to happen? You're just stuck in the future and not in a current state. And so I think the only thing that I would add to what you have is you're exactly right. If you're going to do anything, there's never any risk in education. So like you learning the thing and becoming a deal maker and learning how to do deals, I've never had anybody go, "God, I wish I didn't know how to do that. I wish I didn't understand what equity meant. I wish that I didn't understand how to do the distributing deal versus a normal deal. I wish that um when my boss came to me to negotiate my salary, I didn't take it three steps further because I realized the game of negotiations." Nobody's ever said that to me. They're not like, "God, I wish I didn't have that knowledge." Now, where's the risk? The implementation, the doing of the thing. So we have to get people to obsess with the part up front, which is, can we get you to learn as much as humanly possible, not only about how to do it, but about who you are and what you want? Because when you know what you want and you know what you're capable of and you know how to do it, then you really decrease the risk. And let me give you an example. Like you know, I had a guy buy one of our newsletter businesses back in the day for $8,000. It was like not really a lot of money for him at all. He already ran a newsletter business. This newsletter business was a marketing business. It was basically a glorified list. And he integrated it right into his company. He felt no fear on that that transaction. He had never bought a business before. But why did he feel no fear? He already knew newsletters. He was running it already. He had a little model that was like, "I think that we can sell 3% of all users on this list, so I can make my money back in 30 days because at $8,000 with our purchase price, this is going to make all the sense in the world." And then the deal was small enough where he's like, "Ah, if I lose $8,000, I'd be annoyed at that, but it's not going to bankrupt me. And so, can we get them in this sphere where they know themselves, they know how to learn, and they know how to do a deal. So, I guess the only part that you missed is you need to know yourself. Like you need to be honest about what you want. Not even what you're capable of, cuz I think more most people are more capable than they think. But one thing I see people do sideways sometimes is they're like, "Cody runs laundromats and buys laundromats. I'm going to buy a laundromat." That's called mimetic desire, right? That's you saying Cody's life looks cool, and she started with laundromats, so I should start with a laundromat. As opposed to taking a little bit of time, which we call the deal clarity worksheet, and walking through what do I want? How much money do I want to make? How much risk do I want to take? Where should I be based? Like, what am I willing to do? What am I not willing to do? What's the outcome that would be worth the work? And if you do that, then your risk decreases substantially on doing a deal. But skip that. Just go buy a business after you listen to this podcast with Tom and I, and say, "Cody said that I could," and not really know yourself, and don't follow tools and and resources, and don't know thyself, yeah, you'll probably regret it. You shouldn't do that, in my opinion. What's harder figuring out how to do the deal and getting that done, or running the actual business? I think most entrepreneurship is like it's like war. It's like long periods of boredom punctuated by extreme periods of fear and misery, right? And so, um, entrepreneurs could get people to believe you. Their lives would be a lot better. You know, it's it's I also heard, um, Emma Grand, Emma Grange, whatever the woman who runs a bunch of the Kardashians' businesses, she talked about something that I loved, which is true in entrepreneurship. It's called the rule of thirds. Typically, you think about that in like, uh, cameras, you know, how do you place something on a on a field, but in business, she said a mentor told her that, um, when she was when she was younger a third of the time in business, you're going to be great. Like you're going to be like, "I'm the [ __ ] CEO. Like this is so fun. Get me a coffee." You know, whatever like gets you off. You'll It'll be amazing. You'll be really proud of yourself. You'll be doing work that matters. And you'll stretch yourself to a point that you're like, "I didn't know I was capable of this." Great. A third of the time you'll be stretched but neutral. You'll be like, "All right, this is work. It's you know, I'm going. I'm kind of neutral on it, but like slightly uncomfortable." And then another third of the time, you will be miserable. And you will be like, "Oh my god, I can't figure this out. This is going to be a nightmare. I probably will become a massive failure and everybody will hate me." And as long as you realize that those thirds exist, then I think it's a lot easier to get through it. Cuz when you're in a great period, you go, "Okay, awesome." But like I know it's not going to last forever. And when you're in a neutral period, you're like, "Okay, cool." And when you're in the miserable period, you're like, "Please God, finish." But I do know that another period is coming. And so um that always makes me feel better at least. Yeah, this too shall pass. I have said that to myself a million times. Also when things are going well, like don't get too complacent here cuz this too shall pass. And it always does, doesn't it? does. Even the miserable stuff. But it's interesting. So I think that people really do break. I think that most people will emotionally break and that success is a game of resilience. How long can you stay in the game? And if you're really getting better and you stay in it long enough, you'll be fine. Um let me ask you. So Wait, can I add one thing? Yeah, please. I do think that you're right though. Like I don't think that everybody has to go be an entrepreneur and a founder of a business. I think it's a really fair point. Like my The people who work for me, for instance, why do they come and work for me? It's not that they couldn't go become entrepreneurs. Many of them have been entrepre- entrepreneurs before and run businesses. Um but they come because they think or they know that they can get equity and upside in my businesses eventually, and they see a path for them to get in skin in the game. And simultaneously, they're like, "God, I did that thing before, and I don't want to go be the person in charge 100%." And if that's somebody listening, I think there's two types of humans. There are types of humans that are like, "I want the risk. I want to be in charge, and I want to try my hand against the universe. Let's go, right?" And then there's another person that's like, "I just don't want to work in this job anymore, and I'm kind of miserable, and I wish I had more control over my fate, but I'm not sure I want to fully dive in." Maybe ever, or at least right now. And for that second type of person, it is perfectly okay to learn deal making and figure out how to get part of a company or part of the risk or transfer some of your salary and earnings into a company that you get ownership for instead of taking straight-up compensation, um but not be the person where the buck stops with you. You can just take less of the risk, but take some of it. The only thing I'll add though is you can't get ownership without some risk. There has to be risk if you're going to become an owner. And so I think you were very right on that point. All right. So, going back to the idea of deal making versus running the business, do those skills dovetail or is that just general intelligence? They do They dovetail, I think. Because nobody taught us I mean, I was breaking this down with somebody yesterday. Nobody taught us the language of money. Like, they taught us It's like, you know how most people in the US speak Spanish? Uh like, kind of. Yeah, like that much, right? They're like, "Donde está el baño?" You know, like, "Cerveza, por favor." Uh but like, if you were to go deeper and say like, "Let's talk about the meaning of life in Spanish." Uh-oh. Nobody's going to be able to do it, right? Sí. And so, because of that, um we we train for Spanish, but we never actually implement, utilize, and integrate Spanish. And so, we can't actually speak the language, even though we might be able to understand pieces of it all over the place. I think it's the same with money. So we understand budgets, maybe. We understand savings. We maybe understand investing in the stock market. We might understand salary, like what should I earn broadly. But, I mean God, some of the best entrepreneurs I know don't even know how do I structure a deal? Like what does it mean, what are the levers that I can use, price and terms, and inside of those price and terms, in order to get a percentage of ownership? Like that is not taught. That is taught in private equity. And I mean, it's taught in private equity and finance, and that's about it. Maybe if you're like, if you have a VC startup, you learn a little bit of it because you're giving away the equity, so you learn it in reverse. Um, but for the most part, nobody learns that. And because we don't learn that, we can never actually manipulate money at the highest level. And so I think they dovetail, and we've got to learn this language of money. So we have a whole port point basically talking about structuring, which most people would think is boring. Like why would I want to learn how to structure a deal? What does that matter? Well, I give the example of like, all right, if I'm on a stage, sometimes I'll pick somebody out of the audience, and I'll say like, who here owns a business? And then somebody will raise their hand. I'll go, okay, how much revenue does your business do a year? They'll be like, $10 million. I'm like, awesome. I'd love to buy your business for a billion dollars. Would you take that deal? And they're like, [ __ ] yeah, where do I sign? I'm like, cool, right here. But you didn't look at the structure and the terms, which tell me that I am going to pay you a dollar a day until I pay off the billion dollars. Is that a good deal now or a bad deal? It's a bad deal. And structuring is all about that, right? It's like, hey, I would dude, I remember one time my attorney didn't catch a deal where what was the exact terms? It was they missed gross profit instead of net profit. Oh. The average person does not know the difference. And and the average person can't actually calculate that. So, gross profit So, I ended up having to pay out a partner on a gross profit basis, which means basically revenue. Like basically top line revenue to simplify. Yeah. Instead of the actual money we took in hand. Now, that could have bankrupted me if that was the only deal that I did. And so, if we can learn these terms, we actually make money more money by doing the same thing we're doing right now. Because you would know, you know, if you read the book or if if you obsessed with finance, you would know, oh, I don't want to structure a profit share deal because if I just structure a profit share deal, then Tom could run all of his outfits in the business and take all of the profits out of the business. And when he pays me a percentage of profit, it's much lower. I want to try to do a revenue share deal cuz I want a percentage of top line revenue, the whole every dollar the company brings in. And if you don't know these terms, it's hard for you to actually do deals. Very similar to health care, I think. It's like what they did to us in health care. They're like, organic. Asterisk. There's no definition for organic in the US health care system for for food. So, it's like, all right, what does organic mean? Grass fed. Well, that must be better cuz that means the bull's out in the field, right? No. Have you ever seen the thing with the cows in a row and they're just spewing a machine with grass at them and they're in all their own [ __ ] It's actually not better. So, it's like if we understand the words real meaning, that's where the money is. And that's what we're trying to kind of like pull the curtain back on for people. Um how can somebody watching this go, okay, wait a second. Either I'm going to be good at the deal side or I'm going to be good at the laundromat side. Uh how do you help them bridge that or shut me down and show me that this really is one in the same, but it feels more like I'm going to look into Well, certainly you, it's obvious. You know that you can scale just by being so good at deals, but I have a feeling if I look into your audience, your students, excuse me, I'm going to see the same thing. That they're going to be good at either the deal or the running of the business and it's really about bringing those two people together. Yeah, it's a good point. So, my point before is not that deal making and running a business is similar, it's that if you do a partial deal and or you run the entire business, that's or or you buy the entire business, that's similar. So, it's base My my point was basically you don't have to be good at running a business to do a deal. Facts. Just don't buy the whole thing. So, if I was unclear on that, I want to make sure that's that's clear. Now, you're totally right. There's It's kind of like EOS, how they talk about in business a lot of times they Entrepreneurial Operating System? Correct. It's, you know, it's kind of like in business often they talk about having a visionary, right? Somebody who comes up with the crazy ideas, you, you know, what do we do next? Yeah, I want to do this, it's going to be magical. And then you have your integrator, the person who goes, "Chill, Tom. Like, what's the budget on that? What are we going to do next? Here's Here's the timeline. Here's the follow-up." It's a little rare in business to have both. Crazy ideas, big vision, and ability to execute on the vision. And I do think in some ways I got lucky. I have a little bit of both of those. I definitely err more towards the Hey, big ideas, but I'm also pretty maniacal on the details. Um and I think you could say like who would be best at this? Elon, right? He's like crazy about details. Yeah. I can't believe that people hate on that guy. It makes me want to crawl through the YouTube screen and bite somebody. I don't want that in my mouth, you know. his his politics, what he's done is unreal. Unreal. Anyway. Yeah, well, I I think I'm No, like a if if I'm probably a measure of your bank account is whether you like Elon or not. Like if you don't like Elon, I bet your bank account's not very big or big boys with bees after their name. Well, or you have an ulterior motive. There you go. Cuz they're they're getting in squabbles now over politics for sure. Yeah, that's those are status games at that point. But if if, you know, if you're not on Elon's level and you don't like him, uh that's okay to not like him as a personality, but to not respect what he has accomplished or at least want to learn from it, even if you hate the guy going, "Oh, by the way, he built three multi-billion dollar businesses simultaneously that had never been created before." Like I probably I could learn something from him, you know. Actually, a funny story. We had a member of one of our teams, we have a podcast, too, you know, the Big Deal podcast and um on it, I had a billionaire friend of mine, Joe Lonsdale, who built Palantir. And uh what's funny is we had a vendor that worked on the podcast. Had about like 3 days uh before we had Joe on, the vendor uh reached out to my head of content and was like, "The thing is, I don't feel morally right working on this podcast. And um so, you can give me anything else, but I'm going to opt out on that. And And I hope you respect my moral compass on that." Or something like that. And And at first, I was like kind of categorically baffled because this was a business podcast. We weren't talking about Joe's politics. We weren't talking about Joe's background. Um we were literally talking about how do you build He's built five multi-billion dollar businesses. I want to learn how he did that so that I could even if I hated the guy, I want to I want to steal his homework, of course. Wow, you could only learn from somebody you like? What a limited world view that would be. But the second thing that I thought was fascinating, I was like, "The point of podcasts and all this media that we do um is to beat up ideas, you know? It's It's to see what ideas stand the test of time. And if you can't do that, you can't be on my team. And so he said, you know, with all due respect and not a ton of it, you're fired. And no, I don't appreciate your moral compass at all. Uh I think that you have a very limited world view and I think it's very sad for you. And if you only ever can talk to people that you 100% agree with, you'll never have any friends. And oh, by the way, you'll never become intelligent because nobody will push back on your ideas. And so if if you have an opportunity to talk to somebody you hate, it's a beautiful opportunity because you can understand why. Why do you do this? That doesn't make any sense to me. And then you can become better. But um yeah, I don't understand people who don't like Elon, either. Yeah, it's madness. So you brought up Elon. He's the best at uh balancing the two, which I think is really important. Uh for people that don't understand, give them a primer. So you're able to do both, big ideas, set the vision, but you're also able to get into the details. Um talk about that. That certainly uh by default personality, I am a big idea person, but I found that my progress in business was held back until I could get in the operations of it all. Um why does the integrator matter? What exactly are they doing? Yeah. Well, a couple of things you can do to figure out, can I run a business likely and do I have what it takes, is there's tons of personality tests out there. So I think a few times it's interesting for you to take something like a Kolbe test, which we have a lot of our our people who work at our companies run through, and it basically shows you, you know, fast action. How fast are you to move on things, which is a pretty high indicator of a of a visionary. Uh I never liked that word cuz it feels sort of weird. It's like I just sit up here and do it the way Yeah. Yeah. if there was a countervailing cool name for the integrator, I'd be okay with it, but like you, Right. it does feel a little too celebratory. [ __ ] guy, you know? It's weird. Cuz you really can't have one without the other or you have to be both. So they're they're pretty equal. Um maybe the only difference with with is that they take risk. Like that again is I think how money is made. Um Um but um so you can take a Kolbe test and you can find out how fast action are you versus detail-oriented. And basically think an operator is just detail-oriented? No, it's like a it's a spectrum. Mhm. And so you have to be there's four pillars that are in it. Not that I think that this test is perfect or any of them are, but um part of it is attention to detail and part of it is uh finalization of execution. So like how do you take something all the way to completion? And visionaries also typically have uh a less likelihood to be attention to detail and a less likelihood to follow to execution. And I think most businesses and people's bank accounts die at the altar of 80% done. Mhm. You know, and and it's not actually that you guys don't start. It's not that it's not a good idea. It's that you don't finish and that's why you're poor. And um and so if we can change that, then we can be successful in business. So you have to ask yourself, am I really good at taking risk, coming up with ideas, understanding complex structures, or by and large, am I really good at finishing things, doing what I said I was going to do, and paying attention to the details? And wherever you fall, uh as an entrepreneur, I think the biggest mistakes we usually make is we hire somebody like us because we hire people we like. And uh my business has started to change when I hired somebody not because I liked them, but because they had the opposite skill set set of mine. They loved to do the things that I hated to do. And because of that, we worked well. And so, that's what I would ask yourself first is which one are you? And then whatever you don't have, you're going to either have to really compensate for that or you go find somebody to go on the journey with. Mhm. How long do you think this opportunity is going to play out? So we've got this $68 trillion trapped baby boomers. Uh you're teaching people as fast as you can how to do the deal structure, how to get in, how to be an operator. Uh but this is a limited window. So um yeah, what how quickly do people need to to get in this? Yeah. Well, let's think about it this way. Since So, if you think this is an interesting idea very categorically by 2030, we think a large majority of the $68 trillion in wealth will have been transferred or in some way destruct destroyed. Yo. You could push that 5 years. You could push that to 2035. And the way that we calculated that is basically booming baby boomers to retirement age to degradation of business when businesses start to plateau due to length of existence and, you know, no new things added to the business, complacency because, you know, the only thing we know for sure is if your business isn't growing, it's stagnating, which mean means it's going to move into decay. And so, um retirement age, degradation of businesses, um and then the the average lifespan in the US. And so, um so, I think it is eminent, very, very eminent. I think this is the next 10 years we have to figure this out. Then it's just math. Like, how many 85-year-olds are really coherent and can handle the game of business or like it anymore? Not very many. Um and so, if we don't transfer before that, then I I think that's not great. And simultaneously, how many 75-year-olds are still moving their business forward or is the business starting to decay? And so, we want to catch it before that period where we can sort of we can continue and and maybe even grow it. So, the the it is eminent. And the the second part about that that is that is very, very true is you know, private equity is the other alternative. So, if we don't do something, will all 68 trillion get wiped away? No, but wealth will continue to get more and more concentrated. All right, talk to me about that. I'm literally writing in all caps right now, BlackRock. Yeah. Uh so, why not? Why not just let BlackRock gobble it up? Man, yeah, I mean, we basically have we have a situation which BlackRock in 20 oof, gosh, I should look at the exact number. I think it was in 2000, but check me on the internet, owned uh so private equity in 2000 owned about 4% of US businesses last year Meaning stock market or everything? Uh private. Private businesses. Uh last year, 20%. Woof. And that is accelerating. We're seeing more private equity funds uh continue. We're seeing increased fundraising levels. We're seeing more companies get owned by the few. And it's actually really really scary because if you look at the food market, like there are 11 companies that we buy things from. Procter & Gamble, Kellogg's, um we actually think that we have like 200 companies or 300 companies we buy things from. We don't. We have 11. And if you look at all the brands that they own, you realize, oh wow, this is why policy actually really matters in the food industry because 11 people control anything you put in or on your body. Whoa, that's a little scary. And then you might go, well, maybe that's just the food industry. Then you'd be wrong because if you were to look at the S&P 500, you have four companies that own 40% of the [ __ ] S&P 500, our biggest companies in the world. And that is the the BlackRocks and the Vanguards of the world. And I used to work at Vanguard. So, and my biggest competitor used to be BlackRock. I played with these guys all day. I have met with the CEOs of Vanguard and back in the day I met with the founder of Vanguard. And these people are not evil people. We are incentive-aligned little chimpanzees that do things according to whether we get zapped or whether we get a treat. It's kind of how humans work. The problem is the incentives are really skewed. So, if you went to Bill McNabb, right, the CEO of Vanguard and you had asked him, uh which they did, publicly you can see his response. People would say right now, well, those companies, BlackRock and Vanguard and the like, they don't actually own everything because they're passive index investors, right? literally just going to ask ask clarification on this. Right. So, they would say, no, no, no, it's not up to us. We just buy whatever is in the stock market and we don't have any influence on it." a lot of times. On your behalf. You go and give money to Vanguard. You go give money to BlackRock. the way, we're Vanguard and we're very nice and kind and so we just lower your fees. They actually have an incredible economic structure separately. But that that's that's their mantra, right? You know, Bogle was famous for driving the same car continuously all of his life. He's very Warren Buffett-esque, right? I don't know why people love that so much, but yes. Yeah, I'd rather know who you are, um, for real. may be who he is, but anyway, I won't go down that rabbit hole yet. Okay, so the point is, um, they say, "Hey, we just buy these passively. It's not up to us." And when I was in the industry, I sort of I believed that uh a lot. Um, but then Bill McNabb came out and said something he shouldn't, which is, "People think that we're passive and we're not. We absolutely talk to these companies about things like ESG and things like corporate governance." vague, right? Yeah. All right, so this is his whole stick. So, uh I'm going to lay out what I think BlackRock and Vanguard do. You tell me if I've gotten this all correctly. So, they're taking your money, boys and girls, and they are buying stock in these companies and I think BlackRock owns more than 80% of the S&P 500. I'm pretty sure that's an accurate stat. Somebody should check me. think it's accurate. Drop it in the comments. When I heard about it, I was freaked out. In fact, we're looking it up right now. Yeah. Uh so, we'll report back shortly. They don't own 80% of the com- Well, no, they wouldn't own 100% percent. Meaning that the all of the people in the world that own the shares own it through that this very small number of companies. Yeah. I think it's 40% is the right number for the four companies. getting at, let's find. BlackRock is one of the big three passive index funds managers that control the largest share of at least 40% of the US companies, but 88% of the S&P 500. Yeah. I I thought that was correct. All right, so That's more terrifying, yeah, by a long shot. Yeah. Uh and so what they do is because most people that can hear my voice right now don't think about the fact that they own four shares here or five shares there, they just have their passive index fund. Yeah. And that BlackRock, there was a law passed, I forget when, that says, "Oh, whoever's aggregating these can aggregate their holders from a voting perspective." Correct. And so they're voting on your behalf Correct. because you don't think about it, you probably don't even care, but then that concentrates, to your point about policy, that concentrates these decisions in a tiny number of hands. Yep. The vague started a firm to compete against these guys basically saying, "Hey, we're going to uh vote on a pure fiduciary uh lane. So, um like them, we're going to aggregate and vote on your behalf, but we're going to do it based on what is going to return the most capital to shareholders instead of things like ESG, which may or may not yield returns." Yep. Utterly fascinating. This is one, you and I were talking about this before we started rolling. My obsession is I'm trying to make my brain the ultimate prediction engine. Yeah. To do that, I have to understand how the world actually works. Mhm. And man, when you start peeling back the layers on things like how BlackRock works, it's scary and they I will assume that they're lovely people. Yeah. For better or worse, I'll make that assumption. Uh that doesn't mean that when changes like that get centralized, that it yields a good outcome even when you have good intention people. And this goes back to Abraham Lincoln and his whole idea of a team of rivals. You have to want tension between ideas in order to get somewhere well. You actually mentioned that earlier. Said you're never going to get smart if you're morally turning people off because they're not going to sharpen your own thinking. That's right. Uh which I agree with very aggressively. No, I mean, I think, you know, what you pulled up is so interesting. I also used to work at Vanguard. That was the very first company that I worked for uh when I got into finance. And I remember that we for a period they do like every single time a company votes on something important within them. So, let's say for instance a big public company Amazon that we own part of at Vanguard has a big change that they need to make. Well, it's called proxy voting. So, like basically Vanguard would go out and say, "Hey, we're going to vote on your behalf. I'm your proxy." And they might have to pull a number of their shareholders in order to get XYZ done. And if you have one type of fund, then the shareholders have to have a message sent to them. And if you have another type of structure, they don't and they are allowed to be your fiduciary. Well, it's not even called a fiduciary. They are allowed to act on your behalf. And I think the problem is exactly what you said. These big guys now can put their finger on the scale very easily for every single company. And what does that look like? Well, if BlackRock meets with you and they say, "Hey, will you meet with our active management team?" Active management means they're choosing to invest in I don't know, pick a public company out there in Walmart or in Amazon. So, BlackRock comes and meets with you and they and you know that BlackRock has the ability to move your company's stock more than anybody else does, right? And they can move your company's stock because of the passive things that they have that the stocks that they invest in regardless, but they want you to meet with their active team. And their active team says something, wants you to do something etc. Is Amazon or Walmart going to say no to something that maybe an even an active part of BlackRock wants because it's not the direct passive component? I don't know. And there are all these rules in place where you're not allowed to put your finger on the scale, you're not allowed to do X and Y and Z, except if you are a shareholder, in which case you are actually allowed to put your finger on the scale. And that's what they've become. So, I think that is really, really scary. But the part that we don't talk about as much is, you know, if you were to compare the founder of BlackRock's wealth versus the founder of Blackstone's wealth, who's wealthier? The founder of Blackstone. In fact, we could maybe you could pull up the numbers so we can see the the numbers exactly. But uh Blackstone is worth like 10x what the BlackRock founder is. Why does nobody talk about Blackstone? Because they're private. They don't have to disclose everything. They don't have to have public listings. They're not responsible to go and speak as often with the SEC and FINRA, which are the registering agencies for um for public companies by and large. And so, they're actually unregulated buying everything. And and that's really interesting cuz this is like the shadow influence that's even above and beyond BlackRock in some cases. And so, what I'm concerned about is There we go. So, Schwarzman, that's the that's the CEO of Blackstone, is worth 41 billion. Now, go check out BlackRock. 1.2 billion. So, I'm sorry, not 10x, 40x. also though that could be tied to just quantity of ownership and things like that. But the Well, well, Schwarzman was actually part owner in BlackRock because why are Blackstone and BlackRock so closely named? going to say that. It's basically the private and public sectors. Although, no, you said that BlackRock does some private ownership as well. Now, they do private ownership as well. They do houses as well. You kind of you know, these asset management firms gobble up everything. In fact, like, you know, I'm I'm buddies with some of the people who run Andreessen Horowitz, but if you go and look at what happened to them, they registered as an asset management firm, not a venture capital firm. Because they were also spreading their purview of what they do. And so, my point is again, these people are not bad. I I mean, I have dear friends who work at Vanguard, State Street, BlackRock, and Blackstone. And some of them run the companies. And and I'm still quite close with them. But, man, should any of us own 40% of the company of the country's companies and 80% of the S&P 500? No, that doesn't seem like a good idea. Not even me, not you. And so, um I think in Maybe me. You're like, I'm willing to try. Um, I I just don't think it's right. That's why we don't go out anymore and try to buy all of the individual companies out there. That's why I talk about it so much in the book and I teach other people to do it because I looked at some of these guys and was like, "Have you ever been inside of a company that you just can tell is owned by a private equity?" Like they just strip away kind of like all the extra things that were the soul of that company. Um, and even big conglomerates. Like you walk into a Starbucks and you're like, "This place [ __ ] sucks." You know, it's dirty, they don't know your name, they get your order wrong, you know, they're mad or they're half the time. That's not the third home or the third room or whatever they used to call it. The third space. You know, it doesn't feel anything like home anymore. This is part of that loop I was talking about. So, debt moves in cycles, businesses move in cycles, uh, the economy moves in cycles. And so, I I have a growing hypothesis that I'm going to lay on you like a [ __ ] filthy blanket with smallpox all over it. Uh, please? Yeah, and tell me what you think about this. Um, I don't know that there's any way to escape it and that we may just have to ride it. So, uh, boys and girls, please do me a favor. I really hope you will do the following. In fact, Drew, pull this up. Um, the national debt is so crazy right now and basically nobody's talking about it. And everyone's life, if if you'll let me extend it to just your kids, forget I'm grandkids, nope, just your kids, uh, is going to have to deal with it and it is going to be bad. And the reason it's going to be bad is it's the physics of money. So, the way that money works is such that if you run up debt, you're going to have to pay interest on the debt. Uh, the way that you pay interest on the debt when you have a balanced budget in your nation is that you collect tax money and you pay that interest. But our national debt is getting so high that the interest on the national debt will eventually eclipse 100% of the revenue collected, so it will take up your entire GDP. That's clearly not sustainable. So then you have options. You can default on the debt or you can take money from people in the form of money printing. So it doesn't feel like they're taking money. We're talking about this earlier, but you're robbing their buying power. And so this is how you get into an inflationary spiral. And the problem is which they will do. They will inflate the money supply. They'll print money in order to make the payments out of insane. Like if you put the two charts, the national debt is effectively a straight line up and money printing is effectively a straight line up. Yeah. And people are not being honest with the fact that there's a breaking point. And so everybody that's touching this is just saying, I hope I can kick the can down the road long enough that I'm not the one that has to deal with this. But you can look backwards in history, look backwards 500 years. That's a long time. And if you look backwards 500 years, it's just a cycle of this debt getting big, bursting, and there's bloodshed, starting small again, getting big, bursting, there's bloodshed, getting small again. Mhm. And we just cycle through it over and over and over. Mhm. And Ray Dalio, who nobody has put their own money where their mouth is more than Ray Dalio and had more to show for it. So he's built the largest hedge fund in the world, which is basically a casino that bets on what's going to happen in all the economies around the world. Yep. Once you think of it like that, it's like, okay, this guy's called more shots and won more than anyone else ever. Mhm. And he's saying that there's six stages to this debt cycle. Stage six is total collapse and that we're at stage 5.5 right now. And this is one of those where I'm like, I feel like Elon back when he was trying to tell everybody to chill on AI and nobody would listen. So then he just built his own AI company. I was like, well, I guess I'm going to be fatalistic about it. That's how I feel. Since COVID started, I started learning about the economy, how money actually works and I'm just looking at this going, wait a second. We're driving at full speed towards a cliff and no one no one's even like looking at the brake, let alone stepping on the brake. And so I just go, it may just be that these cycles repeat and you are in the point of the cycle that you are and now you deal with how do you thrive in the moment that you're in because you're never going to convince people to turn the car around. Yeah. Well, I mean, I think I think there's a lot of reasons why you might be right. And I think what it comes down to is what can we do individually? Like if you're a person listening, the individual thing you can do is is vote politically in a way that gives more power to the people, that decreases government spending and that believes more in you than believes in big government. And then I mean, we're seeing it in Argentina. It's probably one of the first examples where a government has really expanded continuously and then severely contracted. Post pain though. I want to be very clear about that. and and Argentinians really like to run out of money and and explode their debt. I think this is like what, the 11th time or something like that. They just are on an accelerated debt cycle. They kind of they they are accelerated. But but that said, I mean, I guess listen, I'm an optimist for a ton of reasons. One, I do think you can make money in any market. Guaranteed. And so if that's true and then what am I going to do? I'm going to bifurcate my focus. I'm going to say on one hand, I realize that governments can't make you rich, no president is coming to save you. It's up to you if you want to get rich, but they can't hurt you a lot. Like governments can't really help you that much, truly, but they can ruin you. And I've seen it happen again and again. So, I think making sure you're politically voting for people who don't ruin you is really like your base level. It's like just don't ruin our economy and country because that's when everything goes sideways. That's like apocalyptic. Um it's not like who has vibes or personality. That doesn't [ __ ] matter. Then the other side is Now, with everything that's happening, what can I do to become richer this moment because I do think money is protection. Like money is freedom. Money is optionality and choice. And you know, and if you are correct, then you earn money and you place it in things that are not correlated to the US dollar, right? You buy gold, you do crypto, you add on these additional things that maybe you hope protect yourself against the risk of the dollar basically eviscerating. But I think my thesis kind of goes to this idea of one, I actually do think we can beat private equity. And why do I think that? Because if money was all you needed to win, then the big companies would have created the best AI companies. Then the big companies would have won at search continuously. I actually think that a lot of times when you get really big, you get bureaucratic oversight, you get heavy, you get constrained, you get uh concerned with too much risk actually because you have a lot to lose, you have a lot of regulatory oversight, you have compliance, you can't move fast. And for all these reasons, I actually think that small businesses, small nimble teams, increasingly with tech to enable them, can beat the big guys. We'll get back to the show in just a moment, but first, let's talk about future-proofing your business. In business, your competition isn't just other companies, it's time itself. While everyone's arguing about bull markets and interest rates, leaders are busy seizing opportunities, and that is where NetSuite comes in. Over 38,000 businesses use it to see clearly in uncertain times. It's not just another business tool. It brings your entire operation into one powerful platform. Accounting, inventory, HR, financial management, all in one place. No more switching between systems, no more reconciling different reports, just crystal clear visibility that lets you seize opportunities instantly. While others are still gathering data from different departments, you're already making moves. While they're still closing their books from last month, you're planning next quarter's expansion. Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com/theory. The guide is free to you at netsuite.com/theory. Again, that's netsuite.com/theory. Now, let's get back to the episode with Cody. And for all these reasons, I actually think that small businesses, small nimble teams, increasingly with tech to enable them, can beat the big guys. We just have to one, make sure we have regulations and politicians that push back on them. And then two, we've got to be a nation of builders. And Vivek talks about this, too. I mean, he says the way to get out of the situation we're in, there's only one way, and that is GDP growth. That's been his comment sort of since the beginning when I first talked to him. GDP growth is the only way to do it. One of the ways to do GDP growth is is AI, for instance, and having our next cycle of evolution. But, you're not wrong. Like, why do young people today not trust the system in particular? It's because wages are stagnating. So, they've for the first time ever, we have Gen Z making less than their parents did at their age on an on an inflation-adjusted basis. The their university degrees are three to four X more expensive than what their parents were. Now, their housing is anywhere from one and a half to two X more expensive than their parents were. And simultaneously, they have had inflation eating away at their dollars. Um there are more jobs available out there, but to your point, they're not jobs that are making more money overall. And And so, I think young people today are rightly saying, "Hey, we're out here working. You're saying we're quite put in. You're saying we're not as valuable and our skills aren't as good anymore." Except, wait a second, our productivity level is higher than our parents' generation, but we're making less money. And so, that there is reality to what a lot of them are saying. You know, sometimes I kind of chuckle at these TikTok videos where they're, you know, saying, "Oh, I'm crying because my first job is really tough." And you and I know, of course it is. It's your first job. It's supposed to be tough. But they're right in some other ways, which is that it is harder than it's been in a long time economically for young people in this country. The only option is not working within the system. Stop doing the thing that everybody told us to do when we were young, which is go to university, burn 4 years, and let's call it on the low end, $50,000 in debt that you can never get rid of for a job that pays basically minimum wage at 30 to 40,000 dollars a year after you spent 50 to get it. Then go and try to climb a corporate ladder where people get 3% raises on average. Try to buy a house, but you really can't because if you don't have a W-2 job, then it's really hard to get a loan. Uh if you do have a W-2 job, you probably don't make enough income to get it. And so, we have to As young people, we got to say no. Like, I'm not doing it this way. And that's I guess why I keep coming back to the only solution I see is [ __ ] the system. Don't go to a bank, go to the seller of the business and talk him into letting you buy the business using future profits. Don't go work in a financial institution, become financially independent and intelligent so that you can become the financial institution. Don't go work at a corporate job for somebody else for 3% wages each year. Become more valuable, negotiate your salary. If there's no upside, leave and go somewhere else. And don't rely on traditional university degrees because they don't teach you business. The best way to learn about business is being a business. And if And if I was going to tell that to a young person, I'd say skip the 50K and the partying and the liberal arts theory. Learn that at Jordan Peterson's Academy. Go listen to the beautiful theory that's happening there. And simultaneously, go get in the game now. And I know it's not very And I'm not saying don't go to university. I'm not one that's saying everybody should be an entrepreneur, but I'm saying what you're doing right now, young people, it's a lie and it's not going to get you to the same place that it got your parents in the current situation, sadly. Why do you think that's true? Because just math. I mean, if there if wages aren't paying you more But why not? Why? So, if they're more pro- productive, why aren't they getting paid more wages? Oh, like why does waste wage stagnation exist and productivity? Yeah. And productivity gains. Well, it's a it's a really good question. I mean, what could it be? It could be like you said, are the jobs that are open, are those actually higher paid, higher skilled jobs that are open? Are the number of jobs that are open actually real? Or are there those like static jobs that look like they're open, but aren't actually going to be filled? 70% of all the jobs that have been added in the last, oh god, 2 years have been Excuse me, have been government jobs. Oh, that's another point. freak you out. And government Now, we need to look that stat up just to make sure that Pretty sure the direction of that's correct. Mhm. It's some just horrifying number. I know, I wish I had Vivek's like memory recall and statistics. You and me both. Um yeah, amongst other things. Also, I'd take his bank account. But um I think that I know that you're right. Uh the private sector has actually, I think, lost jobs while the public sector has gained jobs. But I'm not sure if it's material, like 1 or 10%. Right. Um and so I think there's some funky things going on in the economy there. Can I name them? Yeah, tell me. Uh, so here's what I think is happening. The reason that the productivity is going up is entirely because of technology. It's not like the kids today are better. They're not worse either. They're just not better. So productivity goes up basically in lockstep with um, gains in technology. Now technology is by its very nature a deflationary force. So the question is why do we have inflation? You have inflation because you have to ask yourself what is the thing that's inflating? The thing that's inflating is the money supply. Yeah. And because the government instead of getting you to vote on things is just printing more money which they do not have to get you to vote on. Yep. Um, they are just stealing away all of the gains that people should be getting from the change in the level of productivity. And since buying power is going down and prices are going up, it becomes effectively impossible for companies who are having to deal with all those price changes uh, to pay people more because some invisible thing is stripping all of what should be that profitable cushion away. And that profitable cushion is being stripped away by inflation is my hypothesis. Now this I'm going to do more research on and make sure that I'm correct. But boy oh boy does everything that I know, all the pieces that I am very confident on lead me to that No, I think that's right. call it a theory. I don't even think that's a hypothesis. It is far more I think that's right. Then then you add to it a couple other things which is globalized workforce. So maybe job wages aren't increasing because actually there's a massive decelerator which is international labor force at 10x cheaper the cost. Um, it could and tech That's about to break apart. We're going to see whether that is a big part of the answer or not. Because um, I don't know if you know any of the stats on this but that feels like since COVID that really blew apart and we are now becoming more isolationist. Certainly that's the direction that Trump is leaning. It's America first. All of that rhetoric is about stop the global um the global exportation of jobs, all the stuff about tariffs, which I think is being wildly miss, either intentionally or unintentionally, but misrepresented in the press. Yeah. Um that stuff is about, okay, wait a second. Don't export our jobs. And then some amount, not all, because I have beef with the border. But my beef with the border is not about importing low-wage workers. Um but that's certainly some of the issue there. two See, I think what they're what they're doing is they are mandating, even in this Trump instance, let's say. I think they're going to try to retool jobs in the US in manufacturing, for instance. Take back key services. But at least I play the small business lane. So, you know, when I look at our small businesses, we have Main Street Holding Company, we own, you know, 26 businesses there. In Contrarian Thinking Capital, we own 30 businesses there. When I see the amount of these businesses that now used outsourced talent, is incredible. I mean, for instance, even at Contrarian Thinking, our media company, we probably have 12 We have 12 team members that are located all over the world uh that are 1/3 the 1/4 editors? Everything. Customer service. Mhm. Um You guys using AI for customer service? No, we're probably not as intelligent as you, but that would even be That would be I'm just very curious if you see something I don't. Yeah, I mean, uh I think going forward that'll even be more uh of a deflationary measure, right? Same with the robot baristas, right? Do you really need a human who's not going to show up on time one way or another to do that job? I don't know. But right now, I mean, so if we have 12 at a company that has, let's see, Contrarian Thinking probably has 30 full-time employees, um plus maybe, I don't know, 20 or so um uh vendors. Uh and then if I look at at our underlying companies, most of them have, I don't know, 5% of the workforce or something like that that's it's outsourced. Uh I think it's probably more material than we anticipate and there's no way those jobs can be brought back to the US if they are doing a good job. The only way they'll be brought back to the US is through AI. Because uh it's so much cheaper and to your point inflation has eaten the profit margin of businesses so much so they're not making much money anymore unless they get intelligent with outsourcing. And so we've seen it continuously. I mean I was meeting with one of our business brokers at a company we own called Bizscout which is like a business buying and selling marketplace. And uh and he was saying he's never seen a higher level of LA uh restaurants for sale than this year. Highest level ever ever. Distress, I assume? Distressed. Yeah, and the reason why I'm like if you had to like narrow it down to one thing I was like is it population leaving? Uh is it just that that business is really hard? It's one of my least favorites. Don't buy a restaurant, they're hard. Um and he said it's actually labor costs. They increased the minimum uh wage to $20 and that's the third biggest restaurant cost. And so they're they go from a 10% margin business where for every dollar they make they keep 10 cents of it to essentially nothing. And so um they just don't make sense to operate anymore here. And so I think that is really big and I do think illegal immigration in small business and in sectors like agriculture etc. it artificially deflates wages and it's not great for them either. Um so For who? For uh it's not great for illegal immigrants here in the US. Yeah, I mean look, I'm riffing now but if I were going to do some um freestyle bars on this, it's going to go something like this. You allow illegal immigration out of a very weird sense of empathy. Yep. Uh you let them flood in. You intentionally turn a blind eye to people that hire them all the while raising minimum wage so that you can rail and say people have to be able to make a living wage off of XYZ job which PS not every job is meant to provide a living wage. Many a job, many of the jobs at the minimum wage are meant to get you a foot on the ladder so that you can start learning. You're doing it in high school or right before college or instead of college or right after college. Like I was making peanuts right after college, sharing an apartment with a guy and his girlfriend. And was it fun? No, it was not, but I needed to keep my rent low so I could figure enough of life out to get going. Yep. So, it it's one thing when it's like, "Oh, that's actually a sustainable model and you just have evil capitalists that you're fighting against and so you have to do that." It's another when it's like, "Hey, like run run the math. Figure out what you're doing here. You are um making it such that you need an illegal immigrant that the business owner is going to take advantage of because it's under the table and you were turning a blind eye to it to make up for a problem that you created. And so we're going to say things like, "Well, we have to do this in order to do the jobs that Americans won't do." It's like, "Oh my god." So, have a system that you can just stand up and say, "This is my system." Elisa and I talk about this all the time in the business. Don't ever do like one-offs with people cuz you like them. Just it's a policy. And if you want to do something for that person and you're willing to make it a policy, it's a great thing to do. If you're not willing to make it a policy, it's probably a bad idea. You're just doing it because you like the person. And so, uh good lord. So, I say all of this because I am an optimistic person and I often will paint this stuff with a dark brush, but the reason I cannot stop myself is I hope that people hearing this understand this is a swayable system that they can go in, not just politically, but that's one of the ways, and that they can understand this is how the system works. These things make sense. These things do not make sense. Rail against the things that don't make sense so that you can get the person who's driving towards the cliff with their foot jammed on the accelerator partial partially through the floorboard to let up. And then I welcome, look, if I'm seeing something crazy and somebody has a more accurate interpretation, all I care about is predictive validity. Yeah. I mean, I think what I what I guess I come back to today is like it's so similar to health care. It's like two options. Get Kellogg's to get rid of red food dye and work on that problem, which is great and I think people should do that. Kelly means shout out to you. Yeah, the man. He's a buddy of mine from Austin. Also simultaneously learn about Kellogg's putting red food dye in their food and don't feed your kids that and don't eat it yourself. And so it's sort of the same idea here. Here is what we think is happening in the government. Don't spend your life glued to a screen obsessing about a thing that is out of your control. Take whatever measurable control you can do there and then give it not one second more thought because the best way to control the universe is to become financially free in order to put resources towards things that you want to exist in the world. And if more people did that, then we would be a lot harder to control. What I talk about with being a business owner is you become more unemployable in a lot of ways and you become more unpusharoundable because nobody can fire you because you have an ability to actually affect your financial outcome. And so I think simultaneously to railing against whatever you feel in the government, you should simultaneously obsess on how do I increase the size of my bank account because that is my protective armor. And if I increase the size of my bank account, I can make a lot more decisions based on optionality and what I would like to do as opposed to what I don't want to do because money doesn't make you happy, but it sure as hell decreases misery. And I think we were told a total lie that money is bad for you, that money is evil, that money is wrong, that people who have money, aka billionaires, must have gotten it a bad way. In fact, the opposite is rather true, which is it's really hard to get money if you create no value. Now, at a certain point you like have a lot of money and money can make more money, but to create it the first time, you have to have provided something that somebody was willing to pay for, some sort of value transfer. And so if you think about it that way, money's just a tool. It's like do you want to build the house uh and put together the framing with uh a nail and a hammer or do you want to do it with an industrial nail gun? Like one of you is just going to move faster than the other. And so get bigger tools so you can make a bigger impact. And that is sort of my my point. And you will feel more free because let's say, worst case scenario, this would be awful. I don't think it's going to happen and I hope it doesn't, but let's say America implodes. You can't take your assets with you, you can't take your business with you, money becomes worthless here. What could you do? Well, if you're a doctor, you could technically go to another country, but what are they going to make you do? They're going to make you go to medical school there. You're going to have to become licensed and certified there. Hmm, that's not great. Well, what if you understand the language of money and doing deals? Can you buy a business in another country in the exact same way that you bought a business here? Of course you can. Could you go and negotiate something that shows your value in order to get equity in a business somewhere else? Of course you can. So it's going to be really hard for you to be poor once you understand how money works. And I think that's my my belief because I I argue with Balaji sometimes, not well because he's a genius, but I in my head I argue with him and say, "Stop giving up on America. Like, no, I don't want to move to Singapore. Like, no thanks. I don't want to be in a high-rise covered in green and feel like that's the forest for me. I don't want to live lovingly to him. I don't want to live in the apartment complex with a bunch of other people, you know, talking about crypto. I don't want to. I want like a little land. I want a little maybe country music every once in a while. You know, I like a cheeseburger. Um I like to speak English. And so like I'm going to fight for that. And I think a lot more people, if more of us think that way, we will win. You know what else? I was into Ubers while I was here. Like remember I came I it was like maybe 2 years ago when I first came on the podcast? About that, yeah. Okay. So 2 years ago we're in LA I came on the podcast. Let's just say that when I was in the Uber, I would have never said things like Hmm, the governor here is kind of nutty. Huh? Not a huge fan of that guy. If I would have said that, I would have probably had a pretty negative reaction from people. Today, two people brought it up to me proactively. They were like, yeah well it's not that great around here and you know we got to change our politicians and one of them does Tanner, do you remember what she does did for a living? She does like energy work. Like not the type of person you would think. healing kind of stuff. crystals, right? So you wouldn't think maybe she would be one way or the other. I think people are waking up. I really do. And I maybe crazily optimistically think that more people are willing to fight for what we have here and that if a bunch of people wake up, the stuff isn't that hard to understand. And I think now there are people talking like a little bit of common sense and I think we just might be able to pull it out. Well, your book is an amazing version of that. Thank you. what I want to do now is I want you and I to rank financial advice. So my producer Drew has put together some stuff. So I don't know if you're familiar with doing like the S tier ranking. All right, so we've got S A B C D E and F. Okay. And S tier is like yo, gangster. That's like the the highest tier. All right, let's go Drew. Hit us with it. meaning good? The best. Okay, cuz I'm not cool. I don't know what that is. tier. I think that's what the S actually stands for. Somebody ought to correct me but I'm pretty sure. [ __ ] bad. Terrible. Fail. Fail. Why he's made it blue on here, I guess it's just a color from red hot amazing to blue cool lame. Okay, I like this. Let's do it. Exactly. Yeah, the blue is a cold hard take. Is the first one going to be me? I I would be I would be shocked if you end up anywhere other than S tier. All right. Okay. Okay, here we go. Your network equals your net worth. All right, is that S tier, F tier? What do you think? I think that's probably A. So that's second. Yeah. Not S, but A. I I believe in it big time, but because I have not done it, I'm going to put it C tier. I am living proof that you can do it without it, but man do I think that I should be punched in the mouth by myself. This is not an invitation to people out in public for not doing that more. So that that's a big miss in my book, but you can clearly do it without it. Yeah. I think I think we've been messing around with this idea the five steps. So in order to become really really wealthy, step one and two are you have to work really hard for longer than you think, which is step two. You have to increase the skill stack that you have. You have to have more valuable skills. Then you have to take risk once you have those skills, and finally you have to have connections where you give and take in order to have like real wealth. And so it's, you know, your that thing you talked about in the beginning, grit. Are you willing to do a hard thing for a long type of for a long time, resiliency to finally are you valuable? Do you have a good skill set to then can you take risk? Are you willing to jump in and and choose yourself? And then finally connection. So I think it's it's really helpful at the highest level. Mhm. No doubt. All right, Drew. Next. The way to get rich is to save money. I disagree with that. Where's it go? I've never met anybody who got rich that wasn't in their 70s and did it by saving. So I think that is an F tier. That's hard F. You cannot save money because of inflation. The buying power will be stripped from you. That is a fool's errand. It's immoral that that's true. Yeah. But it is true. So, hard F for me. Hard F. I mean, that's just math, actually. Literally. That's literally math. I mean, if you've ever seen the dollar symbol where it basically when the Fed was created in the '40s Yes. Uh and then you go all the way to the dollar amount that an individual dollar is worth today, you can like see it. It looks like this It looks like a sloping ski slope uh with what a dollar used to be worth and is worth today. It's like a beautiful visual that only is because of our government deflating things. Every fiat currency has the same graph. That's why I'm saying these are probably inevitable cycles. You have to have a currency that can't be inflated. I got to buy more Bitcoin, huh? I mean, look, I try not to overhype it because right now Bitcoin is volatile, but you need a currency that is un-inflatable. Yeah. Yeah. Yeah. Well, I think that's the other reason why I think you have to You could have a currency that's un-inflatable. You could also have assets that increase in value such as like gold, for instance. Maybe real estate, you could say, land. Real estate makes me nervous. Yeah, because of maybe nationalization. get to that. I think that's one of the items, if I'm not mistaken, Drew. Yeah. And but the last thing I think we should talk about is is price controls. So, like one of the reasons I like owning businesses is because if the currency deflates or in- if inflation happens, you increase your prices. And as long as you make sure you have some price elasticity, the ability to raise prices for value, then you can continue to outpace inflation in a way that you can't if you're in a job. Now, are you saying that the government being in control of prices is a bad idea, Cody Sanchez? What? that uh tweet from It's actually a friend of mine. His name is Robert. He's like a CFO. And he had the world's best tweet about why price controls is a terrible idea. And it's worth It's worth reading. But If it was the one that like breaks down like literally from a grocery store perspective why you Yeah, I didn't know I don't remember who it was from but it was literally brilliant. Yeah. Uh and price controls equals starving to death. It's just quite literally true. That tweet and many other analyses have just walked people through it. It's It's absurd. Yeah, that's that's a red flag. Anybody who says you should control pri- I mean and then people go like what about pharma? And so there are instances in which um it makes sense to make sure that if there is life-giving care in some way, we aren't gouging people for it. I think that what Mark Cuban is doing would be my preferred method of dealing with that. Yeah. If you have created some bizarre system where the market has been clamped down on so hard that nobody has done that, yes. Mhm. Uh but woah, do that at high risk because once the government starts doing that, they just want to keep going, keep going, keep going. But what Cuban is doing with drugs cost plus drugs? I forget the exact name. But that to me is brilliant. Like get the transparency, let somebody compete in the open market and let him win. And he's doing exactly that and I hope he gets even wealthier for doing it. Uh he and I certainly don't see eye to eye on all things but I'm so glad like so many people have have gone against him simply because he has a take politically that they don't like and I'm like, "Yo, look look at what this guy's done. Like he brings a lot. You could By all means ignore or a lot of the things that he's saying that don't work in the real world or you fear won't but man, uh don't throw the baby out with the bathwater." Oh, I agree. Moral absolutism will not make you money for sure. What's our next one? Go buy a house, you should rent. E. What's your take on buying versus renting? Um well, multiple aspects. One, um I think we have to not just look at what the math says, which is that sometimes it's cheaper to rent, especially if you add in all additional costs to it, and say the average American has, uh, let's see, so what is it? 60% of Americans have a thousand dollars saved up, and something like 30% of Americans have no savings. And so if that's true, and the numbers are anywhere near that, anything that we can do to have assets that increase wealth over time, and mandate that we have an ability to save with earnings increases, are probably good. And so I think sometimes people talk about this, and they're like, "No, you shouldn't do it because," like Ramit Sethi is sort of famous for this for this line, um, "but we shouldn't do it because in fact you should allocate your your money somewhere else, and it'll make you more money." That's like the argument there. Except that most people don't keep their money in the stock market when the stock market goes down. And so you can't use like the average return of the stock market, which might be 10%, because people get emotional and they pull things in and out. So, that's why I think behavioral economics is really important overlayed on top of hard math and investment returns. So for me, I know that most Americans net worth is largely tied up in their homes, for instance, and that might be good considering our behavioral economic patterns of not really saving at all. Yeah, so I'll put it beat, uh, C tier, excuse me. Uh, so remember this is, dear audience remember, uh, don't buy a home, rent. And the reason that I think that that's actually mid-tier, it's not terrible advice, is dumb money should buy a house and leave the money in the house because it's going to be a forced savings account. The thing that I don't think people take into account with the house, all a house is doing is saying, "Pay an insurance policy, and I will keep I'll I'll make sure your money keeps up with inflation." Housing prices it's not an absolute. It's rare that housing prices are going up because suddenly Austin is the hottest place to be. It obviously does happen, but for the most part, what's really happening is the value of the dollar is going down, and just to keep them equal, the house price appears to go up. But houses are extremely expensive to maintain, especially over long periods of time, and so you're basically just paying into an insurance policy to make sure that the money you save, because the government has done an immoral thing and they are printing money, uh that you're paying into this insurance policy to ensure that the money that you sunk into the house actually maintains its purchasing power. Yeah. That's it. Now, you probably, on a long enough timeline, you are way better off putting that into the stock market or whatever, uh because you can just set and forget there, but to your point, the actual thing that people do is they buy low and they buy high and sell low. That's what people actually do. Um so, there is some protection there for the average person who is probably buying a house because they love it, um and not because of literally any other reason. And so, cool, it's a thing that you love, that you're creating memories inside of, and if you keep paying that insurance policy, it will be there for you when you retire. Yeah. I mean, the other reason that buying your own home kind of makes sense to me is that you uh can also use that as leverage. So, you can take out loans against your actual property, but you can also take out loans against your in my opinion, but loans against your stock portfolio, too. Stock securitization. So, you could technically take out both of them, but your house price is probably less volatile than your stock price. So, maybe less risk there. And then you do have some tax benefits of write-offs you can do for it. Plus, you maybe could turn that asset into multiple things with like income properties in it. But by and large, I think real estate is for keeping wealth, not making wealth. Mhm. And so, that's why I don't invest a ton in real estate, because the average home in the US, I was just at BiggerPockets giving a little speech, and the average home in the US is somewhere between 300 and 400,000 dollars. And it was funny I asked one of the guys there I'm like so how much money do you make on a 300 400,000 dollar house he's like well if you buy it with cash like 1800 bucks I'm like hold up. Nobody's buying this with cash. Like if this is your first house they're not buying it with cash. So with a mortgage on top of it he's like yeah, you know you probably make a 100 40 40 bucks to 150 bucks a month. So you you have a liability that's 300 400,000 dollars and then you only make 50 to 150 bucks a month on it. That's not great. That's terrible given that something will break it will go wrong and it will cost a lot more than that. Yeah, exactly. So I think you're right. I don't think over time real estate is the way to make real wealth. But people in real estate hate me saying that and it it's definitely in some ways less risk less volatile for sure. Yeah, the math is the math. Yeah, the math is the math. Maybe that should be the name. You got it. You gave me C for your net worth equals your net worth. So you can't use C for the house one it got to be a B or F. Oh. Uh then it's a D. Got it. Oh man I Next one. Speaking of the stock market the stock market is a gamble. Um I mean no I think that's probably what I I've already used F and E. Yeah. I guess that's a D. Uh the stock market is a gamble is a D to me. It is a gamble if you're day trading. Like don't Robinhood don't YOLO into the stock market. But over time we have numerical returns that show that if you average out the returns it's not a gamble. That um you can have some predictive ability to see what the future might look like over a long time period. So I think the the question is are you investing consistently? Are you investing uh for the long term? Are you not pulling money out? Are you using low cost investments cuz costs really eat into your returns and investing? Um and have you diversified your risk enough? And and I still think even though I hate a lot of what happens in the asset management industry, that over time there is a benefit to having diversification of income in the stock market. But I I don't give financial advice. It's totally dependent on what you want to do. I'd much rather you built a business. Mhm. It's interesting. Building a business as a way to secure the bag. And that I If I could do another F tier on that one, I would. Just because I don't think most people are going to be capable. I love the energy. I love where where you're coming from, but I think the average person is is going to fumble that. But to the question, I would just first like to say definitionally the stock market is gambling. Period. End of story. And if you think of the stock market is gambling, you're going to be in way better shape. The weird thing is though, on a long enough time horizon, what you're gambling on is the ingenuity of the people in whatever sector you're betting on. And betting on human ingenuity, especially if you can take a full global perspective, so you're protected from any sort of pocket problem, is the best gamble that I know to make. So the stock market as a gamble is the Give it the lowest thing that I haven't already used. And if that's B, then I'm switching my previous home one up to B, and then this one goes to D or whatever. more than politicians today. cuz I don't I don't know the full gamut here of the questions being asked. the two of us. That's an E for you. That's an E for you. Well, there it is. Two more. We're We're almost there. You should get out of debt as soon as possible. You should get out of bad debt, which I would define as high interest debt, where you are not out earning the interest as fast as possible. Yes. Whether you have low interest debt, long-term debt that you're able to out earn somewhere else, that I don't think matters. I don't think matters. That is very shrewd advice. It's interesting. You clearly have a mental model the person that you're speaking to is very sharp, engaged, they know it. The mental model I have is um somebody who is more likely to need a set and forget solution. Uh so, I with all of your caveats, I agree. Like that if you understand it that well, like you can leverage that and get way ahead. Um but if you don't understand, debt is the one thing that will obliterate you. Um so, it's But what about a mortgage? Yeah. Mortgage is debt. Yeah, and in 2008 having a mortgage was pretty trash. And you I I can only imagine the number of people that got divorced because they lost their house because they were in an adjustable rate mortgage. 2008 they had to make the payments. That's what I'm saying. With all your caveats, I love it the most. Like if you're savvy and sophisticated and you get all the things that you just said, amazing. But as somebody who spends a lot of time in the world of crypto and you see people get liquidated like that, uh because they're doing things on debt or calls. That's That's really dangerous. Like people just they go ham. And so, I get super nervous. So, getting out of debt is uh for the average person, getting and staying out of debt is S-tier. Yeah. Is the top. So, you're you're uh that's what what is it? It's uh Charlie Munger said or the easiest way that a man lose all loses all of his money. Ladies, liquid, and leverage. Ladies, liquor, and leverage. I [ __ ] that one up pretty royally, but it's a great line, which is basically and then Warren Buffett had the best one where he came back and he said, "My partner, Charlie, I think meant to say just one L, leverage." Yeah. Um you know, again, it's I think I guess that you're right. I'm I am optimistic about an idea that what if we can actually I mean, if you really sit down and you explain to somebody simply uh here's a calculator that shows you how much money you make in this scenario with debt and this scenario with debt. And they look at that calculator and they see an outcome that comes from it. I think we can teach more people how to just like most people know how to do addition and subtraction, we could teach them how to understand finance. And I think the problem with our our world today is that we don't have any financial literacy. And so this is a perfect example. It's like Charlie Munger and Warren Buffett says the the easiest way to kill a man and lose all his money is leverage. And yet It really is to be honest, but It's really ladies. It really is. I mean, not to derail the conversation, but if you want to see the the Oh God, who was it that said it? It might have been Sam Harris. And he was like it was during the whole time where it was like um do men really have that much power over women? And Sam was like hold on a second. Yes, there can be situations, no doubt. But what is the only thing you could ever imagine a highly successful man with a family and all of that? What's the one thing that he'll throw it away on? An attractive woman. It is crazy and it's true, man. It's true. I'm totally derailing the conversation, but So you're saying it's ladies number one. Yeah, yeah. Ladies, most people won't take on that kind of leverage just because they don't understand it. Well, that's a good point. that people will ruin men, the thing men will ruin their life over is a woman that is probably a little too attractive for their station in life. And men will just do dumb [ __ ] The fact Jeff Bezos, I love you to death, man, and I am so sorry I keep bringing this up, but the fact that Bezos has dick pics out there just tells you everything you need to know. Does he really? I didn't even know that. That's how his whole thing got blown up. Was uh someone hacked his phone and they they I'm sure trying to take down Amazon or something like that. So like we're going to go after him. They tried to blackmail him and he was just like, "Yeah, I'm having an affair. Yes, that is my dick pic and the fact that what I've done historically I'm not going to be blackmailed. So he just stood by it." And credit to him, man. That's that's a baller move. Like he was just like, "I don't do blackmail. So yep, it blew up his marriage." I just just the fact that I can picture Jeff Bezos' face and like his bald head and then what I imagine it's I don't need that in my life. I am now picturing things about Jeff Bezos I never needed to picture. I can almost imagine what it looks like. Like I feel like maybe they represent the two. This is This is a dark corner of the internet for me now. Yeah, it's but that's the thing, man. Guys, there was a time I would like to reflect it was a very long time ago, but there was a time where I thought that women would want to see it. Like that they would be just legit excited. you sent dick pics. To my wife, yeah. There's no universe in which I can stop myself. But and then Yes, I have occasionally to my wife. And my wife is like, of course she's very sweet, but both of us know that she doesn't care. So yeah, I'm just very glad to sell phone pics. actually like the other financial advice that's a that's F level is whoever said that women really want to see your isolated dick pic is a liar. That's an absolute fail. In the background all the 100% nobody wants to see that little naked mole rat out there squeaming around. Keep it to yourself, you know? Men are giving the gift they would want to receive. Because if my wife would like to take a quick pic and send it on any day of the week. You know what I'm saying? I'm here for it. Just shoot it over. Yeah, we are wired differently and there's been a few years of confusion here for a minute about boys and girls being the same and they are not. So my inbox is open Cody Sanchez. My wife can send them all day long. Yeah. true. I'm I I don't think that most women are the same in that. That's how we can tell if you're a man or woman Correct. Correct. Yeah. This has devolved from financial advice. Oh, we did start in the beginning that either we could talk about politics or [ __ ] and now we've devolved there. both. Top ranked podcast. Thank you. Yeah, we're all the way. Do we have any more? Did we get all of them? I feel like we hit all of them. I had a couple more, but the direction of the conversation went better. Please just stop. Well, on that note, Cody Sanchez, your book is brilliant. You have filled uh an important gap in the market today. I really believe that. There's something that you've come onto the scene and done and that's give people hope that they could take control of their own destiny with a super tactical way for them to actually do that. Um in fact, we're going to be now going over and you and I are going to film something for my university where we're going to get very tactical. So, anybody that wants some hyper tactical advice on how to identify a business to purchase and what to do can join me there. Um but until then, where can people follow you? How do they get the book? Yeah, msmbook.com. And there's also lots of cool things we're giving away with it. So, if you buy it within the next couple of months here, uh there's tools and tactics and calculators and the things that I talked to you about because I do think tools limit mistakes when it comes to making money. A lot of times we were talking about, well, how could the average person do this? Well, how can they figure this out by themselves? Well, if you have a nice little calculator that kind of can tell you what the outcome would be and you can see it in dollars, most of us understand the value of a dollar. And so, we want to take these crazy ideas from private equity and finance and we want to simplify them down to a place where you can understand it in 30 to 60 seconds. And so, the book does that and then the download that comes with the book, hopefully, really does that for you. I love it. Cool. All right, everybody, make sure you check that out. It is mind-blowing. And speaking of things that will blow your mind, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace. If you like this conversation, check out this episode to learn more. To me, the economy is like a chessboard. Once you see where all the pieces are, you can get a sense of where you are in the game, and um what is most likely to happen next in the near term. As you look at the set piece right now of a a right-wing populism