There is only so much coffee you can stop buying.
That is more or less where Codie Sanchez lands early in her conversation with Derrick Kinney. You can trim expenses, watch every dollar and get very good at protecting what you have. But eventually, spending hits a floor.
Earning does not have quite the same problem.
It is a fitting starting point for Codie, whose approach to wealth has taken her from Wall Street to a decidedly less glamorous corner of the business world: laundromats, car washes, plumbing companies and the other “boring businesses” most people pass every day without giving much thought to who owns them.
Boring, in this case, is rather the point.
Codie is interested in businesses that have been around for years, serve an obvious need and produce cash flow without requiring the next billion-dollar idea. Buy something simple. Understand how it makes money. Improve what already works. Maybe raise the prices that have not moved in a decade. Perhaps retire the fax machine while you are at it.
But her conversation with Derrick goes well beyond what makes a good business.
The two get into dealmaking, choosing business partners, having uncomfortable conversations and learning the language of money. Codie explains why she believes you cannot save your way to generational wealth, why she would take curiosity over a high IQ and why, if she were handed $5,000 at 20 years old, she would invest it in getting around people she could learn from.
And beneath much of it sits an idea that is considerably less boring: bet on yourself.
For Codie, that has meant leaving prestigious jobs, making moves other people did not always understand and getting comfortable with being misunderstood along the way. As she tells Derrick, she has never regretted taking the swing.
In this episode of the Derrick Kinney Podcast on Modern American Advisor, Derrick and Codie talk boring businesses, better deals, difficult conversations and what can happen when you stop looking only at what you can save and start paying a little more attention to what you can build.
Advisor Takeaways
- Focus on earning, not only saving. There is a floor to what you can cut, but more room to grow what you earn.
- Do not overlook “boring businesses.” Simple, relatable businesses can offer opportunities for ownership and cash flow.
- Learn the language of dealmaking. Structure, incentives and difficult conversations matter, especially when partners are involved.
- Invest in yourself and your network. Codie emphasizes building skills and getting around people you can learn from.
- Track your decisions. Document what worked, what did not and why so you can improve the next decision.
Listen to the Conversation
Transcript
Derrick Kinney
Welcome to the Derrick Kinney Podcast on Modern American Advisor. Each week we revisit one of my most valuable conversations to bring advisors practical ideas to grow their businesses, serve their clients, and make more money to do more good. We know you want to achieve success in a fraction of the time, so each week we give you access to the best business minds to bring you insightful interviews, impactful stories, and the inspiration you need so you can build the business you want and enjoy more meaning and freedom in your life. I’m your host, Derrick Kinney. When my guest, Codie Sanchez, left her job on Wall Street, people thought she was crazy. But Codie knew that true success meant building streams of income that don’t require you to trade your time for money. So she decided to focus on a niche that few investors even think about.
That niche is boring businesses. Today, Codie has built a portfolio of 25 boring businesses, like laundromats and car washes, that generate 8 figures in passive income. Sure, boring businesses might not sound flashy like creating the next Uber, but they are reliably profitable. Today, Codie wants to show you how you can invest in boring businesses and use them to create lasting wealth. Plus, Codie reveals why you can’t save your way to generational wealth and the secret to being an incredible dealmaker. And I asked Codie a pretty candid question at the end of our time together that you might relate to. This was one of my favorite conversations I’ve had on the podcast. I think you’re going to love it too. Codie, welcome to the podcast.
Codie Sanchez
Thanks for having me, Derrick. I’m stoked to be here.
Derrick Kinney
Well, first of all, I wanna go to a post my daughter sent me that you just posted recently, and it said, I made my millions by brewing my own coffee at home, said no one ever. Tell me why you say that, because I love that and could not agree more.
Codie Sanchez
Well, listen, truth of it is, is that we can only spend our way to zero. There’s a floor. And so anytime there’s a floor, it means that there is not infiniteness within an idea. And so I’ve never really liked the idea of just saving because there’s only so low you can go. I mean, what are you going to do at some point?
Derrick Kinney
Yeah.
Codie Sanchez
You got to eat, you got to live somewhere, you might get sick, and you got to take care of your loved ones and maybe have a tiny bit of fun. And I don’t think with this abundant world we have with a lot of money and options sloshing around, anybody should be focusing on only protecting the downside when the downside is finite. It’s zero. You can’t lose more than that. And so instead, I like to focus on how could I earn more if I want that cup of coffee? Okay, I know what it costs me. Let’s go figure out how to do 300x that. In fact, I was just talking to one of my— I have a business consultant that helps me think about, am I thinking big enough? And I was like, yeah, this one company that we have, I think it can be $100 million. And he was like, that’s interesting. He’s like, why only $100 million?
And I was like, Jordan, that’s a lot of, $100 million’s a lot of money. That could be a good company for us. Then he is like, well, what if you thought what it would be like if it was a billion-dollar company? Then what would be the decisions that you would make? And I was like, well, I don’t even know if that could be a billion-dollar company. He’s like, go look out in the world. Is there another example of it? And I went and looked out in the world and lo and behold, holy crap, there’s like 5 of ’em that are already a billion dollars. Why wouldn’t I model it at that? And so instead of saying, gosh, how could I not have a Starbucks today? Although I don’t love Starbucks, but how could I not have a coffee today? I might say instead, how can I become so wealthy that I never ever question what I buy to put in my mouth?
Derrick Kinney
I love that. I, I like to say coffee is the smell of money. And when I have coffee with somebody, it’s about building a relationship. And typically those relationships lead to revenue, whether investing back in that person or into a business together. And it all starts with coffee. Lunch and dinner are boring. You’re trapped in a booth. You’ve gotta sit there for 2 hours. But coffee, coffee could be 5 minutes, it could be 20 minutes, 30 minutes, but you’re just focused on that person. But I like what you said is sometimes the price of the coffee is the price of admission to your next big business opportunity.
Codie Sanchez
Oh, 100%. I love that. Plus you’re going coffee walk and talk, so I like to do those lately. So I love that, that your daughter called that out.
Derrick Kinney
Yes. Yes. Okay. So you like to invest in what you call boring businesses.
Codie Sanchez
Mm-hmm.
Derrick Kinney
Laundromats, plumbing, mobile home parks, RV parks, car washes, roofers, et cetera. Why is that so appealing to you?
Codie Sanchez
I think that the world has it a bit wonky these days. Everybody wants to be the next Elon Musk or the next Jeff Bezos because that’s what we see idolized on the covers of magazines or social media. And in fact, when you look at those people’s lives, one, they seem kind of miserable. I mean, Elon Musk is a, is a stud, but like, I would be, he couldn’t pay me enough money to trade lives with him. I don’t want his life.
Derrick Kinney
Yeah.
Codie Sanchez
Jeff Bezos, really tough, you know, divorce, lots of issues between him and the kids. Like, I don’t want that life either. What do I want instead? I wanna live a really fun life where money’s not an issue. I get to do whatever I want. I get to make my impact on the world. But I get to do it in a way that allows me to actually live as opposed to work for a living. And so I like to invest in boring businesses because I think they are incredibly relatable and most humans could run one. And so instead of us all feeling bad that we don’t have the next billion-dollar idea, why don’t we just start with a car wash and see what happens from there? And that’s why I started this. I didn’t start it with this big grandiose plan of, let’s change the world through small business ownership, which is kind of where it’s gotten to today.
I started with just, I wanna live a life where no one can ever tell me what to do because I have so many income streams that are so protected that, uh, I have complete autonomy. And that’s why I talk about boring businesses because you can get that with those.
Derrick Kinney
I like the word you said, relatable. Why do you think those boring businesses are truly so relatable to the common person?
Codie Sanchez
I talk about the, some of these businesses like gateway drugs business. And so, you know, once you’ve owned your first vending machine and you understand, oh, there’s expenses and there’s outputs, you know, that come in, I make profit and I also have margins. Like you, you kind of start to understand this language of money. It’s really not at the core of it that different running a vending machine business than running a I don’t know, media business. At the end of the day, you need to make more money than you spend. You need to do that through a repeatable process, and hopefully that grows, right? And so I think it’s very relatable. We every day interact with these small businesses that we don’t even think of as businesses.
Laundromats, driver deliveries, you know, landscaping, painters, and these businesses are often owned by the guy who lives on your street, who has the biggest house and the biggest boat and, you know, a bunch of kids and takes a bunch of vacations this year. And he did it all through owning a sprinkler head company. And so, Yes. These businesses make up the backbone of America and our economy. And yet we never think, you know, or most people don’t ever think, how could I own one of these or run one? But they’re very simple and I like simple.
Derrick Kinney
Well, it reminds me of the stock market, how oftentimes when the economy gets crunchy, it’s those bellwether stocks. It’s the shaving cream companies, the razor companies, the detergent companies that we go back to because we always need those types of products. And what I’m connecting to what you’re saying is, look, these are the businesses that everybody needs in some form or fashion every day of their lives. And so they’re inflation-proof, recession-proof. But they’re not proof of not being able to grow in the future.
Codie Sanchez
Yeah, exactly. I like to buy businesses like bonds, not stocks, really. I wanna buy a business that’s going to send me a coupon or cash flow every single month or every quarter. And that business has probably been around for 5, 10, 20, 30 years providing that same service. I’m not looking to turn a dry cleaning business into the next Silicon Valley rocket ship. I’m looking to provide a service in my community and to serve my neighbors in a better way and thus make a little bit of money on top of it. And once you compound a bunch of those, you can make a ton of money. As opposed to if you buy a company like a stock, you want the company to start at a lower valuation. You want it to grow like crazy. You wanna recoup all your earnings at the end, you know, when you sell out. I don’t really ever wanna sell most of my businesses.
I just want them to cash flow to me. They continue to grow and maybe I pass ’em down to the next generation. And I think that is one, it is healthier when you are not always striving for double-digit, triple- digit growth. You know, you’re not burning out. These companies don’t flame out as often. It’s better for your consumers.
Derrick Kinney
Yes.
Codie Sanchez
You’re not focused on short-term earnings reports, et cetera. It’s a sustainable way to run businesses. And wouldn’t the world look a little bit better if we focused a bit more on long-termism than short-termism? And that’s why I buy businesses that are like bonds, not like stocks.
Derrick Kinney
Let’s say that you buy a laundromat or a delivery service. What would be a couple steps that you would implement pretty quickly to enhance the consumer buying experience, which would then ideally increase revenue as well?
Codie Sanchez
Yeah, so I have a philosophy I, I use called BRRT, which I just kind of came up with and put a little acronym around it so, uh, other people could remember it. And it’s buy small businesses, uh, in recession-resistant sectors, raise prices, add technology. And so the last 2, answer your question. When you go into most small businesses, they’re underpriced from anywhere from 30% to 300%. We had a small business that we just increased the price of the goods by 200%. We didn’t lose a single customer. Are we gouging the customers? No. The last owners just hadn’t raised prices for 10 years. And so we’re barely eking by. Now we’re a healthy business. We can provide better services. So I raise prices. That’s usually the very first thing I do, because when you have a little bit of cushion, you can take some risks.
And risks include things like adding technology. We’re not talking about rocket science or brain surgery here. When I add technology to these, these businesses, this is things like, hey guys, that thing over there, it appears to be a fax machine. We don’t still use that, do we? Oh my God, we do. Okay, no, we’re getting rid of the fax machine. Instead, we’re going to use email. We’re going to use auto text services. We’re going to use automation sequences. And we’re going to add like what you and I would consider baseline technology to these businesses. And then we’re going to get fancier and a little fancier and a little fancier. But mostly it starts with no fax machines, no landlines, text and email campaigns, and probably adding some marketing and social media on top of it.
Derrick Kinney
I love that formula. So it’s out with the fax machines, but you’re bringing in just base- level personalized technology that people can relate to, but they also associate heightened value with that. And I think that’s what often gets overlooked.
Codie Sanchez
Oh yeah, you’re exactly right. I mean, we actually, I was doing that, I’ve been doing this for 15 years, which is wild to say out loud. But when I, when I started really compiling a portfolio of them, and now we have, you you know, a bunch of companies, 20 or so that we own outright, and then 100+ that we own a portion of it. And so when I started building this portfolio of companies, something popped in my head and I realized, wow, wait a second. So when we buy these companies, we typically buy them from 65+ year olds, right? And so it’s people like my mom and dad, they’re ready to retire and they need a young gun to come over and give ’em a retirement plan. It’s great. I buy the business, they get an annuity. Awesome.
One thing that was interesting though about that is before You know, when I look at these businesses, none of them have technology. And what I’m seeing now is that these older generations are selling their businesses. And what happens when they sell their businesses? They sell them to somebody like me. And when I come in, the first thing I do is look for what’s the best technology in this space that means that I can be more efficient and I don’t have to be, you know, writing down invoices on yellow notepads. What would, what would be the technology for that? And prior to this next, this wave, you know, people were buying and selling businesses in the same age range, right? So no technology was being implemented.
It would be like, you know, every time I try to show my mom, you know, a new social media thing, it’s like a 72-hour dissertation trying to explain the thing. And so instead, now these new owners are coming in and I was like, wait a second, we need to not just be investing in the boring businesses. We need to have a venture capital fund that we invest in the technology that actually drives these businesses because for the first time ever, The owners will be young enough to implement them. And so that was our most recent venture. We launched, launched a $10 million fund, and the idea is simply invest in the technology that will be the, you know, the, the death knell for fax machines, basically.
Derrick Kinney
That’s brilliant. I love that. Now, you say that if a person could learn one skill, it should be the language of dealmaking. How do our listeners do that?
Codie Sanchez
Man, this is so interesting because, um, it’s sort of like you and I were talking in the beginning, you know, um, in your household and in mine, you probably hear more about, hey, we’re starting this business, we’re doing this next thing. What do you think about this? I’m gonna launch this offer. How does that work? Look at this cool business that’s happening over there. Um, something magical happens when you start understanding dealmaking, deal structuring, um, and how to buy and sell entities and businesses. And the reason I think something magical happens is because we think, we’re taught that the language of finance and thus of money is like saving, spending, investing in the stock market. But you can never save your way to generational wealth.
You can certainly, you could certainly, you could certainly invest your way in the stock market to A lot of wealth. Generational wealth would be very hard to do unless you start with a lot of money. It’s really hard to end up with a lot of money. The way that you have an unfair outcome, which is in finance, we call it 3 standard deviation events. Like there’s a bell curve like this in the middle. You know, we have most people having this outcome, which is related to die broke and unhealthy, which is what happens in the US. 99 out of 100 people will not be rich, meaning that they do not have financial issues when they pass away in the US, which is horrible. Horrible. So that’s the base case. I want to be 3 sort of groupings away from that. I wanna, I wanna be the outlier, right?
And the way that you become an outlier is that you understand how to structure deals. Because if you don’t have a ton of money and you aren’t born into this world, you can’t use your money to make more money. You have to use your brain and you have to use smart structuring. And so this is the difference between, for instance, let’s use celebrities. How about, for instance, Val Kilmer, uh, one of the greats, one of the greatest actors of all time.
Derrick Kinney
Yes.
Codie Sanchez
Right?
Derrick Kinney
Yeah.
Codie Sanchez
Um, had multiple bestselling movies, um, top of the charts, you know, won all the awards versus Reese Witherspoon. Is Reese Witherspoon one of the greatest actors of our time? I don’t know. Maybe people could say one way or the other. Um, right. However, Reese Witherspoon is worth about 100x times Val Kilmer from a financial standpoint. Why? Because Val Kilmer didn’t structure royalty deals, licensing deals, ownership, uh, IP. He didn’t structure anything around this, this massive brand that he had. Now, Reese Witherspoon just sold the company Hello Sunshine for $900 million. That was a content repackaging company basically. And it’s because she understood deal structuring and Val didn’t. And that is what I wanna try to teach people, but it’s fuzzy. It’s hard to grab.
It’s not like— You buy a house because it’s underpriced, then you re, you know, decorate it, you flip it, and you get it for a higher price. You have to be 2 steps past that to play this game.
Derrick Kinney
When it comes to business, and you have been outspoken on this, should you ever have a business partner?
Codie Sanchez
Yeah. Partners are great. 50/50 partners, not great. There’s plenty of instances where Great partners last. There are more instances where they do not. I’m a true believer through personal experience. I had 2 businesses in which I had 50/50 partners. In both instances, what ended up happening is I grew the business substantially. My partner was like, this is great. I’m hanging out. I’m making millions. I’m not doing much anymore. But, and why would he? Because at that point, he didn’t have to do all the work. I was doing it. I was still hungry. But he was reaping all the benefits of my actions. So there’s something really important that I always talk about in deal structuring, which is incentive alignment. And so in every deal that you structure, you have to think about 3 things. What’s the worst case scenario?
What’s the best case scenario? And then how do I optimize to have more of the good and less of the bad?
Derrick Kinney
Yes.
Codie Sanchez
And if you start with the end in mind and think about a prenup for every partnership, you’ll be good to go. But can you imagine something worse than you build this podcast up to tens of millions of dollars in revenue or hundreds of millions of dollars in revenue, and you have a partner that gets 50% of it and that 50% is forever, and yet he stops working and you’re working 70, 80-hour weeks. Is that going to feel good at some point?
Derrick Kinney
No. No.
Codie Sanchez
But we know that most marriages end in divorce and we know almost every business dies at some point. So it’s much more likely that your partner will end in a bad divorce than it is that you will stay happily married forever.
Derrick Kinney
From a business perspective, I like how you said have a prenup for every business deal. And so many people, I think, go into business thinking that they know more, that they can sort of outsmart the odds. But what you’re talking about is, look, even if you don’t know it, and let me go back to your earlier question about You know, the language of dealmaking. Even if people don’t have that knowledge themselves, they can find someone else and pay them for that knowledge. So really, there should be no reason any of our listeners don’t do a deal because they feel like, well, I just don’t know the answer to that. There’s always a resource. Would you agree with that?
Codie Sanchez
All you have to have is the right questions. That’s it.
Derrick Kinney
The right questions.
Codie Sanchez
You have to say, uh, who, not how. Who can give me the answer to this question? Not how do I fix this issue? You have to ask yourself, what do you actually want? Okay. I want to not be in a bad partnership and have the legal documents protect us from that. Okay, great. So who wins? I go ask other people who have money or who have done deals what their opinions are, and then I ask them for their attorney. And then I go and tell them and their attorney, hey, I’m building this business, or I wanna invest in this, or I wanna do this deal, and I need this other person for XYZ reasons. But I’m worried it might not work out.
What’s the best way we could structure this deal for me to protect me from anything going sideways, like him not working hard or her not working hard, like them getting sick, like them getting divorced, anything you could think of. And so that’s where you have to start. Uh, but most people want short-term gain and they sacrifice long-term pain. And so, yes, the problem isn’t really, I think that people don’t know how to negotiate as much upfront on partnerships. It’s that it sucks. It’s weird. You know, you’re excited, you’re starting something with somebody, and then you’re like, by the way, um, I’m gonna own way more of it than you. And here’s all the caveats you’re gonna have about this. And you just have to write down why that makes sense and have a tough conversation upfront. But most people don’t like to do that, which I get.
I totally get.
Derrick Kinney
But that’s what separates really in this case, the haves and the have-nots and those people who can reach out and grab the brass ring of their vision and those who simply keep thinking about it and dreaming But never achieve their goal.
Codie Sanchez
Oh yeah. I mean, I was laughing with my husband the other day because I, um, I was listening to this podcast, actually Tim Ferriss podcast with this guy Todd McFarlane who, um, has built a big comic book company. He was the founder of Spawn and he was talking about how, um, you know, he’s so used to going to war against people in business that, you know, you can’t chop off people’s heads in business anymore. So instead you sue ’em. And that’s our modern-day version, right? And so he is like, I’m so used to talking to attorneys, it’s no big deal. And he’s like, I am so used to it, in fact, that when I have to get in a tough conversation with attorneys, I call ’em on Friday right about 4:30. Uh, I have a really tough conversation with them.
Derrick Kinney
F you. F you.
Codie Sanchez
Hang up the phone. My wife’s like, oh my gosh. But then I go have a weekend. I don’t even think anything about it. I’m good to go. I’m feeling great about it. And the reason why I do that is because What do you think that attorney that I had this tough conversation with on Friday, that I went at him hard on Friday, 4:30 on a Friday, it’s enough time for him to still be in the office. So he’s going to some colleagues and he is like, oh, this conversation I had with that guy was so tough. Can you believe he did this to me? Then they go out to dinner with some buds and they’re like, how was your day? And I was like, awful. Oh, this guy’s such an idiot. This is why. Then they go golfing the weekend. Same thing Sunday, same thing. Monday comes around, Todd calls the guy back up. And, um, goes at it again. Todd’s fresh.
He hasn’t thought about anything all weekend. He hasn’t been like pumping his, his muscles thinking all weekend about how bad this guy is, whatever. He’s good to go. But the, the attorney on Monday, he’s a little tired cuz he’s been bitching about Todd all weekend long. So who do you think wins the negotiation? Todd. And so, yeah. And so the moral of the story for these tough conversations, you just do them a lot. And I’m sort of the same. I don’t like conflict. I don’t wanna fight with people. But because I’ve been in private equity for so long, you get used to it and you get to a place where you have to change your mentality to sort of like, it’s not, I feel bad for this person or I’m worried about them. And it’s this person right now is stealing my time. My time has this dollar amount associated with it.
And every time I let this person get away from it, I need to picture one less soccer game with my kid I can go to. I need to picture that this person is Pulling me away from my wife on date night actively because I’m working super hard. I need to picture that the birthday party that I want to throw for my kids this weekend, I now can’t pay for because they are taking the money away from that birthday. And when you can make it like kind of that visceral, then you actually realize, oh, wait a second. Every time I have to have a difficult conversation with somebody, I’m not doing it on my behalf. I’m doing it for all these other people in my life that these people are actively stealing time or money away from. Because I can tell you what, most people on the other side, they’re not worrying about it from an empathy perspective like you are.
And so, if you can, if you can shore up that muscle a little bit, you’ll be an incredible dealmaker.
Derrick Kinney
Codie, that is gold right there. People need to replay that moment over and over in this podcast. That is so, so good. All right, let’s go to our younger audience. Let’s say someone is 20 years old. They have $5,000 to invest. What would you suggest they do with that money?
Codie Sanchez
Contrary to what I talk about all day, uh, with boring businesses, you’re crazy if you are 20 to not invest every cent you have in the one thing that has infinite returns, which is you. Um, in my mind, you should be spending every single dollar, uh, until you’re making quite a pretty penny. And learning as much as humanly possible about business, about leadership, about dealmaking, and about communication. And that’s not just because I run an education company. That’s because I truly believe I could tell you right now, okay, with $5K you could go buy an online website, probably about that dollar amount. You could probably go buy a vending machine, uh, for that dollar amount. You could put that $5,000 in with a bunch of other people into an angel investment.
And you are gonna learn from doing the vending machine and you are gonna learn from doing the ice machine. Gonna learn from being in the game, but actually the best thing you can do is go where the real players are playing. And so when I think about my best $5K I spent early on, it was randomly, I was in finance, I was super bored at my job and I didn’t know how to get out. And I spent $5K going to this event in Austin, Texas, actually called SumoCon. And I spent the weekend Sitting and listening to all these entrepreneurs talk about e-commerce and all this stuff that I had no idea what they were talking about. I mean, I was hardcore finance. They were talking about email marketing. It was totally outside of my wheelhouse. But really quickly in that event, I just said, ah, I just spent $5K on this and my weekend.
Um, I’m going to meet every single player here and I’m gonna ask ’em how they got there. I’m gonna make real connections and I’m gonna try to do stuff with them. And to this day, I’m still in touch and friends with like 4 or 5 of those guys.
Derrick Kinney
Um, wow.
Codie Sanchez
Some of which run, you know, companies that do hundreds of millions of dollars now. And I wish, like my little brother, I wish I could get him to do this. He will say things to me like, Codie, your network’s pretty incredible. You know, all these, these people that do X and Y and Z. And I’ll say, Colton, you know, do you think I met ’em at the bar? You know, do, do you think I met them, uh, on Tinder? You know, do you think I, I met them just, they were sitting next to me by chance at work? Working in a cubicle at a job that I don’t love either, making the same amount of money as me? No. I went after them. I went hunting for humans, and I did that by spending my own money on it. And that, I think, is what I would tell somebody to do that’s 20.
Go spend money on getting around people that you really have no right to be around from an experience or a success standpoint. And that success will rub off on you in a way that you can never easily turn $5,000 into $5 million, but you can if you spend it on skills.
Derrick Kinney
And let me make sure people don’t overlook the golden nugget that you just laid at our feet there, Codie, when you said spending $5,000 on yourself, going to an event. Some people stop at buying the ticket and putting their butt in the seat. You said, I’m going to hunt some humans that can help make me a better person, 4 of which, or 5, you’re still doing business deals with today. So it’s a 2— I call it the Texas 2-step. There’s always 2 steps. You got to get in the door. And then you gotta ask for more. And that’s what you did.
Codie Sanchez
Yeah, you’re exactly right. Gotta steal that. It’s really good. Yeah. I mean, uh, uh, God, I would take a curious human over a high IQ human almost any day of the week. Um, because— That’s so good. Yeah. There’s, you know, there’s so much value in just really wanting to understand other people. And what I think, I think about it like a layer cake. You know, when you cut into the cake, you see there are all these layers stacked on it to make it as tall as it is. And every time I meet a human, I’m sort of like stacking their experiences and their mental models and their ideas on top of one another, and it makes me taller. And most humans want to do the opposite. They wanna go to an event and tell you how smart they are and say, I know this and I know that.
And instead, you gotta credentialize yourself a little bit so that people think that you’re You’re somebody they want to engage with. But for the most part, I try to ask them a ton of questions and steal as much insight from others as I can.
Derrick Kinney
That’s good. Forget going to college, folks. It’s Codie University. You can sign up right there. I love it. Now, I want to dig a little bit deeper, and you’ve already revealed some of the layers in your mind of how you think, but I want you to share with our listeners how you think and manage your time To maximize your productivity?
Codie Sanchez
Couple things to maximize productivity. First, the most important thing is you just have to figure out where you wanna go. I think most people in their lives try to get up early, take cold showers, work out every day, you know, drink a green juice. And all of that is awesome. And I do a lot of that stuff, like 60% of the time probably. But then they don’t actually have a plan for where they wanna go. And so you could be doing all the right stuff and stay in the wrong spot. The most important thing in my mind is that you spend some time internally saying, okay, where do I really want to go? Then I want to do the right actions in order to get there. But it doesn’t matter how fast you move if you’re going in the wrong direction. And most people don’t stop to think about that.
It overwhelms people for them to ask themselves, what’s my, what do I want to get out of the next 3 months, 6 months, 12 months? And instead they should think, what do I, I think I want to get. Okay. Let’s not put it on my tombstone. Let’s take it easy here. But I think over the next 3 months, I might wanna get a new job in marketing. Okay, cool. Let’s move forward on that. At the end of 3 months, oh God, no, I don’t wanna do that. That’s fine. Next thing. But at least move forward to the thing that you want. And then the, the, you know, second thing I’d say there is I work a lot. There’s, uh, a lot of people these days that are able to do things that I’m not. Like a 4-hour work week and accomplish everything that I wanna do. It’s just not feasible for me. I work a lot.
I just tend to try to structure my life to work on the things that I want to work on or have goals so big that working on the small things still feels good because I got that shiny vision in my head. And lastly, I’ll be honest, I’m really not that efficient. My husband, former military guy, efficient. Wakes up, does things, doesn’t get distracted, doesn’t talk to anybody, goes. I’m not like that at all. I get up, I get distracted, I think about this one thing, then I go for a walk, then I have a brilliant idea, then I go back to this other thing. I’m actually not very efficient. Um, but what I am is driven, dedicated, and I know where I’m going. And so it might actually take me longer throughout the day to get there, but that’s just how my brain works. And I try to not beat myself up about that too much.
Derrick Kinney
Well, and it sounds like you have a really good mirror in front of you and you know yourself well. You know, so many people I talk to would describe what you just said, Codie, and they would beat themselves to a pulp because they’re not the embodiment of perfection.
Codie Sanchez
Yep.
Derrick Kinney
And what you’re talking about essentially is what a mentor told me long ago. People like imperfect people better. They simply like raw and relatable people. And I think that’s why people relate to you is because, look, here I am. I make mistakes, I do well, but I know where I’m going. And even in the mess, that wiggle, you’re still achieving wealth.
Codie Sanchez
Oh yeah. I mean, Jeff Bezos had a great thing that he talked about. They were asking him about how do you start your day? What does it look like for you? He’s like, well, I wake up and I piddle. I just kind of piddle around. And they’re like, what? What does that mean? He’s like, you know, piddling. I like have a coffee. I kind of walk around. I think about some stuff. And it’s so counter to this narrative today of like, get up and then you do this and then you go. And, um, and I don’t think there’s only one, one way to skin a cat. And so, um, I try to not get too crazy about that. One thing that I am pretty intense about is context switching. I think I probably have a form of ADHD. Um, I’m very easily distracted. If you were to sit in this office, it’s like upstairs. I have these glass doors.
I have a lock on the inside so nobody can get in if I don’t want them to. I have this like curtain that shoots across the whole thing. I have a little sign outside that says like working right now. Because if you bother me when I’m in it, I’m, I’m out of it. I’m now, I’m, I’m cleaning the floor or something. And so, um, being really honest with yourself about what do you need? And God, it took me forever. I mean, I remember my husband and I were in a tough spot for a while and I was like, I finally just realized, I was like, oh, you can context switch super easy. You can come in my office, ask me a question, go right back to your thing. Every time you come in my office and ask me a question, I lose 30 minutes like reanalyzing where I was before and getting distracted by other stuff.
Derrick Kinney
Right.
Codie Sanchez
So you have to not talk to me between the hours of 8 and 5 unless it’s an emergency. And so can you be really honest with yourself about what do I need to do to accomplish what I wanna do? And, and, you know, F the person who says that that’s not something that they’re willing to, to deal with. Like you need to be with the people who say, we can support you the way that you are. And And we set up our lives well like that now.
Derrick Kinney
Well, that’s a powerful rhythm I think a lot of people can learn from. Now, in one of your recent Instagram posts, you said, if no one thinks you’re crazy, you’re too late. Tell me what you mean by that.
Codie Sanchez
I can’t remember a time in my life where a move I’ve made, I got applause for. You know, I, I remember intimately I was working at Goldman Sachs. And a Latina lady, that was like the pinnacle for my mom, right? You know, she was like, oh, you know, mi pobrecita, like she’s a Goldman Sachs. This is so amazing. It’s gonna be, you know, this is great. I told my friends about it and, and I was miserable and I hated that job and I worked a billion hours a week. And so when I told her that I was leaving that job to go do something else, she about had a coronary, you know? And, and then I think every single job I’ve left since then, it’s been the exact same thing every time. Panic fear mode because she operates from a perspective of, you know, safety and security for her kids. It’s very lovely. It’s just like a lot of stuff for me to take on.
And so finally I just had to say, I’m gonna tell you something, you’re not gonna like it. I don’t want your opinion and I’m doing it anyway. It’s, and you know, it’s, and now we’re very close. So she’d be like, okay, what is it now? You know, I’m like, oh, I’m running a private equity fund. It’s a couple hundred million dollars. I’m actually gonna exit my position and I’m gonna start a newsletter. She was like, are you out of your mind? And so I think this idea that when I come to somebody and I tell them, uh, the next thing that I’m gonna do, and they’re like, oh yeah, that makes a lot of sense. It’s almost like a little thing goes up in my, my mind and I’m like, oh, too reasonable. Like too small.
Derrick Kinney
Oh yes.
Codie Sanchez
Um, and, and I don’t wanna have that small boy energy. I want big money energy. I want big risk energy because at the end of the day, the big things are just as much work as the little things. Doing a deal that is a $100 million deal is not that different than doing one that’s a $10 million deal. Which is not that much different than doing one that’s a $10,000 deal. And so you gotta play smart games if you wanna win big prizes.
Derrick Kinney
A candid question for you, Codie. Do you ever feel misunderstood?
Codie Sanchez
Yeah. Eh, where do I feel most misunderstood? Perhaps in moments where, um, Where people think that I’m really hard or, um, you know, Codie, you’re so intense and you’re just doing X, Y, and Z all the time. You don’t care what anybody thinks. I care what people think all the time. Gosh, I wish I didn’t. I’ve just had to realize that there are only so many fucks I can give in the world. And, um, if I give too many away, then the number one person that I should care about gets uh, completely silenced. And so I think it was Brené Brown. She had this idea of writing down, uh, a list of people whose opinions she actually cared about, and anybody that wasn’t on that list didn’t get a buck. And so, um, wow. I liked that idea and I’ve carried that with me for a while. And I’ve kind of said, it doesn’t mean that I don’t want feedback.
I like feedback and, and ideas and criticisms, but opinion without expertise, experience, or as you get on the internet with you know, some rudeness associated with it. You’re not on the list. I just go, thank you, next. And so, um, that started pretty early for me because when I was at this one firm, um, well, I wonder if I, yeah, I don’t think I have an idea. I was at this firm, uh, First Trust back in the day. And, um, and I didn’t talk about this for a while because I actually hired my brother. And after I left the firm, he still worked in my, uh, in my business that I built in Latin America for them. But, uh, but the place was like a mixture of, um, uh, let’s see, of like, what’s that movie with Leonardo DiCaprio? Wolf on Wall Street.
Derrick Kinney
Yes.
Codie Sanchez
And, um, I don’t know, Animal House. And, uh, it was just craziness with all these awful things going on. And I remember at one point, um, I was out with a group of, of guys who were all running different divisions of, of the financial company. And one of ’em was doing something I thought was inappropriate. It was like hitting on our event planner and making her feel uncomfortable. And so I was like, you gotta knock this off, dude. Like, it’s not a good look for you. You’re married. She’s like 12. I mean, she wasn’t, she was like 20. I’m like, you’re like 80, she’s 12. Let’s just, let’s not do this.
Derrick Kinney
Yeah.
Codie Sanchez
And, uh, and he didn’t like that answer. And then one of the other guys said, well, this is why we don’t hire women. And I remember just like kind of pausing like that in the moment. Mm-hmm. And being, and I didn’t have one of those good answers, you know how Like Ari from Entourage always had like some like great thing to say back to him and I’ve never been able to have that. So I didn’t have a good response. I didn’t have anything. And it bothered me for a minute. I was like, man, like I’m trying so hard. I feel like I’m part of the boys club, but I’m not really. And, uh, and then I, I went back to my list and I was like, is this guy’s opinion on the list? And I was like, no. I was like, wait a second. This guy’s opinion isn’t on the list. I don’t want this guy’s life. I obviously don’t have a lot of respect for him overall.
Feeling seems to be mutual. Why am I spending any time with him whatsoever? And that has helped me reshape, um, you know, anytime I feel like I’m misunderstood or anytime I feel like somebody’s pushing me out or I have these, these, you know, feelings, I just go back to, ah, are they on the list? They’re not on the list. Okay, never mind. Spending no time there. Um, I think you find those that are predisposed to already want what you’re selling. And you find those who already align with who you are. And if they don’t, you’re not gonna change their mind. And why would you bother trying?
Derrick Kinney
I’m paraphrasing Tupac here, but when he said, it’s not that I don’t want people to eat, I just don’t want them to sit at my table.
Codie Sanchez
Yes, exactly. Eat away. Not in this house. Right. Yeah.
Derrick Kinney
Well, Codie, we, we’ve talked about how our listeners can take your principles and grow their business or even start one. At the end of our show, I ask our guests 5 questions on how our listeners can build their wealth. So question number 1, what’s something you’re doing that your 18-year-old self would be proud of?
Codie Sanchez
That’s so cool. Betting on myself. I think bet on yourself as soon as you can, as often as you can, and then document when and why it works and when and why it doesn’t. I’ve never once regretted taking the swing.
Derrick Kinney
What you said there, I think, is something people shouldn’t overlook. Again, you’re, you’re dropping these extra bits of gold and you’ve already given us a bar, then you add more gold. When you said assessing what worked and what didn’t work, I think so many people bang their head against the wall and they wonder, why didn’t that work? But they don’t journal or write down why that didn’t work so they don’t repeat the same mistake over and over again.
Codie Sanchez
Oh, it’s so true. I was at this event where everybody in the room had to be worth— they were qualified investors, so they had to all be worth at least $5 million. A lot of people in there worth hundreds of millions. And I’m giving a presentation on how to buy businesses and how to create a mini Berkshire Hathaway, how to buy a bunch of businesses, put them together in a portfolio and have the investment income replace your income. What I did. And so I’m explaining this to them and, and these people have done lots of deals. They’re worth a lot of money. Some of the people in there are worth more than me. And so, and so I go, okay, you guys have done all these deals. That’s great. Do you have like an investment track record of the deals that have worked out well or haven’t?
Do you have an investment memo that you can look back on to see why you did a deal or why you didn’t do a deal? If you’re an investment person like I am, the answer’s always yes. Like, of course.
Derrick Kinney
Yeah.
Codie Sanchez
I have a track record, you know, good deal, bad deal. And I have a, a little thing where it’s, it ranks when I first start it. Do I think this is a level 10 business or do I think this is a level 3 business? So I get to see, was I right on this? If not, what did I get wrong? I was in a room full of 100+ people. I asked them, do you have to track, does anybody keep an investment track record? And do you have an investment memo you use, some ranking system to decide if your decision-making is right or not? Raise your hand. Room’s empty. Not a hand. I’m like, wait a second.
Derrick Kinney
Wow.
Codie Sanchez
How much have you guys combined done in deals? We’re talking hundreds of millions of dollars and you don’t even know if you’re good at it or not. Um, and so I think to your point, as many times as possible, Richard Branson said ABCD, always be connecting dots, especially when it comes to your money. Connect the dots.
Derrick Kinney
Hey, so good. What advice would you give your younger self about money?
Codie Sanchez
That you need to learn about it. I didn’t know anything about money. My parent, I didn’t have a credit card until I was like 18 or 19. I, I didn’t understand what a mutual fund was, you know, stocks, bonds, no idea. And so I would say if you want wealth, you have to understand the language that wealth speaks. And so as soon as you can start getting in the game and learning about money, I would. It doesn’t mean that you have to be obsessed with money. Doesn’t mean money has to drive you, but I would spend a good portion of your time making sure that you understand the terminology of money and the way that those with money got it because everything ripples and rhymes. Yeah.
Derrick Kinney
Know the rules of the game. You know, what is the biggest financial mistake you’ve ever made?
Codie Sanchez
I did this one blog post called like how I lost $12.7 million or something like that. And it was a series of 5 different decisions that I made that led to me losing a lot of money. Most of them were not taking chances. Like, you know, I sold out of a bunch of equity when I was at Goldman Sachs too young, and the market was super under because I was worried about what people were saying. But I knew the numbers and was looking at them and I should have known enough to, to keep it. You know, I got a divorce really young and was married young and really wanted out of the divorce. And so said, take, take, take it. You know, there’s always an exit price to freedom. And, and then probably the third one I think was that I invested one of my first deals.
I don’t know why this one still bothers me ’cause it was small, but one of my first deals I invested in a company of a friend’s company with no, I didn’t structure it intelligently. I didn’t actually get in and look at the numbers. I did a deal with a friend really loosely, and I’ve never done that again because it ruined the friendship and, you know, and I lost some money because of unmet expectations. And so those are the 3 things.
Derrick Kinney
Many, many lessons right there. I’m curious, what is your favorite investment right now?
Codie Sanchez
I’m obsessed with our company, Contrarian Thinking, at the moment. And we’re doing goal planning for 2023. And the investment that I made in this business was in investing capital in my niche and creating content around this niche. I had no idea how much attention can cash flow. And so, you know, when I go and invest in these boring businesses, I can now raise money a billion times easier because I have this huge audience. I get deals a billion times easier because I have a big audience. So my favorite investment has been in the content game. And then the favorite thing that I took the money from that and put it into a, into a business is right now we’re investing really heavily in 2 types of businesses. Property management in particular, long-term, not, not short-term Airbnb property management because they haven’t been rolled up yet.
They do well during recessionary periods. They’re low OpEx or capital. You don’t, you don’t have to give a lot of money to start these types of businesses.
Derrick Kinney
Right.
Codie Sanchez
Or buy them. And they sell for really good multiples. So I really like investing in that space right now. And then probably the other space is I’m trying to get all my laundromats to add wash and fold to them, which is where they, you know, you can drop off your laundry and they’ll do it for you or deliver it back and forth. And I like to do those, they’re called add-on uh, revenue streams where you can have a business that’s already doing X and then you’re like, wait a second, I, I can only get to the ceiling of $100K with my current offerings, but if I buy this other thing, this business could become a $3 million business. And that’s what this wash and fold thing does to laundromats.
I actually think we have something called, if you go to contrarianthinking.co/recession, we have, uh, the 3 businesses that I like to invest in during recessionary periods, which maybe would be helpful for people. It’s free. You can just, yes, put in your email and get a download.
Derrick Kinney
Thank you for sharing that. Last question, Codie, what is your generosity purpose? In my book, Good Money Revolution, I talk about this concept of generosity purpose, which is a cause that you care deeply about. It could be a wrong you want to right, an injustice you see in the world. And I’m curious, is there something that you believe in and you support with your time or your money? And if so, why is it important to you?
Codie Sanchez
Yes. The entire reason we started this business was to create 100,000 small business owners and a million financially free humans. I believe that our world increasingly is being owned by the few and the many are becoming the owned. And so you can see this already in our neighborhoods increasingly being owned by big conglomerates, that the CEOs of the businesses that we go and give money to every single day have never even stepped foot in our town, more or less the store. And I think that that is hugely detrimental for our society. We’re tribal beings that do a lot better in small groups where we can have skin in the game and we can see if the local politician fills the potholes or not, or if the local business pollutes or not. And I think it’s really detrimental that we’re allowing mass centralization of big businesses.
And so the reason I talk about buying businesses is I think Yes, you can make a ton of money doing it. Yes, it can be really fun. But third is I’m tired of seeing a Walmart and a Starbucks on every corner, and I’d much rather small businesses got the chance individually.
Derrick Kinney
Well, I love your passion, which leads to profits, which leads to more purpose, and that’s exactly what you’re all about. What I love about the work you and your husband do, Codie, is that you’re actually practicing what you preach. There’s so many people on the socials and on late night TV talking about here is the magic pill, but you have already done the work and you’re seeing people and you’re learning from that. Thank you so much. This has been a great conversation. Codie Sanchez, ladies and gentlemen, thank you for being on the podcast.
Codie Sanchez
Thanks for having me, Derrick. This was awesome.
Derrick Kinney
All right, let’s talk about the key points of Codie and I’s conversation that you can apply right now. First of all, the best bet you can make is on yourself. Now listen, you might be listening and you’re feeling trapped in a dead-end job. Listen, I’ve been there myself and I know how hard that can be to have the responsibility of your family and bills weighing on you, which can keep you trapped in a job you know is not bringing out the best in you. And you’ve got that decision to make. Will you bet on yourself? And one way you can do that is To simply quit the job and get a new opportunity working for yourself and build that.
Or you can do the hybrid approach, which I love, of stay in the job you may not like, but start something on the side you do like and gradually transition into something where you control your income and your time and the economic value that people place on you. That bet is on you. Next, Recognize that you’re often going to feel misunderstood. Here’s what I mean. We have 4 kids and all of them are entrepreneurially minded. And what we find is when we share ideas that we’ve got of doing things differently, oftentimes people look at us like we have 3 heads and 4 eyeballs.
And what we realized in a discussion recently was part of being an entrepreneur and part of doing things differently requires that you are misunderstood because culture today says everybody has to go to college, everybody has to have 2.3 kids, everybody has to own a home, everybody has to do these things that our previous generations were taught was the, quote, American dream. I believe for some people that forced dream is becoming a nightmare because it’s not their dream. So recognize and accept the fact that when you do something differently, it’s not because people don’t like you. It’s often because they’re trying to prevent you from the harm they think you’re going to have. And it’s because they love you. They’re trying to hold you back from that pain. But you recognize that the pain is the process to profitability.
So recognize you’re going to feel misunderstood. And when you do, Almost think of it like a badge of honor that that’s what Derrick said was going to happen. That means I’m on the path to my own business and the success on my terms. Last, one thing that Codie said that really struck a chord with me was that the people who need to know the value you bring will recognize it. So much time as an entrepreneur is trying to convince other people to see things your way. Instead, stop burning your brain cells and energy trying to convince people to see things your way. Simply build your idea and find people who want the way that you’re providing it. It will save you time, save you energy, and connect you with a smaller village, a smaller group of raving fans who buy into what you’re doing.
You know, there’s this talk about you need to have hundreds of thousands, millions of followers If you have 10 people who buy into what you’re doing, they will introduce you to 10 more people. Suddenly now there’s this small but emerging group of people who have bought in to what you do and believe in you. And that’s going to make you a better entrepreneur. It’s going to confirm the people who want to buy from you and not have to convince people as to why your way is the right way. You’ll find the people who align with you is you are in a true alignment with yourself. Think about that a couple times. Thanks for listening to the Derrick Kinney Podcast on Modern American Advisor. Do you want to attract more $3 million to $10 million clients and grow your business? Then check out successforadvisors.com. That’s successforadvisors.com.
And remember, if you want a business that’s booming, focus on the human. We’ll see you next time.
About Codie Sanchez
Codie Sanchez is an entrepreneur, investor, author and founder of Contrarian Thinking, a financial media and education company focused on business ownership and financial freedom.
Before turning her attention to entrepreneurship and Main Street businesses, Codie began her career as a journalist before moving into finance, with roles at Vanguard, Goldman Sachs, State Street and First Trust. She later began buying and investing in the kinds of businesses that rarely make headlines but keep everyday life moving, from laundromats to other small, cash-flowing companies.
Today, through Contrarian Thinking, Main Street Hold Co. and Contrarian Thinking Capital, Codie and her partners continue to buy and invest in small businesses while teaching others about business ownership, dealmaking and building wealth. Her stated mission is to create one million financially free people through business ownership.
FAQs
What makes a “boring business” interesting?
For Codie, boring is rather the point. Laundromats, plumbing companies, car washes and similar businesses may lack the glamour of the next billion-dollar startup, but they can be relatable, cash-flowing businesses built around services people already use.
Why does Codie focus on earning more instead of simply spending less?
Because there is only so much you can cut. Codie argues that spending eventually hits a floor, while earning has considerably more room to grow. Her preference is to spend less time obsessing over the price of the coffee and more time asking how to create enough value that the coffee is no longer the issue.
What does Codie look for in a business partner?
Alignment, particularly when it comes to incentives. Codie has experienced 50/50 partnerships herself and argues for thinking through the best and worst outcomes before signing anything. Her shorthand is memorable: think of it as a prenup for the partnership.
If Codie had $5,000 at age 20, where would she put it?
Into herself. Rather than immediately buying a business or making an investment, Codie says she would spend the money learning about business, leadership, dealmaking and communication, while deliberately getting around people she could learn from.
How does Codie know whether she is getting better at making decisions?
She keeps score. Codie describes maintaining an investment track record and recording how she initially judged an opportunity, then looking back to see whether she was right and, importantly, what she got wrong.
Continue Listening
If Codie’s conversation has you thinking differently about wealth, business and the decisions behind both, keep going with these conversations from the Derrick Kinney Podcast on Modern American Advisor.
Dawn Dahlby — How to Build Your Wealth and Know Your Worth
Dawn Dahlby joins Derrick to explore the emotional side of money, why financial success does not always feel like enough and how wealth can become more closely connected to purpose.
Sten Morgan — How Great Advisors Grow: Mindset, Value and Leadership
Sten Morgan gets into the mindset behind growth, the value of investing in yourself and why curiosity, better questions and better decisions can change the trajectory of a business.
Brian Feroldi — How to Invest Through Market Volatility
Brian Feroldi joins Derrick for a conversation about financial education, investing mistakes and the habits that can help investors make more thoughtful decisions when markets get uncomfortable.
