Making It with Jon Davids: Episode 154 - Codie Sanchez | “The Richest Guy On Your Street Probably Did This”
Introduction
In Episode 154 of Making It with Jon Davids, host Jon Davids sits down with entrepreneur and investor Codie Sanchez to explore the intricacies of building successful businesses outside the conventional tech-centric narrative. Released on November 19, 2024, this episode delves deep into Codie's journey, her insights on "boring businesses," and her strategic approach to wealth creation. Whether you're an aspiring entrepreneur, marketer, or business enthusiast, this conversation offers valuable lessons on navigating the business landscape with contrarian thinking.
Codie Sanchez's Entrepreneurial Journey
Codie Sanchez opens up about her early career in finance and her transition into entrepreneurship. Reflecting on her initial experiences, she shares:
“I made $37,000 a year working for Vanguard. And that felt like a huge payday, actually. And then I remember my first year that I made a million dollars as an employee.”
— [01:14]
Despite earning a seven-figure income in her finance roles, Codie felt confined by corporate life, likening it to "golden handcuffs." Her early entrepreneurial ventures were marked by several failures, including a fashion styling marketplace named Threads Refined. She candidly discusses the challenges and lessons from these attempts:
“Chasing fashion stylists and making sure they were actually meeting with customers and yelling at them all the time, and they were yelling at me. And so that was one of the first businesses and it was really painful.”
— [04:00]
Building a Media Presence
Around 2020-2021, Codie began garnering significant attention on social media platforms like YouTube, TikTok, and LinkedIn. This surge was somewhat accidental, stemming from a period when the COVID-19 pandemic stalled her private equity activities. She started a newsletter inspired by advice from Sam Parr of The Hustle and repurposed her long-form writings into tweets and threads, inadvertently building a robust media presence:
“If you want to speak clearly, you should write clearly because it is so much easier to be honest with yourself in paper than it is to think you are clear verbally.”
— [05:33]
Codie's content resonated widely, leading to viral posts such as her breakdown of the laundromat business, which defied her initial expectations of its potential reach:
“I thought the laundromat was something to be embarrassed of, to be frank... And then I think the Internet thought the opposite.”
— [08:50]
The Four Types of Leverage: Attention, Capital, Code, Labor
A central theme of the discussion is Codie's framework of the four types of leverage: attention, capital, code, and labor. She elaborates on each, emphasizing the growing importance of attention in the modern business ecosystem:
“How we're going to see the next round of billionaires really be made. It'll be a combination of attention, capital, code, and labor.”
— [15:05]
- Labor: Traditional workforce-based leverage, essential for building large-scale operations.
- Capital: The financial backbone that fuels industrial growth, historically pivotal in the rise of titans like the Rockefellers.
- Code: Represents technological and automation capabilities that empower modern innovators like Bezos and Musk.
- Attention: Codie posits attention as the most potent lever today, driven by the accessibility of content creation tools and the democratization of media platforms.
“The ability to market 100% it is. And a lot of my engineers for some of my companies would disagree with me. But you know, marketing is a top of the pyramid skill stack.”
— [15:05]
She argues that in an age where marketing can amplify a business exponentially, mastering attention is more valuable than traditional coding skills.
Choosing the Right Business Model: Boring vs. Trendy
Codie challenges the prevailing tech-centric business models, advocating instead for "boring businesses" that offer steady cash flow and resilience. She introduces the concept of the Sexy Boring Matrix, highlighting how less glamorous industries often yield higher profitability and stability:
“The sexier appeal the industry has, the lower the average income is.”
— [29:00]
Using examples like senior services and drug rehabilitation centers, she underscores the importance of aligning business choices with demographic trends and societal needs. These sectors not only promise profitability but also offer meaningful societal contributions.
Gateway Drug Businesses
A standout concept introduced by Codie is the idea of Gateway Drug Businesses. These are simple, low-overhead businesses that serve as entry points for aspiring entrepreneurs. They allow individuals to gain practical experience without the high risks associated with capital-intensive startups:
“A gateway drug business is a business that is so simple your grandma can understand it.”
— [32:13]
Examples include vending machines, small laundromats, and rural car washes—businesses that are easy to manage and scale, providing a foundation for future entrepreneurial ventures.
Reaction and Pushback
Codie's candid advice and contrarian views have not been without criticism. She categorizes her critics into three groups:
- Negative Mirrors: Individuals projecting their insecurities and frustrations.
- Gatekeepers: Industry insiders who feel threatened by her unconventional success outside traditional pathways.
- Skeptics: Those who question the feasibility of her models without sufficient understanding.
“If you have 8 million people that follow me online, if I have 100 million views a month, 1% of that population's fucking nuts.”
— [37:55]
Despite the backlash, Codie remains steadfast, emphasizing the importance of authenticity and unique perspectives in content creation.
Business Structure and Holdings
Codie provides an in-depth look into her business empire, Contrarian Thinking, which comprises several subsidiaries:
- Contrarian Thinking Capital: A venture capital fund investing in infrastructure for small businesses.
- Main Street Holding Company: Owns various small, service-based businesses that are easy to manage and scale.
- Contrarian Thinking Media: Manages all her social assets, including YouTube channels, newsletters, educational platforms, and courses.
She explains how each arm supports the others, creating a synergistic ecosystem that drives growth and innovation.
“My platform company actually came underneath, and it was the media company. And I was like, oh, I think the media company supports my, you know, Main street holding company.”
— [25:06]
Codie's strategic approach ensures that her media presence not only builds her personal brand but also attracts investment, clients, and acquisition opportunities for her holding companies.
Conclusion
In this enlightening episode, Codie Sanchez offers a refreshing take on entrepreneurship, steering away from the high-stakes tech startup narrative and focusing on sustainable, profitable "boring businesses." Her emphasis on attention as a pivotal lever in today's economy, combined with her practical advice on acquiring and scaling small businesses, provides listeners with actionable insights to build lasting wealth. Codie's journey from a corporate finance professional to a media mogul and business owner exemplifies the power of contrarian thinking in achieving financial independence and making a meaningful impact.
Notable Quotes
- “I made $37,000 a year working for Vanguard. And that felt like a huge payday, actually.” — Codie Sanchez [01:14]
- “The ability to market 100% it is.” — Codie Sanchez [15:05]
- “The sexier appeal the industry has, the lower the average income is.” — Codie Sanchez [29:00]
- “A gateway drug business is a business that is so simple your grandma can understand it.” — Codie Sanchez [32:13]
- “If you have 8 million people that follow me online, if I have 100 million views a month, 1% of that population's fucking nuts.” — Codie Sanchez [37:55]
Final Thoughts
Codie Sanchez's insights challenge conventional entrepreneurial wisdom, advocating for a model that prioritizes steady cash flow, manageable business operations, and the strategic acquisition of small businesses. Her approach demystifies the path to wealth, making it accessible to a broader audience willing to embrace contrarian strategies. This episode is a must-listen for anyone looking to diversify their business portfolio and build sustainable wealth beyond the high-pressure tech startup scene.