Summary of Episode 204 - Codie Sanchez: "The Richest Guy On Your Street Probably Makes Money Doing This"

In Episode 204 of "Making It with Jon Davids," host Jon Davids engages in a deep and insightful conversation with Codie Sanchez, an investor, best-selling author, and prolific content creator. The discussion delves into Codie's unconventional approach to entrepreneurship, her journey from corporate life to building a diverse portfolio of businesses, and her unique perspective on wealth creation through "boring" Main Street businesses. Below is a detailed summary capturing the key points, discussions, insights, and conclusions from the episode.

1. Introduction to Codie Sanchez's Entrepreneurial Journey

Early Corporate Life and Initial Earnings

Codie Sanchez begins by reflecting on her corporate background, emphasizing that her first significant earnings came from conventional employment rather than entrepreneurial ventures.

• Quote [01:04]: "My first big payday was a paycheck... I made $37,000 a year working for Vanguard and that felt like a huge payday actually."

She acknowledges that she was a seven-figure earner before venturing into entrepreneurship, highlighting the stability and financial security she experienced in her early career.

Transition to Entrepreneurship and Initial Failures

Despite her success in the corporate world, Codie pursued entrepreneurial endeavors alongside her day job, encountering several failures before finding her footing.

• Quote [02:00]: "I bought my first business while I was an employee... I plowed a bunch of money in and realized... I'm just going to spend a lot on them until I found business buying."

She candidly shares her experiences with failed startups, such as "Threads Refined," a fashion styling marketplace that did not align with her interests and lacked profitability.

• Quote [03:13]: "I learned that I do not want to work with fashion influencers very much... eventually we sold part of it, but it definitely didn't make my money back."

2. Building a Media Presence and Contrarian Thinking

Accidental Rise to Media Fame

Codie's entry into content creation was somewhat accidental, driven by a period of stagnation in her private equity career due to the COVID-19 pandemic.

• Quote [05:50]: "I never say that we built a media company by accident... I built a media company through staying up late and bleeding, just like the rest of us."

She started writing newsletters and leveraged Twitter to expand her reach, focusing on simplifying complex business concepts for a broader audience.

Philosophy on Content Creation

Codie emphasizes authenticity and consistency over chasing virality, believing that true value comes from providing unique insights and maintaining a steady output.

• Quote [09:29]: "I had no framework or a format or a goal... Just had a, hey, I'm doing this thing that I think is interesting."

She draws parallels between financial compounding and skill development, advocating for consistent effort to achieve excellence over time.

• Quote [12:21]: "Your skill is a direct reflection of how long you allow consistency and compounding to take effect."

3. The Four Types of Leverage: Attention, Capital, Code, and Labor

Understanding Leverage in Business

Codie introduces the concept of the four types of leverage essential for building and scaling businesses:

1. Labor: The traditional workforce, essential for scaling operations.

2. Capital: Financial resources that enable large-scale investments and growth.

3. Code: Technology and automation that can exponentially increase efficiency.

4. Attention: The newest form of leverage, emphasizing the power of marketing and capturing public interest.

• Quote [12:29]: "Attention is actually going to be even more powerful in some ways because increasingly we're already seeing it."

Attention as the Dominant Leverage

She posits that in the modern digital age, attention has become the most critical form of leverage, surpassing even traditional avenues like capital and code.

• Quote [15:23]: "When I think about attention, I really, really think about 21st century marketing. How can we get more eyeballs on our things?"

Codie argues that mastering marketing and capturing attention is paramount for business success in today's interconnected world.

4. Structuring Contrarian Thinking Inc.

Overview of Contrarian Thinking's Holdings

Codie outlines the structure of her holding company, Contrarian Thinking, which encompasses various subsidiaries focused on different aspects of her business endeavors:

• Contrarian Thinking Capital: A venture capital fund investing in infrastructure for small businesses.

• Main Street Holding Company: Ownership of several small, "boring" businesses such as laundromats, car washes, and service-oriented enterprises.

• Contrarian Thinking Media: Manages all social assets, including YouTube channels, newsletters, educational platforms, and courses.

• Quote [23:08]: "Contrarian Thinking is at the top of our holding company... main street holding company where we own a bunch of these small businesses..."

Platform Company Philosophy

Codie explains how her media company serves as a platform to support her Main Street businesses, attracting investors, clients, and new business opportunities.

• Quote [24:24]: "My platform company actually came underneath and it was the media company... build a venture fund where we invest in companies that are progressing the next evolution of SMB in this country."

5. Investment Focus: Main Street and Boring Businesses

Rationale Behind Investing in Boring Businesses

Codie emphasizes the importance of investing in "boring" Main Street businesses, arguing that they offer stability, recurring revenue, and resilience against technological disruptions.

• Quote [25:41]: "Senior services... because our country has an aging demographic."

She highlights sectors like senior services and drug rehabilitation centers as prime investment opportunities due to demographic trends and societal needs.

Demographics and Market Demand

Codie underscores that the aging population and societal shifts present lucrative opportunities in sectors that are often overlooked in favor of trendy tech ventures.

• Quote [27:47]: "You have to think about the games that you're going to play. If you pick a bad game, you'll never be rich, no matter how smart you are."

High Lifetime Value (LTV) Strategies

She advocates for businesses that can maximize customer lifetime value, making them less susceptible to competition and more profitable in the long run.

• Quote [30:12]: "How high of an LTV a lifetime value can you have for your customers? If my company can make more money with an individual user than somebody else's, then I'm really hard to compete with."

6. The Concept of "Gateway Drug" Businesses

Definition and Purpose

Codie introduces the idea of "gateway drug" businesses—simple, low-overhead businesses that serve as initial steps into entrepreneurship without the high risks associated with startups.

• Quote [32:32]: "A gateway drug business is so simple, your grandma can understand it... you could get into a business, feel solid with your first step and scale from there."

Examples of Gateway Businesses

She cites examples such as vending machine routes, small laundromats, car washes, and other service-oriented businesses that offer recurring revenue with manageable complexity.

Advantages Over Traditional Startups

Gateway businesses provide entrepreneurs with hands-on experience in managing operations, understanding P&L statements, and performing acquisitions, setting a solid foundation for future ventures.

• Quote [35:08]: "You might buy a laundromat, a rural car wash, a vending machine route... that you can get your hands wrapped around running a business."

7. Responding to Criticism and Pushback

Dealing with Online Hate and Gatekeepers

Codie acknowledges that with a large online presence comes negativity, often from individuals who feel threatened or envious of her success.

• Quote [38:44]: "If I have 8 million people that follow me online, if I have 100 million views a month, 1% of that population's nuts."

She categorizes critics into three groups: negative mirrors, gatekeepers, and skeptical individuals, explaining each group's motivations and reasons for opposition.

Envy and Jealousy from Peers

Codie discusses how peers, especially those from elite backgrounds, may resent her straightforward approach to wealth creation through simple businesses.

• Quote [43:15]: "If you're a Harvard grad, ... how dare you? ... The best business school is being in business."

Maintaining Focus Amidst Criticism

Despite the pushback, Codie remains steadfast in her mission to democratize wealth through ownership of Main Street businesses, viewing criticism as a reflection of others' insecurities.

8. Key Takeaways and Final Thoughts

Redefining Wealth Through Ownership

Codie Sanchez advocates for a paradigm shift in how individuals approach wealth creation, emphasizing ownership of stable, recurring revenue businesses over chasing high-risk, high-reward startups.

• Quote [45:01]: "I hope that I run into people on the street that tell me that they bought something and that that business that they bought is something that changed the trajectory of their lives."

Empowering Individuals with Practical Steps

She encourages everyone to learn deal-making, negotiate for ownership or profit-sharing arrangements, and consider acquiring existing businesses as viable paths to financial independence.

• Quote [38:00]: "Don't just learn about budgeting and stock market investing. Instead, learn about the thing that actually makes more money than anything else, which is real ownership."

Community and Education

Through her holding company and educational platforms, Codie seeks to create a community of informed entrepreneurs who can collectively contribute to a dynamic and prosperous economy rooted in Main Street business ownership.

Conclusion

Episode 204 offers a comprehensive look into Codie Sanchez's philosophy on entrepreneurship, wealth creation, and the importance of investing in "boring" Main Street businesses. Her contrarian approach challenges traditional notions of success, advocating for stability, recurring revenue, and ownership as the cornerstones of lasting wealth. Through her personal experiences, strategic insights, and unwavering commitment to democratizing wealth, Codie provides a roadmap for aspiring entrepreneurs seeking alternative paths to financial freedom.

Notable Quotes:

• Cody Sanchez [01:04]: "My first big payday was a paycheck... I made $37,000 a year working for Vanguard and that felt like a huge payday actually."

• Cody Sanchez [02:00]: "I bought my first business while I was an employee... I'm just going to spend a lot on them until I found business buying."

• Cody Sanchez [12:21]: "Your skill is a direct reflection of how long you allow consistency and compounding to take effect."

• Jon Davids [09:19]: "So when you were penning post, did you have any tingles like this might be something, or was it literally just like you put it out, like every other piece of content and it just hit."

• Cody Sanchez [15:58]: "There's a formula in engineering which talks about how your top stack engineers can be not 1x, not 10x but 100, 900x more valuable to you than your average engineer."

• Cody Sanchez [38:44]: "If I have 8 million people that follow me online, if I have 100 million views a month, 1% of that population's nuts."

This episode serves as a valuable resource for entrepreneurs, investors, and anyone interested in alternative paths to financial success, offering actionable insights and a refreshing perspective on what it means to "make it" in today's economy.