← Office Hours with Arthur Brooks
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- [00:00]
A
Today I'm super excited because I get to talk to my friend and somebody who shares my values of bringing a better life to more people very deeply. This is Cody Sanchez, the founder and CEO of Contrarian Thinking, and she has a mission of creating 1 million business owners. How did you wind up doing this thing?
- [00:18]
B
I don't know if you've ever had like a moment in your life where you were doing something and then you look down the hallway and you see who the person is that you would be in 10 years and you hate them. I believe very deeply that ownership is like the key to all freedom. And so, like in our belief, it's not that ownership of a business, it's ownership of your life, your decisions, the next moves you make in determining you're not the victim. You know, life doesn't happen to you, it happens in general. And you have the ability to assert your will too. And so we believe really deeply that ownership is a key to happiness.
- [00:56]
A
Foreign. Welcome to Office Hours. I'm Arthur Brooks. I'm delighted to have you with me as every week. This is a show about the pursuit of happiness. This is a show about finding more love and happiness in your life and bringing it to the lives of other people. I'm a behavioral scientist dedicated to lifting people up and bringing them together in bonds of happiness and love, using science and ideas. Once in a while, I get to meet and talk to some of the people I admire the most who share this vision of what a better life looks like. And that's a perfect example today. Now, before we start, as always, make sure that you're writing to me and telling me what you think of the show, what you'd like to hear, the kind of questions you'd like to ask. And the way to do that is by writing to officehoursothorbrooks.com or any place where you're watching this. Put in the comments section. We're looking at that. Even if you have a criticism that's even not completely nice, I promise you that it's useful for us to look at those comments as well, like and subscribe. Make sure the algorithm gods love us and do suggest this show to 3 or 4 million of your closest friends. Thanks again for watching the show and spending time with us today. I'm super excited because I get to talk to my friend and somebody who shares my values of bringing a better life to more people very deeply. This is Cody Sanchez, the founder and CEO of Contrarian Thinking. You know Cody Sanchez, he has a huge footprint on the on the interwebs all over social media. It's really extraordinary. Contrarian Thinking is one of the fastest growing financial media businesses in the world. And she has a mission of creating 1 million business owners. That's an extraordinary mission. Why? Because the mission is not to make $1 billion, is to create 1 million business owners. And we're going to find out where she is in that mission, how it's going and why. That's the mission. Among other things. She's also the founder of Contrarian Thinking Capital, which is a venture capital firm that focuses on investing in technology for smaller businesses. So this is not the trying to create the next huge thing, find the, the sexiest googa out there, you know, this is really about the. The businesses that are the backbone of economies all over the world and making sure that the people who want to run those businesses have proper technology behind them. That's what this venture capital business is all about. And the philosophy behind that, of course, is interesting. And I want to talk about that. Hey, friends, a lot of you know that I keep a very high protein diet. That's important for me in my 60s because I want to maintain a good level of muscle protein synthesis. And I don't always have time to eat as much protein as I want from whole foods. That's the ideal, but it's just not manageable all the time. For that reason, I'm always looking for supplements that can actually get me where I need to go. With respect to my macronutrient profile. A bunch of my friends were telling me that David protein is a really good source. The reason is because protein bars in general, they're handy, they're convenient, but they can be very high in calories and they can actually be really high in carbohydrate, especially in the form of sugar. David protein, I heard, was better. And sure enough, it's got a great profile. It has 40% more protein and 57% fewer calories than most of the protein bars you find out there. 28 grams of protein, 150 calories, 0 grams of sugar. That's actually quite a feat to put that together. And by the way, they taste great. I started buying David protein bars and now I'm pleased that they're sponsoring this show as well. So whether you're on the go or hitting the gym, if you're trying to meet your protein targets, David protein is a good way for you to do it. That's why I'm doing it. And it's what I'm carrying when I'm on The road. So head over to davidprotein.com Arthur, they got a special offer for you. If you buy four cartons, they'll give you the fifth carton for free. You're going to love that. And you can also find David Protein in store stores by looking for the store locator. So enjoy. Welcome Cody.
- [04:51]
B
Thanks for having me.
- [04:52]
A
I'm so happy that you're with me today. Oh yeah, I mean it's like I should, I should have mentioned actually in the introduction here that you're also a best selling author. Congratulations, Main Street Millionaire. Those of you who haven't read Main Street Millionaire, I love it. Everybody who reads it loves it. It's practical, it's interesting, it's philosophical. It's actually very touching too. And that was your first big book, right?
- [05:12]
B
Yeah, thank you. Yeah, it was my first, my only book. Although I'm working on my second just, you know, self flagellation.
- [05:18]
A
You gotta do that. And what happens is you think for five or six years about your first book and it hits the list. And then of course, the first thing that your publisher says is, what's the next book? And so you get like six months to think about the second book. And that's what leads. When I was running aei, I was the president of this think tank and scholars would have what's called the second book curse because you only get about a tenth as much time to do your second book as your first book. So if your first book is successful, the second book is going to suffer. So make sure they don't force you to turn it in too early. What's your sec, what's your next book about?
- [05:49]
B
Well, it's kind of, it's a continuation. The good part is we've been studying two things for a long time. Ten years, building businesses. I'm sorry, buying businesses. And then we've started studying entrepreneurs who build businesses over the past five years and teaching them how to build a business. What happens is, you know, now we've taught 14,000 people how to buy businesses. So I always say congratulations and I'm sorry because now you have a business, right? And so I realized, well, we got to help them. So the second that you buy a business, now you're the owner, now you're in charge, now the buck stops with you. What's going to happen next? And our goal wasn't just that they buy any business, it's that they buy enduring, profitable and consistent businesses. So those are businesses that last through.
- [06:28]
A
The test of time, which is usually businesses that you've often talked about boring businesses.
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B
That's right.
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A
Which are not boring at all.
- [06:34]
B
Yeah, I don't think so. I don't think so. So it's sort of tongue in cheek. But this next book is really like, I think and we'll see if, if I'm right. But what we've been able to test thus far in our little laboratory, that is where we consult and advise people on building businesses, we're able to test and see why some businesses fail. And it's really important because 90% of all businesses fail. Right. And most businesses.
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A
90%.
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B
90% within a 10 year period.
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A
Yeah, yeah.
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B
And the only businesses that really don't fail at that degree are kind of fascinating actually. They're franchises. And at first I thought, huh, why? Because I don't want to like run a McDonald's franchise. But there's really three reasons. One, they have screening mechanisms for who can own them or not. Right. So they immediately see up front, like, how serious are you? Do you actually want to do this? But two is the most important, which is they have operating systems. So like a franchise gives you non MVP business, a real business that has the Lindy effect, so historically has worked, has a high likelihood of continuing to work. And then systems that you don't get to just like pick and choose, they say, no, no, no, this is like how we make a cheeseburger. And so your guess factor kind of goes away. And then the third component is continual oversight. And so, you know, having somebody to say, we all know you've had an SOP or a training manual or you have a program from your gym trainer on what to do. It doesn't mean you're going to do it unless they're there with you.
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A
Right.
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B
And so we're trying to figure out like can we actually meaningfully.
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A
And you do those things without being part of a franchise system.
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B
Bingo.
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A
You're going to basically outsource the franchise part or the oversight, the ownership control, all of that. And the screening.
- [08:19]
B
Yeah. And most franchises, the average franchise cost is $140,000 to $2.3 million to start. It's a lot of money. And so they better succeed more often because you're paying a lot for that. Right. And so my point is like, what if we just wipe that and there's no cost involved? It's a, it's a book. We just tell you how to do it and then maybe we have training for you to do it on top of it.
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A
So that's what the book is, is actually how to be like a franchisee without being part of a franchise.
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B
Yeah. Without a boss.
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A
Cool.
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B
Yeah, that's the idea.
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A
What was the secret to the success, do you think of. Well, first, in a nutshell, describe Main Street Millionaire for the audience. And what was it? Why was that so successful, do you think?
- [08:55]
B
Well, the book is simply this. How do ordinary people buy normal businesses and have extraordinary results? And we determine results as you continue to make money over time, which actually is extraordinary. And so it's a manual for how to take Wall Street's private equity program and apply it to Main street to all of us. And I think it was successful maybe for three reasons. One is we got really lucky with an uptick of. I think in this, you know, day and age in this country, people are a little bit of. They're tired of the system that they were told to follow that didn't actually lead to the things that they wanted. Right. They went to school, they spent all this money. They were supposed to get a job. Wages have relatively stagnated. And, you know, and. And increasingly, I think they wanted something more. And so there was this desire for ownership, because ownership's hard, so people have to desire to do a hard thing. And then the second reason I think it succeeded is it's very practical. To your point, I've always been a believer in, like, okay, tell me the theory. Tell me why. So I buy into your idea. Tell me why I should listen to you at all, and then give me what, okay, fine, what am I going to do about it? We're just going to sit here saying, you know, be like, you know, the French smoking cigarettes, you know, on the river and talking about how nothing matters, like, no, tell me how to fix my life. And so it was the same thing with. With this book. Like, tell me how to actually buy a business. Don't just tell me why. It's a great opportunity. And so I did, and it's very straightforward. And then the third is, it's riddled with, like, frameworks and stories and case studies, because I think you learn the best through story, and you learn the best through frameworks. Like, you can we call it, Name it and frame it. So, you know, here's the 1051 method. You have to talk to these 10 business owners to get to one potential prospect. And so you could just kind of.
- [10:38]
A
Remember these things, these rules of thumb.
- [10:41]
B
Exactly.
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A
Yeah. Yeah, for sure. And they're empirically sound.
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B
Right.
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A
You have the backing behind why this stuff actually works. Yeah, it was a big bestseller, and it really helped A lot of people. And, and, and that's great. And this really leads to. The next question that I have is how did you wind up doing this thing? I mean, it's, it's. I mean, you have a very elite background. I mean, you have a very elite, not just educational background, but you worked for some of the biggest financial firms. You work for Goldman Sachs. I mean, you're, you're, you know, the. This is not what you'd expect somebody in your line of work to do is to be a huge social media influencer, to get people to do things that seem incredibly ordinary so they can lead better lives. Walk me through college till now. That led you to this apostolic mission.
- [11:25]
B
Yeah, well, you know, I started as a journalist, so I actually covered human trafficking and drug smuggling along the US Mexico border for many years. And I did it when I was in college and then right at the end of college. And it was fascinating because all of these, you know, young women that I was covering, it was in Ciudad Juarez, so it was called Las Disaparacidas. This, like, I'm sure you're familiar with it.
- [11:49]
A
Like the disappeared.
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B
Yeah. Have you been to Juarez? It's called La Ciudad de Muerte. And if you were to cross the Rio Grande, the river there, and go over from El Paso to Juarez, you would see a bunch of wooden crosses covered in pink ribbons. And every one of those ribbons represents a murdered woman in Juarez. And it's been going on for decades. And they can't really figure out who's murdering women and they're mutilated. It's pretty egregious. And I was a journalist covering this, and I, I watched all of this happen. And I thought, my last name's Sanchez, I have long brown hair. I'm a woman of this age group. Like, what's the difference between me and them? Why do these women get murdered, tens of thousands over the course of a few years and really nothing happens, Nothing changes. You know, I would go to the morgue and I would be able to see firsthand we would determine how many women were killed because they were so badly mutilated that they weren't all in one piece. And so it's just a big mystery. It's a big. And now it's less of a mystery. It's a little bit of, like, you know, there's a lot of patriarchal tendencies in that area. There's narco traffic trafficking. There's, you know, a pretty big human trafficking component. And so, so it's kind of like probably the smorgasborg of reasons. But what I realized is I was like, the difference between me and them isn't just that I was American and they're Mexican, there's lots of rich Mexicans. And if somebody had killed one of them on the border, they would have been in trouble. But it was really that I had resources and they didn't. I had money and they didn't. And so at that point I was like, huh, maybe I don't want to be a journalist and just tell the stories about this. Maybe instead I want to figure out, I think in a lot of ways, money is power. And so if you have money, you can just assert your will on the world more. And if you don't, you can't. And this is less true in, like, America, maybe, where it's more of a first world country. But if you have no money in Mexico, you don't have a lot of options. And so that's when I got into finance and I sort of climbed up through the financial ecosystem really to, like, figure out. Because I knew nothing about money, I, like, couldn't have explained to you a 401k. I am not great at math. I don't like any of that. But I climbed up with this idea of like, huh, let's understand this currency that we all seem to speak in this day and age. Did that at Vanguard, and then I did that at Goldman, and then I did at State street, and then I kind of went back to Latin America and built a big business in Latin America at a company called First Trust. And while I was doing all this, I don't know if you've ever had, like, a moment in your life where you were doing something, and then you look down the hallway, like, you know, metaphorically speaking, and you see who the person is that you would be in 10 years. And you hate them and you don't want anything to do with them. And then you're like, I see myself divorced multiple times with, like, an alcohol dependency, worshiping at the altar of money, and I don't want this life. And so I had built my whole life for this one moment and then realized, oh, Lord, this is not actually.
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A
What Most people don't have that moment of lucidity because they'll see, they think they know what the rewards of money and power and honor and admiration actually are. And they won't recognize actually the fruit of that in people who are older than they are. So they'll say they'll see somebody like, my boss is miserable and he's Workaholic, and he drinks too much, he never sees his kids, and he hates his wife, and his wife hates him and all that, but. But if I had his money, it would be completely different.
- [15:14]
B
Oh, that's true.
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A
Yeah.
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B
I wonder what.
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A
Because Mother Nature says that you'll be happy if you get these worldly rewards. Mother Nature doesn't lead you to think that you're going to pay the price. Again, interesting. What we all. What we know. And you and I have talked about this in the past in other venues. These rewards are not bad. But if these are your ultimate goals, you're in trouble. And you're. You're going to be in trouble is what it comes down to. So when you see people who say, I just want to be rich, and being rich is the point, their life's going to be a mess. That's what it comes down to. And you saw it. And most people don't.
- [15:46]
B
No, I saw it firsthand. And, you know, when you first. I think you should chase Your 100k, see what it's like. Like, it's not going to ruin your life to go figure out how to get money first. And I think there's nothing wrong with that. There are things that are true about life that is. It is a little bit easier if you have money. And, like, I have a decent amount of it now, so I know that on high, it's very easy for me to say I could give it all up, but, you know, I don't really want to. And so I think it's okay. Like, go chase your money. At least that's what it was for me. I was like, I'm gonna go chase it. But at a certain point, it's like, goes to that moment, you've got to keep asking yourself, is it enough? And am I going in the right direction? And when I looked down that hallway and saw those guys in finance, I was like, ooh, this is not it. And so I took a little pause and did my version of your little pilgrimage, which I think was just like six months off, kind of hanging by the beach, unsure of what to do next.
- [16:36]
A
Did you really?
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B
Yeah. And started writing. And that was it. I started writing a substack and the newsletter. The first one was about how I thought, like, the world was kind of losing the ability for us to question things. I was like, why is it we're not allowed to question things? This was right during COVID And so I was like, we're losing our minds. Like, we should question everything on all sides always. That's what we do as journalists, why wouldn't we keep doing that? And, and so anyway, I never was on the Internet before. I had no interest in being public. I'm relatively uninterested in fame, although it certainly can tempt me sometimes. And. But in that writing, I realized, like, oh, I. This feels good. I can help people and I can talk to them about things. And I know some stuff about money. And so, you know, when you find that thing that you kind of. It's your unfair advantage. I'm pretty good at diving into a subject, figuring out some things about it, explaining it to other people. I was like, wow, if you can find the thing that you're really uniquely good at and then share it with the world, then, then that's a fun way to make money. And so that's what I found. And that first little newsletter led to this media company, Contrarian Thinking that's what I called it back then. But before then, all I did was buy businesses, build asset management companies, and think that one day I wanted to build the next. You know, KKR or Carlisle Group, the next big private equity fund.
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A
And you actually found your own mission. How do you, how do you describe your mission statement today?
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B
Yeah, well, we have, we have two mission statements today. And the main one is that I want to create 1 million financially free humans. And I think the best way to get financially free is ownership. I also think it's the right way. Like, you don't want to just win a lottery ticket, you want to earn it.
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A
That's the what part. Now we're getting to the why part.
- [18:18]
B
And the second part of the mission is that I believe very deeply that ownership is like the key to all freedom. And so, like, in. In our belief, it's not that ownership of a business, it's ownership of your life, your decisions. You know, the, the next moves you make in determining you're not the victim. You know, life doesn't happen to you, it happens in general. And you have the ability to assert your will, too. And so we believe really deeply that ownership is a key to happiness. And I don't mean ownership by saying control. And anybody who's been an owner knows you are not in control. As an owner, you are the janitor and you're the CEO at all times. And it's very perplexing, but if you can own a piece of a house, you don't burn it down, right? You build it. And I think in this country, if you see the statistics, we've gone from 80% ownership of businesses in this country to when we started to less than 10 or 6% today, depending on how you track the metrics. And my thesis is that that is a key reason why so many of us also feel disenfranchised. We don't, we don't feel like we're really part of anything anymore, and we're not responsible for anything anymore. And there are very few people who own a lot of everything and the rest of us kind of rent. And I don't mean that you have to own a business entirely. And this is my last little rant. I think you can own part of it because you want to plant something and see it grow. And this comes up with your idea of capitalism and progress. I think when you own a little something, you want to see it grow. You don't get mad that somebody else owns it and they don't pay you enough from it. And so that's our thesis.
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A
Yeah, good. And I'll get back to the thesis here in a second. I want to make one distinction when you're talking about accumulating, accumulating some money, such that you can have some ownership, such that you can actually live a life that can be happier. There's a bunch of links in that chain, to be sure, and I want to dig into that. But money isn't all money. You emphasize earning it a lot. Super important, super important. Morally super important with respect to the behavioral implications. So dig into that a little bit, because a lot of people, they want to go to Vegas, right? They play the lotto, they hope to inherit. All those things have something in common. In my work, it's really clear that if your, your income is unearned, it will actually be a problem for you. That unearned money creates problems in people's lives.
- [20:43]
B
Oh, I've seen it firsthand.
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A
Yeah, so. So talk about that a little bit more about the importance of earning it and how in the context of what you're trying to do, to set people up in businesses.
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B
What we found. So there was a young man actually who came to one of our advisory groups and wanted to grow his business and we turned him down. And the reason why we turned him down is because he did an online stock trading business. And this was like day trading education business. And I just said it's not morally aligned with what we do here. And so I wish you well, and no judgment, but like, that's not a type of business that I actually think is good for society or works speculation.
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A
Which has too much to do with gambling, which is Too much to do with like, Vegas.
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B
Exactly.
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A
That's your point, right?
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B
That's exactly right. And so, and what was fat? But I've stayed close with the young man. He's actually a man of faith. He's Christian. He's a lovely guy, actually, and, but, and very talented. But he had got caught up into what a lot of young people I think hear today, which is, give me the Rolls Royce, the Lambo, the exterior thing, make people think that I'm somebody special and then I will feel a certain special. And, and through his career, I watched him go from this to Airbnb arbitrage to now selling a sales program, crypto mining, basically. And I watched it and through each phase and now he's kind of removed himself slightly from it. But he would continue to say, well, I can't figure this out and it's not working. And I would say, well, when you don't understand the foundation on which you've laid your house, you're going to be constantly confused when the sand shifts and you think that it's built on cinder blocks. You cannot, you could build a high rise on sand and it will fall eventually. And so until you get right with the why of why you're doing things and with who you're serving as opposed to how you make money, you probably will continue to have this problem. And maybe not. There are plenty of very, very wealthy people that do things that are speculative and scam like and whatever. But he was such a perfect instance of, I think, what happens to the youth, which is like, if you play short term games, you're going to have short term pain and if you play long term games, you're going to have long term gain.
- [22:41]
A
Yeah, so that's important because, you know, we can all come up with somebody who had a kind of a scammy business and turn it into a billion dollars. But the truth of the matter is actually quite the contrary. If at empirically, people who make good money are people who do good things, people who create serious businesses that create real value in the lives of other people. Not like, I got a new way to do a little to arbitrage, you know, 100th of one penny across every trade or, or, or, or mining the crypto in a brand new way. On the contrary, they're doing something that people actually need. They're, they're thinking. It's funny, I have this friend for years and years still friend, and he did this thing, he leases mainframe computers and he made huge money leasing mainframe computers. And I Thought, I wouldn't want to do that. Why do you do that? And I got to know him a little bit better, and I realized that he would lay awake at night thinking, what does my client need? What does my client need? What's actually keeping my. What's keeping up my client right now about his computing capacity? And the whole point was he wanted to create value in the life of somebody else as opposed to trying to make money. And that's behind your philosophy, right? That's the reason that you're helping people set up businesses that are just. They're not sexy necessarily. What they do is they. And this gives people joy to serve other people.
- [23:59]
B
You're exactly right. I mean, there's actually. It's something kind of fascinating. It's called the Songhurst Matrix. And basically there's data to suggest that the sexier a career, for instance, the lower the amount of money that you make and the unsexier the career, the more money you make on average. And I think it was Scott Compensating.
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A
Wage Differentials by Adam Smith in the Wolf of Nations.
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B
There you go. Yeah. And so. So Scott Galloway had an incredible quote that I'm going to steal, which is, he explained it as we called it the Boring Sexy Matrix. Before I knew there was something that actually existed in the world already called this. All ideas are obviously stolen in some way, shape or form. We had actually tracked it in our businesses. So if you can imagine, we analyze a couple thousand businesses a year and then determine, should we invest in this, should we not invest in this? And then we review, did we miss anything, how much money would we have made, etc. And what we found over time is those companies that we passed on, where the companies were really, really sexy, on average, they didn't make a lot of money. And the companies that actually paid us consistently over time were the more boring businesses. And so it was literally our internal tool for tracking the data, which now is backed by this thing called the Songhurst Matrix, which had already existed previously. And Scott gave this incredible line. He goes, when you think about your profession and you think about what you want to do next, and you chase after the shiny object. I want you to think about the fact that most actors and actresses inside of the SAG AFTRA union in Hollywood, more than 67% of them, cannot actually afford to pay even the insurance premiums on the insurance to stay in the union.
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A
Yeah.
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B
So what does that mean? It means that actors and actresses, a few of them make a lot of money. Most of them have to have two or three jobs in order to have the, you know, blessing of that potential profession. But how many electricians are doing that as a side hustle? Because they love it? No, no, no, that's their full time job. They make all their money from it. Same thing with people in finance, because those professions, they actually pay quite well because it's not just for prestige.
- [25:54]
A
Yeah, no, it's interesting. So among musicians, which is mild career all the way through my 20s, 90% of musicians are either unemployed or underemployed. Professional musicians who call themselves musicians. And you're in Los Angeles, for example, and you have a waiter or a waitress is probably an actor.
- [26:11]
B
100%.
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A
That's what it's coming down to. And it's pretty interesting because even the ones who are really successful, and you and I both have friends who are really famous people in Hollywood, for example, who do you think is happier? That movie star or your electrician? Who do you think has a better family life? Who do you think actually has a better kind of balance between the activities in life? And it's a question that almost answers itself, doesn't it? So the compensation that you're talking about is not just financial, it's not just pecuniary, it's actually financial and lifestyle and happiness and love and relationships and a lot of other stuff. There's a lot to be said for doing a boring thing. And boring in the eyes of the world, by the way, when you talk to an electrician, not boring, very.
- [26:53]
B
You know, they think it's fascinating.
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A
Oh yeah. Because. Because it sort of is when they describe it to you.
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B
Yeah. You know, and I mean, we know many, many. I mean, in the boardroom where, where we train people how to, to grow their businesses. You know, most of the businesses that are doing, let's call it $10 million or more in revenue are home services or professional services businesses. They are not recreating a wheel. They are not coming up with the next Snapchat or, you know, or, you know, Palantir or Andrew. These businesses have already existed. There is a ton of competition. Other people want to play the game and yet they are making tens of millions of dollars a year doing it. And is it easy? No. Like. But the optimizing that you have to do on a plumbing company, I mean, think about it for a second. How many plumbing companies can you name? I mean, I can't name one nationwide plumbing company.
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A
Right.
- [27:41]
B
As opposed to. If you go to that space and you start creating a real brand and you compete. Because I Don't know. You pick up the phone and you show up on time and you and your staff look clean and put together and you price appropriately and you market, you can compete in this space. And so one of the most incredible parts about entrepreneurship in this country right now, I think, is that the bar is actually so low for you to win. It's so low. There's more people than ever now competing in entrepreneurship. You know, basically 19x the number of businesses created this year than 2020. And yet most people do not follow through. They do not continue to compete. And the reason that most businesses fail is the founders give up. And so they're right.
- [28:25]
A
Yeah, that's the number one reason for the failure of small businesses is that people walk away from them.
- [28:30]
B
Well, technically, the number one reason is they run out of cash. So number one reason is cash. The number two reason is the founders give up. The number three reason is typically product market fit. This is based on SBA data.
- [28:44]
A
So this is really important because this is basically what your business is doing is solving those problems for them.
- [28:49]
B
Exactly.
- [28:50]
A
Is making sure that there is a market fit, that you're screening them to make sure that they have the requisite skills, et cetera, et cetera.
- [28:57]
B
Right, yeah. That they actually. It's similar to your work in some ways. Like, do you actually want to do this thing? Is a really important question to ask the founder. You know, when we analyze all of these companies, the most important thing is really never the idea. The idea is kind of important. The important thing is, like, what hard, ridiculous things have you done in the past that lead me to believe you're going to continue doing this?
- [29:17]
A
Would you want to do this thing on your worst day? The number one predictor of CEO demise. And CEOs on average in Fortune 500 companies, they, they have a 25% fire rate within the first 24 months. It's a dangerous job. I mean, this is like you're cannon fodder. If you're a CEO for one of these companies, the number one predictor of getting fired, you know what it is? Not liking their job. Everybody wants to be CEO. Nobody wants to do CEO. You know, the being and doing are very different when it comes down to it, but it's exactly the same principle. You know the number one and two emotions that a brand new CEO actually experiences in the first 24 months of the job? Loneliness and anger. Yeah, I believe that for sure. And you're a CEO. And, and, and I've been a CEO too. I was a CEO for this is how we met. Because you were involved with the American Enterprise Institute where I was president. And the first two years there was, it was hell on wheels, man. It was just like I was lonely because, you know, my friends were the people I used to work with and now I was signing their checks and nobody wants to hang out with the boss. And anger because I didn't, you know, it's to your point. You don't have any control. You know, I had 310 bosses. You know, I was at the bottom box on an enormous org chart, all alone in that bottom box. And so the whole point is, you better love it. You better love it. You better find it intrinsically rewarding. If you're doing it for the money, you're not going to be into you. You're not going to. And so the same thing is true for entrepreneurs and business, small business owners, as it is for CEOs of big companies. This is a truism, right?
- [30:44]
B
Very much so. I mean, we even. Mark. So you met my, my president here and I'm still the CEO of the company, but he really runs a lot of the day to day ops. He. And we can tell how bad the day has been by how ruffled Mark's hair gets by the way. Yeah. Because it really.
- [31:01]
A
Yeah. He's gotta be like me or your husband. It's like make sure you can't. There's no, there's no hair.
- [31:07]
B
So I don't know how we'd be able to tell with you. Just general aura, your vibe, it's like. Yeah, but you know, it is an impossibly difficult job, except that if you do it and you like it, it's so worth it. And then it'll be impossible to go back. And you know, I think the other thing with entrepreneurship is that everybody should try it once in their lives. I think. I think you talk about living life as an adventure. I have. There's this quote by Emma Bombeck that I love. And she said, when I stand before God at the end of my days, I hope to be able to say I'm rung dry. I have not one drop left of what you gave me. And I think about that every day. And when I am at the end of the day actually feeling wrung dry, like I have nothing left to give. I remember. That's the point. And so what would it be like if I could? And I don't mean just even with work, just with like my capacity, what am I, what am I capable of? What's, what's in here? And having this, like, curiosity about putting that out into the world. Not because it really matters, not because anybody's gonna remember me, not because I need to win, but just to, like, see.
- [32:10]
A
Yeah, well, I mean. And this actually speaks to, you know, the next big topic I really want to talk about here, which is your philosophy, because you've got a philosophy. This is not just an operational business where you're, you know, checking boxes and, and, and looking at systems and the contrary. This is underlying. This is a view of life that you have. And it's so interesting to me because, you know, as a guy who studies happiness and teaches happiness classes, you actually have happiness principles. Now. Now we've sort of established the fact that, you know, what's. What's money all about? Earned money all about. It gives you ownership. What's ownership all about? That's what leads you to be able to have a happier life. That's very philosophical. So in what you've written and said, happiness requires three things. These aren't necessarily the macronutrients of happiness, but these are requirements. Necessary. Potentially insufficient, but necessary. Number one is progress. Number two is freedom, and number three is ownership. So I want to talk about these things because these. Each one of these things has a whole library of neuroscience and behavioral science behind it. And so we can talk about this. And all of this is super solid and really, really great. So let's first talk about progress, because this is weird. This is not what a lot of people understand. They think happiness actually comes from arrival. They think it comes from outcomes, not. Not processes and what we know. I teach at a business school. One of the things that we teach our business school students is the biggest predictor of your success is not your outcomes, it's your processes. Set your outcomes that you want and then forget them and. And focus on. On processes. Okay, now that suggests nothing about happiness. Your philosophy, however, says that that's not just the secret to success, it's also the secret to happiness. Tell me more about why progress is so important.
- [33:55]
B
Yeah, well, I. You know, one line that stood out to me, I think it was from a fellow by the name of Brad Jacobs who wrote a book called how to Make a Few Billion Dollars, which I always thought was a funny little word to throw in there. And. But he said a line. He said, one of my favorite mentors told me, every time you find a problem in business, that's where the profit is. And Brad, if you've ever met him, is like a very happy billionaire. Weird, because most billionaires I've Met. They're tortured in a lot of ways.
- [34:23]
A
Well, they're chasing. They're chasing because when they get their first billion, the first thing they think is, I didn't feel the way I thought I was going to feel. So I guess they needed another billion.
- [34:32]
B
Yeah, exactly. Well. And that's how I think you feel with a million or a hundred thousand.
- [34:36]
A
Well, that's how you feel with anything when you have this fallacy of arrival, which speaks to your point. Yeah.
- [34:41]
B
And so I, you know, when I saw him, I thought, this is a. He's just. He loves the game. And so this idea of progress probably comes from a mixture of when I find difficulty in anything we do in life, I tend to find that really interesting.
- [34:55]
A
Yeah.
- [34:56]
B
And, you know, I think my husband and I have a shared philosophy on this too, which is he always says to me, when I don't want to do something, are you a good white shark or are you a great white shark? And I find that very annoying. And simultaneously, he's right, because we have this idea of like, who are you going to be in life? Once you declare who you want to be, what would be the actions of the person that you want to be, be? And so if I want to be somebody who wins over time, if I want to grow in my business or life, that means that I'd probably have to, like, keep my word to myself. I'd probably have to treat my body well. I'd probably have to move forward in my life. And all of those things are not about arriving. They're about little decisions you do every day that make you feel better. And so the idea of progress, I think we have found, at least in our lives, that the more you are moving towards a goal that excites you, the happier you are. And he has this line, he always tells me, which is, what do you need in life? Somebody to love, something to do, and something to look forward to. And that's kind of how we live our life. So a lot of times when we're not in flow and we're not progressing, we'll say, well, do you have somebody to love? Like, yes, we do. You know, do you have something to do? Yeah, we do. Do you have something to look forward to? And in that moment, that's often the one that's missing. It might be like, oh, no. We feel like we're on an endless grind. You know, there's just. They're just hamster wheeling. So I'd be like, okay, let's break that down. What, what would you like to look forward to in life. And so that idea of progress is interesting and probably a little scary sometimes to think what would it look like if you didn't progress? And so you have to be careful about that.
- [36:28]
A
Well, and we, we actually sort of know. So there's a really interesting statistic in the, in the, in the book literature on weight loss, right. And it depends on what study you're looking at. Somewhere between 80 and 95% of diets are unsuccessful. Now, what they all diets have in common is they all work like you can do almost any diet and you'll lose weight. If this is your goal is to lose weight. The problem is that within one year, usually is how it's measured is within one year you gain all of the weight back and more between 80 and 95%. And this is just this triumph of hope is that people keep doing this and it's a 40 billion industry that fails all the time. And there's nothing else that exactly that works this way. Now here's the interesting thing about it. Diets are unbelievably rewarding because they're all about progress. And you will absolutely, delightedly not eat things that you like when the scale is going down. The reason they fail is because you arrive. And when you arrive, your reward for hitting your goal is never getting to eat what you like ever again for the rest of your life. Congratulations, you've arrived. Now you cannot make progress and not eat what you like. Isn't that just wonderful? This is one of the reasons that 30% of people on serious weight loss programs wind up with an eating disorder. The reason is because they keep going because they want to stay happy. They keep losing weight even though they shouldn't. And they get unhealthier because losing weight, per se, feels like progress. This is an example of the principle you. In life, we need to be doing healthy things that bring progress, and we need to love playing more than we love winning. That's what great athletes have in common, by the way. They love playing even more than they love winning. And that's what you're talking about in business too, right?
- [38:11]
B
A hundred percent, you know, and even I think whenever, whenever we like, lose the goalpost and can't figure out where to go next. The problem is usually multitasking. And so, like, even today, one of the new things I'm doing that it probably doesn't sound very, very, very clever at all, but has actually been really impactful for me is just like, when you eat, do you do other things? Like, do you check your phone or do you like read a book or anything? I used to. And it's pretty normal. And you see us in this day and age, you sit at your desk, you have the food, you're looking at your computer, you're scrolling on Instagram and you're eating. And I never really thought about that very much. Instead of doing that, I just don't do anything. And so I eat and I, when I say, you know, you're like a, like a young kid in love for the first time, you're like, and the food tastes better and I'm more, you know, and it's more enjoyable. And so I think in business too, you can get caught in all these multitasking when you're eating, you can get caught in this multitasking and either way you lose the taste. You lose the taste completely for what you're doing because, you know, you feel like you have forward momentum only. And so we like to pair that idea of progress with like, can you really be here right now?
- [39:18]
A
Yeah, that's mindfulness. You're very Buddhist. That's a very Buddhist idea. Of course. And that's hard because, you know, we, we time travel our enormous prefrontal cortex. What it's good at is allowing us to travel between three time zones. The future, the past and the present. The average person spends 20 to 50% of their cycles in the future planning out the future, which is why Homo sapiens rules the world. Because we practice future scenarios, make mistakes, come back to the present and not do that. That's what we're really, really good at, as well as going to the past, seeing what went wrong, understanding it, learning from it, and not going back there again and not replicating that. That's why this supercomputer in the front of our heads, 30% of our brain by weight allows us to do that. And you know, your dog is a wafer thin prefrontal cortex and can't do that. Your dog is incredibly mindful, which is why your dog is happier than you. Right? But your dog is less successful than you. That's okay. So here's the interesting part about that, however, and here's the wrinkle in all that. Entrepreneurs tend to spend up to 80% of their time in the future, which is one of the reasons that entrepreneurs, they tend to be quite successful, but they're often pretty unhappy. How do you square the circle on mindfulness and future oriented things, which is also known as prospection, which you actually need to be a successful entrepreneur? How do you Fix that.
- [40:32]
B
Yeah, well, maybe it is all self serving in some way. Because if you think about your job as a CEO, I do think your job is to look into the future and make sure that you make decisions in order to allow your company to continue to survive. Survival is really the game as the CEO, because most things fail. And if you aren't progressing, you have immediate entropy. Right. So you're either actually growing or you are dying. And yet I've also found there's a point about being a CEO that not enough CEOs talk about, which I believe there's real energy transference in almost everything we do. And so at the end of your and my interaction, you will either leave depleted and a little tired and man kind of wishing I don't see Cody again and like, that was not that great or you'll leave like that was enjoyable. And I learned a few things. And even if I'm tired, ha. I'm thinking I'm feeling right. And as a CEO, I think you have to be really careful only thinking that you have to do the tactic and not also thinking about the feeling. So if you sit in our meetings, which I think is one of the most important things you do as a CEO, is your weekly meeting with your team. The reason why is because that is your one chance to sort of rally the troops. And your job is not to just tell them what to do. It is hopefully to inspire them why they should want to do this thing.
- [41:45]
A
After all, you are the bottom box.
- [41:47]
B
Exactly. And it is this whole. I love that you would know this. If you want to teach your people to build a boat, do not teach them about ropes and hammers, but teach them about yearning for the vast and endless sea.
- [41:59]
A
Oh, nice.
- [42:00]
B
And I think I don't know who that is.
- [42:02]
A
I like it a lot.
- [42:03]
B
I'll have to find the attribution, but I think about that a lot. As a CEO, I think part of our job is really to inspire others. And how can you inspire others if you're thinking of the future, stressed out, worried about this, focused? No, it's because you have to take a pause and go, you guys, like, this is what I know you want deeply. This is where we are. This is what we're going. Making jokes, making them feel seen. And I'm not touchy feely or super nice. So I'm not saying like, you have to be this, like, you know, cheerleader. Yes. At all. Instead, you could just really be in the movie.
- [42:32]
A
That's. That's what Daniel Goldman calls authoritative leadership. Authoritative Leadership is that everything gears to the broader mission, and everybody has a role to play in it. And the CEO's job is to help them understand what that role is in the mission and make them want to run through a wall for that mission.
- [42:47]
B
That's right.
- [42:48]
A
And that's not cheerleading. That's, that's, that's a clear author, not authoritarian, authoritative leadership. And those are the most beloved leaders, whether they're, you know, pleasant all the time or not is what it comes down to. Because, like, do you see a better future? You see your part in it? Are you ready to go?
- [43:04]
B
That's right.
- [43:04]
A
That's the weekly meeting. Right. And that's progress. It gets back to the progress principle.
- [43:09]
B
Right. And I, you know, I was talking with a member of our team yesterday, and I found that there is a bit of a. I don't know if it's generational, I don't know if this is continuous, but I've seen a change in, let's call it the last 10 years. And a lot of people want to say, this is my job. You know, that is their job. I do this, they do that. And they want to sort of stay in their lanes. And, and maybe because we're overworked and overstimulated and are mentally masturbating about things as opposed to actually doing them, we feel overwhelmed. And so we don't want to do more at work. I push back pretty hard on our team. And in my opinion, every time you have the ability to collect a skill, it's a gift. It's a really beautiful gift. And work, if done correctly, shouldn't just be like, monotonous, continuous work that you do. We should find ways to give that to AI and to other things. Instead, we should be in the skill accumulation game. And every time we give an outsourced party or somebody else the ability to learn a skill and not us and our team, it's actually a tragedy because not that many people get to work at companies where you get to learn incredible things that will progress your career and your humanity forward. You know, if you come to a company like contrarian thinking and you learn how to communicate, I don't care if you never work again a day in your life after this. You will use that through your life and you will be better for it. And so I do think the other thing as a leader, how I think about it is like, you know, we've got to inspire people, not just for the vision, but for wanting to do more. And you talk about it as, like, happiness in Some ways is suffering. I think it's the same in business. It's actually like, no, no, no. Take on that extra responsibility, do a little bit more. Because if you do, even if you don't get paid for it, in this moment, you are actually the one reaping all the rewards.
- [44:53]
A
Right, right, right. One last question about progress before we move on to freedom. It's going to get heavier. To make progress, you need to have the right goals. Now, there's a. There's a. You and I speak Spanish, not everybody watching us speak Spanish, but there's this wonderful word in Spanish. There's a navigational term that you use in ordinary life. It's rumbo. Rumbo, which means in English, the word is actually a rum line. R H U m Line. And it's like, it's not a word that we ordinarily use, but what it means is the straight line between where you start and where you're going to wind up. And you have to have rumbo, you have to have. You have to have the goal in mind. That's a very specific thing and the correct thing. Now, not because the navigation is going to be perfect, not because you're not going to get blown off course, not because your trip is going to be in a straight line, but you got to have a straight line between where you start and where you're going to go is what it comes down to. And so had to have a rum line in life is really important. And that requires that you put the pin in the others in the other place in an appropriate way. And that means having the right goals. How do you select the right goals to have appropriate progress? How do you know the right goals?
- [45:57]
B
I think the way you get good at anything in life is practice continuously. And I usually learn things like Charlie Munger always talks about invert, always invert. And so when you're looking for something, instead of looking for what you want, look for what you don't want. And so typically I'm not actually smart enough to always figure out what I do want in life, but I can usually get to the things I don't want. And so my husband and I have a practice every single year and then a couple times throughout the year, and the practice is writing down our goals. I have like a journal going back 15 years and I write down all the things I want and then that year, at the end of the year, so we'll do it in a couple weeks. All the things that I got that year, those things that I achieved, and it's quite comical to see what those were 15 years ago as opposed to now. And I'm sure in 15 years from now, I'll laugh at myself. But I really like this belief of you practice figuring out what a good goal is and a bad goal, and then you write down, did you get it? Did you not? And how did you feel about that? And so, you know, my goals from back when I was first starting in finance were very embarrassing. You know, I at one point wrote down how many pairs of designer shoes I had. I have it listed. We could go back and see, you know, and I thought that was quite the goal.