Episode 543: How She Made $50M Buying Boring Businesses | Codie Sanchez

The Foundr Podcast with Nathan Chan
Host: Nathan Chan, CEO of Foundr Media
Guest: Codie Sanchez
Release Date: December 20, 2024

Introduction

In Episode 543 of The Foundr Podcast with Nathan Chan, host Nathan Chan engages in an in-depth conversation with Codie Sanchez, a prominent figure in the entrepreneurial landscape known for her unconventional approach to business acquisition. The episode delves into Codie's journey from a private equity professional to a successful entrepreneur who has amassed $50 million by purchasing "boring" traditional businesses. Throughout the discussion, Codie shares valuable insights, strategies, and personal anecdotes that illuminate her path to financial freedom and business success.

Codie Sanchez’s Journey into Entrepreneurship

Background and Early Career

Codie begins by sharing her background in finance, highlighting her decade-long tenure at a private equity firm. She candidly discusses the challenges she faced while working a 9-to-5 job she despised, which fueled her desire to carve out a different path.

"I worked in finance forever. I had a corporate job for a long time. I was kind of too much of a wuss to ever leave it."
— Codie Sanchez [01:48]

Transition from Journalism to Finance

Before her foray into finance, Codie was a journalist covering intense subjects like human trafficking and drug smuggling along the US-Mexico border. Her experiences witnessing violence and socio-economic disparities profoundly impacted her worldview and motivated her to seek financial independence.

"The real difference wasn't that I was American, she was Mexican, it was just socioeconomics. It was that I had more money... And I wanna figure out why some people can live quiet lives of misery and why other people can live lives of excess."
— Codie Sanchez [05:50]

Embracing Boring Businesses

Defining "Boring" Businesses

Codie elaborates on her preference for acquiring traditional, less glamorous businesses such as laundromats and car washes. She contrasts these with volatile online ventures, emphasizing the stability and higher success rates inherent in brick-and-mortar operations.

"Startups have a 90% failure rate over any 10-year rolling period... small businesses you buy have a 25% failure rate at the height and a 5% failure rate at the low."
— Codie Sanchez [00:00]

Advantages of Traditional Businesses

She highlights several key advantages:

• Lower Competition: Traditional businesses often face less fierce competition compared to internet-based companies.
• Proven Models: These businesses typically have established product-market fit and diversified customer bases, reducing the risk of failure.
• Cash Flow Stability: Boring businesses usually maintain consistent cash flow, providing a cushion against unexpected challenges.

"Boring businesses are not as competitive as the Internet... When I buy a business, I try to buy businesses where they have enough cash flow in them."
— Codie Sanchez [09:49]

Strategies for Acquiring Businesses

BRRRT Methodology

Codie introduces her BRRRT (Buy, Raise, Rent, Refinance, Repeat) strategy, tailored for acquiring recession-resistant businesses. This approach focuses on purchasing stable businesses, optimizing their operations, and scaling through strategic refinancing.

"We buy boring businesses in recession-resistant asset classes, raise their prices and add technology."
— Codie Sanchez [14:48]

Seller Financing

A pivotal part of Codie's strategy is leveraging seller financing, where the business seller assists in financing the purchase. She explains how this method is prevalent yet underutilized, offering a more accessible route for buyers compared to traditional bank loans.

"60% of all businesses are sold with seller financing... There's really no difference between seller financing and bank financing, except one is normalized and expensive and has an intermediary."
— Codie Sanchez [48:13]

Main Street Millionaire: A Blueprint for Acquisition

Overview of the Book

Codie discusses her book, Main Street Millionaire, which serves as a comprehensive guide for aspiring entrepreneurs looking to acquire and scale traditional businesses. The book demystifies the acquisition process, making it accessible to a broader audience.

"The idea in the book is like, you don't have to come up with a billion-dollar idea to make a billion dollars."
— Codie Sanchez [18:09]

Main Street vs. Wall Street

She contrasts the traditional, community-focused "Main Street" approach with the high-stakes, competitive nature of "Wall Street." Codie advocates for empowering local economies by encouraging individuals to own local businesses, thereby keeping wealth within communities.

"Main Street Millionaire is a way to push back... Why can't we be happy with like our little corner coffee shop?"
— Codie Sanchez [18:35]

Building a Community and Content Strategy

Audience as Leverage

Codie emphasizes the importance of building an engaged audience as a form of leverage, akin to capital or labor. She explains how cultivating a loyal community can amplify business growth and create sustainable success.

"Audience could be an even more powerful form of leverage."
— Codie Sanchez [35:41]

Give vs. Take Philosophy

Her content strategy revolves around providing value without over-relying on monetization early on. Codie prioritizes giving over taking, ensuring that her audience receives substantial value before any sales pitches.

"We try to not be takers but be givers... I took not a single dollar from the audience in the first year."
— Codie Sanchez [42:42]

Niche Focus

By concentrating on a specific niche—buying and scaling boring businesses—Codie has successfully differentiated herself in the crowded media space. This focused approach has enabled her to build a strong, dedicated following.

"I didn't try to be everything to everybody... here's the one thing I think I might be the best in the world at."
— Codie Sanchez [44:00]

Personal Challenges and Decisions

Leaving the Corporate World

Codie recounts the pivotal moment when she chose to leave her private equity firm to pursue her passion for business acquisition and content creation. This decision was driven by her belief in the power of direct communication and building an audience.

"I'm gonna go do my own thing... I don't wanna have anything to do with it anymore."
— Codie Sanchez [35:41]

Overcoming Fear and Embracing Authenticity

She discusses the personal fears and societal expectations that often deter individuals from entrepreneurship. Codie's journey underscores the importance of authenticity and resilience in overcoming these barriers.

"I've always been the type of person to want other people's approval... it was really hard to leave and go retail."
— Codie Sanchez [35:41]

Future Plans and Community Engagement

Main Street Millionaire Book Celebration

Codie reveals upcoming initiatives, including a celebratory event for her book launch, aimed at rewarding and engaging her community. This event underscores her commitment to giving back and fostering a sense of belonging among her audience.

"We're throwing a giant book celebration event... we're going to give away something worth hundreds of dollars to every single person."
— Codie Sanchez [56:04]

Continued Growth and Impact

Looking ahead, Codie is excited about expanding her influence and continuing to empower individuals to take control of their financial destinies through strategic business acquisitions.

"I want the people to be able to celebrate that we got there instead of just like the authors, like, sick."
— Codie Sanchez [56:04]

Conclusion

Episode 543 of The Foundr Podcast offers a compelling exploration of Codie Sanchez’s unconventional yet highly successful approach to entrepreneurship. By focusing on acquiring and scaling traditional businesses, leveraging seller financing, and building a supportive community, Codie has carved out a unique niche that challenges conventional startup paradigms. Her insights provide invaluable guidance for aspiring entrepreneurs seeking financial independence and sustainable business growth.

Notable Quotes:

• "When you don't have money, you can't assert your will on the world. And that's what originally drove me to finance."
  — Codie Sanchez [06:48]

• "All business is really hard, and it's a way to become a better human because it's getting punched in the gut continuously."
  — Codie Sanchez [24:36]

• "Audience could be an even more powerful form of leverage... I'm gonna go do it."
  — Codie Sanchez [35:41]

Resources Mentioned:

• Main Street Millionaire: Codie Sanchez’s book on acquiring and scaling traditional businesses.
• Websites: msmbook.com and codysanchez.com

For more insights and strategies on entrepreneurship, visit foundr.com to join a global community of entrepreneurs and access proven methodologies to fast-track your business growth.