← Tom Bilyeu's Impact Theory
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- [00:00]
Tom Bilyeu
Whether it's a birthday trip, a family reunion, or just a fun getaway, booking a VRBO vacation rental means no worrying about surprises.
- [00:07]
Cody Sanchez
VRBoCare and 247 Life Support have your back if something's off.
- [00:11]
Tom Bilyeu
The Loved by Guest filter helps you find top rated homes. And verified reviews mean real feedback from real VRBO guests so you know exactly what you're booking.
- [00:19]
Cody Sanchez
Honestly, I just booked my VRBO because there was a sweet wine fridge.
- [00:23]
Tom Bilyeu
Hey, we all have our reasons. Don't walk into a surprise if you know you. VRBO terms apply. See vrbo.com trust for details. If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from H VAC and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win.
- [00:52]
Cody Sanchez
Call 1-800-granger.
- [00:53]
Tom Bilyeu
Visit grainger.com or just stop by Granger for the ones who get it done. I'm Tom Bilyeu and this is Impact Theory. Welcome back for part two with Cody Sanchez. I'm going to use a gross word, but so it'll stick in people's heads. They don't know what their God is. And utility is my God. Now, if you are pursuing something stupid, you will pursue the utility of stupid things. But if you're pursuing something honorable and it's the meaning and purpose for your life, how could you be focused on anything other than utility? That's the thing that drives me crazy. Thomas Sowell is he just has one of my favorite quotes and he says the last 30 years have been marked by exchanging what worked with what sounds good. And that is blasphemy in my worldview because you are now abandoning utility, actual usefulness, actually moving in the direction of the thing that you want. And this is why again, I'm just going to beat this drum to death. People need to understand what motivates their reasoning. Everybody's reasoning is motivated. It's motivated towards something. We were looking at the Tucker Carlson thing, postmodernism, motivated by power. So you get to your point. I've never thought about it before, so I certainly reserve the right to change my opinion about anything at any time. But that the brutalism of the structures, which if anybody's never looked up brutalist architecture. It's actually a style of architecture that is brutal.
- [02:31]
Cody Sanchez
Yeah.
- [02:31]
Tom Bilyeu
Heavy concrete, very few windows, nasty Soviet
- [02:35]
Cody Sanchez
sort of eastern block.
- [02:37]
Tom Bilyeu
Gnarly.
- [02:37]
Cody Sanchez
Right?
- [02:39]
Tom Bilyeu
And ironically One of them was just built in la, which there was like a whole huge backlash, which I'm not surprised anyway, and the fluorescent lights and all that. If your assessment is right about why they're doing that, and my assessment is right, that postmodernism really is about power and nothing else, then it becomes a statement of power. We are bigger, better, stronger than you. You work for us, you do as you're told. And that when you force somebody to pull into the light, what drives their thinking? Like, in fact, did you ever see the documentary what is a Woman?
- [03:17]
Cody Sanchez
Yeah.
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Tom Bilyeu
Okay. It fascinating. Glad they did it. However, it would have been more like it becomes just a dunk on the lunacy. And it really did come across as lunacy to me. Yeah, but we could have pulled it back out of lunacy if you just start asking what are the base assumptions that are driving your rationale.
- [03:42]
Cody Sanchez
Yeah.
- [03:42]
Tom Bilyeu
And when you make people state like, this is why I believe that. And one, and this, I learned this in business. So the physics of progress, you come up with a hypothesis about what you would need to do to achieve your goal. Okay, what does a hypothesis do? A hypothesis makes predictions. So when you're talking to somebody, what you want to do is say, okay, the, the things you're saying are the end result of, of a prediction you are making. That's invisible to me because you're not saying it out loud, you're just telling me the outcome. But if I think of that as a prediction, then I'm like, okay, this. For that to be true, the following base assumption has to be true. And so I'll just ask people, okay, because you're saying that the following statement must be true. So for instance, if you want to give puberty blockers to a young child, that makes a prediction that you believe that that self professed identity is the most important thing in their life and that you're even willing to put them through a medical procedure that has some risk of complication and death. Is that accurate? And they're going to say, yes, that's true, or they're going to say, no, that's not accurate. But I believe if you deny them the ability to express their gender through a physiological change, that the rate of suicide goes up. Okay, so the prediction that that makes is that they are more likely to die if they don't do this surgery. Is that accurate? Yes. Okay, cool. That's a testable hypothesis. It makes a prediction. I can now look at the data and find out, is that really true? Now the problem becomes if that's a red herring, and that's not really what's motivating their thinking, then it will all fall apart because I will present them with the data and I actually don't know the answer to that, but let's say just for the sake of argument, that it comes back and no, there actually is an increase in likelihood of suicide post surgery. I'm just. I don't know. That's true. I'm just saying if it were. If in that moment, they go, oh, okay, word. Like what we're seeing in England, where they've. They've now banned the use. Not just Tavistock closing down, they have now banned the use of puberty blockers on minors. Okay. So they look at the data and they change word. I'm here for that. But if somebody looks at the data and then they say, oh, no, no, no, we still need to do it for this reason. And you'll get this all the time with. In business where somebody will say, this is why I couldn't get that thing done. And you're like, okay, well, why didn't you do this? Well, no, that's not really the reason. It was because of this. Okay, why didn't you do that? Well, no, no, no, it's not really that. It's this. I will say you're making me chase you. Don't make me chase you. Just tell me the reason and then we will. And if there's four reasons, give me all four, and then we'll go through them one by one. But this is a knowable set of things, right? The problem is, again, people, they argue with the level of fact. They're just two ships passing in the night. Instead of getting down to what are your base assumptions, what predictions do they make, and do those predictions come true? And if people start thinking through that. So rather than trying to be right or pass judgment, which is what I could feel in that documentary, instead of that, like, it's what I call trapping people in their own values. You just tell me your values and then we'll see. Is the thing you're doing leading to your value or not? And if your value is madness, then. Then we can at least I now know what your value is. Right. Like Hitler, that motherfucker just told everybody what he was going to do. Need somebody to blame. Jews are going to work. They've worked all throughout history. So we're for sure blaming the Jews. And then we're going to take over Russia. Don't tell them yet, but we're going to take it over because we want that to be the new version of what America was, you know, whatever, 75, a hundred years ago, where everybody just flooded into America for opportunity and land. He was like, that's going to be what we do with Russia, is it will be Europe's America. I mean, literally just said this shit. And so he had a value system where it's like the lives of the German people, the Aryan race, whatever words he would have used are superior. Yeah, okay, so that's a pretty ugly prediction that that makes. That also predicts that you're gonna do all the things that he ends up doing. And. But you're now pulling it out into the forefront. Nothing's hidden. Everything's out on the table. And now we can say, do we think that human life is equally valuable or not? And you start getting people saying this stuff and it's like, whoa, now we. You can just follow things out to their natural conclusion and you find the place where it breaks. Because what I, what I'm always encouraging people to do is you need to reflect somebody's beliefs, values back to them in a way that they would recognize so that they wouldn't be like, no, you're twisting my words or whatever. Now it's out on the table. Now you can make progress.
- [08:25]
Cody Sanchez
Yeah, it's really, you know, I think if people want to understand what is happening in the world around them and be able to influence it quickly, efficiently, and without emotion, they should read a book like Statistics for Dummies. Because I actually think a lot of what you're talking about are two things. First is we don't understand statistics, we don't understand probabilities, we don't actually understand how to look at the numbers presented to us in a worldview. And statistics drive business, they drive wealth, they drive the economy. And then the other half is the, the being able to follow the scientific method. So I think X hypothesis, I want to test that hypothesis. Here's how the scientific method works. And those two things we learned in school, but not. Were not the focus of lots of what we did. I recall learning much more calculus than I did statistics. And in fact, statistics do not have to be super deep mathematical learnings. They can be understanding assumptions and how to read the math that is happening behind the scenes. And I think a lot of the reasons why we get sold a bunch of lies is because we don't actually understand statistics and scientific method. So we end up going with what feels good and sounds good as opposed to what actually works. And Thomas Sowell is, is A genius at this for many, many different reasons. But you know, if people haven't read Economic Facts and Fallacies from him incredible book. If people haven't read Statistics for Dummies, good. If you don't have a basis for how to understand when they show you the. You know, I always love that example of sometimes when I go on the news they'll ask me, you know, what is the average xyz? What is the average? And averages really bother me on average because. Because there, it's a really poor way to measure, right? Especially monetarily. It's like what does the average American make? Well, really depends how you determine average because you have a few outliers in there, you have a bar, everybody makes 100k, Bill Gates walks into the bar, all of a sudden the average income goes from 100k to $10 million or whatever that would be. Why is that? It's because you should have used median and not average. And that's not actually mathematically difficult to understand. We could start there. We don't to super complex biology, understanding cryptology and deep understanding of the network state. We could just start with statistics and scientific method as opposed to emotions and narrative. I hear a lot lately that like he who holds the best story wins. And I do think that is true. But the reason that is true is because people don't understand how to poke holes in arguments. And if you really want to win, be rich, be successful, you have to understand is somebody lying to me about something that I can verify one way or another, which would be stacks statistics or scientific method.
- [11:12]
Tom Bilyeu
All right, now let's see if we can agree on why that matters so much. Why does it matter to you?
- [11:19]
Cody Sanchez
Well, let's take it from multiple different angles. One, from a business perspective, every business is a constrained business. Nobody has unlimited resources, right? So if you're just started out starting out and you're doing the a hundred dollar startup method and you don't have much money and you don't know how to make a business work very well, you have very little dollars. So you have to understand statistics to understand where if I put $1, will it be most likely to go out and bring back friends back with me. That's just probabilities and statistics. And so in business everything you're doing, every decision you make is really just a determination of should I do this or this and which one of those is going to make me more money or more opportunity or, or better decision making something. And so business is really just a complex game of statistics that Ends in dollar signs, right? And I think the scientific method is so important because we think about it just in science, but all it is is what you're talking about. It's like turtles all the way down. You know, you're just. You're trying to figure out what lies underneath the things people tell you. So, for instance, in our content business, because I come from finance, I push back really hard on ideas. So they'll say, well, this is. We had this argument the other day, like, words mean things, words mean specific things. And if we don't agree on the definition of a word, we can't actually have a conversation. And so what is a good video? Well, lots of people might have different definitions of good. So I said, okay, at this company, a good video is one that gets the most views. Let's just baseline it. A good video at our company is the one that gets the most views. Is everybody on understanding about that? And we had to debate. They were like, well, what if it's a, you know, this type of video where you're naked or this type of video where somebody's getting shot or, like, something awful? And I go, well, because we have our creed and our values, we would never make that video because we understand our values and beliefs. So because we understand our values and beliefs, then we can decide on a quantitative determination of the word good in the video sense, which means views. Okay, fine. If we don't do that, you have a huge problem, because then you go, well, I think this video is great. I think this video is great. I don't know what to do with that. That's like your personal taste in a video. And taste, as we all know from the fact that when we go out to a restaurant, very seldom do all of us order the exact same thing every single time. Why? Because our taste is different. And so I think a lot of business is getting really definitional. What does taste mean? Ooh, taste is difficult to define. So that is a bad word. Instead, we should use a word like, does it convert? Do I make money off of this thing? If I make money, then it is in taste. With this company, as long as it follows our creed. Does this video get views? If this video gets views, then it is tasteful, according to us. And so a lot of people these days don't like definitions. They want to be really wobbly with them. But that's a huge problem, because then you cannot have a conversation and you cannot agree on what a good outcome or a bad outcome looks like. But I.
- [14:18]
Tom Bilyeu
That's why they do it.
- [14:20]
Cody Sanchez
Yeah, but I. I. Fuck you not Tom. I. The other day, I was like. They're like, can we please stop talking about this? And I was like, no, we have to, like, have a argument about what an individual word means. And we need to do that continuously across the company. And I need you guys to do that individually, because otherwise we all feel good because we're agreeing, but because our foundation is not the same, we're not agreeing at all. But what I found with this generation, again and again, and I fall into it too, because I'm a people pleaser sometimes, is like, nobody wants to have those tough conversations. How silly does it feel about arguing over what is one individual word good? And yet it's so necessary, right?
- [15:02]
Tom Bilyeu
The infamous Christmas argument on my side. So, yeah, we got in a huge debate as a company, and it was me against everybody else. And I was like, I know I'm burning relationship capital right now. Cause you all think I'm a psychopath. But I'm like, it was. I don't even remember what the specific thing was anymore, but it was like that. It was a single word. And we're not moving on until we all agree that this is for that very reason. Now, I. You described exactly the way that I think about this. I use slightly different words, exact same idea. For me, the reason that. Because this all started with, why does it matter to detect a lie? And are we being lied to by people? The whole point of my channel is to say the world works in a certain way. The vast majority of it is behind a curtain that you've never looked behind. And so the whole goal of my life, which I just happen to make a show about, is that I am trying to figure out what's behind the curtain. And what I want people to understand is it is. I've actually never watched the video with Jordan Peterson and Sam Harris where they debate truth. But the reality is that finding truth is really, really difficult. Now, the reason it's difficult is because we all wear what I call whole life beer goggles, and we cannot see what's really there. We're interpreting what's there. And so two people can look at the exact same thing and see something completely different. I can spend time explaining how this happens from an evolutionary standpoint, but just for now, we'll say there are algorithms running in your brain and they will control how you perceive the inputs that are coming in. Okay? So if the world works in a certain way and words matter and narrative matters, and even data can become narrative at some point, Your life is controlled by how you interpret the things that are before you, what narrative you're telling yourself. And if your narrative doesn't make accurate predictions, it's broken. So the reason identifying a lie matters is because it breaks your prediction engine. And if you want to make money in business, statistics are going to be your best friend. Because you have to understand, do I do this or do I do this? Which is going to have the bigger impact. You're asking yourself a question of predictive ability. I predict that based on what I know. If I do this one, I'm going to get the outcome that I want. And that's why you do it. But if your worldview is messed up, if there's something you don't understand, you will choose the wrong thing. And of course, never one or two. There's usually a thousand options before you. And so people just have no idea how to choose because they don't know how they think. They don't know where they're being lied to. They don't know how to dissect the information that's coming in. They don't know how to test hypotheses. They don't understand that when somebody puts something forward, it makes a prediction. And if you ask people, if you stop and go, okay, hold on a second, what prediction does that statement make? And then I'm just going to ask you, is this true? And if in that moment you're worried about looking stupid, then you're just going to nod and smile when they give you some bullshit answer, which they will almost always do, because they probably don't know what's driving this. They probably have never thought about the prediction that it makes. But, man, if you really are unafraid to look stupid and you say to somebody, okay, for what you just said to be true, the following base assumption also has to be true. And I'll just say it to them, is, is that true? Or this makes that prediction, Is that accurate? And if they say no, one of two things is true, either they're wrong, which happens more than you would think. And I'm talking from experts, the brightest minds in the world, or you don't understand something. And if you don't understand something and you're not afraid to look stupid, then just keep asking and asking and asking. You understand somebody's worldview, statement, whatever, when you go, ah, it makes this prediction, Is that accurate? And they say, yes, then it's like, okay, cool, I understand what you were saying. And now that I understand, I can't be bamboozled and that is the only way to get good at business. And this is why. Okay, I think I may have learned this from you. So forgive me. Specialists, generalists. The reason that your business content is so good and your business content is so good.
- [19:03]
Cody Sanchez
Thank you.
- [19:04]
Tom Bilyeu
Is because you're a specialist. You buy businesses all day long. I'm a generalist. So I launched a course called Business Decision Making. That. That is the greatest course I'm gonna. I really believe this. That is the greatest course on entrepreneurship ever taught. And all I did was say to whatever the small group of people, bring me your hardest business problem, and we're gonna solve it in real time. And then I would just walk people through. This is how you do it. I don't need to know your industry. None of that. Like, I'm gonna think from first principles. I'm gonna ask you questions about what you said, makes a prediction. I mean, literally all the things I'm just talking about, but in real time. Hey. And you're going to come back week after week, and we're just going to keep going. Okay, now you made progress. What's the next problem? Boom, boom, boom. We go through it and live fire. And what I would say to people is, I know you think you want copywriting or you want funnel marketing or all of that, but you can hire somebody to do that because it's very finite and it's very teachable. The real thing that. That makes an entrepreneur great is the ability to solve novel problems. It is a problem not only have you not seen before, nobody's seen before. And so now you have to be able to build up from first principles to think through it. But that shit, hardest thing in the world to sell because people know this is your painkillers versus vitamins. That shit is a vitamin. And people want painkillers. They know they have a problem. And if you market it as I'm going to take you from $0 in revenue to $3 million in revenue, that shit'll sell all day long.
- [20:32]
Cody Sanchez
You're exactly right.
- [20:33]
Tom Bilyeu
God damn it. It isn't all weather. It will work for one thing, in that one moment. But it doesn't translate because it's not a framework.
- [20:42]
Cody Sanchez
100. 100. I mean, I think a couple things there. One is the real definition of a CEO is a scary one. So if you say you want to be a CEO, here's what a CEO is. It's. You're. You go out, you hire the smartest people you can possibly find. You tell them to fix problems, then they Find the problems that are so hard, even the smartest people you can't find can't solve them. They bring them back to you. And you have one job only, which is to deal with the worst problems that the smartest people that you know can't solve. That's all a CEO is. And so if you think you are anything more than a firefighter in the most complex fires of all time, you're crazy. The CEO is not a fire fun, easy, breezy position. I've never met a CEO that felt that way. That's why they moved to chairman after a while, because they let somebody else deal with it. And so I think that's exactly right. The other thing that I find fascinating there is. So I started contrarian thinking in 2020 with this idea that people have lost their minds. They are no longer able to think because they can't question anything. And I believe that I will give like you will make more cash if you are curious than if you are a genius. And the reason why is because you can use the collective genius if you are curious and you are limited by your own genius if you are not. And so, especially with the world of chat gtp, if you are a genius but unwilling to ask questions because of your own brilliance, you have just lost the world of knowledge. And so I believe our ability to question things is integral to our individual success. And. And yet I thought people were losing that ab and they were smothering it and they were saying it was wrong to question things. And I thought that was criminal. So I started contrarian thinking. And I was like, we are going to teach you to question things, to be contrarian, not for the sake of it, but in order to learn. And then it was crickets. And people are like, I think just fine, this noggin's pretty smart. I don't need your help thinking better. Like, nobody really goes around and says, I wish I could think better, except those at the very, very, very, very top. It's like a 1% problem. Most people think that they think fine. They just haven't found the deal, the money, the next job, the girl, the whatever. They don't think there's anything wrong with the way that their brain functions. And unless it's a pill that can make them like superhuman intelligence. And so I quickly realized that, okay, if I want people to think differently, how could I get them to do that? What would be the Trojan horse to think in? And I was like, well, what do all humans want? They want love in some degree. They're greedy they want like some sort of personal wealth. Right. And they want maybe relevancy in some way, shape or form. You could also say they want health. Right. And so if we have wealth, health, sex, greed, which do I know a lot about? Well, I don't really know that much about health. I don't really want to talk about sex on the Internet. Wouldn't say I'm an expert there either. But what about wealth? Agreed. Well, yeah, I know a lot about that. I've been in finance for a long time. So what if I could Trojan horse my way into thinking by getting people to talk about money? I'll tell them how to make more money. But in the process of telling them how to make more money, I'm actually going to get them to think about something more important, which is ownership. And what do ownerships have? They have personal responsibility for outcomes. When you have personal responsibility for outcomes, you have incentive alignment. When you have incentive alignment, then when somebody breaks something that you own, you feel it. When somebody lifts up something that you own, you feel it. You have the pleasure, pain, you know, cycle happening within you. And so that is why we eventually started talking about money and contrarian thinking, because I realized it's a Trojan horse to getting people to care about decision making because they actually have skin in the game. And ownership, Ownership is the key to freedom. And that in fact, if you do not have control over your life through financial freedom, it's very hard to have other levels of ownership. And I think that is true.
- [24:45]
Tom Bilyeu
Yeah, no doubt, man. Ownership is such a part of your message. And I think it's so, so, so important how 1. Why don't people have that, like, push now? That's not the cool thing that it once was.
- [25:02]
Cody Sanchez
Yeah, it's not, is it? Yeah, it's interesting. The other day we had an employee, you know, decide that they wanted to leave to go into a meditation community like a monastery. Not really sure. And, and I thought about that at first. A really good employee, by the way. Great employee. And I thought, well, what is that decision making? And I went back to the, to the quote, I can't remember who it's from, but that the, the purpose of faith or religion is to live it in life. That you, you know, are you truly a. It's why the Dalai Lama doesn't stay in Tibet, right? His purpose is to go spread this faith that he has while living life, because life is hard and difficult. It's very easy to stay peaceful if you're in 247 meditation states. And yet I Think this generation, they presuppose that if they find the perfect circumstance, that that will lead to bliss instead of realizing that actually bliss is found in the difficulty. And so I don't know about this personal situation with this individual, but I thought about this a. Because I thought, what would make somebody, like, put their life on pause that way and, and, you know, stay in this one, one situation? And I think the reason is because we have not been conditioned in this generation to. To find joy in difficulty. Instead, we want to find joy in. In extreme pleasure. I mean, look at what we've done to this generation. I mean, this is wild. And even to parents today, we told them, we said, parents, you know, run your kids around 24, seven to all of these activities. If they get upset in any way, shape or form, run to the principal, you know, talk to the parent on their behalf. Don't let them handle it. If something is wrong with them and they are sad or anxious, they are probably depressed or maybe they have adhd, we're going to label them and pathologize them as opposed to tell them they're having a momentary issue. We're going to get them into the most expensive colleges or any college we can. But then they will have a massive amount of student debt. And then on top of that, we're going to tell them that, you know, no, it's. It's okay about every single feeling that you're having, and that is all of this trauma. And yes, you know, Your cat died 15 years ago and you are still carrying that inside of your hips. And that's why they're tight, right, because that's where you hold the trauma from, you know, fluffy. And. And so this is what we've told parents and kids. And so of course they're confused. You know, they're confused and they don't know what real joy is. And they've checked all the boxes, they've done all the things that they thought they were supposed to do, and it's led to them being, like, in debt, not that happy, not with a partner, you know, and so what's next? So I do. As much as I kind of give my generation, our generation and the next generation a little bit of a hard time, I really get it because I was told all those same things too, and had to come out on the other side and realize, no, no, I'm the only one responsible for my happiness and that there's actually a lot of joy in the journey and there is no destination that you can reach. And by the Way you can never stay for the rest of your life in perfect meditation. The point of meditation is not that it is to be in life. You know, I heard this thing the other day that I really liked. I think it was Mel Robbins, and Mel Robbins was saying the eye of the hurricane is what she tries to be. So, you know, the. If there's a hurricane and there's chaos and there's tumult and there's broken windows and danger and floods, on the exterior of the hurricane, in the middle of it, it's silent and serene. And so her goal is, no matter what's happening out here, that she wants to stay silent inside. And as I was thinking about that, I was like, I like that. That philosophy. And I was like, but you know what's even more interesting? The bigger the hurricane, the bigger the eye, right? The more silence inside of it. So if you put yourself in bigger, more intense situations, are you able to find a deeper level of silence and quiet and contemplation? And I think the answer is, yes, you are. Which goes back to the Ted Turner. We lost 100 million bucks on that. And so if we all will die, and it may be painful at some time, and the only truth in life is that we will experience pain, we will die, and all of our loved ones will die, and they will probably not remember us much sooner than we would ever like, then we should probably prepare ourselves for that with a bigger hurricane. So that as we look, the true difficulty of life, that is eventual death and difficulty on the path of. Doesn't daunt us, because we've lived in difficulty, too. And so I come closer and closer to that, you know, that Buddhist idea of, you know, that life has suffering. Life is suffering, but that's sort of the point of it all, and that you can find joy in that. And it's way too deep. You know, Tanner would go, that's deep. But. But I think it might be true.
- [29:57]
Tom Bilyeu
The storm destroys most everyone that it touches. That's the. The problem. How do you. I mean, do you think about that?
- [30:06]
Cody Sanchez
Like the. Like creating hurricanes for no reason?
- [30:09]
Tom Bilyeu
No. Do you lament to God, wail from your gut at the fact that you can create an eye in the middle of the largest storm, but that most of the people you know and love will get torn to pieces?
- [30:31]
Cody Sanchez
I think. I don't think that I have that individual power. I think. I think all of us are, like. I get really careful about, like, overstating what I think I'm capable of. And so I don't Think I am capable of destroying the ones around me.
- [30:51]
Tom Bilyeu
No, no, no, not you. I'm saying that I am very distressed that most people will not be able to do. Most people won't be able to be a CEO.
- [31:03]
Cody Sanchez
They won't survive their own hurricane they create.
- [31:06]
Tom Bilyeu
Yeah. Exactly. Like this is one of those where I don't want it to be true. I've just seen it play out too many times.
- [31:13]
Cody Sanchez
Yeah.
- [31:14]
Tom Bilyeu
That. And you and I both said the. So I know that you see what I'm about to say, which is step number one of being a CEO is ask yourself, do you really want to be a CEO?
- [31:23]
Cody Sanchez
Yeah.
- [31:23]
Tom Bilyeu
Because all I hear when someone says I want to be a CEO is that you want to get punched in the face over and over and over. Really? Like really, really, really. And the longer I do it, the more punches I take.
- [31:33]
Cody Sanchez
Yeah.
- [31:34]
Tom Bilyeu
And you do start going, huh. I routinely am asking myself, why am I doing this? And in fact, it's really interesting to compare my wife and I. Okay. So I have married my equal. My wife is unimaginable and. And she has helped me become the person that I am. And I. I really don't even know who I would be without her because of how gifted she is and how smart she is and all that. She can't do what I can do.
- [31:57]
Cody Sanchez
Yeah.
- [31:58]
Tom Bilyeu
So. And she will be the first to tell you. I mean, she did tell you. Literally before we started rolling, she was like, I don't want to be CEO. I see what he has to deal with and I don't want it. Yep. And that like, it is so exciting for me. And I can give the speed. I can be the dancing bear that you poke fun at. I can be the dancing bear of motivation and be very performative around, like just living in that personality of the person that can create.
- [32:29]
Cody Sanchez
Yeah.
- [32:29]
Tom Bilyeu
The calm and that you can do anything you set your mind to. And then I've seen it up close. And the reality is that most people don't have the skill.
- [32:36]
Cody Sanchez
Yeah.
- [32:37]
Tom Bilyeu
Emotional management. That. That's what being the eye of the storm is, is can everything be burning down around you and you're not panicking.
- [32:43]
Cody Sanchez
Yeah.
- [32:43]
Tom Bilyeu
You're concerned. You're taking decisive action, but you're not panicking.
- [32:47]
Cody Sanchez
Yeah.
- [32:48]
Tom Bilyeu
And what I have found is that the person you lost to the monastery, like, place. They're the norm.
- [32:59]
Cody Sanchez
Yeah.
- [33:00]
Tom Bilyeu
What's interesting is they to give to steal men. Their argument. I keep in my back pocket that life choice. I studied Eastern philosophy a lot when I was younger. At one point I actually called myself a Taoist and I meant it. I was a Taoist and I always contended with the idea of becoming a monk of some kind. And I thought I really believe that the, the wellspring of all suffering is desire. That makes sense to me. And. But what I found was that that felt like a choice between engaging with life and disengaging from life. And you could say that you're engaging with the pursuit of non attachment, but it just isn't how it felt to me.
- [33:55]
Cody Sanchez
Yeah.
- [33:55]
Tom Bilyeu
And. And I'm perfectly willing to accept that maybe that's just the part of my spiritual journey that I'm on. And one day I'll be start laughing at myself that, you know, detachment was the right answer all along.
- [34:06]
Cody Sanchez
Yeah.
- [34:06]
Tom Bilyeu
But I decided I'm going to fully engage with life. But for my sanity I keep in my back pocket that I could just stop wanting any of this.
- [34:15]
Cody Sanchez
Yeah.
- [34:16]
Tom Bilyeu
And the second I stop wanting to grow my YouTube channel to make more revenue, to be an entrepreneur for the ages, to build the next Disney, I could just let go of all of that. And if I actually let go of it all of a sudden, those punches don't hurt anymore. They don't matter. It's. You just let it go. Now you do have to contend with freedom coming from financial freedom. But one way to do that is to beg for food and live in either a monastery or a cave and come out every now and then with your rice bowl. It's. I don't pass judgment on that lifestyle. I just don't currently want it for myself. But I. It's in my back pocket.
- [34:59]
Cody Sanchez
Yeah. I like the back pocket idea. I think, I think it's really important and I don't have a good definition for it. So I have to work on this. But this idea of ownership I do not think has to mean owner. I think there needs to be a difference between the two and ownership. In my opinion. There's like four levels to rich I think about monetarily. And so you have the first level as like a spender. You make money, you spend it. The second level is a saver. Right. You make money, you save some of it. The third level is an owner in my opinion that you take the money and you apply it towards your pursuits. So you invest in you working more your business, et cetera. And the fourth level is an investor. And that's you take your excess and you invest it in other people and their pursuits. And the, the levels, you know, you, you can't really go from a spender all the way to an investor, I don't believe. I think you kind of have to like, climb the rungs. And I've thought a lot about what does ownership mean? Because I do not think everybody should be an entrepreneur or CEO in any way, shape or form. But I do think that they should have some skin in the game for what they're doing, and they should have a way where they can continue to earn even if something catastrophic happens to them. So that could be that they have additional income streams, that could be investments, that could be that they help their wife or husband learn a new skill and thus the family has multiple income streams. And what they do, that could mean, you know, sovereignty in that they live on the land and they like, subsidize part of their, you know, income that they would need by growing things or having agricultural tax credits. But I think it's really important that we don't become, like you talked about, people who own nothing and like it. I think we can be people who want less material things because our neighbors have them, but simultaneously have more ownership of the things that can protect us from negative consequences. Like a health event where you need money, like an authoritarian regime that tells you they want you to do X, Y and Z. Money is like, it's an option that you get to either use or not use. And so I need to narrow down this idea of ownership. But I do think you're right. Not everybody should be a CEO. And, and what, what trouble would we be in if everybody was one who would work with us? Right. I think the job of a CEO also is to have a dream so big that your umbrella has room enough for many people and to sell them that dream and to show them that your dream is bigger than anything that they could create individually and is going to uplift them in a way that is bigger than what they could do by themselves. It might be more fun and might be more interesting because high performing teams are a joy to be in. I actually think one of the worst things that ever happened to us was that we sold this lie that remote work was better for us. I think it was actually really detrimental and mental health numbers seem to show that. And that I say online a lot, our teams, we make them as much as possible come back to the office, and it doesn't mean they have to be there every day. We don't put them under fluorescent lights and, and cubicles, but we do require them to now all be in Austin for contrarian thinking. We bought a studio there. We bought a headquarters. We're Hiring like crazy. My other company, Biz Scout is located there too. Contrarian thinking, capital space there. So it's Main street holding company. And so I'm bringing all the people back into the office because I see what happens when they're on an island and I think it's really, really negative. But I have to get closer on that idea of, of ownership in order to, to explain it like even how, you know, it used to be that the people who owned companies were not unaligned shareholders that just gave them money for their stock. Right. That really have no ability to affect the outcome. You and I both, anybody who owns stocks, you have a percentage of Google, you have a percentage of Amazon, but you are not really aligned with the employees and the people inside of Google or Amazon. You just want as much money as you can get for that stock. And there's actually really perverse short term incentives that happen with that.
- [39:08]
Tom Bilyeu
Really perverse.
- [39:09]
Cody Sanchez
And so I think as an employee, part of your game should be I want to make as much money as I can to a certain degree and then I want to invest it in things that ROI to me and I want to find ways to skill stack to become so valuable that the people I work with will give me some percentage of a company, a deal, you know, an opportunity to invest in another company alongside them. And that's where I think we went a little bit wrong. Like my employees don't have equity at Contrarian thinking. Well, one does now, but two of them just got equity at one of my other companies. And so they're now, they're now partners, they're owners in that business even though they're also employees. And I think we should be able to do that a lot with our top performers. And just like people shouldn't stay at minimum wage, they should aspire to grow
- [39:57]
Tom Bilyeu
into more, you know, I agree aggressively. What do you think about BlackRock and other big companies buying everything?
- [40:07]
Cody Sanchez
So Main Street Holding Company is where we own all of these companies, right. We have like 26 companies in the portfolio right now. And not so long ago my goal was I want to create the next KKR Carlisle. I was like, I saw how this, these guys operate. I want to create a private equity fund that's just as big. I've already raised a billion dollar fund at, at First Trust. And yeah, I can do this again, but let's do it in a better asset class which would be private companies. And so I was on my merry way buying these companies and then I kind of started seeing what was happening with A lot of these private equity owned companies and it's stripping the employees, turning it into postmodernist buildings with fluorescent lights and cubicles. It's nobody knows your name when you go to the corner store. It's that they have perverse incentives because they want to strip it and flip it to somebody else and then that next person wants to strip it and flip it. And a lot of these companies, you know, get sold by three or four private equity companies before they go couple public and they've lost kind of their soul. And so I realized, man, I want to build a billion dollar company, maybe multiple billion dollar companies, but I don't want to own all of America's small businesses. I want Americans to own those businesses. And if I can create value by building something that hasn't existed before, that's cool. But do I have to go gobble up all the things that other people could own within their communities? No. And so I am very much pushing back against the big guys owning everything. And we have to work for them, I think. And do, I mean, I don't know if we talked last time, but for those economic nerds on here, like, if you don't understand the unfair advantage that BlackRock and Blackstone has, it will scare the hell out of you. Like, if you think about it this way, they have immense data, right? Because they've been doing this for a long time. They have most of their former executives having at some point or the other worked in the Fed, been consultants for the Fed, been in political positions, been the chairman of, of the Fed. They have also, by the way, all been at varying companies like the CEO of BlackRock and Blackstone, who have both, you know, one's been an owner of the other company before and they get rates to buy these companies and houses and assets and anything that you want to talk about that are like one half to one third to one fourth of the rates that we have if we want to buy these individual companies. And why do they have that? That? Because they have all our money. Because you and I have our investments at BlackRock in their ETFs, which means that they get to use those assets on the balance sheet to have lower rates to buy things that then increase the prices of single family homes in the US with our dollars. And I think that is criminal. And I'm, I don't love the government regulating many things, but I think they should at least get their neck off
- [43:02]
Tom Bilyeu
the little guy, get their foot off the neck of the little guy.
- [43:06]
Cody Sanchez
Get their neck off the foot of the little guy. Yeah, get their foot off the neck of the little guy. There you go.
- [43:11]
Tom Bilyeu
What do people need to know about how the world really works? And how you went from being an underpaid journalist to buying a portfolio of small, what you call boring businesses that now kick off just under $100 million in annual revenue to you?
- [43:30]
Cody Sanchez
Business in general, especially small business, gets way over complicated. So we hear these stories of Silicon Valley billionaires who have exited these giant tech companies and built this next social app or Tesla. And in reality, your richest neighbor, maybe not in this neighborhood, but in most neighborhoods, is probably somebody who owns a plumbing company, somebody who owns a local landscaping company. The community all around you, the services you use every day, can make you a lot of cash. And what makes real change is that, you know, money is the architect for change in our world. You want to get somebody elected money. You want to change your local community money. You want to have different zonings. You can change the businesses in your local area money. And so I don't acquire money because I want Lamborghinis and fancy things. I do it because I think it is a way to freedom, because it is a tool for power. I mean, when. When I first had money was when I made like $30,000 when I left college. I mean, I made no money out of college, and I thought I was super rich and I might never have to work again. And then I heard about taxes and figured that out. But quickly I realized that, you know, I worked at a big company called Vanguard at the time, and Vanguard was the world's largest financial manager. And what was fascinating about that company is the people inside of Vanguard touched at the time. I think one in every four dollars in the US Economy was touched in one way or the other because of the mutual funds and pensions that they. That they invest. And. And I realized, wow, these humans speak a language that I don't understand, like roi, ebitda, you know, basis points. There's this whole other language, and finance has that for a reason. They have it because you and I, as normal people, do not speak that language. And so they say, give money, Tom, and trust it to me. Because you, poor thing, aren't intelligent enough to understand how to shepherd your own future. And so I had people calling me in 2008 when I worked at Vanguard, crying, asking me how Vanguard could have stolen their money because of the crisis and not realizing that the stock market has fluctuations in it. And at that point I realized, oh, wow, like, I'm never going to let this happen to Me and mine. And that was hard because my family thought to chase money was evil and that we were happy and we didn't have a lot of money, so you don't need money. And then I heard this thing called the napkin theory. I can't remember who came up with it, but basically at the time I was struggling with am I okay to chase after money? Like, is this bad? Am I a bad person for this? And I heard this story about a napkin. And imagine yourself in the middle. So you are standing in the middle, Cody. And around me is my mom, my dad, my brother, my sister, let's say, on each of the four corners. And when you, Cody in the middle, pick up your napkin like this. In order of pursuing financial freedom, you lift up everybody else around you, right? Because you can't be what you can't see. And also because money trickles. You know, people talk about trickle down economics. We could think about that one way or the other. But money, actually, when you have more of it around your family, you can hire your family members, you can build new businesses, you can create more wealth by spending it. And so they explained it as one of the best pursuits you can have is pursue it so you can pick everybody else up. And that changed a lot for me. I have a bunch of businesses that I own, right? These small businesses largely run by blue collar workers. And I remember I called up one of the operators in one of my companies, the guy who runs the whole thing overseas, let's call it 100 employees and contractors. And I was like, I want to do events for our like line workers. So for blue collar, largely Hispanic, same thing. And I want to do self improvement events, like what could we do? What would they be interested in? We'll pay them to go even. And I remember he said to me, they won't go. They're not interested in personal development. You can't find those people. And I thought that was so fascinating. So I called up a couple other operators. Some of the businesses that I owned, this was back in the day, and like two or three of them kind of like pranced around it a little bit, you know, we're a little bit PC, and then said the same thing. I was like, that's fascinating. So are they right or like, is there some miscommunication? And what I basically realized is that the language that we use, even the people on YouTube listening to this right now, by and large, most of the people listening are already understand the words personal development. They think it's a good thing, not a Bad thing. And most people that are blue collar workers, at least in my experience that I've worked with, they think about personal development a bit like therapy. Like, I told my dad I was going to go to therapy with my husband proactively, like before we got married. He was like, what's wrong? Are you guys okay? And I was like, no, no, it's because we want to work on this thing called marriage, which seems important. And I failed that at once. So, like, maybe we should get some help. And. And he was like, okay, that's bizarre, you know, and then I told my mom kind of the same thing. Now they're smart, great humans, but the words meant something different to them. And so what I realized with our group is, oh, man, we basically have. I think there's sort of two worlds in the US right now, and maybe even three. But one world is are. You know, it's kind of the elites. And the elites might even mean white collar workers in corporate jobs that use words like quiet quitting. Those words don't exist in blue collar. Blue collar land. And so what I tried to do early on is I realized I had some of those words like, oh, therapy bad. Personal development. Why, what's wrong with you? You know? And I had to re navigate and negotiate my language. That was the only way I could change my relationship with money. So it started with being okay with things like personal development, which is totally normal now. Other thing I'll say is I get really annoyed today when people especially like on Twitter, let's say, they start saying things like, oh, yeah, you should just get up at 5am, get into an ice bath, then sauna, then whatever. Like, you know, you nerds. It's like, hey, I know that that seems crazy for a lot of people, but you guys are so inculcated into this world of being elites that you don't even realize you're being extra elite by trying to tell people that have never experienced what it feels like to get up early and meditate that that's unnecessary because it's actually really powerful. So instead of trying to, like, break out of the, you know, world we live in, where people are obsessed with personal development, realize most people are not in that world and help them. Don't try to belittle it. And that is an interesting cycle I think we're in right now today. It's like, self education is bad. And I think that's so wrong.
- [50:06]
Tom Bilyeu
I can't remember where I heard this, but somebody said it might have been you. Where there's mystery there's money. Like, are people intentionally creating a false version of the world to keep other people down?
- [50:20]
Cody Sanchez
I think in this case it's more people don't realize that they live in bubbles. People on the Internet largely talk to other people on the Internet that are just like them. And so a lot of the people who are mouthpieces, like you and I, let's say, and you've been at it a long time, they never had your experience of. Of hiring ex convicts, speaking to them and driving them around Beverly Hills. Never. And probably they've. A lot of this generation is like solo entrepreneurs who like that idea of being a solopreneur and want to talk about on the Internet, hey, I built this business at $10 million in 90 days, and I have no employees. And I think that's a fucking tragedy. I think one of the most incredible things you can do is hire people. They're going to drive you crazy, but they're also going to mean you have a legacy planet that's above and beyond just what comes out of your body as a small child or human. And so I just think they don't realize how bubbled they are and that their idea of Happiness, aka a solo entrepreneur with $10 million, I think it's going to be really empty in the years to come, because you know this too. But there's nothing better than watching one of your employees change completely. Underneath, you could call it your leadership or just within your culture and building this thing where people are creating bigger than you. It's an incredible feeling. So that's my belief.
- [51:40]
Tom Bilyeu
Yeah, I'm obsessed with that moment where somebody realizes, oh, I'm actually capable of more than I thought that I was. So for me, it really did feel like as I climbed my way up, what I was doing was pulling the curtain back and seeing how the world actually works. And that sense has not stopped for me. Like, the farther I go, the more I learn, the more I succeed, the more I'm like, oh, whoa. Like, the world works in a certain way. And getting into finance was actually the big thing for me. That was the first time where I felt like maybe there really is a conspiracy. Like, when you start to understand what inflation really is, it's like, bro, what is happening? So how do you. Because you're a big believer in. And I think this is something that we'll really share. So I step back and I look at the world and I feel like it's losing its mind. And I'm like, the fuck is happening? And. And never did I think that I would deal with culture war stuff or anything even remotely politicky. And then I realized that the world is tearing itself apart because of bad ideas. And that really is my jam. So how we start getting people to pay attention to good ideas. One thing you said that really resonated with me is getting more people to have skin in the game because if you own part of the house, you don't want to tear it down. What do you mean by that? And what are you actually trying to help people discover in that moment?
- [53:01]
Cody Sanchez
Yeah, there's a famous law called Tragedy of the Commons. Right. And it's an economic theory that is really crucial if you want to understand why people burn instead of build. And I heard about it from a famous economist by the name of Thomas Sowell.
- [53:17]
Tom Bilyeu
Oh my God.
- [53:18]
Cody Sanchez
Yeah.
- [53:18]
Tom Bilyeu
If I was going to be a fanboy for anybody, it would be Thomas all me too.
- [53:21]
Cody Sanchez
His book Economic Facts and Fallacies I think is crucial reading for anybody that wants to understand numbers, not regurgitate them, and to do it in a way that is a competition of ideas as opposed to let me just shout my idea the loudest. And. And he talks about, for instance, when I lived in dc, I saw it firsthand. We had. We were in a new development, we were in Columbia Heights and you know, some of the streets were the hood, some of the streets were brand new developments. Across from us was a big project that went up, subsidized housing. Really well done, pretty. And sadly, within about the year that we were living there, it went from like a nice establishment to by the end, most of the houses boarded up one year. Woof. And. And I remember sitting there watching it. And at the same time I was rereading Economic Facts and Fallacies and Thomas Sowell talked about this, about how instead of subsidizing housing, AKA making it cheaper for people, but having no skin in the game, nobody is responsible for anything in that place. And some of them live for free. What they've done is they've taken away their property. Personal sovereignty, you know, have you guys ever been on a street, let's say, and you see those scooters around, right, that everybody you can rent for a few dollars, whatever, bird scooters, and they're like beat to hell, you know, they're thrown on the sidewalk in Paris, they throw them in the Seine all the time. And that is the tragedy of the commons in action. If that was your scooter, you would take care of it. But because you don't own that scooter and you have no incentive one way or the other to take care of it. You beat it up, up. And you being collective, you, all of us. And so I think one of the biggest problems in our society today, we did this huge research analysis and it, it shook me. And it was, we looked at sub sectors in the US economy, so not just construction, but let's say hardware stores and roofing companies. And what we found is across, I can't remember how many subsectors, but let's say 30 or 40. That 25 to 30% of all subsectors are owned by the top 10 companies in each sector. And that number is growing rapidly. So we don't own our local businesses anymore, we don't own our homes as much anymore. One in four single family homes in 2022 was bought by an institutional buyer. And so we are sort of, we're doing the narrative that's supposed to not be true, which is that, you know, you will own nothing and be happy about it. And we're doing it, we're letting it happen right in front of our eyes. And I think that's a horrible thing because you have all been to, I mean, you've certainly seen it here in, in la, but you go to a Starbucks, right? And outside it's like kind of dirty, beat up. The greeter doesn't know your name. The barista spells it wrong. They get your coffee, the beans are kind of burnt and it's lost what it was. The mermaid is no more. And then you go to a local coffee shop and what do you feel like? It's the same person every day. I just was at one in San Diego the other day. Gosh, I wish I remember his name so I could shout it out. But great little coffee shop in Bird Rock. The owner is right there, he's making the coffee for me. We get to know each other. He's having a community party on Sunday that is never going to happen at a Starbucks. And that's why owning those small businesses is so important, I think. And that skin in the game is all the difference. And then I'll shut up. But last thing is just I don't think everybody should own a business. It's hard. You know that better than anybody. You've been playing this game in a big way. But I do think having some incentive where if I do X more, I can make Y more and I can leave my stamp on the world. It's really important. So that's my mission.
- [56:51]
Tom Bilyeu
I love that. I think it's really important as you were talking so you're going to own nothing and be happy. So when I got into this, I really thought anybody. If you believed in any conspiracy, you were out of your mind. You were like, oh geez, like do I even have time to have this conversation? And then I really started thinking about the way that people think. So here's my thesis. Dear smart people, stop trusting yourself because you think you're real fucking clever. And I'm just going to tell you right now, you're wrong more than you're right. I'm glad you're there. I'm glad the world has smart people and I'm glad that people really push the envelope and do things and take chances and believe in themselves. That's not what I'm talking about. What I'm talking about is the scientific method. Like you, you have to approach everything with humility. And when I hear things like you're going to own nothing and be happy, it's like, bro, stop trying to do top down. Top down always ends in tyranny. Not most of the time. It always ends in tyranny. And so seeing people snatching buildings up or whatever one, I think it's unwise to think of it as a grand conspiracy. I think it is better to think of it as well intentioned people. They aren't evil, they certainly don't view themselves as evil. But they, they have a belief system that we have to dunk on. And we have to understand, we being anybody listening to this, that you can get so good they can't stop you from controlling your own life. You can get so good that you can buy a bevy of boring businesses that generate a hundred million dollars. That's so crazy. And getting people to understand that. And I love that you used to be a journalist, that you did not go to Harvard. That like, I think at one point you said I did more keg stands than like MCAT prep. I forget what the other thing was, but I was just like, just, just. Oh God, it was so on point. And yet you learn the rules of a game and now you play that game well. And so I've been thinking a lot about. Okay, My show's evolved a lot over the years. Always with the same mission. I want this moment. I want people to understand that you can get so good at the game that nobody can stop you. That's it. It's the only reason I do all of this. I work this hard for that one thing. And as I get into this part of my thing where I'm trying to have way deeper conversations. So for the person that's been following me for seven years, it's, like, cool. In the beginning, we got your mindset right. Then we helped you get your personal finances and your relationships right. And now we're like full reality distortion field. And what I want people to understand is that the game of life has rules. You can master them and you can play to win. And so the tagline I'm noodling on is, life is a beautiful game. Because I don't want people to hear wolves howling in the background. I don't want them to think of Klaus Schwab as an evil guy. He really thinks he's good. He really thinks he's trying to help you. And if you approach him in that way, you'll be better off. Anyway. I want people to understand life is a beautiful game, but you need to master it. And so looking under the curtain, seeing how all of this works, that really is what I'm all about at every level. Whether I'm doing a comic book, working on the video game, or doing one of these interviews, it's like, lift up the curtain. See how this. That. See that? It has rules. Once you know how to play, then you can really get good.
- [60:12]
Cody Sanchez
Oh, yeah. Well, I love that because I think you're right. I mean, think about. First of all, the beautiful game's interesting because that's what they call football or soccer around the world. And which is the most viewed sport in the world, Right. Globally. Which I love. And I think also, if you think about it as a game, then you think about problems as levels, and you think about them as natural. And you start to look forward to the solution of said problem, as opposed to expecting that life instead of a game is a vacation with a Mai Tai on a beach chair somewhere. Which I think is what a lot of us expect. Like, it should be easy. I should have this. It's not fair that this happened. It's like, why do we think that we want life without some villains in it and without some worthwhile adversaries? There's no David without Goliath. And so you need those. Those enemies and adversaries because they're how you level up. How boring of a game would it be if we were just handed the prize as soon as we walked on stage? What are we going to do with the rest of our time? And so I've really tried to program my mind over the years and to learn from people who look at problems and they're like, oh, this is juicy. What are we going to do about that? How do you think? Okay, let's get curious. Like, do we use the. Do we use the lightsaber? You know, do we use the laser gun? And if you can do that with business, too, then I think this whole world of opportunity opens in front of you, where you become the wizard behind the curtain and you realize, oh, man, you know, actually, every single, any game you want to play, there's rules, then there's ways to break those rules, then there's trends, then there's ripples, then there's rhythms. And so as soon as you realize that you can have fun with it. I mean, we're talking beforehand about YouTube, and I have so much fun with social media online because it is a giant game. It's hyper algorithmic. There are tons of rhythms to learn and watch from other people. There's a feedback loop that tells you if you are succeeding or not almost immediately. And that is just like business. So if you like playing around with social media and learning which posts go viral because of the human attention span, then you might actually like business, too. And that's why sometimes people are like, you know, well, I want to be a influencer online, or I want to be a singer or an artist. It's like, I don't know, is that actually what you want? Do you want that label or do you want to play a game in which you have some skill set that maybe you could uniquely apply in order to win a little bit more than you lose?
- [62:44]
Tom Bilyeu
And they do want the label.
- [62:46]
Cody Sanchez
I know, but I don't think they're happy once they get it.
- [62:49]
Tom Bilyeu
They're not because they didn't earn it, but the, The. And this is where I really want to get into the way the world actually works. So this is all psychology, yours and others. And the reality is people do want fame for nothing. They do want money for nothing. Now, what they don't understand, going back to money is just the great facilitator. So if you don't know what you want to do, it's going to implode you. No one will believe you until they do it themselves. But that really is true. And so the question is, how do we get people to understand that? In fact, you've said this. The happiness is struggle. And once you understand, the way that I come at it is from an evolutionary lens. So over millions of years of evolution, nature realized that it had to put algorithms in your mind. One of those algorithms is you won't enjoy anything if you don't work hard for it, period. Because nature had to make sure you were willing to face a saber tooth tiger, go hunt, go gather, like every day in an unrelenting parade of difficulty and misery. You had to keep going. And so there had to be a tremendous reward for. I just worked hard. This is why no one once ever said I worked my ass off to get this thing. And I'm so sad I did it right. It's like I worked my ass off to get a thing I care about that is important. Cody Sanchez says, be careful the mountain you choose to climb, which I think is very wise. But if you worked your ass off to get something you care about, then you feel good. Not just about the thing, you feel good about yourself. But there's a reason that rich kids implode. Because when you get that thing, it's not going to hold the emotional weight that you wanted it to. And so the thing I fear with kids is when I got into business, I didn't do it so I could get on the gram. The gram didn't exist. So I spent almost 20 years just building businesses, not thinking one day people will think I'm cool for this. I was doing it just so that I could launch my studio. That that was it, man. I ground myself into the dirt in order to be able to do it. And it was only I was already worth hundreds of millions of dollars before I picked up my first social post. And if I could get people to fall in love with Go get good, that will feel way better than all the likes that you could ever get. All the followers and all of that. That shit is transient. But being good at something is forever.
- [65:15]
Cody Sanchez
When you get rich and or famous, you start to get around other people that are rich and famous. What's interesting then is they can see who's real and who's not like this. And you start to crave actually the respect of people that you respect. And so I've seen it implode real fast because, you know, I have a. I have a friend and he's young and he's done well made couple, let's call it tens of millions of dollars online now. But he's done it in ways that people just don't kind of want to associate with it. And so it's also, it's this empty thing. You have to pretend to a legion of humans listening to you that you're the real deal. And yet at the same time you feel, you can feel it. And so, you know, I've talked to him about it a decent amount. I'm like man, you've got the thing. You're just chasing the wrong rabbit. And so you've got to find your actual real rabbit because you're never going to have the respect just from the likes and clicks. And you'll get it once you're around a bunch of humans who are like, oh, he's a builder. Oh, he's got interesting ideas. No, no, he's not a hustler. Because that's not really what the people that you want respect from are interested in. It's like, no, he's a creator. And by that I mean a creator of value in this world. And most people don't know to strive for that. They think that we walk around comparing our bank accounts, like, no, no. But did you see this? I'm real. It's like, no, we. I have no idea what's in your bank. And you have no. I have no idea. And also, if I told you, you told me we wouldn't. What does that mean? Nothing. You can't talk about that over a dinner table. You talk about what ideas are in your head and things are you building that are worthwhile for us to have a conversation that doesn't feel like we're at the shallow end. And at a certain point, that's where you want to go when you've had some success. And so, you know, Lisa and I were talking about, how do you network with cool people? It's like, be cool, dude. And I don't mean like, outfit cool. I mean, try to do cool or inspiring or things that bridge your curiosity. Because when you do that, eventually you just attract other people who are interested and trying to. And that, I think is the real joy of what we get to do is like, I don't really care about. I mean, you've been in this game for a long time. I met a lot of famous people and a lot of people on the interwebs. I'm like, oh, I could do without that. Never mind. Not what I thought. And then you meet some builders and you're like, this guy scrubs his. One of my CEOs, scrubs his name off of the Internet. You can't find it anywhere. He's definitely. I mean, he's never told me or showed me his bank account, but a billion, and you couldn't find his name anywhere. And he is one of the most interesting humans to talk to because it is a one of one conversation and none of it is regurgitation. And so I think it's important that people are on the Internet. Like, you because otherwise you have a lot of humans who only do chase fame, and that's not. The universe abhors a vacuum. So they're going to fill it with more Kardashians or they're going to fill it with builders. And actually, no hate to them because they're builders now too. But maybe not the world that I want to see. Exactly.
- [68:23]
Tom Bilyeu
Right. I get that I'm a little obsessed with Kim Kardashian, I'm not going to lie. And when she lit the Internet on fire by saying, maybe you just need to work harder, I was like, yes, yes, motherfucker. People need to work harder. I could not believe that that was controversial.
- [68:37]
Cody Sanchez
I. I agree with that.
- [68:38]
Tom Bilyeu
I stand. But I stand in solidarity with the Kardashians. With Kim. I don't know the rest well enough, but I will say that. That, yes, it. It is what she has built is very impressive. How are we all supposed to feel that it started from a sex tape? I don't know.
- [68:55]
Cody Sanchez
She don't care about that. I think, like, that sucks that somebody did that to her or that it got out. I don't know that that's like, I don't care. I'm not a puritan. I think I'm more just like, oh, do I really think. And I use it. So what the. You know, do I think we need more makeup brands or more like clothing brands everywhere?
- [69:13]
Tom Bilyeu
Interesting. To me, that's a brand play. And so that's all psychology, which I'm. I'm all for. I don't have any beef with that. And I really don't have beef with social media and leveraging that.
- [69:23]
Cody Sanchez
Yeah, there.
- [69:24]
Tom Bilyeu
There is something at the edges. I've not taken the time to dive into this, so I'm really sort of spouting off right now.
- [69:30]
Cody Sanchez
Yeah, I think it's probably good, but
- [69:32]
Tom Bilyeu
that I haven't thought about. Yeah, I don't know. Like, there's there. She did. A friend of mine, Matt Higgins, does a class at Harvard Business School every year, and he invited her in y to be a case study. And I actually thought that makes a lot of sense to me, dude.
- [69:47]
Cody Sanchez
Me too.
- [69:48]
Tom Bilyeu
So in the modern era. But there. Yeah, I get it there. There's something at the edges that I.
- [69:52]
Cody Sanchez
Well, and maybe not even that. I think. I think it's cool that humans are building in public. And I think anytime you have people that have built multiple billion dollar businesses, not to mention just $1 billion business, there is something to learn there. And you're crazy to be a moral absolutist and say, I got nothing to learn, learn because it started from a sex tape. How many sex tapes are out there? And they're not billionaires. So there's talking something to learn there. So I would take a master class from her and her larger bank account any day. But I do think, I do think what I would like to see a little bit more of are like, more people like you, more people like, you know, Andy Frisella, more people like, you know, that are building something that I think is super America focused, that I think has like the mission and values. I'm. I'm more of a mission and values sort of human in this world today.
- [70:42]
Tom Bilyeu
That's interesting. That is almost certainly the thing that bothers me. I don't know that there's a mission. I don't know. I have not looked, but I. It does not radiate out from what they create. Thank you for putting your finger on what bothers me. Yeah, that's very interesting. We are living in a time where I think it's, it's. I would never have been an entrepreneur in any other era because for me, the only thing that allows me to work this hard is I have to hold people, a small group of people that I actually know and love and show up every day fighting for them. So at quest it was fighting for my mom and my sister. They were morbidly obese. I wanted to make food that they could choose based on taste and it happened to be good for them. And so I was willing to fight for that. I was willing to make choices that cost me hundreds of millions of dollars in order to just, well, this is either going to help them or it's not. This decision makes me more money. This decision actually helps them. And so I was really proud of that. With impact theory it is again, a very small group of people. And unfortun I've been to one of their funerals already and that's heartbreaking. But just the changes he made in his life before just car accident, just dumb. But watching him change his life was unbelievable. And it was just an incredible reminder of how this stuff really works. But when you have that mission that leaks out hopefully through the choices that you make, the products that you build and that we're living in an era where that's also great marketing.
- [72:07]
Cody Sanchez
Yeah, it's hard to beat obsession. You know, you can have all the tactics and tools and money and leg up, but if somebody is obsessed with the thing they're spending every day building, they're hard to beat. Because they'll just work longer, they'll sacrifice more. And you, I do think that your success level often is tied to the sacrifice that you're willing to give. It doesn't mean you have to work 100 hours a week, but it does mean you need to sacrifice a lot if you want to achieve massive success. And I think anybody who says you don't probably has never played the game.
- [72:42]
Tom Bilyeu
No, there's no way. There is no way. Everyone has to fight against entropy.
- [72:48]
Cody Sanchez
Yeah.
- [72:48]
Tom Bilyeu
And so I won't say that nobody ever got, you know, didn't get lucky. Of course, some people have gotten lucky, but that's just going to be such a minor, minor, minor, minor, minor, minor thing. But the thing that's fascinating sitting down across from you, who is a fellow builder, is that you actually know how to do this. So what I want to do now is go, okay, look, we've talked mindset. Hopefully people understand that money isn't what you thought. It's actually more powerful, but it's different. You really can do this. It really is about pulling back the curtain. It's about understanding psychology, knowing how the world works, understanding how to insert yourself into it. But to do that for anybody at home, that's like, okay, I want to do this. But now let's get into the real tactics so that obsession becomes a set of skills. It really is that simple. And how do people. I think it's really twofold. One, how do they know which mountain to climb? It might be worth telling that oh so wonderful story. And then once they know what mountain to climb, let's really get into the. How doth one climb a business mountain?
- [73:49]
Cody Sanchez
Well, I think we all missed the class in high school where they taught us to know thyself, you know, oracle at Delphi style. But I do think.
- [73:57]
Tom Bilyeu
Nice reference.
- [73:58]
Cody Sanchez
Yeah, that was good. Was that. Was that highbrow? Very elite of you, Ryan Holiday? I would be proud. I feel like that was very stoic of me.
- [74:05]
Tom Bilyeu
He's already leaving a comment in the feed.
- [74:07]
Cody Sanchez
I can feel it. So I think, man, if I could have gone back and done something different, that would have gotten me out of working in corporate jobs that I didn't really like for, like 12 years. Even though I was accumulating, I was stacking cash as I was doing it, what would have changed that for me would have been if I had thought more about who am I and what do I want? And so if anybody listening has an outcome actually written down consistently, I mean, I did it daily, you can do it weekly. Monthly. But you know, what are the things that I like doing every single day? What am I actually uniquely skilled at? What do people come to me for advice on what do I do and focus on even when I'm never paid a dollar and nobody's watching?
- [74:49]
Tom Bilyeu
That one's big.
- [74:50]
Cody Sanchez
You know, what are the things that I find so interesting that I become obsessed with them? And it's like they talk about that flow state. The whole world just goes. And you're just, you're narrowed in and maybe even your family's annoyed because you won't shut up about this one thing that you're doing all the time, right? Where can you find those things? And as you narrow in as those, they don't have to become. I think a lot of people then go, video games. It's like, no, no, be more granular than that. Is it? Wow. I get obsessed with the characters or I really like thinking about the technology on it, or I kind of understand how this video game grew this much. Try to get really granular. And I wish I had done that earlier because then I could have found games that I actually wanted to play. I was too scared that I didn't have some big startup idea like yours. I didn't have any ideas. I just was like, I want to work hard, I want to make money to do what I like to do.
- [75:37]
Tom Bilyeu
Can we pause on that for a second?
- [75:39]
Cody Sanchez
Yeah.
- [75:39]
Tom Bilyeu
So one thing I heard you say in another interview and I was like, oh my God, know thyself. As you said, you said, I'm never going to have the next idea about a music app or whatever. That's just not me. And I was like, whoa. Because people want to be cool. They want to be the person with the big ideas. Everybody thinks they want to be the CEO, but not everybody's wired for that. And then even if they are, they may not be a product led CEO. Maybe they're a people led CEO or a process, whatever, but. But not everybody has to be in that same thing. But once you own, okay, that's not me. Now you can start narrowing your focus to what your strategy is going to be. And that's the cool thing about you, is that you really have taken a super unique path to generating, I repeat, just under a hundred million dollars a year as bananas. So the fact that you were able to do that in a unique path, but it's born out of finally going, oh, I'm just going to be honest about who I really am and what I actually respond to the question. I tell people to Ask themselves along those lines is when you're trying to figure out what it is that you want to do. First of all, who is it you want to serve? Because you'll never fight hard enough unless you're serving somebody. But what is the thing that you're prepared to become the best in the world at? Because if you're just prepared to get good, you'll get crushed. And look, you're probably never going to actually become the best, but when you think about that, you know that's going to be ungodly difficult. And then at least you're approaching the problem honestly.
- [77:08]
Cody Sanchez
Yeah, well, actually, my husband has us do this incredible thing that I love, which is instead of saying, what do I want? What are my goals? It's what do I want? And what am I willing to sacrifice to get it?
- [77:19]
Tom Bilyeu
Preach.
- [77:20]
Cody Sanchez
And so he has me do this with him every year because I'm the workaholic. He's actually balanced.
- [77:25]
Tom Bilyeu
Really.
- [77:25]
Cody Sanchez
Yeah, I know. Which is to say that about a Navy SEAL feels like.
- [77:28]
Tom Bilyeu
Off. I was gonna say it's like, now
- [77:30]
Cody Sanchez
you know how up I am. But, you know, he. He is not singularly driven by money and the creation of an empire. And I am interesting. And I'm not driven by money in my pocket because I basically deploy all of it.
- [77:44]
Tom Bilyeu
For anybody that's looked into your background, that is very clear.
- [77:46]
Cody Sanchez
Yeah, but. But I just find it fascinating. I want to just build this huge thing. I want the billion dollar business control. Yeah, Must be. And I also just think it's fun. It's my favorite thing. If I have to talk about the weather or PTA meetings, I'm gonna just.
- [77:59]
Tom Bilyeu
Now, are you like the oracle of Omaha, where it's like literally just a scoreboard thing?
- [78:07]
Cody Sanchez
No, I think I will get to a certain point where there'll be a new game. Like he has. We've talked about this before. He has singular focus for decades. I mean, I. I told this story on Twitter once, but I sat next to this guy on a plane. I actually think if you have enough cash to do it, it first class. Even today, where everybody's posting about their private jets or whatever, first class today is one of the best investments you can make. If you sit and talk with some of the other people in first class, except not me, because I hate talking to people on planes.
- [78:37]
Tom Bilyeu
I was going to say facts.
- [78:37]
Cody Sanchez
If you see facts, you can say,
- [78:40]
Tom Bilyeu
hi, that's lovely, but I don't want to talk to a flight.
- [78:42]
Cody Sanchez
But what's fascinating is if you get to the generation above ours. So let's call it 50, 60, 70, 80. I was flying back from somewhere in France, must have been Conn or Nice. And I was flying to the UK day, and I sat next to this guy, Joffrey Kent, who created Abercrombie and Kent. You remember that company?
- [78:57]
Tom Bilyeu
I don't.
- [78:58]
Cody Sanchez
Luxury travel company. First company that created those safari tent experience. Very right. He grew up with nothing in South Africa, built up these safari tent companies by himself, then created one of the largest luxury travel companies in the world. Friends with the King of England. Now, like, fancy billions billionaire. And anyway, he was flying next to me, which I thought was kind of interesting. I was like, huh? Like, thought he'd be on a jet. And he's like, I like to fly commercial. I'm like, all right. We get to talking and I'm like, all right. You ran Abercrombie and Kent. You sold it twice. Once for a billion dollars and then going to sell it again and probably for another X and bought it back. I'm like, what was this secret? Yeah, he's fascinating. I was like, what is. What do you think the secret is? Like, you did this for 60 years, like billions in. In. In valuation. And he's like, well, he's like, 60 years plus the same thing. It's like time plus consistency beats everything else. And I was like, God, that's so true. And not what people want to hear. Because most people hear, oh, you could be a billionaire at 97 years old, like Warren Buffett. No thanks. I'd rather have my crypto millions today.
- [80:09]
Tom Bilyeu
And they think.
- [80:11]
Cody Sanchez
They think. But I sit there and listen to that and I'm like, this is fascinating. In, like, what if the only thing that separates a billionaire and you is time of working really hard on a particular thing plus consistency of doing that thing and getting better and iterating every single day. That means that we have a much more even playing field than I think people will tell you today.
- [80:32]
Tom Bilyeu
It compounds. There's no doubt. We were talking before we started rolling. This is my mental illness. I. I really, really. I have a very hard time narrowing my focus. And I am so keenly aware that narrowing my focus will give me better results. But the problem is I'm also a human, and so I have to love my life. And so when I'm very envious of people like my wife, for whom the thing she wants to spend her time doing and becoming the best at, she loves from top to bottom, and so she's just all about it, I there. Thankfully, it's not like I have seven things that I'm trying to do, but I have two. And I cannot seem to stop myself. They're tied. But there. There is a big enough gap that I'm well aware if I would just do like media, be in front of the camera, or I would just do storytelling, game development, my life would be better. It would be more productive in either direction. And only mental illness stops me from doing that. And I mean that very sincerely. I'm not happy about that, but at least know thyself I that about myself. We do things in the company to protect us from that.
- [81:42]
Cody Sanchez
Do you think. Why? Why do you think that that's bad? Like, Warren Buffett has multiple things and is one of the richest men in the world.
- [81:51]
Tom Bilyeu
Does he? Because he. As far as I know, and I may just not know, but as far as I know, he's. He is purely investing. He finds he. If. If you abstract out to. What he understands how to do is recognize a deal when you see it, that's it. As far as I can tell, that's all Warren Buffett knows how to do that plus operate. I don't know. I don't know him well enough to know if. If he operates. Maybe you just need a. Charlie Munger doesn't operate.
- [82:18]
Cody Sanchez
Like, did you ever hear the Charlie Munger quote? That's. He said, oh, it might not have been Charlie. It might have been his mentor. He said, you know, the difference between good leaders and bad leaders is when I hire a dog, I don't do the bark and fork it and, wow, that's good. And I thought that has really driven a lot of my business building is realizing I'm like you. I'm. In some ways, I like hands and pots, which is not very good for focus. But what I found is that there are a lot of people who are singular focus individuals who do incredibly well with one thing in front of them. And so those end up being my number two. And, you know, you've built massive wealth, so you're obviously very good at focus too. But sometimes I wonder, like, is there just one way? I mean, maybe there is a main thing and a side piece.
- [83:13]
Tom Bilyeu
I really think there are physics.
- [83:14]
Cody Sanchez
Yeah.
- [83:15]
Tom Bilyeu
I think that whoever you point to. Oh, God, I'm gonna ruin my own example here because I was gonna say, except for Elon Musk, like, it's freakish, but I. So here's what I think. Yes, but the vast majority of his career was just focused on Amazon. It wasn't until he started really starting to pull away and he had so many of the world's most talented people working for him. And my problem isn't putting my hand in too many pots because I don't want to do people's jobs. I am not a micromanager. As I tell people, if I'm micromanaging you, it's because you're not delivering results. I don't want to pay attention to you. What I want to do is the part I like, the part that I'm uniquely good at. That's all I want to focus at. And if I'm getting results in other areas, amazing. The problem is when you're the CEO, you have a bigger responsibility. You have to paint vision, you have to keep people excited. Anyway, I have a feeling that even Elon Musk, I mean, look, there might be networking things that work for him, but I have a feeling each one of his companies would be better off if he gave it 100% of his time and focus. It's just that he is such a freak. And the rate at which he can think. And also of his own admission, he's not the CEO of many of his companies. He's usually the lead product and engineer guy.
- [84:30]
Cody Sanchez
Yeah.
- [84:31]
Tom Bilyeu
And so his mind just seems to work very, very fast. So there's some level of what's the speed at which you think and how many tasks do you take on? So for instance, if I could think faster, which would not be a stretch. I am not a fast thinker. I'm a fast talker who thinks slowly and deeply about a lot of subjects. And so I confuse people who think I'm a fast talk fast thinker, but I'm not. Not. So if I could think faster, then I could have more output across more things, but I can't. And so alas, it, it, it really is holding us back. So anyway, getting into the, the tactical side here. So you need to be, you need to know yourself. You need to know what your skill set is. Need to be very careful not to misalign your particular skill set with the way that you contribute. But the cool thing, when you realized, okay, I'm not going to come up with the ne next business idea, I'm going to go buy a business. How did you begin to build a criteria? Because you have so many specific criterias from your get rich tripod to your deal valuations, have to meet certain criteria. Like, you've really systematized this stuff. How did you, in the beginning when you didn't have any of that. Yeah. How did you begin to formulate It
- [85:39]
Cody Sanchez
I have a very bad memory. And so, yeah, so one of the worst things about a bad memory is you can't remember things. One of the best things is you have to processize everything. And that frameworks and memes or, you know, specific vernacular actually help you remember. And so the reason that I have the get rich tripod and you know, my deal box and you know, our rules and thesis for investing is because I have to remember. Otherwise I do bad deals. And so I think one of the superpowers you can have have is as you're going on your journey, what I had to do, I didn't mean to do it, was document these frames that I lived by. Because one, when you're in charge, you got to communicate it to people. People. So I would go, hey, what kind of businesses do we buy? And they'd say, like, brt, right? We buy boring businesses that are recession resistant. We raise the prices, we add technology. Is the business that you're putting in front of me a BRRT business? No, it's not. Okay, go find another one. And so I would use it to communicate to people and to really communicate with myself, which is half the on my Twitter is like yelling at Cody. And probably, I don't know if you're
- [86:45]
Tom Bilyeu
the same, but exactly the same. Like when people are like, oh, man, like, you're being so hard on people. I'm like, bro, I am talking to myself.
- [86:52]
Cody Sanchez
It's a whole alter reminder. At some point I'll have to just be like lessons to Cody and it'll just be my Twitter feed. But I like to framework them out for that reason. And the way that you do that is just by taking inventory. I make so many mistakes all the time. Even like 15, 16 years into doing deals. I just had a deal go bad last month and I'm like, God, you'd think I'd figure this out by now. And every time that happens, I have a post op. So just like after you have surgery or after you have a game, you sit down and you analyze what went well and what went wrong. Strong. We do that for every single deal we do that goes sideways.
- [87:26]
Tom Bilyeu
Do you have a structure for that? Are you running them against the BRRT or.
- [87:29]
Cody Sanchez
We run them against our entire investing framework. So we usually have something called due diligence questions. So it's called a ddq. And we, we build out. Our DDQ list is now gigantic. And it's graded so, like, what's most important to what's least important. And then we look at these deals and we say, what did we learn? And so in this most recent deal, I realized, gosh, I have a flaw with partners. I pick bad partners if these characteristics are there. If they're friends of mine already, I let them in and I skip a bunch of stuff in the dddq. So now I go, oh, okay, now I have a new rule. And the rule is no new friends. You know, I don't do deals with new people until we've been together for a long time. Otherwise they go to this other person on my team and they run them through the typical due diligence because I have a weak spot there, there. And so everything that I'm doing, it's just like, you know, when you play a sport, you know, or when you, when you do a video game, like you go through and you're like, what went wrong there? Oh, I can't step out here because then the car hits me or like I can't do, can't go out to the left because that means the guy's going to get there, he's faster than I am. And I think we don't do that enough in business. So I am non stop action, analyze, action, analyze, document. And as long as you do that aad, then I find that I can kind of continuously make better decisions.