#1112 Codie Sanchez On How To Get Rich During A Recession

Codie Sanchez is an entrepreneur, investor, & founder of "Contrarian Thinking". In this conversation, Codie gives us all of the alternative ways you can earn your way to millions of dollars. Some of these strategies involve buying "boring businesses", which can bring in large amounts of yearly cashflow. We also discuss how young people can win during this recession, various business ideas, how to make money if you have no money, and tips on how to get paid more at your job. ======================= Arculus is the next generation crypto & NFT cold storage wallet that combines one of the world’s strongest security protocols with the easiest to use form factor and app. Arculus requires 3-Factor Authentication to ensure only you have access to your digital assets – something you know – a PIN, something you have – the Arculus Key Card, and biometrics. Learn more and buy it now on getarculus.com. Use promo code POMP to save 15%. Remember, with Arculus, it’s your keys, your crypto. ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Even better? Eight Sleep recently launched the next generation of the Pod. The new Pod 3 enables more accurate sleep and health tracking with double the amount of sensors, delivering you the best sleep experience on Earth. Go to eightsleep.com/pomp ======================= Valour (formerly DeFi Technologies) represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at valour.com ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit https://compassmining.io/ to start mining bitcoin today! ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Codie Sanchez is an entrepreneur, investor, and the founder of Contrarian Thinking. In this conversation, we talk about a lot, including how you can make money during a recession, why she is so obsessed with boring businesses, and then we go through tactical advice around specific businesses, evaluating ideas, how to allocate capital, and what you at home can do immediately to get started. I really enjoyed this conversation with Cody and hope you guys enjoy it as well. After listening to the episode, jump on Twitter, let us know what you liked, what you didn't like, what you agree with, and what you disagree with. I really appreciate the feedback and it helps us create better episodes in the future. All

• 0:47Anthony Pompliano?

  right, let's get into this episode with Cody. Hope you all like this one.

• 0:49Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:13Anthony Pompliano?

  All right, guys. Bang, bang. I'm here with Cody. The world's going to shit. The entire economy is collapsing. How do we make money?

• 1:20Speaker 02

  I like it.

• 1:21Anthony Pompliano?

  I think that is the question everyone's asking themselves as they're watching stock prices fall, real estate is now cooling off, crypto has essentially imploded. Just kidding. And, you know, gotta give a shout out to the faithful. People are really worried. And there's a couple of different reactions. People say, hey, I don't want to invest at all. I'm just going to save my money and like, just wait till everything recovers. But then there's other people, they see blood in the streets and they're ready to go. What do you think is kind of the play here? How do people make money during a downturn?

• 1:46Speaker 02

  Yeah, I think you're crazy to do nothing. So if I'm your audience, I'm freeing up some cash because I don't think we're at the blood in the streets level yet, actually at all. I think we're just starting, little drips. And so in my opinion, the best way to do it, and people have maybe heard me say this before, is you want cash flowing businesses with relatively low capex theoretically, or an ability to get debt, or somebody else's capital. In order to plow a bunch of money into things that you can raise prices if there's inflation and where people buy them no matter what, for instance. Do you know what I was doing yesterday?

• 2:20Anthony Pompliano?

  No.

• 2:21Speaker 02

  Actually, this isn't in my notes. We were in Tampa, Florida at a crime scene company. This crime scene cleanup company, fascinating actually. They do $12 million in revenue a year. She's a former cop. Their margins are 60%. And what happens is if you decide Polina's not going to make it, right? And, and there's a crime scene at your house, right? Then sadly, you think, oh, well, you know, the cops come in, they take the body and they clean it up. Wrong. There's no such thing as a government crime scene cleanup. In fact, you have to pay a private enterprise to come and clean up whatever mess is there. So imagine there are meth labs, fentanyl labs, hoarders. All of that costs money.

• 3:03Speaker 02

  And so if there's a meth lab cleanup, it's anywhere from $12,000 to $50,000. This lady comes in, cleans up the meth lab and makes 60% profit margins.

• 3:13Anthony Pompliano?

  Do you have to have special training to clean up the?

• 3:15Speaker 02

  And also not certifications. Isn't that wild?

• 3:17Anthony Pompliano?

  Interesting. So really, it's like no different than a moving company, right? To some degree, but it's specific for cleaning up crime scenes.

• 3:25Speaker 02

  Yeah, like California, you could imagine would probably be stricter than Florida, for instance, where you probably just throw it over your back. But moral of the story is, I think these type of boring businesses, that's recession resistant, right? Like unfortunately, we all still die. We all still have crimes. And so what I would do is I would be looking for, where is there a business? Where there's something boring, dirty or sweaty that other people don't want to do theoretically or don't think about doing, that have pretty high margins. So you make a pretty good amount of cash on it. And you can give them capital in a period where who's going to go out and fund a crime scene cleanup? Like you put that on Twitter, it's not going to get a bunch of VC capital. That's where I would be putting my money to work once recession hits.

• 4:02Anthony Pompliano?

  What are some other ideas that you've seen where you're just like, okay, crime scene cleanup is not something most people have ever heard of before? Are there other ones that you're like, this is incredible how these businesses survive?

• 4:10Speaker 02

  Oh, 100%. Well, there's so many. I mean, we filmed 30 ish videos thus far on YouTube, all about these, what I call boring businesses. We have 130 boring business lists. On our website that talks about every type of business that I think would be interesting to own. One of the other ones I really like today that I'm looking at in a big way is ice vending businesses.

• 4:30Anthony Pompliano?

  I've seen you talk about this. I think we talked about it one time before. Like, why is ice vending so good?

• 4:34Speaker 02

  Well, one of the reasons why I think it's interesting that I hadn't thought of before is every time you get into a deal, I think you should always think about how am I going to get out of a deal? Because you might not want to run an ice vending business forever, right? And so with ice vending, the cool thing about this business, it has my rule of three, which is basically a reoccurring revenue business that you can bundle up consistently that has good margins. And so with ice vending machines, you can have subscriptions for these types of businesses. You have a high repeat customer rates because they're kind of doing the same activities that they need ice vending for. And then it's also a low people, high margin business. And so I like this one because say you want to like go save the world. Well, why don't you start in a tough neighborhood located in outside of Fort Wayne, Indiana,

• 5:19Speaker 02

  where the water filtration is actually pretty bad. And so people don't want to use ice out of their refrigerators ever. They want to go to a ice vending machine and use the ice out of the ice vending machine constantly because you have better filtration systems. And so this one, I think, could solve problems and you could do it in a lot of communities where it's a cheap product relatively, but there's a huge need for it. And then PE companies like these models because they can bundle them up and sell them off. And so.

• 5:48Anthony Pompliano?

  It feels like PE firms, they used to go do really, really big deals. Then there's kind of the middle market was for independents and they thought there were some arbitrage there. Are the PE firms now getting either desperate or see opportunity and going kind of earlier and earlier as we're seeing venture capital funds and even the crossover hedge funds in the venture world go earlier and earlier? Like, will we see PE funds go and buy a business now with like a million dollars in revenue and try to scale it?

• 6:10Speaker 02

  I don't think traditional PE firms will do that at a million bucks. But I think there's a bunch of people like you and I that, you know, what's the difference between a private equity firm and Warren Buffett theoretically? Private equity just means you take somebody's money that is private and you use it to buy businesses, typically outright or a large percentage of them. And then LBOs, leveraged buyers. To use some debt or something else to apply to the business. So I think private equity has really expanded. It used to just be KKR and Carlisle and these guys. Now it could be you or me, right? So now there are micro PE guys like me that would go in and say, ah, a million dollar revenue business. I think we could do a bolt on and invest in another company on top of this. And this could be a nice little five million dollar business that we eventually sell off to somebody else.

• 6:55Speaker 02

  What I do think, though, for these big PE firms is they're realizing increasingly that some of these, you know, boring enterprises that they have historically bought at 10 to 20 million dollars in valuations. They want to start tracking earlier because it's so much more competitive to get the deal when it's at 10 mil. So you could start talking to a PE firm, like one of the ones we're talking to for selling our car washes, when you only have five or six of them. And they're like, hey, the second you have 10 or 12, call me. I want to be your first call. And then they'll buy them for two to three times what I bought them for because they're worth more as a sum that's greater than its parts.

• 7:32Anthony Pompliano?

  And when they buy it, they're buying it to you because they think they can then go bolt on from 10 to 12 to 20, 30, 40, 50. And then they'll turn on and they'll sell it to kind of the next person in the hierarchy of PE that's looking for 50 or more car washes. And you kind of just continue. And every three to five years, these companies get kind of transitioned between the owners?

• 7:51Speaker 02

  Yeah, that's exactly right. Or, you know, a lot of times they'll look at these small businesses and say, oh, my gosh, you guys don't have reoccurring subscriptions. You're using all of these people on the backend. We don't need any of them when we add them to our, you know, model. So these guys are, this isn't rocket science, but the models are relatively sophisticated where they're like, all right, right now you have 20% cost that we're not going to have. So we can pay you a little bit more for it. And yours are worth only 5X when there's so many of them because that's a job, not a business. But when you add it to our thing, they're actually worth 6X because now that makes our thing a business and not a job from a revenue standpoint. So, yeah, that's exactly right. And the game isn't always bigger. The game could just be cash flow or the fact that PE funds and, you know, all this, but like maybe people listening don't,

• 8:36Speaker 02

  have seven to 10 year investment cycles. So at a certain point, I give you my money as a PE firm, I want that cash back. And so after seven or 10 years, you're like, okay, we've 3Xed our money. Now it's time to sell this X for a premium and we close the fund. And so naturally you have velocity of businesses, which is not necessarily a bad thing.

• 8:53Anthony Pompliano?

  So most of the boring businesses that we've talked about in the past are all, I'll call it in the analog world, in the real world, right? Not on the internet with the imaginary kind of audience or activity. But there are companies, we've seen Constellation Software, we've seen many others, Vista and others, that buy internet companies or buy software-based companies. Are there companies that sit at the intersection of boring businesses and software that you find interesting? Or is it all in the analog world?

• 9:22Speaker 02

  I love this question. Yeah, we started a fund, basically, with this entire method. It happened after, actually, we were talking with some of the bigger partners at Vista who have since left and gone and done other things. Because the founder of Vista is actually the wealthiest black dude in the country. He's absolutely crushed it. And their model was essentially you just take kind of underperforming SaaS companies, right? And turn them around and sell them, or make them bigger. And I thought, gosh, that's really interesting. I always think of SaaS companies like Slack or YouTube, like, they're never going to sell the whole business to you for you to turn around and make better. But there's a bunch of these zombie SaaS companies, or these, you know, underperforming tech companies, that you could take and turn around.

• 10:06Speaker 02

  So the two types of companies I think are interesting in the tech world right now are one, that. I actually bought, we bought one tiny little SaaS company that essentially does non-stop 24/7 chat engagement with small business owners' clients. So like, imagine, like, you want to go get your lock changed. Like, you're locked out of your house, you need somebody to respond to you immediately. Most locksmiths do not have that capacity. Our software allows them to do that, and there's a real human that's connected with sort of the AI, and that allows them to outsource to a bunch of locksmiths, and the first one to respond, you know, gets the engagement.

• 10:42Anthony Pompliano?

  Side note, real quick. This is a crazy detail about the city of Miami. Anyone who lives in the high-rise buildings, in most of the situations, if you get locked out of your apartment, you cannot go to the management office and, like, get a key. You have to call a locksmith. So there's, like, multiple buildings, I know this is true. And, uh, this happened to me one time, and I called a locksmith, he was there. In like 20 minutes, he literally came not with like your normal like lock picking tools. He literally came with what looked almost like a hanger, like a, like a, um, kind of a men, a malleable hanger.

• 11:16Speaker 02

  Stop.

• 11:17Anthony Pompliano?

  Uh, but it was a, it was specially built. He put it underneath the door. He flipped it up and he yanked on it. And all he did was on the inside, he just grabbed the door handle and he pulled it and the door opened. And he turned to me, he goes, that'd be a hundred and fifty bucks. And I was like, ha, how much is it? And he was like, no, it's a hundred and fifty dollars. And I was like, what? And he was like, yeah, he's like, normally if, uh, we have to pick the lock, it's like two fifty or two hundred or whatever the number was. Uh, but if we just use this tool, then it's only like one fifty. And I was like, you spent less than three minutes in front of the door. And it just reminded me, it's like, you don't get paid for the time he's spending now. You get paid for the fact that he has the knowledge to build the tool to show up, to like, do the whole thing. And I was like, man, I bet you locksmiths are fucking amazing business.

• 11:55Speaker 02

  Amazing. Well, it's like that Paulo Picasso story where like the lady comes up to ask him for a, a painting. And he takes out a napkin and he draws like a scribble on it and hands it to her and says, that'll be $10,000. And she's like, what are you talking about? Took you 20 seconds. And he's like, no, no, that took me 10 years. But like this last part took me 20 seconds. And so I think you're right. A lot of these service businesses have all this inherent knowledge. Um, and a lot of them actually don't know how to price it that well.

• 12:20Anthony Pompliano?

  Interesting.

• 12:20Speaker 02

  It's one of my favorite parts about buying these companies. Think about them. Every single small business is Costco with their hot dogs, right? Like they haven't changed the price in 472 years and they haven't even considered it because they're doing okay. They're like happy. They're mowing them along. But for you to get your lock changed in a high rise in Miami, you'd probably pay 300 bucks because are you going to sleep outside? Like, no, you're not. You're going to pay whatever the guy tells you and it's a last minute need. And so, um, so my, my point with this conversation is these small businesses, this one that we bought, for instance, I bought it for $60,000. So not a big investment, um, relatively.

• 12:57Speaker 02

  And this business was doing about 40K in profit a year, but no marketing atrocious website. And we basically took this company, put a better, better website on it, gave it a few different lines of revenue. And now the company will do a couple hundred K in revenue. And that's like that Vista little model. Take something, sort of zombie, make it slightly better in tech and then turn it around.

• 13:20Anthony Pompliano?

  This company.

• 13:21Speaker 02

  I got this from, the best ways I get deals, probably the same for you. Why do I do the internet stuff? Because people send me interesting stuff. So this one, this one guy forever ago, reached out to me on Twitter DMs. I became friends with him. He runs a business. He was like, I found this software that I use for my business. It's amazing. This guy's older. He's ready to retire. I think we could buy it. I'll run it for you. I'm like, perfect. How much money? Let's draft up the docs. And now we've done two deals with this guy. His name's John. Shout out, John.

• 13:49Anthony Pompliano?

  And when you do that deal, you go in, you look at the business. How do you evaluate whether it's a good business or not? Like, one is, like, why do you trust John to run the business? And then, two, like, how do you know that, okay, paying 60 is a good price, but paying 100 might not be, but, you know, 75 would be, you know, iffy?

• 14:06Speaker 02

  Yeah. Well, for that small of a deal, so a couple of different things. One, your first deal should never bankrupt you, right? So if you're listening to this and 60K is a lot of money, maybe your first deal's 6K. Because you're gonna make your, some mistakes for the first one. You and I are probably the same in that we've had a lot of reps at this. And so it's like, how do you hit a ball with a bat? You're like, well, you like, put it back here. And then you kind of turn and then you follow through or whatever. And so it's the same with doing deals. I think my first deal, I did everything wrong. You know, I overpaid for the first deal. You know, I ran it myself. It was a job, not a business. But now I look at basically five key things. One is, will it bankrupt me? Two is, does it have enough cash flow for me to be meaningful? So I don't want to do a deal if it's gonna make me 2K a year. It's probably not worth it. You figure out your own metric.

• 14:50Speaker 02

  Three is, this business, am I paying a multiple on profits? And it's anywhere from two to five X. It's just what I pay for small businesses. So that's really easy and means that you don't have to screen out a bunch of extra stuff. Because I know for a small business, if I can get my money back in two years, it's a pretty low risk. And then the next one is like, is it really simple? Do I understand the business? Are they saying the word proprietary that I'm running? You know, anything-

• 15:16Anthony Pompliano?

  Why?

• 15:17Speaker 02

  Because I don't, I'm not intelligent enough to run a biotech company with proprietary XYZ that does all of this. I want like, I call it SOWs, which is simple, old, weak, and stale businesses. I want them to be super simple to understand, around for a while, so that I know they're gonna continue to stay around. Weak competition, nobody else is playing. And stale in that like, this website sucked. There was no marketing. So I don't have to be the best dealmaker, because the business has so much upside optimization. So that's how you know.

• 15:48Anthony Pompliano?

  When you look at the businesses, usually you're negotiating a purchase price with someone who has an emotional attachment to the business as well. How do you negotiate in a way that doesn't offend them, doesn't feel like you're calling their child ugly, but at the same time, you can negotiate well enough to get a price that makes sense for you?

• 16:05Speaker 02

  Yeah, it's a good point. I usually don't make it about their business. I say something like this. Hey, Pomp, you know, your business is really interesting. I'd love to talk to you about it. I buy businesses at two to five X profits, which is what the industry multiple is for a business like yours. I'm interested in discussing a little bit further. Here's sort of a link explaining what current multiples are, and I send them to a link to this research report from BizBuySell, which is the largest aggregator of small business data. And then I say something like, if it might be interesting to you to talk about selling at the right price and terms, I'd love to have a discussion. But I've already set the floor and the ceiling, really. Like, here's kind of where I go. And I've established, this isn't me, this is the market.

• 16:50Speaker 02

  So, and I haven't said, your business is only worth $200,000, even though you slaved your life for it. I've said, hey, this is what business is, or works. So you remove the emotional attachment with that, is the plan at least.

• 17:01Anthony Pompliano?

  I invested in MicroAcquire. The, I think it's similar to BizBuys, what is it called?

• 17:07Speaker 02

  BizBuySell.

• 17:07Anthony Pompliano?

  BizBuySell. MicroAcquire, I know. And I haven't bought a business off of there. When you go on and you look, are there certain things that are red flags to you?

• 17:16Speaker 02

  Yeah. There was really easy ones. There'll be a ton of them on these sites. Not MicroAcquire. MicroAcquire does a pretty good job of scrubbing the businesses, and they're all online businesses, not these like brick and mortar ones that I sometimes buy. But you don't want any business that's a franchise or startups. Those websites are littered with people that are like, oh, you can start this. It's not a business. It has to be profitable. It has to be cash flowing. Second, for these businesses, you want to make sure that there's real profits in the business. And so, a lot of times, they'll say things like, you know. $10,000 in profits, you know, you can run with this local vending machine route, but then they won't put in the seller's discretionary earnings, AKA what you make to run this.

• 18:00Speaker 02

  So in that instance, you don't want to buy a business where you're getting paid 10K a year to run it, probably. So that's the second thing. And then the third is just lots of people are going to tell you like, eh, by the way, I, my tax returns don't exactly match my P and Ls, right? And, and you just have to say, hey, man, I buy on tax returns for my first deal. I can't fuck around on like trying to figure out if your P and Ls are right or not. Once you get a little bit more sophisticated, you could dig in, you could do things like coin counts on laundromats or car washes, but for your first deal, you're like, I buy based on a profit multiple of the tax returns. So those are the three biggest items.

• 18:37Anthony Pompliano?

  Have you ever seen tax returns that are better than the P and L?

• 18:40Speaker 02

  No.

• 18:41Anthony Pompliano?

  It's funny how that happens.

• 18:42Speaker 02

  No, I'm willing to say, if you're going to cheat Uncle Sam, like, all right, you got me. But that's probably it.

• 18:48Anthony Pompliano?

  When you think of the types of businesses, many of the businesses that you've mentioned, they don't have a lot of people. And I think this is really fascinating. We've got a bunch of mutual friends that I think a lot of people are like, hey, technology, the internet, software, but also traditional businesses, people are figuring out how to do more with less people. What have you seen there that's like super interesting?

• 19:09Speaker 02

  Yeah, well, I love high margin, low people businesses. I think there's like two caveats, man, right? I mean, the first thing, you know this too. People are like, I'd like to make 200K in passive income by sitting around and I have no cash. Like, how should we do it? And it's like, nah, dude.

• 19:22Anthony Pompliano?

  Get a job. Get a job, baby.

• 19:26Speaker 02

  I don't know.

• 19:26Anthony Pompliano?

  Drive from Walmart, you get 100K.

• 19:29Speaker 02

  It's like the second you figure that out, call me, man, because I'd love to know. But, uh, so like, not that.

• 19:34Anthony Pompliano?

  That's always, by the way, that's never somebody with tons of experience says that. It's always the 18 to 22 year old kid who watched TikTok.

• 19:40Speaker 02

  Yeah, exactly, exactly.

• 19:42Anthony Pompliano?

  Hundred percent.

• 19:42Speaker 02

  A hundred percent. So like, so that's not the case, but there are a ton of businesses that I like to call, I think of them like bonds. You know how you buy equity because you think equity is going to go up? It's going to make you a bunch of money. There's a lot of businesses that are bonds, like A, I don't know. A laundromat's a good example, like a laundromat. That is never going to be worth $50 million, right? Like, I don't care what you do. Paint it, you know, put glow sticks on it. Not going to be worth $50 million. And so that type of business is relatively passive because you don't have to have an operator all the time. You're not going to try to grow the business exponentially. You use the labor of the equipment as opposed to your own labor. And it has a model that's kind of done it continuously. And so there are a bunch of businesses like this,

• 20:23Speaker 02

  like car washes, laundromats, ice vending machines, anything that's machine-heavy can often be relatively passive. But don't get me wrong. Like, you're going to at some point have somebody call and say like, you know, my XYZ inappropriate sex object got caught in your laundromat, you know? And then you're going to have to fish it out. So there's always going to be these like weird things where you actually have to.

• 20:47Anthony Pompliano?

  And the machines break, right? So there's always like the, the whole, you have to service the actual things doing the work. But also, I do think it's interesting that you can meld some of these businesses together or mold them together. And so, uh, gas stations are very interesting to me. Is it a gas station or is it a convenience store? And like, it kind of depends sometimes. Depending on how many pumps do they have? How much foot traffic do they get? You know, are they actually selling more food or gas? Like all this stuff. But then inside of the convenience store, I've seen some like pretty crazy innovative things. There's obviously, hey, we'll rent you, you know, two by two space on the floor and you can put your ATM or your crypto machine or whatever.

• 21:30Anthony Pompliano?

  But then you see like, well, what about the lottery devices that are in there? And that's just renting space, almost kind of like WeWork did, but for convenience stores where they take one space, cut it up and rent it out. But then you start to see them doing even more things. So you go into a convenience store and they realize where they are is a really special location. And so I recently went into a convenience store and they had all kinds of crazy merch. And I was like, what is going on here? And I realized that they were right at the intersection of two state lines or a state line between two states. And there was tons of tourist traffic that went back and forth. And it was like, last second before you leave the state, if you happen to stop here and you want to get that gift. Buy it here at the gas station.

• 22:11Speaker 02

  Oh, I like that.

• 22:12Anthony Pompliano?

  And so I asked the person, I said, hey, you know, how much of that do you sell? And they were like, that's, we sell more of that than anything in this store. And I was like, wow, that makes so much sense. And it reminded me, what do they do at airports? If you go to Miami airport, all the stores, every single piece of clothing in that store is Miami something. Why? Because people who are landing or people who are leaving, let me get my Miami, you know, kind of merchandise. And so it does make you think a lot about like, if you ran like a convenience store, like, what are all the things you could do within that square footage that could make more money? And then if you ask yourself, like, how many of those people actually are doing that stuff? My guess is probably very few of them. Because they're family businesses, they've been around for a while, whatever. And so it begs the question, like, if a bunch of young people come in and buy these assets, like, are we gonna see like a revitalization and kind of all new business models with some

• 22:57Anthony Pompliano?

  of these businesses and these properties?

• 22:59Speaker 02

  A hundred percent. I have two thoughts. So first of all, the gas station, yes. The fascinating part about gas stations are, they make no money on gas. The margins on gas, I can't remember. It's like three cents a gal. It's ridiculous how little money they make on gas. The play is just to get you into their ecosystem. And then they've got the car wash over there, and then they've got the air pump over there, and they charge you 50 cents for air. Like, that's probably a pretty good business. So like, all those things with car washes are interesting. I mean, with gas stations are interesting. I don't like owning gas stations because, talk about inventory. Like, could you even ima- just going into those things stresses me out with the amount of stuff that they've got in there. Now, it could probably all survive a nuclear apocalypse, because no fresh food, but for the most part, like, that's not a great business in my mind for a newbie.

• 23:41Speaker 02

  The interesting part about gas stations in general, though, I think, are that they do what you talked about really well, which is just revenue stream adding for your business. So I'm really big on, okay, when you buy a business, you buy it for the profits. That's it. I don't want to hear your story about you could do X and Y and Z, and I'm gonna pay for the X and Y and Z that you haven't done. Nope. I buy the business for what you've done. But then, in the back of my head, not talking to the seller, I'm like, ooh, okay. Well, what if we added the car wash here? Well, what if we added the air freshener, you know, distribution box over here? Well, what if we put ads on top of X, Y, and Z, and so we get that reoccurring digital revenue? All of those things, I think, are- Just like you think about, let me add a little Apple stock, let me add a little Amazon stock, and I want to have a diversified portfolio. You want your business to have that too,

• 24:26Speaker 02

  especially for these small businesses. So 100%. But to your point on, you know, kids taking over old school businesses, you know, you guys, your audience probably is not going to remember this. Do you remember that movie, You've Got Mail?

• 24:39Anthony Pompliano?

  Yeah.

• 24:40Speaker 02

  With like, okay, right? So when you got mail-

• 24:41Anthony Pompliano?

  You've Got Mail.

• 24:42Speaker 02

  Yeah, exactly. You nailed it. So they have, they had this woman who owned a little bookstore, and then like Evil Tongue Hanks, Barnes and Noble comes in and like kills her bookstore. And I remember watching that business, and now I think about what I do today, and I'm like, you know, I love making money. Most of what I do is because I think the game of money is fun. But also, like, fuck Starbucks. Like, wouldn't it be nice if on every street corner, there wasn't a Walmart, a Starbucks, a CVS? Like, I go through all these little towns all around the world. Last week, we were in Chicolote, Ohio. I'm like, a lot of them starting to look the same. I'm not into that. And so wouldn't it be better if that little bookstore, if instead of her trying to like fight the man with like her limited skill set, as somebody who had run this business for 10, 20 years, she brought in a young gun? And guess what that young gun

• 25:27Speaker 02

  would have done, probably? Maybe they would have figured out Amazon first. They would have done an actual online bookstore component. Maybe they would have done subscriptions instead. Maybe they would have added a coffee shop or a bar. And so instead of these businesses having to go under because they can't compete, or the owners are tired, they get new revitalized energy. And so that's why I have a really big component for like, young people listening, okay, fine. Yeah, go work at Slack for a while, get real skills. Go work at a big company for a while, get real skills. But after a minute, as opposed to building somebody else's house, or somebody else's castle, why don't you build your own? And hey, by the way, wouldn't it be better if you did it in like a community where you could touch something and you could create something every day? I think that'd be pretty cool. And we'd probably like our communities

• 26:09Speaker 02

  in our country a little bit better if we had less Walmarts and more corner stores.

• 26:13Anthony Pompliano?

  I have some ideas of businesses I'd love to run through with you.

• 26:16Speaker 02

  Let's do it.

• 26:16Anthony Pompliano?

  Coffee shops. I've always thought someone should create a membership-based coffee shop that was specifically structured and designed for business meetings.

• 26:25Speaker 02

  Oh, I like that. Yeah.

• 26:26Anthony Pompliano?

  How many times have you gone to a coffee shop and you're like, I don't want this weirdo listening to my conversation, or I was talking about X and now Sally over here thinks that she has an opinion on whatever. And I literally had one time a experience where I was talking about something, some tech company or whatever. And there was a gentleman, sweetest guy in the world. I frankly think he was lonely. And next thing I know, I'm like, oh, I'm having a meeting with two people, not with one, because he just kept talking and like, and interjecting and all stuff. And I was like, I would love to just be able to meet someone that isn't in an office or isn't in my home and be able to have coffee, meet quickly and leave and do it with some degree of privacy. That doesn't mean it's got to be some soundproof room or

• 27:07Anthony Pompliano?

  whatever. But like, you can imagine, you go in and there's like little booths and it's just optimized for people are going to come here, do business meetings and leave. Why would you not pay a couple hundred dollars per month to get coffee unlimited and be able to meet in peace?

• 27:22Speaker 02

  Yeah. Well, I think the cool thing about a business like that is how I like to play this game. My husband and I do it all the time. It's like, all right, let's come up with an idea like that. Now, and then we do like the Xanax matrix, which I didn't come up with, but like, but basically it's, you know, four boxes and each box, it's like, why should you do it? Why shouldn't you do it? What are the costs? What are the benefits? And I like to take that box and then overlay it with, how could we make this work? And how could we make this awesome? And so the box for that might be like, all right, we want to have a coffee business meeting place. So like Soho House, but not awful service and totally overpriced and a bunch of hipster douchebags. And also, you know, like coffee that tastes good and is a little hipster, but the thing's good for for recording podcasts. How would we make

• 28:04Speaker 02

  it work? You got a subscription model. Maybe you also have an e-commerce component. Maybe you get some sponsors because, you know, the sponsors are going to want to be in front of these business owners. You get like Slack to give you free XYZ. You get like X person to give you X. So then you start to like, kind of go down the list. How else could we make this business a huge F yes, instead of a maybe? And I don't think enough business owners do that. And so if you're a young gun coming into these, some of these businesses, and you're like, I want to own a car wash. Okay, cool. How could you own a car wash and make it amazing? And not amazing like, I think this is a cool really car wash to go to, but amazingly profitable. And so in that instance, for me, for a car wash, I'd be like, I want to add a vending machine. I want to add one of those walls like in Austin where it's like, I love tacos so much and everybody lines up and they take pictures at it.

• 28:49Speaker 02

  And then right by that, I might have a vending machine. And because I know a bunch of young people are going to come around that vending machine might have stuff that they want to buy immediately. And then maybe I'd have like automated air freshener dispensers. And so you layer on all of this stuff and that's how you turn these boring businesses into something cool.

• 29:06Anthony Pompliano?

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• 29:48Anthony Pompliano?

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• 30:30Anthony Pompliano?

  Again, eightsleep.com/pomp, you get $150 off when you use code POMP. This episode is brought to you by Valor, which represents what's next in the digital. Economy. They provide simplified trusted access in crypto, decentralized finance and web three investment opportunities. Institutions and investors can gain diversified, secure, compliant and easily tradable access to a diversified set of industry leading equity products and protocols, all through a single stock purchase on a regulated exchange. They currently are listed in the US under the DEFTF stock ticker and on the Canadian NEO exchange under DEFI. For more information or to subscribe to receive company updates and financial information, visit their website at valour.com. That's V A L O U R dot com.

• 31:15Anthony Pompliano?

  So you mentioned the walls. The other thing that I think it would be an amazing business is to reimagine. Remember when you were a kid and your parents would like take you to like a professional photographer on like some like stupid milestone?

• 31:28Speaker 02

  Yeah.

• 31:28Anthony Pompliano?

  I have four brothers, so you can imagine the five of us. And they were like trying to put us like, okay, you sit here, you lay on the ground here, whatever.

• 31:34Speaker 02

  Where are these?

• 31:35Anthony Pompliano?

  And we would just beat the shit out of each other and like pissed when somebody's crying, somebody's like this. My mom's like, just take the picture. And the photographer is just literally snapping away like, I hope I got one. Imagine today with Instagram and all this stuff, like actually, the photographer component of it is not nearly as important as like the sets and like all the stuff. And we saw, I think it's the Ice Cream Museum or whatever, like people have tried this at, they've tried like a really big scale. But like, how many people between the ages of like, I don't know, 25 and 40 who have young kids would love to take them somewhere and have like 40 or 50 different backgrounds and kind of set designs that they would love to just take photos on their phone. And if they can just take photos on their phone, now all of a sudden, you don't have to pay the photographer, you don't do any of the equipment, you don't have to like do all the things that

• 32:19Anthony Pompliano?

  they used to do after the photo was taken. It's just literally like, hey, I just hired the people paying me to now be the photographer. And they brought their own kids, thankfully. And so like have at it. And all you're doing is you're paying rent and then the cost to set it up.

• 32:33Speaker 02

  Oh, I love that. Yeah, maybe you had pets too, because you know, people are psychopaths with their pets. So I have a little pet component to it. I'm into it. Actually, our, I think you know him too, but Alex Hormozi has a business that they invested in that's like, it's a photography, it's a photography studio. And he said they do Millions of dollars a year. It's a franchise photography studio. And I think there is a mixture of in person and, you know, self-selected, whatever. I mean, even I'm here with with my videographer and photographer and like half the time like, yeah, God, I really need to go on and take these headshots and like run in for XYZ. But there's no like, where are you running in? And so, yeah, I'm on board. I think it's a good idea.

• 33:08Anthony Pompliano?

  The the other component of this around pets, wildest stat of 2022, I heard, there are 78 million dogs in America and there's like 73 million children under the age of 18. So there are more dogs than there are children under the age of 18 in the United States.

• 33:28Speaker 02

  Well, you have a kid. Are you really surprised now? I feel like you could have like a few more dogs, but like throw a few kids in. That's a commitment, man.

• 33:34Anthony Pompliano?

  It's but like, think about that, like, the dog market is bigger than the kids market.

• 33:37Speaker 02

  Yeah, I agree. Well, and I mean, the thing about dogs is, at least as far as I'm aware, you can't like throw your dog in the or your kid in the trunk and like leave them there for a while and they're still excited to see you. You know, I think there's like some other parameters. But, um, actually, we have this this mutual friend, Ramon. We focused on his company, Alpha Pet, in one of our YouTube videos. Amazing. He bought the I'm gonna mess up the numbers. Sorry, Ramon. But let's say he bought the business for like 10 or 50K. Or he bought another business and then added this one on to it. But he bought the business for nothing and now they're doing tens of millions of dollars in revenue. And his little hack that I loved was don't market to dogs. Make specific Facebook groups for like wiener dogs.

• 34:19Speaker 02

  And then for, I don't know, kavapoo's and whatever, and make branded food and branded treats and branded toys and whatever. That are probably a lot of the same thing, but for each type of dog. Because people are so crazy about breeds of dogs that that's like one of the biggest revenue drivers for his business.

• 34:37Anthony Pompliano?

  Jumpstart third grade, the old CD-ROMs that you could go buy at like the Learning Center or whatever.

• 34:44Speaker 02

  Oh, yeah.

• 34:44Anthony Pompliano?

  Do you remember they used to, for all you young kids, they literally used to sell CD-ROMs with software on them that you would use? And so there was Jumpstart software. And if I remember the details correctly, they had like elementary school software. And it was going okay, but the big breakthrough was they made it for third grade. And all the parents in second grade bought it because they're like, my kid's not going to pass third grade unless they have the third grade software. And so then they went to second grade and first grade and kindergarten and then fourth grade, fifth grade, sixth grade. And what they actually did was they drastically increased the number of SKUs that they were able to sell and they increased the throughput of each one of those individual SKUs and the business exploded. And so it's the specialization and the specific targeting ended up actually making the whole business.

• 35:26Speaker 02

  There's so many riches and niches. I know people, all the time I like to think like, don't tell me what to do. I don't like to get told what to do. I want to be free. I want to do whatever I want. And then the second in a business, I'm like, no, no, no, actually, these are your bumper lanes and stay in it. You actually make so much more money and are so much happier. I mean, we have an education business that talks about buying businesses now. And what we found is we have a buy-in business course and that does well. But we also have a course on laundromats specifically, and we have one on online businesses and we have one on car washes. And the difference is problem aware versus solution aware. And so for problem aware people, like, hey, I want to make more money because I don't want to work at this job forever, but I don't have an idea and I don't want to do a startup. I'd like to buy a business because, you know, I'm interested in that maybe.

• 36:11Speaker 02

  That person is just problem aware. They don't really want to buy a car wash. They don't want to buy a laundromat. So their intention to buy is so much lower than somebody who's like, I want to buy a car wash. So this niche, which is so much smaller, sells so much more because they're problem aware. These guys in solution aware state, basically, we just have to give them more ways to figure out what they want to do and they won't buy the, you know, generalized courses as much. And we see this, you know, now I have, I have a lot of businesses. And so across businesses, once I realized this, I'm like, oh my gosh, where are we selling to people that are not actually problem aware, they're just a solution aware? Where are we getting a lot of attention, but they don't have the intention to actually execute? And then simultaneously,

• 36:55Speaker 02

  Where do we have businesses where, you know, people are thinking about ideas but not actually moving forward towards execution? And we need to move out of those.

• 37:04Anthony Pompliano?

  You have been creating a ton of content on the internet.

• 37:07Speaker 02

  Yeah.

• 37:07Anthony Pompliano?

  And it's going very well. I know that you've talked with Night Media, who manages Mr. Beast. And it sounds like you agree and disagree with some of the decisions that they've made in the past. So I'd love to understand, like, how do you think about the content you're creating? Why are you doing it? And then, like, why are you independent versus signing with someone? And do you consider signing with someone? Or do you want to stay independent?

• 37:26Speaker 02

  Yeah. First of all, love the guys at Night Media, so no shame. And like, they're like giant and all over the internet and have way more followers than I am.

• 37:34Anthony Pompliano?

  They're rich. People can critique their strategy.

• 37:35Speaker 02

  Yeah, plus I've become friends with them. One lives down the street from me, so shout out Ben. I'll give you a hard time. So one of the things I think is really cool that the future is going to, and we've already seen it, is that everybody's going to be a content business in some way. And all my companies that don't get this, I'm trying to get them to see it. Whether they're a pressure washer company or a roofing company, like, make content even if it's just to get reviews. And Night Media, I think, is seeing this in that they're able to sell something like Mr. Beast's chocolate bar to his audience and make millions and millions of dollars. What I think's interesting, though, is I really am particular about the type of businesses that I want to engage in if I'm going to create something new. Now, they sold Mr. Beast's audience chocolate bars because who watches Mr. Beast? 10 to 15 year olds.

• 38:20Speaker 02

  That's his target audience. I had no idea they were that young. But that's why his thumbnails are really bright. That's why it's very, like, action oriented, not stop. Think about how Mr. Beast dresses, right? It's kind of childlike in a way, even though he's not a child. He's very smart. So they sold him chocolate bars, which is okay. But the problem is, you have a business, which, one, is a, you know, a business where the product after a certain period dies, right? It becomes unable to be eaten anymore. Two, you don't have a reoccurring revenue model in that business whatsoever. Three, it's a highly competitive marketplace for that business. Four, how many kids these days do you see buying chocolate bars and eating them part of their normal life? Like, people don't really buy and eat chocolate bars. You might buy and eat, like, individual bits of candy.

• 39:05Speaker 02

  So in my mind, what's going to happen in the future is if they were smart, they would have said, all right, we're going to buy, we're going to, we're going to buy rights to a video game. And we're going to have a business that is a reoccurring subscription model because there will be new iterations, to your point, on the third grade, fourth grade, fifth grade CD-ROM. We're going to have a business that has reoccurring purchase points that we build once and get to sell continuously. You don't have to keep building the video game to do it. And simultaneously, where we get to be through somebody's life cycle with them. So you can have video game one, and then as they get older, they can kind of upgrade to varying things. Plus, you can have add-on purchases. So you could have a Mr. Beast video game consult.

• 39:47Speaker 02

  You could have a Mr. Beast beanbag. And all of these things could be third-party produced, just like a lot of the Kardashians' stuff is. And so it's white-labeled product, but it is for that target audience and allows you to build those additional revenue streams around them. So I think in the future, people are going to get so much smarter about the products that they build, and you will no longer see, like, a Mr. Beast burger or a Mr. Beast chocolate bar is a really hard business to create. So I would pick something that you have a lot more opportunity to build once and sell continuously.

• 40:20Anthony Pompliano?

  Do you think, right now, they're in startup studio mode?

• 40:23Speaker 02

  Yep.

• 40:24Anthony Pompliano?

  Are they going to become a private equity firm? They're going to start buying these businesses?

• 40:27Speaker 02

  Yeah, I mean, I talked to their head of private equity. They just launched a $100 million fund with TPG Capital, the woman who's running it. Her name's Alex. She's super smart. And I think that's exactly what they're doing. They're going out and they're buying companies and then going to pair them up with big influencers, which I actually think is really, really smart if you do the right deals. And, you know, and the guys that run it, Ezra and Ben, are super intelligent, like, their backgrounds are impressive. I think they'll get more into software. Like, I've been telling them, listen, you know, and I think they'll get into business influencers, too, which is what I'm talking to them about. But you have Mr. Beast, giant audience, you know, Cody, little tiny audience. But, but my audience, the average viewer or follower of me, you know,

• 41:09Speaker 02

  60% of our audience is accredited, right? So they have some cash to throw around. They have super high intention. You know, my audience size spends a lot of money either with me or in investing. And so if I'm looking at creators, just like I'm looking at businesses, I'm looking for, okay, who has the highest ROI on each individual purchase in order for me to want to partner with them? Because maybe one, you know, user for me could be worth a hundred thousand dollars in lifetime value. And so all of this to say, you know, this world that we're living in today, it started with a bunch of influencers, you know, selling gummy bears and like skinny tees, you know, for abs that they got in the gym, right?

• 41:50Speaker 02

  And where it's going to end up is private equity firms and software companies built on the back of creators. Now, it's gonna, there's gonna be a lot of stuff that goes wrong in the middle, but that's my, my plan.

• 42:00Anthony Pompliano?

  Kim Kardashian, is this real or is this all bullshit?

• 42:03Speaker 02

  That's interesting. I never thought if it was bullshit. I think it's real. I mean,

• 42:06Anthony Pompliano?

  I do too as well.

• 42:06Speaker 02

  Yeah, I think it's real and I think they're really smart. I mean, the part that killed me is like, if you guys like look online, the screenshot of her Instagram, the day that it launched, it was like, American flag ass pic, PE announcement, Kim Kardashian. Second one, titties, Kim Kardashian, right? Like it was just like right in between the two and you know,

• 42:27Anthony Pompliano?

  But that is Kim Kardashian. That is why I think she's gonna be President of the United States one day.

• 42:30Speaker 02

  Me too, because I was like, it's actually perfect. It's like,

• 42:33Anthony Pompliano?

  Like who, who could pull that off?

• 42:34Speaker 02

  Attention grab, this, attention grab.

• 42:36Anthony Pompliano?

  And I also think it's important that she did it in reverse. Like, imagine if somebody had risen to a position of power, influence and high success, and then the sex tape came out.

• 42:46Speaker 02

  Yeah.

• 42:47Anthony Pompliano?

  You, it doesn't work, right? It, it pulls you down. So what you actually have to do is sex tape first,

• 42:51Speaker 02

  Yeah.

• 42:52Anthony Pompliano?

  reality TV star, business person, criminal justice, and then your governor.

• 42:58Speaker 02

  Yeah, that's our advice for all of you listeners. Start with the sex, sex tape.

• 43:01Anthony Pompliano?

  If you're gonna have a sex tape, do it when no one knows who you are. Yeah, like for sure.

• 43:05Speaker 02

  Yeah, a hundred percent.

• 43:06Anthony Pompliano?

  Do you see the congressman or maybe not congressman, but the person who's running, I think it's for Congress or Senate. I think it was in New York. He created a sex tape to show that he was in support of sex workers.

• 43:15Speaker 02

  No.

• 43:16Anthony Pompliano?

  Yeah.

• 43:17Speaker 02

  Sometimes, some days, I'm like, we live in a video game. This is not real. There's no chance. Like, I just, I can't.

• 43:23Anthony Pompliano?

  Like, who sat down in the campaign room and was like, you know what we should do? You should create a sex tape and then we'll tell people that you support sex workers.

• 43:33Speaker 02

  Well, we were just talking about, I mean, that, that I don't think is his brightest idea, but I'd love to meet him. I think that sounds like I could sell him something else. But the other thing we were just talking about before this was like, you should tell the Elon Musk sink story. Cause I didn't, does everybody know that? Have you already talked about that?

• 43:48Anthony Pompliano?

  We haven't talked about it, but basically Elon walks into the Twitter headquarters two days before, I think the deal got finalized and he's carrying like a big ceramic sink. And he tweeted it and said, entering Twitter HQ, let that sink in. And it's like, immediately I just jumped to Bloomberg interviewed him and they asked him, would you rather be a billionaire or a meme lord? And of course, the billionaire says a meme lord. And so like, it takes a sense of humor, but like, actually what a great way to break the ice with a bunch of people who think that you're literally showing up with like a virtual flamethrower and you're going to fire them all.

• 44:25Speaker 02

  It's amazing. Well, and the other thing we were talking about is, you know, at some point you start to make a little bit of money and then you feel pretty comfortable, at least with life. I don't think you ever like lose that, oh my God, I could lose it all at any moment. They're going to find out. But, but in some ways, it's like, you want to have fun when you run these businesses. You know, we were just out at a car wash in, in Ohio and I was talking to the owner of it. We were running through their business and I'm like, all right, now I'm going to wrap you in this hose and we're going to talk about like, what could suck about getting like stuck within your car wash? He was like, okay, you know, I'll do that. I'm like, listen, the reason we have businesses is because it's fun to grow and it's a fun game, but we don't have to take life that seriously. And also, by the way, it's pretty fun running businesses. Like, it's not fun if you have to wear a suit and tie every day like I did when I was doing the Goldman Sachs investment

• 45:10Speaker 02

  banking thing and you have to pretend to be some. Suit, but at some point, you know, you get to run your own business and then why not make it entertaining for your customers and the people that work for you? And that's the goal. I need to like bring a sink more places.

• 45:25Anthony Pompliano?

  I have a theory about a lot of the investment banks. It is the most aspirational, safe path that you can take. And so the people who go and do that, majority, not all, there are outliers, but majority of them end up not going and actually starting businesses because the path and the thought process that it takes to go do that, for the most part, will preclude you from being able to stomach the risk that it takes to go start. And it also is, Jay-Z's got this line, he says, "We're corner boys with corner offices," right? And it's like literally the difference between the street and the boardroom strategy. So you're an outlier in that like you were able to go do that, but still were able to kind of like break out of the matrix, you know, whatever you want to think about it

• 46:07Anthony Pompliano?

  and be like, wait a second, like, I actually want to practice this myself, not just be a point in this big machine that is doing this. Yeah, our firm is doing it, but like, are you really doing it if you're just the person who's putting together the numbers or the deck?

• 46:19Speaker 02

  Oh, yeah.

• 46:20Anthony Pompliano?

  Kind of not really, right?

• 46:21Speaker 02

  No. Well, and it's the golden handcuffs too. You know, you start making some money, you can make some good money in that space, and then you're like, oh, God, I gotta go do a startup and pay for me to maybe one day eventually make money? That's crazy town. And so I do get that. The other thing is, I think finance-

• 46:34Anthony Pompliano?

  Do you get it, though?

• 46:35Speaker 02

  Yeah.

• 46:36Anthony Pompliano?

  I don't understand it because like, I know people who are actively, like, every day, and I'm like, you are not happy doing what you are doing, right? Like, to some degree, like, imagine loving money so much that you are willing to do things that you're unhappy doing with on a day-to-day basis.

• 46:56Speaker 02

  Yeah, I mean, I think it's hard for you and I to stomach it because we've gotten past it. But, you know, if you think about most humans in the US, what's the truth? We're overweight, we're unhappy, we're on prescription pills, we don't have wealth, and we're divorced increasingly and not having sex as a society. So like, human nature today, at least, is like massively path of least resistance and largely unhappy. And so while you and I, I think, probably don't, we don't- Contemplate life that way and it gives us existential angst to ponder the idea of living inside of a cubicle with somebody else's rules over us constantly. Other people somehow have been wrapped up by society to think that that is okay to live that way.

• 47:38Anthony Pompliano?

  And I want to make a clear distinction between like, there's some people who they have no other choice, right? Like, like if you're in a situation where you're like, I got student debt, I have a family, I have like all these things and like literally, we need to make money in order to eat.

• 47:50Speaker 02

  Yeah.

• 47:51Anthony Pompliano?

  That's a completely different story than the people who like, if you're making $250,000 and you're working at an investment bank and you're unhappy, like you have, and you've been there for five years, like you're a fucking idiot if you do not have money in the bank to be able to quit your job for six months to go try something else.

• 48:04Speaker 02

  Yeah.

• 48:04Anthony Pompliano?

  Right? Like you, you have either partied too much, you have made some really bad financial decisions, done too many drugs, like there's something that happened in your life that got you in a position where you've made 1.25 million dollars over the last five years and you've got nothing left to be able to quit your job for six months.

• 48:18Speaker 02

  Oh my God. I mean, well, I trigger these guys all the time on Twitter because you know, it's like crabs in a bucket. So, you know, you start to make the cash and then you see somebody that like starts explaining like, yeah, we're not doing rocket science. It's two and 20. We put together some models, we get some bank debt, we think that this business looks profitable, we buy it, we sell it. Like it's not actually that intelligent. And when you start saying that, people start losing their minds because they have their identity wrapped up in being a banker bro, right? And so I think this happens all the time. I try to shake it up a little bit. Everybody gets pissed at me on the internet, but I think at the end of the day, there's like a little boy inside a bunch of these dudes that is like scared. They're like, oh my God, people are going to find out, I don't know how to run a business. People are going to find out, all I do investment banking is make decks. People are going to find out that like, yeah, I'm like, I don't

• 49:03Speaker 02

  work out because I don't have time. I haven't seen the sun in 72 years, you know, like I'm at Tao every night with my sparklers, but like I'm pretty much dying on the inside. And I think that's what a lot of them are. And so, I mean.

• 49:16Anthony Pompliano?

  Tao, what a shout out.

• 49:19Speaker 02

  You don't know all about that in crypto. That was your guys' moment for a while. But yeah, I think those guys increasingly like I almost feel bad for them because I think even making 250K, there's nothing more miserable than a please fix this PowerPoint.

• 49:33Anthony Pompliano?

  I have a framework. There's actually a lot of these folks who are in their mid 20s who I'm not like a mentor to them, but like we talk and ask them opinions about certain career decisions or whatever. And I always tell them, it's the 10 year sign on the dotted line framework. And all it means is if you do the same thing for 10 years and you're never responsible for signing on the line for the deal, then like you're not doing deals.

• 49:57Speaker 02

  Yep.

• 49:58Anthony Pompliano?

  So if you're 22, I don't care who you are, unless you're a huge outlier, you're not going to be signing for the deal, right? If you're 25, still unlikely. If you're 28, still, okay, maybe you're starting to get, you know, high enough in the organization. If you're 32 years old, you've been somewhere for 10 years in an industry and you're still not the decision maker on, I don't care if it's the smallest deal that the firm does all year long, but like something is putting you on a trajectory where like, if you haven't done it in 10 years, what makes you think you're going to do it in 12 or 14 or 16 or 20? And so in 10 years, you got to have the ability to sign on the dotted line somewhere because if you don't, you never will.

• 50:36Speaker 02

  Yeah, 100%. And that's why like for people like this, it's like, man, go to something that matters, you know? Get, get out of, you know, New York every seven seconds, traveling to the Hamptons, like leave the deal sleds behind. And instead, you know, in my opinion, like go, go take that brain you have, which is probably pretty intelligent if you're able to analyze all of these numbers. And if you're doing anything in finance and like buy a small business, you know, or go start something on the side and do it for the love of it, not just for the cash. And I, you know, I think what'll end up happening is they'll realize, man, I thought I was a deal junkie in investment banking, but it turns out I'm just a deal junkie in general and I actually might like to build something. And so rehab, right?

• 51:14Anthony Pompliano?

  The other piece that I always say to them is, how much does your boss's boss make? And what, what ends up happening is like, these people, like some of them are making, you know, 150 to $300,000, then they'll kind of jump up to 500, 700,000, then You'll get kind of like VP MD levels that now all of a sudden you're making a million dollars, million and a half dollars, right? I'm like, okay, all that's cool. Like, how much does your boss's boss make? And usually, there's like a million dollar milestone, there's like a five million, and then the leap from five is to like 50, right? Like, there's no like difference between five and seven, right? It is literally inside these organizations, like you make a million, you make five, and then it's like unlimited. And what I always explain to them is like, if you stay there

• 51:54Anthony Pompliano?

  for too long, you're capped at five, because you, the person who makes five at that same organization never makes unlimited, right? Because they are in a different seat. And so, you have to put yourself in a position if you desire, again, some people just don't want to do it, right? But if you desire to be in an unlimited earning seat, then you have to get out of the like track that you're in. And to your point, like, it is scary, right? Like, actually, in some way, the earlier that you rip the Band-Aid off, the better off you are, because you're too stupid.

• 52:24Speaker 02

  Yeah, exactly.

• 52:26Anthony Pompliano?

  Like, you're literally too dumb to realize this is a bad decision. And so you just do it, and then you realize, oh, I'll just like figure it out.

• 52:31Speaker 02

  Oh, 100%. Well, and I think, you know, the other thing is like, we're not talking about dying here. Nobody's dying, nobody's dying. And like, if you're in these positions, you're probably never going homeless. Like, we're actually in this amazingly lucky situation. And so, how can we do something really cool with what we got? I always loved that, was it Hemingway? I think his quote was like, I wanna, you know, end up at the end of my days in front of the pearly gates, like battered, beaten, and, you know, and totally used up. I don't want to be like, clean and ready to go. And I think that's sort of the point of life, and why I like doing some hard things. Also, like, more people need to get in the gym, man. Just like lift some heavy stuff, do a few hard physical things, and then you'll be like, oh, I, yeah, I quit my job today to start something else. It's fine. Everybody's gonna be fine.

• 53:13Anthony Pompliano?

  The other piece of this is the internet actually makes it so much easier, right? Like, when you think of all the asset-heavy businesses, you need lots of capital, you know, stuff. But like, today, I mean, I know two different people who have recently quit their jobs, and they quit it because they have a Substack. Like, that sounds insane, right? But you're like, wait, how much money are you making? And they're like, making like 100K. And one of them actually took a little bit of a pay cut, quit his job, he was probably, I don't Like I probably make like 140, 150. And so he took a pay cut to go do it, but he's like, but if I can do 100 in my free time, I can do 300 if I focus on it. Right? So there's like the willingness to take a step back to go forward.

• 53:49Speaker 02

  Yeah.

• 53:50Anthony Pompliano?

  Uh, and then the other person, like they definitely weren't making, I think they make it 125 or something now on the Substack. Like they weren't doing that in their regular job. So they basically in their free time, gave themselves a promotion.

• 54:00Speaker 02

  I love that. Well, and even, you know, even if you don't want to go start the thing, I mean, there's a lot of founder porn out there, right? But I think get on board with some way to have some ownership to your point, somewhere where you got skin in the game, right? And so maybe that is going and joining a cool startup. Maybe that is joining your team here. Maybe that is getting on, you know, some new, uh, you know, business that somebody else is buying, but you're helping to fund the deals and you're helping to find them and you ask and you put some cash into the deals yourself. You're signing docs. And so I think that's the goal. Just get ownership in some way, shape or form, or get some aligned pay where like, hey, if I do X, Y, and Z, and this happens, you know, can I get compensated for that?

• 54:41Speaker 02

  And, and that I think then at the end of your, your day, at least you don't have in your accountant, on your, you know, tombstone that you were just somebody else's accountant.

• 54:49Anthony Pompliano?

  So two things come to mind. One, uh, I don't think I've ever said this, uh, before, but, uh, what we do is we take a portion of revenue and we put it into a pot. And everyone who helps create that revenue gets a piece of it.

• 54:59Speaker 02

  That's cool. I love that.

• 55:00Anthony Pompliano?

  Now, why? Because most of the media businesses that are like these individuals, Joe Rogan can never sell the Joe Rogan podcast. He can license it, which he did. He cannot sell it because Joe Rogan can't stop recording the Joe Rogan podcast. So what you get is, uh, the incentives are weird in a lot of the individual based media companies where there is no equity. There's no ability to sell it. That's bad for the person doing it. And it's also bad for the team. Because like the, the shitty thing to do would be like, oh, give all these people like basically phantom equity. Instead, if you do it more on like a revenue or a profit share standpoint, now all of a sudden it's a feedback loop, right? Everyone on the team knows, hey, we're making more or less money. And like when people are making more money, they're excited, they're enthusiastic, they want to work hard. If you're making less money, people are like, shit, this sucks. If you get the right team, like let's get back to making more money, whatever.

• 55:46Anthony Pompliano?

  So I think that's always like, people think like, get. Ownership has to be equity, but like you have to be honest about like, is the equity ever going to be worth something? Because I look at, and we get approached all the time by people who are like, hey, we should like do a deal like you helped me grow all my channels and stuff. I'm like, I'll give you equity. And I'm like, I don't, your equity is worthless. Like you couldn't pay me to take the equity, right? But like a revenue share I'd be interested in. And so understanding where value accrues is really important. The second thing is, uh, I have tons of young people who always come to me and they're like, hey, I'd like a job. And I'm like, cool. What can you do? And some of them are like very sophisticated and like I can do A, B, C, D. Here's how I've done it before. And you're like, got it. Like you're sophisticated. Other people are like, what do you need done? Ah, it's the worst.

• 56:29Anthony Pompliano?

  What do you need done people? I'm like, ah, I need you to stop emailing me. Love you. Like, you know, email me later when you've got like a plan, right? But the other folks, when it comes to compensation, I always say the same thing. I say, look, there's two compensation paths here. I can give you a bigger guaranteed like monthly salary and very, very little upside. Or I can give you a small monthly salary and immense upside. And immediately here's some alpha for all of you. If you pick the big monthly salary, you're the wrong person. Right? And, and I get it. I'll always talk to them about like, you know, what are your monthly expenses, your family situation? Like, like there, there's other things that go into it.

• 57:09Anthony Pompliano?

  But the most part, like the people who are hiring, they want the person who will bet on themselves and take the upside and all that stuff. Because if it works, the people that I know that are really, really good at running organizations, they want their people to get paid a lot. When I got into the asset management game, I, I met somebody who was incredibly successful at raising assets and building asset management. Where they managed like $30 billion, like the top of the top of the top. And I said to him, I said, what's the secret? He said, all the salespeople drive Ferraris. And I was like, what? And he was like, yes. He goes, I, that's how I flex is that like all of the salespeople drive Ferraris. And I've been like, what are you talking about? And he was like, we pay them incredibly well. So the best salespeople come and work here. They then go and they're the best. So they raise all the assets, which we get management fees on.

• 57:54Anthony Pompliano?

  And then we share an outsized percentage of that with them compared to other organizations. And so when I show up to somebody else's firm and all of their salespeople have Toyotas in the parking lot, I'm like, you suck. And your people will never be able to work for my, uh, for my organization because they're not good enough to go drive a Ferrari. And I remember just being like, that is so fucked up, but also like so genius.

• 58:15Speaker 02

  Oh, yeah. I feel like I know this guy. Yeah.

• 58:19Speaker 02

  Same person. But yeah, he, he, I always called him the cult leader. This particular guy I did some stuff with. And he does the same thing. He used to come to the annual meeting and he would be like, I have one goal this year. And he had like this big personality to come on stage, have one goal this year. And I was like, for every motherfucker in this room to be a millionaire. And everybody would be like, nah. And, and to his credit, a bunch of them were. And like millionaires, multi, multi times over. And he had really clear aligned pay. I think to your point, if, if, you know, if you're a newbie, there's one thing you should do, like only one thing. And it should be, you need to understand where profit and revenue come from in the

• 59:03Speaker 02

  business that you want to work in and how you can insert yourself into that as a leverage point. And so if you come to me and like, this actually happens, like one of our video editors came to me, he lives in India, he's good. And, and he was like, I want to come work full time. And I was like, okay, what would that look like? And he's like, well, I want $272,000. And I was like, come again? I'm like, is this, are we, is currency differential? What are we talking about here? He's like, no, no, US dollars, $272,000. I'm like, bud, first of all, why? And of course, couldn't back it up. Second, like, where'd you come up with this number? What do you think we make on YouTube?

• 59:39Anthony Pompliano?

  272,000 is a very specific number.

• 59:42Speaker 02

  Very true.

• 59:43Anthony Pompliano?

  There's math that goes into that.

• 59:44Speaker 02

  Yeah, I don't know. Well, he didn't have a good answer. But my whole point is if he came and said, hey, I want X amount of dollars, I don't know, $70,000 a year. And I want it because I'm going to do this for our channel and I'm going to get our channel to hit these goals. Then I would listen and I might not agree to everything that he says, but I, there's real like backing behind it. And so for anybody that's working for somebody else, that's what you do. You come in, you understand where the revenue is, you understand where the profit is, and you figure out, how can I make this person more money? And like that, I always did that with that CEO, actually, that I was talking about. When I went and started working with him for the first time, I was like, I'm working at a really big firm, I'm going to come to a smaller firm. The only reason I'm going to do that is because I think we're going to have this huge outcome. And I slid a napkin across the table to him and I was like, if I get us to this number,

• 1:00:29Speaker 02

  then we make this number and I want this number. And he was like, yeah, of course, because I understood the economics of the business.

• 1:00:37Anthony Pompliano?

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• 1:01:21Anthony Pompliano?

  The more you trade, the more you earn. Go download the FTX app today and use referral code POMP. This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of liquidity and they have 100% uptime track record through all the volatility spikes. LMAX Group's liquidity relationships and ultra-low latency technology means that LMAX Digital is the market-leading solution for institutions across crypto trading and custodial services. LMAX Digital: secure, liquid, and trusted. Go learn more at lmaxdigital.com/pomp. Again, that's lmaxdigital.com/pomp. Asking for raises inside of a company is probably one of the most popular questions that I get from people who are like,

• 1:02:03Anthony Pompliano?

  "Hey, I think that I should go get a raise at my company. Like, how should I do it?" And my thing is always like, whatever you ask for, you have to deliver 4 to 10x, depending on the business, in that in revenue or profit, depending on the specifics, or it doesn't make sense for the business. So if you're getting paid, you know, just use the numbers, 100K and you want 150, that's a 50% increase. You can't just increase the revenue by 50K because the business actually will lose money. You may need to be able to show a path to, can you increase the revenue of the business by $250,000 or $300,000? And then it makes a ton of sense. And what I've always found sad is that like, most people don't have the ability to have kind of those nuanced conversations because they don't even understand the business they're in.

• 1:02:47Anthony Pompliano?

  Right? If you don't understand how the business works, then all the conversations you're gonna have with a boss, executives, whatever, doesn't really make a lot of sense because they're like, you don't get it. And if you don't get it, then why would I pay you more money? Why would I put you in a position of more responsibility? Because you're not thinking the way that we think, and therefore, we gotta go find people who do.

• 1:03:07Speaker 02

  Yeah, I mean, I had a guy, I have a lot of people come to me often, because I talk about deal structuring and deal terms a lot. And they'll come to me like, one guy's pretty high up at a large production company. Like, name you would know, he makes a lot of money. And he was like, God, I'm kind of trapped in this. I do this really cool job, I make a ton of money. But one, I don't know how to negotiate something different. And two, like, I wouldn't know how to go buy a business in this space. And, you know, and all I said to him was like, well, do those first things. That go learn how to buy businesses, because you're gonna understand deal structuring, you're gonna understand terms, you're gonna understand how a business works from a P and L and cash flow perspective. And it's actually kind of rare that people fully understand that. And people tell me all the time, like, I'm a business, I know how to do all this. I'm like, have you ever run

• 1:03:51Speaker 02

  a 13-week rolling cash flow? In order to make sure you understand where every dime in a business is? Do you understand zero-based expenses? Where like, every single dime that you have, you need to rationalize why we spend one way or the other. And what's interesting is if you can play the game of like, let me just get really curious about business, you'll make a ton of money. And then you can apply that to negotiation really easy. Because what's negotiation about? When you negotiate with your little daughter, she's not old enough for it, yeah, but when she-

• 1:04:19Anthony Pompliano?

  Oh, she's old enough.

• 1:04:19Speaker 02

  Oh, she is?

• 1:04:20Anthony Pompliano?

  She's negotiating. She don't talk, but she's negotiating.

• 1:04:23Speaker 02

  Oh, yeah, that's true, right? But you're like bedtime, right? You know she wants to stay up, right? Kids always do. So what do you do? You work from their leverage point. And so, most people don't know how to do that with business owners. But even like, I don't know if you've ever had this, I've had like, the funniest interactions lately in like, DMs and like, Instagram or whatever, as you've gotten bigger, and you start interacting with other people that are bigger. I find even really big names on the internet are so dense when it comes to negotiations. Like, one person the other day- Hope he's not listening.

• 1:04:53Anthony Pompliano?

  Name.

• 1:04:54Speaker 02

  Yeah, no.

• 1:04:56Speaker 02

  Literally, like, we're going back and forth in the DMs. Samuel's gonna laugh at this story. And, uh, and he's like, uh, you know, I'm like, yeah, cool podcast like that, whatever. Most recent one you did, we got some mutual friends, blah, blah, blah. And then he comes at me with, I think he's like trying to impress me a little bit, but he's like, uh, yeah, well, if you like the podcast, have you taken my networking course? You know, here it is. It's here's a discount if you want it. And I was like, I think I'm, I'm, I'm doing okay. I got a few people I know. I like, I'm, I'm all right right now, but like, thanks. Hey, I appreciate that. And then writes back, uh, not really though. And I'm like, huh, what do you mean? He's like, I don't know if you've ever heard of this guy, Reid Hoffman from LinkedIn. He's a billionaire, by the way. And then he proceeds to tell me about how networking works.

• 1:05:39Speaker 02

  And I was just sitting there thinking, this is fascinating. Like, what do you think he thinks my end goal is? And what do you, what is his with this conversation? And this is a very successful human. If I said his name, you probably know the guy. And like, I've had so many interactions like this, that it's made me realize that even really successful people have no idea how to get what they want in negotiation. So I should probably, I'll create a negotiation course. I'll send it back to him. I'll give him a hot discount. We could take it from there, but it's super rare to be good at it.

• 1:06:08Anthony Pompliano?

  There's two things that, uh, my wife and I have decided are important to teach our child, not for every child, but our child, we think is important. One is good decision making and the other is the ability to negotiate.

• 1:06:18Speaker 02

  Yeah.

• 1:06:18Anthony Pompliano?

  Uh, but not like sit down and negotiate a contract, right? But just every single thing in your life comes down to, uh, you're faced with a decision. Can you make good decisions? Do you have a good framework to understand pros and cons, risk, reward, uh, options? Like all these things that go into it. Like if you're a good decision maker, you're have a higher probability of like being okay in life.

• 1:06:37Speaker 02

  Yeah.

• 1:06:37Anthony Pompliano?

  And then negotiation is many times implementing the decision that you're making and getting what you want. And, uh, a lot of people, I think, look at negotiating as the zero sum game. I win, you lose.

• 1:06:47Speaker 02

  Yeah.

• 1:06:48Anthony Pompliano?

  Instead, the best negotiators actually I win, you win. And that's how deals get done. And I think that that gets lost. And until people start to like really, really get into doing a lot of negotiating, uh, you can almost tell immediately if a negotiation starts off with. Demands and not questions.

• 1:07:04Speaker 02

  Ooh.

• 1:07:04Anthony Pompliano?

  Almost categorically, they don't know what they're doing.

• 1:07:07Speaker 02

  That is so true. Every single time. Demands and not questions. If it starts out with prices instead of questions, I totally agree. Oh, wait, I want to talk about one other thing. We need to make sure we tell people how to make money in a recession, fully. So there's actually, we came out with a blog post today. It's on Contrary in Thinking. You can see it, but it's like seven ways to buy a business with zero dollars. I think we should riff on some ways to make money if you have no money.

• 1:07:30Anthony Pompliano?

  Okay.

• 1:07:31Speaker 02

  Don't be lazy, caveat. But there's a couple of different ways. One, during the pandemic, 60% of all businesses shut down that temporarily shut down. Huge, huge problem. Now during the next recession, probably not the same level, but there'll be some of those. Every time a business shuts down, I'm sure you agree, there's always value somewhere in the business. And so there's like three types of ways I like to do deals when a business is closing, which is happening now. You're starting to see some of it. One is aqua hire, right? If you have your competitors shutting down and you run a business and you're not going out there and trying to poach their top talent, you're crazy. You should be doing that in restaurants. You should be doing that in gyms. You should be doing that in tech companies.

• 1:08:11Speaker 02

  It only happens in VC-backed tech companies. Two, client acquisition. You run a local gym, let's say. The Pilates studio down the way shuts down. Usually, nothing happens with that business. Why wouldn't you go to the owner and say instead, hey, I want you to have an annuity in your business where you continue to earn even though the business is shut down? And what if your, all of your clients that you've spent all this time cultivating now have a new place to go to? Why don't you let me send an email or you send an email to your list with a couple affiliate links? Anybody that transitions over to my business will give a discount. You'll own part of them for the next two years, right? So that's client list acquisition. Three is also obviously asset acquisition.

• 1:08:51Speaker 02

  So lots of people do this in our world, but not very many people think. That crime scene cleanup company I went to yesterday? When they go to a hoarding site, they take a bunch of the stuff out of there that people want to get rid of it and they turn around and they sell it. They also clean up those houses sometimes and say, the people who are hoarding are like, I need to clean it up because I'm going to sell. And they're like, why don't we just buy it as is? Massive discount. So asset acquisition. You can do that. She bought a house not too many months ago. I can't remember the exact number for a dollar in Tampa, Florida. And so that is totally applicable.

• 1:09:24Anthony Pompliano?

  Was it worth more than a dollar?

• 1:09:25Speaker 02

  Yeah, I think so. Slightly. It wasn't a Barbie house. So, yeah.

• 1:09:30Anthony Pompliano?

  And when you think of things like client list acquisition, how much of it is you acquire the list and then you tell them, hey, by the way, like I'm so and so, you know, this is what we do. It's similar to this other thing. It's shutting down, whatever. Versus like you just add them to your email list and like yours off to the races and just see if they click.

• 1:09:48Speaker 02

  I actually wouldn't do either. I would do it based on a success fee. So if I was going to buy somebody else's client list, because they don't think that that has a value. They're about to just let it go away. So don't put a dollar value on it. Instead, say, why don't I pay you for every person that transfers over? And so you can let them control it for a period. Then also you can get away from like some GDPR, like some issues. If you just buy an email list and then add them immediately to your other list. So that's how I would do it. And you don't even have to own a business to do this. You could just be a broker, right? You could be like, I'm Cody. I own no businesses, but this restaurant shut down. I bet they have an email list. I bet they have reviews. I bet they have all this stuff. Why don't I go to a bunch of restaurants in the area and see if anybody wants to give me a percentage?

• 1:10:30Speaker 02

  If I bring this to that restaurant or whatever type of business. So three, three ideas for you guys. If you want to figure out no cash, but a way to buy a business.

• 1:10:38Anthony Pompliano?

  I think that email is still highly underrated.

• 1:10:40Speaker 02

  Yeah.

• 1:10:41Anthony Pompliano?

  Right? I mean, so many people are focused on all these like super sexy, interesting, shiny things. And it's like, I spend most of my time on email.

• 1:10:49Speaker 02

  Yeah. How big's your email now?

• 1:10:51Anthony Pompliano?

  It's big.

• 1:10:51Speaker 02

  It's, I know. I remember like you told me some time ago what it was and I was amazed.

• 1:10:57Anthony Pompliano?

  It's big, I think, for what people would think, but it's small in the grand scheme of things.

• 1:11:02Speaker 02

  Yeah.

• 1:11:03Anthony Pompliano?

  Right? Like we talked, we were talking earlier about Agora. Like, I don't know how many email subscribers they have across all the emails.

• 1:11:08Speaker 02

  Yeah.

• 1:11:09Anthony Pompliano?

  Maybe even a hundred million, right? Like if you're doing, was it a billion dollars in revenue?

• 1:11:14Speaker 02

  Word on the street is.

• 1:11:15Anthony Pompliano?

  Yeah. So if they're doing a billion dollars in revenue a year and you just start backing into CPMs. Like, yes, they get higher CPMs, it's specific targeted audience, whatever. But like, I don't know. Could you have a hundred million? Probably.

• 1:11:28Speaker 02

  Yeah.

• 1:11:29Anthony Pompliano?

  Right? Like that's like a pretty big number to do a billion dollars in revenue. And so it's like, okay, that's an email company, right? And It'd be interesting. I don't know how much like a MailChimp makes in revenue, but like, does Agora or MailChimp make more money?

• 1:11:47Speaker 02

  Yeah.

• 1:11:47Anthony Pompliano?

  I don't know. Billion dollars in revenue is a big number. And so like, that's one of those situations where like, maybe actually being the service is a better business than being the like platform.

• 1:11:58Speaker 02

  Yeah. Well, I think, I think Workweek, they put out a good article, basically talking about why so many creator companies were failing. I mean, not to, not to, you know, blast Substack, but nine million in revenue, like, probably our businesses do more than Substack does in total revenue, which is wild. Then you apply their valuation versus like what the valuation would be on our businesses. And so I think a lot of these creator businesses, they played a game of like, I'm gonna go out to fish, I'm just gonna bring a big net. And I'm gonna throw it out there, and I'm gonna hope that I catch a bunch of stuff. And I think what they realized is the best creators, like, it's always the 80/20 rule, man. And so the best creators are always going to drive the most revenue. And what you actually want to do is optimize for those as opposed to just have the

• 1:12:40Speaker 02

  super wide net. And a lot of these companies, I think, are having that same way.

• 1:12:44Anthony Pompliano?

  So I agree in general, Substack, this may be a hot take. I think is gonna be one of the most important companies. Context is, I was very, very, so I was one of the first 20 or 50 writers or whatever on there. And I spent a lot of time working with them. I've even invested in the business whole thing. But one of the things they understand that all the other creator companies don't is like, the initial thing is exactly correct. The network is really important there.

• 1:13:12Speaker 02

  Yeah.

• 1:13:12Anthony Pompliano?

  And so one of the features they recently launched is when you sign up for one person's email list, they can recommend other people's emails.

• 1:13:20Speaker 02

  Yeah.

• 1:13:20Anthony Pompliano?

  And so now, some of these people, 50 to 70% of all of their growth is coming from this like recommendation network that they've created.

• 1:13:27Speaker 02

  Yeah.

• 1:13:28Anthony Pompliano?

  So like, I, one of the things that people always forget is like, creating content on the internet, there are people who like the content. You, that does not mean you will be successful in building a business. You still have to be an entrepreneur. You still have to market it. You still have to understand how to negotiate deals. You still have to do all these things. That just creating content doesn't cover. So if they can help you get more subscribers, like that's pretty valuable. But then what they've started to do is then they've started to add other features. Some of them are public, some of them are that they're testing. And what you start to realize is like, oh, like they're just going to build like the sales force equivalent for these creators in a way where they just say, look, if you want ad revenue, like there's all these other platforms, but we're going to be the dominant player for subscription revenue.

• 1:14:07Speaker 02

  Yeah.

• 1:14:08Anthony Pompliano?

  And you look at it and you're like, okay, that's like a very clear thesis. Will it work? Still questionable.

• 1:14:13Speaker 02

  Yeah.

• 1:14:13Anthony Pompliano?

  But my thought process is that the consumer behavior has now officially changed. Do we want to guess how many subscriptions you and I both have?

• 1:14:21Speaker 02

  A lot. It'd be embarrassing. Don't do it. My mom's going to panic.

• 1:14:24Anthony Pompliano?

  I don't know.

• 1:14:25Speaker 02

  Yeah.

• 1:14:26Anthony Pompliano?

  And I have a friend. Her husband always jokes with me and her that he just like shows up at their house and like shit just shows up. And he's like, what is this? And she's like, oh, it's a subscription, like whatever. He's like, you didn't even know this was coming. Like you literally have so many subscriptions.

• 1:14:42Speaker 02

  So bad.

• 1:14:43Anthony Pompliano?

  I'm not that bad, but like I've got enough. And when you look at them, it's like, oh, my consumer behavior changed. I now do not think twice whether it is a one-time purchase or a subscription purchase, because I almost expect these businesses all to move to subscription. And so if consumer behavior changes, then guess what's going to happen? It's like, it's going to change in these other markets as well. And so like people subscribing to a Substack doesn't feel any different than subscribing to all the other subscription services.

• 1:15:10Speaker 02

  Yeah. Yeah, I think it'll be interesting. I mean, I believe in the infrastructure of the creator economy to a certain extent, because I invested in, we're competitors, actually, it turns out.

• 1:15:19Anthony Pompliano?

  Oh, are we?

• 1:15:20Speaker 02

  Uh huh.

• 1:15:20Anthony Pompliano?

  What did you invest in?

• 1:15:21Speaker 02

  I invested in Beehive.

• 1:15:23Anthony Pompliano?

  Oh, yeah.

• 1:15:23Speaker 02

  Yeah. So they were the guys that were behind the Morning Brew's infrastructure. And, you know, I think there's room in this space for lots of different models, just like everywhere else. And in fact, I think there's not enough tools for this new economy yet. So I think it's awesome.

• 1:15:36Anthony Pompliano?

  But it's all just small businesses. Like that, that's the other thing is all the creators are just the equivalent of the small, medium sized businesses.

• 1:15:41Speaker 02

  Yeah.

• 1:15:41Anthony Pompliano?

  50% of jobs in America come from SMBs.

• 1:15:44Speaker 02

  Yeah.

• 1:15:44Anthony Pompliano?

  And now we are just watching all those young people who would have taken over the main street store, right? Or created a business in their local town. They're now doing it on the internet, which is better for them. And it probably ends up actually contributing more to society.

• 1:15:56Speaker 02

  Yeah, I mean, you said something earlier, which I totally agree with, that I think is really important. At some point, maybe soon, nobody's going to care about you or me, right? Like intention and attention on the internet do not stay forever. Nobody stays relevant forever. It's just not reasonable to think that. I'm going to get a few more wrinkles, totally irrelevant, right?

• 1:16:14Anthony Pompliano?

  I already have them.

• 1:16:16Speaker 02

  So it's like, fine, you could have like a hole in your face, it'd be fine. But anyway, so the interesting part, I think, is that for anybody who's a creator on the internet, to your point, you better have something else that isn't just your face and your time tied to it. Because imagine you get sick and you can't write that Substack for six months. What happens? Do you have a business or do you have a job? You know, let's imagine that nobody cares about the topic you're talking about. I mean, we saw this in crypto. How many people had low value crypto content that was largely resharing and hype men? And have gone away. They're irrelevant now. Now, if during that period, they had also invested in a bunch of businesses, they had made really smart connections, maybe they had built a business that was infrastructure and not hyper speculation?

• 1:16:59Speaker 02

  Cool. Then that attention was well deserved and will continue on. But that's one thing I think a lot of people are not preparing for. It's also why I will never be on one platform. Like you can have a newsletter, that's awesome, but I think you better also have some social channels behind you. And, you know, Contrarian Thinking, our business, doesn't have my name on it. Now, my face is all over everything, but there's a reason it's called Contrarian Thinking. Because I'm going to have varying businesses that are around it, we already do. And then my employees will be able to have equity in multiple lines that could actually sell as opposed to, you know, the one overarching Codie Sanchez, which I'm never going to sell my name or likeness. Unless, you know, it's got a billion, trillionaire.

• 1:17:42Anthony Pompliano?

  The one other thing I keep coming back to is this idea of burnout. I think a lot of, especially young people. They're not ready. Like, there's gonna be a tsunami of burnout. So all these people are like, "Ah, I'm like in the creator economy. I'm a creator." I'm like, "You are literally two years away from just being like, 'Holy shit, this sucks.'" And so my warning to all of them is like, "Build the infrastructure."

• 1:18:06Speaker 02

  Yeah.

• 1:18:06Anthony Pompliano?

  Right? Like, I can't tell you how many people I know who, they're like, "I record my podcast, I edit my podcast, I write my newsletter, I do all my tweets, I do like all this stuff." And I'm like, "That sounds awesome." But like, guess what? I don't edit the podcast, I don't edit the video, right? And like, what is the saying? Like, "To go fast, go alone. To go further, go together."

• 1:18:27Speaker 02

  Yeah.

• 1:18:28Anthony Pompliano?

  Right? And so what you do is like, I get it. In the beginning, like, yes, you do have to do some of that stuff. But you have to think about it like a business and building infrastructure and systems and processes and all this. Or you and your team will just one day be like, "Fuck it, like, we're out."

• 1:18:42Speaker 02

  Oh, 100%. I actually have two consultants right now that had really, one had a huge YouTube channel, 900,000 subscribers. He now works for me because he was tired. He didn't want to build any more videos. It wasn't interesting to him. He just lost all of his creative juices on it. He did pretty good, had a couple of good months and was like, "I'm out." And now he really likes what he's doing because he consults, he does it when he wants, he lives in Mexico City, he's got a good thing going. And I have another one that does that for me on the content side. And so I think you're exactly right. People too often listen to these woo-woo, you know, feather-wearing gurus talk about passion and profits and bring them both together and then you'll be happy. It's a business, man. Some days, you're gonna have to do an Excel spreadsheet as a creator. And like, you're not gonna like it. Another day, you're gonna get a lawsuit. It's gonna suck.

• 1:19:27Speaker 02

  And so, you know, this idea of like, "I have to follow my passion." Like, yes, you wanna love what you do, but like, find the passion in the things that you do. I don't think every day, anybody on this existence of a planet loves what they do every single second.

• 1:19:40Anthony Pompliano?

  Do you wanna know something sad that we can end on?

• 1:19:43Speaker 02

  Yeah, let's do that.

• 1:19:44Anthony Pompliano?

  It's sad because it's great for you and I, but I gotta admit that I do this sometimes. Especially younger people, like mid-20s, that wanna do this. I'm like, "You know what you should do? You should hang out with me for a day." And about halfway through the day, I'm like, "How's it going? Like, what do you think so far?" And like, they're like, "It's cool." Like, whatever. And at the end of the day, I say, "By the way, you'll never fucking catch me."

• 1:20:09Anthony Pompliano?

  Right? Like you never will, cause you're not willing to do this. Like I'm on year like six or seven, you haven't even started yet. And like, I just did more work this week than you're gonna do all, or I did more work today than you did all week. And part of it is like, there's only a few people who have like gone through that and seen it, and then they still want to do it. So it's like, if you're gonna quit, like just don't start.

• 1:20:29Speaker 02

  Oh, yeah.

• 1:20:30Anthony Pompliano?

  But the people who get through the filter, then I'm like, oh, you're gonna do this forever.

• 1:20:34Speaker 02

  Yeah.

• 1:20:35Anthony Pompliano?

  Like, or you're gonna do it for a very, very long time, because like you actually understand what it's gonna take to be able to build this. And if you're still willing to like, you know, run gung ho up the mountain, like, all right, you got a shot. Like, good luck.

• 1:20:45Speaker 02

  Yeah, I was editing the newsletter at 12 a.m. last night, like still, you know? And, you know, it was just, I didn't like where it was.

• 1:20:51Anthony Pompliano?

  Editing? Who has time for editing? Just write it and send it.

• 1:20:53Speaker 02

  Yeah, that's how we do it. Well, you know, actually, it's interesting, because I remember, like, back in the day, when you were first, like, really rolling, I was like, this motherfucker, he does a daily show and all the content he does and Twitter? Like, I thought you were just licking the walls that were filled with cocaine. Like, how did you, how did you do that? And like, what's your, cause your stamina level's wild.

• 1:21:16Anthony Pompliano?

  Yeah, I enjoy it.

• 1:21:17Speaker 02

  Yeah.

• 1:21:18Anthony Pompliano?

  Like, I, I, I enjoyed less some of the like, I call it intellectual combat on Twitter.

• 1:21:24Speaker 02

  Oh, yeah.

• 1:21:24Anthony Pompliano?

  Like, I used to go to fuck, I used to go to war. I used to love it. I'd be like, listen, you wanna go, like, I'll go with the best of them. And like, it only takes two or three back and forth before like, here comes the kill shot, right? Uh, but I, I think now, like, that stuff's less interesting to me. I have a daughter, right? Like, sometimes I'm like, ah, I'm not gonna say that. Like, one day she's gonna read that on the internet and be like, dad, you're an asshole. Uh, so like, I, I think I've like, become less into that part. But the part that I do enjoy is like, if you said to me, like, what would I do all day? Right? Like, it, it is, I would talk to interesting people.

• 1:21:59Speaker 02

  Yeah.

• 1:22:00Anthony Pompliano?

  I would like, think, which really, writing is just thinking, and you have to just kind of clarify it. Uh, I would read, and then, uh, I would like, think about or work on business stuff. Like, that's what I do every day. Right? And the, the other thing, um, I think people are surprised by, like, I pretty much read like a book a week now.

• 1:22:16Speaker 02

  Yeah.

• 1:22:17Anthony Pompliano?

  And they're like, well, how do you do that? I'm like, well, it's not a chore, right? Like, if it was a chore, I wouldn't read at all. But I find things that I think are interesting, or that I think I can learn from. And then, like, it's not that hard. If a book is 300, 350 pages, like, read 50 pages a day.

• 1:22:30Speaker 02

  Yeah. Do you ever, I mean, sometimes I do, I like think to myself, I'm like, can you believe we get paid for this? You know, like when I, when I was doing, you know, the investment banking and, and Wall Street stuff and doing 12 hour days and miserable. And now people are like, oh, man, we gotta, I gotta film, you know, like seven or eight TikToks today. I'm like, I think we're gonna make it. I think we're gonna make it. Like, this is the worst that you're gonna throw at me? You know, no problem.

• 1:22:54Anthony Pompliano?

  But it also, uh, it drastically reduced the barrier to entry on content in a way that like, if anyone was interested in doing this, you used to have to want to be a movie star, or have to want to go be like a TV anchor. That was basically the path, right? Um, and now what we did is we basically compressed an entire TV studio into a phone. And somebody can use this and, you know, news flash, they're way more popular than uh, most of the movie stars, and they're way more popular than most of the TV anchors. And they do it with a phone. And it's because the quality of the information is better.

• 1:23:29Speaker 02

  Yeah.

• 1:23:29Anthony Pompliano?

  And like, I, I think that goes back to this idea of everyone's like, oh, I don't know how to do, uh, what they're doing. I'm like, no, just do the thing that nobody else can do. Like, do the thing you can do. And that's where the audience is.

• 1:23:41Speaker 02

  Oh, yeah. A hundred percent. And also, you know, we're not like spring chickens anymore, exactly. So, you know, if you want to crush it on the internet and you're, you know, 12, 15, 17, 20, you're just gonna get it faster than us. You know, Paul and I are gonna be over here like trying to fix the lighting, he's gonna have his glasses on, you know, and like, you guys are just going to move faster. And so if we can help you by saying, all right, we learned a few things. The couple of things we learned are like, understand the language of money, which is deal making and finance, because no matter what business you do, whether the business is TikToking, or makeup-ing, or whatever it is, you gotta understand this language. If you don't speak the language, it doesn't matter. And then you gotta understand, how do you negotiate? And then you've got to understand a couple of things like yourself, like that stuff inside of you. What do I

• 1:24:24Speaker 02

  really like doing? What makes me happy? Paired with, what am I good at? You know, 5'2", probably not gonna be a basketball player, let's be a little honest. And then you, you pair that with the fact that you guys have tech at your fingertips in a way that we never did. It's amazing. No better time to be alive. Don't believe anybody that says otherwise. And even if we come into a really awful recession, which I think is a travesty how this all has been dealt with and where we've come. I think we have a lot of similar views on that. But you know, the world that you're coming into right now, for people that don't have debt hangovers and investment hangovers, which if you're young, you probably don't. You are coming in really fresh. And in this world, that means even if you don't have a ton of cash, you aren't negative cash.

• 1:25:07Speaker 02

  And so you should be looking at this environment like, man, now is the time to lean in. It's the time to build. It's the time to buy something. It's the time to partner with somebody to buy something. And no better time right now than to do it. And then pair it with content. Get the cash, figure out the business model, pair it with some sort of content. And I think, you know, next step, you got your, your ass, your PE, your titties, just like Kim Kardashian up there.

• 1:25:31Anthony Pompliano?

  That's a great place to end. Where can we be able to find you on the internet?

• 1:25:34Speaker 02

  ContrarianThinking.co, probably the best newsletter. And then I'm Codie Sanchez on all the socials.

• 1:25:38Anthony Pompliano?

  Awesome. Thank you. We will definitely do this again.

• 1:25:40Speaker 02

  That's awesome, man.

• 1:25:42Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to transition into a brand new job in the Bitcoin or crypto industry, we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know to break into the industry, including live interview prep and resume review. Our students have been hired at over 75 of the world's best Bitcoin and crypto companies. Go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io. If you enjoyed today's episode, make sure you share it with your friends and I'll see you all for the next episode.