This is an auto-generated transcript of Never Enough Podcast Episode 6. It may contain minor errors.
Andrew: How's it going, Codie? What are you up to today?
Codie: I have a day that would be your nightmare, which is too many meetings, too much going on. And this is the highlight of it, so I'm excited to be here for this at least.
Andrew: Right on. I feel you—I'm doing a book launch and I'm doing these podcasts almost every single day, so I'm living the life of Codie Sanchez in a way. How have things been since I saw you in Austin? Things still totally crazy?
Codie: Yeah, you know, it's self-inflicted, right? So I think one of the things I loved about our chat was you basically said "all right, I can kind of see in your future—I've been where you are" and you know, I'm a few years older than you, I got a few more commas to my name, and I can see what's going to happen in the next year. And like, report back, see if that was true. And I think you were right—essentially running all these businesses is a lot, especially if anything goes wrong with your team. So on one of our teams we had a big issue with the guy running one of the portfolio companies, which means my last three weeks were like Nightmare-ville. But you know, it comes in cycles and now it feels slightly more bearable.
Andrew: Yeah, I did a CEO hiring master class on MFM. I said like, be careful what you wish for, because I think that everybody fantasizes about managing CEOs and investing passively instead of operating businesses. But the problem is that as soon as you scale past about five businesses, suddenly you have five direct reports—you've got five CEOs to manage, and at any given time you got to fire someone, you got to hire someone new, you got to negotiate a comp package, you got to get involved in a problem. And it's just more problems as you scale.
Andrew: I want to talk about—when we met, you were at a fund and you're investing and you're kind of doing a little bit of social media stuff, and that was probably 2018 or 2019. And now you have this huge social media business, you've got a crazy operation. I think you have 6 million followers. Tell me about the evolution—how did you go from working for someone else to now owning all these businesses?
Codie: When we met, I was a partner at the firm—so there were five of us. We came together on this private equity fund that we wanted to run. I've done really well with partners over time. I do better hiring CEOs—I just haven't had the best track record with picking partners that want to go as fast and as far as I do. So we do great for like the first one or two years and then I want to scale. And usually in private equity you can make a lot of money not growing your business like crazy.
Codie: So what happened is I was like, we need to grow, here are the things we should do, it's going to take a lot of work. And one of my partners was like, "take the yacht for the summer, go to the Bahamas." And I was like, well, that's not going to work. So we parted really amicably—I still own a lot of that company. It was basically an ultimatum: I was like, I want to do this; they wanted a more lifestyle-based business, which is totally fair. And so I needed to go do it on my own.
I think the biggest lie we were ever told was that a unicorn looks like a tech VC-backed startup where you don't make money as the founder for anywhere from 3 to 5 to 7 years. You have to pour everything into it, and at the end of 12 to 15 years you might get your face on the cover of Forbes. I can understand why that's a beautiful story for Hollywood, but for most people it's a miserable existence. And so when I say "boring" what I really mean is that you get to actually live your life while running a business.
Andrew: If I had to summarize most of what you talk about, it's kind of the idea that boring is beautiful and that there's riches in niches. Can you talk to me a little bit about your car wash business? Because I think that's such a great example.
Codie: I started—my first boring business I bought was a laundromat and I bought car washes. The car washes are interesting because those can scale. Laundromats are really tough to scale. The average laundromat makes $300,000 with outliers being 1 to 3 million. Car washes on the other hand, you can actually scale individual car washes and turn it into more of an active business. There are individual car washes that do 3 to 7 million bucks.
Andrew: Can you lay out your business right now?
Codie: We have three core components. Contrarian Thinking Media, which is everything social—the newsletters, the courses, the community, the education business. Then Contrarian Thinking Capital, which are all of our VC-style small check investments. And then Main Street Holding Company—that's where I own businesses outright, our boring businesses. We combine a lot of our family office stuff into that.
The core competency of all of them is: I buy realities, not dreams. They have to be profitable businesses. I don't do turnarounds because they're too much work. And I want to be able to explain the business to my grandmother. And if I can't do those four things, I'm going to pass.
Andrew: What's the weirdest highly profitable business you've seen recently?
Codie: There's this one business in the state of Florida—this woman started a crime scene and hoarding cleanup business. What's fascinating is the cost for that is pretty expensive—you got to pay like somewhere between 5 and 20K to dump the toxic stuff. And she built a business I think they were doing 12 million in annual revenue, which is wild. Massive storage industry—hoarding is huge in the US, and there is a really big and expensive cleanup process for cleaning out hoarding houses.
Andrew: These are all businesses that are obviously not disruptable by AI. How do you think about AI? Because for someone like me or people that own digital businesses, we're all scratching our heads, we're very concerned about it. Do you lose any sleep over AI risk in any of your businesses?
My attorneys will be out of a job before my plumbers are. AI did the thing that none of us anticipated—we thought it would take over the dirty, the dangerous, and the dull. Instead it took over design, writing, creativity. Why? Because those industries do not have massive lobbying and governmental regulations behind them. Anything that is a standardized process with a lot of data that has clear constraints on it, I think AI will disrupt aggressively. And the last thing to disrupt will be boring businesses.
Andrew: I think intra-industry—I remember we bought a deli and we were the tech guys coming in buying the deli and we were all excited. And we were like, oh amazing, we'll add the POS and we'll do an order tracking system. And I just found it was very difficult to get buy-in from the employees. Do you guys do any interesting stuff with tech, or are you really just doing the basics?
Codie: We have sort of three different types of businesses. Bond-like businesses that make us 3 to 7% a year—the tech we use is typically hardware: security cameras, automatic locks, card readers. Then there's minor growth businesses doing 10 to 15 to maybe 20% per year—those we add low-level tech: ServiceTitan, Jobber, Slack. And then the high-speed tech companies—those obviously use everything.
Codie: One way or the other, if you're going to play the game of buying other people's businesses, you have to start with humility. If you think you're going to buy a plumbing business that's existed for 15 years and you're going to come in and immediately be a better operator, you're out of your mind. And Notion isn't going to save you. But I do think the long game of playing with technology intelligently and integrating it will beat those who do not.
Andrew: Chris and I were talking about buying businesses that are hard to disrupt. We were thinking about, okay, what's going to exist in 40 years? And we were like, people are going to want to be cool in their homes, right? They're going to get HVAC systems installed. So maybe we go into HVAC. And as we were thinking about that, we were going, okay, so self-driving cars will eliminate between five and 15% of jobs. One of the reasons why HVAC is a good industry is that there's really not that many people training on it—not many people wake up in the morning and go "my passion is to install ventilation systems." One thought with AI is—will the market for blue collar jobs get flooded with white collar people who are traumatized by the fact that they spent 10 years in university and it just went away? What do you think of that thesis?
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