Codie Sanchez — private equity investor, micro PE fund operator, and founder of the Contrarian Thinking newsletter — joins Sam and Shaan to break down how she thinks about buying small boring businesses, acquiring distressed assets for zero dollars, and identifying overlooked opportunities in real estate auctions and modular housing. The conversation also covers Codie’s controversial takes on angel investing and stock market speculation, then closes with a detailed discussion on how to network authentically and what financial freedom actually means.
Speakers: Shaan Puri (host), Sam Parr (host), Codie Sanchez (guest, investor and newsletter writer)
Cold Open — Codie’s Philosophy on Small Bets [00:00:00]
Codie: Most people should not be out there trying to build the next Facebook. I think it’s kind of messed up that a lot of people try to tell people that’s what they should do. Most people want Maslow’s hierarchy of needs — you want your family taken care of, you want food on the table, you want to be able to do the stuff you want to do on the weekends, and that’s it. So I like the portfolio of small bets. I think of buying businesses a lot like I think about buying stocks.
Welcome and Biology Episode Recap [00:00:20]
Shaan: Sam, you showed up! I thought you were too hungover from last night’s pod — that went till two in the morning — to show up today.
Sam: Dude, it went later for me. I didn’t go to bed till four. What time was it over for you?
Shaan: It ended, but my brain didn’t turn off. I don’t even know if I slept last night. So, Codie, we had Biology on the pod yesterday. I don’t know if you know him — kind of a really smart dude. He’s super smart on math, science, computer science, and he was rattling off a bunch of interesting things.
When he left, I’m trying to sleep, I’m in bed, my dog’s in the bed, and my mind is just making up scientific theories. You know that state where you’re kind of half asleep, like lucid dreaming? I was half asleep but my mind was going “oh, but then the vector has to go to the scalar, and then the order of magnitude…” and then I’d wake up like, what the hell am I talking about? This is scientific gibberish. That happened the whole night. So I’m not great — be prepared to be underwhelmed in comparison to him today. That’s the moral of the story.
Sam: Well, we’ve had maybe one other person on the podcast like this. Michael Saylor could be this, but I definitely think Rahul from Superhuman was like this. There’s a handful of people we’ve talked to where people say “oh that person’s a genius” and they don’t really mean it — but if we define genius as a certain IQ, I would bet a lot of money that Biology was the highest IQ person I’ve ever had a conversation with.
It was very obvious. He actually tried hard to hide it — he tried to act nice and friendly, and there were moments where he’d say “sorry, you guys probably don’t understand that, let me try to re-explain.” That was actually pretty cool. His oven just burns hotter than ours, and there’s nothing I could do to try to understand that.
I remember Biology said something, and he used this math metaphor. He said, “what I try to find is the dot product between me and this.” And I was like — dot product. I heard that phrase in eighth grade fifteen years ago, didn’t understand it then, never thought about it again, and he’s referencing it to describe how he thinks about something. And I was like, I don’t know what that means.
Shaan: But he went from math to an idea, then moved to chemistry, and then to the Battle of the Bulge — he goes, “Shaan, you know the Battle of the Bulge, right?” And I was like, yeah. I don’t think he actually knew what the Battle of the Bulge was.
Sam: Anyway, it was an interesting podcast. Could you imagine being in his head every day? Or at a dinner with normal people? He probably wants to kill himself.
Shaan: We even asked him about that. We asked things like — were you always like this? What did your family think? Were you an oddball to them? I’ve never met somebody like you, so I want to know what your life is like, what do you do for fun.
The very best part was at the end, after the recording ended. After a three-and-a-half-hour podcast, we just shot the breeze for like thirty minutes, and his guard was totally down. And then Sam started helping him with newsletter tips, and Biology was taking notes going, “oh this is great, this is awesome stuff.” That was ironically the best and simplest part of the whole thing.
I felt like I was riding a bronco I didn’t know how to ride. He was just too smart for me.
Sam: I love that. Can’t wait to hear it.
Introducing Codie Sanchez [00:06:00]
Shaan: Anyway, with that out of the way, welcome to our guest. Codie’s here. Codie, how do you explain yourself when you introduce yourself? Because you have a newsletter that’s pretty cool — Contrarian Thinking — you have an investment fund, you’ve built and owned businesses, you hold majority shares in some of them. How do you describe this jack of all trades?
Codie: If I’m on an airplane sitting next to somebody, I usually tell them I’m a salesperson so I don’t have to talk too much. But in a conversation where I was trying to impress somebody, I’d probably say I’m an investor. I’m a private equity investor. I run a fund that’s about a couple hundred million dollars, focused on cannabis. Before that I did emerging markets — a couple billion dollars raised there. And now I write about all the things I wish I knew when I was first figuring out anything to do with money, at Contrarian Thinking.
I do a fund and a newsletter, but I think these days that’s not that weird. There are a ton of VCs who write and share their ideas, and I think that’s probably the future going forward.
Sam: I didn’t know that. I knew you had the newsletter, but you run a two-hundred-million-dollar fund?
Codie: There are five partners, but yeah — a two-hundred-million-dollar cannabis private equity fund. We invest in companies doing about ten to fifty million dollars in revenue. It’s called Entourage Effect Capital, and we’ve invested in sixty-seven companies so far. Some you’d know — there have been six unicorns in there, including Green Thumb Industries, Acreage, Canopy Growth, Curaleaf.
And then we have a smaller fund, about twenty million dollars, that’s for micro PE — just me and a couple other partners. We buy small businesses. If the cannabis fund is trendy, this one is super boring. Things your father did when you were growing up and you didn’t really tell people about.
Shaan: Give us examples. Laundromats? Plumbing businesses?
Codie: Actually the first one was a plumbing deal. My uncle Ebb had a five-million-dollar business doing about two to three million dollars in profit. He was in his seventies, grew up in a sharecropping family, didn’t know anything about the business world. When he came to retire, he didn’t know anything about M&A. So instead of selling the company, he basically just wound it down. Took a company with two to three million in profit and let everybody go.
I thought that was a real waste. We realized — wait, there’s a business model here called PE. I’ve been doing it for twelve years at Goldman, Vanguard, State Street. Why don’t we apply this to micro-sized businesses, anything below three million? Instead of making money for other people, we could make money for ourselves.
So we took an offshoot of Ebb Homes Plumbing — you can look it up, it’s in Phoenix — bought another plumbing company, rolled it in, sold that one. And then we’ve done it for a bunch of others. Now we own laundromats, a podcast production company, some lawn care businesses, a professional services business in the cleaning space. A slew of tiny boring businesses. Most of the time I don’t operate any of them — there’s somebody else who’s the operator, or we place someone in the business.
Sam: I love this model. Me and a couple of our best friends started a kind of micro PE firm. I’ve been learning a ton as they look at all these different deals. There’s just a huge generational shift of people who are aging out of their businesses. The kids don’t want to take them over, or aren’t able to. Boomers handing over businesses — beautiful five-to-fifteen-million-dollar-a-year profitable companies with a super steady book of business. And you can buy them out.
Codie: It’s a sixty-five, seventy-year-old mom and dad whose kids went to a good school and are like, “I’d rather work at Facebook than run the moving company.” So they’re asking — what do we do now?
Sam: Exactly. Can you draw a quick line through the resume? When I meet somebody who’s in a really interesting spot, I’m always like — how the hell did you get there? So just short and sweet: I went to school thinking I’d do this, first job was here, second job was here, third job was here, now I’m here.
Codie’s Career Path: Journalism to Goldman to Cannabis PE [00:14:00]
Codie: I went to school for something totally unrelated to finance. I’m not really a finance nerd at the core. I started off in human trafficking and drug smuggling — as a journalist, not doing it — along the U.S.-Mexico border. I was covering things like elderly people being left behind at the border, went with a couple of coyotes, actually saw what the process was like.
I was super young at the time. I thought I was going to change the world, then realized — Britney Spears shaves her head and nobody cares about these stories. So maybe there’s a different way.
So I moved from journalism, had my little quarter-life crisis, and decided I wanted to understand finance. Because my last name is Sanchez — all these people’s last name was Sanchez or Suarez — and I was in a very different position than they were. I asked myself: what’s the difference? Why are they there and I’m here? I think the only difference is money. It’s not even that I’m American.
So I got recruited to go to Vanguard’s accelerated development program. Saw a bunch of parts of finance. Journalists ask a lot of questions, so I was decent at that. Vanguard is all about passive investing — create an index and replicate. That was at the very beginning of ETFs. I thought that was cool but not that sexy or fun.
So I went to Goldman. I wanted to understand active investing — how do IPOs work, what do alternatives look like? They’re more margin. Then from Goldman to State Street, where I ran the international investment business. After that I did a JV with a company called First Trust and built out their international portion, grew the business to a couple billion in Latin America. We sold products to big pensions and sovereign wealth funds.
Then after that business, I was ready to exit. I started investing quietly in cannabis a few years back — I wasn’t sure my mom would approve — and then went full in as a partner at EEC.
Shaan: What’s your heritage?
Codie: My father’s half — so I’m half Spanish, half Mexican.
Shaan: Are you Catholic?
Codie: Yes.
Shaan: Me too. So a Mexican Catholic mother probably wasn’t a fan of the cannabis thing.
Codie: She was thrilled. Very excited about her baby being a weed financier. Once we understood the psychoactive portion of it and the benefits for people overusing opioids, I got her around to it. But up front she was not thrilled.
That’s when you know there’s opportunity, though. When people think you’re a little crazy for doing something, there’s usually some opportunity left — otherwise all the smart people would have moved there first. I’m not smarter than anybody else. I’m just better at maybe finding early emerging markets that people won’t go into yet.
Shaan: I thought you would be a great guest for two reasons. One, I went on your thing and you were so prepared. I’m not anywhere near as prepared for this as you were for me, unfortunately. And two, you’re wicked smart about industries that people don’t know a ton about. Micro PE — a lot of people are interested in it, but it’s a little daunting. They don’t understand how to identify the business, how to value them, how to buy them, what to do after you buy them. Same thing with cannabis. So you sent us some ideas — micro PE, cannabis, and some controversial thoughts. Sam, where do you want to start?
Sam: The ideas, particularly — she posted something in Trends about mailbox money. You have five or eight things that are interesting. Not huge home runs, but small-business entrepreneur stuff that an immigrant who came from nothing would start and eventually turn into a small empire. Let’s rapid fire them. You sent us a bullet point list. I’ll say the phrase and you explain it, and if I want to switch I’ll throw another one at you.
Business Idea #1: Mailbox Money (Pack and Ship Centers) [00:21:00]
Sam: All right. Mailbox money. What are you thinking?
Codie: Pack and ship centers. Think FedEx/UPS, except get rid of the franchise fees — because that’s twenty-five percent of your profit right off the top — and instead you put, you know, “Sam and Shaan’s Shipping Center” on the front of it.
My friend Lisa does this. I’m always curious about people who make money in ways that are repeatable, since I’m not smart enough to create the next Tesla. I just want a bunch of stuff that cash flows now. Everybody’s obsessed with storage units — that’s been a sexy thing. And that’s really just a riff on everybody being obsessed with multifamily apartments. Going smaller and smaller, still trying to get as much profit as possible. Pack and ship centers are the same idea.
The money is not in the taping of boxes. It’s actually in the little mailboxes in the front — the PO box rentals.
Shaan: I like the trend — you’re buying a box of real estate, low operation, rental units. It’s like self-storage but you shrink the unit from a hundred-square-foot room down to a one-square-foot box that you rent for twenty bucks. So what are the quick numbers? Two hundred boxes at a location?
Codie: Two hundred boxes is what you’d find at a UPS or FedEx — that’s not what you want. You want a thousand.
Shaan: Okay, now the math works. A thousand boxes, average fifteen dollars a month in PO box rental — so fifteen thousand a month. How do you get customers? How does your friend Lisa acquire tenants?
Codie: The smartest way — and I talked her through this — is that her first store took a year and a half to become profitable because she had to do it from scratch. It’s PPC ads, direct mail to the surrounding neighborhood, little pop-ups out front offering free packing on certain days. You know those squiggly arm things you put outside new units. All that.
But her second store I told her to just buy an existing store that already had customers, and then upsell them. That’s a much easier way. She got her second store for about one-and-a-half times profit from a retiring owner, then doubled the revenue on that one.
Sam: I like this idea. I actually might steal it. I just rented a big warehouse for my wife’s business, and one thing we could do is put a bunch of mailboxes in there and offer it as a simple way to take advantage of a small footprint of real estate.
Codie: I think you have to decide what type of human you are. If you have the capability and desire to build a really big business, the ROI on that is potentially more interesting long-term. You’re not going to get the same multiples with tiny businesses.
But here’s the thing — most people are not like the three of us. And I don’t even know if we’re all in the same category. We’re all different in how we’ve built things. Most people want their family taken care of, food on the table, and to be able to do what they want on the weekends. That’s it. So how can I get a little portfolio of them with somebody else running or operating them so that my risk is diversified?
It takes more time, but if your goal is to make two hundred thousand, three hundred thousand, maybe a million bucks a year, there are so many better ways to do it than a startup, in my opinion.
Shaan: I’m a hundred percent with you. Build versus buy is so slanted toward build because building sounds sexy, sounds virtuous — it’s what the media talks about. It’s really unfortunate because I know a lot of people who would have been really happy with two-fifty a year in profits, low maintenance, low headache. But they get sucked into either the startup path — find product-market fit, that’s hard — or they stick at a job, rent their time out, and never get that freedom.
Buying gets criminally underrated. But I think it’s changing. Andrew Wilkinson is popular because when he describes what he does, a hell of a lot of people are like, I want to do that. That sounds fun. That sounds like an easier path than the one I’m on.
Business Idea #2: Buying Distressed Assets for Zero Dollars [00:29:00]
Shaan: Let’s talk about buying distressed assets for zero dollars. Is this something you’ve done, or why did you bring this up?
Codie: This is one I’ve done. I’ll give you the actual example.
I have a friend, Brittany, who owns a couple of gyms — the kind where women do set classes and work together. Basically women’s CrossFit but without big weights. Like a Shapes without the franchise.
She was telling me that during the pandemic, a bunch of her friends — their Pilates studios, barre studios, whatever — were going out of business. What was fascinating was she said, “I’m buying some equipment, I feel bad for them, I’m helping them out.” And I told her, that’s not how we should do this.
Think about those businesses going under — they’re worth zero to the market, but they have value. They have a client roster. They have goodwill they’ve built up. So we reached out to some of these gym owners and said, “Hey, I’m really sorry you’re going through this. What if we could help annuitize you a little bit? You could get some revenue off a business you’re about to close for zero. We do a rev share. We’ll transition your clients from your business to mine, very carefully. For every client that comes over, I’ll pay you out for a year, or six months at X and twenty-four months at Y — however you want to structure it. That way you actually make money while closing, your clients have a new home, and we have new clients we can serve.”
What’s fascinating to me is nobody’s doing this that I know of. If I owned any business, I would be out there right now — for every business closing on Yelp, sixty percent of the businesses on Yelp that close temporarily close permanently — going after every one of their client lists. Give the owner a rev share. Pick up the customer base without spending a dime.
Shaan: I love that. You’re picking up the assets and none of the liabilities. You’re not buying the business and taking on the rent. You’re just asking: what remains as an asset to this business? It’s the customer rolodex. That costs zero out of pocket from day one — it’s just profit share if a customer does come over.
Business Idea #3: Modular and Tiny Homes [00:34:00]
Shaan: Let’s do modular homes, tiny homes. You have a couple of ideas here.
Codie: We actually bought a modular home. Did you know there’s a difference between a manufactured home and a modular home?
Shaan: I thought a manufactured home was a modular home.
Codie: They’re two different things. A manufactured home is what we think of stereotypically — basically a trailer home. The difference is there’s no foundation, so you can pick it up and move it. A modular home is built in pieces — what “modular” means — but it has a foundation. At the end of the day there’s really no difference between a modular home and a stick-built house.
The crazy part is, on the surface they’re not that much cheaper or faster when you just drop one on your property. I did a bunch of research, asked a bunch of people — they’re kind of sexy but at a single-unit scale they don’t save that much. But when you do them at scale, that’s where they’re cheaper.
I was surprised there weren’t more developments doing this. So I started scouring the country, found a few, and bought one in Park City. The numbers were amazing. We bought our house for nine hundred thousand dollars on an acre, three thousand square feet. The average in Park City is about two-and-a-half million. The cost savings are real.
If I were a developer, I’d be using modular all day long. I’d probably buy a modular housing company and then use it for my own builds.
Shaan: When you look at that home today, can you tell it’s anything but a normal home?
Codie: I’ll drop you the link — I won’t say exactly where it is — but no, it looks great. Open concept, big windows, all of it. You can’t tell the difference.
The only difference is turnaround time. We bought in December or January — it’ll be done by July, and it hadn’t even been started yet. And I’m going to add a back-office module later. We got five or six friends to buy in the same community. I think I’ll do some events and use them collectively as a tax write-off since it’ll essentially be a little business.
Shaan: Have you looked at the manufacturers of this?
Codie: That’s where this one gets interesting. The builder and the manufacturer in this deal are actually together — they own the modular company and are also doing the build. They have another location that’s modular tiny hotel rooms, I believe in Jackson Hole. The economics are fascinating. Our home will be built in less than six months, at about a third of the cost per square foot of comparable homes.
And in places where the weather is terrible and you can’t break ground often, they build everything in a warehouse. They lay all the foundations in one period of time and then put all the houses up at once. Whereas everyone else in Park City has to wait like two years.
Controversial Take #1: Angel Investing Is Largely Dumb [00:42:00]
Shaan: Let’s do the controversial thoughts. Number one: angel investing is largely dumb. That’s painful because we both angel invest.
Codie: I say this often and people are like, “but you have a rolling fund.” And I’m like, yeah — of all my investment types, this is probably the worst one. But I think it’s still good and fun, so I do it anyway. I have two or three better investment types than this.
One of my biggest problems with angel investing is it’s too fun. It’s like gambling. You get excited about the founders — and guess what, founders are charismatic, that’s how they raise millions of dollars. So you end up getting sold. Then there’s fraud. I wrote this whole piece about one guy we lost two million dollars with because he was super egotistical — big images of himself on the wall — and that stuff got added to my due diligence questionnaire. Like, how many images of yourself do you have in your office?
The thing with angel investing is you need twenty, thirty, forty deals for every one to four that are going to work out. And I think we do a disservice by telling people to start angel investing early. Once you’ve made a few million dollars — and I mean that literally — then I think you can go into angel investing. Or if you’re on a path where you’ve made at least half a million to a million bucks. Until then, let other people lose money and learn from it.
Shaan: Exactly. You said something like — take a DocuSign image of every deal you want to do, write down how you’d think about it, time stamp it, so later you can see how good you actually are at this without burning through tens of thousands of dollars.
Codie: Exactly.
Shaan: I largely agree with you. My red flag is: in order to justify angel investing, you have to give a blend of reasons. It’s like, well, it’s really fun, I like learning about the future and these markets, I can make great money if it pans out, you build a nice basket over time, it’s not too much work because you’re investing in your network you’ve already built for ten years.
And all of those are true things. But anytime you have a blended reason, it really means there’s not one really great reason to do something. Those are always sub-optimal choices. Because whenever I have to come up with a blend, I’m like — oh, interesting. And when the people around me hear me justifying something with a blended reason they say, “that’s a pretty big blend.” And I’m like, oh yeah, we should just not do it.
Compare that to: we should invest in this business because it’s growing like a weed and if it wins it’s going to be this big. I can get behind that. But the act of angel investing as a job or a hobby is — it’s like describing playing basketball with your friends. “It’s great, I hang out with my friends, I get a good run in, I get exercise, I’m outdoors…” You’re giving this blend of reasons for a really fun thing you just really want to do. Your brain comes up with justifications afterward.
Codie: That’s exactly right. The only caveat is if you can do later-stage deals — and now you can with a lot of the AngelList syndicates — or if you can structure debt. If you can figure out a way to earn interest from day one on a startup that has some revenues, or get into a debt deal factoring invoices, like there are ways to make money from day one and still have some equity upside.
People always think of equity with startups, but a lot of startups actually prefer debt. So do debt with an equity warrant kicker on it. That I think is interesting. But throw the Y Combinator term sheet out the window.
That all said, I’m still going to angel invest because it is fun. It’s a hobby that makes money.
Controversial Take #2: Public Market Investing Also Kind of Dumb [00:51:00]
Shaan: Okay, next one: public market investing also kind of dumb. Talk to me.
Codie: I like to talk about this with big investors. If you look at the Forbes 100 list, there is not one person on there who made their money from just investing in the stock market.
And then people say, “Cody, Warren Buffett, Carl Icahn.” I was at Goldman in 2009 when Buffett did the deal to invest in Goldman to stabilize it. That was not a public market deal. He didn’t go out to the street and buy a bunch of stock. He had a ton of warrants and options on top of it. It was a total backroom deal with a huge asymmetric risk — way more upside than downside. Same with Icahn, who tries to affect the outcome.
My point is: if you don’t have an unfair advantage, if you can’t write down exactly why you’re going to win instead of somebody else, you should be really careful speculating on stocks. The big boys don’t really do it.
Shaan: I have a cousin who runs a hedge fund. When he told me all the different things they have at their disposal, I was like — oh okay, I’m coming into a gunfight with a fingernail. That’s how lopsided it is.
So — skin in the game here — do you own any individual public equities? Do you do Vanguard? What do you actually do?
Codie: I don’t hold any individual stocks for speculation purposes. I invest in indices. I’m not saying this is right or that I’m a guru — I just don’t think I’m smart enough to beat the market, so I don’t play games where I don’t like the rules. I’d rather write my own rules.
So I go equity indices — Vanguard, whatever. Mutual funds on alternatives, private equity, REITs where you can actually have an unfair advantage. But I don’t speculate on any individual stock.
Would I own Apple, Amazon, Facebook? Maybe. Would I make a play on Twitter if I thought it was fun? Yeah, maybe. But I think there are so many easier ways to make money with private market investing and buying assets than dealing with the irrationality of crowds. Do fundamentals really matter in today’s world, or is it whoever has the best IR and doesn’t have some crazy thing their CEO said or did?
Shaan: Have you ever heard the term “Keynesian beauty contest”?
Codie: No, what is that?
Shaan: Named after the economist Keynes. The idea is that a normal beauty contest, you just assess the contestant on stage. But in a Keynesian beauty contest — which is basically how the stock market works — you’re not assessing the true beauty of the thing. You’re guessing what other people will value it at, who are also guessing what other people will value it at. So you get these really warped, out-of-whack things that happen because everybody is betting on what the other people will do about the thing, and everybody knows that everybody knows that. You get these crazy outcomes that aren’t value investing at its core.
Codie: Totally agree.
Business Idea #4: Buying Real Estate at Courthouse Auctions [00:58:00]
Shaan: Let’s do a couple more. Buying real estate at auction — a way to buy real estate at a discount. I’ve never done this.
Codie: This one’s fascinating. Let’s use Texas. They actually sell real estate at auction on the courthouse steps of each municipality, before it ever goes on Zillow or Redfin.
Shaan: Are these foreclosed properties?
Codie: So “foreclosed” is really when it’s listed on Zillow and Redfin — that’s the post-auction step. That’s when most of us see them. But prior to that you have auctions — the bank auctions of bankrupt or foreclosed properties — and you get it before the street does.
And you can front-run that one step further. There’s a list of properties that are about to go into foreclosure, and in Texas it’s called Roddy’s List — R-O-D-D-Y-S. You buy the list, it’s cheap, a couple hundred bucks, and you get every property that’s about to go into foreclosure.
Then you can door knock. You go knock on the door and say, “Hey, I’ll give you two hundred thousand for the house you’re in foreclosure on because you owe fifty.” That actually gets them out of bank foreclosure and gives them extra money that the bank was going to write off anyway. So it sounds predatory but it’s actually not.
I did this with a friend of mine, Aaron Mitchusdeggi, who’s a stud at it. Millions of dollars of transactions in cashier’s checks happen same day on the courthouse steps.
Shaan: Why hasn’t somebody brought this online? Why is there no tech platform that goes to all the court steps, flash-lists these things, and lets you sit at your laptop and bid?
Codie: Roddy’s List is kind of an example of bringing that first step online. But there are some parts that still need to happen in real life. You have to validate that the house exists and is in good shape. You could buy a house at foreclosure auction using Google Maps, but Google Maps isn’t updated same day. That house might have burned down last week — and I know somebody that happened to. Or the back end of the house might be totally blown out and you can’t tell from the street view.
So there’s that piece — you kind of have to walk the properties. And then the other part is debt and who owns the debt. One thing I’ve realized about wealth over time is debt is almost everything. You should always look — even before you do a startup investment — for whether there’s any debt on the company, whether you’re in first lien position.
Same with a house. A lot of these times there’ll be a lien on the property from something crazy. Like, one of the biggest predators on low-income homeowners is those little water purification faucets — the ones sold door to door. They put them in houses by applying a lien to that person’s mortgage. You could literally have a lien for fifteen hundred dollars that hasn’t been paid, now worth twenty-five thousand because it’s accumulated at ten or twelve percent interest, and you don’t even realize it.
So you do have to figure out who owns the debt. You do that through a list like Roddy’s List, which tells you who owns the title. But none of these are big problems if someone can build it. Zillow now buys homes sight unseen. You could pull in APIs from Roddy’s List, from the local county, have updated Google Maps, and all three of those things triangulate — you could do this online.
Shaan: I like it. And Roddy’s List is only Texas?
Codie: Only Texas. But there are equivalents everywhere — you go to the county registrar and they list how often they do auctions. In Texas it’s every Tuesday. In California it depends by city and county.
One interesting thing: the biggest buyers of homes in California in this downturn, in my opinion, are going to be the government. They’ve essentially made it so if this is not your primary residence, you cannot buy these foreclosed homes at auction — which is a crazy change from 2008, when PE firms went to all these municipalities and scooped up houses at pennies on the dollar.
The one thing that’s true about all of this: you need cash. You have to pay cash. You’re coming with a hundred thousand dollars in cashier’s checks to the auction.
Shaan: Wild. I’ve got to attend one of these just to see how it feels.
How to Collect Cool People: Codie’s Networking Philosophy [01:08:00]
Shaan: We’ll end on this last one. You wrote “how to collect cool people.” Did you really mean “collect”?
Codie: I did mean that. And Sam would laugh at this one.
One of the things I think is important for investors, VCs, or anyone who wants to be in the startup game, is how do you make a genuine connection with someone? Before social media, how did I actually meet Sam?
I liked one of his articles in The Hustle years ago, and I did some research on him. I was like — I just think he’s going to do some stuff. I don’t know what The Hustle was at the time, it was small, but I wanted him in my rolodex somehow so I could bother him about things.
So I found out what his favorite candy was — butterfingers, I don’t know if it still is — and shipped him this ridiculous box of butterfingers. Like a ton of butterfingers. So many he didn’t have a lot of choices except to call me back and say thanks.
Shaan: And knowing Sam well, the “thanks” was more like “what the hell.”
Codie: Exactly. And then I did something similar with Noah Kagan — something about tacos, that’s his shtick, and I sent him a shirt.
The whole point is, people will say to you, “Well, Shaan, you have this huge network, of course you could raise a fund this way. Sam, of course you could do this, you have this giant rolodex.” But I didn’t have any of that at the time. I was in finance, we couldn’t even have social media. I think those are all excuses.
Instead, get obsessed with people you think are interesting, find ways to connect with them in old-school ways — which might work better today than ever because DMs and social media are inundated.
Shaan: What’s your follow-through? The butterfingers are the pickup line. Great — you broke through the door, I see you, I check you out, I’m like, okay, cool. But most of the time when that happens, I don’t become buddies with them. What do you do to turn that into more of a peer relationship?
Codie: A couple things. One — you have to be doing cool stuff to hang around cool people. That’s rule number one. You have to actually be out there creating the thing to be around creators.
And two — have the lowest expectations humanly possible. I didn’t want anything from Shaan. I didn’t want anything from Noah. I just wanted them in my circle, and then to ping them sporadically with interesting stuff.
I think I connected with Noah because he put something on Twitter, I responded because I knew someone connected to what he was asking about. I was trying to serve them a bunch of different times. And after doing that continuously — which is very similar to what I do with founders I want to invest in — they’ll eventually be like, “Codie kind of solves problems for me, or she does interesting things and makes my life easier in some way.”
And do it without being a creep. When I first engaged with Noah — I can say this now because we’re buds — I think he was like, “Is she hitting on me? What’s happening here?” And I was like, no dude, I’m married. Sorry.
But also: have no shame. I don’t have an ego. I’m not trying to prove anything to anybody.
Shaan: What would work for me? The ultimate networking hack is: be interesting. That sounds like something you can’t do anything with, but you actually can. What is interesting to other people? Somebody who knows stuff in an area other people want to know about. You don’t have to be a power player — the knowledge is actually quite useful. Or be doing interesting things. If I see you out there actually making things happen in your field, even if it’s not SpaceX.
What doesn’t work is the opposite: you reach out, you ask me for something, you ask for my most valuable thing — time — without offering me any reason why I should give you that time. Or you’re basically saying, “I’m kind of doing nothing and I think if you talk to me then I’ll start doing something.” That’s not fun.
I also hate when people start with “Hey, big fan of what you do, I know you get a ton of messages, but I just wanted to put this on your radar.” Fine, first message. Then nineteen hours later: “I guess you just don’t care. I really thought you were a good guy but now I know the truth.” Like — you pulled a 180. You became needy and desperate for a response that I never offered you.
Codie: Do the opposite of those bad things. Be interesting. Don’t expect anything in return. Give, and give little bits — not too much, because giving too much actually creates obligation too. Keep it really simple. Share interesting things, share life updates if you’re doing cool stuff, be useful if they’re working on a project. Give them some feedback, spread the word, tell them you’re in their corner. That’s all it takes to break through with most people.
From there it’s either going to work or it’s not. And that’s fine. Not everybody’s meant to be friends with everybody.
Shaan: And don’t ask to be mentored by anybody.
Codie: That’s my biggest pet peeve. “I can barely mentor myself, you don’t want me mentoring you.” And talking about obligation — “mentor” means I’m supposed to lead you on your path of purpose and we don’t even know each other.
Shaan: Somebody said this and I thought it was totally spot on: seeking a mentor is an advanced form of procrastination. You think you need a mentor before you do the thing. In reality, people who succeed don’t use mentors as a prerequisite. They find people along the way who help, but that’s because they’re in furious motion and people turn and look — who’s splashing in this pool — and sometimes they lend a hand. But they didn’t sit around saying, “Well, once I get that mentor, then I’m going to do the things.”
The way you actually form a mentorship bond is you ask somebody for a specific situational piece of advice. Not “what should I do,” but “I’m debating between these two options, how would you think about this?” or “here’s how I’m thinking about it, can you poke holes in that?”
And then you follow up — which is where ninety-five percent of people fall off the cliff. They get advice and don’t follow up with what happened. People love hearing that update. They’re gathering data points about what works and what doesn’t, and it feels good to close the loop. Then you say, “here’s the next thing going on.” Some people will drop off, and some people will give again. By the third time you’ll both know — does this work, do we have good rapport, do we complement each other — or it’s not the right fit.
That’s how you organically ease into having a mentor, rather than trying to put a label on a stranger and asking them to commit to something they don’t necessarily want.
Financial Freedom: The Internal Question [01:22:00]
Codie: I think this is not very PC, but I think it all becomes easier once you’ve achieved a little bit of financial freedom. The less you’re focused on making money every day, the more you can do interesting things that open up a ton of opportunities. It’s hard to be ideologically free, it’s hard to be time free, it’s hard to really have any freedom if you don’t have financial freedom.
And that means something different to all of us. For some people it’s a big dollar amount, for others it’s just enough to cover what they need today.
Shaan: Here’s the bit of insight I’ve had recently. For a decade I was like — financial freedom, that’s what I want. I wanted to buy a house so I could give my mom a place, have a better life, all that. Financial freedom was my goal.
And now that I’ve achieved a lot of those goals, my goals just got bigger. There’s definitely something true about how you carry yourself differently when you’re not doing things just for the money. You choose projects and people differently. So there are real benefits. But here’s what I realized.
I used to think of financial freedom as: if I get X dollars, for my lifestyle, I’m financially free. And then another person might have a different dollar amount. And I thought that as recently as a month ago.
Then I met a bunch of people who have a way smaller dollar amount — but what they also have is way fewer demands and desires about what they want out of life. They’re happy as is. They don’t feel like they need X to be happier. Great if they have more money, but they’re not going to have more happiness.
So I realized financial freedom is actually an internal question. It’s not about a dollar amount. Financial freedom is when you stop deciding what to do based on money. That’s when you’ve achieved it.
For some people it takes getting a large amount of money to do that. For other people it’s wanting less stuff, so their total number is lower. And for others it’s more Buddhist or monk-like — they realize it’s actually an internal attachment they have to let go of.
There is also the technical definition: you have enough money that even if you earned zero income, your investments pay your lifestyle. Your savings increase faster than your life burn. I know many people who pass that technical definition and still aren’t financially free, because internally they haven’t freed themselves from putting money first as the criterion for what to do.
Codie: That makes a lot of sense. Above a certain level, I get a little obsessed with people who aren’t where you and I are. I almost think financial freedom might have something to do with your skill stack. Even if I lost all my money today, as long as I’ve put in as much relational capital as I think I have with people doing interesting things — I’m never going to be homeless, barring a catastrophic issue.
Because I could go to some of my friends and say, “I’m actually pretty good at copywriting, look at my Twitter account. I’m actually pretty good at building businesses, I’ve sold a couple.” Once you get that skill stack, you’re like — worst case scenario, I can call somebody up and work for them.
So there’s some mixture of: the dollar amount in your bank, what you need to pay, not having a ton of debt, and are you competent enough as a human where somebody will always need your services? Pair that with being able to think and reason for yourself — that’s a pretty powerful combo.
Shaan: I totally agree. Great. So give us the where-to-find-you. Where can people subscribe to the newsletter?
Codie: ContrarianThinking.com is the newsletter. And it’s @Codie_Sanchez on Twitter. Those are probably the two places I’m most rocking and rolling. Twitter — I’ve really found it fascinating in the last six months. I think I’ve finally figured out how it works.
Shaan: There you go. We’ll link it in the description, so if you didn’t catch those, just scroll down and click the links.
Codie, this has been amazing. Thank you so much. I’d love to have you back at some point — maybe we’ll break down a couple of the businesses you’ve either acquired or been looking at recently. That’ll be a lot of fun. Thank you for coming.
Codie: I’m in. Thanks for all the questions. It’s always fun brainstorming with you.