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Welcome back for part two with Cody Sanchez. I'm going to use a gross word but so it'll stick in people's heads. They don't know what their God is and utility is my God. Now, if you are pursuing something stupid, you will pursue the utility of stupid things.
But if you're pursuing something honorable and it's the meaning and purpose for your life, how could you be focused on anything other than utility? That's the thing that drives me crazy. Thomas Sol is, he just has one of my favorite quotes and he says the last 30 years have been marked by exchanging what worked with what sounds good and that is blasphemy in my worldview because you are now abandoning utility, actual usefulness, actually moving in the direction of the thing that you want. And this is why, again, I'm just going to beat this from to death.
People need to understand what motivates their reasoning. Everybody's reasoning is motivated. It's motivated towards something. We were looking at the Tucker Carlson thing.
Postmodernism is motivated by power. So you get to your point, I've never thought about it before. So I certainly reserve the right to change my opinion about anything at any time. But that the brutalism of the structures, which if anybody's never looked up brutalist architecture, it's actually a style of architecture that is brutal, heavy concrete, very few windows, nasty.
Post Soviet, sort of Eastern block, right. And ironically, one of them was just built in LA, which there was like a whole huge backlash, which I'm not surprised anyway. And the fluorescent lights and all that, if your assessment is right about why they're doing that, and my assessment is right that postmodernism really is about power and nothing else, then it becomes a statement of power. We are bigger, better, stronger than you.
You work for us, you do as you're told. And that when you force somebody to pull into the light, what drives their thinking? Like in fact, did you ever see the documentary, What is a Woman? Yeah.
Okay. It fascinating, glad they did it. However, it would have been more like it becomes just a dunk on the lunacy, and it really did come across as lunacy to me. But we could have pulled it back out of lunacy if you just start asking, what are the base assumptions that are driving your rationale?
And when you make people state, like this is why I believe that. And I learned this in business. So the physics of progress, you come up with a hypothesis about what you would need to do to achieve your goal. Okay, what does a hypothesis do?
A hypothesis makes predictions. So when you're talking to somebody, what you want to do is say, okay, the things you're saying are the end result of a prediction you're making. That's invisible to me because you're not saying it out loud. You're just telling me the outcome.
But if I think of that as a prediction, then I'm like, okay, this for that to be true, the following base assumption has to be true. And so I'll just ask people, okay, because you're saying that the following statement must be true. So for instance, if you want to give puberty blockers to a young child, that makes a prediction that you believe that self-professed identity is the most important thing in their life and that you're even willing to put them through a medical procedure that has some risk of complication and death. Is that accurate?
And they're going to say, yes, that's true. Or they're going to say, no, that's not accurate. But I believe if you deny them the ability to express their gender through a physiological change that the rate of suicide goes up. Okay, so the prediction that that makes is that they are more likely to die if they don't do this surgery.
Is that accurate? Yes, okay, cool. That's a testable hypothesis. It makes a prediction.
I can now look at the data and find out, is that really true? Now, the problem becomes if that's a red herring, and that's not really what's motivating our thinking, then it will all fall apart because I will present them with the data. And I actually don't know the answer to that. But let's say just for the sake of argument that it comes back, and no, there actually is an increase in likelihood of suicide post-surgery.
I'm just, I don't know. That's true. I'm just saying, if it were, if in that moment they go, okay, word, like what we're seeing in England, where they've now banned the use, not just tapestock closing down. They've now banned the use of puberty blockers on minors.
Okay, so they look at the data and they change word. I'm here for that. But if somebody looks at the data and then they say, oh, no, no, no, we still need to do it for this reason. And you'll get this all the time in business where somebody will say, this is why I couldn't get that thing done.
And you're like, okay, well, why didn't you do this? Well, no, that's not really the reason it was because of this. Okay, why didn't you do that? Well, no, no, it's not really that.
It's this. I will say, you're making me chase you. Don't make me chase you. Just tell me the reason.
And then we will, and if there's four reasons, give me all four, and then we'll go through them one by one. But this is a notable set of things. The problem is, again, people, they argue with the level of fact, they're just two ships passing in the night. Instead of getting down to what are your base assumptions, what predictions do they make and do those predictions come true.
And if people start thinking through that, so rather than trying to be right or pass judgment, which is what I could feel in that documentary, instead of that, it's what I call trapping people in their own values. You just tell me your values. And then we'll see. Is the thing you're doing leading to your value or not?
And if your value is madness, then we can at least I now know what your value is, right? Like Hitler. That motherfucker just told everybody what he was going to do. Yeah.
Need somebody to blame. Jews are going to work. They've worked all throughout history. So we're for sure, blaming the Jews.
And then we're going to take over Russia. Don't tell him yet, but we're going to take it over because we want that to be the new version of what America was. You know, whatever, 7,500 years ago, where everybody just flooded into America for opportunity and land, he was like, that's going to be what we do with Russia. It will be Europe's America.
I mean, literally just said this shit. And so he had a value system where it's like the lives of the German people, the Aryan race, whatever words he would use are superior. Yeah. Okay.
So that's a pretty ugly prediction that that makes. That also predicts that you're going to do all the things that hands up doing. But you're now pulling it out into the forefront. Nothing's hidden.
Everything's out on the table. And now we can say, do we think that human life is equally valuable or not? And you start getting people saying this stuff. And it's like, whoa, now we, you can just follow things out to their natural conclusion.
And you find the place where it breaks. Because what I'm always encouraging people to do is you need to reflect somebody's beliefs, values back to them in a way that they would recognize. So that they wouldn't be like, no, you're twisting my words or whatever. Now it's out on the table.
Now you can make progress. Yeah, it's really, you know, I think if people want to understand what is happening in the world around them and be able to influence it quickly, efficiently and without emotion, they should read a book like Statistics for Dummies. Because I actually think a lot of what you're talking about are two things. First is we don't understand statistics.
We don't understand probabilities. We don't actually understand how to look at the numbers presented to us in a world view. And statistics drive business. They drive wealth.
They drive the economy. And then the other half is the being able to follow the scientific method. So I think X hypothesis, I want to test that hypothesis. Here's how the scientific method works.
And those two things we learned in school, but not, they were not the focus of lots of what we did. I recall learning much more calculus than I did statistics. And in fact, statistics do not have to be super deep mathematical learnings. They can be understanding assumptions and how to read the math that is happening behind the scenes.
And I think a lot of the reasons why we get sold a bunch of lies is because we don't actually understand statistics and scientific method. So we end up going with what feels good and sounds good as opposed to what actually works. And Thomas Sol is a genius at this for many, many different reasons. But if people haven't read economic facts and fallacies from him, incredible book, if people haven't read statistics for dummies, good.
If you don't have a basis for how to understand when they show you the, you know, I always love that example of sometimes when I go on the news, they'll ask me, you know, what does the average XYZ, what does the average, and average is really bothering me on average? Because it's a really poor way to measure, right? Especially monetarily. It's like, what does the average American make?
Well, it really depends how you determine average because you have a few outliers in there. You have a bar, everybody makes 100k, Bill Gates walks into the bar, all of a sudden the average income goes from 100k to $10 million or whatever that would be. Why is that? It's because you should have used media and not average.
And that's not actually mathematically difficult to understand. We could start there. We don't have to go to super complex, apology, understanding, cryptology, and deep understanding of the network state. We could just start with statistics and scientific method as opposed to emotions and narrative.
I hear a lot lately that he like, he who holds the best story wins. And I do think that is true. But the reason that is true is because people don't understand how to poke holes in arguments. And if you really want to win, be rich, be successful, you have to understand is somebody lying to me about something that I can verify one way or another, which would be stacks, statistics, or scientific method.
All right. Now let's see if we can agree on why that matters so much. Why does it matter to you? Well, let's take it from multiple different angles.
One from a business perspective. Every business is a constrained business. Nobody has unlimited resources, right? So if you just started out, starting out, and you're doing the $100 startup method and you don't have much money and you don't know how to make a business work very well, you have very little dollars.
So you have to understand statistics to understand where if I put $1, will it be most likely to go out and bring back friends back with me? That's just probability, some statistics. And so in business, everything you're doing, every decision you make is really just a determination of, should I do this or this? And which one of those is going to make me more money or more opportunity or more options or better decision-making something?
And so business is really just a complex game of statistics that ends in dollar science, right? But I think the scientific method is so important because we think about it just in science, but all it is is what you're talking about. It's like turtles all the way down. You're trying to figure out what lies underneath the things people tell you.
So for instance, in our content business, because I come from finance, I push back really hard on ideas. So they'll say, well, this is, we have this argument the other day. Like words mean things, words mean specific things. And if we don't agree on the definition of a word, we can't actually have a conversation.
And so what is a good video? Well, lots of people might have different definitions of good. So I said, okay, at this company, a good video is one that gets the most views. Let's just baseline it.
A good video at our company is the one that gets the most views. Is everybody on understanding about that? And we had to debate. They were like, well, what if it's a, you know, this type of video where you're naked, or this type of video where somebody's getting shot or like something awful?
And I go, well, because we have our creed and our values, we would never make that video because we understand our values and beliefs. So because we understand our values and beliefs, then we can decide on a quantitative determination of the word good in the video sense, which means views. Okay, fine. If we don't do that, you have a huge problem.
Because then you go, well, I think this video is great. I think this video is great. I don't know what to do with that. That's like your personal taste in a video.
And taste, as we all know from the fact that we go out to a restaurant, very seldom do all of us order the exact same thing every single time. Why? Because our taste is different. And so I think a lot of business is getting really definitional.
What does taste mean? Ooh, taste is difficult to define. So that is a bad word. Instead, we should use a word like, does it convert?
Do I make money off of this thing? If I make money, then it is in taste with this company as long as it follows our creed. Does this video get views? If this video gets views, then it is tasteful, according to us.
And so a lot of people these days don't like definitions. They want to be really wobbly with them. But that's a huge problem, because then you cannot have a conversation and you cannot agree on what a good outcome or a bad outcome looks like. But yeah, but I fuck you not, Tom.
The other day I was like, they're like, can we please stop talking about this? And I was like, no, we have to have an argument about what an individual word means. And we need to do that continuously across the company. And I need you guys to do that individually, because otherwise we all feel good because we're agreeing, but because our foundation is not the same, we're not agreeing at all.
But what I found with this generation again and again, and I fall into it too, because I'm a people pleaser sometimes, is like, nobody wants to have those tough conversations. How silly does it feel about arguing over what is one individual word good? And yet it's so necessary, right? The infamous Christmas argument on my side.
So yeah, we got in a huge debate as a company, and it was me against everybody else. And I was like, I know I'm burning relationship capital right now. I think I'm a psychopath, but I'm like, it was, I don't even remember what the specific thing was anymore, but it was like that. It was a single word.
We're not moving on until we all agree that this is for that very reason. Now, you described exactly the way that I think about this. I use slightly different words, exact same idea. For me, the reason that, because it's all started with, why does it matter to detect a lie?
And are we being lied to by people? The whole point of my channel is to say the world works in a certain way. The vast majority of it is behind a curtain that you've never looked behind. And so the whole goal of my life, which I just happen to make a show about, is that I am trying to figure out what's behind the curtain.
And what I want people to understand is it is, I've actually never watched the video with Jordan Peterson and Sam Harris with a debate truth. But the reality is that finding truth is really, really difficult. Now, the reason it's difficult is because we all wear what I call whole life beer goggles. And we cannot see what's really there.
We're interpreting what's there. And so two people can look at the exact same thing and see something completely different. I can spend time explaining how this happens from an evolutionary standpoint. But just for now, we'll say there are algorithms running in your brain and they will control how you perceive the inputs that are coming in.
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Go to incogny.com slash impact and use code impact for 60% off an annual plan. Try it risk free for 30 days. That's i-n-c-o-g-n-i dot com slash impact and use code impact. Okay, so if the world works in a certain way and words matter and narrative matters and even data can become narrative, at some point your life is controlled by how you interpret the things that are before you, what narrative you're telling yourself.
And if your narrative doesn't make accurate predictions, it's broken. So the reason identifying a lie matters is because it breaks your prediction engine. And if you want to make money in business, statistics are going to be your best friend. Because you have to understand, do I do this or do I do this?
Which is going to have the bigger impact? You're asking yourself a question of predictive ability. I predict that based on what I know, if I do this one, I'm going to get the outcome that I want. And that's why you do it.
But if your worldview is messed up, if there's something you don't understand, you will choose the wrong thing. And of course, never one or two, there's usually 8,000 options before you. And so people just have no idea how to choose because they don't know how they think. They don't know where they're being lied to.
They don't know how to dissect the information that's coming in. They don't know how to test hypotheses. They don't understand that when somebody puts something forward, it makes a fucking prediction. And if you ask people, if you stop and go, OK, hold on a second, what prediction does that statement make?
And then I'm just going to ask you, is this true? And if in that moment you're worried about looking stupid, then you're just going to nod and smile when they give you some bullshit answer, which they will almost always do. Because they probably don't know what's driving this. They probably have never thought about the prediction that it makes.
But man, if you really are unafraid to look stupid and you say to somebody, OK, for what you just said to be true, the following base assumption also has to be true. And I'll just say to them, is that true? Or this makes that prediction. Is that accurate?
And if they say no, one of two things is true. Either they're wrong, which happens more than you would think. And I'm talking from experts, the brightest minds in the world. Or you don't understand something.
And if you don't understand something and you're not afraid to look stupid, then just keep asking and asking and asking. You understand somebody's worldview statement, whatever, when you go, ah, it makes this prediction is that accurate and they say yes. Then it's like, OK, cool, I understand what you're saying. And now that I understand, I can't be bamboozled.
And that is the only way to get good at business. And this is why, OK, I think I may have learned this from you, so forgive me. Specialists, generalists, the reason that your business content is so good, and your business content is so good, is because you're a specialist. You buy businesses all day long.
I'm a generalist. So I launched a course called business decision making. That is the greatest course. I'm going to, I really believe this.
That is the greatest course on entrepreneurship ever taught. And all I did was say to whatever the small group of people, bring me your hardest business problem and we're going to solve it in real time. And then I'll just walk people through. This is how you do it.
I don't need to know your industry, none of that. Like I'm going to think from first principles. I'm going to ask you questions about what you said, make some prediction. I mean, literally all the things I'm just talking about.
But in real time, hey, and you're going to come back week after week. And we're just going to keep going. Okay, now you made progress. What's the next problem?
Boom, boom, boom. We go through it and live fire. And what I would say to people is, I know you think you want copywriting or you want funnel marketing or all of that, but you can hire somebody to do that because it's very finite and it's very teachable. The real thing that makes an entrepreneur great is the ability to solve novel problems.
It is a problem not only have you not seen before, nobody's seen before. And so now you have to be able to build up from first principles to think through it. But that shit hardest thing in the world to sell because people know this is your painkillers versus vitamins. That shit is a vitamin.
And people want painkillers. They know they have a problem. And if you market it as I'm going to take you from $0 in revenue to $3 million in revenue, that shit will sell all day long. You're exactly right.
God damn it, it isn't all weather. It will work for one thing in that one moment, but it doesn't translate because it's not a framework. 100, 100%. I mean, I think a couple of things there.
One is the real definition of a CEO is a scary one. So if you say you want to be a CEO, here's what a CEO is. It's your, you go out, you hire the smartest people you can possibly find. You tell them to fix problems.
Then they find the problems that are so hard. Even the smartest people you can't find can't solve them. They bring them back to you and you have one job only, which is to deal with the worst problems that the smartest people that you know can't solve. That's all a CEO is.
And so if you think you are anything more than a firefighter in the most complex fires of all time, you're crazy. The CEO is not a fun, easy, breezy position. I've never met a CEO that felt that way. That's why they moved to chairman after a while because they let somebody else deal with it.
And so I think that's exactly right. The other thing that I find fascinating there is, so I started contrarian thinking in 2020 with this idea that people have lost their minds. They are no longer able to think because they can't question anything. And I believe that you will make more cash if you are curious than if you are a genius.
And the reason why is because you can use the collective genius if you are curious, and you are limited by your own genius if you are not. And so especially with the world of chat GTP, if you are a genius but unwilling to ask questions because of your own brilliance, you have just lost the world of knowledge. And so I believe our ability to question things is integral to our individual success. And yet I thought people were losing that ability.
And they were smothering it and they were saying it was wrong to question things. And I thought that was criminal. So I started contrarian thinking. And I was like, we are going to teach you to question things, to be contrarian, not for the sake of it, but in order to learn.
And then it was crickets. And people were like, I think just fine. This noggin is pretty smart. I don't need your help thinking better.
Like nobody really goes around and says, I wish I could think better. Except those are the very, very, very, very top. It's like a 1% problem. Most people think that they think fine.
They just haven't found the deal, the money, the next job, the girl, whatever. They don't think there's anything wrong with the way that the brain functions. And unless it's a pill that can make them like super human intelligence. And so I quickly realized that, okay, if I want people to think differently, how could I get them to do that?
What would be the Trojan horse to think in? And I was like, well, what do all humans want? They want love, to some degree. They're greedy.
They want like some sort of personal wealth, right? And they want maybe relevancy in some way, shape or form. Could also say they want health, right? And so if we have wealth, health, sex, greed, which do I know a lot about?
Well, I don't really know that much about health. I don't really want to talk about sex on the internet. It wouldn't say I'm an expert there either. But what about wealth, or greed?
Well, yeah, I know a lot about that. I've been finding out a long time. So what if I could Trojan horse my way into thinking by getting people to talk about money? I'll tell them how to make more money.
But in the process of telling them how to make more money, I'm actually going to get them to think about something more important, which is ownership. And what do ownership have? They have personal responsibility for outcomes. When you have personal responsibility for outcomes, you have incentive alignment.
When you have incentive alignment, then when somebody breaks something that you own, you feel it. When somebody lifts up something that you own, you feel it. You have the pleasure, pain, cycle happening within you. And so that is why we eventually started talking about money and contrarian thinking, because I realized it's a Trojan horse to getting people to care about decision-making, because they actually have skin in the game and ownership.
Ownership is the key to freedom. And then in fact, if you do not have control over your life, through financial freedom, it's very hard to have other levels of ownership. And I think that is true. Yeah, no doubt.
Man, ownership is such a part of your message. And I think it's so, so, so important. Yeah. How, one, why don't people have that like push now?
That's not the cool thing that it once was. Yeah, it's not as a... Yes, interesting. The other day, we had an employee decide that they wanted to leave to go into a meditation community.
Like a monastery? Not really sure. And I thought about that at first. Really good employee, by the way, great employee.
And I thought, well, what is that decision-making? And I went back to the quote, and I can't remember who it's from, but that the purpose of faith or religion is to live it in life. That you, you know, are you truly a... It's why the Dalai Lama doesn't stay into that, right?
His purpose is to go spread this faith that he has while living life, because life is hard and difficult. It's very easy to stay peaceful if you're in 24-7 meditation states. And yet I think this generation, they presuppose that if they find the perfect circumstance that will lead to bliss instead of realizing that actually bliss is found in the difficulty. And so I don't know about this personal situation with this individual, but I thought about this a lot.
Because I thought, what would make somebody like put their life on pause that way and, you know, stay in this one situation? And I think the reason is because we have not been conditioned in this generation to find joy in difficulty. Instead, we want to find joy in extreme pleasure. I mean, look at what we've done to this generation.
I mean, this is wild. And even to parents today, we told them, we said parents, you know, run your kids around 24-7 to all of these activities. If they get upset in any way, shape, or form, run to the principal, you know, talk to the parent on their behalf, don't let them handle it. If something is wrong with them and they are sad or anxious, they are probably depressed or maybe they have ADHD.
We're going to label them and pathologize them, as opposed to telling them they're having a momentary issue. We're going to get them into the most expensive colleges or any college we can, but then they will have a massive amount of student debt. And then on top of that, we're going to tell them that, you know, no, it's okay about every single feeling that you're having. And that is all of this trauma.
And yes, you know, your cat died 15 years ago, and you are still carrying that inside of your hips. And that's why they're tight, right? Because that's where you hold the trauma from, you know, fluffy. And so this is what we've told parents and kids.
And so of course, they're confused. You know, they're confused and they don't know what real joy is. And they've checked all the boxes. They've done all the things that they thought they were supposed to do.
And it's led to them being like in debt, not that happy, not with a partner, you know, and so what's next? So I do as much as I kind of give my generation, our generation, the next generation, a little bit of a hard time. I really get it because I was told all those same things too, and had to come out on the other side and realize, no, no, no, I'm the only one responsible for my happiness. And that there's actually a lot of joy in the journey.
And there is no destination that you can reach. And by the way, you can never stay for the rest of your life in perfect meditation. The point of meditation is not that. It is to be in life.
You know, I heard this thing the other day that I really liked. The eye of the hurricane is what she tries to be. So, you know, if there's a hurricane and there's chaos and there's tumult and there's broken windows and danger and floods on the exterior of the hurricane in the middle of it, it's silent and serene. And so her goal is no matter what's happening out here that she wants to say silent inside.
And I was thinking about that. I was like, I like that philosophy. And I was like, you know what's even more interesting? The bigger the hurricane, the bigger the eye, right?
The more silence inside of it. So if you put yourself in bigger, more intense situations, are you able to find a deeper level of silence and quiet and contemplation? And I think the answer is yes, you are, which goes back to the Ted Turner. I lost a hundred million bucks on that.
And so if we all will die and it may be painful at some time. And the only truth in life is that we will experience pain. We will die and all of our loved ones will die. And they will probably not remember us much sooner than we would ever like.
Then we should probably prepare ourselves for that with a bigger hurricane. So that as we look the true difficulty of life that is eventual death and difficulty on the past of it, it doesn't don't us because we've lived in difficulty too. And so I come closer and closer to that, you know, that Buddhist idea of, you know, that life has suffering, life is suffering. But that's sort of the point of it all and that you can find joy in that.
And it's way too deep, you know, Tanner would go that steep. But I think it might be true. The storm destroys most everyone that it touches. That's the problem.
How do you, I mean, do you think about that? Like creating hurricanes for no reason? No, do you lament to God, wail from your gut at the fact that you can create an eye in the middle of the largest storm. But that most of the people you know and love will get torn to pieces.
I think, I don't think that I have that individual power. I think, I think all of us are like, I get really careful about like, overstating what I think I'm capable of. And so I don't think I am capable of destroying the ones around me. No, no, no, not you.
I'm saying that I am very distressed that most people will not be able to do. Most people won't be able to be a CEO. Because they won't survive their own hurricane they create. Yeah, exactly.
Like this is one of those where I don't want it to be true. I've just seen it play out too many times. And you and I both said the same thing. So I know that you see what I'm about to say, which is step number one of being a CEO is ask yourself, do you really want to be a CEO?
Because all I hear when someone says I want to be a CEO is that you want to get punched in the face over and over and over. Really, really, really, really, and the longer I do it, the more punches I take. And you do start going, huh, I routinely am asking myself, why am I doing this? And in fact, it's really interesting to compare my wife and I.
Okay, so I've married my equal. My wife is unimachable and she has helped me become the person that I am. And I really don't even know who I would be without her. Because of how gifted she is and how smart she is and all that.
She can't do what I can do. And she will be the first to tell you. I mean, she did tell you literally before we started rolling. She was like, I don't want to be CEO.
I see what he has to deal with and I don't want it. And that it is so exciting for me. And I can be the dancing bear that you poke found out. I can be the dancing bear of motivation and be very performative around, like just living in that personality, the person that can create the calm and that you can do anything you set your mind to.
And then I've seen it up close. And the reality is most people don't have the skill, emotional management. That's what being the eye of the storm is, can everything be burning down around you? And you're not panicking, you're concerned, you're taking decisive action, but you're not panicking.
And what I have found is that the person you lost to the monastery-like place, they're the norm. What's interesting is they, to give, to steal man their argument, I keep in my back pocket that life choice. I studied Eastern philosophy a lot when I was younger. At one point, I actually called myself a Taoist and I was a Taoist.
And I always contended with the idea of becoming a monk of some kind. And I thought, I really believe that the wellspring of all suffering is desire. That makes sense to me. But what I found was that that felt like a choice between engaging with life and disengaging from life.
And you could say that you're engaging with the pursuit of non-attachment, but it just isn't how it felt to me. And I'm perfectly willing to accept that maybe that's just the part of my spiritual journey that I'm on. And one day I'll be laughing at myself that detachment was the right answer all along. But I decided I'm going to fully engage with life.
But for my sanity, I keep in my back pocket that I could just stop wanting any of this. And the second I stopped wanting to grow my YouTube channel to make more revenue, to be an entrepreneur for the ages, to build the next Disney. I could just let go of all of that. And if I actually let go of it, all of a sudden those punches don't hurt anymore.
They don't matter. It's you just let it go. Now you do have to contend with freedom coming from financial freedom. But one way to do that is to beg for food and live in either a monastery or a cave and come out every now and then with your rice bowl.
It's I don't pass judgment on that lifestyle. I just don't currently want it for myself, but it's in my back pocket. Let's talk about the most powerful force in wealth building compounding. There's a reason that people have talked about this forever.
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Yeah, I like the back pocket idea. I think it's really important and I don't have a good definition for it so I have to work on this. But this idea of ownership, I do not think has to be an owner. I think there needs to be a difference between the two.
An ownership, in my opinion, there's like four levels to rich, I think, about monetarily. And so you have the first level is like a spender. You make money, you spend it. The second level is a saver, right?
You make money, you save some of it. The third level is an owner, in my opinion, that you take the money and you apply it towards your pursuits. So you invest in you working more, your business, et cetera. And the fourth level is an investor and that's you take your excess and you invest it in other people and their pursuits.
And the levels, you can't really go from a spender all the way to an investor, I don't believe. I think you kind of have to like climb the wrongs. And I thought a lot about what does ownership mean because I do not think everybody should be an entrepreneur or a CEO in any way, shape or form. But I do think that they should have some skin in the game for what they're doing and they should have a way where they can continue to earn even if something catastrophic happens to them.
So that could be that they have additional income streams that could be investments that could be that they help their wife or husband learn a new skill and thus the family has multiple income streams and what they do that could mean, you know, sovereignty in that they live on the land and they like subsidize part of their, you know, income that they would need by growing things or having agricultural tax credits. But I think it's really important that we don't become like you talked about people who own nothing and like it. I think we can be people who want less material things because our neighbors have them, but simultaneously have more ownership of the things that can protect us from negative consequences, like a health event where you need money, like an authoritarian regime that tells you they want you to do X, Y and Z. Money is like, it's an option that you get to either use or not use.
And so I need to narrow down this idea of ownership, but I do think you're right, not everybody should be a CEO. And what trouble would we be in if everybody was one who would work with us, right? I think the job of a CEO also is to have a dream so big that your umbrella has room enough for many people and to sell them that dream and to show them that your dream is bigger than anything that they could create individually and is going to uplift them in a way that's bigger than what they could do by themselves. It might be more fun and might be more interesting because high performing teams are a joy to be in.
I actually think one of the worst things that ever happened to us was that we sold this lie that remote work was better for us. I think it was actually really detrimental and mental health members seemed to show that. And that, you know, I stay online a lot, you know, our teams, we make them as much as possible, come back to the office. And it doesn't mean they have to be there every day.
We don't put them under fluorescent lights and cubicles. But we do require them to now all be in Austin for contrarian thinking. We bought a studio there. We bought a headquarters.
We're hiring like crazy. My other company, Biz Scout, is located there too, contrarian thinking capital space there. So it's a main street holding company. And so I'm bringing all the people back into the office because I see what happens when they're on an island.
And I think it's really, really negative. But I have to get closer on that idea of ownership in order to explain it. Like even how, you know, it used to be that the people who owned companies were not unaligned shareholders that just gave them money for their stock, right? That really have no ability to affect the outcome.
You and I both, anybody who owns stocks, you have a percentage of Google, you have a percentage of Amazon. But you are not really aligned with the employees and the people inside of Google or Amazon. You just want as much money as you can get for that stock. And there's actually really perverse short-term incentives that happen with that.
Really perverse. And so I think as an employee, part of your game should be, I want to make as much money as I can to a certain degree. And then I want to invest it in things that ROI to me. And I want to find ways to skill stack to become so valuable that the people I work with will give me some percentage of a company, a deal, you know, an opportunity to invest in another company alongside them.
And that's where I think we went a little bit wrong. Like my employees don't have equity at contrarian thinking, well, one does now, but two of them just got equity at one of my other companies. And so they're now partners, they're owners in that business, even though they're also employees. And I think we should be able to do that a lot with our top performers.
And just like people shouldn't stay at minimum wage, they should aspire to grow into more, you know? I agree aggressively. What do you think about BlackRock and other big companies buying everything? So Main Street holding companies where we own all of these companies, right?
We have 26 companies in the portfolio right now. And not so long ago, my goal was I want to create the next KKR I was like, I saw how these guys operate. I want to create a private equity fund that's just as big. I've already raised a billion dollar fund at first trust.
And yeah, I can do this again. But let's do it in a better asset class, which would be private companies. And so I went on my merry way buying these companies. And then I kind of started seeing what was happening with a lot of these private equity owned companies.
And it's stripping the employees, turning it into post modernist buildings with fluorescent lights and cubicles. It's nobody knows your name when you go to the corner store. It's that they have perverse incentives because they want to strip it and flip it to somebody else. And then that next person wants to strip it and flip it.
And a lot of these companies, you know, get sold by three or four private equity companies before they go public and they've lost kind of their soul. And so I realized, man, I want to build a billion dollar company, maybe multiple billion dollar companies. But I don't want to own all of America's small businesses. I want Americans to own those businesses.
And if I can create value by building something that hasn't existed before, that's cool. But do I have to go gobble up all the things that other people could own within their communities? No. And so I am very much pushing back against the big guys owning everything.
And we have to work for them, I think. And I mean, I don't know if we talked last time, but for those economic nerds on here, like, if you don't understand the unfair advantage that BlackRock and Blackstone has, it will scare the hell out of you. Like, you think about it this way. They have immense data, right?
Because they've been doing this for a long time. They have, most of their former executives, having at some point or other worked in the Fed, been consultants for the Fed, been in political positions, been the chairman of the Fed. They have also, by the way, all been at varying companies like the CEO of BlackRock and Blackstone, who have both, you know, one's been an owner of the other company before. And they get rates to buy these companies and houses and assets and anything that you want to talk about that are like one half to one third to one fourth of the rates that we have.
If we want to buy these individual companies, and why do they have that? Because they have all our money, because you and I have our investments at BlackRock in their ETFs, which means that they get to use those assets on the balance sheet to have lower rates to buy things that then increase the prices of single family homes in the US with our dollars. And I think that is criminal. And I'm, I don't love the government regulating many things, but I think they should at least get their neck off the little guy.
Get their foot off the neck of the little guy. Get their neck off the foot of the little guy. Yeah, get their foot off the neck of the little guy. What do people need to know about how the world really works and how you went from being an underpaid journalist to buying a portfolio of small, what you call boring businesses that now kick off just under $100 million in annual revenue to you?
Business in general, especially small business, gets way over complicated. So we hear these stories of Silicon Valley billionaires who have exited these giant tech companies and built this next social app or Tesla. And in reality, you're a richest neighbor, maybe not in this neighborhood, but in most neighborhoods is probably somebody who owns a plumbing company, somebody who owns a local landscaping company. The community all around you, the services you use every day can make you a lot of cash.
And what makes real change is that, you know, money is architect first change in our world. You want to get somebody elected money, you want to change your local community money, you want to have different zoning, so you can change the businesses and your local area of money. And so I don't acquire money because I want Lamborghinis and fancy things. I do it because I think it is a way to freedom because it is a tool for power.
I mean, when I first had money was when I made like $30,000 in my left college. I mean, I made no money at a college and I thought I was super rich and I might never have to work again. And then I heard about taxes and figured that out. But quickly, I realized that, you know, I worked at a big company called Vanguard at the time and Vanguard was the world's largest financial manager.
And what was fascinating about that company is the people inside of Vanguard touched at the time. I think one and every $4 in the US economy was touched in one way or the other because of the mutual funds and pensions that they invest. And I realized, wow, these humans speak a language that I don't understand, like ROI, basis points, there's this whole other language and finance has that for a reason. They have it because you and I, as normal people, do not speak that language.
And so they say, give me your money, Tom, and trust it to me, because you poor thing aren't intelligent enough to understand how to shepherd your own future. And so I had people calling me in 2008 when I worked at Vanguard, crying, asking me how Vanguard could have stolen their money because of the crisis and not realizing that the stock market has fluctuations in it. And at that point, I realized, oh, wow, like I'm never going to let this happen to me in mind. And that was hard because my family thought to chase money was evil and that we were happy and we didn't have a lot of money.
So you don't need money. And then I heard this thing called a napkin theory. I can't remember who came up with it. But basically at the time, I was struggling with, am I okay to chase after money?
Like, is this bad? Am I a bad person for this? And I heard the story about a napkin and imagine yourself in the middle. So you are standing in the middle, Cody, and around me is my mom, my dad, my brother, my sister, let's say on each of the four corners.
And when you, Cody in the middle, pick up your napkin like this in order of pursuing financial freedom, you lift up everybody else around you, right? Because you can't be what you can't see. And also because money trickles, you know, people talk about trickle down economics. We could think about that one way or the other.
But money, actually, when you have more that around your family, you can hire your family members. You can build new businesses. You can create more wealth by spending it. And so they explained it as one of the best pursuits you can have is pursue it so you can pick everybody else.
And that changed a lot for me. I have a bunch of businesses that I own, right? These small businesses largely run by blue collar workers. And I remember I called up one of the operators and one of my companies, the guy who runs a whole thing overseas, let's call it 100 employees and contractors.
And I was like, I want to do events for our like line workers. So for blue collar, largely Hispanic, same thing. And I want to do self improvement events. Like, what could we do?
What would they be interested in? We'll pay them to go even. And I remember he said to me, they won't go. They're not interested in personal development.
You can't find those people. And I thought that was so fascinating. So I called up a couple other operators of some of the businesses that I owned. This is back in the day.
I like two or three of them kind of like pranced around it a little bit, you know, we're a little bit PC and then said the same thing. I was like, that's fascinating. So are they right? Or like, is there some miscommunication?
And what I basically realized is that the language that we use, even the people on YouTube listening to this right now, by and large, most of the people already understand the words, personal development, they think it's a good thing, not a bad thing. And most people that are blue collar workers, at least in my experience, I've worked with, they think about personal development a bit like therapy. Like, I told my dad, I was going to go to therapy with my husband proactively. Like, before we got married, he was like, what's wrong?
Are you guys okay? And I was like, no, no, it's because we want to work on this thing called marriage, which seems important. And I failed at once. So like, maybe we should get some help.
And he was like, okay, that's bizarre. And I told my mom kind of the same thing. Now, they're smart, great humans, but the words met something different to them. And so what I realized with our group is, oh man, we basically have, I think there's sort of two worlds in the US right now and maybe even three, but one world are, you know, it's kind of the elites.
And the elites might even mean white collar workers and corporate jobs that use words like quite quitting. Those words don't fucking exist in blue collar land. And so what I tried to do early on, is I realized I had some of those words like little therapy, bad personal development. Why?
What's wrong with you? You know, and I had to re navigate and negotiate my language. That was the only way I could change my relationship with money. So it started with being okay with things like personal development, which is totally normal now.
The other thing I'll say is I really annoyed today when people, especially like on Twitter, let's say, they start saying things like, Oh yeah, you should just get up at 5am, get into an ice bath, then sauna, then whatever, like, you know, you nerds. And it's like, Hey, I know that that seems crazy for a lot of people. But you guys are so inculcated into this world of being elites that you don't even realize you're being extra elite by trying to tell people that have never experienced what it feels like to get up early and meditate. But that's unnecessary because it's actually really powerful.
So instead of trying to like break out of the, you know, world we live in where people are obsessed with personal development, realize most people are not in that world and help them. Don't try to belittle it. And that is an interesting cycle I think we're in right now today. It's like self-image education is bad.
And I think that's so wrong. I can't remember where I heard this, but somebody said, it might have been you where there's mystery, there's money. Like are people intentionally creating a false version of the world to keep other people down? I think in this case, it's more people don't realize that they live in bubbles.
People on the internet largely talk to other people on the internet that are just like them. And so a lot of the people who are mouthpieces like you and I, let's say, and you've been at it a long time, they never had your experience of hiring ex convicts, speaking to them and driving them around Beverly Hills, never. And probably, they've, a lot of this generation is like solo entrepreneurs who like that idea of being a solo prenuer and want to talk about on the internet, hey, I built this business of $10 million in 90 days and I have no employees. And I think that's a fucking tragedy.
I think one of the most incredible things you can do is hire people, they're going to drive you crazy, but they're also going to mean you have a legacy on this planet that's above and beyond just what comes out of your body as a small child or human. And so I just think they don't realize how bubbled they are and their ideal of happiness, aka a solo entrepreneur with $10 million, I think it's going to be really empty in the years to come. Because you know this too, but there's nothing better than watching one of your employees change completely underneath, you can call it your leadership or just within your culture and building this thing where people are creating bigger than you, it's incredible feeling. So that's my belief.
Yeah, I'm obsessed with that moment where somebody realizes, oh, I'm actually capable of more than I thought that I was. So for me, it really did feel like, as I climbed my way up, what I was doing was pulling the curtain back and seeing how the world actually works. And that sense has not stopped for me. Like the farther I go, the more I learn, the more I succeed, the more I'm like, oh, whoa, like the world works in a certain way.
And getting into finance was actually the big thing for me. That was the first time where I felt like, maybe there really is a conspiracy. Like when you start to understand what inflation really is, it's like, bro, what is happening? So how do you, because you're a big believer in, and I think this is something that we'll really share.
So I step back and I look at the world and I feel like it's losing its mind. And what the fuck is happening? And never did I think that I would deal with culture war stuff or anything even remotely politicky? And then I realized that the world is tearing itself apart because of bad ideas, and that really is my jam.
So how we start getting people to pay attention to good ideas, one thing you said that really resonated with me is getting more people to have skin in the game, because if you own part of the house, you don't want to tear it down. What do you mean by that? And what are you actually trying to help people discover in that moment? There's a famous law called tragedy of the commons, right?
And it's an economic theory that is really crucial if you want to understand why people burn instead of build. And I heard about it from a famous economist by the name of Thomas Sowell. Oh my God. If I was gonna be a fanboy for anybody, it was Thomas Sowell.
Me too. His book economic facts and fallacies, I think is crucial reading for anybody that wants to understand numbers, not regurgitate them, and to do it in a way that is a competition of ideas, as opposed to let me just shout my idea the loudest. And he talks about, for instance, when I lived in D.C., I saw it firsthand. We were in a new development, we were in Columbia Heights, and some of the streets were the hood, some of the streets were brand new developments, across from us was a big project that went up, subsidized housing, really well done, pretty.
And sadly, within about the year that we were living there, it went from a nice establishment to buy the end to most of the houses boarded up, one year. And I remember sitting there watching it, and at the same time I was rereading economic facts and fallacies, and Thomas Sowell talked about this, about how, instead of subsidizing housing, making it cheaper for people, but having no skin in the game, nobody is responsible for anything in that place, and some of them live for free, what they've done is they've taken away their personal sovereignty. You know, have you guys ever been on a street, let's say, and you see those scooters around, right, that everybody you can rent for a few dollars, whatever bird scooters, and they're like beat to hell, you know, they're thrown on the sidewalk in Paris, they throw them in the sand all the time, and that is the tragedy of the commons in action. If that was your scooter, you would take care of it, but because you don't own that scooter and you have no incentive one way or the other to take care of it, you beat it up, and you being collective, you all of us.
And so I think one of the biggest problems in our society today, we did this huge research analysis, and it shook me. And it was, we looked at sub-sectors in the US economy, so not just construction, but let's say hardware source and roofing companies. And what we found is across, I can't remember how many sub-sectors, so let's say 30 or 40, that 25 to 30 percent of all sub-sectors are owned by the top 10 companies in each sector, and that number is growing rapidly. So we don't own our local businesses anymore, we don't own our homes as much anymore, one in four single-family homes in 2022 was bought by an institutional buyer.
And so we are sort of, we're doing the narrative that's supposed to not be true, which is that you will own nothing and be happy about it. And we're doing it, we're letting it happen right in front of our eyes. And I think that's a horrible thing, because you have all been to, I mean, you certainly seen it here in LA, but you go to a Starbucks, right? And outside, it's kind of dirty, beat up, the greeter doesn't know your name, the barista spells it wrong, they get your coffee, the brains are kind of burnt, and it's lost what it was.
The mermaid is no more. And then you go to a local coffee shop. And what do you feel? Like, it's the same person every day.