>> Hi, I'm Lewis Howes, New York Times best-selling author and entrepreneur.

And welcome to "The School of Greatness," where we interview the most influential minds in the world to inspire you to live your best life today.

And in this episode, we have Codie Sanchez, who has become a true powerhouse in the world of finance and entrepreneurship.

Codie has taken the world by storm, teaching individuals how to break free from traditional money mindsets and achieve financial freedom in innovative ways.

In this episode, Codie shares her journey from financial struggles to wealth, why saving alone will never make you rich, and the power of boring businesses in creating extraordinary wealth.

I'm so glad you're here today.

Now let's dive in and let the class begin.

♪♪ When was the moment that you believed you were deserving of earning more than what everyone else thinks they should be making?

Was there a moment or moments where you were like, possible to earn more"?

>> Yeah.

Well, first it actually started from a moment where I felt the most unlikely, like I would never be able to make enough money.

And it wasn't that tragic, but it was -- I was in college.

And I didn't have any money, like all college students don't.

And I remember my mom would, like, track my bank account to see how close it was to going under.

And then she would sort of get on me about anything I bought, would be like, "What are you doing with that?

What are you doing here?"

And I felt this intense control.

>> Mm.

>> And I didn't like it.

And, you know, I was like, "It's my money.

I'll do what I want.

If I overdraft, it's on me."

And that moment, for some reason, was like the little trigger of my little inner rebel.

And at that point I was like, "I don't ever want somebody telling me again that I can't do what I want to do.

And I don't want to feel the control of another human on top of me."

And so for me, money is freedom.

>> Mm-hmm.

>> And I think it is really your ability to push back on the universe.

Like, the more money you have, the more you get to exert your will on the world.

And the less money you have, the more you get exerted upon.

And so I didn't like that.

>> Right.

>> And so that was the moment that I was like, "Bah, I don't ever want that to happen again."

>> [ Laughs ] >> And then the moment where I was like, "Ooh, I think I can actually do this," was when -- You know, do you remember, like, the first time you met a really rich person and you were like, "They're not that smart"?

>> Mm.

>> And I had one of those moments where I met -- >> You're like, "How does this person have money?"

>> Yeah, I was like, "What -- This guy?"

Like, you know he didn't inherit it.

You know, he didn't... >> Win the lotto.

>> ...get it given to him.

Right.

But he -- And it was at a company called Vanguard, and there was one of the really senior executives there.

And I remember asking him a question that for some reason I knew about our segment of the business, and he had no idea what he was talking about.

And I was like, "Oh, that's fascinating.

So, you're a 'millionaire' --" which to me felt like $1 billion -- "and yet you don't understand this thing."

>> Wow.

But what did he understand?

>> Yeah, well, I don't think I was smart enough then to know that.

You know what I mean?

I was like, "This guy's dumb."

And sometimes I think that is a benefit, you know?

>> I think it is.

>> Almost not realizing that he probably had these other superpowers and instead being like, "Well, if he doesn't know that, that means he's not flawless, which means I could probably do it, too."

>> How old were you then?

>> I would have been 21.

>> 21?

>> Yeah.

Before then, I was broke.

I was, like, broke.

I was always falling in and out of having cash.

I was always overdrawing.

I was always worried when I would go to swipe the card there wouldn't be enough cash there.

>> You were stressed out about it.

>> Yeah.

>> What are the things that broke people think they're supposed to do to get wealthy that will never work?

>> Save.

>> Save?

>> It's never gonna get you to rich.

>> Saving money?

Only saving money.

>> Yeah, you can only save your way to zero, right?

You can save your way to, like, not spending anything, I guess, if you don't need to eat or live or have fun.

But it's way easier to earn more than it is to save everything.

>> Mm.

>> And I do think that there is a benefit to things like the FIRE community and whatever.

Spend less, sure, but actually, once you learn how to earn, you're unstoppable.

And I don't think anybody becomes unstoppable by saving.

In fact, you get very scarcity mindset.

It's really hard, I think, to earn like crazy if you're obsessed with saving.

And so I actually think those two ideas might be in conflict.

It'd be interesting to have a debate with Dave about it because I think really, really rich people do not think about saving at a 10:1 ratio of earning.

>> Really?

>> Yeah.

>> But are they saving something?

>> Um, yeah.

I just don't think -- They think about, "How can every one of my dollars be more productive?"

>> Ah.

>> So we think almost upside instead of downside.

People who are saving think, "How can I not spend anything?"

People who are earning and growing think, "How can I make every dollar that I spend bring friends when it comes back to me?"

And I think that's the material difference.

>> Multiplying it.

>> Right, as opposed to just, "Can I just save it over here under the mattress?"

My parents did that forever.

And I love them dearly.

They're brilliant people.

But they do not understand how to make money make more money at a really high level.

>> What would be the three best ways to have your money make you more money that doesn't take all the time in the world, all the risk in the world, and all the stress in the world?

'Cause some people start taking on these different investment strategies or buying businesses, and they realize they're spending double the amount of time on their job or their career or another business trying to fix something or try to grow something.

It seems like it's exhausting.

Or maybe it fails.

>> Yeah.

>> So, what would be those three things that you think would help multiply your money?

>> Yeah, well, the very first thing you have to do is maximize your earnings potential.

That's zero risk.

The zero risk way to make a lot of money is to make the most humanly possible with your skill set.

And most people don't do that.

In fact, only 30% of people will ever negotiate their salary without proactively having the company come back to them.

Now, don't be an...and ask for stuff that you're not worth.

But I really think that maximization of income is super important.

And then the second thing I think you should do on top of it is not just think about how you can earn more, but how can you, within your sphere of influence, get paid more for doing the same activity?

And so that might be like, for instance, don't just ask for more money.

Negotiate upside.

So, you know, for your podcast team, for instance, if they wanted to make more, I would say, "Hey, you pay me $75,000 a year to edit this podcast and produce it."

If I was able to grow it by X over goal, would you bonus me out for that?

>> 100%?

>> Of course you would.

Why does nobody ever ask their bosses that?

And also, by the way, people will listen to this on the Internet and completely ignore it.

It's the weirdest thing.

It's almost like they don't want to hear about these two things.

They don't want to have short-term pain for long-term gain.

>> Well, you also have to have the belief and the confidence that you can grow and add more value.

And a lot of people don't think -- Maybe they think they can and then they try and they fail and they say, "Oh, well, I'll just take what I can get."

So if you can actually have the confidence and the skill to go help your company grow a certain sector, you should be rewarded if you can really track and say, "This is what I did to increase my skills, either on my own time or company time.

This is how I applied it, and this is how I consistently got more growth or more revenue."

If you can do that, amazing.

You're an all-star, A-team player.

>> Yeah.

>> That's what an A-team player is.

>> Yeah.

It's true.

I think the part that people don't realize, though, is that even if you don't win by hitting your goal, you still win because you're getting paid to learn.

>> Mm-hmm.

>> And so -- >> So much.

>> And so, you know, it's such a huge opportunity to say like, "Hey, are you gonna fire somebody because they didn't hit an extra goal they put on top of them?"

Of course not.

>> But if they're saying, "I want to try to go for these goals," even if you fail at half of them, you get some of them, it's like, "Hey, you're ambitious, you're showing you're trying, that's great."

>> Yeah.

And you're doing the thing that people actually need to do to progress in their career, which is like take the next job before you do the next job.

>> Mm-hmm.

>> And I don't think enough people do that.

>> Right.

>> You know, when I was at -- >> Say that one more time.

>> Not enough people take the next job -- or do the next job before they get the next job.

>> What do they try to do instead?

>> They try to get the next job and get the pay before they're actually capable of it.

>> Uh-huh.

>> Which, to be fair, is a terrible thing for you to do often.

>> Why?

>> Perfect example -- I had a guy who came from operations and wanted to have a bigger job in marketing.

And I gave him that opportunity, but I said, "Hey --" >> From a different company?

>> Same company.

So, he worked in this part of my business, wanted this part of my business, but wanted a bigger job with more pay.

And I said, "Okay, you can go ahead and do it, but this has really big goals associated with it.

So if you can't hit those goals, you don't get to stay at the company."

>> Right, or you're getting demoted back to something else.

>> Which I don't really do.

I don't really demote.

>> It's either demote or you're gone or figure it out?

>> Exactly.

>> Why don't you demote?

>> I have never had it work out well.

After somebody takes a step back in a company... >> They're kind of gone.

>> ...they're gone.

>> Emotionally, mentally.

>> Emotionally, mentally.

It's bad for them.

It's bad for the company.

It's bad for morale.

And so -- And in this instance, the guy couldn't hit the goals, so we had to part ways.

And instead I should have -- If I was a better leader back then, I would have said, "I think you should try it first, and I can pay you some success if you hit it, but I don't think you're ready to do the full job."

And so that was actually my fault.

>> What's the difference between, you know, giving someone an opportunity who may not be ready, but allowing them space to make mistakes and grow into it, versus holding them back -- or however you want to call it -- until you think they're ready?

Like... >> Yeah, you know, when you run a startup like this one was, there's just not a lot of room for error.

And so at a big company, you get opportunity to make a lot of mistakes.

>> You can hide more.

>> You can hide way more.

>> A start-up, you need to get results, and everything -- you can see everything.

>> Yeah, otherwise it hurts the overall business, which hurts the rest of the employees.

So, I think, in that instance, there just wasn't a lot of opportunity.

But, you know, the beautiful part about going and being an employee for somebody else at a big company or taking on these extra jobs is there's room to run and it's not your money you're learning on.

>> You're getting paid to master skills.

>> MBA, plus make six figures?

That's what working for somebody else is if you're a go-getter.

>> Yes.

>> And then, you know, stay there until you stop learning.

At least, that's what I did.

>> Right, right.

>> Yeah.

>> You talk a lot about kind of a millionaire mindset in a lot of your content.

If there was a formula that you have seen over the years, personally or others who have gone from zero to millions, what would the kind of five- six-, or seven-step formula be on going from zero, from broke, to millionaire?

>> Yeah.

Well, the very first thing is -- We say at our company, "I'll take curiosity over IQ any day of the week, and I'll take follow-through over experience any day of the week."

So, really, being a millionaire and making a lot of money is you doing two things -- asking a lot of questions and doing the things you say you're gonna do... >> Mm-hmm.

>> ...which is beautiful.

What a low bar that actually is.

>> Right.

>> And yet most people don't.

Why don't we do the things we say we're gonna do?

We're overwhelmed.

We overcommit.

You know, our word doesn't mean something.

Our word is not our bond.

And what I've found from people who are successful is, when they say they're gonna do something, they do it.

>> Right.

>> And they probably do more than what they say they were gonna do.

And they also ask a lot of questions.

Like, you know, I have a friend of mine that had dinner with Warren Buffett.

And I remember asking him, I'm like, "Alex, what'd you learn?"

And he's like, "Pfft.

You know what I figured out?

By the end of the dinner, after we were shaking hands, I realized he had just asked me questions the whole time.

I didn't ask -- I didn't get anything in.

He didn't really tell me anything, and he just took all the information that I had.

And he made me feel good about it."

And I think that is what the wealthiest people do.

They actually ask a ton of questions 'cause the right questions are worth so much more than you showing another person how smart you are.

>> Right.

What would you say are other things that rich people do that broke people don't do?

>> I mean, rich people do not try to look rich, typically.

Really wealthy people do not care about looking rich.

Broke people care about looking rich.

>> Why?

>> It's a signal, right?

At a certain point, you know, when you don't have money, you probably don't have a lot of confidence.

>> Mm.

>> You probably have a little bit more impostor syndrome.

Once you start making a lot of money, you know, there's actually a lot of downside to being rich, you know, which is people want it, people want handouts.

The IRS is coming out of your pocket.

And so I think at a certain point you start changing your game.

And it becomes a lot more important, your competence level, how you execute, than just what you wear or show.

So, care a lot more about being rich than looking rich is a big difference.

And the other thing is, you know, rich people trade in knowledge.

You know, they typically do not ask for favors.

They give favors because they know that there is a price to asking for things.

>> Yeah.

>> And broke people do the opposite.

They try to take, take, take, ask too many favors.

>> Yeah.

>> And I did this wrong, too, you know?

When you're young, you're like, "Hey, can I work for you?"

>> Yeah.

>> "And, you know, you could just pay me a little bit."

>> "And teach me everything you know."

>> [ Laughing ] Right, exactly.

>> "Can I just be by you all day long and watch you and just, like -- I just want to shadow you for months and take up all your time and resources."

>> "Please?"

>> And that's what I'd ask.

You know, I would ask ridiculous things like that.

And then as I got wealthier, I realized, "Ohh, time is the only thing we can't make more of.

And I'm wasting a bunch of people's time."

And that's not the move.

So, how can I be a gift giver of time and not a taker of time?

And I don't think poor people think that way.

>> Wow.

>> You know, and I get it 'cause it's all -- it's constrained, right?

Like, Chris and I back in the day, we lived in DC for a period, and we didn't realize that we lived -- We bought a place.

And DC is kind of like block by block in some areas.

So we lived in the hood.

Like, it was, like, not a nice part of town at all.

What was fascinating, though, is that we would talk to some of the people who had been long-time, you know, residents.

And, you know, there was one young lady, and, you know, she had never -- Her father was like in his 80s, probably.

And he had never left the District of Columbia, never been on a plane, never been on a train.

And she was really interesting, too, because a lot of people would sit outside and they'd want to hang out and they'd want to talk for a long time.

And we were just busy.

We didn't have that much time.

And so she kind of picked up on that and was like, "Hey, can I walk you back to and from the gym?

Like, when you walk to and back from the gym, can we go?"

>> This is a neighbor?

>> It was a neighbor, young girl.

She wanted to go to college.

She would have been the first one in her family to go to college.

And it was really interesting because she would just ask us questions as we were on the go.

And, lo and behold, got into Howard, you know, figured out where she wanted to go next and what she wanted to do.

But I think that was the difference.

They would waste a lot of times sitting outside, you know, kind of with this idea that time was abundant.

And she was the opposite.

She was like, "I know you don't have time.

Can I take up a little bit of it while I walk?"

>> Interesting.

>> Yeah.

>> Wow.

And I don't know the story, if they're just out there watching all day, but there's -- usually, if you're with the same people, watching others, you're judging, you're assessing, you're gossiping.

I'm not saying they were doing that, but that's kind of the general theme.

If you're not asking questions and bettering yourself, you have time to allow your mind to go into a negative place a lot of times.

>> 100%.

>> Judge, assess, make wrong, compare, whatever it might be.

>> Yeah, you know, and also I think it became cool to not strive, you know?

>> Really?

>> Yeah.

I mean, in the neighborhood, a lot of the young kids would... You know, they were kind of goofing around and they would sort of make fun of, you know, her, her ambitions, and, you know, because it's -- I think if you don't make it but you say you never wanted it... >> Mm.

>> ...then you don't feel like a failure.

You're like, "I didn't want it anyways."

>> Right, right.

>> Right?

>> "Didn't matter to me."

>> "Didn't matter to me.

I didn't even try."

But if you actually want it really bad and then you don't get it, oof.

Am I gonna survive that?

So I think it's really easy to fall into that mentality.

>> What do you think -- For those that do want it and they do make it, what is the biggest mistake that people make when they reach 100 grand or $1 million or millions?

What's the biggest mistake at that point they make?

>> I think in your first hundred thousand and your first million, your biggest mistake is thinking that the thing that got you to 100K is gonna get you to $10 million.

The thing that got you to 100K will probably get you to a million bucks, but it won't get you to $10 million.

>> It's just more hard work.

>> Yeah.

>> But not to $10 million.

>> Exactly.

So, that first 100K, you can do all of that working for somebody else, working really hard.

You can get to a million working for somebody else, working really hard on the same things.

But if you want to go to that $10-million mark, you got to do something different.

>> What do you need to do differently?

>> Typically, I think you have to get some skin in the game.

This is when you have to start earning not just with your time and brain, but also with your money.

So you've got to invest in something.

You've got to understand deal structuring.

You've got to get a little equity in something.

You've got to become an owner in some way, shape, or form.

It could be an owner inside of a business.

But you've got to get some sort of upside potential.

And I think that is where the public school system kind of stops teaching us.

>> Yeah.

They don't teach it at all.

>> No, no.

>> So, what would be the best strategy for someone to get equity in something, whether they're at a career currently or they're looking to start or join something where they could have equity that has big enough earning potential to create more?

>> Let me tell you what not to do these days, I think.

You know, if you go back and you look at startup employees over the last 10 years and you look at what their equity options were worth -- So, you're like, fancy.

You went to Silicon Valley.

You started off with an app.

You know, you worked really hard.

You took a low salary because you have equity options.

Most of those equity options are worthless today.

They're not worth anything.

They're underwater.

And maybe one day they eventually will be.

But I think people were sold a dream that they could eat equity.

And you can't.

You need earnings.

And so, one, what I would say to do is -- Yes, you could maybe be part of the next Facebook, but the likelihood is you're not.

And so 90% of the startups fail.

So, I think we were sold a bag of lies there.

And we have to be really careful that we don't bet only on equity.

And, you know, Chris, my husband, would tell you this.

He was at a couple of companies where he got equity, but that's not where we made our money.

And so realizing that.

The second thing I think that people should do, if you want to get some skin in the game, is -- The best way to do it is actually get your earnings going and ask to invest alongside.

So, you know, this is what private equity and private investing firms do.

So, we basically allow for what's called a club deal.

So, if you work at a private equity company, you typically can take some of your money that you make from the private equity fund and you can put it into deals.

>> Wow.

>> And so I think if you're listening to this and you're with a company today, try to think about, how could you get a piece of -- maybe not even the company that you work for -- of a deal that you bring to the company?

And so, like, nobody really does this outside of private equity, but, you know, if somebody brought you a new ad sponsor for "School of Greatness" and it was a company that's gonna pay you cash, but also is maybe small, right?

And so they're up and coming.

And they said, "Let's get some equity in this deal, plus, you know, a little revenue share or something from them.

If I bring you this deal, if I structure it for you, and maybe even I put in a little money for it, could I have a percentage of the company?"

And so this is the great unlock, I think, that once normal, everyday people start understanding this, they can get equity while being employed, which is, I think, the best thing to do because it's hard to get enough money being an entrepreneur to invest in other things.

>> Yeah.

>> Most entrepreneurs have all our money tied up in our business.

>> What is the mindset that people need to start thinking about in order to -- choosing the right opportunities?

Because 10, 12 years ago, you know, I read "4-Hour Workweek."

Maybe it was 15 years ago.

I don't know.

And it was all about, like, investing in startups.

And I think I invested in like seven or eight start-ups, right?

I didn't make money on any of those.

And they were all come from credible resources.

Other people were investing in them also that I trusted.

It wasn't like it was just some random pitch deck.

>> Yep.

>> It was like, "Okay, there's opportunities out there.

None of them paid me anything, and it took so much of my time and energy to, like, get on calls with people and help them and promote stuff.

Now, there's an education that I gained from it, but I didn't create wealth.

>> Yep.

>> I spent more time and energy helping people fail than I did getting a result, right?

And so I learned a certain lesson there -- to put more resources back into my own projects, which are guaranteed a result if I'm gonna be alive.

So, how can people get the mindset of knowing, "I'm gonna invest in this, whether it be time, energy, money, talent, whatever it is, and hopefully I'm getting a return in 2, 5, 10 years"?

>> So, what I would say is, until you've made your first at least $1 million, don't invest in startups that are non-cash-flowing.

Just don't do it.

And probably more than $1 million... >> Yeah.

>> ...in this environment.

So, that is for people who already have so much money that they can throw some chips on the table, just like at the casino, with the knowledge that 90% won't work.

If I was young Codie again, what would I do?

I would be investing in cash-flowing businesses and deals.

>> Right.

>> And so instead of going and doing the crazy startup app, say, "Hey, why don't we own this vertical that we do business with right now?

Hey, you know, let's go in on an Airbnb for when our employees are traveling back and forth.

And I could help manage the Airbnb for when our employees are traveling back and forth.

We get rid of some of the costs that we have from flying people and putting them up in hotels.

But simultaneously, we own a cash-flowing asset that has real value today."

>> Mm.

>> So we own a little equity in it, but we also own the cash flow and we can get a portion of it."

>> Right.

>> And it's so technical.

And sometimes I think people get overwhelmed with these ideas.

But if you just start thinking this one sentence, which is, "Cash flow is king..." >> Mm-hmm.

>> "...and I don't invest in hopes and dreams.

I invest in realities and revenue."

Right?

That's what I do until I've made so much money that I'm like, "No, now I need -- I can't do the same thing that got me to that first $1 million.

Now I got to do something else to get to $10 million and $100 million.

And it's not gonna be Airbnbs probably."

>> I mean, you've mastered the researching aspect and investing aspect in these kind of boring businesses.

What would you say are three to five best cash-flowing businesses if someone wanted to get into today?

>> Yeah.

Well, there's lots of ways to look at this.

I think the first thing that I like to look at is, what are the businesses that have the lowest failure rate with the highest potential for you to make money?

So let's start there.

And if we look at the numbers -- That's why I started with laundromats.

It's like a 90% success rate with laundromats.

They don't fail as often.

They've been around a long time.

They don't cost a ton of money.

They don't make you a ton of money.

>> They don't make a lot either, right?

You're not making millions unless you get a million of them.

>> Yeah, yeah.

My first one was $67,000 in revenue.

So, not much cash.

But that's okay because you're starting to put a few chips on the table, and those chips pay you back with consistency.

>> And how much did that first one cost?

>> 100K-ish.

>> That's not bad.

>> No.

I mean, here's why it's bad.

It's bad because it was a job.

It was like a low-paying -- >> Full time -- >> It's a low-paying job for $67,000 a year, right?

>> Yeah.

In a laundromat.

>> Right, but then I go to sell it.

If I can increase from $67,000 to, let's say, $200,000 in revenue, then I can sell that business for, you know, That's a pretty good payoff.

>> That's not bad.

>> And so you can get in on the back end and you can cash-flow in the meantime.

And you learn without a lot of risk.

Like, I didn't want to put hundreds of thousands of dollars down.

That seemed like too much money for me back then.

And so I would start with something like a laundromat.

I like it 'cause it's low-- There's potentially less risk there.

>> Before you go on to the next one, I mean, what you said there -- I think people have this idea of like, "Okay, it's, you know, a cash flowing business, but you might have been there 20 hours a week at some times, maybe longer in the beginning."

I don't even know.

It becomes almost a full-time job managing a boring business.

And if something's not exciting... >> Yeah.

>> ...and it's not bringing you exciting cash flow -- it's bringing you some, but not a lot -- how do people stay motivated and excited and passionate about something that they really don't care about as much?

>> Yeah.

>> How did you do that for yourself, and how do others do that?

>> You need to learn to love the game.

>> Ah.

>> If you want to make money, you have to learn to love making money and see it just like you do a scoreboard.

I mean, I always joke that every time a troll talks, I just go scoreboard because, you know, at the end of the day, it's like, who's winning or losing?

And here's the board.

And it's a fun game for me 'cause I've just trained myself to like this game.

And so I think that is what you want to do when you buy a first business.

It's like, it sucks.

It's hard.

Just like when you go and play a competitive sport.

You get beat up, you fall down, you get hit in the face, you're tired, you break things, but it's fun.

Like, why do we play sports?

'Cause we like hard.

And that's what business is.

And so I think if you can train yourself to love the game, then you start with a little business, and just like with your first piece of real estate, you start with like a studio apartment, and then you go to a townhouse and then you go to a house.

You do the same thing in business.

You stair-step your way to bigger games.

And if you're good and you're already a business owner, then you're not gonna start with a laundromat.

You're gonna start with a business that already has an operator in place and a managerial team, you know?

Or you're gonna buy a business and you're gonna be like, "Hey, why don't you operate this thing for me?

I'll put up the cash, I'll find the deal, but you run this thing."

>> Right.

>> No different, really, than you buying an Airbnb and putting a property manager in.

But the idea is, how can you become good more of them?

>> Right.

We hope you enjoyed this episode and found it valuable.

Stay tuned for more from "The School of Greatness," coming soon on public television.

Again, I'm Lewis Howes, and if no one has told you lately, I want to remind you that you are loved, Now it's time to go out there and do something great.

If you'd like to continue on the journey of greatness with me, please check out my website, lewishowes.com, where you'll find over 1,000 episodes of the "School of Greatness" show, as well as tools and resources to support you in living your best life.

>> The online course Find Your Greatness is available for $19.

Drawn from the lessons Lewis Howes shares in "The School of Greatness," this interactive course will guide you through a step-by-step process to discover your strengths, connect to your passion and purpose, and help create your own blueprint for greatness.

To order, go to lewishowes.com/tv.

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