How ANYONE Can Create EXTRAORDINARY Wealth & Abundance! Stop Listening To These Money LIES | Codie Sanchez
In this episode of The School of Greatness, guest Codie Sanchez shares her insights on wealth building and entrepreneurship. She delves into the importance of self-belief, taking calculated risks, and developing crucial skills like sales, marketing, finance, and leadership to generate revenue.
Sanchez also discusses strategies for acquiring and growing businesses, highlighting considerations like deal negotiation and cultivating supportive partnerships. The conversation touches on the dynamics between wealth and happiness, emphasizing that extreme wealth amplifies pre-existing traits rather than bringing happiness alone.
This is a preview of the Shortform summary of the Dec 2, 2024 episode of the The School of Greatness
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1-Page Summary
Wealth-Building Strategies
Self-Belief and Action
Codie Sanchez emphasizes that wealth reflects not just skills, but self-belief and others' perception of your abilities. The faster you move and take action, the more money you can make, as illustrated by Bill Perkins rapidly learning from mistakes. Sanchez advocates an abundance mindset, believing money is ubiquitous.
Calculated Risk-Taking
Wealthy people are often willing to take risks that others avoid. However, Sanchez warns against risking bankruptcy. She suggests developing skills and networking to mitigate risk, and highlights private equity as a relatively low-risk path to attaining billionaire status.
Entrepreneurial Skills and Leadership
Key Revenue-Generating Skills
According to Sanchez, sales, marketing, finance, and leadership are crucial for earning more. She deems leadership - enabling a team's success - as the most vital skill.
Business Partner Qualities
Sanchez values loyalty, resourcefulness, and an "all-in" mentality in partners. She stresses aligning on long-term vision and weathering difficulties together.
Acquiring and Growing Businesses
Starting vs. Buying
While starting a business carries high failure risk, buying an existing profitable business can provide faster income. Sanchez discusses strategies like economies of scale and vertical integration to grow acquired businesses.
Deal Negotiation
Howes recounts losing control after selling his first business. Sanchez emphasizes structuring deals to maintain ownership, considering taking on debt rather than diluting equity.
Interpersonal Business Dynamics
Wealth and Happiness
Sanchez suggests extreme wealth amplifies pre-existing traits rather than bringing happiness, observing many wealthy people lack genuine peace despite their joy.
Supportive Partnerships
Sanchez stresses the importance of loyal, resourceful partners aligned on vision. She cautions against partnerships solely motivated by money or status.
1-Page Summary
Additional Materials
Counterarguments
- Self-belief and action are important, but systemic barriers and luck also play significant roles in wealth accumulation.
- Rapid action can lead to wealth, but it can also lead to hasty decisions and significant losses if not paired with due diligence.
- An abundance mindset can be beneficial, but it may also lead to financial imprudence if not tempered with realistic financial planning.
- Calculated risk-taking is a common trait among wealthy individuals, but risk tolerance varies greatly among people and is influenced by one's financial safety net.
- Private equity might offer a path to wealth for some, but it is not accessible to most people and carries its own set of risks and complexities.
- Sales, marketing, finance, and leadership are important skills, but focusing solely on these areas can overlook the importance of other skills such as technical or creative abilities.
- Leadership is crucial, but collaborative and horizontal organizational structures can also be effective and are sometimes preferred.
- Loyalty and resourcefulness are valuable traits in partners, but flexibility and the ability to challenge each other's ideas are also important for growth and adaptation.
- Buying an existing business can be less risky than starting a new one, but it also requires significant capital and due diligence to ensure the investment is sound.
- Economies of scale and vertical integration can drive business growth, but they can also lead to monopolistic behaviors and reduce competition.
- Maintaining ownership in deal negotiations is important, but in some cases, sharing equity can bring in partners with valuable skills and resources that contribute to the company's success.
- Taking on debt instead of diluting equity can be a viable strategy, but excessive debt can lead to financial instability and limit a company's operational flexibility.
- While extreme wealth may amplify pre-existing traits, it can also create new pressures and responsibilities that significantly alter a person's character and happiness.
- The assertion that wealthy individuals often lack genuine peace despite their joy is a generalization and may not apply to all wealthy individuals.
- Supportive partnerships are important, but partnerships motivated by money or status can also lead to successful ventures if the parties involved are transparent and have clear agreements.
Actionables
- You can boost your self-belief by journaling your successes and the actions that led to them, which reinforces the connection between self-belief and wealth. Start by writing down three small successes each day and the specific actions you took to achieve them. This practice can help you recognize patterns in your behavior that contribute to success and build a stronger belief in your ability to create wealth through action.
- Develop a habit of assessing risks with a simple "risk-reward" chart to make calculated decisions like wealthy individuals. On a piece of paper, draw a two-column chart before any significant decision. In the left column, list potential risks and assign them a severity score from 1 to 10. In the right column, list potential rewards and their likelihood. This visual aid can help you weigh decisions more objectively and take calculated risks without succumbing to impulsive actions that could lead to bankruptcy.
- Create a "skill-building roadmap" for yourself, focusing on sales, marketing, finance, and leadership, to enhance your revenue-generating abilities. Start with free online resources or community workshops to learn the basics of each skill. Set monthly goals, such as reading one book on sales techniques or attending a local marketing seminar. Track your progress and apply what you learn to a personal project, like selling homemade products or leading a volunteer group, to practice and refine these skills in real-world scenarios.
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Wealth-building strategies and mindset
Codie Sanchez and Lewis Howes delve into strategies for building wealth, emphasizing the roles of self-belief, action, and risk-taking.
Money is a mirror of your skills, self-belief, and how others perceive you
Codie Sanchez explains that wealth is not just a measure of your skills, but also of your self-belief and the perception others have of your abilities. It stands as a multifaceted reflection of your performance in the economy as well as the trust others place in your competence.
The faster you move and take action, the more money you can make
Codie Sanchez echoes a principle from her mentor that speed in action reflects in one's bank account. Emphasizing rapid movement, she highlights the relationship between the celerity of one's actions and financial success. This mirrors Bill Perkins' view that his wealth is not a product of superior intellect, but rather the result of moving quickly, learning from mistakes, and proactively seeking solutions. Lewis Howes shares a similar sentiment, expressing that his aversion to discomfort pushed him to face potential embarrassment for the possibility of accumulating wealth.
Having a mindset of abundance and believing money is everywhere can help attract it
Sanchez maintains that believing in the ubiquity of money can facilitate its attraction. Similar to the American trait of optimism, she finds that keeping an abundance mindset is advantageous in wealth accumulation. This is further illustrated by her husband's belief in the high returns of investing in enjoyment and the conviction that money, once spent, can be earned back.
Protecting your reputation is crucial for building wealth
However, this mindset does not neglect the necessity of a good reputation, as Howes discusses closing a business due to reputational risks, highlighting the importance of how others view both an individual and their business endeavors.
The importance of taking calculated risks
Wealthy people are often willing to take risks that others are not
Taking calculated risks is integral to wealth-building. Sanchez emphasizes that one's willingness to take risks is often what separates the wealthy from the rest. The potential for immense wealth involves ownership and equity - a path laden with risks compared to a regular job.
Avoiding ...
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Clarifications
- Wealth as a reflection of skills, self-belief, and others' perception means that your financial success is not solely based on your abilities but also on how confident you are in yourself and how others view your competence. It suggests that wealth is influenced by a combination of your actual skills, your belief in your capabilities, and how others perceive your talents and potential. This concept highlights the interconnectedness of personal confidence, external validation, and tangible skills in the context of building wealth. It underscores the idea that wealth is not just about what you can do but also about how you perceive yourself and how others recognize and value your contributions.
- The relationship between speed in action and financial success emphasizes the importance of making decisions quickly and implementing them promptly to capitalize on opportunities in the market. Acting swiftly can lead to being the first mover in a competitive landscape, securing advantageous positions and reaping the benefits before others. This approach is about being agile, adaptive, and responsive to changes, enabling individuals to stay ahead and maximize their financial gains. Ultimately, the correlation between swift action and financial success underscores the significance of proactive decision-making and execution in achieving one's monetary goals.
- An abundance mindset is a positive outlook that believes there is more than enough of everything to go around, including wealth. This mindset focuses on opportunities, growth, and success rather than scarcity or limitations. By believing that money is abundant and attainable, individuals are more open to recognizing and seizing wealth-building opportunities. It encourages proactive and optimistic thinking, attracting wealth through a mindset that is open to possibilities and abundance.
- Reputation plays a crucial role in wealth-building as it influences how others perceive an individual's trustworthiness and competence in business dealings. Maintaining a positive reputation can lead to more opportunities, partnerships, and investments, ultimately contributing to long-term financial success. Conversely, a damaged reputation can hinder business prospects, leading to missed opportunities and potential financial setbacks. Building and safeguarding a good reputation is essential for establishing credibility and trust within the business community, which can open doors to lucrative ventures and sustainable wealth growth.
- Wealthy individuals often take calculated risks that involve careful analysis and planning to maximize potential gains while minimizing potential losses. These risks are strategic and well-thought-out, based on a thorough understanding of the market and potential outcomes. In contrast, many people may avoid risks altogether or take only minimal risks due to fear of failure or loss, which c ...
Counterarguments
- Wealth may not always reflect personal skills or self-belief, as factors like inheritance, luck, and systemic advantages can play significant roles.
- Moving quickly and taking action can sometimes lead to hasty decisions and financial loss; deliberation and strategic planning can also be key to financial success.
- An abundance mindset can be beneficial, but without practical steps and financial literacy, it may not lead to wealth accumulation.
- While reputation is important, some wealthy individuals have succeeded despite reputational challenges, suggesting that it is not the only factor in wealth-building.
- Risk-taking is common among wealthy individuals, but there are also wealthy people who have accumulated wealth through low-risk investments and steady accumulation.
- Avoiding ...
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Entrepreneurial skills and leadership
Lewis Howes and Codie Sanchez delve into the entrepreneurial skills vital for leadership and financial success, highlighting the importance of developing a valuable skill set and choosing the right business partners.
Key skills to earn more money
Sales, marketing, finance, and leadership
Cody Sanchez discusses the four most significant skills to earn more money: sales, marketing, finance, and leadership. She emphasizes increasing one's skill set to become a profit center by tracking how skills directly generate revenue for the company. Sanchez also points out that leadership, involving understanding emotions and empowering people, is crucial, especially in challenging situations, and is considered more powerful than being a strong individual contributor. She underscores that real leadership is about enabling team members to succeed to the point where they may surpass the leader. Successful leaders should benefit from the success of their team members. Howes agrees with this approach, reflecting on his own experience joining a public speaking class to improve his networking and opportunity-creating abilities.
Leadership is the most important skill - the ability to get a group of people to work together effectively
Codie Sanchez suggests leadership, the ability to align a team towards a common goal, is the number one skill set for making a massive amount of money. She stresses the importance of being able to sell top talent on a big dream and to trust the vision enough to allow capable individuals to effectively execute and contribute to the business. Lewis Howes echoes this sentiment, relating that in sports, practice is key, but in business, it is about who you hire, thereby implying the value of skilled leadership.
The characteristics of a good business partner or co-founder
Loyalty, resourcefulness, and an "all-in" mentality
Codie Sanchez places great importance on the qualities of loyalty and resourcefulness in a business partner or co-founder. She believes a partner should have an "all-in" mentality, willing to do whatever it takes to work through challenges and persevere. Sanchez highlights the necessity of having a partner with a ride-or-die approach, someone you can trust implicitly even in extreme situations.
Aligning on long-term visi ...
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Counterarguments
- While leadership is highlighted as the most important skill, some might argue that it is equally important to have a team with diverse skills and that no single skill is universally more important than others.
- The emphasis on sales, marketing, finance, and leadership may overlook other critical skills such as technical expertise, creativity, or strategic thinking, which can also be directly tied to a company's revenue and success.
- The idea that increasing one's skill set can turn them into a profit center might not acknowledge the systemic issues and external factors that can affect an individual's ability to monetize their skills.
- The notion that real leadership is about enabling team members to succeed could be challenged by the perspective that leadership also involves making tough decisions that might not always align with individual team members' success.
- The suggestion that successful leaders should benefit from the success of their team members might be critiqued for potentially promoting self-interest over the collective success of the team or organization.
- The recommendation to join public speaking classes to improve networking might not consider that networking success can also come from other forms of interaction and that public speaking is not the only or best method for everyone.
- The idea that loyalty and an "all-in" mentality are crucial in a business partner may not take into account that a balance of commitment and healthy skepticism can be beneficial for making sound business decisions.
- The emphasis on aligning on a long-term vision might not consider that flexibility and the ability to pivot are also valuabl ...
Actionables
- You can enhance your leadership skills by starting a peer feedback group at work to practice giving and receiving constructive criticism, which will help you understand emotions and empower others. Gather a small group of colleagues committed to personal growth, meet regularly to discuss challenges and successes, and provide honest feedback to each other. This will simulate leadership scenarios and help you refine your ability to enable others to succeed.
- To build a reputation for positive conduct, initiate a 'kindness project' where you perform and document one act of kindness each day for a month, targeting different people in your professional network. This could range from sending a thank-you email for someone's hard work to offering your help on a colleague's project. Documenting these acts will help you reflect on the impact of your behavior and encourage a habit of treating others well.
- Develop your ability to evaluate potential business partners ...
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Acquiring and growing businesses
The hosts explore the world of business acquisition and growth, discussing strategies, and negotiation techniques to increase the chances of financial success while maintaining control.
The benefits and risks of starting vs. buying a business
Starting a business carries a high failure rate; 90% of startups fail within a 10-year period, mostly within the first three to four years. Startups often require significant investment, with entrepreneurs investing an average of $30,000 to $50,000 annually and making no income for the first few years. When they do begin to earn, the salary is relatively low, around $40,000 to $60,000 a year.
However, buying an existing business can be seen as less risky than starting from scratch since it already has a product market fit and positive cash flow. This means new owners can potentially earn income faster since these businesses are already established.
Strategies for growing a business you've acquired
Sanchez speaks about the methods for growing an acquired business. She mentioned acquiring a second laundromat to achieve economies of scale or leveraging the equity of one laundromat to acquire another. Another strategy might involve vertically integrating by creating an own-brand soap to reduce costs and generate another revenue stream. Operating a laundromat can also be optimized by adding supplementary services like soap dispensers and gumball machines, increasing prices, or even purchasing the real estate to gain rental income.
Negotiating and structuring deals to maintain ownership and control
Lewis Howes shares his cautionary tale of selling his first business with a payment structure spread over three years, during which the business suffered under the new management. He mentions seller financing as an exampl ...
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Clarifications
- Equity represents ownership in a company, giving shareholders a claim on its assets and earnings. Warrants are securities that give the holder the right to buy a specific amount of stock at a certain price before expiration. Ratchets are mechanisms that protect investors by adjusting the conversion price of their securities in case of a down-round financing. Options are contracts that give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price before or at a specific date.
- Economies of scale in business involve reducing costs per unit by increasing production levels. This can lead to lower average costs and increased efficiency. Vertical integration is when a company controls multiple stages of the production or distribution process, allowing for more control over quality, costs, and potentially higher profits. These strategies can help businesses grow by improving their competitive position and profitability.
- Seller financing is when the seller of a business provides a loan to the buyer to help with the purchase. This arrangement allows the buyer to make payments over time to the seller instead of paying the full purchase price upfront. By offering seller financing, the seller retains a financial interest in the business and can maintain some level of control or influence during the transition period. It can be a way f ...
Counterarguments
- While it's true that starting a business has a high failure rate, the 90% figure is often debated and can vary significantly by industry, geography, and other factors. Some argue that this statistic is overblown and that the actual failure rate may be lower.
- The investment figures for startups can also vary widely. Some businesses may be started with less capital, especially in the digital or service sectors where overhead can be minimal.
- Buying an existing business may be less risky in some aspects, but it also comes with its own set of risks, such as inheriting hidden debts, outdated business models, or a tarnished brand reputation.
- Strategies for growing an acquired business, such as acquiring a second location, can indeed create economies of scale, but they can also double the risk and management responsibility. Not all businesses benefit from scale, and some may lose their competitive edge or customer appeal as they grow.
- Adding supplementary services or increasing prices at a laundromat could potentially alienate existing customers if not done carefully and with market research.
- Purchasing real estate for rental income assumes a stable or growing real estate market, which may not always be the case. Real estate investments can also be capital intensive and may not be feasible for all business owners.
- Seller financing can ...
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Interpersonal dynamics in business
Codie Sanchez delves into the complexities of wealth and relationships in business, discussing everything from the psychological impact of immense riches on individuals, to the importance of thoughtful partnerships.
The level of fulfillment and happiness among the ultra-wealthy
Codie Sanchez considers whether achieving billionaire status is truly worth the sacrifices it entails. She suggests that those achieving such wealth might never have been peaceful individuals to begin with and that money tends to amplify pre-existing traits rather than change a person's nature. Sanchez points out that while she's met many joyful billionaires, she's encountered fewer who exhibit a sense of peace.
Money amplifies who you already are - it doesn't necessarily bring happiness
Sanchez has observed that the restless energy needed to amass great wealth often precludes a sense of peace. She argues that while wealth can bring joy through the freedom to pursue one's interests, it doesn't necessarily equate to happiness.
Many billionaires seem to lack a sense of peace, despite their wealth
Despite their joy, Sanchez notes that some billionaires may still lack a sense of peace, potentially a result of becoming disconnected from normal life and losing touch with everyday experiences, living in a bubble due to their riches. She illustrates this point by describing the traditional finance lifestyle—filled with displays of excessive wealth—that often leads to misery rather than fulfillment. Reflecting on her own experience, Sanchez recounts a life-defining moment when she realized the emptiness of a life spent merely enriching oneself without impact or adventure.
The importance of a supportive, complementary partner in business and life
The discussion turns to the significance of a cooperative and trustworthy partnership, both in life and business.
A partner who is loyal, resourceful, and aligned with your vision
Sanchez and Lewis Howes explore the idea of symbiotic business partnerships, where each partner learns from one another and engages in meaningful conversations without ulterior motives. They stress the impact of financial struggles on relationships, suggesting that true characters are revealed during these times, highlighting the importance of aligned incentives, trust, and seeing how individuals react to success and failure. Sanchez touches on the loss of a friendship due to a bad investment, emphasizing the necessity of caution when aligning financial and personal relationships.
She discusses the concept of becoming indispensable in a business ...
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Counterarguments
- While wealth may amplify existing traits, it can also provide new opportunities and experiences that could lead to personal growth and change.
- Some individuals may find that wealth does bring them happiness and peace, as it can alleviate financial stress and provide the means to pursue passions and philanthropy.
- The connection between wealth and a sense of peace may not be direct; other factors such as personal values, mental health, and social relationships play significant roles in an individual's sense of well-being.
- Displays of wealth are not inherently linked to misery; they can also be expressions of personal achievements or cultural norms, and can coexist with fulfillment if balanced with other life aspects.
- The idea that being indispensable in a partnership is vital for success can be challenged by the notion that a healthy business should not rely too heavily on any single individual to ensure long-term stability and resilience.
- While caution is advised in mixing financial and personal relationships, there are many instances where such combinations have led to successful and fulfilling partnerships.
- Partners motivated by money or status are not necessarily detrimental to a business; ...
Actionables
- You can reflect on your personal traits and how they might be amplified with increased wealth by keeping a journal where you note your reactions to daily financial transactions. For example, if you feel a surge of power when making a large purchase, consider how that might scale if your spending power were to increase significantly.
- Create a "joy portfolio" where you list activities that bring you happiness regardless of their monetary value. Regularly schedule these activities into your week to ensure that your pursuit of joy isn't overshadowed by the pursuit of wealth. For instance, if you love painting, dedicate time each week to this hobby without considering its financial potential.
- Evaluate potential business partners by engaging in smal ...
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