How To Build A Business That Runs Without You - Codie Sanchez

The Biggest Lie: Looking Rich vs. Being Rich [0:59]

• Many people, especially men, are told that success is about outward appearances, fueled by social media.
• True wealth is defined by having enough money for the life you want and actually liking that life.

• "What's the biggest lie that people are told about getting rich? That is actually about looking rich and not getting rich."

The Harsh Reality of Business Profitability [2:12]

• A staggering 46% of business owners are not profitable, and 64% make less than California's minimum wage.
• The average business owner earns between $40k-$60k annually, significantly less than a full-time minimum wage job.

• "So if you think about it, that the average business owner makes somewhere between 40 and 60 K per year."

The Difficulty of Starting a Business [3:32]

• Starting a business is incredibly difficult, and most fail.
• Even successful businesses that make a million dollars a year might only yield $150k for the owner.

• "And, you know, and I get a lot of crap for talking about wanting to buy businesses instead, but it's mostly because it's really fucking hard to start one and most of them fail."

Knowing What You're Getting Into [5:08]

• Anyone promising quick, easy, low-cost business success is likely misleading.
• Startups have a 90% failure rate within five to ten years.

• "The only time it works out is when you look at the math in most of these things."

The Value of Working for Others First [5:59]

• It's often more beneficial to work for a successful business before starting your own.
• Many people have the ability to start a business but lack the capacity or disposition for the required sacrifices.

• "I think probably most people should go work in somebody else's business that's really successful first before you ever think about starting your own."

The Founder's Sacrifice and the "Messy Middle" [7:52]

• The initial stages of business are the hardest, requiring immense sacrifice.
• The "Dunning-Kruger messy middle" is where founders often struggle and give up.

• "And most businesses fail not just because of cash, but because the founder gives up."

The Entrepreneurial Identity and Ego [10:13]

• Founders often wrap their identity too tightly around their business, leading to a fear of failure.
• This self-importance can be a significant obstacle to growth and resilience.

• "I think when it comes to business building, we try to wrap up our identity so much in the thing that we call ourselves, CEO, founder, creator."

The 12 Types of Owners and Common Archetypes [11:37]

• There are 12 types of owners, with the "closer," "ball hog," and "visionary" being the most common.
• These archetypes often stem from a desire to do things differently after working for others.

• "And we've run about 15,000 people through a survey to figure out what are the three most common, and what are their strengths and weaknesses."

Skills of a Great Founder [14:15]

• Great founders hate repetition, leading them to create systems for scaling.
• They are obsessed with solving a specific client problem, not just the product itself.
• They can inspire belief in others that they can achieve the vision.

• "One, they hate repeating themselves. Like how many times have you as a leader said, I swear to God, if I have to repeat this one more time, I'm going to lose it."

The Danger of Being Indispensable [15:58]

• Being indispensable to your business is a dangerous addiction, akin to heroin.
• The goal of an owner is to build a business that doesn't rely solely on them.

• "I mean, it's true. I mean, I think in your business, there's nothing better than feeling like you can come in and save the day and make the money and do the clothes in your business."

Self-Employed vs. Owner: The Key Difference [17:29]

• Self-employed individuals are still critical to product fulfillment, sales, or distribution.
• True owners create systems and transparency, allowing the business to run without their constant direct involvement.

• "If you're self-employed, that means that either the fulfillment of the product, the sales of the product, or the distribution of the product falls entirely in your hands."

The Power of a Dashboard and Key Metrics [18:48]

• Owners need a "cockpit and dashboard" to see key business metrics daily.
• Focusing on two core metrics (e.g., car count and average order value for a mechanic) can simplify business management.

• "And so I think the way for you to move from founder mode and self-employed to owner mode would be, what if you could see inside of your business the most important metrics every single day?"

The Role of Incentives in Business [22:08]

• Businesses run on five core incentives: money, relevance, leadership, significance, and work-life balance.
• Understanding individual motivators is key to effective incentive structures.

• "They want to make money. One. Two, they want relevance. Three, they want to lead. They want a team and to not be a doer on top of it all the time."

The "Anti-Sell" and Hiring A-Players [29:30]

• Attracting top talent involves being upfront about the demanding nature of the work.
• The "anti-sell" approach, like Elon Musk's job postings, filters for individuals who thrive on challenges.

• "Do not join. If you do not love hard things that almost break you, you know, do not join."

The Puritan Work Ethic and Letting Go [37:03]

• The ingrained belief that suffering equals success hinders founders from delegating.
• True leadership involves enabling others to succeed and stepping back from being the sole problem-solver.

• "If I don't see you proselytizing yourself, you know, a prostrating yourself, sorry, on the fucking crucifix altar of whatever this business is, you need to be the first person in and the last person out."

The Emotional Transition: From Hero to Bottleneck [34:52]

• Slowing down or leveraging more can feel like a loss of importance, but it's a shift to higher leverage.
• The transition requires facing oneself and accepting that the business can succeed without constant personal intervention.

• "Because really you can only, like business only is so many things, which is really, can I sell something for more money than I pay for it?"

The Problem with Pricing and Confidence [43:07]

• Many entrepreneurs undercharge due to a lack of confidence, not a pricing problem.
• Value-based pricing, where you take a percentage of the value you create, is often overlooked.

• "I mean, one of the first things I said to one of the business owners in our group was, I can tell about your lack of confidence in yourself and your business by your price."

The "Wallet Share Phenomenon" and Pricing Bias [45:36]

• People subconsciously price based on what they can afford, limiting their pricing potential.
• Employees often have a lower pricing range than owners realize, impacting profits.

• "So you are actually restricted by your amount of money you make without even realizing it. It's a subconscious bias."

Paying Yourself and Understanding Business Math [48:16]

• Founders should pay themselves a market rate salary early on to understand true business profitability.
• Founder's free labor can mask underlying economic issues in a business.

• "The founder's free labor is disguising bad economics inside of the business."

The "Number Two" Hire and Chief of Staff [54:07]

• Hiring a trusted "number two" or assistant is crucial for founders to offload tasks and focus on higher-level strategy.
• A Chief of Staff is an underrated hire for leaders making seven figures or more, enabling greater leverage.

• "If you don't have a number two, if you don't have an assistant, you are one."

The "Someday Maybe" List and Serial Obsession [41:40]

• Obsession is a powerful, albeit temporary, fuel for motivation.
• Serial obsessives can build a career by linking these passions, while others need to connect their obsessions to lead to freedom or financial gain.

• "The freest discipline and motivation that you're ever going to get is when you're obsessed, right?"

The Goal: Customers Bigger Than You [52:11]

• True business success involves wanting your customers and employees to surpass you.
• Investing in and empowering others leads to greater overall success.

• "Like you want to be the mentor that has a bunch of mentees who are way bigger than you are."

The Law of Reciprocity in Business [39:19]

• Doing favors, like paying invoices promptly, creates a sense of obligation and goodwill.
• This principle is underutilized in sales and employment, fostering stronger relationships.

• "Because actually there is an innate human belief that if somebody gives us something, we've got to give them something in return."

The "Owner Score" and Personalized Advice [46:59]

• Business advice needs to be tailored to the individual founder's personality and skillset (e.g., artist vs. executor).
• Following advice from those whose lives you don't want or whose skills you lack can be detrimental.

• "If you take business advice from somebody whose life you don't want and who has skillsets you don't have, you'll be fucked even if the business advice is great."

The Importance of Showing, Not Just Telling [38:33]

• Entrepreneurs often fail to provide sufficient proof of their capabilities.
• Demonstrating skills through projects or Loom videos is more effective than just listing qualifications.

• "Why so often do we yap so much and show so little?"

Relinquishing Control: The Emotional Hurdle [53:05]

• The biggest challenge for founders is letting go of their identity as the sole problem-solver.
• This transition requires emotional resilience to handle problems and difficult conversations.

• "Can you deal with problems occurring? Are you going to be able to have the hard conversations when you need to?"

The "Gifted and Talented" Program for Employees [57:49]

• Effective leaders focus on nurturing top performers rather than solely trying to uplift underperformers.
• Providing resources and getting out of the way for high achievers is crucial for business growth.

• "The ones I have to work hardest on in there are really typically the ones that are going to give me the least money."

The "Million Dollar Book Launch" Giveaway [56:03]

• Cody Sanchez is hosting a unique book launch with a million dollars in cash and prizes to help business owners.
• The event aims to provide tangible financial support and productivity tools to attendees.

• "So we're going to try to like Oprah Winfrey, a bunch of business grants to business owners."