Ep 261: How Tim Stoddart Acquired CopyBlogger & Scaled It To 7 Figures + His Wealth Creation Philosophies

Jaryd Krause:

Do not buy a business; buy an audience. Hi, I'm Jaryd Krause. I'm the host of the Buying Online Businesses Podcast. And today I'm speaking with Tim Stoddart, who is the owner of Stodzy Inc., Sober Nation and Copyblogger.com.

Tim is an influencer and leader in the sobriety and addiction space, where he shares his story from addict to entrepreneur and how he's built multiple income streams and helps people do the same with his highly successful SEO agency and marketing business.

Tim and I have a great chat on the pod, and we talk about so many things. We talk about the path to owning multiple income streams, when to get a secondary income stream or more income streams, when to buy another business or invest in another asset based on where you're at in your life, in your investments, and also just what's going on in the background, your life situation with friends, family, and all that sort of stuff.

We also talk about how moving from being an operator in your business to being an owner can change the game in terms of building your wealth. We do discuss the acquisition of Copyblogger and how Tim came to acquire Copyblogger, what he bought with the assets and all that sort of stuff.

We also talk about what he looks for when he is buying businesses, and he has bought multiple businesses. And we talk about not just buying an income; we talk about buying a business and we share a bunch of philosophies—a lot of my philosophies, a lot of his philosophies—and how our philosophies are based on some of the greatest investors, like Uncle Warren.

And we talk about, weirdly enough, how to build a business, which is very odd. We talk about starting a business and why it's not the company and employees that grow a business, but we talk about who actually grows the business. I don't talk much about starting online businesses or starting a business, but I know so much about it and I share a little bit in this podcast about that, as does Tim.

Now, this is such a refreshing podcast episode. We don't rush into agendas or certain things. We just let the conversation evolve as we're both very present and had a really good talk that I'm sure is going to be super impactful and very insightful for you.

So we do talk about buying businesses. So before you go away and listen to this, if you haven't already got my Due Diligence Framework, it's what I use and what my clients use to actually buy businesses.

It takes the guesswork out of buying businesses and we've helped people make millions of dollars and save millions of dollars by using this framework. You can get that by clicking the link in the description to my Due Diligence Framework. Let's dive into the pod.

Do you have a website you might want to sell either now or in the future? We have a hungry list of cashed up and trained up buyers that want to buy your content website. If you have a site making over $300 per month and want to sell it, head to buyingonlinebusinesses.co/sellyourbusiness. Or email us at [email protected], because we will likely have a buyer. The details are in the description.

Tim, thank you so much for your time and for coming on the podcast.

Tim Stoddart:

Oh, my pleasure. It's great to be here. Thank you for the invite. And I like your website. I was cruising around on your website a couple hours ago, just trying to prepare a little bit. You have a really cool brand. So it's good to be here.

Jaryd Krause:

Thank you. I appreciate that. As you, with your multiple sites too, when I was cruising around, checking out what you've been up to and where you come from, what you've done, and mate, you must be very proud of yourself.

Tim Stoddart:

Thank you. I am. Yeah. I'm a pretty humble person. I think it's a weird thing when you say, “I'm more humble than you.” I should say I have plenty of people around me that keep me humble and remind me. But every once in a while, I'll take a moment to pause and reflect.

I wake up pretty early every morning. And so I usually have an hour and a half of just really early mornings and sit around and be, you know what, I've come a long way. So it means a lot that you recognize that. And I appreciate it.

Jaryd Krause:

You're so welcome. I think reflection is so big. I learned from one of my mentors that knowledge plus reflection equals wisdom. And where I live, I live in Bali now, and normally every evening, I'll go to dinner with somebody. It's a pretty social place. So we'll normally go to dinner, and we end up talking about our day and having a lot of reflections.

And last night I had some really good reflections and some really beautiful compliments from one of my friends. And I think it's so valuable. He was saying how nice it is to close off his day. And you can start your day like you do but close off your day sort of reflecting because there's so much wisdom in that. That's where we learned so many golden nuggets.

Tim Stoddart:

I agree. I write a blog post every night that no one really knows about. It's kind of like a little secret. It's not a secret. Some people know about it but don't promote it. We'll just say that. And yeah, my nightly ritual is reflecting on the day through my writing. And I agree.

Funny, you mentioned Bali. I have a really good friend that lives in Bali and my wife and I are going to Thailand in January just because I've been fascinated with Southeast Asia recently and all the cool things that are going on down there. So I hope you're having a blast.

Jaryd Krause:

Thank you. Yeah. If you do make it over this way, let me know. When you talk about reflection and learning, you talk about multiple income streams and a lot of people listening want to get to the point where they've replaced their income. And you can do this through many verticals.

You can do this by acquiring one business. Typically, we teach people to acquire businesses. And then just holding onto it and fully focusing on it. Like the one thing, kind of what Gary Keller talks about in his book. And yeah, it's a great book.

And I heard from a wealth creation coach that to grow wealth, we need concentration. To preserve wealth, we need diversification. And that's helped me a lot because I went full diversification, bought too many businesses too fast and neglected some. What do you think is too fast to end up having multiple income streams?

And how do you explain this to people when you say it's good to have multiple income streams? And I think it is great for diversification. But when's too fast? And what type of assets do you normally have?

Tim Stoddart:

Yeah. We're talking about reflection, and this is something that I've personally been reflecting on a lot. I think multiple income streams are important, more so now than ever, just because of the long tailedness of society these days. But I've been trying really, really hard to make sure I continue to get the message across that the vast majority of your money, even your time and attention, are still spent in one place.

And so over the last six or seven months or so, I've been adjusting. Well, I shouldn't even say adjust. I've just been honing my message to make sure that people understand that the cash has to come from somewhere.

And the idea isn't to have eight businesses that you manage at the same time. The idea is to make sure that as you make more money, you turn that money into something else that makes more money, right?

It's a book. It's almost played out at this point. But when I was like 16, I read Rich Dad, Poor Dad, and I grew up a pretty blue-collar kid. I'm a blue-collar city kid. And I never knew that money was a thing that had force and utility within itself. I thought it was just a thing you needed to survive.

And so, when does it go too fast? When does it go too far? I'm not really sure I have a specific answer to that question. I think it's one of those things where I can't tell you exactly what it is, but I know it when I see it. But if there is a rule of thumb, I think the Pareto Principle does apply, where 80% of everything is still going to come from 20%.

So whatever that 20% is, you have to keep that in mind. And then it's the leftovers that you generate from your cash flowing business or businesses; once you get to that point, that's really what you're using. You're not constantly scraping the barrel just to buy another small business.

That doesn't make any sense. At least it doesn't make any sense for me. And so my idea and the refining of what I've done and, therefore, have been writing about is that you still need a cash cow. You need something that produces revenue, puts cash money in the bank account, and then you have options to make other moves with your money.

Jaryd Krause:

Yeah, I absolutely agree with having a cash cow and focusing on that cash cow first and making sure that you do the Pareto Principle with that and you're focusing on that and getting great results.

And then, when you get to a point where I believe you've got some systems, a team, and some processes put in place where it's growing without too much input from yourself, and that could be a business or another asset, you can start to take a little bit of money out of that cash cow. Because you can always reinvest back into your cash cow.

One of my friends was looking at investing in property years ago and said, "Do you invest in property or business?” And he said, “Only business; only put it back into your business.” I think there's a certain time for that. And then there's a certain time when, I guess, it's a feeling and a sense, and it depends on every single person.

We can talk about investing and be very logical and analytical about it, but people have kids, some people have kids and a family and other people to support and different things going on in their lives outside of just investing and what we're talking about here. So it's going to be different for everyone.

And then I think that's a really good time to then start when you are ready, where you're in your life, the situation of your life, plus the situation of your asset, then when you can take money out of it and you've got this self-fulfilling business or asset that doesn't need too much of your time, then you can start investing in something else.

And when you say multiple income streams, do you have multiple income streams in just online businesses, or do you take money outside of online businesses to invest in other things as well?

Tim Stoddart:

Yeah. Another great question and just a topic to think about. So I want to agree with so much of what you said. I think this gets to a little bit of semantics. But in my head, it's how I organize everything. I'm not saying that these definitions are perfect, so don't fact check me on them.

But I see a difference between a business and an asset. I think that one person can only really run one business. Running a business is no joke. It really isn't. It's just that you think about it all the time. It's all you think about if you're doing it right, in my view.

And so you say buy businesses, buy companies, and sure, this is where it gets to the semantics place because yes, technically, I have bought other businesses, but I don't operate multiple businesses. No way. I mean, I am a coach and a mentor in some aspects.

Sometimes my job is just—I don't even know what I would call it, like a task manager. I mean, every single morning, as I told you, I wake up early, I start every day by recording Loom videos and assigning tasks on Todoist and the rest of it just kind of takes care of itself.

And so, I like to think of it as buying assets. And it's not that cut and dry. Because when you have online companies, sometimes you have to rebuild them. Sometimes you have to restructure a website. Sometimes you have to fire people hire people and all of that stuff. So it's not to say that it's always so cut and dry. But my goal, in any case, is to completely remove myself.

And I think that's just kind of a weird, accidental skillset that I fell into. I've read a ton of books about it, and I think I just got lucky that I recognized earlier that there's a difference between owning a business and operating a business and you don't actually have to do both at the same time. And so, yeah, I mean, we can definitely talk about that more. But I also want to answer your question.

So here's the third definition. We're talking about owning a business; we're talking about owning assets; and then we're talking about investing. And sure, all of those things are kind of the same thing. But in my mind, investing is simply putting money into something where that thing should grow in the future. And it's not day trading.

I don't trade stocks. I don't think I've sold a single. Maybe I have. I can't think of any stocks that I've sold. Maybe during COVID, I flipped a stock one day because I was bored. But no, I invest in the S&P 500. Basically, that's it. I think I have 3% or 4% and like some real estate REITs.

And I bought a house in Nashville. And kind of like my philosophy, when we lived in Nashville, the rates were really low. And so we wanted to leave Nashville and we live in Denver now, so we rent our house in Denver. And just with that investing philosophy, the house doubled in value because everything doubled in value with COVID in the real estate market.

But the way I think about it, no, what am I going to do with that cash? I'm not going to do anything with it. I might as well just turn it into an investment. And so now I have a rental property in Nashville. But same thing—I don't even know what's going on with the house, really. I get an email once a month from the property manager.

And so it's investing in my mind. So I know I just sort of made up some phrases and some definitions. But I really do figure there's three things differently. I think of owning a business a little bit differently than owning an online business that's an asset.

And the difference is that somebody operates it for me. And then there's investing, which in my mind is either stocks or bonds or long-term real estate, or, I mean, I guess you could say Bitcoin, but I'm going to stay away from that one.

Jaryd Krause:

We'll keep that for another discussion or another time.

Tim Stoddart:

Totally.

Jaryd Krause:

Yeah. The way I hear you talk about it is investing in something that can be completely passive for you versus owning and operating online businesses. Active income versus completely passive. And you can have multiple variations of active income, from semi-passive to full passive when you say you work yourself out of the business.

There’s a great book for people to read called The E-Myth by Michael Gerber, which is what you're talking about, Tim, about the difference between being an operator and being the owner of the business. And it's a huge difference. And it's an absolute life changer if you understand the two and move from being an operator to an owner.

And I'd just like to bring it up as a topic of discussion because you talk about multiple income streams and I have multiple income streams and I don't talk too much about it on the podcast, but most people are here to replace their income.

And I believe it's a really good route to number one, buy/acquire online business, grow it, learn it, and use that skill to continue to grow it until you can work yourself out of the business, at least maybe a little bit, maybe a bit more semi-passive or your full operator. But then you can also take some funds and invest in something that's passive.

Because it can be a shiny object syndrome if you go, for example, to have your online business and then you go, “I'm going to start day trading for another income stream.” You're taking something away; you're taking your time, energy and effort away from the online business that you own, which can be super dangerous. Neglect, yeah.

So, such a good conversation to start the podcast off. And I want to talk about how you guys help people scale their online businesses. And a lot of people, when they're first purchasing a business, typically go and buy a content business, a media business, a blog and want to gain organic traffic. And you guys have a really cool case study with DCP where you're able to triple their revenue.

How? The simple way to ask that question is how. What were some of the things that you did? If you just talk us through the experience of how they came to you and then the whole journey, I guess. We don't need to go into too much detail in terms of their own IP and stuff, but it'd be cool to just give a general overview for people.

Tim Stoddart:

So this is going to be funny because it's almost an exact example. But we can go into as much detail as you want because I'm a partial owner of the company. So there's a website called Copyblogger that I bought that means a lot to me.

It was a big source of my education, as I was teaching myself how to write online. It's a really legendary website. I know newbies these days who came up on TikTok won't know about Copyblogger, but it's a big deal.

And so I bought that website. And what was strange about Copyblogger was that it didn't have any revenue attached to it. There was no money. It was just a blog. It was just traffic with an email list. And there were some other websites as well that I bought with it. But the deal was really three domains on the RSS feed for the podcast.

One of those domains was copyblogger.com. One of those domains was rainmaker.fm, which is an old podcast network, and I'm still trying to figure out something to do with it. And then the third one was digitalcommerce.com.

So the way it worked was that digitalcommerce.com was where they housed all of their courses and all their online products. And they sold off all of the assets—all of the actual products. And there were a bunch of products attached to it. There was one called StudioPress, which was an old WordPress theme store.

It was probably the most successful WordPress theme store of all time. There was Digital Commerce, which was an online course. And they had a hosting company. What the hell was their hosting company called? Synthesis—that's what it was called.

And so they sold all of those things and all that was left was a blogger. And I mean, they sold the products off of digitalcommerce.com, but I still owned the domain. When I made the deal, I bought the website. So here I am. I just spent a ton of money on this website that generates no money at all. I had a really big email list. And what the hell am I going to do?

And this is a topic for another day, but this is one of the reasons why I think podcasting is so valuable. Because I had a podcast, which is now The Copyblogger Podcast. I just rebranded it once I bought the company. But before that, I just had a personal podcast and I would just reach out to my heroes, basically, people that nobody knew about that I followed and who taught me all of this stuff.

And one of those guys' names was Jonny Nastor. And Johnny Nastor owned a pretty boutique but super profitable SEO agency in Montreal. And he had this podcast called Hack the Entrepreneur, and 10 years ago, when I was driving to my office every day, I would listen to his podcast. He was just a guy who meant a lot to me. And so Johnny came on my podcast; I got to talk to him; I got to build a relationship with him; and that was cool enough within itself.

So finally, I do this deal and I'm thinking, What the hell am I going to do now? I have no way to make money from this website. And I own an agency. I've been in the agency space for a long time, and I knew Johnny was in the agency space, and the first thing I thought to myself is, you know what, I can turn this traffic into clients. I can turn this traffic into content marketing clients.

And so I messaged him, “Hey, Johnny, you want to give me a big chunk of your business? And in exchange, I'll just flood us with as many leads and deals as possible. And you can operate it and I'll just turn Copyblogger into a lead generation site, basically.”

And that's what we did. So we made it happen. And it's been a great relationship. I mean, Copyblogger within itself has generated a ton of business for us. It's really great because it's kind of a self-sustaining prophecy where people know we know what we're doing simply because of how successful Copyblogger is in the organic traffic that it gets.

And also what I've done with the site over the last two and a half years. And yeah, I think we're at—I don't know—110,000 a month now, which might not sound a lot to some people, but building a business in under two years to over a million bucks a year, I think, is pretty cool if you ask me.

And yeah, that whole story is kind of a little microcosm of what I'm talking about. I had money, and I used the money to buy something. It was kind of like a sprint to clean stuff up and the sprint is sort of on my off time because I can't take my eye too far off the ball of what I do for Stodzy every day.

And you make some deals, you make some partnerships, you put some pieces together, you find some writers, you find some operators, and now it's just crushing it, but it takes very little of my time.

Jaryd Krause:

Congratulations. It's so cool. I did not know that Copyblogger didn't make money for that long. When did Copyblogger start? When did the domain get registered, I guess?

Tim Stoddart:

Well, 20 years ago was when the domain got registered. But it was smart. I mean, Clark, the guy that I partnered with, was the original founder of Copyblogger, and I eventually bought him out to be a full owner of it. He just got it. He knew that the content within itself was different than the products.

Because back then, I mean, it wasn't that long ago. It was only 15 years ago, but it wasn't the same as it is now. If you had a website, you were monetizing it by selling ads against your traffic. I mean, it was just what you did. And he really was one of the pioneers; there's no reason to do that. The content isn't actually a revenue source.

The content is the authority source. You build your reputation through your content. And then, through your email list, you can sell your products and your services, which I guess you can have on the same domain. Plenty of people do. It's just that he saw it differently as different pieces of the puzzle coming together.

And so all of those assets, like I said, got sold off, which was part of the reason why Copyblogger itself, copyblogger.com, the media asset, was available. And I'm pretty good at SEO. I've been doing SEO for a long time, and I just knew the power of that website from an organic traffic standpoint. And so, I mean, it was a stupid thing to do. I honestly wouldn't recommend anybody do it. But I don't know; I just knew. I can turn this thing into something. So I just went for it.

Jaryd Krause:

I disagree. I think it was a great thing to do. Having an asset of content that is so valuable with so much authority that has not yet been monetized. When you told me that it wasn't making money and you bought it, in my head, I was like, cha-ching. You are going to take people from loving copybloggers to the next level in their business and you're going to get rewarded for doing so in terms of how much they love the authority that's been built through the content.

And there might be a lot of people, and I'll dare say there were, and a million bucks worth per year of people that are like, “I've learned so much, but can you do it for me? Take me to the next level in my business, in my content business.”

And there's so many threads I want to pull on in terms of the acquisition, but we'll come back to that. What's top of mind for me is what you said about how he had not yet monetized the business and the content in itself was the authority. And I know that most people that get into this space of starting a blog and trying to make money online through a blog are chasing the money too early and putting out content that is not actually building authority and building brand value and trust. Have you noticed that as well?

Tim Stoddart:

I think so. I'll tell you where I've noticed it. And this will sound like a humble brag. I really don't mean it to be. It's just what's happened. I've turned blogs into real dollars in my bank account and I've never known how I was going to make money from something when I started it.

And again, that sounds like a kind of dumb thing. Like, what do you mean you have no business plan? I was like, “Nope.” I'm always most interested in the industry first and if it's open, basically.

It's one of the reasons why I really like healthcare, especially new age healthcare like behavioral health and health tech, and even things like stem cells. Just because everybody in the world is writing about AI and is writing about the creator economy.

And that's all cool. If you're passionate about that, go for it. But I'm excited about things that have real, substantive value behind them. And healthcare definitely fits that bill.

And so I’ll tell you that whole backstory, just to say that with Sober Nation, which is one of my websites, I didn't know how it was going to monetize. I just started with a blog. I was really just writing about my journey.

I was like, I know that this will turn into something I don't know how to do. And I built myself into, like, a real big authority in this niche healthcare sustainability space.

I'm building another newsletter right now called The Census. Well, really, it's about investments and deals in these kinds of behavioral healthcare spaces that I'm talking about. I would think of it as a little similar to Bloomberg, but just really, really specific to this sub healthcare industry. I mean, with Copyblogger, I had to turn that thing into a newsletter, and I just focused on writing.

There are other examples as well. But the point I'm trying to make is that, yes, people try to monetize too early. And I don't have specific examples where I see it and I'm like, “Oh, you're making a mistake.” I've just had a lot of people come to me. And you know what? I was at this conference one time, and I'll never forget it. And this girl came up to me; she's like, “How did you do it? How did you do it?”

I was like, “Well, I woke up at like four in the morning and I wrote articles every day for six years and engaged on the Facebook page.” And I remember her just kind of staring at me. She's like, “So, like, you have no trick?” And I was actually thinking about that.

Like, “No, I have no trick. I have nothing good to tell you. I have nothing that you can take away. I just saw an opening in something that I thought a lot of people were interested in, and I wrote about it until I couldn't be ignored.”

And then, when you get to that place, it's pretty easy to make money, honestly. As long as you're patient and you create a product that people actually give a shit about, or you have a service that is really, really going to help people, it's pretty freaking easy. It's backwards compared to what most people think.

Most people are like, “Oh, you got to build a product and then sell it.” And that just never made sense to me. It's like, why am I going to build something that I don't even know if anybody wants to buy? Whereas the other way is like, let me get a whole bunch of people that want to buy from me, and then they'll tell me what they want to buy. They will literally tell me what they want to buy and then I'll just make it. And that's how I've done it.

Jaryd Krause:

Absolutely. Absolutely. If anything, if you wanted to call what you did a trick, what I see is that you just showed up. You just showed up in a space, added an insane amount of value and did it for a certain number of years. And I don't teach people to start businesses. I teach people to buy businesses. Because I think you can buy great, great businesses and grow them by building not just better content but a better brand.

And on the side, with friends and family and stuff like that, a lot of people come to me outside of work based on the authority that I built in building and growing businesses, asking me about starting businesses. And they are trying to find the million-dollar idea or, like you said, the product or service.

But it is, in my opinion, pretty backwards. I don't think a business grows or is built based on the product itself. I think the people that build a business are not the actual team and/or the company. What builds the business are the customers and the audience.

And how a company grows is by listening to that audience and giving them what they want. Not giving people what they think they need based on what the company believes.

And so if you understand that, why would you not just put out content out there and just do it for free and then build an audience and then just send out a form and say, “What are your biggest fears, frustrations, needs and desires? How can I help you?

I'll build something that's going to change your life?" And they'll tell you exactly what it is. You can even ask prices, “How much would you spend on this in a range? ” They’ll tell you exactly what your product needs to be if you're going to start a business in that way.

And the beautiful thing about it is that you're building so much trust. People buy based on trust. So you're building so much trust that by the time a product comes out, they are drooling for you to help them. And that's what I think you've done with Copyblogger. They've been so keen, and you've got so much trust there and you just go, “Let's take you to the next level.” It's just a huge win for everyone.

Tim Stoddart:

Well, you just said it; it's a win for everyone. Those are the things I like to be a part of. Everybody wins. Whenever I have to push something on somebody, like, “Oh, just buy this. I'm telling you. I'm telling you. You won't regret it. You won't regret it.” I don't care if you buy it. But you care if you buy it because you've already been following me, my ideas, and what I have to say for as long as you have.

I mean, it was an interesting thing that you said there. And I guess it never really dawned on me at this point, where I'm just realizing I've never actually bought a company. I've bought a lot of distributions. I think that's what I've done a few times. It really just dawned on me. I've never bought a single company that was already cash flowing. I've invested in cash flowing companies.

But in terms of me, no, the three brands that I've bought weren't that. I was buying the distribution first. I was buying the audience first and I was getting myself connected to them, into that ecosystem, until eventually the answers would kind of come to me. I don't know. I didn't go to school for any of this. I don't have any degrees. I just love doing this and I tinker around a lot to the point where I feel like I know what I'm doing.

Jaryd Krause:

That's beautiful. I feel that I want to pull on that thread of buying distribution and buying an audience. Because that's not something that we typically talk about when we're buying a business. Normally, most people say, “I want to get my ROI back and I want to know how much I'm going to spend and what I'm going to get back in terms of monthly net profit. And how long will it take me to get my money back?”

Which is a smart and wise thing to do. At the same time, you can do that and purchase a business, a distribution network or an audience and add even more value to it in terms of what a lot of people want to buy based on opportunity.

I don't buy just based on opportunity alone because everything's got infinite opportunity. What I do is tell people to understand the risks and how to decrease them, which are growth opportunities in themselves.

At the same time, there can be a business that has an email list that has an audience that's not yet monetized or a whole blog that has an audience that's not yet monetized. And I think it's a really good strategy to purchase an audience like that, which is a business, which you can just purchase an audience and turn into a business like what you've done.

So my question to you is, how did you identify what distribution networks or audiences to purchase? And knowing, I mean, I'm sure that you had some intuition that you'd buy this and eventually turn it into an ROI. Otherwise, I mean, maybe it was that you're just super passionate about the space at the same time as well.

But what were some of the metrics or things that you thought about when you thought this would be a good investment? Is it worth my money? What went through your head with those?

Tim Stoddart:

Yeah. I make basically all of my decisions based on Uncle Warren. I'm so sorry. It's dark here. People are watching the video; by the way, it's the sun going down. I live in Denver. So I keep thinking, Is there a lamp around me and there's not? So you're just going to have to deal with my dark screen.

But yeah, Uncle Warren and also Charlie Munger, who died yesterday night, November 29th,. He died yesterday, which was kind of weird to be talking about him right now. Because he has this phrase where it's much better to not be stupid than it is to be smart. And it’s so true. He's so right about that. And here's my philosophy on it. And this will sound a little bit heady, but it'll come full circle.

It's so much easier to lose everything all at once than it is to gain everything all at once. And in a lot of instances, you can have big wins and then not feel like a big win because you can lose it so fast. The margin of error for loss is totally less correlated than it is for success. So a lot of my thinking is really based on, like, how do I not lose stuff?

And there's also practical elements to that; as Warren Buffett will say, the first two rules of his investing thesis are to never lose money. And there's actually a reason. Yeah, losing money stinks, but it's not just that you lost money. You lost the money that that money could make/would have made just by compounding.

And so, in a lot of cases, that's why passive S&P 500 investing is so valuable. Because, yeah, it might take 50 years. Well, nothing's guaranteed, but all the evidence has shown that it will get to a point where one day you'll wake up and it'll just go straight up. And so if you're patient enough, it'll work, and it'll happen.

And so all of that is to come full circle, where I think I like to use that same methodology, but in terms of the assets, where I won't put my money into anything as an investment, especially in other people, unless it's already cash flowing, I just won't do it. I'm not an angel investor. I think angel investing is pretty stupid, actually. I think angel investing is more marketing than it is business.

Most of it is just letting me market my company to the point where I can take enough shots to where the law of probability will just ensure that one of them will pay off really, really big, which is all angel investing is, really. It's just guessing something with 1000X and sometimes it pays off. But angel investing and hedge fund investing aren't actually good things to do. It’s just marketing.

Jaryd Krause:

It's a numbers game. It's a game over a game, building something real.

Tim Stoddart:

Yeah. And I like building real things for sure. And I like to look at those real things; really, there are only two criteria. Is this cash flow positive and is this evergreen? Basically, it doesn't make a profit. Even if that profit is $1, if the thing isn't losing money, that's good.

And is this in an industry that will stick around for 10 years? Because that $1 a month turns into $2 a month, turns into $4 a month, and then that compounding kicks into the point where all of a sudden 1,000 bucks a month, it’s 2,000 bucks a month, it’s 4,000 bucks a month, it's 8,000. And then all of a sudden, it's like, holy sh*t, we're making money.

And that's how I like to think about it, really, where I'm not too much into numbers; truthfully, I'm into the health of a business, the health of an industry. And yeah, it's just that Warren Buffet really, really taught me that.

Warren Buffet buys public businesses, so a lot of people think of him as a public stock investor, but he wouldn't think of himself that way. He's like, “No, like, I don't buy stock. I'm not a stock trader. I buy businesses.

It just so happens that the businesses that I buy are on the public markets.” But all of his philosophy is built on the fact, like, is this business itself healthy? Are there good operators? Are there decent margins? Is there longevity in the business?

And that's just how I think about it, man. I don't muck it up by trying to be smart. I really try to look at it, like, why wouldn't I do this? What are all of the reasons why this is a dumb idea? And if I can't find too many, then I just do it.

Jaryd Krause:

Yeah, yeah, absolutely. That's what I teach. I teach people to prove the business is a bad investment. And if you can't, then you must buy. And what I hear from you and a lot of what I like as well, a lot of what I teach of some philosophies from Warren Buffett as well, in terms of acquiring businesses. And what I hear from you is that you are interested in the long game, and you'd like to play the long game.

And with that, you said before that you haven't really sold many assets. I mean, through COVID, you may have sold something. And it's the same with Warren Buffett; he doesn't just buy and hold. And because of what you talked about before, compounding. And I guess through this podcast, what we're actually hopefully doing is deconditioning people into believing that they need to go for the money grab too fast.

Because there are people who do want to buy a business, grow it after a year, and then sell it. But with the work that you've done in a year, you may not realize the results you've achieved from that year until year number three or four.

And like you said, when you lose investment dollars, you're not just losing the initial money; you're losing the potential gains that could have had in the compounding future, which I think is a really cool thing for people to understand.

Tim Stoddart:

I'm into not doing a lot for money. I work really, really hard. I'm a really hard worker. And I don't know what to do with myself. So if left on my own devices, I would just find something to work on. But I guess you just learn these things as you get older. I'm 37 now. I know I still dress like I'm a kid with a skateboard.

Jaryd Krause:

I love it.

Tim Stoddart:

But making a bunch of money all at once doesn't change your life that much. In fact, in a lot of ways, it's the worst thing that can happen. Because you make a bunch of money all at once, and then you spend it on things that aren't conducive to your future.

And so it is about the long game for sure, but it's even simpler than that. Because when you focus on things that just grow your wealth without a whole lot of effort, you kind of get to a point where your wealth generation isn't conducive to your hard work.

And that's what I'm going for. I'll always work hard. Like I said, I'm from Philadelphia. I don't know. I'm Scottish. I just wouldn't know what to do with myself. I'll just work on something, no matter what. And you have to work hard in the beginning. You just have to. There's no other way to do it.

I mean, you probably have to work hard the whole way through, but this is back to that first conversation. If you're building an actual company yourself, you have to work hard on it. If you have a vision and a thing that you want to achieve, you have to smash your head through the wall a little bit.

But generating wealth doesn't actually require hard work. It just requires not making stupid decisions. Because the markets grow. They grow on their own. You can just kind of do nothing. And if you don't spend the money and you let it grow, it'll just grow. And so that's really a lot more along the lines of how I think about it.

Jaryd Krause:

Absolutely. That's just the way the world works. If you put your money into the world and the economy, the economy is going to grow. It's always going to grow. Just be patient and sit with it. I think it's a really good investment philosophy and theory.

Tim, this has been so good. I want to be respectful of your time and I'm so grateful to have you come on and share your story, your acquisitions, and what you've learned about investing and building wealth. It's been a delight. So thanks for coming on. Where can we send people to find out more about you and what you're up to?

Tim Stoddart:

Thank you so much, Jaryd. I really appreciate it. On my personal website, I write a newsletter every week at timstodz.com, T-I-M-S-T-O-D-Z, just like my name, timstodz.com. That's where I send everybody. My newsletter's pretty damn good, I think. I work really hard on it. And most Tuesdays, when I send it out, I think to myself, You know what?

If I got that, I would read the whole thing. So I hope you enjoy it. If you have any questions, I’ll reply. I've replied to every reply to my email. I respond to everybody who replies to my newsletter. So I hope to see you there.

Jaryd Krause:

See you on the next one. Hey, YouTube watchers, if you thought that video was good, you should check out this video here on the 2 Best Types of Websites Beginners Should Buy. Or check out my playlist on How I Made My First $100k Buying Websites and how to do due diligence. Check it out. It's an awesome playlist. You'll enjoy it.