This entrepreneur buys a gas station for his wife’s baby shower

If you’re interested in growing your wealth, starting a business, or living a truly rich life, these six tips can help you do it the right way.

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Karthik Vijayakumar
Published on: May 19, 2024

He didn’t buy a bed until he got married. And when his wife was pregnant, he wondered, “How much does a baby cost?” Today he owns ten gas stations and even a building that houses the Wells Fargo bank.

entrepreneur buys gas station

The farther down this page you read, you’ll understand how you too can buy gas stations and banks.

More importantly, you’ll start to feel, think, and act like a wealthy entrepreneur.

A wise man once told me this:

“You need to think wealthy before you become wealthy”

I remember these words like it was yesterday…

And I like what it means. I had one problem though.

I struggled to understand the specific principles that wealthy people used to think.

So tell me something…

How did you buy your first car?

Did you buy it cash down?

Or, did you borrow money? Took an auto loan, perhaps?

Let me tell you a little story.

Buying my first car.

Over twenty years ago, I bought my first car.

And everything happened so quickly…

A car salesman stopped me at my office lobby. He asked if I was interested in buying a car. And he handed me a pamphlet.

It basically said that based on my salary, I was eligible to take an auto loan.

The promise that I could drive a brand-new car in ten days was too tempting.

So I gave in. I signed up for an auto loan.

And in less than ten days, I had this shiny new gray-color car!

It had power windows, an electronic steering wheel, auto-dimming rearview mirrors, and all the bells and whistles. Smart move, right?

Hold on to your horses!

Smart move or not, I’ll let you decide after you’re done reading the rest of this post.

Recently, I’ve been binge-listening to some of the backdated episodes of a podcast I LOVE.

And I bumped into a very familiar name.

Syed Balkhi.

The millionaire teen.

I first heard of Syed long ago in 2006 when I started blogging. But little did I pay attention to what he did. All I knew was that he had a website called WPBeginner.

It was a blog about WordPress for people who built WordPress websites or plugins. I liked his content and spent a lot of time reading his blog posts as I was building WordPress websites too.

Syed is in his thirties today. Which means he must’ve been in his early teens in 2006!

In about eighteen months of starting WPBeginner, he made his first million dollars in annual revenue.

And ever since, he’s grown his business, Awesome Motive, big time by acquiring other WordPress companies.

If you aren’t familiar with WordPress, it’s a CMS software. Content Management System, in short.

It’s a software that supposedly powers 40% of the internet. But that’s not the best part. Here’s what is:

Syed’s company today owns ~60% of all WordPress businesses.

Let me quickly put that in one picture for ya:

syed balkhi's ownership on the internet and WordPress

I call this the Balkhi Domination Disc.

Put simply, Syed’s businesses power 24% of the internet.

This is HEWGE!

Okay, another story…

The gas station story.

At some point on the podcast, Syed goes…

“I bought a gas station, the first one, primarily because I wanted to offset expenses…”

Offset expenses?

I was on a run while listening to this, and almost tripped when he said that.

Okay. Take a deep breath. I did that too…

Coz from this point on, it’s PURE GOLD.

And here goes the first and biggest lesson in wealth creation…

Tip #1: Every time you need to buy a depreciating asset, invest in an appreciating asset.

Syed says he learned this lesson from his mentor when he was thirteen or fourteen.

The best way to understand this is to loop back to my opening story…

When I bought my first car, I paid the monthly installments using my salary.

But when Syed’s mentor bought his Mercedes, he didn’t spend money from his savings. Instead, he decided to invest money in real estate. And he used the returns from that real estate to finance his shiny new Mercedes.

When Syed’s wife was pregnant with their first son…

He followed the exact blueprint.

He knew the money one would need with a baby birth – hospital charges, medicines, diapers, toys, and everything else!

So instead of spending money from his savings, Syed used the lesson he learned from his mentor to cover the cost of raising a baby – he bought a gas station!

It didn’t just give him the money to pay for the baby shower and childbirth. The gas station would continue to generate a steady flow of cash every single year.

Darn! Why didn’t it ever strike me before?

Mentor, baby! I’m glad to have found one in a podcast!

Okay, let’s look at the next one…

Tip #2: Build a recurring revenue business

In a content business, you turn email subscribers into paying customers. But Syed calls them just re-occurring revenue. The revenue occurs every time someone on your list buys something from you.

A new customer pays once. And unless you sell them something else, you aren’t going to make bank. The only way your business is going to see revenue trickle in from that customer is when you sell to them again.

The solution?

Build a recurring revenue business.

Syed regularly invests and acquires other WordPress software and tools businesses. This allows him to cross-sell software and tools to existing info product customers.

Of course, you can build recurring revenue info products too, using memberships and subscriptions – but Syed didn’t get into that on this podcast.

So yes, using revenue to acquire new businesses is a great idea. But how much should you invest?

Syed has stuck to one principle:

Tip #3: Heads I win, tails I don’t lose much

Syed learned this principle from his friend Monish Pabrai.

In his book The Dhando Investor, Monish talks about the Patels of India. He describes how this relatively tiny subset of humanity from eastern India went on to own most of the motels in the United States.

According to Monish, one of the biggest reasons why the Patels have been successful in business is because they always have followed this principle – heads I win, tails I don’t lose much. So what does this mean?

Let’s look at it with an example.

Assume the intrinsic value of a certain business is $1,000,000, and you buy it for $700,000. What you just did in that transaction is what he describes as a “heads I win, tails I don’t lose much”.

Because let’s say you did a great job with the business and the intrinsic value went up – you win!

But just in case you didn’t do much with the business and the intrinsic value dropped by $400,000, you only lose $100,000.

Heads you win, tails you don’t lose much!

This is wild!

At this point, I was fully invested in listening to this conversation. And I was just getting restless thinking…

“How can I buy a business on the cheap?”

And it just felt like the hosts heard me!

Let’s look at the answer to my question.

Tip #4: Identify “mismanaged gems” to compound at high double-digit

Back in the 1990s, my uncle built an empire buying distressed real estate properties. And it wasn’t easy. Every time he bought one, there was a lot of work to be done.

From litigation and dispute issues to structural issues, he was usually handed a mess. That’s why they were called distressed assets – thankfully, my uncle had the wherewithal to turn them around.

Mismanaged gems are different.

Syed describes mismanaged gems as good (online) businesses with some limitations. These could be in the form of having limited revenue streams, limited target audience, or something else.

Let’s look at a couple of examples…

  • Let’s take an online business where the creator isn’t aware of the different ways to monetize their business. You can acquire this business for $15,000. You use your Facebook Ads skills to sell $20,000 worth of info products and instantly increase the revenue.
  • If an online business has been running only using word-of-mouth marketing, you can acquire it and use your email list to instantly grow the business by exposing them to a new audience.

Here’s how Syed puts it…

“A business might only be thinking about monetizing from one angle. They’re not thinking about it from a full perspective. So I can look at it and say well yes this is the current revenue today, and I’m getting a bargain on today’s revenue. But here are my contracts that I have with so many different partners and vendors and such that I’ll be able to unlock extra revenue here, here, and here. So I turned this business that has one revenue stream to having like multiple revenue streams. That’s how you take something that was doing like no revenue to or very low revenue to having five eight ten million dollars in revenue.” – Syed Balkhi

Tip #5: Leverage the Ecosystem effect

If you’re starting a business, look for an ecosystem. What does that mean?

Syed’s entire online business is built around the WordPress ecosystem.

But there are many other software platforms like WordPress that have an ecosystem. Look at software like QuickBooks, Google Chrome, or Xero. These software platforms are built like an ecosystem, allowing developers to build plugins and extensions.

Most of these plugins and extensions are sizeable businesses in and of themselves. So if you’re starting a business, you’re better off starting one inside an ecosystem.

Starting a business inside an ecosystem exposes you to massive opportunities. You can grow your business through acquisitions, and cross-selling, amongst many other ways. And this also helps you compound over time.

Related Post: Speaking of selling, I think you’ll find value in this episode on The Launch Plan podcast about the F-Word that stops clients from buying your products.

Tip #6: Go from creator/operator to capital allocator

This one is an advanced idea. If you’ve done well with your business and have some cash in the bank, this one’s for ya!

Essentially what Syed says here is that you have one of two choices:

  1. You can choose to build a business from scratch, or
  2. You can acquire an existing business and multiply it.

Obviously, this is an advanced tip. But great business owners don’t master capital allocation overnight. While there are some common traits between the two, it’s a skill you need to build.

I haven’t bought a business so far. But I’m very interested in this. You’ll likely see me writing more on this topic in future posts.

Bonus ‘Rick’ Tip: Don’t be in a hurry to get wealthy

Have you heard of Rick Guerin?

If you haven’t, no worries. Neither did I – until I listened to this podcast.

Rick Guerin was Warren Buffett and Charlie Munger’s third business partner at Berkshire Hathaway.

Huh? Really?

I couldn’t believe it either. A third partner?

So I looked up the interwebs for proof.

It turns out to be TRUE!

Here’s how Monish Pabrai describes what happened to Rick:

“In the ’73, ’74 downturn, Rick was levered with margin loans. And the stock market went down almost 70% in those two years, and so he got margin calls out the yin-yang, and he sold his Berkshire (Hathaway) stock to Warren. Warren actually said, I bought Rick’s Berkshire stock at under $40 apiece, and so Rick was forced to sell shares at … $40 apiece because he was levered.”

Rick was just as smart as Warren Buffett and Charlie Munger. But he was in a hurry. And that’s the bonus tip!

That’s a wrap! Enjoyed reading this?

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  3. Watch the full episode by clicking the play button below (or listen to the audio).

PS: I’m hosting the first My First Million Fans Meetup at Bangalore. It’s free to register. Here’s the link.

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About the author 

Karthik Vijayakumar

Hey, it's me, Karthik. I'm a copywriter and a ghostwriter, too. This blog contains exciting things I gleaned from books, podcasts, and personal experiences. But it's also more—a showcase of my work as a ghostwriter. For instance, you can see the difference in writing styles—this post differs from this one. I help CEOs, founders, and C-Suite executives write content to build authority and trust and grow an engaged audience.

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