$200M/Year Portfolio Owner: Here's How We're Using AI Across our Businesses

$200M/Year Portfolio Owner: Here's How We're Using AI Across our Businesses Speaker 1: I've never been less certain about the future in my entire life. Everybody decided that they didn't want to learn how to do this stuff anymore. They just wanted the result because the promise of AI is it'll just do it for you. As leaders, we have to make binary decisions sometimes. We have to say this is where we're going and we can't be mealy-mouthed about it. And you look really cool when you're right and you look really stupid when you're wrong. And now we have these like magical machines that will do everything for us. At least that's the promise. Speaker 2: Most people know Ryan Deiss as the guy who teaches marketing. But what some people don't know is that you make all of your wealth in actually doing the marketing for the businesses that you own. And last time when we sat here, you had, I think, a $200 million a year portfolio that a lot of people don't know much about. And I want to go deeper into that. And specifically, we're in this very interesting time as marketers and entrepreneurs where it looks like AI is going to take over all of our jobs. Speaker 1: Yeah. Speaker 2: And I am fascinated to hear how you are using that in your portfolios. So first of all, can you share, if you are willing, what was the last deal that you did? Speaker 1: Oh my gosh. So we didn't do a single deal in 2024. It's been a while. The last deal that we did was a payment recovery business. I can't say the name of the company, but it was in the payments recovery assistant type space. But that was in 2023. 2024, Man, we kissed a lot of frogs, touched a lot of things. There was not a lot of deals to be had that year. And this year we're on the verge of what I hope will be a really big deal, maybe our biggest one ever. It'll take the portfolio size to increase it by at least 50%. So that'll be a big one, but it's just gotten Now I kind of want the big deal. We took on a lot of littles early on and so we were doing more and now it's like, ah, let's take on more bigger ones. Speaker 2: Was the dry spell, if you will, because of a conscious choice, because you were being choosier with deals or because of the marketplace conditions? Speaker 1: Both. Both. And if I'm being honest, it was probably more the latter marketplace conditions. Yeah. Businesses, everything kind of slowed down a little bit in 2024. Your businesses or businesses overall? Overall. And, you know, we definitely saw a slowdown in most of our businesses. And then it seemed like, you know, in and around the election, then it seemed like everything kind of came back a little bit after that. Speaker 2: There was like a morale freeze, it felt like, where nobody really knew what to expect. And then it sort of got unplugged. Speaker 1: Yeah. Speaker 2: Now nobody knows what's going to happen, but there's movement again. Speaker 1: Yeah. And this year it's been up and down depending on the business. It's been, you know, certainly ones that if it's tariff related and stuff, I'm sure you're dealing with that. It's fun. Others are doing fine. And so it's just all over the place. But yeah, so last year it was definitely there was a lot of uncertainty. We were dealing with, you know, a downturn for the first time in a while, which was not unexpected. But also just saying, hey, if we're going to get in and we're going to do a deal, let's look back over the deals that have been the most successful and it's the bigger deals. That's always the case, right? I mean, anybody who's ever worked with any type of client, you know, the big clients are the ones that are like, ask you two things. They actually do it and they say, I'll talk to you in a couple of months. And it's the smallest clients that are the ones that are like bugging you every other second. Speaker 2: Were the marketplace conditions business related, meaning businesses weren't growing or was it interest rates so you couldn't get the terms that you wanted? Where did you see the freeze as a buyer and as an investor? Speaker 1: It was more the businesses that we were looking at. They weren't growing. And so from our perspective, we don't mind that because our ideal business that we're working with, they've been flat or down for a period. Because with our model, we don't want to work with businesses that are a rocket ship. We're not traditional private equity. Private equity wants to go into businesses that are growing. They want to put a bunch of money in. They want to financial engineer them, and they want to kind of be out in a couple of years. That's not our model. We want to work with business owners that have been flat or even a little bit down for a bit. Um, because that's when they're open to new ideas. And frankly, that's when they're open to bringing us in and getting, you know, allowing us to come in and earn a little bit of sweat equity in the deal. But because things were down and because there was so much uncertainty, what we don't want to do is we don't want to come in and be a company savior. And in some of these businesses, it wasn't clear, like, are they going to be okay? Are they going to get on the other side of it? You know, or, And so that was part of the issue. So we just made the decision, let's focus on the ones that we got, dance with the ones that brung us. Speaker 2: Let's quickly recap how you go into a business and bring it back into a growth trajectory. So with this last deal that you did, I know one of the first conversations that you have is how do customers happen? How do we actually get money in the door? We start with that. What does the rest of your process look like? Speaker 1: Well, really where it starts, I mean, so almost always It is a demand constraint issue. What we've learned... Speaker 2: Demand constraint? Speaker 1: Yeah, demand constraint. So they need more leads and sales. So they've got a demand issue. But what we've learned is that as we've broadened our scope and we've worked with a lot more businesses, there are some where they don't actually need that. They've got a supply constraint issue. And so we now have started asking the question, are you more demand constrained or are you more supply constrained? Funny enough, What we then do next is almost identical. And so if they're more demand constrained, then what we're going to do is we're going to visually map how do customers happen. If they're more supply constrained, then we're going to visually map how do you fulfill on a customer or client once you have them. So it always is going to start with some type of visual business process map, because we cannot begin to unpack. We cannot begin to optimize until we visualize the process. And once we have a clear visual picture of what's going on, Then you can begin to take it step-by-step, stage-by-stage and say, well, where's the constraint? And we just operate under theory of constraints and see where do we go in and start to kind of de-bottleneck the bottlenecks. Speaker 2: Yeah. I thought I was good at this until I went through your model and realized that I had never visually mapped out how customers happen and how we serve them. It's just all in memory. And man, that was convicting to see that. Speaker 1: Everybody thinks they know how their business works and they can always tell me. It's amazing. I'll ask him like, so tell me how customers happen. They can tell me and they're, it's really close. Like it's always really, really, really close, but it's not until we get into the actual visual mapping process. And almost every time they're like, Oh, there it is. And it becomes self-diagnostic. Where they can see like, oh, that's the problem, but it's not until you see it that you can see it. And that's as simple as that sounds. Speaker 2: So your acquisition model for your portfolio is you're looking for businesses that have flatlined and are stuck, and they often think that they have a demand problem. They want more leads and sales. And then you come in and with fresh eyes, map out how customers do happen, how you fulfill the value to those customers. And then you're looking at where the constraints are. Is that, is that a fair summary? Speaker 1: That's pretty close. And what we're going to do is we're typically going to take a, um, a 20% profits only interest in the business. So we're going to essentially be treated like a 20% partner day one. Now we don't have actual equity in the business day one. Because we're taking a profits only interest, which makes it really, really simple to get into the deal. And that's what we want is we want speed. So we want to get into the deal pretty quickly and usually we're going to be getting, in the beginning, a $20,000 a month retainer plus 20% profits only interest. Now, as soon as there's some type of liquidity event, a funding event, you know, some type of an exit, that's when it converts into equity or we have the ability to do a buy-in at a preferred rate. But we like to start with the profits only interest because If it doesn't work out, it's just a contract that can be torn up and they can kick us out at the six month mark. And where that's really, really nice is that it forces everybody to underwrite the relationship. In the beginning, we were really good at negotiating these deals and we could get people convinced. Speaker 2: I'm laughing because I can relate to this. Yeah. Speaker 1: And especially if you've got somebody that they've been flat for a while. They're like, Oh, yes, you're my savior. Unknown Speaker: Come on, come on in. And, and so we, you know, we'd get into these. Speaker 2: I've lost a lot of money being people's saviors. Yeah. Speaker 1: And, and, and I'll tell you, there are way more times when we're the ones saying, Hey, you can have it back then, then they're wanting to boot us out. But, but there have been times when resentment has built up because they either felt like we weren't doing enough to earn it, or maybe what we did was so front and loaded and we did it, but then we were kind of done. We essentially delivered the value and we didn't have that much more value to deliver. When we put in the cancellation clause where they have the ability to kick us out at six months, that really changed everything because it forces us to perform, but then it also forces us to have more to give. After the fact. And at six months, you kind of have a sense of, it's a good dating period in business. And so at that point, usually there's going to be some type of liquidity event, something to where at least some aspect of that equity, some of that's going to be turned into real equity. Sometimes it's renegotiated, but that's usually how our deals happen. The only downside to that model is if we're receiving Distributions as a profits only interest. Partner, then it's coming to us as ordinary income instead of capital gains. So it just doesn't have as good a tax treatment. There's ways to, there's ways to deal with that, but to a certain extent also, it's like, it's fine. Speaker 2: Yeah. Speaker 1: It's fine. Speaker 2: If that's what we're optimizing for, something's working well. Speaker 1: It's fine. Exactly. Speaker 2: Yeah. Speaker 1: Like, it's fine. Like, oh no, I'm paying, I've got all these pesky taxes. There's only one reason you have all these pesky taxes. So I'll, we'll deal with that. Um, and, and you, you know, in almost every case, If it's a good business, we have an opportunity to buy in. We have an opportunity to convert that into actual equity, which we do. Speaker 2: So you have your scalable model that you are using as the playbook that you're installing into these businesses that you're getting a piece of profits and sometimes a piece of equity from. And then what you're known for is that you talk about those models and playbooks to other businesses. Which is also a business, but it's where you get lead flow from. Speaker 1: Yeah, it's us getting paid to do due diligence. So we're very transparent about our entire model. So it is, we share everything that we do. And you know, what I wrote in my book is exactly the playbook that we run when we go into a company. I mean, obviously it's nuanced and it's more personalized and specialized to that company. But businesses will pay us anywhere between $15,000 and $40,000 to go in and run this playbook. And then at the end of it, they could say, great, thanks. We're good. Or they could say, hey, we want to keep working with you on this. And then that can look like a number of different things, including, but not limited to some type of a partnership deal. Speaker 2: It's a beautiful model. How does AI mess with that? Does it enhance the process or does it threaten it? Speaker 1: Yes. Okay. Yep. So it's, it's one of these things where, uh, from the, from the client side, from the delivery perspective, it is massively streamlined how we're able to deliver on behalf of clients now. So when, when we're doing the initial fulfillment, um, I have all these videos that I've created where normally we would have to say, you know, because we have to get some information from clients. Like I don't know how their business works day one, and I can't go and live In their business for months at a time to understand how the business works, we're going to have to extract that from them. Speaker 2: And that's painful. Speaker 1: It is. And to do that, they have to understand enough about what we're trying to do to be able to even get the right information. So they have to assume a certain amount of knowledge. They have to learn certain things. So they have to watch certain videos, which they only never want to do, which means when they show up for the call where we're trying to get this information, it just takes a lot longer. To get access, you know, to extract this information from them. Well, now what we're able to do is we're able to take AI and we're able to feed that video content, that training content into AI. So now it's really, really, really smart. And now it can ask the questions and it can interpret the answers through that knowledge and it can actually spit out Not perfect, but it's like 80-90% of the way there. Now, at The Scalable Company, we don't ever have our clients interact directly with AI, but our advisors, so our consultants who are working with our clients, They'll be asking questions. So let's say you're the client. I might be asking you questions and you're giving answers, but the whole time I'm actually talking and interfacing directly with a custom GPT that we've made. So if I'm the advisor, I'm talking to you, the client, and I'm asking questions that are being fed by the GPT. So the AI is basically asking a question. I'm reading the question. The answers are coming back. I'm typing in the answers that you're giving me or if I have voice on and it's coming through well enough, it's hearing it. It's feeding it back through and they're essentially just facilitating a conversation between the client and AI as opposed to a human who's smart but they don't know everything that I know. And so they're doing their best. To try to gather all the information based on what they know. And the clients kind of doing their best based on the videos that they've watched of me. Now we've got this intermediary that's actually way smarter than I am because I forgot some of my stuff. It's forgotten nothing. And so from that perspective, it's great. Speaker 2: What's the reason why you never have a client work with the AI directly? Speaker 1: I just feel like for at the price point that we're at and the level of service that we want to provide. It just isn't a great cheapens the experience. It's not, I don't feel like it's that we call it a seven star experience. So you can't, you know, you can't really achieve like a 10 star experience, but even a five star isn't good enough. So like, can we get to a seven star experience? I don't think that's a seven star experience. We may get to that point where people are so accustomed to it that they like it, but Not yet. Now, we've got other companies like Digital Marketer where that's exactly how it works. We give people access to it. But for this one, not yet. But I mean, to your point, there are businesses that we're looking at, and I'm not going to name them, but there were businesses that we were looking at doing deals with that we backed off on because I'm like, boy, I don't know if you're going to have a reason to exist in a world with AI. So that's what I'm saying. There are some businesses where you can see like AI is really going to amplify this business and its ability to do what it does. And there are others where you go, they're kind of screwed. Speaker 2: I have had to have this moment of truth where I'm looking at, am I selling a product or am I delivering a result? And the business model up until this point has been selling a product that will get them to a result. And all of a sudden, my product suite looks a little bit obsolete. And I've got to create the through line for how we deliver that result rather than sell what we've been selling for the last however many years where people have been absurdly successful. And I want to stand up on a chair and say, look at all of these results. Look at what we've done for all these people. Doesn't matter anymore. What matters is that you can continue to deliver the result. It's almost like The product in a lot of businesses is in the way of that result rather than making it easier to deliver that result. Speaker 1: That was absolutely the case for, you know, one of our companies, Digital Marketer. I mean, DigitalMarketer.com for the last 15 years has been a training and certification business. And for 13 of those 15 years, It benefited mightily from being a training and certification business, especially for, you know, the kind of the last three when everybody wanted to take courses and so many people wanted to be trained. You know, companies wanted to have their people certified. They wanted to provide access to this training because they didn't want them to leave. And so they wanted to show that they were investing in them. And so there was this whole season when, yeah, obviously I want to take these courses and obviously I want to get certified and obviously I want to learn. Well, that fell off an absolute cliff over the last 18 months. Over the last 18 months, we saw sales of our courses drop to 20%, not drop 20%, drop to 20% of what they were before. Speaker 2: Nothing else in the business changed? Speaker 1: Subscription revenue and things like that was okay. I mean churn went up maybe a bit. Speaker 2: But no major structural decisions? Speaker 1: Nope. Speaker 2: Or changes about the business? Speaker 1: Just everybody decided that they didn't want to learn how to do this stuff anymore. They just wanted the result because the promise of AI is it'll just do it for you. We are a people that for now 30, 40 years have been, you know, stared at microwaves and said, hurry. So we've always, we've always been impatient. We've always had this propensity. Like this has always been inside of us. This is nothing new. And now we have these like magical machines that will do everything for us. At least that's the promise. Now, They're not that great at it by themselves, but people don't know that yet. And so the promise of AI is that it'll just do it for you. To your point, it'll just get you the result. So yeah, if you're in the business of selling anything other than an end result right now, it's really, really hard. It's really tough. Speaker 2: Do you think that the coaching and information business is on death's door? Speaker 1: I think if you are not, I think if you're still positioned, especially as an information business, yeah, your best days are absolutely behind you and your business, hopefully position it either. If you're not going to make a significant pivot, just decide that you're going to die a slow and profitable death. That was the decision we had ultimately made at Digital Marketer before, you know, we chose to change. Coaching, it's a little bit different. I do believe if you want to survive at the next level, it's people and it's place. So if you can be someone who is engaging directly with people and the people that you're engaging with appreciate being engaged with by a person, and sometimes this is essential. I don't think AI is going to turn a wrench or cut your hair anytime soon. So that's a person-to-person type thing. I do believe that there are certain aspects of coaching, therapy, which a lot of coaching frankly does become therapy, where we still want that from a person. I know like take Tony Robbins for example. He's got his Tony AI deal and he charged like 97 bucks a month for it. That's pretty cheap for Tony. If what Tony can get for his AI, and Tony charges hundreds of thousands of dollars a year for his private coaching, how much really can you get for your coaching AI if he's basically saying the market rate is $97 a month? I think people still want to deal with other people when it comes to certain services, or there's things where, no, this absolutely has to be done here. Locationally speaking, my toilet is here. It's overflowing. Please come here and do that. Speaker 2: Isn't AI, as of right now, information? In itself, I mean, one of the challenges that I see kind of dancing in the information products world and AI is AI is also overwhelming in the amount of information that it spits out. And so like the curation and the focus. ...is where I see value currently. Now, will that change over the next two days when something comes out? I don't know. But it seems like that human-to-human interaction on top of AI is at least the play right now. Speaker 1: Yeah. So, ChatGPT, just by itself, is a sophomore philosophy major. It is smart. It's really, really smart. But it's very confident. And it's not as smart as it thinks it is. But it's very confident. And it will tell you absolutely that this is the fact and be dead wrong. And so yes, if you are in the information space, I do not believe that you should be selling information. I do not believe you should be taking your information and using it to train humans. You should do what the decision that we made at Digital Marketer and what we're effectively doing at Scalable and then delivering it with humans as an intermediary, which is take your proprietary intellectual property, take the information that you have, and instead of using that to train people and asking people to learn, use it to train AI. And then either give people access to this AI in the form of custom GPTs or agents, Have them pay for a better version of ChatGPT that is not a sophomore philosophy major because it's been trained on your brilliance. Or do the thing for them, but now you can perform a service that perhaps before you never could have performed it. The economics never would have made sense. The gross margins would have sucked. It would have taken somebody way too long to do, but now you can have one person doing this thing for 15 people because they can run it through AI. Speaker 2: I'm glad to hear you say that because that is the strategic decision we've made internally, too, where if I'm going to work directly with a client, I have to charge at least 100 grand down, take an equity position in the company, and then I'm going to have them hire Some other people for implementation of the work where now I can actually train AI with my IP and have a facilitator work with the client. And I don't have to take equity. I can use this as my feeder for the companies I'm going to take equity in later. And now we can actually have a service that makes it actually somewhat scalable. And I don't want to kill myself. So we've made the same internal decision. I'm curious from your perspective, when you're going into that a company or acquire a company, or you're looking to make the companies that you have more efficient. And you're looking at this saying, is this going to be necessary? Like, is this business going to be around? Are you trying to use AI to modernize or save the company? Or do you have to make a decision of we're going to let this die? Or how do you go through that thought process? Speaker 1: Definitely. Anytime we're evaluating a business now, one of the questions that we're asking is, how could we leverage AI? And automation to accelerate any aspect of what they're doing, because it is very rare that we would It's very rare that we would encounter a company that is using AI effectively right now. It just, so far, it's happened exactly never times, right? So we can all, so I love it right now because right now it's a huge advantage. It's one of the first things, so this big deal that I'm sharing that hopefully we can get done. Truly one of the very first things that we will do is AI-ify certain aspects of their business where I can see, ooh, this is a constraint If we can implement some AI there, yep, let's do it. But it goes back to what I said before. We first have to visualize. How do customers happen? How do we fulfill them once we got them? Because if you're not using AI to un-bottleneck a bottleneck, then it's really not that helpful. So we kind of only want to do it if that's the bottleneck that we're fixing. If you're just making something that's further upstream more efficient, but it's not resolving a bottleneck, you know, that's the chain is only as strong as its weakest link. The same thing applies to a system. It's only going to be as efficient as its least efficient stage. But it is rare that we can't find a way to leverage AI to de-bottleneck a bottleneck. Speaker 2: So tell me about the tools that you're developing, because what most people think, whether it's within their business or as an advisor or even just side work, when they think about using AI, it's, I'm going to use ChatGPT to write my copy, or I'm going to use Claude to make this client proposal. The tools that are built on top of that is still kind of this gray area that hasn't reached full adoption yet. It's still in this infancy phase. So when most people think about using AI, they're just thinking about what tool they're going to use that somebody else has built. It sounds to me like you're building stuff. That's proprietary to the company that makes things more efficient. Can you tell me more about that? Speaker 1: Yeah, and most of it's still being built on top of ChatGPT or on top of Claude. We're just adding an additional layer. So there might be an additional software layer, which I don't know how any of that works. And really all that is facilitating very often is giving multiple people access to the same To the same agents because one of the downsides right now to ChatGPT is there's a team account. But if I go and create a project. I can't give another team member access to my project in ChatGPT. It's incredibly stupid. You can in Claude, but you can't in ChatGPT. I would hope that they would update that at some point. Now, if I create a GPT, I can do that. Speaker 2: A GPT for those who don't know is? Speaker 1: Yeah, it's essentially a, think about it like an app on your phone. It is basically an app that functions inside of ChatGPT that is designed to perform a fixed set of tasks. Speaker 2: So you have your template for how you write video sales letters and you can train that GPT and that GPT can be programmed to ask specific questions to pull out the copy pieces from you and then write according to the template. Is that a fair summary? Speaker 1: That is. But here's the The bigger way to think about it. Most people when they think about AI and they think about GPTs, they think task first. So what are the different tasks that we need done? We need to write an email. We need to produce descriptions for our YouTube videos. Everybody's thinking about all the different things that they need to do. We've got this playbook and we need to do this thing and it's a repetitive task. Let's create a GPT to do it faster. And that makes sense. And I'm not saying that you shouldn't do that. But an even more sophisticated way in a way that where you get a lot more leverage is to think less about GPTs in terms of tasks and more to think about AI in terms of roles. So how do we build? An agent where this agent within ChatGPT or within Claude, this just like is an email marketing expert. And so we're going to train in on everything that we know about all things email marketing. Here's all of our, you know, winning campaigns for the past five years, which I'm pretty good at email marketing, but I've forgotten all those, you know, here's all of our best practices. Here's, you know, all of these, everything, you know, Now, what I'm talking to, I'm not talking to a GPT that is an email campaign creator. I'm actually talking to effectively an employee and this is the next phase and this is more what we're doing. We're building hubs within companies that effectively are AI org charts. And the goal here is for them to be able to fill gaps within teams and to supplement the people that are there. I mean, the idea if you've ever said, oh, I wish I had two of, you know, I wish I had another one of, I wish I had another Jimmy. Jimmy's brilliant. I wish I had, give me 10 Jimmys. Cool. What does Jimmy know? Let's train AI on everything that Jimmy knows. And then let's give everybody access to Jimmy. Speaker 2: So I'm having four thoughts at once, so my brain just fried. But I see two opportunities for this. Number one, I see the ability to possibly, from an acquisition standpoint, acquire a company and to either build or borrow other people's tools and deploy them into a business to either drive down costs or drive up profits or both. And that could be a really good opportunity from an acquisition side. So if you're buying companies that are stuck or even going down, is there a play to be made for taking these tools and then just deploying them into the existing business? And creating more efficiencies. Speaker 1: That's exactly what we're doing. So this company that we're looking at, this bigger deal, one of the first things that we will do. Speaker 2: We're just calling it the bigger deal. Speaker 1: Yeah. Speaker 2: It's the bigger deal. Speaker 1: The bigger deal. Project X. Project big. We have now... Speaker 2: Have you ever been called Project Big? I have never been called Project Big. Speaker 1: Zero times. If so, I promise you it was ironic. It's like when rappers are big, it's because they're little kind of thing. That would be me. That would be my rap name. With this particular deal, what we have now And we're fortunate because we own Digital Marketer. And Digital Marketer has lots of trainings and certifications. And across all of our companies, we've got swipe files galore. We know what works across all these different industries. Well, we can now take all of this information and we can train AI. So we can say, okay, what do we wish our head of marketing knew? Well, what does our head of marketing know? Let's go and push all this information into it and that's what you can do in AI. I mean the whole point, like the way that you get good stuff from AI is you train it. You tell it what you want it to know so that it takes that and it layers that on top of the collective wisdom of the entire internet and this is how we go from A sophomore philosophy major to freaking Albert Einstein like that. That's what makes this work. And so we're fortunate Digital Marketer, lots of really, really, really great stuff. So we now have built out an entire AI growth team that we can now plop into any business that we acquire. Marketing team a little sluggish. Well, here you go. Now you have a new one. Speaker 2: Do you see that replacing people or do you see that enhancing people? You're going to say both. Speaker 1: Yeah. The answer is yes. And where it's happening right now is, so where it starts is, and we've already seen this. You know what? We had an open hire for that copywriter. We don't need that role anymore. So we're already seeing people take hires off the board. We're not yet seeing layoffs happen because if somebody's already there, and I believe this to be true about entrepreneurs, like entrepreneurs, if I've got a person and I give them a tool to make them more efficient, I don't think let's get rid of this person. Speaker 2: I think that's a misunderstanding that a lot of people have about businesses. If you have good people, you hold on to them and you want them to grow here. Speaker 1: Yes. And so we're not seeing layoffs happening yet. We are seeing people say, well, maybe we don't need to make that higher yet, but I think that's more a function of where the economy is right now. I mean, we are in more of a, you know, we are in, You know, more of a recessionary type cycle right now. I'm not going to say that we're necessarily in a recession, but as we record this right now, everybody's a little bit skittish. Just about every business in our portfolio is flat down. Pretty much everybody's a little bit freaked out. I mean, I don't know any business that right now today is feeling better than they were, you know, two or three years ago. So I think that's another reason why people aren't necessarily looking to double down and higher up. I do believe, though, that As our people become even better, of course we're going to want to hire more. So I don't buy into the AI doomerism that it's going to do away with a bunch of jobs. I do believe that it's going to do away with certain categories of jobs. So I don't believe that companies are going to have, to the extent that you had a marketing team, I don't think that you're going to have a room full of copywriters anymore. You just don't need them. You don't need a lot of people to put out a lot of copy because AI can put out so much copy, but you better have An amazing copywriter who can review all that and make sure that it's good. So you might need two or three instead of ten, but you'll reallocate that budget to other places. Speaker 2: Right, exactly. I once heard you, I think you were the first person I ever heard use the phrase Profit Center Manager. Is that right? Speaker 1: Yeah. Speaker 2: This is like a core piece of your companies, at least for a while. I can see that role making a lot of sense with well-trained AIs where, okay, that person's job is just to make sure that email campaigns are really good and they're going out and now they don't even need to understand copy. They just need to be the manager of that department. And it's like they have a bunch of mini copywriters that are working for them. Speaker 1: You can really get flat with a lot of your organizations if everybody on your team now has access to this just amazing base of talent and it's essentially walking with them in their pocket all day long. And so that is a game changer. The hardest thing in the world is teaching lower level and entry level employees to use AI because they, in many cases, fear it. They see that it can replace them and they're not always the best at using it. So far in my experience, people with high executive ability are great at AI. If you are used to telling human beings what to do, you're great at using AI, right? If you've got high executive function, then you're typically pretty good at AI because it's just telling a person what to do. If you're used to sitting back and being told what to do, Then AI is scary because it essentially sits there and is like, what do you want me to do, boss? And the vast majority of the workforce is used to sitting back and being told what to do. So I think what we're going to have to, you know, everybody's talking about, oh, there's this massive retraining that's going to take place. The retraining that's actually going to take place is in trying to get people to Not just to learn AI, it's really to learn an entirely new way of working. And there's just a lot of people out there who don't have high executive function. They're the ones that are really going to struggle. And I think they're the ones that may find themselves out of work. Speaker 2: I keep coming back to this question of what is this going to do to valuations and what opportunities does this present? And I think the answer is If companies build on top of the technology, their profits are probably going to go up and their valuations are going to go up. But as it exists today, if nothing changes, valuations are going to go down real quick because They're just not going to be able to keep up. Demand for those services are going to go down very quickly, as you saw at Digital Marketer. Would you agree with that assessment? Speaker 1: Yeah. Companies will either go to zero or they're going to go way up. There's going to be almost nothing in the middle. And I think that really is... That's what makes this so brutal. And it's what makes it unlike, I think, any other time that we've ever seen. So if you go back to like the global financial crisis, right, 2008, 2009, that was really scary. Stock market crashing, people getting laid off, people losing their homes. That was scary. But It was kind of clear what was going to happen. You had a sense of how it was going to play out, of what needed to be fixed to get things back on track, right? We needed to get the money flowing again, right? We need to get the banks lending again. If we get that going, then everything's going to be fine. Where we are right now, is like nothing we've ever seen before. And it's happening so fast. Speaker 2: So that's what feels dizzying about it. It's just, it's so hard to keep up. Speaker 1: Exactly. And so you don't have, I mean, if you were in the buggy whip business, You maybe had some time to see the automobile coming so that you could adapt, and I'm sure that there are some that did and I'm sure that there are some that didn't, but there were some who would have had those connections to people who were producing the carriages who likely became automobile and their business blew up because when the automobile business went up and they were now creating accessories for these new bigger automobile companies. Now that they're no longer in the buggy whip business, but they're now providing accessories to these bigger businesses, they went to the freaking moon. Whereas if you were still just selling buggy whips, you went to zero. But that probably happened over decades. Whereas what we're going to see is going to happen over months, maybe year. It's just going to happen so fast. And from that perspective, it's going to be ruthless. Speaker 2: So let's apply this to how you're using this in your portfolio. You're obviously trying to stay ahead of this. And in the marketing community, you're one of the voices in leading in this direction. How are you applying it then into the businesses that you have a stake in to ensure that they're one of the ones that break out rather than goes to zero? Speaker 1: So the first thing that we did is in every business that we have, we went back to what we call the value engines. So the growth engine, the visual process map of how do these things happen, and we have the teams perform an AI audit. So which of these steps and stages could be improved through some type of AI-ification? And so this was actually the initiative last quarter for not every business, but for every business that didn't have some other big significant initiative. Every business in our portfolio follows the same cadence that we teach. And so they're all going to have three main kind of primary initiatives that they're going to pick for the quarter. And we didn't mandate, but we heavily encouraged that at least one of those big three be to AI-ify the business. And we defined that as Go back to your value engines, go back to your business process maps, go step-by-step, stage-by-stage, and ask the question, how could we deploy AI at this step or stage to improve and optimize the efficiency? So that's the first thing. Anybody, everybody could do that right now today. There's not a person around that couldn't do that. The hardest part has been getting buy-in from the team. That's been the hardest part. So that's how we're doing it within the company as we're going and looking at acquisitions. Speaker 2: Why do you think that there's pushback from the team? Speaker 1: It's a combination of they're scared of it. They're afraid that if they start using this thing that it's going to, they're going to lose their job, which isn't true, except it might be. Right? Like, I mean, that's just the reality, right? It probably, I've got a friend of mine, his daughter's a radiologist and he's like, yeah, you know, they're looking at implementing AI and she's kind of freaked out. And I'm like, yeah, I mean, she probably should be kind of freaked out because AI is really, really, really great at picking out At scanning, doing what a radiologist does, whatever they do. It's really freaking good at it. It does it in seconds and it's so much more accurate. And like, so, yeah, I mean, do you need one to kind of verify? Yeah. But do you need like three on site? No, you probably don't. And so, yeah, they're going to bring that in and they're going to train everybody on it. And then, yeah, eventually they're probably going to do the math and say, we don't need as many people. So I get it. Like I can't even be that mad. And it's why you saw like Toby Lipkey at Shopify basically say, you're going to have to justify. You can't come to me and say you want to make a hire, you want to do this without telling me why you couldn't use AI to get it done. Companies are gonna have to start mandating its use because people don't wanna use it because they're not incentivized to use it. And in addition to that, again, most of the people who are down at the lower levels don't have high executive function. They're just not that good at telling things what to do, so they don't come about it naturally. Managers, executive leaders, we come about it pretty easily. And so we assume that our teams do. They don't, and in addition to it not being super simple for them, they're also scared of it. So that's why the rollout here is tough. And so what you need to do is you need to start with, let's make this task really, really simple for you. Let's create a simple GPT here. But I said before, where does it need to go? Where do you get max efficiency? We get max efficiency when you start treating AI like it's a role. When you start treating it like it's a role, people start really getting freaking freaked out, right? They start really getting freaked out. You can explain all day long, hey, I realized that we called this role the exact same thing as your role, but really I promise it's not to replace you. I promise it's to augment what you do and mean it. Every time we've implemented, that is exactly what we've meant. You can see though why people might be hesitant to completely, you know, believe you. Speaker 2: Yeah. I mean, it seems like I have a team of eight people and I'm thinking about, I mean, I don't just mean this because we're recording. Every person on this team, their job will get better and easier because of AI. But in a big company where you have multiple layers of management, I can see that collapsing really quickly. So in those bigger companies, I see why that fear is there. You said the first thing you do is you make them do an AI audit. And then you started to say, and in the acquisition side. Speaker 1: On the acquisition side, we're really interested in companies that have not yet. Speaker 2: That haven't yet. Speaker 1: Implemented it because that now is an advantage. It's sort of like in the past, I loved, still do, love businesses that They're succeeding and they're marketing clearly. Speaker 2: Yes. Speaker 1: Right. I mean, you've seen this. Speaker 2: I love physical product brands that just are doing terrible on Amazon. Cause it's like, Oh, bring it to me. I know what to do here. Speaker 1: Yep. I'll do an old number seven. We'll throw a 14 at it. I mean, it's like, I got a couple of little tricks I can pull out of my bag and bing, bang, boom. This thing is like, you know, to the fricking moon. So the new thing that we can bing, bang, boom is AI, right? So it was like really, really simple. Um, and I think, I think most people, whether you're a consultant or an agency, you kind of have the, have the stuff that's in your bag of tricks that you can pull out to get you a quick win. That now for us is AI. It is very, very rare that we walk into a company that we can't find something within that business that we can throw AI at that's not going to have a really significant, meaningful impact. Speaker 2: Yeah, it reminds me of 2008, 9 and 10, like the local business boom, when you have a Second grade level marketing knowledge, go into any local business and you can bring them leads. And all of a sudden a new industry was created. Speaker 1: It's like you don't even have a Google local listing. Like I can literally just make you magically appear on the Google. Speaker 2: Yeah. Speaker 1: Would you like to appear on the Google machine? Yeah, it is kind of like that. Yeah, you're absolutely right. And even before that, I remember, you know, when I got my start in like 1999, 2000, it was like, You don't have a website. How would you like to have a website? You could appear on this new thing called the internet. We're sort of there. Speaker 2: This is the first time I've heard this positioned as an opportunity in the marketing space because we see it writing copy better than us. We see it doing email flows better than us. But now I'm seeing this as a skill set that could be applied to a bunch of businesses either as an agency, a freelancer, or to buy a business and to deploy those systems into the business. So you're basically seeing a possible shift in the industry or a wave of opportunity where these businesses don't want to go to zero. They're probably going to be willing to pay for help in modernizing their businesses with AI. Would you agree with that? Speaker 1: If you're an entrepreneur, this is only opportunity. I mean, yep. Is it scary? Yep. Will there be winners and will there be losers? Of course. But the fact that your head is up and you're looking around right now, like if you're listening to this right now and you're paying attention, most people aren't. So there's going to be a huge change in regard. Speaker 2: I forget that, you know, cause cause I live in this world and we're all talking about it and I forget that people aren't. So thank you for that reminder. Speaker 1: Yeah. I mean, it's, you need to be extraordinary. That's just extraordinary. And we forget how astounding, ordinary everyone is. Like the bar is so freaking low, man. It is just so low. And so, yeah. And there are plenty of businesses that they're just going to put their head in the sand. They're going to choose to die a slow and profitable death. Either because they strategically make that decision, because they're like, look, I don't have that much more time left, like I was going to retire in the next number of years anyway, like whatever, fine, I don't care. Or they're just going to bury their head in the sand, you know, and make that decision by default. There are still plenty of businesses that aren't going to be massively impacted by this. If you're a plumber, you know, if you're an electrician, Really, if you're an electrician, frankly, you're impacted by this because there's now like just this rush, everything. We just need more electricity. And so like, frankly, if you're wondering what, if you like working with your hands and you're wondering what to do, go be an electrician and start your own electrical, you know, start your own electrician firm. You're going to be freaking rich. Like you're going to do just fine. If you are okay, maybe getting zapped. Like that's what I would do. But the trades in these, they're going to be fine. But thinking about more knowledge-based businesses, They're definitely going to have to make a pretty significant pivot or they will be choosing death during this period of time. So that is an advantage to you. If you're an agency owner, if you're in this space where You can have an advantage by helping other businesses make that pivot. You can also have an advantage by just choosing to make that pivot yourself and your competition doesn't. Speaker 2: It seems like the obvious step that most people are doing, and we did this at Capitalism, was you train a bot, you train an AI agent to speak on that person's behalf, take all their expertise, answer questions, like Tony Robbins has his $97 a month thing. That seems like A first logical step for a lot of businesses. Where do you see the other obvious things that are either coming or that you're doing right now in the portfolio? Speaker 1: So I would start with whatever the role is that you wish you had more of. So that is the question to ask. And it's almost always going to be, so you're going to start with the founder CEO. I'm fortunate. You're fortunate in that I've got a lot of work that's just out there in the ether. I've written books. I've been on podcasts. I've got videos. And so it's pretty easy to take a lot of my stuff and to train an AI and to have AI Ryan. But what this means now is there is an AI Ryan and it's synced up now to Slack. So instead of people asking me a question, they'll ask AI Ryan first, which saves me a lot of time. And frankly, more times than not, it's better because I've forgotten a lot of the stuff that I know. I just have. I don't remember. Truth be told, there's times I ask AI Ryan questions. So that is definitely a place where I think it can be a really quick win for these companies and other people within the organization. Same deal, like you are so incredibly valuable head of this department. I wish we had two of you. Let's figure out how to train a bot around everything you know. The thing is, there just needs to be so much trust there that that person doesn't think they're going to get fired. Speaker 2: One thing that's coming to mind for me is I am fairly good at email marketing, right? And I have a few A few campaigns that I know when I run them, I change the story, I change the offer, but the structure is mostly the same. And I can run that playbook. I've run it in a bunch of different businesses. When I was in between things, I did it as a consultant and I would make people gobs of money running these campaigns. And now I realize I could train a GPT to do that. And if I'm on vacation, One of the big questions is like, Ryan, are you going to write all the emails that keep the cash coming in while you're on vacation? Like, will you front load those so that we don't have to bother you? Well, now project manager can just say, this is the offer. This is the campaign. Write it in Ryan's style. And it has all of my best My best converting campaigns already loaded in there. Speaker 1: Exactly. I mean, you could literally, so you could create a GPT called, you know, email Ryan and, um, and it could be it. Here's all of my best campaigns. And so you upload PDFs of all your best campaigns. You could say, here's my overarching philosophy on it. Here's, um, a, uh, a training that I did. Here's a podcast, a transcript of a podcast that I did. Um, now I want you, um, Ryan, whatever, to tell me, email Ryan, to tell me what is your philosophy on email copywriting? And so you would actually tell it to what it thinks it knows based on everything that it gave you. And so it spits out everything that it thinks that it knows and you'd be like, yep, you're pretty close here, pretty close here. On this one, actually this, hey, we need to make sure that we add in this here, add that to your long-term memory. Speaker 2: Wow. Speaker 1: So you're going back and you're, you're training it. And so the more that you continue to feed back into it, it just gets better and better and better. Speaker 2: I exhaled. Like you saw that relief that just came over me because that just solved a big problem that we were working on in a meeting earlier today is we're putting clients who are over a million dollars to this incubator process to help them be ready to scale towards eight figures. And one of the, one of the steps is I know that almost zero e-commerce entrepreneurs are good at email marketing. And so. We, you know, we have our scripts, we have our campaigns and then we're like, we have this, we know this agency and we recommend this copywriter and we can, we can give them all the ingredients for the cake, but they still got to make the cake unless I'm going to go into the business and write it for them, which I confess I have done at times. And now I can just upload it all into a GPT and I can have our advisor do it for them. And now that problem is solved or we can license that out. To the business and they can use it at will. Speaker 1: You could absolutely do that. Yeah. You could, you could make GPTs public if you want and give them access to that. So all of those are available to you and you could even have what you give them. You could say, here are the different templates. This one is called this, this one is called this, this one is called this. So you could say, I want you to write a template. I need you to write a campaign based on this campaign template. And then you could tell the GPT to say, you know, okay, here's what I need to know from you. And so it would ask a series of questions that it would need to know to be able to write that. And so it would pull all that in. It would go, here's what I'll tell you. Anytime you're working with this, the secret sauce is 108010. So the first 10% needs to be good. Like you want to make sure that you're pulling in the source material that you need to make it really, really, really good. And so that initial list of questions, that initial data that you gather, that's, that's big. And this is where a lot of people shortcut. They don't, they don't give it a whole lot of inputs. And so what they get out is just kind of okay. And so that's, that's definitely all the training that we talked about, but it's also specific to this campaign. What's the product? What, you know, what's the ideal client profile that we're talking about? You know, are there any other, just all this stuff that you know, if I've got these things, I can really crush it. Speaker 2: Could you program the GPT to ask those questions? Speaker 1: It's exactly what you do. Oh yeah. It asks them and you could tell it to ask him all the questions it wants or to ask them one at a time, whichever you think is easier for your people. Um, and then, so that's the first 10% then it does the 80% and then all you really need is a pretty smart person. To just review it for that last 10%, spice it up a little bit, make sure that it's okay. And here's another thing that you can do that a lot of people don't realize. You could say, Hey, email Ryan. This is pretty good. I want you to give it a grade. A through F. How do you feel like you did on this? And it will actually grade its own output. And it'll be pretty honest and pretty transparent. You're like, okay, what would need to be true for this to be A pluses across the board? You know, well, we need to improve that. Okay. What, what would you need from me to be able to, to go back and, well, I need to get this. And it'll tell you other information that it might, that it might need. To be able to kind of plus it up. So it's not like it gives you the output and you're just done. You can keep working with it. And that's where if you've got somebody, you know, who really knows what they're doing, that's where they can really add to the process. Speaker 2: I came into this conversation, like not really sure how I feel about where AI is going to be implemented into our company. That just blew my mind. Like that just solves so many problems that we're having in the service to our clients. And so now I'm curious, is there a third layer? Because we talked about the first layer being you train an AI version of you, then you train the role. Is there a third layer? Speaker 1: The next layer, and it's not quite here yet, is full agents. And so What an agent is, is an agent is AI that is truly acting independently. So it's not you going back and forth and answering a bunch of questions with the GPT in a constant chat feed. It's you saying, I need you to do this task and it just does it. It'll go and pull research from wherever it needs to go and it functions Multi-threaded, doing everything that it needs to do. That right now, I mean, there's tools out there like Manus and that's coming online. Its agents aren't yet built into like ChatGPT. And so this is another layer that isn't quite here yet, but that will be that next layer. And this is kind of when it gets a little bit scary because this is when it's like, ooh, This is starting to look a lot like a person. This is starting to just do the thing without needing constant human intervention at every step of the process. Speaker 2: Give me an example of what that might look like. Speaker 1: Well, just instead of you saying, interfacing with a GPT to produce this email campaign, you would say, you know, going back and forth and asking all the questions, you would say to the agent, Which again, the UI is different in how it functions. It's actually a two-pane thing because there's how you chat over here and then you can see the work that it's doing in the field on the right, the table on the right. But you would say, I need you to go and produce this campaign. Everything that you need is in this folder over here. And so you would just link over to like a Google Drive folder and it would do that. If it felt like it needed some additional information, it would go and do a Google search for it. It might log into your CRM to pull information about that client, to just go ahead and just get the information without you having to feed it in. This is something that a GPT can't do, but an agent can do. It can log into individual accounts, do independent research and analysis outside of ChatGPT. It really is like, A human. Speaker 2: So an agent could log into your email, sort it by category, make recommendations for how to respond and draft sample emails for you to approve or edit. Speaker 1: Oh, absolutely. Yeah. That, that now would be super, super simple. A very, a very easy thing to do. Yeah. There, there are tools right now that can do that. Speaker 2: Oh, okay. So six months out. Yeah. Okay. Speaker 1: Yeah. We are entering the agentic age right now where, where agents, It shifts from being a chat based world where we're having to constantly chat with something and effectively micromanage it. I mean, that's really what we're doing right now is we're micromanaging these to being able to, I mean, if you think about it, the best employees, you're able to manage to an outcome. I want you to make this thing happen and you speak to an outcome and they just make it happen. Whereas entry-level employees or less skilled employees, you manage to a task. Let's do this task. Now, let's do this task. Now, let's do this task. We're very much in that task phase right now. At the agentic era, now the agents are able to essentially manage to an outcome. And if they get stuck, then they would come back around and be like, you know, I'm stuck here just like a good employee would. Speaker 2: Do you have an AI team for this? Are there AI developers on staff at your company? Who is in charge of developing these? Speaker 1: This is currently being done at the highest level, so I'm pretty deep into it. Roland is very deep into it. Richard, my business partner, is deep into it. I believe that this is something that is worth Investing time into now, Roland and Richard are both fairly technical. I'm not. So the three of us, I'm the least like embedded into like the actual technical build and stuff. I use it every single day. But our head of product right now at the company, we essentially pulled out of product development and said, you're now just building AI related. And then we've got a couple of people that we focused on just doing AI stuff as well. Speaker 2: Do you have a story or an example of deploying the agents or what is the right term, modernizing, AI-ifying, agentifying a business and profits went up significantly? Speaker 1: Well, I mean, at The Scalable Company, I mean, I don't know. I'd have to think about, let me do the math in my head. No, I'm trying to do the math in my head because we haven't really run it yet. Because this is all fairly new, right? So I don't have the hard numbers, but the average The average advisor could manage, let's say, 30-ish clients at a time, right? And the average client took 22 weeks to go through the process. Now the average client is taking about 8 weeks to go through the process. And they're able to do, it's looking like 40 to 50 at a time. Now we still have to be a little bit careful about overloading them with the volume because they're still talking to them. So we don't want them to, but just the throughput is so much greater. So what does that mean? That means that our gross margin in terms of what we're able to produce from a services perspective probably just doubled. Now, we had pretty decent margins to begin with over there. So how much is it going to increase the profitability of the company? Not like gobs and gobs, but it's still pretty dang good. And this is another case of we had on the books, we need to make a hire, we need to hire another consultant, we need to hire another advisor. No, we don't. We don't because our folks just became, you know, the capacity just went up by at least double. When you can, when it was taking 22 weeks on average to get a client through the system and now it's eight, like that's a lot faster. Speaker 2: Yeah, we've thought internally that one of our advisors could manage maybe 10 accounts or 10 clients. But now it would make sense that they could manage at least double that. Speaker 1: Yeah. Probably. I mean, probably. Speaker 2: With a much higher level of service towards the result that the client wants. Speaker 1: And that's exactly it. The output is better. So this has been going on for us. That's what I'm saying, man. This is happening so fast. This happened in February was when we was when the mandate went out of, OK, we need to look to AI-ify. This and so it got implemented just like 60 days ago. Like so that's how that's how quickly this stuff is happening. That's why I don't have the numbers on it. But like it's looking like, okay, now we're seeing clients just that first batch of clients that started. Eight weeks. Speaker 2: So what this conversation has done for me is it's made me feel optimistic about the wave because we can all feel it, but it feels really uncertain. This has given me clarity about how to use it to make our own business better, but also help our clients at a greater level of service faster. Where do you think this is going? It's so fast moving, but where where are we in two years? Is can we even see out that that far? Speaker 1: I've never been less certain about the future in my entire life. It's really weird. It's really, really, really weird. Speaker 2: I don't so not certain doesn't necessarily mean negative, correct? Speaker 1: Yeah, correct, but. Where we are right now, so much of it's going to depend on what happens with these agents. So I think I'm going to be able to answer that question far more clearly in six months. Because if the agents do what they're saying they're going to be able to do, then I think in two years, There is a good chance that you're talking about 50% of knowledge workers effectively being irrelevant. Now, I don't think that they're all going to get laid off overnight because at some point it's just bad PR for companies to let that many people go. They won't necessarily need to. But I do think that it's going to be a significant challenge for any entry-level People doing anything and what's the overall ripple to the economy and what does that mean? I think it's going to be weird for the next two years because we're going to see a lot of shifts happening without the gains necessarily creating the new opportunities at the same time. So there is going to be that transition. If the agents Don't quite deliver. And I think there's probably a better than 50% chance that they don't deliver quite as well, you know, as people think, because the fact they got to go and log into this and do all these other things, like I just, there's so many points of failure there where they can screw up. That if it stays more or less how it is, then what we're looking at is significant but still marginal gains over what we have. So people becoming double, triple as efficient as what they are right now. If that's the case, then yep, you're gonna have some businesses that go away that do not adapt. But what you're gonna have for every single business is, oh my gosh, it's gonna get a lot more profitable. Margins are gonna go up. And it should happen across the board to almost every business. This is huge for the economy. This is huge for growth. And I don't think, again, knowing what I know about entrepreneurs, knowing what I know about me, I don't think that people sit around forever and just say, well, you know, I've got this person that They were only able to crank out six widgets and now they can crank out 20. I definitely only want one of those. No. I've got an investment that's generating a significant return. I want to put as much into that as possible. If we're dealing with more predictable but marginal gains, then I think that it's going to be a massive boom and where we're sitting is across the board, everybody's doing better than they are right now because everybody's just more efficient because these tools are just great. It's like what happened with the internet. When everybody got on the internet, everybody did better. Except for the business that didn't get on the internet, right? I mean, like, it was kind of like, and as everybody got on the internet, it was just like, whoa, look, there's more people on the internet. And there's more like people buying stuff on the internet. And like every business on the internet is doing better. Like, look, this is great. Like, who was it bad for? Like, frigging nobody, like Blockbuster, right? It sucked for Blockbuster. Like, damn, sorry, right? Like, but for everybody else, pretty sweet. I think that's kind of what it's, I think that's, I think that's the most likely scenario. But unlike the internet where you had years to adapt, I don't know if this is going to give you quite as much time. Because I think the consumer expectation is going to be that you better deliver really, really quick. And if you don't and your competitor does, then all the value is going to accrue to that one. They're going to get it all. So if you can be the one that does it and your competitors don't, and remember how ordinary everybody is, it's going to be the time when there's a lot of market share being gained. And if this also happens at the time when you see consumer confidence start to go up again, which hopefully that happens if we can get the tariff stuff figured out, if we can get a little bit of easing of some of the interest rates, if we can get any of this stuff to kind of chill, I think we could experience a boom. That we haven't seen in a really long time. Speaker 2: You, you're making your, the tools that you developed available for people, which was a big strategic move for you as a company. Would you share a little bit about that offer and that decision? And I want to ask you some questions about it. Speaker 1: Sure. So we had a meeting at middle of February at strategic planning meeting for digital marketer in particular, because I, you know, for 15 years, digital marketer was in the training and certification space. Sales had fallen off a cliff and we had to make the decision like, what do we do? Like, what is this business going to be? Cause post COVID when everybody bought courses and now less people are buying courses, I mean, that's fine. We'd expected course sales to come back a little bit, but now we're in the AI era and it's like, we realized this had kind of changed everything. Speaker 2: You realized it was not coming back. Speaker 1: They're not coming back. And so we had to make the decision. Do we let it die a slow and profitable death? Or do we make a pivot? And frankly, we didn't know what a pivot looked like. And so we made the decision then that we were pretty much just gonna let it die a slow and profitable death. So anybody on the Digital Marketer team, if you hear this, we decided not to do this. So don't worry. But we did. We did. We were like, let's just start to pull resources away, because I don't know what it looks like. We've got a lot of members, good, solid monthly recurring revenue. Let's continue serving the ones we got, but let's not try to add any new ones. You know, and let's just let it be a super high margin business and just attrition out. That was the decision that we made. Fast forward like maybe two weeks. I've been trying to get a little bit more serious about my personal brand, something that I've been meaning to do for, I don't know, since forever. And a buddy of mine gave me this like course on like personal branding. And I remember seeing it and it was like six hours. I'm like, oh my God, six hour course, kill me. Like I don't have time for this, which is not a good sign. Again, if I'm thinking this and I'm in the course business and I got time thinking that. So I was like, I don't want to do this, but I got an idea. And so what I did is I took the videos and I ran them through a transcription service. And I took the transcripts and I uploaded them. I posted them all to ChatGPT and I said, you are now a brand expert. So I created a project. I created a GPT that is brand expert and that is now trained on my friend's course. And I said, I want you to walk me through this course. And in probably an hour and a half, I had all the output created. In way less time than it would have taken me to go through the course, I just had the thing done. And I thought then I was like, oh crap, this is the future of Digital Marketer. Instead of having these courses and this intellectual property and trying to teach people, we should be teaching AI and give people access to the AI. And so I came back to the team. I was like, this is what we need to do. And that was the decision that we made. So we said, if this is what we're going to do, then let's just go all the way and let's just pull all of our courses and certifications off the market. Like, let's just, let's do it. Like if we're going to go, go all the way. Don't go halfway and just like have this be an offer. Like we got to completely pivot the company and say, we're essentially an AI first company now. But if you're going to pull everything off the market, give everybody one last chance to buy. Right. So that's what we did. We're like, we're going to do one last, like not going out of business sale, but essentially we're pulling all these off the market. Let's go. And so that was the decision that we made to pull all the courses off the market. We told everybody why we were pulling all the courses off the market. It was damaging admission. I was like, why are we doing this? Because none of you want them anymore. They're great. They're awesome. You just don't want them anymore. Here's what we're going to be doing after. And fortunately that sale went really, really well. And now it's an AI first company. And so if you go to Digital Marketer and you sign up for anything that we're doing, There are still courses back there. Like you can still, if you're a member, have access to the courses because I don't like black boxes. And we'll tell you, you can have access to the training that trained the AI, but mostly it's here's the AI tools that will just do the things for you. So that's the pivot that we made for that business. Speaker 2: So now is the business people buying the use of the AI tools that are trained in your intellectual property? Speaker 1: That's exactly it. Yep. So they join a membership and just as they did before, but instead of getting access to content, they get access to AI tools. So bots, GPTs, things like that, as well as prompt libraries. And then the trainings are there too. Speaker 2: So my question is, do you think that over the next year, even AI tools become super mass market? Will there be just a marketplace for all these AI tools and they'll be watered down and cheap? And if so, what do you do to create differentiation between your own IP and what somebody else can just take from a course and rip off and upload and say it's the same plus this? What happens in that world? Speaker 1: This is where brand still matters. And so if you are out there and if people believe that you're smarter than the average bear, And if people trust your brand, then they're going to want yours. Because again, AI is smart, but it just ain't that smart. And so you can go to ChatGPT right now and you know this, you could go to ChatGPT right now and you could be like, Hey, ChatGPT, I've got this like supplement. Here's what it does. Write me a seven part followup series and it will do it and it will be incredibly kind of okay. Right now, train that on everything that you know, and it's not going to be a little bit better. It's going to be like 10, 20 X better. Speaker 2: If I, if I take five to maybe 10 hours and really invest into that, it'll be amazing. Speaker 1: Right? So, Now I know you and I've been following you for a long time. So I could just use ChatGPT and get what I get and don't throw a fit. I could go buy Chucklehead McGee's, um, you know, GPT for like 12 bucks or I could get yours. Now, if I know you and I know you're a pro, I'm obviously going to buy yours, right? If it's even reasonably, if I just have to perceive there being some kind of ROI. So this is where, this is the future of, Uh, of, of media brands, content brands. It's why you're seeing, um, the New York times and all these different content companies. Actually getting some type of value again, because AI, the different AI companies are having to go and pay them because they're, they're seeing value in their core IP. They don't just get to yoink it. They don't just get to be like mine. Um, and so if you have it and it can be used for training, then you have something that the general public does not have. But now that was another reason why we took all of our stuff off the market. People are like, Oh, you should just sell it anyway. Nope. I don't want anybody in their dog being able to take it. Now let's say they did because they could, they could, you could, you could take all of our stuff. If you had in the past, you could do all of our stuff. You could train your own AI, but you can't market it as digital marketers. If you do that, then we'll sue the crap out of you. Right? So brand still matters. Speaker 2: I just had a braingasm because, because what you're essentially saying is that the IP development now becomes the asset. It's not the information. It is actually developing the information and training the tool, using IP to train the tool. And the implementation of that IP is now the asset. Speaker 1: In any new technology, there's always multiple layers at play. So there's the infrastructure layer, right? And in this case, the infrastructure layer. So in railroads, the infrastructure layer was like the track, right? In the internet, the infrastructure layer was, you know, the actual like the internet, right? I mean, it was like the cables and all the stuff going around. For AI, it's the LLMs. Right, that's the core underlying infrastructure. It's rare that this value accrue to the infrastructure. Where you see the bulk of the value accrue is on the application layer. So for railroads, the application layer was the actual railroads that were sitting on top of the track. ChatGPT, the value is accruing there because that is the primary application that is sitting on top of the OpenAI LLM infrastructure. Same with Claude. So you have core application layers that sit and then just above that is the services layer. Right. So the services layer is what comes in to begin, you know, to augment that. And so, and you also have a lot of value accruing there. So that's kind of what, what we're bringing to the party is, are these, are these different services? Speaker 2: So businesses, consultants, agencies can sign up to use your tool and they can then use it for their clients, for their businesses, or for whoever else they impact. And it's built on the back of the IP that your tools are trained on. Speaker 1: Technically, they're just supposed to use it for their one business. If they want to use it for clients, they're supposed to pay more. But how on earth am I supposed to know? There's no way. At some point, we'll try to figure that. And people ask me, they're like, so can I use this for my clients? I'm like, technically, it's you're licensing it for that one business, but I have no way of knowing. There's no way I'm going to know. Speaker 2: I came into this conversation with questions about acquisitions and portfolio development, and I had all my questions answered, just not at all in the way that I expected. As always, I see you as Several years ahead of the next wave, and I really appreciate you leading the charge on this one. Speaker 1: Yeah. Well, we'll see if I got it right or not. That's the fun thing about this. People were like, when we made this change, people were like, oh, it's a marketing gimmick. You're saying that you're retiring. It's this. I'm like, I wish you knew how freaked out I was. I wish you knew how scared I was. Say more about this. I could be wrong, right? I mean, we could be completely wrong about when you pull every single product you have off the market that you've been selling for the past 10 years, when I publicly declare I'm no longer going to be, you know, I am not going to be doing any more, teaching any more marketing courses, right? I mean that when I say that. And the reason that I say that, I mean, there's a number of reasons, but One of the main ones is it's not valued by the marketplace. So why would I teach it publicly anymore? Right? But it's still scary to say that because I basically have planted a flag and I've said, I'm not doing this anymore. Um, I've done that because I think it's the right decision. And I think as leaders, we have to make binary decisions. Sometimes we have to say, this is where we're going and we can't be mealy mouthed about it. We just have to do it. That's the only way we're going to get the team behind us. It's the only way that we're going to get our clients and customers behind us. We just got it. We got to go all in and you look really cool when you're right and you look really stupid when you're wrong. So we'll see. Time will tell if we got it right. That's what's fun about doing podcasts like this. You can look back and be like, Oh my God, what a jackass. He got that way wrong. Speaker 2: Well, I've known you for, 15 years and the only thing that I remember you getting wrong was that you said that Rick Santorum was going to be the next leader of the Republican Party. Speaker 1: Did I say that? Speaker 2: Yeah, you did. You did. I thought you were crazy on that one. Speaker 1: Yeah. Speaker 2: But I find you highly persuasive and so I paid attention and I don't think there was ever a worse candidate. For the Republican Party. So you have that one where you got wrong. And I think that actually legitimizes all the other things that you got right. Otherwise, I would just think you were wrong. Speaker 1: I have no defense for that. That's utterly indefensible. Speaker 2: I'll hold that against you. Speaker 1: Please do. Yeah, I'm worthy of it. Speaker 2: Ryan, I so appreciate our time together. Thank you for being here. Speaker 1: Thanks, buddy.