The Marketing Rocket Ship - Innovation, Marketing & Keeping Up With AI | Steve Simonson | MMP #10

The Marketing Rocket Ship - Innovation, Marketing & Keeping Up With AI | Steve Simonson | MMP #10 Speaker 1: As people grow and as companies grow in particular, you have to innovate across all functions of a business. But marketing is where that's what lights the rocket ship. And I have this kind of argument across organizations all the time. And they're like, ah, marketing and sales, you know, they take too much credit or whatever. But it's like the rocket ship never gets off the ground if you don't have good marketing. Unknown Speaker: You're watching The Marketing Misfits with Norm Farrar and Kevin King. Kevin King: Norm, what's up, man? How are you doing, buddy? I'm finally, I'm glad we're doing this podcast today because, you know, we both have other podcasts that we do in the Amazon space and I record, you record every week, like live, like three times a week. Mike Frekey: Three times a week, yep. Kevin King: I don't know how the heck you do this. Now you're doing this podcast and I think you do a Walmart one and you do like, I don't know when you sleep, but I know you get your Coke Zeros in. I know that for sure. Mike Frekey: A half hour before I go to bed. Kevin King: There we go. How many times are you going to get a pee in the night? Mike Frekey: Oh, I'm old. Kevin King: Four? Mike Frekey: I don't know. Kevin King: Depends on if it's a 12-ounce or a 24-ounce soda, right? Mike Frekey: I don't drink anything. And you know, I get up four times a night. That's what happens when you get old. Kevin King: You know, it's like, I was just recording the other podcast, the AM-PM podcast. I record those in batches, so I just did like 20, I think 22 of them over like a 10 day period. And right before that, you know, we're doing this video. Now on these podcasts, you got to do video because everybody wants to see it on YouTube and they want to see our ugly faces for some reason. But, you know, we have a pretty guest today, at least to actually help us, you know, bring up the level in the room. But I had this big, huge canker sore. You ever had that happen? Something break out like right in the middle of like, When you're doing something, you know, maybe it's... Mike Frekey: I'm covered in thousands of bumps right now. I don't know what the hell they are. So yes, I know what you're talking about. Kevin King: So I had this like big huge thing. I should get a sponsor. Who's the sponsor that could actually sponsor, you know, whatever herpes of the lip or whatever the hell they call it. I don't know. We should go out and get a sponsor for that podcast and show before and after. This was 10 days ago and now this is, but yeah, it's always fun doing this. I always remember Right before my wedding, when I got married, I got some huge thing on the back of my head. I had to go to the dermatologist and they had to shave it. And there's like a little, like a little round spot, you know, a piece of hair missing, a little size of a quarter on the back of the head with this like big bump. And I was like, man, I hope I can wear a hat or something to cover this thing up. But at least it was on the back. So you don't see any of the pictures or anything. But I'm sure someone coming up to me like, Ooh, what's this? I don't want to give this guy a hug. You know, what am I gonna get? Just like right now? I'm glad I'm not sitting there next to you because I might break out in hives or something. Yeah, but and we got an awesome guest today. This guy, his name is Steve Simonson. If you don't know the name, you're going to know the name after this because he doesn't know anything about anything. Seriously, that's his slogan. He's always like, I know nothing about nothing. But this dude is probably one of the sharpest people I've ever met. I mean, he comes across as all shucks, but this guy has been an entrepreneur his entire life. I mean, you know him too. We both know him for quite some time. I think I met him in 2016, 2017, somewhere like that. He was on stage speaking at an event. I was like, that dude's good. I met him afterwards. We invited him. He spoke at our event in Hawaii, the one that you were at in Hawaii. He spoke there. And then I've gotten to know him over the time. He and I ran a business together. And when we got into business together, I was like, damn, this guy is freaking on it. It's like, he's a sharp cookie. So I'm really stoked to have him come on with us today because I think we're all going to learn some fascinating stuff. Steve, are you there somewhere? Mike Frekey: I think he's coming on. There we go. Speaker 1: It's a surprise to me and you that I'm here. It's kind of a letdown after that big build up who's coming, but it's just me. Kevin King: Have you ever had one of those things, you know, when you have to do a podcast or something, you have something, something on your, a big zit on your face or one of those crazy. Speaker 1: This is no longer marketing misfits. It's what ails you. I got a big thing on my elbow. I hit it with a ball peen hammer and now there's a bump. I don't know why. Yeah. Kevin King: I can't sit. If you see me hop up and down on my chair, I'm going to bump on my butt. Speaker 1: Mine is 18. The number is 18. That's how many times I go to the bathroom at night. Unknown Speaker: 18. 18, everyone. Speaker 1: You win. Kevin King: You just need to get one of those little buckets, you know? Unknown Speaker: Yeah, that's right. Kevin King: The ones they have in the hospital. Something like that. Speaker 1: That would be perfect, yes. Kevin King: Steve, super, super happy to have you here, man. Thanks for coming on The Marketing Misfits because, you know, we're just a bunch of misfits. Speaker 1: Yeah. If you do it right, yeah. Kevin King: Entrepreneurs are just misfits, right? You can't be an entrepreneur if you're not a misfit. Speaker 1: I totally agree. You know, one of the things I tell people all the time about entrepreneurialism is the idea that you don't feel like you fit in exactly, right? Even your friends that you grew up with, whether it's high school or college or family, They ask you what you're doing and you start to explain it and they're like, they just scratch their head a little bit and they're like, either they try to be nice and go, I'm not sure that's going to work out, maybe get a job at the post office or they're like, okay, cool, I don't understand, keep moving. So yeah, being a nutty entrepreneur is often being on the outside of the normal circles. Kevin King: I noticed too, a lot of times, I don't know if it's you, but Norm, you're the oldest, right? Mike Frekey: Thanks, Kev. Kevin King: No, no, no. You're 76. Not on this podcast. I think you are the oldest on this podcast, actually. Mike Frekey: I think I am. Kevin King: You're the only one that can get Social Security in the US, I think, right now. Probably. In the US. Mike Frekey: And also be labeled a fossil. Speaker 1: That might entitle you to a little extra. Mike Frekey: Yeah, there we go. Kevin King: It always seems like though the entrepreneurs are always like first born. I know Steve, you're like first of like what there's like 27 kids or something in your family. Speaker 1: Yes. Very, very much more modest number. Kevin King: Nine kids in the family. Norm, you're the oldest, right? Mike Frekey: Yep. Kevin King: Yeah, I'm the oldest. So what is it? Have you noticed that? Like, what is it about like, the oldest is because they're always having to fight and break the rules because the parents don't know what the hell is going on. So you're the you have to be the rebel. To set it straight, what is it about the firstborns that tend to be more likely to be an entrepreneur or something? Or is that just me? Speaker 1: Based on this data, it seems pretty conclusive. I haven't actually done the research, I'll be honest with you. Being a data-driven group of fellas as we are, I really don't know, but I can say that You know, when when you're starting out and you're you're just kind of making your own way, like I just knew, especially with somebody behind me, it's like I'm on my own. And from the time I was, you know, 12 on, I was working because it's like if I want new shoes or I want the cool stuff, I'm going to buy it myself. And so that, you know, that requires, you know, innovation is what we call it now, but it was just like, I need a job, right? And so I did every kind of job you could imagine growing up as a kid just to try to get some money in my pocket and call it innovation or desperation. You know, it's just, it requires you to act and entrepreneurs fundamentally do something. And that's a critical difference. Kevin King: Have you ever worked for somebody? Have you ever made a resume? I've never even made a resume. I think I did in college because I had to for a class, but I've actually never submitted a resume and said, please hire me. Have you ever done that? Speaker 1: No. Because A, I'm unemployable. I put on the glasses just so everybody knows that I'm much, much more intelligent than I come across. The only job that I had as an adult, I was 18 and I had it for about 9-10 months working basically as a secretary for a carpet cleaning company. I didn't need a resume. The guys hired me. They knew me from working as a kid for them over high school. Before I was 19, I bought part of the company and another company and we kind of carried on. By the way, you bought part of the company before you were 19? Yeah, so before I was 19, I actually bought with one of the partners to a janitorial company and then within a year or so, bought part of his company, the carpet cleaning company, just sweat equity on that particular deal because he didn't want to lose me. Kevin King: So it was one of those like, oh, you like me, haha. You want to feed me, haha. You got to give me a piece of the action. Speaker 1: So it was definitely not as strategic as that sounded. I couldn't tell if that was Dr. Evil or some, you know, Shark Tank thing. But no, it was more or less like him and I had bought a janitorial company. We've each put in the cash and we bought it. We thought it was a good idea and it was fine. And then over time, it was very clear that I was kind of the glue that held everything together and he was kind of the sales chaos maker. And he would go out and make chaos and marketing happen, which was great on some level, but I had to clean up all of the promises that he made. So it was a very interesting time. I enjoyed it and was glad to be done with it when it was over. Kevin King: That led you though. I didn't realize that it was a carpet thing because you did a lot of stuff in the carpet slash flooring industry. That's probably what led you down that path, right? You had a string of stores and you were one of the first guys to sell hardwood on the internet or something like that. Something along those lines, right? Speaker 1: Yeah, yeah. So it really did that because of that experience, it set me on a path where, you know, as a carpet cleaning company, we'd send out guys and suck rugs, essentially, right. And then, you know, there's a big storm and, you know, the all the floods that were happening and everybody need the rugs, you know, all the water taken out of the How's once your house floods? And then people are like, well, who's going to replace this carpet? Who's going to replace this stuff? And at the same time, the county was kicking us out of the house we were operating out of. So we just said, all right, let's move our marketing from just cleaning carpets to installing carpets and hardwood and beyond. And that ultimately led into founding a company back in the late 90s called ifloor.com, which turned out we did all right. We became the first leading and largest online flooring company and made a lot of people angry. Kevin King: What do you mean you made a lot of people angry? Unknown Speaker: Customers loved us. Speaker 1: The industry hated us. Really? For the first probably four or five years, I was the most hated guy in flooring. Like if I went to a trade show and I would bring myself and sometimes we bring 20 or 30 people with us, we'd all have our, you know, We had a logo on our shirt and we'd walk around and they would just scoff and moan because all the retailers hated us because we could outcompete them. We had technology. We were using the very cutting edge of marketing at that time, which was the internet. And we remember my brother and I, we were in a trade show in like 1999 or maybe 2000. The company was called iFloor. And so we're at a trade show going, hey, you should sell us your stuff. So that we can sell it on the internet. And he just... Kevin King: That's why iFloor, right? Because everything back then was i, you put an i in front of it. Back in the late 90s, it's like now if you got .ai on the end of it, you're cool. Right. Then you can raise money. Now, back then, if you put an i in front of the name, You could raise money, or you're cool. Speaker 1: Yeah, it was a lowercase i with a dot. So you knew it had to be good, right? Mike Frekey: It had to be good. Speaker 1: Fundamentally, we remember some guy, and he just looks at the shirt, and he's like, you know, it says iFloor. He's like, what do you floor, boy? What do you floor, right? And like, they got none of it. And so even though we did OK, essentially wholesaling manufacturing products for the first couple of years, we learned early that channel conflict was a problem. If the industry hates you, even if you're the largest customer from these manufacturers, the other 99% of their business, they got to protect it. So that's when we got into private labeling and buying from China in the early 2000s. And it just, you know, all the decisions just kind of built on towards the next thing. Mike Frekey: 1999 must have been crazy. Nobody was really selling back then. I mean, CD now maybe, but. Kevin King: CD now, yeah, CD now. Speaker 1: Let's make some other timely references. Kevin King: Yeah, Alta Vista, I remember. Speaker 1: Yeah, I want to go ask Jeeves what year it was. Kevin King: There we go. Mike Frekey: And our music came from Napster. Speaker 1: There you go. Actually, October 98 was our first secure shopping cart sale. It's a beautiful thing. I was just so happy. And then in early 99 is when we just kind of had the first marketing, unbelievable dot com moment slash meltdown. Right. And it was amazing. And I just loved every second of it. And it was also completely destructive. It turned us inside out. Kevin King: You ever go back to like the Wayback Machine and like look at your old stuff? I mean, I've done that sometimes where I was like, look at some of my old early internet marketing days and you know, you go in the Wayback Machine, I think actually Amazon or something owns that now or something, or some of the big companies do, but you go back and it doesn't have every date. It used to have like every date. So you could like, but now you pick, you know, it's three days of a month or something like that. You can actually see what your website looked in like 19, Look like in 1998 and you look at some of that and you just cringe these days. Speaker 1: I love it. I think it's hilarious. So I, my very first website was for my store called midlakes.com back in 96. There's still screenshots of it. And honestly, if people go to that way back, it took us hours, if not days to figure out how to get a piece of like tile and the word tile just below it. No shopping cart. Kevin King: You had to put like extra space, a bunch of extra spaces, like figure out how many space bars you got to hit. Speaker 1: It was an outrage. Like this is HTML1 and it was terrible and we hated it slash loved it. Like we knew that's where marketing was headed. And that's, you know, that's an important thing. As much as we may be on the outside as misfits so often, it's like, I like to look at what's the next thing And then is it shiny object or is it a real deal, right? And that's hopefully something that entrepreneurs are doing on the regular. Kevin King: You know, what's weird is a lot of people that I know now in our space, like, I don't know if this applies necessarily to you, Steve, and maybe there's probably, oh, actually it does. There's something that, I don't know, maybe we'll talk about in a minute. Well, I'm talking like Manny Coats from Helium 10 that started Helium 10 in the Amazon space. He's telling me, yeah, back in the day, back in the late 90s, I had the website Twisted Humor. And I'm like, damn, that was your site? I used to steal jokes from that for my little daily email that I was sending out. That was you? And then Norm was telling me the story like, yeah, he was producing for celebrities and all these people, this technology. You remember the little dancing girls? You could actually pay for this service and it would put a celebrity or they could do little dancing girls and it would show up on the bottom of your screen and she would just like dance around on the bottom of your screen and go off the screen. That was a hot thing. That was freaking Norm. It's like, I'm like, it's crazy when you start talking about this stuff that the younger generation has no clue. You know, they don't know what a They don't know what a Razer phone is or they don't know what a Razer is. Speaker 1: Yeah. Of course, the Gen Z, I suppose, and maybe the younger millennials, they'll be talking about, do you know we used to have to flip our finger on the social media to make it move? Now you just use your mind, right? They have their own burdens to bear. Now you just think and it scrolls or whatever the deal is. Kevin King: But at one point you were bringing in, I know you're very modest about this, but like hundreds of containers a month of product, right? I mean, you guys were like Fortune 500, not Fortune 500, but Inc, whatever, 500, just rolling, like just rolling in logistics. Speaker 1: We've made some decent moves over the years. And even back in the early 2000s, when we would pioneer a market, I was so scared to order my first container of bamboo flooring. I was terrified. I could not stomach the idea of buying $40,000 worth of stuff and having to sell all of that stuff. This was a big nervous moment. And none of my friends, they were more scared than me. So nobody would split it with me. So I finally got one of my friends to let us put the container in his warehouse. When it arrived, and then we set out through marketing to sell, pre-sell as much as we could at a modest margin, just so that we got our feet under us. And we ended up selling that whole container before it arrived. So we're like, okay, let's do that again. So we went from terror of the first container within two years with the largest bamboo importer in the United States, far more than Home Depot or Lowe's or what have you. And over time, of course, they can overtake you when you have 3000 locations. It's going to give you the edge. But we pioneered a bunch of those markets. So it was common even for the last You know, 10, 15 years to clear, you know, 100, 200 containers a month, 150 probably being an average month, but 300 at times around Chinese New Year is again, not uncommon. So we had to get really good at logistics, designing products, merchandising, thinking about the marketing and the placement, and then the functional, like, how's it going to get from A to B? Kevin King: These 20 foot or 40 foot or the big ones or the little ones? Speaker 1: It was a mix. It depended on the weight of the product. So some of them were 40 foot high cubes because it was light stuff. Some of them were just 20 foot that we couldn't even fully fill because they were overweight. So it just depended on the product. Kevin King: And most of this was out of China, right? Most of it? Speaker 1: You know, I would say that we've had a fairly broad mix, but early on it was all out of China. Then it was a mix of China, Europe, some South America. Then it got super strong in China again. So a lot of the times that we will buy from, let's say Europe, we were buying cork products, right? Well, Portugal is the home of like all the best cork. So you buy from Portugal. Brazil has all the best lumber, you know, exotic lumbers and things like that. So you buy a lot of that stuff out of Brazil. But China became the manufacturing hub. And so we got heavily centric in China in the 2010 to 2015. And that's when we saw the geopolitical situation starting to get tense. And so we started to diversify out of China a bit at that point. Kevin King: When did you go to China for the first time? Speaker 1: When did I first go to China? It was probably around 2001 or 2002. And I even have pictures. I was skinnier and younger, as a surprise to no one. And I was kind of nervous to go, but I knew I had to go there. And it was a real eye-opening experience. I remember we were lost. The kind of buying agent translator we had, she had us lost out there. I'm like, just give me the map, right? I open this map. There's not a single word. Or number or anything that is in English. Like it's all just squiggly lines to me. And I'm like, all right, here's the map. Get us back out of here. Like I don't, I have nothing to contribute. Kevin King: Like in the countryside, like going to visit a factory or something? Speaker 1: We were out in the countryside visiting factories, but even back then, the signs were not very much in English. That, that evolved in the early, let's call it mid 2000s. So 2003, 2006, a lot of English on the signs. Kevin King: For the Olympics, right? Because the Olympics were there in 2008. Speaker 1: I suppose they were a big part of that. The Olympics definitely pushed a lot of kind of internationalization, but there was a broad opening of China from 2000 to 2012, let's say, that was very much more inclusive from an international perspective. Mike Frekey: I remember this guy, his name was Michael McMullen. He was over at CNN for international news and he went over to Coca-Cola and he opened the door to China for Coca-Cola. So, back in the day, you know, that was about the only thing that would bring you home is, oh, I can get a coke. I don't know if you remember that, Steve. Speaker 1: Oh, for sure. Well, for me, because by the time I started getting there, I was staying in Western hotels and beautiful hotels, you know, even at that time. If you got out to the countryside, even today, by the way, if you get out to the countryside, Let's just say rural. Unknown Speaker: Code word, super poor. Speaker 1: I saw a recent video on X that went viral where an American fella, seems like a nice enough guy, but he's like, oh, here's all the things people think about China and here's why you're wrong. He couldn't be more wrong, honestly. He has no idea what he's talking about. All the things that he's seeing are face projects and city environments. He has no idea what it's really like in China. I loved going to China. I still think that China is an amazing, extraordinary place, but it's a very different thing. At the end of a China trip, often connected Hong Kong, and that's where I could get a diet coke and oh, there's nothing better than getting that diet coke after a week or two or three of, you know, inside China, nothing but tea or baijiu, which is the rice wine, which I don't drink. But man, oh man, I love getting a diet coke in Hong Kong and I would take a picture and, you know, oh, it's so delicious. Of course, I know you guys are marketing misfits, so you only drink Coke Zero. Kevin King: Exactly. That's right. Coke zero. If they're like, here's a diet coke, I just give you, give me the one with the sugar. I just, I just rather have the sugar one. Ship it to Steve. Speaker 1: You couldn't be more wrong. Kevin King: I turned on Norm though. Steve, Steve, Norm was, was at my stay at my place during a war conference, the old war room guy, digital market deal back in, in December. And it's like, Norm, have you ever had one of these Mexican cokes? What's that? What's a Mexican coke? We don't get that. We don't have that in Canada. I was like, yeah, we're right here in Texas. You know, we got Mexican coke. It's like with real sugar, not with that fake sugar that they do in the US and most places. It comes in a nice bottle so it doesn't have that tinny, canny taste. And I was like, Norm, look, I got this little, I have one of those little machines that makes ice like Sonic, you know, those little pellet ices that you can chew on as you're drinking it. And so one night we're smoking cigar and he's having his Coke Zero and I'm like, I'll be right there. I'm gonna give me something to drink. I get out my big old glass, put some of that little Sonic type of ice in it, pour me a regular Mexican Coke inside. And Norm's like, hmm, that's interesting. Man, can you mind if I try one of those? I was like, nah, I'll try one. Every night after that, Norm's like, give me a Mexican coke. Speaker 1: That stuff is sold in Costco here. It's pretty good. Mike Frekey: Really? Kevin King: Yeah. Mike Frekey: Wow. No, I was kept, as soon as it got down to six or so, it's, Kev, can we get some more for tonight? Speaker 1: I know, six will only carry us through the first part of dinner each. Kevin King: Sometimes, I mean, when China sells, you're talking about that, you go and get your diet coke in Hong Kong, I remember the first time I went to Hong Kong was around, Oh man, about 2006, maybe 2005 and I go into a McDonald's and I want a soda and they're like, you know, I don't remember what they said, small, there's like two sizes, maybe a small and large. Give me a large. And it comes out, it's like, you know, six ounces or eight ounces. Speaker 1: It's like an espresso shot. Kevin King: I'm like, okay, give me four. It's like crazy. Speaker 1: It is quite different. I loved eating in all the fun local places. Hong Kong's got great food and China has all these different regions of great food. I really loved every minute of that. It was quite a special experience. But inside there, there was no getting my normal stuff. In fact, they would take coke and add it to their wine like 50-50 because they hated the taste of both. For some reason, that helped them get choking it down. I don't like either of those so I didn't have any part of that. Mike Frekey: I like to go back to those misconceptions. So I hear it all the time how China's economy is booming. Can you clear up a couple of these things because I heard you speak on this once or more than once but it was amazing. Speaker 1: I am amazing. I agree with that. I think that was your main point. I was reading between the lines. The reality is there is kind of a narrative that everybody's putting out there, right? And this has been going on for the past several years, which is like China's on the rise and America's on the decline. And Ray Dalio, who I like a lot of his philosophical thinking, but like he's just dead wrong on this. Although I have to say in the last recent time period, the most recent time period to now, He has even started to say China's on a trajectory that they can't get out of if they don't make drastic changes. So the fundamental facts are these, as I see it. Their entire economy, a large part of their economy, let me say it differently, was built on real estate. And that whole thing was a giant Enron scam, right? It's just a complete house of cards. And that is a giant problem because it's 30% of their GDP. It's how the local governments get the majority of their money, like 60% of their money. And housing has basically crashed because it was a big pyramid scheme. And it makes, you know, the Sam Bateman Freeds or the other, you know, Ponzi scheme types of people look like just little tiny preschoolers, right? This is trillions and trillions of dollars. And I talked about this at one of Kevin's events, BDSS, a couple of years ago. Evergreen was the first to fall, but even the state-run real estate stuff is falling. And so when you start poking apart and go, well, if that's a lie and completely garbage, and what else is a lie and complete garbage? A lot of the way they do their financials, right? And even public companies. And this is why their public companies over the last six months have lost like $8 trillion of value. So there's like we're talking about their stock market in Hong Kong and inside of China have gone back to the late 90s evaluation. So imagine your stocks that you started putting money in the late 90s and you watch it just skyrocket to the moon. It's now back to where you began. Like that is, you know, unprecedented. And China, they're a very large place and they have a captured market. So they have some advantages to kind of make this a slow, slow car wreck. But make no mistake, it is wrecking. And that will have consequences for not just China, which is important, but also the world that relies on China. So China's economies. Unstable, it's deflationary, and it's getting worse, not better. And every single move they make to correct it is making it worse because they're centralizing instead of decentralizing. They're saying the answer to this is more regulation or more central government instead of going, let's let these wild, crazy entrepreneurs do what they do best. You have to have guardrails about Things, especially in China, right? Because when they let the entrepreneurs do it, whatever, they added melamine to milk, right? Baby's milk. Baby formula literally had melamine in it that like led to catastrophic consequences or melamine in dog food, catastrophic consequences. So you have to have some guardrails around these entrepreneurs. But by and large, they're really smart. They're really aggressive. And if unleashed in a Let's say reasonable way. They could do extraordinary things, but they're getting more and more constrained. They're being, you know, tightened and tightened and tightened. And this leads to a very, I think, difficult situation for China. And that's, it's not going to get better. It's going to get worse. Kevin King: How have they been balancing this between communism and entrepreneurship? It's like a quasi-capitalism but it's not capitalism because you look at like Shenzhen, I just saw something, I think it was actually in my newsletter actually, where Shenzhen and Shanghai have some of the highest concentration of billionaires in the world in those cities and I think Beijing is in there as well. But how they how they balance and then how's that playing out? I've always wondered, you know, I see I've been there, I see it, you know, I haven't, but I'm from, you know, a lot more about, about this delicate balance of that. Everybody's always looking around, it's gonna get taken away from me, or something. How's that really work over there? Speaker 1: So, for some time, it was a celebration of that entrepreneur, right? Everybody knew Jack Ma and everybody started to learn of some of these success stories, but all of these guys are getting running on a rail, including Ma. It's now like every rich person over there is like, don't say nothing, don't act ostentatious, don't show off my wealth because it is, even though it's a face culture, you kind of That's the normal thing to consider. It's the opposite of good for them because they will get the clamp down. I think that, you know, for the first 15 years, let's say 2000, 2015, it was a pretty, you know, we're setting the dial to heavier on capitalism than communism. But believe me, she has dialed that back to let's just go full communist and see what happens. And that's not great for free trade. And by the way, right now, even as we speak, they are having meetings where they're trying to reassure the international community. That they're open for business and we want foreign direct investment to come back and let's make China great again and so forth. It's not going to happen. Foreign direct investment has fallen by like 80 or 90%, which is, again, that's new money coming into China, betting on China's future. That's bad news for China and it's not going to change until the administration there says, here's the guardrails, let's be fair about things, let's make sure you're not poisoning kids or animals, but also let's not stifle innovation and winners. And so that balance has not been reached in my opinion and so I think it's going to be more challenging for China as we go. Kevin King: Well, they got problems too with population. I mean, they got to decline and, you know, they had that one child policy to control it. Now, now let's say, please, please have kids. You can have three. Here's some money and nobody's wanting to do it. And that younger generation, what's it called? Lie down, the lie down movement, where they just don't want to work. So they've got, there's serious, serious, serious issues going over there. A lot of people like, well, they're going to be the, you know, it used to be the US and when we were younger, the US and the USSR, you know, I remember in grade school or something, having to do practice, you know, drills to hide under the desk in case there's a nuclear bomb and that, you know, or whatever. But then people are saying, no, it's not, it's going to be the US and China. But I don't know that China's They're acting like a superpower. They're acting like they want to be, but I don't know if they can be. Speaker 1: Well, here's the thing. So that lay flat generation you referred to, this is a bunch of young people going, you know what? We're not going to get ahead anyway. So what's the difference? Let's just do Uber Eats and make the minimum amount we can. We're not going to go off and get married and have kids. We're just going to play video games and deliver just to get by. And that sustenance mentality, by the way, By the way, whether that happens in China or anywhere else in the world, that's terrible. People being productive actually is good for a country. If you want to be patriotic, be productive. Right. And the population, which you also talked about, is absolutely catastrophic. And again, I mentioned this at the BDSS a couple of years ago, the implosion of young people. And as a prominent figure in this space talks about, they're not just running out of kids, they're running out of adults, like the adults who can have kids are aging so fast. It's the fastest growing population or fastest aging population in history. Although Japan and Germany and Italy are giving it a run for the money in terms of also on a huge depopulation push, they are absolutely doing it faster, better than any other country. China is smashing it when it comes to that. So much so that a lot of predictions are that China will be around half the size it is now in terms of population. You know, by 2050, 60, 70, something like that. So just imagine going from, let's round to a 1.2 billion people, which is probably overestimating China. They'll be at 600 million by 2060, let's say. That is catastrophic for productivity and growth. So, you know, make no mistake, growth requires more numbers. And you guys can write that down, all the marketing entrepreneurs out there. Growth means more numbers adding up higher. Yeah. Kevin King: Well, that's what the U.S. does. I mean, we might have similar issues because more people are getting married later, less people are having kids, but we supplement that with immigration, legal and not legal. I mean, that's what's propping us right now to a big extent. Speaker 1: Certainly rounding us up. So I can't remember the precise numbers, but the replacement population should be 2.1. So if a woman has 2.1 kids, then that is replacement level, not growth, but just steady state. In the US, I think it's 1.7. So that's below replacement value without the help of immigration. You know, I would prefer, you know, a ton of legal high quality immigration and not just, you know, letting the slot machine run wild. But I'm not the guy in charge. So we're on slot machine plan right now. But China's like 1.1. So it's, it's like, again, having the population over time. Mike Frekey: I have 2.1 kids. Unknown Speaker: You still have an arm. Kevin King: He still has an arm. He's got one, right? He puts him out with one arm. It's like in that movie, that popular show, The Addams Family. It's like the little hand. Mike Frekey: It's like a little mini me. He's 23 years old or 24 years old and I'm just about this high. Speaker 1: Well, Norm, you're tall enough, you can be, you're 1.1 people. Mike Frekey: Oh, there we go. Sometimes I find them in my beard. Unknown Speaker: I got to shake it out. Kevin King: I'm fat enough, I can be 1.75 people, right? Speaker 1: Oh, see, there you go. Unknown Speaker: We'll make it up. Kevin King: So from a marketing point of view in China, I mean, a lot of companies have put a lot of effort in marketing. I mean, Apple's put a lot of effort, now they're having to give way to Huawei or however you say that, Huawei, you know, Google pulled out, Amazon pulled out, Facebook's banned, YouTube's banned. I know that like luxury goods, like what's that big company out of France that owns, yeah, that's all those initials, the Louis Vuitton and you know, All the top liquor brands and all that stuff. That's like 60-70% of their sales or something. Their business was coming out of China. Some high number. And now that's turning around. Gucci's on the rocks right now for some of that. From a marketing point of view, a lot of people, you know, I used to remember when I could just, when I was young, people say, if I could just get a dollar from every person in China, I would be rich. That was me and the kids on the playground. Yeah, how can we get a dollar from every person in China? We'll be rich. Speaker 1: It's a classic marketing strategy. But first of all, luxury brands, when they do all their PR and so forth, they always go, you know, luxury is really kind of, it doesn't matter, recession or not, the rich, super rich, they always have money. But guess what? Luxury brands are getting spanked because China's like, you can't drive a Ferrari. You can't carry around a $4,000 purse. Otherwise, that makes you a target. By the way, for those keeping score at home, you can find Xi Jinping's daughter driving around Bentleys and having all the rich stuff on planet Earth. She posts to X. Like, I have no idea how this is a good idea, but the business people who do that sort of thing, whether they post to Chinese media or other media, they will get into big trouble now. And massive taxes or penalties or they call it common prosperity penalties will show up. So, you know, I would say for marketing, for many years, we were all told there's so many people in China, you got to figure out how to get into China. And now it's like everybody's exiting from China and not everybody, many, many companies are exiting with China, you know, Tesla and Apple. They have a lot of eggs in that basket. And so that's one that I'll be keeping a close eye on because I'm fascinated to see what they do because I think it's a weak spot. Kevin King: Well, what about this EV maker, this Chinese EV maker that's just, all the reports are saying they're crushing Tesla now. And they're starting to export and some of these EVs are saying at the beginning were kind of pieces of junk. But they've evolved in their technical knowledge like driving little iPads or something around inside. People are wanting them and people in Japan and Korea and other places in Europe and they're starting to export those heavily. And it's affecting, you know, even Musk has come out and said, hey, this is a problem. What do you think? Speaker 1: It is pretty spectacular. So there's a couple of things. One, I've been in a bunch of those. So BYD is the main company that a lot of people hear about that is doing more units than Tesla globally. There are others in the recent past. Xiaomi has just come out and basically copied a Porsche design, which is like, it's a direct copy. If you just copy this Porsche design, they've got a car that is under 30,000 US that looks just like it. And so this is legit competition, assuming the following things, which we can't assume 100%. One of them is safety of the battery. I don't know if you guys remember any hoverboards exploding, but I can show you hundreds of videos of these cars catching on fire, buses catching on fire. Although I talked to my friends in China and they're like, the only cars I've seen on fire are Tesla. And I'm like, that's because the news is only going to cover one side of the story over there. But I can send you literally hundreds of videos, including one from a Chinese EV maker. It's tragic, so I'll only laugh for about five minutes, but otherwise, I'd laugh for about the rest of my life. The guy is driving down the street, and it looks like there's an ejector seat, and the guy goes flying out of the car, right? It's a terrible tragedy, but hilarious. I'm not going to lie. The guy's apparently okay, but the car company, despite seeing the ragdoll fly out of the car through some malfunction, I can't say what it was, I don't know, but they said, no, no, that's just the airbag, right? And ultimately, what people surmise is the airbags deployed and basically just blew the guy right out of the windshield. And you just see him ragdoll right out, land on the pavement and kind of get up and scratch his head. It was terrible. My point for all of this, is assuming that quality is the same safety standards, for example, as Tesla. That's a fool's assumption. Assuming that the fire risk, like I would never park a Chinese EV in my house. I would just assume that the risk is too high. So, I want everybody to know that while I have no doubt that it will continue to get better, the strategy that China has used successfully for the past 20-30 years is, let's be the lowest cost producer, we'll drive everybody out, we'll subsidize and build our industrial base, and then when everybody else is gone, we'll just do whatever the heck we want, right? And if they can do it safely, they can win, assuming that protectionist policies don't take place. It's a legit threat. They're beautiful cars I've been in. And many of these cards across Asia, by the way, I've never been blown out of the car. I've never seen one catch on fire in person, but I've seen hundreds of examples of these things online. So it'll be a very interesting and challenging situation for Tesla and other EV makers or regular car makers for that matter, because the cost is really, really compelling. Mike Frekey: Did you remember the Russian Lada? Speaker 1: I do. Yes, of course. I've seen James Wan movies. Mike Frekey: Oh, yeah, there we go. But just those cheap crappy cars and they'd have these dealerships. I mean, it was very inexpensive. But, you know, will it work? Speaker 1: Hey, listen, I was a big proponent of the Yugo, right? When I was a kid, the Yugo came out from Yugoslavia, which no longer exists, by the way, and it was just the worst turd ever. But it was so cheap that you're like, man, if I was an 18-year-old kid, if I can get one of those, it's like, why not? And I'll be honest, assuming that the cars are safe, They are some beautifully designed, very, you know, now they're copying a lot of those designs. Let's not kid ourselves. But as they put all those things together, it is a really compelling value proposition. And that's a fundamental piece of marketing, right? Your price is not to be ignored. And I have to say that you know, Elon Musk has said it, others have said it, if there are not some sort of, you know, kind of tariffs or other protectionism added to the thing, it'll be very tough for European, American or Canadian industry to compete. Mike Frekey: You know, sorry, Kev, but the... From what I understand, I'm not sure how true this is, but the Chinese are manufacturing in Mexico. Trump said if these cars come over, they'll be paying 100% extra. I'm just wondering, you know, if we want to talk about marketing, will that boost the perceived value? Speaker 1: Gosh, that's an interesting question. You know, that's going to just be a war of propaganda, right? And so ultimately, it's going to be a marketing message coming from governments, right? And And they're subsidized partners, right? Like on, you know, what's good and what's bad. Like there are a ton of Chinese factories across Mexico saying, essentially, we'll set up a factory here and we'll do final assembly or maybe even some heavier assembly. It depends on the products. And then we'll ship them in the US because as long as we follow these certain rules, it applies to the USMCA, which is kind of the new version of NAFTA. The US and Canada and Mexico have this free trade agreement. It's quite compelling for those partners as long as all the inputs are, you know, let's just say fair. And so I do expect there to be some scrutiny depending on the administration. But even the Biden administration has a woman named Catherine Tai, who is the head of our kind of Negotiating team, you know, for international trade and she, by the way, as a little. How are you doing to China? Her family is from Taiwan, right? So you've got a Taiwanese negotiating on behalf of the United States. If that's not a political statement, I don't know what is. And she's been very diligent at trying to get the countries to honor these agreements. I certainly can't say I agree with everything a politician does, but she seems to be on the job. So there's no reason to believe that tariffs wouldn't get worse You know, under a Biden administration part two, or follow a similar strategy to Trump, they'll only say they're going to do the opposite of Trump until the election's over, then they'll do whatever they think is prudent, ideally. Kevin King: China's always been good at copying but not good at innovating. I don't know if that's a cultural thing or that they've stifled it or you look at India, India's never any good at athletics pretty much, you know. You think countries this big, they're going to have pockets of people that are good at stuff but China's never had that but you always tell every entrepreneur that's out there whether in marketing, whether If they're ever going to consider buying something in China, they need to read the book Poorly Made in China. What does that actually tell you? What's the 30-second synopsis of Poorly Made in China for people? Speaker 1: Yeah, so it's an important lesson, especially right now. So Paul Miller wrote a book, I don't know, 15 years ago, maybe 20 now, called Poorly Made in China, that essentially says, here's how China thinks about selling to foreign buyers, right? And it's always about, let's have a good, you know, face relationship. Let's talk We're going to say yes we can to everything you ask us and we can do it. Whether we can or not is irrelevant. That has nothing to do with our answer. Yes, we can. In Chinese, it's kaiyi, right? You say, hey, can you make this in a circle? They're like, kaiyi. And you say, how about a square? Kaiyi. How about a hexagon? Kaiyi. And then you come back to place your order. They're like, we only do ovals. Unknown Speaker: And you're like, wait a minute. Speaker 1: And they're like, do you want the oval or not, right? And they'll have a little more sweet talk around it. But the whole point is, You have to know your adversary. And Paul did an extraordinarily good job of articulating that book, Margin Optimization, which we all came to know as product fate. I think he actually invented that term and developed this concept that maybe your first order is pretty extraordinary, pretty awesome. And then it ticks down in quality because they will just kind of margin optimize things that they don't think you can notice. And if you're not vigilant, and I mean maniacal about checking every little thing, you're not trading with a full power that you're being traded against. Trading is for and against. That guy's against you and you're for you. You have to be a good, judicious, hardcore player. By the way, Paul Medler has another book called What's Wrong With China that came out a few years after that. That gives you a cultural and philosophical understanding. And I have to give him credit because he's the first guy who ever said China's lying about its population and kind of about its economy. It's not nearly as big as people think it is. It's not nearly as strong. And even at the first time I read his book on that, I'm like, I never heard that before. I don't even understand Like, I've been to China. There's a ton of people there, right? So, I mean, my math, I'm like, yeah, those four cities, that's got to be 1.4 billion, right? The traffic was terrible, but he was really, really instrumental in that. So I'm a big fan of Paul's and think that those two books combined give you enough of a leveling of a playing field to give you some insight into China. And maybe that perks your curiosity and you go further and decide, The present value of China, the future value of China, everybody can have a different equation on that. Kevin King: I just saw this story, there's some American executive that was working for a Fortune 500 company, it was based in China, owes like $7,000 or something on some I don't know what exactly he owes, $7,000. He's blocked from actually leaving the country. He's been blocked for years. It's like on his little permanent card. So I don't even know if he can take the subway or, you know, take the bus because they have this system. I remember you've said something like, yeah, I'm not so sure I actually right now, you know, if you're a high level executive or high profile, you might want to think twice about actually visiting China. Speaker 1: I definitely I'm not putting on my to-do list to go back to China anytime in the short term or Hong Kong for that matter because it's basically the same. Or Macau, also the same at this stage. And they've passed a bunch of laws that are so squishy, like an espionage law. Like I'm not a spy, but if you say something negative or speak in this way with candor, like I'm kind of, I love going to China. I love the food, I love the people, you know, but just like I don't like some American policies, I don't like some Chinese policies, right? I can be a critic of that. In my own mind, I can be, but not, Publicly, like China will not tolerate that. So if you've published anything negative, whether it's social media or formalized media, or, you know, been on a podcast like this and talk things that are not just flowery about China, I would give it a second thought because the espionage law could apply to you. And that could block all kinds of potential things. Whether or not it would impact you, I can't say, but I actually to both of you guys, I'm going to introduce you guys to a leading China attorney. That you guys can talk to for your future podcasts and he will give you so you don't have to just listen to crazy Steve. He'll give you countless pieces of let's call it evidence of you know, kind of the the chaos that is sometimes China and again, I still buy a lot of stuff out of China through some of the companies I've sold and I'm still kind of responsible for that supply chain, but it's a it's a I think it'll change between now and five years. It's a dynamic situation. So the opportunity is quite good price-wise, negotiation, currency, like you can get everything you want right now to China because they're desperate for orders. As long as the geopolitics hold up, that means it's a very good opportunity. But for resilience of a supply chain, I would do everything I could to build it outside of China if it's even remotely close to China right now. Mike Frekey: What do you think about the business environment in the States right now? I live up in Canada and all right, so a little bit more socialist, but you're going down to this a little bit. Speaker 1: They think he's a raging capitalist up in Canada. Mike Frekey: Just a tad, I'm saying. Speaker 1: Marx can't get enough of Canada. Mike Frekey: Hey, I got to watch it because they do monitor, right? Speaker 1: That's true, yeah. Actually, Norm could get in trouble for saying anything, hopefully. Kevin King: Didn't that happen to you during the pandemic, Norm? Weren't they reading? Yep. They were reading your text messages or something, right? Mike Frekey: So, yeah, what happened was, and my son says this was just a feature of Apple, but as I was sending messages, updating my friend, Paul Barron, about what was happening at the truckers, you know, the whole convoy, they were being deleted. So I have four and I said, you know, Paul, did you get these? He got the message, but they were deleted. And I'm not sure if that's an Apple thing, or I've never had that happen before, ever. Speaker 1: It's an Apple Canada thing. Well, it's a fair question. Honestly, Norm can have some problems in Canada for speaking freely, which I find absolutely candid. But the environment, I mean, there's actually there is there is some laws that there is a real law that has consequences for Canadians speaking freely. Yes. Kevin King: Really? I actually didn't know that. OK. Speaker 1: Now, by the way, there I think Ireland just rejected their law, but Scotland just passed a similar law. In the UK, people are in jail for speaking freely or posting memes on the internet. It's way worse from a free speech perspective than I've ever seen it. But from a pure business US perspective, there's a lot of business getting done. I do think that people are trying to tighten up. I think there's some economic pressures. So I would say, you know, looking for the highest ROI activities, especially marketing, is the logical answer to any time period, you know, whether it's recession, there are countries like the UK and, you know, Australia, probably technically in a recession, Germany is in a recession, like all these companies in recession, even if the US is not in a technical recession, Everybody's going to be tightening up and trying to get operations and everything organized. So I would say, you know, being diligent about knowing your numbers is not a trite, you know, thing to say. It's a legit, like, know every number on your P&L. Why are you spending the money? Is it a good ROI? Where would you put more money that would have a good ROI? I think that's good advice for any entrepreneur. Kevin King: I remember one person, someone told me once and it's a philosophy that I've lived by and maybe you can tell me if you agree or want to add something to it or disagree but all business comes down to two things, that's innovation and marketing. Those are the only two things that ultimately when you drill it all down, those two things is all that matters. Would you say that's true based on your life's experience of running business because it sounds like from the carpet stuff? That was, you're innovating with one of the first guys on the internet and you're marketing differently and pissing everybody else, upsetting the status quo. But it seems like that's, everybody that gets ahead, it's a combination of those two things that they're putting together and just pouring the gas on it. Speaker 1: It's interesting insight. You know, the best part of that statement is that innovation can be applied to all kinds of different things, right? Not just innovation and marketing. But innovation and how do you scale your team? How do you scale your supply chain? How are you dealing with your systems? All those things are innovation. Back in the day when we're sucking rugs, we didn't need to learn how to import 200 containers a month. Think of Facebook when it was just Mark and his buddies that he eventually kicked out and got sued by. But it's the Winklevoss's and Zuckerberg just kind of hanging out. They didn't have to have a giant HR thing, right? And they didn't have to have a big, you know, how do you manage office buildings? Like all those things are innovation. So as people grow and as companies grow in particular, you have to innovate across all functions of a business. But marketing is where that's what lights the rocket ship. And I have this kind of argument across organizations all the time. And they're like, ah, marketing and sales, you know, they take too much credit or whatever. But it's like the rocket ship never gets off the ground. If you don't have good marketing, like if you don't have a good offer, you're not innovating in that space. And in fairness to all my operations and fulfillment side of the equation, the service side, we don't stay in the air if we don't do those things right. So you have to do all of it. But your rocket ship never gets off the ground if you don't do marketing right. Kevin King: How is AI going to change this? You're big into AI and you're big into playing with it and looking at that. I think it was you that said, you know, AI is equivalent to the invention of fire, or something like that. Were you seeing it? How is AI going to revolutionize all of our businesses, all of our entrepreneurship? Is there going to be a billion-dollar one-person company? Is there going to be a How is it going to affect the marketing side of things? What are you seeing on AI and what changes people just aren't paying attention to that need to wake up or they're going to be like really screwed? Speaker 1: Gosh, it's such an important question. You know, when all this chat GBD talks first started in, let's call it late 2022, you know, I didn't know if this was like a, you know, cabbage patch doll mania, or, you know, what were those little bears that were stuffed in the 80s? What were those things called? Mike Frekey: Oh, what were they called? Speaker 1: Not the cabbages. Kevin King: Beanie Babies. Speaker 1: It had a real Beanie Baby vibe to it. I'm like, oh yeah, yeah, we're all going to get into this. Yeah, that sounds really good. But I tested it for a week and it was just like a lightning bolt. Humanity will never be the same because it's not about what it could do then or even now as we're speaking today. It's about what does it do in five years? And if you look at that trajectory, as I like to say, When I was a kid, computers came out and I'm like, this is a very important thing. PCs are a thing. We better pay attention and this seems to be a future. I was in seventh grade and I made that declaration and got really good at computers, right? And I was just a stupid kid, but I'm like, this seems like a thing in the future. And in the late nineties, I'm like the internet, this seems like a thing, right? And even though I'm just a stupid flooring guy, I'm gonna figure it out. And so we got good at that. And when AI came out, it's like, This is bigger than both of those, number one. It's bigger than electricity. I like steam engines. That's kind of fun, but electricity is better. I'm a fan, right? But this is way bigger. It is way bigger. Every part of every business and every human will change over time. I think it's Klarna, a big travel company. They turned their AI loose to be the message bot. In years past, not that many distant years past, you go to the message bot and it's like, oh, you have a question. Is it about customer service? Click here. Is it about making an order? Click here. Same with the IVRs on the phone. Press one for this. Instead of us just yelling, representative, representative. Now you can just talk to it in whatever language you want and it'll respond. Klarna was able to handle two and a half million Two and a half million responses in the course of a month by AI. And that was the equivalent of 700 full-time people. Mike Frekey: Sure. Speaker 1: Okay. So first, that was a huge added capacity. They didn't fire 700 people. They just added this capacity and their customers used it. Now the question is, how did the customers like it? Well, they had a better first resolution than any human and a better customer satisfaction than the humans. So, now you start to go, well, why would you have humans if they're worse at it, right? And less available and more problematic, right? So, there is going to be an evolution of things that we do, whether it's in marketing. And by the way, creation of content in AI is already pretty amazing. Like I would be using AI in every part of your marketing department first. That's the easiest one. And then AI will adapt into operations and finance and things like that over the course of time. So it's super exciting. It will change everything. I can't imagine a business in five years being on a leading position who's not fully embraced the AI first mentality. Kevin King: It amazes me how many people haven't played with it. I saw some numbers, something like 24% of the population has dabbled on OpenAI or Chet GPT, which is not a lot, but that just means they, oh yeah, okay, they looked at it. It's like my dad, I showed it to him, so he would be in that 24%. But people that are actually using it day in, day out, it's not a whole lot when you put it in the big picture of things. It's still a very minor, small minority of people. And I think a lot of people just don't get it. I mean, I was just at a, I had a conference a couple of weeks ago and there's a guy up on stage saying basically exactly what you're saying. He said, I got 162 employees in the Philippines doing my customer service for me. He jobs this out as a service. He's like, I'm about to go in there and I feel really bad about this, but I'm trying to do things, but I got this new software where I only need five of them. The rest of them I don't need. I'm trying to be a good guy and find other uses and keep them in the business, but it's going to turn upside down that service economy that's a heavy percentage of the Philippines and parts of India are based on that. It's going to turn some of that upside down. You said like electricity, you're a fan of electricity, but electricity is probably the big stumbling block when it comes to really mass adoption of AI, isn't it? Because the power it takes right now And the energy it takes between that and all the crypto stuff is going to be a bottledeck. Because especially like in the US where our infrastructure is pretty, pretty decrepit right now. Speaker 1: It'll be interesting. The truth is, I think a lot of these models, many of them will be open sourced and many of them will be runnable on an iPhone or your laptop. So you don't have to hit the GPUs that are super expensive. But by the way, I saw a number recently $50 billion has spent on GPUs at NVIDIA that have produced $3 billion of revenue. So this is a very front-loaded GPU. $50 billion spent on processing for AI for NVIDIA, and that's generated $3 billion in revenue. Now, remember, this is a front-loaded situation. You have to train the model, perfect the model, and then you milk the model till the cows come home. So disruption, yes. And changes like, you know, NVIDIA is basically like, hey, programmers in three or four or five years are not going to be necessary because you just like, today, you can just jot down on a piece of paper, here's what I want the website loaded up to chat GPT vision and go give me the code for this website. And a better graphical look right and it can do that. It's not perfect, but every area you get you just feed it back in and it gets better and better and better. So, it's across a wide range of categories but I'm not an alarmist I'm not one of those guys who has to solve every problem in the world it's like. You know, buggy whips used to be a thing. They're not now. So get with the program, right? We used to have guys in New York that were picking up poop all day from all the horses. That's not a thing anymore, right? Let's keep moving. I think actually talented people will get much more out of AI. And the more that people focus on getting good at AI, the more value they have to add. So this is an unprecedented opportunity for the next 10 plus years for people really to get good at AI and make that a core part of who they are and what they're able to offer. They will have nothing but upside in terms of their future career, business, whatever. No question. Mike Frekey: There's still going to be these people that want no part of it. I had a doctor, he retired two years ago, and he had no computer. Great doctor, no computer. And he had post-it notes all over his wall. There's hundreds of post-it notes. I don't know how he kept track of them. And I'm sure there's going to be people like that out there that are just going to refuse to use it. I don't know how they're going to get around it, but. Speaker 1: Yeah, listen, more power to them. Nobody's going to force them except the market, right? So if they can keep going and doing what they want to do without impacting, more power to them. But I talk to people all the time and they say, oh, I used it once and I asked it this question, it was wrong or it was dumb or it was, I'm like, Okay, cool. You just keep doing that. See you little buddy. You're not prepared for the future. I've put in stuff in the AI and had it give terrible results back. In many ways, it's actually gotten lazier in the last six months, not better. And some of this is them trying to manage the GPU usage. Like an open AI or whatever. So sometimes it's actually gotten worse, not better. But fundamentally, the winners will continue to innovate. Grok just went, you know, an open source. There's other open source models that are going to work. Those will be unrestricted. Brilliant innovators will be able to use those and apply, you know, language models to many different factors, lots of different hardware. So power is not going to be the issue. Accessibility is not going to be the issue as long as we make sure that Microsoft, Google, and Apple don't make this thing all their own. But man, oh man, it is an exciting time to be alive. Can you imagine? We're here at a moment of history similar to, like I say, it's like the invention of fire. Humanity never changed as much as the invention of the wheel or fire, in my opinion, and this is one of those pivot points, and it's super exciting. Mike Frekey: Yeah, it's scary though, because you have to figure out where you're going to go. My son's third year med school. And you know, where's that going to affect? Did I just put you through med school? Did I have to work for the last three years? And you're going to end up being a starving artist? Who knows? Unknown Speaker: Did you say med school? Mike Frekey: Yeah, med school. Speaker 1: Yeah. Well, listen, that has unlimited upside for the healthcare to make people better and have fewer mistakes made in medicine. But the doctors don't disappear. There's still going to be doctors. But it's the guys, honestly, If I'm in the arts, you see OpenAI Sora. Even Tyler Perry, who was putting up an $800 million studio complex, he's like, no, hold on. Sora is so extraordinary. We may be fools to put in this much money if we can just process our way through this thing. There are lots of things. I would say that fear is a choice. You can choose to be scared and choose to kind of wring your hands and I hope it all works out. Or you could just, you know, buckle up and ride into the storm and you'll be far better off just facing that and dealing with it. Kevin King: Yeah, I think it's all in the prompting too. It's like what you said, you know, some people tried it and then let's, you know, oh, that gave me a wrong answer. But from what my experience is, it's, there's a skill to actually prompting. And you can see this. And actually, I think there's like seven, someone, a really smart guy just told me, I don't have them in front of me, but there's seven core things that need to be in every single prompt. And if you don't have those seven core things, you're not going to get the best results. And so I think People learning how to prompt properly and actually write very specific stuff because I know the more detail I put in a prompt, the better the results I get and I had this challenge because I'm doing a company where we're summarizing podcasts and I was trying, there's about a hundred and some odd podcasts in the Amazon space where one of my other businesses is and we were trying to actually summarize. Nobody has time to listen to 120 podcasts a week or whatever they, how often they come out. So we're going to summarize them all and we were trying to find tools and there's some AI tools that will do it and then we tried to write our own, had three different guys like try it and And we could never get anywhere with it to where it would pull out, it would do a general summary and tell us, oh, this podcast, Kevin and Norm and Steve, they talked about selling in China and they talked about some AI and they said, just be careful. Don't be scared. You know, it'll give you that kind of stuff. But I'm like, no, what is a very specific thing? How many containers did Steve, you know, bring out of China as an example? Try to get it at that level where it brings out the real information, the real nuggets. It was almost impossible to tell. I found a piece of software where these guys have really mastered the code behind it and the prompting behind it. And I think that's where we're at in that transition point. And you're going to see that become highly specialized. Like you said, this open source with the LLMs, I think you're going to start seeing Right now, you know, ChatGBT and Gemini and Claude and all these, they're more general use, more like, you know, they're the Googles and Yahoo's or the go look for some general purpose. But I think you're going to see things spin off and there's a very specific LLM for a purpose. There's going to be a medical-based LLM that's nothing but medical stuff and there's going to be one that's nothing but law and one that's nothing but e-commerce and one that's nothing but marketing or whatever and they're going to be highly specialized. And that's where I think the major opportunity, the biggest opportunity is and where the biggest effect is going to be for us as business people and as marketers is when we get to that point, and you're starting to see some of that happen, but it's going to, I think, refine pretty quickly into something like that. Speaker 1: No doubt there will be continuous kind of segmentation. There's a bunch of factors in play there. The depth of prompting is helpful. Anybody who wants to learn prompting, it's like just go to Dolly and type in baby penguin and then watch the result. Dolly will make a better prompt for you and then show you that prompt and then show you the image, right? So it's thinking, all right, they want a baby penguin, but I'm going to go ahead and add in a little extra color to this thing based on what I think you want. But the one of the challenges we have, particularly with the the centralized models are they're putting filters in. That make it difficult sometimes to get what you want out, right? And Gemini's launch was hilariously terrible for that reason, right? They have all these filters that make it essentially try to deliver the content they think they should be delivering, right? And it just happens to be horrific levels of content in terms of, you know, accuracy and whatnot. It was very, let's just say, streamlined towards one ideology. So the whole point is like, if that wins in the market, more power to you, knock yourself out. But I bet you when somebody is looking for a picture of the founding fathers or give me a rendition of The Last Supper, They don't expect some of the characters who showed up in Gemini to be in those things, right? Because that's not the gist of what they were going for. And force feeding users to accept what the masters think we should have is not the right answer for me. Now, again, there's a whole market out there. People choose what they want. My guess is that fewer filters, more flexibility, more precision and specialization that Kevin talked about is the way forward. And there will be micro ways of doing that. I have my entrepreneur mentor filter that has, you know, I don't know, 900 plus uses according to chat GPT. It's not a common thing people search for, but You know, there's people finding it and they have conversations and it detects my content that I've uploaded and tries to give contextualized answers about what I might say based on past podcasts or writings or charts or whatever I've uploaded. And at first it was kind of weak. It wasn't really referencing things. And then it got kind of good and it was referencing things. Well, you know, you want to talk about this. Here's Steve's process about this or that. It would kind of even give like attribution of, hey, was in this podcast or was in this document. And then it got dumb again. It's like, no, you know, you've asked me this question a few times. Why don't you go find somebody else to ask? Right. What are you talking about? You lazy son of a gun. I'm paying you. Do your job. Right. So I think that those vacillations will smooth out. I think the accuracy will get better. The precision and Let's call it finite nature of a specialized GPT, whether it's using open AI or some other mechanism. Anthropics got much better with cloud. Cloud's not bad for writing and not bad for coding. There's some competition that's good for us, but make no mistake, whatever the experience has been with AI thus far, it is absolutely going to be in every application you use. It'll be part of every workflow, whether you see it or not. And I think the more you embrace the upside and minimize the downside, the better off you'll be. Tell you what, it's, you know, it is a fascinating time to be alive and people should really embrace that, you know, optimistic opportunity that we have to be here at this almost like a dawn of new civilization. Like I'm super excited about it. And I encourage everybody who's listening, like get focused and get excited because this is a good thing. Kevin King: If people want to find you, Steve, or follow you, or play with your entrepreneur GPT or whatever, what's the best way to do that? Speaker 1: Yeah, I think I've got some links on stephensimonson.com, that's with a V, and I think that's got a link to my, it's an entrepreneur mentor. By the way, it's a free thing. I don't charge for it, but you do have to have a premium subscription to OpenAI's chat GPT to make it work. And there are other things you can find me sometimes on the Austin First Podcast and parsimony.com is where I spend most of my time right now. So I always love entrepreneurs. So anything I can do to help without it costing me time or money, then I'm down. Kevin King: Awesome. Thanks, Steve. Appreciate it, man. We'll see you soon, I'm sure, somewhere. Speaker 1: No doubt. Mike Frekey: Thank you, sir. Speaker 1: Norm, if you ever get out of Canada, it'll be nice to see you. Mike Frekey: Oh, yeah. It's getting past the border, right? Speaker 1: Yeah. All right, fellas. Kevin King: All right. Mike Frekey: Okay, Steve. See you later. Speaker 1: Bye, everybody. Mike Frekey: Yeah. Kevin King: Thanks. Mike Frekey: Bye.