The Best Marketing Masterclass You'll Hear in 2025⏐Holdco Bros Discuss! Ep. #122

You're literally stupid if you don't take me up on this. There's no risk.

If you're going into something and you have no experience, it's a cheat code.

If you want to learn how to sell or to market things, you don't buy any courses from the gurus and the marketers, but reverse engineer how they're doing it.

If it's working, it's working for a reason. Don't be afraid or ashamed to copy.

Frank Kern is the OG Internet marketer. He thinks, what if I start selling pet training manuals on the Internet? That's where he made his first millions through $300,047 a piece. 14 mil, give or take. Okay, let's start off with a question. I've got a fill in the blank question for you, Nick.

All right.

I'm pretty sure I know how you're going to answer this, but we'll see. Okay? Grant Cardone and Tony Robbins are world class at fill in the blank sales. Okay.

Marketing.

Absolutely. Yeah, you win. You got it. Because, like, one's a motivational speaker, one's a guru, but, like, the overlap is marketing. Right. Would you believe they both learned their marketing prowess from the same person that most people have never heard of?

Really?

Yes, really. His name is Frank Kern. Have you ever heard that name? No. No. You're in the business world. I'm in the business world. Most people have never heard of Frank Kern. But if you're Alex Bromozi, you love Frank Kern. He talks about him every now and then. He loves Frank Kern. Frank Kern is the Tai Lopez. Before Tai Lopez. He was the OG Internet marketer. The OG Guru. The original guru.

Oh, you're not saying he was an Internet marketer. You're saying he's the original guru.

He invented Internet marketing gurus. Frank Kern, he is the godfather of it.

He's the ogg. Original gangster guru.

Yes. Can I tell you how we got to start?

Yes. I'm freaking sitting on pins and needles.

All right. He grew up in a trailer, obviously. It's funny, he grew up in, like, a 4,000 square foot house in Santa Clarita or something, but.

But it was on Trailer Street. I grew up in a trailer.

Okay. Anyway, grew up in a trailer, went to college at Syracuse, dropped out early, started selling things door to door.

Give me a year. Sorry, like, when is this. Is this.

Give me a year. Born in 73.

He's born in 1973.

Born in 1973. Started selling door to door in, like, the late 80s, early 90s well, he's.

Younger than Grant Cardone and Tony Robbins.

Yes, he is.

So how did they learn from him?

He trained them.

Oh, he trained them specifically on Internet marketing.

Yeah, yeah.

Oh, got it, got it, got it. Okay, okay, I'm up to speed. I'm a bit of a stupid idiot now. I understand. Okay. So because Grant Cardone was already doing things in life, Tony Robbins was already. I mean, he's been a world famous motivational speaker for a long time. They were doing their thing. This guy Frank Kern, either came to them or taught them, like, hey, this is the ultimate distribution channel, the Internet, selling to the masses one to many.

Yes, yes. So let me back up. So he starts selling credit card processing door to door, which is a very, very hard sale. And then he says, huh, what if I sell credit card terminals on this new thing called the Internet? So he starts selling credit card terminals on the Internet for 300 bucks. See some success there, Some success, but not a lot. I don't know how his mind goes there, but he thinks, what if I start selling pet training manuals on the Internet via audiobooks? Okay. That's what he did. That's where he made his first millions. I want you to guess how many pet training manuals this guy sold over the course of seven years.

Seven years. Number of PET training manuals. A hundred thousand.

300,000 for $47 a piece.

Geez Louise. What does that come out to? $12 million?

14. 14 miles, give or take. Wow. Basically 100% margin. It's an audio book. Okay.

Yeah. It was literally a digital course. It was literally a digital product.

Digital course, Yep. And what happens when you start selling digital products? You become Tai Lopez Jr. Okay. Tai Lopez was Tai Lopez. He was addicted.

Yeah.

So he starts, like, he just invents all these terms that Alex Horosi talks about on a daily basis. Alex Hormozi is white labeled for Frank Kern. That's not a joke.

Like the term white label, probably.

Alex Formosi took everything Frank Kern did and, like, packaged it in, like, a social media way that Frank Kern never really excelled at. He's got a YouTube channel, he's got Instagram, but he's not very big on any of them. That's why most people haven't heard of him. Alex Hormosi put it in his books. $100 million offers, $100 million leads, and. And it's all he talks about in his content. And it's basically all built on Frank Kern.

I love this because there's like, seven frameworks. I'M already thinking of. Keep going.

Okay. All right, so Frank Kern, he has an eight step process for selling anything. Okay, here's a framework. Before you get to your frameworks, here's mine. If you want to learn how to sell or to market things, you don't buy any courses from the gurus and the marketers. Actually, I take that back. You do buy the courses from the gurus and the marketers, but not to read what's in the courses, but to reverse engineer how they're doing it. Okay. How they sold you, how they sold you, what their funnels are like, how often are they emailing you, are they texting you, are they calling you? Is there a vsl, a video sales letter? Is it, Is it a one landing page that's a mile long on a clickfunnels form? Like, there is so much more to learn from the funnels that these guys employ than from the actual content that they're selling. But a lot of times you have to buy the content. Content, learn the funnels. Right?

Yeah. Yep. Because they wouldn't be using it if it wasn't working.

Exactly. Okay, so this is the eight step process for selling anything in the world as invented by Frank Kern. And I only found this, Nick, on the Warrior forum message boards.

You went deep.

I went deep. Sixteen years old, I found this.

Oh, my gosh. All right, so am I going to be like a 70 year old woman that you're about to sell to?

Exactly. Okay, here's how to sell anything in eight steps. Okay, Number one, here's what you get. Okay? You list out all the products and features, okay? You overwhelm them with value. Number two, establish the value. All right, this product is worth $3,000, but you're getting it for 30. This product is worth. So list everything else.

All these components combined are $17,000, but we're giving it to you today for the low price of 16.99.

Exactly. And we've seen this stuff, but we don't really know the framework around it or why it's a framework. Number three, number three, bonus. And you know what? I shouldn't be doing this, but go ahead and buy this. Now I'm gonna add. So now they're like, oh my gosh, this is so much value.

Oh, is it coming out of your paycheck? I'm so sorry.

Only for the cost of a cup of coffee per day. I'm gonna get all this. Okay? The bonus is number three. Number four, price. Then you drop the price. Okay? You hit them at the Price, but you're only halfway through the steps.

You anchor them with a high price, and then by number four, you're already dropping the price.

Yeah, because when, when you hit the value, it's like, oh my Gosh, this is $25,000 worth of value. Like, he's probably going to give me a discount and sell it to me for 20,000. Right? Like, I guess that would be. That's a good deal for me. 20,000. Oh, geez. Okay. And then you hit him with the price and you're like, it's only 4, 9, 9, 7, $5,000. That's it. Not 20, not 25, only 5,000. Automatically they're like, oh, geez, that's a, That's a big value. But you're not done. You're only halfway through the steps here. Number five, you got to trivialize the price. This is a Frank Kern quote, an fkq. Okay? Trivialize it. Which is like, listen, really, if you, if you divide that out and amortize it over 30 years like a mortgage, that's. That's only like the cost of a cup of coffee per day, right? That's nothing. Really? $5,000 is nothing? Because how much is tuition at a top tier University? Right? 5,000 a semester. Bare bones, right? Then you add the guarantee, and you know what? I shouldn't be doing this, but full money back, guarantee. You're literally stupid if you don't take me up on this. There's no risk. There's no risk. And I'm glad I just said risk, because that's number seven. Risk reversal. Honestly, think of a used car salesman. Honestly, if. If I sell you this Camry for 9800, I'm. I'm kind of worried about my job. Honestly, my manager is not going to be happy about this because he told me out the door, never sell this camry for under $12,000 and going to get for 9,800. So really, I don't even. I'm kind of changing my mind. Honestly, this is a big risk for me. Right? You turn it around.

I'm feeling like I want to buy now. Wait, wait, wait. What are we talking about?

I don't want you to get fired.

I don't want you to.

I want to get a good deal for myself. This is such a good deal. Risk reversal. That's number seven. That's at the end. Okay, Almost at the end. Number eight. This is the most important. Scarcity. You have to have scarcity. And I went to Perplexity and I dug deep on every Time that Frank Kern has put an offer out there with scarcity. And I saw a current modern day example of it. Okay, so 13 years ago, in the same warrior forum, which is a message board for degenerate Internet marketers, okay, 13 years ago, there was this viral message board post of this angry guy saying Frank Kern just released his new course. But what the heck, the order page was only open for 15 minutes and then he closed it. Did he actually sell out or is this yada, yada, yada? And then like, everyone was arguing, saying, like, it doesn't matter, it's genius. We're all arguing about it and talking about it because his order page was only open for 15 minutes. He only let people buy it for 15 minutes. He might have sold four, he might have sold 4,000, we don't know. But he was doing that 13 years ago and he's doing that today. And I'll give you an example in a minute. So you think there's something to it, right? Scarcity. You got to have scarcity. Why would you not have scarcity when selling anything? Nick? Give me a good reason, I'll listen.

I mean, it's fomo.

Fomo. Scarcity. Yeah, we don't do it.

You have to instill some sense of urgency. Why now? Right, because we may think it's the best offer, we may see all the benefits, we may know it may actually help us, but if we don't have a motivation to do it now, we'll put it off or we'll forget about it or, you know, something will happen in the intervening time period. So you have to build in a mentality of urgency. And scarcity does that?

Yeah. I mean, look at like conferences, conferences. Sell half of their tickets the day leading up to their event, but they start selling tickets a year in advance, six months in advance. There's no scarcity, there's no sense of urgency.

I had his name, Spencer, on my podcast and he has. He does music festivals, lantern festivals.

What's your podcast called?

Nickonomics. The podcast exploring businesses. Anyways, so on my podcast, only allow.

10 downloads per episode, right?

So, yeah, honestly, that actually might be a really cool. That's a really cool idea. We should think about just like a way to start something in a podcast or social media. It's like Snapchat is scarcity, right? Like I can only see it once and it disappears.

That's just a whole framework. Apply scarcity to anything. I forget service. Right?

I don't want to Rabbit.

I want to be a scarcity consultant. Nick.

And you. I only take two clients.

Yeah. I've got, I sell a SaaS product. What's SaaS? A scarcity as a service killer multiples.

Anyways, he was, he was saying they had, I think, 200,000 people that attended their events last year, and then 50% of their tickets, they, they sell in the last week. And they do it on purpose so you can, you can buy for a year, but they wait till the last week because they know that if somebody goes to buy, they're going to be okay paying a higher price because they're like, yeah, I could have bought this ticket a year ago, but I didn't know a year ago. So of course it's triple the price now. Yeah. Makes sense. Like in your mind, you're already justifying it and, and like, it's part of their strategy. So, yeah, you have to have scarcity in any model that you're offering.

Yeah, but we don't do it. Like, we all know this, but we break our own rules all the time.

Here's a couple of, I guess, tactics that I saw in those anchoring. So, like, he anchors you in a couple of, like, the price. Oh, that's a lot of money. Then he brings you down. Right. Or he anchors you.

Explain from a negotiations perspective what anchoring is.

Oh, thank you. It's a great question, Chris. So if I'm negotiating with you, Chris, so scripted, and I want to buy. I want to buy your house, and you think your house is worth a million dollars, and I think your house is worth probably a million dollars. I know that there's going to be some back and forth. If I offer you a million, you're going to say, oh, that's the floor. I bet I could get more. And you're going to come back and we're going to go back and forth, and we'll probably settle at like 1.2 million or something like that. Even though we both went into the negotiation thinking the house is worth $1 million. So what I'll do is I'll anchor you. I'll come in with a very low ball offer. I'll say $500,000. And what that does is it reframes in your mind not only the value of your house, but my perspective as a buyer. All of a sudden, it goes from, oh, this guy has a lot more money to he's only offering $500,000. I guess if I move him up to $900,000, I, I just almost doubled his offer. Right. Or even if you get a million, it's like, oh, well, I started at 500, but I got up to a million. So there's a psychological effect on the part of the buyer who's like, oh, I got a win here. It just starts the negotiations at a much better place because you know there's going to be this back and forth haggling, and that's what he does. He anchors you with this. The value of this is $25,000, names all the benefits, goes through it, blah, blah, and you're thinking in your head, oh, man, I can't afford this. And then hits you with a, actually, I could offer it to you for 500 bucks. And then he reinforces it over and I probably lose my job. Oh, I don't know, you know, like the reverse risk. Tons of emotional manipulation. Tons of emotional manipulation. I'm probably going to lose my job for this, but oof. I think I can, I think I can do that. I think I can get this figured out. The guarantee, man, you're creating a no risk scenario for people. And the reason the no risk scenario is so important is not because you're worried about giving the rebate or the refund, but you know that most people are not going to get the refund. Do you know there are billions of dollars worth of gift cards that have gone unclaimed? And it's because people have those gift cards and they just don't spend it. They just keep it there. Like that's real money on a card.

Yeah, we're human.

That's not even a refund. That's just, oh, I had the money there and I didn't do anything with it. So the guarantee makes you psychologically feel like, oh, there's no risk to this. But you also know that a certain percentage of those people are never going to even call to get the.

Yeah, yeah. And like I talked about this about LCD Cycle on a podcast. Earlier this week, we started the lifetime return policy. We were the first company in the industry to do it. And I just assumed, all right, 3 to 5% of people are going to do that, so let's just raise our prices by 3 to 5%. And that's a guess. I could be way wrong. And we could, you know, have to reverse that decision, but it was more like 2%. So we netted out ahead. And now everyone in that industry does.

It well, and it's really smart from a selling perspective because what you're trying to do in any environment is build trust. Like you need them to trust you in order for the sale to close and by offering the guarantee, even if they never use the guarantee, it's like, oh, they're willing to give a guarantee. Oh, I trust them and their product. Right. And many people use that for evil. I think people who have good intentions use that a lot of times. But here are the frameworks that I thought. Sorry, go ahead.

I was gonna say it's like we've talked about, like, to sell anything, you need to get someone from, like, they don't know who you are. They don't trust you to. They're your good friend. Because we buy from our friends and family. Right. So getting them to trust us a little more just moves them further down that spectrum.

Totally. All right, so here's some of the frameworks that I saw as you're talking. The first one is Alex didn't reinvent anything. He just copied. He took exactly what's been done and he copied it. And a lot of times we think, oh, well, I've got to add my spin on this. I've got to do something new. Like, just go copy what's already working.

Like, naturally, though, when we copy something, we're going to add it to our personal experience of, let's say, turning around gyms. Right. And it will become our own naturally. But we don't have to, like, be deliberate and purposeful. Like, all right, I can't just copy this. I got to make this. No, like, copy it and then see where that takes you. And then it naturally will become your own.

Before I move on, I just think there's. I've fallen into this trap where I want to do something. Social media, for example. Oh, I want to post this video. Okay, Nick, we'll do this thing and that's what's going to work. No, everybody does that. I want to do my own thing. And then you learn. You're like, well, there's a reason why everybody does follow me for more, because a lot higher percentage of people actually follow you if they read your posts. Right. If it's working, it's working for a reason. Don't be afraid or ashamed to copy. I think this. The second thing that I found interested in just. Just hearing about that is. And I was you. And I talked to James Camp this week. My episode's not going to come out for a little while, but one of the things he said was people crap on course creators or information sellers. He's like, but anybody who's built a business, anybody who's, like, actually gone through the process and scaled and sold, understands how operationally intensive it is to build something of value. And so when you see money coming in from selling knowledge, from selling a course or access or coaching and you're like, wow, I can do this and make this living without having to do all of the operational headache. It's very understandable why they sell info products. And I think anybody who hasn't done it just does not have an appreciation for the decision making process. And yeah, oh, they're a guru. Oh, they're just selling people on the dream like. But until you've actually built something and you understand how hard that is, you also don't understand the appeal of this is cool. I get to help people at scale. I get to sell an idea and information. This is much easier than scaling up a business.

Well, dude, like, to support your point, I forgot to tell you in Frank Kern's story, before he sold $14 million worth of pet training manuals, he bought a course for $150 from someone and that taken skills to sell those. So that like A, set the precedent for him selling a course because he knew it was a thing B helped him make $14 million.

I just posted about this. There's a lot of crapping on course sellers and I think for good reason. There are some weird stuff that people do. Like I heard some of them have, have hardline sales tactics where they'll have you finance the course or they're like, it's only $10,000 and you can finance it. And it's like, yeah, people who can't afford it. I don't know how I feel about financing, but whatever, put that to the side. But I posted, if you're going to buy a business, you need to either buy a course, attend a boot camp or hire a coach.

All right, if you are watching this clip right now, you are watching this on YouTube and if you are a fan of podcasts, please check out my podcast while you're at it. Because sometimes I have podcasts that aren't on YouTube and sometimes I have YouTubes that aren't on podcast podcast. So check out the Kerner office on any podcast platform or you can go to tkopod.com also my newsletter will throw that in there. There are no ads, it's weekly. It's different content than my podcast and YouTube newsletter.chrisjkerner.com you'll see the link and we'll see you there.

And then I got some people who are like, well actually, why didn't why you should actually have a CPA and a lawyer. And it's like, yeah, Those are table stakes. No, duh. Like, of course, I have to have a CPA due to my quality of earnings. Of course I have to have a lawyer write up the purchase agreement. Of course, I need to have potentially a broker that I pay help me understand what's going on in the smart. Like, of course, I'm not saying that. But if you're going into something and you have no experience, it's a cheat code. I'm going to pay someone to teach me quickly and I can jump the line and I don't have to go through the iterative process. I think there's a real place in the market for people who sell info products.

It's funny, we talked about Alex Hormozy just copying Frank Kern, because Frank Kern, he just copied this guy named Gary Halbert. You remember the National Enquirer?

Yeah, yeah, yeah.

Like the crazy sensationalist headlines. That was all Gary Halbert. And Gary Halbert had this framework that he called the desperate nerd theory, which was basically like, even this freaking idiot over here lost £80. Right. You could too. Like, he invented this direct response style marketing. Frank Kern learned from him, put his own spin on it. Alex Hormozi learned from him, so on and so forth. And before Gary Halbert, there was a dude named Claude Hopkins who had this marketing method that he called scientific ad advertising that basically appeared to or appealed to first principles that Elon Musk always talks about to get people to buy more of your stuff. So, like, there's always been marketers. Nothing's original, right?

Yeah. Okay, so two more frameworks. One framework was. Or not framework, but just observation. He went from selling payment processors to selling. What was it, pet training videos or. Pet training.

No, credit card terminals.

Okay. Credit card terminals to pet courses. Essentially. If you look at that on its face and you're like, the freak was that. But there's two things in there. Number one, when you start the process.

Yep.

You. You sometimes you don't know where you're going to finish. And so you need to be flexible. I'd be really fascinated to hear how he went from credit card terminals to pets, because I'm sure maybe he went door to door and it was like, no. Everybody kept talking about their pets. And I had this idea like, there's something in there that he saw and he was flexible and he moved on it. The piece of it is. The only reason he was able to take advantage of that is because he had obviously amazing sales skills. He had this skill set. He was trying to apply it to this credit card terminal process or whatever wasn't working. Then he sees the pets and he's like, cool, I can apply my skill set here. So it's like he had no pride about it. He just saw what was working and he moved to where it was working. So I think those two observations are really interesting. Sometimes you don't know what the idea is going to be until you actually get in the weeds and start working on it. And then two, you really need to be opportunistic about where your particular skill set works and then go on. And once you see something working, yeah, like, I bet.

I bet you anything he started going door to door. He's probably desperate broke. He sees some success, he learns how to sell, and he's like, okay, there's something to this sales thing. And you know what? There's something to this credit card industry thing. But going door to door sucks. Well, I heard about this Internet thing. So what if we sell credit card processors or like the actual hardware on the Internet? So then he starts doing that. Oh, wow. Internet money is pretty cool. But, like, shipping stuff really sucks. This is not fun. How can I keep making Internet money without having to ship stuff? Hmm. What about like an audiobook that people just download it? Like, you, in retrospect, you can see the dots that he connected. But in the moment, he was just freaking trying stuff. He was testing everything. Except drugs. Maybe drugs too. I don't know.

There's a million examples of this too, right? Amazon started selling books on the Internet, and then all of a sudden, they started selling a bunch of products on the Internet. And then they started grow, and they're like, oh, crap, we have demand. Let's start selling these product skus. So they start adding more product skus. Then they have so much demand, their servers are out of whack. So they got to find more and more server space in order to meet the demand of people going online and buying their products. Then they get to the point where they're like, the server space is a cost center. It's so expensive for us. How could we solve this problem? Oh, I don't. Maybe let's buy some servers ourselves. Let's stand up our own server center. So then they stand up what has become aws, Amazon Web Services, and they start building it out and they realize, hmm, we have all this excess capacity because we bought all these servers. We're doing it for growth. All these other companies have a need too. Let's start selling our excess server space. And now the most profitable unit of their business is Amazon Web Services. If you look at any profitability from Amazon, it is not from their core business, which is selling things online. It is mainly from Amazon Web Services. And it all came from this. Like you start as a bookstore online to Amazon Web Services. Doesn't make sense. But you look at the dots that connect it. And Jeff Bezos was obviously maneuverable enough to say and seize the opportunities when you saw them.

Exactly. Dude, the whole reason I found out, or I dug deep on Frank Kern is because we were supposed to bring an AI idea to this episode, right? And so I start looking. We've talked about High Level a few times. They have these award ceremonies every year called the saaspreneur Awards. And they have the silver, Gold, and platinum award. Silver award means you have over a hundred SaaS customers on their platform. Gold is 500, platinum is a thousand. So if anyone listening this, Google's saaspreneur award go high level. You'll see this list.

They're awarding these two affiliate marketers customers.

That are white labeling High level to build businesses.

Yeah, okay, got it.

And so if I'm like, looking for ideas, I'll go to this website and look at who won all the awards for 2024. And. And I know I can reverse engineer what their MRR is because I know how many customers they have and I can see on their website what they're charging. Okay, So I was doing this, and one of the gold awards, it's. It's amazing. One of the gold award winners was. It was called Rainmaker AI. So I go to this website and I had no idea what it was or who was behind Rainmaker AI or what it even did. So I go to this website, and it's rainmakerai.com and it says rainmaker. This is the whole website. There's nothing you can click on. Rainmaker AI has done the unthinkable.

What? Tell me more, dear friend.

And look, that's copywriting, right? Copywriting is get person. Get the person to the next sentence. Do whatever you can. Just get them to the next sentence. Okay, so Rainmaker AI has done the unthinkable. I have to keep reading because what did they do? Right?

I can't even think of it.

Yeah, so it says we have stopped accepting new customers. Okay, why would I keep reading? I want to know why. Okay. All right. The reason why is we already have a lot of existing customers who pay us every month. Oh, geez. Why do you have so many customers? That sounds nice. How can I have A lot of.

To quote Greece. Tell me more. Tell me more.

They. Okay. They are awesome and we really like them a lot. Also notice this is very much Donald Trump language. And people have studied this. He speaks at like a third or a fourth grade reading level. And that's.

What's the website? Rainmakerai.com rainmakerai.com Let me reread this for you.

Okay?

Dear friend, we've stopped accepting new customers. The reason why is we already have a lot of customers. The most. The best customers who pay us every month. They're awesome. We like them a lot. They're the best. They just called me yesterday, they said, hey, listen here, AI Rainmaker, you're the best customer we've ever had. And I said, that's true. A lot of people. I'm getting a lot of people who are coming to me. They're sending me their worst customers. I don't want those customers. I want the best.

All right, sorry.

Keep going.

He's a marketer, dude. He's the freaking best.

He is. So I love him or hate him. That guy is a savant when it comes to marketer.

Yeah. And people. Anyway, so he's using a third grade reading level. They are awesome, and we really like them a lot. Like, my 8 year old would write that sentence.

Okay, so true.

So it's like on the base level. Wow, this guy's an idiot. He doesn't know how to write on the. You know, go a little deeper. This guy's a genius because he's writing like an idiot. Okay.

Yep, yep.

So next line. So we're putting 100% of our focus on creating the best experience possible for them. When we're ready to take on customers, you'll know. Thanks for stopping by. So I'm like, what is going on here? Who doesn't? And my first thought was, all right, so they went out of business. Got it. Okay. And then I keep diving in Rainmaker, and it's like, oh, this is Frank Kern's company. This is like his. His go high level, white labeled CRM business dashboard that he's selling to people that buy his course only. So he doesn't need a landing page because he's pushing this to people on his email list through a different URL. It's scarcity. It's more scarcity.

And when they get it and they click on it, they're like, oh, what is this? Click. We're not accepting new customers. Oh, wow. Frank's letting me now.

I want it. Oh, yeah.

This software is only being Accepted by people he invites. And he invited me. Oh, my gosh. All right, I guess I'll do it.

I guess I'll give him a lot more of my grandma's life savings.

That's incredible. How much money is that one doing? You reverse engineered it. How much money are they doing?

I don't know what he's charging for it because I'm not in his community, but he has five hundred to a thousand customers and a lot of people are selling this same thing, right? And they usually cost between 200 and 400amonth.

So to the end user or to. Or to go high level.

No, they pay go high level. Tiny fraction of that to the end user.

Okay, so let's just say 400 for math sake. So 400 times, how many users in this community?

Let's say 500. So is that 200,000amonth? 20,000amonth.

And it's white labeled 200.

200,000.

It's $200,000 a month.

His go high level bill is maybe a couple thousand dollars. Like with all those sub accounts.

Jeez Louise. Dude. It's all customer acquisition. Yeah, dude, we've talked about this before. When a venture company goes and raises money and they raise at a. Oh, it's a $50 billion valuation, and they raised $100 million. Do you know where 50 cents of every dollar goes? It goes to Facebook and it goes to Google to acquire customers. That's not an opinion, that is a fact. Because the majority of those dollars are spent getting their name out there and acquiring customers. So if you can understand sales and marketing and you build a distribution through social media or this, you know, Frank has figured out how to leverage the Internet. The most expensive part of your business, which is the customer acquisition cost, all of a sudden becomes the biggest profit center of your business because you figured out a way to do it better than 99% of people. And that's. That's why Alex Harmonize is successful. This Frank Kern is successful. That's why these course creators are successful, like marketing and sales. I used to crap on and not think that it was important. It's as important, if not more important, than any other aspect of the business. I don't care how cool your product is or how good your operations are. If you don't know how to market and sell, you're done. You have no business.

Where do you think the other 50% is going? Okay, I'll tell you. Overhead and salaries, salaries to coders and developers, which AI can basically do now and is growing by Leaps and bounds every day. Therefore, the marketers are about to have their heyday again. So marketing is more important than ever. Attention is more important than ever because AI is taking all those binary tasks like code and, and democratizing it.

So on that note, I haven't, I, I've been thinking a lot about AI since our last conversation because our last episode was just all AI ideas, which was fun, it was awesome. And it just got me thinking, like we have a lot of these types of ideas. Let's keep talking about them. I, I have, I have a framework that I've been thinking about. I want to talk it through with you and see what you think. I think there's two possible investment strategies when it comes to artificial intelligence. I think the first strategy is a cigarette butt strategy. Have you heard of this?

I don't think so.

Okay, so the cigarette butt investing philosophy strategy is what Warren Buffett started his investment career at, where you're just trying to extract as much value as possible out of something that has lost a ton of value and is probably going to continue to lose value. I think. Oh, I'm blanking on his name. Warren Buffett was a pupil of a famous investor. And I'm anyways at Columbia University. Warren Buffett offered to work for him for free. And the famous investor was like, it's too expensive because he knew how much it would cost. But this was his strategy, the cigarette butt strategy, where they would see declining businesses and they'd buy into them. So some examples of this would be like Philip Morris, well, around the world smoking cigarettes, literally.

Cigarette butt strategy.

Yeah. These types of products are consistently decreasing in their total volume because people are getting healthier and they're focusing on healthier things. However, the business is still exceptionally profitable. And so for the next 50 years it's still going to make really good money. But it's, it's a, it's a shrinking market over time. Warren's first investment wasn't an investment, but type of a business. It was called Berkshire Hathaway. Berkshire Hathaway was a text. Yeah, it was a textile company and the textile company was declining year over year over year. And I can't remember his exact thesis on it, but it was like, oh, the value of this business on the balance sheet is greater than it's currently worth. I can get in there, extract the value. And that was, it was a reverse. I think it was a reverse public. Anyways. I can't quite remember what the circumstances were around it, but that was his first investment. And then it Changed. He and Charlie Munger got together and, and they decided to. Then we're just going to buy great businesses at a fair price. Right. And that to me is the investment strategy number two.

I thought, wait, I thought Andrew Wilkinson invented that.

Dude, I can't wait to make a video with you where we talk about the top 10 red flags. Somebody says who's not an entrepreneur? That is one of my top 10 red flags is somebody who's just like, I don't know, I just, I just want to buy a good, great business at a fair price. I don't know. That was stupid.

It's the, it's the non lds equivalent of saying oh my management style. I don't know, I, I try to teach them correct principles and let them govern themselves. I don't know, I'm quirky like that.

I don't, I don't know where I got that from, but I probably made.

It up originally by myself.

To me those are kind of two investment philosophies. One is I'm going to extract as much value as I can, knowing that there's a finite shelf life on this because there's still value there, but people are fleeing it because it's not as long term. Or I'm going to buy a great sustainable business with a moat, sticky customers, all of these other parameters and I'm going to invest in that over time because it's a great business. So.

And what's the other like?

Let's just say long term.

Okay.

Yeah. So I think that applies to AI. I think that a lot of businesses that we talk about are cigarette butt businesses. Oh, we could implement this AI process to do X, Y and Z. Like we're accelerating the transition to artificial intelligence. We are eliminating those positions. But after a certain amount of time the ability to implement them or the actual usefulness of those AI tools is just going to be ubiquitous. And so starting up an agency to implement this or a company that's just built around coding and collections, it's just, they're going to not, not exist. But that market and opportunity that TAM is going to disappear over time because there's a short window of time where you can take advantage of it. That I think is the cigarette butt strategy and I think there's a ton of cool applications for it. But I started thinking about sort of this long term strategy where it's like, what is not going to be replaced by AI? What are the things that are going to, even with AI, probably become even more important. And so that's the Investment philosophy. What do you think of the way I'm thinking about it?

Yeah, I'm totally with you. And there's a million things I can say right now.

Okay. So from there, I took it a step further. Do you remember in the 90s when we watched cable?

I still do when I go to hotels. Okay.

When you turn it on, you're at the mercy of whoever the cable provider is in their. And their programming.

Yeah. We talked about. Remember Jerry Springer. Stop the scroll.

That's right. That's right. That is so funny. Second highest rated episode ever. So over time, people didn't want that. They wanted to be able to watch what they wanted to watch when they wanted to watch it. And so we got an unbundling with Netflix and Amazon prime and all the other streamers. So you went from this old model and technology to this new model, which was streaming online. And now the new model is doing what, Chris? They're rebundling. You've got Thursday Night Football on Amazon Prime. You've got sports, you've got video game, you've got a millionth live events now on Netflix. They're like rebundling these things. And these streaming providers are going bankrupt and selling to the other streaming providers. And so there's consolidation happening. And I think there's this really interesting framework that happens where what's old has become new again. And you see it with trends in fashion, you see it with music, you see it in the business cycles. You sound like you wanted to say something.

There's a famous, famous. I don't know of anyone that knows about this tweet than I do, but I never. Sometimes you see a tweet and you never forget it. Right? Okay. In my head, January 17, 2022, Jim Gaffigan, the famous comedian, tweeted, they should bundle all the streaming services together and call it cable. 13,000 retweets. So, yes, that's why I'm smiling.

It's so good, dude. Oh, my gosh. So. So I've got these two. These two ideas that were just popping in my head. One was the cigarette butt and the long term investment, and then the other was, what's old again? Or what's old has become new again. And I started thinking, how could I apply that to AI? And there are some examples that are already happening in person events. We went from community being in real life to digitizing it and moving it to social, social media, social platforms. And now we're seeing a big shift to community again. In person events, detox events, conferences, experiences Those types of things. And I think it's a really interesting framework to apply to thinking about AI and the age of AI and the opportunities. So here's I made my first principles and I'm going to list them out for you. I think prioritizing human interaction. So businesses that prioritize human interaction, healthcare gyms, fitness conferences, focus on fundamental human needs, healthcare, food, purpose, religion, scale your authenticity. So it has to feel like a human. Have you noticed on social media when you read posts now, like I've written some posts recently that are freaking bangers. Amazing hook, amazing post. Here are the top 10 reasons why you should start a franchise today. Making $4 million a year. Like two years ago that would have been a banger post and amazing. But now people are seeing it and it's like it's too good. It's too good of a post.

Oh, did AI write that curated? Yeah, it's too cur.

Even though you didn't use AI to write it, it just, it's too good. So like people are, are self selecting to things that are authentic.

So my daughter, my 12 year old daughter would call this being a try hard or a pick me. That's what's it called, being a pick me. Also shout out to my daughter. Her and her friend made, made this at a farmer's market. At least shout out shut up.

And then the last two. So leveraging the human nature. So like I think face to face interaction, just aspects of human nature that, that persist over time and independent of technology. So a physical hug, a handshake, meeting in person, those types of things that's like my framework that I've created that I want to start thinking about more. And when we talk about AI ideas, it's not just going to be hey, what's the thing we can automate to get us faster to the implementation of AI? It's also the hey, what's the business that's going to be sticking around even after AI has taken over and we have way more free time than we know what to do. What are things that people are still going to want and how could you create a business around that?

I just find it so fascinating how the pie just keeps growing. We've been expecting automation, technology, AI to take all of our jobs for years now. And the opposite is happening. Right. Just look at people that want to start businesses, the aspiring business owner, how many of them from over the next five years are going to go start a tree trimming business versus an AI app? Right?

Right.

Like anything home services is going to be. It's already a huge opportunity. It was a huge opportunity five years ago, 10 years ago. It's going to be even more so of an opportunity because all the attention is going to AI going to the Internet and technology more than it ever has been. So it's just a bigger pie. It's a rising tide. Right? I'm a thousand percent with you. We're all going to benefit more. That's it for today, folks. Part two is a week from today on Holdco Bros. I'm not exaggerating. Part 2 of this episode is one of the best we've ever recorded. All AI ideas. Super high energy. I got a headache. Come back a week from today to hear that.