AI Is Changing the Workplace, Agency Reality, Cold Emails & Marketing's New Price Tag | Ep. 3027

Yesterday, I went to this founders lunch and there are around 40 people there. And so, here are some of the things that I overheard. One is, number one, one doctor said this. He said 60% of doctors will not be needed anymore in the next few years, okay? A doctor said this, actual doctor, okay? Number 2, the terminal value of SaaS companies will become zero, okay? This is from a well-known, let's say like a startup incubator guy. Number 3, I actually saw a friend in front of me. He vibe coded a game from scratch with zero technical skills. And first I thought it was going to be a piece of crap, but it was actually good. You've definitely not played this game before, but those of you that have played Hearthstone, the Warcraft game, or like Magic: The Gathering on your phone, it looks really good, right? And here's the crazy part. The person who was running the lunch, Nancy Liu, She asked the group, she's like, hey, what percent of the group here uses cursor? Okay, bear in mind, most of these people are non-technical. 70% of the hands went up, right? So I was just saying the rate of change is insane right now. And then everyone in here on Threads is calling me an idiot, right? So all that to say is, if people just want to hear what they want to hear, and you just have to understand the audience that you're talking to.

Dude, did I tell you I started giving my kids games? I know this is a random tangent. I started giving them games like trivia puzzle games, like where you have to solve puzzles. 1416, Eric, knows this, but, you know, some of them are pretty challenging. My kids are good with puzzles and, you know, critical thinking and thinking outside the box. Some of these games are like strategy, right? What pieces can you put in? And you don't know what's going to come next, but there's only X amount of shapes, so you have to have enough room. But either way, my son and daughter— I've been doing this for like a week and a half. I had to delete the games from my computer and my iPad and my iPhone. My son, 2 days ago, all right, was just like, I need more. And this is at bedtime and is getting mad at me.

Yeah.

He started hitting me and I don't hit my kids, but I was like, how would you feel if daddy did this to you? And he just got mad and he just started hitting me and kicking me. And we don't really give him TV. And I'm like, ah, this is why we don't give our children devices. And, you know, I took this from an Elon Musk video I saw. He's like, we need to make education more like Games. Kids love games and they're addicted to it. Why can't education be like that? And I played games as a kid and I know you did too. And we both turned out fine. Like, I don't think necessarily giving kids TV or games is going to screw them over in their future. I don't necessarily believe that. I do think there's some bad television and you don't want to give them too much. You want them to live a good life and read and all those other kinds of things.

But I don't realize what games do to little kids when they get addicted to them. Well, I actually became like that So as a teenager, I think, but my reasoning was, my mom was taking me away from work and my dad was taking me away from work, right? Because I grinded really hard in those games and I would play like a long time and the team I would play with was like a really elite team, right? And so I felt like I had a job to do and they needed me for a certain time and I wanted to be there, right? I didn't understand that. I felt like it was a job to me and I felt like I was needed, right? No, it's definitely a different story for your son. I don't think it's the same situation here.

No, it's not. There's no team. Yeah, and this is the crazy part. My son never hits me or anything like that. He'll talk back to me for sure, but he's, he's very peaceful. The first time I experienced it, I deleted him right away, right? And I wasn't like pissed off at him. I was just like, wow, games are really addicting. I've never really gotten into games. Even when I was younger, I didn't play them that much. I was addicted to television more than games.

You still are.

I still am. Like, I need television. I need my CNBC in the background. I don't know why. It just helps me get along with my day.

CNBC is a good thing to have.

Yeah.

Okay. So the— by the way, because we just talked about that lunch, I can give you the core takeaways from that lunch. So there were some 9, some people that sold their businesses for 10 figures actually. So 10-figure valuation, some had sold for 9 figures, some were actually doing 9 figures. Some people are curing Alzheimer's, right? So it's a pretty good group. And I would just say that one of the things there is, learned is one, what I just mentioned. So the doctors think that they're going to be replaced in the next couple years. And what's interesting is one of my clients was there and he was sitting right next to me and then he was like, Dude, all the stuff you talk about on your YouTube, why don't you just do it for your clients? He just kept bugging me the whole time. Why don't you just keep doing it for your clients, right? And he's like, dude, I know my friend that does it for his clients, like all the AI stuff that I talk about, right? But to your point, it kind of validates the point where people expect you to move faster, especially the people that know the AI stuff.

Yeah.

And the crazy thing is when you have 70% of the group saying they're using Cursor and they're not even technical people, it is the stuff that I've been talking about, right? Like I do think, you know, if you have the time to learn Cursor, MCPs, and Claude Code, You're going to move a lot faster. And I think the— let me ask you about this. Do you think, do you agree with the statement that terminal value of SaaS is going to zero? No. I could be wrong.

You know, I also don't agree doctors won't be as needed in 3 years.

I'm not saying—

and here's just my viewpoint on it. I like my information from a good doctor. I think junk doctors are going to be gone. I already don't use junk doctors. I pay a premium for really good doctors. Well, but that's 60%.

You said 60% are no longer going to— so those are the junk doctors, no?

Sure, yes. But I pay an arm and a leg outside of insurance for amazing medical care. And not only will they come to your home and things like that and help you out, but like, you know, like I have a bump on my head, can't sleep well. Dude, I got appointments right away, like same day, you know, MRI scans, all this checking for cancer, not weeks, but like straight up within 24 hours. And they're like, cool, you're good. We can't figure out why your brain is, uh, or why your head is inflamed and your, your brain is, uh, was it bruised or something like that? I forgot what the terminology they used, but they're just like, it all worked its way out. But yes, I think the cream of the crop will stick around. I do think for SaaS companies, a lot of the traditional SaaS companies are going to get hurt. I don't see valuations go down to zero, at least anytime soon. You know, maybe 10 years from now, it's a different story. But here's the kicker. We all talk about AI, dude. We work with so many companies that aren't even on the cloud yet that are like worth tens of billions of dollars, and they still pay for, you know, these SaaS solutions that have to be installed on servers of theirs that aren't on the cloud and they pay an arm and a leg for them. And these companies have very low churn because they're working with old archaic corporations that are in random industries that you would think, oh, they're just going to get disrupted, but they control some of the supply chain or some of the natural resources. And it's like, it's hard to displace them.

Dude, speaking of which, when you mentioned hard to displace, I mean, AOL just discontinued— it's going to be discontinued on September 30th. On September 30th after more than 30 years, right? So actually, so the company itself was called Quantum Computer Services in 1985. I wasn't even born yet. You were just born. Um, so for nearly 40 years, there's been AOL's dial-up service. And like, you and I haven't been using dial-up probably since, I don't know, the early 2000s. I've always moved over to DSL, you know, cable modem and all that stuff. Um, so it takes a long time for these things to die is our point.

Yes. And it goes back down to the cigar butt. mentality, right? You know, will SaaS go down in valuation? I think we've already seen SaaS start going down in valuation. I think a lot of people start looking at SaaS these days. There's so many SaaS companies that aren't growing as much and they're valued at like 7, 10 times revenue. And people are like, what's the difference between this and a furniture company that's making profit and growing at the same pace? You know, if you don't have a SaaS company with net negative churn and it's not growing at a rapid pace, your valuations already suck.

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Yeah. So what's interesting is, you know this, we've leveraged bank debt in the past and you've leveraged bank debt in the past, but we have a lot of relationships with a lot of the large and mid-market banks in the United States. And the reason we have the relationships is you shop around debt. So when you have debt or you're using debt to grow, some people will give you more money, some people will give you less money, some people will give you cheaper interest rates or more favorable terms or less restricted capital. Because with capital or debt comes restrictions of what you can or can't do. And a lot of the providers we've talked to mainly focus on the marketing agency sector. So when you're talking to banks like JP Morgan or Bank of America or whoever it may be, or KeyBank or, you know, Zions or CIBC or whatever, they all have divisions and there's debt people within there that specialize in a certain category like ad agencies or media companies or manufacturing, you name it. So they see industry trends. And one thing that we've seen is because Google and Meta have seen increases in ad revenue. No joke, almost every bank we've talked to in the last 60-ish days, they've told us like, oh yeah, you guys are doing decent in this economy, not as great as we want, but they're just like, we've talked to a lot of companies and some that are even larger than yours and been around a lot longer. People are just getting beat, like they're just getting hurt really bad. And they're just like, you know, your numbers are better from what we're typically seeing. And it doesn't mean we're doing amazing. They're just giving analysis. You know, we're not doing as good as what we did when COVID first came around. And, you know, we're getting double-digit— I mean, double-digit, we're getting 100-plus percent growth a year at our peak or around 100%. And they were just breaking down, you know, ad agencies are still getting crushed right now. Right. It doesn't matter what Google's posting on their earnings or Facebook is. They're seeing real data. From small and medium businesses, we classify medium businesses as less than $1 billion in revenue. I know some people don't, but medium typically is what we classify as $100+ million to $1 billion in revenue. And they're saying that, you know, whether it's SMB, doesn't matter what size, they're typically getting crushed in the marketing landscape and they have been for around 3 years. And it doesn't matter if Snap or Google or Facebook or wherever are posting amazing earnings. That's just not what they're seeing in the private sector.

You know what's interesting? My only contribution to this is we've been doing some reference checks for some executive hires. And what we do for the executive ones is we do this thing called extreme reference checking. So I don't ask for just one reference. We ask for 6 references. So we say, Neil, wow, I want 2 managers, I want 2 peers, and I want 2 direct reports. I also want to know who can we absolutely not talk to so we don't put your job in jeopardy, right? And so I actually, because this is like a really important executive that we close to me, I actually made the reference calls myself. So I was talking to some of these people and a lot of them don't have jobs right now. I'm like, oh yeah, you worked in so-and-so at this company owned by, let's say like one of the large holding companies. And I'm like, oh, you're fun employed right now? He's like, yeah, I'm just, I'm not learning the new stuff right now. I guess I probably should. I was like, yeah, you probably should.

Wait, wait, to clarify, and sorry to cut you off, is this the reference check? Like the people that you're talking to for the reference check have no job? Are you talking about the person you're interviewing doesn't have a job?

No, no, no, not the person I'm interviewing. The people, I think there's 2 or 3 of the 6 don't have jobs right now. And they used to work at large holding companies with VP titles and they used to get paid really well. What I was saying was, Yeah, a lot of these people don't have jobs and they're looking for other jobs right now. And it seems like a tough job market. Like it seems like the other agencies they worked at, even after they work with the candidate, like a lot of them didn't work out. So it's a tough market right now, I think, for agencies. And I think, you know, you and I are, you know, somehow doing okay and knock on wood.

Yeah. And we've also pivoted a lot on our business model, our service offerings, right? I think, If you, if you had to pick, what's the biggest bet you made in the last 3 years during this downturn?

My biggest bet is just getting more involved with my business.

Okay. What's your second biggest bet? Carrot.

Carrot's there. Carrot and the tech-enabled— Carrot is really pushing this tech-enabled services vision forward. So yours is more around the LLM stuff. Ours is more tech-enabled services around B2B. So it's focusing on being that B2B growth partner that people can't outgrow.

And I would say in the last 3 years, our— the biggest bet that we've done is internationalization or globalization. So like just being in 28+ countries, which has cost us an arm and a leg, but that screwed up our financials and profit because it's just so expensive to expand. But yeah, so I would say that would probably be the biggest bet we made.

Yeah. So I guess for us, we'll see. By the way, when we make these bets, they typically take 3 years to pan out. And that's what Jeff Bezos used to say, like, whatever you see now, we were working on 3 years ago, whatever we're working now, you're not going to see for 3 years. And so hopefully these bets pay out and, you know, you will hear from us in 3 years. So By the way, do you remember the cold email experiment that I'm running? So I can report back on some of the results that we're getting so far. So on every 250 cold emails that we send, this is outbound emails, we get a response. So it's actually pretty good. We're looking at ramping that up now. And the subject line that works well for us, Is, it's very simple. It's just company name and then brackets, not brackets, but the little arrows pointing outwards and then single grain intro. That one has the highest open rate. And basically the offer is a gift card. It's a $100 gift card to get on a call with them.

How's it working?

And it actually is booking, it's actually booking calls. So yeah, I know you're looking at it, but 2, 250 emails, every 250 emails leads to a response.

What's your cost to close? Do you have that, like the data? So you're spending how many hundred dollars?

Too early right now. Too early right now. It's, we're just getting on the calls now. So I'll let you know in a month or so, but at least there's, you guys are getting the progress as we go.

How much have you spent in total on it?

Not much. Uh, 5, 5 grand for the month. And so initially the test is we test like 11 different sequences and then we narrow it down to 4. And then from there, we'll narrow it down to probably one and just go all in on it. So it's like 1,500 emails sent per sequence, and then we narrow it down to 4, and then we pick one, and then we send 100,000 emails. So I'll let you know how it goes.

So in essence, you got 50 phone calls for $5,000.

Something like that.

And then I'm guessing you'll have some closes within 30 to 60 days, is your guess?

Uh-huh.

And then you'll have data if it's profitable or not based on the LTV.

What's the interesting thing too is, um, and happy to share the info with you after too, but, um, a lot of people you'll find when you cold email them, because I don't know if you guys are, I think you guys are doing cold, right?

Uh, depends which country, but yes, US, we don't do as much cold.

Yeah. I mean, this is always a good reminder. I think you and I have both known this, but it's always good to see like you catch people at the right time. Oh, oftentimes you see them and say, oh, the timing is so good right now. The timing is good right now. The timing is good. And so you just need to start Yeah.

Yeah.

Okay, so you're— you have one here on how marketing is about to get a lot more expensive. Perfect way to end this.

Yeah, I think marketing is going to get more expensive because companies are getting— from what we've seen over the past 30 to 45 days, they're getting used to this environment, whatever you want to call it, whether it's rates or whether it's tariffs or from a global perspective, uncertainty. And it's just like, you got to do something. You can't be in this position forever because you guys still got to figure out ways to grow, even though you— whether you like it or not.

Yeah, dude, this is a good way to end. I'll end it with another subject that dovetails with this. So the stock market is ripping right now. Okay. Right. We would say it's doing pretty good. Mainly because jobs are slipping.

Mainly because of AI.

Yeah, the jobs are slipping, right? Um, and so let me show you this, this meme over here. Those of you that can't see this, um, we will explain the meme that you see on the screen. So, um, it was Jason Calacanis that tweeted this, but check this out. So you know how like when you work at a company in an office, there's always employees of the month. So you can see, you know, this is Ethel, Matt, you can see these are human beings, right?

Yeah.

And then August, it's all robots. Autotron, Autotron, Autotron, Autotron. And so to your point, I was actually asking Grok earlier. So there's this little Grok button you can hit. So Jason Calacanis said, fairly obvious what's going on here. I'm like, is it really AI? And then I was asking to justify. I was like, what do you think it is? Is it, you know, is M2 money supply part of the equation? Which is like a small part of the equation. But the big piece is actually AI because when you look at TechCrunch here, TechCrunch, look, they're citing how many tech layoffs are happening. January 2025, 2,400 employees laid off. February, 16,000. March, 8,800. April, 24,000. May, 10,000, 1,600, 16,000. When you think about COVID when there's that layoffs.fyi thing, that was people being cut all over the place because of COVID But this is becoming really consistent now.

But do you think this is because of AI or job or poor company performance or a mixture of both?

I think it's both.

Yeah, we've seen AI disrupt a little bit. It depends which sector, but What the main reason we've seen companies cut is because of poor company performance.

Yeah, I think it's— we're not in a great economy right now. I think it's company performance. And then I think companies are more willing to cut because they know they're going to gain AI efficiencies too. And I think we're going to start to really see it pick up because again, like just using that dinner as, or that lunch as a forward signal. Again, if all of them are thinking like that and 70% are using Cursor, Like, trust me, it's top of mind for, I think, almost every single entrepreneur. And I'll leave you guys with this. Naval Ravikant said this. He said that there are no entrepreneurs that are afraid of AI taking their job, right? And part of the reason there is because, well, entrepreneurs are really scared, right? They're very paranoid, and they're going to be— they're going to— if they hear something's going to take their job, they're going to be the first ones to understand it. So our recommendation to you, or at least my recommendation, is Try to learn as much as you can, try to explore as much as you can. And that is it for today, guys, and we'll see you tomorrow.