GEO Is Not Different Than SEO But… | Ep. 3043

At this event, this HubSpot inbound event, everyone likes to talk about GEO.

And I learned they called it something else because I was doing an interview with Kip. AEO? Yeah, they call it AEO. What's AEO again? I don't know.

I forgot.

Kip explained the acronym.

GEO is Generative Engine Optimization. AEO—

LLMO is Answer Engine Optimization.

And then LLMO is Large Language Model Optimization.

Yeah.

And Search Everywhere Optimization.

Yeah.

Yeah.

This makes it so complicated as a marketing agency because on our website we have to use so many different vernaculars because the clients all call it something else.

Yeah. As a side note, I do want to— so I was talking to— because internal SEO team, I was kind of just auditing the work that we're doing. And like, how much more blog content are you outputting now net new versus a year ago?

It's very similar. It hasn't changed.

Similar, right? Yeah. And you're— I'm assuming you're spending a significant amount of resources still on updating, deleting, consolidating content. versus net new, correct? And so I had to kind of dig in.

Well, we added one more bucket, but yeah, continue.

What's the other bucket?

Getting mentioned on a lot of other people's blogs.

Okay, that's good.

So we do a ton of digital PR that we didn't do as much for our company.

Oh yeah, I saw a digital PR picture from your team.

Oh yeah, that's right.

That was a good picture. It was from a mutual friend of ours. But, you know, I kind of had to like ask my team yesterday, I was like, hey, like, what are we— what's the net new? And so I'm like, so much of it is net new and it's like template AI. I'm like, dude, And there's like zero or a lot less, maybe like 15, 20% on updating, deleting, consolidating. I'm like, guys, like, we got to flip this ratio a little bit, you know what I mean? But sometimes the reason I'm calling this out is sometimes you have to look into yourself and you have to do some of the dirty work yourself.

Yes.

Which you do as well. I do as well, which is fine, right? Because if you don't manage these things, they'll start to go off the rails. But Glenn Gabe said this. So Google once again shoots down the idea of generative engine optimization, GEO, being different than SEO. So Danny Sullivan, remember Danny Sullivan? So I think he was a search liaison at Google, former editor of Search Engine Land. Now I don't think he—

He's a co-founder of Search Engine Land.

Yeah. So he just said, from Danny Sullivan, good SEO is good GEO or AEO, AI SEO, LLM SEO, or LLM NOPEO. I don't know what that is. But he says what you've been doing for search engines generally is still perfectly fine and the things you should be doing and people will tell you, you have to make sure You have this vector thingy that's doing this passage thingy and it's just like, uh, which I largely agree with this statement.

I agree with him, but there's one issue. It doesn't matter what Danny or me or anyone in the industry thinks that it's similar. Clients ask for something specific, GEO, AI SEO, whatever you want to call it. And they're like, no, no, I don't want SEO. I want this. And if you're in business, You got to give the client what they want. And you can explain to the client, which we do, how there's, you know, it's pretty much the same thing. There's a lot of similarities. And I would say for different platforms, they look at different factors, right? Google may use the same factors for SEO as GEO. ChatGPT may put weights on different things and you can still say that's SEO. But when a client says, no, I don't want SEO, I want you to just focus on ChatGPT, You have to adapt to what the client wants if you want the contract. You can explain to 'em, which we do, how there's a lot of similarities and SEO has evolved and it's pretty much the same thing. Clients don't care. They say, they'll tell us on the phone, no, we got all this, or we don't care what you're saying. This is what we wanted. This is the mandate from our executive team. So you got to adapt to what the market wants to hear.

Marketing and sales one-on-one is just way easier to sell something that people want versus try to educate people.

Yes. Yeah, I agree with Danny and we used to try telling people, SEO and GEO is, it's the same thing. And we still tell them it, but instead of fighting people on that, we say, all right, you have an RFP just for GEO and this is what you're looking for. We'll let them know.

Happy to help you.

Yeah. We'll let them know clearly that it's going to involve SEO and other things and things that they may already have vendors for. So that way, you know, we're not lying, but it's like telling them, hey, you're trying to pay agencies for this. No, you don't need this. You just need SEO because it's the same. And if they start fighting with you and you're trying to correct them, you're not going to ever get a contract. You got to go with the flow on this.

Yep. I do think it's also important for us because we've touched upon it a little bit, but, you know, people when they're looking for GEO now, LLMO, a lot of it encompasses Reddit, a lot of it encompasses YouTube. And so like we mentioned before—

Or brand mentions.

Yeah.

Brand mentions weren't as important in SEO versus link building and these LLM platforms link building doesn't matter as much as brand mentions. Does it mean SEO and GEO are different? No, it's just, it's evolving. That's really all it is.

And we should talk about some of the core tenets. So like when we think about traditional SEO, for example, yes, content, links, technical. Yes, you should think about how you can rank higher in the AI overviews, for example, right? That's traditional SEO. Now, if we think about the core tenets for YouTube, and I'd like you to maybe talk about YouTube or Reddit as well, but YouTube is How good is your idea? That's still number one. How good is your packaging, your headline, your thumbnail? How good is your 30-second retention? How good is the hook to keep people? How good are your open loops to keep the retention high? Right.

But how much do people keep going to other videos on YouTube after they watch yours? That makes them more money.

Watch this one next, right? Yeah. But then, but that, that, see, these games are different. You can't just say they're the same thing. I think the problem with SEO is like, oh yeah, when we do YouTube, yeah. Oh yeah, it's, it's, it's, you got to optimize for the keywords, the tags and all these things. And like, No, you're thinking about that from an SEO angle, right? So we're just trying to give you the core tenets for traditional, for YouTube, and now Reddit. Yes.

And that's why on our end, we call it search everywhere optimization, because what we found is corporations will say, I want to rank on Instagram for our products or our services. Okay. And the factors that Instagram uses is different than Google. When you tell corporations that this is all a version of SEO, most companies will tell us SEO is ranking on Google, not even Bing. They just focus on Google. So they look at it as something totally different for Instagram or, you know, Reddit reputation or LinkedIn or, you know, getting searches from TikTok or Pinterest or even ChatGPT. So you got to adapt where companies are going. We as an industry may want to continually use one vernacular, but if the customers and the majority don't, then it is what it is. Yep.

By the way, there's this guy that tweeted this, quite possibly the SEO play of the year. I don't know if you saw this, but I'm showing Neil this graph over here, but you can see it's just, it's kind of gone vertical like a hockey stick. So organic traffic, 530 million. And so what he's calling out here is when you search for like cover letter generator, for example, you see Grammarly is the first one, AI cover letter generator. ChatGPT is number 2, cover letter generator. So all he's saying is you create custom GPTs and they'll get crawled and you leverage the domain authority of OpenAI. Now, is this the SEO play of the year? No, absolutely not.

But it won't last long. We've seen this.

It won't. This is just parasite SEO.

Yeah. And Google will be like, oh, we're sending all our traffic to ChatGPT. Let's go fix this.

I do have a friend. Oh, they also kind of compete with ChatGPT too. Yeah. So they'll do whatever.

They may not say it directly, but I bet you if I was, if I was an owner of a business, why the heck would you be promoting a competitor? This is just basic business.

And Google had that. The judge just ruled recently this week and they got a slap on the wrist. Google got saved by AI. Because originally they might have had to divest from Chrome and all these things. Right. And then I think they're still allowed to continue to make revenue from Apple in terms of—

They just, they just can't force them to be the only option.

No, they can't. But they still make good money from Apple. Then the other—

Apple stock went up, I think like 3% or somewhere around there. Google's went up 7%, 8%. Yeah, something like that.

And then the other thing for Google is, yes, they have to share some data around how their search algorithm works and all that, which will help some of these other competitors. But I saw in the ruling that the judges were basically like, or the judge was basically like, look, you know, AI has made this so much more competitive. And I don't think if AI wasn't— didn't like make it competitive, it would have more like Google would have been in more trouble.

Yeah.

So they got saved.

This is also why people in business shouldn't play politics. You make enemies with other businesses. All right. That's one thing. It doesn't matter how rich you are. You make enemies with the government or people like that.

They can take it all away. Yeah, they can take it all away. That's the real reality.

I don't care what country you live in, they can screw you over. And you can't make the pitch like, let's say if you're Facebook, but Senator, the government approved us buying Instagram or WhatsApp, and they'll go with, we approved you at that time, but look at what you've done with it. And now your social networks may be more monopolistic. I'm making an example here. They don't care what they approved in the past. They can do whatever they want.

Yep. By the way, I have a friend. I won't name names here, but he actually was buying ChatGPT plugins and it helped him with customer acquisition. I think he bought like a number 1 or number 2 plugin in his niche. I think he paid a couple hundred grand or so, but it's helped him generate a lot more customers for his AI SaaS.

I've never thought about that.

Yeah, there you go. See?

Yeah, I'm gonna go try it and let me know what you find. I'm gonna message a crapload of people today on that one.

Yeah. And why not?

Yeah.

And it's like, these arbitrages aren't gonna last forever. But you know, we know some people, like going back to Reddit for a second, because we haven't talked about how to optimize for Reddit. On Reddit, some people are buying, you know, they're buying accounts that have a lot of authority, right? To kind of insert themselves in the conversation. That's one element. But there's also Reddit reputation management. So what are you seeing on the Reddit side when it comes to how to play the game?

Well, participate in the community, network with other people who are influential on Reddit. It helps knowing people with powerful accounts and, you know, have been used— been high Reddit contributors for years is very helpful. I think buying Reddit accounts, we've seen a lot of companies do that. The issue is they don't know how to maintain them. And I think that just causes problems because they look at it as like, oh, let me just buy these accounts and then promote my own business. I think that's very shortsighted. I think the real way is to You participate in the community, you network with other Reddit users, get to know them. Just like how I was talking about earlier, how I'll go meet up with enterprise companies and just shoot the shit and not talk about business and just maintain relationships. And in the long run, yes, it helps generate revenue, but that's not always my goal. A lot of these people are just friends that I've known for years. You know, when I was on Digg back in the day, the reason I did well on Digg was I networked with other users and I got to know them. And at that time when Digg was really popular, I had the highest ratio for submits to homepage hits.

Yeah, Digg was the thing back then and Neil was, was, was up there all the time. You know, back in the day when people didn't take blog comments as seriously, you would hire people to take care of your blog comments. So that was like ahead of its time. So you have to— my point of saying this is you have to engage with the community. You have to be authentic. And that, that's like saying a lot of like buzzwords. But in my mind, if you're going to try to do Reddit well, you probably should hire someone who really understands the game and has a native to Reddit and is not trying to spam because we've tried all that stuff a long time ago. You try to spam the community, they catch it very quickly. Reddit is so good at catching that.

Yeah, the biggest mistake companies we see make with Reddit and posting on there is they use AI to create a response. And Reddit is really, really, really, really— I know I use a lot of reallys, but they're really good at detecting content or like replies or comments that are created by AI and they just remove it.

Yep.

And I highly recommend that you're not too promotional and you focus on helping out the community and you have someone manually write your replies because if you do that, you're much more likely to succeed versus if you use AI. And I'm telling you, they have a really high hit ratio of detecting if something's AI. And me and a few buddies, we did a fun experiment where we used AI 100 times on Reddit, right? So there's 10 of us, each of us did 10 times, and we wanted to see how many times they actually detected if it was AI written. We didn't use our main accounts because we didn't want anything to get screwed. No joke, over 70% of the time they detected if it was written by like a ChatGPT and they just removed it.

Wow, that's a lot.

It was over 70. I have to get the exact number. I know it was less than 80, but I know it was over 70.

It's also hard to find these Reddit people to hire too. Oftentimes you're going to find these people on like Reddit, that's one, on Discord channels as well. You're not going to find these people oftentimes on traditional—

No marketing events. We find a ton of them at marketing events.

Like what marketing events?

Even at HubSpot. You know how many people here are on Reddit? There's a lot of them.

Really? I didn't know that.

Percentage-wise, no. But you have a ton of marketers in the room. You're going to get enough of them that have been using Reddit for years.

No, I'm just saying if we want to, like, if you want to traditionally, like if you're looking to hire like an agency executive, you're going to LinkedIn, you're going to source these people, right? It's harder to find these people on LinkedIn. You're finding them in like the nooks and crannies of the We don't find them on LinkedIn.

We find most of them through A, relationships, or B, going to events and talking about Reddit. And a lot of people who participate will be like, oh yeah, we do this or we do that. Yeah, you'll end up meeting a lot of people who are active on Reddit.

They're very different people. By the way, we're hiring Reddit people and YouTube people. We just go to ytjobs.co. So good. So good.

Yeah, I still haven't used that. You told me about that last time. Okay.

You know why it's so good? Did I tell you? If, if let's say I'm trying to work for you as an editor, I can show you all the accounts I've worked with and the other accounts will verify that I have in fact worked with them and there's testimonials. So all the— then it shows me as like a, like a purple diamond, which is like highest. That means I have a lot of verifications. This guy's like a good candidate or a girl and then like gold star or whatever. But we're talking to a lot of great candidates right now on the YouTube side because we're getting a lot of inquiries for YouTube and I think definitely worth it for you guys too. We're just struggling on the Reddit side.

You're getting a lot of inquiries for yourself or your clients?

Clients.

We don't really get any YouTube inquiries.

It's interesting because a lot of— a few of these, like you look at how much money they raise or some of their are like multibillion dollars in revenue. They're looking for YouTube a lot, for Reddit for sure, but we're struggling on the Reddit side. So we're high on the Reddit side. Reach out to me.

For YouTube, we get corporations asking us to like create campaigns or creative. Yeah.

Like YouTube ads?

No, not just YouTube ads. For Mitsubishi, we did a really cool campaign for the Northern Lights, you know, filming like people in a car, in a Mitsubishi, going all the way to Northern Lights and, you know, tracking the whole experience there. So we get like inquiries like that.

Yeah.

But most corporations don't want help with YouTube, like the type of videos that you and I create.

I don't think agencies can help that much with it because you need to get buy-in from internally that they'll help with the creative stuff.

It's not even that. Most corporations don't want a face. And if you even tell them, oh, you can have an AI face, they just don't want to deal with it.

Yeah. I just think there's— it's YouTube. If you're going to help someone with it, it's much more done with you versus like when you're doing an ad. Okay, You might collaborate a little bit, but it's very done for you. Or the ads that you're— that we're running for our clients or doing SEO for them, a lot of it's done for you. If you're in B2B, here's the deal. LinkedIn account-based marketing sucks, but it doesn't have to. With Carrot, it allows you to create personalized ads towards your customers and also personalized landing pages that align with the ads. So you're going to have higher conversions and influence pipeline reporting to prove that your ABM works. So if you want to learn more, just go to carrot.ai and And you can join the waitlist. Again, it's karrot.ai, K-A-R-R-O-T, and we'll see you on the other side.

Yeah, if I had to pick the top 3 YouTube things that companies hit us up for is ads, of course, like the Mitsubishi example, we're helping with experiences. And the third one, and the third one's actually probably one of the biggest ones, is influencers. Like reach out, help us reach out to a lot of YouTube people and leverage your network and go get them to talk about—

That's where you get more support from AI when you're reaching out to a bunch of people.

Yeah.

Yeah.

So, but we haven't seen a lot of success with AI reaching out to get influencers.

I think it'll get better over time.

Yeah, it's not that most enterprise corporations want really big accounts pushing them. It's very relationship-based. They don't want the person who's just like, I got 10,000 followers. They want well-known people within a space. Because if you're a big corporation like a Microsoft or a Google or or, you know, Walmart or whatever it may be, HSBC, they have money.

You don't want to be associated with, with too small either.

They want to be associated with big, even if it doesn't produce ROI, they don't care.

Perception.

It's perception. You also have to keep in mind when you're Google and you're doing $100-something billion, you don't care what some of these things cost.

You know what's interesting? You mentioned the Northern Lights campaign. So as you say that, I'm like, yeah, I wouldn't have the creativity for that, nor do I think you would have the creativity for that either.

Well, we have a whole creative team.

I know, exactly. I'm saying you have amazing people on your team that are super creative. And then when I think about us, it's like, We're really good on the digital side and we mostly try to stay in our lane there and we hire amazing people for things that we just suck at. It just reinforced in my mind because it's like when I think about the Northern Lights creative, I'm like, I don't think you would want to get involved with that. I wouldn't want to get involved with that either.

But I watched a lot of it.

It was really good.

And I'm not saying because we created it, but they made it almost like reality TV combined with the experience in a Mitsubishi car.

And that makes you feel good about your team. It's like, damn, we have some really amazing people, right? Yeah.

And I learned about it when it went live. And I was like, what is this?

It makes you feel proud, but it's like, it's also like it has nothing to do with your creativity or my creativity. Yeah. You know what I mean? So, but Matt Diggity said this, so I just want to finish off on the YouTube and Reddit thing and then we can move on. I'm out of topics on this thing now.

That's okay. We only have like 6 more minutes, by the way.

No, we don't.

Yeah, we do. I've been keeping track of time.

We started at 25. We go for 80 minutes.

We go for 80 minutes? Uh-huh.

We go for 80 minutes.

I thought we go for—

We go for 80. We could talk about the podcast.

I thought we go for 75.

No, 80 minutes.

I thought it was 15-minute episode. No?

But they requested 80 minutes. So guys, the reason we're talking about this right now is 80 minutes is because YAP Media, who we work with, they want to sell more ad slots. And then each episode's 20 minutes. Each episode's 20 minutes.

We have 10 more minutes. Yeah.

A little longer.

No, 10 more minutes. You should be good at math.

What time do we start at?

25.

Oh, that's right. Okay, you're right, you're right. So Matt Diggity, he said, to dominate on YouTube and Reddit, just to close this thread, there are the second and third These are the, these are the 2nd and 3rd most cited domains in AI response. I remember on Monday, I showed you that graph. I think we saw Google— oh no, we saw Reddit, 41%. I think Wikipedia was up there and then YouTube top 3.

Yeah.

So he says YouTube optimization, create tutorials and product demos with clear timestamps. Number 2, use keyword-rich titles and descriptions. Number 3, add detailed video descriptions AI can parse. Number 4, focus on how-to and comparison content. And then for Reddit strategy, he says find high-traffic Reddit threads already ranking on Google, add thoughtful, helpful answers, not promotional content, focus on product discussion subreddits in your niche. And so this, his high-level starting thread on this one is the 80/20 of AI SEO. So I like the Reddit piece. I think that's fine. The YouTube piece, like when I hear keyword-rich titles and descriptions, that makes me think traditional SEO again.

Yeah.

And I don't think that's the way to win. Like when you, when you see MrBeast do his videos and we're not MrBeast by any means, but he's not thinking about the keywords. He's thinking about the idea. He's not thinking about the keywords. He is thinking about how it's going to get people to click and how good the idea But, and speaking of MrBeast, I agree with that.

To do well on YouTube, I know it's different for AI SEO, but with YouTube, it's all about just hooking people and keeping them engaged. And it really is the watch time is probably the number one metric other than the click-through rate on the image, right? Yeah. But going to MrBeast really quickly, I sent you an article the other day breaking down some of it because TechCrunch was talking about how Feastables does around $20-ish million in profit.

Profit?

Uh-huh. Okay. $200+ in revenue.

Yeah.

'Cause they're talking about how he's potentially creating a cell phone company like, you know, Mint Mobile, like the Ryan Reynolds.

Okay.

It said $80 million in losses from his media company.

Yeah.

$80 million in losses. I know people are saying MrBeast is worth $1 billion or whatever it may be. I agree he has one of the biggest brands and his brand's worth a lot of money. From a business standpoint, I actually don't think they make a ton of profit. And he always talks about how he has like maybe a million bucks in his, less than $1 million in his bank account.

Yeah.

Yeah, he does reinvest it all. But if you reinvest it all and you can't figure out how to make profit, it doesn't matter. Because if you look at his YouTube content, if he didn't invest that much money into his content, I don't think he would make anywhere near as much revenue and have as big of a brand.

Yeah. You know, it's interesting. So I'm— I know you're focused on the profit piece, but when I look at how sustainable this is, because I've seen videos where he's like close to burnout and the quality of the videos, like he did one on like $1 bunker versus a nuclear bunker versus a billion-dollar bunker. And to do all these videos and to do that, the Amazon Prime show and to try to, you know, influence these businesses because he's got Lunchly, he's got Feastables, right? What else does he have? He's trying to do the cell phone company. It's a lot to do for, for one person.

And— Well, he has a team, but yeah.

He does have a team. But here's the thing. I've talked to multiple MrBeast people that have worked there. And so I understand a little bit in terms of the dynamics because I've interviewed these people personally, right? He cycles through people very quickly. And it does sound like it's— you're kind of running on knife's edge, which I think is how his personality is. So we talked about not reinvesting because I— we have some mutual friends that have hung out with him at the My First Million basketball camp, right? And I think almost everyone was trying to talk to him about how, hey, maybe you should at least take some profit. Maybe just some profit.

No, but it's not that. I look at it as like a great example of like Cursor, right? Cursor, from my understanding, spends more money than what they're getting in revenue.

I don't know, right? That's just Twitter right now, right?

So if you're spending— if someone's paying you $100 and your cost is $120, You're losing money. That's the example that I look at MrBeast on. I'm not saying he's losing money everywhere. He must be breaking even because I don't think he has investors.

Did MrBeast raise— that's what I'm asking.

I don't think he raised money.

When you raise as much as—

He raised a lot of money.

You can afford to lose money.

You can afford to lose money. But for MrBeast to get the views, he has to spend so much. But the problem with spending so much is if he says, hey, I want to make more profit and I don't want to go as much, I think his view count would start going down. So he needs to spend that much money, but it's just not profitable. It's a business.

Yeah.

And he has to figure out other ways to monetize it. And I'm not saying he won't figure it out, but it's a sexy business that is not great from a margin perspective because it costs so much to get that attention and the attention doesn't monetize well. Yeah.

Yeah. So, well, look, I think he's phenomenal. One of the best creators of our time.

Definitely.

Yeah. But It remains to see how the business will pan out in the next few years. So I—

but it's basic economics. It's like marketing. I could tell you, you know, we're running an AI—

Summit.

AI and marketing summit that's happening sometime in September. And my team started running ads for it and they sent me the report this morning. No joke. Like I literally saw it. And, you know, the numbers vary each day. Some days our ROAS is, call it 1 point something. Today the ROAS was 10 plus, but it started And we barely spent any money, at least when we're recording this podcast. But on average, we're doing 6, 7 times ROAS, which is amazing, right? When you're at 6, 7x. And I was telling the team, cool, maintain profitability. We're in a business to make money, but I'm like, you can bring it down. You don't need to make that much money because a lot of those leads will convert into other future revenue. It's okay.

Yeah.

Don't break even. Just make more than break even. And they're saying, why not just break even? And I'm like, in case someone screwed up the reporting or got some of the— Margin of safety. Uh-huh, margin of safety. I'm like, so if you have like a 30% margin or 20% margin, worst case scenario, we probably break even. So they're like, oh, okay, sounds good. And I'm like, there's other costs too, right? Payment processing and stuff like that. Maybe some people want refunds. But you got to create a business that that generates money and is cash flow positive. It's like me doing marketing, like, look, you know, look at some of these companies that do sports sponsorships. They're like, oh, we spent $100 million sponsoring the FIFA World Cup. And I'm like, yes, but it only brought in $20 million in revenue. This was an epic failure. It's just like generating revenue, but not keeping— taking into account the expense, to me is just a useless form of marketing.

Yeah, I hope— I mean, kind of everything you talked about here is it goes back to focus and involvement. I think he's involved in too many things right now. I think eventually he'll learn and we'll see. And I have no— like, by the way, his brand's way bigger, revenue does a lot more revenue.

Yeah, but he's struggling to really scale Feastables because everything that I've read from Feastables, it's not like the growth is skyrocketing where he can get to $1 billion or anything like that.

Yeah.

And there's a certain point where you need to figure out how to continually scale. He's— you're right, he's doing too many things. But if you go with Feastables, if you want to get into food, get into food and go and grow that thing and make it amazing and really big. And, you know, he's doing what a lot of the celebrities do. Use your celebrity notoriety to get a huge launch. You scale really quickly.

And that's proving not to work anymore. We talked about Prime a couple of weeks ago. Yeah, that's not going well anymore.

No.

So you can't— and we've seen a lot of influencers try to launch things and they, they, they, they— it's like a huge spike and it goes down. Yes. To maintain a business and continue to compound it, you have to put compounding focus and compounding involvement with it.

Yes, totally agree with that.

By the way, go ahead.

But if you and I went to any one of our clients, we're like, we'll make you super successful and famous or popular and you'll spend more than you make and we don't know if you'll ever get a return. Oh, they'd laugh us out of the room. You would get fired.

Yeah, yeah. So Cursor, by the way, and we can, we can end on this one, but Cursor has achieved explosive revenue growth, reaching over $100 million in ARR. Some reports estimate it climbing to $300 to $500 million ARR by mid-2025. Profitability challenges. While revenue is soaring, profits are likely thin or negative due to high operational costs, especially for large language models, because they're charging like $20 a month and $40 a month for business plans. They tried to move it to $200, got backlash. So they might be breaking even or losing right now. Broader reports on AI coding startups describe them as highly unprofitable because of compute-intensive features with margins as low as 20% on token-based pricing. But once you've captured all the users, you can afford to raise your pricing a little bit.

Like Teams. Yeah, but they're also betting on— when you look at these tokens that you're paying for from AI, if you look at the last year, those all go down a lot in cost.

Yeah.

So people are betting on the fact that the cost will start going down and then the cursors of the world can be more profitable. They just got to wait it out. And you know, there's a lot of investors with deep pockets that'll put in money.

Yep. Hypothetical margin analyses show potential for 55% plus profits in balanced user scenarios, but heavy AI usage can flip this to losses, indicating growth revenue is a primary metric while costs are managed reactively. So in summary, Cursor's story is dominated by revenue milestones, with profitability taking a backseat amid high AI expenses typical for venture-backed tech firms aiming for market dominance, which is not what MrBeast has with this thing.

Yeah, no. And I don't know how MrBeast is going to sell one of these companies. Like, you look at like a Feastables or anything, it's too reliant on his brand. I don't see someone buying.

You know, he said that he's gotten multiple offers in the past where someone has offered him like $1 billion for his YouTube channel or something like that.

I don't— I'm not saying people would have offered it. I'm not saying he's lying. I don't think the deals would have went through.

Yeah, it's interesting to me. Like, look, I think we hope it all turns out great, even better than he ever could have hoped.

I hope he makes a killing. I hope he becomes a $100 billionaire, right? He seems like a nice guy. I watched some of his Prime show and it was chill. Prime show? Amazon Prime.

Oh yeah, yeah, yeah, yeah, yeah.

Right? And I forgot what it was called, but I watched some of the MrBeast show.

Beast Games.

Beast Games.

Yeah, yeah, yeah.

I watched a little bit of it. And he did on one of them. They were driving on like this cliff and then he's having someone get out of the truck to just make sure they don't go like too far. Yeah, I would have been scared to drive in there. I would have crashed.

Yeah, but—

or fell off the cliff. But going back to it is, you know, I hope he does really well. He's an amazing marketer. I just think the economics of his business model are broken.

I just think he's— he was used to growing up on knife's edge and it's continued to compound in that way where you're like riding the edge.

That's not how you build a business.

Yeah. So we'll see how it goes. And I hope we're really wrong. So anyway, we'll catch you later, guys.