The REAL Reason Why Netflix Just Bought an AI Startup

If anybody can build this right now, what is the moat? Yeah, so I'll share kind of the other side. Neil and I were talking about this over the weekend, but let's say we're talking to, talking to investors, right? There's been interesting conversations around, um, or interesting takeaways around the, the single brain side of things, right? Um, and so one thing I, I, I learned, uh, through this process is that, um, a lot of companies are trying to— they're trying to build this right now, right? Which actually shows there's market demand for this. But I found that one of the firm's questions was, let's just say that I think when you ask this question today, it's probably not the smartest use of a question because the question was, if anybody can build this right now, what is the moat? And so when I was asked that question during this process, I still answered it, right? I was still very calm about it. But I think this question has to be tweaked a little bit because It's used quite a bit from, from VCs over the years. And so in the past, you might say, well, if everybody can build this, what is the moat? Well, today, because you can vibe code and you can build everything a lot easier, it's like my answer to that question was, well, if anybody and everybody is building right now, who's going to maintain this stuff, right? Who's going to maintain it? Who's going to optimize it? Who's going to upgrade it? In fact, what we said before on this podcast is that if people are going to be building a lot more stuff, more people are going to be hired, right? You're going to need more services at the end of the day. Like these, you know, people might poo-poo on agencies or services in general, but you're going to need a lot more. So that was my answer to that question. Neil and I were kind of talking about it over the last few days. And I think if anything, I'm grateful for this one firm because they did the customer research for me. What they did was they talked to all their portfolio companies and they talked to maybe like They talked to maybe 3 of their CEOs in the portfolio companies, not all of them. And the CEO's like, oh, we're going to try to build this ourselves right now, and they'll see how it goes, right? But that actually reinforces to me that one, there's a demand for this stuff, but two, don't go after the companies that have the engineering teams or engineering resources already that are maybe tech startups. Maybe go after traditional companies. Like we have like a 9-figure custom homes business that we work with, right? And they're the types that need this stuff because They might not have the engineering resources or the know-how around this. And that's what I thought was interesting. Like, they did some customer validation for me already, which I'm grateful for.

Yeah. And I think you nailed it too. It's just like, I talked to my brother-in-law frequently enough. And, you know, he'll talk to me and tell me things like, you guys don't use Zoom? Or he'll be like, you guys don't use Slack? Like everyone here in the Bay uses Zoom or everyone here uses Slack. I tend to focus on getting contracts from companies and marketing to companies that are not on Slack and are not on Zoom. A lot of the companies on those 2 things are more tech-ish startups, and a lot of them have venture funding, and a lot of them believe they can do everything themselves, whether it's true or not, yet to be seen. And I think it's more company by company. But culturally, a lot of them believe that they need to figure it out or they can do a lot of that stuff. On the flip side, though, when we go after people who are on Outlook and they use Teams, a lot of them are large, older enterprises that are just more flexible paying people to get stuff done than, you know, than trying to do everything on their own. And I think that is super important to realize that and target the right type of people because not everyone wants to do everything themselves. You know, I've met people who are like, with AI, I no longer need a Salesforce. We're just building it ourselves. Most of the people that tell me that narrative are startups or tech-enabled companies. The bigger companies that we work with, I would never see them do any of that kind of stuff, and they wouldn't care to. They're like, it's so cheap compared to our overall revenue. I'd rather just focus on something more important than reinventing the wheel and saving a million bucks a year.

Yep, 100%. So by the way, I don't know if you saw this, Neil, but did you see that Netflix paid $587 million in cash for Ben Affleck's AI startup? Did you see that?

I did. I liked it and I was like, good for him. He was one of the co-founders and it was all cash. Like, as you mentioned, it was a good deal. Good for him.

Yeah. So I'm going to give the audience here a little background. So this startup was called Inner Positive and it was built It's been stealth since 2022. So here I'm gonna talk about what it does at a high level, and then I'm gonna talk about what the takeaway here is and if we can react to it. So here's the thing. When you think about AI in Hollywood, so this, what Inner Positive does is it doesn't generate new footage from text prompts. It trains a custom AI model on specific, on a specific film's own raw footage from the lighting, the lenses, the camera, the angles, the color, the style, right? And then it helps fix and enhance that footage in post-production. It handles relighting shots. It does each project has its own model. And then, um, basically Affleck made it because existing AI tools didn't understand how real films are made, right? So obviously he does. Um, but the main thing here is this: it's an AI filmmaker. So it's, it's basically an AI tool for filmmakers. And, um, Netflix bet half a billion dollars on how, uh, Hollywood's going to adopt to AI by, by not replacing creators but giving them better tools, right? So the key takeaway, I believe, in, in this case, in terms of Ben Affleck selling his, um, his AI startup for $587 million in cash is that, you know, when you're building specific tools like vertical tools, when you really understand the— when you understand the craft and you understand the ins and outs of it, you're going to know how to build something that is valuable to that industry, right? Versus someone like saying, oh, if anybody can build it, like if an intern were to build this right now, they wouldn't have that experience and they wouldn't know necessarily what to adjust with the product, where to start with the product. And all these other things, right? So I think that industry experience becomes more and more important, uh, in a world where you have all these like, uh, open source models, frontier models, uh, becoming powerful in their own right. So I think we're gonna see that in marketing for sure. We're gonna see that in sales. We're gonna see that, um, we're gonna see that in design. We're gonna see that everywhere. Do I—

I definitely do believe we're gonna end up seeing it everywhere too. And, uh, what was interesting when Ben Affleck ended up talking about it. He mentioned how his goal is to also protect humans from his, you know, and people in the film industry with what he's creating and not just try to replace humans.

Yep. So let me pull up the next thing, give me one second.

Which I think is important from a marketing role too, right? It's just like, if you're reliant on a big group of people and you're in that industry and then you tell them, hey, I'm trying to build something that just replaces all of you, I think it just goes against Then you have people inherently who are rooting against your company from day one.

So let's see. So I wanted to call out this next thing. This is Chamath Palihapitiya posted this. So basically, there's a— I don't know what has happened. This happened about 4 days ago or so, but basically, there's a tweet about how the Trump administration is considering restricting cutting-edge Chinese AI models with momentum reviving after the launch of Kimi K3, per Axios. And so Chamath tweets this and he's like, The leading AI already has forked into 2 options. So A is closed-source American that costs $26 to $56 per 1 million tokens. And then B is open-weight Chinese that costs $0.50 to $1 per 1 million tokens, right? And so his whole thing is like, if you force American companies to spend 50 to 100x more than their competitors abroad, basically it's— he's like, this is the equivalent of the US government saying we can only buy oil at $800 a barrel, even when the free market sells some of the same oil for $80 a barrel. So it actually makes us— We have to fight headwinds and it makes us less competitive. And so he also said that in the short term, the revenues of the closed American labs may remain high, but the revenue will also crater because their customers in the US will be impaired and their customers abroad will have already flipped to cheaper solutions. So because you and I both have a business tied to this right now and our business does spend on tokens, what is your thought on this overall?

Companies will figure out how to use the cheapest and best solution for them, no matter where it is in the world. Like, for example, if a US company is banned, I don't know the legalities. Can my European company use it? Can my Singaporean company use it? Can my Hong Kong company use it? I'll figure out how to end up making it the most efficient for my business. If I don't, my competitors will. And because their costs will be way lower than mine, they will displace us. So we'll figure it out.

So Reid Hoffman, one of the co-founders of LinkedIn, he basically tweeted something around building a network, right? And I'm struggling to pull up the tweet right now. But I wanted Neil and I to, because we continue to get asked this question. I know I frequently get asked this question. I remember when Ali Abdaal was interviewing me on his podcast, he asked me the question, like, how do you, how do you know these people, right? And so I think more important than ever now, maybe we want to talk about how to effectively build a network. And I think, Neil, we should start from scratch here, right? And so, I think if you're starting in like high school or college right now, because there's kids that are entrepreneurs in high school and college, how do you start from there? How do you start as, you know, like a, you know, someone that's coming out of the workforce? Maybe you're going from an employee to an entrepreneur, and you want to build a network, or you just want to build a network in general, right? So, You know, I'll kick it off first because I actually see people doing this right now. And then we can talk about what we— how we built our networks, Neal. So one thing that I see is that kids right now are going to college not because college is necessarily valuable from an education standpoint, but it's valuable from a networking standpoint, right? And so, like, if you go to Stanford or Harvard, for example, the network is going to be very strong. It's very prestigious. But also, even if you go to like a lower-tier university, I don't think it's a bad thing. Like, you're gonna meet amazing people. Maybe these are people that you can partner up with in the future. I think about— I'm reading this book right now called Thinking Machines, which talks about Jensen Huang. And, you know, he still remembers a lot of his colleagues from whether it's from college, right? He still remembers those people. He even remembers his best friends from when he was coming out of like a boarding school, right? So, All that to say is that maybe if you're in high school or college right now, maybe you can think about going to college and think about building your network that way. That's certainly a way to do it. I would just say that my preference would be that you're actually building and shipping things online, that you're building things in public so other people can discover you. Maybe you can work for other companies for free to begin with, and then you can start building a professional network that way. And then you start to get invited to events, you start to hang out at events. But I think one of the best ways is to actually start to build, right? Because you have no experience right now, people will start to notice you online. As you start to build, you start to gain more experience and you start to build interesting things. People will notice you, right? Whether it's potential job opportunities or, you know, potential friendship opportunities or potential speaking opportunities. Content's done a lot for both Neil and myself over the years, which is why we, we continue to make this podcast. So that's the starting point, Neil. I'll let you— I'll move over my monologue to your monologue now. Real quick, if you want to acquire customers faster and more efficiently this year with the latest strategies and tactics, then check out singlegrain.com. That is my ad agency. Again, www.singlegrain.com. Check it out. And if it seems like a fit, we'll get in touch and help you with a free marketing plan.

So I look at networking as something very hard to build by just wanting to build a network. I know some, some people are just great at mingling and are social butterflies. But the way I look at building a network is you build a network by not inherently trying to build a network. You build a network by doing things that are valuable and helpful to others. So whether it's creating content like Eric mentioned, whether it's being in one specific industry and trying to grow it, and that could be growing it by speaking at conferences or paying for booths, Or going to events and talking with other people. When you naturally run your business, whether it's you or people on your team, you should naturally be building your network as well. I don't think it's actually hard to get to know a lot of people. I think most people do that without really realizing that they do that. The big gap isn't getting to know a lot of new people. It's actually building deep relationships so you can leverage that network. And the issue that you have is most people will meet someone, they don't follow up, they don't try to get to know them. Okay, so I'll give you a real-life example from the other day. So a few days ago, my kids are entering this box cart derby. Like, you build a car out of wood and then you ended up— you end up racing them. And my kids did that last year in Beverly Hills. My daughter placed second, my son placed third. This year there'll be more competition. It's growing in popularity every single year. So, you know, my, they, they're splitting up by age groups this year versus the previous years. And, you know, while we were building the boxcars, you paint them, you put decoration and glitter on them, you put, you know, iron plate on them to try to make it go faster, and you have to figure out where's the right area to put the iron plate. And during this whole process, my daughter gets her hands really dirty with paint. So my wife looks at the table over next to us, and there's some wipes. And remember, Beverly Hills set up every single table that people were building cars on with a lot of random stuff. Our table didn't have wipes. So, my wife goes over to the next table, takes some of the wipes, and washes my daughter's hands. Now, during this process, she quickly realized that someone was sitting on the table. This was after she pulled the wipes, and the wipes were brought by them, and they weren't actually provided by the city. So, right away, she apologizes. She said she's sorry. She felt bad. The other table didn't care. They had kids. You know, When you have a family and you meet another family, they're usually almost always helpful. They were a nice couple. And as we're going through the process and building the boxcars, and I was focusing on my sons, my wife was focusing on the daughters, the guy from that table who we took the wives from comes to me, he's like, hey, are you Neil Patel? I was like, yeah. He's just like, oh, I used to be part of ClickBank University. I was like, oh cool, you live here in Beverly Hills? He's like, yeah, I was able to walk here. He's like, yeah. I'm like, yeah, I live close by as well. And I was like, oh, we should trade numbers. Now, I didn't just do this because we took wipes from their table. I didn't actually do it at all because of that. I don't know much about him. I don't know what he does. He lives in the city. And I said, oh, we should meet up. So I took— I'm like, you have iPhone? He said yes. Took out my iPhone. He took out his. We bumped, so that trades numbers. And then from there, I texted him. I'm like, hey, we should do lunch. And we've been texting back and forth. We haven't been able to figure out a date because when I'm traveling and busy, he's here. When I'm here, he's on a family vacation. I was like, we should just grab lunch and get to know each other. And I think that's the key. People don't spend enough time actually building real relationships. And I'm not saying this guy is rich. I'm not saying he's poor. I'm not saying he's successful or not successful. I'm saying I don't know And honestly, I don't really care. I'm just meeting other people and I'm trying to get to know other genuine people for who they are and what they do. Because no matter where people are in life, you can always learn something from them. The second thing is you also don't know who those people are connected to. So there's a guy on X, Matt something. I think, Eric, you follow him as well, or he follows you. I've talked to him quite a bit, and I'll give you a real-life example from this, Eric. Matt, where is he? Matt Gray. Have you followed Matt Gray on X, Eric?

Yep.

So I met Matt at a mastermind and we were sitting and he was a paid attendee and I was getting paid to speak. Matt runs a business. I don't know what size of his business he runs, but he's pretty public about it. My business is larger than his. Doesn't mean I'm smarter than him or anything, and he's calling me for advice. I remember sitting down with Matt at that mastermind somewhere in Mexico. Matt's just like, well, what are you trying to do? And we were talking about some businesses. I'm like, man, I really want to buy one of my competitors, but they're owned by Hearst and there's just no way they'll sell them. He's like, dude, I know the person in charge at Hearst, or I know a buddy of mine Knows a person in charge of Hearst and he can get you an introduction and they'll tell you if they'll either sell the business to you or not. So he gets me the introduction. I talk to the person at Hearst, right? The Hearst family is one of the richest families in the world. They own like part of ESPN and a lot of big businesses. He, no joke, tells me, all right, what business do you want to acquire that we own? All right, let me think about it and I'll get back in touch with you. They were not interested in selling it at the end of the day, but he got me in touch with the right person. It doesn't matter how successful someone is or how unsuccessful they are or where they are in their journey. You don't know who other people know and what doors they can open up for you. And you should genuinely take the time to get to know others. And the key is to not just get to know them because, oh, they can help me out in this area or another. It's more so get to genuinely know them, figure out where their problems are, and help them wherever you can. And don't worry what they can do for you. And it all works its way out in that. That's truly how you just build a big network.

Here. So I'm going to give a couple of examples on how you can build a network here. So when I think about, I think about you and me, for example, right? It was me reading your blog posts. Okay. And you and I started talking on Skype and then we met at Taco Bell and then, you know, things, things continued to go from there. Okay. Well, in that case, you were writing a blog post. I was reading, I was trying to learn, right? So I was doing something. Now, when you think about one of our mutual friends, let's use like a Syed, for example, right? So Syed, very, very successful on his own, right? Owns a bunch of, you know, WordPress businesses. How did I meet him? Well, when I was working as a director of marketing for an online education startup, I had messaged Syed asking for a link, right? But from there, you know, him and I ended up at the same mastermind maybe 5 or 6 years later, something like that. And he walked up to me at the mastermind, we started talking, and we became fast friends, right? But in both cases, I was doing something, he had something that he was doing something interesting too, right? And then we both were doing something at a mastermind, right? It goes back to what Neil was just saying. Now, let's look at one of our other mutual friends, Yaniv, for example, right? So, he listened to my original podcast, Growth Everywhere, now called Leveling Up. And then he invited me to speak at his conference, right? And then, you know, what eventually happened was that he invited both Neil and I to speak at his conference, and then Neil became a friend of Yaniv's as well, right? But All these friends that I have, I'll use one more example here like David Hensel, okay? So, he is a guy that met me in a computer game that I was playing when I was 12 years old and he was 21 years old, okay? But in all of these occasions, so everyone's an entrepreneur now, everyone's done well for themselves, but we're all just doing something and trying to get better. And when you're doing something, you're trying to get better, you're going to meet like-minded people. And I think that's the main thing. Whether it's a mastermind, whether it's a conference, whether it's a podcast, you want to find like-minded people who are trying to get better every single day. And that's what it is. And by the way, if you're doing something, you're hanging out at a club all the time, you're partying all the time, if you're— what kind of people are you going to meet, right? It just depends on your goals ultimately. And if you're just focused on meeting people, doing interesting things around business, and you want to grow your business, well then that will probably grow your business. If you meet party people, you're probably going to grow your partying skills, but maybe that's not going to help your ultimate goal. So that's what I think about it.

Dude, totally. But it's just like Don't expect to build an amazing network in 6 months or a year, even 2, 3 years. It takes like 10+ years to build an amazing network and people just don't want to put in the effort. But if you look at it as like, I'm building a network, it becomes tiresome and you're not going to do a good job. But if you're just going out there and just being you and doing business and trying to be helpful and maintain your relationships, you'll build a network without even trying. That's the reality for most people.

So, by the way, it's most people that try to build a network just to build a network, and most people that are professional networkers, like I used to go to all these networking events, it kind of feels very transactional. You're just handing out your card all the time. I would just see people in the room walking around, handing out their business cards as quickly as possible. You're better off going deeper with maybe just 1 or 2 people max instead of trying to hand your card to 20 different people or 30 different people that aren't going to remember you. And by the way, Business and more so networking and relationships is more about giving more than you get. And if you can nail down that equation where you're giving a lot more than you're getting, like 4 to 1, something like that, you're going to do a lot better. So anyway, wanted to cover that piece because I thought it would be a good one for people. Okay, well guys, that's it for today. Sorry for the technical issues. With that being said, we will catch—