The Strip Club Sales Lesson That 10x's Your Pricing

Let me ask you a question. I just want to get, because I've talked to a lot of friends about this already, but do you see running a company is somewhat similar to having children?

No, very different.

That's so interesting. You're the first one to decline, and I thought you were going to decline, but all my other friends say it's very similar because I still think we behave like children. You and me, I'm pointing at you and me right now. I think we're all children, right? And everyone has different, like if you're like, if there's a parent above, like they're going to ask for different things and all that. They're going to see what they can get. That's why I say it's kind of similar, but I don't have kids, so I don't know.

It's very different. And here's why. When you have kids and they do stuff that you hate and they don't listen to you—

You can't fire them?

You can't fire them. And with kids, when they're young, there's not a lot of logic, no matter how smart they are. They just get emotional. They can throw tantrums. They can be really well-behaved one day. You know, like my kids were sick a few days ago for one day. They were just coughing, but it was only early in the morning. And Eric's leaning back, they're not sick now. Although William was sick this morning, but I haven't got anything from him. And they're like, oh, we don't want to go to school. I'm like, Daddy has to work today. So, if you're not going to go to school, you got to let Daddy work. Okay, if you don't, if you let us stay home, we'll let you work.

They're both sick at the same time? Yeah.

How convenient. They And then they cough in the morning, but they were, they genuinely were sick. Yeah. Yeah. So then we're just like, okay, you'll let dad work. They don't go to school. Hour and a half comes, goes by, you know, it's by this time around 9:00 AM. And they're like, dad, when are you going to play with us? I'm like, dad has to work. Remember, I didn't go to school. Yeah, we got it. By the time it hits around 11:00 AM, there's no more, hey dad, chill. Hey dad, you got to take it to the park. Let's go play with rockets. The rockets part I like. So for me, I'm like, all right, let's see if we can get this stuck in trees. I tend to do the stuff I shouldn't be doing, like goofing off with my kids. I'm like, the key with the rock is not just go high, but like, let's get them all stuck in trees and they can't come down. And that I have fun in, it's just a game. But it all became, hey, we need you to spend a lot of time and I didn't get much work done. Again, no logic. What they promise you, it's not necessarily going to hold true.

Yep.

And that's not how it works with employees.

That's a fair example, but I think you get what I'm saying. Like there, there's a lot of similarities is my point.

Most of the friends who I know who are entrepreneurs that have kids, I can't think of one that'll tell me there's similarities, but I can, they all tell me this one same thing. Hey Neil, I want to work and travel more. And I'll always ask them why. And they're like, it's easier than watching kids. But they all love their kids.

I'm curious. So do this, do this later. Just go for the next week or two, go ask your friends. Because all my friends I've asked that are entrepreneurs with kids, they've, they've said it's like, it's, it's like, it's very similar. It's like the same thing. Some say it's the same thing. Some say it's very similar. You're the only one. And I felt that you would say it's different and your reasoning is fair, but go ask some of your friends too. I kind of want to see what they think.

Yeah. And I think the entrepreneurs who are saying that it's very similar, they have a shit B and C team. If you have an A team, at least the people you're dealing with as an entrepreneur, you won't feel like it's like having this.

These are some, some of these people are doing a couple hundred a year.

Forget the revenue.

Yeah.

There's a lot of people that do hundreds of millions, if not billions of dollars, and they still have C teams because they're just in a massive TAM.

Yeah. But these are some people you and I know and like some of them maybe, but some of them have good teams.

Yeah.

Anyway. Okay. So I want to, I want to, I want to tell you this. So this one's interesting. So do you want to know about the strip club sales lesson that 10x's your pricing?

A strip club sales lesson?

Yeah. So get this, a bouncer at a strip club, right? So he makes like 300 grand a year, works 4 days a week, no degree, barely speaks English. Okay? So this guy watches him and he turns away a bachelor party of 12 guys. Okay? So he says, sorry, we're full tonight.

Okay?

But the club was half empty. They begged, they offered $500 to get in. He said $1,000 and then they paid, right? Then the guy that was watching him was like, hey bro, like it was empty. Why did you do that? And then the bouncer looks at him and is like, are you stupid? So he's like, look, if I let them in easy, they spend $200. If I make them pay to enter, they spend $2,000. They have already decided that the night is expensive, so they act expensive. So then this guy goes back and tests this on his consulting. Before, he was charging 5 grand for a project, right? Now it's like, oh, let me think about it. And so then he says, hey, I'm at capacity. Let me see if I can move things around. And he doesn't talk to the prospect for 3 days. And then he's like, hey, okay, I can fit you in you know, $20 grand, but that's because of the rush. And then his close rate jumped up from 34% to 71%. So the lesson here, and this is a post from Gisco on Twitter, scarcity isn't a tactic, it's a filter, right? And so that's how this bouncer makes $300 grand a year. And then he just helps the club jack up pricing too, because everything's valued higher.

So isn't the bouncer supposed to just get paid a flat salary and not be taking money from people? Because I'm assuming they're not paying him $300,000 a year.

Yeah, so he's getting greased by all these people. And then he also knows the game too. Like, hey, like, look, if you let them in, oh, we'll give you $500, $1,000. So imagine how often that happens. He just manufactures scarcity in a club. And I used to be a club promoter at UC San Diego, right? And we would manufacture this really long line and there'd be nobody inside, right? Just to make it look like, oh my God, this place is popping, blah, blah, blah. But imagine like if he lets them in easy, they don't spend anything, they're not gonna spend much money. But because they already spent $1,000 to get in, it's like they have to spend a lot more inside. Yeah.

Yeah, I get what you mean. This model for anyone listening does not work if you're an enterprise.

No, no, but it works in different areas.

It works in different areas.

What areas do we think it works in? Strip clubs, that's one.

I think it works for like individual consultants as well. Like if you're a social media consultant or someone who helps other people with their marketing and you're individual, you don't have a big team.

If you're a club promoter, sure.

Club promoter. Any way that where your personal time is valuable and you can say that you're full and you're creating quote unquote fake scarcity, whether that's ethical or not.

I mean, we know consultants that are doing 7 figures by themselves. Like we're talking about like multiple 7 figures and they have like one assistant. So you can do that because you are selling your time.

Yes. I think in that model it works extremely well. Strip club is the obvious one because that was the example that you gave. I can't think of too many.

I just know it doesn't work when you have a massive team.

Because it's like saying, oh, we got 2,000 employees. Okay, sounds good. So yeah, we're full up right now. People will be like, you got 2,000 employees, you're going to take all the business that you're going to end up getting. And enterprise procurement will be like, okay, well, we hit up, you know, 10 companies, you're one of them, and you said you're busy, so we'll go talk to the other 9. No problem.

Here's the problem with most marketing agencies. They don't understand what is happening with the world of AI. With my agency, Single Grain, we think about agentic workflows. We think about creating agents for the future. When we think about SEO, we think about creating different products such as internal linking products or content consolidation products. And on the other side of things, we think about building products such as Carr. We just think about making marketing easier overall. If you want to stay at the cutting edge of marketing and at the same time leverage the power of AI, go to singlegrain.com and we'll see you on the other side. Dude, you know, one thing I want to test. So I was reading about this, but Goldman— I don't know how long ago was this. Maybe they still do this right now. But Goldman Sachs, they basically double employee salaries And what ends up happening is they get 3 times the profits. And so I was reading this, I was reading a book called Scaling Up Compensation, right? And so I was just getting comp ideas. And so I was like, whoa, like, because we're so big on AI fluency right now, what if we just took the market salary and we doubled it for everyone that comes in with super high AI fluency? Like, I wonder how that would go. I was talking to my CTO about this, right? Who knows? Like, I'll let you know how this experiment goes.

You should try it.

But I'm actually curious. And if it works well, I can see you doing it too.

You should try. No, I wouldn't do it.

You wouldn't do it?

But you should try it. I'm curious on the results.

Why do I have to go through the pain? What about you?

No, no, I don't want to try the experiment, but I know you'd be up for this.

I would be up to try it actually, because look, Goldman Sachs is not stupid, right?

But also there's no way Goldman's paying all their employees double the amount or else the stock price would get—

Not all. But this was, I don't know, again, I don't know how long ago is this. I think they switched this, but we do know that if you're coming outta school, I think Goldman does pay more, but they also work you to the bone, right? But if you double employee salaries and you get 3 times the profits, Morgan Stanley pays better than Goldman.

There's actually a lot of people who pay better than Goldman.

I don't know, but they have the numbers here where it's like they get 3 times the profits from an employee, right? And so because it's higher perceived value and you're going to have the people that want to do better for themselves coming from prestigious universities, and it makes sense that that would happen.

Goldman has a closet full of pillows and blankets for people who want to sleep there.

Do they?

Uh-huh.

You know, I'm sure you've been in an office. I've been in an office and it's like, it's not labeled. It's like, it's a pretty, Which office? They have a lot. The New York one. It's pretty stale. So yeah, I haven't seen that before. So I guess you have.

I haven't been to the Goldman office in New York. I've been to a few of them.

There's a lot of people.

Not the one in New York. Yeah. Yeah. I remember during one of the hurricanes, Sandy. Yeah. They had a generator and the lights were still on. And it was all over the news and it was like, the lights never turn off at Goldman Sachs.

That's a pretty good ad. Yeah.

It wasn't an ad, it was all natural.

Oh, I thought it was a— but it became an ad.

It could have been, yeah, it could have became an ad, but everyone was talking about it 'cause they were just like, look, Goldman Sachs, lights don't turn off.

Yep. The last one we can end off here is, so I'm looking at this, this guy who works for Menlo Ventures, so they dropped a 12-page AI report. So this is how 500 executives at US enterprises use generative AI. And so look at this over here. So what we talked about earlier, Anthropic is actually the— they're the leading LLM provider when it comes to enterprise, 40% of market share, whereas OpenAI dropped from 50% to 27%. This is in 2 years. And then you have Gemini coming out of nowhere, 7% to 21%. And then Meta is like, you know, falling by 50%, right? So AI coding market share, Anthropic 54%.

So when you're saying market share trends for leading LLM, I'm assuming this is only for coding. Yeah. No, this is not coding 'cause Anthropic on the left side is 40%.

Yeah, so this is coding market share, you're right. Market share trends of leading LLM providers. This is for 500 executives.

Got it, so the left is enterprise companies, the right side is for market share for coding related.

Yes, yes, and used by the enterprise, yeah.

Yeah, I think ChatGPT is going to struggle more in enterprise because they haven't made enough moves to adapt. I think Google will start doing better on the enterprise end than ChatGPT. Dude, and that's where the money is, by the way.

This is what we were talking about earlier with the fast growth of Cursor and Lovable and all that. You look at enterprise AI, AI, fast scale, and then Lovable's not AI, but Cursor is.

So, well, Lovable is AI.

Oh, sorry, enterprise, enterprise, enterprise, enterprise AI, yeah, yeah. So now capturing 6% of the $300 billion global SaaS market. So we went from $0 to $1.7 to $11.5, so that's a 6.8x in one year, and then $37 billion, 3.2x year over year. So the growth is insane, and I don't even look at it, like we talked about this last week, I think, but people say the SaaS market is like $1 trillion, right? I think a lot of this stuff is going into services, which is like $16 trillion.

Yeah.

So I don't know how you're looking at it. Where's the gen AI budget go anyway? But you guys can check out Menlo. Maybe we can spend the last few minutes talking about this because where are you going with the software side of things? How do you see that evolving? Because yesterday I was looking at one of the LLM trackers, they added in, you know, context, agentic workflows and content production, right? And I think everyone's going to start doing the same thing. Maybe a month ago we talked about how I, we do have a little, like where we're different is we both have a services line. How do you think you are going to separate yourself from the pack?

Sure. So I'll give you an example with AnswerThePublic, because that you'll see the changes in January. So we bought a tool that does content creation really good using AI. We'll improve upon it and make it even better. So that'll be integrated and launched within AnswerThePublic. So imagine doing keyword research, but instead of just picking keywords, you can just start writing content on any one of those topics within our system. It then creates a content calendar and there's a lot of different steps from figuring out the tone of voice you want, the type of content you want, writing it, adding images, and it'll post automatically for you to— it'll create the calendar, post automatically to either WordPress, Shopify, or Webflow. You can set it as a draft or you can just have it go live. We'll start doing that. Then we're going to start integrating promotions. And when I say promotion of the content, you then schedule a call with people on our team and then our services side will work with you on promoting the content.

Oh yeah. And getting links and all that too. Yeah.

And, and then we'll start doing similar workflows for social media as well.

And guest posts have made a big comeback too, because now they're like, oh, you can't just keep listing yourself. Right. So all this stuff is like, everything comes back to services and that's where I think you and I are differentiated because the things you mentioned on the software side, there's multiple people do it. And like, we're even doing that on the ClickFlow side too, but it's like, That's why it's like, you know, the thesis has always been from my CTO, it's like everyone's just gonna make the same shit, but then it's the human aspect. Even Elon saying like, oh, live events are gonna become more valuable. It all comes back down to the human aspect. Yeah.

But even think about like the AI visibility tools. How many people talk about 'em now?

Nobody.

Yes. No one cares.

Last thing we can end with here, just a nice graph over here. Look, coding dominates $7.3 billion. of the departmental AI spend by category. Look at this, $4.2 billion on product and engineering, $700 million on IT, $660 million on marketing, right? It's all coding right now. This stuff will catch up. And then you look at healthcare dominates $3.5 billion vertical AI market, vertical AI spend, $1.5 billion going into healthcare.

I think coding is so much more stickier. I don't see marketing catching up like the way coding is.

Yeah, also because, I think Ilya said this, one of the engineers, AI engineers, he was like, look, whatever is verifiable, like math or coding, AI can pick that up very quickly. It's not going to hallucinate that much, right? Sometimes it might mess up on the numbers a little bit, but marketing where there's a lot of taste, there's a lot of room for— there's a lot of time before I think AI is going to just have something like Cursor for marketing.

So, you know Kevin? Do you remember Kevin from Seattle?

Yeah.

So Kevin from Seattle, left a hedge fund, started his own company, no employees. He's been doing this for a while and he takes his own capital and trades it in the market. Kind of like, are you familiar with Jane Street?

Mm-hmm.

You know, like the Undercover Billionaire, you know, like the founders and stuff. Jane Street's a high-frequency trading company, bot trading, and it's like Citadel. They're just like cranking out thousands and thousands of trades and they're clipping like, you know, Pennies on a dollar. But those pennies really do add up when you do them in quantity, assuming you can get your fees on the trading side low enough. Kevin used AI to code up his own version of Jane Street. Of course, it's nowhere near Jane Street's level. I don't mean it in a disrespectful way, but Kevin's making an arm and a leg. When I say arm and a leg, I'm not talking about like 10, 20% on his money. I'm talking about like in excess of more than doubling your money. And he's starting with a really solid base.

Yeah. Okay.

In short periods of time. And he was doing this for a while. So he's coding with these LLMs. The same code will code some of the trades correctly, or will the same code trade some of the stocks correctly, and it trades some of them incorrectly. And with coding, it's not bad. He saved a lot of money, but even with him, he's like, dude, One mistake, like one of his bots did not code Microsoft correctly or did not trade Microsoft correctly, even though it was using the same code and it should have. And he couldn't figure it out. And he's like, man, he's like, this is when sometimes you just have to hire an engineer to review everything and just double and triple check.

Yep.

Because these little mistakes, they don't cost you like $1,000. Some of them cost you millions of dollars or hundreds and thousands of dollars. And he's just like, so he'll start eventually adding people.

Yep.

But I do see, it hallucinating way less? Because we were talking about hallucination in marketing versus coding. And he's like, yeah, I rarely have problems like this. And I'm like, dude, I have problems every single day with so many hallucinations. He's like, nah, these things work really well with coding because it's much more black and white.

And that's why you need to have a human in the loop. That's where we're going to end because I really need to pee. So goodbye, guys.