What Eric Learned From Hosting A 9-10 Figure AI Operators Dinner

So, Neil, I'm in New York right now and I'm here for a couple of investor meetings. I am here, I'm speaking at 2 conferences. Spoke at MozCon on Tuesday, which I've never spoken at before. And then today I'm speaking at an e-commerce conference, the Social Commerce Summit that we spoke at in Manhattan Beach. So, Stuart's doing another one. And then I also threw a dinner. Probably the highlight was the dinner that I threw on Tuesday and I wanted to share some learnings. I'm also going to prompt you with some of the questions I used because my Hermes came up with some questions that they're actually really good questions. And so this dinner was 9 to 10 figure AI operators. And then by the way, the restaurant I hosted at, I saw DJ Solomon. You know who that is?

No.

It's the freaking CEO of Goldman Sachs, man.

He's this—

remember he's a DJ?

Oh yeah.

Yeah, yeah, yeah, yeah, yeah.

He gets made fun of sometimes. I'm not saying people should. He should have hobbies, but I think Trump is the one who makes fun of him for being a DJ.

Yeah. It's funny.

So I think it's DJ Solomon. I'm like, I don't know what music he's creating.

So he was like, my friend and I were talking at the table and then I looked over. I was like, I was like, he's like, yeah. I was like, oh, it's DJ Solomon. And then like another investor came over. This, this place I hosted at, it is so interesting because it's, it was like all investors and finance people there. Whereas in Miami where it's the same restaurant, it's not like that. It's very chill in Miami. So anyway, I hosted this dinner. You had people from, you know, we're talking about, you know, 9, 10-figure companies, like revenue-wise. And I'm going to kind of just go down the list and share some takeaways and some questions. And then, Neil, we can kind of go back and forth here. And then I'm curious to see how your week went as well. Excuse me, I have a lingering cough as well. So first and foremost, Neil, one of the first questions I asked was, You know, where are you actually seeing margin expansion with AI, which is a very important question, right? Because we all like to talk about stuff we're doing right now. So do you want to answer that first and I'll give you some answers on it, then I'll give you another good question after.

We're seeing margin expansion by AI by cutting, and you got to be careful which models you use because if you use the wrong models, they're very expensive. And what we find is a lot of organizations use the most advanced models to do some of the most simplest things, which doesn't logically make sense. And they can use older models that are a fraction of the cost. But we see margin improvement from mainly cost cutting.

Okay, so the table struggled to answer this one. Okay. Now, one of the guys was like, it's very clear for us, this is a, this is a multibillion-dollar company. He's like, we're seeing margin expansion clearly in customer service, right? So customer service, we're seeing that because obviously that one is You know, you look at a Fin, for example, it can handle a lot of these support tickets. And so you're actually saving significantly there, but in other areas, not as much, right? And so for coding, you can say, yes, we're getting more output, but what ends up happening is you need to hire more engineers anyway. So it's not like anybody has created—

And pay them more. The good ones want more money. We're not seeing margin expansion in developers.

Yeah. And by the way, like one topic I started to bring up last week, was this whole thought around if all these people, let's say, Neil, you become more powerful with AI, but I don't, and you're able to do all these other things, how do we handle compensation with you? And this was a really— like, I asked it again at this table. I was like, how are you guys thinking about compensation when it comes to the AI-pilled people? And I might as well bring it front and center because I think a lot more people are going to start talking about this. And so one of the guys, he's like, yeah, I brought it up. And then the HR team's like, well, we already have these structures and all that, and this is how it's going to be. And so he doesn't necessarily agree with it. He thinks that people should be compensated, AI pill people should maybe be compensated like athletes. Like if you're LeBron James, for example, you get a supermax contract. Or if you're somebody else, like, I don't have a good name here, but if you're, I don't know, I was trying to give an Asian player name, but there aren't many of those either. So my point is, when you look at an athlete, a superstar athlete, they get paid a lot more. So that's an interesting model. Someone else at the table, they compensate their developers just a lot of money, right? And I'm like, how does that work exactly? Because their developers can make up to 7 figures and they start at a good amount initially. And he's like, we charge them based on these story points. And I'm like, what's a story point? And he's like, a story point is like when you have a storyboard for a product, but we charge them per that. I'm like, isn't that just time and materials? And he's like, well, no. And he gave me some answer, but then I still interpret that as time and materials. There's a couple answers here, but Neil, I'm curious to get your thoughts. We should react to this in terms of how we're thinking about it.

Yeah, just honestly, internally, we're not thinking about margin improvement from AI. We're trying to figure out— we're not even trying to figure out where we're focusing our time and energy is how to get people more productive and do more. And I think the key is do more because when you're doing more for the customer within the same price point, yes, you're using this technology, it helps you be more efficient, maybe you don't need as many people in certain roles, but you are paying for AI and tokens, which can be costly depending on which model you're using. Net-net, we're not seeing too many margin gains and we're not seeing too much extra profitability because of AI, just being really transparent. We're able to do more that we've never been able to do before, but that costs more money, right? So I'll give you an example. We have— we work with a lot of franchises, and franchises are all different types. Some people are old people homes, some people could be like a dentistry franchise, some people could be a restaurant franchise, some people could be like an HVAC franchise. The list goes on and on. And what we found is, and this is obvious, every franchise has its own needs. So we started building custom interfaces for franchises to make the reporting better, to make the experience better, because some of these people have like over 1,000 locations and it can be really painful to manage it all in traditional systems. So building something custom for each of them would cost hundreds of thousands of dollars, if not millions of dollars. And then you got to maintain it. With AI, we're able to do this really quick, really cheap for a few thousand bucks or $5,000, $10,000, whatever it costs may be, including human time. Customers are happier. It makes life easier, not necessarily meaning we're saving money, but life easier from a reporting angle, making us making less mistakes, franchises making less mistakes, people being more clear on what's happening, the results. And what we found is AI's created the opportunity for us to do more for our clients and do different things that would've been too costly based on their budgets. Of course, we would've loved to do these things in the past. Client's not just going to fork over extra million dollars for a custom interface that's designed just for them, in most cases from what we've experienced. And these kind of things haven't made us more money, They haven't really saved us any money. We're just now doing new things that were not financially feasible for our client, but now are. That's a big thing that we've noticed as a marketing agency because of the technology.

You know, it's interesting. I was listening to this podcast with Lenny's podcast, Lenny Rachinski, I think is how you pronounce it. And basically they ran a large-scale survey around tech worker sentiment around AI. And so, the number one fear in AI right now is actually not necessarily losing your job to AI. That's actually second from the bottom. But the number one fear right now in tech is actually do more for the same pay squeeze. So, most workers are feeling— because you just mentioned do more, right? And so, with these people that are very excited about it, I think you have 41% of people that are excited about this stuff. Their whole thing is burnout more, right? And what's interesting is that the founders that were surveyed, they're having the most fun ever, but they would never recommend founder as a job. And that's funny. That's not really funny. But you and I, I don't think we'd recommend founder as a job to the vast majority of people because it's really hard, but we recommend it to maybe like 1% of people, right? But I thought that was really interesting that you brought up the do more thing. And it turns out that the number one fear in tech right now is the do more for the same pay squeeze.

Yeah, dude, you don't have kids yet. But would you ever want your kids to be an entrepreneur? Honestly, I'm just curious.

Nope. Nope. Oh, actually, hold on, hold on, hold on. Maybe my son, but I wouldn't want my daughter to go through that, which is— I feel like that's how you've set up yours. Can I— is that kind of how you feel?

So both my kids are great. My daughter, she's young. She has made up her mind that she wants to— she's really well educated for the age of 7, and so is my son at the age of 5. I'm not saying that means they're more brilliant or anything like that. Just being quite frank, when you have more money, you can pay for private schools and tutors and all these things that help your kids get ahead in life. Right. And I wish everyone else had those opportunities as well, but— I'm just speaking real here. My daughter right now at the age of 7, a lot of times she tells me, I'm like, what do you want to do? And she has some ideas on what she wants to do. But then she says, in the long run, I want to have a family. I want to raise them. And I want to be home cooking for them, taking them to school, you know, and helping them be the best kids they can be and be successful when they grow up. Right? And some people are going to hate me for what I just said there, but I'll also say one other thing. I believe being a mother is the hardest job in the world. I think being a stay-at-home mom is much harder than working 9 to 5. This is just my personal experience. Even as an entrepreneur, I think what I do is much easier than raising kids. I cannot do it. I think it's way easier to get on a plane, speak at a conference, do some meetings, go back. I get to watch Netflix. You're a mother. A lot of these mothers have it even worse. They have to work 9 to 5 and they have to take care of the kids at home. I get they may get help from their significant others, but check this out. If you're a mother and you're sick and then your kids are sick, they don't care. They still expect you to help them out. Like, you never have a day off in your life. So when my daughter said that, if that's what she wants to do, more power to her. And then she asked me, I was like, so what are you gonna— or technically asked her, I said, what are you gonna do for money? She's like, I'll work for a little bit, but then, you know, I'm gonna live with you. I'm like, oh, you'll live with me? I'm like, I would be very ecstatic and happy if she lives with me. I'm like, you sure you're gonna live with me? You pinky promise? I'm like, don't change your mind. And literally before she pinky promised, she's just like, well, actually, it may be easier if I live next door to you. And then I said, how are you going to afford the house? And then she says, you love me, right?

And I'm like, yeah.

She's like, you'll help me. And then I was just cracking up. For my son—

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If he wants to be an entrepreneur, I would be okay with that. He's really into numbers. Like for Christmas, he asked for things like a calculator. I wonder where he got that from. Yeah. So if he wants to be an entrepreneur, I would be really happy. I wanted to name him Neil Patel II, you know, and that did not happen. It wasn't that I couldn't name him Neil Patel II. I wasn't sure. I was like, should I, should I not? And then I settled on, I'm like, eh, let's just name him Neil Patel.

I think it's better not to because imagine if Michael Jordan named his kid Michael Jordan. I think he did actually. That's the thing. If he doesn't live up to the name, it's tough.

Correct. And I'm not saying I'm an Elon Musk or I'm— I know I'll never be that successful, but still, I don't want my kids to believe that they had to do what I did. And I don't think it's the best quality of life. What I think is actually better, like, my son's like, maybe I'll get to be a scientist, or I'll get to work with animals because he loves animals and animal facts. And he's young, and I don't know what he wants to do, but I do want them both to work, and I do want them to understand how hard it is. Whatever they decide in the future is up to them. But if my son had a choice, from making millions and millions of dollars and being miserable or being a teacher and being happy, I'll tell him, be a teacher and be happy and go live in like Missouri or something like that. Now, if he wants to be a teacher in Los Angeles County where he probably wouldn't be able to afford a home because it's just sad but true, and he had kids and he would be next to me, I would help him out because what's the point of me working all this hard, all these years to not have my family next to me.

I will come back to the compensation thing in a moment, but my take on it is the way I see it is I would want my son to go through it because I see entrepreneurship as a rite of passage type of thing and you learn a lot. I think it's a great learning machine. I don't think I'd want to put my daughter through it. That's just my philosophy. And I do agree that being a mom is the hardest job. I looked at my mom, she had to be the breadwinner and she had to be the mom. That's double hard, right? I think your mom was like that too.

Yeah, same.

And so I wouldn't want my daughter to have to do both. At the end of the day, I think one's already hard enough. So that's just us. But going back to the survey for a minute, Neil, so I'm going to read some of these things and then let's talk about AI and compensation. Okay, so you have the number one fear right now is doing more for the same pay. Okay. Most people in tech would not recommend their own role to someone else entering the industry today. Okay. Designers and researchers scored the worst. Founders came closest to neutral. That means you and me are closest to neutral. Everyone else is there not recommending their job to someone else. That's fascinating to me. Now, the one, the one final thing I'll call out here, then let's talk about the compensation piece, is AI is splitting the tech workforce in half. So when asked how AI has shifted their professional identity, 50% of respondents said they feel amplified. Okay, I feel like that. I think you feel like that too. So we feel more capable, more productive, more excited about their future, right? The other half feel like their role is being Redefined, so 27%, that they're feeling destabilized, 14%, or that they've been diminished, 5%. So, I would say maybe 19% of that is fairly negative. I think redefined is not necessarily negative. And which category you're in correlates with your career optimism, burnout, and layoff worry. And then the final thing, final, final thing for real now, burnout surged 10 points in a single year while optimism fell 6 points. I think burnout the year before was like maybe like 44%. Now it's like 54% or something like that. So we've said this on the podcast before that my number one concern, especially with the AI pill people, is burnout.

Yeah, I definitely can end up seeing it. And I think things will change within a few years because I don't see people going this hard, especially in certain roles like engineering where they're expected to do a lot and work a lot of hours and crank out more. I know the top players are getting paid well, but dude, they're saying, oh, the engineers don't have to code as much. A lot of the A-player engineers that I know now are working 6 to 7 days a week and they're working like 13, 14-hour days. It's just not sustainable. Just being realistic, I don't think it's sustainable, especially if you have a family. And I just think if you're not getting enough sleep, you're not as productive during the days that you're working. I don't care if you're using AI or not.

Yeah.

You're just not as productive if you don't get enough sleep. But I think things will change. It's just a question of when.

So it says also founders are still the happiest people in tech. For the 2nd consecutive year, founders score highest on optimism, job enjoyment, AI excitement, and lowest on burnout and layoff worry. The there's never been a better time to build narrative holds emotionally, at least for now. So anyway, going back to compensation, Neil, so we've talked about some people look at it as, oh, maybe you have to pay your superstar athletes, okay? The second piece is, okay, maybe you're awarding people based on these story points, or maybe you're giving people a percentage of upside based on, let's say a client's paying 10 grand a month and then they upsell to 100 grand a month. Then on that 90 grand difference, maybe you're getting like 10% of that, right? And so I think we need to reimagine compensation, and I don't think it's going to happen overnight, but I think a lot more people are going to start to think about this. And when we have better tracking when it comes to outputs or outcomes that people are delivering, and we're able to kind of tie things in with like smart contracts and things like that, then I think people will be more satisfied with their compensation. Because I don't think, Neil, you're necessarily wrong for saying do more. That's becoming more of an expectation. But I do think compensation needs to adjust as well. Otherwise, it's the rich are going to get richer and then the pitchforks are going to come out.

When you say the rich are getting richer, I agree with you. It has to be fair for both sides. And I'll give you an example of this in a bit. But when I say that, if you're doing more, but your token costs are through the roof and it's very expensive for the business and their margins are going down, that's also not fair to the business. Assuming you're doing what's required as one individual, there has to be a balance. And what I'm getting at is it's like, If you're using AI and you can't replace any other people and the customer's paying the same amount of money, something's going to end up breaking. And I think companies are realizing that they're spending too much. A lot of these employees are token maxing, which I think is over now or is going to be over soon enough. And it's all about just making it fair on all sides. A real-life example of this is My buddy works for a software company and the software company focuses in the health service space. So him and their team members are on a thread. They're really friendly and they were complaining how they barely got enough of a raise to even meet inflation. So they're like, and this was just a raise for standard of living. This wasn't a raise for promotions or doing better. This is just a standard of living increase. And they were all complaining that they barely got enough money. And the first thing I asked was, does your company that you work for have investors? And they said, no. I said, how is the financial performance of the business? And they're like, oh, we've been struggling over the last 2 years. We've been doing worse. So I look at that as, so the founders are helping you out. And I asked them, I'm like, do the founders live lavish lifestyles or anything like that? They're like, no, they're putting all their savings back into the company keep it afloat. And I'm like, so you guys are pissed off that they barely gave you enough money to meet the inflation rate, but the founders are putting their personal livelihood into the business so that way everyone gets paid and the founders aren't taking any salary and they're not living lavish lifestyles. And I'm like, you also have to look at it from their point of view and they need to look at it from your point of view, but they're just trying to keep everyone you know, doing okay with the job. And I said, hey, have they thought about raising money? They're like, yeah, they tried, they weren't able to do it. So they're just trying to keep the company afloat and not fire anyone. And I'm like, look, that's pretty admirable, right? Not a lot of founders were willing to do that. They would just fire and just think for themselves and do what's best for them.

Neil, let me take the other side of that just to experience share. And then I think you'll find this I think you'll understand where this is coming from. So, you know, whether I've put millions of dollars back into the company a long time ago, right, or whether there's a period of time where I didn't get paid, nobody gave a damn if it was my personal sacrifices or if I didn't get paid a dime. And but they do give a damn if you are living a lavish lifestyle, right? Which, which, like, it's funny, they don't give a damn when, when, if you're sacrificing. And I won't even put this on anybody. I think it's just human nature, right? Human nature. People tend to look at their own situation. And then when it's like, oh, the founder's sacrificing even more, it's like, well, my situation still sucks, right? So I think I understand where you're coming from, but I just kind of sharing my lived experience here. The vast majority of people won't care that you've done that.

Yeah, dude, I totally agree. So, you know, and I'm not saying that people should care or shouldn't care or shouldn't switch and try to get a job. It's just finding not only the right balance, but this is why I think it's really important to hire people who are a really good cultural fit. If you don't, I think you just run into issues where they don't look at the whole picture or care as much for the company, and the company doesn't care as much for the people.

Yeah.

It needs to be both. Like, I think of a company as a family. If the founders don't care for the team members and the team members don't care for care for the company, it's not going to work out. And I'll give you a real-life example of this. I had someone whose kid was sick, like really, really sick, really badly. And I'm happy everything ended up working out. We told them, don't work, just spend the time with your child, right? No parent should ever have to see their child be really sick or even potentially pass away before them. It should be the kids seeing the parents pass away and not the other way around. And we didn't care how much time they took off or whatever they needed, we'll still pay them, right? But you should support your team members when they are struggling and when they're really in a time of need. I've also seen people abuse this and say they're sick. I think you went through that experience where someone said they were sick and they took another job and they were just milking money from you and trying to take your clients and create their own business that competed with you on the on the side that did the same exact thing while they're getting paid from you and they were just blatantly lying, right? To me, that's just unethical and people shouldn't do that. But yeah, you can see all sides of it. That's it. Thank you guys for listening in. We'll see you tomorrow.