Video (media leverage) for business owners: Early Lessons Learned

Another edition of Lazy Leverage, the internet's number one small business operations podcast. I am joined by my plaid-wearing, tractor-fixing, crane-break-taking heterosexual life partner, Peter S. Lohmann. How are you today, Peter?

You guys thought I was gone. John did 2 episodes without me. I was at a conference, but I'm back. We're still together. We're still, you know, we're still a pair. We're still, still a couple here on Lazy Leverage. And you're right, my tractor is broken and I've been recording some video with, uh, trying to get it fixed, trying to do like, you ever, I'm sure you've seen these videos. There's a billion videos on YouTube of like how to fix a tractor. So I thought I'd, uh, just have fun with that. Why not? Right.

Love it. Yeah.

Why not?

And, uh, what's good about your travels last week is, you know, while traveling is hard and being away from the family, at least you get to go to exotic locations like South Dakota.

South Dakota. That's right.

South, you know, that's what makes it all worth it. Rapid City, South Dakota. ...someplace that you didn't want to go to, but Rapid City, South Dakota, sign me up, baby.

Yeah, I'm going to some shithole next week. I think it's called San Diego.

Oh yeah, you're staying with me next week. We're gonna do a live pod. Um, okay, so, uh, just in case you missed it or whatever, you know, I did 2 awesome episodes, and I like to think, you know, when I, when I seek with how I like to identify myself, I like to think that I'm one of the only people who could do a somewhat wonkish theory of constraints conversation with Justin Roff Marsh on Tuesday, and on Thursday, talk about the spirit path with my shaman hoot. Yeah. And I like to think there's not— I like to think that, you know, a good rule in content is if anybody else could have made it, you shouldn't write it. And I think if you look at last week in terms of podcast recording, I don't think that there's a lot of folks who are really into contribution margin per constraint unit, as well as the spirit realm and talking to your ancestors.

I think you're probably right about that. Right.

So that's, you know, that's— I felt, I felt good about last week. Have you, have you listened to those 2 episodes yet?

I have the Justin Roff Marsh one pulled up right here to watch as soon as we're done recording. Is the other one up yet?

Um, it was just live on Twitter, so it's on Twitter, but it'll be up probably pretty shortly. You want to hear the 2, my 2 favorite ideas that still stick with me like a little bit later from Justin?

Definitely.

One of them was We were talking about— one thing was a lot of theory of constraints consultants come in and they say, if you go into a factory and you can't figure out what the constrained machine is, pick one. And I was like, that's so smart. Like, well, it could be my crews or it could be this machine. And it's like, pick one. And it's like such a profound point. It's like, It's like, when you're lost, any map will do.

Yeah.

And it's just such like a wonderful— it's just such a wonderful approach, which is, well, I don't know if I should— it's like, pick one. Well, my, my maintenance team— it's like, pick one. Yeah, I just, I don't know why, it was just, it was just like summarized wisdom. It's like, I don't know, pick one.

Well, it's used to like, um, you know, A lot of entrepreneurs and a lot of investors struggle with analysis paralysis. The idea that you have to get it perfect before you make a move. That is something that I think is very relatable, at least I know is in property management with business owners. And I'm kind of feeling a little bit of that with my own endeavors into making YouTube content, which maybe we'll talk about that later. I'm feeling like because I'm so experienced with these other domains of media, Now I've recorded, I've probably recorded over 500 podcast episodes across like all the shows I've ever been, been on or done. And I've been on stage many times. And I've written, I've probably written 500 email newsletters by now. So this is new for me. And I'm feeling the weight of having good taste with media and seeing that my own stuff is nowhere near that level.

Yeah, yeah. YouTube versus what your newsletter or something.

Yeah. So it's kind of like, yeah, to your thing is like, yeah, just pick one. It's like, yeah, just start, just get in there. Get, you know.

I like, uh, I like, uh, action produces information.

I love it. I was just gonna say that. That's one of my— I just said that the other week again. Uh, that's one of my favorites. I love it.

That one stuck with me. Uh, action produces information. Um, so, uh, okay. So that was one thing he said that I really liked. And, uh, the other thing he said, which was, we talked a little bit about, um, we talked a little bit about—

The self is an illusion. Oh, that was probably the other one. Sorry.

No, that was, no, that was the, uh, shaman. Um, we can talk about that too. But the other thing he said that really stuck with me was about F1. teams. And he's like, you know, everybody, even in NBA, would see that you shouldn't fire half the pit crew because—

Even in NBA.

Yeah. Would say you don't fire the pit crew because of their efficiency. Like, and I was like, good, love it. And I was like, yeah, but like in business, it's a little bit different because I'm chasing free cash flow. And they very obviously are just trying to finish the race at a lower time. So it's easy when you have a unifying metric, like a race time to not make something dumb, but I'm chasing something more nuanced, like free cash And then as I was talking to them, as we were talking about it, I was like, wait, F1 racing teams are also chasing free cash flow. They're businesses too. They've just chosen to use this one. It's easy for them to know what their number is that produces the best business. And you too, Peter, can similarly say, this is the number that we choose to put on the wall, so to speak, that will drive free cash flow with the same simplicity.

Mm-hmm.

that getting our F1 race time down is, because an F1 is also a business trying to chase free cash flow.

Yeah. What's your equivalent of winning races makes us money?

Correct. And you too can have a big number on the wall that everybody at our, you know, net revenue retention for Crane members or daily active users in Crane, and you too can have the exact same simplicity if you just put your foot down and say that. And I'm like, I it came out in our he didn't say it, but like he he walked me into that. I was like, oh yeah, I can just F1 teams want free cash flow too. So is it just really he's such a sharp dude and nice.

Well, I'm excited to listen to that episode.

Yeah, big big fan of Justin. And then Shaman Dude was great. Just it was I had Christian Ruff on too. We just talked about it, and it was nice because it's now public. A couple people who I didn't want to like name specifically, but Chris Berg has talked about being on the journey with us, who's great. He's on Twitter if you follow him. And then the other person is Kevin. Henderson, who's founder or co-founder of SMB Law, who is, you know, lives in Dallas and is, you know, comes out of the LDS tradition and, you know, is just on this wonderful journey. And he's talked— he now has written about it publicly. So I don't mind naming that he was there with us. And it was awesome.

So that's great.

Yeah, super cool. So yeah, definitely check those out if you haven't. So what are we talking about today, Peter S. Lohmann?

So what we're talking about today is AI. You ever heard of it? And specifically, I had a note here to talk about with you, which is the biggest problem with AI is the difficulty in visualizing what's possible.

Yes.

And we had a great episode about, you know, the factory floor and how converting steam-driven factories to electric motors, like electric motors are clearly more efficient, more robust, cheaper to operate, easier to start and stop, have all these advantages. However, if you just swap an electric motor in place of a steam engine in a factory, you may not get all or any of the benefits that you were hoping to get. So what it took to be successful in the age of electric motors was creativity and imagination about what is now possible that was not previously possible in the era of steam engines. And it requires like, you have to have both domain expertise and a really clear understanding of like why things are set up the way they are and why they weren't a different way. And you have to have a little bit of a creative inspiration or a creative spark. So it requires like this combination of like deep domain expertise, understanding of why things are the way they are, and also the ability to be really creative, maybe Not to the extent of working with a shaman, but you still need a little bit of creative thinking to—

And lazy, I think also lazy.

And lazy. Great. I love it.

Or energy efficient.

So that's what we're gonna talk about is like, how, how can we reset our thinking around what's possible with AI? What is involved there? And why are most companies struggling here? Or most entrepreneurs, including you?

So let's, let's, yeah, let's use a specific example. Then I think we should talk about Javon's paradox. which is, I think, really important to this conversation. But let's use a specific example. When you— if you owned Sears and Roebuck or whatever it's called, the old catalog thing, right?

And you— Sears and Robots? Sears and Robots? I think it's called Sears and Robots.

Sears and Roebuck.

I don't know. Sears and Roebuck. Sears.

A mail-order catalog, and it's 1997. And you hear about this thing called the internet and email, and you say, oh man, you know, there's some marginal things we can do here, right? The idea that you could send an email and provide a live status update as a delivery driver literally circles my block, and I'm sending my customer that when it's at the distribution center is is. Well, by the time we put it in the post office and stamped it, we wouldn't need— you know, it wouldn't be up to date anymore. So how can you just go, whoa, whoa, whoa, whoa, whoa, whoa, whoa, you are grokking this as if we are going to mail it and it's going to take 6 days to get there. You need to understand that email is free and instant. So in a dream fantasy scenario, how much would we talk to our customer about when they're going to get their new chair? And until you say, okay, I'm an expert in purchasing, and I also know the internet really well. Why don't we send them an email when we've received the order, and then when we've packaged it, and then when we've and and now you actually are communicating more, and you're doing things completely differently because of this new frontier that innovation has unlocked. But it's not like. So I could like mail the catalog with emails. Like it's, it's like, well, yeah, exponential, not linear.

The equivalent is just like, oh, well, we can put our, we can put the catalog on the internet.

Correct.

Right. And you're like flipping through a PDF of 300 pages, right, on searsandroebuck.com.

And literally there's a page flip animation, right? It's weak replacement. It's the same thing with YouTube where you saw people basically running it like TV and you're like, you're not understanding how Facebook ads work.

Yeah, right.

It happens. It's an innovation phenomenon.

There's a real, there's a real phenomenon of like, I don't know what the right expression is here. But expertise blinds you. Like, the more intimately familiar you are, in some ways, it's kind of going against what I just said about domain expertise. But the more intimately familiar you are with how things are done right now, the more difficult it can be to visualize them being done in any other way, or what the advantages of doing that might be. Whereas if you have a beginner, and they come in with beginner's eyes, they're like, why is the factory— this makes no sense. Like, there should be a motor at every single individual machine.

Agree.

What are you guys doing? Right?

Totally agree.

And it's very, very hard. It's harder and harder the older you get. And the more familiar you are with an industry, or with a medium, or with an advertising channel, or whatever, the harder it becomes to think about What were the constraints that existed 50 years ago when things were all set out the way they are now? And what is now possible now that those constraints aren't here? That part of your brain is just decayed and inactive. Whereas some kid coming outta college is like, what are you guys doing? Like, I remember being that kid. I remember coming into, into the engineering firm I worked at when I first started, and I was like, there's 50 things I would do differently if I was in charge of this company. Like, it was so clear and so obvious to me. Yeah.

Yeah, obvious. Yeah, obvious is the word. Yeah, obvious is the word. I'll give you a specific example at Sagan. Your video's frozen, but you can still hear me, I think, right?

Yeah, that's weird. Okay, I can hear you.

No big deal. Historically, every recruiter has done a quality control email that says, is this request that Peter Lohmann Put in, is this a realistic request? And they say, okay, Peter, your budget's good, or oh, you know, whatever. And that's what every recruiting firm in the world does is some sort of intake, right?

Yep.

Now that you have access, and now we've got our data in order and all this fun stuff, I can instead of writing you in an email form, I can just say, Peter, I went ahead and pulled three candidates at your stated budget. I also pulled three above your budget, and I also pulled three below your budget. Which of these three is more what you're looking for?

Mm.

And it's a—

I love that.

How much more, how much more effective is that than me emailing Peter saying you need to raise your budget?

I love that. What's your thing about like someone asks what's your budget? You're like, well, my budget's a dollar, but I'm open to—

Yeah, that's my, that's my line. Yeah, I'm open. I'm open to be convinced, right? So it's like, hey, I just want to show you what this looks like. But that's only possible if you say like, because every recruiter goes, well, of course I have to examine it and I have to use my judgment and artistic experience to know the realism of what of this request based on the characteristics. And I'm like, nah, man, just pull 3 categories below, at, and above in 20 minutes, and then send those to Peter and say, Peter, you still like your choice? And you go, ah, let's go up. And you're like, great. And no convincing is necessary. So that's like a, a very basic example.

Yeah. Am I still frozen?

No, you're better.

Okay, good. All right, so let's talk about how we could cultivate Some of this thinking, because really this is, every business owner should be walking through some type of exercise where they're like, okay, there's a billion things we could do with AI, literally, like it's unlimited and it's getting more and more powerful by the day. What then should I do? So how could we, how could we walk through some type of an exercise or visualization or technique to help unlock that part of a business owner's brain so that they can beat their competitors and Um, leverage the tool, the incredible insane tools that we now have available. And I'll give you my first take on it. I think we maybe had a brief conversation about this one time, but you gotta go all the way back to the job to be done framework.

Yeah.

And you have to think about why are customers hiring us? What is the purpose of them paying us? What product or service Like, like, yes, there's the obvious product or service that we're delivering, but what are— what if, if the customer could instantly solve this problem for free, what would that look like? Right. And then is there something within our delivery that we could, that we could now do that wasn't possible before that gets us closer to that fantasy ideal? Um, Like in your example, the job to be done of a recruiting firm, like when the customer approaches you, the customer's job to be done is whatever this job is that is currently not happening because I have a hole of tasks not being completed. I want those tasks to be completed. Now that's likely going to be an employee in, in the form of, you know, working with a recruiter, but it could also be AI doing the job and you've rolled out your your agent builds in order to plug that same hole. But it's the same job to be done. In this case, it's literally a job to be done. The problem that they have, uh, it's usually not that literal, but that's like, that's the problem that you're solving. The problem that you're solving is not we need to deliver 6 candidates within 2 weeks. That's not the job to be done. The job to be done is these things that aren't being, being done in my business right now, I want them to be being done. And whether that person comes off the street Or it's a recruiting agency or it's an AI or whatever, some magical fairy fantasy. I don't care how, I just want these things to be getting done. And you have to go all the way back to that level and it requires you to take this beginner mindset and put yourself in the mind of your customer and figure out what is the reason that we're there, that they are approaching my firm in the first place.

What is the pain that they're experiencing or what is the I think there's a book recommendation and then there's kind of us, what I would say is a dangerous path that I've already seen. And then I want to talk about empathy because I've changed my mind on this. The first book recommendation is you need to read John Seifer's Output Thinking, which is— I interviewed, I did a 3 or 4 part series with him in early Lazy Leverage, like first 10 episodes. And it's just essentially like it's jobs to be done and it's a systematic way to think about outputs in your company.

Yeah.

And I think that's a great way to think about it.

Yep.

There is a trap here that I've already dodged like freaking Neo in The Matrix. And the big term these days with our AI developers, as well as our head of AI and our head of engineering and all this, and it's more popular, which is paving cow paths. Which is the trap here is to take Peter Lohmann's task map and say, This is how it's done now. I'm going to focus on the process and seek to improve the process. And the correct answer is you take the output as a black box and you say, what is actually the way to get this output? It's the task is not create a Notion page. The output is owner investor is understanding the status of maintenance requests, not upload to Appfolio. The task map is a trap. It's a trap in in the era. It's seriously though. It's a because I've seen it because it's like well we can't use AI here because Appfolio doesn't have a good API and I'm like no no the output is keep the owner investor updated on the status of their maintenance request not upload the maintenance order Appfolio those are two different things correct yeah and like.

You could think of five different ways to solve that problem. Well, we could call the investor every day.

Correct.

We could text them every day. We could email them every day. We could give them a portal. We could give them an appfolio portal. We could give them a Slack channel. We could send a carrier pigeon. We could drive to their house. Yeah. And so, correct. So, but what is the cow path thing? That wasn't connected.

Oh, paving cow paths says the the place where you put streets. If you look at early cities, they're basically along— old school cities in the Northeast, they're basically designed along how the cows used to come in from outside the country into the downtown, and then they just put asphalt on them. And that's why Boston's freaking chaotic. Whereas if you're actually thinking from first principles, you're like, is this how we should put that street?

Are you a cow? No.

But paving cow paths is Well, we post on eight job boards, and AI can't post on job boards. So we need it's like no no no no no.

Okay, I like this.

Paving a cow path, right? It's paving a cow path, which is if you focus on how the work's currently being done, you're going to at the very best do cheap a weak replacement.

Yeah, so it's like well we've always done it that way, so we'll just do it that way but faster.

Correct, weak replacement and save a bit of money because I don't need a. whatever, versus like, I'll give an example, like portals. When I go to an absolute luxury resort, I went to a very nice one a couple months ago. Everything is via WhatsApp.

Hell yeah, brother.

No, which is the point. I don't want to— I don't want to know where the room service menu is. I don't want to know how to book a pool chair. I don't want to call a cab. I don't want to Do shit. I want to go to WhatsApp or SMS and say, hey man, we're going to be out at the pool for a few hours. Can you send the cleaners? Hey, can I get a hamburger or whatever's closest to— now, why can't you build that for your owner investors at RL instead of, well, uh, here's your portal and we update it once a month?

We made it faster and we, we added features to your portal. Right.

But that's not how— if I was a rich owner investor, I want to send a text message in I want an iMessage so I can take pictures and say, hey, man, what's the status of this maintenance request? Not here's a link to your app, your new and improved Appfolio portal. If you need your password reset, let me know.

Screw the Android users, too. They're slowing the whole thing down.

Who's slowing the whole thing down?

The Android users.

Oh, yeah.

And like if you're listening to this and you're like, well, no, I mean portals are great, blah, blah, blah. Let me put it to you this way. Let, let's take John's example. Let's pretend that you booked a hotel for your family vacation. And instead of just getting a confirmation email, you got an email that was like, your portal is now active for ABC Resort Incorporated. Please log in and submit these forms.

Your number is already— there's no login because your number Is the, is the proof.

Yeah, that's the better—

keep going.

No, but my point is, like, I think because we're so used to working with portals— I'm just speaking as like a property management business owner. Yeah, we're so used to the portal thing that we're— it's hard to envision the fact that it's an annoyance to have a portal. And I'm trying to put you, to put you back in the beginner's mind. Picture you booked a vacation And instead of them just emailing you your confirmation, they're like, your portal's now ready. Log into your portal. Everything's on your portal. Get your forms on your portal.

You can't just tell me that. Yeah.

You're instantly annoyed. You're like, I don't want to sign up for a portal. I don't want to sign up for a portal for this thing I'm going to use one time. It's horrible. Correct.

Well, it's really fast though. And it's really easy.

And everything's in there. You're like, I don't care. Just tell me what I need to know. I don't want to log in. I don't want to create another username and log in with 2-factor authentication and everything else. Forget it.

Exactly. Rather, what I do is send a voice note or a text that says, have we collected this month's rent? Or even better, and you can do this with AI, is, hey, could you send me 12 months of— hey, would you like me to send you the trailing 12 months of the rent roll and maintenance requests so you can do an ROI analysis on this rental unit? Not a static portal that's fragile and you have to go buy some SaaS. No, because you send that to AI and you say, Pull this data, visualize it like this, and text it back to them. That is so much better than— and then they text back and go, oh, can you net out that roof repair because that was just a one-time thing? And you go, sure. And then you text it back and you go, perfect, I can now send this to my account. That is so much superior to modifying what you want against SaaS, which is what we've historically been Right.

Yeah. I think what's interesting about this whole thing is the people who are most well positioned to help businesses implement what we're talking about. Like you would think like, well, is it like, who can help businesses with this? Because not everyone's gonna be able to figure out on their own. And your first instinct is like, well, maybe it's like the, maybe it's like the software development agencies because They're familiar, they're really good with the technology and they know what the AI is capable of. So maybe if we bring the software developers in, like they'll be able to help with these AI rollouts and AI implementations. But I don't think that's correct. I actually think that the best positioned people to help business owners here is marketing people. Because if you've ever worked with a really good marketing agency before, it's kind of a fascinating experience. You end up like, You end up like reinventing your whole business from first principles, because they really walk you through this exercise of like, well, why did you even start this company? Like, what do you— what's your— what's your mission? What are you even trying to do? And why do your customers hire you?

Like StoryBrand guys, they're like, why do your customers hire you?

Yeah, who is your customer? Tell me more about your customer. What do they need? What are they trying to achieve? What do they— what pain are they preventing? And how does your solution do that? And how are you different from competitors? And marketers are very familiar with this language of like, what is the job to be done? Because they then craft a marketing message around that and they build your website around that. Now, what they don't do is fix your operations, which is likely not up to the task of this like fantastic thing that they're promising in the marketing. But with AI, you kind of can now develop the magical solutions that the marketers want to promise to your customers. So I think working with a great marketing agency or reading a book like StoryBrand, which is fantastic.

Yeah.

Or kind of getting into that mode of like, not the AI implementers, but the marketers are in tune with your customers.

And, or vivid vision, right? A vivid vision is wonderful because a vivid vision is not, we'll keep AppFolio up to date. It's, our owner investors will never have to guess as to the status of their maintenance. That's a beautiful thing to then reverse engineer how you use innovation versus, Appfolio tickets will be closed in 2 minutes. Nobody, nobody fantasizes about closing. That's a great point.

Right? Yeah, because vivid vision encourages you as a business owner to speak in the present tense of what things would ideally be like 3 years from now. And so it takes you out of your current, like, that time distance helps release you from your, like, your well-worn neural pathways of like, well, this is how it all is right now, right? Like, no, no, no, 3 years from now, everything's perfect. You have an amazing team, you have unlimited budget. What does the business look like? How do you serve customers? How do you find them and everything else? So—

Can, can I tell you why I'm horribly pessimistic? Mm-hmm. For this particular thing? Yeah. The reason why I'm horribly pessimistic Is anybody listening to this almost certainly, and and they're not wrong, and it's why I want to be empathetic. Almost certainly has something to lose, and they currently have 425 doors, and they're making a good living, or they have a recruiting company, or whatever it is. And the pressure to get back to forced principles when you have an eleven thousand dollar a month SBA loan and an office lease, and And an office manager who the last time you tried to roll something new out almost quit, and then you would have had to be the office manager yourself, and the bookkeeper who still mails you things, the appetite to truly get back to the studs is horribly difficult.

Yeah.

I would say basically impossible in almost every offline category. In tech, where you're trying to build scalability and you're new and you have nothing to lose and you're and you're arrogant because you're ignorant, then it's like sure we can run a fully agentic property management company and 99% of them won't work, but maybe one of them will. But if you're currently doing the thing and you've got Tammy, your skeptical ops manager, who if they get sent one more crappy five-coded build, they're gonna quit, and then you're like I'm gonna miss payroll. Like the appetite to truly innovate using technological innovation is almost zero from what I've seen.

Yeah. I don't think it was ever thus. Uh, and that's why you see, like, if you ever look at those statistics about the number of companies in the S&P 500 today that were also there 50 years ago is like shockingly low. I just think that's the nature of capitalism. That's the beauty of capitalism is Companies that don't innovate and, and find better ways to deliver value for their customers end up dying. Now, it's a good thing. Now, the people don't die. The people move on and they join new firms. And there's like this kind of circle of life thing that happens with, with, with the firm in American business.

Correct.

Um, and it's, it's a kind of a beautiful thing. It's kind of a scary thing when you're in it. And I think it's, it's, I mean, you gotta know what's going on and you have to make a decision for yourself. Where are you in your career? How old are you? How well established are you? What's your risk appetite? What are your time commitments in the near and medium-term future for you? And you just have to like, it's, you need to make an informed decision. Don't be blindsided or don't let it kind of sneak up on you where all of a sudden you don't have choices anymore.

What I told my team, I had a conversation with my emerging leaders team. And it's the, the way we're, we're doing it at Sagan now. And there's a lot of changes, which is I said, if you view your job as a static quantity, you will not have your job at Sagan in 6 months. And you can go to work at a different company that is impressed that you know how to use Claude, because for the next 10 years, you— there are So many different companies that if you just know how to use Claude, they will say, oh, this is my— this is my AI agent.

You're gonna walk on water there. Yeah.

You're gonna walk on water for 10 years. At Sagan, if you send me something that takes the call transcript we just had and you put it in Claude and it takes you 3 days to do it, you're fired. And so I think similarly, as a business owner, depending on where you are in your career, and what kind of industry you're in, you can absolutely spend 10 years, the next 10 years, not changing a freaking thing. Are you in a local market who has recurrent— like, you don't ignore— don't risk dying and trying to get rid of AppFlow. Just pay the— it's like you used to say, custom software development is where like companies go to die, right?

Yeah.

Why risk it? You're making a good living. You're happy. You're not being forced by your competitors. You're growing at 10% a year. year, if it ain't broke, don't fix it. But if you're in different categories, you might have to. Or if you're saying, I'm 30 and I'm trying to make my mark, well then you'd make your mark very differently if you do or don't have something to lose. So like, I'm empathetic to like, you have a functioning profitable factory and I walk in, I'm like, yeah, the only way to use AI is to rip all of this out. It's like, Wait, what? And so I'm empathetic, and I don't want to be so dismissive to say, look at these idiots, they're, they're not ripping out their core SaaS 2 weeks after Grokbot comes in. What's wrong with them?

Right?

Like, I understand that if you got a good thing going and you're not in a sector that's forcing you to innovate, don't, don't. I'm super empathetic to it. I'm super empathetic.

to it.

I can tell a story that is going to become more and more common. We're working with a very, very large company and we're building some go-to-market stuff for them. And we said, look, just tell us how you know that this big account is going to come into the market. And we can build an agent to look at the CTO changes on LinkedIn or something, whatever it is. I'm not going to say what the real one is. And I was like, are we getting weird resistance? And You know, this is a multibillion-dollar company and this is the enterprise sales group. And we finally, after a couple of days, we got to this very quickly. 3 days later, the person said, I've spent 20 years in this industry knowing when somebody is going to come onto the market and I'm a salesperson. You don't pay me enough for me to tell you so that you can do it without me.

Wow.

I'm not going to tell you. I've spent 20 years understanding how to know when this type of customer is about to have a million-dollar bid go out. I'm open to compensation conversations.

Interesting.

And I was like, at least it's the truth. Like, hey.

That's fascinating.

But it's a perfect example though of where I'm empathetic to the journey, let's say. I'm not mute to how difficult it is and how hard it is to even get your team to use a simple vertical SaaS Well, and I don't think we've seen change this rapid ever.

Like, I mean, I was— you and I were kind of around for like the internetification of business. Like we sort of entered our careers on the tail end of that where, you know, by the time you and I were working, like every company had a website, every company had emails. Like, but we were still like, we kind of grew up listening to our parents transition from no internet exists to everyone has an email address, right, in business. And like, it took a long time. Like, it was slow. There was the whole dot-com peak and then crash. And like, it was just a very drawn-out process. And as recently as 5-ish years ago, there were many companies operating in my market that were barely using the Buildiums and AppFolios of the world, if at all.

Yeah.

Like, like ledgers on paper. And they were still, they were still there. They're still operating. They're still making money. The owners of those businesses were going on vacation and paying for their kids' colleges and everything else. Now, I'm not saying they were like, you know, had an 8-figure exit or anything like that, but they were making a living. Whereas with the AI stuff, my intuition is that It's moving at light speed compared to something like the internet. And really, yeah, I wouldn't guess so for sure. And I think that— I think what you're saying is true, that you don't need to rip everything out and like you're still going to be able to operate and still make money for a number of years. But I do think it's gonna be compressed compared to anything we've seen before, like the Industrial Revolution, the Information Revolution. I think it's going to be more compressed In the timeline?

I don't think so.

I don't think so. Really?

I, I don't think so. I think it's gonna be 10 years.

But 10 years would be much faster, is what I'm saying.

Well, then, okay, okay. Sorry, then maybe it's just a definition of terms here. I think it's about— for offline businesses to do anything other than weak replacement, I think it's gonna be about 10 years, 10 to 15 years, because I've seen absolutely gorgeous agents get built and deployed and not even used because the ops manager really likes to have color-coded, you know, Google Sheets to track this thing. And it's like, I don't think you understand that this is exponentially different. It's like, yeah, but you know—

Well, but don't think about implementations in current companies though. What you have to think about is how quickly will new companies be able to spin up And yank all the value away from the existing firms.

Got it. Got it. Yes. I mean, I think in 10 or 15 years, if I— if you said, John, what are you going to do? I'd say, well, here's what I'm going to do. I'm going to create a new business model where I don't charge any standing fees for property management because it's done totally agentically. But I have an exclusive option to sell the home if it ever transacts.

Yeah.

And I'm going to build a business based on that.

Yeah.

Like, But that's so different, and I don't know if that's actually a good idea or not, by the way. That's just some bullshit off the top of my head. But that's a ways away. But like, oh, I make money on the transaction, not on the maintenance, or it's a no-fix, but that's the kind of innovation that needs to flood through the market, but I just don't think current players, until that stuff is really pressuring them, are really then incentivized to change.

Well, completely agree, of course, but the question is, How quickly will new players spin up such that incumbents have to react or die? And like with the internet, that took a long time. Like there were legacy companies that just plodded along and ignored the internet for ages and ages and ages. And I'm just, my intuition is that this time around, it's not going to be an option for as long, but we'll see.

I don't know. And yeah, and I think it really has to do with Porter's like 5 competitive forces.

Right.

And it has to do with things like density of competition, which is if you're an SEO agency, you're going to have to do it like this quarter.

Yeah.

Right. And if you're a local handyman, you don't ever have to do it.

Yeah. Or if you're like a 50-year-old wealth advisor and all your clients are 60, they're not switching to some agent.

Correct.

Like, no, I work with Johnny. Like, you can go work with Grokbot. It's like, yeah.

Correct. Correct. But in certain categories, based on who your customers are, you're going to have to— it has to do with density of competition to me.

And so, so what about Jevons paradox?

Ah, Jevons paradox. Basically what it says is—

Or Jevons or whatever it is.

Yeah, it's what Jev is named after. Have you seen Jev? I don't even want to tell you, but I'm going to get you the real—

I've heard of it. It's about— and I heard it was cheaper, but that's about all I know.

Yeah, we can, we can talk about it. I want to get you the real definition of Jevons paradox. Okay. Jevons paradox is an economic phenomenon where making a resource more efficient to use leads to an overall increase in total consumption of that resource rather than decrease. Yeah, it's basically elastic demand based on lower costs. When something's cheaper to use, you get more of it. So for example, while a single household might use less of a resource with a single efficient appliance, the economy-wide savings stimulate new applications, broader adoption, and greater total usage. Modern examples: fuel-efficient cars lower the cost of driving, leading people to drive more miles or buy larger vehicles.

Great examples.

Jev, this new— it's not a large language model, it is a different type of AI, is incredibly efficient, almost the cost of electricity at categorization, but it's going to exponentially, by a factor of logarithmically, I don't even know if that's the right word, by a factor of 10 to the 10th power increase the demand for categorization. And so in fact, total dollars spent on categorization is going to explode even though it costs $0.001 to categorize an inbound email.

Got it. Okay.

Yeah. So like, we— I used Jev the other day in combination with an LLM to categorize Every single email that Sagan's ever gotten. And it cost me maybe $6 and less than 10 minutes with Jeff.

That's crazy. Wow.

Every single email ever received from Sagan with Jeff.

So I have Grokbot looking for spam in my email inbox like 3 times a day. Should I tell it to use that and do it like 100 times a day?

There's— dude, that I would say is Linear, not exponential. Like, right, like you should look at— I, I just, I can't even just— that's— JEV is a whole other conversation. It's, it's insane. It's just, it's like a whole can of worms.

But maybe we'll kick it for another episode.

Yeah, we should do a whole thing on JEV because it's so transfer— like, JEV's to the point where if you combine it with certain things, you can now control your agent, including the mouse click, live with your voice.

So once again, You're 9 weeks ahead of me. So 9 weeks from now, I'm gonna be like, John, this is awesome. I like— I downloaded Jev. I'm trying it out. Like, did you know about this? All right, so start your count. Mark your calendar. All right.

Yeah, yeah. Um, all right, cool, man. Well, I think, uh, you know, we talked a lot.

Oh, but the paradox though. Oh, you talked about the paradox.

Oh yeah, we talked about the paradox.

So let me ask you this though. Yeah, as it relates to that paradox, I think a lot of people are scared about losing their jobs and AI is taking over the world and we're all going to lose our jobs and there's going to be this big crisis because AI is going to do all the work of all the email workers. Information white-collar jobs are going to, are going to go away because AI is going to do all of it. But then I hear other people saying like, actually it's the opposite. All of this AI is just inducing more work and there's like more things that people can do and more companies and more jobs. So it's actually the opposite. Every introduction of a new technology has actually increased the total number of jobs when you would think the opposite would be true, where if you can get more done with less, there would be less jobs available.

Jobs are not a finite quantity, right? If you wanted to create more jobs, ban calculators, right? Jobs are not the goal, right? Economic productivity is.

And yeah, but, but, but, but realistically though, Jobs are how wealth is distributed in this country because we don't have an effective wealth allocation strategy. In the absence of jobs, all the wealth would accumulate at the top.

Well, we have the most effective, uh, wealth allocation strategy heretofore invented called the free market, right? But it has numerous hickeys, but it is the most efficient system.

I agreed on that point. Yeah.

But specifically about what you're talking about, which is anytime you look at technological innovation, it is going to cause overall massive wealth increase across society, but it will absolutely cause job displacement. Meaning, why have TVs gotten cheap and medical care still expensive? Meaning, What I mean specifically is, if you look at a specific person, their life might be ruined by AI now being able to do bookkeeping. Unless they're willing to retrain and enter a new category, their individual life is undoubtedly worse off because of AI, just like the globalization of labor, or a global economy that imports— If you look at coal miners in West Virginia, the explosion of nuclear power in a good way is going to make his life worse in this very specific instance. But if you look over a macro perspective, the rising wealth of the middle class globally is attributable to all of this wonderful innovation. AI is going to cause significant displacement of labor, undoubtedly, but human beings have unlimited want and limited resources, so it's going to cause reallocation of labor and Do you think— would I say, go study bookkeeping and try to get a job for $70,000 a year today? F no. But would I say, learn how to create authentic media using the internet to distribute it? I'd say, we need 100x more of that. It will undoubtedly cause displacement, but human beings have unlimited demand, so it's not going anywhere. What happens is that everything rises.

Yeah. Obviously, everyone understands the idea that, well, the buggy whip manufacturers lost their jobs, but cars are better. Like, we get— like, everyone intuitively gets that. Everyone listening anyway. But I think what people are worried about is more like, okay, so I don't know how many jobs there are in the United States. Let's pretend there's 100 million jobs in the United States. And those 100 million jobs are— there's 10 million companies. And half of those jobs At all those companies are now able to be done with AI. And so now there's only 5 million jobs, or sorry, now there's only 50 million jobs available in the United States. We have mass unemployment, riots in the street, pitchforks, insanity, right? So, so what, explain the mechanism by which that's not going to happen.

I, I don't think the, I think it's not going to be tomorrow 50% of people lose their jobs. Much like inflation, I think that there is a certain amount of economic transformation that can essentially happen without the overall system breaking. And I, as we just said, I think it's gonna be 10 years for non-tech companies to start doing this. Essentially, again, like inflation, there's a certain amount of job displacement that I think we can incur as a society without pitchforks in the streets. And over a 30-year period, 50% of white-collar jobs might fundamentally transform, but it's done 5% per year. And, you know, and you're going to fast forward and all of a sudden you realize 50% of these white-collar jobs look completely different, but there wasn't a revolution. That, that would be general. That's on the top of my head.

That would be my answer. And I think what's, what makes that all work though, is that there's going to be a net increase in goods and services delivered.

Correct.

Right. So like Yes. In my example of— I already forgot the number— 10 million companies with 100 million jobs, there's going to be like 5 million new companies that are now creating new jobs and services that were previously too expensive to produce or to consume, but now are realistic. Like now suddenly everyone can afford to get a new iPhone every month, or now suddenly everyone can own 10 cars, or now everyone like It's hard to imagine what that is, but I think you're right in when you said that humans have unlimited demand but limited resources.

I think that is true. That is day 1, hour 1 of economics. Economics is the study of how to allocate finite resources for unlimited demands. If you would've said 100 years ago, what's the demand for computers? There's that famous quote, there's a demand for 5 computers worldwide. It's a very famous quote from 1956.

Right?

Yeah.

Interesting.

And so human, like, all of a sudden, it's now on everybody's desk. And now it's not on everybody's desk, it's in everybody's phone. Now it's on everybody's phone, it's on everybody's watch. And now it's on everybody's watch and everybody's thermostat. And there's people who need to maintain that, repair that, and build that. And it's like, 5 computers? What are you talking about? I have more compute power in my phone than the Apollo 10 moon lander did when it landed.

By like a factor of a million.

It's crazy too. What's the demand for compute? What's the demand? So I'm ultimately— there's absolutely challenges. And if you look at a specific person, I'm like, I am so sorry that you lost your job as a bookkeeper and you spent 10 years investing in bookkeeping. I am so sorry. And, you know, retraining and reinvention and all this other stuff. But at the macro level, there's only one, one direction that this can go.

Yeah. Speaking of which, where the hell are the AI bookkeepers at? Because I'm still spending a small fortune every month on bookkeeping across like 3 different companies.

Yeah, it's a hard— we can talk about it. We can talk about it. But yeah, man. So ultimately, I am— there is somebody in Africa right now who, because they don't have access to the intelligence that AI is going to bring, is going to give somebody AIDS because they think that virgins can't get AIDS, literally, or they don't realize that mosquito nets prevent dengue fever transmission or whatever. And so there's absolutely a glass half empty version of data centers and water and all this stuff. And then there's like the— you realize that like 30% of people don't realize that mosquitoes cause malaria.

Right.

And can you imagine if they could text a number and get high-quality health information for a penny? And they could do it from their cell phone. So absolutely, there's scary parts of AI and there's doomerism and there's— and, and we need to balance that and all that stuff. I completely agree. There's also this wonderful thing where you can map your personal genome and use CRISPR to fight genetic diseases that were heretofore fatal. So like, I refuse to like say that the die is cast on the fatalism. I refuse to.

Yeah.

In white-collar work and medicine and emerging markets and all that stuff. So that's ultimately like, I can't— there's a lot of scary things about saying, kind of bringing it home to the first topic, which is there's a lot of scary parts of unlimited intelligence and there's a lot of beautiful parts of unlimited intelligence. And it's our job to be smart and try to make the beautiful parts win.

Well said, John. Let's close on that.

Close on that. Thank you for joining. Please follow Peter Lohmann. If my sources are correct, there is currently an open crane application window. Very limited, less than last time. We're getting near the end, baby. We're getting near the end. So at some point, you all listening are not going to be able to join the world's number one scattered site residential property management community.

Could be.

Was that a good pitch?

I feel like yeah, I love it.

Like I did a great pitch, right? Little scarcity, little urgency.

So.