The Future of Business: Single Person Companies vs Giants

Hey everybody, welcome to another episode of the Business Lunch podcast with your host Ryan Deiss and myself, Roland Frasier. Ryan, this is the first time that we've really been able to be together, even virtually, in way too long. How are you doing?

Months. Great. I missed you. Yeah, we were, we were talking, you, you took the entire month of February off, which is awesome. We like to take 30-day vacations. That's kind of one of our things. And, um, you took February off. Uh, and then right when you got back, it was kind of like a week little, like there was a week window in there and then I was basically gone for 2 weeks and now here we are, uh, together at last.

Um, but yeah. Yes.

And it's been a wild and crazy time.

It was. And, and I think we have a cool thing to talk about. And, um, uh, there's a few things that are going on out there. Um, one of the things was, um, Elon Musk has said that he's betting that there is The first trillion-dollar single-person company has already been born and we just don't know who it is yet. 19 companies that were single-person companies showed up on the Inc. 500 or 5,000 list in this month's issue.

And that's highest ever, right? You were saying?

Yeah.

Yeah.

Crazy. Yeah. 19. That's insane. And then there's this general discussion out there about the 10x company, uh, with like massive scale and, uh, and growth compared to the lean architect single person companies. And so I just thought it would be kind of fun for us to talk about, you know, is one better? Um, and, um, and what are the pros and cons of, you know, of maybe targeting to be a single person company? I, I think, um, another thing I just saw was Oracle laid off 30,000 people. Uh, and the message was Oracle lays off 30,000 people with a cold email at 6:00 AM. Um, which leads to another discussion that I do want to do with you on one of our future episodes about businesses aren't your family and you're transactional and the great resignation, you're just resigning and going to the highest bidder, which I don't blame you for as a, as an employee. But are you supposed to get like a call from mom from the company for 30,000 calls? That seems incredibly inefficient. I don't know how you warmly lay off 30,000 people, but yeah, like, you know, hey, maybe, and, and if I'm the person being laid off, I kind of don't want to call. I like, I don't want an interaction telling me why I'm useless and valueless to the company. It's just, okay, I get it. I, I, I gotta go do something else. So I would like to do an episode on that, but this one is not about that. This is about the single-person company. Um, let, let me just get your general thoughts on that and then let's talk about pros and cons.

Of, so first of all, of a single-person company versus, um, like should you just go and pull an Oracle and fire everybody to become a single-person company? So is that, is it, should you start one or is it, should you seek to become one or become closer to one? I think it's the frame.

2 different good frames. Uh, I like, I think more people here will resonate with, I've got a company. Um, what do I do? Do I move towards lean architect? So that's not a single person. That's just basically, do I, if I can cut my, uh, labor expenses by 75%, do I do that? Um, and you know, and if I, if not, why not? And, um, if I do that, what are You know, what's the likelihood of being able to do it and sustain what I've been able to do? How does that affect scale? I know we just had to hire a bunch of people to help us with fulfillment in one of our businesses we were just talking about before we came on. So let, let's just kind of talk about the existing company and, um, lean versus scale.

Sure. So, you know, it's funny because you mentioned Oracle. I guess a few weeks ago, Jack Dorsey, you know, announced that what's his holding company that has like Square and all that Block, I think is what it is. I think it is. Yeah. They announced that they were laying off a whole bunch of people.

And I looked at the numbers.

I don't know if you did. Um, but all that their layoff did was, was bring them down to the same approximate headcount as like every other company their revenue size.

Yeah.

Right.

Like I didn't see that, but yeah.

Yeah. Go. It's amazing if you go, if you go and look at it. And so, so with, with so many of these like layoffs that, that you're seeing, they're couched in this like, well, we're laying off because of AI and AI is creating these efficiencies. And so we don't need all these people. My theory of the case is that that's just the politically correct thing to say, um, that simultaneously, uh, is going to help your margins and help your balance sheet, um, while also, um, making you sound cool because look at us, we're AI-fying everything. I don't think it's true. I think most of them are just kind of shedding, um, dead weight. So I'll tell you the approach that we've had. Um, as soon as it was clear that AI was a thing, we were, we sought to implement it in all the different parts of the company that we could. And the first layer of people that were cut were the people who refused to layer, you know, utilize AI in their business. And we're a lot involved, frankly, on the marketing side. Yeah. Um, and now what we're doing. Because we have AI inside the business is we're looking to hire more people because the people we have are efficient. Um, we're able to get more out of them and therefore the business as a whole is growing. So I don't think the goal should be smaller headcount in any business. The goal should always be, wait for it, revenue and profitability, right? I mean, the goal should be how do we increase top line? How do we increase while increasing bottom line and distributable cash? Like that's like that's the goal. And typically that's going to happen as your productivity goes up. And I think productivity is going to go up when you have humans combined with technology and automation. And it's almost never just technology and automation alone.

Which I like because it goes to when we did our Get Scalable Live, our big event, um, you know, 4 or 5 months ago, we talked about the, like that single metric to kind of rule them all is RPE, the revenue per employee. And so I think that this gets back to, let's look at how, you know, how productive are our employees and let's measure it with revenue per employee. And while your accountant might not be able to, you know, perform at the same level as your, your star salesperson, it's still a great metric for you to use. And there are benchmarks that you can compare towards other companies in your industry to see how you're doing. And so if you can get an edge there, then you're getting an efficiency edge and that's a good thing. And I wanted to mention, I was listening to Gary Vee talk about this and he was talking about his business and he's like, you know, so let's say I've got 400 employees and you decide you're going to outcompete me because you'll be able to, you know, slash your workforce by 75%. So now you've got 100 employees and I've got 400, and let's assume they're all paid the same and our services are basically the same, then you're significantly more profitable. So you can do one of two things. You can either pocket that profit, um, I guess three things. You can pocket that profit, you can reinvest it in growing the business to be better, or you can lower your, your, um, charges, your fees, and, um, and, you know, steal business that way. And he said, but cutting, you know, and this is me saying this, cutting your fees is always a race to the bottom, right? Perfect competition's a terrible place to be.

And it's not gonna last very long.

Let's rule that one out.

Yeah.

Let's say that, you know, you're either gonna pocket the profit or you're gonna reinvest in the future, which is, you know, they're two smart things to do. But he said, you know, but here's the thing. If I take the time to get my 400 employees completely up to speed and doing all the things that I could have done with 100, I'm probably going to be 4 times more efficient and better, you know, capability-wise than you are. And therefore I can outcompete you that way. So is the correct move to do the cut and pocket the money or reinvest, or is the correct move to get as many of your people up as possible? And obviously there's going to be an evolutionary attrition based on people that don't want to uplevel, but I thought that was a really cool way of looking at it. And, uh, and I thought that was something that, that would be worth talking about. What are your thoughts on that concept?

I think he's exactly right because, uh, he's approaching it exactly frankly the way an entrepreneur would, would approach it, which is so many of the people who are talking about this stuff are not entrepreneurs. You've got journalists, you've got academics, you've got bankers and like private people trying to make money with headlines. Exactly. you've got people selling AI software. I mean, it's just everybody's being heard on this stuff except for the folks who are actually operating businesses. And so the operators of the world don't think, okay, I've got this new amazing tool. It makes my people twice as productive. Okay, then I can go from 400 to 200. No self-respecting operator worth their salt thinks that. They think, oh my God, so you're telling me my 400 people will now do the work of 800? That's leverage.

Yes.

Like that's leverage. And when you have leverage, you don't think, oh, I know I'll put less in. Like, that's stupid. That's not how that math don't math. And so, but now he brings up a really good point, which is the leverage, the gains don't occur immediately and they don't occur evenly. So if you have a large team, sometimes it does pay. To get smaller and to then scale back up. And that is frankly exactly what we had to do. We were overbloated and had we attempted to implement and roll AI across in these different systems across the organization, I know for a fact we would've had significant pushback and change management issues and we would've had it from our lowest performers, right? Because in the process itself, they would've been exposed. They would've known that that now the expectations of performance would've only gone up now that they were given these tools. And so they would've pushed back and so it, it would've just been a hassle. But so what people will do now is they'll delay rolling this out because of change management issues. A far better thing to do is just to say, well, who are the people that I'm most worried about pushing back on change management and why? Is it a good reason? Is it merely that they've got some kind of legitimate fears about this that are worth talking through? Or is it that they're simply just an underperformer and they need to go whether AI existed or not? And that's why we just made the decision of let's use this as a time. Let's use, let's, and let's not blame AI, which everybody else did, right? We said, we're going to be letting a bunch of people go, right? And we didn't want to disparage the people, but at the end of the day, we let a bunch of people go. Who simply weren't performing at the level that we needed them to perform at. And once we actually got leaner, it was so much easier to roll out these AI initiatives.

I like that you said they weren't performing at the level that I think you said that we needed them to perform at, because that level is a moving target. If, if without AI or, you know, typewriters or computers or, you know, whatever you want with, if without the thing that has come along to disrupt and make everything potentially more productive. If without that you were, you know, you, if you weren't going to put that in and you were going to stay at the level that you were, you would be underperforming. It would be like, it would be a terminate anyway. Right? So, so, and, and as a business owner, you can't, you can't make, it's irresponsible to make a decision to keep an inefficient person who's not willing to uplevel and evolve.

And so it's irresponsible for the business, by the way, it's also mean for them because what that means is they're, you're allowing them to persist in a, in a place where they can't be the best version of themselves either. So better to let them go and let them find a place where they can succeed. So anyway, sorry I interrupted.

Yeah. And, and I mean that, that's to me, that's just business 101. And so I think that, that, like that's a really good thing. And it goes back to RPE is, is that if RPE benchmark is changing because of some technology like AI and you need to bring that in to stay competitive in the market and you've got a workforce that, you know, part of is not open to that, which, you know, there's always resistance to change, then, um, then that's just the logical thing to do. It's like, there's no coldness. It's just, it's a business decision. And I think giving people the opportunity to embrace the technology, supporting the transition and the upleveling is a smart thing to do because good people are hard to find. But man, if they ain't going to do it, they shouldn't be there. Right?

Yeah, for sure. And I think there's a big difference between someone who has concerns and is reticent about something. Um, and they make those concerns known and they're still open and willing and collaborative in it and somebody who's just flat out like, not on my watch, right? And you can tell.

It's kind of a hybrid level beneath, uh, not on my watch and disagree and commit, right?

Exactly. Yeah. And so there, we, we did have some people on the team who, um, they, they just were nervous. Like they were scared. Like it was just new technology. And, um, and they were just, they didn't get it. Like they, they just weren't. Technical. And so they were concerned, frankly, in one case that they were just going to look foolish. So it's like, okay, like, let us get you some extra help there. Right? And then what you could see is one, a willingness to try, like a willingness to do it. And then once they got ahold of it, they were, they were rocking and rolling. That I'm fine with. But here's, this is the important thing. And this is where you were, what you were saying before, they have to already be great. I cannot like emphasize this enough. We're talking about AI implementation and AI, you know, do you need big teams or do you need small teams? What you need is great teams, great people. That's it. Whether you have 1 or whether you have 1,000, they need to be great. And if they're not great, then they probably shouldn't be there. And if they're not great, AI is just a multiplier. And so if this person is a 4 out of 10, okay, cool. Like now you're going to, we're going to assign a multiplier item. So they're going to be double. So now they're an 8. Fantastic. But what if they were a 9? They could be an 18, but they're also an 8 in the new order.

And so the 8 in the new order is a 4 in the old order. So they are still who they are. Right.

And they're even, but, and the gap is like, that's the thing. The gap is even worse because now the difference isn't between an 8 and a 4, the difference is between an 18 and an 8. Like the gap only widens as you add multipliers. So you cannot, as we begin to introduce new technology that accelerates, the worst thing in the world that you can do is to allow people in your organization to sit and to adopt these technologies because they're actually going to slow you down in the aggregate. This is what these big companies get. I promise you, they are not making these cuts because AI is making them more efficient. They are cutting their lower quadrant of performers because they know when they make these people faster and more and yield a higher level of productivity, they need to have their best talent. And what they're going to wind up doing is just rehiring more talented people. Exactly what we're doing at a slightly smaller scale than Cisco and Block, just slightly though.

So if somebody's, uh, you know, consuming this podcast and thinking, you know, well, I really like the idea of, uh, I've got some people that, that I think I can actually, I can create apps and, and I just don't need that function anymore. Um, and I've got some people that are doing that. Maybe they're order takers, maybe they're, um, all-purpose consultants, you know, some of the things that are getting, you clerical, some of the things that are really truly getting eaten by AI. So that person and that job title is really going to disappear off the org chart because it's just, it's been automated. How do you think is, is what, what do you think the best move is in terms of, okay, I've got that person, if they were a 4, they're gone. Let's say they're an 8 or a 9, but they don't know how to, like, they don't know how to do the new thing. They, like, that job's gone, you know, literally, like, in our accounting company, um, all the people that were doing data entry for transferring the form-based tax information to the computer, they're just gone because we don't need them anymore. Um, so how would you say, and how are in, in our companies, you addressing that in terms of, you know, what do I do with those people? And then what do I do with, 'cause there's usually a little bit of an overlap of the money that it costs to make that automation happen. But I mean, once it's done, it's done and, and the profits are there. Um, do you hire more people in different places? How do those two things work?

Well, I was going to ask you if you're seeing a lot of whole, like entire roles going away. You answered the question when you said that, because I really haven't seen in the companies that we're watching that I have direct oversight over and that I'm looking at day in, I'm not seeing entire roles necessarily disappear. It makes sense, the data entry one, like it makes sense that that one would go away. What I'm seeing is, uh, departments flatten. And this is something that you talked about a year ago. I think we did a podcast on it, like the Great Flattening. Um, it was all your concept. What, what we're seeing is right now, at least as teams are getting smaller, um, leaner and more efficient, we're able to lose a layer of management because you just simply don't need the layers of communication. I mean, if one person—

but let's talk about and, and I think that's a good analogy. Let's talk about the, the, the function. So, so certainly, uh, well, we, we have businesses that have, um, SDRs, right? Sales development reps, which are also known as setters. Um, I'm seeing those people go away a lot or being shrunk down dramatically through automation. I'm seeing data entry. I'm seeing customer service especially. Um, so many things like that.

Yeah.

That the, I mean, it's pancaking, flattening, you know, like big time, uh, in terms of the people because the roles just aren't needed because the roles have been filled by better for the customer. Like it's not just that like this is an evil move by a greedy profit-seeking company. This is, uh, you know, actually customer, you know, now when customers are calling for, appointments at the auto shop, they get immediately served by an AI agent whenever they call 24/7. You know, they, the people who are needing to get answers to this, like status updates on, you know, where does my tax return sit? Now it's an immediate automated answer. And so those are truly getting replaced. Let's let's talk about that first and then if we wanna talk about management, we can talk about that.

Yeah. I mean, so we are seeing, um, 'cause, 'cause, so good examples being like SDR, uh, customer support. We're also seeing at a certain level, uh, when we talk about service fulfillment where we've been able to automate much of, of the grunt work, right? For lack of a better term, like the, the repetitive task type work. Through AI. What we're seeing is those people still are there and they're going to go into, they're gonna shift into one of two roles to the extent that they stay. Um, one of them is an oversight function of the AI. So you still need somebody to kind of monitor and maintain, and preferably not like, that's not a technical role.

It's, it's kind of quasi-technical because you and I were talking about this with some, vibe coding we're doing for apps and things. If the person that's overseeing that doesn't have the, uh, job-specific background and experience, then AI, it's garbage in, garbage out, right? That they, they don't know all the issues to, to guide the AI to have the best experience.

Yeah. When they brought in like, you know, automated manufacturing lines, you know, in Detroit, like with, as this got more mechanized, um, and they were pulling guys off the line and getting people to come in, they weren't necessarily bringing mechanical engineers to come in and run these lines. It was the people who were running the lines before, they were now just monitoring the machines because they knew what needed to happen with the machine. They knew that that part needed to be connected to that part. And if it wasn't done right, they could, you know, they could figure it out. And also if the machine frankly broke down, you need somebody there who knows how to weld those suckers together. So that's important. And so I do still think you need somebody to talk to and through the machine. So that is one role. And that person is going to exist. And by and large, all you're doing is, you know, you still need that person. Maybe you don't need as many of them, but you definitely do still need some of them. So that's one place they go. The second place that we've seen is it's afforded a lot more opportunities for people to, um, ascend into other places in the company. So because that efficiency has been created, because the company is able to grow and, you know, scale faster, what do you know? In the case of SDRs, we've now created a full stack sales position. So every salesperson comes in as an SDR, but it's largely a training function, right? And, and so they're gonna start as an SDR.

I mean, it's a filter too, right? Like, it's like, if you can't do that, then you definitely shouldn't be up here.

Yeah, show that, show that you can do it, show that you can honor a lead and that you value it. Um, and, and then move through because yeah, what, what we believe and we're still doing certainly at, at the scalable company, like we're still doing pretty manual, you know, qualification and stuff like that because of the volume, you know, we're, we're dealing with slightly smaller volumes. We will absolutely get there, but I promise like it'll still be training ground for folks and that, They'll still, you know, be able to ascend into, into AE status. So usually what it does is it frees people up for better jobs, for better work. Congratulations. You no longer have to do the rote task, uh, that, that you hated before. Um, now there are going to be some people who they don't, they're not able to ascend into one of those two places. They kind of get left, you know, in the middle and that's, that's unfortunate. What I can tell you is a lot of those people will find work doing one of those two things at another company. Or they'll just be able to find work doing something completely different inside a different company, inside a completely different role. Because man, the thing that I know to be true, like anybody who thinks that they know what this world's going to look like in like 2030, give me a fricking break. No, you don't. No, you don't. The most in-demand job in the world has not been invented yet.

Well, one of the biggest trends right now among, um, you know, is it, I don't know, it, if there's one after Gen Z, I'm, I'm missing whatever it is because I can't keep track of them. But, um, but the biggest trend now is basically leaving, uh, social media, leaving the digital world and, you know, getting back to other things that matter. So it might be interesting that like, it's, there are people that are literally paying other people to walk with them. You know, it's like, So you could build this giant business of the future that's not robots that are walking AI conversations with, you know, people. It's just organizing a bunch of humans to be able to hang out and talk with each other. I mean, and, and go for a walk that, I mean, that's what's so cool about how it all evolves.

So, you know what, somebody should go buy like Friendster and MySpace and like Friendster should just be like, I'll be your friend in real life. And MySpace should just be come over to MySpace and like, we'll hang out in person. So like the exact opposite of what it was, right? Because nobody remembers that those used to exist.

I like that.

We're bringing it back. God, if somebody does that, that'd be amazing.

But I think that's interesting too. So like there will be a place for people that are not technical.

And if you would have told me in 1999 when I started college that I was going to be a digital marketer, I would have laughed and said, what's that? And yet that was my business 4 years later. You know, like, come on, like there's just, and then, oh, social media marketer. Like this is, this wasn't really a thing when I first, and now it is, and the world is moving so much faster now. So I don't think that we as business owners, um, I'm not saying that you shouldn't care about your people. but I don't think that you should be making decisions based on the fact that like, oh, this, this might create job loss in, in my company.

Amen. Yeah. Which, which also goes to a different topic, but, but related. I, I, I, you know, you and I are in lots of different threads and masterminds and, you know, talk to people and stuff. And I see so many people desperately glomming onto the latest thing that's happening in AI. And, um, then 2 weeks to 2 months later, that's been taken over by something else. I, I feel like that the, the bleeding edge of AI is not the place to be either because, you know, it's like open clause everything. And then it's like, well, open clause, you know, destroying me because it deleted all my, you know, emails or yesterday Claude, Claude Code completely rearranged my son Ryan's files, just all of them, just on its own. And it's like, you know, and then, you know, and then OpenAI makes, you know, or somebody, I think somebody bought OpenClaw. Was it Anthropic?

I don't know. Meta, I think.

But yeah, Meta. Okay. You know, then the thing that got bought gets subsumed into the other thing. And if you're spending all your time, you're like, let's run out and buy a Mac mini and install OpenClaw on a, you know, on a separate clean sandbox server to figure out how to do it. I feel like if you're a founder doing that stuff, you are absolutely misfocused.

You're derelict in your duties. Yeah, I agree. And I, I, I, we have this conversation with our clients. Uh, Richard and I did a webinar, uh, where we talked about what we're doing, like creating AI employees, how we're using like projects and now co-work, um, and skills and stuff like that in Claude. And the number of people who were like, this is so basic. Why is it so basic? And I'm like, and finally I was like, look, the people who are saying this is basic, um, I don't care. This is what we actually do every day in the business and it works for us. Like we get more productivity out of this. If what you're looking for is the leading cutting edge stuff, go subscribe to some like AI newsletter. But if you actually want stuff that works today to run your company, This is what is working for us that we are actually doing.

Yeah.

As business owners.

Yeah.

The, the goal should not be to be on the cutting edge of this stuff unless your job is to, you know, is to talk about AI, which is probably not the job of most of these founders out here. They're, they're playing business and they're using that as an excuse to distract themselves from the fact that something's probably fundamentally broken in their business. And they think that AI is going to be the fix-all and it just ain't.

Right.

I like that.

That's probably a good place to end. We'd love to hear you guys' thoughts on that. Um, hopefully you found this helpful. I think there's some definite, definite insights and guidance here in terms of, you know, is it the 10x, uh, or, or lean architect or somewhere in between? Um, what do you do with your good performers who, uh, have, you know, a role that's basically been eaten by AI? What do you do with the people who are not completely performing? Should you be on the bleeding edge? All of those are, I think, interesting topics to think about and worth considering. If you found this interesting, we'd love it if you'd share this with a friend. And if you feel like leaving us a 5-star review, we like that too. And you can reach out to us both on social medias. We are basically us/our names on almost everything you can find. We're not hiding from anybody. So that's it for this podcast. And Ryan, anything you want to say before we close out?

You don't have to be on the bleeding edge. Please, for the love of God, don't be on the bleeding edge.

I like it.

Awesome. That's all I gotta say about that. Okay.

That's it. Thank you guys for joining us.

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