From Training Humans to Training AI: The New Marketing Revolution

0:00So Digital Marketer is a company that basically you created with Ryan and Perry. I came and horned my way in a little bit later in the game. And I'd love to talk a little bit about what was Digital Marketer. I know it kind of had, I don't want to say lost its way, but it was really having a hard time finding an offer that worked. And it was when digital marketing was kind of new when it first came around. I'm going to let you tell the story, But I want to talk a little bit about that evolution and what changes you've seen and then how the AI is coming to have a role and kind of turn the ship around a little bit.

0:52Hey, everybody. Welcome to another episode of Business Lunch. And as you can see, Ryan has had face transplant surgery, if you're watching this, and changed his name to Richard Lindner. A more handsome version, if I might add. But anyway, Richard Lindner is joining me today. I am your host, Roland Frazier. And Richard is the business partner with us on several of our ventures, as well as the president of Digital Marketer and Scalable. And Richard, it's wonderful to have you here today. Man, I'm excited to be here. Well, frankly, I can no longer be offended for the lack of an invite. So I lose a little bit of a one-up on you.

1:35I have a list that ChatGPT generated of ways to be offended. So I'll share that with you. Yeah, that'd be great. I call it the umbrage list. It's perfect. So, you know, it's really cool. I'm really excited actually to have you here and wanted to chat with you a little bit. Ryan Dice and I were chatting offline about what's going on at Scalable and Digital Marketer. And he mentioned that you have gotten deep into the world of AI and are building things and doing all kinds of fun things. And I thought it might be fun for us to chat about it just so everybody that's listening or watching can kind of see what are we actually doing with it?

2:19Because it's nice to talk about it, but then to see how it's actually being deployed and being used and what results you're having is another thing. Does that sound like something that'd be kind of fun to chat about? That sounds great. Obviously, it's kind of what I've spent my, well, last six months really diving deep into in kind of a couple of different areas. So I know that let's start with Digital Marketer. So Digital Marketer is a company that basically you created with Ryan and Perry. I came and horned my way in a little bit later in the game. And I'd love to talk a little bit about what was Digital Marketer.

3:03I know it kind of had, I don't want to say lost its way, but it was really having a hard time finding an offer that worked. And it was when digital marketing was kind of new when it first came around. I'm going to let you tell the story, but I want to talk a little bit about that evolution and what changes you've seen. and then how the AI is coming to have a role and kind of turn the ship around a little bit. Yeah, I think you're pretty dead on. Maybe not lost its way, but maybe lost its purpose. When Digital Marketer was formed, the job or the role of Digital Marketer was simple. One, I guess maybe it was twofold.

3:50One, at the time that we created Digital Marketer, the goal was to professionalize what most people were referring to as Internet marketing at the time, right? There was this kind of up and coming group of marketers that refer to themselves as Internet marketers, which good job. We use the Internet pretty much every day. So they've done it. They did a fantastic job. We mass adoption to the Internet. But we really looked at that and said, what we're talking about here is leveraging the internet to market all types of goods and services. So we need to kind of up level this future career, right? So digital marketer was a professionalization of that industry as we saw it.

4:37Now, our purpose or kind of our reason to exist was we used all of our portfolio holdings to just figure stuff out, right? What's working in all of the different platforms to drive leads, to convert sales in any different type of business on the Internet? And then we would kind of templatize those things and open source them and sell them to other business owners and professional marketers. And that was digital marketers kind of whole purpose for existing. And the reason that it worked is because when digital marketing was new, everything changed. Everything changed daily, weekly, monthly. There were new platforms that existed.

5:23The platforms that were there were rolling out new features. And the features that were there were changing or being taken away. So everyone was always wondering, like, what should I do? What should I use? What platform should I use? How should I use it? Or Facebook changed something. what do I do? So digital marketers main purpose in the marketplace, how we served marketers and entrepreneurs and founders was we figured out just that, what you should do, how you should leverage these different platforms, what types of campaigns you should use, how you should use them to drive leads and convert sales.

6:02And then we just told people. So we cut through the noise and eliminated confusion. That was digital marketers purpose. We, over the years, kind of, whether it was intentional or unintentional, swam a little up market. We went more in the alternative education space and we rolled out certifications and certifications were huge for service-based businesses, mainly coaches, consultants, and agencies. So a digital marketer certification was great for them because it was, you know, it was credibility to their, to their clients. Well, we pivoted a little too hard and went all in on kind of becoming a, an, an university almost, right.

6:45And really went into serving and serving an education, alternative education space. I think what people after COVID really got tired of a bit of the, the distance-based learning. We went all in on second career in COVID and digital marketer, while it benefited mightily during COVID of some of these things getting incredibly popular, when we came out of that, digital marketer did not benefit from that. It kind of went the other way. So from about that point on, digital marketer definitely lost its way and really had lost its purpose because really nothing was changing all that much. I mean, you know, meta was meta and Google was Google and they weren't rolling out a lot of features.

7:34They were more, they took a bunch of stuff away. Um, and you just market, right. Did, um, something also happen though, that caused the certifications to be less desirable or had you just cap out on it or what, what do you think? You know, I think as, I think people stopped caring about the certifications as much really. And one people stopped caring about the certifications from an internal employee level. So, and in order to, you know, get a raise, get a promotion caring about that to what we saw was these platforms, when they stopped making as many changes, they went in and created their own certifications and they were free.

8:23Okay. And if you didn't care about the certification for the credibility and what you really wanted was the knowledge, well, why not go straight to the source? That's what we would do. Makes sense. So, you know, smart people did smart things. Who could blame it? Right. So, and then you tried a bunch of different things to kind of get to the next level. How did you go about, because, because, and here's what everybody, you know, out there that's listening or watching. I want you to think about this because business is always changing and evolving. And if you stick with what you've got, what you started with, you could very well ride down to bankruptcy or not being in business anymore.

9:00But it's difficult. While it is difficult to change, it's often hard to figure out what is how should we change? What should we even try to change? And so you've heard Richard say, we started basically with the market, which I would argue was online entrepreneurs, people that were solopreneurs and entrepreneurs that wanted to figure out how do I market and sell stuff online? We, you know, hit that market pretty well, then pivoted to let's go up to people that have a little bit more money to spend and get a recurring revenue model and offer these certifications. And now that's been kind of replaced by something else.

9:38This can happen to you if your product, you know, you're in the middle and your source, like I used to sell diamonds and the people that had the diamonds in Israel never came to the United States. They sold to wholesalers like us who would then bring the diamonds to the United States and sell them. And then when things got tight, they started coming here themselves and they cut out the wholesalers. And so like that, this is wherever you are in your business, it's either a risk or it's already happening or happened to you. And you've got to figure out where do you go. So this to me that Richard's about to get into, I think is one of the most inciting, you know, one of the things that will give you the biggest insights from today's episode.

10:21So now this isn't working. We've been usurped by these rude people who are teaching their own people how to use their own stuff. Right. And they're charging for it. How dare they cut us out? Yeah. So what do we do besides not do them? We went all in on certifications and we're going to be a, basically a university, an unaccredited university. So we're going to take on the big boys. Well, we have no competitive advantage and people started giving it away for free direct to the source. So that didn't work. Come back to the drawing board and say, well, what are we going to do? Well, let's go all in and focus on agencies.

10:57So instead of going to the entrepreneur, instead of going to the professional marketer, let's go and let's only support agencies. So digital marketer decides we're going to go in, we're going to just acquire agencies, we're going to enable agencies and really train them. Because if we can impact one agency, then they can impact dozens, if not hundreds of clients. And really, we can have a much bigger impact. Great. Very well could have been true. The problem was math, right? The math didn't work. We couldn't figure out how to make that a true channel, right? We're not digital marketers, not a software company.

11:35And really when you have a VAR network, a value added reseller network, then it becomes a channel. And that channel just plugs into a revenue model that you already have. We did try though. You, you and Ryan, you did the The whole, you know, Dan Martell thing and talk to all the SaaS people. We spent millions, literally millions, more than one, millions of dollars developing something that didn't work. A couple of them. Yeah. We developed a couple pieces of software, really tried to create our own internal software that we could leverage so that we could put digital marketers trainings in there and enable agencies to become their own training portal.

12:18so that they could not only go out and serve their clients, but they could become kind of that one-stop shop for training internal team members and for actually doing the services. So went all in there, failed to really create a software, right? We realized that, again, while we don't have a competitive advantage and we are absolutely not, we're not a university, right? That's not us. We don't have a competitive advantage there. We're also not a software company. um dive into that because because really where where you're heading now is more software sassy um even though it's a different thing because it's a different world for building but um yes what what was the biggest challenge was it we just like we weren't a software company i don't think it was that we didn't know how to code because we acquired and hired coders and things like that was it that we just didn't know how to build a thing or what we built the wrong thing or what would you say as far as lessons learned there?

13:17I don't think we, I think we built what we thought someone wanted instead of really going out and figuring out what the marketplace wanted and then building that. That was number one. Number two, I think we, you know, we, we fell prey to the same like cliche trap, feature creep kicked in. And we just kept adding more and more to a product that, frankly, we were unsure if anyone wanted. So we just took longer to take it to market and spent more and more dollars. And three, I think, as partners, right, you, Ryan, and I, what we didn't do was sit down and decide how much money we were going to invest in this project and fund it.

14:03We just kind of said, sure, we have kind of the rich grandpa account, right? Or the rich uncle account. It just was funded from our other ventures and there was no start or stop. It just kind of kept going until one day we hit a monthly burn number that was impossible to ignore. And we I think also we had poor financial insight because we were told that the burn was anywhere between X and 10 X. And then we would say, it looks like it's 10 X and finance would come back and say, no, no, it's only X. And so we didn't really have a good enough internal financial reporting or accountability system to be able to identify for sure what was being spent.

14:59Because I know you and I would have a conversation and then Ryan would be like, no, no, it's not that, it's this. And then we'd be like, well, that's acceptable, but this is not. But the dollars seem to be this. And so that went on for six to 12 months, right? I was going to say about a year. Yeah. About a year. Well, and here's why, because it was both right and wrong. We, again, lesson learned, we wanted it so badly. And frankly, we were unwilling to pay what it cost. So we split the focus of the developers. We said, well, we can afford them if they also do this. Right. So technically it costs X, but technically it costs half of X because we were having a coder instead of focusing on one project, we had them do something for a profitable company as well.

15:49So that's the way we justified it. And kind of that's a double miss, right? It was a double miss because it created an unnecessary dependency on a profitable company. And it took someone that should have been focused on creating one product to go to market and split their focus. So yeah, Yeah. All in all, we just, if there was a mistake to be made, I think we found it. I think we found it and made it at least twice. So we then, we then chalked it up and said, we're not that we're not going to do that anymore. We're not going to do that. Now what? And, and what was the conversation to get to the next place?

16:26The conversation was we need to go all in and we need to support professional marketers. Because I'll tell you, this is something I truly believe it when you're trying to define or redefine your company. If something's not going right and you're trying to reposition, you don't define your company by the product you sell or the business model. You define your company by the person you serve, right? So at first we said, well, we're going to serve someone who's looking for like a second career, right? They're looking to get certified. They're looking for either status elevation or second career. Really, we're serving this person.

17:05No, that's not it. we're serving agency owners. No, that's not it. So the third attempt was we are serving professional marketers and really employees. And again, it worked, but it didn't. We went out and we were able to acquire employees, professional marketers, marketers at companies large and small. They liked what we were selling them. The problem was the LTV. The problem was not a lifetime value and immediate value was low. And when we went back in and looked, our product line, the ascension ladder, the things that really were profitable on the back end were misaligned with the client that we were now acquiring.

17:51They didn't have the purchasing power to make the decision that we were asking them to make. At that time, we were selling a mastermind. So we're selling products to employees and then saying, would you like to join a mastermind? That's five-figure mastermind. Which they're going to get approved by somebody else. They don't get to make the decision. And a lot of them were scared to ask because there's a cost even asking for that. So while it worked, it didn't. We had the decision to make, do we abandon this avatar? car to abandon this person or do we completely abandon our product line and build a product line for this person?

18:35At the time it was, I can't think of anything that we could sell that would make the unit economics work to acquire this person. And I'm really not excited about going in and redefining a product line and service offering. So let's abandon the person. Now we've kind of gone through three or four different versions of who do we sell to. Finally, we kind of came back around and said, you know, what we really sell to is the performance marketer, right? We're selling to the kind of performance-based marketer. We're selling to someone that maybe they're the entrepreneur, maybe they're the founder, maybe they're a growth marketer, maybe they're an agency owner.

19:16At the end of the day... Let me pause just to be sure that I don't miss on another thing that I'd like to hit on. Um, is this before we get to trying licensing SBA, that kind of stuff, or this after that? So the licensing SBA, um, that was when we got with, uh, or when we focused on agencies. Okay. So the licensing went with the portal and the software, right? Uh, we did come back around and try that again without the, without the SAS aspect of it. And, um, but that was, that was next. So we, we took another bite at that one, um, after this. So we came back and said, let's focus on performance marketers kind of really, it was another way to say, um, let's go all the way back to the beginning and just do what we used to do.

20:09What if we just hit kind of control Z about 10 times and just did what digital marketer used to do. Okay. But it's still a different level of marketer, right? Because I feel like that the first time around, it was more biz op focused and like it was how to make money playing around your phone with social media, something or other. In the very, very beginning, yes. It pivoted quickly from any opportunity-based into tactical, because we made the intentional decision that we want to only focus on people that have something to sell. Right. So we but we kind of went back and said, let's really focus on people that can benefit from increasing the revenue.

20:56So maybe they're an employee, maybe they're an agency, maybe they're the owner, maybe they're in every box we've already attempted to check. The unifying factor in this avatar is that if revenues, if the company revenue goes up, their compensation, their take home goes up as well. And what we found there was it's just too generic. It's just too broad. Too many people. So maybe it works, but we couldn't call out any one person. So we went back to the agency, removed the SAS aspect of it and focused on licensing. And without the SaaS aspect, that's when, again, just there wasn't a way to track the licensing and really get it to where without having almost installing a police force, a legal arm to the business to enforce and make sure that are these licensed partners, if they deliver this, are they paying a licensing fee?

22:01It likely could have worked. I think it's tough because, and you tell me if I'm right, but it feels like that model was tough because it was, hey, we've got a whole bunch of intellectual property that we've got, which is easily copied and impossible to measure because it's not using something that has like credits or units or draws data or that we can monitor. so we're going to give it all to you and expect you to pay for it a few different ways one i think way we tried was every time you use it you pay us a little something the other was um you have it for this period of time uh and then you got you have everything for this period of time and you pay a fee for that and then every year that renews but in both cases it's just impossible i think just human nature wise uh it's impossible to get most people to do that because they're like but i've already got it.

22:55Right. Would you say that was the challenge or was it something else? Well, yeah, the business model is scouts honor, right? The business model is tough to scale. It's tough to scale. And I think that business model puts you in a bit of conflict with your ideal client, because they're going to make nuanced changes and they're going to feel some level of ownership to that IP, whether they should or not, over time, it becomes blurred lines. We all do it. How much do we teach? And we don't know the origin of that in our minds. I created this new concept. Well, I probably read it in a book 10 years ago.

23:33And now I'm in my mind. I think it's mine. Let's not. So I think that model is so conflict heavy with you and your ideal client that you just have to decide where the line is and how much you're going to give. And I just don't want to be in that business. I don't want to be in a business of, of that level of you got me, or I'm not going to let you get me that much. It just wasn't profitable enough. And it didn't, I don't think it scaled large enough to, to deal with what it was going to require. So abandoning that. Because you're still going after more than anything agencies, I think, at that point, right?

24:17Absolutely. Because they have to be reselling. Right. Really more, almost coaches and consultants at that point. So maybe some agencies. But when you go into licensed IP model, you're going to people that have the ability to get clients, but don't have a proven delivery mechanism. That don't run them through the same system. And maybe you can help them get clients a little bit better. Maybe you can help them send clients to a higher package that you can package up for them. But really what you're going to give them is a consistent delivery mechanism, a consistent outcome, and almost a productized service with your IP.

24:54So less agencies, more coaches and consultants. And then what you've got to also figure out is you're putting your logo on every one of these people and they're walking into a business and they are doing work on your behalf. Yeah. Whether that work is fantastic or whether that work is terrible. Yes, it's going to reflect on that person, but it's also going to impact you and you have little control and no visibility into who they're even working with. Yeah. So, no, we're out of that. So, and then from there we go to where we are now, or is there another jump in between? Well, from there, we went back and we said, we really do just need to focus on what everyone needs.

25:43Like a digital marketer, let's get back to what everyone needs. Everyone needs more leads. Everyone needs more buyers. Let's get back to community. Let's really give people a place, go all in on community and then go all in on kind of these two accelerators. like let's give them an accelerated training on how to get more leads leads on demand let's give them an accelerated training on how to get more buyers buyers from scratch and it worked right it worked and then we gave them a place where they could go and get group access to daily calls with with our experts with our coaches so anything and everything you could want if you need help with copywriting or sales funnels or paid media, you can come on a call every single day, five days a week and get help.

26:31So that really, really worked. And it's looking good. We're like, we nailed it. We got it. Then AI, right? Then AI went from AI is a thing to, oh, oh, AI is a thing, right? Everyone is using AI and disruption, right? Disruption. When you think about even the greatest training in the world, you're still going to have to fill in the gaps, right? If I'm giving you a training, you're still going to have to fill in the gaps on your company, your business, yourself. Well, if I ask AI, it's just going to tell me what to do. Now there's some, there's some gaps or flaws in that logic, but at a basic level, why would I go through and watch a training or go through a cohort based training that I still have to figure out from conceptual to practical application on my business?

27:34And I want to, I want to split, because I want to do two podcasts during our time. I want to split this because we talked a lot about like the business model and I want to get to takeaways before we get into the actual AI and then let's do the AI in the second one. So now this model is what? Just kind of break down the model without, we don't care what the AI does. This model is moving from moving from more, moving from merely training and community to training and services or community and services. And really where I think we are headed, where we are headed, where digital marketer is headed.

28:17I'm going to bring up AI, but I'm not going to get into it. I think AI has given digital marketer a purpose, a reason to be relevant again. Which is? Which is AI is changing at the rate at which the internet changed. So we're back to originally Facebook is new. Instagram is new, et cetera, et cetera. And we're here. Hey, chat GPT is new and version, you know, X is new and Google flash is new and fire studio is new. And so there's all this newness. So there is a demand again for understanding and monetizing the newness in the context of their jobs. Absolutely. Well, and there's a million different AI tools that are launching outside of the big, which one do I use?

29:00How do I use it? When, what should be a GPT? What should be an agent? Should I have a team? Should I have, what team should I have? So everything is the wild, wild west. And for us, that's when we excel. We're really providing now. So before it was training, but training is yesterday's news, I think. What are we doing? So what are we doing? Digital marketers where AI meets real world marketing for business, What we want to do is we want to help small business grow by giving entrepreneurs AI-powered marketing systems that drive sales, build brands, and scale businesses without losing that human touch.

29:43You're finding that to resonate now with the marketing of Digital Marketer, correct? Here's the big pivot. Here's the big shift. We don't train humans anymore. We train AI to work for humans. If you go back to just thinking of the whole training business just as a whole, someone buys a training, the first thing they have to do is log in. So let's now take off 50 % of the buyers. Now they have to complete the course. So we'll now take off another, I don't know, of the 50 left, we'll take off another 80%. then they have to, let's assume of those people, a hundred percent of them comprehend it, but then they have to retain it.