Navigating the Challenges of 2025: AI as a Strategic Partner in Business

0:01Hey, everybody. Welcome to another episode of Business Lunch with me, Roland Frazier and the wonderful Richard Lindner. Richard, how are you doing? Happy New Year to you. Happy New Year. I feel like a real boy again. I feel like it's a new year and it is already a new me. I love that. Let's talk about that a little bit. Let's talk about 2025. I just did a year in review with Ryan Dice and we talked about a lot of the, you know, like kind of takeaways and things like that. I think that, um, generally and with the operational view that you've got and all of the deep operational involvement that you have with a lot of the clients that we've got, um, it'll be kind of fun to, to say, you know, what, if you had to put like a slogan around 25 and say, it was the year that, um, one of the things that you and I were just talking about before we started recording was it's, it was the year that everything seemed harder and there didn't seem to be any more money.

1:14At least the first half of it. Um, what, what would you, 25 is a TV show and you have to put a title on the episode. What, what are you going to call it? I mean, the rallying cry of 25 was don't die. Like winning is winning is you live another day. I mean, that it was, you know, we're still here. Yay. Everything was so hard last year. Like nothing was easy. And I don't know why. What happened, though, was that as we went into Q3 and particularly Q4, we end up wrapping the year. And this was I was on another call with another Portco, you know, before this, the these two companies had their best month, I think, of all time.

2:13um so what happened do you think between let's try not to die to gosh we just had the best month we've ever had i mean obviously it's brilliant operational you know yeah i've got to say for us it had to be the operator um um you know i think if we look obviously this year was loaded with all types of geopolitical and, and economical and we had macro, micro, we had all the headwinds and just really a lot of things that didn't make sense. If you looked at it, like if this is up, then shouldn't that be up and shouldn't I have more money or shouldn't this be down? And nothing made sense. And I think any, any time that happens, it just leads to indecision.

3:06Like if I can't, if I can't track these trends or if these trends aren't doing what they normally do, then I'm just going to not do anything because nothing makes sense. But I think that at some point, we all accept a new normal. We all just go, I can't, I can't do nothing. And especially if you're in markets like we are in B2B, I think entrepreneurs are used to kind of creating their own reality, creating their own environments and just saying like, this doesn't make sense, but I'm going to refuse to kind of live in this indecision any longer. And I'm going to move in this direction. And I think it just complacency was done.

3:53And I think we all decided this isn't OK anymore and we're going to move forward. and we're not going to wait. I don't know. I've got nothing to point to, but it feels like everyone just decided, at least in the entrepreneurial B2B space, that it's time to move and we're just going to have to do it ourselves. Do you think there was anything in terms of systems that were put into place or decision-making frameworks or anything else that kind of was driven by the decisions that we had to make to stay alive during the first part? Yeah, I don't know which company you talked to, but I know of our portfolio companies and our clients and us.

4:45Of the companies that had amazing Q4s, the ones that fall into that category, didn't wait to make really difficult decisions. in the year. They didn't hold on to products or if they had to make cuts. And maybe those were people or maybe that was software or tools or locations or whatever it was. I think the people that installed systems and that made difficult decisions or that, you know, had the insights into their business, into scorecards, into the, you know, financial health of their business and knew that we need to be okay for a while and made those difficult decisions early, when things started to change, they were able to benefit from those decisions that were made and that allowed them to stay default alive when things were bad.

5:45When it kind of swung in the fourth quarter for those businesses, they weren't just good. They flipped the other way. Yeah. And do you think there was anything like, do you think it was anything we did? Or do you think it was just kind of the feeling of the times was everybody made the hard decisions that is still alive. The people that didn't make the hard decisions basically are gone now. And therefore, it was like, okay, we've got to get back to business and all the stuff that maybe we've been putting off. Let's go on and get it in by the end of the year, get the tax write-offs, get the, you know, like, like it seemed like people were, who were very tight on the purse strings were willing to spend more at the end of the year.

6:27And that's not typically what we experience. We don't. And, and, and that's never made sense to me. Um, why we don't have, um, a lot of people at the end of the year that are looking to like tax benefits. Yeah. Um, I know, I know we think that way. You know, it is really, really tough to say. I think there were plenty of companies that we spoke to. I think our biggest objection when we were having sales conversations was not the price and was not capital, which was weird. It was truly indecisive. Like, I don't know what's going to happen. People were holding on to their capital, which, hey, so were we, right?

7:13We weren't making any massive capital investments at the time either. And I think it was a point where maybe things did start to turn around because we all decided, maybe things started to turn around a little bit more, or maybe the compounding effect of difficult decisions starting to add up. And we all just kind of woke up and we were default alive, not trying to to get there um and and i don't know i mean i know for for us we we had some things that we had to do at the end of the year for for tax purposes um that was nice um i didn't i didn't hate that but you know i i don't know but it definitely felt like there was a a changing of the tides or the season um it did and it seems to be continuing into the first week or so of the new year.

8:08It does. How did your AI usage and your working with it change during 25? Great question. I did not use it for nearly as many tasks. um i really used it for strategic thinking partnership um and and really building people like i used um my cfo a lot right my ai when you say yeah exactly when you say building people you built agents that were agents right i mean and and even going into this year i I mean, I've spent the majority of this year validating the pro forma for all of our companies and just making sure that it's defensible and validating key initiatives and what we're doing and what we need to be thinking about as to when the model breaks.

9:13I mean, on our partner call this morning, I'm talking to you about the model potentially breaking mid-2027 if we don't make a switch here. That's coming from me leveraging my AI agent CFO and not only building performas, which I've always done for our companies, but really stress testing that performa. And I've done that with our AI or my AI CFO and CMO and, you know, CRO and really using those as strategic thinking partners, not only to help solve today, but to model out and say, where does this break? When it's good, where does it break? When it's bad, how do I solve it? And I've really just built a team of strategic thinking partners, even though we have those employees that are fantastic at what they do, that are incredibly intelligent.

10:12They also have calendar commitments. And I don't want to take our head of sales out of leading the sales team. I want to be able to talk to the head of sales or the sales agent whenever I'm processing through something. but I don't want it to show up negatively on our P &L or our sales report. So what I had kind of identified was that for me, it was a change between tools and prompts to labor, to basically it was replacing labor. Absolutely. And when we say replacing, it doesn't necessarily mean that you're letting people go because what you're doing is you're replacing the calls to the head of sales or head of marketing or head of finance that you would otherwise have made that would have been helpful to you, but also taken them away from other things they did and maybe cause the need for either lower performance, diluted performance, or the need to hire additional people in those departments.

11:18but you still get the benefit of having the counsel of the labor that you would otherwise have hired. So you're replacing hiring somebody new or diluting their time. So I think that's an important thing to think about. It's the duplication of key labor. It's the addition of labor that maybe we can't justify hiring. I mean, I've hired, and by hired, I mean, trained and built AI agents, roles that frankly would be nice to have at best and could not be justified any year, definitely not last year. But I've hired AI agents that have been incredibly beneficial. Now, on the duplication of these high value roles that we have, I haven't excluded those people from the conversations, but I've validated some of my thesis and made sure that what I had was sound and it would have an impact and it wasn't going to be overly disruptive before I took it to them so that I'm not living in that entrepreneurial, you know, blue ocean and have the tap on the shoulder.

12:38Hey, what if we did this? And they're going, hey, what if I, you know hit our numbers this month and I didn't take this call or or you know what if I was able to go through and do a cost analysis and see where I could save us an additional 15 percent so that that would drop straight to the bottom line and we weren't having you know this blue ocean call so um I don't know I just my my oldest daughter um makes fun of me because she says um I basically am the oldest person with imaginary friends because all of my best friends aren't real. I like it. Now you took that also to the next level by productizing the things that you were doing, the agents that you built and making something that was offered to other people.

13:33how has that gone in terms of like how are you finding not like you know did you make a bunch of money selling it but more like how are the people using that what's the feedback that you're getting from people that are taking the ai agents that that you've built that they're using it's been um it's been really cool i had a had a chance to sit down at at our annual conference um a

14:02basically said, you know, I have a full leadership team now. And frankly, our company is more of a lifestyle business. Now we're high revenue, but we're very low people and the people we have, there are very few employees. So we couldn't really justify a leadership team. And watching the transformation that that company's had from building and training AI agents, to be employees and strategic thinking partners was just really, really cool and humbling. And I don't know, it was fantastic to see the impact there. But, you know, I built basically 36 templated trained agents that were trained on different methodologies of a specific role and then gave the instructions on how to train that agent on the company and made that available to our clients.

15:05And it's really amazing to see not only who these different clients are hiring from that catalog, but who they're building following that methodology and how they're using them. I mean, they're having meetings and stringing the agents together now because you can, within ChatGPT, you can just add another agent. So one of our clients the other day sent me a loom of their text chat meeting where they were literally having a leadership meeting with three AI leadership team members and themselves going through their scorecards before they had their leadership team meeting with their true human leadership team so that they could kind of get all the insights from their AI agents.

15:56I don't know. It's been really cool to see. What do you think, would you say, are some of the things that were done most right during 25? I think there was a lot of cost adjustments that were made right. I know in some of our companies, I say hard decisions, and they were hard decisions. So I don't, I'm not backtracking on that. They were hard decisions, but there were a lot of decisions that we knew needed to be made. They were just more hard conversations, right? And things that we knew were maybe frivolous or maybe a better way to put that isn't frivolous, But we were making investments that were producing a negative ROI.

16:53And that could be in any category. So I think there was a right sizing of expense in 2025 for a lot of companies that just said, like, we can't do this. I think there was a – I think a lot of companies fleed to simplicity. And once they got to simplicity, there was a systemization of that simplicity. Like, what is our core competence? How do we how do we create value and how do we deliver value? And then how do we document that so that we we're really, really good at doing this? And and it caused an alignment to the company and the customer. Right. They're the company and the client, however you you think about that person, because if you were going to take a dollar from someone, then there needed to be a value exchange there and you needed to protect that relationship.

17:49So I think a lot of things realigned. The relationship between the company and the client or the company and the customer, the accounting side of things with the expense ratios were realigned. And I think we all got a little bit more honest with the state of our businesses and where they were. Um, in, in 2025 and, and the people who did had tough realizations and probably conversations with themselves and the ones that didn't, you know, probably didn't have the best fourth quarters. And that's tough. You're, you kind of maybe kick the can. And I'm sure there's plenty of businesses that, that didn't have tough 2025s.

18:37Um, and God bless them. Um, that that's great. Yeah. What would you say we did wrong or could have done better? Did wrong or could have done better in 25? I think there was the initial reaction when things go wrong is always to throw volume at the issue, at least for us internally. Because we are so quick fix solution oriented, we will throw 10 or 15 solutions at a problem rapid fire. And I think there's, you know, the thing that makes you great can also lead to your downfall. And I think we lived in that 10 or 15 solution kind of throw spaghetti against a wall and see what sticks for months at a time.

19:40Um, I don't think it was good for the, the duration that we live there for us, um, both as a business. I don't think it was good for the, the, the clients because it was probably exhausting. I know it was exhausting for us as humans, right? And I mean, we, the, the three of us, the partners have all, all talked about this. Um, I made it through about November and I've never been as tapped out as a human being as I was, I don't know, November 18th, call it. Right after the thing, yeah. Right after the event. You know, I was done. It was putting one foot in front of the other was challenging. And it was just going through the motions until the year was over.

20:28So I think we did too much in an initial reaction to things not going well instead of maybe pausing and being a little bit more intentional about our reaction. Not an unnatural response, but not the most, not the best, I would say. So what are the takeaways and insights that drive what 26 is going to look like? The first one is there's, you know, we have a coin. I've got it right here that we give to all of our clients. And it's on one side says success is temporary. And on the other side, it says failure is temporary. And I think the way last year ended versus kind of the majority of the way the majority of the year felt, I think the takeaway is there's two sides to that coin.

21:32And we've got to remember that both success and failure are temporary conditions. So if you're having success, be grateful and be humble. And if you're failing, just remember, don't freak out. don't don't do too much breathe um so that's the one thing that that really as i reflected remembering that there's two sides of those coins and how to react depending on which side the coin is sitting uh in my pocket at the time um i think the other um takeaway is it's better to it's better to make adjustments in good times than bad So, you know, let's make sure that our house is in order, our business is efficient.

22:24Let's remember that businesses don't have expenses. Businesses make investments and investments are expected to produce an ROI. And, you know, we need to look at all of our investments more often. And just because maybe we're producing an ROI from other places that are covering poor investments, that we shouldn't allow those to continue for whatever reason. And I think just the alignment with the customers as well, the fleet of simplicity. I think we overcomplicate our business sometimes when we get bored, when things are going well and, you know, we're bored, so we want to play. So I think fleet of simplicity, you know, document what works and make sure that it's always happening.

23:16Make sure that your house is in order. Businesses have investments, not expenses. And both success and failure are temporary conditions. I like it. I like it. Anything else that you'd like to leave people with before we close out?

23:36I'll say that I have high hopes for this year. I really do. For us and for everyone else. I don't, you know, I'm not not an economist. I don't have any, you know, anything that I'm I'm I'm necessarily going to go on record here for basing that on. but I think that I think that this year is going to be a good year. I think that we're going to we're going to we're going to continue to have to do the right things as businesses and as business owners, as operators, as executives. But I think there's going to be opportunity for those that continue to make difficult decisions and do the right thing.

24:21And I think this year is going to be really, really fun. And I hope that that statement is true for as many people listening to this as humanly possible. But I plan on making that true for us. Love it. Awesome. Well, thank you for taking the time today, everybody. If you enjoyed this, we would love for you to share it with a friend, give us a review. If you have questions, thoughts, want to share something, feel free to reach out to Richard or to me. We are at our names on social media and we'll see you next time on Business Lunch. Hey, business owners. I've got a quick question for you. Do you feel like you're missing the data you need to make strong business decisions?

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