In short
Podcast Episode Summary: GEO is Not Different Than SEO. BUT…
Podcast Details
- Title: Marketing School - Digital Marketing and Online Marketing Tips
- Hosts: Neil Patel and Eric Siu
- Episode Title: GEO is not different than SEO. BUT…
- Description: The hosts discuss the evolution of SEO into GEO, AEO, and LLMO, the importance of adapting to client demands, and insights from creators like MrBeast concerning growth and profitability.
---
Key Concepts
- Evolution of SEO
- SEO (Search Engine Optimization) has evolved into:
- GEO (Generative Engine Optimization)
- AEO (Answer Engine Optimization)
- LLMO (Large Language Model Optimization)
- SEO is still relevant but needs adaptation to include new terms and methods as per client requests.
- Importance of Client Demands
- Clients often request specific services (e.g., GEO) even when they are fundamentally similar to SEO.
- Marketers must adapt their language and approach to what clients understand and want, to secure contracts.
- Shift in Search Visibility
- Platforms like Reddit and YouTube are increasingly significant in shaping search visibility.
- Brand mentions are becoming more critical than traditional link-building methods in SEO.
---
Discussion Points
Future of Optimization
- SEO is now intertwined with other factors beyond traditional searches, requiring a broader approach termed Search Everywhere Optimization.
- Different platforms (e.g., Instagram, TikTok) have unique factors that affect rankings, indicating that businesses need to cater to different optimization strategies depending on the platform.
SEO Hacks and Strategies
- Caution against relying on short-term SEO hacks as they pose risks for long-term success.
- The conversation addresses the concept of parasite SEO, where leveraging high-authority sites temporarily boosts visibility.
Reddit Optimization
- Reddit Reputation Management is critical; authentic engagement is necessary rather than promotional content.
- Companies must participate genuinely in Reddit communities instead of spamming or using AI-generated content, which is easily detected and removed.
Lessons from MrBeast
- Insights from MrBeast on growth, focus, and profitability highlight the challenges of reinvesting heavily without securing profits.
- MrBeast's approach to content creation showcases the importance of engaging ideas and maintaining viewer interest over traditional SEO tactics.
---
Lessons Learned
- Adaptability: Marketers must adjust their strategies and terminology based on evolving digital landscapes and client expectations.
- Authenticity: Genuine engagement in digital communities leads to better outcomes than artificial tactics.
- Profit vs. Growth: Heavy investment in content creation does not guarantee profitability; brands must find a balance between growth and sustainable profit margins.
---
Conclusion The episode emphasizes the need for marketers to evolve with the digital landscape, focusing on client needs and adapting strategies for different platforms. The lessons from successful creators illustrate the complexity of monetizing digital content while maintaining audience engagement.
For more insights and actionable tips, follow Neil Patel and Eric Siu on their respective YouTube channels and platforms.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00At this event, this HubSpot inbound event, everyone likes to talk about GEO and I learned they called it something else. because i was doing an interview with kip aeo yeah they call it aeo what's aeo again i don't know i forgot kip explained the acronym geos generative engine optimization um aeo lm answer engine optimization and then lmo is large language model optimization yeah and search everywhere optimization yeah yeah um this makes it so complicated as a marketing agency because on our website we have to use so many different vernaculars because the clients all call something else yeah um as a side note i do want to so i was um talking because internal seo team i was kind of just auditing with the work that we're doing and um like how much more blog content are you outputting now net new versus a year ago it's very similar it hasn't similar right yeah um and you're i'm assuming you're spending a significant amount of resources still on updating deleting consolidating content versus net new correct uh-huh and so i had to kind of dig in well we added one more bucket but yeah continue what's the other bucket uh getting mentioned on a lot of other people's blogs okay that's good so we do a ton of digital pr that we didn't do as much for our company oh yeah i saw a digital pr um picture from your team oh yeah yeah that's a good picture it was from a mutual friend of ours yeah um but you know i kind of had to like ask my team yesterday i was like hey like what are we what's the net new and so i'm like so much of it is net new and And it's like template AI is just, I'm like, dude, and there's like zero or a lot less, maybe like 15, 20 % on updating, deleting, consolidate.
1:35I'm like, guys, like we got to flip this ratio a little bit. You know what I mean? But sometimes the reason I'm calling this is sometimes you have to look it into yourself and you have to do some of the dirty work yourself, which you do as well. I do as well, which is fine, right? Because if you don't manage these things, they'll start to go off the rails. But Glenn Gabe said this. So Google, once again, shoots down the idea of generative engine optimization, GEO, being different than SEO. So Danny Sullivan, remember Danny Sullivan? So I think he was a search liaison at Google, former editor of Search Engine Land.
2:05Now I don't think he - He's a co-founder of Search Engine Land. Yeah. So he just said from Danny Sullivan, good SEO is good, sorry, good SEO is good GEO or AEO, AI SEO, LLM SEO or LLM N-O-P-E-O. I don't know what that is. But he says, what you've been doing for search engines generally is still perfectly fine and the things you should be doing. And people will tell you, you have to make sure you have this vector thingy that's doing this passage thingy. And it's just like, uh, which I largely agree with this statement. I agree with him, but there's one issue. It doesn't matter what Danny or me or anyone in the industry thinks that it's similar.
2:44Clients ask for something specific, GEO, AISEO, whatever you want to call it. And they're like, no, no, I don't want SEO. I want this. And if you're in business, you got to give the client what they want and you can explain to the client which we do how there's you know it's pretty much the same thing there's a lot of similarities and i would say for different platforms they look at different factors right google may use the same factors for seo as geo chat gpt may put weights on different things and you can still say that's seo but when a client says, no, I don't want SEO. I want you to just focus on chat GPT.
3:22You have to adapt to what the client wants. If you want the contract, you can explain to them, which we do, how there's a lot of similarities and this SEO has evolved and it's pretty much the same thing. Clients don't care. They say, they'll tell us on the phone, no, we got all this, or we don't care what you're saying. This is what we wanted. This is the mandate from our executive team. So you got to adapt to what the market wants to hear. Marketing and sales one-on-one is just way easier to sell something that people want versus try to educate people. Yes. Yeah. I agree with Danny. And we used to try telling people SEO and GEO is it's the same thing.
3:57And we still tell them it, but instead of fighting people on that, we say, all right, you have an RFP just for GEO. And this is what you're looking for. We'll let them know. Happy to help you. Yeah. We'll let them know clearly that it's going to involve SEO and other things and things that they may already have vendors for. So that way, you know, we're not lying, but it's like telling them, Hey, you're trying to pay agencies for this. No, you don't need this. You just need SEO. Cause it's the same. And if they start fighting with you and you're trying to correct them, you're not going to ever get a contract.
4:29You got to go with the flow on this. Yep. I do think it's also important for us because we've, we touched upon it a little bit, but you know, people, when they they're looking for GEO now, LLMO, a lot of it encompasses Reddit. A lot of it encompasses YouTube. And so like we mentioned before, or brand mentions, brand mentions weren't as important in SEO versus link building. And these LLM platforms, link building doesn't matter as much as brand mentions. Does it mean SEO and geo are different? No, it's just, it's evolving. That's really is all it is. And we should talk about some of the core tenants.
5:02So like when we think about traditional SEO, for example, yes, content links, technical. Yes. You should think about how you can rank higher in the AI overviews, for example, right? That's traditional SEO. Now, if we think about the core tenants for YouTube, and I'd like you to maybe talk about YouTube or Reddit as well, but YouTube is how good is your idea? That's still number one. How good is your packaging, your headline, your thumbnail? How good is your 30 second retention? How good is the hook to keep people? How good are your open loops to keep the retention high, right? How much do people keep going to other videos on YouTube after they watch yours?
5:32That makes them more money. Watch this one next, right? Yeah. But then, but that, see, these games are different. You can't just say they're the same thing. I think the problem with SEO is like, oh yeah, when we do YouTube, yeah, oh yeah, you got to optimize for the keywords, the tags and all these things. And like, no, you're thinking about that from an SEO angle, right? So we're just trying to give you the core tenets for traditional, for YouTube, and now Reddit. Yes, and that's why on our end, we call it search everywhere optimization. Because what we found is corporations will say, I want to rank on Instagram for our products or services, okay?
6:08And the factors that Instagram uses is different than Google. When you tell corporations that this is all a version of SEO, most companies will tell us SEO is ranking on Google, not even Bing. They just focus on Google. So they look at it as something totally different for Instagram or, you know, Reddit reputation or LinkedIn or, you know, getting searches from TikTok or Pinterest or even chat GPT. So you got to adapt where companies are going. We as an industry may want to continually use one vernacular, but if the customers and the majority don't, then it is what it is. By the way, there's this guy that tweeted this, quite possibly the SEO play of the year.
6:51I don't know if you saw this, but I'm showing Neil this graph over here, but you can see it's kind of gone vertical like a hockey stick. So organic traffic, 530 million. And so what he's calling out here is when you search for cover letter generator, for example you see Grammarly is the first one AI cover letter generator chat GPT is number two cover letter generator so all he's saying is you create custom GPTs and they'll get crawled and you leverage the domain authority of OpenAI now is this the SEO play of the year no absolutely not but it won't last long we've seen this many times this is just parasite SEO yeah and Google will be like oh we're sending all our traffic to chat GPT let's go fix this I do have a they also kind of compete with chat GPT yeah so they'll do whatever They may not say it directly, but I bet you if I was an owner of a business, why the heck would you be promoting a competitor?
7:41This is just basic business. And Google had that. The judge just ruled recently this week, and they got a slap on the wrist. Google got saved by AI because originally they might have had to divest from Chrome and all these things, right? And I think they're still allowed to continue to make revenue from Apple in terms of— They just can't force them to be the only option. No, they can't. But they still make good money from Apple. And Apple's stock went up, I think, like 3 % or somewhere around there. Google's went up. 7%, 8 %? Yeah, something like that. And then the other thing for Google is, yes, they have to share some data around how their search algorithm works and all that, which will help some of these other competitors.
8:17But I saw in the ruling that the judges were basically like, or the judge was basically like, look, you know, AI has made this so much more competitive. And I don't think if AI didn't make it competitive, Google would have been in more trouble. So they got saved. this is also why people in business shouldn't play politics you make enemies with other businesses all right that's one thing it doesn't matter how rich you are you make enemies with the government or people like that uh they can take it all away yeah they can take it all away that's the real reality i don't care what country you live in they can screw you over and you can't make the pitch like let's say if you're facebook but senator the government approved us buying instagram or whatsapp And they'll go with, we approved you at that time, but look at what you've done with it.
9:05And now your social networks may be more monopolistic. I'm making an example here. They don't care what they approved in the past. They can do whatever they want. Yep. By the way, I have a friend. I won't name names here, but he actually was buying ChatGPT plugins and it helped him with customer acquisition. I think he bought like a number one or number two plugin in his niche. I think he paid a couple hundred grand or so, but it's helped him generate a lot more customers for his AI SaaS. I've never thought about that. Yeah, there you go. See? I'm going to go message a crap load of people today on that one.
9:35Yeah. And why not? Yeah. And it's like these arbitrages aren't going to last forever. But we know some people, going back to Reddit for a second, because we haven't talked about how to optimize for Reddit. On Reddit, some people are buying, you know, they're buying accounts that have a lot of authority, right? To kind of insert themselves in the conversation. That's one element. But there's also Reddit reputation management. So what are you seeing on the Reddit side when it comes to how to play the game well. If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast.
10:08That's where Framer comes in and it totally changes the game. Framer is the design first no code website builder that lets anyone ship a production ready site in minutes. I recently built a custom landing page in just a few hours, animations, fast load times, responsive layouts, all without writing a single line of code. It was easy to use and the end result was polished enough to look like a developer spent days on it. One of my favorite things is that Framer's AI handles translations with a single click. So your site can be up and running in multiple languages almost instantly. And with real-time collaboration, your whole team can jump in and work together.
10:40No issues with versions or miscommunication. Whether you're starting from scratch or using one of their templates, Framer lets you focus on design while handling the technical side for you. Animations, responsive layouts, search optimization, and all the things that matter. Ready to build a site that looks hand-coded without hiring a developer? launch your site for free at framer.com and use code MS to get your first month of pro on the house. That's framer.com, promo code MS, framer.com, promo code MS, rules and restrictions may apply. When I first started my business, the overwhelm was real.
11:12I didn't have the tools to help me scale. If only I had Shopify from the start to handle all the behind the scenes work. Shopify is the platform behind millions of businesses globally from huge names like Mattel and Gymshark to the smallest brands just getting started. The best part about it, it has everything you could need. Say you're ready to launch your own design studio. Shopify has hundreds of templates to create a beautiful store that matches your brand style. Or if you need help with content creation, Shopify's got AI tools that write your product descriptions, craft page headlines, and even enhance your product photos.
11:43Shopify lets you easily create email and social media campaigns to reach customers wherever they are, whether they're scrolling or strolling. If you're ready to sell, you're ready for Shopify. Turn your big business idea into with Shopify on your side. Sign up for your$1 per month trial and start selling today at shopify.com slash marketing school. Go to shopify.com slash marketing school. Shopify.com slash marketing school. Participate in the community. Network with other people who are influential on Reddit. It helps knowing people with powerful accounts and have been high Reddit contributors for years.
12:22is very helpful. I think buying Reddit accounts, we've seen a lot of companies do that. The issue is they don't know how to maintain them. And I think that just causes problems because they look at it as like, oh, let me just buy these accounts and then promote my own business. I think that's very short-sighted. I think the real way is you participate in the community, you network with other Reddit users, get to know them. Just like how I was talking about earlier, how I'll go meet up with enterprise companies and just shoot the shit and not talk about business and just maintain relationships.
12:51and in the long run, yes, it helps generate revenue, but that's not always my goal. A lot of these people are just friends and I've known them for years. You know, when I was on Dig back in the day, the reason I did well on Dig was I networked with other users and I got to know them. And at that time when Dig was really popular, I had the highest ratio for submits to homepage hits. Yeah, Dig was the thing back then and Neil was up there all the time. You know, back in the day when people didn't take blog comments as seriously, you would hire people to take care of your blog comments so that was like ahead of its time yeah so you have to my point of saying this is that you have to engage with the community you have to be authentic um and that that's like saying a lot of like buzzwords but in my mind if you're going to try to do reddit well you probably should hire someone who really understands the game and is native to reddit and is not trying to spam because we've tried all that stuff doesn't work a long time ago you try to spam the community they catch it very quickly reddit is so good at catching that yeah the biggest mistake companies we see make with reddit and posting on there is they use ai to create a response and reddit is really really really really i know i use a lot of reallys but they're really good at detecting content or like replies or comments that are created by ai and they just remove it and i highly recommend that you're not too promotional and you focus on helping out the community and you have someone manually write your replies because if you do that you're much more likely to succeed versus if you use AI.
14:16And I'm telling you, they have a really high hit ratio of detecting if something's AI. And me and a few buddies, we did a fun experiment where we use AI a hundred times on Reddit, right? So there's 10 of us. Each of us did 10 times. And we wanted to see how many times they actually detected if it was AI written. We didn't use our main accounts because we don't want anything to get screwed. No joke. over 70 % of the time they detected if it was written by like a chat GPT and they just removed it. Wow. That's a lot. It was over 70. I have to get the exact, my nose less than 80, but I know it was over 70.
14:53It's also hard to find these Reddit people to hire too. Oftentimes you're going to find these people on like Reddit. That's one on discord channels as well. Um, you're not going to find these people oftentimes on traditional, uh, no marketing events. We find a ton of them at marketing events. Even at HubSpot, you know how many people here are at Reddit. there's a lot of them. Really? Uh-huh. I didn't know that. Percentage-wise, no, but you have a ton of marketers in the room. You're going to get enough of them that have been using Reddit for years. No, I'm just saying, if we want to, like, if you want to traditionally, like, if you're looking to hire, like, an agency executive, you're going to LinkedIn, you're going to source these people, right?
15:24Yeah. It's harder to find these people on LinkedIn. You're finding them in, like, the nooks and crannies of the internet. We don't find them on LinkedIn. We find most of them through, A, relationships, or, B, going to events and talking about Reddit, and a lot of people who participate meeting a lot of people who are active they're very different people by the way we're hiring reddit people um and youtube people we just go to ytjobs.co so good so good yeah i still haven't used that you told me about that last time okay you know why it's so good did i tell you um if if let's say i'm trying to work for you as an editor um i can show you all the accounts i've worked with and the other accounts will verify that i have in fact worked with them and there's testimonial so all the then it shows me as like a like a purple diamond which is like highest that means I have a lot of verifications.
16:07This guy's like a good candidate or a girl. And then like a gold star or whatever. But we're talking to a lot of great candidates right now on the YouTube side because we're getting a lot of inquiries for YouTube. And I think definitely worth it for you guys too. We're just struggling on the Reddit side. You're getting a lot of inquiries for yourself, for your clients. We don't really get any YouTube inquiries for clients. It's interesting because a lot of, a few of these, like you look at how much money they raise or someone that are like multi-billion dollars in revenue. They're looking for YouTube, a lot for Reddit for sure.
16:31But we're struggling on the Reddit side. So we're hanging on the Reddit side. Reach out to me. For YouTube, we get corporations asking us to create campaigns or creative. You mean YouTube ads? No, not just YouTube ads. For Mitsubishi, we did a really cool campaign for the Northern Lights. Filming people in a car in Mitsubishi, going all the way to Northern Lights. That's awesome. Tracking the whole experience there. So we get inquiries like that. But most corporations don't want help with YouTube like the type of videos that you and I create. I don't think agencies can help that much with it because you need to get buy-in from internally that they'll help with the creative stuff.
17:11It's not even that. Most corporations don't want a face. And if you even tell them, you can have an AI face, they just don't want to deal with it. Yeah. I just think there's, it's YouTube. If you're going to help someone with it, it's much more done with you versus like when you're doing an ad. Okay. You might collaborate a little bit, but it's very done for you. Or the ads that you're, that we're running for our clients or doing SEO for them. A lot of it's done for you. Yeah. Yeah, if I had to pick the top three YouTube things that companies hit us up for is ads, of course, like the Mitsubishi example where you're helping with experiences.
17:39And the third one, and the third one is actually probably one of the biggest ones, is influencers. Like, help us reach out to a lot of YouTube people and leverage your network and go get them to talk about. That's where you get more support from AI when you're reaching out to a bunch of people. Yeah. Yeah. But we haven't seen a lot of success with AI reaching out to get influencers. I think it'll get better over time. It's not that. Most enterprise corporations want really big accounts pushing them. It's very relationship-based. They don't want the person who's just like, I got 10 ,000 followers.
18:11They want well-known people within a space. Because if you're a big corporation like a Microsoft or a Google or Walmart or whatever it may be, HSBC, they have money. You don't want to be associated with too small either. They want to be associated with big. Even if it doesn't produce ROI, they don't care. Perception. It's perception. You also have to keep in mind when you're Google and you're doing a hundred and something billion, you don't care what some of these things cost. You know what's interesting? You mentioned the Northern Lights campaign. So as you say that, I'm like, yeah, I wouldn't have the creativity for that.
18:42Nor do I think you would have the creativity for that either. But we have a whole creative team for that. I know, exactly. I'm saying you have amazing people on your team that are super creative. And when I think about us, it's like we're really good on the digital side. And we mostly try to stay in our lane there. and we hire amazing people for things that we just suck at. It just reinforces my mind. Because it's like, when I think about the Northern Lights Creative, I'm like, I don't think you would want to get involved with that. I wouldn't want to get involved with that either. But I watched a lot of it.
19:06It was really good. And I'm not thinking because we created it. But they made it almost like reality TV combined with the experience in a Mitsubishi car. And that makes you feel good about your team. It's like, damn, we have some really amazing people. Right? And I learned about it when it went live. Yeah. And I was like, what is this? It makes you feel proud. but it's like it's also like it has nothing to do with your creativity or my creativity yeah you know what i mean so um but um matt diggity said this so i just want to finish off on the youtube or reddit thing and then we can move on i'm i'm out of topics on this thing now that's okay we only have like six more minutes by the way we don't yeah we do i've been keeping track of time we started at 25 we go for 80 minutes we go for 80 minutes huh we go for 80 minutes i thought we go for we go for eight we could talk about the podcast i thought we go for 75 no 80 minutes i I thought it was 15 minutes episode, no?
19:49But they requested 80 minutes. So, guys, the reason we're talking about this right now is 80 minutes is because YAP Media, who we work with, they want to sell more ad slots. And then each episode's 20 minutes. Each episode's 20 minutes. So we have 10 more minutes. Yeah. A little longer. No, 10 more minutes. You should be good at math. What time do we start at? 25. Oh, that's right. Okay. You're right. You're right. So Matt Diggity, he said to dominate on YouTube and Reddit, just to close this thread, there are the second and third. These are these are the second and third most cited domains in AI response.
20:21I remember on Monday I showed you that graph. I think we saw Google. Oh, no, we saw Reddit. 41%. I think Wikipedia was up there in the YouTube top three. Yeah. So he says YouTube optimization, create tutorials and product demos with clear timestamps. Number two, use keyword rich titles and descriptions. Number three, add detailed video descriptions AI can parse. Number four, focus on how-to and comparison content. And then for Reddit strategy, he says, find high-traffic Reddit threads already ranking on Google. Add thoughtful, helpful answers, not promotional content. Focus on product discussion subreddits in your niche.
20:54And so his high-level starting thread on this one is the 80-20 of AI SEO. So I like the Reddit piece. I think that's fine. The YouTube piece, like when I hear keyword-rich titles and descriptions, that makes me think traditional SEO again. and I don't think that's the way to win. Like when you see Mr. Beast do his videos and we're not Mr. Beast by any means, but he's not thinking about the keywords. He's thinking about the idea. He's not thinking about the keywords. He is thinking about how it's going to get people to click and how good the idea is. But in speaking of Mr. Beast, I agree with that.
21:26To do well on YouTube, I know it's different for AI, SEO, but with YouTube, it's all about just hooking people and keeping them engaged. And it really is the watch time is probably the number one metric other than the click the rate on the image, right? yeah um but going to mr beast really quickly i sent you an article the other day breaking down some of it because tech was talking about how feastables does around 20 ish million in profit but his profit uh-huh okay uh 200 plus in revenue yeah his because they're talking about how he's potentially creating a cell phone company like you know mint mobile like the ryan reynolds okay um it said 80 million in losses from his media company yeah 80 million in losses i know people are saying Mr.
22:07Beast is worth a billion dollars or whatever it may be. I agree he has one of the biggest brands and his brand's worth a lot of money. From a business standpoint, I actually don't think they make a ton of profit. And he always talks about how he has like maybe a million bucks in his, less than a million dollars in his bank account. Yeah. He does reinvest it all, but if you reinvest it all and you can't figure out how to make profit, it doesn't matter. Because if you look at his YouTube content, if he didn't invest that much money into his content, I don't think he would make anywhere near as much revenue and have as big of a brand.
22:35Yeah. You know, it's interesting. So I know you're focused on the profit piece, but when I look at how sustainable this is, because I've seen videos where he's close to burnout and the quality of the videos, like he did one on like$1 bunker versus a nuclear bunker versus a billion dollar bunker. And to do all these videos and to do that, the Amazon Prime show and to try to, you know, influence these businesses because he's got Lunchly, he's got Feastables, right? What else does he have? He's trying to do the cell phone company. It's a lot to do for one person. and um well he has a team but yeah he does have a team but here's the thing i i've talked to multiple mr b's people that have worked there and so i understand a little bit in terms of the dynamics because i've interviewed these people but personally right he cycles through people very quickly and it does sound like it's um you're kind of running on knife's edge which i i think is how his personality is so we talked about not reinvesting because i i we have some mutual friends that have that hung out with him at the my first million basketball camp right and i think almost everyone was trying to talk to him about how, hey, maybe you should at least take some profit.
23:37Maybe just some profit. No, but it's not that. I look at it as like a great example of like Cursor, right? Cursor, from my understanding, spends more money than what they're getting in revenue. I don't know. Right? Let me check Twitter right now. Right? So if you're spending, if someone's paying you$100 and your cost is$120, you're losing money. That's an example that I look at Mr. Beast on. I'm not saying he's losing money everywhere. He must be breaking even because I don't think he has investors. Did Mr. Beast raise? That's what I'm asking. I don't think he raised money. Because Cursor, when you raise as much as Cursor, you can afford to lose.
24:09You can afford to lose money. But for Mr. Beast to get the views, he has to spend so much. But the problem with spending so much is if he says, hey, I want to make more profit and I don't want to go as much, I think his view count would start going down. So he needs to spend that much money, but it's just not profitable. It's a business. Yeah. And he has to figure out other ways to monetize it. And I'm not saying he won't figure it out, but it's a sexy business that is not great from a margin perspective because it costs so much to get that attention and the attention doesn't monetize well. Yeah.
24:41So look, I think he's phenomenal. One of the best creators of our time. Definitely. Yeah. But it remains to see how the business will pan out in the next few years. So I but it's basic economics. It's like marketing. I could tell you, you know, we're running an AI and marketing summit that's happening sometime in September. And my team started running ads for it. And they sent me the report this morning. No joke, like I literally saw it. And, you know, the numbers vary each day. Some days our ROAS is call it one point something. Today the ROAS was 10 plus, but it started a day and we barely spent any money, at least when we're recording this podcast.
Read the full transcript
25:23But on average, we're doing six, seven times ROAS, which is amazing, right? When you're at six, seven X. And I was telling the team, cool, maintain profitability. We're in a business to make money. But I'm like, you can bring it down. You don't need to make that much money because a lot of those leads will convert into other future revenue. It's okay. You know, don't break even, just make more than break even. And they're saying, why not just break even? And I'm like, in case someone screwed up the reporting or something, uh, margin of safety. Um, I'm like, so if you have like a 30 % margin or 20 % margin, worst case scenario, we probably break even.
26:01So they're like, Oh, okay. Sounds good. And I'm like, there's other costs too, right? Payment processing and stuff like that. Maybe some people want refunds. Um, but you gotta create a business that generates money and is cashflow positive. It's like me doing marketing like, look, you know, look at, um, some of these companies that do sports sponsorships. They're like, Oh, we spent a hundred million dollars sponsoring the FIFA world cup. But I'm like, yes, but it only brought in 20 million in revenue. This was an epic failure. It's just like generating revenue, but not keeping, taking into account the expense to me is just a useless form of marketing.
26:41Yeah. I hope, uh, I mean, kind of everything you talked about here is It goes back to focused involvement. I think he's involved in too many things right now. I think eventually he'll learn and we'll see. I have no, like, by the way, his brand's way bigger. Revenue does a lot more revenue. Yeah, but he's struggling to really scale Feastables because everything that I've read from Feastables, it's not like the growth is skyrocketing where he can get to a billion dollars or anything like that. And there's a certain point where you need to figure out how to continually scale. You're right, he's doing too many things.
27:13But if you go with Feastables, if you want to get into food, get into food and go and grow that thing and make it amazing and really big. And, you know, he's doing what a lot of the celebrities do. Use your celebrity notoriety to get a huge launch. You scale really quickly. And that's proving not to work anymore. We talked about Prime a couple of weeks ago. Yeah. That's not going well anymore. No. So you can't. And we've seen a lot of influencers try to launch things and they, they, they, they, it's a huge spike and it goes down. Yes. To maintain a business and continue to compound it, you have to put compounding focus and compounding involvement with it.
27:45Yes, totally agree with that. By the way, go ahead. But if you and I went to any one of our clients, we'll make you super successful and famous or popular, and you'll spend more than you make, and we don't know if you'll ever get a return. Oh, they'd laugh us out of there. Yeah, yeah. So Cursor, by the way, and we can end on this one, but Cursor has achieved explosive revenue growth, reaching over$100 million in ARR. Some reports estimate it climbing to$300 million to$500 million ARR by mid-2025. Profitability challenges. While revenue is soaring, profits are likely thin or negative due to high operational costs, especially for large language models, because they're charging like$20 a month and$40 a month for business plans.
28:21They tried to move it to$200, got backlash. So they might be breaking even or losing right now. Broader reports on AI coding startups described them as highly unprofitable because of compute intensive features with margins as low as 20 % on token-based pricing. But once you've captured all the users, you can afford to raise your pricing a little bit. Like Teams. But they're also betting on when you look at these tokens that you're paying for from AI, If you look at the last year, they've gone down a lot in cost. So people are betting on the fact that the costs will start going down and then the cursors of the world can be more profitable.
28:52They just got to wait it out. And you know, there's a lot of investors with deep pockets that'll put in money. Hypothetical margin analyses show potential for 55 % plus profits in balanced user scenarios. But heavy AI usage can flip this to losses, indicating growth revenue is a primary metric while costs are managed reactively. so in summary cursor stories dominated by revenue milestones with probability taking a backseat amid high ai expenses typical for venture-backed tech firms aiming for market dominance which is not what mr beast has with this thing yeah no and i don't know how mr beast is going to sell one of these companies like you look at like a feastables or anything it's too reliant on his brand i don't see someone buying you know he said that um so he's gotten multiple offers in the past where someone has offered him like a billion dollars for his youtube channel or something like that But I'm not saying people haven't offered it.
29:37I'm not saying he's lying. I don't think the deals would have went through. It's interesting to me. Look, I think we hope it all turns out great, even better than he ever dreamed. I hope he makes a killing. I hope he becomes a hundred billionaire, right? He seems like a nice guy. I watched some of his Prime show. And it was true. Prime show? Amazon Prime. Oh, yeah, yeah, yeah, yeah. Right? And I forgot what it was called, but I watched some of the Mr. Beast show. Beast Games. Beast Games. Yeah, yeah, yeah. I watched a little bit. I watched the whole thing. And dude, on one of them, they were driving on like this cliff and then he's having someone get out of the truck to just make sure they don't go like too far.
30:11I would have been scared to drive on there. I would have crashed or fell off the cliff. But going back to it is, you know, I hope he does really well. He's an amazing marketer. I just think the economics of his business model are broken. I just think he was used to growing up on knife's edge and it's continued to compound in that way where you're like riding the edge. That's not how you build a business. Yeah. so we'll see how it goes um and i i hope we're we're really wrong so anyway we'll catch you later guys

