MrBeast goes corporate, How Costco sells $9000 exercise equipment for $100, and Is using the word "AI" in your marketing dead?

0:00So Matt Paulson tweets this. I don't know if you met Matt. But the day Mr. Beast has to become a real grown-up company is the day that the channel has peaked. The suits will ruin the creative magic. So here's what happened. I'm not going to go into too much detail here. No, go into the detail. There was an issue. So Mr. Beast had someone employed that was a trans female, I believe. I think, yeah. Some kid harassment or something like that. And so that person, that employee, was one of his good friends before it, but was basically like sending, I think, like was harassing like little boys or something like that.

0:36Right. I could be wrong on this. You guys can crucify me in the comments. But basically, this person's name is Ava Tyson. And so Mr. Beast then sends this message over. It looks very professional. It looks like it's written by a law firm. Right. So it's a company confidential. Do not distribute. That's when you know it's super professional. He did state online that he hired a company to investigate the situation. Yes. So I'm going to kind of go simple here. So he's like, okay, you know, we hired a top tier law firm, Quinn Emanuel, to do a full investigation. Okay, so to start off, we will be instituting.

1:09We'll be instituting, hiring a new chief human resources officer. We will do mandatory training. We'll do listening sessions. Okay, we'll do anonymous reporting and we'll do external review. So look, they've got over 300 million YouTube subscribers. I think it is important to professionalize it a little bit. But Matt Paulson's point is like, once you start bringing in the suits, the creative magic is going to be gone because Mr. Beast had so much creative freedom. Growth will slow down. When lawyers come in, they're going to be like, hey, they're going to put guardrails around things, right? Because when you build a large organization, you're going to want to put guardrails around things, which is why you see a lot of big companies eventually become bureaucracies.

1:45Yeah, because people don't want to lose what they have. Yeah, you want to protect once you become big, right? But oftentimes that's a mistake. And by the way, in that book, J. Paul Getty is like, you don't want to do it. Even though he built the world's kind of largest oil operation, he's like, yeah, you don't want the bureaucracy. You don't want to become like a government. A lot of companies do that. You want to prevent that as much as you can. I think Amazon's done a pretty good job of preventing that. I think, yeah, Amazon would be a good example. Steve Jobs used to call Apple the world's largest startup.

2:13Here's an interesting example. So I remember my co-founder, Mike, telling me this. around six months ago, our head of marketing solo gets on the phone with our CEO, my co-founder, Mike, Sarah, who runs our SMB division and a few other people, maybe Colin and a few other people on our team. So solo is just like, Hey, I got this cool marketing experiment. I want to run. I want to start doing some Instagram ads to webinars. I think this is what we can of course, uh, signups for this is the return I think I can produce, but it's still early. So I don't have any real return data and I'm asking for a budget, uh, 15 or$20 ,000 or 10 ,000 or something small like that.

2:58And just a one-off as a experiment. So then Mike's like, the CEO is like, Oh, I don't know. This seems interesting. You know, Sarah, you're, you're, you're a little bit above your numbers for the year. Do you want this on your books? He was like well i don't know i don't want to mess up my numbers in case if it doesn't work and then a few other people and pretty much it goes down the list and everyone's a little bit hesitant nobody wants to put it on their p &l yeah because they don't want an expense and they don't want to take a risk so then they pose a question to my co-founder mike on the call our ceo is also named mike um different person but my co-founder yeah my co-founder's name is mike camo so they pose it to him he's just like how much are we talking it's like 10 15 he's like do whatever you want just try it out if it works great if not whatever yeah right there was no bureaucracy or anything it's just like sure dude you want to try to experiment what works great if it not whatever we take a 10 to 20 you weren't on the call i wasn't on the call yeah i was probably traveling yeah and it just shows you you know like we have over a thousand people imagine how long that would have taken it probably wouldn't have happened it wouldn't have happened if my co-founder wasn't on the call.

4:05Yeah. And that goes back to the working businessman. I don't think the experiment worked out. I'm 99 % sure it doesn't work out because I don't see us running ads anymore. But most experiments don't work anyway. Totally agree. But what's funny about it is you're spot on. The moment organizations get really bloated, we're not really bloated, but more so big head count wise, people really run things through a PNL. And like all that people tell me like, well, if we do this, it can affect our numbers and we may not hit it. Like we're right on that. Who the heck cares? Yeah. But the thing is like, that's why founder blood is so important because founders, like, you know what it took to build everything up and you know what risk taking looks like.

4:44And so you're more, you're more okay with the whole idea of risk because starting a company in the first place is so risky. All right. But based on what I said, do you think I run a business by a P &L? No, I never have. I do have people in place. You're super on top of the numbers though. Yes, I do keep track of the P &L, but I don't really care if we hit it or off a little bit, assuming it's because of choices. If we choose to miss because of extra investment, I don't care. If we choose to not, if we miss because we tried our best and the team just failed an execution, I'm not as happy in that situation, but you accept if everyone tried their best.

5:28What's funny though is I believe most founders are like me. So we've been doing a lot of M &A and we reach out to so many companies. In a bad economy like this, what do you think most founders don't do? They don't run their business on a P &L basis. So when shit gets bad and they lose revenue, what do they forget to do? You're asking me? Yeah. They forget to cut? Exactly. They forget to cut. So their numbers are bad. And we talked to so many agencies that are like, yeah we're negative profit or not negative profit we're just losing money we're not making any money so then we go to these people this is like the best time to buy well we'll give you extra really high multiple compared to what you normally would get in this bad economy and then you give them earn out because we're just looking at those businesses like huh if you actually cost controlled you could have instead of being negative you could have made two million dollars in profit and poor management yep so it's just like it's good to i think all businesses should know how to operate a P &L and stick to a number and know how to hit a number if they need to, or get close enough as possible with whatever circumstances you have to deal with.

6:37That doesn't mean you should always run to one or operate to one, but it is a great time to buy right now because the economy sucks and most people don't operate to P &L. So everything's cheaper from that aspect. And a lot of agencies, when we ask them, like we have our agency community, right? Agency Owners Association. A lot of people are struggling with leads. I think 99 % of them are struggling with leads. So if you got lead flow and you got a good operation, then now is a good time to figure out. There's a lot of different ways to buy, right? If you don't have the capital, you can do equity swaps.

7:05There's a lot of different ways to put a deal together. And my favorite part is when you buy these companies or even before we need diligence, what's your utilization? Oh, it's pretty much full. Everyone's at capacity. So you're telling me you have five extra people than you did last year, but you have 15 % less revenue and everyone is at capacity. I wonder how, and you're pricing your contracts correctly. It just means people are getting lazy and they're not actually performing. So then you go in there once you buy, cause we've bought some by now, or we already have. And you start looking at things.

7:37You're like, oh yeah, everyone says they're really busy, but when you're all the time, and what do they say? We need more people. Yes. All the time. We need more people. And then you look into it and say, oh yeah, you're really busy. You're working two and a half hours a day. You're like, oh, exactly. Because then you start implementing things like time tracking, not clocking, clock out tracking, but more so how much people are spending per project actually getting work done. You're like, wow, you're not really doing much. What's your target utilization rate? I don't know. I should know that. Ours is 70, 80%, right?

8:06But even then, oh my God. Yeah, no, no, we need more resources. And by the way, going back to the Getty book because it's fresh on my mind. He's like, you know, your company, the people at your company are always going to ask for more resources. and your job is to be as frugal as possible and tell them no. Dude, they all want more resources. But what we found is most of our leadership are executives who've been in our space for a long time. None of them ask for more resources. We typically have that issue with the younger generation. Yeah, because nobody want to work. Everybody wants to get paid, but nobody wants to work.

8:40You know, my favorite is one time someone pitched me. They're like, Neil, we need Fridays off. Okay, why? Well, if we have Fridays off, we'll be able to recharge and we'll have a three-day weekend. Why don't we give seven days off then? And we'll do better. I was like, okay. What about the clients? Well, the clients will still pay the same and they expect the same work. Okay. What about the pay? Because people now get an extra day off. Oh, no, no. Everyone will get paid the same. All right. So the clients get less work done because there's less days in a week. and remember we track utilization so we know when our people are efficient or not the people get paid the same so now i gotta hire more to make up for that in a business that already has low margins so then i make what no money to negative money and then i gotta make it work i'm like this is not logical you cannot do this yeah i mean go find a company that does that i'll tell you like a lot of the four-day work work week companies i they talk about the experiments that have worked in Europe, but I think in American culture, it's probably going to be tougher to roll that out.

9:44I think at least right now, over the next five years, that's not going to become a big thing. Maybe it will over the next decade or two. No, I do not see a four-day workweek becoming popular. Yeah. I just don't think it's happening in the next five years. We might have a different take on it. We don't know how the world's going to look in 10 years. That's true. With AI, things can change, but I would say for the majority of jobs where people are still working, people will want them working five days a week. I just, I mean, like, again, it comes down to purpose. If you enjoy what you do, and it's hard.

10:12Like not everybody can find, like not everybody thinks they can find what they enjoy. But if you can, like you're incredibly lucky. Why would you not? Yeah. And culturally, some countries are probably more open to four-day work weeks. Like France takes off for this pretty much whole month. The entire European Union. Yes, that's true. UK, which isn't in the EU, is still working strong during these months. Yeah. I got to take a minute to tell you about the Agency Owners Association. This is a peer group for agency owners. Think YPO or EO, but for agency owners. And I just wanted to read you a couple of testimonials.

10:44So this first one comes from Carrie. And we asked her, what do you like most about the group? She said, having a group of people to discuss and bounce ideas. The leads are great too. Yes, we share leads in this group as well. This one from Alian. He says, the ability to really post whatever I want and need. And the group responds. Great experienced members. Getting a lot of insights from conversations with other members. getting a lot of value from sessions from Eric, getting advice from others as well. And so if you want to grow your agency faster and you want a peer group to do so, just go to marketingschool.io slash agency.

11:12This is a group that both Neil and I created. And our hope here is to create a vibrant community of agency owners and do a lot more with it in the future. So again, marketingschool.io slash agency, and we'll see you inside. Can we talk about how Costco sells$9 ,000 exercise equipment for$100? Yes. I'm curious on what is this? Is this their membership where you walk around? No. So, okay. This guy, Shannon Jean tweets this. Who has solved the problem of selling exercise equipment? Again, Costco selling$9 ,000 exercise equipment for$100. So Costco has a liquidation auction. It continues to basically give this product away.

11:48So here's some numbers. $8 ,490 worth sold for$302. Okay. $7 ,000 worth of equipment sold for$100. $9 ,005 worth sold for $402. So here's a screenshot over here. You guys can see it on YouTube, but they have a section over here where you can do liquidation auctions and you can buy like these, these super expensive. On Costco.com? Yeah. It's, I think it's just search for a - Is it used or brand new stuff? It's used. Costco liquidation auctions. And maybe some of it's not, but so he says, I know there's a reason, quote unquote, soft market that they're selling so cheap, but I can't help but also think that the person who solves for where to sell is going to make a killing your thoughts.

12:28If you, so basically you search for Costco liquidation deals and you're going to be able to find these things at a massive discount because people are just bidding on this stuff. And I don't think a lot of people know about this. And so that's why it's selling for so cheap. So me telling you guys about this right now. Yeah, you're welcome. The black Friday, cyber Monday weekend is where systems get stress tested. Traffic surges, inventory moves fast. And every second counts. You need a platform built for the moment. That's Shopify, the commerce platform behind millions of businesses and 10 % of all US e-commerce.

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13:28Sign up for your free trial today at shopify.com slash marketing school. That's shopify.com slash marketing school. Go to shopify.com slash marketing school and make this Black Friday one to remember. This is going to be like one of your other Instagram clips on the mall. Yeah. All over. The mall did really well. Yeah, this will do well too. Yeah, yeah, yeah. dude with Costco I know how you can get $9 ,000 worth of equipment for$100 how you just don't buy it and you just walk their stores you'll get so many steps and it's like exercising you know in Italy when I was there I was eating like an asshole every day and I lost 5 pounds because I was taking 15 ,000 steps a day and the food's cleaner way cleaner I was about to say it's not just because of how much you ate yes you get more steps in but the big one is their food is actually way cleaner.

14:19And B, their portion size, if you actually look, is very small compared to American portion size. I had some fat portions. You probably ordered them, but generally speaking, their portion size is smaller than you'd get like at an American restaurant. All right, quick note. This is about my company. It's called Single Grain, and Single Grain is an ad agency where we're focused on driving innovation. We'll talk about a couple of new strategies, and if you need help with marketing, great. If not, here are a couple of new strategies that you should try out. One is programmatic CRO. So we are doing programmatic conversion rate optimization on our site.

14:49So it's building products that will automatically optimize your site to increase conversion rates. We're also auto-optimizing, auto-updating from an SEO standpoint. And we're constantly thinking about what else we can do in terms of enriching the visitors that are hitting your website and also tailoring custom messages for them using AI. And so there's a handful of things that we're doing from a marketing standpoint. And our mission is just to drive more innovation. So if you want to learn more, just go to singlegrain.com. Grain Like Rice. So singlegrain.com to learn more and we'll see you inside.

15:17You know what? This is a good one over here. Why don't you talk about using the word is using the word AI in your marketing dead? Dude. So it was funny. We looked at companies early on that were using AI in their marketing and there's a good group of us that share a lot of data and no joke, everyone in the group called it a year year and a half ago when they put ai in their headlines and their marketing materials they saw a boosting conversion anywhere from call it like seven eight percent low single digits or high single digits all the way up to we saw people boosting conversion rates in the 20 plus percentile and i'm not talking about one or two sites i'm talking about like 15 plus sites all running tests and all seeing positive results.

16:06Now, fast forward to today, a lot of the same sites re-ran experiments, AV tests, using the word AI in the headline or in their copy versus not using it literally has little to no impact on conversion anymore. Even if they use AI technology or there's something cool about it, it's just, it's gone so overplayed anymore. People are, what we're getting from the data at least, and I'm putting words in the mouth, I'm assuming people are burnt on hearing the word AI. I'm kind of tired of it myself. I think a couple months ago, we're doing this global marketing summit, those of you that are interested in Miami.

16:48We got some good speakers coming. One of my co-champions was like, we need to have AI in everything. Everyone's so interested. It's kind of played out now. If you are just talking about AI by that point, it actually shows you that you're behind the times. You know what I mean? It actually makes you look bad. And so it's better off to just talk about the things that are working like usual, because AI will be like the internet in the future. We don't call it. We don't just say the internet every day. Oh, I'm going to go on the internet today. You don't say that. You might, you might've said that like when I was nine years old, maybe I said that just like, Oh, I'm going to go use you some AI right now.

17:21No, no, it's just going to be built into what we do. Yes. It's like Eric talking about this LinkedIn video that he put up earlier on this podcast with him and Jason Cohen. And he talked about this app that he used to slice and dice. And it was AI. Yeah, I don't think I said AI. Yeah, but it was AI driven. It was AI driven. Yeah. And the point I'm trying to make here is you talk about AI without saying it, but more so showing how you can use it to solve problems. Whereas the product name or the steps, that's what people want to know. No one cares that, oh, this is AI. They just want to know how to get stuff done as efficiently as possible and getting the best results at the same time.

18:00People just care about what you can do for them. They don't care how you're going to do it. Just what can you do for me? And the costs and the results. Yes, yes, yes, yes, yes. All right, guys, that is it for today. Please go to marketingschool.io slash agency to learn more about the Agency Owners Association. And please don't forget to rate, review, and subscribe. It helps us grow. Please help us balance out the people that don't like the new format. Tell us you like the new format. All right, we'll see you guys later.