Sora causes Adobe to lose $18 billion dollars in 1 day, The best way to make money in AI isn’t to create something like ChatGPT…

0:00Open AI introduces Sora and it's going to shake up the marketing world like crazy.

0:09Adobe stock in one day lost 18 billion dollars in market cap because of Sora. I don't know if you saw that. I didn't see that. You were just looking at Adobe stock? Or you saw a headline somewhere? I looked at Adobe stock and it tanked right when Sora got announced. Literally$18 billion. What percent was that? 7-ish percent. 7.4-ish. And this is not an earnings related thing? No. Because OpenAI is now going into Adobe space. Nothing is safe. Nothing is safe. But also what we talked about yesterday at dinner, we're having dinner with one of your VC friends and I just, I think the phrase here is AI is overhyped in the short term.

0:50It's underhyped in the long term. That's what I believe. I'm with you on that because even when you look at Sora, for anyone who hasn't seen it, it can create a one minute video for you. This is OpenAI Sora. Yes, so you type in a prompt just like you would on chat GPT and it can create a video for you that is a minute long. The hard part with AI, no matter how good the video quality looks and it looks really cool and amazing, there's a few things that happens. One, if anyone's trying to create AI-based videos or images and put that on their social, like through MidJourney, you know, using all their images, most people don't see crazy engagement.

1:27These images and videos aren't doing that well from a sharing-like perspective. It's cool and novel right now because AI can create it for you, but no one really cares to engage with it as much as we're seeing compared to human-based or human-created content. You know, the problem is with generative AI, it's like when you ask Dolly or Midjourney to make something, you actually can't edit it. So if you say, hey, they make something for you, say, hey, can you change this for me? Or like, I like this, but change the shape of this over, it actually can't do it. It actually makes a brand new one for you.

1:56So basically, what's going to happen, I believe in the future is that you're going to have a situation where it'll create the initial one. And then it might push over to like a model, like an actual engine where you can you can edit things, right? So it might create the initial like batch for you, or the initial like inspiration, which will save you a lot of money, the concept, right? And then you can build on top of it. Right now, you just can't do that, which is why it's not that useful at the moment. Dude, totally. But even when you're able to edit it, the way I see it is this will take out a lot of people are doing production.

2:25But you're going to still need people to come up with creative ideas for the content. Yeah, it just comes down to strategy at the end of the day. Whoever is good at strategy. And basically, that means whoever is good at continuing to learn and continuing to practice. Those are ones that are actually going to stand out. The rest of the people are unfortunately not going to have jobs. Dude, funny enough, speaking of jobs, I was speaking to a group of people a few days ago, and they were talking about AI and how they can make a ton of money from AI. A lot of these were college grads. And I was talking to them virtually.

2:54But when I was talking to them, they were just like, yeah, I want to create something like OpenAI or ChatGPT or MidJourney. And the first thing I ended up telling them is… Are these people smart? They're smart, yeah. I was like, you're actually looking in the wrong place. If you want to make money from AI, it's really hard because to create a chat GPT or open air, any one of these projects, it costs a ton of money and you have to have really, really, really talented engineers. It's not easy at all. These aren't even half a million engineers. These are like a million dollar plus engineers. Yes.

3:26And for every one of those that is created like a chat GPT, there's thousands that failed and billions and billions that were lost. Like, dude, look at Jasper. Do you remember when Jasper came out? Yeah. Yeah, Jasper, they raised a bunch of money from David Sachs Craft Ventures. I think they were valued at$1.25 billion. Do you want to describe what it does? Yeah, so Jasper is an AI content writer. How many people really use Jasper right now to write AI content? I think their churn has to be through the roof. And I like the team a lot, right? I think they got in really early, a year or two before ChatGPT came out.

3:56Once ChatGPT came out, they're like, oh, crap, right? Well, I did talk to them last year when we went to HubSpot Inbound. The Jasper team actually sponsored their. I was like, hey, so with all the stuff going on, how are you guys pivoting? How are you adjusting? And they're like, oh, we're just focusing more on B2B now. But the problem with that is OpenAI also has a B2B version too. There's a Teams version that I pay for. Dude, and the way I look at it is like, why the heck do I need Jasper? I need a lot of these tools out there. And I believe that if people want to make money through AI, the best thing for them to do is be a prompt engineer and be good at it.

4:30And when I say prompt engineer, I'm not talking about someone who knows how to code. I'm talking about someone who knows how to modify the prompts to get the output that's desired. Because if you give Chad GPT or anything a crappy prompt, you're going to get a crappy output. Even if you give them a good prompt, you still may get a crappy output. But being a prompt engineer is a large part of the future because how can you continually get what you want out of AI? And according to Forbes, there's a lot of jobs that are paying prompt engineers$300 ,000 plus a year. Which company is paying 300 grand a year for a prompt engineer?

5:04I don't know, but that's what Forbes is saying. That's crazy. I believe it. It's crazy. It's how fast that's going already. And when you think about a lot of these SaaS tools that are AI, it's just prompt engineering in the background. There's a lot of these AI writers and things like that. A lot of the SEO writers, like ByWord, or there's a couple others that I've seen, they're all just prompt engineering with a SaaS UX on top of it. and funny enough a lot of them are for sale because I get hit up by so many of them the churn is through the roof one guy told me what's your churn right now it's pretty good it's 7 % a month that's not pretty good it's just like your customers stay for roughly a year I think you lose 70-80 % of your customers in a year if it's 7 % roughly a year if you can't keep your customers for 4 or 5 years and it's really tough.

5:57And ideally, these days in SaaS, investors don't want people who keep their customers for four or five years. They want a snowflake type of company where like, well, if you turn off sales and marketing with the upsells that you get, even with the losses, the company keeps growing. Yeah, I think the other thing too is talking about agencies, agency churn too. Agencies like last year, what we've seen, what we talked about is like churn is like 50 to 70%. But like you made a good argument. It's like, well, here's how you actually reduce churn. What is that argument? it. Yeah. The way that you ideally reduce churn is you sell multiple services through, uh, to your customers.

6:30They stay way longer. Yeah. So this, this concept is known as switching costs, right? If they have a bunch of services that are going pretty well, they're not likely to want to switch. Like even if someone offers something better in one area, you have the whole suite. So you're likely to keep them longer. So it just comes down to having a good product and a good service at the end of the day. That's what it is. Nobody cares like how you're wrapping it. So no, but what's funny is, is when you look at corporations, they don't care if Chad GPT can do something for free or another SaaS tool charges$100 a month.

6:59Like if you're a big enough company, it's all rounding errors. They'll just pay for whatever's more convenient for them. By the way, Neil and I have an agency owners group called the Agency Owners Association. All you have to do just go to marketingschool.io slash agency. Once again, it's marketingschool.io slash agency to learn more. and now back to the show. You know what's related too? There's an argument that YouTube is actually going to become the number one search engine in the long term and the reason for that is because YouTube has so much new content, so much new data that previously wasn't really crawlable by search engines but I don't know if you've seen this video from Gemini Pro.

7:38It's Gemini 1.5. So Bart is now named Gemini and there's a 1.5 version coming out. You probably haven't seen this video, right? So basically what this video, this AI does now is you can show it like a 44 minute video and then say, hey, tell me what happened at 44 minutes. Like what exactly is happening? What is being displayed? And it shows exactly, hey, this is what the note says over here. This is what happened in this moment. And then you can also then draw a picture and say, hey, tell me the moment where this happened. So someone drew a stick figure picture of people falling out of a water bucket or something.

8:08And it's like, this happened at 15 minutes and 34 seconds. and so Gemini is becoming multimodal now and you're going to be able to crawl all of YouTube and so I think in the long long term it makes a lot more sense to just continue investing in YouTube I think it's just getting stronger and stronger and that's their data mode that they have Yeah dude I can see YouTube still being really popular I also see Google being popular for the next 10 years There's a lot of use cases for why people keep using Google and they have 8.5 billion daily searches It is a powerhouse. A lot of people take it for granted.

8:42The other thing that you'll notice too is a lot of the older demographic is slower to switch. They're stuck in their ways. It's a younger demographic that we're seeing that is starting to use the chat GPT first or the TikToks first or a lot of these tools. And a lot of the older demographic is where the money is. If you think about it, they're the ones who own the homes. They bought them for pennies on the dollar. it was easier during their time to come up because things were cheaper. Yeah, look, I think this is really for the SEOs. It makes a lot of sense to look at YouTube. We actually get a lot of reach outs.

9:16I'm sure you do too, a lot about people looking to optimize YouTube. And we're, dude, by the way, I don't know if you've seen our YouTube channel. Our YouTube channel, like we're getting like 5 ,000 views this video over here, 7 ,000 over here, 1 ,000. And that is - Your YouTube or our YouTube? Our YouTube. We have our marketing school one. Not the one with 8 ,300 subscribers, is the one that has less. So not MS Archive, the other one. Not MS Archive, okay, what's the other one? It's just type marketing school and it should be like the one with 1500 subscribers or something. But as Neil looks for it right now, my main point is this is actually, we actually, by shutting down our other channel or stopping the other channel, we're getting more views now.

9:55So I had a hypothesis that our other channel was in YouTube jail. And so, because each video is only getting like 100 views or whatever, right? And so we started this new one and it has like no subscribers, but some shorts will get a couple thousand views or so for a small channel, and then the long form videos will get a couple thousand views too. And so that makes a good argument that if you feel like you're in YouTube jail, maybe just go start a new channel. 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. That's where Framer comes in, and it totally changes the game.

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11:57Shopify 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 a deal 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. you could or what i've also found too is if you continually produce good content and you stop producing crap and you don't produce as much but everyone is a hit over time you just get out of youtube jail and you're getting tons of traffic yeah i think both both are fine i think we just we switched the quality of ours and then we just made a new channel and it's performing a lot better than the old one so i mean that's like 70 times more so cool so yeah um there's one there's one more over here because we still have some we still got a good chunk um the what do you i think going back to sora real quick right we talk about how we should talk about the risk of ai companies right so jasper right so you can't yeah i think it's it's if you're going to build an ai company because the problem with marketers right now here's an ai mastermind oh i'm an ai influencer now and then they're on magazines and stuff right it's it's like it's like no like and then they're like, oh, I'm building this AI software.

13:19There's a lot of people you and I know, it's like they're just building this, but they're just wrappers at the end of the day. Where you're going to make the money is probably building a proprietary LLM or the picks and shovels, or the GPUs. It's the people who are building, yes, like what you're saying, or you can sum it up with the platform place, right? The people who are actually building the technology that you need. You need, a lot of people need NVIDIA's chips to do anything. That goes back to the picks and the shovels, like Levi's, right? they made a killing during the gold rush same goes with the platform if you look at open ai and what they've built you can build a lot of stuff off of it and at the end of the day the one that keeps making money from it is open ai would you okay let's let's let's let's do this fun exercise so if you were to invest you can only buy and hold in an ai stock for the next 10 years if you picked one what would it be and why microsoft i think they're leading the way and so why why are they leading the way?

14:17They're the ones who funded OpenAI with tons of server resources when no one else would. And their whole play was we want to get people onto our ecosystem. And I think they have a really big head start. Okay, so that's your number one. Do you have any others that you would throw into your buy and hold for 10 years? I would just do concentrated bet and go all in on Microsoft. I'm not giving financial advice, by the way, but that's what I would do. I think NVIDIA will have a lot of competition and so will Microsoft and stuff like that. but how many times you need to keep buying chips, right? I'm not saying it's a dying business.

14:51These chip companies are massive. What you do need is you need to keep paying for the software each and every single day. Chip is a one-time expense. I get you may need more and more chips over time, but the software, you keep paying for that every single month. Yeah. I think the cost of compute, I mean, we're not engineers either, right? But I think the cost of compute is good. It's continually going to come down and the resource stream is going to continue to come down. But I do think that we talked about this yesterday, that NVIDIA is probably going to have a run for maybe the next five, ten years or so.

15:19And so as the world shifts. But my bet too, I guess it would be boring. It would be Microsoft. And I'll give you some other reasons as to why. One, nobody really uses Skype anymore, but they have Skype. Dude, I use Skype. You still use Skype? A lot of people use Skype. Neil used to call me on Skype all the time. I'm like, who calls me on Skype? And the only reason I use Skype still. How many billion people use it? Can you check how many billion people use it? How many people use Skype? 2023. Skype has 300 million active users. That's a lot. That's a lot. So look, they own Microsoft. More than 40 million people use Skype daily.

15:55Daily. That's 40 million DAU, guys. Yes. But to end it on this, so Microsoft owns LinkedIn, right? They own Xbox too, right? Oh, guess what? Who uses Excel? Oh, we do. We still use Excel, right? So like the Office Suite, Teams and everything, They have lock-in and really they're not under antitrust scrutiny because they went through all that in the 90s or so. And so I think Microsoft's well positioned here and they've made a lot of good moves. They own what, 49 % of OpenAI, something like that? Something like that, but who knows how the ownership works out, but OpenAI is very reliant on Microsoft servers.

16:31Yeah, so look, I think that's probably a safe bet. I think the other ones would probably be Google, Meta, Amazon, but we're only going to pick one here. So that's it. This is not financial advice, everyone. Please don't forget to rate, if you subscribe, it helps us grow. Also, don't forget, if you're an agency owner, go to marketingschool.io slash agency to find out more about our agency community that we do. And we'll see you tomorrow.