The 2 Lessons Silicon Valley Relearns Every Decade

0:00You know that feeling when the strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and actually create all the content? That someone is you, and it's due tomorrow. Breeze Assistant can help. It works right inside HubSpot. Drafting campaign copy, blog posts, emails, all in your brand voice. All grounded in your actual customer data. So you don't just create content. You create content that converts. Check out HubSpot.com, the agentic customer platform for growing businesses. So Neil, did you know the same two lessons that Silicon Valley relearns every decade?

0:40Eric Siu:What are the same two lessons? First and foremost, if you're watching on camera right now, Neil and I are crying. We'll go over that in a moment while we're crying. But this guy, Ben Thompson from Stratichery. Stratichery? He was on the Patrick O'Shaughnessy podcast. So the same thing that Silicon Valley learns every two years or every 10 years, rather, is one, consumers do not want to pay for software. And two, consumers do not care about being productive. What does that mean? Look at Dropbox. Nobody wants, remember early days of Dropbox? What ends up happening was this. Dropbox had to go more B2B because they realized that only businesses were willing to pay for storage, right?

1:23Eric Siu:because they're charging individuals like 20 bucks a month, but most people don't want to pay for that. So ChatGPT is learning that most people don't want to pay for these subscriptions. It's better, he was saying that they're better off just starting in advertising first, right? So he's saying, had they leaned into advertising immediately, as soon as ChatGPT was hit, they would have a great ad product right now. And so charging people money is hard. Giving people things for free is easy, right? So you look at Meta, for example, Google as an example, right? Meta, Google, Amazon's a big ad business, but they didn't start out like that.

1:51Eric Siu:Who else is a good example of this? Amazon. Oh, sorry, sorry. Meta. Google. Who else?

1:57Neil Patel:All the social networks. X.

2:01Eric Siu:TikTok.

2:01Neil Patel:Yeah, TikTok. Snap.

2:03Eric Siu:Yeah. So when you have the volume, you're better off just giving it away for free or charging ads and then charging businesses too. So when Anthropic started, they started off just charging mostly businesses. They went businesses first, right? So I think it's really interesting that Ben calls this out because he's been a tech writer for a very, very long time. Like you and I have read his stuff for years and years. And so, again, the two lessons are, one, consumers do not want to pay for software. And two, consumers do not care about being productive.

2:30Neil Patel:So let's go back to consumers not wanting to pay for software. If you want to talk specifically about the social networks, whether you consider it a service or a software, I get it. It's all similar concepts. quite a few of them have tried charging for different things including showing of no ads but if you look majority of the revenue still comes from ads and not subscriptions because the majority of the people don't want to pay for no ads we rather see ads than pay money and not show ads because one actually costs us money the other you know you can ignore skip check out your phone at the same time and which is very common there's a lot of people there's been studies on this that have streaming services at the lower tiers.

3:15Neil Patel:So they're being shown ads, but they pull out their phones at the same time as ads appear. And my sister is a great example. Did you know her Amazon Prime account shows ads? Like no joke, her Amazon Prime account shows ads and she has money. Although I did, this sounds bad, but I think I'm pretty sure I logged into her TV with my username because I was tired of seeing the ads when I was at her house. It doesn't sound bad because seriously, my Disney Plus, I was watching last week,

3:43Eric Siu:and I think I was part of a bundle, and they started adding ads into it. And I got so angry that I went through my phone, and I immediately added to the next level. So I will happily pay. But what's happening is Disney, they're kind of squeezing other people. So if you're part of this legacy bundle, we're adding ads for it. And it almost doesn't even matter if you're paying, if you're at a lower tier now.

4:03Neil Patel:Yeah, so I do see that. And if you look at software as a service, The biggest software as a service companies I know are all B2B. Microsoft is a great example. B2B. Salesforce is a good example. B2B. Atlassian is a good example. B2B. SAP is another great example. B2B. I don't know if you saw the announcement that happened a few days ago. I don't know exactly when this podcast comes out. Salesforce announced a partnership with... Anthropic. Anthropic.

4:29Eric Siu:Yeah, I saw that.

4:30Neil Patel:That was yesterday. What is it called? Aging Cloud? Or Cloudforce. Cloudforce. Cloudforce. There you go. So, and that's going up. I think Salesforce stock popped 23-ish percent. I could be off.

4:44Eric Siu:Do you know the details of the partnership? I didn't look into it. I saw the videos popping up on my YouTube.

4:48Neil Patel:So there's a whole interview with Dario, Mark Benioff. And I don't know who the other person is. They're interviewing or filming. I do know Benioff also gave an interview with Kramer. But to go specifics about software, he straight up said on the interview, There is no SaaSpocalypse. Everyone said there's going to be seat compression. They're seeing more seats being added, more people paying and more companies paying for their software. And he said something that was actually quite entertaining. He's like within a, and I'm paraphrasing here, and I could be off on my mile radius. He's like within a mile or half a mile or five miles.

5:26Neil Patel:He's like, you can have three or four, whatever the biggest AI companies. And he's like, they've all added more. They all use Slack. They all use Salesforce. He's like, they've added more seats. and they're paying more for the software than they did a year ago. And he was just breaking down how businesses keep paying for it. I do agree with that. I think there's actually another nuance here if you're actually going to leverage this for marketing. Smaller businesses also don't like paying for software. So if you can figure out how to give the low end of the market something for free and then use that virality because you're giving it away for free to capture more word of mouth, more digital PR.

6:07Neil Patel:And that helps you get a smaller percentage of larger companies filling out their form and applying to work with you or use your software, buy it or whatever it may be your service. You can then create a really good flywheel that's affordable, collect a lot of leads and sell them.

6:26Eric Siu:By the way, speaking of the SaaSpocalypse, you look at the stock market, right? So everyone's like, okay, this NVIDIA, Nvidia is going up again. All the stocks are going up. But here's the thing. Without going too much into markets and finance, you look at the government, the Treasury, they're doing buybacks. They're trying to bring the 30-year yield down. So interest rate, they're trying to bring it down. The reason for that is because they're trying to... One of our mutual friends who listens to this podcast, George Gammon, I was watching one of his videos. And so he's saying, look, the treasury is trying to bring interest rates down because they are trying to make sure that these hyperscalers when they're issuing bonds right these these they're issuing loans on their side that they can keep up because if the the 30-year yield is too high then you know they have like if it's eight percent they have to charge nine or ten percent right and then they're not going to be able to pay back um those loans um and so his argument is that the treasury is trying to make sure that the hyperscalers can continue to spend because that is what's propping up the market right now.

7:27Eric Siu:And the argument is like, I saw one of our mutual friends, you know, one of his videos day on like, how many of you are actually productive with AI and it's making money for your company, right? And so, like, I just want us to react to this because you and I, you and I might have different opinions. We might have the same opinions. But, you know, do we think that this is a this is a bubble right now? Because, you know, Salesforce is saying they're seeing seat expansion, they're seeing more usage overall, you see, you see the SaaS company, like Atlassian is crushing it, right? And so do we think we're going to see more net growth?

7:57Eric Siu:And is this build out, this AI build out worth it? Or is it a bubble? If you're building an e-commerce brand, you should check out DTC pod hosted by Ramon Berrios and Blaine Bolas on the HubSpot podcast network. They speak with founders, marketers, creators, agencies, and platform experts about what it actually takes to grow a direct to consumer business from paid ads and influencer marketing to conversion, email, brand building, and consumer trends. I particularly enjoyed their conversations around scaling a brand without losing what made customers care in the first place. Listen to DTC pod, wherever you get your podcasts.

8:30All right.

8:31Eric Siu:So I wanted to take a moment to tell you about my podcast co-host Neil's agency called MP digital, and they work with a whole host of global companies or a global organization. Also Neil has SEO tools such as Uber suggest and answer to public. All you have to do is go to npdigital.com to learn more and we'll see you on the other side.

8:50Neil Patel:I look at it from a different lens on whether it's a bubble or not. I look at it as you have a lot of crap companies in the AI space and you have a much smaller pool of amazing companies. I don't see, thank you, I don't see these amazing companies going bankrupt or anything like that. Forget this concept of are people buying too many chips or do you actually need as much memory. Think about the world and how we're going to actually market within 10 years. My personal belief, there's going to be robots everywhere. There's going to be AI integrated into cars, fridges, homes, toilets. I'm not trying to create disgusting images, but it's already starting with toilets.

9:33Eric Siu:The Chinese toilet will go to you and you can get out of your bed.

9:36Neil Patel:No, not even that. They're building toilets right now that analyzes your feces and tells you how how healthy you are and what you need to do to adjust.

9:43Eric Siu:I think that is actually very valuable. And you get auto-delivered to you.

9:47Neil Patel:Yes, it can roam around in your house. But I don't think people need to deliver to them. It's more so you can go to your bathroom and then...

9:54Eric Siu:No, no, no. I mean, you could have the supplements or whatever delivered to you.

9:57Neil Patel:Oh, I thought you meant the toilet would follow you around in the house.

9:59Eric Siu:No, there is one that follows you around in China. I'm like, dude, that's disgusting.

10:02Neil Patel:Yeah, yeah, that's disgusting. Yeah. for all of that whether they can run these models in a more efficient way from a cpu or gpu or memory perspective i think it doesn't matter because the usage is going to not be double triple quadruple i think it's going to be way more than even 10x what it is right now secondly i think this is going to open up a whole new opportunity for marketers let's use a toilet example i don't want to get you know graphic here i like that example but that's an easy one because you just mentioned supplements if something's wrong for you i would partner with that toilet company and have them try to promote my supplement company before someone else's and do a rev share deal that's a great partnership or a fridge imagine your fridge imagine the ingredients in your fridge and it telling you uh what you can make that's remaining from it or it can even tell you hey hey, Neil, you're using Blue Diamond almond milk, silk milk, we can give you a promo, a free carton.

11:05Neil Patel:I saw the laughter, it's making my nose running. We can give you a free carton of silk milk. Try it out, it'll be delivered in the next five minutes and you or your kids will love it. Similar tastes, but it's half the cost and it's organic. I'm making up this pitch here, but imagine being a food company and partnering with, I believe it'll be controlled more by like the Googles of the world because they already have the ad inventory and the advertisers, which people plug into them, just like how X has a partnership with Google, right? And this will allow marketers to push more products and services in the right moments in life when people are actually in that moment, right?

11:46Neil Patel:In which they're on the using their toilet or in their car or opening up their fridge. those create very marketable moments that work out really well and the closest example i have to this that people kind of see right now is end caps in grocery stores so i don't know how often you go to a grocery store that's not air one i only go to air one yeah so air one's probably a bad example of this because they don't they don't have the tech for advertising you can do some grocery stores have a lot of crazy cool advertisements that when you're walking around depending on the aisles you're in, they push you with stuff.

12:19Neil Patel:You're like, oh, that actually looks interesting. Let me try it out. It's like right then, right there in your face, specifically when you're going down the right appropriate aisle. It's not like they're pushing me tomatoes when I'm in the cereal aisle, right? They would push me a unique cereal being like, hey, check out this cereal. It tastes just as good, but it has lower fat, lower sugar, and it has protein, right? That's a great example of me trying to buy cereal and seeing an ad right then and there of a product that I can just pick up and get.

12:51Eric Siu:So here's what I think the future of marketing is going to look like from a, even the future in general, right? So let's use health, for example. So I sleep on my eight sleep, right? It has all my health data. So then you imagine you have a toilet that's collecting data from your stools every day, okay? And then you have all these other connectors, maybe your aura ring, and then it's connected to function health. All these platforms, platforms are going to connect with each other, right? They're probably going to share data. By the way, you're going to have to pay for these partnerships too, right?

13:20Eric Siu:And then it's going to come up with custom supplements for you or custom whatever it is exactly. Here's the other thing. You're also going to have Neuralink, right? We haven't even thought about that, right? Where you can just think your thoughts. Whatever you're typing into your vibe coding right now, you're having all your different agents build. What if you just think it? And that just happens a lot faster, right? And then all of a sudden, you're going to have agents marking the agents, right? And so there's going to be way more data sharing. Okay, that's opportunity for money, which wasn't there before.

13:47Eric Siu:Agents, marketing agents, that's another opportunity over here. And then the more compute you have, the more agents you're going to have. And so it's not even, I think Neil's being conservative on purpose, but I think genuinely, you probably think it's 100X more. I'm probably a little more aggressive, maybe 1 ,000X more. And we probably can't even fathom this because we've never seen this before. If you look at marketing 20 years ago, there wasn't social media, right? Was it 20 years ago? Was there social? No. No real strong social media. YouTube wasn't even that strong yet, right? Podcasts weren't even that strong yet.

14:16Eric Siu:Twitter was maybe just starting off, right? 20 years ago, you're not even riding Uber. I was riding sidecar.

14:21Neil Patel:It was MySpace back then, which didn't do well in the long run.