The Best New Cookies in LA, Podcast Ads vs. Influencer Marketing, Inside Profound’s $20M Pitch Deck, Helping Brands Show Up in AI Search, Your Greatest Strength Is Also Your Weakness

0:05So Neil, let me tell you about these new cookies I got over here. So, guys, in the camera, you can see these are these Biscoff cookies. They're nice and fancy. And those of you listening, Neil, do you want to describe what you're seeing right now? I don't know what the base is, but it looks like some sort of cookie. I don't know if it's chocolate chip or oatmeal or whatever it is or just a plain cookie. A Biscoff standing up. And I don't know what the white thing is. The white thing kind of looks like cheese, but it's not. It's white chocolate. And then she made the cookie. My friend Stephanie made the cookie from scratch.

0:33And then there's like some salt on it as well. But what kind of cookie? Is it chocolate chip? It's a Biscoff cookie. Oh, the base is made out of Biscoff as well. Oh, no, no, no. I don't know what the cookie is. It looks like a regular cookie. I don't see any chocolate chip or anything. Maybe some oatmeal or whatever. But this is really nicely done. And by the way, she started this company three weeks ago, and it's called Warm House Cookies. So at Warm House Cookies on Instagram. And I think when you design something like this from a marketing standpoint, it stands out. Because I bought this for Neil's kids, right?

0:58Thank you, Eric. Yeah, and I'm like, dude, the fancy one was give it to the kids. Because it's like, whoa. I've never seen a cookie where there's a Biscoff standing up from it. And then there's like a white chocolate. So sometimes you can say the design itself sells the product, right? Especially when it's food. Yeah, but here's what's really interesting. And we're bringing up this cookie company for a reason, not just to promote them or anything like that. Sure, you know, any great buzz is great buzz. But there's actually a different reason why we're bringing them up on this episode. I asked Eric when he first brought them to me is I'm like, hey, Eric, what's their website?

1:32He's like, they don't have a website. Now, I was like, how do I buy cookies from there? He's like, you just have to go to Instagram and go to Warm House Cookies. And do they need a website? Yes. But the bigger lesson here is for especially a lot of marketers, you can just get started and it doesn't have to be perfect. Everyone just overhypes everything and thinks it has to be perfect. I'm like, I need the perfect launch. I got to figure out a PR strategy, hire a social media company. I need to go and figure out how to get my website and Facebook and then do TikTok reels and get influencers. And what does she do?

2:08She just started. She just started. And I asked Eric, oh, where's her location? And what did you say? Home. Exactly. Because when I look at the box, it looks very professional. Super fresh. And then she has a sticker with a logo on it and Instagram. You look at the videos, the videos are well done too. I didn't see any videos on Instagram. On the Wormhouse, at Wormhouse Cookies? There's one video. Sorry. Okay, even the one video itself is fine, right? And then I'm just like, the product itself is good. But the fact that she started this three weeks ago, and then she has boxes, and then she has logos and things like that, it's already pretty crazy.

2:41She only has 335 followers. She's following 26 people, seven posts. This is it. She doesn't have a ton of business. So how is she generating business? Because you're not the only customer. But what's her model? I actually asked her yesterday. I was like, how many customers do you have so far? So keep in mind, it's three weeks in. And so how many customers do you think she has for? It's not a crazy number. Like 10, 20. Exactly, 10, right? 10 customers is what she has right now. And so I'm like, whoa. Wait, were you one of them? Yeah, I'm one of them. But it's like, you just need a couple customers to get validation to show that you should keep going.

3:13Like, you're not gonna build a giant business in a day. And I don't even know if she's trying to build into the big business. Because once you get into the cookie business, that's a legit thing, right? And so, by the way, I have a friend, YPO, his mom makes these amazing cookies in batches. I got those for your kids too, right? and they actually had a major cookie investor. There's one of those, right? That really liked the cookies. Hey, like I'll invest, but I need to ask you, do you enjoy what you do right now? And are you ready to make this into a business? Those are two separate things. If you want to do it for fun, do it for fun.

3:42But if you want to make it into a business, it's going to be a lot of pain and suffering. Yes, and when you look at her model for Wormhouse Cookies, you know, people ask like, how are you differentiating? What's your unique value proposition? and honestly there's some cool designs and stuff like that but you don't have to overthink it all if you're going after a big market like cookies or food it's you know as i was once told when i was talking to a guy in private equity who's a billionaire he ended up telling me we were talking about the agency space at the time he's like look it's a big punch bowl it's big enough where everyone can get drunk and if you're in cookies whether you're crumble or warm house cookies or someone else.

4:23Or Levain's coming out nearby. Do you see that? Which one? Oh, you don't know Levain. Okay, Levain's popular in New York. It's coming right by, you know, Honor Bar. What's a new cookie? We're going to see it today. Watch. When we walk there for lunch, it's L-E-V-A-I-N. It's a very popular cookie thing in New York. Sometimes you just got to go out there and just do it. And it's okay if you're not differentiated. And marketing was like, I need to have a unique value proposition. Sometimes just go and get lunch and then figure out the rest later on. When have you ever done a business plan? I did a business plan when I was starting off.

4:54Yeah. It was the very beginning. You're like 14, 15 years old. No, a little bit older than that. I would say early 20s. Okay. I was looking to raise money at that point. For what? And there was a company called Fruitcast, I believe it was, that we had. It was one of the first podcast advertising companies. What? Fruitcast? Yeah, I did it with a guy named James. Was it James something? I forgot his last name. It was his idea. He and I put a majority of the money. We even had good meetings with Yahoo about M &A and stuff. This is past ACS time. Very early during ACS. Okay. So you guys were cash flowing well?

5:26We were cash flowing well. And the whole model was when podcasts first came out, like literally when they first came out, the way people did advertising is, hey, let me go call you Eric for marketing school or leveling up and see what the rates are and do some insertion. And we have this model where we're like, we're going to create interface kind of like Google, which we did. and podcast advertisers can go in there, they can slice whatever moments and they can just buy ads on an impression basis. And it was just more automated and it was gonna create, in essence, a marketplace. Where we struggled with was the technology end.

6:02Not that we couldn't create a marketplace. It was a lot of people would just record their podcast episode and it was meant where you can put ads just at the beginning. It was hard for the podcast advertiser to follow, get them to follow instructions on where to put breaks so we can insert ads in the middle. And then the other big problem with the business was we were looking at CPMs and the multiple like dollars of like 15,$20 a CPM, which was really high for certain categories. People weren't ready for it yet. And they also weren't ready for it, but that's really high when you're talking about like, call it 18, 19 years ago or something like that.

6:44That's extremely high CPMs. So you did a business plan, but since then, have you really done business plans? I think a business plan is a terrible way to raise money. And that was the only reason we created a business plan. You thought you needed one. That's what we were told. And then the person sold us on three business plans, not just one. Three. A business plan seller sold you on a business plan. Of course, he's incentivized, just like a real estate agent. And guess how much we raise from all the business. Zero. Zero, yeah. Exactly. So I think the point we're trying to get, going back to the cookies thing again, it's like you just need to start sometimes.

7:17Like the software or a lot of the stuff that you've built, you just, me knowing you, you've always just launched things, right? In the beginning. And it's, you're better off doing that and then seeing if you get some customers and then go from there. The fact that she has 10 customers in the first three weeks shows that she's already like, she's doing something about it. She's not just waiting around for the customers to appear. You can't just say, oh I have a great product and then hope the customers come and then by the way the flavors are unique that the one Noah and I just ate probably like 300-400 calories but like passion fruit and like jelly on it right the ones your kids are getting white chocolate and biscoff biscoff?

7:50biscoff right yeah yeah we'll cut it up into chunks before I give it to them oh because they can't have too much or else they're going to go crazy 300 calories for someone who weighs like 30 something pounds oh yeah you should chop it up but dude when we see the Levain later you'll see like they were huge in New York and they're expanding right by you So that's cool. I'm going to check it out. By the way, you just mentioned podcast ads. And then I want to talk about the deck that you had earlier. So what I think is interesting is right now, like I'm looking at all the podcast ads we're running that I'm recording.

8:17So I want to talk about podcast ads versus influencer marketing, because you've seen this with influencer marketing. Sometimes you'll get like six figure plus deals. And then right now I'm getting like a healthy, like five figure deals. Like they'll come out to us and reach out, whether it's like a, like, you know, a big advertising company or something like that. Right now, what's interesting to me is last week. I mentioned, I was at some AI event and one gal was like, oh yeah, you know, we, we work with so and so, you know, big multi-trillion dollar company and we just throw 50 to a hundred grand at people.

8:44Just like that. I was like, do you track attribution? That's like nothing. Right. Whereas when we have like a Dell reach out, like Dell, the computer, or now it's like a server company, right? I thought you said a Dell. Not a Dell. Yeah. I said, I was like, I kind of sounds like a Dell, but Dell still very big company. They cashflow well, right? Michael Dell. They'll reach out and they're like, I'm like, okay, so how much are we going to make from this? $3 ,000. I'm like, like, so, so like, are we just going to keep making like$3 ,000 each time? I'm like, what, what is this? Right. And this is no knock on, on, um, you know, who we work with as on the podcast side.

9:14It's not even their fault, but I'm just like, we're better off doing any type of influencer deal than doing like one, the influencer deal. They don't, they're not tracking attribution or anything and they're paying way more. And then on the other side, I'm just like $3 ,000 for a month. You know what I mean? So like podcast, it's a lot of work for$3 ,000. Yeah. And then like I have to record it too. And we've resorted to using 11 labs now for my voice. And I'm sure you do the same thing. But I'm just like podcast ads versus influencer marketing. It seems like podcast ads, like pricing seems to be going downwards right now, whereas influencer is just going upwards.

9:46I agree with you. I don't see, unless you're like a Joe Rogan or something like that, where you just have a really massive audience, podcast advertising is a very difficult business to make an arm and a leg for and one of the hardest reasons is attribution yes you can send people to landing pages yes it's great for branding but it's it it's becoming a more saturated place i'm not talking about podcasts i'm talking about the ads portion where podcasts are recording three four five six advertisements just in one episode and they're not really tying it into episode. And that's a great example of us.

10:26When someone's advertising, Eric's using 11 Labs or he's recording it and they're just slicing it in. While sometimes when Joe Rogan has a sponsor or some of the other big podcasts I've seen, they intertwine the ad within the episode and they make it more relevant and it just works better. But that costs a lot more money and it takes a lot more effort. Yeah, even Joe Rogan doesn't necessarily weave it into his episodes that much. I've been listening to a lot of podcast rates. Like Lex Friedman, he'll load the first eight minutes all like just reads, right? He's not really weaving it in. Only a, you know who weaves it in pretty well?

10:59Mr. Beast. Mr. Beast does. Yeah. But with Lex Friedman, I just skipped the beginning. Yeah, I just skipped the first 10 minutes and I just go into it. So yeah. But anyway, that's what we think about podcast ads versus influencer marketing. I think, you know, anytime someone reaches out to either of us for influencer, we should just try to push them into the podcast and include that in it. That's what I think we should do. Yeah, but when you look at Joe Rogan, when I look at a version of a successful ad is what he did with, what was it called? On it? On it, yeah. Well, he owned a piece. He owned a piece.

11:29Yeah. But that was really well integrated and that did well for him and it did well for On it. And that allowed them to exit. I forgot who they sold to, but. Dude, you know what you should weave into? Because your YouTube gets views, right? I'm like, why don't you just weave these little mid rolls into it? Because when I weave the mid rolls into like Carrot or ClickFlow or Single Grain, we actually get leads from it. What do you do for your mid-roll rolls? It's simple. It's like the video will go for like two, three minutes or so, and then there'll be like an ad. If it goes for another like three, four minutes, there'll be another ad.

11:56And then that's how we just keep rotating the ads. And then you just pop it up on the video with the CTA on the screen? Yeah. You should do that. Because you're getting like hundreds of thousands of views sometimes, right? Per video. Over time, yes. Not usually in the first week. I think it's worth it just to do that. I guarantee you, you'll get more. Yeah. We should try it out. You can buy me more cookies. Yeah. After that. Yeah. Okay. So let's talk about this deck that you pulled up. So Profound has a pitch deck. You can end up seeing it online. You may need a count to ad week. And their deck pretty much just goes to that.

12:31Removepaywall.com slash whatever the URL is. Then you're good. What Profound is, is for anyone who isn't familiar with the tool, it's a tool that helps you track how well you're doing on the AI search engines like ChatGPT or Perplexity. when it comes to getting mentions. And what was interesting is they raised a few million bucks and then all of a sudden, less than a year after that, they raised$20 million. And their whole pitch within their pitch deck or part of their pitch, which was really interesting, is when you look at, or at least within the article as well, but when they were telling the story for Profound, they're like 10 % of searches happen in AI search engines or start with AI search engines now.

13:16And if you look at the FinTech brand Ramp, which has a crazy high valuation, their mentions in AI search rose from 3 % to 22 % after using Profound's tools. So they're talking about the value. And if you look at Profound's pricing, I believe it's somewhere around like$400-ish. I could be a little bit off. It's somewhere around there,$400 or$500. $400, yeah. But either way, it's not the cheapest tool, but they're showcasing how companies are getting more mentions, how that's driving better results for these organizations, and that's causing them to continually pay Profound. And they're using Profound's tools to specifically get included in more the AI engines.

13:57Now, obviously, Profound's tools can't just get you included a ton of times. You actually got to do work or AKA marketing. But that's a pretty attractive pitch. Instead of just saying, here's your company and this is why you should invest, they're saying, here's your company, Here's why people are using it because there's a shift happening with search in which 10 % is starting to happen with these AI search engines and it's increasing. And look at these brands like Ramp who have used it to grow their brand mentions, their brand, their traffic, and their revenue. Yeah, so I was kind of giving my opinion on this one.

14:35So here's the thing. Last week, I had someone else show me like on a demo, a competitor to Profound. And there's a handful of these competitors already. I think maybe it's Glenn Osop from ViperChill or maybe somebody else shared this on Twitter. But I think there's like 15 or 20 of these LLM surfaces companies. I mean, you're doing something similar that's coming out with Ubersuggest, right? Yeah. So I'm like, okay, they raised$20 million. Okay, let's assume like$80,$100,$120 million valuation. I think the problem with raising so much, and you've raised money. We both raised capital. But I'm just like, you end up having a board and you start to have expectations.

15:08And the expectation is when you have to grow at this rate. And if you're not growing at that rate, there's a lot of pressure on you. And I'm not saying that's necessarily wrong, but I think for something like this, I guess my question is like, what is the moat? I don't think there's much of a moat, not for Profound and not even for us at Ubersudest or Answer the Public when we're copying some of these features just to be really transparent. But I think the mistake they made, because I saw the cost structure. So my team sent me a document, depending on the usage, it can be anywhere from call it like extra and we have good usage call it like 30 40 grand on the very low end to like two three hundred grand a month on the line yeah on cost yeah that's not a lot in cost we're giving away a lot of it for free because our costs aren't that high and keep in mind when you do a search and you have a lot of usage that keyword or prompt or whatever you want to end up calling it when other people are interested in that data you don't have to pull right away if you pull the previous day you're going to get similar results right and even with a lot of these solutions you're pulling the prompt multiple times to see what brands because it does change you may pull a prompt like 10 times to see the different results and then average it out but still even then like the costs aren't that high and we included this all in our cost formula and this is like i think they raised too much money do i think they should have raised a three ish million dollars i think it was three and a half yes but i think they should have went the route that Zapier went, raise a little bit of money, you get the profitability and scale, and then you got a great business.

16:43If things don't work out well for you, then - They only raised that YC round. They gave it like 7 % and that's it. That's all they ever did. I thought Profound took a lot. Zapier? Yeah, yeah. And then from there, you just go and you can keep going and you can paint your own journey. Now, if Profound's trying to go pure enterprise and they want to go all or nothing, I think, all right, go for a race 20 and then go raise another 80 after, you know, swing for the fences. But I think a better solution is when you have a business that doesn't have a big cost base, which this kind of business doesn't.

17:15And if you look at AI costs over time, it has been dropping. So it's like, why would you raise that much money? But that's just my two cents. And you and I have been really against raising money just generally. Well, I think the times I've worked for companies that have raised money, I've seen it go poorly. You've also raised money? I've raised money. You've raised money too. You've seen it. It just, it doesn't work for our personality. styles. And we're not saying it's wrong or right. I think it's just a matter of what your preference is. But I think in this situation, when you have so many different competitors and there's not a big moat around it, maybe this is the wrong way to look at it.

17:46But when I think about the SEO space, okay, you have BrightEdge, right? They're a nine-figure company, 100 million, right? I think SEMrush does, what, 400 a year and they're publicly traded. And then Ahrefs last public data was like 140 or something like that, right? And they've all done it differently. BrightEdge raised money. They only target enterprises, 100 million, right? And then SEMrush, they got to a certain point and then they, you know, then they, they went public. Right. And then you have Ahrefs, who was just bootstrapped the whole time. So I don't, the question is like, how big can this market get?

18:12And I don't know if we just compare it just to, you know, kind of the SEO space and it's, it's not just SEO, but you get what I mean. Yep. Yeah. So, all right. You know, this is interesting because, because we're talking about these three different competitors right now. I was thinking about it this week and I'm curious to hear from your end too. So my thought here is, Okay, on the carrot side, so carrot is our account-based marketing product. We have one competitor who's raised tens of millions of dollars, right? We have another competitor based in Europe who has raised a couple million dollars, but they're very inexperienced, right?

18:45And then you have us. We're bootstrapped. And so you can say, well, the big company that raised money, maybe their advantage is, well, they have a lot of capital. But I would argue that their greatest strength is also the greatest weakness too. Meaning that, okay, they raised a bunch of money, but they have the board to report to. They have to grow at a certain rate, right? And they're subject to the whim of other people's opinions, right? Because when you have a board and you've raised a bunch of money, there are expectations, right? What's the total race? Let's just call it like 50 or 60. Then the other problem you have, and how many rounds?

19:17Looks like, I would say two rounds, I think. And then the other problem you have is founder dilution. And then if you don't hit the growth numbers, the founders get - You get screwed. Liquidation preference. Yes. And then the founders just aren't as motivated to keep pushing forward. And their main reason being is you're like, oh, cool, I'm not going to really make any money from this even if I found 20 % because I raised a lot. Then the motivation to work on it is gone, right? Correct. Now, the second example is, okay, these guys raised like three, four or five million bucks, right? These were the guys that copied our features a couple months ago.

19:45I don't think they're doing much with it now. But so they raised three, four or five million bucks. I think they're in their early 20s or mid 20s or so. So you can argue that they're inexperienced as startup founders. Now, I might say, oh, they're inexperienced. We're going to crush them. But no, that's not the right way to look at it. Because they're inexperienced, they might try things that I would never try to think of trying. And they might just grow like crazy, right? So again, people's greatest strengths are their greatest weaknesses. And on our end, we're bootstrapped. But what does that mean?

20:08That means we can move very quickly, but that also means we can do whatever we want. And if we can do whatever we want, we might build in the wrong direction. So if we're not very focused and locked in, we're gonna start to build a bunch of random things, right? And so there's always like a trade-off to all this stuff. And that's why I say your greatest strength is also your weakness. When I first started my business, the overwhelm was real. I 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.

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