The Strip Club Sales Lesson That 10x's Your Pricing

0:28Let me ask you a question. kids so i don't know it's very different and here's why when you have kids and they do stuff that you hate and they don't listen to you you can't fire them you can't fire them and with kids when they're young there's there's not a lot of logic no matter how smart they are they just get emotional they can throw tantrums they can be really well behaved one day um you You know, like my kids were sick a few days ago for one day. They were just coughing, but it was only early in the morning. And Eric's leaning back. They're not sick now. Although William was sick this morning, but I haven't got anything from him.

1:13And they're like, oh, we don't want to go to school. I'm like, daddy has to work today. So if you're not going to go to school, you got to let daddy work. Okay, if you let us stay home, we'll let you work. They're both sick at the same time? Yeah. How convenient. They planned it. and then they cough in the morning, but they genuinely were sick. Yeah, yeah. So then we're just like, okay, you'll let Dad work. They don't go to school. Hour and a half goes by. It's by this time around 9 a.m., and they're like, Dad, when are you going to play with us? I'm like, Dad has to work. Remember, I didn't go to school.

1:45Yeah, we got it. By the time it hits around 11 a.m., there's no more, hey, Dad, just chill. Hey, Dad, you got to take it to the park. Let's go play with rockets. the rockets part I like so for me I'm like alright let's see if we can get it stuck in trees. I tend to do the stuff I shouldn't be doing like goofing off with my kids. I'm like the key with rockets not just go hide but like let's get them all stuck in trees and they can't come down. And that I have a fun and it's just a game but it all became hey we need you to spend a lot of time and I didn't get much work done. Again no logic. What they promise you is not necessarily going to hold true and that's not how it works with employees.

2:24That's a fair example, but I think you get what I'm saying. Like there, there's a lot of similarities is my point. Most of friends who I know who are entrepreneurs that have kids, I can't think of one that'll tell me their similarities, but I can all tell me this one same thing. Hey Neil, I want to work and travel more. And I'll always ask them why. And they're like, it's easier than watching kids, but they all love their kids. I'm curious. So do this later. Just go for the next week or two, go ask your friends because all my friends I've asked that are entrepreneurs with kids, they've said it's very similar.

3:02It's like the same thing. Some say it's the same thing. Some say it's very similar. You're the only one. And I felt that you would say it's different and your reasoning is fair but go ask some of your friends too. I kind of want to see what they think. Yeah, and I think the entrepreneurs are saying that it's very similar. They have a shit B and C team. If you have an A team, at least the people you're dealing with as an entrepreneur, you won't feel like it's like having kids. Some of these people are doing a couple hundred a year. Forget the revenue. Yeah. There's a lot of people that do hundreds of millions, if not billions of dollars, and they still have C teams because they're just in a massive TAM.

3:34Yeah, but these are some people you and I know. And like some of them maybe, but some of them have good teams. Yeah. Anyway. Okay. So I want to tell you this. So this one's interesting. So do you want to know about the strip club sales lesson that 10X is your pricing? A strip club sales lesson? Yeah. So get this, a bouncer at a strip club, right? So he makes like 300 grand a year, works four days a week. No degree, barely speaks English. Okay. So this guy watches him and he turns away a bachelor party of 12 guys. Okay. So he says, sorry, we're full tonight. Okay. But the club was half empty. They begged, they offered 500 bucks to get in.

4:07He said$1 ,000 and they paid. Right. Then the guy that was watching him was like, hey, bro, like it was empty. Why did you do that? And then the bouncer looks at him like, like, are you stupid? Like, so he's like, look, if I let them in easy, they spend$200. If I make them pay to enter, they spend$2 ,000. They have already decided that the night is expensive. So they act expensive. So then this guy goes back and tested this on his like consulting before he was charging five grand for a project. Right now it's like, Oh, let me think about it. And so then he says, Hey, I'm at capacity. Let me see if I can move things around.

4:42And he doesn't talk to that, the prospect for three days. And then he's like, Hey, okay. I can fit you in for, you know, 20 grand. but that's because of the rush. And his close rate jumped up from 34 % to 71%. So the lesson here, and this is a post from Gisco on Twitter, scarcity isn't a tactic, it's a filter, right? And so that's how this bouncer makes 300 grand a year. And then he just helps the club jack up pricing too because everything's valued higher. So isn't the bouncer supposed to just get paid a flat salary and not be taking money from people? Because I'm assuming they're not paying him 300 ,000 a year.

5:15when, yeah, so he's getting greased by all these people. And then he also knows the game too. Like, hey, like, look, if you let them in, oh, we'll give you$500,$1 ,000. So imagine how often that happens. He just manufactures scarcity in a club. And I used to be a club promoter at UC San Diego, right? And we would manufacture this really long line and there'd be nobody inside, right? Just to make it look like, oh my God, this place is popping, blah, blah, blah. But imagine, like, if he lets them in easy, they don't spend anything, they're not gonna spend much money. But because they already spent$1 ,000 to get in, it's like, they have to spend a lot more inside.

5:45Yeah, I get what you mean. Yeah. This model for anyone listening does not work if you're an enterprise. No, no. But it works in different areas. It works in different areas. What areas do we think it works in? Strip club, that's one. I think it works for like individual consultants as well. Like if you're a social media consultant or someone who helps other people with their marketing and you're an individual, you don't have a big team. If you're a club promoter, sure. Club promoter. Yeah. any way that where your personal time is valuable and you can say that you're full and you're creating quote unquote fake scarcity, whether that's ethical or not.

6:22I mean, we know consultants that are doing seven figures by themselves. Like we're talking about like multiple seven figures and they have like one assistant. So you can do that because you are selling your time. Yes. I think in that model it works extremely well. You know, strip club is the obvious one because that was the example that you gave. uh i can't think of too many i i just know it doesn't work when you have a massive team because it's like saying oh we got 2 000 employees okay sounds good uh so yeah we're full up right now people will be like you got 2 000 employees you're gonna take all the business that you're gonna end up getting and enterprise procurement be like okay well we hit up you know 10 companies you're one of them and you said you're busy so we'll go talk to the other nine no problem dude you know one thing i want to test um so i was reading about this but goldman um i don't know how long ago was this?

7:09Maybe they still do this right now, but Goldman Sachs, they basically double employee salaries. And what ends up happening is they get three times the profits. And so I was reading this, I was reading a book called Scaling Up Compensation, right? And so I was just getting comp ideas. And so I was like, whoa, like, because we're so big on AI fluency right now, what if we just took the market salary and we doubled it for everyone that comes in with super high AI fluency? Like, I wonder how that would go. I was talking to my CTO about this, right? Who knows? Like, I'll let you know how this experiment goes.

7:37You should try it. But I'm actually curious. And if it works well, I can see you doing it too. You should try. No, I wouldn't do it. You wouldn't do it? But you should try it. I'm curious on the results. Why do I have to go through the pain? What about you? No, no. I don't want to try the experiment, but I know you'd be up for this. I would be up to try it, actually. Because look, Goldman Sachs is not stupid, right? There's no way Goldman's paying all their employees double them out or else the stock price will get hit. But this was, I don't know, again, I don't know how long ago was this? I think they switched this.

8:05But we do know that if you're coming out of school, I think Goldman does pay more, but they also work you to the bone, right? But if you double employee salaries and you get three times the profits, like - Morgan Stanley pays better than Goldman. There's actually a lot of people who pay better than Goldman. I don't know, but they have the numbers here where it's like they get three times the profits from an employee, right? And so because it's higher perceived value and you're going to have the people that want to do better for themselves coming from prestigious universities. And it makes sense that that would happen.

8:29So Goldman has a closet full of pillows and blankets for people who want to sleep there. Do they? Uh-huh. You know, I'm sure you've been in an office. and it's not labeled. It's a pretty... Which office? They have a lot of them. The New York one. It's pretty stale. I haven't seen that before, so I guess you have. I haven't been to the Goldman office in New York. I've been to a few of them, but not the one in New York. Yeah. I remember during one of the hurricanes, Sandy? Yeah, they had a generator and their lights were still on. Uh-huh. And it was all over the news. It was like, the lights never turn off at Goldman Sachs.

9:03That's a pretty good ad. Yeah. It wasn't an ad. It was all natural. Oh, I thought it was, but it became an ad. It could have been, yeah, it could have became an ad, but everyone was talking about it because they were just like, look, Goldman Sachs, lights don't turn off. Yep. The last one we can add off here is, so I'm looking at this, this guy who works for Menlo Ventures. So they dropped the 12 page AI report. So this is how 500 executives at US enterprises use generative AI. And so look at this over here. So what we talked about earlier, Anthropic is actually the, they're the leading LLM provider when it comes to enterprise, 40 % of market share, whereas OpenAI dropped from 50 % to 27%.

9:42This is in two years. And then you have Gemini coming out of nowhere, 7 % to 21%. And then Meta is like, you know, falling by 50%, right? So AI coding market share, Anthropic 54%. So when you're saying market share trends for leading LLM, I'm assuming this is only for coding. Yeah. No, this is not coding because Anthropic on the left side is 40%. Yeah. So this is coding market share. You're right. Market share trends of leading LLM providers. This is for 500 executives. Got it. So the left is enterprise companies. The right side is for market share for coding related. Yes. And used by the enterprise.

10:16Yeah. I think chat GPT is going to struggle more in enterprise because they haven't made enough moves to adapt. I think Google will start doing better on the enterprise and then chat GPT. That's where the money is, by the way. This is what we're talking about earlier with the fast growth of cursor and lovable and all that. You look at enterprise AI, fast scale, and then lovable is not AI, but cursor is. So, sorry, enterprise, enterprise, enterprise, enterprise. Yeah, yeah. So now capturing 6 % of the$300 billion global SaaS market. So we're from$0 to$1.7 to$11.5. So that's a 6.8x in one year. And then$37 billion, 3.2x year over year.

10:52So the growth is insane. And I don't even look at it. Like we talked about this last week, I think. but people say the SaaS market is like one trillion, right? But I think a lot of this stuff is going into services, which is like 16 trillion. Yeah, so I don't know how you're looking at it. Where's the Gen AI budget go? Anyway, you guys can check out Menlo. Maybe we can spend the last few minutes talking about this because where are you going with the software side of things? How do you see that evolving? Because yesterday I was looking at one of the LLM trackers. They added in, you know, context, agentic workflows and content production, right?

11:26And I think everyone's going to start doing the same thing. And maybe a month ago, we talked about how we do have a little, like where we're different is we both have a services line. How do you think you're going to separate yourself from the pack? Sure. So I'll give you an example with Ants to the Public because that you'll see the changes in January. So we bought a tool that does content creation really good using AI. We'll approve upon it and make it even better. So that'll be integrated and launched within Ants to the Public. So imagine doing keyword research, but instead of just picking keywords, you can just start writing content on any one of those topics within our system.

12:04It then creates a content calendar. And there's a lot of different steps from figuring out the tone of voice you want, the type of content you want, writing it, adding images, and it'll post automatically for you. It'll create the calendar, post automatically to either WordPress, Shopify, or Webflow. You can set it as a draft or you can just have it go live. We'll start doing that. then we're going to start integrating promotions. And when I say promotion of the content, you then schedule a call with people on our team and then our services side will work with you on promoting the content. Oh yeah, getting links and all that too.

12:39Yeah, and then we'll start doing similar workflows for social media as well. And guest posts have made a big comeback too because now they're like, oh, you can't just keep listing yourself, right? So all this stuff is like, everything comes back to services. And that's where I think you and I are differentiated because the things you mentioned on the software side, there's multiple people. and like we're even doing that on the click flow side too but it's like that's why it's like you know the thesis has always been from it's like everyone's just going to make the same shit but then it's the human aspect even Elon saying like oh live events are going to become more valuable it all comes back down to the human aspect yeah but even think about like the AI visibility tools how many people talk about them now nobody yes no one cares last thing we can end with here just a nice graph over here is like coding dominates 7.3 billion dollars of the the departmental AI spend by category.

13:26Look at this. 4.2 billion in product and engineering. 700 million on IT. 660 million on marketing, right? It's all coding right now. Yeah. This stuff will catch up. And then you look at healthcare, dominates 3.5 billion vertical AI market. Vertical AI spend, 1.5 billion going into healthcare. I think coding is so much more stickier. I don't see marketing catching up like the way coding is. Yeah. Also because, I think Ilya said this, one of the engineers, AI engineers, he was like, look, whatever is verifiable, like math or coding, AI can pick that up very quickly. It's not going to hallucinate that much, right?

14:00Sometimes it might mess up on the numbers a little bit, but marketing where there's a lot of taste, there's a lot of room for, there's a lot of time before I think AI is going to just have something like cursor for marketing. So you know Kevin? Do you remember Kevin from Seattle? Yeah. So Kevin from Seattle left a hedge fund, started his own company, no employees he's been doing this for a while and he takes his own capital and trades it in the market kind of like are you familiar with jane street you know like the undercover billionaire you know like the founders and stuff jane street's a high frequency trading company bought trading and it's like citadel they're just like cranking out thousands and thousands of trade and they're clipping like you know pennies on a dollar but those pennies really do add up when you do them in quantity, assuming you can get your fees on the trading side low enough.

14:52Kevin used AI to code up his own version of Jane Street. Of course, it's nowhere near Jane Street's level. I don't mean in a disrespectful way, but Kevin's making an arm and a leg. When I say arm and a leg, I'm not talking about like 10, 20 % on his money. I'm talking about like an excess more than doubling your money. And he's starting with a really solid base, okay? In short periods of time. And he was doing this for a while. So he's coding with these LLMs. The same code will code some of the trades correctly or will the same code trade some of the stocks correctly and it trades some of them incorrectly.

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18:13Because these little mistakes, they don't cost you like a thousand bucks. Some of them cost you millions of dollars or hundreds and thousands of dollars. And he's just like, so he'll start eventually adding people. But I do see it hallucinating way less because we were talking about hallucination and marketing versus coding. And he's like, yeah, I rarely have problems like this. And I'm like, dude, I have problems every single day with so many hallucinations. He's like, nah, these things work really well with coding because it's much more black and white. And that's why you need to have a human in a loop.

18:45That's where we're going to end because I really need to pee. So goodbye, guys.