Top Talent Left Zuck for Elon, Cloudflare’s Bold Bet, AI Pilots Keep Failing, and YouTube’s AI Advantage

0:00Elon Musk just stole 18 of Mark Zuckerberg's best AI engineers. So Zuck has offered his engineers$250 million each to stay at Meta, but Elon gave them something money couldn't buy, and they abandoned Meta. What do you think that was that Elon gave them that Mark couldn't? Shares in XAI at a really good valuation because Facebook is already worth a lot, so what are they going to do, double? You're probably right on the shares, but here's Elon's response. So he said, many strong Meta engineers have and are joining XAI and without the need for insane initial comps. So the key word, initial comp, still great, but not unsustainably high.

0:38Also, XAI has vastly more market cap growth potential than meta. And we are hyper merit based. Do something great and your comp can shift substantially higher. And you've read about this on Twitter. You'll have like young kids going in. If they do an amazing job, he'll promote them quickly. He'll pull in engineers from different areas. If like, for example, actually, one of, I'm not going to name names here, but someone I know is a friend of a friend is married to a guy that came up with the chopsticks for SpaceX when they land, right? So you can imagine he's doing really well now. But that was just a scenario where he just raised his hand and said, hey, why don't we just, nobody could come up with a good idea on how to land it and said, why don't we just use chopsticks, right?

1:14He didn't say it like that, but that's what it ended up being. And so you know just about reading about Elon, it's very merit-based. The other thing too is when you work with Elon, you're working on something. The vision matters a lot. And you've seen he's going to sleep in the office. He's going to do whatever it takes to get there. And he is right. Vastly more market growth potential. We give him more stock. But I think he paints a very compelling mission and vision. And when he's pulling in SpaceX engineers and Tesla engineers to do whatever it takes to build the Colossus factory, you know that this is probably the best visionary founder of our time.

1:49Not saying that Meta is not interesting and Zuck isn't a great entrepreneur, but I think the fact that, by the way, you want to know some of the last names of these people he's pulling in? Let me tell you. Let me tell you, Neil. You tell me what kind of people these are. Wait, let me guess. They're from China or India. If I had to take a guess on the two, probably more from China. You're right. You're right. So Xinlei Chen specialized in multimodal AI at Meta. Qingyao Chuang worked on vision and video. Okay. And Alan Rice, that sounds American to me, managed critical data centers. And so sometimes it's just not about the initial compensation.

2:21I think the money matters a lot, but I think the long-term compensation and the vision and the mission matter too. And being able to work with a generational entrepreneur, maybe the best one is great. Because I do think Zuck's a generational entrepreneur, but I think Elon's number one. Yeah, and I don't know how true this is, but speaking of these AI platforms, I was talking to a VC that was breaking down, what is it called? uh anthropic or claude yeah um well i don't know which one's a parent company name anthropic's a parent company right uh-huh and they were talking about their valuation was either 70 or 100 or whatever and they're just like do you know how much some of these early investors made and i'm like i don't know 10x 20x 30x and he was just saying and i don't know how true this is he was saying no more like 2 3x and i was like what he's like they raised so much money and with the warrants it just makes it hard as an investor that's early to actually make a huge premium.

3:20And I was like, oh, that sucks. Dude, you know what's funny? I bet your angel investment, let me speak to my angel investments. I'm like, oh, so-and-so a company raised at a billion-dollar valuation or whatever. I'm like, oh, cool. And I'm like, I look at it, I'm like, oh, yep. My multiple is like 3, 4x on that, okay? And then like another company that I invested in, oh, damn it, the safe note was too high. Okay, so maybe it's still a 6, 7x return, but it's like, okay. And by the way, there's another company. I invested in Lime. Okay, I thought that was going to go to zero. Turns out they're driving a ton of EBITDA now, right?

3:55They're doing pretty well. I think it's like 150 a quarter or something like that. I could be wrong. I'm like, oh man, I'm going to make a lot of money on that. Nope, I'm going to get like 3x once they go public, okay? And so it just goes to show you that the game of venture angel investing, it's pretty harsh. and if you're not going to play full in all out you're probably not going to win dude remember our dinner with kellen at avra the fuse guy yeah so i met him up uh at spago like a few weeks ago yeah and we were talking about um uh a company that because i'm an lp in funds i don't do as much angel investing anymore but i tend to just stick with being lp because this easier.

4:36And he knew one of the funds I was at LP. And I'm like, yeah, I'm like, I keep getting reports from them because they have so many companies and they made this fund. It's more than 10 years old. So it's pretty much one down. They just have a few outstanding investments. So I was like, yeah, I'm like this company here. I hope it's going to do really well because it's a massive SaaS company that does well into the nine figures in revenue. I'm not talking about like a hundred million. I'm talking about well into the nine figures, like hundreds and hundreds and hundreds and he's just like no not so much i'm like what do you mean and he's like dude they and we both didn't know the exact amount of money they raise offhand and we didn't search it but we both knew they raised over a half a billion dollars so well over 500 million and he's like their turn is too high and their growth is non-existent it's a flat company and i was like you know even though we were the first check-in through that fund there goes that money yeah Yeah.

5:31Plus, there's a lot of dynamics that people don't think about, right? All the rounds of dilution, liquidation preferences, and all these things. Bad market to go public in, right? Or you have a tough government on you as well, the Lillasset administration, right? So you just never know. It's just better to bet on yourself. And it's better to bet on yourself without many other outside influences. So when you have a board, when you have investors and things like that, I think a board's actually good if you have an internal board. But when I think you have too many winds of opinions driving you, I don't think you can make a proper decision on your own.

6:04And that's what caused a lot of problems for people, especially right after 2021. It certainly did for me. Yeah, no. And this is why I don't do much angel investing and I stick with my own business. I'd rather just run Google Ads or rank a site organically or build up a brand and just generate revenue that way. It's more control and the returns tend to be better for people like you and I. That's actually the best part about being a marketer because people have asked me a lot of times, and I know you must get this question a lot. If you had to start all over again, what would you do if you only have like$100 or$1 ,000?

6:35You must have answered that like a hundred times by now, right? I'm assuming you got those questions a lot. Yeah, yeah. You get that question on podcasts a lot. Yeah, and I'm like, we're marketers. We would just start all over, launch a side. I would just do the same thing. Yeah. Yeah. It's a great skill set. I think, by the way, just to read, like it's earlier in this episode, we talked about focus, but the problem with marketers is we know how to do so many different things to drive revenue. And then we think we're like God and we think we can do everything under the sun. And that is what ends up causing problems for us.

7:07You're actually much better acquiring all these skills, learning how to drive revenue, and then just focusing on one area. And that's how things have gotten really big. But I read this tweet from Andreessen Horowitz. They tweeted this and I thought this was an interesting concept. So, you know, a lot of people, especially people, technical people, they think it's all about building the product, right? And the line here is really, ultimately, your job isn't to build a product, your job is to solve a problem. So people in agency, they like to talk about the different service lines that they have, and people in different service lines, they like to brag about that.

7:37Or people that are different product managers for different types of products, they like talking about whatever product they have. But ultimately, that's not what matters. Your job as a business is to solve a problem, and then you make money from that as a byproduct. So most companies, they avoid the messy, unsexy work, but that's usually where the biggest opportunities live. And you do the work that others won't. It's to solve problems, and that's it. It's not about the product that you have. Dude, the money's in the messy. People don't like the messy. They like the cool and sexy. Yep. Yep. And here, you can pick one.

8:13You have this Cloudflare one that's interesting. This one keeps coming back, this topic. It's just like Cloudflare, their stock is doing decently well. I think they have like a$70-ish billion market cap. This isn't financial advice, by the way. And by the way, Eric and I don't want to give you any financial advice. Do whatever you guys want. Cloudflare just keeps pushing, hey, make your website a toll, pay for it. And the reason I believe Cloudflare is big on this kick is because they're afraid overall website traffic will go down, which will impact their earnings. So they want to be the toll road of the internet to save their business.

8:52That's my two cents. I don't think their business will ever go to zero, but that's my two cents on why they just keep doing this. Have you mapped out how much money they can make if, you know, 10 % of the internet or 10 % of their users went with paper, I don't know, toll? uh can you repeat again yeah so i'm just saying that have you this cloud flare thing have you done the math around hey like maybe five or ten percent of their users opted into this or websites did how much money they would make uh no do you no i haven't done it i'm just wondering because i the fact that they're pushing it so hard must have meant that they they've mapped it out um but i just don't think it's the way it's too much friction for what it is um and you don't want resistance to happen on the internet when people are just trying to browse around freely yes i i also think their model is just going to screw up businesses and cause them to make less money in general yeah dude speaking of which um i had it's funny i we were talking about wordpress about how it powers um 40 of the web and you and i were talking about how um a lot of this stuff is becoming for for free because of Jason Lemkin's tweet.

10:05But WordPress was like automatic Matt Mullen. He responded to one of my Instagrams. I'm going to look for it right now, but I don't know. That just brought it up. So let me see what he said. Go ahead. But I know a lot of people that talk about how WordPress is powering 40 plus percent of the internet. It doesn't matter how much of the internet you're powering. All that matters is, is can you make money from powering 40 percent of the internet? WordPress does a decent job of making money, but not like Shopify. Shopify doesn't even power 10 % of the internet or 5 % of the internet. It's a much smaller number, but look at their market cap.

10:37Yeah. Anyway, it's too hard to find that tweet or that reel. So I'm going to move on to the next one. You want to pick the next one? Let's go with the MIT report. Did you read that MIT report? I read that one. The problem with that one is Ethan Mollick, he actually looked at the methodology for that research, and it was only on 52 companies or something like that. too small of a sample it the sample size was too small so i'm like okay of course this thing's gonna get a lot of headlines because people fucking hate sorry people hate ai freaking hate ai right um and so sorry whoever heard me cuss i meant freaking but anyway go ahead you go right now so we're good okay all right go ahead you you can shed some insight and sorry if your kids are listening in the background um but one thing i do agree with the report in and they talk about how 95 % of generative AI pilots at companies are failing.

11:31Now, I don't know if that number is 95 % for most people or if it is 50 % are failing. I do agree that a big percentage is failing. Does it mean generative AI is bad? No. Does it mean AI just in general is going to fail and it's a fad? No. It just means most people in an organization, I think this is very true. This is what I got out of the report more than anything else, don't know how to use AI effectively. And you need training in an organization to teach people how to actually use it to do their job better. Or you need to replace people with people who actually already know how to use it. So that way you don't have to train up your existing.

12:09I think the more realistic solution is you have to come up with some sort of training program to help all the existing people in the organization. Because once you have too many people, it's not like starting from scratch. Starting from scratch, you can just hire people who are good to go from day one. But if you already have thousands of people, you got to figure out how to train these people to use these products correctly. I think there are three types of AI people at a company. You have, let's call it FCA. Okay, so you have people who are fanatics. That's the F. You have Cs. These are the converts.

12:39And then you have people, A, these are the anchors. So let's start with the anchors first. The anchors are the people who are unwilling and these people that are dragging when it comes to AI. And these people don't like AI. Okay, those are people you need to rotate out of your company. Not financial advice. Let's rephrase. Those are people you need to rotate out if AI can help them with their job. Like if their job is legal and only going to court and they're just amazing at fighting and litigating and they barely use AI, but they have other legal people underneath them, you probably don't need to get rid of that person.

13:10okay then then the converts are the people who are willing but they just to your point they need to be guided they need to be taught and they need to be showing the light then they need to be pointing the right direction so they're down to do it you just need to show them the fanatics these are people that are talking about the latest things oh my god this is happening over here oh my god check this out over here they're trying all the new things all the time these are you want to there's only a handful of these people in your company these are the people that you want to to bring with you and we actually have a mutual friend that I was texting with the other day Neil what he does and I think this is genius and i'll probably do the same thing here is he has selected these fanatics and then he gets to he takes them all on a retreat okay and it's like a super exclusive thing it's like oh my god all these people like i want to go on that retreat it's like the super like elite group and then at that retreat it's a hackathon where people are are building things they're only vibe coding things that people are sharing what's happening at the end it's also a grounds for him to see who they might need to let go okay because some people will make excuses that oh i just couldn't build this i couldn't do this i couldn't do this he's like oh man i can't have you anymore right and so he he decides to rotate people out but the point is doing this hackathon he's probably going to do them once a quarter or so but it gets the best of the best together um and you get to break bread with these people you get to build better relationships and you just get these fanatics together and and and point them in the right direction and then they'll start guiding other people um but this is no different than what steve jobs did back in the day where he had his top 100 people or top 150 people summit and i do know there's some other companies right now that are doing that top 100 i think coinbase does that too um where they have those people get together.

14:37And I think it's really smart if you get your top 10 % of people together for this specific initiative. So I have one issue with the fanatics. And now I can see you. I have one issue with the fanatics. We have quite a few of those fanatics in our business and a lot of my friends' companies, and I've seen them at publicly traded companies that have market caps, 50, 100 plus billion. And I've interacted with a lot of them. The one, this isn't all the fanatics, but a lot of the people in the fanatics bucket they always tell me how the latest cool thing they're doing and they say how this is awesome they show me the work and most of the people i talk to that are in the fanatic category they're doing all this cool stuff and has no impact on revenue generation or saving money all right i'll give you one of those two because that's the purpose of ai either make make it so we make more money or make things more efficient so we save money just as a business owner or executive.

15:31That's really what those two things people are looking at. So what I found really useful is that C category. What'd you call the C category again? The converts. Okay. What I found is a lot of the converts are, there's a lot of people in that category that understand the concept that things need to either make more money or save money. They're just not as financially or tech savvy. And then having the fanatics help them be more efficient in those areas, we found to be a winning combination. Yeah, I think it's helpful if you have converts, especially that are business outcomes driven because the fanatics are actually usually the, I would say, not usually, but a lot of the fanatics are younger people in their 20s or so.

16:15And they're really excited about new tools and things like that. And dude, in my 20s, when I worked at different companies, I was always a new tools guy, right? But now I think it's important for the converts or even people leading this, maybe if you're like executive of the company, you have to just constantly add, hey, this is really cool, but what are the business outcomes that we're trying to drive to here? And just constantly setting it around that ban. And then if they look at you blankly, we have had people who are fanatics that can't, for the life of them, they can't tie it to revenue.

16:42If they can't do that, then they still can't be in this group, and they still can't come attend this hackathon. I haven't met one fanatic yet that is over the age of 35. I know they do exist, but in all the companies that I've talked at, and the teams I've met, all the fanatics tend to be 35 or younger. And to go more specific, most of them tend to be in their 20s. Yeah. And I mean, even beyond that, some of them are like in their late teens. And then, you know, we have mutual friends that are hiring the late teens and these teens actually sleep in the office and they're like super fanatics. So we have one, he's early 20s.

17:18He's showing me all this cool stuff with AI. He's telling me like, if we don't do this in our company, it's going to die, right? really loyal guy great guy i love him to death yeah and he showed me all this cool stuff he's like look how powerful this is and for like six months now i've kind of just been try to drill down one point to him i'm like you need to focus on stuff that either produces more revenue or saves on expenses and we're talking about doing stuff for customers and i'm like yes but the customers are paying us to help them drive more revenue. I get it's traffic or leads or sales, but overall they're paying and they need to see more revenue in a profitable way.

18:04And it has to be more profitable than what they're doing before, or they need to save money. And I'm like, and some of these younger people, I really struggle for them to get that concept. Yeah. 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. The best part about it, it has everything you could need. Say you're ready to launch your own design studio.

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20:39I don't notice. Yeah, even when we do our recordings, they usually have a watch on. Oh, I don't notice. Actually, no, probably I would say 50-50. But when I have meetings or I'm going somewhere, yeah. Today I had kids go to school. So I had meetings and stuff. Speaking of AI, did you know that YouTube, there's a guy, this guy named Rame Rowe. He's basically saying that YouTube is now in easy mode for new channels in 2025. So YouTube apparently made an update recently. So they now run on a dual algorithm system. So they have the old model plus Gemini AI. So Gemini prioritizes viewer experience, relevance, fact-checking, and emotion for YouTube.

21:15And so practical strategies now, it's saying that you want to use Google's ranking signals. So it says use – here, I'm just looking at it. Use Google ranking images and thumbnails. Add factual details, names, dates, locations, and descripts. Match background music to intended emotion. Encourage context-rich comments by asking questions. So basically, what it's saying is these fast edits and all these things and the suspenseful music and all that, Gemini can now detect that. And that's not what it's looking for anymore. So Gemini is running quietly in the background. It's learning from videos, audience patterns.

21:48And after a year of training, Gemini now helps decide what YouTube recommends and ranks, working alongside the original algorithm, meaning that there are two now, which is what I said earlier. And they haven't really publicly announced it because they're still testing it. But basically, and I'll wrap this up here. So Focus Shift is now on viewer experience. So unlike before, it's not about flashy editing or transitions. Gemini focus on individual viewer patterns. So what people have watched, what they're evolving to, and what they're likely to watch next. And it creates a profile, right? And that means that if you're a smaller creator, you want to get into YouTube.

22:16Neil and I have been talking about YouTube quite a bit. Smaller channels can now compete with larger ones by tailoring content to Gemini's priorities. So, haha, that means our marketing school YouTube channel should do better theoretically. And you know what's funny, Neil? My mom kept telling me, she kept asking me why I wasn't getting any views. I didn't realize she was talking about my marketing school channel or our marketing school channel because each video before we get like 20 to 30 views. Really? Yeah. But like now it does better. But the content that we have, I think if it's going to go down this path, this algorithm, I think it's going to do a lot better.

22:48So it says success depends less on entertainment value now and much more on how well the content matches what Gemini expects and verifies. So let's talk about this. Keep going. I have to send this text. Someone screwed up on my headline. They just published my video on ChatGPT. Now Neil's pissed. So I know how. Yeah, now I'm really pissed. So Neil's out of it now. So I just think my reaction here is that if you are, if people are watching deep content, so let's say when I see deep content, like a screen share for 30 minutes or an hour or something like that, I've seen some people do it well. I know there's this guy, Wes McDowell, I think he does these 20 to 40 minute videos.

23:30and I like doing these screen share videos where I like talking for 30 minutes or so. And I think the thing to understand is that if you have a lot of people leaving comments and they're saying, I don't know why this isn't getting more views, that means your video is probably really good. It's just the algorithm hasn't picked up on yet. And if the algorithm is actually getting smarter, this means that smaller creators are going to have a shot. And I do think my bet in the next six to 12 months, if this algorithmic change is true, the marketing school podcast channel is going to grow a lot faster and it's about damn time.

24:00oh that's good dude what pisses me off and i know this is a side tangent my team publishes content you know some some of the stuff we use contractors i'm texting the contractor right now and i said use the title rank number one on chat gpt my three-step traffic system and then the video's not doing well and then little do we see they pick their title is chat gpt the new google for traffic and i'm like guys stop trying to like just do stuff that is like, oh, let me try to do something that's like a more evoking curiosity. And I'm like, dude, people use YouTube for educational. The video breaks out how to rank on chat GPT.

24:39Let's just keep it simple. I just hate when, okay, so I run into the same problems that you run into. When instructions are given, instructions aren't followed. And then the thing is, I come back and I catch it later and I feel like I'm constantly looking behind my shoulders. Is that kind of how you feel? Yes. Yeah. And I can't wait. for the time where I don't have to do that anymore. Yes. Same here. Yeah. Because look, here's what I call out. So those of you that can't see the video right now, once this happens, it ruins your day. Like I'm looking at Neil right now and I know how, like, because I feel the same way too.

25:11And I already know Neil's day is ruined for the next five to 10 minutes at least. I'm pissed. Yeah. And so what's going to happen after this? We're on camera, but yes. What Neil's going to do after this, he's going to send them like a barrage of text messages. He's going to get into it. While we're on the phone. One, two, three, four, five, six. I counted six ones a screenshot. Seven. Seven text messages while I'm recording a podcast. And then just wait till I'm done. Dude, can I tell you something? So I was talking about this last week, but me, I've been used. I've been so impressed by YTjobs.co.

25:47So the YouTube jobs website, because it literally, I think I told you this, but it shows you who verified who they've actually worked with. Because the other channel has to verify that they work with them. So when people apply now, it will score them like a purple diamond is the highest rank, and they'll show gold star. Let's go back. I'm a little confused. There's a site called what? YTjobs? Yeah, this will help you, I think, with your situation right now because this is YouTube-related, yeah, a little bit? Yeah, but what's the exact URL? I'm confused. YT stands for YouTube, so YTjobs.co. That's the website, okay?