What Eric Learned From Hosting A 9-10 Figure AI Operators Dinner

0:00Eric Siu:So Neil, I'm in New York right now and I'm here for a couple of investor meetings. I am here, I'm speaking at two conferences, spoke at MozCon on Tuesday and then, which I've never spoken at before. And then today I'm speaking at an e-commerce conference, the social commerce summit that we spoke at in Manhattan Beach. So Stuart's doing another one. And then I also threw a dinner. Probably the highlight was the dinner that I threw on Tuesday and I wanted to share some learnings. And then I'm also going to prompt you with some of the questions I used because my Hermes came up with some questions that they're actually going to be able to do.

0:30Eric Siu:actually really good questions. And so this dinner was nine to ten figure AI operators. And then, by the way, the restaurant I hosted at, I saw DJ Solomon. You know who that is?

0:40Neil Patel:No.

0:41Eric Siu:It's the freaking CEO of Goldman Sachs, man. You remember he's a DJ?

0:45Neil Patel:Oh, yeah. He gets made fun of sometimes. I'm not saying people should. He should have hobbies, but I think Trump is one who makes fun of him for being a DJ.

0:56Eric Siu:So you're like, DJ Solomon?

0:58Neil Patel:I don't know what music he's

1:00Eric Siu:My friend and I were talking at the table and then I looked over, I was like, he's like, yeah. I was like, oh, it's DJ Sullivan. And then another investor came over. This place I hosted that, it is so interesting because it was all investors and finance people there. Whereas in Miami where it's the same restaurant, it's not like that. It's very chill in Miami. So anyway, I hosted this dinner. You had people from, we're talking about nine, 10-figure companies, revenue-wise. and I'm going to kind of just go down the list and share some takeaways and some questions and then Neil, we can kind of go back and forth here and then I'm curious to see how your week went as well.

1:39Eric Siu:Excuse me, I have a lingering cough as well. So first and foremost, Neil, one of the first questions I asked was, where are you actually seeing margin expansion with AI? Which is a very important question, right? Because we all like to talk about stuff we're doing right now. So do you want to answer that first and I'll give you some answers. And then I'll give you another good question after.

2:01Neil Patel:We're seeing margin expansion by AI by cutting. And you have to be careful which models you use because if you use the wrong models, they're very expensive. And what we find is a lot of organizations use the most advanced models to do some of the most simplest things, which doesn't logically make sense when they can use older models that are a fraction of the cost. But we see margin improvement from mainly cost cutting. Okay. Right.

2:26Eric Siu:So the table struggled to answer this one. Okay. Now, one of the guys was very clear for us, this is a multi-billion dollar company. He's like, we're seeing margin expansion clearly in customer service. So customer service, we're seeing that because obviously that one is, you look at a fin, for example, it can handle a lot of these support tickets. And so you're actually saving significantly there. But in other areas, not as much. And so for coding, you can say, yes, we're getting more output, but what ends up happening is you need to hire more engineers anyway. So it's not like anybody has a career.

3:01Neil Patel:And pay them more. The good ones want more money. We're not seeing margin expansion in developers.

3:07Eric Siu:Yeah. And by the way, one topic I started to bring up last week was this whole thought around if all these people, let's say, Neil, you become more powerful with AI, but I don't. And you're able to do all these other things. How do we handle compensation with you? And this was a really, like, I asked it again at this table. I was like, how are you guys thinking about compensation when it comes to the AI pill people? And I might as well bring it front and center because I think a lot more people are going to start talking about this. And so one of the guys, he's like, yeah, you know, I brought it up.

3:39Eric Siu:And then, you know, the HR team's like, well, we already have these structures and all that. And this is how it's going to be. And so he doesn't necessarily agree with it. He thinks that people should be compensated. AI pill people should maybe be compensated like athletes. If you're LeBron James, for example, you get a super max contract. Or if you're somebody else, I don't have a good name here, but if you're, I don't know, I was trying to give an Asian player a name, but there aren't many of those either. So my point is, when you look at an athlete, a superstar athlete, they get paid a lot more.

4:07Eric Siu:So that's an interesting model. Someone else at the table, they compensate their developers just a lot of money, right? And I'm like, how does that work exactly? Because their developers can make up to seven figures and they started at a good amount initially. And he's like, we charge them based on these story points. And I'm like, what's a story point? And he's like, a story point is like when you have a storyboard for a product, but we charge them per that. I'm like, isn't that just time and materials? And he's like, well, no. And he gave me some answer, but then I still interpret that as time and materials.

4:37Eric Siu:So there's a couple of answers here, but Neil, I'm curious to get your thoughts. We should react to this in terms of how we're thinking about it.

4:45Neil Patel:Yeah, just honestly, internally, we're not thinking about margin improvement from AI. We're trying to figure out, or not even trying to figure out, where we're focusing our time and energy is how to get people more productive and do more. And I think the key is do more because when you're doing more for the customer within the same price point, yes, you're using this technology. It helps you be more efficient. maybe you don't need as many people in certain roles, but you are paying for AI and tokens, which can be costly depending on which model you're using. Net-net, we're not seeing too many margin gains and we're not seeing too much extra profitability because of AI, just being really transparent.

5:32Neil Patel:We're able to do more that we've never been able to do before, but that costs more money, right? So I'll give you an example. We work with a lot of franchises. and franchises are all different types. Some people are old people homes. Some people could be like a dentistry franchise. Some people could be a restaurant franchise. Some people could be like an HVAC franchise. The list goes on and off. And what we found is, and this is obvious, every franchise has its own needs. So we started building custom interfaces for franchises to make the reporting better, to make the experience better, because some of these people have like over a thousand locations and it can be really painful to manage it all in traditional systems.

6:19Neil Patel:So building something custom for each of them would cost hundreds of thousands of dollars, if not millions of dollars, and then you got to maintain it. With AI, we're able to do this really quick, really cheap for a few thousand bucks or five,$10 ,000, whatever it costs may be, including human time. Customers are happier. It makes life easier, not necessarily meaning we're saving money, but life easier from a reporting angle, us making less mistakes, franchises making less mistakes, people being more clear on what's happening, the results. And what we found is AI's created the opportunity for us to do more for our clients and do different things that would have been too costly based on their budgets.

7:03Neil Patel:Of course, we would have loved to do these things in the past. Clients are not just going to fork over an extra million dollars for a custom interface that's designed just for them, in most cases, from what we've experienced. And these kind of things haven't made us more money. They haven't really saved us any money. We're just now doing new things that were not financially feasible for our client, but now are. That's a big thing that we've noticed as a marketing agency because of the technology.

7:33Eric Siu:It's interesting. I was listening to this podcast with Lenny's podcast, Lenny Rychinski. I think is how you pronounce it. And basically, they ran a large-scale survey around tech worker sentiment around AI. And so it's the number one fear in AI right now. It's actually, it's not necessarily losing your job to AI. That's actually second from the bottom. But the number one fear right now in tech is actually do more for the same pay, squeeze. So most workers are, because you just mentioned do more, right? And so, and with these people that are very excited about, I think you have 41 % of people that are net excited about this stuff.

8:11Eric Siu:Their whole thing is burnout more, right? And what's interesting is that the founders that were surveyed, they're having the most fun ever, but they would never recommend founder as a job. And that's funny. That's not really funny. But you and I, I don't think we'd recommend founder as a job to the vast majority of people because it's really hard. But we recommend it to maybe like 1 % of people, right? But I thought that's really interesting that you brought up the do more thing. And it turns out that the number one fear in tech right now is to do more for the same pay squeeze. Yeah.

8:38Neil Patel:yeah dude you don't have kids yet but would you ever want your kids to be an entrepreneur honestly

8:44Eric Siu:i'm just curious nope oh actually hold on hold on hold on maybe my son but i wouldn't want my daughter to go through that which is i feel like that's how you've said yours can i is that kind of how you feel? So both my kids are great.

9:03Neil Patel:My daughter, she's young. She has made up her mind that she wants to, she's really well educated for the age of seven. And so is my son at the age of five. I'm not saying that means they're more brilliant or anything like that. Just being quite frank, when you have more money, you can pay for private schools and tutors and all these things that help your kids get ahead in life, right? And I wish everyone else had those opportunities as well, but I'm just speaking real here. My daughter right now at the age of seven, a lot of times she tells me, I'm like, what do you want to do? And she has some ideas on what she wants to do, but then she says, in the long run, I want to have a family.

9:47Neil Patel:I want to raise them and I want to be home cooking for them, taking them to school, you know, and helping them be the best kids they can be and be successful when they grow up, right? And some people are going to hate me for, you know, for what I just said there. But I'll also say one other thing. I believe being a mother is the hardest job in the world. I think being a stay-at-home mom is much harder than working nine to five. This is just my personal experience. Even as an entrepreneur, I think what I do is much easier than raising kids. I cannot do it. I think it's way easier to get on a plane, speak at a conference, do some meetings, go back.

10:30Neil Patel:You know, I get to watch Netflix. You're a mother. A lot of these mothers have it even worse. They had to work nine to five and they had to take care of the kids at home. I get they may get help from their significant others. But check this out. If you're a mother and you're sick and then your kids are sick, they don't care. they still expect you to help them out. Like you never have a day off in your life. So when my daughter said that, if that's what she wants to do, more power to her than she asked me. I was like, so what are you going to, or technically asked her, I said, what are you going to do for money?

11:05Neil Patel:She's like, I'll work for a little bit, but then, you know, I'm going to live with you. I'm like, oh, you'll live with me? I'm like, I would be very ecstatic and happy if she lives with me. I'm like, you sure you're going to live with me? You pinky promise. I'm like, don't change your mind. And literally before she pinky promise, she's just like, well, actually, it may be easier if I live next door to you. And then I said, how are you going to afford the house? And then she says, you love me, right? And I'm like, yeah, she's like, you'll help me. And then I was just cracking up for my son.

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11:56Neil Patel:If he wants to be an entrepreneur, I would be okay with that. He's really into numbers. Like for Christmas, he asked for things like a calculator.

12:06Eric Siu:I wonder where he got that from.

12:07Neil Patel:Yeah. So if he wants to be an entrepreneur, I would be really happy. I wanted to name him Neil Patel II. And, you know, and that did not happen. It wasn't that I couldn't name Neil Patel II. I wasn't sure. I was like, should I? Should I not? And then I settled on. I'm like, eh, let's just name him. I think it's better not to.

12:29Eric Siu:Because imagine if Michael Jordan named his kid Michael Jordan. I think he did, actually. If he doesn't live up to the name, it's tough.

12:37Neil Patel:Correct. And I'm not saying I'm an Elon Musk. I know I'll never be that successful. but still I don't want my kids to believe that they had to do what I did and I don't think it's the best quality of life what I think is actually better like you know my son's like maybe I'll get to be a scientist or I'll get to work with animals because he loves animals and animal facts and he's young and I don't know what he wants to do but I do want them both to work um and I do want them to understand how hard it is. Whatever they decide in the future is up to them. But if my son had a choice from making millions and millions of dollars and being miserable or being a teacher and being happy, I would tell him, be a teacher, be happy, and go live in Missouri or something like that.

13:25Neil Patel:Now, if he wants to be a teacher in Los Angeles County where he probably wouldn't be able to afford a home because it's just sad but true, and he had kids and he would be next to me, I would help them out because what's the point of me working all this hard all these years to not have my family next to me

13:44Eric Siu:I We'll come back to the compensation thing in a moment but my take on it is the way I see it is I would want my son to go through it because I you know It's I see an entrepreneurship as a like a Rite of passage type of thing and you learn a lot. I think it's a great learning machine Um, I don't think i'd want to put my my daughter through it. That's just my philosophy and I do agree that being a mom is the hardest job. I looked at my mom, she had to be the breadwinner and she had to be the mom. That's double hard, right? I think your mom was like that too. Yeah, same. And so I wouldn't want my daughter to have to do both at the end of the day.

14:17Eric Siu:I think one's already hard enough. So that's just us. But going back to the survey for a minute, Neil, so I'm going to read some of these things and then let's talk about AI and compensation, okay? So you have the number one fear right now is doing more for the same pay, okay? Most people in tech would not recommend their own role to someone else entering the industry today, okay? Designers and researchers scored the worst. Founders came closest to neutral. That means you and me are closest to neutral. Everyone else is there not recommending their job to someone else. That's fascinating to me.

14:46Eric Siu:Now, the one final thing I'll call it here, then let's talk about the compensation piece, is AI is splitting the tech workforce in half. So when asked how AI has shifted their professional identity, 50 % of respondents said they feel amplified, okay? I feel like that. I think you feel like that too. So we feel more capable, more productive, more excited about their future, right? The other half feel like the role is being redefined, so 27%, that they're feeling destabilized, 14%, or that they've been diminished, 5%. So I would say maybe 19 % of that is fairly negative. I think redefine is not necessarily negative.

15:20Eric Siu:And which category you're in correlates with your career optimism, burnout, and layoff worry. And then the final thing, final, final thing for real now, burnout surged 10 points in a single year. while optimism fell six points. I think burnout the year before was maybe like 44%. Now it's like 54 % or something like that. So we've said this on the podcast before that my number one concern, especially with the AI pill people, is burnout.

15:43Neil Patel:Yeah, I definitely can end up seeing it. And I think things will change within a few years because I don't see people going this hard, especially in certain roles like engineering where they're expected to do a lot and work a lot of hours and crank out more. I know the top players are getting paid well, but dude, you know, they're saying, oh, the engineers don't have to code as much. A lot of the A player engineers that I know now are working six to seven days a week, and they're working like 13, 14 hour days. It's just not sustainable. Just being realistic. I don't think it's sustainable, especially if you have a family.