Ex-Tesla President reveals EVERYTHING Elon does to win

24:06And so if you want to read the whole book instead of just reading part of it, visit HubSpot.com. You have a couple of other business principles. And one of the things I liked was, I'm an idea guy. My entrepreneurial style is a high variety style. I've done businesses and, you know, whether it's restaurants and biotech and cyber and, you know, a bunch of different industries and, you know, not all have worked, but like, that's, I guess, just the way I'm wired. Whereas some people, they stay in one domain and they keep solving problems in that domain for 40 years of their career. And it seems like you're also in the high variety category.

24:39And one of the reasons why is you've learned how to sniff out opportunity because it smells like a problem. It smells like something that doesn't make sense. And it sounds like one of the tells that you have in the book is anytime you see something that's one size fits all. Yeah, so a little bit like you, I've been a variety-driven entrepreneur. I think it's a little bit because I've got business ADD. Like I couldn't spend an entire career in a single industry without driving myself crazy. So I do look at these one size fits all and as a clue of, ooh, there could be an opportunity here. So an example of that is we took a look at the cybersecurity industry.

25:19And we started with this question of like, hey, 30 % of compute has moved to the cloud, 70 % hasn't. When does the next 30 % move? What opportunities is that going to create, et cetera? This is in my venture firm. And we found something surprising that 30 % of compute wasn't moving to the cloud. It was small, medium-sized businesses like law firms, accountancies, et cetera, have no compelling reason to go to the cloud. and they have a headwind of data risk. They have very sensitive data. They don't want to move that to the cloud. And so then we started to ask ourselves, like, is there a one size fits all here scenario?

25:56And it turned out there was. We just happened to ask the question, how many cybersecurity platforms have been created for the cloud in the last five years? And the answer is like 1 ,300. And then we said, how many have been created for the SMB in the last five years? And the answer was zero. all right, this is a one-size-fits-all market. Cyber is sized to the cloud, which I totally get as a computer scientist. I get that it's easier to write to Amazon, Azure, and Google, and it's super difficult to write to an infinity number of tech stacks in S &P. So that one-size-fits-all is creating an opportunity.

26:32And then we asked one more question because then we felt like we knew the answer to this question. Where are the ransomware attacks happening? And no surprise, it's in the S &P side because they haven't had tech in five years. And so we set out to build a company that is essentially a super modern cyber platform for widely variable tech stacks. And introduced that, and it's got a ton of market traction, and it's like one of the fastest growing companies in cyber right now. But it came from that first insight of like, ooh, we just tripped across a one size fits all. The market has been 100 % cloud, and there's this small medium thing hanging out here that isn't large or extra large, how about we like split the market and go after where the competition isn't?

27:17I like that. In the book, you phrase this, you use a slightly different intro to the story, which I liked, where you basically talked about like you're looking at the expense. I think you were on the board of two companies or something like that. Yeah. You're looking at the line items on the expense sheet and it was like, it was two different, it was like. It was Lyft and Lulu. Lululemon, which is a retailer. They don't really have any personal sensitive data about any customers. You know, a customer comes in, swipes their credit card, they don't save it. And they were spending something like$7 million on cyber insurance.

27:47Yeah. And then somebody else was spending, you know, somebody else who had a lot of sense of data was also spending$7 million. And you sort of had this like, huh, how could these two vastly different companies with vastly different risk profiles and vastly different industries have the same thing? And they were like, that smells a little fishy to me. And whether that became a successful company or not, I just like the general idea of noticing is actually a superpower. We talked about noticing for bottlenecks, but then you can sort of notice for things that don't make sense in the world and an entrepreneur can come in and make it make sense by actually changing the way the world works, right?

28:25Exactly. And actually change the system rather than try to just say, I guess it just has to be that way. Right, right. And that's a perfect example of that. I think noticing is a trait a lot of entrepreneurs have because we do see friction and say to ourselves, why does this friction exist in life and how do we get rid of it? And I have people ask me, do you fly private? And I've got a weird answer. I said, no, I don't, but for a weird reason. I don't fly private. I fly commercial because I want to experience friction of everyday life. That's going to give me my next business idea or two or three.

29:01and I think entrepreneurs are kind of wired to look for friction as a clue that there could be an opportunity but they definitely we all have I think in a heightened spidey sense for that where that friction is yeah as an entrepreneur if your life gets too comfortable you lose your ability to spot problems exactly comedians when comedians get too rich they fall off a cliff because they don't have relatable jokes anymore because their life is completely unrelatable at this point right and they don't see the everyday things. Okay, so I want to go through a couple of the steps of the algorithm. So your book is called The Algorithm, and the idea is that, let me phrase what I took away from the idea.

29:39Okay. So the idea is there's a certain way that you can run a company that will lead to faster growth and more success, obviously. And what I liked about it is there's this feeling that Elon's just the super genius alien, and maybe he is, but let's say like that the success of the companies are because you have the super genius. It's a very nice story, fits well in the sort of Hollywood way of looking at the world. But you said, or is it that he is really smart and ambitious and talented, but he surrounds himself with really smart and ambitious and talented, a legion of smart people who are empowered by a way of working, a culture of working, a method that leads to this level of success because he's got all these different companies.

30:23One man can only be doing so much and can only be in so many places at once. Is that accurate how I describe the premise of what we're talking about? Yeah, it's kind of three layers. First off, he's brilliant and he is unique as an entrepreneur in our time. Like I can't name any entrepreneur who's created four or five companies all worth tens of billions of dollars, if not hundreds of billions of dollars. Zuck has had one, Gates had one, Jobs had two, Beating Offs had one, Ellison's had one. You go down the list of entrepreneurs of our time, there's nobody like him. And so he is a pretty special dude.

31:01He does surround himself with world-class talent. But the idea of the algorithm was to give that world-class talent a framework so that we could push decisions to the edge and people could drive innovation without us showing up and having to drive it ourselves. And a framework is super helpful in that. So you combine world-class talent with a framework and a method, and you start to get innovation breakouts that are really unique. And a lot of people said, hey, do you have to be willing to do this? And my answer was no. Like, that's why the book is told through the eyes of people who are actually on the edge doing this work and telling their story.

31:42So you can see, hey, there was no senior management team hanging around here. This was like frontline people taking on these big problems and saying, we just want to solve this. And you give them a framework to solve it. And they do crazy things like inventing mobile car service from a manufacturer, inventing one-click loans, inventing insurance embedded in car payments. Like just stuff that was flowing and moving so fast because people at the edge were empowered, but they were also equipped with this framework. And one thing that's not in the framework, but it seemed common, was that the starting point for a lot of the stories was, we had this problem.

32:23You have this one in there about online sales. It's like, you know, Tesla is this, you know, high tech, kind of the most tech forward company, but actually the e-commerce, the online sales were pretty weak at the time. Right. And so you have this problem, and it's a weakness in the company right now. And instead of just saying, hey, let's improve our weakness a little bit. Let's get back up to par. Elon's method, it seems like, starts with a crazy goal that's like, not only are we going to go from weakness to average, we're going to go to like world class or best in class in that same category, which I think is not how most people think.

33:00It's not how I operate. Like when I see that, I'm like, hmm, that's not what I would have said in that situation. For example, with the online sales, it's like online sales are weak. Okay, here's what we're going to do. We're going to 20X our online sales or something like that. Like we are going to lift this and it's going to be the number one driver, right? Of sales. And so there's this crazy ambitious goal to start the thing. And it sounds pretty unreasonable, especially because you're starting not from a position of strength, but from a position of weakness. Can you talk about that side of things that like, let's just start by laying down the gauntlet of a somewhat impossible goal on something that today is actually a weak area.

33:38Yeah. Goal setting can determine like what outcome you're going to get. And so if you set a goal for five to 7 % improvement, you're probably going to get three to five. If you set a goal for an order of magnitude improvement, now you got people that have to think way differently about that problem because you can't tweak the status quo to get to a hundred percent improvement or a 20X improvement. And so part of his secret sauce is he sets these order of magnitude improvement goals. So 10x, 100x. And it forces you to think way differently about how you would solve that problem or what you would do with the product or what you would do with the process, etc.

34:22And so like you're referencing this example of he came to me and said, hey, look, we have continuous demand challenges. We got to figure out how to sell cars. online, which sounded crazy at this time because nobody was buying$120 ,000 things sight unseen online. Click, click. But we both knew because we'd both been in consumer that every click you have, you ask the consumer to make, your conversion goes down. And that's, I'm saying an obvious, every entrepreneur in e-com knows that, but we looked at our clicks and there were 64 clicks to buy a car. And so he turns to me, he says, let's improve digital sales.

34:59This is your goal, improve digital sales by 20x. So now it's like, oh crap, I got to think way differently about this. I can't think about like tweaking here and there. And so he said, how many questions do they take to buy Domino's pizza on their app? I have no idea. He's like, let's pull it out. So we pull it out. It turns out it takes 10 thumbtaps to buy Domino's pizza at that time. He's like, we're 64, Domino's is 10. Let's go to 10. And the first thing then that that calls into question, it was a core tenet of the business at that time, which was producing custom bill-to-order product. Right.

35:37And that was religion there, partly driven by the fact they didn't want to be a typical car company. They wanted to make you the car you wanted versus the car the car company wanted to sell. Right. And it's something everyone will nod their head to. Fully customizable, of course. But that led to like 360 ,000 different combinations of a car that you could choose, which is driving a lot of clicks, plus a lot of decision fatigue for people. And so we went and ran the data. My team ran the data. And we came back and figured out that people weren't buying 360 ,000 versions. They were buying two. And it was either what is known today as a standard or a performance.

36:13And so I went to the head of manufacturing, Greg Reichow, and the head of engineering, Doug Field. I said, hey, look, I'm the new guy here. I've never been in the car business, so I could be completely stupid about this. But let me show what the data says. The data says that out of all these 360 ,000 combinations of build to order, people are only buying two. And what would it mean to you guys' side of the business if there were only two? And sorry, just to clarify, what you're really saying is, it's not that they're buying two configurations. It's like the job to be done. The thing that the customer cared about was they wanted either high performance, you know, like tap the pedal and it flies.

36:53Yeah. Or they want the safety plus EV plus whatever, you know, like some other. Plus the longest range battery they can afford. Longest range battery. Good. I'm going to have that. and actually like we can pre-customize, we can pre-configure cars to like solve those needs without letting them choose what color the strip is on the side of the, you know, the side of the door. Exactly. And that's exactly it. And so Greg, who's running manufacturing says, oh my God, I've been waiting for this day for somebody to like, somebody to really drive this because you know what that would do to our factory?

37:26Totally simplifies the factory. It simplifies the supply chain. we could increase throughput dramatically. Turn to Doug, what does it mean for engineering? He's like, are you kidding me? Like, I don't have to design all these parts. I don't have to test them. I can put engineering's time on the stuff that really matters to the job to be done for the customer. I'm totally in. So then I walk into the senior management team meeting and one of the team members was like, hey, you are the new guy. You don't understand. Like, it's religion here. We do build order. I'm like, it might be religion, But that religion might take you to the grave.

38:00Here's why. Here's what happens to the business if we do this. We're going to get rid of a lot of clicks, a lot of decision fatigue, if we just get down to two configurations. And you can make it three if you want. I don't care. But you can't make it 360 ,000. Right. And Elon, he's super rational. He looked at the case and listened to Greg and listened to Doug. And he was like, yeah, we have to do this. So if you go to buy a Tesla today, you'll see you've got two or three configurations on there. That's it. And the fear was we would look like Honda, but it turns out we didn't because we had a completely different product.

38:34We had software on wheels. We were taking away all that decision fatigue from the customer and all that friction in the sales process just by questioning. At the end of the day, we questioned the business model at the time, which happens to me as an entrepreneur, happens to a lot of entrepreneurs. You fall in love with your business model and you don't really accept any challenge when somebody says, should we chuck this business model? Because it's actually what's in the way. Right. And I wonder what you learned when you went to work for someone, because you said, like you said, I've been CEO for 20 years and I had the same experience where we got acquired and I went from a 20 person company and I'd always been my own.

39:16I was always the CEO of startups for 10 years. And then suddenly I now had to go and report to, and forget the report to. I just had to bring my plans of what I'm trying to do to the table with somebody. I had to learn how to talk to a CEO who was thinking about the business, you know, separately. And I never really been on that side of the table. And I had to learn how to like communicate upwards. What does that mean? How do I simplify? How do I speak the language that they're trying to understand in order to do this? Well, do you have any tips for somebody who's learning how to communicate to a CEO?

39:46And, you know, you were doing it with Elon, right? Maybe there's something specific to Elon, but what was your method for when you go into those meetings of how you present information in a way that is productive versus wasting time? We actually had this bit of a game for a while. I think it was just his idea. He's like, let's try to get down to three-sentence emails. What is the problem? What's your analysis of the root cause? And what's your proposed solution? And he's like, I think we could run the company on three sentence emails. And so we did that. And what that taught me about exec communication was that level of efficiency is so helpful.

40:27Like if you can give me three sentences. So I turned to my people and said the same thing, like, tell me what the problem is. Tell me what the root cause is. Tell me what your proposed solution is. And in that proposed solution, you got to have like, how much it's going to cost and what's going to do the economics and all that sort of stuff. But the thing executives, if you're talking to a CEO, the most precious commodity that CEO has is time. And it's information inbound absorption time, information processing time, decision time. And so if you can get super efficient in communicating to a CEO and say, I'm going to minimize your information absorption time, I'm going to minimize your information decision time, you become a very valuable member of that team.

41:12Very valuable. And it sharpens your own thinking. You think you're doing it for them and then you realize, actually, I didn't fully have clarity on this until I was forced myself to be clear to them. Now I'm clear to myself. Actually, it's so funny you said that, that those exact three, when I went into my first meeting with Emmett, the founder of Twitch, and I said, how do I talk to you? How do I use these? I don't want to come here and just, you know, chit chat, you know, like we could do that, but I'm guessing that's not what you want me to do. And he goes, yeah, three ways. three sentences, he goes, what, why, so what?

41:41What is happening or what happened? Why is it happening or why did it happen? And so what are we going to do about it? And he's like, that's the way I like to communicate. What, why, so what? And then I've now taught that to my team of the same, it's so funny, the same, basically, almost the exact same thing. We just had different labels for the same exact communication structure. I love that. In fact, I'm going to steal that because I think the world of Emmett, but that's a great way to think about communication. And I think the other way, the other thing you made me think about is as an entrepreneur, if you're successful, the most likely outcome of your business is somebody who's going to buy it.

42:14And that means you're going to have an owner that you're going to now be subordinate to. And that's a different form of mindset. And I got it wrong, like the first few times that we sold companies to, like every time we sold a company of mine, we sold it to a public company. And so then I would come in and I'd owe that company a year or two and I'd have to work in their structure. And at the time I was young and, uh, and so I was trying to keep this bullheaded entrepreneurial, um, uh, mindset and that doesn't work in large corporations. And what I've now learned, if like I had a redo and I apologize if anybody's listening who bought one of my companies, he had to put up with this pugnacious like entrepreneur who didn't get it.

42:56Now what I get is I should have sat down with him and said, what, what drives success for you? Like, what do you care about. Like you bought this company, what has to happen in your mind to make it a success? That's often different than the bullheaded entrepreneur's way of thinking about it. Right. And, um, and I think that's a different set of challenges when you sell yourself to another company. You, the first thing you got to realize is that you don't own it anymore. They do, they have the keys. And if you owe them a year or two, you might as well make, not make that miserable. You might as well make it like fun.

43:27And the way to make it fun is to figure out, okay, like, how do I make this thing work for you and for me? Right. And if you do that, oftentimes you got to nerd out and it's going to work for you too. Yeah, that's great advice. I wish I had that advice earlier. Me too. Me too. Man, I stumbled so badly. You sort of discovered the hard way. I wanted to ask you about the collision repair business because this was fantastic. Can you just tell the story of, because I only know part of the story. I want to know the whole story. So what's the story of how you got into that business, like how you discovered the problem and what actually happened with that company.

44:00Because I think it's pretty fascinating because it's not a venture tech, it doesn't sound to me at least like a venture tech business, no software, but you built that and it sounded like a pretty interesting success story. Can you tell that one? Yeah, I ended up having a lot of software in it, but it starts with a little context. I grew up in the back of my grandfather's auto repair business. And so I was a tech, I had the dirtiest jobs because I was a kid, didn't have any skills. So I was changing oil and changing tires and that sort of stuff, but learned how to hang out and talk to auto technicians.

44:35And so decades later, my wife's car gets hit by one of our neighbors, and now I got to go get that fixed. And so I go to a large body shop and drop it off, get the estimate, agree to have this place fix it, and the guy says it'll be done by Friday. So this is Monday. I come back on Friday. Car's not done. He's like, ah, this parts didn't come in. This is kind of typical. Next Friday. So I show up next Friday. Car's not done. Tech didn't show up. Da-da-da-da-da. I said, you know what? I've just sold one of my businesses. I got a curiosity about how your business works. Can I just come hang out here?

45:16He was like, you're the first customer ever to ask that, but I don't want you back there because you're going to get hurt. And then I explained to him, no, I know my way around a body shop. I know my way around auto repair. I'll stay out of the way. I won't get hurt. In fact, I'll just run parts for you if you want. So I went home that weekend and I started to do research and found out the auto collision industry is a$50 billion industry. And then figured, it then found out that there were 38 ,000 of these. And so the average business is around one, 1.2 million. So pretty small. And I had been exposed to advanced manufacturing and I could got a sense of that was not what was happening in the back of these shops.

45:55So I went and just observed, I was running parts, just observing. And what I saw was essentially a hair salon. Every technician had two bays and they were on commission and they made money off of those two bays. So they had no interest in how fast that car went through because it was, that car was sitting in front of them as a cash register to make money. And so I thought to myself, what if what if this was$50 billion industry was modernized? What if you put these cars into a, into a production line like Henry Ford did? And what if you paid the entire team a bonus based on cycle time and throughput?

46:35Right. So I didn't understand. So the, why, why doesn't the technician want the cars to go through more cars equals more commission? No. They wanted to control their paycheck. And so they would surround themselves with three or four cars and they would just cherry pick hours off of those cars. And they got paid by the hour, but not, so the car didn't have to get finished. They were getting paid by the shop just on the hours they worked on that car. So that car could sit there for a couple of weeks. They didn't care. And you had these two terms, cycle time and touch time. Can you explain what those two are?

47:03Yeah, so I went to the shop owner and I said, tell me what the average time it takes between a customer dropping it off and a customer getting their car back. And he said, yeah, I can tell you that it's 18 days. I said, how do you know that? He said, that's the average rental car time. I said, okay, that's pretty good proxy. I said, how many hours of labor do you bill on each job on average? He said, oh, that's easy, six to eight. And I went, 18 days to get six to eight hours of work done. That looks like an opportunity because that's the difference. Cycle time is the 18 days. That's from the beginning to the end of the process.

47:44And touch time was the amount of time that those technicians were actually touching the car, six to eight hours. And I went, oh, that looks like an opportunity to maybe turn this industry around for the consumer. What if you could go to market and say, you'll get your car back in a day versus the 18 days of the rest of the guys down the street? That's when I started to diligently say, let's start a business. So I grabbed some guys that I'd worked with and we started to work on just doing that. We ended up with the largest, at the time, collision repair chain around the country. What was it called?

48:23It was called Sterling. Then it's now called Service King. It's owned by Carlisle. It's got several billion dollars in revenue. But the whole premise was, we're going to get your car back way faster because we're just deploying assembly lines versus a hair salon. That's amazing. Do you have a name for that moment where you're like, what if you could get it back in the same day? What's the name of when you do that? When you say, we're all the way over here. It's kind of the same thing with the Elon 20X online sales. It's like the industry, the expectation of the customer, the current workflow is all the way here.

49:00What if it was all the way on this side? I do have a name for it. I have a name for it. I call it an epiphany. And so my teams that I've worked with now, they hear this phrase a lot. Because in that moment, I'll sit down, and I'll write out a Slack or an email and say like, and the subject would be, I just had an epiphany. And it's kind of a realization moment where you're like, ooh, there's a big opportunity here to move the market. And that word for me is an epiphany. It's just like, ooh, it's like a sudden discovery where you've been like, you've been pilled and now you can see the other side.

49:34Right. Yeah. Today's podcast is brought to you by my friends at Mercury. They make the world's best banking product. I think you know this already. I use Mercury for all of my businesses. I think I have like maybe seven or eight businesses. We use Mercury as our business banking across all of them. And now they actually just launched a personal banking account. So I have my personal account there. I moved off of Wells Fargo and Chase. I'm just all in on Mercury. Why? I like products that are easy to use. I like products that get me and the problems that I have. So like very easy to make a joint account with my wife.

50:03Very easy to spin up virtual cards. One click and I get savings yield. It just has all the stuff that I need in one place. So if you're looking for the best banking product on the market, it's definitely Mercury. I will fist fight anybody who disagrees with me on that. Go to mercury.com slash personal and learn more. Mercury is a fintech, not an FDIC insured bank. Banking services are provided through Choice Financial Group and column NA members FDIC. What do you think now with AI? So I feel like you've been doing this for a long time and just when you're probably like, I'm a veteran of this game, the entire board game changes.

50:35Somebody flips the table and now there's a whole new game to be played. Where's your head at with AI? How do you think about this? Man, I'm excited. All the way back in college, I worked my way through college writing trading algorithms at the world's largest options and futures trading platform in Chicago. I went to college in the Chicago area and worked my afternoons coding. And way back then, we were using the very beginning neural nets to try to get an edge in the market and try to robo-trade in a way that people hadn't been able to in terms of the accuracy and the speed. So all these years later, now that this has emerged, I'm like completely psyched because we were using what looked like rudimentary computers to do this stuff.

51:23Now you've got real compute power. Shaveman AI. Totally. And now that you see this unleashed, I'm like, oh, this is what we were trying to do three decades ago. So I'm super excited by it, largely because every technical revolution and breakthrough like this that has happened in history creates enormous opportunities for entrepreneurs. I cannot name a technical revolution that's happened that's resulted in less GDP and less jobs. I can't. Like, it just doesn't work that way. And there's a lot of hand-wringing, though, at the beginning of every technological revolution, because humans are really good at seeing the first-order effect, which is the job destruction, but they're not good at seeing the second order effect, which is the job creation that happens by entrepreneurs on the backend.

52:10And I think we're like right in the middle of this. So we're applying AI at the core of each of our companies, but I think more importantly, I think there's going to be just like, we're keeping our eyes peeled for big, big opportunities that are being created by this. So I'll give you an example, and this example would date me, but when I was growing up, to make a long-distance phone call, you had to dial zero and talk to a human being. And that was usually a lady in your town who would literally plug the local phone network on one end of a cord and then plug that cord into the national phone network.

52:48And that would create a connection for you to do a long-distance call. In other words, humans were switches. And sometime in the late 60s, early 70s, Bell Labs invented an electronic switch that would do this. And by the end of the 70s, there was a lot of hand-wringing that there were 800 ,000 people, pillars of our communities that were employed as operators, and 100 % of those jobs were going away. And sure enough, by the late 70s, early 80s, 100 % of those jobs had gone away. Those humans were replaced by electronic switches. But what people couldn't see while they were doing the hand-wringing was what was going to happen on the other side.

53:29And what happened on the other side was now that a long-distance call is free, it doesn't require human labor, it just requires electrons, now you can offer toll-free calls. And so some entrepreneurs said, I'm going to use these toll-free calls. There was a single area code, 1-800, and I'm going to create businesses. 1-800-Flowers, 1-800-Junk, 1-800-Insurance, 1-800-This, That. And what those 1-800 numbers required was now centralized answering of phone calls, because now people were calling like crazy because it was free. And so this industry got created called call centers and support centers.

54:07And a few years into the 1980s, there were now millions of people employed in call centers. Hundreds of software firms that were created. and my first startup was a software firm in the 90s serving call centers because the technology was still nascent. When people were just deploying electronic switches and people were lamenting the end of these jobs as operators, nobody could see on the other side that these entrepreneurs were going to create toll-free dialing. They were going to create businesses on top of toll-free dialing. And on top of that, there were going to be this whole layer in our economy call centers that millions of people are going to be employed in.

54:47We just had creativity to see the other side. And so now I tell our teams, like, we cannot see through the other side, but we can get a hint of where this stuff is going to go if you think creatively. And so that's the thing I'm most excited about. Like, we're going to have entrepreneurial opportunities like crazy over the next few years based on what this technology is going to unleash. I love that story. So keep going. So let's say, you know, if we can think creatively, We could start to get a glimpse of what maybe is possible. What do you see as the kind of first-generation businesses that you're excited about and what the second-order effect might be?

55:21Well, now we've got intelligence that is so rapid and non-latent. So you can solve problems way faster that are really complex. So one of the businesses that we've got that I'm most excited about is we pulled a team out of Tesla to build the supply chain automation platform at Tesla, which is super sophisticated and way beyond anything anybody had in the industry. And they built this with ML in like 2017-ish. And we said, how would you like to build it today in AI? And what AI allows that team to do is solve a super complex problem really quickly, but also use agentic AI to understand the workflows of their clients super rapidly.

56:05So they just went into one of the biggest grocery delivery platforms in the country. I don't think I can say which one yet publicly, but it's one of their newer customers. And their agents could go in and understand the work rules of that ginormous platform within hours and then design a system and a workflow within hours. That you really have to have two special things to be able to do. you have to be expert in that particular thing, which is supply chain optimization, to know which rules are good, which rules are bad, what to tell your agents to do, et cetera. And then you have to be able to judge, okay, what these agents are bringing back is correct or it needs to be tweaked or redirected or whatever.

56:48So you definitely have these humans who have got AI as exoskeleton, like super strength, that are now building a business that's growing like a rapid fire because it's got this incredible compute. to actually fuel the business and deliver value back to the customer way faster than you could otherwise. Like what they're competing against is standard ERP systems that take nine to 12 months to implement, and they can implement in a period of days and deliver that value back. And that's the kind of business I think we're going to see more and more and more of as its capabilities unleashed. Yeah, that is the weird thing about this, that the software essentially works like labor, right?

57:32So what you're describing is like - Yeah, exactly. Essentially a consultant. It comes in and it learns your workflows, it documents it, it figures out how things are currently working and then it starts to improve or automate or whatever. That's right. And so the weird thing is like, there is a question of, is it different this time in terms of the job? Right. Because it's like, if the software is fundamentally like human labor, like equivalent, then even the business it creates, won't the workers in that business also just be AI labor mostly that's doing that, right? And do we all just become sort of like mechanics for the robots and for AI, right?

58:06That's one part I haven't been able to wrap my head around. I haven't either. And I haven't heard the case for why we do that is compelling enough to me. Yeah. The most frequent example I hear is, hey, in the 1950s, there were skyscrapers full of humans who were humanly calculating spreadsheets. and then the real spreadsheet came along and all those jobs are eliminated. And then that's where the story ends for them. And I'm like, hey, time out. I was just in New York City. Those skyscrapers aren't empty. What happened? And what happened was a plethora of things. And I would use just one tiny little example of what happened that created trillions and trillions of dollars of market cap.

58:47Once a spreadsheet was available that was digital, it could calc things in complexity way faster than those humans and those skyscrapers. And so all of a sudden you could have sophisticated pricing engines like Black Shoals at your fingertips. And that meant that you could now price options and futures and derivatives that didn't exist before. And so entire markets got created on top of that one technological change that employ hundreds of thousands of people. And again, that was unknowable on the other side when the spreadsheet was just being invented, that somebody would deploy Black Shoals and somebody would figure out how to price puts and calls and derivatives and make entire markets like the Options Exchange, the Merck, et cetera, possible to be able to syndicate loans.

59:40Like none of that stuff was available and now it's all available. And that's the kind of thing where I think, okay, make me the case that all of a sudden, now the computers do all of that and take all that creativity and all those jobs. I just haven't seen that in history, and I don't know that I can fully buy into that ending point. What do you think happens with the different AI players? You've got, like, you think Elon has called it the highest ELO game in the world, right? So it's the highest level chess game being played between the smartest people with the most capital behind them going all out for the biggest prize.

1:00:17You've got Zuckerberg, and then you've got Google, and you've got Elon, you've got Sam Altman, you've got Anthropic, you have all these players. How do you see this playing out? You've seen a couple of tech waves. You know at least some of the players, maybe even all of them personally. How do you see this playing out? I sort of wonder if they're creating an app layer or a tooling layer. And what I mean by that is, I think they're creating the tooling layer that then a lot of us are now using to create real businesses on top of. So I kind of go back to the internet breakthrough and internet revolution and think about, okay, like the browsers, everybody was super excited about the browser business.

1:01:00And Marc Andreessen made a career out of Netscape. But I wonder if, like those, now browsers are a commodity. But what got built on top of a browsable web were things like Facebook and Airbnb and E-Trade and you name the businesses. Like tons of GDP got created on top of that tooling. And it sort of feels like to me we're getting really excited like we did about Netscape and Internet Explorer. We're getting really excited about these hyperscalers. but what you really want to be looking at is what businesses are going to get created on top of this tooling. And so I'm psyched for the work they're doing.

1:01:42I think it's amazing and it's breakthrough level, but I am also much more excited about what's going to get built on top of it. Yeah, me too. I can't wait to see it. I almost want to fast forward. It's like, I don't want to miss it, but at the same time, I'm so curious how this all plays out, what the world looks like in 10 years. is probably the first time that I feel like I have no idea what the world's going to look like in 10, 15 years. But I do know it's likely to be very, like, completely different. For sure. You know, like, I bought a Tesla this year, and it has, like, self-driving that's perfect.

1:02:17It's amazing. It's so good. And I just don't drive anymore. And I'm, like, trying to tell my mom and my sister, and I'm just like, guys, you realize, like, you don't have to drive anymore? Like, that's now. And I can't believe that that's not, more people aren't freaking out about this one change, let alone whether it's robots or it's AI that, you know, AI assistance in everybody's pocket. Totally. There's so many different ways that I feel like the whole world in 10, 15 years is going to, like, my kids won't really understand. Wow, you used to have to do all that? You used to do that? Like, that's so funny that you used to do that.

1:02:51That's horseback riding, right? Not cars. And it seems like we're on one of those transition points, which is exciting. Totally agree. Well, John, I appreciate you coming on. Everybody should go get your book, The Algorithm. I don't say that, but usually most people come on, but I actually am reading the book and liked it a lot. Awesome, thank you. I'm a big fan of it. And thanks for coming out and doing this because I feel like we get a lot of biographies. Oh, they grew up this way and daddy issues and blah, blah, blah. But like, you know, which isn't, it's entertainment. It's great. But what I really love is tactical, practical.

1:03:27Me too. And how do you actually do things? How can this be useful for me? Me too. Versus reading about somebody else's life. And so I'm glad you wrote this book. I think if this book didn't exist, and it can only be written by somebody who's kind of there doing it side by side with other people and has the experience doing it. So congrats to you and thanks for writing the book. Thank you. I'm glad you're enjoying it. All right, take care.

1:03:57Looking back. If you made it this far, then you're going to love what I'm about to tell you. So there's this amazing entrepreneur. His name is Neil Patel. He's been on MFM. He's one of our favorite guests. And he has a podcast. It's called Marketing School. And it's brought to you by the HubSpot Podcast Network. Marketing School brings you daily actionable digital marketing lessons learned from years and years of being in the trenches. They have over 100 million downloads and over 2 ,500 episodes. Marketing School gives you bite-sized marketing wisdom that you can implement immediately, whether you have a new website or you already have this huge established business.

1:04:26you're going to learn about the latest SEO, content marketing, social media, email marketing, conversion optimization, and general online marketing strategies that work today. You can get Marketing School wherever you get your podcasts.