PLG Is Dead. It's Now About ALG

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0:00

No, I want to know what it is. But I don't know what it is.

0:39

What it is. Okay.

0:44

No, I said I want to know what it is.

0:45

I don't know. I know, I know. I'm joking, I'm joking, I'm joking. Okay, so Guillermo, from a CEO of Vercel, he says this is why ALG will be the king for startups. Okay? It's agent led growth. So have agents adopt your product first, then have meetings if needed. The companies that start with the meetings are likely not your ideal customers. Okay, so the dangers of selling to big companies if you're a startup is that they don't say no outright. They have months of meetings with you first. Since you hate meetings, that seems to you a sign of commitment, but it's not. They love having meetings. It's almost all they do. That's what big companies do. Right? And the funny thing is this. I talked to one of my, one of my friends who works at Apple and his role at the company is to be taking notes and his team takes notes about meetings, about meetings and meetings. And meetings, right? So he has meetings to discuss the meetings, to figure out how to disseminate information about these meetings. Okay, and that's what you do at Apple, right? And not everybody does that. But I'm just saying that if you, or I'm not just saying this, but Guillermo saying this, if you have a product. So imagine again, you have an API, you have an mcp, you have good documentation around it for AEO SEO purposes. The agents discover it and they start using it. Look at how fast Supabase is growing. Growing, right? You look at all these other products out there, people are using like these Cloudflare agents and things like that. So you need to have an agent led growth strategy. And, and I don't think product led growth is necessarily dead. In fact, I think you need to have Some product qualified leads in terms of the stuff that you give away for free. But you need to have an ALG strategy as well.

0:46

Yeah, cause for some businesses agent led growth won't work as well. And for some businesses, product led growth works better.

2:20

Right?

2:27

I think it depends on the industry you're in. A prime example of this is like toilet papers thinking like old school Procter and Gamble, you know, it's, you're not really going to do agent led growth for toilet paper. I could be wrong, but I'm pretty sure I'm right. Your ideal customer for toilet paper, and I know this because I've done marketing for toilet paper, is typically the, the head of the household, which is a woman who's in charge of the family, is the number one purchaser of toilet paper.

2:27

Well, hold on a second, Neil. What's to say the robots don't need to wipe their butts?

3:00

Eric's like trying to say that with a straight face.

3:08

Anyway,

3:13

that was good.

3:18

Let me move to, let me move

3:19

to this one over here.

3:21

So Higsfield, by the way, guys, so Higsfield is. They haven't they, they, they help you make creatives at scale. Let's just leave it at that, right? So move. Matt Epstein tweets this. So by the way, so Higgs field went from 0 to 400 million ARR in 14 months. Okay? So he says pay attention to what Higsfield is doing right now because this is craziest distribution playbook ever. So this is the craziest distribution playbook from Higsfield, okay? So they do daily launches on X. They have thousands of creators on IG and TikTok every day. They're posting every day. They have full movies made entirely out of AI. They're working with every major kol. So that's basically like a key, key influencer, let's call it that. And then UGC farming at insane scale and an influencer marketing machine running 24 7. And they're clipping everything, right? So that's what they're doing. And I do see the Higsfield stuff every now and then, but I think it's, it's, it's interesting because we're, I think people are doing this, but not many people are doing this really well. I think Higgs Field is doing this well. I think Gamma did this well for a period of time. Who else comes to mind here, Neil?

3:22

There was that guy who got caught and he said he lied about his numbers but he was getting a ton of press from it. Korean founder. I Think he went to Stanford, he got startup. I believe he got back asics.

4:25

Which one? Cluey.

4:39

What did you say? Cluley? Yeah, Cluey ended up doing it really well and getting early traction. But the problem was is the product didn't work the way people expected. So the numbers didn't work out really well too. Before a lot of this AI stuff took off cheap. Jasper was doing it too. And Jasper was doing it before people were really using like chat GPT. They're just using it. They were doing it with APIs or their product was released out there through APIs and anyone could create content easily and they were just getting a ton of people to push that narrative online and that helped quite a bit with them.

4:40

You know what I'll say if you look at Jasper for example, nobody really talks that much about Jasper anymore, right? But Jasper basically they're.

5:16

It's moved to enterprise enterprises. Talk about them a lot now, the regular. But yes, in general you're right. The average person does not talk about Jasper because that was their marketing. You can create social posts really easily and all this kind of stuff. They moved upstream to enterprise. Enterprise talks about them quite a bit now. The non enterprise has pretty much forgotten about them from what it looks like.

5:26

So Neil, like, because I have looked at them maybe a couple months ago from enterprise side so they definitely gone up market. My question is how are they really doing as a company? Because if you look at, if we just look at Google Trends and Google Trends isn't the end all be all right. But you know, just, just because the overall sentiment has not sentiment but the, the kind of win behind their sales has gone out from consumer mindshare. I just wonder how they're doing as a company now.

5:45

Right.

6:13

Like if we, if we look at their LinkedIn for example Jasper AI, I think they have a couple hundred employees. Do you, do you have any visibility?

6:13

I think Tim Young is a CEO. My guess is they do around 60 million in revenue.

6:21

Okay. And then I know they pushed the original co founders out.

6:26

Yeah, they raise a lot of money. Tim Young is an ex Dropbox I believe. Coo.

6:31

Yeah. So okay here it is. Thousand employees or so, right. And then they're in San Francisco. This is the marketing agents platform which is what everyone calls themselves. So I think it's worth calling this out because when Jasper first came out, keep in mind, ChatGPT didn't even come out yet. Right. It's when ChatGPT came out, when it started to get weird. So I remember one of the original Dave Rogan Moser, right. I think he was, he, he went to ask Sam Altman because I think he was talking to Sam Altman. He's like, hey, what does this mean for our business? Right? Because they were doing really well and I think they were just crushing it because there's no ChatGPT yet. And the way people are using ChatGPT in the beginning is for copywriting. But as ChatGPT matured over time, people realized they didn't need to, you know, pay Jasper. And Jasper was very much a quote unquote, a rapper. Right. Which is what, you know, they kind of just wrap themselves around these LLMs. So the reason I'm bringing this up is because there's another company out there and I know the founder, Stan, right. And they have Stanley now. They launched on X and they said they're making this, this chief AI officer for everyone and trying to democratize the ability to create content, democratize distribution. Okay. So on Twitter I saw a lot of the comments and like it was a cool launch, cool launch video. I think it got like maybe a million views or something like that. But a lot of people are just like, well, why do I need this? This seems like it's just a bunch of skills. It seems like it's a rapper. Like, why do I need to use this? And to be fair, maybe it is. Right? But my point of saying this, Neil, is it kind of doesn't matter if you're a rapper sometimes if you have the distribution already and you don't have your mis. You don't have incentives that are misaligned where you maybe overraised too much money or whatever, they're in a situation where they can still make it happen. And Gary Vee put some money into it. Stephen Bartlett put some money into it. And I'm just saying that sometimes it's okay to have a rapper, especially if you have distribution already and you know it's okay. But sometimes it doesn't work out if you know your, your cap table is upside down. Yeah.

6:36

On a side note, did you see what ended up happening with, I don't know how to pronounce his last name. Leo Poerold Ashen Brenner and, and Ken Griffin and the market.

8:28

You're talking about the demise of a 25 billion, 25 year old, $200 billion fund manager.

8:38

I don't know if it was 200 billion. I think it was like 40 something billion dollars leveraged at forex, but I could be wrong.

8:44

Yes.

8:52

Yeah. Either way, whatever the number was, it was Very large. But people trust Ken Griffin as like old school versus new school. So he leveraged the Internet and marketing. He believed that a rate hike could be apparent and he was pushing for surprise rate hike fears. And that was the day before the AI trade collapsed and forced the forex leverage Leopold to have to come to Ken and sell his portfolio at a discount. And he came quite a bit from it. But I thought that was an interesting financial marketing move. And another person who pulled something similar was, dude, I don't know why I'm blanking on his name. Bill Ackman. So Bill Ackman was investor. I forgot in what Canadian company, but I believe they owned Wendy's or a good chunk of Wendy's. And he's like, wait, the Wendy's asset and these companies are separate. They wouldn't take a call from him. So he took a credible source. So in marketing world, the influencer, this influencer was Blackstone, I believe. And, and he had Blackstone publish a letter and they paid attention to that letter. So then they ended up splitting the companies apart and it made everyone more money. But you can do similar things with influencers on the web. If someone's really well known in a space and you're trying to get a specific narrative out, you can always push the influencer or pay the influencer or work with them to help with that narrative. And in many cases, it can change the perception of your company or change the perception of of a market condition. So for example, if you sell SEO services and people like SEO's dead, if you get a lot of influencers who are entrepreneurs and marketers to talk about SEO's live and kicking and how well they're doing, it can help change a narrative even if they're not talking about your company, which then can help you generate revenue indirectly.

8:54

If you're building an E commerce brand, you should check out DTC Pod, hosted by Ramon Barrios and Blaine Bolas on the HubSpot Podcast network. They speak with founders, more marketers, creators agencies and platform experts about what it actually takes to grow a direct to consumer business. From paid ads and influencer marketing to conversion, email, brand building and consumer trends. I particularly enjoyed their conversations around scaling a brand without losing what made customers care in the first place. Listen to DTC Pod wherever you get your podcasts. All right, so I wanted to take a moment to tell you about my podcast co host Neil's agency called MP Digital. And they work with a whole host of global companies or a global organization. Also, Neil has SEO tools such as ubersuggest and answer to public. All you have to do is go to npdigital.com to learn more and we'll see you on the other side. Yep. So here's one thing I'll say now, Ken Griffin did marketing to basically, you know, acquire his assets. Right. But the letter that Leopold sent to his LPs was actually pretty good. It was, it was very humble. And I was to say, like, I'm not gonna, you know, Charlie Munger has said there's only three ways you go broke. Ladies, ladies, liquor and leverage. Right. And he's like, I just added the first two because it's like more funny, right? But it's really leverage at the end of the day because when you think about if you're on four turns of leverage, if you're down 20%, you just multiply that by four. Right. It's hard to recover from that. And the, the, the numbers here basically are the public book is down 100%, but his private investments, like anthropic is what has kept it alive. Right. So sure, he had to do that. But I think he's a very smart guy. I think he'll learn from this ultimately. And he did tell the lps, like, it's not like we're, we're like completely wiped out. Maybe some of the recent people that invested are. But I think it's important that when you get knocked down like that, you learn from that lesson. You send a note apologizing and you say, hey, I'm down to have these one on one calls. I think that's good. I don't think he's, he's dead by any means. And so you know, that that's, that that's a good thing. And I think, you know, people, people will learn from it. But uh, leverage can be very dangerous. So, so my thinking here, Neil, I'm curious to get your thoughts on it. When you think about the turns of leverage that you're willing to put on, how many turns is it, is it one? You know, how, how far will you go with leverage?

10:46

So are you talking about Leopold or whatever his name is, came from ftx? I don't know if you knew that. A lot of the FTX people are big in leverage. And I worked at FTX for a bit.

12:54

Neil was literally an employee. He was literally a full time employee.

13:10

Yeah, first time for a corporation being a full time employee other than like a theme park or like Party city where I was a cashier. Right. I'm talking about like a white collar job. But I met some really solid A players there. And I have to say, yes, Sam did some bad stuff, but there was a lot of amazing talent at ftx. Sadly, what he did was, you know, terrible for people. And sadly, you know, when people, I think if they kept some of the assets, this is my personal take, like Robinhood Anthropic, it would just be worth so much more now when you can just look at the stock and the valuation. So I think, you know, liquidation at some of these, for some of these things happened at wrong times and it would have made people much more whole. But the leverage aspect, I was always different on leverage. I'm not big on opm, other people's money. I'm big on just using my own money and being able to sleep at night and not be as big because of that. And I like the cushiness versus going too hard on the leverage. So I would say I usually stick around less than a 1x leverage. I'm willing to go more than 1x leverage. I don't really ever see myself willing to go to 2x leverage unless there's an amazing opportunity. But I rather at that point just take equity investment and get diluted and be able to sleep at night in case something goes bad. Because I don't care how good of an entrepreneur you are, you can be Elon Musk. You're going to have failures. Mark Zuckerberg has failures. Elon Musk has failures, Bill Gates has failures. They keep pushing forward and their successes outweigh the failures by far. I just don't like the idea of betting all of my cash on one thing. And if something goes sideways, I'm back to, you know, starting all over again because I have a family, because I have a comfortable life, I'm just not willing to take that risk anymore. But I will go hard. Like if someone says, hey, there's this really amazing opportunity, I will sell my house, I will go mortgage stuff if I need to, I will sell cars and all that kind of stuff before I put on too much leverage or what I'll do. And I thought about this a few times. I will take money from my personal account, invest it in the corporate account so I can go more aggressive with without having to put on too much leverage onto the company or more so debt.

13:13

And by the way, there's no right or wrong strategy here. Cause I just searched up what Elon Musk and Bill Gates have done. So Bill Gates famously ran Microsoft with zero business leverage, maintaining a strict policy of keeping enough cash to survive a full year without revenue. So that's a principle. Right now, Elon has heavily used business leverage, right? He used tens of billions in debts to buy Twitter and relied on junk bond markets to scale SolarCity and Tesla. Right? So there's different ways of thinking about it. You have to just decide what your risk tolerance is. Neil and I aren't saying one way is right or one way is wrong. So that's what it is. But that is it for today. Please don't forget to rate, View, subscribe and yeah, we'll talk to you tomorrow.

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