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[email protected]. Hello everybody and welcome to another episode of In The Trenches. I am your host as always Steve DeVicco's. So today's episode is one that I've been hoping to publish for many months now, mostly because there was a very specific person that I wanted to speak with. Unless you are living under a rock inside of a cave on the surface of Mars somewhere, you are almost certainly aware of how much AI has already changed how we live and how we work. You're probably also aware, at least vaguely, of how much it will continue to change the way that we live and the way that we work over the coming months and years. The process of searching for, diligence, inquiring, and operating a small business is no exception to this. Those who don't know how to leverage the power of AI may find themselves quickly falling behind those who do. To help me better understand how AI is like the change acquiring and operating a small business, I was joined today by Jeff Woods, author of the AI Driven Leader, currently one of the fastest growing and best-selling AI books in the world. Prior to writing the book, Jeff was the chief growth officer of Gendel's Steel and Power, where he drove market cap growth from $750 million to $12 billion in four years through AI Driven leadership. He also co-founded the training and consulting company behind The One Thing, where he coached and advised companies with annual revenues ranging from $10 million to $60 billion. Before we dive into today's episode, allow me to conclude with my usual reminder that I'm an active investor in search funds and the companies that they acquire through my fund, Miniola Search Partners. And if you tuned into the brief episode that we published last month, you'll be familiar with the fact that we just concluded the first close for Miniola's second fund that will again be investing in search funds and the small businesses that they acquire. So if you're looking to raise a search fund yourself or if you're interested in investing alongside me within the search fund asset class, I'd welcome the opportunity to speak with you. But for now, I hope you enjoy today's wide-ranging conversation with Jeff Woods. Jeff Woods, welcome to the show. Thank you so much for having me. What a treat it is to have you here. And maybe we can start with an easy one for folks who might not be familiar with your story. If you could just walk us through the arc of your career, including some of the major stops along the way in what you're doing today. Yeah, so if we fast forward today, I'm the author of the AI Driven Leader, which kind of has blown me away is currently the number one book in the world for AI. And I'm a guy that when I started to write it, I really didn't consider myself an AI expert at all. If we go back in time, when I was a senior in college, I was doing an internship, Steve, and I sat down with a CEO right before I graduated. And I asked him what job he thought I should get after school. And he leans in and he goes, Jeff, you're asking the wrong question. That stopped me. And he goes, you really should be asking, what are the skills I can master that are so valuable. They'll serve me no matter where I go. Then go find the jobs that help you build those skills. That ended up becoming the most valuable career advice I ever had. And it shaped my career and it's highly relevant for a world of AI. Had a good career in sales eventually got into entrepreneurship. You ever read the one thing, Steve? I have not. No. Okay, popular business book, Gary Keller, who started Keller Williams, wrote it. It's all about focus on the one thing that matters most. I ended up becoming his business partner and turning his book into a training and consulting company. And at the core, I had to learn this skill of asking leaders the right questions to get them to focus on the things that mattered most to drive growth of a company. This became a huge superpower of mine. By 2022, I sold my stake in the business, got pulled in house by a client, which is called Gendel Steele. This is a giant steel company out of India, global footprint, 100,000 people. I had been the coach to the chairman of the board and it holds C suite. And he asked if I would step in his chief growth officer over all their operating companies, which I did. My focus was very narrow strategy, execution people and technology. Meaning every operating company, I would sit down with them to define strategy, their future competitive advantage. I'd ask questions like, what's the business that'll put you out of business? What would it look like if you were the one to build it first? And we would cast that vision and get real alignment around it. And then we'd say, great execution. Let's have a focus business plan that we can stay focused on that if we do so will not only allow us to hit our goals, but achieve our strategy over the long run. Then people, I had this huge realization, Steve, why do you think we hire people in our companies? That's a great question. To get the work done, then he's to get done to leverage ourselves and to leverage our time. Yeah. Also, we can achieve our goals. Now, how often are goals and priorities changing within a company? Oh my God. Way too frequently in my experience. And I had this huge realization of, oh my gosh, we have all these talented people, but we're focusing them on the wrong targets because we have not realigned them. And I asked a question, which was, how might we dynamically realign a workforce of that size? You'd have to look to tech for something like that. It was December of 22 when I saw chat GPT for the first time. It had literally been out for two weeks. And when I saw it, I saw the next skill, Steve, but I think I also had the same limiting beliefs a lot of people listening to this ad, which is one, I'm busy. I'll get to it later or two, can I just delegate this to IT or can I hire a consultant who can do this for us? But in the back of my mind, I wondered, what if this was the skill that if I could master it, it would be so valuable. It would serve me no matter where I go. And so I just made a commitment. I'm going to use it once a day. The problem is I was asking myself all the wrong questions. I was asking, how do I use this to write a better email? And honestly, it felt like a waste of time. But then I realized, okay, my whole career has been defined by asking leaders the right questions to unlock new levels of growth. Here I am asking AI questions. Could I turn the tables and get AI to ask me the right questions? That was a true game changer, because that's when I started to use it as a thought partner to elevate how I think. And when I showed the chairman how I was using it for strategy, he put me in charge of AI for the company. The problem is I knew nothing about AI. But I had learned something from my old business partner, Gary Keller. Anytime you're hitting a ceiling of achievement, you're just missing a person. If you're asking, how do I drive this to the company? Are you actually asking the right question versus who can I get into relationship with that could enable me to drive this through the company? And in my case, that led to a partnership with Google. I learned a lot going to their headquarters about the tech. And as we started to drive it through the company, it just became so clear that the tech is not the difference that makes the difference. It's the leader who wields it. But most leaders know it's the future, but they don't know where to start. They don't know what to do next. They all think they're falling behind. And I realized I thought I could solve that problem. So I resigned, wrote the AI driven leader. It's now number one in the world. And it built a company called AI Leadership, which helps executive teams harness this in a way that actually moves the value of their company. Fantastic. I would love to break our conversation down today into three primary buckets. So the first is the M&A due diligence process. And we're not going to get into the nuts and bolts of M&A specifically. We're going to talk about how a prospective investor ought to think about certain business models and certain industries. And I want to get to AI's application internally to small businesses. And then we'll conclude with some questions about the future of AI. So maybe I'll start with a question that I feel like I wrestle with almost daily evaluating new small businesses to invest in. And that is like at the highest level, how should buyers think about whether AI is likely to be a net positive or a net negative for any given company and any given industry? Obviously it's very context and situation specific. But are there any questions that you might ask of a business owner or any things that you would look for in an industry that would suggest that hey, AI is likely to be a net positive as opposed to let's say an existential threat. I think it's both in every industry. And the question is how do you maximize the upside or mitigate the downside? So let's use just because this is top of mind for me because I was speaking to a coaching company yesterday coaching. I've been an executive coach the last 10 years of my life when I the vast majority of my money I made asking leaders the right questions. The moment I figured out I could get AI to ask the same questions as me if not better ones, it scared the crap out of me. But I had a choice to make. I could ask how my AI replaced me and I could find answers for that. Or I could ask the question how my AI make me irreplaceable. And I could find answers to that. Have you ever read the book 10X is easier than 2X? I haven't read the book but I am familiar with its general message. Yeah. So from Dan Sullivan, here's the fundamental premise. If you want to double the size of your business or double your income, you can keep doing 80% of what you currently do. You only got to change 20%. You can double. But you want to 10X the size of your business or 10X your income. You've got to hold on to the core 20% you currently do that drives 80% of the results. And you've got to stop doing 80% of what you currently do and reinvest all of that in higher capability. And you can 10X. I think in every business, we have to challenge the way that things used to be and reimagine who we can become and to embrace this idea that if you are looking for linear growth, like only change in 20%. I'm not investing in that business. And I don't need the current leadership team to be thinking that way if we're talking M and A and me acquiring them. But from an acquisition standpoint, I personally want to look at the business model and ask the question, what's the AI driven business that would put this out of business? And what would it look like if I were the one to build it first? If I'm looking at a specific company, what are their internal capabilities that are valuable, rare, costly to imitate? Those are sources of a sustainable competitive advantage. And if I used AI on those capabilities, where would it enhance those capabilities and where might it undermine those capabilities? Because it could do both. And you use it where it's an enhancement and you don't use it where it undermines. And then you got to look at the leadership team and understand what is their current appetite for change in transformation? Is this a current team that's excited about AI that's already leaning in, that's embracing it, that's optimistic about this? Or is this going to be a team that we're going to have to do a tremendous amount of mindset and change management? And do I actually am I willing to go through that? Like this is me off the top of my head, how I would start to think if I look, if I look at that business. So you mentioned that AI is both an opportunity and a threat for substantially any business in any industry. Are there any industries or business models that you view as being particularly at risk? Are there any industries or business models that you would reject immediately out of hand because you think there are so at risk? One that comes to mind would be a translation business or tutoring business, maybe even medicine or law. Are there any industries that fit that description? No, because I mean, if you ask me what are the industries that I see being most resistant to this technology so far, I'll go to law and accounting. Because both are based on the billable hour. So to actually transform, they're going to have to disrupt their entire economic model and both of them are saddled by a current partnership structure where you have all these partners that have retired that are waiting for a check. And so for you to disrupt the model means disrupting their cash flow. You can view that as something you'd stay away from or you can view that as I'm going in because I'm willing to do what's required to win. And you could totally disrupt the entire industry because all of them are waiting if they're all playing the game of chicken waiting to see who's going to blink first. And the moment somebody blinks and actually goes all in on this, all the other ones will have to fall in line. So that that just depends on you. Like you could I could say I don't even want to touch that because I'm not going to deal with that or I could say I am absolutely going to touch that because I'm willing to make that switch. So I don't know that there's an industry off the top of my head that I would flat out avoid. I think this is you more about your own self-awareness from an acquisition standpoint understanding what's your appetite? Are you willing to do what's required to win? What about the inverse that question? Are there any industries or business models that you think are particularly likely to benefit most from the widespread adoption of AI? I think every industry stands to gain. And I'll tell you how I how I think about it because when I think about value from AI, I really see three buckets. Can it make your people more productive? Yes, it can. Can it make your operations more efficient? Yes, it can. Can it help you deliver more value to your customers? Yes, it can. In every industry, period. So every industry stands to gain, but I haven't thought so deeply around who stands to gain the most. This episode is brought to you by Bulae. Now, for those of you who operate within the search fund ecosystem, you probably already know that Bulae is the standard when it comes to quality of earnings reports, tax and audit services. But for those of you who are newer to the community, consider this. Over the past 20 years, Bulae has worked directly with hundreds of search funds from capital rates to exit, currently assisting over 150 funds in the search phase and another 125 in the operating phase. 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So, I used to run a software company and it has become almost fashionable for external observers to point to the broader software ecosystem as being one that is particularly at risk of being disrupted by AI. I saw somebody post something recent that said something to the effect of every time I use the software tool I ask myself, could this just be a prompt? And most of the time the answer is yes. So this particular person has kind of gone out on a limb and said, hey, I'm just not investing in any enterprise SaaS businesses anymore because I'm just not sure if they're going to exist five years from now. I'd love to hear your reaction to that. Is it too much of an over-generalization to suggest that like the survival or just the basic business model of software is at risk? Yes. And you can view that as threat or you can view that as opportunity. I'm going to keep coming back to this. It's actually about you and what's the right fit for you. You can look at that and see threat. I can easily look at that and see opportunity because I can look at these vibe. I mean, I literally built a full prototype of a very comprehensive software product in 10 minutes while I was sitting on the plane waiting for it to take off with one prompt. It was enough for a prototype for me to actually show it to potential customers and demo the functionality. That was 10 minutes. And I don't know how to write a single line of code period. You can view that as threat or you can view that as opportunity. I look at the developers that I know that know how to harness AI for writing code, for reviewing code, for getting to prototypes. I think it's a huge advantage. I think the challenge with software companies is a lot of them are viewing AI as something they bolt on versus saying if we were to start over from scratch. Like I just spoke at Vista for their like, I think it was a hundred of their port codes last week. They're not stopping investing in SaaS. And the last time I checked, this is pretty smart. They know what they're doing. They're still investing in SaaS, but how you do it, I think is the opportunity. A lot of what you've discussed thus far smells to me like the classic innovators dilemma, right? 1000%. Like you one must quote unquote disrupt themselves before somebody else comes along and does it. You mentioned the example of the law firm that is kind of stuck for lack of a better way to put it with this hourly model. I had a very miniature version of that when I was running my SaaS company. We were selling legacy on premise software. We had to build like modern multi tenant cloud software, which is kind of a milder flavor of disrupting ourselves. I think like intellectually academically, I understood that it was important and why we needed to do it, et cetera. I found that on one hand, we had this old product on old technology that represented 100% of our customers and was paying 100% of our bills. We had this new thing on the side that was paying 0% of our bills had zero customers yet what was required for our very survival. And I just found that the quote unquote old business and the quote unquote new business were just constantly fighting for time, people, resources, investment, et cetera. So I want to ask you a little bit about like the how of the implementation. If a law firm is listening to this, they say, okay, I get it. AI is something that we're going to have to do. We're going to have to get good at internally. Do you have any like best practices or even just observations in terms of like the tactical execution of how they go about doing this? I can just share what I'm aware of. So what I'm about to say, I'm not going to suggest that I am the global expert on this. I'm not. I'm the global expert on using this as a thought partner, but two observations. One is you just have a really strong CEO like I think back to Intel. When the two guys were sitting in the office and they said if we had to fire ourselves today as CEOs and rear hire ourselves as the next CEOs, what would they do? And they completely shifted the model to chips. They literally said we fire ourselves as a CEO of the legacy company and we hire ourselves as the CEOs of the future company. They completely pivoted their product suite when all of their revenue was legacy. And Intel went on a tear for a long, long time as a result of that. That strong leadership at the top that's willing to say we are going to sever ourselves from the way we used to be. And we are going to reimagine who we can become. That's not easy. Another option, I read a book called Exponential Organizations. And there is a model in this where it talks about when you have a legacy system, if you want to innovate the future business model out of a current business, you have to put it on the outside of the current organization, starve it for resources and see if it can survive. This is what Gary Keller did with me. I mean, Keller Williams is a multi billion dollar company. He has incubated a lot of companies out of KW. Mine was one of them. And literally while I sat in the KW headquarters, we were a completely separate operating company, our own PNL. We got a certain amount of money to start the business and then he starved it. And literally said you need to go lead with revenue and go be able to swim independent of me. Literally the first words he ever said to me ever were welcome to Austin because I just move there. Good luck. You're going to need it. And I said, hi, thanks. Why? And he asked me Jeff, do you know what the best part about your job is? And I said, no, what is it? He goes, that it's your job. And here's the thing. If you try to give me pieces of your job, you will no longer have one. And I said, thank you for that. What does that mean? He said, you're going to want to make me your product. You're going to want to put me on stage. You're going to want to put me on the podcast, me on the course. But if you need me, then I don't need you. So go succeed without me. Yeah. That was our first conversation. That was our first conversation and it was gift because I couldn't like literally, we were going to launch our first product at KW's family reunion, which is 18,000 real estate agents. Two weeks before family reunion, we got an email from Gary saying, you're not allowed to sell to KW, go succeed without me. Yeah. He's, he put me on the outskirts, starved me for resources, and saw if I could swim. I have seen companies who have done this where they've said they've, they've created a task force or a very specific team of Navy SEALs where they might even get them a separate office, literally get them off site, sever them from the current organization and say, go build the business that will put us out of business. That way, the current business can't cannibalize it. Yeah. Yeah. If I could do it over again, based on the mistakes that I made in the lessons that I learned over many years, that is the fundamental change that I would make is make the quote unquote new business effectively a separate entity in almost every conceivable way from the existing entity. Otherwise, that competition for time, resources, capital, etc. is just, in my opinion, like almost too hard of a problem to solve. Totally. So it's interesting because I have this kind of templated list of questions that I would ask any company in any industry, regardless of the widget that you sell, things like customer acquisition numbers, profitability, customer concentration, etc. I would ask that of a gutter maintenance company, and I would ask that of an enterprise SaaS company. Five years ago, AI-specific questions were not on that list. Now, I spend a lot of time digging into whether AI is likely to be a net positive or a net negative for this company or in this industry. So you mentioned you were speaking to Vista and some of their portfolio companies, but you don't have to focus on software. You've spoken to a lot of business owners, a lot of entrepreneurs, a lot of CEOs. Are there any common ways that they are currently overstating their AI readiness or maybe like the AI defensibility or their products or services? Are there common like almost talk tracks that you feel are a bit more sizzle than stake? It happens the larger the company. The larger the company, I often hear, oh yeah, we're using AI, which means they gave everybody co-pilot or a chat GPT. That doesn't mean anything. Or yeah, we have a governance policy. Are you familiar with the Dunning Kruger effect? Not terribly. So when you learn a little bit about something, your confidence skyrockets. And you learn a little bit more and then like a rollercoaster, you fall off the cliff. And then as you learn a little bit more, it eventually starts to hover back out. And this is what I'm seeing with a lot of companies is a, if you asked me a year ago, where's the market? I would tell you leaders know it's the future. They do not know where to start. And they think they're falling behind to where we are today. They know it's the future. A lot of them have started, but they don't really know what they're doing or what to do next. And they still think they're falling behind. I think there is a false sense of confidence among leaders because people have access to chat GPT or to co-pilot or because they've done a few trainings, they think they're using AI. But it's like they're still trying to win the race with a, with a tricycle rather than being on the jet. So small business owners listening to this. And you know, there are plenty of headlines for them to read to suggest that like their internal capabilities vis-à-vis AI and competencies, it's rather important that they develop them over the coming years. But they don't know what to do other than give their employees access to chat GPT Pro. If only somebody wrote a book about this. Are there any, let me ask the inverse that question. Are there any like low hanging fruit use cases for AI in like a hypothetical service company that AI have already been adopted with great success or maybe B, haven't yet been widely adopted. Yes, probably should be. Yes. So this is where I mentioned the three buckets before. Make people more productive, make ops more efficient, deliver more value to your customers through products and service. The mistake I'm seeing companies make is they are moving, they're starting with their product or service or they're trying to streamline operations to take costs out of the business. Here's why I think that's a mistake. Imagine Steve, if your entire life, you have literally only seen black and white. And I ask you to describe color. Can you do it? Not a chance. As a CEO, how can you possibly understand how this is going to transform your operations or your value proposition or your competitive advantage and your value to customers? If you haven't experienced it, transform you. If you have not experienced it, transform you as a leader. All leadership starts with self leadership. And this is the gap that I'm saying, we're like, oh, we gave everybody co-pilot, but the number of sea level executives today that still have not really experienced transformation themselves is the majority. So for me, here's how I stumbled on this. I literally interviewed over 200 execs for my book. 100% of them said, "A I was the future." 100% of them said they would adopt it. Less than 5% had done anything. Interesting. Why? They didn't know how to start. And that's when it actually, I had to fully blow up my book. It was going to be about how to transform your company. And instead it became like, how do you use this at a sea level to go from zero to one? And at a leadership level, it's all about how you think. Your ability to think strategically is the difference between growing your business or going out of business. Because for a guy who wrote a book about AI, I don't care about AI. And the reason why is AI adoption is not the goal of any company. It's created better business and better lives. One CEO looks at me and he goes, I got a big problem. I run a manufacturing company here in the US, at least all this capital equipment from a company in Japan. Things have shifted in the market. The debt structure is now killing us. We're going to go bankrupt if we can't get a restructured. And I ask him, okay, what have you done? He goes, man, I feel like we tried everything. And he lists off five very specific strategies, Steve, that he's deployed. None of them have worked because the board of the company in Japan is refusing to restructure the debt because they think they'll lose face in Japanese society. And he looks at me, he goes, I have no next steps. We are going out of business. Do you think AI can help? Now I have a very specific framework for how I communicate with AI. What I'm about to share with you is the most important thing I can share in the entire episode. It is called crit. C-R-I-T stands for context, role, interview, and task. Every prompt I write, I give it lots of context about the situation. I assign it a role, meaning I tell it the kind of expert I want AI to act as for this use case. And then I make it, I don't ask AI questions. I make it interview me to ask me questions to pull deeper context out of my head. I would have never thought to have given it also. It can accomplish a task, which is whatever I wanted to do. Here's the actual prompt I wrote for this CEO context. I'm a manufacturing CEO, at least all this capital equipment from a company in Japan. The debt structure is killing us. We're going to go bankrupt if it doesn't get restructured. I feel like I've tried everything. Here's the five strategies I've deployed. One, two, three, four, five. And I listed everyone out in detail. None of it has worked because the company that holds the debt in Japan is publicly traded. And the board is refusing to restructure the debt because they think they'll lose face in Japanese society. I have no next steps. And I fear we're going out of business. Roll. Your role is to act as an investment banker with deep expertise and restructuring debt. Interview me. Ask me one question at a time, up to three questions to gain deeper context. Then your task is to generate five non-obvious strategies I could deploy to get the board to restructure the debt. Here's what happened. Steve, how many books do you think you've read in your life? Oh, probably 500 plus. Cool. I want you to think about all those pages, all the words on every single page across 500 plus books. What percent of that collective knowledge can you recall and apply right now? A fraction of a fraction. Right. These models have been trained on anywhere from 200 to 500 million books worth of data. Guess what percent it can recall and apply? 100? 100. Guess how long it took AI to read through 200 to 500 million books worth of data to understand how an investment banker with deep expertise and restructuring debt who also knew 2,000 years of Japanese culture and history would think and act and give the first question to the CEO. Seconds. Under a second. It asked the CEO, do you have any relationships with any other influential executives in Japan that the board would respect? And I look at the CEO and he goes, oh my goodness. What a great question. I would have never asked that. I actually do. And then AI asked two more questions like that before it turned to the tables and said, okay, here's your five non-obvious strategies. Number one on the list. The saving face consortium. It said, you have enough relationships with all the right people in Japan. Why don't you just approach those people to acquire your debt? Give them really favorable terms. Your debt gets restructured. The board saves face. I turn and I look at the CEO. He's actually holding back tears. And he admits to every person in the room, I have not slept in 90 days. I have been making peace with the fact that we are going out of business. But in less than 10 minutes, I got hope. Two months later, my phone rings and it's a text for a minute, said the ball is moving. I actually think this is going to get done. Use AI to elevate how you think. This episode is brought to you by Oberly Risk Strategies, the insurance brokerage and insurance diligence provider that's been trusted by investors, lenders, searchers, and CEOs for over a decade now. The company is led by August Felger, himself a two-time searcher within both the funded and the self-funded models. He personally runs Oberly's dedicated search fund practice that works with searchers across the entire diligence, purchase, and post-close process. Their diligence offering, which is completely free, by the way, will assess your target company's insurance program and will summarize any potential coverage gaps, the pro forma insurance pricing, and any changes needed for closing or shortly thereafter. In nine out of every ten client engagements, they're able to either reduce spend or improve coverage. All in such a way that the searcher or CEO can focus on other things while Oberly handles all things insurance for them. Oberly has serviced over 900 customers across a decade of operation and has an NPS score that puts them at the very top of their industry. But don't take my word for it. Click on the hyperlink located within today's episode description, and we will gladly put you in touch with as many happy Oberly customers as you'd like. Hmm, incredibly interesting. I mean, the crit framework is just incredibly thought-provoking, and one that I'm going to experiment with later on this afternoon. I also love this idea that before your company can become competent and proficient with AI, you as the leader first must do both of those things at a personal level. Well, Eric Schmidt said, "Former CEO of Google, pretty much everything you know about how your company operates is going to be different within the next five years." Not ten, five. And he said that a year ago. And when I heard that, I remember thinking, "Okay, if I'm a CEO and I hear there's a title wave that's coming that has the possibility to change everything I know about my business, is that something that I delegate to IT?" No freaking way. Like, I would clear the decks to learn as much as I can so I could figure out how do I ride the wave instead of getting crushed by it. Let me give you another example specifically in M&A. I was doing a workshop for a room full of CEOs, and I told the story about how I've created AI boards. Like, actually trained on real board members to simulate the boards so we could give it the deck before the meeting, and it would tell us everything the board would say before they ever say it with at least a 90% accuracy. Yeah. I have my own AI advisory board. Steve Jobs is on it for vision, product design, and storytelling, but he's now allowed to give me advice on being a husband, a father, or a leader. Warren Buffett is on my board for long term planning and risk mitigation. My future self is on the board of the man I want to become in 30 years, so that version of me can advise me today. One of the guys comes to me and goes, "Okay, I love this idea of a board. I'm in the process of selling a minority stake in my business to my number one competitor. They just started the due diligence today, and I'm wondering if it's possible to create an AI board that could simulate what their due diligence team is going to think and ask so I can be prepared for those things before they think it and ask it." And I literally opened up chat GBT, wrote Crit context, everything about his business, all the things he had shared with me, fed it the name of the company that was going to be doing the due diligence. He fed me the names of the people that were doing the due diligence on behalf of that company that was acquiring the minority stake. Roll was to act as a deep research expert who understands the M&A market on a deep level who could also really deeply research every single one of these people and identify the top questions and ways that they would conduct due diligence. It had to interview us to gather deeper context and then the task was to conduct deep research on all of those people and to summarize that into a training document that we could use to train a custom GBT to simulate that company's due diligence team so we could feed it all the assets we actually fed the real company so it could simulate what they would say before they ever said it. I did that while we were sitting at the table eating lunch on his cell phone. He sent that to his team who plugged it into a GPT and by the time we were at drinks that night he came up to me and literally gave me the biggest bear hug I have ever received and showed me the report his team had sent him where it simulated the due diligence team and it called out the questions that the company had already asked by the end of the day before they asked it. That took me 10 minutes. What I have recently found interesting is when Chad GBT first came out some number of years ago at this point there was a wide swath of headlines appropriately so about how this is going to change everything. Three years later however many years it's been I'm seeing a different type of headline which is examples of how companies like overshot or maybe acted too quickly. I can't remember the name of the company. It might have been Clarno but they famously fired not 90% or some large percent of their customer service reps. They ran it off AI for a while and now they said oops we kind of overshot we need to hire them back. In any instances of companies overshooting or acting too rashly or acting too quickly or without this efficient you know amount of thoughtfulness are there any like through lines or maybe generalizing the lessons that you can extract from those case studies. Senior leaders are viewing AI as a solution looking for a problem. So they go we want to drive cost out of the business we're going to fire the majority of our customer service reps when they are still living in black and white. They have never seen color meaning the people who are identifying and approving the use case aren't qualified to do so. That's the through line. The leaders aren't AI driven leaders themselves. Now I'm not going to like say that that's exactly what happened with Clarno because again this is this is a grand experiment. Anybody who tells you they know how this is all going to shake out doesn't doesn't know like that done in Kruger effect like I'd like to think I know a lot about AI. I do which just means I know how much I don't know that's right right when my wife was talking to somebody and this woman said oh I hear you're an AI expert. I said all that means is I know how much I don't know. That's how that's what you should be listening for. So now let's be clear. They're initial use cases. They were able to massively improve their CSAT scores in a fraction of their time with AI agents. But what they found is that AI agents couldn't replace all customer service. There were still places where a human was needed. So they just over corrected. It's not that they were wrong with AI or that they're getting rid of it. They're still using it. I'm curious at a personal level. How frequently daily are you using an AI tool and be which tool do you use and doesn't even does it matter? Does it particularly matter which tool one chooses to use? I use it daily all the time and I don't use it for everything. Like the more I use it the better the more aware I am of when to use it and when I'm just not and I'm not going to use it. Like I talk about using AI as a thought partner. Let me be clear. I do not outsource my thinking to AI. I still sit down like I actually am staring at a leather chair on the other side of my office that is my thinking time chair that I literally go to to think where I have pen and paper. Now I have a remarkable tablet where I still will ask myself questions and journal my thoughts with a pen because I know how to shoot the arrow to use AI but I got to know what target to aim it at. So there are still times that I go to old school journaling but once I know where I want to focus no longer do I just sit there and think by myself which is me recalling and applying the minority of the information that I can recall which is the minority the information of the world. I now go to AI as a thought partner. So real example we have been growing so fast this year that we are at that inflection point where everything is breaking internally and externally. There are lots of places that I can see that we have the ingredients of product market fit and there are a lot of things that we have to change. I went to my AI board put it in the voice mode. So I'm literally talking to it and it's talking back where I described everything that was happening in the business. All the insights that I have had around this but all the places that's breaking the things that we're doing that I think are not going to scale. Roll was to act as my board. It got to choose which board member to call on. It had to interview me one question at a time up to five questions to gain deeper context. It's task Steve was to identify 100 alternative business models business structures that would harness those capabilities in different ways to help me see what I couldn't see. So I was going to ask you what are the situations in which you don't use it but I think you've already answered it which is if it smells like your outsourcing you're thinking to AI that represents a use case that you're not using AI for. You want to use it more as like a thought partner. I thought provoker. I'm the thought leader. It's the thought partner. I think this is one of the greatest risks is people abdicating their responsibility as the thought leader and this is happening a lot. They're asking AI a question and they're trusting the answer with no discernment. They're asking AI to draft the email or the marketing copy and copying and pasting with no discernment. They're using it to interview them and giving them recommendations and they're just following it without challenging what biases does AI have. Where might it be creating an echo chamber and just telling me what I want to hear versus being the thought leader and then saying what do I like about it? What do I not like about this? What are the top changes I would want made to this? Like I give it that kind of feedback then I play it against itself where I'll say great now that you've got the best of my knowledge I want you to act as the challenger your world class at bulletproofing plans and identifying every place this thing is insufficient. I want you to stress test the sufficiency of this plan and I want you to tell me where it's strong where it's weak and the top changes I need to make and when it gives me that I then layer in my ideal customer who I've already built profiles of my ICPs where I say now be my ICPs and I want you to tell me where it's strong where it's weak and the top changes I need to make so you'd give me the blank check. I get AI to play against itself and here's the here's the shift you're shifting away from being the player of an instrument in the orchestra like you play the violin to now you're the conductor you wave the baton and you can get the violin to play you can get the cello to play you get more cowbell you can get the cowbell to play I have fed Steve jobs transcripts of my keynotes and hat as well as the conversion data of how many people were in the room and how many people signed up to do business with us and and asked for feedback this was so crazy it literally said Steve jobs walks to the center of the stage the lights in the room dim while leaving his face illuminated he nods his head but he does not smile because he thinks your pitch is unremarkable and then AI fricking Steve jobs starts interviewing me asking me questions and I'm doing this for like 10 minutes and at one point I said Steve you've got enough context about me how about you pitch me my pitch but I want you to do it in a way that's so damn compelling that it would put the the release of the iPhone to shame Steve I'm not kidding AI Steve jobs turn to the tables and pitched me my pitch I had it turned that into slides those are now my slides it doubled our conversion rate incredible incredible so let's fly back up to 10,000 feet you're asking like what are those use cases that people aren't thinking about that are really valuable I don't care what industry you're in and a leadership level which is what this podcast is for your ability to think strategically is the difference between growing your business or going out of business you have a choice you can keep doing things the old way which is you recalling and applying the minority of what you've learned which is the minority the information of the world which is like you acting with horse blinders on or you can start to redefine yourself as the thought leader with AI as a thought partner and with a framework like crit I don't care what your situation is you give me any problem we could write crit and we could solve it in a fraction of the time at a way higher quality I'd love to get your thoughts on a few questions vis-a-vis future because I'm reminded historically that even the most optimistic people have underestimated the impact of certain technologies that we now know with retrospective change the world so for example cars airplanes the internet etc do you think that's also the case with AI like are even the most optimistic among us underestimating it's likely yes yes and if you listen to Eric Schmidt talk about this that's what he'll say because he'll cast a vision that will blow people's minds and he goes I'm probably underestimating it here before the internet you could not have imagined Google or Uber or Waymo zoom like you just couldn't even fathom it six out of ten jobs today didn't exist in 1940 we are humans are very linear thinkers so we anchor we we harness all our past experiences to create a projection of the future but you're anchoring yourself to the past so we really are terrible at envisioning the future and my realization is that fully adopting and harnessing and wielding AI across people operations and product is not you winning the game it's your ticket to play the game all this stuff that we're talking about is not even how to win that's your ticket to get in to what is the market and the business of the future most people are grossly underestimating how how different everything is going to be as a result of this and the question if I were to ask you to support the exact opposite viewpoint would you be able to argue the idea that the threat of AI is significantly overblown for those operating small largely local businesses no I know and there are studies that are coming out like an MIT style like 95% of AI use cases don't even matter you know why because a leader still seeing black and white and is unqualified to make the column word to deploy it and they're not thinking strategy first technology second yeah so in the short term I think there's going to be a lot of treading water and people wasting a lot of time effort money resources on AI because the leader hasn't gotten in the driver's seat and said I'm going to embrace this and I'm going to be really strategic about this I think 80% of the use cases are a distraction you know why they drive the minority of the value why the heck are we majoring in the miners let's focus on the 20% that drives 80 percent the number of people that tell me like oh well I study this tool and I'm what about this tool and what about this tool and what about this tool and I'm like how much one guy literally was bragging to me about how he was able to collapse eight hours of work to two consistently and I went that's amazing what do you do with the other six and he goes oh I research AI tools he has had no net improvement to his business as a result because he's spending his six hours wasting his time so I think the majority of AI is a distraction my filter is if we focus on this will this help us create a better business and better lives if the answer is yes lean in if the answer is no it's a distraction move on I see that you're married do you have do you mind me asking if you have kids yeah you do have kids so so I have two young ones in light of AI's rapid emergence I'm curious your time any are there any careers that you would now guide your your kids towards pursuing or conversely are there any careers that you would advise that your kids stay away from entirely I'm going to play this for you right now I was speaking on stage yesterday and my daughter was my opener listen to listen to what I'm about to play for you and I'm going to do a little bit about it is respect and I isn't here to take over the world but it's good to advance our world and help us become better do you believe it better some ways I use AI it's I ask my dad in the time said what should I do for them older or what skills should I have he told me that's not the right question let's have AI to feed us and AI will be through basis of the questions and and I'm telling you that almost taking this part of my message that's what brought me here today so to repeat what she said this was this summer my kids are asking what they're going to do when they grow up and I tell them you're asking the wrong question you should be asking what are the skills I can master that are so valuable they will serve you no matter where you go and focus on building those skills and definitely looked at me and said well I want to get a job in your company what skills can I focus on that would bring value your company and I said you're asking the wrong person let's use AI and we wrote crit and got AI to interview Daphne about where Daphne thought that she had natural strengths and it had to contrast that with what it thought the human skills would be that would become more valuable in an AI driven world and one of the things that it came out with was communication and it said I really think you should double down on speaking for your dad's company because people always ask about kids just like you just did Steve and I actually think if you talked about a kid's perspective on AI and how you're using it that would bring value so now whenever she can she'll come with me if I'm speaking on a stage and she'll open for me and she'll tell that story amazing I mean and consistent with you know the ethos that you've been communicating today which is outsourcing your thinking is not the primary use case for AI enhancing your thinking is its primary use case here's the context on this if you study history if we go back to the industrial revolution we stopped focusing on developing the skills that were unique to us as humans and started focusing on developing skills that were more reflective of machines we stopped acting like humans and we started acting like machines our education system today is literally a factory teaching people to act like machines the way we work today is literally reflective of getting people to act like machines show up to work on time take direction from a boss do something repetitively with minimal error with maximum efficiency so you can make more money and one day live a good life a guy's taking all of that away so what's left it's what actually makes us us I thought about how Michelangelo sculpted the David he started with a large block of marble Steve he didn't add a single thing he stripped away layer after layer after layer after layer all that was left was a masterpiece might it be possible that every single one of you listening to this has a masterpiece inside meaning there are god-given strengths that every single one of you have that is different from anybody else in the world can you get clear on what those things are that make you you can you harness those strengths and then focus them on the 20% priorities of your role that are in alignment with company goals and then use AI to enhance you because in those places it can never replace you in order to do that you have to ask better questions hmm who can you become that answer lies within you Jeff before I let you go today I'd love to end with the concluding question that I often end with and at the risk of putting you on the spot the question is what is the most meaningful lesson that you've learned over the past 12 months across any domain of your life personal professional family spiritual lessons that really resonate with you over the past year how many times I'm artificially putting a ceiling of achievement over what's possible for me hmm February 8th of 24 was the day that I made a commitment to write a book about AI and build a company around AI when I felt unqualified to do so and I was having a conversation with a guy that I was interviewing to be my book coach and I asked him I'm not qualified I'm not an expert on this yet and I don't even know what the book's going to be about and you're telling me the book has to drive the company I don't even know what the company's going to be about so do I do I go become an expert like gain the credibility and build the business then write the book or do I make the commitment to start writing the book and use it as a forcing mechanism to go so deep on research and so heavy on personal application that I would literally emerge the other side as a global thought leader see the moment I ask the question I knew the answer people think you have to have the capability and the confidence before you begin you don't you make the commitment first then you have to sum in this massive amounts of courage because you feel like an imposter and as you start to move forward in spite of that imposter syndrome you start to gain capability which then leads to confidence I remember writing the book in wondering like is anybody even going to read this are people leaving in a like it like if you told me that it was going to end up becoming the number one book in the world for AI or that we'd sell a hundred thousand copies in the first year which the average business book sells a thousand in their life I mean that's top one percent of all time self-published zero marketing dollars I wouldn't believe you if you tell me that I'd be sitting in front of the sea suites of fortune ten companies like literally talking to the CEOs advising them on AI strategy I'd tell you you're smoking something I think we grossly underestimate what we are capable of because we put ceilings over our achievement and we play it safe and this is where I genuinely think for you who's listening to this I'm telling you there are certain things about you that are your core strengths that differentiate you that you might be you might be walking around like that big block of marble carrying around all these other layers of you acting like a machine or climbing a ladder without ever wondering if it's even leaning against the right wall like is your work even a reflection of who you actually are and if you actually use AI to start to interview you to understand what is it that makes you you and how much you harness who you are in what you do oh baby what an amazing place for us to leave it Jeff if folks are interested in learning more about you either your book or your company and how your company might be able to help theirs what's the best way for them to find you and get in touch so first is the ad driven leader which is the book it's available on amazon audible kindle I also created a podcast called the ad driven leader where I literally interview CEOs who have gone on their journey and then I even turned the tables and write crit to solve one of their biggest problems live so like you can watch me actually write the prompts on youtube or listen to it on whatever podcast player that's the ad driven leader and then our company is AI leadership which is the website is a leadership calm we do three things we do training for executive teams we have a pure network of sea level executives called the collective so membership model where we put you in the room with hundreds of other sea level execs and we share everything about how we're all deploying AI so you know way more than your competition because you've got hundreds of people teaching you how they're doing it and then there are some companies that we do advisory with where we actually partner with the sea suite to drive this in the company and make it real in a way that moves the value of the company fantastic Jeff what a treat it was to speak with you today thank you so much for joining us thank you Steve
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