The AI Spending Trap

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So this time I found the ad. So I'm going to show it to everyone and then show kind of what's working for me on Twitter right now. And then we can move over to TokenMaxing.

TBPN's daily newsletter has op-eds that are written by Jordi and I, in addition to top tech headlines and the timeline's best posts. Sign up for free at tbpn.com. Okay. So I want to explain what I just played over here.

So we went, we did the eBay video first. Um, the, the, there's that interaction and then they basically clipped that part. And this is, I call this a mid form clip where it's like three to 10 minutes or so. And it's horizontal.

It's not vertical. Um, these tend to do pretty well on, on Twitter or X. Um, you see this one has 644,000 views. So that's 644,000 impressions that you have for a post roll over here to get people onto their newsletter. And it kind of advertises their show too.

And so I think we're going to see more of this. And I wanted to test this as an example for kind of the work that we're doing right now, right? So if you go to, I'm looking at my page right now.

I think this one is, maybe it's with you as well. Not bad. Okay, look, Neil. So there's a video of Neil here with his kid's laptop decorating it. And then this is us talking about Anthropic as a single growth marketer.

This is from this podcast, Neil. Okay, two minutes over here, 54,000 views. That's not bad, right? Yeah, it's not bad. yeah so you got you got two here so my point of saying this is like you have 1100 bookmarks 535 likes um i think there is this one's 1.7k i'm looking at one here 9 10k over here uh 2.2k in fact whoever wants to advertise on this podcast the next advertiser will have to pay for these impressions as well because we will also stack these on so um 18k on that one not bad right so my point of saying all this is that um

If you're trying to grow on like X, for example, the reason I think TBPN did so well is because they were selling these impressions, especially on X. And, you know, you have very tech forward people listening to this stuff. Right. So what do you think about this?

It's not a bad way to monetize, but when their ad, I always saw go subscribe to their website. I didn't hear them pitch another company or product or service. I saw other companies, so I think it just depends on what you see. Like last time I tried to show it, I couldn't find anything.

No, no, the one you just played right now, it wasn't a pitch of another company. It was just subscribe to their own channel. I've seen them pitch other companies. Oh, I got it.

You're saying they rotated up, so it's random. Yeah, exactly. Yeah. So we should definitely do that. You know what's funny for this podcast, Neil? I have to record the podcast for you or the podcast ads for you promoting your company because you won't do it for yourself.

So if you would ideally do it for yourself, we can include yours as well. So I can do it. Just tell me what you want me to record. Ubersuggest. I'll just tell you right now.

Ubersuggest, Answer to Public, and MP Digital. Yeah. You can just make like, uh, three 30 seconds, uh, at the end. Please don't do it when you're traveling.

Do it in like a nicer three 30. Okay. I sent myself a note. Oh, with video or no video. I think you should do video. And cause we want it to be horizontal.

Okay. Cool. All right. Cause I think we're gonna get a lot more views this way. Anyway. Okay. So let's talk about the next topic here. So, A lot of people are talking about token maxing.

Okay. So, you know, I've been watching some videos. Everyone's like, yeah, you should token max. What token maxing is first and foremost is spending as much as you can on tokens.

Okay. So here's the uncomfortable truth about token maxing. Simple execution beats clever strategy when timing is right. So what that means is if you,

spend on token maxing like let's say neil says oh eric uh if you work for me you have to spend as much as possible i would just run my tokens on stupid tasks all day i might just have an agent just to hit that number so i don't get fired okay but if you say just token maxing alone is pretty stupid because it creates perverse incentives when you create a metric like this you have to have a pairing metric and so a pairing metric means sure you can try to token max but maybe every time At the end of every month, you have to go to your manager and say, hey, here's all the things that we built. Here's how it helps customers or here's how it gets us customers.

Because if you don't have a pairing metric there, it's going to just drive a bunch of compute up. You're going to pay an arm and a leg and you're going to get nothing from it from your organization.

Dude, I totally agree. I don't understand why people would want to just juice up their costs. It doesn't make any logical sense other than their bosses looking at it as a way of, did you use AI? And we can see based off of your spend.

I think that's just a terrible way. They should start looking at things like, what tasks did you actually complete? What were the results from it? What's the ROI?

Did it reduce churn or increase LTV or repeat purchases? And I genuinely believe... That's what a lot of the data and analytics teams will start looking at or CIO or CFO. They'll start grinding into the numbers because you can't just say in marketing, oh, we're all spending 5% or 10% more of our marketing costs in total because of AI.

Oh, what are we getting for that? Who knows? But look at this spend. People are just going to be pissed. Yep. So again, I don't think we're saying don't look at your tokens.

I think we're both saying that look at your tokens. Absolutely. But your token spend, but you have to make sure that you're working closely with your team because if unmanaged, it's just going to go all over the place. Speaking of which, Neil, my, my token cost got up to basically like a $12,000 a month run rate.

Um, And I was like, oh my God, this is crazy. So what I did was I literally, all you have to do now for Neil, if you want to cut it to zero for yourself, is you're paying for the Cloud Max subscription, $200 a month. You can even pay for the chat sheet, $200 a month.

The important thing is you create a long-term token, which will last for a year, and use the Cloud CLI command line interface for that. You literally, you can just go to your Cloud and say, how do I make a one-year token? you create that token and then you just run your, whatever you're, you're using like an open claw or whatever.

And that will basically cut your costs. I cut it down to 87 cents from $400 a day, Neil to 87 cents a day. Yeah, that's awesome. You shared that last week, or was it the week before?

Where the issue, for a few-day period, it started, or one-day or two-day period, it started rising again. It started to 400, so I fixed that. And now, officially, it's on the Cloud CLI, or you can use OpenAI OAuth. I will say another thing, Neil, that's funny about this stuff, is...

Let me just ask you right now, let's see where you're at. What do you think is like the model that's ahead in the world right now? The number one model, AI model.

I would say it's Anthropik who's winning right now, just based off of your valuation and how many people want to buy their stock and how many people in my organization

use Claude versus any other company's products. Like they have access, in my organization, they have access to Microsoft's products, Google's products, OpenAI's products, but yeah, majority of my employees are using Claude. Yep. So here's the thing.

Would you would also agree that in the world, there's a little bit of a lag when it comes to adopting like the internet or email, things like that. Yes. Yes, but the lags have gotten shorter and shorter over time. So for example, when it comes to AI, the reason, or let's actually go with e-commerce.

The reason it really started picking up is everyone started having these devices and it made it easier to buy. If you start looking at things like AI, well,

you don't have to get people on the internet, or when people had to get on the internet, not a lot of people had computers. Now everyone already has devices that plug right into the AI, so it's easier for human beings to adopt the technology at a much quicker pace. Yeah, so let me tell you where I'm going with this, Neil.

A couple, like, until very recently, everything was about Claude. They were marketing very quickly. It's like they could do no wrong, right? Mythos came out.

You have the Opus 4-7. Amazing, right? Oh, my God. They're shipping constantly. Claude co-work, all this stuff. Here's the thing, Neil. In the past couple weeks or so, because I tend to live in this world –

OpenAI is slowly taking the crown back, right? Everyone now on X is talking about Codex. They're talking about chat, TPD 5.5. They're talking about the slash goal commanders, all these things.

And so I think it's pretty funny that in AI, we're very promiscuous. There's a tug of war. All that matters in this world when you're talking about trying to stay at the cutting edge of intelligence is the product itself, right? Nothing matters more.

one or two weeks three weeks ago i would just be talking about claude all day okay and now i'm like oh man this opening eye has made a comeback i will gladly switch over to it so it's like there isn't really like a defined moat quite yet um i'm not seeing it's coming soon i genuinely believe it's coming soon and i think the winners are going to be microsoft and google

Because if you look at the technology right now, it's improved over time, okay? When AI first came out, it's drastically improved from then to now, right?

But in the earlier days, you saw much bigger leaps in the technology. You give it two, three, four years, right? The versions that keep changing, I don't think they're going to be leaps and bounds better each new cycle. And I believe the Microsofts and the Googles are going to be like, it's included with your subscription for your company and it's free.

And I believe that they will just dominate and take over a lot of the corporate spending, which is where Anthropic is growing extremely fast due to the fact that they already have the customer base and they'll take free overpay. Real quick. If acquiring customers has been a struggle for you and you are trying to figure out how AEO works, answer engine optimization or the new version of SEO, how paid works, how all this AI stuff is going to play into your customer acquisition strategy, then check out my ad agency, Single Grain. It's singlegrain.com.

And if it looks like it's a good fit, we'll help you with a free marketing plan. So again, go to singlegrain.com and we'll see you on the other side. Yeah, I'm trying to pull up a chart where it shows AI intelligence compounding over time, where basically it's right now at genius level, and it's going to continue to get stronger and stronger. So I'll try to pull that up in a little bit, but let me just show you something, Neil.

So we're talking about... Neil talking about Microsoft and Google being the winners in AI. There's a big reason why that's important because when you look at Google and you look at Microsoft, they have the most distribution, right? It's distribution that matters, especially if distribution is getting harder and harder in an AI-driven world where you can make whatever you want.

you want to be able to control that distribution. And Microsoft, they have those enterprise contracts locked down. Google as well. In fact, Google kind of has the whole stack.

They have the tensor processing units. They have search. They have, they have Android. They have Gemini. They have, what else do they have? They have, they have Gmail.

They have YouTube. They just have all the distribution in the world. They have all the data in the world and they're going to make use of that. So obviously they have Google ads too.

So, and then Microsoft, not too bad themselves. They're both multi-trillion dollar companies. So, You were just speaking about, Neil, Anthropic and OpenAI.

I just want to call something out here. So you look at this here. I'm going to share my screen real quick. So let me share my screen. Let's go over here.

So Anthropic has decided to start a $1.5 billion joint venture with multiple Wall Street firms. So you got Blackstone in there. You got Goldman Sachs in there. They're all major investors.

And basically, this is from Wall Street Journal. Anthropic nears $1.5 billion joint venture with Wall Street firms. So Anthropic, Blackstone, Hellman, and Friedman and Goldman Sachs announced the formation of a new AI services company. The organization will work with mid-sized companies across sectors to bring Claude into their most important operations.

Applied AI engineers from Anthropic will work alongside the firm's engineering team, where Claude can have the most impact, build custom solutions, and support customers over the long term.

So the company is backed by these leading companies. Oh, look, Apollo's in here, Sequoia's in here as well. These are General Atlantics in here. These are major firms, okay?

So why is this important? People might be thinking, oh, well, First of all, first and foremost, Anthropic and OpenAI are doing this. That means that everything still comes back to services at some point.

And you might be thinking, oh, I run an agency. Now I have no chance. No, this actually reinforces that people need agencies. They need services companies to help with implementation here.

So I think this is a net positive thing. It's not a negative thing, right? There's a lot of things. that I see online right now where people are talking about building these single brains or company brains and all these things.

And that reinforces the path that I'm on. But also when I look at Neil's agency as well, it's not like this stuff is going away. In fact, they're going to need it more because I think Anthropic and OpenAI, they're going to try to go with their engineering resources are going to focus more so on the enterprise market, right? It could be a lower market enterprise or higher enterprise, but there's still a lot of room.

There's still more customers than ever. And there's going to be a lot more entrepreneurs, I believe, as well. So I would try to double down, triple down, especially if a services business.

Yes. And services now, I think, is going to explode more and more because of all the noise that's around it right now and all the announcements, right? Like it's becoming, quote unquote, sexier, at least temporarily. Yeah.

I mean, look, what is it? Sequoia, Andreessen Horowitz, why comment or talk about this? The new $1 trillion company is a services firm, right? Services as a software.

So that's why I'm more excited. I'm excited for Neil. I'm excited for myself. This has never been a better time to do business, I believe. Yeah, and what was the amount that they all raised?

OpenAI did a joint venture with someone. I forgot what the dollar was. I forgot how much they raised, yeah. But it was in the billions, and I'm assuming, I think Anthropic was five, right?

$5 billion? For the joint venture, $1.5. Oh, $1.5. Maybe the other one was $5 billion. Yeah, let me see. So OpenAI raises money for services. Yeah, that's right.

Anthropic was $1.5. The other one was, which you just covered, but the other one was $5 billion, I think. I could be wrong. The deployment company. Okay, yeah, I see it over here.

So OpenAI has raised over $4 billion for a new joint venture focused on helping businesses adopt software. So who's in here? You got the other side, TPG, Brookfield Asset Management and Bain Capital.

All the biggest companies, right, in terms of investment companies. They're spending. Yep. Enterprise growth, by the way, enterprise revenue for OpenAI now makes up over 40% of total revenue with targets to reach parity with consumer revenue by end of 2026.

So I think we thought, like, at least I was like, oh, man, OpenAI is really falling behind. And then boom, before you know it, they're back. Right. Let's just see how that lawsuit goes.

Yeah. Yeah. All right. So let's... Here, I'm going to pick another one here. I'm good at the screen shares, guys, when we're on the go. So I'm just going to keep calling these out.

Neil, I'm going to let you pick one. Which one do you like to pick? All right. So let's go with... Oh, I want to do the Groon's one, right? The ad strategy that helped Groon sell for $1.2 billion.

Or using your hook in the sheet, this brand sold for $1.2 billion off of landing pages. Yeah, here we go, Neil. So this is Groons. This is Chad Janus or Chad Janus.

Dude, I'm calling this out again, Neil. Look at this. This mid-form video, 367k views, okay? So the Groons founder, Chad, sold his three-year-old company, Groons Unilever, for $1.2 billion.

And here's what he did that most brands don't. Most brands send every ad to the same generic homepage. That's why they bleed cash. Chad builds an entire world around every winning ad angle.

The system is you test hundreds of ads per month to find the unlock. Once an angle sticks, so gut health, energy, focus, you rebuild everything around it. If someone checks a gut health ad, landing page is 100% gut health. A pop-up asks about their gut concerns, emails, SMS, tailored to gut health.

His team is 30 people. That's pretty crazy. 30 people, five to six creative strategists, four to five media buyers, three on retention. Look, the media strategists or the creative strategists outnumber the media buyers, right?

Three on retention. The tool is you use Replo, which is a Shopify plugin. Chat says they don't charge enough. You can now build a funnel, build a new funnel today.

So I guess it's a funnel builder. Winners don't just test ads. They rebuild the entire experience around each winning message. Message match is the difference between $10 million and $1.2 billion exit.

I'll let you go first. I think Gruden did an amazing job marketing. One thing to mention is he's also ex-Unilever, so he understands marketing really well. They're one of the bigger spenders of marketing globally, and he came from there, built a good product, and it wasn't hard to get that product to go viral because that category just tends to do well.

He grew really fast, and I think it was a smart playbook. Yeah, so by the way, I don't know if you know this, Neil, but when he started the company, his goal was to sell to Unilever because he knows their playbook, right?

And the other thing, I mean, I think it's always a lot of marketing stuff. We haven't seen a lot of new marketing channels in the last 10 years or so, but we often forget about the fundamentals. If someone sees an ad, let's say it's a green-colored ad talking about your gut health, and then they land on a landing page that's orange, and it talks about sleep, right?

It's not going to be aligned, and you lose trust that way, right? And people have very short attention spans. So whether you use something like a Replo for Shopify or on the B2B side right now, we still have Carrot, K-A-R-R-O-T. Carrot allows you to personalize your LinkedIn ads, and then the landing page is also personalized as well because you want those things to look relatively the same.

And in this case, we kind of personalize the company name, the name, and things like that. Yeah. But I think this is smart. Good job on him. I think he can ride off into the sunset.

And sometimes when you work at a company, you know their strategy and you're focused on it. And look, only 30 people. This, again, reinforces that you don't, the rise of these small teams, big businesses. You also look at perplexity.

Only 30 people on the team. There's only 30 people at perplexity? Yeah. I don't know. Yeah. Yeah. I did not know that. But one thing about Grunz is, I'm pretty sure, and when I say pretty sure, if I had it, I'm guessing I don't have any inside information.

Oh, no. I'm wrong. It says 1,500 employees. That sounds about right with complexity. Because it's an AI company, I'm like, that just sounds too low. But with Grunz,

That 1.2 billion number is the flash number, like what they go out with the release with. Majority of these deals, what happens is you get X amount of dollars up front. The rest is hit on earnouts based on the company performing and hitting A, B, and C milestones. That's typically how almost all acquisitions work.

Yeah, I'm looking at it right now. So here's a breakdown of the structure. Reports suggest it's a cash acquisition designed to scale the brand. So yeah, there's probably a mix of multiple things.

Yeah, it's usually not simple like, here's a $1.2 billion because then people can just leave and then you don't have the founding team and a lot of people are just like, I got my check, I'm done. So they incentivize. Incentivize not by just having you sign a piece of paper saying that you'll stay for two or three years. Incentivize on which you need to keep pushing harder to grow this thing and that's how you'll unlock more money.

If not, you won't get the full $1.2. With that being said, yeah, we'll talk to you guys later. Bye.