Exploring AI's Impact on Data, Device Sales, and Business Strategies: Insights from Jay McBain

[00:00:13] [SPEAKER_02]: Let's get practical about artificial intelligence, looking at where the models will live,

[00:00:18] [SPEAKER_02]: how that will impact device sales and IT service providers, and what peanut butter has to do with technology.

[00:00:25] [SPEAKER_02]: Jay McBain from Canales is back on the show to give us some insights.

[00:00:30] [SPEAKER_02]: Welcome to the Business of Tech Lounge, the live version of the Business of Tech Podcast.

[00:00:35] [SPEAKER_02]: It's Wednesday, September 18th, 2024, and I'm Dave Solbowl.

[00:00:39] [SPEAKER_02]: We'll be taking questions and comments throughout the show so make sure to put them in chat.

[00:00:45] [SPEAKER_02]: If you have a question, we'll happily respond to it.

[00:00:49] [SPEAKER_02]: I want to thank Sales Builder, our Patreon sponsor who support makes this show possible.

[00:00:53] [SPEAKER_02]: Focus on your IT sales workflow with the power of automation and visit them at salesbuilder.com that's bui-l-d-r.com.

[00:01:04] [SPEAKER_02]: And our reminder, we're watching the chat, we'll be taking questions throughout the show,

[00:01:08] [SPEAKER_02]: so make sure to throw them into the chat and we'll get them answered.

[00:01:11] [SPEAKER_02]: So before we dive in and bring Jay on, I want to dive in on some data that he recently shared.

[00:01:17] [SPEAKER_02]: First, with 85% of the world's business data currently sitting on premises.

[00:01:22] [SPEAKER_02]: The plans for training and tuning large language models will not involve

[00:01:26] [SPEAKER_02]: for-liping this data into public clouds.

[00:01:29] [SPEAKER_02]: The opportunity for Genitive AI services will grow to $158 billion by 2027, according to Canales, a 59% cagur.

[00:01:40] [SPEAKER_02]: Second, with the on-device execution of these models at the edge in things like PC's,

[00:01:46] [SPEAKER_02]: smartphones, smart devices, wearables, self-driving cars, drones, etc.

[00:01:49] [SPEAKER_02]: Partner services opportunities will outpace the device grow.

[00:01:55] [SPEAKER_02]: 40% to 47% cagur for smartphones and PCs over the next four years.

[00:02:01] [SPEAKER_02]: And third, servers which are already up 105.5% year over your last quarter,

[00:02:07] [SPEAKER_02]: storage and network opportunities to train in tune these models with business data will create a solid double-digit growth in related services.

[00:02:15] [SPEAKER_02]: In fact, they recently highlighted the parent companies on-device research showing a 19.7% cagur growth opportunity at the intelligent edge,

[00:02:25] [SPEAKER_02]: pulling telco into the mix.

[00:02:27] [SPEAKER_02]: So I'm excited to welcome back Jay McBane from Canales where he's the chief analyst for channels, partnerships and ecosystems.

[00:02:35] [SPEAKER_02]: Welcome back Jay. It's great to have you.

[00:02:37] [SPEAKER_02]: Yeah, well thank you for having me.

[00:02:39] [SPEAKER_02]: These are great fun because you come armed with really good data.

[00:02:42] [SPEAKER_02]: And I want to start a little bit with that 85% of data on prem and how you think the training of AI models will happen locally rather than moving it to the cloud.

[00:02:55] [SPEAKER_02]: Is there a sense of how partners will have to maneuver to position themselves with hybrid and edge models dominating?

[00:03:02] [SPEAKER_02]: I think that there's something to be said about this vectorization of data where you're going to have to combine the private data with the public.

[00:03:10] [SPEAKER_02]: What's the positioning you're thinking about for providers?

[00:03:14] [SPEAKER_01]: Yeah, this is one of the early questions that partners had for the hyper-scalers.

[00:03:18] [SPEAKER_01]: So if you tuned back to last year March when Jenner to AI became a consumer trend, it was writing poetry, music, you know,

[00:03:27] [SPEAKER_01]: it could write a 1200 word blog for us. It was pretty cool.

[00:03:31] [SPEAKER_01]: It quickly got into the business conversation.

[00:03:34] [SPEAKER_01]: And as we started talking, companies like Microsoft and OpenAI started talking about 4 trillion and 7 trillion dollar target addressable markets for this.

[00:03:44] [SPEAKER_01]: I mean, the world economy is 105 trillion.

[00:03:46] [SPEAKER_01]: So these are material numbers and these numbers are the size of the tech industry today.

[00:03:52] [SPEAKER_01]: So people started getting a little bit tripping over themselves.

[00:03:54] [SPEAKER_01]: So it's always partners that bring people back to kind of earth.

[00:03:59] [SPEAKER_01]: So I got to speak at AWS, I got to speak at Microsoft, I got to speak at Google.

[00:04:03] [SPEAKER_01]: And it was interesting as partners came back and said, you know, you know, you know that the world's data sits on premise.

[00:04:09] [SPEAKER_01]: Your relationship with your bank, your relationship with your airline, your relationship in all these B2B or B2B to C spaces is on data that might sit on an IBM mainframe from decades ago.

[00:04:20] [SPEAKER_01]: It might sit on EMC storage, none of that was ever moved into public cloud.

[00:04:26] [SPEAKER_01]: So what's going to happen? Because you're talking about a topology today network topology to your listeners that looks like 50% cloud,

[00:04:33] [SPEAKER_01]: but 50% edge in terms of where the compute storage networking is going to reside.

[00:04:39] [SPEAKER_01]: This looks really different than what we've been going through in the cloud where kind of everything was with the hyperscalers.

[00:04:44] [SPEAKER_01]: So this is kind of the interesting conversation now is where is going to be the wealth created?

[00:04:50] [SPEAKER_01]: Where partners, where are different businesses going to draft on this trend in the next 10 years?

[00:04:57] [SPEAKER_01]: And how is all this going to come to be?

[00:04:58] [SPEAKER_01]: So we started writing research not at those trillions of dollars, but in the services the partners do every day.

[00:05:05] [SPEAKER_01]: And when they're going to happen and we tend to be overestimating what's going to happen in two years and underestimating what's going to happen in 10.

[00:05:13] [SPEAKER_01]: And then all this is happening again.

[00:05:16] [SPEAKER_02]: And you started thinking about the order that this is going to play on it.

[00:05:20] [SPEAKER_02]: I had an error from Tekaiw on recently who's really leaning into the idea, not only of the roll out of these AI-based PCs and these edge-based, enabled devices, but the idea of the small language model.

[00:05:33] [SPEAKER_02]: But as I think about the relevance and what a partner will need to do to make it customer successful,

[00:05:40] [SPEAKER_02]: I'm starting to travel that there's a number of components and I think order is going to matter.

[00:05:45] [SPEAKER_02]: You've got to get the data organized, some level of data governance.

[00:05:50] [SPEAKER_02]: You've got to make sure that the devices on the edge are capable.

[00:05:54] [SPEAKER_02]: You have to make sure that the users are prepared from the perspective of both training to use it,

[00:06:00] [SPEAKER_02]: but also that they understand the data restrictions.

[00:06:02] [SPEAKER_02]: You've now got this element of understanding how to bring in the hybridization of it, right?

[00:06:08] [SPEAKER_02]: We've got to make sure that we're pulling in both private and public data models.

[00:06:14] [SPEAKER_02]: Right? And I think the power is going to be combining public LLMs with private data.

[00:06:21] [SPEAKER_02]: Have you started thinking about like the order and the opportunity levels at each stage?

[00:06:27] [SPEAKER_01]: Yeah, it breaks into kind of four major categories.

[00:06:30] [SPEAKER_01]: And there's different kinds of partners that participate in each of these categories.

[00:06:34] [SPEAKER_01]: I mean the first is that every business in the world, whether you're a small business, whether you're a large enterprise,

[00:06:39] [SPEAKER_01]: is starting to think through what is AI mean to us?

[00:06:42] [SPEAKER_01]: Not only does it mean to our customer and how we bring our product to market,

[00:06:46] [SPEAKER_01]: but the marketing, the sales, the operations, the finance, the HR, you know,

[00:06:49] [SPEAKER_01]: kind of we have to have these initial conversations,

[00:06:51] [SPEAKER_01]: and maybe even get to some initial pilots on how we're going to kind of rethink like chatbots and marketing language

[00:06:58] [SPEAKER_01]: and things like that. So those early conversations really sit in the realm of system integrators.

[00:07:03] [SPEAKER_01]: You know, at the large companies who are ready to have these conversations,

[00:07:06] [SPEAKER_01]: we're not dumping our world's history of data into language models.

[00:07:10] [SPEAKER_01]: And we don't trust it, we don't trust the hallucinations.

[00:07:13] [SPEAKER_01]: We don't like the fact that the Supreme Court and Canada came down on Air Canada,

[00:07:17] [SPEAKER_01]: we've made them liable for hallucinations. Like all this is happening,

[00:07:21] [SPEAKER_01]: we're not lined up to be an early adopter.

[00:07:24] [SPEAKER_01]: And now that you've seen a year and a half results from Accenture and Deloitte and TWC and Captain M&I,

[00:07:29] [SPEAKER_01]: it's been disappointing.

[00:07:31] [SPEAKER_01]: Those early conversations haven't turned into projects, haven't turned into big time pilots and things like that.

[00:07:39] [SPEAKER_01]: So it's been disappointing. The second one has been less disappointing,

[00:07:42] [SPEAKER_01]: which is 250,000 SaaS companies today, ISVs that can make their products better with AI.

[00:07:49] [SPEAKER_01]: So you've seen across the board now from, you know, today a dream force with Salesforce,

[00:07:54] [SPEAKER_01]: talking about Einstein, GPT, making it better.

[00:07:57] [SPEAKER_01]: You know, the co-pilot Microsoft, making it better, every company out there has now a little AI button

[00:08:02] [SPEAKER_01]: or feature function that they're adding and rethinking their products.

[00:08:06] [SPEAKER_01]: And this has been the initial kind of surge of consumption

[00:08:10] [SPEAKER_01]: and the uptick we've seen at the HyperScalors in terms of success on AI has really weren't been around ISV consumption.

[00:08:17] [SPEAKER_01]: The third stage is in data.

[00:08:19] [SPEAKER_01]: So snowflake and data dog and data bricks and MongoDB and kind of this whole data layer that hasn't been all that exciting.

[00:08:26] [SPEAKER_01]: Data warehouses and data lakes of the past is getting more exciting.

[00:08:30] [SPEAKER_01]: So as you're thinking about training and tuning these large models,

[00:08:33] [SPEAKER_01]: the small models where they reside, edge to cloud,

[00:08:35] [SPEAKER_01]: you know, now you have to take this world of legacy data and label it properly, clean it properly,

[00:08:43] [SPEAKER_01]: create these lakes that can actually serve these models.

[00:08:47] [SPEAKER_01]: And there's opportunity there and those companies are obviously growing those partners with skills in that area

[00:08:53] [SPEAKER_01]: are in triple digit growth mode at the moment.

[00:08:55] [SPEAKER_01]: And then kind of this fourth piece which is how does this all this tap it?

[00:08:59] [SPEAKER_01]: I mentioned you know, servers growing 105% which a doubling of an industry that's been around 40 years is amazing.

[00:09:07] [SPEAKER_01]: Until you find out that 80 to 90% of that growth was one company in video who now has a $3 trillion valuation amount.

[00:09:15] [SPEAKER_01]: So you didn't see Dell or HP or Lenovo post even double digit growth on a triple digit growing server market

[00:09:21] [SPEAKER_01]: and it just shows you kind of how this is playing out.

[00:09:25] [SPEAKER_01]: Networking is down. Cisco and Juniper, those numbers are actually negative in the last couple of quarters.

[00:09:31] [SPEAKER_01]: You've got the numbers around PCs which are kind of hopping along but they're going into a two year super cycle.

[00:09:38] [SPEAKER_01]: But it isn't just AI.

[00:09:41] [SPEAKER_01]: It's the laptops we went home in the pandemic are now more than three years old.

[00:09:45] [SPEAKER_01]: You're seeing that Windows 10 is end to service next October which creates a cycle.

[00:09:51] [SPEAKER_01]: And then AI which you can't do AI on a $500 hunk of plastic is going to have to be a $1,000 plus capable machine.

[00:09:59] [SPEAKER_01]: So those three things are creating a perfect store maybe eight quarters of double digit growth for the edge market.

[00:10:05] [SPEAKER_01]: But again we're watching storage.

[00:10:07] [SPEAKER_01]: We're watching all these things it's not there yet.

[00:10:09] [SPEAKER_01]: So when you talk about time, you know we're under estimate in two years but over the course three five and ten years.

[00:10:16] [SPEAKER_01]: You know this is going to be a solid time for not only client server companies but obviously cloud companies.

[00:10:22] [SPEAKER_02]: All right I'm going to pull from a question from the audience here because it's really insightful.

[00:10:26] [SPEAKER_02]: Those cagor numbers really are quite something and this LinkedIn what viewer is asking are there any non obvious geo's or markets that might be hidden gems that are prime to explode.

[00:10:39] [SPEAKER_01]: Yeah you can watch and one of the ways partners are being successful right now is watching AI kind of six different ways.

[00:10:47] [SPEAKER_01]: Which buyers right now are lined up for the early opportunities you know hint in many companies the CMO right now is spending more money on technology than the CIO.

[00:10:57] [SPEAKER_01]: So where are some of these early wins that we can go get by by your type?

[00:11:00] [SPEAKER_01]: Second where can we go find you know in those sub industries the 297 sub industries some industries the ones that happen to be less you know with around compliance and regulatory and governance are moving faster than the heavily regulated ones makes a lot of sense.

[00:11:17] [SPEAKER_01]: Third looking at the different geographies you know the United States is the fastest growing in the world that's where SaaS.

[00:11:24] [SPEAKER_01]: You know continues to be the majority of their businesses is in North America and it's happening again with AI Europe is kind of a fast follower a pack is a fast follower after that other markets are likeers.

[00:11:38] [SPEAKER_01]: So much like managed services you know kind of started North America the SaaS business started North America we're seeing it happen again the cloud businesses the hyper scalars really came you know North America first is happening again in January and so geographically that's the way it's going to roll.

[00:11:53] [SPEAKER_01]: You know fourth we're looking segments you know is your hairdresser is your flower shop is your daycare center you know going all in with copilot no.

[00:12:02] [SPEAKER_01]: Is this SaaS that they used to run their business you know gonna add a feature in the next six months yes but it's the larger organizations that can see you know generational level changes in cost and revenue and working with their customers are the first you know so it's really top down enterprise down.

[00:12:23] [SPEAKER_01]: In terms of where the opportunities are you know a gen AI actually breaks into 250 product categories so you can actually go in and find some growth like for example cyber secure.

[00:12:33] [SPEAKER_01]: You know people are really worried about these hallucinations they're really worried about training and tuning consumer models with your you know hard earned business data that you need to keep protected and not only do not want them to hallucinate you don't want them to share that when somebody does a chat GPT search for something.

[00:12:50] [SPEAKER_01]: And then obviously all the models you know there is subscription and consumption there's managed there's all kinds of different business models wrapped inside gna as well.

[00:12:59] [SPEAKER_01]: You've got to go find that specialty and if you could find an intersection between two or three of those six things.

[00:13:06] [SPEAKER_01]: You could go build a triple digit growing business around gna going into 2025.

[00:13:12] [SPEAKER_02]: But obviously that's a big opportunity of now one of the areas where I've been particularly interested and I always remind listeners you know my love.

[00:13:22] [SPEAKER_02]: I'm trying to find ways to be effective in mid market and in SMB with these emerging technologies and one of the use cases that starting to treat me more than anything.

[00:13:33] [SPEAKER_02]: Is what I'm building as the report builder problem.

[00:13:36] [SPEAKER_02]: Traditionally we've had a consistent problem with organizations being able to get access to data it's fallen into one of two categories either the solution comes with a pile of pre and reports that.

[00:13:49] [SPEAKER_02]: They try and leverage get 80% of the way there the software designer has done it to give access to the data and then you bet most of the time customers are always complaining about well it doesn't white solve my problem.

[00:14:02] [SPEAKER_02]: It doesn't quite get me the day that I want or the vendor spends a considerable amount of time either making APIs available, making the data all available trying to plug power BI into it or they go down the rabbit hole of building a report builder.

[00:14:17] [SPEAKER_02]: That offers all of that and we find particularly for most we think about a lot of mid market or organizations that have technical chops but are not necessarily teaching their people to build all of that the real.

[00:14:30] [SPEAKER_02]: I'm starting to see is the best potential here is the idea of providing them natural language queries against the data that they.

[00:14:40] [SPEAKER_02]: What I want to get from you is first of all you're reaction to the premise but I have a feeling you're going to think on on to the right direction which leads to the second part of is what are the challenges that you think.

[00:14:52] [SPEAKER_02]: Organizations need to work for that are thus the opportunity for providers in order to make that a thing.

[00:14:59] [SPEAKER_01]: Yeah, I mean the first thing realized that these natural queries is going to replicate kind of the SaaS business.

[00:15:06] [SPEAKER_01]: One of the things that kind of shock managed service providers and vars and you know people that have called on the CIO for a long time is it's 75% of SaaS is bought is bought and sold to the line of business leaders.

[00:15:16] [SPEAKER_01]: Now the sales leader by CRM the marketing leaders by marketing automation all the categories which G2 Crowd has 2,262 categories of SaaS but they're bought by business leaders.

[00:15:29] [SPEAKER_01]: So these queries are going to happen in a department and they're going to happen through the data probably generated inside a SaaS platform.

[00:15:37] [SPEAKER_01]: A Salesforce service now a work day on marketo and that's we to HubSpot.

[00:15:42] [SPEAKER_01]: It's going to be that data of which you can analyze get insights from go ask questions and this is what AI's superpower is it's not just building this huge big data lake.

[00:15:54] [SPEAKER_01]: And I'm going to download the entire internet into this data lake and hopefully you know it can connect the dots for me.

[00:16:01] [SPEAKER_01]: It's going to be to ask AI go read the internet cover to cover about this particular customer about this particular person about this particular partner and go build this wealth of information in milliseconds to give me the answer and then bounce that against my own data and tell me the next best action.

[00:16:20] [SPEAKER_01]: This is what AI's going to change everything for every business leader and if a partner's there you want to think through these use cases and I agree with you this is the kind of the end outcome once we train business data into large language models.

[00:16:37] [SPEAKER_01]: Is this real time query with real time data and real time insights that no human would have the ability to go and click on a thousand things to condense into you know one paragraph answer.

[00:16:51] [SPEAKER_02]: Now you brought up the enterprise you know as the traditional way that this is going to be invested in and I buy into the to that from the perspective of a large market and if we're trending and watching the entire space to say yes it will get adopted in enterprise first and move through the mid market it'll get to S.

[00:17:07] [SPEAKER_02]: That is very much a market trend but if I'm thinking about this from an individual company perspective that means there's incredible opportunity for small companies to lean in further, who may be significantly more willing to take on risk.

[00:17:23] [SPEAKER_02]: I wanted to get your sort of impression and take on this as a competitive thought in that if you're a small organization you likely have a lot less of those restrictions.

[00:17:36] [SPEAKER_02]: You both culturally and even intellectual property itself because you've likely created a lot less of that let's think of the typical very small lawyer or the very small.

[00:17:50] [SPEAKER_02]: You know the mayor a small manufacturer it could even go all the way down to a very small retail organization or small chain of them.

[00:17:58] [SPEAKER_02]: They're in a position where they don't their competitive advantage is much more about customer service intimate relationships.

[00:18:04] [SPEAKER_02]: The classic we have better people and they work with with them better versus we've built up this incredible lake of valuable IP.

[00:18:14] [SPEAKER_02]: It feels to me like there's a space here on an individual or small groups of company level to be competitively aggressive with that agility.

[00:18:27] [SPEAKER_02]: Because you aren't bringing with you all of those those big risks.

[00:18:31] [SPEAKER_02]: I want to again I want to get your take as somebody who's looking at it in broad sense does that happen in the market data and if so like what are the characteristics of those organizations or why does it not.

[00:18:44] [SPEAKER_01]: Right, so I think the way there's two things that I would answer the question quickly one of the biggest confusions with AI is it's it's not a product.

[00:18:52] [SPEAKER_01]: You don't go to distribution you don't go to a market place and say I want to buy AI what it is is a feature.

[00:18:59] [SPEAKER_01]: It's a function within everything you use today.

[00:19:02] [SPEAKER_01]: So if you go talk to a lawyer today, you know running a small office or whatever else they do not have the capability or capacity to kind of train in tune or build their own model or or do those types of things that they don't have the people the skills the development the investment.

[00:19:18] [SPEAKER_01]: And you know can they go buy a $30,000 chip from Nvidia and go build a you know what no they're going to see AI through the products they already use.

[00:19:27] [SPEAKER_01]: The products they use that they manage their customers with you mentioned customer success you mentioned all these different things they're going to ask the question hey can I replace or can I augment some of my you know junior folks with a tool that can do much better legal research.

[00:19:42] [SPEAKER_01]: And and probably do better than today a paralegal yes you know two versions ago of AI chat GPT past the bar exam.

[00:19:53] [SPEAKER_01]: The second you know version back actually past the bar exam in the top 10% up.

[00:19:59] [SPEAKER_01]: The most recent version that's out there today with AI is writing the bar exam.

[00:20:04] [SPEAKER_01]: It's exponential growth so the question is how do I change the shape of my organization how do I drive a better outcomes for my clients and they're going to see all of the customer success they're going to see all the financial they're going to see the operational they HR the sales the marketing.

[00:20:19] [SPEAKER_01]: All of the different benefits are going to be in the platforms they already buy it's going to show up in the things they already own and they're going to rethink how they can do it better.

[00:20:30] [SPEAKER_01]: Not on their own but through the tools they already use and partners have to come around to this is going to be how and perhaps there's no more money on the product side.

[00:20:42] [SPEAKER_01]: You know while some are offering you know five dollars for a co pilot or five dollars for Einstein GPT today that's going to go away in 18 months it's just going to be built in.

[00:20:52] [SPEAKER_01]: And then how you help that firm rethink everything they do is where the value is.

[00:20:59] [SPEAKER_02]: I mean I understand with you and I think even right now you're the use of those products and how you effectively use them is still wide open and a lot of people are learning now.

[00:21:07] [SPEAKER_02]: And I'm going to remind you for those watching us live you know we are watching the chat and we're taking those questions drop them into the chat bar and we will happily answer them.

[00:21:16] [SPEAKER_02]: Jay I want to ask you I want to lay her on another element of this you run an article that's kind of stuck with me for a little bit now and you talked about peanut butter.

[00:21:24] [SPEAKER_02]: I don't quite have the same affection for peanut butter.

[00:21:28] [SPEAKER_02]: And I think I share with you on that one but you use the metaphor of the selection of peanut butter to explore how AI automation and IoT is involved with everyday decision making.

[00:21:39] [SPEAKER_02]: To those low value repetitive tasks where it doesn't matter what brand of peanut butter you have versus some customers who are very selective over that.

[00:21:50] [SPEAKER_02]: And I kind of wanted to get a little bit of your insight into the thinking of the criteria that differentiate low value decisions versus high value decisions because it's there's more than just the marketing of that because we could make an argument that they're all peanut butter.

[00:22:07] [SPEAKER_02]: But clearly for some people it really matters and for others it doesn't.

[00:22:12] [SPEAKER_02]: What's your thinking on the criteria around low value versus high value decisions?

[00:22:17] [SPEAKER_01]: Yeah this was one of those you know evenings I woke up in a cold sweat in the middle of the night and it was like personal psychology.

[00:22:25] [SPEAKER_01]: You know you and I both love communities we both love you know when people get together and share in their passion.

[00:22:31] [SPEAKER_01]: And I started thinking my life like how many thousands of decisions do I make that I have no passion or no you know question which way I want to go just make it happen.

[00:22:43] [SPEAKER_01]: So I kind of brought up peanut butter as the metaphor because like you I don't have a huge passion for peanut butter.

[00:22:48] [SPEAKER_01]: I don't care if it's a skipier Jeff or store-bought brand. I don't care if it's chunkier smooth the only criteria I have is I need peanut butter because I needed in my cabinet.

[00:22:59] [SPEAKER_01]: So of all that it's not that passionate if I was passionate I go to farmers markets and choose the ingredients and be debating on Facebook you know what you know I'd be deep into the community and passion and I'm just not.

[00:23:12] [SPEAKER_01]: Then I started thinking about paper for my printer. I started thinking about just the thousands of things that we do almost on a weekly basis that are just consumption models.

[00:23:22] [SPEAKER_01]: So peanut butter for me if you put it into my pantry and put it on a waste scale and every time it got down to like two ounces it just got replenished.

[00:23:30] [SPEAKER_01]: And you know whoever wants to buy me the waste scale which cost five dollars they now have a customer for life.

[00:23:37] [SPEAKER_01]: And if it's skipy that does that not only am I customer for life I'm recurring so that dollar of revenue actually looks better to Wall Street or proctor and gambler whoever I have no idea who owns it.

[00:23:48] [SPEAKER_01]: But the fact of the matter is getting recurring customers for life could be as much as just understanding how much of your market tam doesn't care.

[00:23:57] [SPEAKER_01]: Why do we care as Dave Solbow would say and so for those thousand decisions and when I get paper for my printer that's another waste scale.

[00:24:05] [SPEAKER_01]: And when I'm down to a hundred pages like send me more when I'm down to you know two ounces of peanut butter.

[00:24:09] [SPEAKER_01]: And I can probably think of a thousand things where I just said it and forget it.

[00:24:12] [SPEAKER_01]: I don't want to go to Amazon and subscribe.

[00:24:15] [SPEAKER_01]: Because every three months I get it it's always the wrong.

[00:24:17] [SPEAKER_01]: I don't get enough I get too much I get it just you can't keep my time there's so much more that goes into the solution.

[00:24:24] [SPEAKER_01]: There's IOT parts of this that can have sensors and cameras and but if I can move those decisions away and just set automation in my life where the things I am passionate about.

[00:24:36] [SPEAKER_01]: You know maybe my motorcycle where I do care about how I get from point A to point B other people like just give me a Toyota Honda whatever it is.

[00:24:43] [SPEAKER_01]: And and every three years refresh it I don't care I just need to get from point A to point B.

[00:24:49] [SPEAKER_01]: So take the people with passion and market to them differently.

[00:24:54] [SPEAKER_01]: They're on YouTube watching videos racing Tesla's they're on the deep you know of edges of the internet you know debating and fighting with people over what's better.

[00:25:04] [SPEAKER_01]: Get that people with passion ignite that passion for the people that don't care just automate and simplify their lives.

[00:25:12] [SPEAKER_01]: And then there's about a third of the market that's just priced right so you're going to have to have channels of distribution.

[00:25:18] [SPEAKER_01]: You're going to have to show up a nickel less with a coupon at the right time and you have to be kind of that lowest price or best value and just treat those three markets separately.

[00:25:27] [SPEAKER_01]: And understand that it's all personal psychology you have to you know have eight billion dollars eight billion people kind of in this AI model of who is where and get them to declare who they are.

[00:25:39] [SPEAKER_02]: So but I want to press a little bit here because I love the concept and it is a natural fit for market and I want to definitely think I think that's also an identifying of correct buying behaviors within customers.

[00:25:51] [SPEAKER_02]: That makes perfect sense to me and I wouldn't by the way encourage our listeners both to go and read the article which I've highlighted on the show, but also to think about that way of engagement because because there's value in those that are also passionate about the decisions.

[00:26:05] [SPEAKER_02]: And there's value in the automation but what I'm curious in your thinking about this is are there identifiable criteria about those customers because it feels like those that are passionate about those decisions would also be higher value in that particular space.

[00:26:26] [SPEAKER_02]: But if I'm going after a group of people that are very passionate motorcycle enthusiasts for example, right? I can sell a very different kind of service to those at least in the white love service versus those that are just transportation where may be running a volume business there.

[00:26:43] [SPEAKER_02]: Are there criteria that you've been thinking about that you can identify to say this is how we can pull those customers out to deliver that higher value.

[00:26:53] [SPEAKER_01]: Yeah, the interesting thing is the first two cohorts that I just mentioned are very profitable.

[00:26:59] [SPEAKER_01]: If you set it and forget it for the rest of my life for peanut butter, I'm going to pay MSRP.

[00:27:04] [SPEAKER_01]: I'm never going to cash a coupon. I'm never going to grab you on a sale and you can design your entire supply chain around people like me that need these shipments on a kind of semi regular basis.

[00:27:17] [SPEAKER_01]: It allows you to kind of take every cost out of your business. There's no sales, there's no marketing, there's no customer success, there's absolutely very little supply chain costs.

[00:27:28] [SPEAKER_01]: So you can profit off of me paying less price.

[00:27:31] [SPEAKER_01]: But then the second which you are kind of alluding to, I get really excited about peanut butter and I'm going really aggressive on things and things like that.

[00:27:38] [SPEAKER_01]: I can sell skipy plus and skipy plus plus and now I'm paying 12, 15, 20 dollars for a jar of peanut butter because that's my passion.

[00:27:47] [SPEAKER_01]: And somehow I'm thinking that that's a better way to do it.

[00:27:49] [SPEAKER_01]: No, what Starbucks did do a cup of coffee.

[00:27:51] [SPEAKER_01]: So yes, a highly profitable way to upsell crocel in rich that clients life and delight them and get the get the value for that.

[00:28:00] [SPEAKER_01]: The hardest is the 30% of people who just buy on price.

[00:28:03] [SPEAKER_01]: If you don't have the right line of sight at the grocery store, if you're not listed properly on a digital marketplace, if you don't have the right coupon and you come up a nickel, you know, to high and price.

[00:28:15] [SPEAKER_01]: You know, you win or lose on a weekly basis.

[00:28:18] [SPEAKER_01]: You still want to compete for that third of the market but just understand that's going to be your least profitable segment.

[00:28:24] [SPEAKER_02]: Well good to know and I think we all the other thing we've learned about this is that you're quite into more strawberry jam as you're favored on this and I will say my sweet tooth.

[00:28:32] [SPEAKER_02]: It means distinctly to the Nutella and I am brand loyal on that one despite my wife's best efforts.

[00:28:40] [SPEAKER_02]: Jay a little bit of fun as we wrap up here is there a big question you're kind of pondering right now the one that hasn't quite fully formed.

[00:28:47] [SPEAKER_01]: Yeah, and it's one of the reasons I listen to you every day because you know, it's taking governments and regulators and compliance folks and legislative folks.

[00:28:56] [SPEAKER_01]: You know, it always takes them 10 years to catch up.

[00:28:59] [SPEAKER_01]: You know, for everyone that wrote an open letter on JNI and you know, people that think we lit up sky net here and you know, people that honestly think that you know, maybe 44% of all of our jobs could go away.

[00:29:12] [SPEAKER_01]: You know, this is actually the threat that might hold.

[00:29:15] [SPEAKER_01]: This old mechanical muscles and you know, industrial revolution, agricultural revolution.

[00:29:20] [SPEAKER_01]: This is the revolution that actually doesn't have humans, you know, need not apply whatever state you're in.

[00:29:26] [SPEAKER_01]: You know, governments it always takes them 10 years to kind of figure something out.

[00:29:31] [SPEAKER_01]: When Microsoft invest 13 billion dollars in a company and they turn around and consume that product back from you.

[00:29:37] [SPEAKER_01]: Doesn't really pass the smell test.

[00:29:40] [SPEAKER_01]: John Deer can't sell a billion dollars worth of tractors and then have that person go and sell them back to them.

[00:29:47] [SPEAKER_01]: You know, so it's a model where regulators and governments, I'm not sure they're going to get smart and time, which is going to lead to the fact that the big get bigger.

[00:29:57] [SPEAKER_01]: You know, these three trillion dollar companies today before governments catch up are going to be 10 trillion dollar companies.

[00:30:04] [SPEAKER_01]: So if you're thinking through the eyes of your 401k or your RSP, the deck is kind of stacked for these really big companies as utility companies as consumption companies who are going to kind of hide back and get all the benefits.

[00:30:19] [SPEAKER_01]: And it's just, it's not going to be as competitive of a market for that bootstrapping little start up to go and you know create something big.

[00:30:30] [SPEAKER_01]: And so I'm worried a little bit in terms of just the, you know, balance of power or the balance of opportunity to create insane amounts of wealth through this major change in technology.

[00:30:43] [SPEAKER_01]: And you know, we saw what the cloud turned it. We saw what the client server, you know, trend did this is that next big decade long trend and it seems again to be creating billionaires on one side.

[00:30:57] [SPEAKER_01]: And you know, 30% of MSPs on the other side that struggle with profitability each month.

[00:31:04] [SPEAKER_02]: Yeah, I have the same concern and I am at least a little hopeful that the regulatory machine will not move as slowly.

[00:31:16] [SPEAKER_02]: Partly because it appears at least, you know, I'm right to think about this. You asked perspective that there is some bipartisan support for different reasons but at least alignment on that and there's significantly more discussion about it than if I compare against the social media trend and I compare against the cloud trend.

[00:31:35] [SPEAKER_02]: There's a lot more discussion at least happening, which is an indicator of something. And I think the other thing that is very notable here is is that governments will be end up being big sumers of technology.

[00:31:46] [SPEAKER_02]: I mean, I've been several upcoming interviews talking with some really interesting people on the data space and they've alluded to how much some of the governments are consumers of that and thus at least the organizational infrastructure of the government will have a better understanding.

[00:32:03] [SPEAKER_02]: Will you and I will be having more conversations on this.

[00:32:07] [SPEAKER_01]: I'll leave you with one last stat is 45% of the world's population is going into elections this year 51 different countries, including here in the United States.

[00:32:18] [SPEAKER_01]: We've been very clear, you know, through this phase around the world that were done being the products on the internet. So what happened?

[00:32:26] [SPEAKER_01]: A couple of weeks ago Google lost version two of the cookie trying to sell that to Europe.

[00:32:31] [SPEAKER_01]: So that thing is going to get broken up the biceye, the sell side of us being products, Alexa over here in us in the kitchen and then Facebook showing us an ad a minute later we've kind of been clear that that's done.

[00:32:42] [SPEAKER_01]: Now a couple of weeks ago Google also lost an anti-trust suit in the US.

[00:32:48] [SPEAKER_01]: So this regulation piece is picking up Microsoft's, you know, in front of them apples and front of them.

[00:32:54] [SPEAKER_01]: So the trillion dollar companies are hiring more lawyers than anyone. I remember I was at IBM, you know, through that phase and there's more lawyers at IBM than most of our competitors had employees.

[00:33:06] [SPEAKER_01]: And then they're going to go through a very deep tier of defending how they can be trillion multi trillion dollar companies, you know, when other industries and other people are struggling.

[00:33:18] [SPEAKER_02]: I mean, I, I, I, I, I, I, I think about, you know, putting together the things we're going to talk about on the show.

[00:33:22] [SPEAKER_02]: I have a recurring legislation and regulation segment that if I think if I had been doing this show 10 years, 15 years ago, there wouldn't have been enough to talk about.

[00:33:31] [SPEAKER_02]: But now it's an actual recurring statement that's that's just the general thought of there's a lot more compliance out there.

[00:33:38] [SPEAKER_02]: But on top of that, it's exactly what you talk about is there's there's a pushback, there's a recognition that there's a change and it's not all sunshine and roses.

[00:33:47] [SPEAKER_02]: I do think a, I keep clipping that there is opportunity in this complexity.

[00:33:52] [SPEAKER_02]: And so we want to lean into that but we need to recognize it's it's complex day. This is super fun.

[00:33:57] [SPEAKER_02]: I look forward to having you back again, sure, soon to mix it up some more. All right, thank you so much.

[00:34:04] [SPEAKER_02]: So we talked a little bit about data lakes and the future of data management is here and it's called the Lake House concept in this weekend's bonus episode.

[00:34:12] [SPEAKER_02]: I dive into a conversation with Oring Rafael, the CEO and co-founder of Upsolver to understand how this new data architecture is revolutionizing the way businesses handle complex data.

[00:34:24] [SPEAKER_02]: Or he explains the key advantages of the lake house, including cost savings and the ability to use multiple data engines.

[00:34:31] [SPEAKER_02]: He shares in this clip his thoughts on the evolving role of data engineers. Here's a preview.

[00:34:37] [SPEAKER_00]: Engineers are definitely here to stay and for example, I can tell you that my perception of a data engineer and I was the DBA and the data engineer can I know the job well.

[00:34:49] [SPEAKER_00]: I think that the data engineer would like to be a platform manager and not developer for our invitation. So if the R&D team needs to come to the DBA or to the data engineer and ask them to build to write codes for support the workflow.

[00:35:06] [SPEAKER_00]: And basically everything is being funneled to the engineering.

[00:35:09] [SPEAKER_00]: So you're creating this bottleneck and that's exactly the reason people be the dislike data like for example. This is why we have a genders in the world like data match today talking about freeing up all the people that are domain expert not necessarily data engineer to build their own workflow.

[00:35:27] [SPEAKER_02]: With all the talk of data, some of us may need to come up to speed on what all of the concepts around data architecture are.

[00:35:34] [SPEAKER_02]: By saying it was one of the things I needed to learn as well. My Patreon supporters already have this interview if you want to listen right now.

[00:35:42] [SPEAKER_02]: It'll drop on the weekend on YouTube and the podcast feed. If you're interested, really do encourage you to listen visit patreon.com slash msb radio to sign up and get access right now.

[00:35:54] [SPEAKER_02]: I want to thank sales builder our Patreon sponsor who support makes this show possible.

[00:36:00] [SPEAKER_02]: Focus on your IT sales workflow with the power of automation and visit them at salesbuilder.com that's BU-I-L-D-R.com

[00:36:09] [SPEAKER_02]: And vendors you too can get your name mentioned on the live show right here. It's a simple monthly subscription visit patreon.com slash msb radio to learn more.

[00:36:20] [SPEAKER_02]: Unless you can support the show. Make sure to hit like, share and then follow on all of your favorite platforms. That's the number one thing that you can do to help us out.

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[00:36:41] [SPEAKER_02]: If you have a question or listening to the recording send it in at question at msb radio.com.

[00:36:47] [SPEAKER_02]: Thanks for joining me for the business of tech lounge and I will see you next time.