The Startup Ideas Podcast - Brainstorming The Most Profitable AI Business Ideas

Episode Date: March 8, 2024

I’m joined by Eric Siu, Founder of the digital marketing agency Single Grain. We discuss million-dollar trends and opportunities entrepreneurs should have on their radar right now, including pay-per-performance agencies, AI customer service, AI transformation agencies, and so much more.🚀 My FREE 5 day email course to learn how to build a business of the future using the ACP funnel:https://www.communityempire.co/🎯 To build your own portfolio businesses powered by community you might enjoy my membership.You'll get my full course with all my secrets on building businesses, peer-groups to keep you accountable, business ideas every single month and more!Spots are limited.https://www.skool.com/community-empire-6150/about📬 Join my free newsletter to get weekly startup insights for free:https://www.gregisenberg.com70,000+ people are already subscribed.FIND ME ON SOCIALX/Twitter: https://twitter.com/gregisenbergInstagram: https://instagram.com/gregisenberg/LinkedIn: https://www.linkedin.com/in/gisenberg/FIND ERIC SIU ON SOCIALX/Twitter: https://twitter.com/ericosiu LinkedIn: https://www.linkedin.com/in/ericosiu/Episode Timestamps00:00 First business idea: Pay per performance agencies 05:05 Second business idea: AI customer service agencies 09:28 The potential of Smart Contracts 11:35 How to gamify daily life 15:50 Lifestyle trends to have on your radar 20:12 Existing products you can rebrand 23:39 Opportunities for agency owners 25:40 Third business idea: AI transformation agenciesIf you enjoy the podcast, consider leaving a review to help others discover the show :)

Have you seen retail AI for sure you have? Yeah. When I did the demo last week, they were setting up like a dental appointment. I would try to, you know, throw it off. Like, it was perfect. I was like, imagine if you can build this at scale now. They can take the call with the lead. They can then set up the next call.

And then also the lead might say, oh, I need to reschedule. They can handle all the rescheduling. It will probably get to a point where eventually you can just close the customer or two. I think that's going to be a big thing because you saw the Klarna report like two days ago. They think they're going to add 40 million in profit because they added like 700 new agents, AI agents. So how are we not going to go into this world? It is so good to see you.

Yeah. Been seeing you for a couple hours already. But likewise. We just recorded Eric's podcast right before this. Yeah, Greg did great. I had to bring you on for a few ideas that you had. And you've been gracious to write down a few ideas. Yeah, no.

Great questions. And I got them right here. So you've got a lot. But let's start with this pay performance agency. Why is that a business idea that's exciting you right now? Because when I hear paper performance, I'm like, hasn't been done before? Like, why is paper performance an interesting startup opportunity right now? I'll give you two stories on this one.

So one of my friends, his pay for performance agency does $80 million a year, $30 million in profit. And they have like 30 employees. And it's like, okay, well, that sounds, agencies are boring business. It doesn't scale well, blah, blah, blah. It's like, no, like all he does is he focuses on one industry and just runs paid ads. He's really good at copyright, and they're really good at strategy. He's co-founder's technical, and they just build a lot of interesting things for people in that industry. And what they do is, let's say you are in the finance industry.

I'll say, okay, well, how much are you in the pay per customer, like 500 bucks? I'll say, okay, we're going to run a test. We're going to run some traffic towards you. And if you like the customers, we can continue the conversation. But there's no need for a long-term commitment. you only pay us if we perform. That's a good offer. And my whole thing is, as a marketer,

if you're a good marketer, you would charge on performance, right? But most people aren't willing to take the risk. And I've always wanted to emulate that model. And so I don't think pay for performance will ever go away. In fact, I think we can go towards like smart contracts. I think it's going to get even crazier, right? The best marketers are going to capture even more value.

I also think that in like an AI world where an AI in just like data world, the marketer has more data. So they're able to underwrite and be like, okay, we're willing to bet on this particular opportunity. Right? Yep. And here's the other thing.

Yes. And imagine all the stuff you're going to be able to build, which we might get into. But there's another pay for performance agency. They focus on telecoms. And I think they're probably doing over a billion in revenue now. And one of the guys I used to work with at another agency a long time ago, he was one of their early employees. And they were not really doing much to begin.

I think they were doing like a couple million dollars a year. And then they started to do this pay for performance thing, tongue twister, where they would basically drive you leads through Google ads, and then they'd get paid for the leads. Eventually what they did was they got bigger. They started acquiring call centers. And then they would basically just gift wrap a customer for you. And then a bunch of private equity, like invested.

But they just gift wrap customers for like AT&T, Verizon, you know, all these, like, T-Mobile and all that now. And so I think it's a big opportunity because there's not a lot of capital expenditures to set it all up. I feel like a lot of people have done pay performance in the lead space. Is that correct?

Like insurance lead, sorry. Yeah, yeah. Because like, you want to go into a space where they'll pay you a lot for lead. Right. So what other spaces would be interesting? I think finance depends on like, you know, I think there are a lot of crypto companies

reaching out to us right now. A lot of the biggest exchanges, they all want to do pay for performance and, you know, there's money in crypto. AI is a very broad space. I think you need to focus on the actual industry. You can't just say SaaS or AI. It's got to be like, you know, for like hotels would be another example, right? It just, wherever they're going to pay high CPAs. Right.

So you just make a list of industries that are paying high CPAs and then create a brand, a landing page. Yep. And you test it. And, like, my friend, by the way, what he does is he creates a lot of different brands. So he might have, like, 20 different websites, like, you know, California Hotel Group or something, or Florida Hotel Group. And he just drives traffic there. Because, like, if I'm working with you and you decide you want to screw us or something, sure, you can cut us off, but we'll just go to your competitor. Right.

And so the relationship is a lot more balanced now. I like it. I feel like, you know, a lot of the affiliate world does a lot of this paper. This is basically affiliate marketing. But the way he does it and the way these are actual businesses, they're not doing it in like dirty ways. And they're not doing it like, they won't do anything it takes to get the conversion. Other startup idea that you've been thinking a little bit about is AI agents.

Tell me about what sort of agents. Well, maybe explain what an agent is and why you're interested in it. So have you seen retail AI for sure you have? Yeah. Yeah, okay. Tell people what it is. Retail AI is, it's like a, it's basically like a voice LLM, right? And you can basically, when I did the demo last week, it was with, like, they were setting up like a dental appointment.

It's like, what's your name, blah, blah, blah. And it like, I would try to, you know, throw it off. Like, it was perfect. I was like, it's like, oh, when do you have. You would try to throw it up. Yeah, it's like, when do you want to have a call or like, when do you want to meet? I was like, never. And she's like, okay.

well, let us know when you want to meet, and then boom, hang up, right? And so imagine if you can build this at scale now, these agents at scale for companies where they can take the call with the lead. They can then set up the next call. And then also the lead might say, oh, I need to reschedule. They can handle all the rescheduling. So there's a tool called scheduler.ai. They've actually gotten really good at rescheduling calls now.

Combine those two, right? It'll probably get to a point where eventually it can just close the customer too, especially if it's SaaS or help a customer or try to set up phone calls to move over to your AEs. I think that's going to be a big thing because you saw the Clarna report like two days ago.

It's like what they added, they think they're going to add 40 million in profit because they added like 700 new agents, AI agents, and they handled like 2.3 million chats and like, I don't know, like 80 to 90% faster. So how are we not going to go into this world? I also think there's a huge opportunity

to just go to companies with big customer service teams and be like going back to your pay performance thing, it's like, we're about to save you $2 million a month. Give us a percentage of that by using agents for customer service. So I was thinking on exactly the taking the percentage piece, but then I listened to a podcast episode, I think it was my first million. And a smart bear, God, what's his name again?

The guy that found a WP engine. James Cohen, maybe. something like that. The WP engine guy. The WP engine guy. So this guy, as I was thinking about this, he literally, he was like, yeah, you guys might as well just, like,

you can either try to save a company money and take a percentage there, or you can just go straight for the value, and you'll capture like four to eight times more. And I'm like, that was the thing that was kind of like bugging me in the back of my head. Go for the value? What does he mean by that? Just like, instead of saying, hey, I'm going to save you money,

it's like, no, I'm going to get you like X more customers or something like that. and just charge him up front like that. But like I had this like little like twist, like a little knot in my, in the back of my mind. And like he just like unknotted it. So yeah, a good line, a good podcast line. Sometimes that does that.

I don't know. I think contingency lawyers, right? Like people who lawyers who will say, yeah, I'll take your case, but I want 50% of the money I get. I think like. Yeah, if you can take a fat percentage. percentage, that's awesome. Yeah, which is probably the move, yeah.

I also think that if you're trying to start, like, something like an AI customer service agency like that, sometimes it's really helpful to start at a percentage of cost savings, and then you can move to something else. Yeah. Or I think, to your point, I think if you want to derisk yourself, the entrepreneur wants to de-risk himself, maybe there's a base cost first, just so there's some skin in the game.

Because I've seen a lot of situations where people will save money, and then, like, they just will stiff them, and they just won't pay the money. I think there's an opportunity to create. pay for performance conversion rate optimization agency. You know, there's actually a pay for performance CRO agency based in Atlanta. I think they're, I forgot their name.

I would, oh, spiralize, that's their name. And let's say your conversion or e-com conversion rates 1% right now. I'm like, okay, well, if we double it to 2%, how much money is that worth? Well, 25 million. It's like, okay, well, we're going to take two and a half million on that 10%. Is that fair?

Oh, yeah, it's fair. And that's what they do. They just take a spread. That, I think, is a huge opportunity. I think that's the move. And then you start laying on smart contracts and everything, which is we're still probably like five, ten years out. How do you see smart contracts playing in and rolling that?

I think like chain link is moving, they do a lot of stuff in enterprise, right? And so like I think the way I imagine it working is like, okay, we have an agreement. If we hit these numbers for you, this money goes into escrow and it's released to us, like a portion is released to us if we have. hit these numbers. If we don't by this time period, then the money goes back to the customer. And then it's like, it's very transparent and it's fair and it doesn't, there's no anxiety on either side. Yeah. Yeah. I feel like smart contracts is going to be like something like that,

such an obvious, you know, use case. Yeah. Yeah. I feel like speculation. Bitcoin speculation, Bitcoin goes up and like smart contracts like that, something, you know, I don't need to trust a third party. That's where I think crypto is really interesting. That's why DeFi works so well. Yeah, that's why DeFi works so well. Do you have any other smart contract ideas? Well, I think also just in general, like with agencies. I don't know about you, but, you know, we've had two clients who just didn't pay us

because of financial difficulties. And one of them particularly is like, a huge company. Now, if it was a smart contract, like we did our work, we delivered it, they actually loved it. If the money was in an account and just got like escrowed into our account.

But what ended up happening was they hit some hard times and there was a bunch of people, a bunch of debt that they had to pay off. So, yeah, I'm interested in smart contracts plus service providers. So are they like ignoring you now? No, just ignoring us.

It's so it sucks. Yeah, that sucks. Like, what would you do, honest? I just side, yeah, what do you do in a situation like that? I think even if you sue them, it doesn't matter because it takes forever anyway. And then there's like appeals and everything. And it's like, this is why smart contracts need to happen. But I'll give you another example with how we actually built something internally for my agency.

Yeah. I bought the domain for it. Incentive.Soul, right? And so you can, like, my whole thing in, we're talking a little bit ago about how we see life as a game or at least I see life as a game. Then if that's the case, and how do we just gameify everything?

And so, you know, for... We have these things... We have an employee engagement tool called 15-5, and it's like, if you feel that out on time each week, you know, by end of day, like, you know, you get a dollar or $2 in Solana, right? Or if, like, you get like a really high rating from someone or you complete all these deadlines in your sauna,

like a lot of stuff is trackable three APIs. but you can give people little micro incentives and then a leaderboard gets created you can see who's getting the most stuff done or whatever you can see who's lagging behind and that's also grounds for like who should be promoted and who shouldn't

and maybe who should be cut to and that increased our engagement on a lot of these tools by like I think it was like 77%. We had it going and we still have we still have the code and everything but it's like I'm just really you know we got to focus right

so eventually I'll probably come back to it but did you see the Apple Vision Pro demo of someone vacuuming. Yeah. And there's just like coins and they're like vacuuming the coins. What do you think of that?

I think that's awesome. And now imagine if you can reward your kids and based on how many coins they collect. Right. Right? Totally. That for sure is going to happen. And it's going to work.

Yeah. Like it's going to work. Kids want to play. I wanted to play. Yeah. I was looking at it. It gave me, yeah.

It was like, it was like, it was like in Mario when you're trying to get all the coins. you know yeah yeah that was really really cool yeah what other what other boring parts of life can we gamify okay well i mean you're married so it's like you know you get you probably get asked to take the trash out all the time right so it's like i do actually yeah yeah yeah so it's like gamify all the things that you want your spouse to do and there's little micro rewards it maybe it doesn't have to be money it can be something else right yeah like what else what else can we get rewarded by maybe it's like i'd imagine like all

like your favorite stores are going to have like little coins. And so maybe you get an Amazon coin or something. Right. Yeah. So I like it. The question is who's going to build. I mean, maybe you would just build all this stuff. Like, let me know if you build all this stuff.

Well, who's going to build? I think it's like, it's an interesting time with spatial computing is because like it's early. Apple said they're going to sell 500,000 units in the next 12 months. They're breaking that. They're going to break. Or I think they said 400 and now it's 500. It might be 600. point is I think it's like even if you got 10% of that right it's like still not huge right

so I think on one hand it's a small market but on the other hand now is the time to sort of get the reps in you know smartphones were really small market at some point I mean but but what we talked about maybe like an hour ago or so is like the with AI co-pilots and everything like developers are becoming 4 to 8x more effective and so you can probably build a lot of this stuff as long as you have the vision. And the taste. Yeah. Yeah, the taste, yes.

Yeah, you need to have the taste. I mean, when I was watching that demo of the vacuum, like the sounds and the way the coins looked. It, like, felt good. It felt good, right? And that's what a good product does, right? Like, think of, like, the difference of when you close a door on a, I don't know, a Rolls-Royce versus Honda Civic. the sound is going to be different. Never heard of Rose Roy's clothes.

Neither have I, but I imagine it's pretty safe. I get it. Yeah, it's like a crisper sound. Yeah. I mean, I drive a Volvo. You've been in my car. Yeah, you took me home. Yeah. Thank you for that. It's not the nicest car on the planet. It's about 10 years old. But it's saved. Those safety features, like, I once was driving and someone like ran across and it stopped.

My car stopped. Oh, like automatically. Okay, got it. And those are the little things, right? and that's what great product design is. Totally with you. Yeah. What else is on your mind?

I mean, do you pay for like a longevity practitioner or anything like that? I don't, but should I? Okay, well, let me tell you my pain in the ass story right now. So every, and I'm happy to introduce you to these guys. Every quarter, they'll draw like 10 vials of my blood and they'll tell you like all my metrics. But then it's automatically, inevitably, what happens is, oh, you need to have all these supplements. now. I was like, dude. And then it cost you, like, you know, a lot of money, too.

How much is a lot of money? So, like, the last invoice I got was, like, $5,000. And, like, one of the supplements alone was, like, $2,800. I was like, can I just, like, take that out? So, like, but my markers have gotten a lot better. I think the trouble with that is, like, it's still a lot of manual work. And so I'm just like, well, how can I just have, like, imagine, like, levels, right?

Like, it's kind of stuck in you, but, like, ongoing biometrics, it's scanning you every day it's coming up with recommendations for you and maybe it's like auto ordering for you too and maybe it's using like Mark Cuban's like cost plus drugs thing where the drugs are a lot cheaper because all this stuff is marked up

and you know I think if you can do deep discounts with this and have it be more less of a pain in the ass a better user experience I think you're gonna get a lot more people like a lot more people are caring about their sleep now a lot less people are going to clubs

so this is just I think this space is just gonna get a lot bigger I mean, anything to do with sleep, just in general, like, is, I mean, that's what we've learned, right? Is, like, sleep is such a big driver of health and wellness. And, like, you can literally die if you don't get good sleep. Dude, kids now, like, the, I don't know if you saw this, but the sleep scores are, like, people are sleeping earlier now. And then, like, the sleep scores are getting better. People aren't drinking as much alcohol. It's, like, all the education that's happening, like, I think the world's trending towards healthier.

now, like Dr. Peter Atia, Dr. Andrew Huberman. Yeah. But those guys, like Artia, isn't he, like, an up the wazir to be,

like, how do we get up, you know, Artia in your pocket? And, you know what I mean? Like, it feels like, yes,

Huberman does a free podcast so you can learn that way. Yeah. But. So there's, haven't you seen this Dexa. AI, where they just,

like, scan everyone's podcast, and then you can just, it's like a little LLM, you can just ask questions. Okay. That's, I don't know how, legal that's going to be in the future, but

that's what's happening right now. They're just scanning all Huberman's stuff. Peter Atia's podcast, The Drive, a lot of the stuff is free, and then he has some of the paid stuff. Okay. Yeah. I have a health idea. Yeah, what is it? So, I recently got a night guard.

What's that? So, it's a mouth guard, and I sleep at a night with, because I grind my teeth. I think because I drink too much caffeine or something. Yeah. Anyways, it turns out Like, it's very, like a shocking amount of people wear nightguards in the U.S. It's just to stop the teeth grinding.

It's like basically a plastic thing. Like, you know. It's not annoying? It's annoying. It's totally annoying. Yeah. So, yeah, idea number one, make a less annoying night guard. Okay.

But no, the real idea is I heard about someone who would put whitening in their nightguards. so that when they're sleeping, it whitens their teeth. Okay. Interesting. There's the idea. I like it. And so with the night guard, are you like using your mouth to breathe when you sleep? I mean, I try to sleep with my mouth closed just because apparently it's better for you.

Yeah. The night guard, I mean, it's basically just plastic. It's like a plastic thing that goes over. Ooh, yeah. I mean, everyone's complaining about microplastics, right? So how do you, you can solve for the microplastic piece, the whitening piece. Totally. And then what I do, this is combining our habits.

I've been wearing sleep tape for like seven to eight years before it even became cool. And like, that forces me to use my nose to breathe. So all three of those things, I think you're good. Because didn't Sam and Sean talk about that mouth tape business that does like 14 million a year? Yep. That's just good messaging and good storytelling and good branding. Totally. And what's it called hostage tape?

Postage tape. Yeah. I mean, I wonder what other opportunities exist where the product exists already. And you just have to rebrand it. Yeah. I mean, all over the place. Okay, like, okay, I'm Asian, right? So I like...

You're Asian? Yeah. You guys can't see me on the video. But like, Asian's like wearing slippers. Like, that's my point. And so how do you create like a better version of slippers? Like, the Americanized versions, like, we like wearing like bamboo slippers. Reason because like, you know, it's more...

It's more airy, we'll just put it that way. But yeah, how do you brand something where it's like anti-sweat slippers? And bamboo is actually good for that. Totally. Yeah, totally. Someone should do that. Bamboo linens became really big recently. Yeah.

That's the other thing. Is that what you use? I don't, but I've used it in the past. I think there's a huge opportunity, like, startup ideas-wise, to see what's working in one culture and bring it to another culture. Yeah, because each culture has, like, good habits. Yeah. Like, you know, Indian cultures, they're very, very, like, Buddhists and, I mean, that's Asian cultures, too.

I heard, I was just talking to someone about this, like, the idea of a supper club, which is a place where you go for dinner that turns into a nightclub. Yeah. It's actually not that popular in America, but is popular in places like Europe. Mm-hmm. Is this a supper club? So I thought it was supper club, or, and then I heard on a... podcast or he says someone said a British person said super club supper club interesting yeah oh well a British person must know English better than us yeah so anyway continue yeah a Canadian and American

what do we know but yeah like um this isn't an internet startup idea or anything but like the idea around supper club which like I said like you know I remember I in Montreal you know I went to a few of them where you'd sit you go through a group of friends you have dinner and then they kind of like remove the chairs after and it kind of like people have drinks stay around some dance whatever yeah it's like okay how do you bring that to another another city right and it's interesting i think you can combine that that like we're now moving into community so that piece for sure like i think that's a good idea yeah but also like we talked about eo and yPO what about eo for like um certain community types right so like we know sam started hampton but um i have uh i know someone he started uh

dental entrepreneurs organization, DEO, right? And Neil and I, we just started agency owners association, right? And I think people crave community,

but it's like, you need specific community too, right? Totally. And they're, like, YPO and EO they've been around for a while.

There's a lot of space, I think. Totally, yeah, I have a friend who has a Hampton, like, competitor called Benwise.

Oh, interesting. And it's like for CTOs and CMOs. That's cool. Yeah. Chief, remember that? Chief, yeah.

Chief was for women entrepreneurs. I think it's just women executives. Women executives, that's right. So I think it's sort of like the unbundling of YPO. Yeah, yeah. And yeah, there's a ton of opportunity there. And the cool thing is it doesn't cost a lot of money to get going.

Like what do you need? A brand, a landing page, and a vertical. Yeah, communities and agencies, like low-cap-ex, good to go. Yes. Are you still bullish on, I mean, you run an agency? I used to hate it. Yeah. I mean, because I come from working in tech, right?

I'm like, oh, my poo-poo doesn't stink. I'm too good for a services business. But, like, you know, the pot I do with Neil, like, just looking at numbers, we talk all the time. And pre-2020, you're at $5 million to eBay that you can sell for $15 to $20 if your agency is really good, 15 to 20x. And so that's like a $100 million business if you wanted to sell. But then the other thing is if your agency is doing it. you know, five, ten, $20 million in profit a year,

that's an exit for you every single year. And then you can sell later if you want. And so I think with my founder buddies, the consensus now is like, no, like you want to build something generational. Forget a decade, like 20, 30 years. And we're just like, let's just keep compounding. And I think any business, like it's just a boring business.

It's not sexy, but it's also what I know. And like the audiences that I've created, like it just makes sense to funnel it into that. So it seems like the best engine. And then I can also build cool products and services, especially with AI being so deflationary. So it makes a lot of sense to me. Yeah, and you can incubate software products.

I think, I mean, this, Noah Kagan doesn't run an agency, but I had him on the pod recently. And he was, you know, he has App Sumo, which is doing really well. Yeah. It's 80 million a year. 80 million a year. But he's got all these kind of SaaS software products

that he's spitting up on the side. Yeah. Yeah. Well, I mean, let's use him as an example. It's like he had Sumo back in the day, the pop-up thing. And that quickly got up to eight figures, I think. But then it didn't work out. And then, but he had like a lot of things going on. And he was sitting in that seat. And there's just like, you know, focus at the end of the day is, I think he realized how important that was. And I think I just got punched in a face so many times. I'm just like, things are a lot better when I just focus, you know. So I'm just very bullish on agency. It seems like you're like that too. And you have your own model. It's like community first, which I think is genius and then agency. Exactly. Other than paper performance, any agency ideas or any spaces that you think over the next 12, 18 months, there's opportunity to build in? Yeah. Well, I mean, we'll probably have the same mindset here, AI transformation agencies.

Everybody, like digital transformation is still a thing right now. Now it's AI transformation. I think, I mean, looking at boring marketer, right, like AI assisted content. I think we're going to see more agencies doing programmatic SEO too because you have this one to two year window where you can do it and I think search just changes so yeah and I think I think we're going to see more

I think creatives becoming more and more of the X factor and it's really hard to find a damn good creative agency so yeah I like it Eric where could people get more of your ideas yeah just at Eric O S I you on Instagram or Twitter or you can

just go to search for leveling up Eric Sue on YouTube and that's where I'll hang out too. Amazing. All right.

Thanks a lot, man. Thanks for having me. Later.