From Founder to Investor: Lance Cottrell on Startup Growth, Leadership & AI in Business

Shane Mahi
[00.00.00]

 It's a good mouthful there. But Lance, welcome to the Connect podcast. I really appreciate you showing up today. I like to get

Lance Cottrell
[00.00.08]

 to be here.

Shane Mahi
[00.00.09]

 I'd like to get right into the conversation. So who are you? What do you do and why should people stay on this podcast for the next hour to listen to what we have to say?

Lance Cottrell
[00.00.19]

 So my name is Lance Cottrell. I'm an excited founder. I built the world's first internet privacy company and took it through a gigantic pivot, survived the dotcom collapse in 2000 and survived to build a successful company. Since then, I've been an active angel investor. Uh, got dozens of investments out there. I'm on the board of my local angel group and run our selection process. I'm a venture partner with a couple of different, uh, early-stage funds, and I have a YouTube channel and blog focused on advice for early-stage founders.

Shane Mahi
[00.00.55]

 And why should people stay?

Lance Cottrell
[00.00.57]

 Because there's going to be a lot of good information here. I think my story and the journey that I took was pretty wild, but also because I've talked to so many hundreds of founders, I'm talking to more than a dozen a week. It gives me a huge amount of insight into the kinds of problems that they're running into, and what sorts of solutions work.

Shane Mahi
[00.01.16]

 So what interesting, interesting question, I think is what is it like being an angel investor?

Lance Cottrell
[00.01.26]

 What's it like? I mean, so as a joke, I usually describe it as, you know, all the excitement of being a founder without the 100 hour workweeks and continuous existential dread.

Shane Mahi
[00.01.39]

 Okay. But

Lance Cottrell
[00.01.40]

 Really, you know, it allows you to keep a finger in that space to be a part of some of these really exciting missions and companies that are getting started. Uh, it lets you try to help and be involved in the company, but also have your finger in a lot of pies. So when you're a founder, you only get to touch one thing at a time. Whereas when you're an angel investor, you're able to support a number of these.

Shane Mahi
00.02.06]

 So what kind of minimum investments do you kind of get involved in when something catches your eye? Do you have a minimum threshold or is it just like whatever the founder needs to grow?

Lance Cottrell
[00.02.18]

 So in terms of direct investments, uh, the angel groups that I know well, typically $25,000 is kind of the minimum ticket size. And we frequently see between that and 50. Sometimes people will reach a hundred. We don't usually see much above that, because most of us are trying to pursue more of a portfolio model, and knowing that it is such a hit driven business, you want to make sure that you're investing quantities of money that allow you to make quantities of investments, right? I want to be making 20 or 30 investments over some reasonable period of time. And the bigger the check, the harder that gets. Of course,

Shane Mahi
[00.02.56]

 of course. And for those that are interested in walking into this space of I'm a CEO founder, I kind of border on the common problems. I came up against it. I'm not really the greatest at managing people. I can move a business really fast and but the one of the things that I struggled with in the early stages until I had the right coaching, was how to manage behaviors, how to manage people, the emotional intelligence that I had to understand that I wasn't replicable, and just because I'm stern and hard and easy to kind of motivate others aren't. So when, when, when people are making this jump and they've built a decent business cumulative bit of cash flow, they want to go make that move. Okay, I'm going to hire a CEO and I want to go make some investments. What kind of equity does 25,000 get you these days?

Lance Cottrell
[00.03.48]

 Not a lot usually. Certainly in Northern California, typically companies have a pre money valuation at the pre-seed level. Right. So the first angel investment came in sort of 3 to 5 million. If they've got some real traction you're starting to see seven or higher. Europe tends to be much lower. So much more often 1 to 3. Uh and so you can do the math depending on the size. Check your writing and work out what kind of percentage that means. But generally it's pretty small. Yeah. However, because you're getting in so early, the potential multiples on that can get really, really large. But I think most angels, you know, we're looking to make returns. We hope to make returns. But it's not necessarily the fundamental driver of why we're doing it. Of

Shane Mahi
[00.04.33]

 course. So how did you get into this? Because you can't be, uh, losing and becoming an angel investor. So you must have won a couple of times or done really well. Where did it start for you?

Lance Cottrell
[00.04.45]

 So when I exited my company, I, you know, had golden handcuffs to stay on with the acquirer and stayed on for a couple of years and realized that I was missing that entrepreneurial connection. But I didn't necessarily have an immediate idea for what I wanted to do next. And for personal reasons, I wasn't in a position to make the kind of time commitments to do another startup because I remembered how, you know, all consuming intense that was. So that allowed me to get connected. Also, I moved to a new area at that time. And so one of the ways to get plugged into this community was the first thing I did was I joined the local angel group.

Shane Mahi
[00.05.26]

 Wow. And then I think

Lance Cottrell
[00.05.28]

Joining an angel group is a great way to get plugged in, because there's a huge amount of sort of soft learning around how to source investments, how to analyze them, how to do due diligence, and how to think about whether this is a quality deal that it's difficult to do on your own. And the problem is the first couple of deals you see probably look really good and they probably aren't. And so one of the things I recommend is to make a commitment to yourself that you won't make an investment for the first year or two of looking at angel deals just so you can set what you're looking at. Yeah, because there's this thing that I learned as I was building my business of tribal mentality for customers, right? People want to do what others are doing. But the biggest problem that I saw, even going into business, there's not really a blueprint of how you should run the business to your own specific idea and the own specific problem you solve. You have all kinds of business for dummies. You have all kinds of other books online, online kind of content that you can consume. And it will help you get a jump start. But to be in the right circles, I found that to be quite a challenge, and even more so even after being an employee, then starting my own company with a co-founder and a kind of really close friend, and then even taking on some of the other friends, um, and people that were in my network who kind of wanted to go along that journey. We grew and did well as a business. But as a founder and CEO, I'm sure you know yourself. You get detached from the group because even though you don't see it, you are now the boss.

Shane Mahi
[00.07.14]

 Right. And when,

Lance Cottrell
[00.07.16]

You know, I talked to a lot of founders about the reality that you're not a team of equals after a little while and communication becomes very, very difficult, right? People want to impress the boss. They don't want to disappoint the boss. You know, that founder title carries a huge amount of mystical weight these days, and trying to overcome that to get realistic feedback. I mean, I remember I'd be in a room talking to my team and I would throw out an idea just kind of half brained, you know, here's, here's a thought and everyone would agree with me. And it terrified me. I'm like, wait a minute, I know this is a half assed idea and you should not be agreeing with

Shane Mahi
[00.07.55]

 this, right? It's true. And then you become isolated and then you wonder you that those questions thought to be raised right, like, what do I what what do I say to these guys so that they don't panic and think that I'm throwing them another task or another mission into the abyss? It's just an idea that I want to float, and you can't really float the same ideas with your team as you would if you were able to find, like, a Founders Circle or a business CEO, business owner slash CEO circle. And still to this day, I'm kind of finding where my circle is after being a founder CEO. They're moving into something different where I want to be helping multiple companies other than a consultant grow based on my experience, but I still don't know how to other than searching online, which ones are the right ones. So for you when you were excited and then were searching for those, did you have a coach that guided you into that, like that atmosphere or did you? It was just no like knowledge, just common knowledge. I need to go network with this exact circle to kind of so

Lance Cottrell
[00.08.58]

 I knew I knew that there I knew that angel groups existed. And so I did some research. There's only one angel group in my little area here, and so that kind of limited the set of people I could go to. But then I was very slow in how I approached it. So I got to know them. I got to find some people who I could sort of tag along with on some of the deals and listen to them pretty quickly. I joined the selection committee because that would accelerate the number of companies I was looking at, and get inside insight into hearing them talk about how they analyzed each one of the companies, how they thought about, you know, which ones were worth inviting, which ones would be appealing to the group, which ones had potential, which ones had sort of some scary aspects to them. And that was a fantastic learning experience. So tagging along on that for a couple of years was sort of a masterclass in that. And then fairly quickly, I got roped in through that group into mentoring startups, uh, first local startups, and then got involved with other organizations and accelerators doing my own office hours. And then that just sort of expanded the range of things that I have the ability to see. So you've won. You've done the journey from one to many and most people either. Again, like I said, they're going to either be making the transition or they're going from CEO to a wider scope.

Shane Mahi
[00.10.19]

 Describe what it's like for those that are making the jump to to build a business today, in today's environment,

Lance Cottrell
[00.10.26]

 to build, to build just a, a normal business, not an investment business.

Shane Mahi
[00.10.29]

 Yeah. Just any type of business that's going to go into a portfolio. Uh, yeah. So I mean, I think it's an amazing time to be building businesses now compared to, say, when I was starting in the mid 90s, because there is so much more infrastructure for you. You know, AI makes it easy to do a lot of content creation and a lot of coding. Uh, no. Code platforms allow non-technical founders to build prototypes, to build mockups, maybe even build a 1.0. Everything can be in the cloud. You don't have to run your own servers. You need much less IT infrastructure. So for me, the key is always extreme validation of every idea that you've got. And especially for technical founders, the happy spot is to start building things right. They want to start coding. And that's one of the main things that I emphasize is to back away from that. And you've got an idea. Spend a lot of time talking to potential customers. Interview them deeply and not just, would this be useful to you, but why would you not buy this? Where does this fall on your list of priorities? If you had the money, you know, if this was existing now, would you buy it today? Right? Even if it's useful, we don't buy a lot of useful things. And you can ask questions to make yourself feel good about your idea. But, you know, dig into have you had disasters with solutions like this before and if so, what? And how does that make you feel about other solutions? And what could we do to avoid those sorts of problems? Really investigating deeply into the market, into the buying process, into the budget, into the priorities, into the fears. What makes these people look like heroes? Then you can build the right product and make sure that you've, you know, tested out the customer acquisition costs and marketing approaches and messaging, you know, all of those things you want to do on the cheap. Mhm.

Lance Cottrell
[00.12.20]

 Before you really dig into building the company and long before you try to raise money, because no one wants to invest in the company that hasn't answered all those questions.

Shane Mahi
[00.12.28]

 Absolutely. And are there any similar products that help you dive deep into understanding your ICP? Diving into developing the right messaging based on your customer's voice. What kind of things are you using?

Lance Cottrell
[00.12.44]

 You know, I don't use tools for that. Really. I find it is much more of a human process from my perspective in terms of, uh, you know, there are some platforms if I'm doing, say, a consumer, uh, product, that I may want to go out to some platforms that allow me to do large scale surveys or, you know, tests and hypotheses that way. And in a B2B scenario, they really have to be interviewed. But I think you can lean too much on this automation, or you should be a B to C developer. You should still be doing dozens of in-depth interviews with potential customers to make sure that you've got it right, because writing surveys is difficult. Um, I've got a couple of sociologists in my family, and writing ones that don't build in your own bias is really complicated. Uh, but those open ended discussions and questions that can really help extract the truth of what's going on. But I think a very scientific approach to all of this. I really believe in running experiments over and over again before you build, while you're building, after you build, as you think about the 2.0 continuously. And that really is probably an outgrowth of my background. I started my, uh, my startup when I dropped out of my PhD in astrophysics.

Shane Mahi
[00.13.57]

 Um, what was that like?

Lance Cottrell
[00.13.59]

 Um, that was interesting. Well, in fact, I had this insane thought that I was going to finish my PhD in my spare time while I was launching the startup. That did not happen, but.

Shane Mahi
[00.14.13]

 Okay.

Lance Cottrell
[00.14.15]

 Uh, that was an unrealistic thought. But, uh, you know, that was definitely jumping in the deep end. I mean, my resume was sort of a college grad school CEO. Uh, so it was a very steep learning curve, you know, talking about how to manage people, how to learn about managing people. I mean, I've never even really had a boss. So I had no models. But I took a very academic approach to it and made a detailed study. How do you manage people? How do you motivate them? How do you work with them? How do you give feedback? All of that sort of stuff I took on, as, you know, a very structured learning process to build those tools because I knew I didn't have them.

Shane Mahi
[00.14.53]

 So what do you think was the and I love like the my notebook from these podcasts is like just absolutely insane. But what would you say was the toughest part of learning how to be a CEO?

Lance Cottrell
[00.15.11]

 You know, I had that classic engineering disease where, you know, I thought that I should be able to rationally argue people into buying things and into accepting my worldview. And it took quite a long time to get my head out of my own way and understand the degree to which all of this is more emotional, and I needed to be able to speak to that other side of the people's brains and really express things and communicate so much more than was my want. You know, I was an introverted scientist and used to being in a box in front of the screen. That is my happy place. And getting to that point where I was spending a lot of time working with the people and understanding the role as the leader, which is not the doer. Right. That was another one of those things that was challenging is, you know, I wrote the first version of the code and I, you know, did all this stuff. And then I'm starting to hire people and they don't do it as well as I did, or they don't do it the way I did, but you still have to delegate it to them because you don't scale personally. You know, that was sort of a continuous source of agony for me over time, as I learned to get comfortable with and familiar with that process.

Shane Mahi
[00.16.22]

 So if there are introverts that are watching this right now and they're raising the question, I don't know how to break through this. Like this guy, he's talking a lot, he's talking about a big game. He's done it. But I don't know if I can do it. So what would you say to those introverts that are watching this on? How do they break out of that shell and shift their behavior from where they were as maybe technical engineering kind of background to actually being a leader and caring about people as well as the problems you're solving for customers.

Lance Cottrell
[00.16.54]

 I mean, I think there's sort of a fake it til you make it. Aspects of this, where you need to behave as someone who prioritizes people and their emotions and their interests and put together systems to support it. You know, for me, I really structured out here's how I handle my 1 to 1 meetings. Here's the kind of questions I asked. Here's how I want to support people, and I could review my checklist of things that I wanted to do and say each time so I can engage. And actual engineers and introverts don't not care about people. They're just not great necessarily expressing it. And they tend to sort of assume everyone is working for this more, uh, mechanistic approach to things. And so just keeping that front and center of all of those interactions was really helpful to me in developing those rapports, because at the end of the day, I did care about these people, and that came through because I put so much work into prioritizing that.

Shane Mahi
[00.17.50]

 So when times get tough and times always get tough, when you're learning a business and building a business, and sometimes clients don't pay on time and you've got payroll and you've got to make, uh, those calls and they're not really happy. How were you again? You didn't really have those managers to help you get through work. So you turned into the deep end. How did you stay afloat during those hard times when when you felt like giving up, what kind of things did you lean towards

Lance Cottrell
[00.18.21]

 to help? We definitely had hard times, right? I started in 95 and I exited in 2008. So I got to go through the, you know, all of the dotcom collapse, and we spent about 18 months with less than three days working capital in the bank. So it was a high pressure, high tense kind of live day to day scenario for a very long time. Uh, and, you know, it takes sort of a stupid level of optimism to survive that and tenacity. We basically embraced something we call the cockroach principle, which is, you know, after nuclear annihilation happens, the cockroaches will still be walking around. The key was to be the cockroach just to survive you. If you don't survive to tomorrow, some opportunity to tomorrow can't help you get out of the situation you're in. You just need to be there and in the game for success to happen. Now, at the same time, there are certainly companies that should stop and quit and restart some other business. And where that line is, that's some sort of deep, murky, dark art to understand precisely where to draw that line. But it is pigheaded stubbornness that keeps you in there and a focus on I mean it. The whole situation focuses the mind where, you know, every dollar you spend has to have a return in 30 days. You just have no choice. And remember, I started in 95. So by 2000, when the really bad stuff was happening, I had a company, I had a team. Um, and in fact, just as we went into that, uh, my board of directors had convinced me to hire a CEO. So someone who was more business oriented than me. So I was the chairman and sort of president CTO, and he was the CEO. So I kind of had him in a roll sandwich. But it was a fantastic thing. And this is some advice to founders: when you realize you need someone with more business experience than you with maybe some other skill sets, don't let the board pick them. You need to go grab it by the horns and recruit them yourself. Right. You want to pick them? You want to interview them. You want to find the right person who really compliments your skills. And you can work with, uh, because if they're shoved down on top of you, you're probably out in 12 months or less.

Shane Mahi
[00.20.41]

 Right now is my next question. Why would you? So why would you let you use one would think that again. So one would think that

Lance Cottrell
[00.20.50]

 considering you have a board and you probably hired a board because you believe that they have visions, connections that can help you move further, faster, quicker in your career or whatever the longevity of your business is versus your own. Um,

Shane Mahi
[00.21.07]

 and that is how. So are there any other reasons other than I always feared being booted out of my own company, which is why I didn't get a board. But I mean, to some extent, uh, I had control right from shareholder voting shares. So if I needed to, if they seriously threatened me, I could replace the board and then vote myself back in. Right. So I had that situation.

Lance Cottrell
[00.21.37]

 And that really is true even if you're well below 50% ownership, because you really only lose, let's say 40%, you only lose that vote if literally everyone chooses to show up and vote, and they all vote against you. And if that's happening, there's probably a good

Shane Mahi
[00.21.54]

 reason. Yeah, of course

Lance Cottrell
[00.21.56]

 they've got a point and maybe you should be listening to it. So, you know, it was not contentious. The board came to me and sort of laid out their case for why they thought we were at a spot where we needed someone with, you know, a lot of business experience, more experience with contracts, more experience with marketing, more experience with HR. You know, a bunch of these things that I had no deep background in. I've learned I muddled through, and I had the humility to sort of look at what they were saying and go, well, yeah, you're right. That would be really useful to have in the company. Let me go find that. And so I found a couple of candidates, interviewed them, brought this guy in, had him work with the company for several months for free as we sort of mutually test drove each other to make sure that was going to be a good relationship and then hired him in. And it turned out to be fantastic because we did have a huge mutual respect and we became a team. And you talked about, you know, how do you survive those hard times? He came in right as the worst times happened, and the fact that he didn't bail on us was amazing. Like when we hired him, we had an acquisition offer for $12 million. Not great. But, you know, things were terrible. And we had an angel who was going to put in like a $2 million check. And that would have also set us up great. And within, I think, 90 days of him signing the employment contract, both of those evaporated. Ah. And so, you know, that was crazy stuff. And, you know, we had people like, I had a part time CFO who really helped us because we had some significant debts. And how do you negotiate that? How do you play when you're sort of up against the wall and it's, you know, life or death, every decision. How do you negotiate with these people? And I discovered those kinds of hardball that you can play that I did not conceive were on the table that saved the company. And, you know, we had a whole lot of lucky breaks and managed to survive things and then eventually discovered a pivot opportunity. That really is what brought us out. And it shows us to look for opportunities all the time. Because the pivot opportunity came while we were being subpoenaed by the local FBI cybercrime group.

Shane Mahi
[00.24.12]

 Lovely. What's that like? Well,

Lance Cottrell
[00.24.16]

 it was a common occurrence, right, because what our company did was we sold anonymity tools like VPNs, Tor. But before anyone else was doing that, people did bad stuff. So we got subpoenas. We got to know these people reasonably well. And one of the times they came and talked to us, we started asking them, well, look, you're the FBI, you're investigating people. How do you avoid the bad guys knowing you, the FBI, when you go visit their site and just block you or give you fake information or whatever, and they more or less said, you know, uh, we think most people aren't looking. And if they are, we use the Wi-Fi at the Starbucks down the street or something equivalent. And we said, okay. This is ridiculous. We need to talk. And they ended up being our first government customer. And within three years, the US government was 95% of our business and things. We never looked back.

Shane Mahi
[00.25.06]

 Wow, talk about turning things around. So one thing that I want to ask on, like when you're looking for talent, looking for talent, or really testing talent, what was one thing that this CEO did in the early stages of working with you that really stood out and you were like, wow, this is the guy for the job. Other than navigating, not bailing, but a specific behavior, a trait that he possessed.

Lance Cottrell
[00.25.31]

 You know, he was very thoughtful about things. So sometimes you'll see people. And when I talk to people, they'd come in like, oh, everything sucks and everything's wrong. But he really took the time to come in, understand what we were doing, study the things, and then got his hands dirty so he would sit down with us and put together a marketing plan and help us execute it and, you know, work with us on how we position things and what messaging we were using all of those sort of things. He was showing his experience and talent through the actions that he was taking, and he was listening as well. So he wasn't some bull in a China shop, although that's not actually a real analogy. But, uh, he was, you know, open to criticism and pushback and discussion. And that was also something I was really, really looking for because I was not interested in getting pushed out of my company. I was interested in bringing someone in who could be my wingman and we could, you know, kill it together. And that was the sort of thought process that really mattered to me. So a combination of, you know, show me you've got the skills and talents and capabilities that I need and the social intelligence and frankly, just personality mesh. Right. Do we get together or not, uh, on these things. And it's funny because we are such radically different people. You know, if you'd met both of us, you wouldn't necessarily think we would get along well. But it worked out.

Shane Mahi
[00.26.57]

 So that recruitment process. And then we're going to jump into the AI segment. But that recruitment process and like personality matching Krystal knows like disc profiles and all that stuff. Was there anything you used or was it gut instinct when you found this guy?

Lance Cottrell
[00.27.16]

 So, uh, I did not use any tools at all. And, uh, again, it was sort of I didn't even know that was sort of a process to use at that point. That's why I needed to hire this guy. Uh, what I did was I reached out to my network, and so I reached out to people I knew to say, do you know people who would need this? And this is the reason to have a broad network and not to be too discerning about who you ask, because you never know who's got it. And one of the people I talked to was our real estate agent, the guy who represented us as renters for our office space in San Diego. And as it turns out, this guy represented almost all of the tech companies in San Diego as their, you know, renter side lease or side, uh, agent. And so he knew the C suites of every tech company in town. So I, along with many other people, sent this guy an email saying, I'm looking for a CEO. Here's the kind of characteristics I need. Here's why, here's what's going on. And I think within 48 hours, I had six resumes on my desk that were all killer. And then I was able to go through this, right? You never know who the right guy is going to be. None of my other things really panned out at all. And this guy just delivered in spades. Um, and if I hadn't been thrown into a wide net, I might not have gotten anything.

Shane Mahi
[00.28.34]

 Geez. That's incredible. Never underestimate anybody. It's. It's true. It's very, very true. So now we'll jump into the next one. But what's the best advice throughout building your business? Stepping into the role of an angel investor. Now you're helping a bunch of companies achieve their goals in that time. What's the best advice you've received from a mentor that helped shape who Lance is today?

Lance Cottrell
[00.29.02]

 So for me, what really helped me was sort of getting constantly reminded to work on the business, not just in the business, right? That was that thing. It's so easy for me, and I think a lot of founders get in the weeds. You're executing your, you know, trying to deal with all the minutiae of what's going on day to day. And there's, you know, a bazillion things to do, and it almost feels like a waste of time sometimes to take a step back and just stare out the window for 15 minutes and think about the bigger picture of what you're doing, why you're doing it, how you're structuring it. You know, not just is this the right person to hire for this job, but is this the right job to have? Is it in the right structure of the company? You know, are we going in the right direction or we're doing the, you know, what should we be doing marketing or should we be looking at, uh, channel partners, you know, some of those larger structural architectural things that, you know, don't feel like being productive when you're doing them are especially important to the success of the business.

Shane Mahi
[00.30.03]

 Oh, well, I agree with you. So we jump into the I segment. Everybody's talking about it. There's a number of different things that we can go into, but we like to stay close to. A few of the fundamentals that help really drive business growth. That usually comes down to revenue through sales and the right type of marketing and however that's put together. So what are your views right now in this year alone on the evolution of AI from that first release of ChatGPT, and find those 100 million quick signups to what we have today where like, I'm in the canvas kind of territory of seeing how I build things, building my mermaid kind of charts, trying to build applications that help me pass pass through any type of bottlenecks. What are your views on the evolution of AI?

Lance Cottrell
[00.30.52]

 I mean, it is amazing the way already we're seeing that it's getting built into everything. So obviously there's the chatbots and people are going into those. But now I'm seeing every single tool that I use is building AI into it in some way. And it's becoming sort of part of the standard workflow if you sort of throw out idea 1.0 and say, generate, you know, six variants of this or improve it or tweak it or make it more applicable to this group or just content generation. Here's a post. Give me eight variants of it that I can post over the next three months. So the, the, uh, leverage that you gain from it is fantastic. And I think, you know, anyone, especially in the kind of marketing space that isn't using it, is going to be a huge, huge disadvantage. But we're starting to see some that are more intelligent in the way they're integrating it. So taking advantage of specific data where it will go and scrape your website and understand who you are, what language you speak, what kind of positioning you have, and then automatically use that to shape the kind of content that it automatically generates for you. That's where I think some of the interesting things are happening, and we're getting close to where I think these things can really be set loose on their own. I mean, right now a lot of the automated AI things are pretty obviously automated in AI, and you know that that hits wrong.

Shane Mahi
[00.32.15]

 So one thing that I found with how it's how the evolution of it is, I built an agency from 2020, the start of the pandemic, through to last year, and then I pivoted into more of a solopreneur kind of approach. But I was able to generate, uh, we broke through $1 million in revenue in month 33, I think it was. And we were a service based appointment setting company. So, like the crappiest type of business, you could have had the most headache driven business. You could have poor quality service. But it gave me the best understanding of how to handle customers. Right. But one thing that I've seen, and it's how it's helped me really, really help the clients that I'm serving right now, is a lot of them don't know the voice of their customer. How to actually identify the right type of customer when it's not coming in through your inbound engine, and to go out to strangers and kind of identify that that was really hard, and that was a process that took four weeks. Usually it was 1 or 2 calls a week to speak to them. Hey, what markets are you really active in? How do we score those based on revenue potential profitability for reality? Then let's hear your segments categorize them. Let's list them. What kind of stakeholders? Champions, blockers, everything. And then we'd go into the interview section, and the interview section was always the biggest resistance, because I don't know why. But when people are buying appointment setting services and you ask them to go interview your customers because this is going to help you do your job better. They are so hesitant. I don't want to bother my customers. I know what they want and we'd have to sic them on them and they usually come back with, no, don't, don't worry, we know. And you'd get those answers and you see how skewed all that versus what the customer would actually say when companies do it right. Now I

Lance Cottrell
[00.34.07]

 see that everywhere.

Shane Mahi
[00.34.08]

 Exactly. And as much as I still encourage and want them to go interview their customers. Now that four week process takes four hours, because I take Lance's profile from LinkedIn and I download the PDF, I take the company or companies you work at. I put those in. I put my 40 questions in. These are the questions on goals, business triggers, personal struggles, frustrations, communities where they spend their time, all of that. And then I answer all the questions and then get the head start before they go and kind of get that validation from their customers. So that's how I'm using it in my business today. And I've shaved off three, three, three and a half weeks. How do you think sales and marketing teams should be using AI in their business to add more revenue today?

Lance Cottrell
[00.34.56]

 So I think a lot of, uh, automatic triage on messaging is really useful because a lot of transactional things can be handled in an automated way, but making sure that you've got it's more of a copilot thing, I think is going to be the way it's working for the medium term, where you can't you can't replace the people. I see it was really successful, and I've worked with a couple of companies that are doing it more on the outbound side. So automating the content creation and outreach based on the proprietary information they can gather. So I'm working with a company that does arts and events organization, uh, promotion. And so they built a system that can watch a company's, an organization's calendar, see when events are coming up, see who's in it, see what they're doing, pull all that, synthesize it, and, you know, automate producing content that they can then put out to promote these activities. It's still editable. There's still a human in the loop, but it's like a 99% acceleration on the whole process. And so the ability to do so much more, so much faster, and I think with higher quality and depth, because people won't do the amount of research that you can ask the AI to do in a big hurry or as often as they should. That's moving the needle a lot.

Shane Mahi
[00.36.08]

 I can see that, too. And, uh, I interviewed John Burrows. Uh, what was it two weeks ago? He's a big time sales trainer. Was that Salesforce kickoffs? HubSpot kickoffs? And, um, he was telling me about the potential for what he's seen, Salesforce and HubSpot and what they're doing now with their AI agent workflows and how they're kind of enabling a seller to just really act throughout the entire day and perform actions. But then we're losing that little bit of nuance where creativity comes from the ability to write your notes down with your hand on a piece of paper and kind of digesting that knowledge, and then learning how the fundamentals of business work so that you can have the right conversation. None of that is happening because everything is just insights, insights, insights, messaging, messaging, messaging on your screen. So with that in mind, these big giants have tons of money ServiceNow, Salesforce, HubSpot to be building these AI workflows and systems and language learning models that really supercharge a business. Then there's this category below that might not have the money to do it as well, but there's this thing in the middle where people are floating around playing with ideas. So what are your predictions for how I will be used effectively in sales and marketing over the next six months? What do you think the biggest win for teams will be

Lance Cottrell
[00.37.29]

 in the next six months. I think it is going to be integrating automations into all of the tools that we're using so that increasingly it's a one button click to say, okay, build out a template of this, build out this workflow, build out this funnel, build out this thing. I'm going to go in and do the creative work around it. But removing all of this sort of step by step, very similar to, I think, the way the AI based coding is doing is you can express an intent, it gives you the shell and the framework that you need, and then you can go into the details of those. But I think the amount of time you spend, uh, having to learn and work with the tool and work out how to get it to do the flow that you want is going away. Those things are all getting automated. I'm seeing a lot of people doing, uh, tools that do cross-platform, that. So you say, okay, here's what I want to do. And it, it sort of like will tie into Zapier and tie into four different platforms and work out how to do the data translation between them and paste it all together and create this central control hub. And you just had to sort of express to it what you wanted to do. Those are really interesting, uh, new innovations and the ability to tie these disparate tools together, even if the single company doesn't provide that in a unified package or intend for you to do that.

Shane Mahi
[00.38.47]

 Well, of course. And so on the other side of the fence where there's. Maybe less opportunity. There's more of a concern, and a lot of companies are raising an eyebrow on compliance risk. And really, does this have the potential to damage everything I've built over the past decade to 3 or 4 decades? So for someone that is quite seasoned and experienced, what are your major concerns on the usage of AI, especially related to customer experiences?

Lance Cottrell
[00.39.20]

 I mean, I think naive use of AI is really, really problematic. And like I said, I think when you try to replace that human touch, especially in sort of complex sales or more sophisticated environments, uh, the opportunity to damage relationships is very high. Um, I think also a lot of these tools are being built without a lot of thought towards privacy. And privacy is a particular background issue of mine. Uh, these often have very, very poor privacy protections. And so I worry a lot about inadvertent leaks. Non, you know, lack of containerization of things, cross-pollination as being a big issue. There's also some interesting big lawsuits against the models because of the data sets that they've been trained on. And so it would be interesting to see if you like, bet the farm on using some particular set of models, and then they have to be substantially retooled or retrenched or something like that because of some legal outcome that could be an interesting area. But increasingly we are seeing more and more kinds of walled garden things where you've got your own AI that's trading off your own data, and that helps with hallucinations as well. So I'm seeing a lot of companies that are building tools specifically around preventing hallucinations and authoritatively sourcing data. The big public one is perplexing, but lots of ones that are more special purpose that allow you to have greater confidence in what's going on. And, and, you know, make sure that it's providing the correct kind of information and specific to you, right? So you can even feed it with proprietary data about your solutions that you wouldn't want to have on the public systems. And that also allows you to then integrate it with your sales process. So someone can ask a question. It's going to give the right kind of answer in an automated way.

Shane Mahi
[00.41.13]

 I use a couple of them now, so I go tos perplexity yeah, I don't use Google anymore or I use Google very rarely, I use perplexity. I've even paid 200 bucks for the whole year, and that is an absolute game changer because of how specific you can get. And then the evidence that I'm able to find, because GPT can extract that same information, I can take perplexities and use that in GPT. But then I just spent another 80 bucks on

Lance Cottrell
[00.41.39]

 clawed grok,

Shane Mahi
[00.41.42]

 I decided to upgrade my Google Workspace to Gemini and play around with that. And there's another one. No, I think that's all five. That's GPT perplexity, Claud. Uh, grok and uh, Gemini for you, other than GPT, is there another is there any other go to models that you kind of

Lance Cottrell
[00.42.01]

 I really like experimenting with clouds a little bit. I mean, the way I'm using it, GPT works pretty well. Uh, the biggest thing I was interested in with Claud and the place I've run into with GPT is, is trying to work with larger format content. So when I've got larger documents, larger pieces of information that sort of exceed the, uh, chunk size that it can deal with, it really starts to break down. And I've got a lot of workflows where I want to be able to handle larger forms of content. Claude looks like it may have some advantages, but, uh, you know, these are all temporary things. I think really within the next generation, we're going to be seeing a lot of those ironed out. And this is accelerating so fast. And, you know, the big models are being commoditized. We'll probably end up just seeing a handful of them because they cost billions to make. But it's certainly an interesting time. Uh, and then the other question is just going to be energy requirements. Right. The more we adopt these kinds of models, especially the big models. Uh, the economics of that is starting to become difficult because we're moving from a scenario where, you know, a database query costs a micro sent to your AI based query actually costs someone a couple of cents of power. And that changes the economic model on the frequencies you can do it and how you have to build in your monetization. And I don't think we're facing that yet right at this point. There's an awful lot of things being sold below market. There's enormous amounts of VC cash sloshing around. People are doing land grabs, but those chickens are going to come home to roost.

Shane Mahi
[00.43.32]

 So let's say three years out from now, you've got OpenAI, you've got meta, you've got Apple, you've got who do you think's going to be the giant who's going to be the top dog in three years of all this? If you just I don't

Lance Cottrell
[00.43.44]

 see I don't see a sustainable long term power dynamic that allows one of them to stay in place. The economics don't allow them to be very many, but I suspect that you've just rattled off the big players that are likely to be there. I don't even know if Apple is going to be, in fact, one of the main players. My guess is they're going to be partnering for the big back end cloud models. Uh, and the Apple Play is going to be doing more as much as possible on their AI optimized silicon on device, uh, so that you can improve privacy, you can improve security you don't need, you can work offline, you get faster reactivity because it's happening locally, and then hybridizing out to the cloud when you need more horsepower, when you need more capabilities, I suspect that's how they're going to play it. But yeah, at the end of the day, I'm thinking there's going to be probably 2 or 3, uh, you know, the probably some other countries that want to have it, like China will want to have their own and some others will as well. So last question. What is the most interesting use case that you've seen using AI this year alone? Most interesting. Yeah, I think it is in these use cases where it's customizing what it's doing by doing some deep research around the target that it's going after so that it isn't using the generic models. It's ingesting large amounts of data about you, about your speech patterns, being able to, you know, effectively agents as an individual, I think is really interesting. I mean, as an advisor, I would love to have a really good Me agent on my website for, you know, the easy questions and, and, you know, be able to outsource a lot of that. And I'm seeing some interesting variants on that. And that seems like it's very close.

Shane Mahi
[00.45.43]

 I think Salesforce has done it the best. If you check out the Agent Falls conference or how they've done their recent branding, They've got people which always used to be the face of any type of branded business, but they've got these little minions, these little alien minions, and these are representative agents that they're now putting into their branding to show. Look, not only do we have this mega platform that is able to help you do X, Y, and Z, but we provide you with these little agents. So look, um, that's the top of the hour. Lance. It was an absolute privilege to be able to have this time with you for any of those that really want to learn more, where can they find you and kind of connect with you a little bit further?

Lance Cottrell
[00.46.23]

 Absolutely. The best place to find me in all my thoughts on all things startups is at my website, my YouTube channel. Both feel the boots.com is a motivated kick in the ass to the founders who need it. Uh, and you can also find me on LinkedIn. I'd be happy to connect.

Shane Mahi
[00.46.39]

 Awesome. And any last words before we wrap up the show?

Lance Cottrell
[00.46.42]

 Validate validate. Validate. You can't do too many experiments. All right, well, guys, that's a wrap.