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You know, I was looking at the labor market numbers

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this morning. It is February 2nd, 2026, by the

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way. And there's a $10 trillion figure staring

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back at me. Wow. That is the valuation of the

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AI labor market. It feels massive. Kind of like

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the entire world's been rewritten by code. It

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definitely feels that way. But then you look

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at the hard truth buried in those reports from

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IBM and MIT. And that truth is just staggering.

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Up to 95%. of AI implementations right now show

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zero measurable return on investment. Zero. Zero.

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That is a massive disconnect. You've got $10

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trillion of hype on one side, and on the other,

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business is just burning Pash with nothing to

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show for it. So why? Why is there such a gap?

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Well, the answer is actually pretty counterintuitive.

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It turns out the secret isn't being exciting

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or revolutionary. It's about being boring. Welcome

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to the Deep Dive. I'm really glad you're here

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with us. Today we are stripping away the hype.

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We are not talking about how to build the next

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chat GPT or, you know, the next sentient robot.

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We are looking at the current landscape of 2026

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to understand why most AI businesses crash and

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burn and how to build one that actually works.

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We are digging into a guide titled The Profitable

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Pivot. And the core argument here is just fascinating.

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It really is. We're going to unpack some concepts

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that might honestly change how you see your own

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work. We'll talk about the wrapper trap, why

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treating AI like a smart intern is the only way

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to survive, and why doing manual unsexy service

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work is actually the shortcut to building a massive

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software company. I love that. OK, let's start

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with that 95 % failure rate. That is a terrifying

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number if you're a founder or an investor. What

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is going wrong? It usually starts with what we

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call the wrapper trap. Even now, in 2026, you

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see founders who think an AI business is just,

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you know, slapping a user interface, a UI on

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top of OpenAI or Anthropix models. OK. They create

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a nice looking website that basically just passes

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text back and forth to a big brain in the cloud.

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Right. So you have a specialized chat bot, but

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under the hood, it's just the same engine everyone

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else has access to. Precisely. And the problem

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is that doesn't solve a deep business problem.

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It's a commodity. Think of it like this. Imagine

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opening a restaurant that claims to have a secret

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family recipe. Okay. But when you go into the

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kitchen, you realize they're just microwaving

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frozen meals from the grocery store. That's a

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great analogy. It tastes fine. But anyone can

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buy the frozen meal. There is no special sauce.

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Exactly. There's no moat. And then you have the

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corporate side of this failure, which is the

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magic button fallacy. The magic button. I'm guessing

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this means companies buying software expecting

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it to fix their problems instantly. That's the

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one. They buy the tool, they install it, and

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they just wait for the profits to roll in. But

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they don't change how they work. The MIT study

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we looked at showed that only 5 % of AI pilots

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actually make it to production. Only 5%. And

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Deloitte found that only a tiny fraction of organizations

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see real money coming back from these things.

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But, wait, hold on. You do have winners in this

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space. I mean, look at Klarna. They cut customer

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service costs by 40%. Or, Intercom, resolving

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millions of tickets, they're using the same underlying

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tech as the failures. So what's the difference?

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The difference is workflow. Klarna didn't just

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buy a tool. They fundamentally changed their

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internal processes. to accommodate the tool.

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The failures happen when you try to jam a probabilistic

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engine like an AI into a deterministic hole without

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changing the shape of the work. That is a really

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crucial distinction. So if the code isn't the

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problem, is the issue actually us, the humans?

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It's not a software bug. It's a workflow failure.

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That makes so much sense. And it brings us to

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the core of this deep dive, the three pillars

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of a model that actually works. If the standard

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model is broken, what replaces it? Well, the

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first pillar is what we just touched on, integrating

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into real workflows. You cannot just add AI as

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another layer on top of your existing stack.

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It creates friction. A ton of friction. You have

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to redesign the flow. The source material mentions

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a McKinsey study claiming that customizing workflows

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is the number one success factor. But let's get

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specific. I mean, customizing workflows sounds

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like corporate speak. What does that actually

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look like on the ground? Let's take a real estate

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agency. In the old world, a lead comes in. and

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a human agent has to read it, look up properties,

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type an email, update a spreadsheet. It's slow.

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Right. And boring. And prone to error if you

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haven't had your coffee yet. Extremely boring.

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Now, a successful AI integration using a tool

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like N8n, for example, turns that into a digital

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reflex. Pause there for a second. For people

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who might not know, what is NN? Good catch. NAN

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is basically a visual workflow builder. Imagine

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a whiteboard on your computer. You drag and drop

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little icons for different apps, Gmail, Slack,

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a database, and you just draw lines between them

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to connect them. OK, so it's the plumbing. Exactly.

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It's the digital plumbing. So back to real estate.

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The lid is captured. That's the trigger. The

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system automatically fetches properties matching

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the budget, say, within a 5 % variance. If a

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match is found, it instantly executes three actions.

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sends the email via Gmail, notifies the agent

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on Slack, and updates the database. So it's not

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just a chatbot answering questions. It's an engine

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performing actions across different platforms.

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It turns a manual tour into an automated reflex.

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But, and this is huge, that brings us to the

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second pillar, retraining the workforce. This

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is where the mindset shift has to happen. Yes.

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We've spent 30 years using deterministic software.

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If you click Save, In Microsoft Word, it saves

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every single time. It's binary. It works or it

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doesn't. But AI is probabilistic. It might give

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you a slightly different answer every time you

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ask. Which is, I imagine, terrifying for a manager

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who wants consistency. It is. That's why you

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have to train your team to be what we call rigorous

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editors. They have to stop trusting the screen

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blindly. If they don't learn to audit the output,

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they lose trust the moment the AI hallucinates

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or just makes up a fact. I have to admit, I still

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wrestle with this myself. I call it prompt grift.

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I'll get a great result three times in a row,

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so I stop checking. And then the fourth time,

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it's completely off the rails and I don't touch

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it until it's too late. It is so easy to get

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lazy. We all do it. It's human nature to conserve

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energy. That's why specific training prompts

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are so valuable. The source suggests literally

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giving your team a prompt that says, act as a

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rigorous editor. Identify hallucinations, incorrect

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facts, or tone mismatches. Explain why the AI

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might have made that mistake. You're training

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the human to grade the machine. Exactly. That

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leads right into the third pillar, but I have

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to ask, if the human is the grader, aren't we

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just trading one job for another? I thought the

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point was to do less work. That's the common

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trap. Pillar three is owning operations. Think

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of the smart intern analogy. AI is like a brilliant

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intern from a top university. They're fast, they're

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well read, but they're inexperienced. If you

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don't watch them, they will make very strange,

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confident mistakes. So the human role shifts

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from doer to babysitter. Or operator. The operator's

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job is updating prompts when the business logic

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changes and handling the edge cases, those weird,

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rare situations the AI hasn't seen before. Right.

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If you don't have an operator, Your system is

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like a Ferrari with a brick on the gas pedal

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and no one at the steering wheel. That is a vivid

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image. It raises a tough question, though. Does

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this mean the dream of set it and forget it is

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dead? For now, yes. You can't autopilot a car

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with no driver. That is a hard pill to swallow

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for people who wanted that easy passive income.

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But it seems like this necessity for human involvement

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is actually creating whole new business models.

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It is. This is where we see the rise of service

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-led AI. And this is probably the most important

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shift happening in 2026. We usually think of

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business as so binary. You're either a sauce

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company software as a service, or you're an agency

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selling hours. But you're saying that line is

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blurring. Completely blurring. In fact, the most

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successful companies are erasing that line. Even

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the biggest startups, the ones coming out of

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Y Combinator, are hiring roles like forward deployed

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engineers. Forward deployed. That sounds like

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military terminology. It does, doesn't it? Yeah.

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But it's really just fancy talk for engineers

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who go into the client's office and fix their

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data manually. Look at a company like Harvey

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AI. They're massive in the legal space. Now,

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lawyers are notoriously resistant to new tech.

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Right. They don't like changing how they work.

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And they bill by the hour. Efficiency isn't always

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their top goal. Sure. Exactly. So Harvey AI didn't

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just hand over a login and say, here's your chat

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bot. Good luck. They hand hold the deployment.

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They send people in to ensure the model actually

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works for that specific firm's messy data. They're

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doing service work to make the software stick.

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Because if they don't, the client churns. The

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software just sits there. Unused and then it's

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worthless spot -on. We're seeing the emergence

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of the full stack automation partner. It's not

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just building a bot It's a four -step cycle audit

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the process build the automation train the staff

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and then support it on a retainer That support

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piece is key. That's recurring revenue and it's

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sticky You aren't just a contractor you become

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the AI officer That is a booming role right now.

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Someone who sits between the CEO and the developers

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to translate business needs into technical prompts.

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Whoa! Imagine scaling that. You aren't just selling

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a login. You are selling a whole new way for

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a company to exist. You are. And that creates

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a dependency that pure software can't match.

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But wait a minute, why are investors suddenly

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loving services again? We spent a decade hearing

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services don't scale, revenue per employee is

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too low, tech multiples are better. Why the U

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-turn? Because in an AI world, services ensure

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the software actually gets used. Services protect

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the revenue. Without that service layer, the

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churn rate is just too high. That makes perfect

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sense. It's a moat. But there's another angle

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here that I found really compelling. The idea

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that starting with services is actually the fastest

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way to build a product. This is the x -ray vision

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concept. Break that down for us, because usually

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people think you build the product, then you

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sell it. OK, so everyone wants the passive income

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dream, right? Build the software once, sell it

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a million times while you sleep. But if you start

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there, you're usually guessing at what people

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need. You're building in a vacuum. Exactly. You

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build as a solution in search of a problem. But

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if you start as a service provider, let's say

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you're manually managing SEO for 10 different

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clients, you get x -revisioned into the market.

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You see that client A, client B, and client C

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all struggle with the exact same workflow step.

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Maybe it's categorizing keywords or formatting

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headers. That repetition. That is the signal.

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That is the blueprint. Yes. You aren't writing

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code based on a hunch anymore. You're writing

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code based on the pain you felt doing it manually.

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Yeah. Even Andreas and Horowitz A16Z, their reports

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confirm this. The long -term AI winners often

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start with a heavy service layer. So we should

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essentially embrace the manual grind. Yes. The

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grind is what generates the blueprint for the

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software. I love that. It really validates the

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hard work. Okay, let's get practical. We have

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listeners who are employees, listeners who are

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founders, and listeners running agencies. Let's

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give them a roadmap. Start with the employee,

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the intrapreneur. If you have a job right now,

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do not quit yet. Use your job as a laboratory.

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A laboratory, I like that. Look at your own day.

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Find the tasks that drain you. The boring stuff.

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Use tools like Zapier or NATU to automate just

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your own desk. Once you save five or 10 hours

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a week, you have a prototype. You go to your

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boss and say, look, I made myself faster and

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more accurate. You prove the value first. Exactly.

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And then you get paid to learn. You're upgrading

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your skills on the company dime. OK, what about

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the new founder, the person starting from scratch

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today? The biggest warning here is, do not be

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the AI guy for everyone. The general is trapped.

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I can automate anything for anyone. It's deadly.

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You need to niche down hard. Be the AI automation

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expert for dental clinics or inventory specialist

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for local warehouses. How do you even find that

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niche if you don't already have one? Use AI to

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find it. You can literally ask ChatGPT. List

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10 industries with high average customer value

00:12:19.470 --> 00:12:22.789
and heavy manual admin tasks. It'll give you

00:12:22.789 --> 00:12:26.269
things like legal intake or tax document labeling.

00:12:26.490 --> 00:12:29.429
So the strategy is find a boring problem like

00:12:29.429 --> 00:12:32.769
missed patient calls, build a specific solution

00:12:32.769 --> 00:12:35.669
like a voice agent to book appointments, and

00:12:35.669 --> 00:12:38.990
then charge a setup fee plus a retainer. Precisely.

00:12:39.370 --> 00:12:42.370
You solve an expensive Boring problem. And finally,

00:12:42.409 --> 00:12:44.769
for the existing agency owners, the marketing

00:12:44.769 --> 00:12:47.230
firms, the design studios. For them, it is all

00:12:47.230 --> 00:12:50.070
about silent margin expansion. That sounds profitable.

00:12:50.190 --> 00:12:53.230
It is. You use AI internally to do the work 10

00:12:53.230 --> 00:12:56.710
times faster. But, and here's the secret, you

00:12:56.710 --> 00:12:58.710
keep your prices the same. So your delivery cost

00:12:58.710 --> 00:13:00.610
just drops through the floor. And your profit

00:13:00.610 --> 00:13:03.190
margin skyrockets. Plus, because a client already

00:13:03.190 --> 00:13:05.610
trusts you, you can sell them trust upsells.

00:13:05.690 --> 00:13:07.769
Sell them an AI training workshop. It's an easy

00:13:07.769 --> 00:13:09.450
sell because the relationship is already there.

00:13:09.580 --> 00:13:11.759
When you look at all these strategies, the employee,

00:13:11.919 --> 00:13:14.379
the founder, the agency, what do they all have

00:13:14.379 --> 00:13:17.120
in common? They all solve unsexy, boring problems

00:13:17.120 --> 00:13:20.360
instead of chasing hype. Unsexy, boring, profitable.

00:13:20.639 --> 00:13:23.100
That's the trifecta. Let's recap the big idea

00:13:23.100 --> 00:13:25.639
here. We started with the failure of the wrapper

00:13:25.639 --> 00:13:28.639
model. We talked about the need for a smart intern

00:13:28.639 --> 00:13:31.259
mentality. Right. And the realization that the

00:13:31.259 --> 00:13:33.899
winning business model isn't about the newest

00:13:33.899 --> 00:13:37.120
shiny model from Google or OpenAI. It's about

00:13:37.120 --> 00:13:39.960
customizing workflows, training humans to audit

00:13:39.960 --> 00:13:43.100
the machines, and acting as the operator. The

00:13:43.100 --> 00:13:46.080
money's in the gap. The gap between what AI can

00:13:46.080 --> 00:13:49.399
do and what businesses actually do. That's the

00:13:49.399 --> 00:13:51.659
best way to put it. Before we go, we always like

00:13:51.659 --> 00:13:54.299
to leave you with something to do, not just something

00:13:54.299 --> 00:13:57.419
to think about. Here's your challenge. Pick one

00:13:57.419 --> 00:14:00.299
manual process in your daily life today. Just

00:14:00.299 --> 00:14:02.879
one. Spend 30 minutes mapping it out on paper,

00:14:03.120 --> 00:14:05.799
step by step. And then just ask yourself, how

00:14:05.799 --> 00:14:08.039
can I help a human do this faster? That is where

00:14:08.039 --> 00:14:11.879
it starts. The year is 2026. There are no true

00:14:11.879 --> 00:14:14.399
experts yet. Everyone is figuring this out in

00:14:14.399 --> 00:14:16.899
real time. If you are willing to do the unsexy

00:14:16.899 --> 00:14:19.240
work, the future belongs to you. Couldn't have

00:14:19.240 --> 00:14:20.600
said it better. Thanks for diving in with us.

00:14:20.740 --> 00:14:21.480
We'll see you on the next one.
