C (3:08)

Glad to be here.

A (3:09)

Okay, so let's set this up the right way. The three of us all see this intersection of AI and small business through different lenses. So Oz sees it from the technology and media world. Kathleen sees it on the ground, working with small businesses to make it come to life. And I see it from the big picture of how the money's moving, what the surveys are telling us, and all the millions of data points that we get from the 7 million small business businesses that we serve across the country. So we come at it from different angles. So let's start high level in AI right now. What do you think people are getting right and what do you think they're not paying enough attention to?

B (3:44)

Well, you know, as you mentioned, I host Tech stuff, which is iHeart's flagship tech podcast. And so as a result, I get a avalanche of inbound AI generated pitches every day.

A (3:56)

All quality, I'm sure, all quality.

B (3:58)

But a big part of my job is to sort the signal from the noise. And I think, as you mentioned in the introductory remarks, people have been talking for the last two years about how AI is going to change everything. I think, and this is a bolder call than I would normally make, I think the world did actually change in the last three months. I think that the adoption of Claude Code over the holidays was a significant watershed moment in AI for small business and for all of us. If you remember, 12 months ago, the viral AI moment was OpenAI Studio Ghibli. Like you could make photos of yourself with your family and your friends into Studio Ghibli or Pixar or the Simpsons or Futurama. And that was really, really fun. But it was a flash in the pan. And now you have real people, real small business owners, real employees of big companies over the holidays, taking Claude Code playing around with it to create applications to drive their actual lives and work and finding that it worked, and then going to their holiday dinners and then going on LinkedIn, especially on LinkedIn and flexing about how much success they have with it. And so we've had viral AI moment, but this one, I think, is much more consequential. And you just have to look at the data. I mean, the run rate of Claude Code revenue in December was one billion dollars. In March is two and a half billion dollars. So as a small business owner, if I could increase my run rate by two and a half times in three months, I would think that I was on a rocket ship. This is a rocket ship. We are on a rocket ship. And just finally, I think even as a person who does a technology podcast and a small business owner, I, like most people in the world, I think, have had a tremendous sense of FOMO for the last couple of years. Like, I spent all day talking about AI, thinking about AI, but wondering how do I actually harness this without being left behind? And now I have FOMO about Claude Code, but it's productive fomo. I'm like, wow, I got to actually get into gear. And there's something I can tangibly do to try and drive better outcomes for my business. And if I don't, it's on me. So I think we've gone from this very abstract, highfalutin set of concerns to, like, the tool is there. People are making it work. It's on us as small business owners to try and make it work for us.

A (6:01)

Okay, Kathleen, why don't we triangulate that with a view on the ground, actual

C (6:05)

boots on the ground.

A (6:06)

Boots on the ground.

C (6:06)

Bring them down. Yeah. Well, I normally have Jomo joy of missing out, but in this case, you can't. Right? So the headlines are real. They're noisy, they're loud. We just saw Jack Dorsey lay off 40% of his whole team in one day, saying it's a prelude of what's to come. Matt Schumer, his viral essay, I don't know how many of saw that. 80 million views now. Inside perspective on AI. We've reached this tipping point. It now has judgment that exceeds human capacity. The Atlantic's article that the US Is not prepared for what it's going to do to US jobs. So that's the backdrop that we're sitting in, and small business owners are sitting in, and it's enough to give you acid reflux like it really is. And so whether I'm somewhere here or small business, you know, intimate networking session, the goal posts have really moved from should I be using AI? To how exactly should I be using AI? And so there's this real horse trading that's happening where folks are trading actual tools. It's like, what are you using for this? What are you using for that? So I'm really paying attention right now to AI agents. Of course, we all know AI is not Google. And so now you can deploy these agents on behalf of your business, which is interesting and exciting. And then generative video. So I grew up in the ad space for any ad friends. Any ad friends out here. Yeah. Remember the days where we'd have seven figures and a year to make a single commercial ad? Right. Like, those were good days, but now with AI, you can do something $0. Ten minutes later, you've got a commercially viable product. So that is wild. I was just looking at the original tamale company. Have you seen that spot? It's good, you guys. So it's this cute little mom and pop based out of California, hobbling along as most small businesses do. They son starts playing around with AI, creates this PSA for what to do if you're ever in a plane crash. Don't land in water. Land in a tamale. Land on a tamale. Anyway, it's got 22 million views. And so this thing has just like changed the trajectory of their business using video. And while that's the exception to the rule a little bit, I think we're going to be seeing a lot more of that. The question I keep asking myself is, and I know I tend to be a little more alarmist than you, you're a little more measured. But it's, if this were the single most important year of my entire career, what would I do?

A (8:38)

So when we triangulate that, interestingly, with what small businesses are telling us. Right. 60% I mentioned are saying that this is critical for my business. Actually, when it comes to efficiency, it goes up. When we survey manufacturers, it's 72%. So I thought we were going to see the highest numbers in professional services and that we're actually seeing the highest numbers in manufacturing. So this stuff is now becoming. It's not just about the world of thoughts and writing, it's the world of atoms. And that's happening really fast.

C (9:04)

And do you get the sense that there is the same level of urgency that we're describing? Are you hearing that yet?

A (9:10)

So I hear more a combination of that with trepidation. And I'm going to pull another number out of our survey. 55% say they are really worried about AI taking away the important human connections in their business. Oftentimes, that's the moat that a small business builds and they're worried about the erosion of that moat coming from the erosion of those human connections. So that can be an issue. We hear that from clients all the time. I would say we're going to get to it in a minute. But there's this interesting moment also for small business in general. I can't tell you how many people I meet that are also thinking about starting a second or a third business because the cost of starting that second or third business has radically changed in the last 18 months. Take the venture capital space. You know, the average check that a venture capitalist writes has probably come down significantly in the last 10 years. Once upon a time they might have written a $3 million check, and now sometimes they only have to write a $300,000 check. It's come way down in terms of you now have angels starting companies instead of VCs doing the first round. That's all sliding down the scale and those numbers are only getting smaller. So that's great for entrepreneurship, but it's also great for disruption. Depends on which side of the trade you want to take. There's some things that are obvious about AI and how you use them, and then there's things that are maybe a little less talked about. Help me separate the signal from the noise.

C (10:23)

I'll take it. Yeah. I mean, I think what is obvious is that it is potentially the greatest personal amplification tool we will see in our lifetimes. Like all of a sudden we woke up, right, and we were superhuman. We had rocket propulsion packs and could distill the world's information at like the speed of sound. That's here. And I think that's just like a transition and adjustment for folks that we're all really aware that we're experiencing. The other piece that I would say is that it is obvious that there is no obvious playbook. So one day it's Claude and we're using that for long form writing. Then it's Gamma for presentations. It's lovable for apps. The next day it feels like it's something new in the not so obvious camp. Leaders are really not using this in the way that I think that they should be. I was just last week listening to a very well known podcaster. Everyone would know her name if I said in the space runs a big media company. And it became really clear she's never used AI before. Her team's using it, she's not using it.

B (11:25)

There's a lot of do what I say, not do what I do.

C (11:28)

Right. Exactly. And what I've learned is just Context is key. So the more that you feed it, the smarter and smarter it gets. The other place that I would just say the main place people are using it is for content creation. So of course it's really invigorating when you can upload a one hour video and it spits out 15 social media clips and captions. And that's really exciting, but I really think the opportunity is around operations. So how do you operationalize, put systems in place, whether it be customer service or automated sales, and that really has a demonstrable impact on your roi.

B (12:04)

Yeah, I think, I mean I talked in answer to your first question about all the people who used law code over the holidays and vibe code and found that it worked.

C (12:11)

Can we not say vibe code anymore, by the way? Can you single handedly take that on?

B (12:15)

I'll strike it from the record, but I think for every one person who did that and told their friends about it and Talked about on LinkedIn, 10 people didn't. I was at an event the other day when a big AI unicorn founder was talking about people voluntarily offboarding, which I thought was quite a chilling phrase. And I don't think anyone.

A (12:33)

That's a new one for me.

B (12:34)

I don't think anyone voluntarily off boards.

A (12:36)

Okay. That's different than quit your job because that's what I would call voluntarily offboarding.

B (12:40)

If you look, it's obvious that people in the tech industry are using AI tools to optimize their workflows. I'm interested in the manufacturing example that you race. Is that for supply chain optimization or what kind of.

A (12:52)

It's across the board? So we see some of it is for supply chain. We see a ton of interest in AI driven robotics.

B (12:58)

Right.

A (12:59)

And then a ton of interest on the back end. Because for a long time the manufacturing sector here has struggled to compete with Asia and there's a view that this is a moment that could allow the entire industry to leapfrog and get competitive again.

B (13:11)

So yeah, I mean, I think coming back to that, what's obvious is that tech people are using AI tools to optimize their jobs. And the tech industry is the place which is ironically seeing the biggest layoffs right now. You mentioned block meta coming Atlassian, et cetera. What I think is less obvious is how many people running normal businesses will go from talking about this, being intrigued by it, to actually making it part of their everyday work. All you have to do is look, I think at the anthropic advertising campaigns recently. I mean super bowl spot, partnership with Williams, F1 to talk about how there's going to be the official thinking partner of Williams F1, talking about how AI can optimize this extremely exciting and complicated sport. But how robust will normal people's adoption be? And Anthropic released this graph, I'm not sure if you saw like a spider graph where they kind of mapped all the potential areas where they see how AI could change people's work and then overlaid a smaller spider graph of where it's actually happening. According to Claude Data. And the places it's actually happening are finance, back office, a little bit of marketing. But there's wide oceans of places where this can be applied. I think the big question is, will it be? I think as a small business owner, the obvious versus less obvious thing is it's less obvious how you make your team feel safe and motivated to integrate AI into their workflows when every single person is reading headlines about mass layoffs coming.

C (14:36)

Speaking to your point about lack of adoption and safety and trust, it really does bring up a trust issue when it comes to operations. Ben, are you seeing business owners comfortable adopting AI when it comes to running their operations? Are you seeing other barriers there?

A (14:54)

Varies by industry. And so as you can imagine, some of the more skittish ones are things like healthcare, where you've got HIPAA laws, things that are more general legal profession, where you've got a lot of proprietary PII type data. Anywhere where the data gets really sensitive, you get a lot more reticence, which is fair enough. And frankly, I'm kind of glad that's the case. If you're looking around the world and watching threats, that's not a terrible thing. The further you are away from that, the more aggressive you generally are. Add to what you said, Oz, in a couple of ways, I think first of all, the white space you've described as real. I lived in Silicon Valley for a long time and the people they are the best at selling to are other Silicon Valley companies because it's who they know. So they think. My last tech company, this was really hard. So I'm going to go build a solution for the tech company that does this. But that's actually not the majority of the U.S. economy. And so I think Anthropic is an interesting example. They've obviously gone pretty upmarket corporate in terms of enterprise, but there's I think, still a really big white space in the small and medium business segment that it's always the last to get tackled because it's small, it's messy, it's complicated, you don't sell one license into some big Fortune 500 company and then more seats and more users and more tokens. It's a longer tail of distribution, but once you crack it, you really get a nice moat around it. So I think that's going to be a huge opportunity. The other thing that I think is a misconception and that most small business owners actually get is if you asked any small business owner what would you rather have, a business that is the same size but half the cost structure and therefore twice as profitable, or a business that is double the size at the same margin, they'll take the double the size any day. This is more a growth play than it is an efficiency play. Now efficiency leads to growth because it makes you more competitive, it makes your products more affordable. You know Jeevan's paradox, It means more people can afford to buy what you sell. But I think what most people miss is if you gave them a choice, you could have half the employees employees and the same revenue or the same number of employees and double the revenue. You take the latter every time and twice on Sunday. And that's how most people are thinking.

B (16:51)

Why do you think they're thinking like that? Because in terms of running a small business, obviously HR and operations is such a big part of what makes it hard. And so I'm curious as to what's driving that psychographic because if you ask

A (17:02)

any small business owner what the hardest thing about running their business is, they will say growing their business. Right Every time they will say growing their business is the hardest part. It's not that running the operations isn't hard and it's not that people don't want to be. Of course they do, and of course that matters. But at the end of the day, safe, responsible growth solves an awful lot of problems. And small business owners are smart and they know that.

D (17:31)

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A (18:30)

Equal Opportunity Lender I mentioned bigger businesses. I do want to have a conversation about how we should think about this moment in of big versus small. Because you read all the time about how the big Fortune 500 companies are plowing billions into AI AI tools for their employees. I can put my hand up. I work for JPMorgan Chase. We have our own instance of many different models that we use. We're using it at scale all the time. Small businesses don't have those kinds of budgets, but they have a nimbleness and a flexibility that big companies don't have, number one. And a lot of these tools are democratizing pretty rapidly. So it's not like you have to have this sort of enterprise grade level. You can just buy that off the shelf. So how should we think about does this make small businesses more competitive, less competitive? Where are we in that moment?

C (19:18)

In the short term my money is on the small business. You are all of a sudden able to be a solopreneur single founder and have an entirely AI generated business. I mean that is so bonkers. The number one issue that a small business owner is always stating is that they don't have capital for staff, for employ. And now all of a sudden you can have a marketing team, you can have an operations team, you can have a financial team. This is just unbelievable. So the power shift from big, well capitalized institutions to the individual is really interesting. And Ben to your point, just the democratization of it, the possibility of it. So I'm really excited about that and bullish about that long term of course it's going to behoove the bigger businesses more who are plowing billions of dollars into it.

B (20:14)

And what's really interesting is this moment in Silicon Valley. We went from a world where it was impossible to imagine that Facebook, Google, Amazon would not be the only big players. And all of a sudden three small businesses, Anthropic, OpenAI and DeepMind rose to become the leaders of the biggest value creating part of the world economy. So there's an interesting theme. I think you really put your finger on it, that the flexibility to use new tools, build New tools that exist outside of huge corporate environments is a real tailwind for small businesses. I agree with that.

C (20:47)

When you're looking at growth, are you seeing AI as kind of the greatest differentiator for small business owners?

A (20:54)

Not yet. I think that's why this conversation is relevant now because I think that is going to change over the next 18 months. I think it's trickling down fast and so it hasn't been. And that's actually a perfect segue to my next question, which is I want to give people some real examples of how small businesses are using it. So Kathleen and I had a company, I'll give one example, called Apogee Healthcare on the podcast and they are doing emergency room video care for elder dementia patients and they're taking that load off of the er. But they're using an AI algorithm to find which patients are the best for their care and it's making the throughput go much faster. It's helping the hospitals triage much faster and then ultimately cutting their costs, which was a fascinating use for AI. And this is a couple of ER doctors.

C (21:37)

So these guys are also national treasures, by the way. You guys, like you ever lose faith in human humanity? Check them out and check out their business.

A (21:46)

So it would be helpful if both of you could give some real world examples, both on the sort of top line, grow the business and on the sort of run the business, drive efficiency through the business. Not big corporates, but small businesses. What can they do and what are you seeing them do today?

B (22:00)

Well, we actually have some external investors in our business. I went to one of the portfolio off sites where several of the portfolio companies presented about how they're using AI in their businesses. And I love this panel because often these AI panels are so, so highfalutin, abstract that it's impossible to really engage. But this was like, no, no. Every company, please share an example of what you're actually doing. And the two that really stuck with me, One is a marketplace for secondhand bicycles. And the biggest impediment to throughput that is quickly selling secondhand bicycles is that bicycle owners are unrealistic about the value and price of their bicycle. So it took a really long time to close sales because it took a lot of getting religion for these people to finally part with their prize bikes

A (22:45)

because it was just worth much less than they thought.

B (22:47)

Much less than they thought. So creating an AI tool that essentially took the bike and created a data driven price comps report to send to the owner reduced the time to getting a realistic price and therefore the time to sale by an extraordinary amount. I thought that was a really cool, lovely, tangible example. Another one, which is a bit more abstract, but also I thought very, very interesting, was how many executive meetings in small businesses are inefficient. I mean, we all hear about how Amazon run their executive meetings. You come with a memo, everyone reads the memo. Everyone then discusses the key points of the memo. As a small business owner, that's a very aspirational way to run your meetings. But one of the other people who had a startup was talking about how they basically made all of their key data sources, sales, marketing, margin, et cetera, et cetera, legible live data sets, and then created their own AI tool that essentially pulls from all these data reports. Data sets and creates a report that everyone has to read before they come to the meeting. So there's not one person who has to spend their whole week pulling data. There's not an argument in the meeting about, you know, am I grabbing the elephant's tail or its leg or whatever the cliche is. It's like, no, no. These are the key metrics of the business that have been distilled. And let's have a very targeted discussion about how we react to them. And so those two examples both struck with me as very inspiring and also very different.

A (24:05)

Learned Kathleen.

C (24:07)

Yeah, I can speak to our Unshakables guests a bit more because they're already ripping and running with it, which is pretty neat. We've got a company that came on partake. Are you guys familiar with their better for you cookies? So darn good. So, so good. And they're using it for financial modeling. So they've got these huge data sets. They're essentially feeding them into the AI that's doing predictive modeling around sales forecasts. Where things are going, hypotheses are coming out of that that their team validate and use in a great way. So you could test an assumption. Hey, if we heavy up on back to school, what's it going to do for the business? You could imagine we pull out a Kroger. Does that tank the business sort of thing. So that's neat. We've got a company called Nerdwax, which they make cloths that help you unfog your glasses, which we all need here today. Ben, you love yours. You've got a Star wars one, right?

A (25:01)

Star Trek.

C (25:02)

Star Trek. Sorry, excuse me. We got a Chucky. Check me on that.

A (25:06)

You better nerd up.

C (25:07)

You better nerd up, up. And they're using it for product design. So design is super time consuming process. Now instead of AB testing, they're able to do A to Z testing. So product design, but then also getting feedback from customers. There's another company in the Lone Star State called Gretna. They're in the manufacturing business and that was a really interesting use case because the founder CEO is new and so she's using it for business coaching. It's lonely at the top. Like we know this and she's essentially using it to do, do a planning at the end of the year, have a sparring partner be able to kind of figure out the trajectory of where the business is heading. So that was really neat and I thought unexpected. Of course, the manufacturing applications I'm sure are there and then there's another company that is in battery storage named Vessel and they're using it for market research. So really just figuring out what's happening from a competitive standpoint. Lots of things that she told us that that were above my pay grade I did not understand. But what really blew my mind is how quickly they've all adopted it and they're just kind of like running fearlessly head first into AI. You know, I don't think that just speaks to the caliber of the folks that we have on the Unshakables, although they are extraordinary business folks. I think that just speaks to the entrepreneurial spirit of like, I'm going to break things, I'm going to try to figure it out, I don't know what I'm doing. I'm going to speak nice to this thing just in case it turns on me a few years from now, what have you.

A (26:42)

Okay, we're getting to the end, so I want to close with your best advice for any small business owner who's listening, who has not yet gotten deep enough into this stuff. Give them 1, 2, 3 things they can do in the next 30 days to change their trajectory. As far as the use of this

B (26:59)

tool, I think that yesterday is better than today, today is better than tomorrow, and tomorrow is better than never. We had an interesting conversation literally last week at Kaleidoscope, which is science and tech podcast network that has a partnership with iHeart. And our head of marketing was like, well, we're doing several hundred pieces of content each month and I have 20 years of experience in terms of SEO and titling. But every time somebody has a question, they can't just slack me and ask me how I should title a piece of content, because otherwise my job title is Head of titling content. So we sat down and we said well, let's make this a real world case of using Claude. Let's create a product based on your insights and our content and iterate it and publish and measure and optimize and create a virtuous circle where we can use our ip. Like we have an incredible team member who really has a sixth sense for this stuff. So how do we take that proprietary Kaleidoscope ip, productize it and unlock more time in that person's schedule? This is frankly our first mini product, AI Sprints. And I'm really excited to know where we'll be in 30 days. I'm optimistic that we'll get some good results, but I think there's no small business which doesn't have a somewhat repetitive time sucking task that somebody in the business knows how to do very well. And I think that's a great place to experiment with an AI tool.

C (28:19)

Practice, practice, practice. 30 minutes a day for the next 30 days out of ChatGPT. I mean, that's great if that's part of the equation, but make a video, create a sales agent, build a presentation using AI, really get under the hood and you'll just be blown away by what you learn about yourself at the end of that period and what it's able to do for your business.

A (28:43)

I guess mine would be leverage your employees. Ask all your employees what are the two or three tasks that they hate the most at work and then challenge them to solve those with AI so they don't have to do them anymore. Because if you want incentive to use it, it tell people it's a way for them to stop doing things they hate. I think that's good. I think that's a good way to jump start. Okay. I want to thank you both for being here. I think this is a moment obviously for the economy, but I can feel it in my bones that this is a moment for small business in terms of the adoption of these tools. And we're going to be sitting here at south by Southwest a year from now having a completely different conversation about where it is.

C (29:15)

Because time stamp this conversation because otherwise it's going to look like we didn't really know what we're talking about.

A (29:20)

It's going to move. So I want to thank you both for being here. Thank you everyone for coming and please listen to the Unshakables. Thanks so much for listening to this episode of the Unshakeables. If you liked this episode, please rate and review it. Next episode, we'll meet a woman whose idea to recycle used clothing may end up changing the entire fashion industry.

C (29:46)

I had this crazy vision of a blender bringing back the clothing to the fiber form. I immediately googled, and when I did that, it didn't exist.

A (30:00)

I'm Ben Walter, and this is the Unshakeables from Chase for Business and Ruby Studio from iHeartMedia. We'll see you back here soon.