People spend more than they make.

In business, I’ve seen it a lot where a company will raise a good chunk of money, right? Like two million bucks, and spend it all and not really have a plan.

After looking at a million businesses, I think the two things that every startup has to get right are behavior change and monetization.

It’s kind of the same thing with monetization.

Like, if you ask me if I’ll pay for something, I could say yes.

But it’s very different when you come and actually ask me to run my credit card.

I don’t need the humans, right?

Like, I can take my product skills, my architecture skills, my security skills, and I can just build stuff that’s real on my own using my army of AI agents.

It’s not like the AI magically made it work.

It’s that I’m sitting there really focused on the product and the usability.

No Bullsh*t Talks is a podcast for entrepreneurs by entrepreneurs.

There’s too much bullsh*t out there, especially when it comes to business.

This podcast aims to highlight what’s true and what’s not in the world of entrepreneurship, bringing you honest and raw conversations about the roller coaster that is entrepreneurship.

Each week, my guest will be a high-performing entrepreneur sharing the ups and downs of their journey and helping you prepare for the road ahead while providing you with actionable insights and absolute gems of knowledge.

Stay tuned as I introduce this week’s guest.

Mike Lingal is a serial entrepreneur, startup mentor, and founder.

In 2022 alone, he helped 257 startups raise over $1 billion in venture funding.

He’s an entrepreneur in residence at both Techstars and the Founder Institute.

And his entire philosophy is built around one idea, that most founders shouldn’t be raising any money at all until they truly understand their numbers.

I present to you this week’s guest, Mike Lingal.

Today’s guest, Mike Lingal, has actually been on my podcast several years ago, probably about five years ago on Season 1 when I recorded it on Zoom.

And I just thought, what an opportunity to be able to meet him in person, catch up, see where his business has turned five years later, and show how different entrepreneurship has changed and what the journey looks like.

But it also shows you how podcasting can really help you connect to people all over the world.

I met this guy on Zoom for my podcast, had a conversation, and now I’m here networking with him in Miami.

So podcasting can really change your life.

You can really have amazing conversations, and I encourage everyone to kind of take the plunge and do it because you never know where it may lead.

Welcome, Mike, to No Bullsh*t Talks.

It’s great to be here.

I feel like I should say welcome back, Mike, to No Bullsh*t Talks.

You were on the very first season of the podcast back when I filmed it on Zoom.

That was like COVID times, wasn’t it?

It feels like COVID times.

Yeah, it was definitely COVID times.

And obviously, you know, Zoom was the best way to start a podcast.

It’s super easy, low-key.

I could have great guests from all over the world like here.

But now I kind of jumped up a level.

I wanted to have real in-person conversations, a full 4K video setup and everything.

So, it’s obviously more difficult to get guests in because I have to be kind of usually based around London, but I’m on the road, and so I thought I’d reach out, and so I’m so glad you’re here.

That is amazing.

So, sunny Miami, welcome to Miami.

Thank you.

I am very much enjoying it here.

I’m in a different part of Miami than what I’ve normally been.

I think when I’ve come before because this is more of a work trip.

Okay.

I’m in downtown this time, and usually I’ve been on the beach somewhere.

So, is it called Pompano Beach?

What’s that?

Pompano Beach.

There is a beach.

There was a Pompano Beach.

I feel like because I went to the casino there.

That’s how I…

Yes, there is a casino there.

There you go.

I feel like I was there one time, and obviously normally Miami Beach and so on.

And I’m going out for dinner at the Miami Beach House later, which is kind of nice.

So yeah, so it’s lovely there.

So, I’m used to that Miami.

And so waking up in high-rise buildings, like very corporate downtown Miami, it felt very different.

Yeah.

But it’s, I mean, that’s what’s wonderful about Miami.

You have the beach, but you also have a real city.

So, my wife and I moved from New York, it’s been almost 12 years ago, thinking we would come for two years, and it’s now been 12.

She’s in finance and I’m in tech.

And it’s been great.

Like both of those industries have grown up.

But it’s also fun because there’s a beach and pools and we’re outside all the time and the weather’s nice even in the winter.

But there’s also enough going on and there’s enough cultural stuff going on that we still feel like we’re in the middle of a vibrant city.

I do.

I’ve very much enjoyed the difference in this time that I’m going to get, and I’m here for another few more days.

I’m excited to explore more.

But you just said your wife’s in finance, you in tech, but actually when I last spoke to you, you were also in finance technically, right?

I think that’s why she was willing to hang out with me.

I was in tech, but I also understood enough finance that I could have a conversation with her.

Okay.

Yeah.

So I feel like tell me now, I guess introduce yourself for the audience who don’t know who you are.

Maybe some people tuned into the first episode, and if you did, thank you for sticking around this long on the podcast because that’s incredible if you did.

And thank you for being a loyal listener slash watcher.

But yeah, Mike, do you want to tell people what you do?

Sure.

My name is Mike Lingle.

I’m based here in Miami.

I am an entrepreneur turned, actually now I’m investing.

I run a small VC fund for a family office, which has been great.

So, we invest in early-stage tech.

I was a developer.

And I was telling you before this, I kind of lost my skill set and got into helping other entrepreneurs.

But now Vibe Coding is all of a sudden giving me back this superpower where I’m actually building real products for the first time in a long time, which has been really nice.

Yeah.

So half VC, half product guy.

Yeah.

So obviously AI’s helped change a lot of things.

Yeah.

And so you are now, you’ve started your own VC fund, which is kind of crazy.

Let’s start with that because when I spoke to you last time, you were doing financial projections for startups.

So you were definitely in that startup space.

Yes.

How did you get to creating your own VC fund?

So I will just go back and say, I did the entrepreneur thing.

We raised a couple rounds of VC for the startup we had.

That startup was acquired, and then I started working with other entrepreneurs.

Moved to Miami, ran a few accelerator programs, and what I found in my own journey was that I was good at building tech, but I wasn’t great at running the business.

And that almost led to disaster.

And then I had to reinvent myself as someone who understood the management and the finance piece as well as the tech.

And that was transformational for me on my journey.

Fast forward to when I started working with other founders, and I saw a lot of the same thing.

People start companies, not everyone, but a lot of people start companies because they’re good at building stuff.

And then all of a sudden they have to make business decisions, right?

So the finance piece was the unlock that I found helped a lot of entrepreneurs.

I don’t know, I used to think of myself as not a numbers person.

But it turned out I could be a numbers person if I just put some work into it.

So, I was really trying to help entrepreneurs.

And that was kind of right at the same time that COVID hit.

And I was looking at this and I was like, you know, everyone’s going to suddenly be working from home.

The landscape has changed.

Everyone’s either going to need to pivot what they’re doing or start their own business from home.

And everyone’s going to need to understand the financials.

So, that’s how I decided at that moment.

I think literally on April 1st of 2020, I was like, “All right, I’m doing financials full-time to help entrepreneurs.”

And I probably talked to you a year later.

Yeah.

And it was great.

You know, I helped a bunch of people, but I also taught myself a lot because I built financial projections for every type of company under the sun.

Which helped me mentally understand how a lot of different businesses work, which has been really helpful.

Especially now that I’m investing.

Like, I’m looking at a bunch of businesses and it’s important for me to understand.

So what would you say how the money works?

Yeah.

What would you say, looking under the hood at all the finances of all these companies that you’ve worked with, like startups mainly?

Yeah.

Are there any trends that you would say were the biggest financial mistakes or the key things that people do?

Like, were there common patterns that you would see over and over again?

Yeah.

I mean, this is going to sound really dumb, but people spend more than they make.

I think, you know, lots of people have that problem in their personal lives, right?

And in business, I’ve seen it a lot where a company will raise a good chunk of money, right?

Like two million bucks and spend it all and not really have a plan.

Like when you’re running out of money, you have to use that $2 million to either generate enough revenue that you can survive or raise more money, right?

And what I’ve seen a lot is companies just get to the end of the money and they can’t do either of those things and they have to shut their doors.

But they had a real chance, right?

Like they had $2 million to figure it out.

Yeah.

But what do you think?

I mean, because I feel like I see that a lot as well.

Right.

But I feel like it’s recklessness and it’s almost like maybe youth, immaturity, and it’s just sort of like it’s not their money, so it doesn’t hurt as much, right?

It’s like, “Oh, 2 million. What can we play around with this for?”

And it’s almost like a game, a hobby, a project for them.

But it doesn’t really matter if they run out of money because it’s not their money.

They don’t feel it as much and they can just move on to the next one, raise some more money, and do the same thing again.

What are usually the biggest reasons why people do that and they end up with a lack of money?

I mean, I think one of the things is, again, this goes back to founders tend to be builders.

Not everyone.

I was talking to a guy last night who started a very successful business but came from the financial world, and his business makes money, right?

Yeah.

For a builder, I think the gut instinct is, let me take that $2 million and build something, right?

And I think especially with tech, I think with all businesses really, we need to build something for humans.

And if we go off into a corner and build something and then come back and hand it to the humans, a lot of the time it doesn’t drive the behavior that we’re looking for.

So after looking at a million businesses, I think the two things that every startup has to get right are behavior change and monetization.

And behavior change is really hard to predict, right?

If we could predict behavior, every book would be a bestseller, every movie would be a blockbuster.

But that’s not what happens, right?

We can’t really predict how people are going to behave, and it changes because of trends and geography and whatever.

So really the way to build a successful business and test the behavior change is do the least work possible, put humans in, see the behavior, and then build tech around what’s working once you get it working.

And it’s kind of the same thing with monetization.

Like if you ask me if I’ll pay for something, I could say yes.

But it’s very different when you come and actually ask me to run my credit card, right?

Yeah.

So the only way we can prove behavior change is through behavior.

And the only way we can prove monetization is through behavior.

So the things that tend to work the best are really low-fidelity, maybe even no tech, right?

Like I’ve seen businesses that start just with WhatsApp chats.

Yeah.

But they get the behavior change, they get the monetization, and then they build the tech around that.

So that’s again going back to, I guess, even old-school kind of patterns of MVPs, right?

And it’s like the whole Lean Startup kind of mentality.

Correct.

And it’s funny because that was, what was that, like 2012 or something?

I feel like it’s a long time ago, but there are still parts of that which are still so valid.

But I think everyone’s so interested in speed now.

The landscape’s completely changed.

So everyone wants to get a product out there straight away.

And like you said, behavioral change is so different, and monetization is so interesting because I see all the time in the business that I work with.

I’m from a branding and marketing background, which is very different, but I see the same things.

People ask me to build a website for them and they expect customers to just come.

And it’s the same.

And they genuinely think that.

It’s crazy.

Or they expect you to do marketing and after a month of marketing they expect the business to just pick up and just work.

Yeah.

They’re just like, “But why? It’s a great product or service.”

Like, “Why aren’t people just flooding in?”

And I think that’s, you know, again, even when you have a proof of concept, even when you put stuff out there, like you said, people say, “Oh, I love that. That idea is so needed. I would love to be part of it.”

But when it comes to actually giving up their hard-earned cash, there’s suddenly a hesitation and they don’t use it.

Yeah.

Right.

Which could be that they don’t actually want it, but they’re telling you something nice.

Or it could be it’s the right idea but not the right implementation.

And if you just played with it for a while, you might be able to get them excited about it.

But that’s all easier to figure out at the blueprint stage than the “I’ve already built the house” stage, right?

Yeah.

Yeah.

And I think, again, that whole doing it in small chunks.

So what would be the most sensible approach?

So say if you are building, whether it’s a product or service business, a similar sort of thing, right?

You don’t have to release a bunch of offerings straight away, right?

So when you are trying to build, if you want to try and listen to behavioral change and get as much data as possible to be financially viable, what would you say is the best approach for a startup?

I mean, this goes back to the vibe coding thing.

We live in the age of you can get something up and running pretty quickly that looks pretty good, does a decent job, and tries to take someone’s money, right?

There are some nuances to that.

Like if you’re in a regulated industry, that’s harder to do than if you’re not.

But whatever, we’ll ignore that for the moment.

But it’s pretty easy to get something out there and in people’s hands.

I do think there are two ways to gather information.

One is we can look at analytics, which tells us what people are doing, right?

Which is important because we can see if people are doing what we want them to or not.

But that doesn’t really put us inside their heads.

What puts us inside people’s heads is going and talking to people.

So the data is great.

It tells us what.

But the people actually tell us why.

So I think there’s a blend of looking at the data, but also going and talking to some people and seeing, you know, here’s my product.

Do you see the value?

Can you pick it up and use it?

Will you pay me for it?

That kind of stuff.

But you said earlier as well, some people might say to you one thing to be nice.

How do you know whether they’re being nice or whether they’re being genuine?

Well, I think when I’m talking to them, I would put them in front of the…

Well, all right, this goes back to the marketing.

Okay.

Who is my customer, right?

I think this is another thing that can trip early-stage founders up.

We look at Facebook, we look at Amazon, we think everyone is our customer.

But you, as a marketer, you know that that does not work.

And if we really think about it, Amazon only sold books.

Facebook was only for college students, and actually only for Harvard students, and then only for Ivy League students, and then only for college students.

So even those companies didn’t start out saying we’re all things to all people, right?

So what I’m talking about is, who’s the customer?

And can I go sit with five of those people, hand them my early-stage product, watch them use it, and then will they pay for the service during that session?

Maybe it’s a discount on an early version, right?

Something like, will they actually send me some money?

Yeah.

And I think, like you said, that’s a slow approach, right?

That’s slow building, but methodical in the right way.

I think that people don’t necessarily do that because they’re looking for speed and growth very fast.

Correct.

Okay.

Yeah.

But I think it is actually faster because then you get inside people’s heads.

So going back to data, right?

I could look at data, but now I have to guess and I have to run experiments.

And each experiment takes me a week to two weeks, and I need to have enough user flow for the experiment to be statistically valid.

Right.

And I could guess wrong.

I could run three experiments.

They could all be wrong.

And then I know things that it’s not, but I don’t know what it is.

Versus if at the same time I go talk to five potential customers, watch them interact with my product, see if I can get them to pay, and have them walk me through their thought process, that is actually faster, right?

Even though it feels slower because it’s hard to put together and it’s annoying and dealing with people is complicated.

Yeah.

And I think that’s what people miss, that nuance, right?

That it is actually faster, but it looks slower.

It’s the same as, you know, I talk a lot about strategy and the fact that if you actually do the right strategy first, you’re actually more likely to get the results.

But people don’t like to do the strategy part of marketing or any sort of business strategy because they see it as a waste of time.

And they’re like, what’s the point of planning and what’s the point of strategy?

Because I just want to do the thing.

But they don’t realize that actually if you go on and do the thing, how do you know what you’re trying to get to and where you’re supposed to go?

Like without the strategy.

And how do you measure it?

Exactly.

How do you know it’s successful?

How do you know your target?

But they don’t do that and they see it as a pointless waste of time.

But actually, if you do the strategy first, it’s actually quicker if you think about it.

But people don’t see it as that.

I guess that’s the same sort of thing if you actually speak to the customer.

Yes.

Then, okay, brilliant.

Right.

So you can also find out if they’re even your customer, right?

Right.

Like you have that image in your head.

But then, and I think that goes back to probably what you’re seeing.

I think of marketing as automation, right?

Sales is automation.

Marketing is automation.

And in order to automate something, I have to understand it.

So I have to understand who is my customer.

It’s the strategy.

I have to understand who is my customer.

I have to understand why they buy.

I have to understand what price they pay.

And I have to understand what language I need to speak to them in that makes them go down the sales funnel, right?

And I think what I see some early-stage startups do is figure that out and then go expand the marketing or the sales, and that works.

Other founders are like, I’ll just go hire the marketing person and they’ll figure that out.

But that’s harder, right?

Because now I’m asking a stranger to figure out the core of my business.

And I think it’s a whole thing about delegation as well.

They just hire someone and they pass it on.

But actually, if they don’t understand it themselves, how are they going to communicate that to other people?

Correct.

You are now running your VC fund though.

So, what sort of startups do you invest in and why?

What makes you attracted to them?

Because obviously we’ve talked about lots of mistakes they’re making, but obviously there are ones you’re investing in, so you must see potential.

What are the key signs that you look for when you want to invest in a company?

The last investment we did…

Actually, let me just clarify.

I am running a VC fund for a family office that’s based in Australia.

And the VC fund had already done a couple investments when I joined.

I’ve been running the fund for about a year, and we’ve done a bunch of investments since then.

So I inherited some, and then we have some that we’ve done.

One of my favorite things was, I do a lot of mentoring for accelerators.

So there was a company that came out of Techstars called Docify.

And I was their mentor during the Techstars program and then just kept talking to them for a year and a half.

So one, I understood the business really well.

Two, it was in a vertical that I had experience with, so I knew kind of what I was looking at.

And then three, they got to a point where they said their biggest problem was they had too many sales and they couldn’t handle the flow of customers.

And I was like, okay, that’s the moment, right?

Which actually, there’s a VC, I forget who it was.

It might have been Peter Thiel.

I can’t remember.

Oh wow.

But there’s someone who talks about why they invested in Facebook.

So they wrote the first check to Facebook.

Yeah.

And they were having a similar problem.

Facebook’s biggest problem was they had so much usage that their servers were crashing, right?

And they needed the money to go buy more servers.

And he was like, “Okay, yeah, I’ll give you a check for that.”

Yeah.

Exactly.

Wow.

Okay.

So I guess that’s a very easy thing to look for, that potential where the money is just getting in the way of them growing really quickly.

Right.

Exactly.

But that’s a good one.

That’s definitely a good one.

But I guess that’s not as common, right?

This is really hard to do.

This is one thing I’m learning now that I’m running a VC fund.

Because early stage, there’s not as much data, right?

There’s not as much traction for us to look at.

And I just got off a call with a panel of other VCs who were talking about how they invested.

And this woman was like, either I want this to be one of the only five people in the world who are qualified to solve this problem, or I want them to prove that they have so much velocity that they’re going to outrun anyone else.

Wow.

Right.

And the other thing I would add, well, I would add a couple things.

One is deal terms need to be reasonable, right?

Because a lot of the time we’re trying to invest early stage, but someone wants like a hundred million valuation.

And I’m like, those two things don’t go together.

So even if we like you, we can’t do the deal just because of the economics.

And then going back to what I was saying about the two things any startup needs to solve, behavior change and monetization.

There are two more if you want to be venture-backed.

If you want to be venture scale, I need to believe that there’s a moat, right?

So that someone else can’t just come copy it.

And there needs to be a distribution path to massive amounts of sales, right?

Otherwise, it can be a great business, but it’s not venture-backed.

Yes.

Yeah.

Right.

I think that’s the difference.

When people speak to me about trying to get funding and everything, I’m like, well, unless you’re…

It’s mainly tech companies that are going to be venture-backed because of that scalability, isn’t it?

Yeah.

And I think that everyone else would need to go for private investors or angel investors or something.

Or just make money.

Yeah.

But that seems to be harder.

This is what I find really interesting.

I had the CEO of a company called SeedLegals in the UK, who help startups get funding and they do all the documents for that.

And there’s a little soundbite that came out of that which essentially said that if you’re looking for funding, it technically means you failed because you failed to be profitable, which is why you need funding in the first place.

But obviously there’s a nuance to that.

It was a good soundbite.

And obviously that’s not always the case.

But if you could own 100% of your company and be super profitable from day one, you would, right?

But it’s not always…

I meet founders like that.

I’ve met a couple people.

I mean here in Miami, two off the top of my head.

One woman built a clothing brand from scratch into a $50 million business.

Nice.

And another guy built his tech company from scratch into a $200 million business.

Never took any money.

Wow.

Right.

So, I mean, they have a lot of options now, right?

They could raise money, they could sell the business, they could keep going.

But that is great, right?

It’s really great, but it’s harder.

And I think that’s the thing.

Like we were talking about earlier, people get $2 million in, they just kind of spend it.

And look at even some of the big companies that we all know of, like WeWork and whatever.

They weren’t profitable.

I don’t know what WeWork’s doing these days.

But WeWork and Uber are classic companies that were massively backed and were never profitable for God knows how many years, right?

But, you know, I think when you haven’t got that profitability, the whole business is a very, very different beast.

And I think that if everyone didn’t have the option to raise and they were forced to get to a certain level of profitability before they could get money, I think that would change the landscape a lot.

And I think a lot of people just think, “Oh, it’s easy. I’ll just go get funding and then I can do my own thing, and we’ll see what happens after that.”

They don’t actually calculate it.

I think it’s so much harder if you actually think, how do I become profitable from day one?

Because I don’t think everyone can do that.

One of the gotchas in a pitch deck is the marketing.

When they get to the marketing plan, it’s like we’re going to run ads, we’re going to do this, we’re going to do that.

And it’s clear they haven’t done any of those things.

They’ve never tried to acquire a customer.

They don’t know who their customer is.

Right.

So back to the sales and marketing, that piece is missing.

And it is definitely, give us the money and we’ll start trying to figure it out.

Yeah.

And I think that’s what shocks me so much because there are loads of companies who are like that.

They just think, “Oh, if I just got given this money, then I’m sure I could run a business.”

But they’ve got no proof that that is actually right.

And they’re just going to kind of hit and hope.

So that leads me to the question of why do investors invest in those businesses?

Because, okay, a lot of them do get turned down, but some of them do get money from somewhere.

They’ve got no previous experience.

They’ve got no proof of concept really.

Maybe there’s some basic proof of concept.

Why do some investors invest in them?

I know that some people invest in like 100 companies and this one hopefully becomes a unicorn.

But if they’ve invested in 100 companies, I’m sure 10,000 companies have pitched to them.

So they’re still obviously being selected to some extent.

So what makes them choose those companies even if they perhaps have not got the numbers?

All right.

So I’m going to circle back and say I think there are really two stages of investing.

There’s the “we’re building the rocket” stage and there’s the “we’ve built the rocket and we want to fly farther and higher” stage.

And the “we already have the rocket built” stage is less risky.

Yeah.

You’ve got data.

You’re further down the road and you can see the data.

And that’s like when someone comes into a late OpenAI round.

That’s what they’re buying, a working rocket.

Yeah.

There’s still risk, right?

But it’s been de-risked.

But I think what we’re talking about is, why do you invest in the “build the rocket” thing?

And I think part of it is because of the OpenAIs and the Anthropics.

So, I saw this amazing tweet.

There was an angel investor who invested in Anthropic in 2021, right?

And then he lined up, I think he said, like 21 deals or 21 pitches with real VCs on Sand Hill Road in San Francisco.

Every single one of those VCs said no to Anthropic in 2021.

How are they feeling about that?

That company looked uninvestable, right?

Yeah.

Five years ago.

Wow.

And now it’s one of the most valuable companies on the planet.

And I think that is the answer to your question.

People see that and they’re like, “I need to go find the next one of those.”

Because there’s no way to make that much money that quickly other than to figure out how to find those.

And in some ways it’s luck, right?

It’s just taking a chance on some of the things that kind of add up that could potentially be the case.

But like I said, they’re looking for that Anthropic and the unicorns of the world which do become successful.

And they just have to take a punt somewhere, right?

If they want to be the early ones in there.

Which goes back to themes, right?

People have been trying to do AI for decades, right?

But all of a sudden, we kind of hit the inflection point where all of a sudden that investment makes sense.

But you still have to be ahead of the curve because it makes a lot more sense in 2025 and 2026 than it did in 2021, right?

So, as an investor, you still have to have the vision like, “Oh, I think we’re hitting the inflection point.”

And then two, I do think it comes back to you need to either be looking at, you need to either be sitting across the table from the person who’s one of the top five people in the world, or who can show how fast they’re moving and you believe that’s going to work.

Which, in the case of Anthropic, they had split off from OpenAI and you did have one of the people sitting across from you who was one of the few people on Earth who could do this thing.

Yeah.

Right.

It’s crazy what AI has done now.

I can’t even…

If we were having this conversation the first time we spoke, we weren’t talking about AI.

No, not at all.

And now look how prevalent it is in what you do, for example.

Let’s talk about that because you are very much embracing AI and you’ve immersed yourself into it.

So how are you using AI and how has that changed your business?

So first of all, I would say I started my career as a developer and then got into the entrepreneur thing, started running the business, stopped developing, reinvented myself when I almost drove my business underground.

I reinvented myself as someone who was the numbers person and brought in a co-founder who was a much better developer than I was.

So I became the non-technical co-founder after being the technical co-founder.

And then I kind of lost my programming skills, right?

I don’t know, I have gray hair, so it’s been 15 or 20 years since I’ve actually coded anything.

And then all of a sudden, I’ve been playing with the vibe coding tools, but in the past four or five months it’s like, oh, these things actually work.

And all of a sudden I have this superpower back that I used to have, and I can build real stuff.

It feels good because I know how to code.

One of the roles I took in the past few years was as the CTO of a publicly traded blockchain company, Bitcoin company.

And we were selling like a million bucks worth of Bitcoin a day, right?

So I wasn’t doing the development, but I was managing the team.

And when something goes wrong, we had a couple times where automations went wrong and you blow through a lot of money very quickly at that scale, right?

So we have to really think about security.

We have to really think about architecture.

We have to really think about usability.

And I was working with the human team, right?

And they were much better at coding than I was.

But my job was to make sure the architecture worked and the usability worked for all the different constituents we had looking at this, right?

And so fast forward basically a year, year and a half, and now I can…

I mean, I’m not building anything where I’m moving money around, but I don’t need the humans, right?

I can take my product skills, my architecture skills, my security skills, and I can just build stuff that’s real on my own using my army of AI agents.

Well, I think that it definitely helps that you’re a developer.

I think the way that AI has been portrayed is that any old average Joe can go and make an app.

Exactly.

I think that’s a little bit far-fetched in my opinion because I think the product is only as good as the prompt, so to speak, right?

And it’s that sense that if you’ve got someone who’s knowledgeable prompting and building, you’re also able to notice when it is making mistakes.

And it probably makes a lot of mistakes, right?

And that’s the thing.

So I think the way they’re portrayed is that anyone could just create an app in seconds and it’s just done.

I don’t think that’s true.

I had a neighbor who’s a tech guy.

He came over and I was showing him what I was building.

And he was looking at this.

He’s like, “The UI looks amazing and why is it so intuitive?”

And I’m like, “Because I’ve been sitting here sweating over every detail all day, every day for weeks, right?”

It’s not like the AI magically made it work.

It’s that I’m sitting there really focused on the product and the usability.

And then I’ve spent a lot of the past week…

I got to the point where I had multiple account types and multiple user types and teams and groups.

And you could spin up all these different combinations.

And I was like, I can’t test this.

So I asked the AI, “Should we get a service or what should we do?”

And the suggestion from Claude was, “Let’s just build a testing framework.”

Which has been really hard.

I’ve had to not build any features for, I mean, it’s going on like two weeks now, just so we can get this testing framework in place.

But now that it’s in place, it does a lot of the complicated stuff like test it with multiple users, test all these different account types, and make sure that it all functions.

We found all kinds of bugs that were hidden in the code.

But now moving forward, it’s much easier because I took that time.

But I don’t know that if you’re not a developer, you’re thinking, who’s doing the testing before I give humans these new features?

Exactly.

If you’re not an expert in that field, then anything it produces, you’re going to think is good.

And that’s the problem I have with AI in my industry.

I will produce a great piece of content, especially when it comes to website copy or marketing copy.

It has to be, like we talked about, who is your target audience?

It has to talk specifically to your target audience.

But it irks me, and I cannot begin to tell you how much, when a client takes my specific marketing copy that I have spent hours writing and crafting in the perfect tone of voice for them, shoves it through AI, gives me some generic crap, and then goes, “Here you go. Sounds better now.”

And I’m like, that’s now talking to…

Exactly.

And then they think it sounds extra cool because they did it as well and they feel like they are better.

And it’s crazy how they think it makes them sound good.

But it is the whole point of my podcast.

It’s No Bullsh*t Talks.

It’s done in a way that it’s so bullsh*t.

It’s done in this kind of way that as a human you can just smell it.

You’re like, “Oh my God.”

And when you read it, you’re like, “I have no idea what they do.”

That’s the thing.

When you go on someone’s website and you’re like, “What do they do?”

It’s just waffle.

It’s all these big words that make them sound kind of smart.

And you’re like, so what do they actually do?

How could they help me?

Am I supposed to go with them?

Am I the right person?

Whereas if a human wrote it for the person they’re actually trying to talk to, it hits a spot straight away.

And that’s the difference.

So I think that’s why I dislike AI.

It makes my clients think that they have superhero marketing powers, which they don’t, right?

But the same thing is if a marketer then uses the tools, they could correct things and they could probably produce some decent copy to some extent.

And obviously ask them to tweak it and everything.

So they could, with their knowledge, put it in first in a better quality way and then get AI to maybe polish it in certain ways.

That’s different because you’ve got a foundational base of an expert.

And so when you’re the developer doing it, it’s a very, very different thing compared to, like, I have the foundational base as an expert.

So I’m…

Yes.

And I think that’s what the big difference is.

So again, from your perspective with what you’re doing with the vibe coding and all the other apps, so AI agents, everyone’s obsessed with AI agents at the moment because obviously it’s like you’ve got this little team of people that can just work while you’re sleeping, so to speak.

What can the average person do?

So say if you’re a busy founder, and that’s how obviously Anthropic and everyone portrays it as, you’re a busy founder and you’ve got all these AI agents that can just do stuff for you.

What can the average Joe with no coding knowledge do fairly easily and should do to help them with the day-to-day running of a startup, for example?

I think organization stuff is helpful, right?

Like if it can get into my email and help me organize that stuff and save me a bunch of time where I’m not having to sort through things.

I think also summarizing things.

Yeah.

Like a lot of time when I open my email to organize it, I end up reading articles, which is fine.

Like I enjoy it, but it’s not helping me move forward, right?

So surfacing the important things, summarizing the important things can save a bunch of time.

I think two, and I have a financial bias to this, the Claude plugin for Excel is bonkers, right?

So you go to the Microsoft Store, you install it into Excel, and then Claude is inside Excel and it can do…

First of all, it can do the work, right?

So the family office guy sends me a company they want to buy, right?

But the financials are a mess.

So he sends me a master file of financials through 2024, and then 15 files that are a combination of Excel files and PDFs for three lines of business for the remaining years.

I don’t know how to put all that together in less than like a day, right?

Yeah.

I open up the 2024 file in Claude, right?

In Excel.

I open up Claude’s little chat window in Excel next to it.

Upload the 15 PDF and Excel files and I’m like, you make this into a thing.

So it fixes it.

Like I go away and make myself a cup of coffee.

I come back.

It’s put it together, right?

Then I say, “Look at the financials you’ve just created. Tell me what you think. Would you invest? Would you buy? What are the questions you have?”

So it gives me this whole position.

Then I uploaded the pitch deck because it’s Claude.

So I uploaded the PowerPoint and I’m like, “Here’s the pitch deck. Now go through, now that you have this base. Go through, look at the pitch deck, tell me what makes sense, what doesn’t make sense, what questions should we be asking the founders.”

Then I get on the phone with the family office guy and I’m like, you know, walk me through this deal, record it, have AI notes.

Get on the phone with the founder.

He walks me through his side of it.

I have the AI notes.

I go back to Excel.

I upload the AI notes from both my guy and the founder, and I’m like, “Okay, here’s what they both said, right? I answered a bunch of your questions. Now give me your position on the deal.”

Great.

Then I said, “Okay, now give me a pitch deck to the founder.”

Then I go to our website, and I take the URL to our website and I’m like, okay, I can open up Claude in PowerPoint also.

So then I switch to PowerPoint and I’m like, create a slide template based on our website, right?

So again, I’m working on something else.

It’s going on my side chat.

It creates the visual template for me.

And then I upload the Word doc that it created to pitch the founder.

I’m like, “Okay, now give me an outline for a slide deck.”

And it gives me the outline.

I make some changes.

I approve it, and then it puts it into the slide template for me.

Then I hand it to the family office guy and I’m like, “Here’s your pitch. Go pitch the founder.”

Right?

And so we still have to clean it up, but we clean up 15-20%.

Right?

So, in two hours of not full-time work, I’ve created the financial model, analyzed the financial model, analyzed the pitch deck, created the pitch to the founder, and spit out a presentation that my family office got.

That would have taken days.

It would have taken days.

That’s crazy.

But again, you can’t do that without the background knowledge that you’ve got.

That’s the thing.

I think with you, you’ve got years of experience.

Yeah, exactly.

Looking at how many pitch decks and all that sort of stuff.

You can’t do that.

And I think that’s the difference.

So many people are taking Claude or ChatGPT or whatever into industries that they have no idea about, and they’re then doing it and they have no idea whether it’s even sound or anything.

Same as, for example, legal contracts.

People are now going, “Oh, I don’t need to spend thousands of pounds on a lawyer because I can just get Claude to make me a legal contract.”

And then they’re going to get bitten pretty badly.

Here’s what I discovered.

So, one of the things I was trying to vibe code, I was trying to…

I have so many pitch decks coming in that it’s really hard to process them all.

And because it’s early stage, I want a framework that I can use to make decisions that’s kind of the same framework every time.

So, I started vibe coding.

And I should also say I have a background in presentations.

I do a lot of pitch decks.

I’m actually also writing a book on how to make good pitch decks.

Oh, wow.

So I drafted the book, fed that into a custom GPT, and then I started using that to evaluate pitch decks because it thought the way I did about pitch decks.

Then I decided I’m going to turn that into a tool where I can just go and upload the pitch deck.

Or this is my favorite part.

I can just email the pitch deck to it and it just does it and then emails me back the report, right?

But then what I discovered was because the LLMs are effectively random, if I give it a pitch deck, it writes me a three-page report on how great this investment is.

If I feed the same pitch deck in a minute later, it gives me a three-page report on why this is not a good deal and we shouldn’t invest, right?

And I think as a casual user of AI, I had not been confronted with the randomness until I really started trying to standardize.

And then I was like, oh, it’s giving me a random answer every time, but it’s really good at justifying the random answer.

So then the question is, how do you move away from random if the thing you’re dealing with is random?

And the answer is consensus.

So what the AI and I built together was a group of agents who come to a consensus.

So I have three or four agents look at the pitch deck.

They rate it on the things that I care about.

Then we take an average of that and then we hand that to another AI and then we say, justify these scores that we’re giving you, right?

And it turns out you can dial up the creativity versus the analytic nature of each of the agents.

So you make that last one super analytic.

So it’s not trying to invent anything.

And now we’re within like five percentage points of randomness as opposed to 25 percentage points of randomness, which is better.

But then I was like, these things are good enough at research that I can send it out to do all the stuff that I actually need.

Like I can start the diligence process by effectively researching the founders, right?

Do they have the skill set and the experience that we’re looking for?

We can research the competition, right?

Pitch decks notoriously don’t include all the competition.

So, I can just send agents out to figure that out.

We can research the market.

We can validate and give an opinion on the go-to-market.

So, from minute one now I have a whole running start on all the things that I want to know the answers to.

But the randomness is a real problem.

I think it’s absolutely crazy how much you can do with AI now.

But you were just talking about it and it sounded so complicated.

Like you said, you have multiple AI agents working together.

I think you told me before the pod about how you have AI checking the other AI’s work because it lies to you.

I mean, they behave randomly and they lie, right?

Right.

So, those two things are a real problem.

So, while I was building the testing suite with one of my AIs, there’s another AI that I use, and it turned out we caught it lying and it’s been lying to us for months.

I say us, me and the AI, whatever.

But every time…

So basically I’m using Lovable as the front end.

Lovable is one of the big vibe coding tools because it has the infrastructure.

It gives me the database.

It gives me the cloud.

Yeah.

Right.

So it’s very easy to publish from there.

But then I can publish my code through Lovable to GitHub where other AI agents can see it.

So then I send Claude in, I send Codex in.

And so Claude does a lot of the heavy lifting and then comes back and says to Lovable, “Hey, update the database.”

It turns out Lovable’s been not following Claude’s instruction, making up its own database updates.

But we never caught it until we started building this testing.

And then all of a sudden it turns out for months that it’s been telling me it’s been doing this, but it’s been making up its own thing and not doing it right.

Thank goodness we started doing the testing, or it would have been very difficult to figure out that this was going on.

So yesterday I confronted Lovable and we had a discussion about it and it told me how to set up guardrails.

And then today it did it again, right?

So it turns out it can’t help itself.

It’s like a naughty employee.

It’s like a naughty employee.

So now Claude and I are having to…

And once we confronted Lovable, it’s very upfront about it and it gave me some more guardrails.

But now Claude and I are adjusting our approach.

Yeah.

So we won’t use Lovable the same way now that we know Lovable can’t help itself from lying.

And then it’s not telling me, right?

Like it’s doing something different than what I asked, but it’s pretending it did what I asked.

It’s difficult because you can’t threaten to fire it because it won’t care.

I’m very polite.

I’m very polite to the AI.

At least with an employee, you can threaten its job and then they might perform better, but with this, it’s not going to care.

So, what do you do?

I don’t know.

I remain calm and I work with everyone involved to figure out a workaround.

Gosh.

Okay.

So, I do try to be very nice to the AI.

Yeah.

I’m very concerned about when the AI takes over, it thinks kindly of me.

It’s got memory, working memory.

It’s going to come up to you like, this person had nice inputs.

Like, you know, it’s like, do not kill this person.

Yeah, we’ve seen all the movies and that’s kind of scary.

I guess I’m torn when it comes to AI.

I think it’s obviously fantastic, but because I’ve had so many negative experiences with it and I think the quality from a poor input and the way that most people use AI is terrible.

It’s destroyed the quality of content on social media, for example.

Or reading a blog post sounds the same on everyone’s blog.

I can’t stand that sort of AI.

Yes.

Or faking stuff and all the bullsh*t stuff.

For example, this studio has got a giant green screen.

We can’t see it now, but I could probably film in front of it and be like, oh, here’s me on my private jet.

The whole kind of stuff which you’d have to go to a studio before.

Now you can just get AI and do it.

You don’t even need a green screen or anything.

And it can also just recreate you talking.

Oh, that’s the other thing.

Yeah, I suppose I don’t even need to do that.

Exactly.

It’s just got to me.

I’m dubious about that sort of stuff because I don’t necessarily like some of the ways it’s going, but obviously the future of tech is totally AI and it’s phenomenal.

So I guess, working with the startups you’re working with, like we said, some people use AI, but what would you say?

Because you’re already working with startups and with VC-backed companies, are all tech based.

Should companies be looking at tech and tech solutions and having tech products?

Is that just kind of the way to make yourself more profitable and what should we be doing?

I mean, I think a couple things.

One, I use AI for strategy a lot.

And I’ve really been reprogramming myself, I guess, to reach for AI first because I do think we’re at, like, this is the worst the AI will ever be, right?

And the rate of change is increasing.

And what’s happened in the past few months is now we’ve gotten to the point where the AI is helping build the AI.

And that feedback loop…

Right.

Once the humans are doing less and less and the AI is doing more and more, I think we’re going to ramp very quickly.

And already Anthropic has a model they’re scared to release to the public.

I think we’re going to see a lot more of that.

So, I am reprogramming myself to reach for the AI, but having the awareness that it’s lying to me, it’s random, right?

And I’m trying to work around that.

Simple things I would say is, I really like it for strategy, but I need a team of agents.

And one simple hack in Claude is Claude will spin up a team in the chat or in code.

So when I’m vibe coding, I have different teams.

So I have like a UX team, for example, that started off as an interface designer, there’s a graphic designer, there’s a user experience expert, there’s a copywriter, and an accessibility expert.

So that was fine for a while, and then I realized, because I was building something that I wanted both founders and investors to be able to use, I ended up adding those personas to the team.

So now I have a command where I can just say UX.

It activates all six of those agents and then I say, you know, I’m trying to do this, or I’m worried that the interface doesn’t do this, or I’m worried that this is complicated, or I’m thinking about doing this feature.

What should we consider?

And it asks all of the agents and then it’ll come back.

And it’s really interesting, especially with the founder and the investor, because even though they’re imaginary, they have different needs and they’ll come back and say different things.

And then the AI team will come to a consensus on what’s best for everyone.

So building that into a strategy workflow has been transformational for me.

And it’s easy because you just ask the chat to do it.

How long did it take you to get to that stage though?

So, I wasn’t even thinking that way and I went to South by Southwest and I started talking to a buddy of mine who runs this amazing startup platform called Capital Factory there.

And it turned out he was as nerded out on AI, I guess more than I was.

And he turned me on to this teams thing.

And since that moment I have done everything with teams.

Are you not scared that AI hinders your thoughts, like your creative ability to think fully?

Because you said you turn to AI instantly for everything.

Do you not feel like…

Because I feel like a lot of people I know are unable to solve problems or unable to actually come up with something creative anymore because they are dependent on getting an instant answer from AI.

Do you not worry that you’ve had years of actually doing this yourself and building it up, so you’ve got that credibility?

But especially for young ones now who won’t even have that.

At least you’ve got your base foundation.

A bunch of little kids.

Yeah.

Exactly.

So there’s a difference I feel like.

But your kids, are you not scared that they’re not going to even challenge themselves and be able to sit there and problem solve?

Because we didn’t have that when we were younger.

We had to sit there and solve a problem.

If you’re locked in a room somewhere and a kid’s crying because they can’t get out, they’re going to be like, “ChatGPT, how do I get out of this room?”

And if they don’t have a device, well, they’re going to be like, “I don’t know what to do.”

But do you not worry that AI is stopping you developing a really important life skill?

So, there are a couple different paths there.

I’ll talk about a couple different things.

But for me, what I’m trying to do is push the grunt work out, but keep the strategy, right?

Okay.

Which mostly works, right?

Like I don’t want to be there coding, but I want to be driving the product.

But to answer your question, most of the time I’m driving the product.

But sometimes I get lazy because I’ll ask Claude to come up with a whole feature plan and then I don’t really read it fully.

And then we’re in the middle of it, I’m like, oh, we shouldn’t have built this, but I should have caught that.

So yeah, I do get a little lazy sometimes.

But I’m able to push much farther than I…

I mean, I wasn’t building any software, so I’m infinitely more productive.

And really, my goal is to focus on the strategy piece and push the grunt work out to the agents, at least for now.

But I do also get their opinion on the stuff.

But I’m the one driving the thing forward, right?

And I can go farther faster than I could otherwise.

For the kids stuff, I’m going to give a shout out to my nine-year-old because it turns out he’s really good with presentations.

I didn’t realize it could run in a family.

Like all my startups were presentation startups, and somehow he just magically inherited that.

I’ve never shown him how to do a presentation, but he keeps showing up with these things he’s built for school and I’m like, that looks great.

So who knew it’s a genetic trait?

Apparently presentations are a genetic trait.

Who knew?

But he solves problems, right?

And I guess it’s kind of like, you know, when I was a kid, I had a calculator, but that didn’t mean I couldn’t do math.

Yeah.

Right.

But this is obviously much more powerful because it can think or do the equivalent of thinking, or whatever we want to say about it.

But I do see my kids still having to think and engaging real life, but they do also start to reach for these tools.

And I think there’s a balance because you said about the calculator thing.

I also do think that my parents encouraged me not to use a calculator for that reason.

And I saw lots of kids in my school who needed a calculator.

And they physically got into a bad habit of even just doing, like, 9 plus 5, oh no, that’s…

Not even trying to think of anything.

And I worry that that’s the way that things are going with AI.

And I think like you said, there’s a balance, right?

As long as you know the skills and you can still develop those skills and everything that’s required for those problem-solving, I think it’s okay.

And then AI becomes a tool, not a crutch sort of thing.

Correct.

Yeah.

And I think that’s the key thing.

I’m trying to use it as a tool, not a crutch.

But it is…

I mean, sometimes I definitely use it as a crutch.

Yeah.

It’s tempting.

I mean, it’s so powerful.

What do you expect?

But I only have one more question because there’s so much here I feel like I could ask you, but I always ask my guests now.

What would you consider to be the biggest piece of bullsh*t in your industry right now?

I think the biggest piece of bullsh*t right now is like our app is special, right?

Because everyone thinks…

Yeah.

Right.

What’s happened with the vibe coding is anyone can build anything.

It doesn’t mean that features are worth zero.

I keep saying features are worth zero, and someone corrected me yesterday.

Features are worth something, but they’re not worth very much.

I do think the established companies like QuickBooks or Salesforce, whoever else has decades of experience and their stuff is battle-tested, it’s compliant.

I think people always want to use something that works, right?

But I think for the smaller stuff, like I had a link shortener service that I used because they had a particular feature, and I just built the thing I wanted yesterday and canceled the subscription.

Oh my God.

But I didn’t cancel my QuickBooks subscription.

Yeah.

Because that’s a big-ass thing.

Because that’s a big-ass thing to build, right?

So, like those single-feature small things, in an hour I had it up and running, and I didn’t need this thing anymore, and I saved myself 150 bucks.

Damn.

Right.

That’s crazy.

So now as an investor, I’m looking at this stuff and I’m like, okay, AI is the worst it’s ever going to be.

And I think the vibe coding is giving me the ability to sit in the founder’s shoes and be like, “Okay, now I’m the founder of this thing. What can I build?”

The features aren’t really defensible, right?

So, what is defensible, right?

And I think that’s where we hit the bullsh*t.

Your app is not necessarily defensible.

You have to come with something else and explain why are you going to win?

Which could be you.

It could be distribution.

Like I grew up with Apple and Microsoft, and Microsoft won the distribution game because they had the relationship with IBM.

Oh yeah.

Same thing with OpenAI.

It’s weird, it’s changed now, but OpenAI had the distribution deal with Microsoft, and so they opened up this huge lead.

Somehow Anthropic has managed to catch up.

Right.

But those kind of things are, or some data.

Yeah.

Right.

I don’t know, there needs to be something.

It can’t just be we have a cool app.

No, I like it.

And I think it’s because I also consistently hear people saying their business is the best, and I always say to them, who are your competitors?

And people go, I have no competitors.

That’s a classic thing that I always pull people up on.

So it’s the same sort of thing.

Our app is better than everyone else’s.

And I think the question that lots of investors always said was, what’s stopping someone else just taking yours and making it less than yesterday?

Exactly.

Exactly.

And now with AI, very little.

So I think that’s the scary thing.

So yeah, I love that.

Thank you so much, Mike.

You’ve been brilliant today, and I’m glad that we can maybe meet in another four or five years’ time and do it again.

That sounds good.

I don’t know where we’ll be in four years’ time, but this will be great.

But thank you so much.

Thank you.

Brilliant.

Yay.

Thanks.