Adapting Your Business to AI: Productivity Surges, New Models, and the Power of Data

Welcome to Building Better Developers, the Developer Nord podcast, where we work on getting better step by step professionally and personally. Let's get started. Well, hello and welcome back. We are continuing our season of Building Better Foundations, but we are Building Better Developers as well. We are also Developer Nord. We are so many things to so many people. I am one person though. I am Rob Brodhead, one of the founders of Developing Nord, also the founder of RB Consulting, where we are a technology firm that allows you, helps you assess your technology and build a roadmap for success. Good thing, bad thing. Good thing is my schedule is getting just full. I got so much stuff going on. So many things out there. We've like been networking and we're doing interviews and being a guest on stuff. Check out rb-sns.com slash rob.php and you can see all the different places. The other podcasts that I have been on along with this, there's some great conversations out there. Lots of them are AI related, very much like the guy we're going to talk to in another minute here was we're getting into part two of our interview with Hunter Jensen. Bad thing is, is my schedule is stinking full. It is hard to like breathe basically these days, but I'm going to take a breath now while Michael introduces himself. Hey everyone. My name is Michael Mollosch. I'm one of the co-founders of Developing Nord, Building Better Developers. I'm also the founder of InvisinQA, where we help businesses build reliable software through custom development and expert testing. Good thing, bad thing. Bad thing, it's kind of a slash good thing. Been extremely busy lately. Good thing I've actually started dusting off my test generation tool again and getting that kind of modernized and maybe even dabbling with a little AI. That's, that's always a good thing. It's amazing how much it's bonus tip out there is that if you've got an old application running through AI, it is amazing how quickly you can get things like updated and dusted off and make it look all modern and stuff like that. Don't let your head explode while you do so though. We will dive right in because this has been part one was great. Hopefully you caught it. Go listen to the prior episode. And now we're going to step into part two of our discussion with Hunter Jensen. So what do you see in the next, I don't know, the next five years maybe, because I know it's like you get beyond that and it's going to get, who knows where things are going to be who if we went back five years with any of these like projections or be like, Oh, I would have, I don't think too many people would say, yeah, this is where we're going to be. What do you see like the biggest or maybe the biggest three, depending on how it works, you look at it, but like benefits of AI to business, how it may, a changing business, I think maybe a little bit of a stretch, but like where businesses are going to really find their most value in it, I guess is, you know, keeping a little more realistic. Yeah. So I'm going to shorten that timeline. Five years gets science fiction for me. And so, but like in the next one, two, three years, let's say. Okay. So what are we seeing right now? Right now we're seeing a lot of like what I would call kind of value in kind of back office stuff, the kinds of things that every company, once you get to a certain size does, you know, your HR, your accounting, your research, your what have you. We're already seeing a return on investment in those types of things. Right. But what comes next is the thing that you actually do. Right. Like what you do as a company, like if you're a cybersecurity company, you know, your ability to create an HR bot that can answer, you know, whether or not Sally's dental coverage includes Invisalign, like you could do that today. But where it's still kind of very new is using AI to actually help you perform cybersecurity services. You know what I mean? And so that comes next. That's the year two, year three part where the actual thing that you do will be greatly accelerated. And so get out to three years and here's what I see. I see a massive increase in the productivity of your team. They can do 5x what they used to be able to do with the same amount of time. And that leads to a surplus of work hours. I've already seen this. It happened to software development first because everybody building LLMs are software developers and they're like, oh, it should write code. Isn't that neat? But we can write the same amount of code in a fraction of the time with the same amount of people. Now, what am I going to do with all these developers if I don't have client work, if I don't have code that needs to be written, right? I have a surplus and that's going to happen to a lot of other industries and it's rolling out depending on what industry you are. But if you have a bunch of junior analysts, let's say, it's going to happen to them as well. You're going to have more analysts than you need. Think about professional services is actually, I think, like law, as an example. It's happening next year. I'm already seeing clients of law firms apply pressure saying, hey, I know that this doesn't take you as long as it used to and I want to see that reflected in my billing. But what does that mean for the attorneys? Do they have enough clients where they can stay busy even though they can do things in half the time or a quarter of the time and all the rest of it? So as a business, if you're trying to think out, you need to think, what am I going to do with the surplus of knowledge workers when the tools kind of catch up to my industry? And my answer to that is not layoffs. Layoffs are not a growth strategy. You have a good team. You worked really hard to find good people. And the answer is actually, you have to innovate. You have to innovate. You have to skate to where the puck is going. Right. The old Gretzky saying, like, and if you don't, you're going to be in trouble because the status quo, like I ran Barefoot Solutions, custom software development company, right. I've run it for 20 years. My business model has been basically the same. I sell design and software engineering services. I bill by the hour. That doesn't work anymore. That model, it's not going to make it much longer. And so what do I do? I have to innovate. So what did I do? I said, we're shifting to becoming a product company, right? We're building Compass and we're going to take that surplus coders and have them build this product so that we can go to market with it. And so after 20 years of having the same business model, sure, the technology changed, right? It was web and then mobile and then IOT and then blockchain and then machine learning and all that. But the model, the business model stayed the same. That's how drastic of a change this is, is that I had to completely rethink the business model. And I think, you know, to go back to the attorneys, they need to completely rethink their business model. If you're providing professional services and you bill by the hour, you like this train is coming for you, right? And you need to innovate. You need to maybe change how you bill. Right. Value based pricing versus hourly pricing. Like there are solutions here, but you cannot maintain what has worked for you for a very long time. What has worked for attorneys for like, you know, millennia. Yeah, I think this may be the thing that finally kills the old way back now, I guess, 56 years old, the mythical man, but month kind of approach of which is software development is just full of it, where it's like, you know, it's always. So about hours that, you know, excellent number of lines of code that can be generated per hour and all that kind of stuff is that it really is, I think, going to break it because same thing sitting in a, in an industry in a, in a, you know, where you're service oriented like this, but it's based really on hours to generate an application or to generate code. The pricing models are out, you know, are completely out the window at this point, because like what you, what you did six months ago that took you eight hours and you know, okay, this is what it's going to take me to do this. The estimates are now going to be completely trashed basically, because you're going to have to reset it and figure out, okay, what does it, what does it take for me to actually build this now with this influx of tools? And especially since it feels like a moving target because we're getting better and better versions of this very quickly. Yeah. That what we could do, I'm seeing even six months ago, there's an improvement in productivity today versus in such a short period of time. So, um, is there a, and since you're in the middle of it, what are your thoughts on like, how do you, what are, if you're in that industry, that situation where you're servicing and you're needing to go from our base to product base, do you have any recommendations for somebody out there that's sort of struggling with that? Yeah. I mean, it's a hard thing. I, you know, I make it, I'm saying, Oh, innovate, you know, how do you do that? Right. Um, but there are some, there are some options out there. Um, one is like, can you become just a factory? Is there enough demand out there for you to just crank out whatever it is, whatever product or service that you have, right? Like, you know, the printing press gets invented and so let's start printing millions and millions of books. Right. There was a market for that. And so there are some companies where that strategy will work. Like, let's just scale with this technology, but there are a lot of companies that don't have the market for that. I can't just go out and get a hundred X more software development clients. That's not like realistic. And so, you know, that's when I started thinking, okay, well, maybe we need to kind of build a product that services some of the needs that this new technology is bringing about. Right. But, you know, across a lot of different industries, there's opportunities. I mean, you know, I was talking to a guy that runs an investment bank, right? Uh, you know, they create these like 50, 60 page deal memos and now they can do them, you know, in a 10th of the time, uh, that it used to take and, you know, they can't become a factory. There's only so many, you know, acquisition deals that they can, they can get. Um, but can they build the tools and sell those tools? Like, can you take a pick picks and shovels approach to this, right? That, that they built internally that make it only take 10% of the time to build this stuff out. Like, can you do that? That might be an option as well. Right. But you really need to be rethink. You know what your industry is going to look like in the next three years and try to find a path to not only, not just, you know, surviving, but actually like massive disruption is a massive opportunity. If you can find the right position, you can be scared or you can be entrepreneurial about it, right? Find the opportunity and go after that. Um, but again, what you can't do is have a wait and see approach to the time. It's already happening. Software development is like the canary in the cold line. It's coming for other industries too. Uh, we were just the first. So with that, um, for those of us, you know, entrepreneurs, developers that are out there that are not necessarily have our own businesses or starting our own business, what are some of the things that you would recommend that we start doing now to prepare ourselves for this? Because I see kind of a two things happening in the industry. One, um, kind of the newer mid level developers are out there. They're using AI, but they're losing like the critical thinking skills. And so as I'm trying to grow my business, trying to find the right people that can manage both of these and kind of scale, it's getting harder because. They can only use one tool or the other. They're not, uh, we're going to lose that skillset. Um, and then the other thing is, you know, as I'm looking to innovate and kind of grow like, uh, different directions, what are some like tips or techniques or things I can look at to kind of give me some ideas and suggestions to grow, to find this innovation? Yeah. Um, so for the, for the younger folks, um, I can't, I mean, I've talked to a good number of folks coming out of school with a computer science degree right now, and I'm sorry, I'm sorry about the timing when you started that program and decided to spend that money. It was one of the safest things you could have possibly done. The, the prospects for, you know, recent computer science graduates were incredible. And then four years later, and it's a totally different ball game. And so, you know, what I suggest is that you really need to focus on your. Your literacy, like as a company, your AI literacy is what I mean. As a company, what do I need? I need folks that can come in and use their critical thinking skills to evaluate all this new technology and to teach the old farts how to use it. Right. You know, so, so again, be entrepreneurial. Where's your value? The value of a very junior software developer. That's not, there's not a lot. It's not a lot there right now. And I, again, it's really bad timing for these young folks, but where can you be valuable is come in and say, well, I've been using these tools for years. I'm an expert at them. I can teach you and the rest of our team how to do it. I can be part of the, you know, the tip of the sword and, you know, implementing new technology. Like I know a lot of companies right now that did their like summer interns. That's all they did. They just came in their big summer internship project was figure out how to deploy AI at this organization. Right. And so to the second part of that question, which was, well, okay, as a business owner or, you know, or, or even just someone starting out, like, how do I find the innovation? Like where, where do I look? And this to me has not changed as an entrepreneur. Where do you look for opportunity? You talk, you talk to people, you learn about their problems and you think about whether or not you can solve them. Where did I come up with Compass? My innovation. I was having a beer with a buddy. He's a patent attorney. He said, man, I wish I could use chat, cheap, ET for my job, but I can't. And I said, why? And he said, well, you know, I've got very confidential technology designs sitting on my desk that I can't even with a protective license. There's no way they would allow me to, to use something like that. And he said, well, well, that's interesting. How much, you know, how much time do you think it could save you? Uh, about eight hours a week, probably right now, eight hours a week. How many attorneys are you for 800? What's the average billable rate? $500 an hour. Okay. So if we were able to save eight hours a week for 800 attorneys at an average billable rate of $500 an hour, we're talking about over a hundred million dollars in annual net like value creation there. That's incredible. Let's build that. Right. And so that's what I did. I heard a problem and I saw, I converted it into an opportunity and we went and we built Compass and that law firm was our first customer. Um, and, and so, you know, it, it really is a fundamental thing. Uh, and it's, it should be innate. If you're an entrepreneur is just looking for opportunities, looking for problems and opportunities. Uh, you know, they say it's always better to be a pain pill than a vitamin. Right. Look for problems that you think this new technology can solve, uh, and go after them and go quick because the old SAS playbook, like the lean startup, all that doesn't work anymore. That's broken too. And the reason is that that model used to be, you go out, you raise a million dollars, put your head down, you spend nine to 12 months building your product and you're in stealth mode and then you come out and ta-da, here's our product and nobody has anything like this. And you have a competitive advantage that we call the first mover advantage. Right. Doesn't take a million dollars anymore. And it doesn't take nine to 12 months anymore. It only takes a few months. So that, you know, is not going to work moving forward. And the VCs already know that. Uh, and you can see that by the, the shift in strategy and who and what they're investing in right now. And so, you know, you need to take a different approach to find a problem and quickly develop a solution and bring it to market. Nice. All right. So back to the kind of the students ideas, cause I kind of want to piggyback on what you just wrapped up there. So those of us are those coming out of school with the, some idea of how to use AI using APIs and things of that nature, what would be a kind of a stepping stone, like how would you encourage them to start getting or using AI for products to actually start building solutions with AI besides just the usual, um, you know, chat, you know, the, uh, chatbots. Yeah. I mean, so you can communicate with these large language models via API. Uh, you just need to get the right licenses and the right models and all the rest of it. Um, and what I would encourage as a stepping stone is build, build a proof of concept of something, of some problem that you've been able to identify. Um, and the best way to learn is especially for engineers is by doing, in my opinion. Um, and so build something, anything, you know, find someone at some company and say, what would it be helpful if you, if you had a piece of software? It would like, what, what, what, what would it do? How can I make your day easier? And you say, oh, well, if I had something that could do this, that would be really helpful for me. Build it, build that. And, and, and you're going to learn so much and that might not be the groundbreaking thing that you build a whole company around or what have you. But you're going to learn how it all works in the real world. And you're going to have a really great proof of concept that you can show people. Say, look what I can do. Wouldn't it be helpful to have somebody like me on your team? What could I do for you? Because I know how to do this. Right. You don't need a big engineering team of people writing code all day anymore for most, not everything, but for a lot of things, like what. What could I build for you? I think that would be a nice way to kind of, you know, demonstrate value to organizations. If your job, if your goal is to get a job, then, then that's a path to doing that. Uh, or if you want to evaluate a particular, you know, a potential product to start a business around it. You, you don't need a ton of money and a ton of engineers anymore. You used to, but you don't go build your proof of concept, figure it out. There's a, there's a vibe code stack out there that can, I mean, what it can accomplish is just absolutely incredible. So do you see this, um, cause you mentioned a little bit, does you see this really, I guess for like a better term, breaking the first mover advantage that we've seen in the past, because it seems like this is going to be, um, on steroids. What we saw in the past where there would be, you know, you'd get a knockoff. There'd be turned off, turned around and you know, hours after sometimes, uh, you know, Microsoft spend millions of dollars on Microsoft word or billions, whatever it was, and then you'd have a knockoff, you know, word with a Q at the end or something like that, that was turned around very quickly. You think that's going to, you see that being something that we're going to have to, as from a business or an entrepreneurial point of view, really change how we think of getting a product out to market. I'll give you an example. I call this the weekend problem. Uh, this was 2023 diffusion models. Just, just come out like that. We're any good. Um, and I needed a new headshot for my LinkedIn cause I didn't have my beard in my headshot and people weren't recognizing me because I have my beard now. So what I used to do is I would hire a headshot photographer. I'd go to their studio. I'd put my suit on and pay 200 bucks. And it'd be like the most painful hour of my life. And then I'd get my headshots and I'd put one on LinkedIn. That's what I would have done five years ago. And I've done that. Right. And I said, Oh, I wonder what I can do. And I found this website called insta headshots.com. And I took a bunch of selfies with my iPhone. I was just in a t-shirt. I didn't have any fancy clothes on and I uploaded them into this site. I paid $20 and I got an excellent LinkedIn headshot that looked exactly like me. Um, according to my wife, like she was like, this is you. I don't see how this is not you. Um, and I thought my entrepreneurial brain thought what a neat business. But then I thought, well, I could build that like over the weekend. And then I realized, Oh, anybody could build that over the weekend. Right. Fast forward one month, there's 50 of these and half of them are free because first mover doesn't matter anymore. That's amazing technology three years ago. Amazing. If you build something that could do that prior to generative AI, you've got a you've got a multi multimillion dollar business on your hand. Now you have a weekend project on your hands. First mover advantage is no more. It's dead. Now what is an advantage? Proprietary data. If you can get your hands on data that other people can't, you have a competitive mode. If I was starting a brand new startup tomorrow, what would I do? I would look for businesses that have been around for 50, 60, 70 years that aren't doing anything with their data and identify big opportunities of things that we could do with that data. How could we train these new, this new form of machine learning models, these large language models with this incredibly rich historical data set to do something novel that you can only do if you have that data set. That is the new advantage that I think startups should be focused on is data. Which is funny because this goes back to if he'd asked, you know, five years ago, what is probably going to be the most valuable thing five years from now? I have a feeling data would have been right up there when, you know, big data has just become more and more valuable. I've had customers that are in data sensitive areas like finance and healthcare where that stuff is gold and companies are starting to figure it out. And I think now this may be where some of the tools are like, well, I've got all this data, how do I work with it? I'm wondering if this isn't going to be sort of like that next step that says, hey, now you can build tools super fast to be able to work with that data. So now you can actually, all that stuff you've been storing, you can actually do something with it instead of just store it. Right. It was like the general consensus of we're not quite sure what we're going to do with it, but make sure that you keep it. Now we know what, like we have tools to know what to do with it. Right. And so I do think that's the next wave here of applications is, you know, being able to interact with your data that you've been collecting for many, many years. That's what my product does. Right. That's part of it. And so that is, that is where I see us kind of, or already there. Like to me, first mover is dead. It's no longer an advantage. Full stop. Yeah. I think you've got like a very minimal window to do anything for a while here with some of these things. I mean, you may have a really genius idea, but that's only going to last for, like you said, in some cases, a weekend or two before somebody else has knocked it out and then they're doing it, they're just under and cutting you because they didn't spend any time. But on the upside, if you didn't really spend any time building it out either, then you can, you can keep the price really low and the value proposition changes immensely for your, you know, for your customers that are out there. Yep. That's exactly right. Well, I want to, we're running this, this again, I told you in the pre, the pre show there, the pre game that AI would get us going pretty darn quick. And that's just sort of where it is. There's so many, it really is. It's a fun time. I enjoy all these conversations because there's just so much going on out there. There's so many opportunities and a lot of these things allow you to sort of jump on them sooner rather than later. I don't know how many I've built. I've got to have built a dozen apps in the last two or three weeks just because like, Oh, this will help me out. This helped me out. So pain points are starting to disappear quickly and it's, it really frees you up for, for the next innovative step. Uh, but that being said, uh, you know, with, with your, your thoughts and how you guys are doing things, I'm sure our audience be interested in it, particularly if they've got the questions or they've got someone it's like, Hey, that sounds like the perfect product for me. What's the best way for them to get ahold of you? Yeah. Um, so as a, as a thank you, uh, to you, Rob and Michael, uh, for having me on the show, I, I want the listeners to know you can get ahold of me at hunter at barefoot labs.ai. And if you say in the opening line, I heard you on building better developers. I promise that I will respond to you. I will respond and we can, you don't have to be a potential customer. If you just have something you want to talk about, we can talk about it. Uh, if you don't say that, I very may easily may not respond to your email because I get a lot of emails, but, um, you know, mentioned that you heard me on, on build better developers hit me up at hunter at barefoot labs.ai. Uh, also just check out our website, barefoot labs.ai. I'm also very active on LinkedIn and say you can connect with me there. Uh, but the best way to do it is to send me an email and mention this podcast. Excellent. So we will, yeah, we will have links in the show notes for all of that. Appreciate your time because it is a busy time and now more than ever, you know, you probably could have created three applications in the time we've been talking here, could have solved some, could have solved some of the world's problems. So we appreciate more than ever the time given to this. And for those of you out there that aren't listening to it, that being said, it is time for us to wrap this one up and our conversations, uh, and we will come back, we have more episodes right around the corner, uh, not AI generated. Uh, these are, we are all real people with real guests. And all that kind of good stuff, but we will be back, uh, next episode, we will continue with some, uh, some interviews, although we do have a little bit of, we've got holiday breaks coming up as well with some of our return to some classic episode styles. That being said, go out there and have yourself a great day, a great week, and we will talk to you next time. This was sponsored by RB Consulting, your partner in building smarter, scalable tech from startups to established teams. Startups to establish teams, RB Consulting helps you turn tech chaos into clarity with proven roadmaps and hands-on expertise. Visit RB-SNS.com to start your next step forward. Also sponsored by Envision QA, they help businesses take control of their software by focusing on what matters most, quality, reliability, and support you can count on. Find out more at EnvisionQA.com. Thanks for tuning in to the Develop and We're Podcast, where we're all about building better developers and better careers. I'd love to hear your thoughts, your feedback, so drop a note to info at DevelopTheNewer.com. Be sure to subscribe on Apple Podcasts, YouTube, or wherever you listen. And remember, a little bit of effort every day adds up to a great success. Keep learning, keep growing, and we'll see you in the next episode.