AI Layoffs Backfired For This Marketing Agency

An internet marketer cut his team from a couple hundred people to under 100 and credits AI and OpenClaw with the work. Eric Siu and Neil Patel explain why AI cannot handle marketing work alone. Then Neil shares why he walked away from buying a European agency that is cutting staff to run on AI. Growth Newsletter: https://levelingup.beehiiv.com/subscribe Need marketing help? Visit: https://www.singlegrain.com/ and https://npdigital.com/Want to recruit great marketers? Find them here: https://marketingschool.io/hire Eric and Neil start with a well-known internet marketer who cut his team from a couple hundred people to under 100 and says AI and OpenClaw now do 20 to 30 times more work. Eric says that claim hurts the marketer's credibility, and that AI should elevate capabilities rather than eliminate jobs. Neil describes a call with a European e-commerce agency he decided not to acquire, because it planned to shrink to eight to ten people, said two or three people could run its ad spend, and had lost three of its four biggest clients. Eric lists where AI output still needs a human editor, including his YouTube channel, ad creative, AEO and SEO content, and X posts. They also cover AI metrics that do not match business results, and how to handle client expectations and feedback. Human judgment still decides marketing results. Key takeaways◾Cutting staff and crediting AI for it can hurt a marketer's credibility◾AI output still needs human taste and an editor in the loop◾Optimize for business results and client value, not AI-suggested views Chapters00:00 Internet marketer says AI replaced his staff00:58 Does cutting jobs hurt credibility?01:46 OpenClaw is unreliable03:16 Marketers who talk about AI without knowing it03:45 Neil's call about acquiring an agency04:33 The agency plans to shrink to eight or ten people06:22 Why the agency is losing clients08:11 Up or out, and selling a company09:08 AI cannot handle marketing work alone10:20 How Eric's view of AI has shifted11:37 AI feedback creates a bias toward views12:58 Views versus revenue14:13 Clients pay for results, not effort15:34 Optimizing for revenue, not brand16:39 Two types of consultants17:52 Why feedback is a gift 𝗔𝗕𝗢𝗨𝗧 𝗧𝗛𝗘 𝗖𝗛𝗔𝗡𝗡𝗘𝗟Welcome to Marketing School, one of the top business podcasts with over 61 million downloads. Each episode delivers actionable marketing tips and strategies from two entrepreneurs who truly practice what they preach. The show is hosted by Eric Siu, founder of Leveling Up and Single Grain, and Neil Patel, co-founder of Neil Patel Digital and recognized by Forbes as a Top 10 Marketer. 🎙️ Learn More About the Hosts Eric Siu – Leveling Up: https://www.youtube.com/@LevelingUpOfficial Neil Patel: https://www.youtube.com/@neilpatel 📩 Free Resources Ubersuggest: https://www.ubersuggest.com/ Answer The Public: https://www.answerthepublic.com/ ✅ Subscribe for Daily Marketing Insights!

• 0:00Speaker 00

  Finding customer information shouldn't mean digging through emails, call notes and spreadsheets. HubSpot Starter Plan brings all of those details together, so it's easier to track what's happening with every deal and what to do next. It pulls information from calls and emails, then it gets to work, logging and summarizing them. Right after your call ends, HubSpot pulls next steps from your call notes and drafts suggested follow-ups. And it stays up to date for you, so you can build demand, win more deals and spend less time on repetitive work. Your records, insights and next steps are ready for you to act on, and you don't have to miss a beat searching for any of it. Try the Starter Plan for $10 a month. Learn more at hubspot.com. I was just watching a well-known internet marketer, okay? And he was talking about how he cut from like hundreds of employees down to like less than a hundred right now, right? And what is the reason for that, you think, Neil?

• 0:46Speaker 01

  He put on Instagram that he's at 300.

• 0:50Speaker 00

  I'm just calling on Neil because I know he's not paying attention right now.

• 0:52Speaker 01

  I'm not paying attention.

• 0:53Speaker 00

  So I'm calling on Neil because this internet marketer had a couple hundred employees, cut down to less than 100 and says that AI is doing everything for him right now, okay? That AI is doing like 20 to 30 times more. And don't get me wrong, I'm the biggest proponent of AI. And Neil, you'll like this. So this guy was saying like, look, you know, OpenClaw. So he's talking about OpenClaw right now. He's like, OpenClaw is doing the work of like a bunch of other people right now. And it's better than him at copywriting, okay? I have a lot of problems with what's being said, so I respect this internet marketer. Again, you know this internet marketer. In fact, you've spoken at this person's events before. So let me just ask you, does it make you look good or bad as an entrepreneur when you talk about cutting hundreds of employees?

• 1:37Speaker 00

  And talking about how AI is making you much more efficient?

• 1:40Speaker 01

  It makes you look bad.

• 1:41Speaker 00

  It doesn't make you look good. And you shouldn't do it. As much as I love talking about AI, I don't like talking about having to cut people. In fact, I think that AI is not about eliminating jobs, it's about elevating capabilities. And so you look at this person, okay?

• 1:55Speaker 01

  Or being way more efficient and getting more done for the same.

• 1:59Speaker 00

  Which is elevating capabilities, is it not? And so if AI is about elevating capabilities, it doesn't help you, it doesn't help you with recruiting when you say, hey, we've cut this many people and then we're gonna, we're looking at cutting even more people and we can do this and that. But I also think this person's credibility was hurt too. When they say right now, this interview only happened recently, when they say they're using OpenClaw and it's replacing employees. It's like, bro, first of all, OpenClaw sucks and it's unreliable, okay? Number one, that shows that you don't really know that much about AI.

• 2:27Speaker 01

  And there could be some security issues that you have to worry about.

• 2:29Speaker 00

  And there's even more security issues as of this Black October, right? Which is, which you can talk about in a moment.

• 2:34Speaker 01

  So more security issues came out?

• 2:35Speaker 00

  Oh, major security issues in internet. I'll update you in a moment. I hope, you probably have someone on this already, but number two.

• 2:41Speaker 01

  Well, no, I don't use it myself, so I don't have to worry.

• 2:43Speaker 00

  I'll tell you in a second. So anyway, all that to say is, he's talking about, he's talking about how he uses AI so much, he's cutting employees, that doesn't make him look good. He's talking about how OpenClaw is doing the work. OpenClaw sucks now, so that ruins credibility too, right? And then the other thing is, the, he's talking about how it's better than him at copywriting, okay? So I don't, I don't think you can say that, okay? So like, AI is really good.

• 3:06Speaker 01

  Wait, why can't you say that? Because if you suck at copywriting, it's probably better than.

• 3:10Speaker 00

  But this guy's good at copywriting.

• 3:12Speaker 01

  You can't be that good at copywriting if he says OpenClaw is better than him.

• 3:16Speaker 00

  You know this guy. He's, he's a good copywriter. In fact, he's well-known in the industry for solid copywriting.

• 3:22Speaker 01

  Do I know him well, well?

• 3:24Speaker 00

  You know him decently well. Yeah. But I'm not gonna name names right now.

• 3:27Speaker 01

  He can't be that good of a copywriter then.

• 3:29Speaker 00

  He's a good copywriter.

• 3:30Speaker 01

  You're telling me OpenClaw is better than most?

• 3:31Speaker 00

  He said that, but he's exaggerating. But that, that ruins credibility with someone that knows AI, like my, I'm not gonna say I'm amazing, right? But I know that one, OpenClaw sucks, and I know that he's good at copywriting. And I know that if he says the OpenClaw is better than him at copyright, or AI is better than him at copyrighting, that he's full of it. That he cannot say that right now. And he's also full of it when he's, he's kind of talking about cutting employees. Even if you are, you don't say that openly. So I have a lot of problems with this because I think internet marketers coming into the AI space right now, AI is trending, right? You see all these people selling courses and I have nothing, no problems with courses, right? But this is what makes internet marketers look bad. When you start to talk about shit that you don't understand, and it just makes all internet marketers look bad.

• 4:12Speaker 01

  Yes, I went through the same thing this morning on my 10:30 call. And I was just like, are you serious?

• 4:19Speaker 00

  Tell us about the 10:30 call.

• 4:20Speaker 01

  So my 10:30 call, there was a agency in Europe that one of my team members found that said, we should look at this company to potentially acquire them. When my team member says we should look at this company, it doesn't mean we should buy them. What someone may tell them in that organization versus what I find or someone else may find as we continually do more diligence, we may end up finding out things we don't like and then you just back away. So today, we definitely backed away. So this agency has been around for a little bit less than 10 years. They focus on e-comm. Thank you for the waters.

• 4:56Speaker 01

  You do provide good service for this building.

• 5:01Speaker 01

  The, and I was making a joke there because sometimes some of the people inside the building don't provide the best service.

• 5:06Speaker 00

  True.

• 5:08Speaker 01

  So I was talking to them about their agency. They have, they had 30-something plus people. They recently did a round of layoffs. They're in the low twenties. And their goal within next year is to be at eight to 10. I said, how is this possible? They said they have low churn. And they said.

• 5:28Speaker 00

  Eight to 10 in revenue?

• 5:29Speaker 01

  Eight to 10 people. So next year, their goal is to have eight to 10 people. So they went from 30, 30 into the low twenties.

• 5:35Speaker 00

  I see.

• 5:35Speaker 01

  So next year, if we buy this company, by the time we take it over and we're running it, by then and next year, let's say it takes six months to buy, but by then and next year, they would have cut down the employees even more to eight to 10. And I said, how is this even possible? Do you guys have high churn? They said, no, we have really low churn. Which is false because they lost quite a bit of revenue. So if you look at it from a revenue standpoint, no, they actually have quite a bit of churn, but they're figuring things out. And they're just like, we have this technology, we've figured out how to use AI. They specialize in e-comm marketing. They're just like, we don't need all the people. We can scale up to infinite amount of ad spend with just two people. I'm like, this is impossible.

• 6:18Speaker 01

  They're like, yeah, technology, AI, everything can do it for us. We don't need tons of headcount.

• 6:24Speaker 01

  And I was like, and I asked this guy more detailed questions. I was like, so once it feels like a half a billion dollars in ad spend a year or a billion? Like, yeah, we're pretty sure we can do it with two people, maybe three max, right? And I was like, how so? Because we manage a lot in ad spend. And they're just like, and we definitely don't have two people or even 10 people on ad spend management. We have way more. I don't know what the number is, but we have a lot in just paid ads. And they're just like, you know, the technology is really good, you barely need any people. I'm like, well, that means you're just letting the technology do everything and the humans are just checking to make sure it doesn't screw up. So I was just like, then why does someone need to pay agency for that? This is why your agency isn't growing as fast, you're providing mediocre results, and this is why you're losing clients.

• 7:07Speaker 01

  This is my opinion, at least. I didn't tell them all of this, but this is my opinion. I'm like, this is why you're losing clients. This is why you lost three of your four biggest clients in the last year. Hence, when they said there are barely any churn, I'm like, well, you lost three of your four biggest clients. To me, that's not very little churn. I don't need a spreadsheet to figure that out. But I took it as, you're just using AI to do the work and optimize for your profitability? You're not optimizing for the client's results. If you were, you wouldn't just focus on gutting everyone in your company and only have two people and just be like, yeah, I can streamline it all. Well, if everyone's doing the same thing through technology, why will your campaign perform better than all the other people's? It won't. You need to do something outside the box.

• 7:51Speaker 01

  I'm not saying every person can do that. I'm not saying technology can or can't do that. I'm just saying if everyone's using the same tech to manage everything, you're not gonna get great results. You're gonna get mediocre results because you're doing what everyone else is doing. And we know this in marketing, you have to do something special. And you know, the guy wanted to sell to us and I was like, yeah, I'm not buying this company. I told my guy right away, I'm like, this is just a waste. He's just trying to use AI to cut all his employees. And he's like, yeah, from the last few years, our profit was decent, it's gone down, but now, next year, our profit's gonna be amazing. And when I asked him what your business, what the biggest struggle in your business was, he's like, closing your business. And I'm like, yeah, no crap, because you have a terrible reputation.

• 8:33Speaker 01

  You're not gonna get the referrals, you're not gonna get tons of RFPs, because all you're doing is just trying to streamline work, maximize your profit. He's like, human cost is my highest cost, and then just pocket all the money. I'm like, this is not a business I wanna buy.

• 8:45Speaker 00

  That's the worst way to look at it. When, when people say, oh, I just wanna cut more humans, cut more humans, no. Like, you want to hire, again, AI is not about. Eliminating jobs about elevating capabilities, right? Which means people go up or out. That's how I view it at my company. You're either up or you're out and people, a lot of people are meeting the challenge. But when you, by the way, guys, if when you're trying to sell a company, people can can see that you reek of desperation, right? So you can smell it immediately on the call that he's just trying to offload and trying to go for an exit. And usually, by the way, if you're trying to just sell for an exit, it doesn't end up that well. If you try to build for the long term, it usually ends up better and all the people end up courting you. You might want to put in front of you a little more. Yeah, there you go. So that brings me to Frictionless Growth Marketing hosted by Sonya Thompson is brought to you by the HubSpot Podcast Network,

• 9:29Speaker 00

  the audio destination for business professionals. Frictionless Growth Marketing hosted by Sonya Thompson shows how modern brands grow by removing the friction in their marketing and customer experience that pushes customers away every single day, often without leaders even realizing it. Each episode delivers practical insights, real brand examples and conversations with marketing leaders, showing brands how to win with the new rules of growth, identity-driven marketing, cultural relevance, and frictionless customer experiences. Listen to Frictionless Growth Marketing wherever you get your podcasts. Another point, Neil. Real quick, if you want to acquire customers faster and more efficiently this year with the latest strategies and tactics, then check out singlegrain.com. That is my ad agency. Again, www dot singlegrain.com.

• 10:12Speaker 00

  Check it out. And if it seems like a fit, we'll get in touch and help you with a free marketing plan. So I don't believe that AI can handle marketing work alone. I'm going to give you a few examples and I'm curious to hear a few examples on your side. Okay? So even for my YouTube channel, okay? So my YouTube channel, when I let the skill just do its work without me implementing my taste for five to 10 minutes or so, it's really bad. Like I posted a few videos recently where I just let the skill do its thing and I I thought it learned from my recent videos. It didn't learn, right? No, same thing with our ad creative that we do for clients. We can't just let the AI do its thing. Same thing for our AEO SEO content. We just can't, we still need to have an editor in the loop, right? Same thing with our X content. So Max, who was actually on this call right now, he manages my my X account from time to time. Or like a good chunk of the time.

• 10:57Speaker 00

  When he was just using his X, the X skill that he forked off of mine, he can see that the reach was going down. But he starts writing again in his voice this week. Boom, the reach goes back up. And then same thing with my my videos that I cross posted from YouTube. The moment I start writing again, instead of like, I don't know, 1,000 views, it's like 15, 20,000 views, right? Which is pretty decent for for a video on on YouTube, like especially for B two B. So all that to say is you still need the human in the loop. And for anybody that goes to you right now and says, oh, AI is already figured it all out. You should probably run in a different direction because as much as I like it right now and as much as I want it to be like that, it's not that right now.

• 11:30Speaker 01

  Yes, and I, you know, take my hats off to Eric on this one because Eric was in a very different camp a year ago. In which when AI technology came out, he saw a lot of opportunities. And he believed that it can disrupt in many ways and he still believes that. But Eric isn't stubborn in which just because everyone's talking about something like AI and marketing, what it can do. He won't just blindly say, yeah, this is what's going to happen. Here's the end of all humans. You won't need as many of them. He'll adapt with whatever he learns or time. And Eric was, I would say, more more extreme AI a year ago, in my personal opinion, than you are now.

• 12:15Speaker 01

  It doesn't mean he's using the technology any less. He's quickly used it and adapted and figured out where it's weak and where it's strong. And that's the key. I know Eric's not employed, but that is the key when you're hiring marketing employees in AI. You don't want them to drink the Kool-Aid. You want them to adapt to whatever is best for the strategy, for the clients, for the results, instead of just having tunnel vision and just being like, this is how it's going to be. And it doesn't mean that AI in a year from now won't be better and be able to do a lot more stuff. And Eric may go back to saying like, oh, wow, you don't need X, Y, and Z for this. You can just use AI. Because as technology changes, show should how you interact or do your strategy or do your marketing.

• 13:00Speaker 01

  The interesting thing that I see with AI is it creates a lot of bias. And I'll give you a real life example of this. Eric was talking about my Instagram profile on how I'm doing like clone type videos where there'll be like two or three of me. And he's like, oh, they're getting pretty good views. And he was looking at my stats and Eric was right. I don't look at my stats on Instagram that often. I thought I got like, you know, 100,000 or 500,000 views a month. And Eric's like, no, you get a decent amount of views. And I looked at my Instagram analytics and I think I sent you a screenshot of it. I think I was getting like 11 million views or something like that in 30 days. I was like, oh, actually, people view my stuff on Instagram. And some of the guys I work with were like, we need to do more clone videos.

• 13:44Speaker 01

  I'm like, why do we need to do more clone videos? Keep in mind, they also take longer to create. I don't have an issue of putting in time, but they they were using AI and AI gives you feedback on what's working and what's not. And AI was pushing them to do more clone videos like

• 14:03Speaker 01

  this is a good CMO versus a bad CMO versus mediocre CMO. This is a good entrepreneur versus mediocre entrepreneur versus a bad entrepreneur. And Eric knows this. How much revenue am I going to generate from those videos? Exactly. So do I care if I get a million views or zero views?

• 14:20Speaker 00

  No.

• 14:20Speaker 01

  Exactly.

• 14:21Speaker 00

  Yeah.

• 14:21Speaker 01

  So I was like, AI is just telling these guys to tell me to create content on shit. Excuse my language. That won't make me a dollar in revenue and is not targeted towards my ideal customer. So why the heck am I going to record this content? And I remember I had to create 30 videos that day because of my travel schedule. And it ended up being that I ended the day with 27 videos because I refused to create videos on stuff that is useless.

• 14:46Speaker 00

  And it also pisses you off when you, it's like, at least for me, I shouldn't speak for you. But if I see it on my list, when people use to generate the topic ideas, I just get more and more pissed off as I see more and more of it. And then I just don't want to record anymore. So, yeah.

• 14:58Speaker 01

  Yes. And I got so pissed off that I had a talk with them and Eric knows me really well now.

• 15:04Speaker 00

  I know that you know this person really well, too.

• 15:06Speaker 01

  When I get mad, I usually don't get mad, but like when people are wasting my time and it just keeps me in a recurring thing. I just, I just go off and I don't have a temper, but I'm very direct.

• 15:19Speaker 00

  You just don't let up.

• 15:20Speaker 01

  Yeah, I don't let up.

• 15:21Speaker 00

  You don't yell, but you don't let up.

• 15:23Speaker 01

  And I was just like, why do, why should, I asked him like, why should I keep paying you? Like, it was just very direct. And then I was like, I pay X dollars a month. This is what I'm getting. And I'm like, I don't see the value. And then it went into, you don't see the value in our work. You're belittling us. And I'm like, no, no, no, I'm just telling you very direct that I pay X dollars. I expect Y. If I can't get Y, I'm going to look for other solutions. I'm not saying your time is not more valuable or less valuable. That is your decision. I'm just telling you as a consumer, paying you X dollars, I'm expecting Y. If I can't get Y, I'm going to look for other solutions. So why should I? And it went down a track of, hey, you're a client of mine.

• 16:08Speaker 01

  And this is a lesson for anyone who's a consultant or an agency owner. There's like, you're a client of mine. You don't understand all the value we create and how good we make you look and all this. That is the perception of the person providing the service. As a person paying for the service, I'm paying for X. If I can't see X and someone else is providing me Y, but I don't care for Y, but they think I should care for Y. That means there's a disconnect. And that means usually they're not going to continually get paid and I'm going to go find someone who can get me X. Now, their whole philosophy on creating social content for me is you look good. This builds your brand, you know, look at what your brand can do for you. And my response, and Eric knows this, is I don't care how my brand looks.

• 16:53Speaker 01

  Of course, I don't want it to look bad, but from a perspective of, I don't care how big my brand gets. My goal is not to be a Tony Robbins or LeBron James, and those are big examples. But bigger examples in my space would be a Gary Vaynerchuk or Alex Hermosy or Cody. She has a big brand as well, Cody Sanchez. I'm not trying to optimize for my brand. I'm trying to optimize for revenue. I'm not saying the Gary Vaynerchuk approach does not drive revenue. I'm saying for my business, that approach doesn't work for me. It doesn't mean it can't work for Gary or someone else. I'm just saying for my business and what I'm trying to do, it doesn't fit in my playbook and it doesn't work for me.

• 17:34Speaker 01

  So I'd rather stick to what I know that works for me and double down on that and ignore the rest. Because as you guys all have heard Eric and I say on this podcast, there's no wrong or right way to do marketing. You have to figure out what works for you.

• 17:48Speaker 00

  So there's, there's two ways to win as a consultant or actually two approaches to being a consultant. Okay? So we have this one consultant right now, helps us with LinkedIn. Thousand comments, 1,500 comments, 2,000 comments. Amazing, right? Lot of engagement. He's good. He's very young, too. He's 18 years old. But whenever I give him feedback, it's very direct. I was like, hey, man, I don't know if this is going to work because you're getting all the engagement in the world, but it's not driving us any booked meetings right now, right? And we're going to have to end engagement. So this is also one way to handle the engagement early, right? Like he's just started to nip in the bud. But every single week, he's like, hey, man, thanks for the learnings. I'm trying to get better. I'm trying to get better. And like, he is getting better. He's trying, right? But there's no, look at all the effort that I'm putting in. You don't understand the value of this. If you have to fight like that, it's just not going to work, right?

• 18:31Speaker 00

  No, we do have another consultant that we worked with, and he's probably going to listen to this, right? Hello? So what happens with that one is like, he's asking for more money. But at the same time, the results aren't getting better. In fact, the results are getting worse. And then if you look at them, if you look at the thumbnails that are being posted, they're more and more AI generated. And there's not a lot of thought that are going into them, right? So you have two different camps here. You have the 18 year old who's like, I'm going to get better and I understand if I'm going to be fired. Okay?

• 18:53Speaker 01

  Which is the right attitude, by the way.

• 18:55Speaker 00

  Yeah.

• 18:56Speaker 01

  Right attitude.

• 18:56Speaker 00

  And I trust he's going to figure it out in life, no matter what. Then you have the other attitude where it's like, you just don't understand, you know, we're not getting

• 19:02Speaker 01

  Wait, can we go back a bit?

• 19:03Speaker 00

  Yeah.

• 19:04Speaker 01

  Eric just said he believes he's going to figure out what, he's going to figure out things in life. I know what you mean by that, but for everyone listening, why is that the right attitude and what do you mean by that?

• 19:15Speaker 00

  Yep. So when you get feedback, you should look at as a gift. 99% of people do not look at feedback as a gift. He sees it as a gift and you can see genuinely, he's like, oh yeah, that's good, right? There's no like, he's not getting defensive about it, right? So he has a curious and adaptable mindset and that's exactly what you need to win as an entrepreneur.

• 19:34Speaker 01

  Yes. And when Eric says he'll win in life, he's not necessarily saying he's going to win in Eric's organization. He's just saying generally in life, this person has the right attitude to do well.

• 19:43Speaker 00

  Exactly. Now, the other attitude is like the example that you gave me from, you know, someone that we know, right? And it's, it's defensive. When you're defensive like that, you're not in the headspace to want to get better. And if you don't want to get better, then no matter how good your coaching is or how good my coaching is, you can't get better and you're always going to be adversarial. And if it's an adversarial relationship, we might as well just not work together. Anyway, guys, that's it for today and we'll catch you later.