PLG Is Dead. It's Now About ALG

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 Vercel's Guillermo Rauch says agent-led growth replaces product-led growth: let agents adopt your product first, take meetings only if you have to, and treat months of meetings as the signal that this was never your customer. Eric runs it against the Higgsfield playbook, zero to $400M ARR in fourteen months on daily X launches and thousands of creators posting every day. It closes on Leopold's LP letter, Charlie Munger's three ways to go broke, and what four turns of leverage does to a 20% drawdown. Key takeaways◾If an agent cannot discover, read, and use your product, you are invisible to the next buyer◾Distribution at Higgsfield's pace is a daily habit, not a campaign◾Leverage turns a recoverable drawdown into an unrecoverable one Chapters00:00 From PLG to ALG02:48 AI Distribution Machines10:35 Leverage, Risk, and Scale

• 0:00Speaker 00

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• 0:42Speaker 01

  No, I want to know what it is, but I don't know what it is.

• 0:47Speaker 00

  What it is.

• 0:48Speaker 01

  No, I said, I want to know what it is.

• 0:49Speaker 00

  I know, I know, I'm joking, I'm joking, I'm joking, okay. So, so Guillermo from a CEO of Versal, he says, this is why ALG will be the king for startups, okay? It's agent-led growth. So have agents adopt your product first, then have meetings if needed. The companies that start with the meetings are likely not your ideal customers, okay? So the dangers of selling to big companies if you're a startup is that they don't say no outright. They have months of meetings with you first. Since you hate meetings, that seems to you a sign of commitment, but it's not. They love having meetings. It's almost all they do. That's what big companies do, right? And then funny thing is this.

• 1:27Speaker 00

  I talked to one of my, um, one of my friends who works at Apple. And his role at the company is to be taking notes. And his team takes notes about meetings, about meetings and meetings and meetings, right? So he has meetings to discuss the meetings, to figure out how to disseminate information about these meetings. Okay, and that's what you do at Apple, right? And not everybody does that, but I'm just saying that if you, or I'm not just saying this, but Guillermo's saying this. If you have a product, so imagine again, you have an API, you have an MCP. You have good documentation around it for AEO SEO purposes. The agents discover it and they start using it. Look at how fast Superbase is growing, growing, right? You look at all these other products out there, uh, people are using like these CloudFlare agents and things like that.

• 2:11Speaker 00

  So you need to have an agent-led growth strategy. And I don't think product-led growth is necessarily dead. In fact, I think you need to have some product-qualified leads in terms of the stuff that you give away for free. But you need to have an ALG strategy as well.

• 2:23Speaker 01

  Yeah, because for some businesses, agent-led growth won't work, um, as well. And for some businesses, product-led growth works better, right? I think it depends on the industry you're in. A prime example of this is like toilet papers, uh, thinking like old-school Procter & Gamble. You know, it's, you're not really going to do agent-led growth for toilet paper. I could be wrong, but I'm pretty sure I'm right. Your ideal customer for toilet paper, and I know this because I've been marketing for toilet paper, is typically, um, the, the head of the household, which is a woman who's in charge of the family, is the number one purchaser of toilet paper.

• 3:03Speaker 00

  Well, hold on a second, Neil. What's to say the robots don't need to wipe their butts?

• 3:11Speaker 01

  Eric's like trying to say that with a straight face.

• 3:20Speaker 01

  Oh, that was good.

• 3:22Speaker 00

  Let me move to, let me move to this one over here. So, um, Higgsfield, by the way, guys, so Higgsfield is, they haven't, they, they, um, they help you make creatives at scale. Let's just leave it at that, right? So Matt Epstein tweets this. So, by the way, so Higgsfield went from zero to 400 million ARR in 14 months, okay? So he says, pay attention to what Higgsfield is doing right now, because this is craziest distribution playbook ever. So this is the craziest distribution playbook from Higgsfield, okay? So they do daily launches on X. They have thousands of creators on IG and TikTok every day. They're posting every day. They have full movies made entirely out of AI. They're working with every major KOL, uh, so that's basically like a key, um, key influencer, let's call it that. And then UGC farming at insane scale.

• 4:06Speaker 00

  And then influencer marketing machine running 24/7 and they're clipping everything, right? So that's what they're doing. And I do see the Higgsfield stuff, uh, every now and then. But I think it's, it's, it's interesting because we're, I, I think people are doing this, but not many people are doing this really well. I think Higgsfield is doing this well. I think Gamma did this well for a period of time. Who, who else comes to mind here, Neil?

• 4:28Speaker 01

  Uh, there, there was that guy who got caught and he said he lied about his numbers, but he was getting a ton of press from it. Um, uh, Korean founder, I think he went to Stanford, uh, he had that startup, I believe he got back with Asics. Which one?

• 4:43Speaker 00

  Cluey.

• 4:43Speaker 01

  Did you say Cluey?

• 4:44Speaker 00

  Yeah.

• 4:45Speaker 01

  Yeah, uh, Cluey ended up doing it really well and getting early traction. But the problem was is the product didn't work the way people expected. So the numbers didn't work out really well, too. Uh, before a lot of this AI stuff took off, Jasper was doing it too. And Jasper was doing it, um, before people were really using like ChatGPT. They're just using it, they were doing it with APIs, uh, or their product was released out there through APIs and anyone could create content easily. And they were just getting a ton of people to push that narrative online, uh, and that helped quite a bit with them.

• 5:19Speaker 00

  You know what I'll say? Um, if you look at Jasper, for example, nobody really talks that much about Jasper anymore, right? But Jasper, basically, they're

• 5:29Speaker 01

  It's, it's moved to enterprise. Enterprises talk about them a lot now. The regular, but yes, in general, you're right. The average person does not talk about Jasper, because that was their marketing. You can create social posts really easily and all this kind of stuff. They moved upstream to enterprise. Enterprise talks about them quite a bit now. The non-enterprise has pretty much forgotten about them from what it looks like.

• 5:48Speaker 00

  So Neil, like, because I have looked at them maybe a couple of months ago from enterprise side. So they, they've definitely gone upmarket. My question is, how are they really doing as a company? Because if you look at, if we just look at Google Trends, and Google Trends isn't the end-all-be-all, right? But, you know, the, just, just because the overall sentiment has, not sentiment, but the, the kind of, um, wind behind their sails has gone out from consumer, um, mindshare. I just wonder how they're doing as a company now, right? Like, if we, if we look at their LinkedIn, for example, Jasper AI. I think they have a couple hundred employees. Do you, do you, do you have any visibility?

• 6:24Speaker 01

  I think Tim Young is the CEO. My guess is they do around 60 million in revenue.

• 6:29Speaker 00

  Okay. And then I know they pushed, um, the original co-founders out.

• 6:34Speaker 01

  Yeah, they raised a lot of money. Tim Young is a ex, uh, Dropbox, I believe, COO.

• 6:39Speaker 00

  Yeah, so, okay, here it is. Thousand employees or so, right? Um, and then they're in, they're in San Francisco. This is the marketing agents platform, which is what everyone calls themselves. So I think it's worth calling this out, because when Jasper first came out, keep in mind, ChatGPT didn't even come out yet, right? It's when ChatGPT came out when it started to get weird. So I remember, um, one of the original, um, Dave Rogan Moser, right? I think he was, he, he went to ask, um, Sam Altman, because I think he was talking to Sam Altman, he's like, hey, what does this mean for our business, right? Because they were doing really well. And, um, I think they were just crushing it, because there's no ChatGPT yet. And the, the way people are using ChatGPT in the beginning is for copyrighting. But as ChatGPT matured over time, people realized they didn't need to, you know, pay Jasper. Um, and Jasper was very much a quote-unquote a rapper, right?

• 7:24Speaker 00

  Which is what, um, you know, they kind of just wrapped themselves around, um, these LLMs. So the reason I'm bringing this up is because there's another company out there, and I know the founder, um, Stan, right? And they have Stanley. Now, they launched on X and they said they're making this, um, this chief AI officer for everyone. They're trying to democratize the ability to create content, democratize distribution, okay? So on Twitter, I saw a lot of the comments and like, it was, it was a cool launch, cool launch video. I think it got like maybe a million views or something like that. But a lot of people are just like, well, why do I need this? This seems like it's just a bunch of skills. It seems like it's, it's a rapper. Like, why do I need to use this? And, and to be fair, maybe it is, right? But my point of saying this, Neil, is it kind of doesn't matter if you're a rapper sometimes.

• 8:05Speaker 00

  If you have the distribution already and you don't have your, you don't have incentives that are misaligned, where you, you maybe over-raised too much money or whatever. They're in a situation where they can still make it happen. And Gary Vee put some money into it, Steven Bartlett put some money into it. And I'm just saying that sometimes it's okay to have a rapper, especially if you have distribution already. And, um, you know, it's okay. But sometimes it doesn't work out if, if, you know, your, your cap table is upside down.

• 8:29Speaker 01

  Yeah.

• 8:31Speaker 01

  On a site now, did you see what ended up happening with, I don't know how to pronounce his last name, Leopold, Ashen Brenner and Ken Griffin?

• 8:39Speaker 00

  Yeah, it's, uh, you're talking about the demise of a 25 billion, uh, 25-year-old $200 billion fund manager.

• 8:47Speaker 01

  I don't know if it was 200 billion. I think it was like 40-something billion dollars leveraged at Forex. But I could be wrong.

• 8:55Speaker 00

  Yes, yeah.

• 8:57Speaker 01

  Yeah, either way, whatever the number was, it was very large. But, um, people trust Ken Griffin. It was like old-school versus new-school. So he leveraged, you know, the internet and marketing. He believed that a rate hike could be apparent. And he was pushing for surprise rate hike fears. And that was the day before the AI trade collapsed and forced the Forex-leveraged Leopold to have to come to Ken and, uh, sell his portfolio at a discount. And he came quite a bit from it. But I thought that was an interesting financial, uh, marketing move. And another person who pulled something similar was, uh, dude, I don't know why I'm blanking on his name, uh, Bill Ackman.

• 9:42Speaker 01

  So Bill Ackman was investor, I forgot in what Canadian company, but I believe they owned Wendy's or a good chunk of Wendy's. And he's like, wait, the Wendy's asset and these companies are separate. They wouldn't take a call from him. So he took a credible source, so in, in marketing world, the influencer. This influencer was Blackstone, I believe. And he had Blackstone publish a letter and they paid attention to that letter. So then they ended up, uh, splitting the companies apart and it made everyone more money. But you can do similar things with influencers on the web. If someone's really well-known in a space and you're trying to get a specific narrative out, you can always push the influencer, pay the influencer, work with them to help with that narrative.

• 10:25Speaker 01

  And in many cases, it can change a perception of your company or change a perception of a market condition. So for example, if you sell SEO services and people like SEO is dead. If you get a lot of influencers who are entrepreneurs and marketers to talk about SEO is live and kicking and how well they're doing, it can help change a narrative, even if they're not talking about your company, which then can help you generate revenue in direct.

• 10:48Speaker 00

  Frictionless Growth Marketing, hosted by Sonia Thompson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Frictionless Growth Marketing, hosted by Sonia 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. Alright, so I wanted to take a moment to tell you about my podcast co-host Neil's agency called NP Digital and they work with a whole host of global companies or a global

• 11:33Speaker 00

  organization. Also Neil has SEO tools such as UberSuggest and Answer2Public. All you have to do is go to npdigital.com to learn more and we'll see you on the other side. So here's one thing I'll say. Now Ken Griffin did marketing to basically acquire his assets, right? But the letter that Leopold sent to his LPs was actually pretty good. It was very humble. I know it's to say like, I'm not gonna, you know, Charlie Munger said, "There's only three ways you go broke: ladies, liquor, and leverage," right? And he's like, "I just added the first two because it's like more funny," right? But it's really leverage at the end of the day. Because when you think about, if you're on four turns of leverage, if you're down 20%, you just multiply that by four, right? It's hard to recover from that. And the numbers here

• 12:17Speaker 00

  basically are, the public book is down 100%, but his private investments like Anthropic is what has kept it alive, right? So sure, he had to do that, but I think he's a very smart guy. I think he'll learn from this ultimately. And he did tell the LPs, like, "It's not like we're like completely wiped out. Maybe some of the recent people that invested are." But I think it's important that when you get knocked down like that, you learn from that lesson, you send a note apologizing and you say, "Hey, I'm down to have these one-on-one calls." I think that's good. I don't think he's dead by any means. And so, you know, that's a good thing. And I think, you know, people will learn from it, but leverage can be very dangerous. So my thinking here, Neil, I'm curious to get your thoughts on it. When you think about the turns of leverage that you're willing to put on, how many turns is it? Is it one? You know, how far will you go with leverage?

• 13:03Speaker 01

  So are you talking about Leopold or whatever his name is, came from FTX? I don't know if you knew that. A lot of the FTX people are big in leverage. And I worked at FTX for a bit.

• 13:19Speaker 00

  Neil was literally an employee. He was literally a full-time employee.

• 13:22Speaker 01

  Yeah, first time for a corporation being a full-time employee, other than like a theme park or like Party City where I was a cashier, right? I'm talking about like a white-collar job. But I met some really solid A players there. And I have to say, yes, Sam did some bad stuff. There was a lot of amazing talent at FTX. Sadly, what he did was, you know, terrible for people. And sadly, you know, when people, I think if they kept some of the assets, this is my personal take, like Robinhood, Anthropic, it would just be worth so much more now. And you can just look at the stock and the valuation. So I think, you

• 14:03Speaker 01

  know, liquidation at some of these, for some of these things happened at wrong times. And it would have made people much more whole. But the leverage aspect, I was always different on leverage. I'm not big on OPM, other people's money. I'm big on just using my own money, being able to sleep at night and not be as big because of that. And I like the cushiness versus going too hard on the leverage. So I would say I usually stick around less than a 1X leverage. I'm willing to go more than 1X leverage. I don't really ever see myself willing to go to 2X leverage unless there's like an amazing opportunity. But I'd rather at that point, just take equity investment and get diluted and be able to sleep at night

• 14:47Speaker 01

  in case something goes bad. Because I don't care how good of an entrepreneur you are, you can be Elon Musk, you're gonna have failures. Mark Zuckerberg has failures, Elon Musk has failures, Bill Gates has failures. They keep pushing forward and their successes outweigh the failures by far. I just don't like the idea of betting all of my cash on one thing. And if something goes sideways, I'm back to, you know, starting all over again. Because I have a family, because I have a comfortable life, I'm just not willing to take that risk anymore. But I will go hard. Like if someone says, "Hey, there's this really amazing opportunity." I will sell my house. I will go mortgage stuff if I need to. I will sell cars and all that kind of stuff before I put on too much leverage. Or what I'll do, and I thought about

• 15:30Speaker 01

  this a few times, I will take money from my personal account, invest it in the corporate account, so I can go more aggressive without having to put on too much leverage onto the company. Or more so than that.

• 15:40Speaker 00

  And by the way, there's no right or wrong strategy here, because I just searched up what Elon Musk and Bill Gates have done. So Bill Gates famously ran Microsoft with zero business leverage, maintaining a strict policy of keeping enough cash to survive a full year without revenue. So that's a principle, right? Now Elon has heavily used business leverage, right? He used tens of billions in debts to buy Twitter and relied on junk bond markets to scale SolarCity and Tesla, right? So there's different ways of thinking about it. You have to just decide what your risk tolerance is. Neil and I aren't saying one way is right or one way is wrong. So that's what it is. But that is it for today. Please don't forget to rate, view, subscribe. And yeah, we'll talk to you tomorrow.