RICK (00:00.386)
That was the longest countdown. Why was that countdown so long?

Tyler King (00:03.838)
Rick, you got to pay attention. We switched from Zencaster to Riverside like six months ago and it counts down from, Zencaster went from three, Riverside goes from five. You've just been asleep at the wheel this whole time, I mean a lot just vibe coding my life away right now. What's going on with you?

RICK (00:10.34)
I thought it started at three.

RICK (00:17.386)
man, what's up this week, Tyler?

RICK (00:27.65)
I want to hear about that. I'm at a conference in Park City, Utah. You've mentioned that you've gone to a couple of the like in bootstrapper ski conferences. I forget what they're called, but yeah, there's big, big snow, tiny comps. This is, think a version of that for venture and private equity funded growth companies. So there's, you know, somewhere between 50 and a hundred

Tyler King (00:41.078)
Big Snow Tiny Conf.

Tyler King (00:54.432)
Hmm, sounds very douchey.

RICK (00:57.71)
You would assume that but what I'm really impressed with my friend Julian Castelli is he's created a company called Growth Elevated which does events and community related to this. Think of it as executives in the 10 million to 50 million revenue space that are backed by outside investors and bringing them together. He's done a great job of finding really good people.

Tyler King (01:18.729)
Mm-hmm.

RICK (01:27.014)
and so it's, it's not like that at all. Actually. It's a very kind, thoughtful. Yeah. But you would assume that, you know, there, there are, there, you know, that's yes. quarter zips, lot of quarter zips. yeah. And I'm, not, I'm not, mean, I'm in my own version of that right now, so I shouldn't, I shouldn't talk, but it's a great.

Tyler King (01:30.092)
That's cool. Yeah, I'm just joking. I just assume there's a lot of Patagonia vests. That's all I mean. People are wearing vests there. Be honest. People are wearing a lot of vests. A lot of quarter zips. Yep.

Tyler King (01:49.876)
Yeah. You said it's like 50 to 100 people. Is that what said?

RICK (01:54.912)
Yeah, 50 to 100 people, but very intimate. It's not a conference that's geared around like content. It's more around like building deep relationships. Kickoff was last night and we'll ski a little bit today, break into groups and ski today. Then there's like a needs and leads section where different people kind of share what their biggest need is and everyone tries to help. And then Friday has a little bit of content, but it's more like

Tyler King (02:01.728)
Yeah, yeah.

RICK (02:24.12)
thematic around like AI and longevity and just interesting things versus like, you know, I'm getting certified in something. But anyway, I'm excited to be here and it's been nice to get out of the normal routines.

Tyler King (02:32.3)
Great. Cool.

Tyler King (02:39.776)
Yeah, it's so much fun. I've got Big Snow Tiny Conf in a couple of weeks. The first year I went, I was excited to go, but I was kind of like, I don't know, how do I justify that I'm just going to go to a quote unquote conference and ski all day? Now I'm like, I need this. This is a huge part of motivation. A lot of stuff I know about business is just randomly absorbed through conversations like that versus, I read it in a book or...

So I get it.

RICK (03:10.734)
Every time I sign up for something like this, I'm excited when I sign up. But then as it gets closer and closer, I get more and more like, why am I doing this? I don't really want to do this. Do I have to do this? Is there any way I can get out of this? And then the minute I get there and I'm doing it, I'm I'm so glad I'm doing this.

Tyler King (03:30.622)
Mm-hmm. I have to prepare my presentation. I've got you at least just to get to go hang out. You're not like presenting or anything, are you? you buried the lead. Okay.

RICK (03:34.165)
Ooh.

RICK (03:39.296)
I am presenting. have a, yeah, yeah, I have a, I'm the, as part of being able to come to this and not having to pay full freight, yeah, part of the agreement I have with Julian is I'm his content chair for the year. And so I'm helping him with this podcast and with his blog content strategy. And so I've got some.

I've got a session to talk about how we can elevate people through content. And so it's very brief, but it's, I do have to be on for it. Tell me about this vibe coding stuff.

Tyler King (04:21.024)
Yeah, so you and I live in totally different corners of the internet, I think. I think there's very little overlap between what the two of us see. Have you, are you familiar with an AI vibe shift in the last, like really since December, I would say.

RICK (04:36.246)
Is it have to do with Claude? Yeah, I am generally familiar with the concept of like new functionality Claude work work. I don't know. I don't know exactly what it is, but yes.

Tyler King (04:38.25)
Yes. Okay.

Tyler King (04:48.278)
Well, Claude Code, they just put out a more consumer facing thing called Claude something else, but Claude Code is way out with all the developers. And Claude Code has existed for a while now. It's not like it came out in December. Claude Opus 4.5, the new model did, and people say it's better. don't know. I wasn't like using enough of the old model to be able to say, the model's way better. And I wasn't using Claude Code at all. So I can't say the technology took a big leap up in December, but I can say like the...

the zeitgeist, the people talking about it. mean, the entire history of AI, I have not noticed as sharp of a uptick in people's excitement and optimism about it as I have these last really, I say December, but really just these last couple of weeks, I think it's even ramped up more. So, you you see something like that you're like, got to, I like to think of myself as a fast follower. I know I'm behind, like a lot of people listening to this are like, you're just trying Claude code, but

I think I'm still doing it before a lot of people are. So I, this week started.

RICK (05:49.814)
And yeah, you're, yeah, I would say you are a quick, quick adopter of like, other people's like other super early adopters proven you like let people kind of prove that it's like got some sort of worth but then you're quick to adopt like you're still early adopter I would say.

Tyler King (06:05.844)
Yeah, because you could have spent the last two years adopting all this crap that ended up being all hype. I shouldn't say all hype. Obviously, there's been a lot of value from AI, but a lot of over-promising going on. Actually, side note on that, two episodes ago, you mentioned a tool called Scribe that you thought might make videos with AI. I looked into that. No, it doesn't do anything. I'm not blaming you for this. I'm saying you heard some hype that was all bullshit.

And then it was bullshit. Well, so their main product. So first of all, it's one of these things where like you have to talk to sales to learn anything at all. But from what I can tell their main product, they have like a kind of internal documentation tool that involves like recording demo videos and stuff. It's not really for customer. I think you can use it for customer facing, but that's not the main use case. Then separately, they have this new AI thing on top of it, which is again, hard to tell. But from what I can gather.

RICK (06:37.314)
What do they actually do?

RICK (06:43.615)
okay.

Tyler King (07:03.584)
They basically spy on everything all your employees do, and then they figure out what is being done over and over and over again. And then you can figure out how to automate it from there. it's not like these two parts of the documentation of a process versus using AI to figure out what's actually happening, as far as can tell, are two different things.

RICK (07:23.274)
Okay, that's a bummer. Just on this note, feel like because the cost of like spinning up ideas and marketing them is so low now and spamming people with them, I feel like there's a lot of fake companies being spun up with like really pretty websites and messaging and outbound emails. And they're just like testing whether people will respond and then like just throwing shit out, you know.

Tyler King (07:25.223)
Tyler King (07:34.645)
Yeah.

RICK (07:52.13)
just making stuff up when you call them. Like I got one where it was like, Hey, we have, an AI landing page provider. We'll basically like take over all of your landing page stuff. And this is before we had built out the templates at like a Peltos. Like this is great. And I was like, I would love this, like put me on the list. Like I would love to be a beta user. Like, yeah, we're, starting at $2,000 a month for managed service of landing pages. And I'm like, all right, see ya.

Tyler King (08:15.692)
Cheers.

And also if it's $2,000 a month, you know it's not AI. well, yeah, they're like, we'll just hire a freelancer to do this for you and then maybe one day we'll turn it into some AI, whatever. Yeah, so there's absolutely agreed. yeah, there's so much bullshit out there that I think it's very reasonable to keep your guard up and be like, I'm not going to believe these promises I hear. And at the same time, there's enough real stuff that you...

RICK (08:23.618)
It's not real, it's just humans behind the-

RICK (08:31.244)
No, I think that's going to happen for a while.

Tyler King (08:46.764)
You'll get punished if you can, like, I think what a lot of people, like I work with, for example, their attitude is we all tried AI. Everyone uses AI. I don't want to make it sound like nobody uses it, but we tried to like use it as a total like game changer a year ago. It wasn't ready for it. And then I think a lot of people were like, all right, it's never, it's never going to be ready for it. You have to kind of live in this in between of treat everything with skepticism, but if enough people are talking about it, you have to take it seriously, I think.

RICK (09:01.326)
Too early.

RICK (09:15.074)
This is true in lots of other areas too. Like this is true in AI especially, but like I feel like in business, if you've been in business a long time, what you tried like five years ago, like it didn't work and you're like scarred from it. But like if you tried it today, it might work. Like it's this weird thing. Like AI is putting that on, you know, 10X like speed scale.

Tyler King (09:15.18)
And lots of people are talking about clog code.

Tyler King (09:26.476)
Yeah.

Tyler King (09:35.409)
And so self-driving cars, I think is a great example of like where it leads, is, it, I don't know, 2016 or something. There's this, I mean, part of it's Elon Musk making all these promises that were bogus, but I thought we were going to have self-driving cars in 2016. And here we are 10 years later, but we do now. Like Waymo is moving to St. Louis and it's, I wouldn't say it's a huge deal yet, but it pretty clearly will be. So it's like you should have.

RICK (09:53.911)
Yeah.

RICK (09:57.293)
It's the jet.

RICK (10:01.934)
Mm-hmm.

Tyler King (10:03.756)
It was correct to be really excited about it 10 years ago, and it was incorrect to do anything about it with your life, right?

RICK (10:12.494)
Speaking of Waymo, you seen the pranks online where these kids are ordering Waymos to a cul-de-sac? Like hundreds of Waymos and just freaking them out? They don't know what to do. I think it's just, I don't know. Apparently that's the new prank for 15 year olds is to order a bunch of Waymos to a small neighborhood and they don't know what to do when there's that many Waymos in one spot.

Tyler King (10:22.524)
No, I assume they have to pay for this, right?

Tyler King (10:36.662)
Man, I see all these internet pranks and I'm like, as an adult, tsk tsk, and like, man, would have been def- I definitely would have done that shit when I was in high school. Sounds fun.

RICK (10:43.758)
All right, AI vibe coding.

Tyler King (10:49.908)
Yeah. And I, I'm using the term vibe coding. think at this point, you can't call it vibe coding. To me, vibe coding means like, I don't know what I'm doing. I'm piecing together a bunch of shit and it will kind of maybe work or not. And then in either way, I've hit my ceiling. Claude code. So, so like, do you know what Claude code is versus just Claude in general? Okay. So it's an agent.

RICK (11:13.068)
I do not. It would be great to explain it.

Tyler King (11:16.81)
I'm sure we have listeners who know a lot more about this than me and they're going to, I'm going to get some details wrong, but I think I'm directionally correct here. It's an agent and by agent, like a few episodes ago, we were talking about AI and I said like, to me, the opportunity is not you give it a prompt and it gives it like, it gives you the finished output. It's like you give it a prompt and the analogy I made was if you're in a sound studio, if you want a song rather than it gives you the song, but then you can't edit anything about it. It gives you like the synthesizer settings.

which you can hit play and it plays the song, but then you can change it, right? I think an agent is in that the ballpark of that, which basically means it's like non AI code that orchestrates the AI running. the, if you just use chat GPT or Claude, you go to it, you paste some code in, say, Hey, I want to do XYZ. Can you give me some code back? That's it with Claude code, you say that same type of thing, but it doesn't just send that directly to an LLM. says,

like I gave it a prompt yesterday. want to add, I want to update a filter on the activity report in Lesson.A.C.R.M. to, right now you can filter by one type of activity, email notes, whatever. I want to be able to filter by multiple types at the same time. Hit enter. The first thing it's doing is it's saying, well, where's the activity report? And so using non-AI, it's like using grep and like command line tool. It's like, I got to find the files we're talking about. I'm going to search the code base. I'm going to look at dependencies, figure out what we're talking about.

And then it'll look at it be like, okay, can I figure out what, what this filter is that he's talking about? And like, when it needs to, it will pass that to the LLM and say like, Hey, can you interpret this code for me and tell me what's going on or whatever? I don't know what's going on behind the scenes, but something like that. The LLM responds, but it doesn't send that response to me. It sends a response to Claude code and then Claude code decides, okay, what's my next step? So it's kind of going back and forth with the LLM until it's done. And this is a huge unlock compared to just like.

sending it directly to the LLM for a lot of reasons, one big one being it can check its own work. Right? If an LLM gives you something bad and then you say to it, hey, that's bad, it can fix it. Cloud Code just does that for you. it hallucinates and then it's like, hey, did you hallucinate? And then it's like, yeah, sorry, I did hallucinate. And then it fixes it, that type of thing.

RICK (13:32.686)
One thing that I struggle with here in terms of conceptually talking about these things, you're differentiating between the Cloud Code agent and an LLM, but isn't the Cloud Code agent an LLM of its own to a degree? Okay.

Tyler King (13:45.088)
I don't think so. I have no idea what the code looks like, but my guess is it looks more like a normal pre-AI code. And you could have an agent that does all kinds of things. Like I could make an agent for less annoying CRM where the user says, hey, give me a report that blah, blah, blah. And we could have, I could say to the LLM, like, here's our five reports. Pick which one you think the user means. And it gives me that report. And then I could go back to it and say,

Okay, we picked this report here, the settings for that report. Can you tell me how you would set the settings? Like that would be an agent, I think as it's defined as like normal code that's taking what the user wants and talking back and forth multiple times, directing the LLM until you get the outcome you want. I think that's what the agent is.

RICK (14:31.33)
Got it. That's helpful. It's like that could be applied to lots of different things. And I like I like. OK, so the coding version of this you're using.

Tyler King (14:40.842)
Yeah, and there are multiple agents. There's AMP, there's OpenCode, OpenAI makes Codex. I don't know why I haven't tried any of those other ones, but like, Cloud Code just took over the zeitgeist completely in the way that like back in the day, there were a bunch of different front-end JavaScript frameworks and now everyone uses React. I'm not saying it will be this way forever, but like right in this moment, it seems like Cloud Code has just completely dominated.

RICK (15:05.807)
And do you feel like this is a huge unlock for you and less annoying CRM? Or is this just like this? Is it already like table stakes?

Tyler King (15:15.188)
meaning everyone else is doing it so it doesn't give us an advantage. I'm trying to figure that out. I'm kind of waffling back and forth. So let me start by just saying like what I did, because I started this week. I'm like a few days in. And I want to acknowledge it's a skill using it like any tool. So I'm probably not using it to its full effect right now. I have mostly not worked on code. I probably spent five hours this week on this. And I built.

RICK (15:18.018)
Yeah.

Tyler King (15:43.456)
three fully working, three fully working like what otherwise would be one week long to build features. So in five hours, I built three weeks worth of stuff. Maybe I'm estimating here. Now I specifically picked features that I thought it would be good at, right? I think there's a whole different set of things that it would be bad at. And with all of these, it got a lot of stuff wrong.

I, there was bad, like it was like, maybe call it two hours per project. So it's not like I give it a prompt and it just does it. But the code it's writing is good. I can ask, well, let me say, I have not written a line of code in this whole process. this isn't like it gave me some code and I pasted it in, but I was doing a lot of the work. I didn't even open my code editor the whole time. And I got three things that like, customers are going to notice, like real features builds. So is this an unlock or is this table stakes?

I don't think it's table stakes yet. know that lots and lots of people are using this and building all kinds of shit. I think most people doing that are in the like, I'm launching a new product or building a side project type of thing.

I'm sure I don't know. I've said this many times where I still haven't. I haven't noticed an improvement in the shipping velocity or the quality of software yet. It's new. It's early. I'm not saying it won't happen, but I haven't noticed it yet. You still agree with that?

RICK (17:11.278)
I mean, don't, I think I'm close enough to the measurements of this to know what the difference is.

Tyler King (17:18.198)
I'm just saying like you're like, use software. Are you, do you feel like we're living in a golden era of like lots of great software getting built that you use?

RICK (17:21.166)
Mm-hmm.

RICK (17:28.16)
No, I'm still wishing for more stuff that doesn't exist.

Tyler King (17:33.28)
Yeah. So I think if, if, if I was like, okay, I did this in five hours, I could just knock out our entire backlog of we've got all these little things. Sorry. I'm talking a lot, but let me side note on mostly technical, the podcast, they said something that I thought was really interesting, which is they were like the big unlock of this is there's a lot of stuff that it didn't make sense to build in the past, but it does make sense to build now. So rather than just thinking of it as like, we're building the same thing, but twice as fast or whatever.

All three of these features that I built were on our backlog for years. None of them are game changers. None of them are going to fundamentally change the business. But if we could ship 200 of these in the next month, well, I don't even know if we have a list that long, but our customers would be like, my God, every single little paper cut, every single little improvement that we wanted the product just got shipped in one month. That stuff wouldn't have gotten built ever pre-AI.

RICK (18:31.022)
So potentially for you, this could allow you to close the gap with the competition on feature parity a lot faster. It could be advantageous more so to you than them moving further away from you in terms of feature comparison.

Tyler King (18:46.598)
Certainly. Yeah. Okay. So let's, okay. Let's stop talking about the specifics of my experience and like try and. So I think it levels the playing field, right? That could be good for us or could be bad for us. All of the CRMs that are bigger than us have more engineers. They have more features. This, that is an advantage they have over us. And this reduces the importance of that advantage. I don't think it makes it go away, right? They get to use these tools also.

RICK (19:14.766)
Mm-hmm.

Tyler King (19:15.052)
But there is diminishing returns with building features where like each feature is a little less important than the one before it. so. Presumably the ones that we get to build with AI are more impactful than the ones that HubSpot gets to build with AI. That's my theory.

RICK (19:26.568)
That makes sense. On the other side of things though, a new entrant can come in and rebuild a lot faster.

Tyler King (19:29.792)
Right.

Tyler King (19:34.334)
Exactly. So if you think of this as a David and Goliath story, when we're the David, this is good for us. But compared to one of our listeners, some aspiring entrepreneur that wants to bootstrap a business, well, to them, we're the Goliath and they're the David, and this is good for them. I don't know which of those two forces is going to be more powerful. Is this going to be good or bad for us? I don't know how to think of

RICK (19:50.242)
Hmm.

Tyler King (19:59.286)
What do you think?

RICK (20:00.246)
No, I, the thing that stood out to me that you said that resonates across not just coding, but any sort of AI application is things that didn't make sense to do now make sense to do. And like an example of this, in IT, for example, is there's a lot of like long tail IT support requests that come in that you don't, you just like kind of handle one off because it doesn't make sense to take the time to write the documentation.

blah, blah, blah. And so you just like deal with it when it comes up. But now like you can say, Hey, this thing's coming up. Please, please, please handle this in the future. And you just take it off your like, the agent creates the piece, the the internal wiki page, and now updates its memory. So that next time this person this question gets asked, you direct the agent to answer it versus you. And so like, I feel like there's this like, long tail of

stuff that is getting unlocked. And I don't know what the value of that is, I guess is what I'm trying to say. Yeah.

Tyler King (21:06.656)
Right, so let's talk about that, because if it didn't make sense to build before, what that means is the cost of building it is greater than the value provided, which means either the cost was really, really high. More likely, it's that the value is low, right? If something really, really high value but really expensive to build is still probably worth building. And it's not like AI lets us build things we couldn't build before. It just makes it faster. So I think most of these use cases that are going to get unlocked are like,

It's just not that big. yeah, it's like we could spend some person in HR is spending an hour a week doing this thing. And it would previously would have taken a hundred hours to automate it of a developer's time. Who's paid three times as much as that HR person. Now we can do it in five hours. Maybe it's worth it now. So I think like internal tooling and stuff like that is just going to have a Renaissance. Yeah.

RICK (21:36.588)
Marginal.

RICK (22:01.784)
So yeah, so I think like there's a limit to that, right? Like eventually you do all the things and then there's nothing more to do, right? So then what? What does this unlock?

Tyler King (22:07.788)
Mm-hmm.

Tyler King (22:15.146)
Yeah. Well, I mean, operational efficiency that then hits a plateau. Yeah, I guess.

RICK (22:19.662)
Yeah, and then it's like, okay, well, does this actually lead? So I guess my question next question is like, I totally buy that this will allow you to kill the long tail of feature backlogs that didn't make sense to do before but like, is it unlocking any new innovation that you wouldn't have thought of otherwise?

Tyler King (22:38.826)
Right. well, there's a middle one before that, I think, which is you were talking about catching up with our competitors. The things I just mentioned that I'm building right now, we could have a billion of those. the reason we're not building them is they don't fundamentally unlock new value in the product. They just make it a little nicer to use. So there's like that, there's paper cuts, let's call them. Then there's like, we're building a mobile app. We're building Kanban, the big stuff that really matters. I've asked Bracken and Robert on the team to...

RICK (22:41.847)
Okay.

Tyler King (23:07.914)
also use cloud code and they're working on those types of things. And they're both like, yes, it is helping. I don't think it's helping to the same extent that it helped me ship these really minor things. like there's, it will make us faster, but it's not like, I just spent two hours and Kanban is done, you know? and then there's that next level, which is like, we're not just playing catch up with the competition, but are we able to build things that no one ever even thought of before? I don't see any reason why that would be true. Like.

The code that's getting written is the same. It's just being written by AI instead of humans.

RICK (23:44.664)
So it should help identify ideas and innovation is what you're saying. Or are you saying it won't? Yeah.

Tyler King (23:50.252)
I don't know. I'm saying I don't think so. there might have been ideas that we already could have had, but we're like, that's too big, that's too ambitious. And maybe now it's not too ambitious. But I don't know that it does anything to help us have the idea. I don't know. Have you?

RICK (24:03.511)
So you're basically saying it's fundamentally a multiplier of your existing capacity to do all the things you did previously or didn't do previously because of a cost issue.

Tyler King (24:14.954)
Yeah. Yeah. Our roadmap is not changing because of this, right? Yeah.

RICK (24:16.673)
Cool.

You're just going to accelerate the timeline to completing it.

Tyler King (24:24.188)
yeah. And so, yeah, I'm, if I could push a button and stop all progress on AI right now, I would. Like, I don't know what's going to happen, but I feel scary to me, but I, I think there's like lots of upside and lots of downside. And so I all, you know, I can't control the downside. So I'm trying to just lean into the upside, I guess. leg up health is a place where that's one thing I want to talk about is what does this mean for leg up health? Like, I don't think the tech.

RICK (24:30.904)
Hmm.

Tyler King (24:54.218)
We're at an unfortunate spot, like up health right now in that all of the bottlenecks are non-technical, but I do think I can do some stuff. Some of the more ambitious stuff you've daydreamed about before, which like, what if we can connect to Diwala and do ACH payments and like effectively run payroll more or less for companies. That is still even with the help of AI. I wouldn't want to take that on as a single, very part-time developer, but things like

RICK (25:15.329)
Mm.

Tyler King (25:23.668)
Let's build a little tool for JD to do XYZ faster. Again, I don't think that's the bottleneck. Let's build a feature for our customers. Are they asking for XYZ? I don't think anyone's asking for any features because they don't actually log in and use the product. But I do think like, LegUp Health is such a small code base with such simplicity right now. I mean, I could fly on that code base with Cloud Code.

RICK (25:39.522)
Mm-hmm.

RICK (25:50.882)
That's really helpful to know because I do feel like for the one of the one of the topics I put on the on the agenda for today was I'm in this weird spot with like up health where part of the big bet with leg up. I mean this is me going back to like why every time we get into these situations in business I think the natural thing is like why did I start this thing in the first place you start questioning like you know like okay what was I trying to accomplish because it's not necessarily growing as fast or you know.

Tyler King (26:14.508)
Yeah.

RICK (26:20.204)
whatever, it's not going as well as we, as we thought it would. Cause like open enrollment really was hard for like a Pelt this year because of the, the uncertainty in the marketplace space. and so, you know, I'm starting to go like, why did I start this thing? And like, I went back to my, original notes cause I wrote down, like, I had three ideas when I started like a Pelt and the other two things are no longer in play. And this thing has stuck around and it's like, well, what was I thinking?

My big bet was, I believe at some point in my lifetime, the United States health insurance and healthcare system is gonna go through a seismic update through legislation. And that hasn't happened yet. I ultimately, like my big bet was build a cash flowing bootstrapped business in the environment that exists today and be ready.

for when the seismic shift happens so that you can go after it big time. And so I just kind of remind my, that's what I wrote down in this doc four years ago, five years ago. Yep. I, one, it's like motivating to, you know, know that and remind myself that of like being intense with patients around that big bet. But the second thing is, is like, what do you do in the interim?

Tyler King (27:22.912)
I'm not sure I've ever heard you say that before.

Tyler King (27:29.44)
That's really interesting. Yeah. I mean, it makes total sense.

RICK (27:46.626)
you know, like, what, what, what, do you spend money and resources and time? Do you just try to grow this service, you know, very difficult, you know, and I would say difficult, but like, unsexy, you know, service business, or do you just like, you know, on one end, do you just like scale up people and try to build a great brokerage, and then you figure out where to pivot when things change? Or, or do you do you just run tons of experiments to try to

super with the technology we have today to superhuman, know what JD is doing? Or is it somewhere in the middle? And I don't know the answer. Yeah, yeah, it's interesting to me.

Tyler King (28:20.096)
Yeah.

Do you want to dive into that right now? I realize that's sort of a different topic, but so here's my immediate reaction to that, which is, think, Hey, brilliant. think it makes a ton of sense when you, you look at some of the most successful bootstrapped entrepreneurs. Like tuple comes to mind as like the, the pair programming remote screen sharing tool. They, they had already started when screen hero shut down and then screen hero closed. And it's like.

The market's wide open for anyone to grab, they were already there. So I definitely like the idea of like, you've already got to be there. You can't just wait for things to change and then jump in because someone will be ahead of you. Having said that, it almost goes without saying that whatever the seismic shift is, is going to be hugely disruptive to your business. I think there's like the Elon Musk of the world who take pleasure in other people's suffering.

me who would avoid it much to my detriment, even when it's like, I'm talking about layoffs here to be clear. I think you're probably in the middle of the two of like, you'll do what needs to be done, but you don't take pleasure in it. If you build up a large service business and you're rooting for this change, there's a very, very good chance that this change is going to put all your employees out of work, even if it's good for you as the owner of the business. Do you agree with that?

RICK (29:27.022)
Mm-hmm.

RICK (29:33.582)
Mm-mm.

RICK (29:47.992)
I think if we build it without consideration for what the future would require, if the seismic ship happened, yes.

Tyler King (29:55.422)
A good healthcare system does not need a lot of insurance agents. So like if your employee base is mostly made up of insurance agents, even if the shift happens thoughtfully and well, they're going to lose their jobs.

RICK (30:00.843)
I agree.

RICK (30:13.166)
if they are going to lose their jobs if they're unable to adapt to the new requirements of the job. But yes, but generally someone who wants to be an insurance agent in today's world is probably not going to be the insurance engineer, you know, whatever you want to call that future person in the in new world.

Tyler King (30:19.008)
Yeah, but like your

Tyler King (30:31.681)
Yeah, and we've seen a lot of tech companies do this where they're like, they do layoffs as they're hiring a lot of people and everyone's like, what are you doing? The point of layoffs is to have fewer people and they're like, no, we have an army of people to do the old business. We need an army of people. It's still software engineers, but it's like those were full stack web developers and now we need AI people.

RICK (30:54.702)
side track on this, the way I'm dealing with this at Windfall right now is the rev ops is being blown up right now. It's like the historical like Salesforce admin or rev ops specialist. Like it's very administrative. In the short term, instead of hiring those people, because we need to do that work, I'm outsourcing it. And then I'm high, anyone to hire is this GTM go to market engineer type person.

Tyler King (31:01.004)
Mm.

Tyler King (31:15.517)
Mmm, that's smart.

RICK (31:21.432)
who's overseeing the outsource people and overseeing the automations and AI applications. And I wonder if there's something similar with like Appel with where maybe the middle ground is like, we don't hire these people, but we contract with outsider, like outside providers who provide the labor while we're scaling this up and micromanage it to a degree to make sure it's to our service level. And that's the middle path.

Tyler King (31:44.906)
It's worth saying, like, the reason that's better is just because you're being upfront with people that it's temporary. Like, they're still going to lose their jobs probably, but yeah.

RICK (31:54.252)
The problem I'm not making the promise to them though. it's a it's a it's a one year contract versus a you know that sort of thing. But then that's another I guess that's the other way you could do it is you could say hey like you know this is a year to year contract you know and you know and you're not making a I think I think what we both agree on whether or not we're willing you know what we were willing to stomach certain things is when you when you hire a full time employee you're generally saying I'm committing to you as long as you do the job to not

Tyler King (31:56.274)
Right, exactly. It's. Yeah.

RICK (32:24.334)
let you go. And it's a failure.

Tyler King (32:26.176)
Yeah. And if the job changes, you would give them the chance to retool and all that, even though probably what's best for the business, like some of them might do it very well, but it'll be time consuming. You'll have to pay them while they're doing it. It'd be a lot easier to just be like, you're gone. I'm hiring someone who already knows how to do the thing. I know how to do it. I need, I need done.

RICK (32:36.163)
Mm-hmm.

RICK (32:42.286)
And this is other world though, where you could say like, I'm not hiring a full time employee, I'm hiring a temporary employee. And that person could be employed directly without going to another firm who employs that person directly. And so there are a lot of middle paths there.

Tyler King (32:48.523)
Yeah, yeah.

Tyler King (32:58.572)
Okay, so I brought that up, probably getting ahead of ourselves in the sense it could be 20 years before the seismic shift happens. But the other thing I wanted to say is it's kind of weird. You're almost like, I think it takes a special type of risk tolerance and like courage in entrepreneurship to really disrupt yourself, right? I'm kind of feeling this right now where I'm like, I'm excited about a lot of the AI stuff, but I'm also like, I do not want to lose what I have. It's interesting that for your strategy to work,

You have to put a lot of effort into building a thing that you're then going to try to destroy.

RICK (33:35.054)
And that's so in my document, there are a couple of things that I wrote down that I believe to be true when the site that I believe will remain true when the seismic shift happens. One of those like one of those core things is that the consumer is going to be in charge of their health insurance. And the second thing is that the employer is going to be involved in helping to pay for the health insurance. Like so like those were like the two factors, which is why I and I believe that. Yeah. Yeah.

Tyler King (34:01.932)
I don't know, I don't know. That's not how any other country does it.

RICK (34:06.958)
That's my belief of what's going to happen in my lifetime. And so that's why I leg up benefits is where we put the software investment. And it's why despite like the market saying, not saying, yay, you know, it's like, no, I still want to bang our head against the wall here. I'm realizing talking to you about this that I could be a lot more intentional about like why I...

think these things because it's oftentimes not based on like what people are asking for today. Anyway, we're gonna get.

Tyler King (34:43.306)
What? Yeah. Sorry. What? Were you trying to segue?

RICK (34:45.87)
I don't know where I'm going with this, guess. At the end of the day, I don't know what to do at Leg Up Health with our resources. And I think it's interesting to think about it in terms of what my original bet was. And then that grounds me into reality.

Tyler King (34:53.397)
Okay.

Tyler King (34:59.018)
Yeah, I like that a lot. Now I'm going to talk my own book here because when we're in like up health partner meetings, I think I'm generally less excited about the like hire a million agents and scale it up that way version of things. When the seismic shift happens, who's going to be in the best position and we don't even know what the shift might be, but who's going to be in the best position to capitalize on it. It's someone with a lot of connections.

with a high personal profile, probably like the type of person that maybe could get paid speaking, get like Paul Pilser, our former mentor, like that type of person. It's not the person with the largest army of insurance agents underneath them, I think.

RICK (35:34.38)
Mm-hmm.

RICK (35:43.202)
The only thing I would say is if you have a lot of employer relationships, which is the primary method in which people get their health insurance, even if, what dictates where you get your health insurance is your job. Fundamentally true today. So if, when the seismic shift happens, you have those relationships with employers, then you are in a position to,

Tyler King (35:51.339)
Yeah.

Tyler King (35:58.529)
Sure.

Tyler King (36:09.238)
But I absolutely agree with that. But if by relationship, you mean they are your client already, you don't need the next phase. Like the shift is how you get the market share. If you can get the market share without the shift, then what are you waiting for?

RICK (36:09.29)
Navigate the next phase.

RICK (36:27.598)
That's a question.

I mean, I guess the market share today is a service business with low, like it's just low. It's not easy, right? Nothing's easy, but like it's not the sexy business. It's not, it's boring, right? And so like, it's just basic blocking and tackling. And I think what you're saying is we probably, what I'm probably coming away with too, with my bias is we need to figure out how to grow our employer customer base.

Tyler King (36:45.568)
Yeah.

RICK (36:59.18)
you know, over the next two to three years significantly. And that's most likely going to be running the playbook of a tech enabled broker, not a tech company that has brokers. And, and ultimately, like if a seismic shift happens, that's fine. We're in a good position. If it doesn't, it's a good business.

Tyler King (37:12.982)
Right.

Tyler King (37:22.656)
Yeah. Okay. Two different thoughts about that. One, why do we need a lot of employers over the next few years? It's not to put you in a position to seize the day when the shift happens. It's because right now it's a business with only one person working on it that's JD. It's not even really a good bootstrapped business yet. So this isn't, we need a lot of employers to position ourselves or to fund hiring a big team. We need a lot of employers just to get to like, step one was

RICK (37:51.618)
the next phase of the business.

Tyler King (37:52.842)
Yeah, the first big milestone was get JD to a compensation level where he's not looking around for other jobs. He's like, this is as good as whatever my next best option would be. He's here for the long-term. That was achieved over in 2025. The next phase is like, get a good bootstrap business where it's actually putting out cash for the ownership, meaning you. Right?

RICK (38:12.814)
100%. That, you know what? We haven't said that out loud. That is actually what we should be anchoring around with our ideation as partners right now. How do we produce cash?

Tyler King (38:21.93)
Yeah. And it's not, there are a lot of businesses that don't go in that order. If you raise money, you say, okay, then we're going to scale and then we're going to profit. But like, that's not what this business is.

RICK (38:32.406)
No, that was really good. think between now and let's escape, say middle of February, what we need to be talking about is like, how do we what is the best thing we could do today to maximize cash flow and for for us three. That's fundamentally it and and sustainability for JD simultaneously.

Tyler King (38:52.684)
Meaning like don't overwork him. Right. Because yeah, just for the listener, like a thing that keeps coming up is like the business is sort of pure profit in the sense that JD is sort of a quasi owner and like all the money going to him you could think of as whatever. like how many customers can he serve by himself? If the answer is we can only afford to pay JD, but he hits his max and it's only making enough money to pay himself, then this is a pretty bad business.

RICK (38:55.148)
Yeah, exactly. That's the trade off.

Tyler King (39:21.908)
If he can service a million dollars a year in revenue and he can make a really good salary and Rick can take out money. that, that's a conversation that's happening behind the scenes of like, can one, how much revenue can one person's service?

RICK (39:34.7)
Yeah. And it's interesting, like this supports the outsourcing concept of experimentation of like, Hey, how do we increase JD's capacity to make our ability to scale more likely? What does that cost? What's the trade off that kind of stuff? Anyway, this is helpful. I don't have much, I would've liked to spend some more time noodling on that being the outcome. and what that means for like how we might think about what our goals are or software bets or, you know, yep.

Tyler King (40:00.95)
Yeah. Can I say one other thing? I think for very understandable reasons, you want to run an interesting business. And I think you would be good at running an interesting business, but I think you would be especially good at running a boring business. You are good at blocking and tackling. Like every business is hard in some way and you have to find a way, a thing that's

RICK (40:04.398)
Of

Tyler King (40:28.168)
easier for you than it is for other people. Like the sweet spot is it's not hard for me, but it's hard for everyone else. everyone wants a really interesting, innovative, blah, blah, blah business. Some people are completely unwilling to do the blocking and tackling and boring work. I'm not saying it's your favorite thing, but you're good at it. And you're at least somewhat willing. Like I think if the future where Rick Lindquist is running an empire.

RICK (40:47.765)
I'm willing, yeah.

Tyler King (40:55.176)
is more likely to be you figured out a way to scale and operationalize a bunch of like a large scale or a series of large scale boring businesses versus like a traditional tech startup that invented some brand new thing. Maybe you don't want that. That's fine if you don't want that, but like think about that.

RICK (41:11.43)
No, I think I agree with that and I would say that I want that. What I also think is awesome is when those boring businesses have secret upside long term based on macro trends that could be a value multiplier.

I think that's so yeah like I would say that what you just described actually is the larger long-term bet that I'm making but there's this like you know sometimes you get like lost and like why this idea? Why did I have conviction around this idea even though it's like boring and hard? it yeah well this not only is this a good business but it also has this other sort of asymmetric upside that you know

I believe I was, you know, I am and was at the time uniquely positioned to navigate. And that makes, this is kind of the chess part of this that's, that makes it's, you know, you're playing checkers with this business, but there's also the chess component that's interesting and fun. But yeah, I agree with you. I think you're right. I would love to be, to look back in 10 to 20 years and at this conversation and say, look at the empire of boring businesses that Tyler helped me build.

Tyler King (42:28.748)
Yeah. And there's so much innovation that goes into how do you like, how do you outsource health insurance agent work without the quality of service suffering? Like that's not a simple problem. So yeah, the business is boring, the work that goes, it's the, to belabor this, but a classic example is just cause you like coffee doesn't mean you should open a coffee shop. Right.

Opening a coffee shop is not sitting around drinking and talking about coffee all day. It is hiring a bunch of minimum wage workers and figuring out what to do when they don't show up. If you love that work, start a coffee shop. There's the reverse, which is like, I don't love CRMs. I don't care at all about CRMs, but I love the work that goes into making one and to building the company. When I say a boring business, I mean that the coffee part of it is boring, but the hiring minimum wage employees part of it could still be really interesting.

RICK (43:27.32)
Yep. Yeah, it's challenging.

Thank you for going down that road with me.

Tyler King (43:33.612)
All right, we've got to go in five minutes. You got any quick updates?

RICK (43:41.678)
We kind of covered it. just I I just our health care system is a disaster and I've never felt more strongly that it's awful and I just I Can't believe we're not making more progress at making it better it's actually getting worse and worse and worse and Anyway, I feel a little powerless to solve it and I that's that's another side of this. That's really frustrating

Tyler King (44:11.936)
Yeah. I remember, this must've been 2007, 2008, Paul Zane Pilser, our boss at the time, was taking me to vote in Utah, because I was brand new there. I didn't even know where to go. And he was talking to me and he's like, listen, I worked for the Reagan administration. I'm the biggest free market conservative you're ever going to meet. And we have to blow up our healthcare system and do universal healthcare.

He was like, this goes against every belief I have. It is the exact opposite of my ideology, but I can just say what we're doing is not working and it's never going to work and we just have to socialize this thing. And I was too young to really appreciate how big of a statement that was from him, but I look back on that moment a lot.

Tyler King (45:02.344)
All right. Can I squeeze a quick update here? Yeah, I'll just rattle off some stuff real quick. It was the end of the year, so I every year update our financial model thing to just look back over the last year and see, did it go the way I thought and then model it out for the next few years? I go three years out in the future. It's always a good experience of just take a second to zoom out and look at things.

RICK (45:05.326)
Do you

Tyler King (45:31.198)
My financial model is always under guessing how profitable we will be. We made an extra $160,000, which is not a small amount of money. We made about $500,000 total in profit. I define profit. This is not like the CPA accounting definition of profit. The less knowing serum bank account balance is $500,000 higher than it was at the beginning of the year. This doesn't include what I pay myself, et cetera. That was 160 more than it was supposed to be. I looked through the spreadsheet.

and I check every single number and they're all right. I can't even tell you where it came from. A good problem to have, I guess, but every year I'm like, I'm going to make it more conservative. So I'm not over or underestimating it next year. And then every year it comes in under again. I don't know. Yeah, no, this is, we've basically been breakeven our entire existence, small amounts of profit, but very small. And then as you recall,

RICK (46:17.678)
That's awesome. This is a good problem.

Tyler King (46:29.484)
July of 2024, we raised prices on our current customers and immediately our ARR jumped up a lot. It's entirely because of that we just had our first really profitable year ever. Despite the fact we're not growing, in many ways the trajectory is not good, but wow, that's a lot of money.

RICK (46:47.118)
It's awesome. What are you gonna do with it?

Tyler King (46:48.256)
Yeah. So that's cool. Just let it sit there. I know it's tempting to be like, how do we reinvest it back in the business? But there's this trade-off of if we had really high conviction ideas of how to spend money to grow the business, we'd like do it. No question. But every dollar we save extends our runway. So the question is, do we have more conviction that spending the money on something new will help us grow? Or do we have more conviction that our current team?

executing within our current budget can get there if given enough time. And right now I'd rather have more runway because I believe our current team is going to get us there as opposed to, I don't have any high conviction bets yet.

RICK (47:29.144)
Yeah, makes sense. Yeah, you're playing defense while your team plays offense.

Tyler King (47:34.826)
Yeah. And it seems very conservative, but important context is like, as I've mentioned many times, our dev team is shipping. Well, this isn't even talking about what cloud code might unlock, but like the last year or two, we've actually shipped real big features. we had, we went a decade without doing that. if the business was plateauing with total stagnation for a decade, I just have to believe our current product strategy combined with our execution.

a decade from now, I well, assuming AI doesn't destroy everything, I feel like it'll work out eventually. And we're basically out of time. I have an update about how it's maybe showing very small signs of starting to work out, but I will save that for next time.

RICK (48:10.307)
I love it.

RICK (48:17.486)
Small signs of starting to work out.

Tyler King (48:21.344)
Well, know, things go up and down and every time it goes up, you're like, is this it? Is this the, and then it goes down again, but it's going up right now. So we'll see. Yeah.

RICK (48:28.57)
Well, if you'd like to review past topics and show notes, visit StarUpToLast.com. See you next time.

Tyler King (48:34.198)
See ya.