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The AI Sherpa Podcast

with Robert Mitchell and Jack Monson
EPISODE FOUR - DECEMBER 13th, 2024

In the podcast, Jack Monson and Robert Mitchell explore the transformative role of AI for 2024 and beyond. They discuss how businesses increasingly adopt AI technologies to enhance operational efficiency and the promising future of agentic AI. The conversation underscores the need to train employees to maintain a competitive edge. Additionally, they stress the importance of investing in AI to boost return on investment and attract top-tier talent, positioning franchisors for sustained success in the evolving market landscape.

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Podcast Transcript:

Jack Monson: We are chatting once again with the AI Sherpa. It's Robert Mitchell from WSI. Robert, how are you today?

Robert Mitchell: Great. Another episode of the AI Sherpa. I'm excited today.

JM: Yeah. And it could be our last one of the year. The year's almost done. So, I guarantee it's the last one of the year. But today I wanted to take a look back at 2024 briefly, but really take a big look ahead at 2025.

JM: So, starting with 2024. It's been a big year for AI, especially in the franchise space. So, tell me a little bit about how franchisors have really embraced AI and maybe what you've seen and what you've learned from these franchisors jumping in this year. What have you seen?

RM: Yeah, I want to speak to really what I've seen others do, like not my clients, not people that I know personally, but what I've heard rumblings of in workshops or sessions, at IFA or FLDC, or any number of conferences around the country, and just on forums and LinkedIn for that matter.

RM: And what I've found, this is what's brilliant about AI. I think it's baby steps, baby food, right? Where people are using it in franchising individually. So, you're seeing people hear about it, maybe on 60 Minutes, a podcast here and there. They go, "What is this ChatGPT?" Then they start playing around with it.

RM: Then they decide, "You know what? I have a hard time with this email to this grumpy customer. I'm going to ask ChatGPT to help." These little wins—we call them smart wins or quick wins, right? We're using that as the mentality behind helping to unpack those connections.

RM: So, people can't quite get there with AI. Six months ago, I got all these questions: "Robert, where do I start?" And so, this is the genesis of that. But what I'm seeing is that people are trying it here and there. They're giving it a chance.

RM: And what I love about it is it's so easy to use. I'm talking about anybody—from kids, like my daughter trying to use it (I won't let her; she's got to learn stuff first), to older people, even older than me. They're saying, "You know what? This is a great tool that can make me better at my job."

RM: So, franchisors, in a weird sense, are using little pieces, having little wins, and that ends up being what people call me about. They've tried it a couple of times, played with ChatGPT, had some wins, and then they go, "What else is out there? What else can I do with it?"

RM: I feel like there's more I can accomplish. I need a bigger answer to a bigger problem. So, what I'm seeing over the course of the year is people trying it, using it, getting excited, and having wins.

RM: And I'm not just talking about fun emails. It's about 10, 20, 30 percent more efficient. How you measure that depends on you, but I know it takes me a while to write something. I have writer's block every time I try to write. So, people like me I just saved 30 minutes an hour of time. I mean that's a measurable benefit and you do that across the organization, then it's amazing.

JM: So instead of looking at this as something that is a huge game-changer and maybe one big thing that someone has done fantastically this year using AI, do you really see this as a way to save a few minutes today, a few minutes tomorrow, and maybe a few more minutes the following week?

JM: It's really about saving time, more than one big thing. Is that what you're saying?

RM: Yes. And that's exactly right. So, as you remember from months ago, I would always use the teRM, "Don't be a hammer in search of a nail." Don't use a SaaS product or a large solution with an AI stamp on it to solve a handful of issues.

RM: Because then you're looking at your business cockeyed. You have to maneuver around this tool you've been forced to use, and it doesn't really fit. It's a square peg in a round hole.

RM: These minuscule, minutiae of tasks—addressing things that people weren't able to do before—that's what AI is addressing. I was thinking about this: it's like everybody now has an Einstein next to them.

RM: For me, it's sales development and marketing—things I'm not good at, things I need help with. Now, think about every employee at every company. If you've given them training, peRMission, and governance documentation, they now have an extra element to their skill set.

RM: It's like hiring two people for the price of one—or maybe three or four.

JM: Or five, right? It’s really exponential depending on how much people are using it.

RM: Exactly. That’s what people aren’t connecting to. They’re not realizing that artificial intelligence—it’s a teRM people are just throwing around—but the language model and the generative AI capabilities are what make it powerful.

RM: It has access to the corpus of knowledge across the whole internet. Now, I might be smarter on a couple of things, but not likely—it's smarter on everything. That’s where you’re tapping into.

RM: If every employee can tap into that genius, what are you doing? There is no balance. That’s the biggest problem I have with clients—they can’t reach the AI limit. The human can't reach the AI limit.

RM: We’re constantly pushing the boundary. When you say these little minuscule productivity gains, those are the gains. The big SaaS products are not the gains; those are the distractions.

RM: I think that once people get their heads around this concept, they’ll start seeing larger, more complex builds that require AI architects. But the beginning stages are very ground-level.

JM: I want to ask you now about those builds. Specifically, for the coming year—looking ahead—are there technologies that franchisors should really be watching and paying attention to for 2025?

RM: 100%. And this is like on the heels of what they call "Spinmas."

RM: It’s 12 days of announcements, and they’re in the middle of that right now as we’re recording this podcast. They’ve announced a couple of big ones—Sora, which is their text-to-video model, and some other interesting things.

RM: Among those, they’re trying to steal the limelight. You’re hearing stuff from Copilot Vision, Google, and OpenAI on 60 Minutes—about vision in real-time. You start to realize this is the next level. If we’re talking about next year, what’s coming is agents—but not in the way people think. We couldn’t have AI without data, just like we couldn’t have the internet without computers. There is a progression that has to happen.

RM: We can't have agentic AI. Now let's break that down just briefly for those who don't understand what agentic AI is.

RM: Think about an individual expert. That I'm this particular agent is only good at telling you the time. Okay, and this agent is only good about telling you the weather, and this one is only good about booking a plane ticket, right? And so, you have what's called a triage agent that is responsible to talk to you as the human and direct those agents based on a task.

RM: So, what is going to be happening in the future is you're going to have a human interact with an AI arbitrage agent that will basically fulfill a task. For example, book a vacation for my family. A very generic teRM like that will be answered by a dozen agents that have access to bank accounts, knowledge of your kid's ages and their preferences, their calendars, and your taste for food.

RM: And it'll book everything because it has knowledge, and it has different experts. But in order to get there, what you're going to see right coming soon is the ability for AI to absorb a computer screen, absorb that kind.

RM: So that’s what has to happen first, and that's what happened last week. Vision came out. So, they're able to watch you operate on a computer. Copilot has access to Microsoft's actual laptop, and you push a button, and it watches you interact on the website. It can talk with you and watch what you're watching.

RM: So that kind of interactivity is going to be important moving forward. So, what does that mean for franchisors? Any customer interaction can be upskilled or improved with that kind of technology. I see agentic AI and the ability for these new elements of data absorption to really improve what franchisors are doing, not only for their owners or their teams but for their end clients and customers.

JM: So, if I'm a franchisor, I'm just going to push back on that a little bit, okay? And maybe we can role-play a little bit here. Let's say I'm a franchisor, and I heard everything that you just said, and I agree with it. But what's my first response going to be?

JM: It's going to be, "Yeah, Robert, but what's the return on investment?" Because every CEO just wants to know what's the ROI on anything that anybody within the franchise organization does. So how do you respond to that when the CEO says, "Yeah, but what's the return on the investment?"

RM: And I love that you said that because we're actually in talks with a couple of private equity groups, and we have a couple of dozens, if not hundreds, of brands. A couple of them are franchise-related; some of them are not.

RM: And what do they care about? What does private equity care about, right? Return on their investment. Exactly. But what they typically don't have is a valuable mechanism to make that happen—a good ROI. They might hire consultants, they might do lean manufacturing or Six Sigma, different efficiency.

RM: They might hire a team to sell on, then strip it down—all these strategies they've done for years. But what's coming up on the pike, and which we're going to bring to the table with these PEs, is let's take a brand. Just give us one brand.

RM: If we use 10 percent and improve efficiency, and that—I hate to say these names because these teRMs just keep getting reused and overused, right? Efficiency optimization and whatnot. But those true impacts go right to the bottom line. They flow downstream. They end up sitting down on the EBITDA.

RM: Here's an example. If you have a million dollars in payroll, okay, and your employees are 10 percent more efficient, it's a hundred-thousand-dollar savings. Now, how do you equate those savings? They're absorbing tasks that would be absorbed by other employees. So that's a hundred-thousand-dollar employee you didn't have to hire or two fifty-thousand-dollar employees. So, you save the money. The work—we can't argue with that.

RM: They take those hundred thousand dollars. You want to sell your business in five years or next year? Typical EBITDA multiple off of EBITDA is about five times—I'm being very generous, but if you're in PE, it might be like seven or ten. Let's just say five times EBITDA.

RM: You just made a five-hundred-thousand-dollar impact on the hundred thousand you made that one year for a minor change in training your employees. Are you kidding me? Who wouldn't jump at that? What private equity wouldn't be banging down my door right now if they didn't hear that example? And that's just simply from taking employees, training them, upskilling them just a little bit. Ten percent. Did I say twenty? I said ten.

RM: I hear thirty. Give me a break. So, I think that most of our impact is not ten. So, I'm just, I'm being very basic. So, going back to your question about ROI—are you kidding? I don't know how else to say it, but that's what I'm seeing, and that's what I believe to be true. And I know to be true.

JM: Yeah. And I think in this coming year, we're going to see more private equity action. We're going to see more mergers and acquisitions, and maybe we can help some of those CEOs of franchise brands come along with, "Hey, if you're really looking for..." and everybody's talking about their exit strategy right now, right?

JM: If you're really looking to make your exit strategy the most efficient thing you've ever done in your life, there are ways that we can use AI to help make that happen—a better exit—because the private equity guys who are coming in, I guarantee they're looking at something much more efficient with your business than what you're doing right now.

RM: Absolutely. And within that, a lot of the strategies, as you know, they want to buy, ramp up, and then cut costs, right? Why cut costs? Why not, in the third, fourth, or fifth year, keep that sales team churning but make them more efficient? And now your returns are 10, 20, or 30 percent.

Robert Mitchel: Okay. Now we're talking about a real return on that initial investment. So don't keep the original game plan, but don't end it that way—in with AI in the mix. So, I think that's the big takeaway that people should be looking at. As you remember, that's just upskilling the team. That's very low level, very cost-effective, very cheap.

Robert Mitchel: Going back to your very blunt question, pushing back on building a solution, building a tool—sometimes those solutions are 10, 15, or 100 grand to build, right? But let me tell you, we don't build them unless there is a positive net impact. So, if it costs a hundred grand, but it only impacts fifty thousand, we don't build it. And we do a cost-benefit analysis. So that's an easy question to ask and an easy decision to make. We have ten projects to put in front of a client; they're only going to pick the ones that are positive.

JM: Okay. Last question for you today, looking at 2025. For the people you're talking to who might still be a little hesitant about investing in AI or really diving into the AI pool, what advice are you giving them? And what are you saying to really help them see the light of what this could do for their brand?

RM: Let me answer that question with a case study or a story, okay? I was talking with a client about a year and a half ago. They weren't ready, and for whatever reason, they just fizzled, and they went on their way. They were busy. They got busy. And they came back recently, about a week ago. Do you think they've done anything different? They're exactly where they were.

RM: But guess what shifted around them? The world—everybody else, all of their competitors, and all of their clients. So, what I would tell people is, yeah, you had some time. That time is over. What's happened recently is that people are becoming aware. It's been on 60 Minutes many times. And I say that because that's like mainstream media. So, what I would give as advice is, I hate to say this doom-and-gloom crap but get off the pot. There are two businesses in the future: those who are closed and those who are using AI. You gotta be one of those two. So which one are you going to be?

RM: So, my advice to those people: do what I told you at the beginning. Do what I've seen other franchisors do—dabble. Just dabble. It will unlock those "aha" moments. Or just hire WSI, for crying out loud. We do a six-month roadmap. We take you through it. We make you AI-ready. We get your policy in place. We provide training. We start showing you quick wins inside your organization—things you can connect to.

RM: Because, no, not everybody can do that. Some of our clients are very green. They barely use email. This is fine. Let them get recorded. We do this thing we call a quick win. We ask them to send us a video of a task or workflow—a Loom video, if you want to call it that—and we go, "We'll show you how AI can fix that." Fifteen minutes, done. Now it's a one percent upgrade out of ten percent.

RM: But then they go, "Oh, so that's how it works." So if you don't know where to start, if you don't know what to do, just call me, for crying out loud. That’s the simple point. But yeah, anyway, start using it. Start playing around with it. That's the base advice.

JM: And talk to professionals. Because I think this is one area, too, where you could go out and discover all of these things on your own. You could learn it. You could listen to all of these podcasts and read a thousand articles and follow all of the right influencers in the space. And you could learn as much as any AI expert right now. But the time it would take you to even learn one percent of what you need to know, the rest of the world—including your competitors—will pass you by in that time. So, this is not a time to avoid the professionals.

RM: I will end this with one thing, too. Think about your organization. This was said to me years ago—not directly to me, but I saw it on a LinkedIn post. I thought it was brilliant. A CFO says to a CEO, "What if we train this person and they leave us?" And the CEO responds, "What if we don't train them and they stay?" So, think about that in the context of AI.

RM: Let’s say you have an AI champion in your organization, and you’re not feeding that AI champion. This guy’s hungry—or this gal is hungry. They love this technology. And you're saying, "Alright, you can just stay over there. We're a construction company. We're manufacturing. We do janitorial work. We don't need AI." The problem is that AI champion is not getting fed. Just like if you had a superstar athlete.

RM: This is a great analogy that was used on a podcast by a friend of mine. If you had a superstar athlete, and you’re in the NFL, what do you do with that athlete? You’re feeding them. You’re giving them time on the field. PTs. You're giving them anything and everything they need to practice and hone their craft, right? So, they can be the best in the field come Sunday.

RM: If you don’t do that with an AI champion, you’re wasting the talent, and they’re going to go somewhere else. So, at the very least, look at your team and see who’s enthusiastic. Feed them. Have them connect with us. You can assign them a whole different role, and they can do great things in your organization if you don't want to. So, I can talk about this for hours.

JM: Yeah, the recruitment end of that is an interesting thing I hadn’t thought about. Do you want your brand to be the employer, the preferred employer, in your space, right? Do you want to have a new generation of critical thinkers and smart folks joining your organization?

JM: Or do you want to be that organization that people say, “Eh, it’s old-fashioned. They’re not doing anything interesting. They’re done. They’re not doing anything innovative. So, I’m going to take my brain and move over to some other company.” We don’t want to have that happen. Because I think, just to wrap up our look at 2025, this is going to be a huge year for franchising. It’s going to be a massive year for franchise development, franchise sales, and all of those franchisees expanding their current operations. And I think the last thing that you want in a year with so much opportunity is to lose all of your top talent just because you’re not investing in growing your own business.

RM: That’s—nothing could be said better there. For years, we’ve said, "Keep your talent happy, or keep your talent." But this is a little bit more problematic and volatile. So yes, I agree. Brilliant.

JM: Very good. Thank you, sir. We will see you very early in 2025, and cheers to a great year ahead.

RM: Cheers. See everybody later.

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