AI agents could take control of where consumers buy

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 32:12

   there's a reason why all the big companies are freaking out about this. So I don't know if you saw, but Amazon shut off access to Muse to be able to go buy stuff on Amazon. Now, why would they do that? Why would you stop somebody from shopping on Amazon? Well, the reason is what's called disintermediation, meaning if I just tell Muse, hey, go find me the best price for this thing that'll ship in two days or three days or whatever it is. Well, today as a consumer, I'm not going to want to do a ton of effort to go to check in case I can get a book somewhere else for cheaper or whatever. I'm not going to go look at five different places and do this comparison.

2. 32:50

   My mental shortcut will just always be Amazon. Or if I'm ordering something, maybe it'll always be DoorDash. And I'm not going to compare, you know, DoorDash versus Uber Eats versus the three other things that I could do, you know, Prime Fresh or whatever the hell. Like, I'm not going to do all that work. So consumers just start to gravitate towards trusted brands. Well, what happens when you have AI that's tireless? You will say, hey, order me this. And it'll be like, oh, you know, you can just buy that directly from Walmart. You know, you actually go to the brand and get it for $4 cheaper. Do you want that? And then the consumer is just going to thumbs up emoji this. And so these companies that have built so much time carving out mental real estate in consumers' minds, building those habits, hardwiring those habits day after day, year after

3. 33:34

   year, suddenly the agent is going to be the one with all the power to decide. This is also why Zuckerberg is so hell-bent on doing this because just like the Apple App Store had this monopoly, this kind of gateway to who can be in the store and who's going to show up in the top of the rankings and all this stuff, and they took a transaction fee on everything, that's what's going to happen so that the founder of instinct said he wants us to be free forever and he wants to make his money taking a cut on all the transactions he said that already while they're an invite only they've already crossed a billion dollars of transactions that like through the platform or people use instinct to buy something that 40 or 50 percent of that was travel so imagine you're booking.com or your expedia sorry boys game's over the show is over for you guys

4. 34:20

   because yeah yeah i mean it could be but also like i mean those guys all have these programs set up where they give you a three percent perform um like affiliate fee and i wonder if they would just like use that or broker deals because like by that logic facebook would have done this already where it would have been strictly an affiliate marketing play uh sorry i don't understand who would have done what i think that what that guy noah said is very similar to when the Google founders said that ads won't work on Google, or I think they said, what did they say?

5. 34:51

   We don't want it to be an ad platform. I kind of think it's something like that, like where the way that it's going to end is going to be drastically different than his, what's he saying in the first year of the business? Well, there's a good chance of that. But I would say the fact that people are using their agent to buy stuff in such volume, where he said, I think he said that 40% of users give Instinct their credit card within the first three weeks.

6. 35:18

   And then once they've done that, there's like an 80% retention rate, which is, these are numbers that, to the average person, it's just a number. But if you've been in tech, you understand how rare that is, how rare both of those numbers are, that people would hand over their credit card to an agent to buy things stored in the vault and that 80% would retain that have done that. That's like the Facebook, you know, get seven friends in 10 days and then you're there for life.

7. 35:43

   that's that sort of like aha moment where you get tons of value from the thing and the point is if you're the agent that makes the buying decision that's even more powerful than the most powerful business model of the world so far which has been the Google ad platform because the Google ad platform was advertisers pay to be shown and the user is going to decide what to do. If this is the agent is going to decide where to buy and then every merchant basically has to pay a VIG in exchange for the customer being brought to them, that's going to be really big.

8. 36:14

   This is how DoorDash charges merchants. People don't really realize this. DoorDash charges not just the customer for the transaction fee or the service fee or whatever. They also charge the restaurant because they're telling the restaurant, hey, you wouldn't have had this order if it wasn't for us. And the restaurant over time, they didn't like that. It's not like they wanted to agree to that, but they eventually realized there's too much power in the hands of this aggregator in the middle.

9. 36:40

   And they have to play ball, otherwise they lose out on all that volume. If they don't agree to it, they'll just put another Mexican restaurant there. Another Chinese restaurant will go in its place. And so I think that's why a lot of these platforms are very scared of, they want to be the agent because you don't want to be the one who is basically at the mercy of the agent who's making all these recommendations and buying decisions.

10. 36:59

    Do you want to know who's been a big recipient of this? And this is very niche because you and I are in this industry.